Upload
dangtram
View
221
Download
2
Embed Size (px)
Citation preview
1
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
© 2014 Gaffney, Cline & Associates. All rights reserved. Terms and conditions of use: by accepting this document, the recipient agrees that the document together with all information included therein is the confidential and proprietary property of
Gaffney, Cline & Associates and includes valuable trade secrets and/or proprietary information of Gaffney, Cline & Associates (collectively "information"). Gaffney, Cline & Associates retains all rights under copyright laws and trade secret laws of the
United States of America and other countries. The recipient further agrees that the document may not be distributed, transmitted, copied or reproduced in whole or in part by any means, electronic, mechanical, or otherwise, without the express prior
written consent of Gaffney, Cline & Associates, and may not be used directly or indirectly in any way detrimental to Gaffney, Cline & Associates’ interest.
Alan Cunningham
Gaffney, Cline & Associates
3rd Sept 2014
WILL MEXICO BE COMPETITIVE?
2
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
Resource Potential
• Nature of Resources
• Size
• Oil or Gas
• Access to Markets
• Access to Resources
• Allocation Process
• Transferability
WHAT DOES IT TAKE TO BE COMPETITIVE?
3
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
Resource Potential
• Nature of Resources
• Size
• Oil or Gas
• Access to Markets
• Access to Resources
• Allocation Process
• Transferability
Fiscal Balance & Stability
• Defined vs. Negotiable
• Regressive vs. Progressive
WHAT DOES IT TAKE TO BE COMPETITIVE?
4
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
Resource
Potential
• Nature of Resources
• Size
• Oil or Gas
• Access to Markets
• Access to Resources
• Allocation Process
• Transferability
Fiscal Balance & Stability
• Defined vs. Negotiable
• Regressive vs. Progressive
Acceptable Ancillary
Risk Factors
• Country Risk
• Regulatory Environment
• Transparency
• Local Content & Services
WHAT DOES IT TAKE TO BE COMPETITIVE?
5
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
RESOURCE POTENTIAL
6
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
MEXICO’S RESOURCE POTENTIAL
Regional Resource Ranking
1. USA
2. Canada
3. Brazil
4. Venezuela
5. Mexico
Conventional Shelf & Onshore
28.9 Bboe
- 16.1 Bboe in < 500m
- 12.8 Bboe Onshore
But
Development Risks
Economic Risks
Unconventional
60.2 Bboe
460 – 545 Tcf Gas
But
No Commercial Production
Exploration Risks
Deep Water
27.7 Bboe
- 16.1 Bboe in > 1500m
- 3.7 Bboe in 1000 – 1500m
But
No Commercial Production
Exploration Risks
TUDORPICKERING HOLT & CO. “MEXICO OPENING AND
OPPORTUNITIES..”, FEB 2014
7
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
Source: USGS Map
MEXICO’S CONVENTIONAL POTENTIAL
28.9 Bboe Potential
Regional Ranking
• USA
• Brazil
• Canada
• Mexico
• Colombia
Four Onshore Geological Provinces
• South East
• Burgos
• Tampico
• Veracruz
Competitive Factors
• + Field Size vs. US Limited Access (Pemex Controlled)
• + Oil/Gas Ratio Onshore Security
• Technical Complexity
8
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
MEXICO’S UNCONVENTIONAL RESOURCES
60.2 Bboe Potential
Regional Ranking
• USA
• Argentina
• Mexico
• Canada
• Brazil
Five Geological Provinces
• Burgos
• Sabinas
• Tampico
• Veracruz
• Chihuahua
$100 billion needed over next 10 years
Competitive Factors
• + Unexploited Potential - Water Access
• + Access to resources - Infrastructure
• + Gas price - Land/Security
•
9
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
MEXICO’S DEEP WATER POTENTIAL
27.8 Bboe Potential
Success to Date
• 25 Exploration Wells Drilled
• Perdido Fold Belt 500 mmboe
• Catemaco Fold Belt 5Tcf Wet Gas
Other Prospective Areas
• Salina del Bravo
• Mexican Ridges
Competitive Factors
• + Unexplored resource potential
• + Access to rights
• No Infrastructure
10
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
RESOURCE ACCESS
11
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d. No Pemex Entitlement
“Assigned Migrated” Contracts
Higher Risk/Tech/Capital
Pemex Non-operator
CNH/SENER Established Terms
“Entitlement” Contracts Lower Risk/Tech/Capital
Pemex Operator
Pemex Free to Contract
RESOURCE ACCESS
No Pemex Application
Pemex Round Zero Application SENER Decision (Aug 2014) Investor Access
Pemex Surrender
Pemex Awards
Service Contracts
Round 0.5 J.V.S
Unconventional 15% Pros Res
Deep Water 29% Pros Res
Shelf 63% Pros Res
Onshore 82% Pros Res
Round 1
Annual Rounds
How Will Areas Be Made Available?
