Editor’s Note: Talos Energy (NYSE: TALO) will be presenting at The EnerCom Dallas Energy Investment & ESG Conference April 6-7, 2021. EnerCom Dallas is a financial conference that provides institutional investors an early 2021 opportunity to meet CEOs from leading independent E&Ps, including some of the industry’s leading Permian, Eagle Ford, Marcellus, Utica and Canadian producers, and the oilfield service companies supporting them, and hear them discuss their ESG strategies and plans to drive development, fund operations, and return value to shareholders in 2021.
Other presenting companies at the conference include Lonestar Resources (NASDAQ: LONE); NuVista Energy Ltd. (TSE: NVA); HighPeak Energy (NASDAQ: HPK); Range Resources (NYSE: RRC); GeoPark (NYSE: GPRK); Goodrich Petroleum (NYSEAMERICAN: GDP); PetroTal Corp. (CVE: TAL); Northern Oil and Gas (NYSEAMERICAN: NOG) and more.
VILLAHERMOSA, Mexico – Petroleos Mexicanos (Pemex) would consider having a consortium headed by U.S. company Talos Energy operate a shared oil field in southern Mexico, the chief executive officer of the Mexican state oil firm said.
Discovered in 2017 in shallow waters of the Gulf of Mexico off Tabasco state, the Zama oil field is believed to contain nearly 700 million barrels of oil, making it the biggest new find in Mexico by a private company in decades.
Identified in an area operated by the Talos consortium, the discovery also extends into Pemex’s neighboring block.
In 2015, The Talos group won the right to explore the block in tenders held under former president Enrique Pena Nieto’s opening of the energy market to private capital.
Zama has become a litmus test of private sector confidence of President Andres Manuel Lopez Obrador’s government, which quickly canceled further oil tenders.
Pemex CEO Octavio Romero said although his company had the wherewithal to operate the field, he was not set against the private consortium doing so, provided it met certain conditions.
“It’s not a case of ‘I want (to be the operator) because I’m the biggest, or I’m the best-looking,’ it’s because it suits them and it suits us,” Romero said in an interview in Tabasco. “We’re talking about it, we’re analyzing it technically.”
“It may be at some point the consortium meets all the criteria that matter to Pemex to develop this field; if all the conditions are acceptable and beneficial for Pemex, we could analyze it,” he added.
Made just ahead of a key deadline for agreement between the two sides, Romero’s comments hinted at a shift in posture: just over a year ago, he said Pemex wanted to operate Zama, arguing it had most of the deposit and could develop it faster.
Talos, whose consortium also includes Germany’s Wintershall Dea and Britain’s Premier Oil, did not immediately reply to a request for comment.
Urging them to come to terms, the energy ministry extended until March 25 a deadline for the two sides to reach an initial unitization agreement to set rules on shared operations.
However, since Lopez Obrador took office in December 2018, his leftist government has halted that liberalization of the market and vowed to strengthen Pemex against private competition.
Both Pemex and Talos have argued they can best develop Zama and have most of the oil in their part of the field.
Asked whether due to a lack of funds Pemex would be willing to grant the consortium the right to operate Zama, Romero said that while economic limitations did exist, they were no reason to sign deals contrary to his company’s interests.
“We can’t accept being told: ‘since you don’t have the money, you have to accept my conditions,’” he said.
“We are Mexico,” he added, noting that Pemex is developing infrastructure around Zama in an attempt to create “synergies” with other discoveries that would permit cost savings.
Romero also said he would rather reach agreement than have to resolve the matter via international arbitration.
“We have all the credentials to be the operator, we believe we have the highest percentage (of the deposit) but we’re not closing the door either. If they’re prepared to accept what we’re proposing, Pemex would consider it,” he said.
Romero did not provide further details.
Lopez Obrador has gradually rolled back Pena Nieto’s energy reform for the benefit of Pemex and state electricity company the Comision Federal de Electricidad (CFE), which he said his predecessors wanted to carve up.
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