Talos Energy eyes possible tie-up with Pemex next year for Zama find

MEXICO CITY (Reuters) - A consortium led by U.S.-based Talos Energy is looking to partner with Mexico’s state-run energy firm Pemex next year on a plan to jointly develop a potentially lucrative oil and gas discovery pending more drilling.

A digital LED price sign of state-owned company Petroleos Mexicanos (PEMEX) shows their prices of the gasoline at a gas station in Monterrey, Mexico, August 8, 2018. REUTERS/Daniel Becerril

Last year, Talos’ Zama project in the southern Gulf of Mexico’s shallow waters struck a major oil deposit that could hold as much as 2 billion barrels, including up to 800 million barrels in recoverable reserves.

The discovery likely extends into Pemex’s adjacent block, where the Mexican company plans on drilling its own well by the end of this year to confirm its share.

“We want to see their data so it can help all of us, and then we want to figure out how quickly we can form the partnership so we can move forward with our final investment decision,” said Talos CEO Tim Duncan in an interview this week.

He said the consortium, including Talos, Britain’s Premier Oil and Mexico’s Sierra Oil and Gas, will also share its own data with Pemex, hoping to finalize negotiations by the end of next year.

Duncan attended a meeting last month with President-elect Andres Manuel Lopez Obrador, who has pledged to strengthen Pemex upon taking office in December.

Duncan said Mexico’s next president emphasized the need for operators like Talos to produce more barrels as quickly as possible to help reverse a 14-year-long production slump.

“He doesn’t have to look for urgency in us,” he said. “We’ve maintained it, we’re fully committed to it.”

In September, Mexico’s oil regulator approved an appraisal plan for the Zama project in which the Talos-led consortium will invest as much as $325 million to drill two new wells, as well as other studies it expects to complete by mid-2019.

Drilling is set to begin by the end of November, Duncan said, while production of 100,000-150,000 barrels per day is seen in 2023.

The consortium has yet to make a decision about the infrastructure needed to bring the barrels to market.

“We are definitely going have to construct several platforms here in 500 feet (152 meters) of water that will take a little bit of time, and that gives us time to really let the market evolve on what we ultimately do with the oil,” said Duncan.

“The gas will certainly end up in the local market,” he added.

Reporting by David Alire Garcia; Editing by Phil Berlowitz