Talos Energy Enters Into Transaction With Hokchi Energy

In another bold move, Talos Energy has entered into a transaction with an unlikely partner. The company recently announced an arrangement with Hokchi Energy, a subsidiary of the Argentinian Pan American Energy LLC.

The deal involves what is called a “cross assign” of two blocks of territory in Gulf of Mexico Waters. The areas are Block 2 and Block 31. Talos Energy will cross assign its interest in Block 2 for Hokchi’s Block 31.

Talos will give 25% interest in Block 2 to Hokchi for a 25% interest for its Block 31. This latter area is located immediately south of Block 2. After the transaction is completed, Hokchi will be the operator of both blocks while Talos retains its 25% interest.

Talos Energy CEO Tim Duncan said the reason for the exchange is to facilitate a faster, more robust investment and shorter cycle time for production. It’s seen as a win-win situation between Talos and Hokchi. It frees up Talos to focus its own production activity on the new ZAMA-1 well it sunk in Mexican territorial waters in 2017. The ZAMA-1 well may hold a maximum of two billion barrels of oil, according to preliminary estimates.

Talos Energy’s recent foray into Mexican waters made history since no foreign entity has operated with Mexican sovereign territory in more than 80 years. Mexico nationalized its oil industry in 1938. But now Mexican giant Pemex is eager to try new things to revitalize the oil industry south of the border.

The Hokchi and Pemex cooperation deals show that Talos Energy is a different kind of energy exploration company. It is willing to do things differently. Even drilling in the Gulf is considered a higher risk proposition than land-based projects — but the potential long-term profits are much higher if all goes well.

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