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In re Panaco, Inc.

United States Bankruptcy Court for the Southern District of Texas, Houston Division

December 9, 2002, Decided; December 9, 2002, Filed; December 10, 2002, Entered

CASE NO. 02-37811-H3-11

Opinion

MEMORANDUM OPINION

The court heard the Joint Motion By Unocal and BP Exploration & Production Inc. For Entry Of An Order Compelling Debtors [sic] To Assume or Reject Operating Agreements (Docket No. 263). The  [*2] court also heard the objections and responses filed by Panaco, Inc., Foothill Capital Corporation, High River Limited Partnership, and the Official Committee of Unsecured Creditors (Docket Nos. 286, 287, 288, and 289). After consideration of the pleadings, testimony, evidence and argument of counsel, the court makes the following Findings of Fact and Conclusions of Law granting the Joint Motion and compelling the Debtor to assume or reject operating agreements no later January 10, 2003. A separate conforming Judgment will be entered. To the extent any of the Findings of Fact may be considered Conclusions of Law, they are adopted as such. To the extent any of the Conclusions of Law may be considered Findings of Fact, they are adopted as such.

Findings of Fact

1. Panaco, Inc., Debtor, filed a voluntary petition under Chapter 11 on July 16, 2002 and is operating as a debtor-in-possession.

2. Panaco is in the business of selling to third parties oil and natural gas produced from or attributed to certain oil and gas interests.

3. Panaco, as lessee, under one or more leases with the United States of America Department of the Interior minerals management Service ("MMS"), owns an interest in certain  [*3] fields located in the Gulf of Mexico, off of the Texas Coast, commonly known as East Breaks 160 and 161 (collectively, EB 160). Panaco obtained its interests in EB 160 from Amoco Production Company. Stipulations For Hearing on Unocal's Motion to Compel ("Stipulations").

4. Unocal, as operator, and BP Exploration & Production Inc. ("BP") and Panaco, as joint working interest owners, are parties to a Joint Operating Agreement ("Unocal JOA") covering EB 160. The Unocal JOA recites that Panaco has a 33 1/3 interest in EB 160. Stipulations.

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2002 Bankr. LEXIS 2084 *; 2002 WL 31990368

IN RE: PANACO, INC., Debtor

CORE TERMS

abandonment, plugging, expenses, operating agreement, properties, estimates, costs, escrow account, lease, oil

Bankruptcy Law, Administrative Powers, Executory Contracts & Unexpired Leases, Time Limitations, Existing Defaults, General Overview