Monterrey, Mexico-based industrial conglomerate Alfa is continuing to explore sale options for the U.S. assets of upstream oil and gas unit Newpek LLC, the company said Tuesday during a presentation of third quarter 2017 results.
Earlier this year, Alfa said it planned to sell projects in the Eagle Ford Shale in Texas, assets in Peru and some of its Mexican oil service contracts with Petroleos Mexicanos (Pemex), citing persistently low prices, including for West Texas Intermediate (WTI) crude oil.
“Oil and gas prices increased on a year/year basis, with WTI oil price up 7% and Henry Hub natural gas price up 19%,” the company said in its 3Q2017 earnings report. “However this was not sufficient to offset the normal decline in production volume, resulting in lower revenues in the quarter, which totaled $21 million in 3Q2017, down 28% year/year.”
Nearly two-thirds of revenue for the quarter was from Newpek’s U.S. operations. The company owns mineral rights in the Eagle Ford and Wilcox fields in South Texas, where production averaged 4,300 boe/d during 3Q2017, down 35% from a year ago.
Newpek has partnered in the Eagle Ford with leading U.S. onshore operator Pioneer Natural Resources Co. and India’s Reliance Industries Ltd., a region where it has been active since 2006. In 2013, Newpek acquired additional drilling and mineral rights in Colorado, Kansas, Oklahoma and Texas.
During the third quarter, Newpek participated in bringing seven U.S. wells onstream, and it expects to put an additional nine into production through the end of the year, for a total of 20 new wells this year. Last year, Newpek put on hold some of its U.S. exploration and drilling projects because of the declining price of oil.
Newpek also operates two mature oil fields in Mexico’s Veracruz state, the San Andres and Tierra Blanca, which are under service agreements signed with Pemex in 2013. Production at these fields averaged 3,400 boe/d between July and September, down 3% from 3Q2016.
Although it is scaling back its international operations, Newpek has been active in the Mexican upstream sector. The company, in partnership with U.S. firm Verdad Exploration Mexico LLC, won licenses to explore two blocks during the Mexico Round 2.3 auction in July.
The two blocks are in the northeastern state of Tamaulipas in the Burgos Basin, the largest producer of non-associated gas in Mexico. The auction was held in conjunction with round 2.2. The two tenders were the first to offer natural gas-rich blocks to private developers.
Alfa reported a net loss of $333 million in 3Q2017, compared with a year-ago profit of $12 million, on one-time charges related to the petrochemicals subsidiary, Alpek.
Alfa, controlled by Mexican business magnate Armando Garza, is one of several industrial groups that have sought to break into the oil and gas business since the energy reform began in 2013. Others include Carso Oil & Gas, part of the business empire of Carlos Slim, and Petrobal, founded by Grupo Bal’s Alberto Bailleres.
Monterrey, Mexico-based industrial conglomerate Alfa is continuing to explore sale options for the U.S. assets of upstream oil and gas unit Newpek LLC, the company said Tuesday during a presentation of third quarter 2017 results.
Earlier this year, Alfa said it planned to sell projects in the Eagle Ford Shale in Texas, assets in Peru and some of its Mexican oil service contracts with Petroleos Mexicanos (Pemex), citing persistently low prices, including for West Texas Intermediate (WTI) crude oil.
“Oil and gas prices increased on a year/year basis, with WTI oil price up 7% and Henry Hub natural gas price up 19%,” the company said in its 3Q2017 earnings report. “However this was not sufficient to offset the normal decline in production volume, resulting in lower revenues in the quarter, which totaled $21 million in 3Q2017, down 28% year/year.”
Nearly two-thirds of revenue for the quarter was from Newpek’s U.S. operations. The company owns mineral rights in the Eagle Ford and Wilcox fields in South Texas, where production averaged 4,300 boe/d during 3Q2017, down 35% from a year ago.
Newpek has partnered in the Eagle Ford with leading U.S. onshore operator Pioneer Natural Resources Co. and India’s Reliance Industries Ltd., a region where it has been active since 2006. In 2013, Newpek acquired additional drilling and mineral rights in Colorado, Kansas, Oklahoma and Texas.
During the third quarter, Newpek participated in bringing seven U.S. wells onstream, and it expects to put an additional nine into production through the end of the year, for a total of 20 new wells this year. Last year, Newpek put on hold some of its U.S. exploration and drilling projects because of the declining price of oil.
Newpek also operates two mature oil fields in Mexico’s Veracruz state, the San Andres and Tierra Blanca, which are under service agreements signed with Pemex in 2013. Production at these fields averaged 3,400 boe/d between July and September, down 3% from 3Q2016.
Although it is scaling back its international operations, Newpek has been active in the Mexican upstream sector. The company, in partnership with U.S. firm Verdad Exploration Mexico LLC, won licenses to explore two blocks during the Mexico Round 2.3 auction in July.
The two blocks are in the northeastern state of Tamaulipas in the Burgos Basin, the largest producer of non-associated gas in Mexico. The auction was held in conjunction with round 2.2. The two tenders were the first to offer natural gas-rich blocks to private developers.
Alfa reported a net loss of $333 million in 3Q2017, compared with a year-ago profit of $12 million, on one-time charges related to the petrochemicals subsidiary, Alpek.
Alfa, controlled by Mexican business magnate Armando Garza, is one of several industrial groups that have sought to break into the oil and gas business since the energy reform began in 2013. Others include Carso Oil & Gas, part of the business empire of Carlos Slim, and Petrobal, founded by Grupo Bal’s Alberto Bailleres.
