Russia’s Lukoil has agreed to acquire a 50% operator stake in the Area 4 project in Mexican shallow waters in a deal worth $435m.
The acquisition cost also includes the expenditures incurred this year on the project as of the transaction completion date.
Lukoil’s partner in the Area 4 project will be PetroBal, which will hold the remaining stake of 50%. PetroBal is the oil and gas subsidiary of GrupoBAL, a Mexican conglomerate.
The closing of the deal is subject to approval from the Mexican authorities and certain other conditions.
The earlier partner of PetroBal in the offshore Mexican project was the US-based Fieldwood Energy, a portfolio company of Riverstone. In August 2020, Fieldwood Energy had entered into bankruptcy.
The Area 4 project is made up of two blocks spanning 58km2 in total, located 42km off the Mexican coast in the Gulf of Mexico.
The blocks are contained in sea depth of 30m-45m and feature the Ichalkil and Pokoch oil fields.
According to Lukoil, the combined recoverable hydrocarbon reserves of the two offshore fields is 564 million barrels of oil equivalent. Of these, more than 80% is crude oil.
Lukoil president Vagit Alekperov said: “Lukoil considers Mexico a strategic region for the development of our international upstream operations. The new Project, where we will be the operator, is notable due to its considerable explored reserves and significant production potential.
“It naturally complements our existing portfolio of projects in the Gulf of Mexico.”
The Russian energy company said that currently the construction of production facilities at the project is being finalised.
The first oil from the Area 4 project is targeted to be produced during the third quarter of this year.
The offshore Mexican project will be developed in three phases. It is expected to have a peak daily production rate of over 115,000 barrels of oil equivalent.
It is being implemented under a production sharing agreement inked in 2016 for a period of 25 years. The agreement provides the participants the right for an extension for a maximum of 10 years.
