Premier Oil won 30% of Block 30 in the Sureste Basin, south west of the “world-class” Zama discovery in the Gulf of Mexico.
A basin which Mexico only opened up to international companies in 2015, Block 30 was coveted by many of the world’s biggest oil companies. Premier Oil held its nerve to beat its competitors.
The bidding process was an event of national interest in Mexico, so much so it was streamed on national television.
Premier chief executive Tony Durrant said that when it came down to bidding against Eni and Total, he’s not sure whether it was a case of being smart or lucky which made the difference, but probably both.
He said: “You get a head-start if you decide to go in early. In 2015 a lot of people decided to stand on the sidelines and we decided to push on.
“It’s either being smart or being lucky, it’s probably a combination of both.”
“In Mexico what we have is a massive proven oil and gas basin which is hugely under-drilled because they only opened it up to international companies in 2015. You’ve got proven hydrocarbon systems and a large area which the oil and gas industry can compete over.”
Discussing the process, in which companies had to make a significant bonus payment to the Mexican Government, Mr Durrant was pretty sure of Premier’s desire to win this round of bidding so close to to the already acquired Zama discovery.
With seven consortium bids in play it was up to Premier to be best in the “shoot out” that would ensue over the prospect.
Premier Oil bid with a bonus of $51million, beating out Eni at at $47million and besting Total who tabled a bid of $40million.
“It was a pretty competitive situation” says Mr Durrant. “I’m delighted that we’ve won it and delighted that we only piped Eni by $4million. The only objective in these processes is to win but win by paying the smallest possible amount more than anyone else.”
“We debated over the last few weeks and up to the last few days what the final number would be. You have to feel comfortable with the final number you’re putting on the table…and you also have to try and second guess what kind of number the opposition is putting on the table.”
Overall potential for the field is 500 million barrels, competing with the Zama discovery of 600 barrels.
Mr Durrant said he is buoyant about the win and excited about the potential of what Block 30 can produce going forward.
He said: “It’s more of a frontier area, it’s a new area. And we’ll see how it plays out. We’re building quite a little business in Mexico.”