Russian oil company Lukoil said Friday it had completed the acquisition of the 50% operator interest in the Area 4 project in Mexico through the acquisition of the operator's holding company.
The proposed acquisition was first announced in July 2021, when Lukoil said the transaction value was $435 million, plus expenditures incurred in 2021 as of the transaction completion date.
The Mexican authorities approved the deal on February 3, 2022. As previously announced, the transaction value amounted to $435 million plus expenditures incurred since January 1, 2021, as of the transaction completion date (about $250 million).
The project includes two blocks, 58 square kilometers in total, which are located 42 kilometers offshore in the Gulf of Mexico. The sea depth at the blocks is 30-45 meters. Two oil fields - Ichalkil and Pokoch - are located within the blocks. The recoverable hydrocarbon reserves of the fields amount to 564 million barrels of oil equivalent, more than 80% of which is crude oil.
Production at the fields started in the fourth quarter of 2021, and the current average daily oil production exceeds 25 thousand barrels. The project is developed in three phases, with a peak daily production rate estimated to be more than 115 thousand barrels of oil equivalent. The partner in the project is PetroBal, the oil and gas subsidiary of Mexican conglomerate GrupoBAL, with the remaining 50% interest.
The project is implemented under a production sharing agreement, which was signed in 2016 for a period of 25 years with the right for an extension for up to 10 years.