Saxon is the second largest working interest owner in a portion of the North Tatum (Oak Hill) Cotton Valley field of Rusk County, Texas operated by Comstock Resources. Saxon currently owns working interests in ten gas wells producing from the Jurassic age Cotton Valley formation and additional 40-acre locations remain to be drilled on Saxon interest leasehold. Saxon also has interest in one well in the Carthage Northwest field of Panola County. Saxon owns mineral rights to the deeper Bossier/Haynesville shale under Saxon acreage held by production from shallower horizons in these fields. The Haynesville shale of Northeast Texas and Northwest Louisiana has experienced considerable, highly publicized, leasing and drilling activity in the recent past and although Saxon anticipates no drilling activity in the short term, our acreage appears well placed in this producing fairway.

Saxon owns the majority interest and operates Hudson Hills prospect in Central Texas. The company, which holds a 75% percent working interest in the prospect, leased approximately 2,100 acres in this area and is currently producing from three wells. The company recently farmed out its interest in the 1,146-acre Heatherwood prospect north, and separated by several miles, from the Hudson Hills area. Saxon also has minor working interests in several wells in northwest and south Texas.