Talos Energy Aims To Complete The Appraisal Plan For The Zama Discovery By Mid-2019

Talos Energy recently announced at the end of September that the Mexican oil and gas regulator, CNH (the National Hydrocarbons Commission) approved the appraisal plan regarding the Zama discovery. Getting the approval of the appraisal plan from the CNH was a key approval that was required in order to start the appraisal of the Zama discovery. The National Hydrocarbons Commission is reviewing the application for permits to start drilling, which are necessary in order to begin the operations. Talos Energy estimated that it will spud the Zama-2, the first appraisal well, in the 4th quarter of this year, and that the appraisal program will be finished by the middle of 2019.

The appraisal plan contains 3 new reservoir penetrations. The first well, the Zama-2, will be deepened by about 500m in order to test an exploration prospect entitled Marte, which contains an unrisked recoverable resource ranging between 60 and 150 MMBoe. In order to deepen the Zama-2 wellbore to commence the Marte test, the estimated cost is approximately $10 million, with $3.5 being the approximate expected share of Talos Energy.

The National Hydrocarbons Commission approved a budged of $325 million for the plan, which also includes $75 million of contingent operations. The budget includes the cost of hole coring across the Zama reservoir, performing a drill stem test in order to gather information about the reservoir productivity and continuity, drilling the wells, as well as collecting a number of samples of rocks and fluids. Talos Energy is expecting its net share of costs to be between $75 and $80 million for the whole appraisal campaign, prior to any contingency costs.

The President and CEO, Timothy S. Duncan stated that the company is pleased to reach another milestone with its partners in Mexico, after the previous announcement regarding the Pre-Unitization Agreement with Pemex. The approval received by the CNH, according to Duncan, will allow Talos Energy to continue to maintain a fast-paced schedule of investments when it comes to the Zama project in Mexico, and to begin drilling operations by the end of 2018. This will allow Talos Energy to stay on track towards their ultimate goal of achieve initial production in 2022.

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