For nearly a century, Mexico has prohibited foreign firms from engaging in offshore oil drilling. However, Mexico, in a move to revive its struggling oil sector, is moving to relax its ban on foreign involvement, inviting international companies back into oil exploration for the first time since the country’s oilwells were nationalized in 1938.
The project is a joint venture between Talos Energy LLC, UK-based Premier Oil Plc, and Sierra Oil & Gas, with drilling beginning on May 21. The Zama-1 well, located off the coast of the Mexican state of Tobasco, is believed to contain between 100 and 500 million barrels of crude oil. The entire undertaking will take around three months.
Analyst Elaine Reynolds said that as this is the first time that international firms have been involved in oil exploration since the oil industry was nationalized, other companies will be watching this closely. Talos, a privately held firm, is the well operator and has a 35% ownership stake in the joint venture, with Sierra and Premier owning 40% and 25% respectively.
Founded in Houston, Texas in 2012, Talos Energy is an independent energy company involved in the exploration, extraction, and production of oil and natural gas in the Gulf of Mexico. Despite being such a young company, the Talos management team has decades of experience in the oil business. CEO Timothy Duncan recently made a presentation to potential investors at the JP Morgan Energy Equity Investor Conference.
Prior to this most recent venture, Talos had already built up a solid track record. The Talos team built up and sold two previous energy companies before forming Talos, at a considerable profit to investors. Despite their successes, Talos Energy is committed to finding new ways of doing things in order to prosper in an increasingly competitive oil and gas industry.