The Fayetteville Shale is an unconventional gas reservoir located on the Arkansas side of the Arkoma Basin, ranging in thickness from 50 to 550 feet and ranging in depth from 1,500 to 6,500 feet. The shale is a Mississippian-age shale that is the geologic equivalent of the Caney Shale found on the Oklahoma side of the Arkoma Basin and the Barnett Shale found in north Texas.

 2007 reserves of 716 Bcf of gas (49% of total proved reserves). 2007 production of 53.5 Bcf of gas (47% of total production).

 As of mid-April 2008, the company’s gross operated production rate from the Fayetteville Shale play was approximately 400 MMcf per day, including approximately 11 MMcf per day from 12 wells producing from conventional reservoirs.

At May 8, 2008, Southwestern held approximately 851,100 net acres in the play area, including approximately 125,400 net acres held by conventional production in the traditional Fairway portion of the Arkoma Basin.

Through March 31, 2008, Southwestern has drilled and completed a total of 557 operated wells in the play, of which 493 are horizontal wells. Of the 493 horizontal wells, 446 wells were fractured stimulated using either slickwater or crosslinked gel stimulation treatments, or a combination thereof.

During the first quarter of 2008, the company’s typical horizontal well had an average completed well cost of $2.9 million per well. During the first quarter of 2008, the company’s typical horizontal well had an average horizontal lateral length of 3,285 feet and average time to drill to total depth of 15 days from re-entry to re-entry. As the company continues to drill wells with longer laterals in some of its pilot areas, the number of drilling days and well costs may increase. Southwestern has drilled and completed 142 wells with lateral lengths over 3,000 feet through March 31, 2008. Southwestern forecasts that the average gross ultimate recovery from wells with greater than 3,000 feet horizontal laterals to range from 2.0 to 2.5 Bcf per well with an average completed well cost of approximately $3.0 million per well.

For 2008, Southwestern plans to invest over $1.3 billion in the Fayetteville Shale play in Arkansas.