Mexico Drillers Sign First Farm-Out Deal Without State Oil Giant

05/22/2018 Bloomberg

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Two upstart Mexican drillers have signed the first farm-out deal in Mexico’s oil sector that doesn’t include state company Petroleos Mexicanos.

Jaguar Exploracion y Produccion agreed to sell a 50 percent stake of three onshore areas in Tabasco and Veracruz to Vista Oil & Gas for $37.5 million, plus contingency payments if oil prices rise above $65 a barrel in the next two years. Vista, Mexico’s first listed crude producer following a $650 million share sale last year, will pay and operate two of the areas that are already in production, while Jaguar will remain the operator of the third exploratory block.

The deal will help Vista “position ourselves in Mexico,” said Chief Executive Officer Miguel Galuccio, former head of Ypf SA and the architect of Argentina’s shale boom. The areas Vista will operate in Tabasco are already known to Galuccio from his prior experience as a Schlumberger executive, he said. “These areas have a lot of potential. This year we are going to conduct a lot of studies, and next year we will drill eight wells.”

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Mexico’s Pemex says testing crude for import could start in July

05/16/2018 Reuters

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SEATTLE (Reuters) – Mexican state-run oil company Pemex expects to begin testing light crudes as soon as July for possible import, looking to boost margins at its domestic refineries, its chief executive said on Tuesday.

Pemex has for decades exported crude oil but has hardly ever imported the commodity, preferring to process domestic crudes at its six refineries in Mexico.

Pemex Chief Executive Officer Carlos Trevino said the company would likely seek imports resembling its proprietary Isthmus grade of light crude, the production of which has been declining in Mexico.

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Pemex’s Trevino Rushes to Put House in Order Before Elections

05/15/2018 Bloomberg

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Petroleos Mexicanos is in a race to get deals and bond sales done before an election that could scuttle efforts to lure international investments into Mexico’s battered oil industry.

Carlos Trevino, the company’s third chief executive officer in about two years, plans to raise $4 billion in debt markets, seal three refinery partnerships and hedge about a third of the company’s production. All that hopefully before a new government takes office in December, following a July 1 vote.

“We have been opportunistic” in issuing bonds to meet liquidity in the market and consider the political risk following Mexico’s elections in July, Trevino, 48, said in an interview. Pemex must consider “what the bond market will think of the outcome of the elections,” he said.

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Mexico, 2 U.S. states could see Colorado River cutback in 2020

05/09/2018 The Denver Post

colorado riverDENVER — Mexico and the U.S. states of Arizona and Nevada face a better-than-even possibility of getting less water from the Colorado River in 2020 because of a persistent drought, water managers said Wednesday.

The U.S. Bureau of Reclamation, which manages the river, released projections showing a 52 percent chance the river’s biggest reservoir, Lake Mead in Arizona and Nevada, will fall low enough in 2020 to trigger cutbacks under agreements governing the system.

If that happens, those two states and Mexico would be the first see their share of water cut. Further drops in the reservoir could trigger cuts for other states.

The chances of a shortfall rise to 64 percent in 2021 and 68 percent in 2022, the bureau said.

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Mexico’s Oil And Gas Industry Privatization Efforts Nearing Critical Phase

05/10/2018 Forbes

energy - oil barrelsEarlier this year, oil and gas statisticians in Mexico marked a historical first, for on 23 March officials at the National Hydrocarbons Commission (CNH) created a buzz in the market by including “251 million barrels of oil equivalent (boe)” in national reserves discovered by private exploration and production companies operating their own prospection blocks.

While positive, keen-eyed observers were quick to note that Mexico’s headline reserves figure was in the region of 8.5 billion boe, implying that less than 3% of the proven reserves were in private hands. Furthermore, the CNH acknowledged that the reserves position was down 7% on an annualized basis compared to the same month last year.

And if you look purely at crude oil reserves, total privately held reserves are actually around 1%, because Mexico is “still learning to crawl, let alone walk” when it comes to courting the private sector investment needed to boost its standing, according to Carlos Morales-Gil, Chief Executive Officer of PetroBal.

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Mexico City’s New Air Pollution Woe: Pipeline Geysers

05/04/2018 The New York Times

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MEXICO CITY — Mexico City’s stubborn air pollution problem has a new cause: gasoline and diesel spewing from illegal taps drilled into government pipelines to steal fuel.

Taps have increased in the city and its suburbs, and one came close to causing a pollution alert on Thursday.

The environmental commission for the metropolis said a 60-foot (20 meter) tall geyser of gasoline spewing from an illegal pipeline tap brief pushed ozone levels above limits.

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Reeling From Job Cuts, Mexican Oil Country Pins Hopes on a Rebel

05/02/2018 Bloomberg

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In the wetlands of Tabasco in southeast Mexico, indigenous farmers stand guard outside oil wells. They have no official status -– but anyone who wants to do business there has to pay to get past.

At Well 144 in the massive Sen field, for example, owned by state-run Pemex, service companies say they have to pay off two such groups, who claim to represent local communities and landowners. In some areas there are as many as ten. They charge fees that can reach 50,000 pesos ($2,670) a month for the larger international firms.

There aren’t too many other ways for the province’s people to make money out of oil. In the four years since Mexico opened its energy industry to global business, more than 100 exploration and production contracts have been signed. But the promised wave of investment hasn’t arrived, while Pemex and its contractors cut jobs as crude prices fell and haven’t restored them in the current rally.

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