Timothy Duncan
President and CEO
Talos Energy
View from the Top

Taking the Lead: The Zama Discovery

Sun, 07/01/2018 - 09:26

Q: How is Talos capitalizing on its experience in the US side of the Gulf of Mexico to expand its portfolio to Mexico?

A: Talos has honed its exploration skills in the US Gulf of Mexico for decades and the results of that process are achievements like the Zama discovery. The successes, and even failures, that we have had in the past on the US side fuel our ability to continue to find and develop material discoveries like Zama. Our portfolio of prospects in Mexico gives us a richer, more diverse corporate portfolio that will allow us to optimize capital allocation, which is the key to building value in the upstream oil and gas industry. Mexico gives us a range of prospects, geological risk and production time frames to choose from.

Q: What capabilities does Talos bring as an operator into its consortium with Sierra Oil & Gas and Premier Oil?

A: With the level of success that we have been fortunate to have so far in Mexico, we have shown everyone that Talos is a partner that can contribute significantly to any aspect of the upstream sector. From prospecting to drilling to governmental relations, Talos has demonstrated the ability to create value in Mexico and the US. Very little of our process or technology involves intellectual property or methods unknown to the rest of industry. What Talos brings consistently, though, is an entrepreneurial spirit, a focus on excellence and a strong sense of urgency. These values truly power our achievements in Mexico. In our role as operator, Talos takes the lead in all aspects of the consortium, from geology and geophysics to reservoir engineering, legal and commercial negotiations, drilling operations and field development planning. Our partners certainly contribute with their specific skills and a wide range of experience, and all of that comes together to allow us to develop such an important discovery.

 Q: How will the merger between Talos Energy and Stone Energy impact Talos?

A: With the merger between Talos Energy and Stone Energy, our company has acquired more scalability for its operations and a stronger balance sheet to position itself as a partner of choice on both sides of the Gulf of Mexico. We hope to leverage that position not only into asset deals but potentially into other corporate transactions with companies looking for the right partner they can trust to execute the program they have begun.

Q: What led to the significant discovery in Zama-1?

A: The key to success at Zama was to do our homework ahead of time. That started with developing a reprocessed seismic dataset that focused on the Lower Pliocene through the Miocene regionally. Once we had a good handle on the regional and then local structural picture, then we could make some well-educated estimates of the pore pressures that would be encountered in the drilling of the well. In the execution of the well, our pore pressure estimates turned out to be very helpful in safely drilling a sparsely-drilled new area.

Q: How does the 1.4-2 billion boe discovery in Zama-1 impact Talos’ reserves portfolio and its future activities in Mexico?

A: At this moment, the oil discovered at Zama is classified as a contingent resource instead of a reserve. Once a final investment decision has been completed and the development plan has been approved by the government, these resources will migrate into reserves and will have a significant impact on Talos. The biggest impact will be the cash flow that will enable the company's further growth.

Q: How can Mexican service companies become a strategic ally of Talos in the Gulf of Mexico?

A: The best way for a Mexican service company to work closely with Talos is to consistently and reliably provide industry best practices with accountability and an innovative spirit. Talos values partners who are unafraid to continually bring their best ideas to the table and break from traditional local practices to create outstanding results. Anyone who wants to work closely with Talos should never tell us, “that is the way we have always done it.”