The government of Mexico has undergone a sea change with their overhaul of rules regarding energy investment that has stood for nearly 80 years. Mexico is allowing foreign competitors back into its market with the commencement of a joint venture which is drilling an offshore oil well in its waters. Petroleos Mexicanos is the state-run monopoly which has been in existence since 1938. The oil industry was nationalized at that time and has been dominant ever since.
The new well is a joint venture which includes three partners, London-based Premier Oil Plc, Houston’s Talos Energy LLC, and Mexico’s Sierra Oil & Gas. Drilling began on May 21 and may take up to 90 days to complete. The well is known as Zama-1 and is in the Sureste Basin from the state of Tabasco and is estimated to hold 100-500 million barrels of crude oil. The three companies actively bid for the rights to this project in 2015. The Mexican oil industry was in a state of decline when they voted to allow private investment back in to help boost its productivity.
Industry watchers will be monitoring this endeavor closely as a possible benchmark for the success of the Mexican reforms. An analyst at Edison Investment Research Ltd., which is based in London, considers the project to have a strong chance of success from a geological standpoint. Talos will be the operator of the well and holds a 35% stake in the project, while Sierra is a 40% partner, and Premier holds a 25% stake.
Talos Energy is an independent oil and gas company which is occupied with offshore exploration and production. They primarily work on the Gulf Coast and in the Gulf of Mexico where they aim to optimize assets.
Talos Energy relies on state-of-the-art 3D seismic data which nearly covers all the acreage in their portfolio. With this data at their disposal, they are able to optimize their drilling and better evaluate possible ventures.
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