This update provides the first opportunity for Elixir to report on its interests acquired by way of the merger in the High Island and Pompano Projects.
High Island Field
The High Island Field is a gas and oil field located in 169 feet of water offshore Texas in the Gulf of Mexico. The field is surrounded by a number of producing fields and associated oil and gas production and transportation infrastructure. Elixir, through its acquisition of Gawler, now holds a 30% working interest in the field. This interest is subject to a 5.4% 'back-in' arrangement which will take effect once Elixir has recouped its initial investment in the project.
During the course of the year, two production wells have been drilled, completed and tied back to a regional processing facility located near the High Island field. The wells were brought into production during September 2007. In the period following the issue of Gawler's quarterly report on October 31, 2007, the wells have continued to flow steadily at approximately 17.5MMcf of gas per day and 200 barrels of condensate per day.
Sales proceeds from production for the month ended September 30, 2007 are expected to be received by Elixir in the next few days. We are advised by the operator that the average price realized for the sale of gas produced in September was US$6.18/mcf and for condensate was US$79.27/Bbl.
Future sale proceeds from production at High Island will be received by Elixir on a monthly basis.
We are pleased to announce that the Joint Operating Agreement ('JOA') for the Company's Pompano project has been executed by each of the joint venture participants.
The Pompano Gas Field is located approximately 90 miles southwest of Houston and 30 miles east of Port O'Connor, Texas. It is located 7 miles offshore in the Gulf of Mexico in approximately 55 feet of water. The Pompano project has existing production facilities in place requiring only relatively minor refurbishment work to allow them to be utilized for production purposes.
The execution of the JOA allows for the commencement of infield activities and it is anticipated that this work will be completed in the next 21 - 28 days at which time the drilling location will be ready for the rig to move onto site. The Operator has advised that negotiations with rig providers are advanced and final rig selection and contracting will take place in the near future.
The first well to be drilled is a commitment well and Elixir is able to participate in the drilling of an additional 5 wells in the Pompano field.
The participants in the Pompano Project Elixir with 25%; Buccaneer with 65%; Baron Petroleum with 7.5%; and Streamline Exploration with 2.5%.
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