Integrated E&P Contracts May 2013
Oil Production Oil production MBD Incremental production w/o Cantarell MBD 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Cantarell Other fields 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 900 800 700 600 500 400 300 200 100 0 04 05 06 07 08 09 10 11 12 Cantarell, one of the world s largest offshore oil fields, provided Mexico with a significant production base. In 2003, it reached its peak production of 2.2 mmbd. As Cantarell entered its depletion stage, Pemex developed other important projects, which today contribute to 900 mbd of new oil. 2
Mexico s Hydrocarbon Resources Prospective resources 3P reserves* Cumulative production 28.4 Sureste Southeast 44 24 20 Tampico Misantla 6 18 3 Burgos 2 1 3 Veracruz 1 2 Deep water 1 27 Shale 60 Total 54 44 115 * Billion barrels of oil equivalent as of January 1, 2012 The IEA estimates that Mexico s shale resources could reach 681 bcf, the fourth largest reserves worldwide. Pemex has identified five provinces with shale potential. 3
Cumulative NPV Matured Fields Extra heavy oil Chicontepec Deepwater Gas Investment Portfolio & Integrated E&P Contracts 800 700 600 500 400 300 200 100 0 Pemex Project Portfolio (Million dollars) Execution Limit 0 25 50 75 100 125 150 175 200 225 250 Cumulative PVI Integrated EP contracts 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 Production Forecast MBD Additional Capacity Base 0 2013 2015 2017 2019 2021 2023 2025 2011 2012 2013 2014 1 st Round Brown fields Onshore Southern Region 2 nd Round Brown fields Onshore & Offshore (sh wt) Northern Region 3 rd Round Chicontepec unconventional 4 th Round Extra Heavy Oil Offshore (shallow water) 5 th Round Deep water 6 th Round Shale oil & gas 4
Integrated E&P Contracts: First and Second Rounds 2011: Three contracts for brownfields in Tabasco. 2012: Six contracts for brownfields in Veracruz. The first two rounds of Integrated EP Contracts account for $4 billion dollars of investment in the first six years. Production is expected to reach at least 150 mbd towards 2020. In total, 30 companies participated in both bid rounds. 5
Third Round: Chicontepec Chicontepec is located in the States of Puebla and Veracruz, in the Gulf coastal plain. Chicontepec holds 33% of Mexico s total reserves and mostly unconventional resources. The six blocks account for than 3,195 mmboe in 3P reserves and prospective resources of more than 1,000 mmboe in a total area of 953 km 2. The quality of the oil ranges from 27 to 44 API. With the Integrated E&P Contracts, Chicontepec will reach production of 500 mbd. 3P reserves* 1,100 1,048 993 900 700 500 300 100 431 341 248 134-100 * Pemex base case forecast for Tertiary 6
Discovered: 1926 First production: 1952 Basin: Formation: Geological model: Trap type: Location Chicontepec Northern Veracruz and Western Puebla in the Gulf coastal plain. Background Tampico Misantla Chicontepec Submarine fans Stratigraphic Surface area: 4,243 km 2 Drilled wells: 3,268 Operating wells: 2,050 Shut-in wells: 1,218 Reserves (MMbpce) Forecasted Np Recovery factor OOIP 81.5 mmmb 1P 743 *current 2P 6,498 3P 17,037 (2012-2059) 4,025 mmb 8 % 7
High Materiality Block Area Cumulative production 3P reserves (Tertiary) Prospective resources (Mesozoic) Type of hydrocarbon (sq.km) (mmboe) (mmboe) (mmboe) API Amatitlan 230 0.1 993 251 44 Soledad 125 40.4 134 128 32 37 Humapa 128 0.6 341 157 27 Miquetla 112 11.1 248 86 35 Miahuapan 128 0.1 431 101 33 Pitepec 230 0.1 1,048 251 32-38 Total 953 52.4 3,195 974 8
Successful Use of Shale Technology 27 horizontal wells represent 10% of oil production* Two twin wells with multi-fracture stages * Over 2,000 producing wells in Chicontepec 9
Scope of the Integrated EP Contracts Hydrocarbon ownership. Mexico (Pemex). Activity. The contractor invests, executes, and delivers production. Payment. Upon delivery of production, and cash only, not in specie. Bidding variable. A NPV/b (fee) and an additional work commitment. Work commitment. Investment is predetermined in relation to undeveloped 2P reserves. Infrastructure. The contractor will have the right to use all infrastructure. Governance. Participation of Pemex and contractor in a steering committee. Sustainable development and national content. Included in contract provisions. 10
Business Model Return= q t r t s t q t = production, barrels s t = estimate of available income in $/b (after taxes) r t = adjustment factor in function of a NPV/b; Maximum value 1; or percentage neccesary to get to or maintain the maximum NPV/b 100 80 60 40 20 Pemex tax burden, dollars per barrel 56 47 38 28 19 11 14 66 75 Cumulative cash flows Million dollars 0 50 60 70 80 90 100 110 120 130 Available income (variables) Oil price, dollars/b 39 46 51 52 52 53 54 54 55 sq sqr year 11
Future Rounds: Shale Chihuahua Paleozoico Gas lutitas Sabinas Cretáceo Gas lutitas Burro Picachos Burgos Tampico Misantla Eagle Ford Gas lutitas Texas Jurásico Gas lutitas Shale Gas Provinces Eagle Ford/Agua New Haynesville Bone Spring /Woodford The IEA estimates that Mexico has the 4 th largest reserves in shale gas, with 681 TCF. Pemex estimates around of 297 TCF shale resources, equivalent to 62 BBOE. Currently, Mexico certified 3P gas reserves are 62 TCF, more than 50% of those are wet resources. Pemex Estimated Prospective Resources (62 BBOE) Veracruz More than 200 shale exploration prospects identified in five provinces. Wells drilled by Pemex confirm the extension of the Eagle Ford play into Mexico, with significant wet gas resources. Gas 28.3 47% Oil, 32, 53% 12
Bidding Rounds Calendar 2013 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Chicontepec Bidding Process Roadshows Workshops Award Offshore heavy oil Approvals 2014 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Deep water Approvals Project presentation Shale Approvals 13
Final Remarks Chicontepec s blocks have high materiality and certified reserves. The contractual model is in line with the activities required in Chicontepec. Simplified bidding process in place. Remote access to all information: technical data, contract model, bidding guidelines, news, events, through www.pemex.com/contratos Bidding and award on the same day. Unconventional technology and know-how has recently improved productivity in Chicontepec. Upcoming bidding rounds for: offshore heavy oil, deep water and shale. The scheme has a risk-reward balance that considers the materiality of the blocks and technological challenge of reservoirs. 14
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