A valuable asset of the Company, High Island 30 in the Gulf of Mexico (Pan Andean 62.9%), has been closed in since 2004 to add gas lift to the platform and to allow the construction of a new pipeline and pumping system to transport the oil and gas to shore. After extensive delays, due mainly to the aftermath of hurricanes Katrina and Rita, a boat capable of undertaking the necessary alterations was obtained and is completing work on the pumping installation. The pipelines are finished and the pumps should be operational in January 2007. After testing, production will commence at an expected rate of 300 barrels a day of oil with associated gas. At current prices this implies a revenue of over $20,000 a day.
Our US assets have been good to us and further potential exists. After extensive negotiations, a farm in deal has been agreed with Phoenix Exploration whereby they have an option to drill the deep plays on most of High Island 52. Having evaluated existing seismic, it is believed that Phoenix will drill a deep well on the block in early 2007. Pan Andean has a 2.15% royalty.
Onshore Texas we are expecting to participate, in mid 2007, in a well on the Vrazel property (Pan Andean 21%). There is a limited interest in the deep play on our Danbury Dome acreage (Pan Andean 100%
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