NEW YORK (TheStreet) -- Thanks to landmark oil industry reforms, Mexico is gearing up to explore its undeveloped deepwater oil reserves, which could hold roughly twice as much oil as the nation's existing proven reserves.
Since 1938, Mexico's oil and gas reserves have been off-limits to foreign companies. However, earlier this month Mexico's President Enrique Pena Nieto signed into law changes that end the 75-year-old monopoly of the government-owned energy behemoth Pemex on the country's enormous 13.5 billion barrels of oil reserves while opening up the nation's energy sector to foreign investors.
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Schlumberger's shares, at around $110, have risen by 22% for the year to date, while Chevron stock, at around $129, is up by 3% for the same period.
Not only does the law end the Pemex monopoly but it allows the nation to tap into its deepwater as well as unconventional reserves -- Pemex does not have the skills to carry out the complex drilling and production operations. In an email to TheStreet, Robert MacKenzie, the director of research at Iberia Capital has said that Mexico's deepwater assets represent "perhaps the most prospective untapped resource on the globe."
The earliest beneficiaries of the Mexican reforms could be the oilfield services companies that will carry the ground work for other exploration and production companies -- and that's where Schlumberger comes in.
In an email to TheStreet, Joao Felix, Schlumberger's director of external communications, said the company sees Mexico's oil reforms as a "significant step in the evolution of the country's oil and gas industry." The company is optimistic about "various business opportunities" in Mexico, ranging from deepwater to shale oil and gas projects.
Schlumberger already has significant operations in Mexico. Moreover, the company has a solid track record of working on various deepwater projects around the world, including at the U.S. Gulf of Mexico. Schlumberger might find significant opportunities on the Mexican side of the Gulf of Mexico, which is largely undeveloped and could hold as much as 27 billion barrels of oil reserves.
Chevron, on the other hand, could be one of the biggest beneficiaries in the long run. The oil major is not only the second biggest player in the industry but also one of the biggest leaseholders and producers at the U.S. Gulf of Mexico.