Mexicos Round 1, Phase 1 Results

SHALLOW WATERS
Exploration State

Mexicos Round 1 Phase 1 (Exploration blocks in shallow waters) bids took

place on July 15th, 2015. Out of the 25 prequalified participants, 9 were
registered. The 9 participants in the bids were:

Statoil, ENI International and CASA Exploration consortium,

ONGC Videsh,
Talos Energy, Sierra Oil & Gas y Premier Oil Plc consortium,
Hunt Overseas Oil Company,
Atlantic Rim Mxico,
Pan American Energy and E&P Hidrocarburos y Servicios consortium,
Murphy Worldwide and Petronas Carigali International consortium,
Cobalt Energa de Mxico.

Out of the 14 blocks offered 2 were awarded to the consortium formed by

Sierra Oil & Gas, Talos Energy LLC and Premier Oil PLC (the Consortium). Out
of the remaining 12 blocks, 8 lacked bidders and the other 4 were not awarded
because the bidders fell short in the offers.
The chart below includes a summary of the results of the bids. The blocks that
are not included in the chart below did not have any offers by the participants.

Round 1
Shallow Waters - Exploration State
BLOCK 21

CONTRACT AREA 2

Bidder

Minimum Acceptable Values

Sierra Oil & Gas S. de R.L. de
C.V.
Talos Energy LLC
Premier Oil PLC.
Hunt Overseas Oil Company
Atlantic Rim Mxico S. de R.L. de
C.V.
Cobalt Energa de Mxico S. de
R.L. de C.V.
E&P Hidrocarburos y Servicios S.A
de C.V.
Pan American Energy LLC.

1 http://ronda1.gob.mx/English/results.html

State's
share of
the
Operating
Profit (%)
40.00

Additional
Investmen
t
Increase
(%)
0

55.99

10

51.972

54.55

50.213

Weighted
Score of
the
Bid

No bid
No bid
No bid

Eni International B.V.

Casa Exploration L.P.
Murphy Worldwide Inc.
Petronas Carigali International
E&P B.V.
ONGC Videsh Limited
Statoil E&P Mxico S.A. de C.V.

No bid
No bid

0.00

No bid
No bid

Round 1, Phase 1
Shallow Waters - Exploration State
BLOCK 72

CONTRACT AREA 7

Bidder

Minimum Acceptable Values

Sierra Oil & Gas S. de R.L. de
C.V.
Talos Energy LLC
Premier Oil PLC.
Statoil E&P Mxico S.A. de C.V.

2 http://ronda1.gob.mx/English/results.html

State's
share of
the
Operating
Profit (%)
40.00

Additional
Investmen
t
Increase
(%)
0

68.99

10

63.672

65.00

86

63.136

Weighted
Score of
the
Bid

Hunt Overseas Oil Company

Eni International B.V.
Casa Exploration L.P.
E&P Hidrocarburos y Servicios S.A
de C.V.
Pan American Energy LLC.
Atlantic Rim Mxico S. de R.L. de
C.V.
Cobalt Energa de Mxico S. de
R.L. de C.V.
Murphy Worldwide Inc.
Petronas Carigali International
E&P B.V.
ONGC Videsh Limited

65.11

15

60.535

57.00

20

53.536

27.26

Rejected
No bid
No bid
No bid
No bid

Mexicos Round 1, Phase 2 Results

SHALLOW WATERS
Extraction State

Mexicos Round 1 Phase 2 (extraction blocks in shallow waters) proposal

openings took place on September 30, 2015. Out of the 14 prequalified
participants, only 9 filed proposals. The companies and consortiums that
participated are the following:

Statoil,
DEA Deutsche,
ENI International,
Lukoil,
CNOOC International,
Talos Energy, Sierra Oil & Gas, Carso Oil & Gas and Carso Energy
consortium,
Pan American Energy and E&P Hidrocarburos y Servicios consortium,
Petronas Carigali International E&P and Galp Energa E&P consortium,
Fieldwood Energy and Petrobal consortium.

Round 1 Phase 2 included 5 blocks for extraction of hydrocarbons in shallow

waters. Out of the 5 blocks offered 3 were awarded. Any participant filed
proposals for Blocks 3 and 5. Below is a summary of the results obtained in the
bids.

Round 1, Phase 2
Shallow Waters Extraction State
BLOCK 13
Summary
The Contract Area 1 is
located in the Southeastern
Basins and comprises a 67
sq km area. It includes 3 oil
fields: Amoca, Miztn and
Tecoalli.
Estimated 2P reserves are
107 Mb of light oil and 69
Bcf of gas. Reservoir rocks
are Pliocene sands with 33meter water depth.

