DEA to focus on Zama discovery with Sierra acquisition

Dec. 5, 2018
DEA Deutsche Erdoel AG (DEA), Hamburg, has agreed to acquire Sierra Oil & Gas, Mexico City, giving it access to a portfolio of six exploration and appraisal blocks in Mexico, including the Zama discovery. With the agreement, DEA commits to participate in the drilling of nine offshore exploration wells and to the development of Zama.

DEA Deutsche Erdoel AG (DEA), Hamburg, has agreed to acquire Sierra Oil & Gas, Mexico City, giving it access to a portfolio of six exploration and appraisal blocks in Mexico, including the Zama discovery.

With the agreement, DEA commits to participate in the drilling of nine offshore exploration wells and to the development of Zama.

“Our drilling program for 2019, which has taken years to plan, involves three appraisal wells in Zama and four exploration wells in other blocks, making Sierra one of the most active players in Mexico next year,” said Ivan Sandrea, chief executive officer of Sierra Oil & Gas.

Sierra holds a 40% non-operated working interest in Block 7, containing a substantial part of Zama, a shallow-water discovery offshore Port of Dos Bocas, Mexico, estimated to hold 400-800 million boe in recoverable volumes. Sierra’s exploration blocks cover 9,400 sq km in the core of the Sureste basin including:

• 50% in partnership with Petronas in Block 4.

• 23.3% in partnership with Murphy Oil, Ophir, and Petronas in Block 5.

• 25% in partnership with Repsol, Petronas, and PTT in Block 29.

• 40% in partnership with Repsol in Block 11.

• 27.5% participation with Talos Energy and Hokchi Energy in Block 2.

Talos Energy Inc., as operator, spudded the Zama-2 appraisal well Nov. 29, beginning the Zama discovery appraisal program. Initial production is expected to by 2022-23 (OGJ Online, Dec. 4, 2018).

DEA Chief Executive Officer Maria Moraeus Hanssen said the deal underlines the company’s confidence in the future of Mexico’s energy industry. “Upon completion of the planned merger of DEA and Wintershall, this acquisition will further strengthen Mexico as a core region for the combined company, which will become one of the major players in Mexico (OGJ Online, Dec. 17, 2017).”

DEA currently operates onshore Ogarrio oil field in partnership with Pemex and holds interests in exploration blocks in the Tampico Misantla and Sureste basins. Following the acquisition of Sierra, DEA will hold interests in one onshore production block and 10 exploration blocks—a portfolio that will require capital investment of more than $2 billion over the next 5 years, the companies said.

Upon completion, expected during first-half 2019, Sierra will be integrated into Deutsche Erdoel Mexico, a fully owned subsidiary of DEA.

Contact Mikaila Adams at [email protected].