Production casing has been set and flowlines are being prepared for production, which is expected to commence at an initial level of 5 million cubic feet of gas per day. Pan Andean retains a 2.15% royalty on all revenues from this well.
Pan Andean's farm-in partner Phoenix Exploration drilled the well. Under the terms of the agreement Phoenix have now earned into the block and will take over the platform and related abandonment liabilities, estimated at US $6 million (Pan Andean: 50%).
Pan Andean holds an existing 1.32% revenue royalty on 3 wells drilled by Gryphon Exploration in the northeast quarter of the block High Island 52. To date, Pan Andean has received over US$8 million from the Gryphon royalty David Horgan, Managing Director of Pan Andean commented:
"This is an excellent discovery for both Pan Andean and Phoenix Exploration. High Island 52 in the Gulf of Mexico has been very good to Pan Andean. The existing Gryphon royalty produces over USD140,000 a month, royalties will flow from Phoenix in weeks and we have exited or abandonment liabilities. More importantly this discovery means that additional wells will be drilled on the block."
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