SINOPEC SSC (01033) has announced that its subsidiary is moving to acquire a 50% equity interest in Mexico-based DS Company, along with a 0.01% project interest in the EBANO venture held by D&S Company, for a total consideration of $4 million.
According to the announcement, Mexico DS Company is a joint venture under SINOPEC SSC, with its wholly-owned subsidiary, Guogong Company, and DIAVAZ each holding 50% equity. DS Company serves as the operator of the EBANO project, overseeing crude oil production activities at the EBANO oilfield.
Under the validly executed EBANO Oilfield Exploration and Development Contract (CEE) signed among Mexico DS Company, Mexico's National Hydrocarbons Commission (now integrated into the Ministry of Energy), Pemex, and D&S Company, the respective interests in the EBANO project are held as follows: Mexico DS Company holds 54.99%, Pemex holds 45%, and D&S Company holds 0.01%.
Guogong Company and its Mexican subsidiary intend to acquire DIAVAZ's 50% equity in Mexico DS Company (the "Target Equity") and D&S Company's 0.01% interest in the EBANO project under the CEE (the "Target Project Interest") at a price of $4 million. Following the completion of this acquisition, they plan to inject an additional $212 million in phased investments into the EBANO oilfield project in Mexico, including abandonment costs.
DS Company currently acts as the operator running the EBANO oilfield project. Situated in the Tampico-Misantla Basin on the central western coast of the Gulf of Mexico, the EBANO oilfield covers an area of 1,569 square kilometers. Discovered in 1903, it is a fractured-porous carbonate heavy oil reservoir, with current development layers in the Upper Cretaceous KSF and KAN formations at depths ranging from 350 to 750 meters. Based on evaluations of existing 2D and 3D seismic data, the structure, reservoir, fluids, and reserves of the mature field area are well-established, with petroleum geological reserves of 4.92 billion barrels (approximately 743 million tons) and an overall recovery factor of 6.84%. According to well data descriptions and seismic attribute calculations, the deeper KTS layer (760-1,140 meters deep) holds estimated oil resources of approximately 351 million barrels (about 53 million tons). The deeper Jurassic formations also present exploration potential.
Due to the partner DIAVAZ's consecutive losses, operational difficulties, and inability to make proportional investments, the EBANO oilfield development plan has faced multiple delays. Through this transaction, Guogong Company will acquire DIAVAZ's equity in DS Company, leveraging SINOPEC SSC's integrated geological and engineering advantages, its two decades of operational experience in Mexico, and its international team to further unlock the oilfield resources and value of the EBANO project, thereby optimizing the company's business layout in the Mexican market.
Upon completion of this acquisition, Guogong Company and its Mexican subsidiary will hold 99% and 1% equity stakes in Mexico DS Company, respectively. Through Mexico DS Company, they will indirectly gain a 55% interest in the EBANO project under the CEE, and Mexico DS Company will be consolidated into the company's financial statements.