Pemex, Talos, Premier Oil, and Sierra Oil and Gas Sign PUA for Zama
Pemex, with the Block 7 Consortium – Talos Energy (ticker: TALO), Premier Oil (ticker: PMO), and Sierra Oil and Gas – have just signed a Pre-Unitization Agreement (PUA) for two offshore areas in Mexico’s Southeast Basin: the Amoca-Yaxche-03 allocation and the Block 7 contiguous production sharing contract.
The PUA is potentially laying the groundwork for a more permanent agreement between Pemex and its Block 7 partners in the Southeast Basin.
This is the first Pre-Unitization Agreement ever to be signed in Mexico.
Pemex and Talos, as the operators, will continue exploration of the Zama reservoir, potentially extending into Pemex’s neighboring block.
In 2017, Sierra Oil & Gas, Talos Energy, and Premier Oil announced the discovery of the massive oil field in offshore Mexico, with more than 1 billion barrels of oil recoverable.
Setting legal precedent for shared discoveries
In the event a shared reservoir is created, a Unit Agreement and Unit Operating Agreement (UOA) will be signed. With Mexico’s revamped regulatory framework, the UOA will define each party’s involvement in the ongoing development and begin to set legal precedent for shared discoveries in Mexico.
The objectives of the working group, once formed, will be to define activities that optimize data collection efficiency, reduce hazards, maximize operating efficiencies, and benefit the country of Mexico. Technical and legal representatives from the member companies will be present in the working group.
The PUA has previously been approved by the Ministry of Energy (SENER).
The Zama discovery
In 2017, Sierra Oil & Gas, Talos Energy, and Premier Oil announced the discovery of the massive oil field in offshore Mexico, with more than 1 billion barrels of oil recoverable. According to the Financial Times, this is the fifth-largest oil discovery in the world in the last five years.
This discovery is the result of the Zama-1 offshore well, the first private offshore well in Mexico in nearly 80 years. Located about 35 miles off the coast of Mexico, the well was drilled in 550 feet of water.
Sierra Oil & Gas, based in Mexico City, is the largest independent company in Mexico, according to a press release. It has the largest stake in the play, holding 40%. Houston-based Talos Energy is the operator and holds 35%, while Premier holds 25%. Premier holds interests in the UK, Vietnam, Indonesia, the Falkland Islands, Mexico and Brazil.
