IFR Joint Venture Tonalli Energia Qualifies for Upcoming Mexican Onshore Bid Round 2.3

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Stockhouse | V.IFR | CALGARY, Alberta, June 26, 2017 (GLOBE NEWSWIRE)

“International Frontier Resources Corporation (“IFR” or the “Company”) (TSX-V:IFR) (OTCQB:IFRTF) today announced that its jointly owned Mexican company Tonalli Energia (“Tonalli”) has been named by Mexico’s energy regulator, the National Hydrocarbons Commission (CNH), as one of 12 companies and seven consortiums to qualify to bid on up to 14 blocks in bid round 2.3 scheduled for July 12, 2017. Other qualifying bidders are from Mexico, Canada, the United States, China, Colombia and Uruguay.”

“As previously announced on January 19, 2017, Tonalli has been analyzing and assessing block data, and completed documentation in anticipation of entering the bidding process this July. Concessions are to be awarded under a license contract model for exploration and production that will last 30 years and can be extended for a maximum of two additional terms of five years each.”

“Round 2.3 includes 14 onshore blocks averaging 185 square kilometres (72 sections) available nationwide: six in the Southeastern Basin, four in the Burgos Basin, three in the Veracruz Basin and one block in the Tampico-Misantla Basin. Covering a total of 2,595 square kilometres, these development and exploration blocks contain 25 oil and gas fields with existing 3D or 2D seismic coverage. The Mexican government estimates that the blocks contain total prospective exploration resources of approximately 251 million barrels of crude equivalent and remaining original extraction volumes of approximately 328 million barrels of crude oil equivalent.”

“IFR was one of the first foreign companies to participate in the historic reform of Mexico’s oil and gas sector. Last year, Tonalli assumed operatorship of the Tecolutla block from state-owned PEMEX.  Tecolutla was acquired through a 50-50 joint venture with Mexican petrochemical leader Grupo IDESA in last year’s onshore block auction.”

“ABOUT INTERNATIONAL FRONTIER RESOURCES”

“International Frontier Resources Corporation (IFR) is a Canadian publicly traded company with a demonstrated track record of advancing oil and gas projects. Through its Mexican subsidiary, Petro Frontera S.A.P.I de CV (Frontera) and strategic joint ventures, it is advancing the development of petroleum and natural gas assets in Mexico.”

“The Company’s shares are listed on the TSX Venture, trading under the symbol IFR, and on the OTCQB under the symbol IFRTF. For additional information please visit www.internationalfrontier.com.”                                                                                    

““Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility or accuracy of this release”. The Company seeks Safe Harbor.”

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FOR FURTHER INFORMATION Steve Hanson – President and CEO (403) 618-7346 shanson@internationalfrontier.com or Tony Kinnon – Chairman (403) 607-6591 tkinnon@internationalfrontier.com

Stockhouse | V.IFR | CALGARY, Alberta, June 26, 2017 (GLOBE NEWSWIRE)

 

OPEC Deepens Oil Cuts as U.S. Shale Comes Back

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Bloomberg / By Brian Wingfield and Samuel Dodge / 

“The most globalized effort to cut oil production in history is proving increasingly successful. Now Iraq and Kazakhstan just need to do their bit. OPEC curbed output as promised in May, even though Iraq, the group’s second largest producer, hasn’t complied with the agreement this year. Non-OPEC nations trimming supplies are making steady gains, without help from Kazakhstan. There’s still time to improve: the cuts are set to remain in place through March.”

“OPEC Cuts Output More Than Promised”

“Thousands of barrels a day”

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“The 21 nations participating in supply cuts are collectively trying to reduce output by almost 1.8 million barrels a day, in most cases using October levels as the starting point. Five OPEC members and three from outside the group met their targets last month, versus nine in April, revised data show. The biggest producers wield the most influence. Russia’s deeper cuts buoyed non-OPEC compliance, even if it didn’t fully meet its own pledged supply curbs.”

