Mexico's National Hydrocarbons Commission ("CNH") held yesterday its 5th Ordinary session of Y2016, in which it was approved, among other matters, the Resolution by which CNH consolidates and publishes the values of the 2P and 3P Mexican reserves up to January 1, 2016, the report as follows:

  • In terms of Article 43 of Mexico's Hydrocarbons Law, CNH shall consolidate annually the national information on Mexican reserves quantified by the Entitlement Holders (i.e. Pemex) and those who have executed a Contract for Exploration & Extraction of Hydrocarbons with CNH (the "Contractors").
  • The content of the consolidation is the sum of all the oil fields in Mexico with certified reserves and it is composed by:

    1. the Entitlements granted to Pemex (our national oil company) in Round Zero;
    2. the Entitlements that will be awarded in a bidding procedure as farmouts but that now are kept by Pemex;
    3. the fields of the Mexican State that were not granted to Pemex through an Entitlement neither have been awarded through a bidding procedure so far; and
    4. the fields that were awarded to Contractors through bidding procedures L01, L02 and L03.
  • The reserves quantification procedure consists in the submission by the relevant operators (Pemex and others) of the reserves quantification performed by them along with the quantification of the same reserves issued by an independent, private company expert in certification, analysis, estimations and evaluation of hydrocarbons reserves, which shall be registered in CNH´s Independent Third Party Registry; meaning that the quantification carry out by the Independent Third Party and the operators may be different.
  • In terms of the CNH's Guidelines governing the procedure of quantification and certification of Mexican reserves and the report of the related contingent resources (Lineamientos que regulan el procedimiento de cuantificación y certificación de reservas de la Nación y el informe de los recursos contingentes relacionados) (the "Guidelines"), CNH shall identify if the differences between the quantification made by certain operator and the one made by the Independent Third Party, exceeds 20%. If the differences does not exceed this percentage, the quantifications that will be taken into account will be the one submitted by the operator, but in case that the differences exceed such threshold, a second criterion shall be applied in which CNH will review if these differences entail more than 5% of the total certified reserves of the country subject to consolidation, in which case the operator and the Independent Third Party shall appear before CNH in order to explain such differences in a hearing and clarification procedure.
  • In this regard, note that it was identified by CNH a difference between the quantifications of the 2P and 3P reserves made by Pemex (as operator) and the Independent Third Party in the offshore large field named "Akal", which is the main field of the Cantarell asset (the former giant productive asset of Mexico). Such difference surpassed the 5% threshold established in the aforesaid second criterion of the Guidelines (5.5% regarding 2P reserves and 6.6% in 3P reserves, both referring to crude oil).
  • In light of the foregoing, the quantification and consolidation of the Mexican 2P and 3P reserves approved yesterday by CNH will not include the reserves corresponding to the offshore Akal field. Pemex and the Independent Third Parties will have to provide additional information in order to resolve and clarify such differences.
  • Once the differences of the Akal field are resolved, these reserves will be added to the quantification of the Mexican 2P and 3P reserves approved by CNH on May 31st, 2016.
  • The following are the 2P and 3P reserves for 2016 (until the same are updated with the Akal field):

    Category Oil mmb Gas bcf BOE mmb
    Total 2P 12,195.2 21,633.1 16,642.8
    Total 3P 17,510.2 31,904.7 24,074.4

Hope this information is useful.

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