Paxton has entered into a definitive agreement with 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.

Tags: Paxton Energy Inc.