Schlumberger (NYSE:SLB)
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Petroleos Mexicanos, or Pemex, has awarded Schlumberger (SLB) a $687 million drilling contract for the Chicontepec project in northern Mexico, Pemex said Wednesday.

Mexico is one of the few oil countries that plans to boost spending on oil exploration and production this year despite the decline the price of oil. That boost in E&P is providing opportunities for oil services firms during a year when other major oil companies are cutting spending.

Pemex's oil production fell 9% last year, and the company is increasing investments in an effort to reverse the trend.

Schlumberger's three-year contract will start in April. The Houston-based oil services giant has been drilling at Chicontepec since mid-2007, giving the company experience in a geologically difficult oil zone that has small pockets of oil with low reservoir pressure.

Chicontepec, an area slightly larger than Delaware that spans three Mexican states, is a main pillar in Pemex's strategy to get oil production back above 3 million barrels a day by 2015.

Pemex expects to be producing only 72,000 barrels a day at the basin this year despite two years of aggressive drilling. But by 2015, Pemex says, it will be producing 511,000 barrels a day, or a sixth of total output.

Some observers expect that target will be hard to meet. A well at Chicontepec only pumps a few hundred barrels a day, compared with a few thousand barrels at Mexico's prolific oil fields in the Gulf of Mexico.

-By Peter Millard. Dow Jones Newswires; 5255-5001-5724; peter.millard@dowjones.com