NEW OIL BABY: $525 MLN
In the wake of an energy overhaul that ends Mexico's state oil monopoly, a new exploration and production company was born with the name Sierra Oil & Gas, which Chief Executive Ivan Sandrea says already has a wealth of global expertise.
"We're pretty big for a baby," he said on Wednesday.
Sierra said last month it had secured equity commitments of $525 million from U.S.-based private-equity firms Riverstone Holdings LLC and EnCap Investments, along with Mexican private-equity fund Infraestructura Institucional.
Mr. Sandrea said his team has a combined 350 years of experience, and most of its members have worked in the industry in Mexico. They are currently preparing for Mexico's first bidding round for oil and gas blocks, set for next year.
Sierra will initially focus on conventional oil fields in shallow waters and mature fields onshore, where the deployment of technologies new to Mexico, such as horizontal drilling, will boost production, Mr. Sandrea said.
Mexico has gas potential in shale-rock formations, but that is probably a few years off, he said. Sierra is not interested in oil projects in the deep waters of the Gulf of Mexico because of the high level of risk, and will steer clear of extra-heavy crude for now because of the billions of dollars of investment needed there.
Mr. Sandrea, who has worked before at BP PLC and Norway's Statoil, said Mexico has first-class oil and gas resources, and that the implementation of the energy reforms is moving quickly.
The energy overhaul was signed into law in August by President Enrique Peña Nieto, ending the 76-year monopoly of state-owned oil company Petróleos Mexicanos, or Pemex, and decades of dominance of the electricity sector by government utility Comisión Federal de Electricidad.
Mexican officials expect the overhaul will draw new investment to the oil and gas sector by private and foreign firms seeking to tap the nation's vast energy resources.
Other companies, including majors such as BP, Chevron and Royal Dutch Shell, have also expressed interest in the Mexican oil-sector opening, with which the government hopes to raise crude-oil output by around one million barrels a day in the next decade.
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BP and its partners in Azerbaijan's giant ACG oil production complex agreed Thursday to extend the production sharing contract by 25 years to 2049 and to increase the stake of state-owned SOCAR, reducing the size of their own shares.
The U.S. current-account deficit increased to $123.1 billion (preliminary) in the second quarter of 2017 from $113.5 billion (revised) in the first quarter of 2017, according to statistics released by the Bureau of Economic Analysis (BEA). The deficit increased to 2.6 percent of current-dollar gross domestic product (GDP) from 2.4 percent in the first quarter.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading up 41 cents, or 0.8 percent, at $50.30 by 0852 GMT, near the three-month high of $50.50 it reached last Thursday. Brent crude futures LCOc1, the benchmark for oil prices outside the United States, were at $55.91 a barrel, up 29 cents, and also not far from the near five-month high of $55.99 touched on Thursday.
“The principal risk regarding Russian and Chinese activities in Venezuela in the near term is that they will exploit the unfolding crisis, including the effect of US sanctions, to deepen their control over Venezuela’s resources, and their [financial] leverage over the country as an anti-US political and military partner,” observed R. Evan Ellis, a senior associate in the Center for Strategic and International Studies’ Americas Program.