For decade the Mexican state-ran monopoly of Petroleos Mexicano controlled all new oil excavation. But recently a major industry break-through gave way to the possibility of success for both overseas and local investors.
A new offshore well serves as the first private company-owned well in over eighty years. The drilling began on May 21st. It is also the first private exploration since the 1938 nationalization of the Mexican oil industry. This drilling is held on to be acreage awarded in Mexico’s first international licensing round. The well’s main goal is to target low risk Zama prospect with supportive direct hydrocarbon indicators in the Tertiary clastic reservoirs.
This is just the beginning of Mexico’s plan to allow foreign investments back into the energy market. The well, The Zama 1, is located in the Sureste Basin off of the state of Tabasco. Recently, a representative for Premier stated that drilling will cost Premier 16 million dollars. The drilling could take as much as three months to complete.
The primary investors of the well are Premier Oil, Talos Energy LLC and Sierra Oil & Gas. Talos, based out of Houston Texas, is the current operator of the well and holds 35%. Premier Oil is London based and owns 25%. Sierra Oil & Gas is based out of Mexico and owns 25%. After a vote was successfully held to open up drilling rights to foreign investors, these companies accumulated the rights during the first round of bidding.
Charlie Sharp is an anyalyst at Canaccord Genuity Ltd. Sharp recently stated, Zama is “one of the most interesting exploration wells to be drilled in the sector this year,”. She further went on to state that the structure shows a high possibility for success. Sharp also stated that the market will be closely watched. This is a very exciting time for investors. The success of this operations will likely lead others to follow.