CURRENT STATE OF E&P PROJECTS IN PEMEX. September 22 nd, 2015

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1 CURRENT STATE OF E&P PROJECTS IN PEMEX September 22 nd, 2015

2 Content I. Pemex in context II. Relevant offshore projects in Pemex III. Challenges and opportunities 2

3 Pemex in context Exploration & Extraction 1 International 2 Crude oil production: 2,300 Mbd Natural gas production: 5,753 MMcfd 75% of crude oil is produced offshore 8 th largest oil producer worldwide Crude oil exports: 1,164 Mbd 3 rd largest oil exporter to USA Transformation 3 New regulatory and institutional framework New procurement and corporate governance New opportunities for private participation (suppliers, partners, competition) 1. January 2015-March PIW Ranking 3. Energy Reform 3

4 Pemex in context PEMEX as a State Productive Enterprise ROUND ZERO ASIGNACIONES (ENTITLEMENTS/ASSIGMENTS) PEMEX WITH OPERATOR COMPANIES Administrative act by which the right to explore and produce hydrocarbons in a determined area is granted Pemex Pemex with service contracts New fiscal regime Possibility to return Asignaciones Migration into E&P contracts Associations with Private parties: 1. Production-sharing 2. Profit-sharing 3. Licenses 4. Services Transboundary Hydrocarbon Reservoirs Possibility of direct assignment to PEMEX State participation ( 20%) Comply with international treaties Subject to work program obligations, and for a particular duration. 4

5 Pemex in context PEMEX as a State Productive Enterprise PEMEX WITH HIGHLY SPECIALIZED PROVIDERS PEMEX is seeking to create value through successful business New flexible legal framework governed by principles of private law Special regime for acquisition and procurement Transparency and anticorruption by Law Strategic suppliers of materials. Alliances with partners with operational quality. Strategic suppliers of materials. Development of fields with high technical Complexity. Less bureaucratic process 5

6 Content I. Pemex in context II. Relevant offshore projects in Pemex III. Challenges and opportunities 6

7 Relevant offshore projects in Pemex Before Round 0 After Round 0 Areas Assigned (489 fields ) - Exploration: Extraction: Not requested: 95 PEMEX obtained 100% of the 2P Reserves and 68% of the Prospective Resources requested 7

8 Relevant offshore projects in Pemex Offshore Onshore Oil and gas Non-associated gas Main projects in development Aceite Terciario del Golfo (unconventional) 2. Yaxché (light crude oil ) 3. Tsimin Xux (super light crude oil) 4. Ayatsil Tekel (super heavy oil) 5. Lankahuasa (non-associated gas) 6. Lakach (deep water) Main projects in production 7. Burgos 8. Veracruz 9. Ogarrio-Magallanes 10. Tamaulipas - Constituciones 11. Antonio J. Bermúdez 12. Jujo-Tecominoacán 13. Delta del Grijalva 14. Cantarell 15. Ku-Maloob-Zaap 16. Chuc 17. Crudo Ligero Marino 18. Ixtal-Manik 8

9 Relevant offshore projects in Pemex Relevant characteristics in exploration projects Projects of oil in offshore areas Located in the offshore portions of the basins in the Southeast, Tampico-Misantla and Yucatán platform These projects contain 14.3 Bboe, equivalent to 26% of the total prospective resources of Mexico Most of the sites are light and heavy oil in rocks from the Mesozoic and Tertiary. Deep water projects Deepwater portion of the Gulf of Mexico with rods of water greater than 500 m. According to studies, 49%, 26.5 Bboe, of prospective resources of the country are in deep water Here we have areas in the initial stage of exploratory knowledge, variety of complex geological structures that require high investment The projects are complex with high discovery, development, production and exploitation costs 9

10 Relevant offshore projects in Pemex Shallow waters, Round 0 Type Assigned Volume (MMboe) Round 0 2P Reserves 11,374 Prospective R. 7,472 10

11 Relevant offshore projects in Pemex Deep water, Perdido Round 0 Type Assigned Volume (MMboe) Round 0 Prospective R. 3,013

12 Relevant offshore projects in Pemex Deep water, Holok and Han Round 0 Type Assigned Volume (MMboe) Round 0 2P Reserves 397 Prospective R. 1,824 12

13 Relevant offshore projects in Pemex Recent discoveries In 2015, Pemex announced 4 new fields Batsil-1, Xikin-1, Cheek-1 y Esah-1 in shallow water The new oil fields are in the coast of Tabasco, and near the complex Cantarell The characterization studies estimate the existence of total reserves of up to 350 million barrels of crude oil equivalent. 13

14 Content I. Pemex in context II. Relevant offshore projects in Pemex III. Challenges and opportunities 14

15 1P 2P 3P Conventional Shale Total Pemex s resources Forward looking, the potential reserves are more complex projects Round 0, Bboe Deep water Shallow water & Onshore CIEP & COPF Chicontepec 6 DW 2 SW (HO) 1 18 Bboe Partnership potential Chicontepec 9.9 Shale Direct investmentoutsource services Prospective resources 15

16 Pemex challenges and opportunities Farm-out opportunities Total 2, MMboe million barrels of oil equivalent. 3 3P Reserves 16

17 Pemex challenges and opportunities PEMEX has a big potential of resources and in complex areas. The new legal framework allows associations, therefore Pemex is finding opportunities to build strategic partnerships. WHERE? Fields with high technical complexity Knowledge and expertise Projects with high execution risk Where mandatory by Law. (Art. 16 LH, Frac. II 1, Art. 17 LH 2 ) Projects with high CAPEX requirements Migration of existing contracts into Exploration and Extraction Contracts. Farm out of selected fields assigned to Pemex in Round Zero Farm in HOW? Production/ Service contracts Bidding rounds A partnership is not only about getting financial resources 1 When there are opportunities to promote the transfer of knowledge and technology for the development of capabilities of PEMEX 2 Transboundary Hydrocarbon Reservoirs 17

18 Pemex challenges and opportunities Key elements for effective partnerships A B C D Opportunities to escalate business Suitable partner Effective terms & conditions Efficient partnership administration Strategic potential areas Link between partner experience and PEMEX perspective Equitable and fair relation to all parties Knowledge transfer to impact all organization 18

19 Conclusions Pemex is in a transformation process, however this process is not immediate, as the company is going through a major restructuring process to be ready to face competition and to develop effective partnerships As many other oil companies, Pemex has to face important challenges, particularly related to efficiency Pemex can now offer opportunities for Oil and Gas Companies and is working to identify the most attractive rounds to bid and the best partner for each of them Given the budgetary constraints, Pemex is also optimizing its current portfolio to maximize the return on its investments and defining the best way to approach each field, whether on its own or through associations 19