“Which Countries Reached Their Output Target in May?”

“Eight of 21 countries involved reached their target”
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“More than half of the burden for reaching the total supply-cut goal falls upon Saudi Arabia, Russia and Iraq. Only the Saudis have consistently met their target, lifting OPEC’s compliance in the process. Russia, responsible for much of the non-OPEC pledged cuts, has said it would curb output gradually. Iraq’s compliance rate in May fell to 65 percent, versus 87 percent in April, OPEC secondary source data show.”

“May Crude Oil Production”

“Thousands of barrels a day”

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“Kazakhstan, which is boosting output from its Kashagan oil field, again produced more crude than it pledged to do under the supply agreement. Small producers Gabon and South Sudan also pumped more than they said they would, according to OPEC and IEA data. Other nations that didn’t cut as much as promised include Algeria and Malaysia. OPEC members Libya and Nigeria are exempt from supply curbs, and Iran is allowed to boost output.”

“Price and Production”

“Prices Have Fallen to Near November Levels”
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“By the end of May, oil prices had fallen to within cents of where they were on Nov. 30, when OPEC announced the supply cuts. That’s largely because others, notably U.S. shale producers, have ramped up output. Libya and Nigeria have also boosted production, and the IEA sees new supplies from OPEC’s rivals outpacing global demand growth next year. For OPEC and its allies, draining the world’s oil glut suddenly looks much harder.”

Bloomberg / By Brian Wingfield and Samuel Dodge / 

American energy firms are enjoying a bonanza south of the border

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| KU-MALOOB-ZAAP| The Economist

“A CHEMICAL engineer at Pemex, Mexico’s state-owned oil company, opens a tap atop a maritime platform in this offshore oilfield in the southern part of the Gulf of Mexico. She decants a jar of heavy Mexican crude that comes, hot to the touch, from 3,500 metres below the seabed. It looks like a succulent chocolate sauce, but smells like the back end of a cow. “Taste it,” she laughs.”

“The crude that she is testing is pumped a short distance across the sea to a vast floating storage tank, known as an FPSO, where it is blended with lighter crude for export. The FPSO stores about 2m barrels—roughly the equivalent of a day’s worth of Mexican oil production. A quarter of that is fed into a supertanker tied alongside, contracted by Chevron, America’s second-largest oil firm. It then sails north across the maritime border to Texas or Louisiana where the crude runs through refineries. The refined petrol or diesel often then returns to Mexico.”

“These transactions are part of a historic transformation of North American energy that President Donald Trump appears to have overlooked as he fumes over his country’s trade deficit with Mexico and pours scorn on the North American Free Trade Agreement (NAFTA). In 2015 the energy trade balance flipped (see chart). Between 2011 and 2016, it swung from an American deficit of $20bn to an American surplus of $11.5bn. America earned almost as much from exporting hydrocarbons to Mexico as from cars and trucks.”

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“This about-turn has been caused by several factors, namely America’s shale boom, Mexico’s slumping oil output (down by more than 1m barrels a day in a decade) and energy liberalisation in 2014 that ended Pemex’s 75-year-old hegemony over the domestic oil industry. This shifting landscape has already had an effect on Pemex: a recent bump in oil prices, combined with cost-cutting, has led to its first consecutive quarterly profit in six years. The ripple effect through North America’s energy business has also been quick, and should expand—provided it is not derailed by a hamfisted effort to renegotiate NAFTA.”

“The cross-border flow of hydrocarbons is the most tangible change. Petrol from American refineries amounts to about half of Mexico’s domestic consumption. Last month Tesoro, a Texan refiner, became the first private firm to win an auction to move imported petroleum products through Pemex’s own tanks and pipelines.”

“Mexico has also become the destination of choice for surplus American natural gas, produced in the shale revolution. Sales south of the border have almost doubled since 2014, as Mexico switches its power generation from coal and oil to cheaper, cleaner fuels. The capacity of natural-gas pipelines crossing the border is expected almost to double over the next three years. Since Cheniere Energy became the first firm to export American liquefied natural gas last year, much has flowed to Mexico.”

