Mexico Discovers Important Oil Reserve in Gulf

Mexico Discovers Important Oil Reserve in Gulf

Mexico Discovers Important Oil Reserve in Gulf

The first exploration well drilled by a private company off the coast of Mexico has struck oil.

Mexico's decision to allow private companies to explore for oil and gas started to pay off after the discovery of at least a billion barrels in a new offshore field.

The project is jointly owned by Talos Energy, which acts as operator and has a 35 percent stake, and Sierra Oil and Gas which holds the remaining 40 percent.

The oil explorer's production soared 34.2 per cent compared with the previous year to 82,100 barrels of oil equivalent per day (boepd), the firm said in a trading update for the six month ended 30 June.

Talos, Premier Oil, and Sierra Oil & Gas signed production sharing contracts for the block with Mexico's upstream regulator, the National Hydrocarbons Commission, in 2015. Initial gross original oil in place estimated is 1.4-2.0 billion bbl, exceeding pre-drill estimates, some of which could extend into a neighboring block. "We believe this discovery represents exactly what the energy reforms meant to deliver: new capital, new participants and a spirit of ingenuity that leads to local jobs and government revenues for Mexico".

"The Zama discovery by Talos is the most important achievement so far of the Mexico's Energy Reform", said Pablo Medina, an analyst at energy research firm Wood Mackenzie. "We see a bright future for shallow Mexican waters in the coming years".

Once the assessment of the primary target is completed, drilling operations will continue to a second, deeper target located at 4,300 meters, stressed the source.

"There are no plans for immediate tests in the well", Duncan said. As a relatively small company, Talos' competitive success depends on identifying niches where it can use its exploration expertise to operate in areas that are underexplored or where likely resources have been overlooked, he said. It is particularly pleasing that our strategy of focusing our exploration portfolio on high impact opportunities in proven but under-drilled basins has led to this world class discovery with our first well in Mexico.

It appears that Talos and its partners will be nicely rewarded for being first.

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