ENERGYALERT
April 11 th, 2018
The Development Path that have taken Pemex´s Farm - Outs in Mexico
By virtue of Round Zero, the Ministry of Energy (SENER per its acronym in Spanish), with the technical assistance of the National Hydrocarbons Commission (CNH per its acronym in Spanish), was the body in charge of assigning to Pemex 489 Exploration and Extraction fields (Asignaciones per its name in Spanish), where 108 are for exploration activities, 286 for extraction and 95 would remain assigned to Pemex until they are tendered by CNH through an open bid round process.
On August 15th, 2017 CNH released the results of its assessment on the Minimum Work Commitment for 103 Asignaciones, where it was shown that Pemex did not fully comply with these obligations. As a consequence of this, SENER decided to grant a two-year extension to the exploration period, in order to allow Pemex to comply fully with its Minimum Work Program commitments and been able to declare a commercial discovery. It is worth mention that if there is no declaration of commercial discovery by the end of this extended period, the Asignacion may not be transferred to the extraction stage and Pemex shall forfeit the Asignacion.
Derived from the above, and the economic situation that Pemex is under, it has been expected that many of the Asignaciones are migrated to Farm - out processes, where Pemex will be able to partner with other entities to carry out the required exploration and extraction activities, and be able to comply with the commitments acquired by virtue of Round Zero.Taking into consideration that one of the main objectives of the Energy Reform in Mexico has been the encouragement of foreign participation/investment in the Oil and Gas industry to boost the development of the country, Pemex developed a Farm Out program in 2016, that as of today, has continued with the migration of eight onshore Clusters in southern Mexico (Tabasco, Chiapas and Veracruz) and are formed by exploration and extraction Asignaciones with over 40 years’ of operation. These eight Clusters are the following:
► • Bacal – Nelash
► • Lacamango
► • Cinco Presidentes
► • Giraldas – Sunuapa
► • Bedel – Gasifero
► • Artesa
► • Juspi – Teotleco
► • Remolino
1During 2016 & 2017, the following events took place:• Asignaciones of Ogarrio, Cárdenas – Mora and Trión had already been migrated into Exploration and Extraction Contracts through a farm out process and a participation in said contracts have been awarded to different oil and gas companies, as partners of Pemex. • Pemex suspended the bidding process for the Nobilis-Maximino deepwater farmout due to the lack of adequate conditions to ensure participation in the process. • As of Ayin – Batsil shallow water farm out bidding process, no bids were submitted to the CNH due to the lack of adequate economic conditions. • Ek Balam was the first migration of an Asignacion into an Exploration and Extraction Contract where Pemex remained as the Operator and the only company carrying out the hydrocarbon activities
It is worth mentioning, that according to the last version of the Five Year Plan, the migration of six more Clusters into Exploration and Extraction Contracts have been requested by Pemex that together with all the aforementioned Clusters gives a total of 53 Asignaciones (1. Boluntikú; 2. Sinán; 3. Ayatsil, Tekel, Utsil; 4. Kunah, Pilikis; 5. Samaria; 6. Bacab-Ku-Lum-Maloob-Zaap)
In this regard, the chart below specifies in general terms the process carried out for a migration of Asignaciones to an Exploration and Extraction Contract regime:
Derived from the above, with this Farm Out program, Pemex is looking to increase the company’s total output to 2.072 million barrels per day. Also, if Pemex can successfully Farm Out this Clusters, an investment of approximately $4.6 billion dollars is expected during the life of the seven onshore Clusters.
Finally, it is worth mentioning that according to CNH data the exploration potential of the Clusters Bedel-Gasifero, Giraldas-Sunuapa, Juspi-Teotleco, and Artesa is promising, with a combined prospective resource of 443 million barrels of oil equivalent.
