Houston investors win Mexican offshore lease

(AP Photo/Patrick Semansky)
(AP Photo/Patrick Semansky)

HOUSTON — Houston-based investors were among successful bidders Wednesday when Mexico auctioned three offshore leases as part of its historic move to open up its long-nationalized oil industry.

Mexico offered five blocks in the Bay of Campeche, and sold three.

Buyers were Italian oil company Eni, a consortium including an international arm of BP Plc and another partnership including Houston-based Fieldwood Energy. The blocks contain shallow-water fields with confirmed oil and gas deposits in the southern Gulf of Mexico.

The sale was the second in a series of tenders intended to revitalize the country’s flagging energy sector by luring private investment. The first auction, in July, floundered as the Mexican government’s strict bidding terms combined with low oil prices to scare off potential bidders. The first auction awarded only two of 14 blocks and was widely considered a failure.

Wednesday’s auction incorporated a bidding process and contract terms designed to be more favorable to drillers. The results — three of a total five blocks sold — were in line with what analysts had predicted and are above the two-block bar for success Mexican government officials had set prior to the auction.

Companies bid on the blocks by offering the Mexican government percentage shares of pre-tax profits. Regulators also weighed the size of the investment companies will sink into the acreage.

ENI International B.V. won the most hotly contested block in the first round of bidding by offering to send the Mexican government 83.75 percent of pre-tax profits, though Mexican officials said that other taxes and fees would push the state’s share higher. The block included the Amoca, Mizton and Tecoalli fields.

The second field was awarded to PanAmerican LLC and E&P Hidrocarburos y Servicios, an international consortium that includes affiliates of BP. The group offered Mexico a 70 percent share of pre-tax profits.

The third field awarded went to a partnership between Fieldwood Energy LLC and Petrobal. Fieldwood Energy is a portfolio company of energy-focused private equity shop Riverstone Holdings LLC, which has about $30 billion in capital committed across the globe.

Mexico’s regulators said they expected the three fields to begin production in late 2018 and to reach combined peak production of 90,000 barrels per day.

SHOW MORE