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Interest In Mexico’s Offshore Blocks Is Surging

Offshore

25 companies pre-qualified for upcoming lease sale

The Comisión Nacional de Hidrocarburos (CNH), which will conduct the lease sale, has listed a total of 25 groups that have successfully pre-qualified for the Round 2.1 sale. As might be expected, supermajors are prominent among the companies involved. Chevron (ticker: CVX), ConocoPhillips (ticker: COP) and Shell (ticker: RDS.A) have each pre-qualified. Other major international companies include Eni (ticker: E), Repsol (ticker: REP) and Total (ticker: TOT).

Several NOC’s have also applied, including CNOOC, Pemex, Lukoil, Petronas, Colombia’s Ecopetrol and India’s ONGC. International E&P’s that have signed on include Noble (ticker: NOG), Premier (ticker: PMO) and Ophir (ticker: OPHR). Five consortiums have also applied, accounting for a total of 11 companies.

(Click to enlarge)

Source: CNH

A total of 15 offshore lease blocks will be offered in this sale. According to CNH, these 15 blocks contain a combined 1.6 BBOE of recoverable resources. Block 11, in the southern section offshore from Tabasco, has the largest prospective resource of any block with a P50 of 300 MMBOE.

(Click to enlarge)

Source: CNH

Related: 4 Wildly Different Oil Price Scenarios For 2020

Interest in Mexican offshore properties is increasing as the overall oil industry recovers. Mexico’s recent deepwater offshore lease sale was highly successful, with eight out of ten blocks sold.

First private offshore oil well in 80 years recently began drilling

A major milestone was achieved in May, as a JV between Premier Oil, Talos Energy and Sierra Oil & Gas began drilling the Zama-1 offshore well. This is the first time in nearly 80 years that a private company has drilled an offshore oil well in Mexico. Each of these companies has pre-qualified for the most recent lease sale.

Privately-held Talos Energy is the operator of the well, with a 35 percent stake. Premier owns 25 percent, while Sierra holds the remaining 40 percent. According to Premier, the Zama-1 well has a P90-P10 gross unrisked resource range of 100-500 MMBOE.

Premier expects Zama-1 will take about 90 days to drill, and will have a total cost to the company of $16 million.

Tudor Pickering & Holt, however, predict that this resurgence will not have an effect for some time.

While the firm does expect shallow water production to be the next material near-term contributor to Mexican production, it will not have a significant effect for several years. TPH predicts Mexican production will decline by about 5 percent per year through the end of this decade.

By Oil and Gas 360

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