International Frontier Resources explores Mexico’s untapped potential
Mexico’s oil and gas potential has been overshadowed in recent years by the tremendous success in the United States and Canada—the rest of North America. But Calgary-based International Frontier Resources (ticker: IFR) plans to help start the trend of new success stories south of the U.S. border. International Frontier Resources is among the first to enter Mexico’s liberalizing oil and gas sector after 77 years of state monopoly.
IFR’s 50/50 joint venture with Mexican petrochemical company Grupo Idesa – Tonalli Energia – was awarded Onshore Development Block 24 (Tecolutla Block) on May 12 after the first-place bidder was unable to meet the conditions and terms required by the Mexico Comision Nacional de Hidrocarburos (CNH). Tecolutla consists of 7.2 square kilometers in the Tampico-Misantle Basin located within the state of Veracruz. The oil reservoir in the block is the El Abra formation at a depth of 2,340 meters (about 7,700 feet). 3D seismic has been acquired over the entire Tecolutla Block and 7 wells have been drilled into the producing reservoir. Peak production of over 900 barrels per day was recorded in 1972 from 3 wells, with 1 producing well remaining as of December 2014.
Resources have been discovered, and much of the infrastructure is already in place, all that remains is for companies with the experience to run the assets effectively to fully exploit the hydrocarbon wealth in the ground.
“Our view is that this is the largest oil and gas sales in decades,” IFR President Steve Hanson told Oil & Gas 360®. “The fact that it’s in North America, it has large oil reserves, and it has good infrastructure makes it even better. Mexico is not a country that is in exploration; they’re already in development,” Hanson emphasized.
“What was apparent to us going down there was that these fields have been underdeveloped and under-explored. In many cases, wells that were drilled back in the ‘50s, ‘60s and ‘70s have good 2D and 3D seismic, show good pay zones, and have not been exploited to the degree that they have been in the U.S. and Canada.”
The company hopes to sign its license agreement with the Mexican government by late August, Hanson told Oil & Gas 360®.
IFR brings regional expertise to the table
International Frontier Resources’ partnership with Grupo Idesa offered the JV a stronger balance sheet to use in the bidding process, but it also gives the company a valuable perspective and resources while working in Mexico, said Hanson.
“Grupo Idesa has facilities, ports, trucks, infrastructure, and they have people that understand the unions, the community and local issues,” said Hanson. “If you go down there and you’re perceived as a foreign company trying to take advantage of the situation, you’re going to run into trouble.
“Tonalli Energia is a Mexican company. We want to ensure that the interests of the local community and the country as a whole are a factor in our operations.”
Adding to the company’s regional expertise are two board members the company announced in July. Helping IFR find success in Mexico are Ignacio Quesada Morales, Managing Director with Alvarez & Marsal (A&M), and former CFO and Board Member of Mexican state-owned PEMEX. Also announced in July was the addition of Colin Mills to IFR’s board of directors. Prior to joining IFR, Mills held positions including Director General and Chairperson of the Board of TransAlta Mexico, the Mexico-based branch of TransAlta Corporation, one of Canada’s largest publicly traded power generators.
International Frontier Resources will be presenting at EnerCom’s The Oil & Gas Conference® 21 in Denver, Colorado, on Monday, August 15, at 6:50 p.m. EST. To learn more about the conference and the presenters, click here.
