offshore pemex cantarellThe Mexican government awarded its first oil block to a Mexican company Sierra Oil & Gas, in consortium with Houston-based Talos Energy LLC.and U.K.-based Premier Oil.  This was the second block of 14 blocks up for auction in shallow waters of the southern Gulf of Mexico.  This marks the official historic open of the oil and gas industry to private and foreign investment for the first time in almost eight decades.

The winning group offered to pay the government 55.99% of the operating profit from the block, and agreed to invest 10% above the minimum required. The formal award is expected by Friday at the latest.

The bid was above the 54.55% government share and 5% incremental investment offered by Hunt Overseas Oil Company.  Both offers exceeded the government-set minimum of a 40% share in operating profit and no required incremental investment.

The oil block covers an area of around 194 square kilometers off the coast of Veracruz state at an average depth of 31 meters, and is expected to produce light oil and dry gas.
Hunt Sierra CNH Round One 2