In 2016, a 75-year old monopoly of state-owned petroleum ended in Mexico. This massive reformation of Mexican oil policy has given oil conglomerates around the world the opportunity to sink offshore oil wells into Mexican waters. This move to allow foreign competitors has been a boon for the world oil market and a much needed stimulus to the Mexican economy.In the middle of the Great Recession crude oil prices and a depressed market forced Tim Duncan and his partners toconsolidate their funds and move them to only the most sure investment areas.
This strategy allowed them to double the companies size when most were barely surviving. Because of this success they were able to sell to Apache Corp for a large profit.On the back of this success, Duncan and his partners created Talos Energy. With the partner’s reputation and $600 million from previous backers Talos Energy was able to produce upwards of 16,000 barrels of crude oil per day last year. This team has now combined in a joint venture with Mexico’s Sierra Oil & Gas and Premier Oil Plc to drill for oil off the shores Mexico.It will be the first offshore exploration well by anyone other than the Mexican state-run monopoly Petroleos Mexicanos since oil became a nationalized industry in 1938.
The first well, the Zama-1, was sunk in the Sureste Basin and holds between 100 million to 500 million barrels of crude oil. Drilling will take an estimated 90 days to complete, at a cost of around $16 million. Their was heavy competition to win the rights to prospect in 2015, when the Mexican government was voting on whether or not to open its oil industry to foreign and private investment.Because the impact on Mexican oil markets is likely to be significant companies around the world are watching Zama-1 with great interest.Talos Energy, with their experienced Gulf Coast field team, is the operator and has a 35% stake in the joint venture. London-based premier owns 25% and as part of the reform deal, Mexico’s Sierra Oil & Gas owns a majority 40%.