Below is a summary with the status of the migration process of Pemex Clusters to Farm Outs:
Upcoming Pemex Farm Outs
Cluster ´s name Asignaciones forming each Cluster
Date in which CNH approved the
migration
Type of partner that Pemex is
looking for
1. Bacal - Nelash
1. Arroyo Prieto
November 16th, 2017 Operator 2. Bacal
3. Nelash 4. Tiumut
2. Lacamango 1. Lacamango November 16th, 2017 Operator
3. Cinco Presidentes 1. Cinco Presidentes
November 16th, 2017 Operator 2. Rodador
4. Giraldas – Sunuapa
1. Giraldas
February 20th, 2018 Operator
2. Chiapas-Copano 3. Muspac
4. Comoapa 5. Sunuapa
6. Mezcalapa-04 7. Grijalva-01
5. Bedel - Gasífero
1. Eltreinta
March 5th, 2018 Non-Operator 2. Bedel
3. Gasifero 4. Tesechoacan-02
6. Artesa
1. Nispero
March 6th, 2018 Operator
2. Sitio Grande 3. Rio Nuevo
4. Artesa 5. Gaucho
6. Mezcalapa-08
7. Juspí - Teotleco 1. Juspi
March 6th, 2018 Operator 2. Teotleco 3. Mezcalapa-07
8. Remolino
1. Remolino
TBD TBD 2. Morelos 3. Hallazgo
4. Riachuelo
1) Bacal – Nelash
On November 16th, 2017, CNH presented its technical opinion in a favorable manner to SENER for the request for the migration on the following onshore Cluster which is located in the States of Tabasco and Veracruz, 70 km from the city of Coatzacoalcos, Veracruz to an Exploration and Extraction Contract.
Moreover on April 3rd, 2018 CNH approved SENER’s proposal of migrating both Asignaciones, into one single Exploration and Extraction Contract under a License model regime. As of the date, CNH has not yet published the dates in which this Farm Out bidding process will be launched.
General Information Asignaciones Arroyo Prieto, Bacal, Nelash, Tiumut
Type of activities Extraction Area 117 km2
Hydrocarbon type Crude oil API density 30°- 40° API Drilled wells 116
Upcoming Pemex Farm Outs
Cluster ´s name Asignaciones forming each Cluster
Date in which CNH approved the
migration
Type of partner that Pemex is
looking for
1. Bacal - Nelash
1. Arroyo Prieto
November 16th, 2017 Operator 2. Bacal
3. Nelash 4. Tiumut
2. Lacamango 1. Lacamango November 16th, 2017 Operator
3. Cinco Presidentes 1. Cinco Presidentes
November 16th, 2017 Operator 2. Rodador
4. Giraldas – Sunuapa
1. Giraldas
February 20th, 2018 Operator
2. Chiapas-Copano 3. Muspac
4. Comoapa 5. Sunuapa
6. Mezcalapa-04 7. Grijalva-01
5. Bedel - Gasífero
1. Eltreinta
March 5th, 2018 Non-Operator 2. Bedel
3. Gasifero 4. Tesechoacan-02
6. Artesa
1. Nispero
March 6th, 2018 Operator
2. Sitio Grande 3. Rio Nuevo
4. Artesa 5. Gaucho
6. Mezcalapa-08
7. Juspí - Teotleco 1. Juspi
March 6th, 2018 Operator 2. Teotleco 3. Mezcalapa-07
8. Remolino
1. Remolino
TBD TBD 2. Morelos 3. Hallazgo
4. Riachuelo
2) Lacamango
Also, on November 16th, 2017, CNH presented its technical opinion in a favorable manner to SENER for the request for the migration on the following onshore Asignacion which is located in the States of Veracruz to a Exploration and Extraction Contract.
Moreover, on April 3rd, 2018, CNH approved SENER´s proposal of migrating the Asignaciones into one single Exploration and Extraction Contract under a License model regime. However, CNH has not yet published the dates in which the bidding process will be launched.
General Information Name Lacamango
Type of activity Extraction Surface 16.26 km2
Hydrocarbon type Crude Oil API density 27.5° API Drilled wells 16 (11 producing and 5 shut down)
3) Cinco Presidentes
Likewise, on November 16th, 2017, CNH presented its technical opinion in a favorable manner to SENER for the request for the migration on the following onshore Cluster which is located in the States of Tabasco and Veracruz, 40 km east from the city of Coatzacoalcos, Veracruz to an Exploration and Extraction Contract.
