Mesa Offshore Trust announced that by letter dated January 11, 2010, Pioneer Natural Resources informed the Trust that Pioneer proposed to its co-working interest owner in the Brazos A-39 No. 5 well, Woodside Energy USA, Inc., that the well, platform and related facilities should be abandoned pursuant to an operating agreement governing the property. Woodside agreed to this by election dated January 8, 2010. As a result, the Brazos A-39 lease will lapse and revert to the U.S. government, and all of the interests in the lease held by each of Pioneer, Woodside and the Mesa Offshore Royalty Partnership (the "Partnership") will be extinguished.
The Brazos A-39 lot, including Pioneer's working interest, previously drew no bids in an auction provided for under a settlement agreement executed May 18, 2009 with the Trust relating to the lawsuit by MOSH Holding, L.P. and other plaintiffs. Production from the Brazos A-39 No. 5 well was relied upon to maintain the Brazos A-39 lease, but the well was shut in by a pipeline purchaser on September 2, 2009 because the production does not meet pipeline specifications.
Based on these events, Pioneer has informed the Trust that it is moving forward with the final accounting relating to the termination, liquidation and wind-up of the Partnership in accordance with the settlement agreement and the Partnership's First Amended and Restated Articles of General Partnership. Pioneer expects to complete that process by the end of the first quarter 2010.
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