SOURCE: Paxton Energy, Inc.

March 30, 2011 08:30 ET

Paxton Energy Enters Into Definitive Purchase Agreement

Acquisition Contains Oil and Gas Reserves Valued at Over $90 Million

SAN FRANCISCO, CA--(Marketwire - March 30, 2011) - Paxton Energy, Inc. (OTCBB: PXTE) (Paxton), an energy turnaround company engaged in the acquisition, exploration, development and drilling of oil and natural gas properties, is pleased to announce that on March 28, 2011, Paxton entered into a definitive agreement with Montecito Offshore, LLC ("Montecito") of Louisiana to acquire a 70% working interest in 546.875 acres in the Vermilion 179 (VM 179) track. Located in the shallow waters of the Gulf of Mexico offshore from Louisiana, VM 179 is adjacent to Exxon's VM 164 #A9 well, which is currently producing 2,500 BOPD (barrels of oil per day). Based on Internal Engineering Reports, VM 179 contains reserves valued at $92 million at PV-10 (present value at a discount rate of 10%).

The agreement calls for a deposit of $250,000 paid to Montecito by April 4th. The remaining balance of $1,750,000 plus 15,000,000 shares of Paxton common stock are due to Montecito by May 27, 2011. Third party engineering reports dated March 29, 2010, by James F. Hubbard, indicate proved and probable reserves of 1,600,202 barrels of oil (bbl) and 3.37 billion cubic feet (bcf) of gas for 100% of the working interest in the Vermilion 179 track.

"The Vermillion 179 acquisition follows the company's strategy of acquiring producing properties with proved and probable reserves," said Charles F. Volk, Jr., Chairman and CEO of Paxton.

About Paxton
Paxton engages in the acquisition, exploration, development and drilling of oil and natural gas properties. Paxton is an energy turnaround company whose strategy is to acquire cash flow producing properties with proved and probable reserves, develop the fields by reworking existing wells and drilling new wells. Paxton was founded in 2004 and is based in Stateline, Nevada.

Cautionary Note to U.S. Investors
Effective January 1, 2010, the United States Securities and Exchange Commission (SEC) now permits oil and gas companies, in their filings with the SEC, to disclose not only "proved" reserves (i.e., quantities of oil and gas that are estimated to be recoverable with a high degree of confidence), but also "probable" reserves (i.e., quantities of oil and gas that are as likely as not to be recovered) as well as "possible" reserves (i.e., additional quantities of oil and gas that might be recovered, but with a lower probability than probable reserves). As noted above, statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve estimates provided in this press release that are not specifically designated as being estimates of proved reserves may include estimated reserves not necessarily calculated in accordance with, or contemplated by, the SEC's latest reserve reporting guidelines. Investors are urged to consider closely the disclosure in Paxton's Annual Report on Form 10-K available from Paxton at P.O. Box 1148, Zephyr Cove, NV 89448 (attn: Investor Relations). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC's website at www.sec.gov.

Safe Harbor
Statements about Paxton's future expectations and all other statements in this press release other than historical facts, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private Securities Litigation Reform Act of 1995. Paxton intends that such forward-looking statements be subject to the safe harbors created thereby.
The above information contains information relating to Paxton that is based on the beliefs of Paxton and/or its management as well as assumptions made by and information currently available to Paxton or its management. Paxton does not undertake any responsibility to update the forward-looking statements contained in this release.

Contact Information

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