Mexico’s data room will become available to companies looking to bid in the second round starting December 15
Mexico has been taking large steps to liberalize its oil and gas industry since 2013 when the government decided to end the 77-year monopoly of state-owned PEMEX.
Several rounds of bidding have taken place already, and the second round of onshore assets will be up for offers in the near future, and the blocks available in Round 2.3 will be even larger than those available the last time around.
Fourteen onshore blocks will be made available as part of Round 2.3, according to the Mexican government, with an average size of 185 square kilometers (71.4 square miles). The blocks will consist of four gas and ten oil fields located in Tamaulipas, Nuevo Leon and Veracruz. The licenses will be for 30 years with the ability to extend the contract twice, each time by a period of five years.
“These blocks are highly perspective and underdeveloped,” International Frontier Resources (ticker: IFRTF) CEO and President Steve Hanson told Oil & Gas 360®. “The blocks are larger than those available in Round 1.3. There’s a great opportunity just in the sense of scale,” Hanson explained. The larger assets available might attract more international companies, as well.
IFR is one of the first international companies to enter Mexico following the end of PEMEX’s monopoly. The Calgary-based company’s 50/50 joint venture with Mexican petrochemical company Grupo Idesa – Tonalli Energia – was awarded the 7.2 square kilometer Tecolutla Block in the first round of onshore bids.
You can pinpoint where money can be made
While the size of the assets might be enough to interest some companies, the truly exciting opportunity is bringing technology to bear on Mexico’s underdeveloped assets, said Hanson. “A lot of these fields were developed prior to 3D seismic being available. With new technology, you can pinpoint where money can be made.”
IFR plans to continue growing its footprint in the next round of bidding
“We believe that there are blocks in this round that are opportunistic,” Hanson said about the soon-to-be-available assets. “We hope to grow our footprint, and particular, the block to the north of us is of interest,” said Hanson, referencing a block that butts up against Tecolutla.
Located in the Tampico-Misantle Basin within the state of Veracruz, Tecolutla had one producing well in the El Abra formation as of December 2014. The formation is located at a depth of 2,340 meters (about 7,700 feet). Seven wells have been drilled on the block with peak production of over 900 barrels per day in 1972 from three wells.
IFR is working through the transition period on the Tecolutla block with PEMEX, and the government has been “first-class in how they’ve dealt with our company and other companies in the bid rounds,” said the company’s CEO.
“The reserve calculations on some of these [blocks] is very large. There is potential to exploit these with new technology. There has been a lack of capital there so far, so there is a lot of potential upside,” said Hanson.
