MX Oil Plc; Q&A

By James Moore


Q1.) Since the formal launch of MX Oil, the company has made short work of creating shareholder value, what do you put this down to?

A lot of hard work and good fortune! The opportunity in Mexico truly is exceptional and many of the people we’ve spoken to within the oil and gas industry have told us that they’ve been waiting decades for the country to open up. We’re fortunate that we’re in the right place, at the right time and our board has relationships in the country which enable us to take advantage of this. We are doing everything in our power to maximise this opportunity because we may not get a better one in our lifetimes. As a result we’ve put maximum energy and effort into this and that’s already paying off for shareholders, but we believe that what we’ve seen so far is just the beginning and we’re excited at what the next few months will bring.

Q2.) Crystallizing the future of MX Oil is reliant heavily on forging strong relationships in order to secure your PSA in country, could you remind us in brief of the process and how investor / shareholders may expect this to play out?

It became apparent very early on, that in order to succeed in securing assets, we needed strong local partners, technical expertise, financing capability and a socially responsible approach to doing business in Mexico. The team that we have assembled ticks all these boxes. The process and fiscal terms are still in the final stages of being defined but the road ahead gets clearer with every passing week. Pemex are the key player in this process and our JV is currently in discussions with them regarding 3 specific assets which we believe are highly attractive. As is the case with many government led processes, timelines are subject to change but November is a key month in this process where pre-qualification criteria and fiscal terms should be finalised, therefore when the formal bid process commences, farm in deals with Pemex could happen at any point after this date. As far as bid round 1 is concerned, calls for bids are due to commence shortly and shall run through Q1 2015 with data room access, registration and bids expected throughout H1 2015. We believe a single deal would generate very significant value for our shareholders, however it is our focus to secure multiple assets compounding success.

Q3.) Pat and Sergio thanks for joining us, experience tells us how imperative it is for any London listed company to appoint indigenous personnel particularly those of a highly skilled technical nature, on that basis your recent board appointments could potentially help mitigate complications from arising. Could you tell us here at ValueTheMarkets what you bring to the table in regards to relevant experience but also the vision you share for the future with MX Oil?

Pat and I bring a tenure of over 30 years within the energy sector in both the U.S. and Mexico, we are familiar with the culture of conducting business in Mexico and Latin America. More importantly we have been incumbent in our roles when working with companies like Pemex and Ecopetrol, together with social, environmental and other governmental agencies. With that being said, we work around the bureaucracy and build relationships with longevity to accomplish our goals in a timely manner. We also have experience dealing with country service companies on the subjects of pricing and quality products which reflect cost savings and profitability. We have done land negotiations for 2d and 3d seismic together with the drilling of 27 vertical, deviated and horizontal wells in 2 countries. We carried this through from the birth to the barrel where we assisted in optimizing production and reducing lifting costs. The vision we see on the horizon for MX Oil, is that being associated with Geo and utilizing their 18 years of experience in seismic interpretation in the area, will lead us to determine the best objectives to be drilled and produced for high rate of returns and create value and success for our shareholders and future investors.

Q4.) Private equity out of Houston has recently committed $500m for an early raid on Mexico, clearly leading the charge over the borders as state owned Pemex release some of their assets through formal bidding rounds in H2 2014 and H1 2015 really presents a simple case to follow the money. What kind of movements are we seeing on the ground and behind the scenes in Mexico?

There is a lot of jostling for position, which is not surprising given that bid round 1 will include 183 blocks covering more than 29,000 km2. Once the qualification criteria are defined and companies start to meet these, we believe there will be a frenzy of activity. If prospective bidders can’t meet the non-financial requirements (e.g. Technical and social criteria), they will be forced out of the bidding process and their only way back in at that point would be via a commercial deal with one of those who have qualified. With that in mind, pre-qualification is a very significant step in this process and one which we are currently focused on. This process has many stages and we hope to be in a position to release specific news regarding our progress to the market over the next few weeks and months.

Thanks for talking to us at ValueTheMarkets and we wish you all the very best in the near future.


Author: James Moore

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

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