(Rigzone, Thursday, September 12, 2019) -- Hailing it as unprecedented for a private company in offshore Mexico, Talos Energy Inc. reported Tuesday evening that it has secured a two-year contract term extension and regulatory approvals for more exploration activities on Block 7 in the Sureste Basin in the Bay of Campeche.

Talos operates the Block 7 consortium, which includes Wintershall DEA unit Sierra Oil and Gas and Premier Oil plc. In a written statement emailed to Rigzone, Talos stated the National Hydrocarbons Commission of Mexico (CNH) on September 4 granted the consortium a two-year extension under the companies’ Block 7 production sharing contract. Five days later, CNH approved the consortium’s modified exploration plan for the block, Talos added.

“The recent CNH approvals have provided Talos and its partners with the flexibility to continue optimizing the potential of Block 7,” commented Talos President and CEO Timothy S. Duncan. “The consortium has consistently over-delivered on its commitments under the production sharing contract, and these approvals will give us the opportunity to continue to successfully develop the country’s resources.”

The consortium has identified multiple potential exploration targets on Block 7 – including the Xlapak and Pok-A-Tok prospects – boasting typical gross unrisked resources ranging from 75 to 150 million barrels of oil equivalent each, Talos stated. The firm added the targets are located near the consortium’s Zama discovery.

Talos also pointed out the consortium has already satisfied minimum work commitments required for extension and that the modified exploration plan and approvals enable it to retain acreage covering all of the potential exploration targets. Previously, the production sharing contract required the consortium to relinquish roughly one-half of the Block 7 acreage upon receiving the two-year extension, Talos explained.

“We are excited about the additional potential of these prospects, all of which could be incremental to our world-class Zama discovery, the first by the private sector in Mexico’s history,” noted Duncan. “Finally, we believe these approvals, in combination with the significant increase in industry activity, are yet another indicator of the tremendous potential of the basin in the future.”

According to Talos, the consortium needs no extension from CNH to proceed to final investment decision (FID) for Zama because the asset has already been discovered and appraised. The company added the consortium, having completed the Zama appraisal program, is continuing its Zama unitization discussions with Pemex and advancing its front-end engineering and design work.

Earlier this year, the Block 7 partners claimed another pioneering event in Mexico’s oil and gas industry: acquiring what it stated was the largest whole core for a single offshore Mexico well.

The consortium anticipate reaching the FID milestone in 2020, Talos concluded.

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