Talos Energy Inc. has joined Mexico in a pre-utilization agreement that will allow for a two-year information sharing process in relation to the recent drilling of a well in Mexico’s Gulf-water territory.
In cooperation with Pemex, Mexico’s nationally-owned oil company, Talos Energy was the first American company to drill for oil in Mexican sovereign waters since 1938, the year that country nationalized its oil industry. Talos has two partners in the venture, Sierra Gas & Oil, an independent Latin American entity, and Britain’s Premier Oil.
The new well is called the ZAMA-1. All indication is that it represents a significant find. Experts predict the ZAMA well could harbor from 1.4 billion to 2 billion barrels of oil equivalent. The contract just signed between Talos Energy and Pemex also includes a Unit Agreement and a Unit Operating agreement.
Both parties will now form what is called a Working Group which encompasses many functions, including maximizing operational efficiencies as well as establishing an effective flow of communication between all parties. Furthermore, the Working Group will handle critical details, such as establishing safety protocols, gathering information and putting together the groundwork for a future working partnership between Talos, Pemex and partners.
Pemex is Mexico’s largest company while Talos Energy is based in Houston and is considered by industry experts to be a company on the rise. It recently merged with Whistler Energy II in a $52 million transaction. And just before that, Talos acquired Stone Energy which significantly bolstered its cash and infrastructure position. Talos Energy is helmed by CEO Tim Duncan. The company was established in 2012.
Talos’s geographic focus is the Gulf of Mexico. Its recent deal with Mexico greatly expands the area in which it can operate. If the joint venture between Pemex, Talos and its other partners succeeds, industry experts say it may usher in a new robust era of fossil fuel development in the region.
Mexican officials are especially eager to make it work. Allowing foreign partners to drill in Mexican territory was a historic decision. It indicates that Mexico is determined to revitalize its energy exploration industry after some 80 years of total government control.