Mexico’s Crown Jewels: Deep Water and Farmout Tender Results

Dec 6, 2016

Reading Time : 2 min

The Farmout

BHP Billiton Ltd. (“BHP”) won the bid to develop the Trion deep water field in Pemex’s first-ever farmout deal.1 The Trion Field included Blocks AE-0092 and AE-0093 located in the Perdido Belt at a 2,500 meter depth and 40 kilometers from the U.S. border, it is estimated to contain about 485 million barrels. Under the Farmout, BHP will become operator and acquire a 60 percent participating interest in Trion, while Pemex will retain the remaining 40 percent. BHP’s bid included the maximum additional royalty percentage of 4 percent, together with an investment commitment of $624 million, which includes a future carry for Pemex obligations up to $561.6 million. 

Deep Water Licenses

The Fourth Tender was first published by the CNH on December 17, 2015. It included four deep water exploration blocks located in the Perdido Belt and six deep water exploration blocks located in the Salinas Basin totaling more than 23,000 square kilometers in the Gulf of Mexico. By all accounts the Fourth Tender was a success for bidders and for México. The Fourth Tender attracted more prominent international oil companies than other rounds in Mexico, including BP, ExxonMobil, BHP Billiton, Royal DutchShell, Total, Chevron and Eni, as well as national oil companies with international portfolios like Statoil, China National Offshore Oil Corporation and PC Carigali. Ultimately, the Fourth Tender received bids for all but two contract areas, a significant accomplishment in a time where deep water exploration projects have been delayed and/or canceled around the world. The Fourth Tender was not without its drama, however, as many of the blocks received only one proposal. Below please find the complete results of the Fourth Tender.

Click here to view results.


 

1 BP came in second place with a $606 million cash payment and a 4 percent additional royalty.

2 Pemex Exploracion y Produccion came in second place with a 6.65 percent royalty and a 1x Investment Factor.

3 The Statoil and Total Consortium came in second place with a 13% royalty and a 1.5x Investment Factor.

4 The Shell and Atlantic Rim Consortium came in second place with a 19.11 percent royalty and a 1.5x Investment Factor.

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