The agreement stipulates that crude oil and natural gas from Callon's Entrada Field, located on Garden Banks Blocks 738, 782, 785, 826 and 827 in the Gulf of Mexico, will be processed by the Magnolia production platform on the adjacent block, Garden Banks Block 783, which is owned by ConocoPhillips and Devon.
Current plans call for an initial development of two producing wells as sub-sea tiebacks to the host facility, with production anticipated to commence during the first quarter of 2009. In addition, provisions have been made for additional wells to be tied into this infrastructure in the future.
Negotiation of the production handling agreement has been ongoing since Callon announced its acquisition of BP's 80% interest in the Entrada Field in April 2007.
Fred Callon, Chairman and CEO, commented that "We are very pleased to have reached this important milestone in the development of the Entrada Field and are moving forward with the final engineering design work to ensure the successful completion of this project."
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