Cheiron, DEA Deutsch win Mexico oilfield farm-outs

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Wednesday, October 4, 2017

Indian oil company Cheiron Holdings and German firm DEA Deutsch Erdoel won auctions on Wednesday to develop two onshore areas in conjunction with Mexico's state oil firm Pemex.

Cheiron won the auction to partner Pemex in the Cárdenas-Mora field, offering a maximum additional royalty of 13%, in addition to a cash bonus of US$41.5mn, beating off competition from the only other bidder, a consortium formed by Gran Tierra Energy and Sierra Blanca P&D.

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The Cárdenas-Mora field has proven reserves of 93Mboe light crude at 39°API, covering 168km2 and located 62km from Villahermosa in Tabasco state.

Pemex and Cheiron will jointly develop the area with 50-50 shares.

Meanwhile, DEA Deutsch Erdoel won the auction for the onshore Ogarrio area, offering 13% additional royalties and a US$214mn bonus, putting it ahead of rival bidders California Resources, local firm Petrobal, Uruguayan firm Tecpetrol, Galem Energy and Ogarrio E&P of Chile.

Ogarrio is a mature field covering 156km2, located 65km from Coatzacoalcos in Veracruz state. Pemex estimates that it has 3P reserves of 54Mboe of light crude at 37°API, and has the potential to increase its output in the short term with interventions in existing wells.

No bids were received for the shallow water Ayín and Batsil fields, which were also planned to be offered as a farm-out by Pemex as part of its strategy to share risk and investment, outlined in its five-year business plan announced last November.

The two farm-outs awarded add to the deepwater Trión field farm-out granted last December to BHP Billiton, and will allow Pemex to advance in its strategy to diversify and optimize its portfolio of investments, the company said.