Zama Resource Estimate Upgraded

Talos Energy and its partners have increased the resource estimate of the Zama field in the offshore portion of Mexico's Sureste Basin, following evaluation of the data acquired from the Talos-operated Block 7 Zama appraisal campaign.

"Based on the preliminary results of our appraisal program, we have confirmed the combination of outstanding subsurface properties, significant recoverable volumes and attractive economic potential that have already made Zama a globally-recognized asset," said Talos President and CEO, Timothy S. Duncan.

"The match of the preliminary well data to our geophysical model suggests that we have a gross recoverable resource in the upper half of our pre-appraisal guidance range of 400-800 MMBoe," he added.

The campaign, led by operator Talos with partners Sierra Oil & Gas and Premier Oil, comprised two appraisal wells (Zama-2 and Zama-3) and a vertical side-track (Zama-ST1) which was flow tested.

The Zama-2 and Zama-2 ST1 appraisal penetrations, both drilled in the first half of 2019, generated results that met or exceeded the consortium's expectations.

The third and final appraisal penetration, Zama-3, was drilled approximately 2.4 kilometers south of the original Zama-1 location, allowing the well to penetrate the oil-water contact in the southern portion of the field, consistent with the geophysical flat spot seen throughout the downdip edge of the reservoir. The well logged more than 300 meters of gross true vertical depth (TVD) sand and 228 meters of gross TVD pay bearing section, consistent with expectations for the southern extension of the Zama reservoir. The net to gross ratio across the entire pay section is consistent with prior penetrations, with Zone 3 significantly exceeding expectations with a net to gross ratio of approximately 85-90%. Zones 3 and 4 comprise the majority of the Zama resource potential, Talos said.

The data has demonstrated reservoir properties at the upper end of expectation, including a higher net-to-gross ratio, better porosity and increased hydrocarbon saturation. This has resulted in a higher estimated oil-in-place and ultimate recovery from the Zama field. Premier said it has refined its gross resource estimate of the Zama structure to 670-810-970 mmboe (P90-P50-P10).

Talos said it captured 219 meters of whole core with 99% recovery, breaking its own record for the longest whole core from a single well in the history of offshore Mexico. The additional core samples will provide critical information to assist the consortium in evaluating expected recovery factors, completion techniques and other details to aid in optimizing recovery in the Zama field.

The consortium is continuing to evaluate the full universe of data and samples collected from its four penetrations of the Zama reservoir, including approximately 440 meters of whole core, fluid samples from 30 separate points in the reservoir, 180 pressure points, 25 logging runs and two extended flow tests, with the goal of integrating this data with internal models and sharing it with external auditors to produce an updated contingent recoverable resource report by year end.

Operations for the Zama-3 well were concluded approximately nine days ahead of schedule and within budget. The entire three-penetration appraisal program was finalized 39 days ahead of schedule and under budget.

Premier Oil CEO, Tony Durrant, said, “We are delighted with the results of the latest Zama appraisal well which, together with the positive results from the earlier appraisal wells, has caused us to significantly upgrade our resource estimates of the Zama structure. Our focus now turns to selecting the optimal development for the field, ahead of taking a final investment decision (FID) next year.”

Talos said it is working with its project partners to advance both front-end engineering and design (FEED) work streams as well as unitization discussions with Petróleos Mexicanos (Pemex), with the aim of making a FID on the project in 2020, pending required government approvals.

Duncan said, "With the collaboration of our consortium partners, Pemex and the Mexican government authorities, we look forward to reaching FID as soon as possible and then turning our attention toward first oil. I'm extremely proud of our operating performance throughout the exploration and appraisal program, and we are excited to advance the project to full realization in the near future."