Paxton Pokes Potential Pearsall Discovery in Texas

Paxton Energy, Inc. has been advised by the operator, Bayshore Exploration LLC, that re-entry operations have commenced on the Cooke No. 3 discovery well-site at the Cooke Ranch, La Salle County, Texas to test and attempt a completion in the Pearsall formation. The Cooke No. 3 well was drilled in the summer of 2005 to a total depth of 17,500 feet.

During the drilling of the Cooke #3 well, operations encountered multiple deep formations below 12,000 feet with significant gas shows in the Pearsall formation from 12,950 to 13,872 feet. In the completion operations it was deemed practical to focus on the naturally flowing Escondido discovery at 6800 feet. Subsequent operations set production casing to 12,000 feet and stimulated commercial oil and gas production from the Escondido reservoir.

In late 2006 and early 2007 several new discoveries in Maverick County by XTCO, Encana and Anadarko in the Pearsall formation caused Bayshore and our geological consultants to review drilling logs from the Cooke #3 wellbore for the potential of commercial Pearsall production. All available data was reviewed and Bayshore has advised that the well contains approximately 90 net feet of potential commercial pay.

Additional research on the geology and completions from the Pearsall shale discoveries in Maverick County confirmed the following; in 1979 a Pearsall well was drilled setting a new Texas record with the highest absolute open flow rates ever achieved at 265 Million cubic feet per day. To-date TXCO and other have produced 20 BCF of gas from the Pearsall through 50 vertical wells with an estimated 100-300 bcf/sq mile.

During the past several months operations have been focused on stabilizing production from our five commercially producing wells at the Cooke and Storey Ranch in La Salle County, Texas. Currently three wells are producing and two wells are in current work-over programs.