Q: How should the government balance the relative weight of the royalty and work plan in allocating the contract?Ī: The government should favor the investment commitment. For that company, it may have been a good business model but we are certain this was not the best result for Mexico. In a model where production rates remain the same as current levels, 99 percent can feasibly be given to the government because the bidder will still earn 1 percent with zero investment. These high bids do not necessarily mean they will lose money. Another issue was that most of the winners placed high bids. In our model, we allocated six times the required investment to develop the fields, which was not considered in the CNH criteria. One of our problems was that CNH placed little importance on the additional investment criteria, which totaled less than 10 percent, because it had a cap. We also put together a good business case with the objective of developing the fields to their maximum potential. Grupo México is a large operation if we win a block, we need one of a certain size. We then submitted three bids for the onshore Round 1.3, selecting three of the four largest blocks. But this experience helped us to understand how the process works. We tried to qualify in Round 1.2 but we could not submit a bid because CNH ruled that our partner did not meet the criteria to become the field’s operator, so we had to withdraw our prequalification. We are participating in the rounds but we have not yet won a block, which is not necessarily a bad result. 2016 was a difficult year for the industry, mainly for shallow water drillers like us. Q: How have the bidding rounds shaped Perforadora México’s E&P ambitions?Ī: Our objective is still to become an E&P player and we are carefully moving toward that goal.

Pemsa rigs