CONTRACT AREA 1

Bidder

Minimum Acceptable Values

ENI International
Lukoil Overseas Netherlands
Pan American Energy LLC
E&P Hidrocarburos y Servicios
Statoil E&P Mxico
DEA Deutsche Erdoel AG
Petronas Carigali International E&P
Galp Energa E&P
CNOOC International Limited
Talos Energy LLC
Sierra Oil and Gas
Carso Oil and Gas

3 http://ronda1.gob.mx/English/resultsL02.html

State's
share of
the
Operatin
g Profit
(%)
34.80
83.75
75.10

Additiona
l
Investme
nt
Increase
(%)
0
33
0

68.23

34

64.322

66.00
61.81

0
0

59.400
55.629

57.00

52.714

54.60
46.73

0
11

49.140
43.715

Weighte
d Score
of the
Bid

78.247
67.590

Carso Energy
Fieldwood Energy LLC
Petrobal

48.00

43.200

Round 1, Phase 2
Shallow Waters Extraction State
BLOCK 24
Summary
The Contract Area 2 is
located in the Southeastern
Basins and comprises a 40
sq km area. It includes the
Hokchi oil field.
Estimated 2P reserves are
60 Mb of light oil and 29 Bcf
of gas. The reservoir rocks
are Tertiary sands with 28meter water depth.

CONTRACT AREA 2

Bidder

Minimum Acceptable Values

Pan American Energy LLC
E&P Hidrocarburos y Servicios
Fieldwood Energy LLC
Petrobal
Talos Energy LLC
Sierra Oil and Gas
Carso Oil and Gas
Carso Energy

4 http://ronda1.gob.mx/English/resultsL02.html

State's
share of
the
Operatin
g Profit
(%)
35.90

Additiona
l
Investme
nt
Increase
(%)
0

70.00

100

68.000

65.00

10

60.081

63.84

11

59.114

Weighte
d Score
of the
Bid

61.00
50.15

Statoil E&P Mxico

CNOOC International Limited
DEA Deutsche Erdoel AG
ENI International
Lukoil Overseas Netherlands
Petronas Carigali International E&P
Galp Energa E&P

0
0

54.900
45.135
No bid
No bid
No bid
No bid

Round 1, Phase 2
Shallow Waters Extraction State
BLOCK 45
Summary
The Contract Area 4 is located
in the Southeastern Basins
and comprises a 59 sq km
area. It includes 2 oil fields:
Ichalkil and Pokoch.
Estimated 2P reserves are 68
Mb of light oil and 92 Bcf of
gas. The reservoir rocks are
Cretaceous
and
Jurassic
limestones
with
45-meter
water depth.

CONTRACT AREA 4

Bidder

Minimum Acceptable Values

Fieldwood Energy LLC
Petrobal
Pan American Energy LLC
E&P Hidrocarburos y Servicios
Talos Energy LLC

5 http://ronda1.gob.mx/English/resultsL02.html

State's
share of
the
Operatin
g Profit
(%)
33.70

Additiona
l
Investme
nt
Increase
(%)
0

74.00

Weighte
d Score
of the
Bid

66.600
No bid
No bid

Sierra Oil and Gas

Carso Oil and Gas
Carso Energy
Statoil E&P Mxico
CNOOC International Limited
DEA Deutsche Erdoel AG
ENI International
Lukoil Overseas Netherlands
Petronas Carigali International E&P
Galp Energa E&P

No
No
No
No
No

bid
bid
bid
bid
bid

No bid

Mexicos Round 1, Phase 3

Call for Bids
ONSHORE
Extraction State

On 12 May 2015, authorities in Mexico made a call for bids of 25 new onshore
blocks for extraction of hydrocarbons (Round 1 Onshore). The drafts of the
terms and conditions for these bids, as well as the draft of the license contracts
for extraction of hydrocarbons, are available at www.ronda1.gob.mx.
The map below shows the location of the 25 blocks which are part of Round 1
Onshore, as well as a summary of their characteristics.

Total surface area: 777.6 km.

Two different type of blocks
o Type 1: Less than 100 million barrels of residual volume of liquid
hydrocarbons.
o Type 2: Equal or greater than 100 million barrels of residual
volume of liquid hydrocarbon.

1
2

Area
(km2)
*Removed by CNH
Barcodn
11

Benavides

135.5

16

4
5
6
7
8

Calibrador
Calicanto
Carretas
Catedral
Cuichapa Pte.

