Return on Exploration Investment

The country’s prospective hydrocarbon resources can be separated into di†erent segments. Conventional resources are found in onshore, shallow water and deepwater, and unconventional resources include complex fields requiring advanced technology, and shale oil and gas. “Deepwater fields present high financial risks, due to high level of capital expenditure needed for their development that is concentrated in the first few years of a project,” says Carlos Morales Gil, Director General of Pemex Exploration and Production. “Non-conventional resources such as mature fields at Chicontepec and shale oil and gas, on the other hand, have low financial risk. The other factor in the analysis is profit, which is inversely correlated with risk. High profitability is usually present in high risk reservoirs and vice versa,” Morales Gil adds.

Companies follow di†erent strategies to tackle the diverse sources. “IOCs tend to concentrate on the high-risk, highprofitability areas, while smaller companies concentrate on the low-risk niche,” Morales Gil says. “Exxon, for example, manages non-conventional resources in a separate subsidiary called XTO Energy. Given that Pemex is the only operator working in Mexico, it has to attack both fronts. Mexico currently has a wide array of projects, and we discriminate investment through a set of factors, but primarily the analysis of risk and profitability.”

 With the Perdido successes of 2012, the next step is more e·cient well completion through the implementation of horizontal drilling and other technologies. “Currently, we have more than 50 prospective wells in Perdido,” Escalera Alcocer, Subdirector of Exploration at Pemex E&P details. “We need to continue planning accordingly and decide on the drilling procedures, the amount of wells, the equipment to be used, and the investment required to optimize our resources.”

Pemex’s exploration and production division will continue to be the biggest beneficiary of the company’s budget – accounting for 79% of the $US25.1 billion made available this year by the Federal Government. “We expect an equal share of the budget to be allocated to shallow water, deepwater, and onshore, while keeping conventional gas projects active in Burgos and Veracruz,” Escalera Alcocer says. This compels the E&P division to continue to favor projects that o†er the most atractive returns on investment potential to reach its goal of achieving a production level of 3 million b/d mid-term.

WHAT DOES THE PIPELINE OF POTENTIAL DISCOVERIES LOOK LIKE FOR 2013?

We still have a lot of hydrocarbon potential in deepwater areas such as Perdido. We started drilling three additional wells in that area between December 2012 and February 2013, Maximino, PEP, and Ahawbil. We have great expectations for these wells, as well as from the other three that we have planned for 2013. If we continue with the same success rate as in 2012, we estimate that two or three of those six wells will end up being commercially productive.

In shallow waters, we are expecting important discoveries similar to what we found at Tsimin and Xux. We are also delineating Xux, which is looking promising. We believe that President Peña Nieto will get some good news soon in terms of hydrocarbon findings, since we expect to have some interesting results in 2013, continuing the trend of last year. We will continue to add reserves in the same proportion as we have managed to do in the past few years.