PEMEX / FARM OUTS

PEMEX / FARM OUTS

As per information released on August 27, 2018, the State-Owned Productive Company, Petroleos Mexicanos (“PEMEX”) may, in the coming years, choose directly the partners with whom it would seek to exploit oil fields in partnership, also known as “Farm Outs”.

In this regard, Fluvio Ruíz, who could be the next general manager of Pemex Exploration and Production in the administration of the elected President, Andrés Manuel López Obrador, has supported the fact that PEMEX may choose directly its partners and not by means of a tender procedure called by the National Hydrocarbons Commission (“CNH”) as currently occurs as per the legal mandate provided in article 13 of the Hydrocarbons Law.

If the above results viable, first, the National Congress would have to modify the referred Hydrocarbons Law as to eliminate the obligation of carrying out a tender as per the procedure referred therein so PEMEX may partner with national and/or international companies in the “Farm Outs”.

As of this date, PEMEX has three association agreements to explore the fields known as: (i) Trion, in ultra-deep waters with the company known as BHP Billiton Petróleo Operaciones de México, S. de R.L. de C.V.; (ii) Cardenas-Mora, for onshore fields, with the company known as Cheiron Holdings Limited; (iii) Ogarrio, in onshore fields, with the company DEA Deutsche Erdoel AG. Likewise, beginning this year, CNH issued the call CNH-A6-7-Asociaciones/2018, with purposes of tendering 7 fields to be explored / exploited in association with PEMEX where, as of this date, there are 8 companies which have begun the prequalification process and in which the awarding of contracts is expected to take place for February 19, 2019.

It’s important to point out that Fluvio Ruiz Alarcón was, during the administration of former President Felipe Calderón Hinojosa and under the administration of the current President Enrique Peña Nieto, independent member of the Board of Directors of PEMEX.

SINCERELY

Mexico City, September 17^th, 2018