Unitisation of the Zama field was required after determination that the field is located within both the Talos-operated Block 7 and an adjacent Pemex-operated block and provides for joint development of the entire reservoir instead of each party developing its own block
Talos Energy announces finalisation of the Zama unitisation process. (Credit: C Morrison from Pixabay)
Talos Energy Inc. (“Talos” or the “Company”) (NYSE: TALO) announced today that it has received the final Unitization Resolution (“UR”) from Mexico’s Ministry of Energy (“SENER”) regarding the development of the Zama field in offshore Mexico. Among other things, the UR affirms the appointment of Petróleos Mexicanos (“Pemex”) as operator of the unit. Unitization of the Zama field was required after determination that the field is located within both the Talos-operated Block 7 and an adjacent Pemex-operated block and provides for joint development of the entire reservoir instead of each party developing its own block.
Talos will maintain a 17.35% participating interest in the Zama field, and the Company anticipates submission of a Unit Development Plan for approval by the working interest partners within 6-12 months, a critical step before the parties can make a Final Investment Decision (“FID”) in 2023. Talos will participate in activities related to reaching FID, while also continuing to evaluate various strategic and legal options. The Company does not expect any material changes to its 2022 capital expenditures guidance as a result of the issuance of the UR.
Talos, as operator and 35% partner in the Block 7 lease, discovered the Zama field in 2017 as the first private sector consortium to enter Mexico following the country’s major energy reforms. Zama was subsequently named the 2017 Global Discovery of the Year by Wood Mackenzie, and the field was fully appraised by mid-2019. An independent third-party reserves auditor estimated the discovered recoverable resource volumes to be between approximately 735 – 950 million barrels of oil equivalent, and Zama could produce over 160,000 barrels of oil equivalent per day once fully developed. Talos has invested approximately $104 million in Zama since 2015 and these past investments are subject to cost recovery under the Production Sharing Contract.
Talos President and Chief Executive Officer Timothy S. Duncan stated: “We are very proud of our operational leadership in Mexico’s private energy sector and of our accomplishments thus far with our world-class Zama discovery. We are disappointed that despite our consistent track record of success, safety and progress we were not provided the opportunity to retain our role as operator for the benefit of the project. However, we understand how important accelerated first oil from Zama is for the Mexican energy sector and all of the Company’s stakeholders and we will work with the urgency required to finalize the Unit Development Plan so FID can be reached.”
Source: Company Press Release