Companies show interest in Mexico's deepwater acreage


Anticipation continues to build for Mexico's Round One deepwater phase, which closes in December. We assess the subsurface potential and risks and identify analogue fields for the blocks on offer in our latest Insight: "Mexico's Round One deepwater exploration: risks and potential rewards."

10 deepwater blocks on offer
Mexico Round One offshore deepwater

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The deepwater phase of Round One will close on 5 December 2016 with 10 exploration blocks on offer. Twenty-six companies, including every major deepwater player, have started the prequalification process, a clear sign of interest given the current buyer's market for exploration acreage.

We assessed the subsurface potential and risks of the two areas where the blocks are clustered: the Perdido region of the Sabinas-Rio Grande basin and the Salina del Istmo region of the Salinas-Sureste basin. Perdido appears less risky than Salina del Istmo. We also identify 11 fields on the US side of the Gulf of Mexico that have analogous stratigraphic and structural features to the 10 Mexico blocks.

If forthcoming government-set minimum bids are reasonable, we believe that 70% of the blocks will be awarded given the low work commitments, long exploration phases, and especially the subsurface potential.

The deepwater phase will also include one discovered resource opportunity as a JV with Pemex. Trion would be Mexico's first deepwater oil field to be developed. Trion's competitive economics demonstrate the potential of Perdido.
Trion's IRR sensitivity to oil price and royalty bids
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You can purchase our full US Upstream Week In Brief on demand to read this week's top stories in the North America Upstream sector, including finalised arctic drilling rules from the Department of the Interior; a jump into the Delaware Basin by Resolute Energy; Chevron re-deploying capital by marketing its non-core Marcellus assets; analysis on the EPA's latest methane regulations; and our latest supply update and rig-count dashboard.

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