Moreover on February 20th, 2018 CNH approved SENER’s proposal of migrating both Asignaciones, into one single Exploration and Extraction Contract under a License model regime. As of the date, CNH has not yet published the dates in which this Farm Out bidding process will be launched.
General Information Asignaciones Cinco Presidentes Rodador
Discovery Date 1960 1971 Type of activitty Extraction Extraction
Surface 138.7 km2 28.4 km2 Hydrocarbon type Oil Oil
API density 33.6° API 29.4° API Drilled wells 404 (30 producing) 90 (19 producing)
Production Average monthly production per well of
160 barrels of oil and 190 mcf of gas (as of January 2018)
Average monthly production per well of 150 barrels of oil and 180 mcf of gas (as of
January 2018)
4) Giraldas - Sunuapa
On February 20th, 2018, CNH presented its technical opinion in a favorable manner to SENER for the request for the migration on the following onshore Cluster which is located in the States of Chiapas, 35 km south from the city of Villahermosa, Tabasco to an Exploration and Extraction Contract.
Giraldas - Sunuapa Cluster
Asignaciones
Campo Giraldas
Campo Chiapas- Copanó
Campo Muspac
Campo Comoapa
Campo Sunuapa
Mezcalapa 04
Grijalva 01
Surface 124.6 Km2 102.6 Km2 108.3 Km2 72.1 Km2 212.4 Km2 1,452 Km2 229 Km2
Field Mid Cretaceous
Late Cretaceous
Late Cretaceous
Late Cretaceous
Late Cretaceous All geological formations
Type of activity Extraction Exploration
Original Volume
Oil: 464.6 MMbbl
Oil: 320.2 MMbbl
Oil: 163.2 MMbbl
Oil: 171.8 MMbbl
Oil: 427.8 MMbbl
N/A N/A Gas:
2,828.6 Bcf Gas:
2,226.6 Bcf Gas:
2,720.1 Bcf Gas: 215.3
Bcf Gas:
1,160.3 Bcf
3P reserves (January 1st,
2017)
Oil: 2.9 MMbbl
Oil: 2.8 MMbbl
Oil: 1.0 MMbbl
Oil: 1.7 MMbbl
Oil: 6.2 MMbbl N/A N/A Gas: 177.5
Bcf Gas: 11.9
Bcf Gas: 14.7
Bcf Gas: 2.7
Bcf Gas: 59.6
Bcf
Hydrocarbon type
Gas / Condensat
es
Gas / Condensat
es
Gas / Condensat
es Volatile Oil Oil
Gas / Condensat
es / Oil
Gas / Condensat
es
API density 42° API 44° API 54° API 32° API 31° API 31°- 54° API
31°- 54° API
Recovery factor
Oil: 37.6% Oil: 44.6% Oil: 47.4% Oil: 26.0% Oil: 11.5% N/A N/A Gas:
70.3% Gas:
66.8% Gas:
56.2% Gas:
44.8% Gas:
16.0% N/A N/A
Drilled wells 55 drilled
(10 producing)
30 drilled (8
producing)
35 drilled (6
producing)
11 drilled (4
producing)
37 drilled (10
producing) N/A N/A
5) Bedel - Gasífero On March 5th, 2018, CNH approved the migration request of the Bedel – Gasífero Cluster to an Exploration and Extraction Contract. With this in mind, Pemex is looking for a Non-Operator partner that contributes economic resources to the project that will consequently lead to a greater recovery of hydrocarbons.
The Bedel – Gasífero Cluster is formed by 4 Asignaciones located in the South Tertiary Basin of Veracruz and covers a surface area of 1,165 km2. Relevant information on the Cluster can be analyzed in the following table:
On April 3rd, 2018, CNH approved SENER´s proposal of migrating this Cluster into one single Exploration and Extraction Contract under a License model regime. However, CNH has not yet published the dates in which the bidding process will be launched.
