CNH approves Zama appraisal plan

The Mexican oil and gas regulator, the National Hydrocarbons Commission has approved the appraisal plan for the Zama discovery, according to Talos Energy Inc.

Offshore staff

HOUSTON– The Mexican oil and gas regulator, the National Hydrocarbons Commission (CNH) has approved the appraisal plan for the Zama discovery, according to Talos Energy Inc.

CNH is reviewing the application for drilling permits, which are required to begin drilling. Talos estimates that it will spud the first appraisal well, the Zama-2, in 4Q 2018 and that the appraisal program will be completed by mid-2019.

In addition, the block 7 consortium – which includes Talos as the operator with a 35% participating interest, as well as Sierra Oil & Gas and Premier Oil – has entered into a firm contract with a subsidiary of Ensco PLC to use theEnsco 8503 semisubmersible rig for the appraisal plan. The contract covers the drilling of two wells, a side track and a well test. The rig is expected to be on location ready to start operations in November.

The appraisal plan includes three new reservoir penetrations. The first well in the program, the Zama-2, will be deepened by about 500 m (1,640 ft) to test an exploration prospect called Marte, which has an unrisked recoverable resource range between 60 MMBoe and 150 MMBoe. The estimated cost to deepen the Zama-2 wellbore for the Marte test is approximately $10 million gross, with Talos’ share expected to be about $3.5 million.

The CNH approved a gross budget of $325 million for the appraisal plan, which includes about $75 million of contingent operations. The budget includes the cost of drilling the wells, performing a drillstem test to gather information about the reservoir continuity and productivity, hole coring across the Zama reservoir, and collecting many rock and fluid samples.

Talos expects its net share of the costs to be approximately $75 to $80 million for the entire appraisal campaign, before any contingency costs.

President and CEO Timothy S. Duncan said: “…This should allow us to stay on track for our ultimate goal of achieving initial production from the Zama discovery in 2022, thereby providing local jobs, increasing government revenues to Mexico, and materially adding to Mexican domestic production.”

09/28/2018

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