Overview

Saxon Oil, a Tier One Texas-based Canadian company, is an independent oil and gas company engaged in the acquisition, development and production of oil and natural gas reserves. Saxon seeks to deliver strong shareholder returns through an effective exploration and development program that incorporates sound business practices with the latest oil field technologies. The goal is to steadily increase proven reserves of oil and natural gas – which, in turn, will lead to enhanced cash flows and earnings per share.

Saxon is moving ahead with several noteworthy projects in the first half of 2008 that should continue to lead to improving cash flows, improved financial performance and increased shareholder value. Saxon remains active in its drilling and completion program throughout the first and second quarters of 2008. The company’s midstream gathering gas system in central Kansas, held in Saxon’s wholly owned subsidiary, Central Kansas Gas Gathering (CKGG), should begin service in the second quarter of 2008. In Italy, AleAnna Resources LLC, of which Saxon holds a 20% membership interest, is progressing on the process to obtain government approval for a 3d seismic survey scheduled for fall 2008.

Chief Properties

Saxon experienced strong growth during the first half of 2008, fueled by timely property acquisitions, successful drilling opportunities and workover operations, and favorable commodity prices.

Saxon currently has production totaling more than 245 bbl of oil equivalent per day from located in Texas, New Mexico, North Dakota, Oklahoma, and Kansas. Saxon, through its wholly owned subsidiary, Mid Kansas Gas Gathering System, owns 100 miles of gas gathering systems in Central Kansas. In addition, Saxon owns a 20% membership interest in AleAnna Resources LLC, which has a significant acreage position in the Po Valley, Italy, and a 10% interest in Preset Drilling.

Saxon’s largest base of operations is now in Kansas, where it operates and holds majority working interests in 30 oil wells on 18 leases in north central Kansas. Saxon purchased these leases in August 2007 and since that time has carried out a number of successful workover and maintenance operations.

A company goal for the last year was to increase oil production as a percent of overall oil and natural gas production. Prior to these acquisitions in Kansas, about 85% of the Company’s production was natural gas. Because of the Kansas production acquisitions, which were all oil wells, and the rapid oil commodity price increases throughout 2007 and early 2008, the company reserve base at current commodity prices is now 60% oil on a barrel of oil equivalent (BOE) basis.

Saxon’s second most significant oil production is from working interests in nine wells located in the Last Chance and Catwalk fields in the Williston Basin of North Dakota. Saxon’s primary gas production comes from the wells developed in the Lasley Project, a mid-depth Red Fork formation gas field located on approximately 2,000 leased acres in Caddo County, Oklahoma.

Oklahoma

Saxon’s primary gas production comes from the wells developed in the Lasley Project, a mid-depth Red Fork formation gas field located on approximately 2,000 leased acres in Caddo County, Oklahoma. Saxon has working interests in 27 producing wells in the field.

The most recent well in which Saxon has a working interest is the Western Williams 3-9 well, which was completed in early January 2008 with an initial rate of 1.4 million cubic feet per day (MMcfd) and 11 barrels of oil per day (Bopd) with a 2,500-psi tubing pressure.

The operator has recently applied for increased drilling density in the Lasley Field and successful drilling in the Red Fork reservoir by another operator on acreage adjacent to company leasehold may lead to additional drilling opportunities for the company in the Lasley area.

Saxon has significant oil and gas reserves in the Lasley area of western Oklahoma where we have 25 producing wells most producing from the Pennsylvanian age Red Fork sandstone. We have reviewed well performance and will continue to monitor activity. We recently farmed out our interest in the deeper Springer sandstones on an exploratory 160 acre tract near the southern end of our 2,000 acre leasehold. We retained the rights to the Red Fork sandstones and plan development activity for this sand if warranted after evaluation of the new well.

Kansas

Saxon’s largest base of operations is now in Kansas, where it operates and holds majority working interests in 30 oil wells on 18 leases in north central Kansas. The Company purchased these leases in August 2007 and since that time has carried out a number of successful workover and maintenance operations. In addition, the Company participated in the successful re-entry and test of a well in Gove County, Kansas, that began production tests in the 2nd quarter of 2008.

Also in central Kansas, Saxon owns a approximately 240 miles of gas gathering systems through its wholly owned subsidiary, Central Kansas Gas Gathering Company LLC. The first gathering system, with associated compression facilities, was acquired in June 2007. Additional gas gathering systems were acquired in June 2008. Saxon’s strategy is to combine its upstream exploration & production (E&P) operations with the acquisition and operations of selective gas gathering and processing systems to maximize the profitability in both market segments. The company will receive revenue for its own production, as well as fees from third parties for transporting and processing their gas production.

North Dakota

Saxon’s second most significant oil production is from working interests in nine wells located in the Last Chance and Catwalk fields in the Williston Basin of North Dakota. Current production comes from the Madison Limestone, however, the deeper Bakken Shale has been completed in a horizontal oil well approximately two miles north of Saxon’s leasehold. No drilling activity is forecast for 2008 but Saxon’s operator may propose drilling of a horizontal test if the performance of the offset operator’s well justifies this Bakken Shale drilling.

Texas

Saxon is the second largest working interest owner in a portion of the North Tatum (Oak Hill) Cotton Valley field of Rusk County, Texas. The operator, Comstock Resources, drilled a successful 40-acre infill well in the third quarter 2007 and plans additional drilling on other 40-acre locations in 2008. Saxon currently owns working interests in eleven producing gas wells in Tatum field.

Also during the 1st quarter of 2008 Saxon announced the completion of the Tri-C Resources Jackson-Williams 3 well in Jackson County, Tex. During production testing in early February 2008 the well flowed at rates ranging from 1.0 to 1.7 MMcfd with flowing tubing pressures of 5,000 to 7,200 psi through chokes varying from 5/64- to 8/64-inch in size. Saxon owns slightly less than 1% working interest in the Jackson-Williams 3 well.

Saxon owns the majority interest and operates Hudson Hills prospect in Central Texas. The company, which holds a 75% percent working interest in the prospect, has leased approximately 2,100 acres in this area. Saxon is currently producing from three wells drilled in 2006. The company is currently in negotiations to farmout the majority of its interest to a company interested in further drilling in this area and the 1,146-acre Heatherwood prospect north and separated by several miles from the Hudson Hills project.

New Mexico

In May 2008, Saxon announced the successful completion of the Eumont State No. 1 exploratory well in Lea County, New Mexico. The well flowed at daily rates exceeding 500 barrels of oil per day (bopd) with no water through a 48/64-inch choke during the first 24 hours of sustained production through perforations from 3,962 to 3,968 ft in the Seven Rivers formation. Subsequently, the well choke size was decreased to 20/64-inch and the well tested at a stabilized rate of over 300 bopd with no water at over 150 lb per sq inch (psi) of tubing pressure. Saxon has a 15% working interest in this well.

Saxon is pleased with this oil discovery, not only with the initial high flow rate, but because it is flowing oil to the surface under its own pressure. Typically, in this part of New Mexico, a newly completed oil well immediately requires some type of artificial lift to bring the oil to the surface. The Eumont well opens up a whole new area of opportunity for Saxon, and the company has identified at least four offset locations for development drilling.

Saxon also acquired from AleAnna Energy LLC during 2007 a 20% working interest in AleAnna’s West Texas and New Mexico production and future projects.

Management

• Richard G. Green – Chief Executive Officer
• Steven D. Moore – Interim Chief Financial Officer
• Sioux Sinnott – Operations Manager

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