“Investment is also flowing. American oil companies won five out of the eight blocks auctioned in Mexico’s first sale of deepwater oil licences last year. That forms part of what Pedro Joaquín Coldwell, Mexico’s energy secretary, says are $49bn-worth of international investment commitments in exploration and drilling since 2015. José Antonio González Anaya, Pemex’s boss, says he hopes to encourage American refiners such as Tesoro and Valero to co-invest in some of Mexico’s six refineries. But all were built before 1980, are decrepit, and lose about $9bn a year.”

“The changes are becoming visible at the petrol pump. ExxonMobil, America’s largest oil company, announced in May that it would open its first petrol station in Mexico this year and invest $300m in fuel distribution over the next decade. Currently, only one petrol station in Mexico is owned by a supermajor, BP (its enthusiastic pump attendants work for salaries, not tips, unlike those at Pemex-branded ones).”

“At a congressional hearing in Washington this month, experts noted that the United States, Mexico and Canada are on track to achieve North American energy independence by 2020—meaning the region will produce more liquid fuels than it consumes. Cheap, abundant energy will boost the region’s industrial competitiveness; it will also reduce its dependence on less stable producers such as Venezuela and Persian Gulf States.”

“But in both America and Mexico, uncertainties loom. The process under way to renegotiate NAFTA could jeopardise energy co-operation if Mr Trump pulls America out of the treaty, as he has threatened to do. Since Mexico’s energy liberalisation, NAFTA’s provisions have helped provide certainty to foreign investors. Those safeguards could be valuable if Andrés Manuel López Obrador, a staunch opponent of energy reform, wins Mexico’s presidential election next year. He could take issue with the growing dependence on American fuel. A vibrant network of North American energy markets is taking shape, but it remains fragile—especially with populists blundering about in positions of power.”

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| KU-MALOOB-ZAAP| The Economist

Mexico Said to Take First Steps in Annual Oil Hedging Program

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by Nacha Cattan and Javier Blas / 9 de junio de 2017 11:23 GMT-5

  • “Mexico said to ask banks for options quotes to fix 2018 prices

  • “Mexico annual sovereign hedge is Wall Street largest oil deal

“Mexico has taken the first step in its annual oil hedging program, asking Wall Street banks for price quotes on the put options it buys to lock in prices for the following year, according to people familiar with the matter.”

“Mexico usually buys put options from a small group of investment banks, starting as early as May but sometimes as late as July, in what’s considered Wall Street’s largest — and most secretive — annual oil deal.”

“The country started asking for quotes from banks as recently as late last week, the people said, asking not to be named because the information is confidential. The people didn’t say whether Mexico executed a trade after receiving the quotes. The Ministry of Finance declined to comment.”

“The Mexican oil hedge, which typically covers between 200 million and 300 million barrels, has the potential to roil the market as the banks writing the put options for the country’s ministry of finance hedge themselves in the market by selling oil and refined products futures and swaps.”

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“The put options give Mexico the right, but not the obligation, to sell oil at a predetermined price and time. The hedge runs from December to November.”

“Oil options traders and brokers detected trading activity last Thursday and Friday that in the past has been associated with the banks behind the Mexican oil hedge laying down some of their own risk.”

“Last year, the Mexican government spent $1 billion buying put options to lock in an average price for its export basket of $38 a barrel for 2017. Year-to-date, the Mexican export basket has averaged $44 a barrel. In addition, Petroleos Mexicanos, the state-owned oil company better known as Pemex, also hedged some of its production for 2017, spending nearly $134 million buying a put option spread that gives it protection if prices drop below $42 a barrel.”

Handsome Payouts

“The Latin American country has received handsome payouts from its oil hedging program, earning a record $6.4 billion in 2015 after OPEC embarked on a war for market share that sent prices tumbling. Mexico made $5 billion in 2009, after the global financial crisis, and another $2.7 billion in 2016.”

