Under the terms of the agreement Phoenix have the right to drill a test well within the next four months. If the well is successful, Pan Andean will retain a 2.15% Royalty Interest on production.
Pan Andean is currently earning in excess of US$ 100,000 per month from the Gryphon Royalty on the North-East quarter of the High Island 52 Block. This will not be affected by the Farm-out Agreement with Phoenix. Pan Andean and Sterling, who share the block 50:50 currently produce about 400,000 cubic feet of gas a day from one well.
Elsewhere in the Gulf of Mexico, Pan Andean receives US$5,000 a month from a Royalty Interest on the Eugene Island Block. Block High Island 30L is expected to restart production by yearend of 300 barrels of oil per day when current refurbishment of pipeline and pumping systems are completed.
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