16.1
10.6
89.4
58
41.5

1
1
1
1
2

17
18
19
20
21

Duna

36.7

22

22

23

10.2
21.2
29.8

1
1
1

24
25
26

Area

10
11
12
13

Field

Fortuna
Nacional
La Laja
Malva
Maregrafo

Type

Area

Field

14
15

Mayacaste
Moloacn
Mundo
Nuevo
Paraso
Paso de Oro
Pea Blanca
Pontn
Ricos
San
Bernardo

Area
(km2)
21.9
46.3

Type
1
2

27.7

17
23.1
26
11.8
23.7

1
1
1
1
1

28.3

Secadero

9.8

Tajn
Tecolutla
Topn

27.5
7.2
25.3

2
1
1

Mexicos Round 1 Phase 3 (Onshore blocks) bids will take place on December
15th, 2015.
Actually there is 60 companies registered for Onshore Block Bids. Some of
them companies are:

Carso Oil & Gas

Diavaz
PetroBal
Total
Sinopec
GeoPark
GPA Energy
Grupo R Exploracin y Produccin
Iberoamericana de Hidrocarburos
Interamericana de Navieros
Servicios Administrativos Somer
Strata Campos Maduros

License contracts for extraction of hydrocarbons

License contracts will apply for Round 1. Drafts of two different contracts
were published: one for individual investors and the second for
consortiums. The term of the contracts is 25 years with the possibility of
two 5-year extensions.

The considerations the Mexican Government will receive pursuant to the

license contracts are royalties and over royalties (bidding factor) in US$

and a quota for exploration in MXN. In exchange, the contractor will

receive all produced hydrocarbons. The license contracts also include a
mechanism of adjustment (R factor) determined according to the daily
average production of hydrocarbons for the current period and the prior
two periods.

License contracts establish an evaluation period. The initial term of the

evaluation period is one year and may be extended for an additional
year. During the evaluation period, contractors have to comply with
minimum work commitments that will be expressed in working units. To
be able to extend the evaluation period, contractors have to comply with
the minimum work commitments, agree to comply with the additional
work commitments and agree to carry out additional working units
equivalent to the working units of one well. The contracts include
penalties to the contractors for not complying with the minimum work
commitments. Likewise, the contractors are obliged to execute a
compliance guarantee.

The license contracts will include a start-up transition plan for blocks
that are already producing.

120 days after the evaluation period, contractors have to file a

development plan with the CNH to continue their activities.

A corporate guarantee is required at the moment the license agreement

is executed. In case the guarantor is not the ultimate holding company, it
has to be demonstrated that the guarantors equity is at least a certain
amount (to be determined).

As in the case of the shallow waters bids, the contractor should

incorporate a trust (under control of CNH and the contractor) to fund
abandonment provisions.

Contractors are obliged to have an operating account for accounting

purposes where all transactions related to compliance of the contractual
obligations are registered. This compliance requirement, as well as other
requirements related to procurement, may need to be adapted to a
royalty license regime.

License contracts include local content requirements for each phase of

the project, as well as penalties for not complying with those
requirements (to be determined). The local content will be set at 22%
during the evaluation period. During the development period, local
content will be at 27% during the first year with annual increases of 1%
until it reaches 38% minimum in 2025.

Regulations regarding the transfer of contractors rights under the

license contracts are included.

The methodology to determine the contractual price of hydrocarbons

depends on the volume of commercialization of the contractor. In case
the contractor does not commercialize more than 50% of the volume of
hydrocarbons in a period, the contractual price will be determined
according to certain formulas included therein. Also provided is a true-up
and true-down adjustment, which is applicable in certain instances.

Hydrocarbons should be measured at a measurement point (inside or

outside the contractual area).

Payments to the Mexican Government will be in cash. The contractors

are in charge of the calculation of the Mexican Governments
consideration, and the payments will be made on a monthly basis on day
17 of each subsequent month. The hydrocarbons will be distributed on a
continuous basis to the contractor to the extent it is up to date in its
payments. However, hydrocarbons will be delivered definitively on day
17. If contractors do not make the corresponding payments to the
Mexican Government, interest will be calculated (Interbank Equilibrium
Interest Rate + 20%) and other penalties may apply.

Contractors may not sell, lease or offer assets generated or acquired by

the means of the license contracts.

The license contracts require contractors financial statements to be

audited by external auditors on an annual basis.

A tax stabilization clause is included in the license contracts; however,

such provision does not provide full protection to the contractors.

License contracts include procurement rules that cover more than local
content requirements; however, the compliance requirements do not
depend on the amount of the transactions, as in prior contracts.

Similar safety and environmental requirements to the ones included in

contracts for shallow waters are included. The contractor will not be
responsible for existing environmental damages in the blocks prior to the
execution of the agreements.

Rules for flaring, burning and self-use of hydrocarbons are included.

The license contracts still include an administrative rescission clause,

which is the right of the Mexican Government to abrogate the contract at
any time due to a material breach.

The depth of the contractual area is not as limited as in prior biddings.

Some rules which make sense on a cost recovery contract are kept in a
license contract, such as property of fixed assets and remaining balances
on abandonment trust.