After 80 years, the Mexico oil reform industry has seen some major advances. This is in the form of its first private well which is being operated by a foreign company. This is being considered as a major step as it shows the commitment of the government in allowing foreign competitors back into the energy industry.
This private well is the result of a joint venture between the Premier Oil PLC which is based in London, Talos Energy LLC based in Houston, and Sierra Oil & Gas which belongs to Mexico. The drilling of the well had started on May 21. This is the first time that someone other than Petroleos Mexicanos is doing the digging as this state-run monopoly was doing so since 1938. This was when the country had nationalized oil industry.
This is the Zama-1 well. It is based in the Sureste Basin which is just off the state of Tabasco. The estimates say that it has 100 to 500 million barrels of crude oil. Drilling should get completed in the next 90 days. The digging will be costing the Premier nearly $16 million.
These three companies had won the rights to this prospect in 2015. This was during the first round of bidding which took place once Mexico decided to open its oil industry to foreign investment. This was meant to give a boost to the ailing oil industry of Mexico.
Since this is the first well to be drilled by a private player since the Mexican waters opened as a part of the energy reform process, it is being keenly watched by all in the industry. Even the structure of this basin indicates that this project has very high chance of success.
Due to these implications for the market, Zama has become an interesting exploration well that is being drilled this year.
Talos Energy remains the most important operator of this well. They own a 35% stake in this venture. Nearly 40% is being held by Sierra and Premier holds 25% stake in it.
Hence, a lot is at stake here for all.
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