Paxton Energy has signed an agreement with Montecito Offshore of Louisiana to acquire a 70% working interest in 546.875 acres in the Vermilion 179 (VM 179) track in the US.

VM 179, which is located in the shallow waters of the Gulf of Mexico offshore from Louisiana, is currently producing 2,500bopd.

As per the internal engineering reports, VM 179 contains reserves valued at $92m at PV-10 (present value at a discount rate of 10%).

The agreement calls for a deposit of $250,000 paid to Montecito by 4 April.

Montecito is expected to receive the remaining balance of $1.75m and 15,000,000 shares of Paxton common stock by 27 May 2011.

Early Third party engineering reports indicate proved and probable reserves of 1,600,202 barrels of oil (bbl) and 3.37 billion cubic feet (bcf) of gas for 100% of the working interest in the track.