“Since the modern oil hedge program started in 2001, Mexico has made a profit of $2.4 billion — its hedges raked in $14.1 billion in gains and paid out $11.7 billion in fees to banks and brokers. The country also made money in the 1990s, when the hedge wasn’t done on an annual basis.”

“Despite Mexico’s hedging success, few other commodity-rich countries have followed suit. Ecuador hedged oil sales in 1993, but losses triggered a political storm and the nation never tried again. More recently, oil importers Morocco, Jamaica and Uruguay have bought protection against rising energy prices, but their deals had been relatively small.”

“Mexico last year started hedging in late May as oil prices peaked after a soft start to the year. This time, however, oil prices are declining after a relatively strong start to 2017. Brent crude, the global benchmark, peaked at $57.10 a barrel in early January and approached those highs in April. But since then it has weakened to trade below $48 on Friday.”

“Mexico has traditionally used banks including JPMorgan Chase & Co., Goldman Sachs Group Inc., Morgan Stanley, Barclays Plc, Citigroup Inc. and BNP Paribas SA for its annual hedge, according to government documents. Last year, the trading unit of Royal Dutch Shell Plc became the first known non-bank to join the hedge, according to people familiar with the matter.”

by Nacha Cattan and Javier Blas / 9 de junio de 2017 11:23 GMT-5

From: Bloomberg

Repsol Said to Mull Entry Into Mexico’s Newly Opened Fuel Market

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by Amy Stillman, Rodrigo Orihuela, and Adam Williams / 

  • Company is conducting market study; has met with regulators

  • Spanish firm could make a decision as soon as next month

“Repsol SA, Spain’s biggest oil company, is studying Mexico’s nascent fuel market as it considers whether to open gas stations in the country, people familiar with the plans said.”

“Repsol could make a decision as soon as next month, one of the people said. A Repsol press officer declined to comment. A spokeswoman at Mexico’s energy regulatory commission, or CRE, said that some commissioners met with Repsol in February.”

“If it proceeds, Repsol would be following in the footsteps of companies such as Exxon Mobil Corp., BP Plc, and Glencore Plc, that have recently announced plans to invest in Mexico’s fuel retail market, taking advantage of rules allowing firms other than state-owned Petroleos Mexicanos to import fuel since April 2016. “

“The Madrid-based firm, which has a refinery and network of more than 400 service stations in Peru, is only likely to be interested in markets where it can have a five percent share or more, one of the people said.”

PEMEX“Mexico’s recent energy industry opening was designed to lure investment and bring competition to a market formerly controlled by Pemex. However, the gradual elimination of fuel subsidies this year has also sparked social unrest as prices at the pump increased by as much as 20 percent in some regions in January.”

“The slow pace of new regulations and infrastructure hurdles has meant that companies continue to rely on Pemex’s pipeline and terminals to transport and store fuel, as well as to supply it in many cases.”

“Repsol has had a rocky relationship with Pemex, which sold a stake of about eight percent in the Spanish firm in 2014, valued at $2.8 billion. The sale followed a lengthy dispute between the companies’ boards of directors, with Pemex citing differences over corporate governance as one of the factors that led to the fallout, according to a statement at the time. “

by Amy Stillman, Rodrigo Orihuela, and Adam Williams / 

Interest In Mexico’s Offshore Blocks Is Surging

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By Oil & Gas 360 – Jun 03, 2017, 12:00 PM CDT

The Comisión Nacional de Hidrocarburos (CNH), which will conduct the lease sale, has listed a total of 25 groups that have successfully pre-qualified for the Round 2.1 sale. As might be expected, supermajors are prominent among the companies involved. Chevron (ticker: CVX), ConocoPhillips (ticker: COP) and Shell (ticker: RDS.A) have each pre-qualified. Other major international companies include Eni (ticker: E), Repsol (ticker: REP) and Total (ticker: TOT).

