South east basin most popular in latest Mexico round

Following on from our recent Offshore Mexico ‘Exploration Watch’ (Click here for report), bidding in Round 2.1 was concentrated on the south east basins and saw the first entry to the basin of supermajor Shell as well as UK independent Cairn Energy. Ten of the fifteen shallow water blocks on offer were awarded, with nine of these located in the Sureste Basin. Only one block, Block 2, was awarded (to Dea Deutsche and Pemex) in the five blocks on offer in the Tampico-Misantla and Veracruz basins.

The most hotly contested licence was Block 9 with six bids, followed closely by Blocks 7 and 10 with 5 bids each and Block 6 with four bids. These licences are located in the western part of the Sureste Basin, where the prospectivity is for mainly light oil in sandstone targets, though Block 10 also contains Cretaceous fractured carbonates

Source: CNH

Eni picked up the most licences, securing Block 7 and 10 together with the heavy oil Block 14 to the east. The company already operates a development block in the basin, where it is currently appraising the Amoca discovery. It will operate Block 7 as part of a consortium that includes Cairn and Mexican-focused independent Citla, and beat competitors by offering a 75% additional royalty together with a two well work programme.

Cairn (operating here as Capricorn) and Citla were also awarded the most competitive licence, Block 9, offering an identical additional royalty of 75% with two additional wells to second placed Eni, but with an additional bonus of $30m(the maximum biddable additional royalty was 75.1%).

UK independents Premier Oil and Ophir Energy also took part in this latest round, but were unsuccessful in growing existing positions in the region. Premier is currently drilling the Zama-1 exploration well in the Sureste Basin (located close to Blocks 9 and 10). It bid for Block 7, together with Repsol and Sierra Oil & Gas, where it lost out to Eni. Ophir holds 23.33%WI in deepwater block 5 in the Salina del Istmo basin, a sub basin of the Sureste Basin, with an exploration well planned in 2018. It participated in the bidding for two licences, but lost out to Petronas and Ecopetrol in Block 6 and Eni in Block 10.

While clastic plays are more common in the western portion of the basin, carbonate reservoirs and heavy oil feature towards the east. In this region, Lukoil entered the area for the first time with the only bid on Block 12 and Eni was awarded Block 14 uncontested. Block 13 received no bids. The most easterly licence, Block 15, is prospective for wet gas in Pliocene and Miocene sandstone and this was awarded to Shell, entering the basin for the first time, and partnering French major Total.