Update On Migration On speaking to management this week, they have indicated that good progress is being made on the work to migrate the Amititlan contract. There has been a lot of proposals and ideas exchanged and a lot of work done with Pemex management and accounting departments, with respect to how deal with the reserves and production accounting. Pemex cannot afford to give up any of its reserves (Chincontepec) and an accounting approach had to be developed on how to handle the reserve issue going forward with respect to both the Chincontepec and the shale formations. These issues appear to have been resolved.
Management indicated there had been a shift in how the proposals are being dealt with by Pemex. Up until recently, ROE and its team have been making proposals to Pemex Management and has presented several different proposals and scenarios. This has shifted and Pemex is now also presenting proposals to ROE and its team. Pemex has presented a couple of different proposals that possibly could be workable with some further negotiations and adjustments. This is a significant positive change.
The negotiations are ongoing and making progress. The shift with Pemex making proposals is significant in that it may indicate that Pemex has the green light from AMLO. AMLO of course is the key.
The private sector as a whole has been putting a lot or pressure on AMLO. (https://www.voanews.com/americas/oil-companies-press-mexican-president-resume-suspended-auctions)
In my personal opinion the dire financial quagmire of Pemex is likely finally hitting home with AMLO.
According to management, Roccio Nahle and Sener have been onside throughout even though her political comments at times might make it seem otherwise.
Fracking will not be a problem as approval has been given to frack on the block to the South and East of Amititlan where there is ongoing drilling by Grupo Diavez. This is on the last block that migrated - the Miquetla block. Pemex is fracking its wells as usual.
Again, I am not sure when this contract will migrate, but everything is moving forward again with progress being made.
ROE and its partners have agreements with a lot of the landowners in the Amititlan block as they reached these agreements prior to drilling the 17 Chincontepec wells on the block. They also have a lot of the drilling pads complete as ROE built and used them for the 17 well program and these can be used for the deep shale drilling, so once the contract migrates, enough of this part of the work has all been completed so that it will not take long to start drilling once the contract migrates.
The Chiapas blocks are already to be drilled. All contracts, with landowners, permits, roads and infrastructure are in place. This will likely be late Q1, 2020. The ROE teams main emphasis has been and still is, on the work to get the Amititlan contract migrated.