First private joint venture to drill offshore Mexico strikes ‘significant’ oil discovery
Joint venture partners Premier Oil, Talos Energy and Sierra Oil & Gas, announced today that the Zama-1 exploration well in Block 7, offshore Tabasco, Mexico, has made a world class oil discovery. The Zama-1 well is the first offshore exploration well drilled by the private sector in Mexico’s history. Talos holds a 35% participation interest with Sierra and Premier holding 40% and 25% participation interests, respectively.
Preliminary analysis estimates that initial gross original oil in place range from 1.4 to 2.0 billion barrels, exceeding pre-drill estimates, some of which could extend into a neighboring block.
“This is both a historic and significant discovery, and we could not be more proud of the highly skilled personnel from Mexico and the US who have been working together in a safe and efficient manner to make it a reality,” said Tim Duncan, President and Chief Executive Officer of Talos Energy.
“We believe this discovery represents exactly what the energy reforms intended to deliver: new capital, new participants and a spirit of ingenuity that leads to local jobs and government revenues for Mexico. We are eager to begin appraising this discovery and drilling more unique opportunities. The future is bright for offshore Mexico for years to come,” Duncan added.
Houston-based Talos Energy, along with British firm Premier Oil and Sierra Oil & Gas raised US$ 947 million to participate in Round One tenders which resulted in two production sharing contracts (“PSCs”) with Mexico’s upstream regulator, the National Hydrocarbons Commission, for Block 2 and Block 7.
The blocks are located in the Sureste Basin, a prolific proven hydrocarbon province, in the shallow waters off the coast of Mexico’s Veracruz and Tabasco states.
Sierra Oil & Gas is a company based in Mexico City, whose capital comes mostly from foreign funds. In 2014, three foreign-funded and one Mexican-owned funds invested US$ 525 million in the company. These are EnCap Investments, Riverstone Holdings, Riverstone Energy and Infrastructura Institutional.
In 2014, Mexico deregulated its oil and gas market and broke the monopoly of the state oil company, Petroleos Mexicanos (Pemex), inviting foreign companies to take part, with hopes of spurring exploration and production and boosting the country’s sagging energy profits.
Over the past year, oil and gas companies from around the globe began bidding on Gulf blocks. Tuesday’s announcement marks the first find by a private company in almost 80 years.