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On 27 March 2018, the Comision Nacional de Hidrocarburos (CNH) took bids for 35 exploration and extraction blocks in Mexico’s Round 3.1 (CNH-R03-L01/2017 over 2 areas: Burgos Basin, Tampico-Misantla-Veracruz Basin & Sureste (Southeast) Basin.   There were 30 companies representing 6 continents that participated in the Bid Round (20 pre-qualified as operators and 10 non-operators) including BP, Shell, Chevron, & Total who just won blocks in the GOM 250 Lease Sale last week.  Other participants include ENI, Pemex, Repsol, Lukoil & Premier Oil.  In total, 16 areas were awarded in today’s Bid Round.  Pemex came out the winner with the most areas awarded (4) totaling 2,935 sq km, plus they partnered up with 4 companies, including Shell & Total adding another 3 areas to their portfolio as a non-operator.  Total is making a big push to be a leader in the GOM as they came out strong in the US GOM 250 lease sale last week winning 9 blocks, plus were awarded 3 areas today totaling 2,356 sq km.

Overall the Mexican government was excited about the results from the sale and the positive impact it will have on the country especially the competitive bidding on the Sureste (Southeast Basin).

Pre-3.1 Sale Overview

Prior to the 3.1 sale, Pemex had the most blocks (116) & acreage (~45,000 sq km).  With Shell having the next highest block count (9) & acreage (~19,000 sq km) making them the boss in the GOM from the American and Mexican side (Figure 1).

Offshore Mexico Bid Round 3.1 – Results are in!

Figure 1: Pre-Mexico 3.1 Offshore Round operator by block count and acreage. *Not shown: Pemex who has 116 blocks and over 45,000 sq km of acres they are the current operator making them the dominant operator in Mexico.

3.1 Results

Bidding kicked off slow in Mexico City, with only four out of the 14 Burgos Basin blocks on offer getting snapped up. Repsol of Spain and UK-based Premier led the effort for this tranche of offshore shallow water blocks, separately picking up two tracks each. The Spanish company’s Repsol Exploración México secured rights to the 823 sq km Area 5 block with an additional royalty rate of 56.27%. That beat out state-run Pemex’s bid of 23.89%. Neither company offered additional investment factor. Meanwhile for Area 11, Premier Oil Exploration and Production Mexico scooped up the tract with its additional royalty bid of 29.43%. Premier was the sole bidder for the 396 sq m block. Repsol bid once more, scooping up Area 12. The company won the area with its 48.17% bid. The last block to be awarded, Area 13, went to Premier with its additional royalty payment bid of 34.73% The Burgos Basin blocks encompassed 8,424 sq km, with an estimated 579 MMboe in prospective resources.

Bidding for the second tranche of blocks in the Tampico-Misantla-Veracruz Basin was modest, with only four blocks out of 13 of the blocks on offer receiving any bids. Capricorn Energy with Citla Energy E&P won Area 15 (971 sq km in the Tampico-Misantla Basin) with an additional royalty bid of 27.88%. State-run Pemex Exploración y Producción with Deutsche Erdoel México and Compañía Española de Petróleos won Area 16 with their 24.23% bid. The trio followed up that win by offering an additional royalty if 35.51% for Area 17. Pemex, in a separate partnership with Spanish Compañía Española, bid an additional royalty of 40.51%, thus winning Area 18.

Bidding finally picked up the pace with the Sureste (Southeast) Basin with lots of partnerships and contested bidding for these 8 coveted areas.  As the bids were announced you could feel the excitement transmitted from the Mexican government about the competitiveness & desire from companies to win awards in this hydrocarbon rich basin.  In Area 28Eni of Italy and Russian Lukoil came on strong with an aggressive bid of 65% with an investment factor of 1.5, and a tie-breaker cash bonus of US$ 59.823 million. That beat out the second highest bid from Deutsche with Premier.  As for Area 29, Pemex submitted a winning bid of 65% with an additional investment factor of 1.5 and a US$ 13.07 million-plus bonus. In second place, Deutsche Erdoel México & partners lost out again offering 65% with an additional investment factor of 1.   Bidding intensified for Area 30. Deutsche, Premier, and Sapura won this tract with their bid of 65%, an additional investment factor of 1.5, and a US$ 51 million-plus cash bonus.  They won out over 6 other bids on this area making it the most competitive in the 3.1 Bid Round.  Area 31 went to Pan American Energy, which bid an additional royalty of 65% with an additional investment factor of 1 while Total & Pemex won Area 32 with 40.49%.  Area 34 was awarded to Total, BP and Pan American Energy with a bid of 50.49% and an investment factor of 1, and Area 35 closed out the awards going to Shell and Pemex with the winning bid of 34.86% for this block.

Figure 2 shows the results of the 3.1 Bid Round by award count and area (sq km).  Pemex came out the top winner followed by Total.  Premier Oil made a great showing walking away with 3 awards.

Offshore Mexico Bid Round 3.1 – Results are in!

Figure 2: Mexico 3.1 Bid Round Results. Pemex was the top winner followed by Total and Premier.

 

Offshore Mexico Bid Round 3.1 – Results are in!

Interested in learning more?

Please contact the DrillingInfo GOM Team:

Tom Liskey, Regional Mgr – Americas Tom.Liskey@drillinginfo.com

Robyn Marchand, Technical Advisor – DrillingInfo  Robyn.Marchand@drillinginfo.com

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