Harbour Energy was appointed operator of the Zama oil field offshore Mexico following its announcement that it will acquire LLOG Exploration in a cash-and-stock transaction valued at $3.2 billion. The back-to-back developments significantly expand Harbour’s deepwater portfolio as it seeks to produce 500,000 BOE/D through 2030.
London-headquartered Harbour said its acquisition of LLOG’s US deepwater assets, announced on 22 December, makes it a “leading player” in the region. Key assets include the Who Dat and Buckskin fields, as well as the Salamanca floating production unit which is used to develop the Leon and Castile fields.
Harbour said the assets represent 22 years of proved and probable reserves, with total production expected to double by 2028 as projects targeting the prolific Lower Tertiary Wilcox play ramp up. The assets currently produce about 34,000 BOE/D and have a breakeven cost of roughly $12/BOE, according to the company.
Harbour added that it will operate more than 80 leases offshore the US, with another 11 anticipated from a recent federal lease sale in which LLOG submitted bids. The company said its expanded position could support the drilling of up to eight new wells by 2027.
Under the terms of the transaction, Harbour will pay $2.7 billion in cash and issue $500 million in Harbour common stock. LLOG shareholders are expected to own about 11% of Harbour’s outstanding shares upon closing, which is targeted for the end of the first quarter of this year.
“The LLOG business complements our portfolio with a high-quality, long-life asset base underpinning strong production and cash flow growth profiles,” Alexander Krane, chief financial officer for Harbour, said in a statement. “This transaction also builds on the recently announced agreements to acquire Waldorf in the UK and divest assets in Indonesia, materially enhancing our free cash flow outlook.”
Harbour followed its acquisition announcement by confirming that it has been appointed operator of the Zama oil project offshore Mexico, holding a 32.22% interest. The appointment was approved by Mexico’s Ministry of Energy and agreed by the project’s partners Pemex (50.4%), Grupo Carso, and US independent Talos Energy (17.5%).
Houston-based Talos sold a 49.9% stake in its Mexican subsidiary, Talos Energy Mexico, to Grupo Carso in 2023 for $124.75 million.
The Zama oil field was discovered in 2017 by Talos and successfully appraised in 2018 and 2019. It is estimated to contain about 750 million BOE of gross recoverable resources. Talos lost control of the discovery in 2022 following the confirmation of a ruling by Mexico’s industry regulator which determined that an adjacent block owned by Pemex held the majority of the reservoir’s reserves.
Harbour said it plans to complete engineering and design work this year before taking a final investment decision on the Zama development.
