2010-08-31-2010-08-18-2010-08-18

Purchased ORRI in 5,120 gross acres in Haynesville trend area in DeSoto Parish, gaining 5 horizontals.

Midland, Texas-based Mexco Energy Corp. (Amex: MXC) has purchased an overriding royalty interests in 5,120 gross acres covering eight sections in the Haynesville trend area of DeSoto Parish, Louisiana, for $1.65 million.

This acreage currently contains five horizontal wells producing from the Haynesville shale formation and operated by Petrohawk Operating Co. which will operate six of the eight sections. The two remaining sections will be operated by Chesapeake Energy. The company owns average overriding royalty interests of approximately .28%.

The acreage contains an additional 59 potential drill sites in the Haynesville shale. Other wells drilled in the Haynesville area show the presence of at least two other potential producing zones, the Bossier and Cotton Valley, which are held by production and available for development should conditions warrant. The development of these royalties is free to Mexco of expenses for drilling, development and operations.

"This acquisition represents a significant addition of the natural gas reserves for Mexco and future development potential," says Nicholas C. Taylor, Mexco president and chief executive.

Mexco paid $1.46 million in cash and 26,833 shares of its common stock. The company funded the cash portion of the purchase from working capital and primarily from its $5 million credit facility. The stock was issued from Mexco's treasury shares.