Talos Energy Drills Oil in Mexican Waters
On May 21, 2017, Talos Energy LLC became one of the first foreign companies to drill in Mexican waters for offshore oil since Mexico nationalized its oil industry in 1938.
Since 1938, only the state-run firm Petroleos Mexicanos or Pemex had operated in Mexico. However, by 2013 the Mexican government recognized that Pemex had not kept up with the industry. Therefore, they decided to open up to foreign competition to improve results. A stronger energy industry in Mexico should benefit the country’s economy and its people. Therefore, that year they passed the Constitutional Energy Reforms.
In 2015, Mexico began the bidding for the right to drill the Zama-1 well, which is offshore in the Sureste Basin. It’s off the coast of the state of Tabasco. The joint venture Talos Energy belonged to won the right on the first round. They own 35% of the partnership, and they operate the well. A London company, Premier Oil Plc, owns 25%. A Mexican company, Sierra Oil & Gas owns 40%.
The well holds an estimated 100 million to 500 million barrels of crude oil. Talos Energy expects to take 90 days to drill this. Edison Investment Research believes, based on its analysis of the geological properties of the Sureste Basin, the Zama-1 well has a high chance of succeeding.
Tim Duncan is the CEO of Talos Energy. He founded the firm in 2012, attracting investment funds of up to $600 million from Riverstone Holdings and Apollo Management. They are based in Houston, and have a total of 120 employees, half at headquarters and half in the field. WorkplaceDynamics named Talos Energy as the best small business to work for. That’s because they are giving employees equity in the business as well as a paycheck.
Oil & Gas Investor named a Talos Energy employee, Ash Shepherd, as one of its Thirty Under 40. Shepherd is the commercial manager for Mexico for Talos Energy. He has signed two production contracts for Talos with Mexico. According to Shepherd, the biggest challenge he and Talos Energy faced with this project is Mexico’s lack of a regulatory framework.