Private Oil Firms Announce Major Finds Off Mexico

In 2014, Mexico ended its state monopoly on offshore oil exploration in a bet that private operators would be able to locate and exploit new resources. Last week, that bet paid off in a big way when a consortium led by Talos Energy announced the discovery of one to two billion barrels of light oil in a shallow-water reservoir called "Zama," about 30 nm off the port of Dos Bocas in the Gulf of Mexico. 

Talos consortium partner Sierra Oil, a private Mexican E&P firm, said in a statement that drilling will continue down to a deeper target reservoir as well, suggesting that Zama's potential could grow. If the well is successful, it would be a windfall for the consortium, but also for the Mexican government, which stands to reap about 80 percent of the profits when all fees and taxes are taken into account. Production will likely be online within three to four years. 

"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,"  said Tim Duncan, president and CEO of Talos. "The future is bright for offshore Mexico for years to come.” 

This news came at about the same time as Eni's announcement of a successful drilling campaign at its "Amoca" field in the shallow waters of Campeche Bay, which resulted in the discovery of a reservoir of about one billion barrels of oil equivalent. Eni expects to begin production as early as 2019, with an eventual output in the range of 30,000-50,000 barrels per day. Eni holds 100 percent of the lease on Amoca, but it will owe a higher portion of its profits to the state – fully 90 percent, according to Mexico's Energy Ministry.  

Bloomberg reports that these results are so significant that the ministry plans to delay its next round of deepwater lease auctions by an additional month, giving the market more time to consider the potential of the Mexican continental shelf.