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Petrofac And Schlumberger Selected Bidder By Pemex

Stocks in this article: SLB

LONDON, June 19, 2012 /PRNewswire/ --

Following the announcement by Petróleos Mexicanos ('PEMEX'), Petrofac (LSE: PFC) confirms that, together with its partner Schlumberger (NYSE: SLB), it has been declared the selected bidder on the Pánuco integrated production service contract in Mexico. The contract, which runs for 30 years, is expected to be signed in late August 2012 and field operations are expected to start around the beginning of 2013.

The Pánuco Contract Area contains four mature onshore fields operated by PEMEX, and discovered in the early 1900s with original oil in place of approximately 6.8 billion barrels.  The fields have about 1,600 wells of which around 200 are currently producing a total of approximately 1,500 barrels of oil per day.  Petrofac and Schlumberger will develop the fields jointly with Petrofac as the lead Operator.

Petrofac will be reimbursed for 75% of its development expenditure through a cost recovery mechanism and receive a tariff for each barrel of incremental production.  Under the terms of the contract, Petrofac has committed an initial investment of approximately US$17.5 million for the first two years on the Pánuco fields.  For the remaining 28 year period, capex has been committed on a per barrel basis, contingent on the quantum of remaining undeveloped 2P reserves.  

This award demonstrates Petrofac's continued success and commitment to Mexico.  In August 2011, Petrofac was awarded two integrated services contracts by PEMEX to develop the Magallanes and Santuario blocks in central Mexico.  Petrofac successfully completed the transition and assumed operational responsibility for the blocks on 1 February 2012.

Andy Inglis, Chief Executive of Integrated Energy Services, commented:

"I am delighted to develop further our relationship with PEMEX and bring our field management capability to support the development of Mexico's oil & gas resources.  This contract is the first example of our agreement with Schlumberger to work together to deliver integrated and high-value production projects.  I believe that our complementary skill sets and proven execution capability will maximise the potential of these fields for PEMEX."

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