Quadruple Winner of R1-L03

Q: What factors led to your decision to bid for four blocks in the Tampico-Misantla Basin, and what main challenges did you faced in this endeavor?

A: The fields we were awarded had been abandoned by PEMEX since 1967, and have not had any activity except for some marginal punctual oil extraction since then. As a technology-based firm with more than 20 years of experience in those fields, we saw a real opportunity in this round to prove our abilities as operators and to develop Mexico’s oil production. Our business is developing technology that will confer us advantages over knowledge and best-practices, allowing for cost-reductions and competitiveness in challenging areas. We are designed according to a model that gives us the capacity to be competitive and produce our fields at a low cost.

Our first challenge was not related to the database, but rather it was linked to succeeding in winning the four blocks we were awarded. We had to ensure that our technological development was sufficiently far along to allow us to bid high royalties without putting the profitability of our projects at risk. Overall, the bidding round was well carried out, but I think CNH should have included many more areas in the tender, so that competing firms could have a wider capacity for analysis. Indeed, the excess of demand over supply complicated CNH’s work, even though it was transparent and just. CNH should be more aggressive and make a larger number of contractual areas available per unit of time.

Q: When will you begin operations on those fields, and what first steps will you take?

A: We hope to receive the fields at the start of May, despite the fact that the original contract signing date was set for February 8, 2016. From there, we will begin activities in June or July. Our team and personnel are ready to start on that date, and our execution capacity is directed toward the installation of the infrastructure that our four fields are currently lacking. We do not consider this a challenge, but rather, an opportunity, because we can plan and design our own infrastructure using the latest technology. We will be working in a context of high security and high social responsibility. It would be more problematic to receive existing infrastructure that requires investment to develop, repair, and maintain, as this would be costlier than our current situation. The challenge associated to property isotropy deposits, which is the property change in relation to horizontal and vertical distribution within the space of the deposit, has been well analyzed so far. The next step is to use 3D seismic technology and to reprocess information to improve our production expectations.

Q: Given the fact that you offered a relatively high royalty rate for the State, how will you ensure the company will be able to invest in future projects?

A: We are a company that does not depend on public funds or on financing processes from other institutions. We invest in our own projects, make money from these, and reinvest it elsewhere. The royalties that we offered are a reflection of the security that we obtain from being a longstanding company. Unlike companies that were created at the last minute to take advantage of the Energy Reform, we have had the time to carry out the necessary analyses. The rate we bid was our strategy for the future. Going forward, we will offer lower royalties, as we will have higher control of the market. Moreover, our technological capacity allows us to be efficient at the current royalty rate that we bid, and not to have to worry about relying on corrupt processes to obtain contracts.

Q: Now that your firm is changing, how do you hope the company will grow, and how do you hope to contribute to Mexico’s oil and gas energy and its production?

A: We have been preparing to become an operator for many years now, training our personnel with the necessary knowledge. In fact, our service company will participate as a service provider for our operator. Our vision for the future is to have an operating company that is completely independent of that of our services. We would like to acquire around 25 fields in the next two years. We think this will allows us to contribute 5% to national production. We also want to contribute through our services, and our main concern at the moment is to put forth a solution that is adapted to the investment purpose of operators.