Mexico’s national oil company Petróleos Mexicanos (Pemex) unveiled its 2016-2021 business plan that will see the company take advantage of the Energy Reform with an aggressive farmout program, expecting to increase production by 15%.
Image from Pemex.
Along with the rest of the industry, Pemex has also made several cuts and adjustments, including halting production in wells that cost more than US$25/bbl; and reassess investments by $3.1 billion (65 billion pesos). Of the $3.1 billion, Pemex cut deepwater investment by $622 million, where the Trion deepwater farmout set for December comes into play; and the farmout for shallow water area Ayin-Batsil set for April 2017.
Trion has an estimated 500 MMbbl of 3P reserves; and both offshore and onshore fields that Pemex will auction in Rounds 2.1 and 2.2, hold and estimated 444 MMbbl.
Pemex’s “aggressive” farmout plan will include 13 farmouts, both offshore and onshore next year. In 2018, Pemex is planning to farmout six shallow water areas in the North region, and 64 onshore areas.
According to the business plan’s scenario, Pemex’s reserve incorporation goal is 1.1 billion boe at 3P level from 2017-2021. In case of additional resources, Pemex said a sustainable increase of 1.5 billion bbl has been considered.
The business plan encourages the creation of joint ventures along Pemex’s entire value chain as a mechanism to increase investment and efficiency, Pemex CEO José Antonio González Anaya said.
Due to changes in its legal framework, Pemex said it can carry out operations in a similar way to the rest of the international oil companies, which will enable it to reverse the last years’ downward trend in its results and share technical, technological and financial risks along the entire value chain.
According to González Anaya, results already obtained by measures that have been taken so far have gradually yielded an increased confidence from international markets into Pemex’s future.
“So far this year, Pemex’s risk has decreased by 50%, the average term of the debt has increased and the company has been able to successfully access several financial markets that hadn’t been approached in many years, such as the Japanese financial market” he said.
In February, Pemex cut its budget by $5.5 billion (100 billion pesos), which the company said will be completed this year.
“The established savings target will even be exceeded, reaching 35 billion pesos (nearly $1.7 billion) due to the austerity measures, 6 billion pesos ($284 million) in excess of the programmed amount. Furthermore, total 2015 overdue accounts payable to suppliers have been paid or are scheduled for payment. Finally, the company went through a corporate restructuring process, and reduced by 40% senior management positions,” Pemex said.
Should all go to plan, Pemex expects to be financially stable by 2019/2020, the company said.