Australia's BHP Billiton Wins Bidding for Stake in Mexico's Trion Oil Field -- Update
December 05 2016 - 1:20PM
Dow Jones News
By Robbie Whelan
MEXICO CITY -- Australia's BHP Billiton won the bidding to join
with Mexican state oil company Petróleos Mexicanos in the Trion oil
field in the Gulf of Mexico, in the first award of several auctions
of deep-water oil blocks to be announced Monday.
Billiton outbid BP PLC to become Pemex's first private partner
in exploration and production under Mexico's 2013 opening of the
oil industry.
Bids for 10 other deep-water blocks up for auction are due to be
opened later Monday.
For Trion, both Billiton and BP offered additional royalties of
4%, on top of the minimum royalty payment of 7.5%, while Billiton
offered an additional cash commitment of $624 million, higher than
the $606 million offered by BP.
Billiton will have 60% of the project and Pemex 40%, and as
winning bidder is obliged to make a minimum investment of $570
million. The $624 million cash commitment includes coverage of
$561.6 million that Pemex has already invested in the project.
The auction is the fourth under the 2013 opening of the Mexican
oil industry, but the first for deep-water reserves and the first
to attract the interest of major oil companies.
The Trion field, part of a larger area of oil deposits known as
the Perdido trend, was discovered in 2012 and is thought to contain
about 485 million barrels of commercial reserves. It is expected to
cost about $11 billion to develop the field, with capital
expenditures of $7.5 billion, according to Mexico's oil regulator,
the National Hydrocarbons Commission.
"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
deep-water Gulf of Mexico, " said Steve Pastor, president of BHP
Billiton petroleum operations.
Pemex's chief executive, José Antonio González Anaya, said the
state company hopes that by 2025, the field will be producing
around 120,000 barrels a day.
BHP Billiton is the world's biggest mining company by market
value. Mr. González Anaya called Monday a "great day" for Mexico
and said he's confident it will bring significant advantages, such
as technology, to Pemex.
"I'm happy that the bids were so close, and that there wasn't a
'winner's curse.' When bids are far apart, sometimes winners may
think they offered too much."
Write to Robbie Whelan at robbie.whelan@wsj.com
(END) Dow Jones Newswires
December 05, 2016 13:05 ET (18:05 GMT)
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