The farmout agreement calls for the drilling of an initial test well on Pannonian's 149,435 acre Neues Bergland Exploration Permit where Pannonian is the owner of a 50% interest in the permit area and is the designated operator for the project. Phase One of a three year work commitment has commenced under the terms and provisions of a Farmout Agreement with Empyrean Energy PLC providing, among other general items, for the payment of all costs and expenses involved in Phase One and Two to be borne by the Farmee entity for the benefit of Pannonian and its two co-permittee partners. Empyrean will earn an initial 40% interest in the Permit, which could rise to 52%, depending on the success of the project. Pannonian's interest will be reduced to 30% (from its original 50%) and could be further reduced to 24%. A drilling contract for the first well has been negotiated and secured by payment of the required initial consideration to the selected contractor in the amount of 265,176 Euros (approximately $323,170 USD). These funds were provided 100% by the Farmee in accordance with the Farmout Agreement.
Pannonian will act as operator for the first three wells contemplated under Phase One and Two, and a related planned seismic program to be conducted in 2005 and 2006. Actual drilling of the first well is designated to begin in mid August 2005, with the second and third wells to follow in 2006 and 2007 respectively. Total expected expenditures for the first two phases of this project are in excess of 9.0 million Euros (approximately $11.0 million USD).
Cecil Gritz, Galaxy's Chief Operating Officer, stated, "The Neues Bergland farmout provides an opportunity for Galaxy to evaluate one of its prospective international acreage holdings on a timely and low risk basis, at the same time that the company is aggressively developing its promising non- conventional gas projects in the U.S. Rocky Mountain region."
Most Popular Articles