Talos Energy LLC ("Talos" or the "Company") as operator, together with its joint venture partners Sierra Oil and Gas S. de R.L de C.V. ("Sierra") and Premier Oil Plc ("Premier"), announces that the Zama-1 exploration well, offshore Mexico, has discovered oil. Talos holds a 35% participation interest with Sierra and Premier holding 40% and 25% participation interests, respectively.

The Zama-1 well is the first offshore exploration well drilled by the private sector in Mexico's history. The well, located in 546 feet (166 meters) of water and approximately 37 miles (60 kilometers) from the Port of Dos Bocas, has reached an initial shallow target vertical depth of approximately 11,100 feet (3,383 meters).

Preliminary analysis indicates:

  • A contiguous gross oil bearing interval of over 1,100 feet (335 meters), with 558-656 feet (170-200 meters) of net oil pay in Upper Miocene sandstones with no water contact
  • Initial gross original oil in place estimates for the Zama-1 well range from 1.4 to 2.0 billion barrels, exceeding pre-drill estimates, some of which could extend into a neighboring block
  • Initial tests of hydrocarbon samples recovered to the surface contain light oil, with API gravities between 28° and 30° and some associated gas

"This is both a historic and significant discovery, and we could not be more proud of the highly skilled personnel from Mexico and the US who have been working together in a safe and efficient manner to make it a reality," said Tim Duncan, President and Chief Executive Officer. "We believe this discovery represents exactly what the energy reforms intended to deliver: new capital, new participants and a spirit of ingenuity that leads to local jobs and government revenues for Mexico.We are eager to begin appraising this discovery and drilling more unique opportunities. The future is bright for offshore Mexico for years to come."

"This success is the culmination of a tremendous amount of work by our technical and operations teams in concert with our consortium partners Sierra and Premier," Duncan continued. "The team deserves a great deal of credit for their conviction in this opportunity and their leadership in making Talos the first private sector operator to receive acreage and drill a successful offshore exploration well in Mexico following the landmark energy reforms of 2014."

The well spud May 21, 2017 utilizing the Ensco 8503, a moored floating drilling rig. The Company is currently setting a liner to protect the discovered reservoirs prior to drilling deeper exploratory objectives to a total vertical depth of approximately 14,000 feet (4,267 meters). There are no plans for immediate well testing. Further evaluation will be required to calibrate the well with the existing reprocessed seismic to determine future plans and optimal follow up locations to define the extent of the discovered resource.

During 2015, the Company, together with its consortium partners Sierra and Premier (the "Consortium"), executed two production sharing contracts ("PSCs") with Mexico's upstream regulator, the National Hydrocarbons Commission, for Block 2 and Block 7. The PSCs were awarded to the Consortium during the first tender of Mexico's oil and natural gas fields in over 80 years. Block 2 and Block 7 are located in the Sureste Basin, a prolific proven hydrocarbon province, in the shallow waters off the coast of Mexico's Veracruz and Tabasco states, respectively. Block 2 and Block 7 contain approximately 162,904 gross acres with numerous high impact prospects in well-established and emerging plays.

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