Northcote Energy Limited is pleased to announce its 51% owned subsidiary Mayan Drilling Fluids SAPI de CV (‘MDF’), has signed a Letter of Intent (‘LOI’) with PEMEX, Mexico’s national oil company, to provide a range of waste remediation services, including the recycling of oil cuttings generated by activity on oil fields operated by PEMEX at MDF’s facility in Comalcalco, Mexico (‘the Facility’). The LOI is in line with Northcote’s strategy to capitalise on the deregulation of Mexico’s oil and gas industry to build a Mexican focused energy services and development company. MDF is a joint venture company between Northcote and its local Mexican partner Gaia Ecologica S.A. DE C.V.
The LOI sets out the basis under which MDF will provide PEMEX with the following services:
- Remediate and restore dams, grounds and polluted water bodies which have been contaminated by oil related activities, and
- Manage urban solid waste and hazardous residuals generated by the active installations on oil fields belonging to PEMEX.
Progression from LOI to a legally binding contract is subject to the completion and full commissioning of the Facility and all appropriate permits being in place. A water handling and treatment permit (a key requirement for the commissioning of the Facility) was obtained in February 2016 from CONAGUA (the Mexican National Commission of Water). It is intended that once the Facility is fully commissioned it will operate continuously, with a processing capacity of up to 845 tonnes per day. On the basis of the Company’s knowledge of similar plants in South Texas, it believes that the Facility will have the potential to generate significant revenue. For the time being the Comalcalco facility is generating some contribution towards its costs, by offering public scale (weight measurement) services to local trucking companies.
Northcote Chairman Ross Warner said, “We have always said that the opening up of Mexico’s oil and gas sector represents a once in a generation opportunity to companies operating in that sector. Today’s LOI with PEMEX demonstrates that Northcote is becoming increasingly well positioned to take advantage of some of those potential opportunities. Once our Facility is fully operational we believe it will contribute profits and revenue streams, to complement the Company’s existing business which is building up our production base at the Shoats Creek field in Louisiana. More fundamentally, if successful, we believe it will provide us with an excellent reference point from which to identify and secure further midstream and service opportunities in Mexico.”
The Remediation Facility
Following the opening up of Mexico’s energy sector to international competition and compliance with environmental protection and other industry standards within the refining and retail fuel distribution market, there is an increasing need for operators to improve environmental standards; mandate greater environmental and financial accountability; and improve the retail fuel distribution segment to operate in line with international standards.
The Facility will be able to play a part in this process through the recycling of oil cuttings and other oil field services to both onshore and offshore wells. The Facility when commissioned will be the first investment by a foreign company in Tabasco to come on line following Mexico’s energy reform. The Facility will be commissioned in phases. Phase 1 the buildup of a public weigh scale operation is now completed. Phase 2 is for completion of the Facility, at which point the plant will be capable of operating continuously, handling in excess of 700 tonnes per day. The Facility’s business model is based on that used by similar plants in South Texas, which demonstrate significant revenue and profit potential. The Facility is strategically and centrally located among existing onshore oil and gas fields in the state of Tabasco. The Facility has excellent access to infrastructure including two key highways and a major port which supports all offshore oil and gas activity in the southern portion of the Gulf of Mexico. In addition, there is substantial refining and industrial activity nearby which has the potential to diversify the Facility’s revenue streams.
PEMEX is the Mexican state-owned petroleum company, which was created in 1938 following the nationalisation of all private, foreign, and domestic companies. PEMEX is ranked 98 in the Global Fortune 500 of companies, generating overUS$70 billion in revenue and with some US$102.83 billion in assets in 2014.
The information contained within this announcement is deemed to constitute inside information under the Market Abuse Regulations (EU) No 596/2014
For further information visit www.northcoteenergy.com or contact the following:
|Ross Warner||Northcote Energy Ltd||+44 7760 487 769|
|Roland Cornish||Beaumont Cornish Ltd||+44 20 7628 3396|
|James Biddle||Beaumont Cornish Ltd||+44 20 7628 3396|
|Elliot Hance||Beaufort Securities Ltd||+44 20 7382 8300|
|Nick Bealer||Cornhill Capital Limited||+44 20 7710 9612|
|Elisabeth Cowell||St Brides Partners Limited||+44 20 7236 1177|
Northcote Energy Limited is an entrepreneurial energy company with diverse interests. The Company combines a portfolio of US exploration and production assets in Louisiana and Oklahoma with the development of new business opportunities in the US and also in Mexico as well as Indonesia via a strategic relationship with Andalas Energy and Power Plc.
All of the technical information that is contained in this announcement has been reviewed internally by the Company’s Technical Director, Mr. Kevin Green. Mr. Kevin Green is a Petroleum Geologist who is a suitably qualified person with over 30 years’ experience in assessing hydrocarbon reserves and has reviewed the release and consents to the inclusion of the technical information.