It is worth mentioning that from the 7 Asignaciones that form this Cluster, 5 of them (i.e. Giraldas, Chiapas-Copanó, Muspac, Comoapa y Sunuapa) are Extraction blocks, while the last two (i.e. Mezcalapa y Grijalva) are Exploration blocks. The Asignaciones are bounded by a surface area of 1,724 Km2 and currently possess 37 production wells, in which gas and condensates are the predominant types of hydrocarbons.
Bedel - Gasífero Cluster Asignaciones Campo Eltreinta Campo Bedel Campo
Gasífero Tesechoacan
Surface 21.97 Km2 22.78 Km2 37.45 Km2 1165.6 Km2
Field Mid Miocene (sands)
Inferior Pliocene (sands)
Mid Miocene (sands)
Late Miocene (sands)
All geological formations
Type of Activity Extraction Exploration
Original Volume Oil: 163.6 MMbbl Oil: 217.5 MMbbl Oil: 133.3 MMbbl
N/A Gas: 218 Bcf Gas: 114.5 Bcf Gas: 384.8 Bcf
3P reserves (January 1st, 2017)
Oil: 27.7 MMbbl Oil: 23.7 MMbbl Oil: 18 MMbbl N/A
Gas: 109.8 Bcf Gas: 14.1 Bcf Gas: 133.1 Bcf
Hydrocarbon type Black Oil / Humid Gas Black Oil / Dry Gas
Black Oil / Dry Gas / Non -
Associated Humid Gas
N/A
API density 29° API 27°- 28° API 28°- 45° API N/A
Recovery factor Oil: 1.8% Oil: 1.4% Oil: 6.4% N/A
Gas: 2.5% Gas: 0.9% Gas: 16.1% N/A
Drilled wells 12 drilled (8 producing)
9 drilled (6 producing)
25 drilled (22 producing)
8 drilled (5 producing)
On April 3rd, 2018, CNH approved SENER´s proposal of migrating the Asignaciones into one single Exploration and Extraction Contract under a License model regime. However, CNH has not yet published the dates in which the bidding process will be launched.
It is worth mentioning that the form the 4 Asignaciones that form this Cluster, 3 of them (i.e. Eltreinta, Bedel and Gasífero) are Extraction blocks, while only one (i.e. Tesechoacan) is an Exploration block.
The Asignaciones are bounded by a surface area of 1,165 Km2 and the 3 Extraction blocks are inside the exploration area of Tesechoacan.
6) Artesa On March 6th, 2018, CNH presented its technical opinion in a favorable manner to SENER for the request for the migration on the following onshore Cluster which is located in the States of Chiapas, 35 km south from the city of Villahermosa, Tabasco to an Exploration and Extraction Contract.
Artesa Cluster
Asignaciones Campo Níspero
Campo Sitio Grande
Campo Rio Nuevo
Campo Artesa
Campo Gaucho Mezcalapa 08
Surface
54.5 Km2 121.3 Km2 23.6 Km2 52.3 Km2 60.4 Km2 870 Km2
Field Inferior - Mid Cretaceous
Pliocene, Late Cretaceous, Mid
Cretaceous
Inferior - Mid Cretaceous
Late Pliocene, Mid Cretaceous
Mid - Late Cretaceous
All geological formations
Type of activity Extraction Exploration
Original Volume
Oil: 479.5 MMbbl Oil: 1,152.6 MMbbl Oil: 245.4
MMbbl Oil: 191.4
MMbbl Oil: 45.9 MMbbl N/A
Gas: 484.6 Bcf Gas: 1,837.9 Bcf Gas: 392.6 Bcf Gas: 333.7 Bcf Gas: 136.4 Bcf
3P reserves (January 1st,
2017)
Oil: 8.7 MMbbl Oil: 0.4 MMbbl Oil: 0.8 MMbbl Oil: 2.8 MMbbl Oil: 2.8 MMbbl N/A
Gas: 16.7 Bcf Gas: 4.2 Bcf Gas: 2.3 Bcf Gas: 1.7 Bcf Gas: 7.4 Bcf
Hydrocarbon type Black Oil Black Oil Black Oil Black Oil Black Oil N/A API density 35° API 34° API 35° API 28°- 32° API 25° API N/A
Recovery factor Oil: 34.1% Oil: 31.7% Oil: 35.8% Oil: 31.3% Oil: 33.5% N/A
Gas: 55.5% Gas: 32.5% Gas: 46.2% Gas: 30.0% Gas: 41.9% N/A
Drilled wells 30 drilled (5 producing)
48 drilled (4 producing)
15 drilled (2 producing)
60 drilled (20 producing) (2 producing) N/A
Moreover, on April 3rd, 2018, CNH approved SENER´s proposal of migrating the Asignaciones into one single Exploration and Extraction Contract under a License model regime. However, CNH has not yet published the dates in which the bidding process will be launched.
