Block 7 in the offshore portion of Mexico’s Sureste Basin contains the recently appraised Zama oil discovery

oil-rig-2191711_960_720 (2)

Image: Talos Energy is the operator of offshore Block 7 in Sureste Basin. Photo: courtesy of C Morrison/Pixabay.

Talos Energy and its partners have secured a two-year contract term extension of their production sharing contract (PSC) for offshore Block 7 in Mexico’s Sureste Basin, which contains the Zama oil discovery.

The US-based oil and gas company is the operator of Block 7 where it is partnered by Wintershall DEA’s Sierra Oil & Gas and Premier Oil.

The extension for the offshore Mexican block has been granted by the National Hydrocarbons Commission of Mexico (CNH). The partners have also secured regulatory approvals to undertake additional exploration activities on Block 7.

CNH approved modified exploration plan for Sureste Basin block

The CNH has approved the partners’ modified exploration plan for the Sureste Basin block as well. The expanded plan enables the partners to assess additional exploration prospects on the offshore Mexican block in the future which comes in the wake of the completion of the appraisal of the Zama discovery in June 2019.

The Block 7 consortium has marked various potential exploration targets, which include the Xlapak and Pok-A-Tok prospects. Each of the additional prospects in the Sureste Basin is estimated to have gross unrisked resources ranges between 75-150 million barrels of oil equivalent (MMBoe).

The prospects are said to be oil bearing with similarly-aged sands as those seen in the drilling programme related to the Zama discovery and its appraisal to be targeted.

According to Talos Energy, the additional inventory identified by the partners in the Sureste Basin is within close proximity to the Zama oil discovery, which potentially gives scope for substantial development cost synergies if the drilling campaign succeeds.

Talos Energy said that the consortium is continuing discussions regarding its Zama unitization plan with Petróleos Mexicanos (Pemex), while moving ahead simultaneously with its front-end engineering and design (FEED) work. The consortium expects to take a final investment decision (FID) on developing the Zama oil discovery in 2020.

Talos president and CEO Timothy Duncan said: “We are excited about the additional potential of these prospects, all of which could be incremental to our world-class Zama discovery, the first by the private sector in Mexico’s history.

“Finally, we believe these approvals, in combination with the significant increase in industry activity, are yet another indicator of the tremendous potential of the basin in the future.”