BHP Billiton teams up with Pemex for Trion discovery
BHP Billiton has won operatorship over Pemex’s Trion discovery offshore Mexico in what is Pemex’s first such cooperation.
During Mexico’s first bidding round, held on Monday, BHP Billiton submitted the winning bid to acquire a 60 per cent participating interest in and operatorship of blocks AE-0092 and AE-0093 containing the Trion discovery, beating the offer made by the oil major BP.
Pemex was looking for an experienced deepwater player to share costs at the Trion discovery due to its depth and complexity. The Mexican company will retain a 40 per cent interest in the blocks.
Pemex estimates the gross recoverable resource to be 485 MMboe. Subject to satisfaction of conditions, including the obtaining of government approvals, it is anticipated that the relevant agreements would be finalized and signed within 90 days, BHP said on Monday.
BHP Billiton’s bid for Trion includes an upfront cash payment of $62.4 million and a commitment to a minimum work program, estimated to be up to a maximum of $320 million.
Should BHP Billiton and Pemex agree to progress the project beyond the minimum work program, BHP Billiton said it would be required to invest the remainder of the $570 million minimum work contribution, which includes the minimum work program spend, and a $624 million cash contribution (which comprises the upfront cash payment of $62.4 million already paid and the balance of $561.6 million as a future carry for Pemex). BHP Billiton’s bid also includes a commitment to an additional royalty of 4%.
Steve Pastor, BHP Billiton President Operations Petroleum, said “We see attractive potential in Trion and the Perdido trend, and we are pleased to have the opportunity to further appraise and potentially develop this prospective frontier area of the deepwater Gulf of Mexico.”
“This opportunity aligns with our strategy of owning and operating Tier-1 assets and provides an opportunity for BHP Billiton to leverage its industry leading deepwater drilling, development and operational expertise to create value in Mexico.”