It is worth mentioning that the first 5 Asignaciones (i.e.Nispero, Sitio Grande, Rio Nuevo, Artesa, and Gaucho)are Extraction blocks, while the last (i.e. Mezcalapa) is anExploration block. Additionally the CNH proposed to SENERto include the Cactus block in the migration.
The Asignaciones are bounded by a surface area of 870Km2 and have average recovery factors of 34% for oil and46% for gas.
7) Juspí - Teotleco Cluster
Also on March 6th, 2018, CNH approved the migration request of the Juspí – Teotleco Cluster to an Exploration and Extraction Contract. This Cluster is also located in the oil province Chiapas - Tabasco. The Asignaciones will be merged into one single block, which will be subject to a Farm Out bidding process for selecting a partner for Pemex. Some key facts may be observed in the following table:
Juspí - Teotleco Cluster Asignaciones Campo Juspí Campo Teotleco Mezcalapa 07
Surface 52.89 km2 182.98 km2 450 km2
Field Mid - Late Cretaceous Late Cretaceous and Inferior - Mid Cretaceous
All geological formations
Type of activity Extraction Exploration
Original Volume Oil: 39.9 MMbbl Oil: 393.5 MMbbl
N/A Gas: 175.1 Bcf Gas: 1,614.8 Bcf
3P reserves (January 1st, 2017)
Oil: 0.3 MMbbl Oil: 40.1 MMbbl N/A
Gas: 2.8 Bcf Gas: 306.5 Bcf
Hydrocarbon type Gas / Condensates / Oil Gas / Condensates Gas / Condensates
API density 42° API 40°- 50° API N/A
Recovery factor Oil: 29.19% Oil: 8.43% N/A Gas: 41.87% Gas: 8.55% N/A
Drilled wells 20 drilled (2 producing) 19 drilled (11 producing) N/A
Moreover, on April 3rd, 2018, CNH approved SENER´s proposal of migrating the Asignaciones into one single Exploration and Extraction Contract under a License model regime. However, CNH has not yet published the dates in which the bidding process will be launched. It is worth mentioning that the first 2 Asignaciones (i.e. Juspí and Teotleco) are Extraction blocks, while the last (i.e. Mezcalapa 07) is an Exploration block. Additionally the CNH proposed to SENER to reduce the area from 450 km2 to 282 km2 to avoid exploration activities near the Asignaciones Arroyo-Zanapa and the Cacho-Lopez.
8) Remolino
Moreover, on March 8th, 2018, CNH also approved the amendments of Asignacion Campo Remolino to adjust its surface area. Then, CNH approved the merger of Campo Remolino with several other Asignaciones (i.e. Campo Morelos, Campo Hallazgo and Campo Riachuelo) in order to form a Cluster that constitutes a complete geological column. However, CNH has not yet approved the migration of this Cluster.
Contacts:
Alfredo ÁlvarezMexico City Office - Energy [email protected]
Rodrigo OchoaMexico City Office – Oil & Gas Tax [email protected]
Enrique Pérez GrovasNew York City Office - [email protected]
Javier Noguez Houston Office - [email protected]
Yuri BarruecoMexico City Office – Tax [email protected]
Mario Karim Mexico City Office – Tax [email protected]
Jimena González de Cossío Mexico City Office - [email protected]
Jeffrey HelmMexico City Office – Tax [email protected]
Rodrigo MondragonHouston Office – Tax [email protected]
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