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Talos, Partners Hit Oil Pay with Mexico’s First Offshore Well

The Zama-1 exploration well in Mexico, the first offshore well drilled in the country by the private sector, has hit net oil pay and some associated natural gas, Houston-based Talos Energy LLC and its partners said Wednesday.

Talos, which holds a 35% stake, drilled the well with joint venture partners Sierra Oil and Gas S. de R.L de C.V. (40%) and Premier Oil plc (24%). The well, in 546 feet (166 meters) of water 37 miles (60 kilometers) from the Port of Dos Bocas, reached an initial shallow target vertical depth of 11,100 feet (3,383 meters).

"This is both a historic and significant discovery,” said Talos CEO Tim Duncan. "We believe this discovery represents exactly what the energy reforms intended to deliver: new capital, new participants and a spirit of ingenuity that leads to local jobs and government revenues for Mexico. We are eager to begin appraising this discovery and drilling more unique opportunities. The future is bright for offshore Mexico for years to come."

Talos and its partners in 2015 executed two production sharing contracts (PSC) for two shallow water leaseholds in Mexico’s first-ever auction, which opened the oil and natural gas industry to private and foreign investment. The PSCs were for blocks 2 and 7 in the Sureste Basin, off the coast of Mexico's Veracruz and Tabasco states. The blocks contain about 162,904 gross acres.

The preliminary analysis of Zama-1 indicated a contiguous gross oil bearing interval of more than 1,100 feet (335 meters), with 558-656 feet (170-200 meters) of net oil pay in Upper Miocene sandstones with no water contact. Initial gross original oil in place estimated is 1.4-2.0 billion bbl, exceeding pre-drill estimates, some of which could extend into a neighboring block.

Initial tests of hydrocarbon samples recovered to the surface contained light oil, with API gravities of 28-30 degrees and some associated natural gas.

"This success is the culmination of a tremendous amount of work by our technical and operations teams in concert with our consortium partners Sierra and Premier," Duncan said. "The team deserves a great deal of credit for their conviction in this opportunity and their leadership in making Talos the first private sector operator to receive acreage and drill a successful offshore exploration well in Mexico following the landmark energy reforms of 2014."

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The Zama-1 well spud on May 21 using the Ensco 8503, a moored floating drilling rig. A liner now is being set to protect the discovered reservoirs before drilling deeper objectives to a total vertical depth of 14,000 feet (4,267 meters).

“There are no plans for immediate well testing,” said Talos management. “Further evaluation will be required to calibrate the well with the existing reprocessed seismic to determine future plans and optimal follow up locations to define the extent of the discovered resource.”

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