Australia's BHP Billiton Wins Bidding for Stake in Mexico's Trion Oil Field -- Update

By Robbie Whelan 

MEXICO CITY -- Australia's BHP Billiton won the bidding to join with Mexican state oil company Petróleos Mexicanos in the Trion oil field in the Gulf of Mexico, in the first award of several auctions of deep-water oil blocks to be announced Monday.

Billiton outbid BP PLC to become Pemex's first private partner in exploration and production under Mexico's 2013 opening of the oil industry.

Bids for 10 other deep-water blocks up for auction are due to be opened later Monday.

For Trion, both Billiton and BP offered additional royalties of 4%, on top of the minimum royalty payment of 7.5%, while Billiton offered an additional cash commitment of $624 million, higher than the $606 million offered by BP.

Billiton will have 60% of the project and Pemex 40%, and as winning bidder is obliged to make a minimum investment of $570 million.

The auction is the fourth under the 2013 opening of the Mexican oil industry, but the first for deep-water reserves and the first to attract the interest of major oil companies.

The Trion field, part of a larger area of oil deposits known as the Perdido trend, was discovered in 2012 and is thought to contain about 485 million barrels of commercial reserves. It is expected to cost about $11 billion to develop the field, with capital expenditures of $7.5 billion, according to Mexico's oil regulator, the National Hydrocarbons Commission.

"We see attractive potential in Trion and the Perdido trend, and we are pleased to have the opportunity to further appraise and potentially develop this prospective frontier area of the deep-water Gulf of Mexico, " said Steve Pastor, president of BHP Billiton petroleum operations.

Pemex's chief executive, José Antonio González Anaya, said the state company hopes that by 2025, the field will be producing around 120,000 barrels a day.

BHP Billiton is the world's biggest mining company by market value. Mr. González Anaya called Monday a "great day" for Mexico and said he's confident it will bring significant advantages, such as technology, to Pemex.

"I'm happy that the bids were so close, and that there wasn't a 'winner's curse.' When bids are far apart, sometimes winners may think they offered too much."

Write to Robbie Whelan at [e-mail]

(END) Dow Jones Newswires

December 05, 2016 13:29 ET (18:29 GMT)

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