For the first time in nearly eight decades, a private company has established a new oil well offshore in Mexico. This is the latest step in Mexico’s decision to permit foreign competitors to enter its energy market again.
The oil well is the joint effort of Premier Oil Pic, which is based in London, Talos Energy LLC from Houston and Mexico’s Sierra Oil and Gas. Drilling for the well started on May 21, as confirmed by a recent statement from Premier. The well is the first off-shore exploration to be launched by a company other than Petroleos Mexicanos, the main oil company in Mexico. Petroleos Mexicanos has had a monopoly in the industry since 1938.
The well has a Zama-1 classification, and is in the Sureste Basin, off the state of Tabasco. The oil well can hold between 100 million to 500 million barrels of crude oil, according to Premier. The drilling process is expected to take about 90 days, and will cost Premier around $16 million. The three companies that are collaborating on the well won their prospect rights in 2015, during the first bidding round. This occurred after Mexico voting to allow private investments for the purpose of reviving the oil industry in the country.
Elaine Reynolds, an analyst for Edison Investment Research Ltd., in London, stated that this new well will be watched closely by the oil industry. Reynolds states that the reason for this is because the well is the first non-Pemex well drilled since the start of the energy reform process in Mexico. She also suggests that the well will be successful in terms of production, due to the basin’s structure.
Charlie Sharp, an analyst for Canacord Genuity Ltd., also stated that because of the implications in the Mexican market, the well will be one of the most interesting for exploration, particularly for this year.
Talos will serve as the well operator. The company has a 35% stake in the oil well venture. Sierra has 40% and Primer owns 25%, according to an official Premier statement.
Talos is known for its entrepreneurial spirit and collaborative efforts with fellow team members and other businesses, including organizations in Mexico.