Mexico-focused junior explorer MX Oil plc reported on 1 August 2014 that it has established a joint venture with Geo Estratos SA de CV, an established oil services business in Mexico, that MX describes as "potentially transformational" for the company.
The joint venture will identify, evaluate, explore, develop, and produce hydrocarbons in Mexico. MX said that the JV agreement means that due diligence can now begin on three potential asset transactions that Geo has identified.
MX Oil CEO Stefan Olivier said, "We have an early mover advantage in Mexico and this transformational JV with Geo ideally positions MX Oil to capitalize on the country’s vast hydrocarbon potential, which is estimated to hold 13 billion barrels of recoverable oil resources. From the outset we recognized the need to secure a highly qualified and well-connected local partner to penetrate the sector and Geo more than fits the bill.
"With over 17 years of in-country experience, it has a long track record of delivering a diverse range of services to many of the leading operators in the Mexican oil and gas sector, including Pemex, the state-owned operator, and FTSE 100-listed Petrofac. Geo also has a comprehensive in-house database covering Mexico's geology and hydrocarbon formations and an extensive list of concessions that will be of major benefit to MX Oil. We are about to start evaluating three of these to determine whether MX Oil will elect to participate alongside Geo in the bidding round and, subject to the outcome, in their subsequent development.
“We are thrilled with the response to our first placing as MX Oil and believe that with this additional funding in place we will be fully funded into 2015 and well-positioned to hit the ground running with targeted concession bids in Mexico ’s re-opening energy sector.
MX Oil announced that it had raised approximately $3.4 million in a share placing to provide working capital ahead of the upcoming licensing rounds in the re-opening of Mexico's energy sector.
MX Oil also added two non-executive directors to its board: Pat Mendoza and Sergio Lopez. Both have experience in Mexico and long relationships with the company through Northcote Energy Ltd.
Geo JV
The Geo JV is a product of and supersedes the agreement between MX Oil and Nogal Holdings LLC, as announced on 27 May 2014. Under the terms of the JV,
Under the terms of the Geo JV:
- Any concession or project awarded to the Geo JV will be held under a separate company, 51% owned by MX Oil and 49% owned by Geo with each party being assigned equal voting rights.
- MX Oil to provide access to funding for the delivery of specific approved projects by the Geo JV including , but not limited t , the acquisition of E&P assets and the provision of oil services in Mexico and any pre bid expenditure required ahead of a formal bid for concessions.
- GEO shall contribute any proprietary seismic or asset data relevant to the concession or project.
- MX Oil may fund any third party projects in Mexico’s oil and gas industry that are not directly related to a concession identified through the Geo JV.
The partners
Geo Estratos SA de CV is based in Tamaulipas, Mexico, and has provided services including subsoil drilling, geological and geophysical studies to operators in the Mexican energy sector for 20 years. The company has a number of patents granted and pending in both Mexico and the US. www.geoestratos.com.mx
MX Oil plc (MXO), formerly Astar Minerals plc, is based in London and listed on the London Stock Exchange (LSE) Alternative Investment Market (Aim). Lynda Jane Chase-Gardener is Executive Chairman of the Board. www.mxoil.co.uk
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