BHP Billiton and PEMEX sign agreement for deep-water oil discovery in Mexico
BHP Billiton has advanced its exploration and production interests in the Gulf of Mexico by executing a contract with PEMEX Exploration & Production Mexico (Pemex) to complete work on the significant Trion discovery in Mexico.
In December 2016, BHP Billiton successfully bid on the resource that, once fully appraised, is expected to be in the top 10 fields discovered in the Gulf of Mexico in the last decade.
The agreement includes a commitment to deliver a Minimum Work Program, which consists of drilling one appraisal well, one exploration well and the acquisition of additional seismic data.
The signing ceremony today was attended by President of Mexico, Enrique Peña Nieto, BHP Billiton CEO, Andrew Mackenzie, and Director General Pemex, José Antonio González Anaya, and was held at the Official Residence of the President in Mexico City.
BHP Billiton CEO, Andrew Mackenzie, said the partnership was an historic moment for Mexico and the beginning of a new chapter in business relations between BHP Billiton and Pemex.
On 5 December 2016, BHP Billiton announced that it submitted the winning bid to acquire a 60 per cent participating interest in and operatorship of blocks AE-0092 and AE-0093 containing the Trion discovery located in the deep-water Gulf of Mexico offshore Mexico. PEMEX Exploration & Production Mexico will retain a 40 per cent interest in the blocks. Pemex estimates the gross recoverable resource to be 485 MMboe.
BHP Billiton’s bid for Trion includes an upfront cash payment of US$62.4 million and a commitment to a Minimum Work Program (estimated at US$320 million).
Should BHP Billiton and Pemex agree to progress the project beyond the Minimum Work Program, BHP Billiton would be required to fulfil the commitment to invest the remainder of the US$570 million Minimum Contribution, which includes the Minimum Work Program spend. BHP Billiton would also carry Pemex for an additional US$561.6 million on future project costs, which is the remainder of the US$624 million cash contribution submitted in the bid (the upfront cash payment of US$62.4 million was paid at closing). Should the project progress to full development and production, both BHP Billiton and Pemex would pay the Mexican Government an additional royalty of 4 per cent on revenues, also committed in the bid.