DEA Deutsche Erdoel, a subsidiary of German oil and gas firm DEA Group, has agreed to acquire Mexico-based Sierra Oil & Gas for an undisclosed price, to foray into the offshore Zama field.
Image: DEA to acquire Sierra Oil & Gas. Photo: courtesy of DEA Deutsche Erdoel AG.
Sierra Oil & Gas has stakes across six Mexican exploration and appraisal blocks, including the Zama discovery contained in Block 7 in the offshore Sureste Basin. The Zama field, which is being planned to be developed with an investment of $325m, is expected to enter into initial production in 2022.
Sierra Oil & Gas has a stake of 40% in Block 7, which is operated by Talos Energy. The Zama field is projected to contain 400-800 million barrels of recoverable oil equivalent.
Currently, the Block 7 partners have launched a $250m appraisal program for the Zama discovery.
Apart from Block 7, Sierra Oil & Gas has non-operated stakes across five exploration blocks that are spread around 9,400km2 in the core part of the Sureste basin.
DEA expects the addition of Sierra Oil & Gas’ acreage to its current operated production and exploration portfolio to help it become one of the largest acreage holders in Mexico.
Currently, the German oil and gas firm is the operator of the onshore Ogarrio oil field in Mexico, where it is partnered by Pemex, besides owning stakes in exploration blocks in the Tampico Misantla and Sureste basins.
Post transaction, the German firm will hold stakes in the onshore Ogarrio oil field and a total of ten exploration blocks.
DEA CEO Maria Moraeus Hanssen said: “The acquisition of Sierra will allow DEA to achieve materiality in the highly strategic and competitive Mexican upstream market and provide us with a high-quality exploration and appraisal portfolio in one of the world’s most sought-after offshore basins, as well as a strong team.
“The transaction also underlines our confidence in the future of Mexico’s energy industry. Upon completion of the planned merger of DEA and Wintershall, this acquisition will further strengthen Mexico as a core region for the combined company, which will become one of the major players in Mexico.”
The deal is likely to be completed in the first half of 2019 depending on government approvals and meeting of other customary conditions.