BHP Billiton is up more than 1% after the company said it submitted the winning bid to acquire a 60% participating interest in and operatorship of blocks AE-0092 and AE-0093 containing the Trion discovery located in the deep-water Gulf of Mexico offshore Mexico. Final agreements are expected to be signed in the next 90
PEMEX Exploration & Production Mexico (Pemex) will retain a 40% interest in the blocks. Pemex estimates the gross recoverable resource to be 485 MMboe.
BHP Billiton’s bid for Trion includes an upfront cash payment of US$62.4 million and a commitment to a Minimum Work Program (estimated to be up to a maximum of US$320 million).
Should BHP Billiton and Pemex agree to progress the project beyond the Minimum Work Program, BHP Billiton would be required to invest the remainder of the US$570 million Minimum Work Contribution (which includes the Minimum Work Program spend) and a US$624 million cash contribution (which comprises the upfront cash payment of US$62.4 million already paid and the balance of US$561.6 million as a future carry for Pemex). BHP Billiton’s bid also includes a commitment to an additional royalty of 4%.