Pegasi Energy Resources Corp. announced the drilling of its first horizontal well in Cass County, Texas. The Morse Unit # 1-H is the first horizontal well in Pegasi's planned development of its extensive Cornerstone Project in East Texas.

The well has been drilled and suspended with production liner set within the 2,000 foot horizontal section of the well.

The Company is planning a multi-stage frac in the completion of the well, which will be performed within 60 to 90 days. This multi-stage frac will involve a sequence of dynamic fracturing conducted in pre-determined sections of the horizontal well bore.

The company is currently evaluating the data acquired on the vertical pilot that penetrated all of the formation's potential target reservoirs to a vertical depth of 10,843 feet as well as the data acquired from the target zone of the horizontal lateral, which was drilled to a MD of 12,576 feet. This petrophysical and petrochemical information will be used to design a multi-stage frac that is specific to the target reservoir of the well.

CEO Michael Neufeld commented: "This is the first horizontal well targeting the oil bearing Bossier formations that has been drilled in Cass County, Texas. We are pleased with the results and will continue our drilling program for these reservoirs during 2012."

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