Tuesday, February 12, 2019

Most Interesting Story All Week? -- February 12, 2019 -- Mexican President Flip-Flops -- Will Allow Fracking

There is increasing talk that Pemex could fail.

When Mexico's new president was running for office, he said he would ban fracking in his country -- even though the prolific Eagle Ford in Texas extended south into northern Mexico.

Yesterday Argus Media reported that President AMLO has had a change of heart. He will allow -- or should we say, his regulators will allow -- Pemex to frack .... drum roll .... four wells.

Why the change of heart? AMLO says the technology has gotten better, has gotten safer. LOL.

Some data points:
  • Pemex will invest up to $203 million under the two-well drilling scenario.
Let's stop there.

Let's do the "cut and paste" from the article:
Pemex will invest up to $203 million in the exploration plans under the two-well drilling scenario, with the potential to incorporate up to 201 million boe into national reserves.
So, the data points:
  • two wells
    • $203 million (am I missing something here?)
  • two wells
    • 201 million boe 
Back-of-the-envelope: I don't even want to think about it. LOL.

For newbies: in the Bakken,
  • about $8 million / well
  • EUR for a single well: 1.3 million bbls crude oil
Other data point from the article:
Mexico's 3P oil reserves dropped by 40 percent to 25.5 billion boe from 42.2 billion boe between 1 January 2014 and 1 January 2018, according to the annual reserves report, according to data published just last week.


  1. He hates fracking, then he doesn't hate fracking, could that be because he can now demand a personal under the table cut to an offshore account. He is a quick study of the Clintons, Obamas and our congress.

    1. Agree completely.

      But in addition and much more importantly, some argue convincingly that Pemex is doomed. Saudi Arabia is in deep trouble with oil at $50, but my hunch is that Mexico may be in much deeper trouble.