Pan Andean Resources, the Anglo/Irish oil and gas producer announces the start up of production of the Phoenix Exploration (“Phoenix”) well on High Island 52 in the Gulf of Mexico. Initial production rates are 5 million cubic feet of gas a day, but this is expected to rise as the operator familiarises himself with the reservoir.
Highlights:
• Production start up on High Island 52 in the Gulf of Mexico
• Initial production of 5 million cubic feet of gas per day
• Production rates expected to rise in the future
• Revenue royalty of 2.15% to Pan Andean
• The platform and abandonment liability passed to Phoenix Exploration
Pan Andean holds a 2.15% revenue royalty on production from this well and any others to be drilled by Phoenix on High Island 52.
Pan Andean has also passed ownership of the platform on High Island 52 to Phoenix who have also assumed all abandonment liabilities estimated at $6m (Pan Andean’s previous liability was 50%).
John Teeling, Chairman, commented:
“This is a great deal for all parties concerned. Pan Andean gets immediate revenue, an exit from heavy liabilities and an interest in future drilling. Phoenix, who were successful with their first well, get a valuable asset with production, revenue and improved prospectivity on the block. I am very hopeful that drilling of deeper targets on the block will occur in the near future.”