Houston's oil firm announces significant discovery in Mexico's waters

Pennzenergy Company Oil Exploration Drilling Rig In The Gulf Of Mexico During Sunset (Ph

The joint venture's discovery marks the first offshore exploration well to be drilled by the private sector

Shares in Premier Oil PLC (LON:PMO) rocketed after the mid-cap producer announced a new "world class" oil discovery offshore Mexico, with the Zama-1 exploration well unearthing an estimated 1bn barrel find.

The oil company noted that Zama 1 is the first discovery derived from the Energy Reform and one of the most significant in the Gulf of Mexico in recent years. The well, located in 166 meters of water and approximately 60 km from the Port of Dos Bocas, has reached an initial shallow target vertical depth of approximately 3,383 meters. We are eager to begin appraising this discovery and drilling more unique opportunities.

The find also hands the government of President Enrique Pena Nieto, which ended state-oil firm Pemex's decades-long monopoly, a key victory as Mexico prepares to embark on fraught trade, security and immigration talks with U.S. President Donald Trump's administration. Talos says it hit a 1100ft (335m) oil bearing interval, with 558-656ft (170-200m) of net oil pay in Upper Miocene sandstones with no water contact. Oil samples indicate light oil, with API gravities between 28° and 30° and some associated gas. Block 2 and Block 7 are in the Sureste Basin, a prolific proven hydrocarbon province, in the shallow waters off the coast of Mexico's Veracruz and Tabasco states, respectively.

Separately, Italian oil firm Eni said on Wednesday it was raising its oil estimate at its Amoca field off Mexico that it won as a production-sharing contract in a 2015 tender, to 1 billion barrels of oil equivalent. After three years of losses City analysts expect the company to return to profit this year, with a pre-tax profit of £42m and earnings per share of 0.7p projected - not much but it's a start.

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Premier and its partners are now setting a liner to protect the discovered reservoirs, before drilling deeper to test other exploration objectives.

"There are no plans for immediate well testing", said Talos management.

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