Mexico's oil winners backed by New York financiers

Mexico earlier this week auctioned two of 14 blocks in a crucial oil and gas tender. The two winners are backed by New York financiers.  

Mexico's oil winners backed by New York financiers

World Bulletin / News Desk

Mexico auctioned only two of 14 blocks in a pivotal oil and gas tender on Wednesday, falling far short of the government's modest expectations as it begins to open up the long-nationalized industry to private investment.

Both the shallow water exploration and production contracts were awarded to the same consortium made up of Mexico's Sierra Oil & Gas, U.S. firm Talos Energy and Britain's Premier Oil.

The companies, either in consortia or alone, pre-qualified for the first set of 14 shallow water production-sharing contracts, including U.S.-based majors ExxonMobil and Chevron.

Mexico has historically relied on crude oil revenues to fund about a third of the federal government budget. But slumping oil prices, down by about half since last summer, cut the government's take to about 15 percent in the first quarter.

The auction was the first test of Pena Nieto's sweeping oil sector overhaul finalized by Congress last year.

The reform aims to lure billions of dollars in investment into a domestic industry long dominated by Pemex, which saw its 75-year monopoly on exploration and production end in 2013.

The government estimates investment from each of the two awarded contracts will total $1.3 billion per block, with 80 percent coming in the first five years of the 25 year contracts. 

Sierra Oil & Gas Backed by New York Financiers

Sierra Oil & Gas despite never having drilled a well has money going for it - from New York financiers, a co owner of the Houston Astros and a Mexican firm being bought by BlackRock Inc.

With Sierra, the only winning bidder in the first oilfield auction since the country scrapped a state monopoly, Mexico gets exactly what it needed: an infusion of foreign capital to help reverse a 10-year decline in crude output.

In a Houston Chronicle report said, “They have nice funding, and their team has great experience,” said Eduardo Canales, an energy lawyer in Houston at Akin Gump Strauss Hauer & Feld. “They’ll be the ones to build relationships with the government and generally manage the project.”

Sierra, while incorporated domestically, has $450 million from two U.S. private-equity firms, Riverstone Holdings and EnCap Investments. It also has $75 million from a Mexican company that’s being acquired by BlackRock, the New York-based fund manager. Its Venezuelan chief executive officer is a former oil analyst at Merrill Lynch & Co.

Last Mod: 18 Temmuz 2015, 12:36
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