JOHANNESBURG (miningweekly.com) – BHP Billiton has advanced its exploration and production interests in the Gulf of Mexico by signing a contract with Pemex Exploration & Production Mexico to complete work on the significant Trion discovery.

BHP in December successfully bid to acquire 60% of the resource that, once fully appraised, is expected to be in the top ten fields discovered in the Gulf of Mexico in the last decade.

Through the agreement, BHP will have participating interest in and operatorship of blocks AE-0092 and AE-0093, while Pemex retains a 40% interest in the blocks. Pemex estimates the gross recoverable resource to be 485-million barrels of oil equivalent.

BHP’s bid for Trion includes an upfront cash payment of $62.4-million and an estimated $320-million initial commitment to deliver a minimum work programme, which comprises drilling one appraisal well, one exploration well and the acquisition of additional seismic data.

Should BHP Billiton and Pemex agree to progress the project beyond the minimum work programme, BHP will be required to fulfil the commitment to pay the remainder of a $570-million minimum contribution.

BHP Billiton would also carry Pemex for an additional $561.6-million on future project costs.

Should the project progress to full development and production, both BHP Billiton and Pemex would pay the Mexican government an additional royalty of 4% on revenues.

The signing ceremony was attended by Mexico President Enrique Peña Nieto, Mexico Energy Minister Pedro Joaquín Coldwell, BHP Billiton CEO Andrew Mackenzie and Pemex CEO José Antonio González Anaya.

Mackenzie noted at the signing that the partnership was an historic moment for Mexico and the beginning of a new chapter in business relations between BHP and Pemex.

“It is an honour to be the first foreign company to partner with the people of Mexico in developing their significant petroleum resources for mutual benefit,” he added.

Nieto thanked BHP for being Mexico’s partner. “I am certain [this journey] will yield greater development for our country,” he highlighted.

González Anaya further added that the agreement constituted a parting of the waters in the history of Pemex. “For the first time, an area assigned during the Round Zero auction, will be progressed in partnership with a world leading company.”