LOCATION - The Fayetteville Shale is an unconventional gas reservoir located on the Arkansas side of the Arkoma Basin, ranging in depth from 1,500 feet to 6,500 feet. The Fayetteville Shale is Mississippian in age and is the geologic equivalent to the Caney Shale in Oklahoma and the Barnett Shale in Texas. It ranges in thickness from 50 to 325 feet.

RESERVES - Hillwood has rights to 34,896 acres across 11 counties in this play. Exploration is scheduled to begin in 2007.

Leveraging its experience in the Barnett Shale, Hillwood entered the Fayetteville Shale via an acquisition of minerals in 2006. The Fayetteville Shale is an unconventional gas reservoir ranging in depth from 1,500 feet to 6,500 feet.

Approximately 20 vertical tests have been completed with flow rates ranging between 200 MCFGPD and 1,000 MCFGPD. The first horizontal completion initially flowed at the rate of 3,700 MCFGPD. However, this play is in its infancy and is potentially another Barnett Shale play in the making.

In early 2006, Hillwood acquired the rights to 34,896 acres across 11 counties. It is now evaluating the conclusions of geological studies of the acreage to determine which areas appear to be the most prospective. Following the geological studies and evaluation, 3 D seismic will be acquired and drilling will commence.