SAXON OIL COMPANY LTD SXNOF

RE: Pls. check this link !!!! IMPORTANT !!!

[Bobwins]

I have no doubt that Saxon is trying to increase their share price by making investors aware of their various assets. The US energy market is being dominated by the various unconventional gas/oil plays. As each area has been successfully exploited, there has been a land rush to lease large acreage positions. The big players want situations where they can deploy drilling crews and fraccing crews to drill wells one after another. These unconventional wells typically don't produce huge volumes but are completed at high percentage rates and allow these guys to produce reliable increases in production. I call it the factory mode. They have the capital to tie up multiple drilling rigs and fracturing crews that have the special expertise to drill these successfully. But the key is to tie up the acreage before everybody knows about it so that you pay 1,000/acre instead of 17,000+.

Saxon came up with that $5million by multiplying $17,000 X their 1273 acres X 18 to 23%. I would question whether they can get that valuation now. First, their land is prospective and unproven. Can they get the highest price recently paid? Unknown. Perhaps more importantly, they don't own 100% of the play. They are a minority partner. Someone willing to pay top dollar would probably would not want partners or would want to own majority position. They want to control WHEN and WHERE to drill if they pay top dollar. As Saxon notes in their PR, they are not saying they are going to drill in the Haynesville or Bakken because the operator of the acreage would determine that. IF the operator proposes to explore either acreage, Saxon can decide to participate or not. There is a possibility that the operator would want full control and would buyout Saxon's position.

If the acreage in either Haynesville or the Bakken appears highly prospective, both the partners are big enough to take action. In the case of CRK and the Haynesville, CRK has a huge position totaling over 100,000 gross acres. Will they look at their inventory and decide that Saxon's 1273 acres within that inventory is "special"? Unknown.

Again, I applaud Saxon for helping investors understand that they have some "hidden assets". As time goes on, this acreage could grow in value as the Haynesville and Bakken plays mature. The oldest unconventional play, the Barnett Shale, is still going and acreage is leasing for higher and higher amounts in the main fairway. They are even drilling UNDER one airport because the Barnett runs under large sections of Texas.

Will these assets produce revenues from the Haynesville or Bakken soon? I doubt it. Does our knowledge of these assets mean Saxon is an immediate buy? Not in my book. It is a good thing that they have this acreage with future potential. When will it turn into revs? Unknown. I am in Saxon because of Italy and the Central Kansas gasline. I want conventional production that is cashflow positive to support these activities. I am hoping they can repeat in New Mexico with that oil well. That was a major plus because it brings current revs and has developmental sites.

https://biz.yahoo.com/cnw/080521/saxon_new_mexico_oil.html?.v=1

Bobwins