Shallow water farm-out to bring new firms to Mexico

Mexico will hold a farm-out auction for the Ayin-Batsil shallow water fields on October 4, for which 16 companies have signed up to participate, some of which are not yet active in the country.

The 16 companies include 10 operators and six non-operators. The former are DEA Deutsche Erdoel, China Offshore Oil Corporation, Murphy Sur, Gran Tierra México Energy, Cheiron Holdings, Tecpetrol International, Ecopetrol Global Energy, Pan American Energy, Ogarrio E&P and California Resources Corporation; while the six non-operators are Galem Energy, Petrobal, Sierra Nevada E&P, Sierra Blanca P&D, Grupo R Exploración y Producción and Newpek Exploración y Extracción.

Pan American Energy and local company E&P Hydrocarburos y Servicios won a bidding process in September 2015 for contract area 2 for the 40km2 Hokchi shallow water field, while Ecopetrol Global Energy, in a consortium with PC Carigali, was awarded area No. 6 in the July 2017 onshore auction, in addition to area No. 8 in a consortium with Mexico's NOC Pemex, and was awarded two areas in Mexico's June 19 shallow water auction.

As a result of its auction wins, Ecopetrol created a Mexican subsidiary in July.

Also read: More foreign oil firms moving into Mexico

The hydrocarbons commission (CNH) modified the bidding rules and contract terms for the Ayin-Batsil fields in August. They lie at a depth of 160m and have total 3P reserves of 281Mboe, with 46Mb in the proven category, 77Mb probable and 158Mb possible reserves.

The auction is part of state oil firm Pemex's plan to accelerate its farm-outs and partnerships to revert a decade-long decline in production as part of a five-year business plan announced last November. Pemex said in March it expects to start oil production with a private partner at the Ayin and Batsil fields in 2020, with output ramping up to 80,000b/d in subsequent years.

ENI DISCOVERY

In related news, Italian oil company Eni announced in late September it had successfully drilled the Miztón-2 shallow water well in Campeche bay, boosting the estimates of the resource in place for contractual area 1 to over 1.4Bboe.

The company said the well reached a final depth of 3,430m, encountering 185m of net oil pay in the Orca formation, characterized by excellent quality sandstone reservoirs, with oil gravity estimated at 28-30 API.

"An extensive borehole data acquisition together with a fluid and rock sampling campaign was carried out and the well will now be temporarily suspended. The exploration campaign will continue with the drilling of a well on the Tecoalli discovery," the company said.

In addition, Eni is preparing the development plan for phase 1 of the Amoca field (early production), which will be submitted to the CNH for the approval, with start-up expected for early 2019.

In March, Eni become the first post-reform foreign major to drill in Mexico.