Talos Energy Inc. provided an update on the Zama appraisal program in Block 7, located in the offshore portion of Mexico's prolific Sureste Basin. Talos is the operator of Block 7 in a consortium (the "Consortium") with its partners Sierra Oil & Gas, a Wintershall DEA company, and Premier Oil.
The Zama-3 appraisal well is the third and final appraisal penetration drilled by the Consortium to better define the resource potential of the Zama discovery. The Zama-2 and Zama-2 ST1 appraisal penetrations, both drilled in the first half of 2019, generated results that met or exceeded the Consortium's expectations. The Zama-3 well was drilled approximately 1.5 miles (2.4 kilometers) south of the original Zama-1 location with the goals of testing the southern extent of the reservoir and capturing additional reservoir description data.
The Consortium is continuing to evaluate the full universe of data and samples collected from its four penetrations of the Zama reservoir, including approximately 1,450 feet of whole core, fluid samples from 30 separate points in the reservoir, 180 pressure points, 25 logging runs and two extended flow tests, with the goal of integrating this data with internal models and sharing it with external auditors to produce an updated contingent recoverable resource report by year end. However, based on the preliminary information collected to date, Talos expects the updated value will fall in the upper half of the previously provided pre-appraisal guidance range of 400-800 MMBoe.
The results specific to the Zama-3 well were as follows:
The well was drilled downdip of the Zama-1 well, allowing the well to penetrate the oil-water contact in the southern portion of the field, consistent with the geophysical flat spot seen throughout the downdip edge of the reservoir. The well logged approximately 1,000 feet (greater than 300 meters) of gross true vertical depth ("TVD") sand and 748 feet (228 meters) of gross TVD pay bearing section, consistent with expectations for the southern extension of the Zama reservoir. The net to gross ratio across the entire pay section is consistent with prior penetrations, with Zone 3 significantly exceeding expectations with a net to gross ratio of approximately 85-90%. Zones 3 and 4 comprise the majority of the Zama resource potential.
Talos captured 717 feet (219 meters) of whole core with 99% recovery, breaking its own record for the longest whole core from a single well in the history of offshore Mexico. The additional core samples will provide critical information to assist the Consortium in evaluating expected recovery factors, completion techniques and other details to aid in optimizing recovery in the Zama field.
Operations for the Zama-3 well were concluded approximately nine days ahead of schedule and within budget. The entire three-penetration appraisal program was finalized 39 days ahead of schedule and under budget. The appraisal was conducted without any lost time incidents or environmental issues over approximately 600,000 man-hours. Local contractors and service providers were again critical in delivering positive results for the Consortium.
The Consortium is simultaneously advancing both its front-end engineering and design ("FEED") work streams as well as unitization discussions with Petr?leos Mexicanos ("Pemex"), with the aim of making a Final Investment Decision ("FID") on the project in 2020, pending required government approvals.
Talos President and Chief Executive Officer Timothy S. Duncan commented, "Based on the preliminary results of our appraisal program, we have confirmed the combination of outstanding subsurface properties, significant recoverable volumes and attractive economic potential that have already made Zama a globally-recognized asset.
The match of the preliminary well data to our geophysical model suggests that we have a gross recoverable resource in the upper half of our pre-appraisal guidance range of 400-800 MMBoe. With the collaboration of our Consortium partners, Pemex and the Mexican government authorities, we look forward to reaching FID as soon as possible and then turning our attention toward first oil. I'm extremely proud of our operating performance throughout the exploration and appraisal program, and we are excited to advance the project to full realization in the near future."