12
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
RESOURCE ACCESS - Round One
Source: SENER
Type Volume
MMBOE Blocks/Fields
Area
Km2
Investment
Level in 4
years
MM$
Annual
Investment
Level
MM$
Exploration 14,606 109 25,903 19,000 4,750
Exploitation 3,782 60 2,597 15,100 3,775
Associations
w/Pemex
(Farm-Outs)
14 ND 16,400 4,100
2P
Reserves 1,557
3P
Reserves 2,664
TOTAL 50,500 12,625
13
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
Resource Access - Mexico’s Contract Options
Contract Type Likely Use
Service Contracts
Pemex Entitlements
Producing Areas
Commercially Feasible
Developments
Profit Sharing Agreements
Conventional Exploration
Complex Developments
Production Sharing Agreements
Deep Water
Licenses
Unconventional
14
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
RESOURCE ACCESS - REGIONAL COMPETITION
▪ Any contract form can be
used to generate the same
economic take under a given
set of assumptions.
▪ Primary differences are the
risk/reward relationship and
operational control which are
generally higher for the
investor under concession
contract regimes.
Concession
Contract
Type
PSC/PSA
Service
Argentina Argentina
Brazil Brazil
Canada
Chile
Colombia
Ecuador
Peru Peru
Uruguay
USA
15
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
FISCAL BALANCE & STABILITY
16
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
MEXICO’S CONTRACT & FISCAL REGIME
Fiscal Balance & Stability
17
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
Fiscal Factors Service
Contract
Production
Sharing
Profit
Sharing Licenses
Income Tax
Exploration Fee
Royalty (Price/Product Sensitive)
Signing Bonus
Contractor % of Operating Profit
(Bid Variable)
($/Bbl Fee)
(In Kind)
(Cash)
(In Kind)
Windfall Adjustment
Cost Recovery
Minimum Work Investment
(Bid Variable)
FISCAL REGIME COMPONENTS
18
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
Fiscal Balance & Stability
Fiscal Factor Applicable To Range
Royalty Oil
CP< $48 R= 7.5%
CP> $48 R= (0.125 xCP) + 1.5%
Assoc. Gas R = CP/100
Non Assoc. Gas
CP < $5/MMBtu R = 0
$5 > CP < $5.50 R = (CP - $5) x (60.5/CP)
Condensate
CP < $60 R = 5%
CP > $68 R = (0.125 x CP) – 2.5%
Exploration Fee
First 60 Months
Starting Month 61
$1,150 Pesos/Sq. Km
$2,750 Pesos/Sq. Km
EEHA Tax
Exploration Phase
Extraction Phase
$1,500 Pesos/ Sq. Km
$6,000 Pesos/Sq. Km
Land Use Fee Onshore 0.5% - 3% Post Govt. take revenue share
19
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
Onshore Conventional
• 60% - 65%
Onshore Unconventional
• 45% - 55%
Offshore Shelf
• 70% - 85%
Offshore Deep Water
• 55% - 75%
FISCAL BALANCE & STABILITY - The Regional Competition
• Jurisdictions that move towards bonus/regressive fiscal systems
generally experience a decline in licence activity.
• Jurisdictions that move towards net profit/progressive fiscal systems
generally experience an increase in licensing activity.
Mexico intends to be at a competitive regime by emphasizing
progressive fiscal parameters and allowing investors to bid the
Contractor’s share of operating profit.
Range of competitive state-take
20
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
ANCILLARY RISK FACTORS
21
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
Country Risks
Legal System
International Treaties
Internal Security
ANCILLARY RISK FACTORS - INVESTOR RANKING
22
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
ANCILLARY RISK FACTORS - INVESTOR RANKING
Country Risks
Legal System
International Treaties
Internal Security
Regulatory Environment
Transparent
Experience/Capacity
Some Regulatory Gaps
23
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
ANCILLARY RISK FACTORS - INVESTOR RANKING
Country Risks
Legal System
International Treaties
Internal Security
Regulatory Environment
Transparent
Experience/Capacity
Some Regulatory Gaps
Transparency Defined Process
Checks & Balances
24
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
ANCILLARY RISK FACTORS - INVESTOR RANKING
Country Risks Legal System
International Treaties
Internal Security
Regulatory Environment
Transparent
Experience/Capacity
Some Regulatory Gaps
Transparency Defined Process
Checks & Balances
Local Content/
Services
Realistic Targets
Service Company Presence
Water/Infrastructure Limitations
25
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
Country Risks Legal System
International Treaties
Internal Security
Regulatory Environment
Transparent
Experience/Capacity
Some Regulatory Gaps
Transparency Defined Process
Checks & Balances
Local Content/
Services
Realistic Targets
Service Company Presence
Water/Infrastructure Limitations
ANCILLARY RISK FACTORS - INVESTOR RANKING
26
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
COMPETITIVE SUMMARY
Mexico USA Canada Brazil Argentina Venezuela
Resource Potential
Conventional
Unconventional
Deep
Resource Access
Conventional
Unconventional
Deep
Fiscal Balance
Ancillary Risk Factors
Country Risk
Regulatory
Transparency
Local Content/Service
27
© 2
014
Gaf
fney
, Clin
e &
Ass
ocia
tes.
All
Rig
hts
Res
erve
d.
Q&A
THANK YOU