During 2010, the Company conducted drilling operations on four horizontal Cotton Valley Taylor Sand wells throughout its acreage position in the Minden, Beckville and South Henderson fields of East Texas. In the South Henderson field, the Company's Travis Crow 1H well reached initial production of over 12.0 MMcfe/day, which included approximately 380 Bbls of oil per day. In 2011, the Company plans to spend approximately $20 – 25 million to drill three offset wells in its South Henderson field. The Company has approximately 56,000 gross (49,000) net acres prospective for the Cotton Valley Taylor Sand. The Company's net production volumes from its Cotton Valley Taylor Sand wells totaled approximately 7,000 Mcfe per day in 2010, or approximately 8% of the Company's total oil and gas production for the year.

During 2010, we drilled and completed 4 gross (4 net) oil wells with a 100% success rate in the play. Our 2011 capital expenditure budget includes plans to utilize approximately 1 rig to conduct drilling operations on approximately 3 gross (3 net) additional Cotton Valley horizontal wells.