VIEW FROM THE TOP
WORK STILL NEEDED TO KNOW STATE OF INHERITED FIELDS JAVIER ZAMBRANO Executive Director of Jaguar E&P
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Q: What main challenges do onshore operators, such as
down payments because we have more money but because
Jaguar, face in the Mexican market?
our expert team saw a value in the fields that was comparable
A: The top two challenges operators face in onshore fields
to the down payment we offered. The fact that we invested
are dealing with security and with communities. To handle
in an oil field in the Caribbean last year also helped a lot. This
the community aspect, we become closely involved in the
investment has been a good experience and helped us learn
social issues of the communities in which we work. As each
and get some boots-on-the-ground experience, which was
community has a different set of needs and concerns resulting
helpful for the bidding processes where we won the 11 blocks.
from our operations and as there is no specific pattern to
Still, in terms of capital commitments, we are 99 percent
follow when dealing with them, each area represents a
focused on Mexico. We developed a very good partnership
different challenge. We follow the guidelines established by
with SunGod from the beginning, and that will make us
international best practices by being respectful with all the
even more successful once operations start. Its experience
people we interact with, as well as with the landowners, is
in Canada is important, but one of the most significant
crucial. On the security side, when dealing with any kind of
characteristics SunGod brings to the table is that it is very
criminal activity that may be present in our areas of operation,
focused on costs and lean operations. That is an asset we
we follow procedures and recommendations that are put in
need right now, especially in the Burgos region where prices
place by our security consultants from top security firms that
and costs are important. Now that we have won 11 blocks we
showcase specific expertise in the areas we operate.
can apply economies of scale. The steep learning curve during the process also prepares us for the next rounds, with assets
A third challenge is the lack of information and the
already in place and the capacity to make strategic offers. In
inconsistency of information between sources. There is still
the first phase, our funding sponsor, Grupo Topaz, has pledged
a lot of work to be done before operators can get a final
a strong commitment to sign the contracts, start operations
sense of the true state of the fields they are inheriting, be it
and to continue at least until the end of 2018. As the projects
infrastructure conditions and availability, social components
are developed, the subsequent cashflow will continue funding
or environmental variables and potential damages.
our operations. The next phase implies focusing on strategic
Comprehensive data surrounding these key variables is critical
activities, such as appraisal wells in some of our operating
and even more so to have at hand for consultation prior to
areas and workovers in cash-flow attractive areas to put our
acquiring the blocks. Potential environmental damages need
business plan to the test. Once that part is done, raising capital
to be accounted for and by any means necessary avoid taking
will prove easier to fully develop our five-year development
operators by surprise. Although we consider these risks
plan. Capital markets, debt markets, public markets are all
in our economic models, it takes work and time to get to
under consideration to that end.
know the true state of things. The portfolio of assets Jaguar was awarded call for a case-by-case analysis. The process
Q: How is Jaguar preparing for operations in its 11 blocks?
is meticulous because we have to make strategic decisions,
A: The skillsets we require have changed completely and our
which is time and work that takes us away from of our true
priority is to attract the highest quality professionals from the
value-creating activities.
Mexican industry. We are working to assemble a regional staff that will bring local knowledge and expertise to our team,
Q: What was Jaguar’s strategy to win 11 blocks in Rounds
such as local operators and maintenance crews who know
2.2 and 2.3?
the assets and the land. We are moving to get this done as
A: Jaguar’s solid team of geologists, geoscientists and
quickly as possible. We have found quite a good regional offer;
reservoir engineers allowed us to obtain an accurate and
there is a sufficient and robust number of Mexican companies
conscious evaluation of the assets, which is crucial when it
that offer national products and services. The true problem is
comes to crafting winning offers. We did not offer bigger
not finding them but quantifying and reporting the national