Premier Oil shares surge on 'world class' oil discovery offshore Mexico

Premier Oil Shares Surge On Major Oil Discovery in Gulf Of Mexico

Premier Oil Shares Surge On Major Oil Discovery in Gulf Of Mexico

A consortium of three worldwide private energy companies announced Wednesday they discovered more than 1 billion barrels of crude oil in the Gulf of Mexico.

The news of the discovery, in the first shallow-water offshore exploration well drilled by the private sector in Mexico since the country's 2014 energy sector opening, sent Premier's shares rocketing as much as 38 percent on the London Stock Exchange and helped the peso strengthen 0.70 percent to 17.785 per dollar. Sierra holds a 40% working interest in the well, whilst fellow Riverstone portfolio firm Talos Energy LLC holds a 35% stake, and Premier Oil the remainder. The well, in 546 feet (166 meters) of water 37 miles (60 kilometers) from the Port of Dos Bocas, reached an initial shallow target vertical depth of 11,100 feet (3,383 meters).

For 2018, based on current oil price projections, the company's pre-tax profit is expected to hit £209m and earnings per share are set to come in at 22.4p.

"This is both a historic and significant discovery, and we could not be more proud of the highly skilled personnel from Mexico and the United States who have been working together in a safe and efficient manner to make it a reality", said Talos President and CEO Tim Duncan.

Riverstone said that preliminary analysis indicates the presence of a contiguous oil bearing interval of over 1,100 feet - or 335 meters - gross, with net pay of over 650 feet and no identified oil-water contact.

Conservative estimates say there are at least 1 billion barrels of oil in the field although the figure could be as high as 2 billion and there is also a possibility that it might extend into a neighboring block. Oil samples indicate light oil, with API gravities between 28° and 30° and some associated gas. The PSCs were for blocks 2 and 7 in the Sureste Basin, off the coast of Mexico's Veracruz and Tabasco states.

For this operation the drilling platform Ensco 8503 is being used, which has the most advanced exploration technologies.

Talos is now setting a liner to protect the discovered reservoirs prior to drilling deeper exploratory objectives to a total vertical depth of about 14,000ft (4267m).

"There are no plans for immediate well testing", said Talos management.

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