Argus Media Limited

05/26/2023 | News release | Distributed by Public on 05/26/2023 08:59

Talos to sell stake in Mexico's Zama oil find

Talos Energy plans to sell a 49.9pc share in its Mexican subsidiary that includes the giant Zama shallow-water field to Grupo Carso, owned by Mexican billionaire Carlos Slim, for $124.8mn, the company said.

"As we accelerate recent momentum and advance Zama toward a final investment decision and first production, we are confident that Carso is the right partner at the right time," Talos Energy's chief executive Tim Duncan said yesterday.

Grupo Carso will pay $74.9mn at closing, with the remaining $49.9mn due at first production, while the total purchase price could increase to $262.5mn "if certain milestones are reached," Talos said.

Talos Energy discovered the giant Zama field of up to 950mn bl of oil equivalent (boe) in 2017 in its block 7 contract that neighbors acreage owned by state-owned Pemex in the southeast basin. But unitization negotiations with Pemex were fraught and protracted, ending last year with Pemex's designation as operator against Talos Energy's wishes.

But the company has sounded a more positive note in recent months following submission of the production plan and creation of an integrated project team that gives Pemex and the block 7 contract holders - Talos, Wintershall Dea and Harbour Energy - shared control over operational decisions.

"This transaction establishes a baseline Zama valuation for Talos shareholders while providing material upfront cash proceeds," Duncan said. "Most importantly, Talos shareholders retain significant valuation upside as we advance the project toward first production."

Talos holds a 17.4pc stake in Zama and will co-lead the planning, drilling, construction, and completion of all Zama wells as well as the planning, execution, and delivery of Zama's offshore infrastructure.

The Zama project is strategically important to Pemex amid the accelerated decline in oil and gas production as it will provide up to 180,000 b/d at its peak, or 10pc of current national output. No gas production estimates have been provided.

"We celebrate the agreement reached yesterday, particularly because it is with a Mexican company," President Andres Manuel Lopez Obrador said today. "Grupo Carso's participation is important because they have drilling rigs and so drilling will not take too long."

Grupo Carso already owns development rights for two small onshore blocks in Veracruz - both of which are in the exploration phase - but this would be the company's first foray into a major oil and gas project.

The sale is expected to close in the third quarter of this year.

By Rebecca Conan