Panaco, Inc. announced the State Lease 16854 No. 1 well, drilled to a true vertical depth of 13,732 feet, encountered four gas sands totaling 55 feet of net pay. The well was drilled by Transocean Sedco Forex's inland barge, Rig 46. Panaco owns an 80% working interest in the No. 1 well which is located in North White Lake Field, Vermillion Parish, Louisiana. The results for this well were delayed due to a geological side-track and mechanical problems in the side-tracked wellbore.
Depending upon pipeline connections and right-of-ways, production could begin as early as April, 2002. Anticipated production rates are 2,000 to 3,000 Mcf per day. Although the delays were disappointing, the Company was able to increase its ownership in the well via non-participation in the side-track operations by other partners.