Several NOC’s have also applied, including CNOOC, Pemex, Lukoil, Petronas, Colombia’s Ecopetrol and India’s ONGC. International E&P’s that have signed on include Noble (ticker: NOG), Premier (ticker: PMO) and Ophir (ticker: OPHR). Five consortiums have also applied, accounting for a total of 11 companies.

A total of 15 offshore lease blocks will be offered in this sale. According to CNH, these 15 blocks contain a combined 1.6 BBOE of recoverable resources. Block 11, in the southern section offshore from Tabasco, has the largest prospective resource of any block with a P50 of 300 MMBOE.

Interest in Mexican offshore properties is increasing as the overall oil industry recovers. Mexico’s recent deepwater offshore lease sale was highly successful, with eight out of ten blocks sold.

First private offshore oil well in 80 years recently began drilling

A major milestone was achieved in May, as a JV between Premier Oil, Talos Energy and Sierra Oil & Gas began drilling the Zama-1 offshore well. This is the first time in nearly 80 years that a private company has drilled an offshore oil well in Mexico. Each of these companies has pre-qualified for the most recent lease sale.

Privately-held Talos Energy is the operator of the well, with a 35 percent stake. Premier owns 25 percent, while Sierra holds the remaining 40 percent. According to Premier, the Zama-1 well has a P90-P10 gross unrisked resource range of 100-500 MMBOE.

 Premier expects Zama-1 will take about 90 days to drill, and will have a total cost to the company of $16 million.

Tudor Pickering & Holt, however, predict that this resurgence will not have an effect for some time.

While the firm does expect shallow water production to be the next material near-term contributor to Mexican production, it will not have a significant effect for several years. TPH predicts Mexican production will decline by about 5 percent per year through the end of this decade.

By Oil and Gas 360

OPEC’s LNG giant keeps exposing gas and oil as saudis cut ties

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From Bloomberg, by Mohammed Sergie,Tsuyoshi Inajima, and Anthony Dipaola 

“Qatar, the world’s biggest seller of liquefied natural gas, can still access shipping routes to deliver oil and gas to buyers after Saudi Arabia and other neighboring states barred the emirate from exporting through their territorial waters.”

“State producer Qatargas told Japan’s Jera Co. that it would keep supplying LNG as normal in spite of the Saudi-led severing of diplomatic ties with Qatar, Jera spokesman Atsuo Sawaki said by phone. Jera is Japan’s biggest buyer of Qatari LNG under long-term contracts, according to data compiled by Bloomberg.”

“The escalation of tensions in the energy-rich Persian Gulf probably won’t disrupt LNG supplies to Qatar’s main customers in Asia, according to Robin Mills, head of Dubai-based consultant Qamar Energy. “In principle Qatar should still be able to export via its own waters, Iran and Oman,” Mills said.”

“Saudi Arabia and three allied Arab countries cut ties with Qatar on Monday, escalating a crisis that started over the emirate’s relationship with Iran, a Saudi rival in the region. The governments of Saudi Arabia, Bahrain, the United Arab Emirates and Egypt said in statements they will suspend air and sea travel to and from Qatar. “

“Qatar exported 79.62 million tons of LNG last year, or 30 percent of global supply, according to the International Group of Liquefied Natural Gas Importers, known by its French acronym GIINGL. State-run Qatar Petroleum, the world’s fourth-largest oil and natural gas producer, has only five Middle Eastern customers for its gas — Kuwait, Oman, Jordan, the U.A.E. and Egypt. LNG exports to these countries comprised about 10 percent of Qatar’s total shipments in 2016, GIINGL data show.”

““I presume LNG exports to the U.A.E. will stop,” Qamar Energy’s Mills said. “The U.A.E. will have to use other suppliers, but there are plenty of cargoes around at the moment.””

“Qatar, like Saudi Arabia and the U.A.E., is also a member of the Organization of Petroleum Exporting Countries. The emirate is the group’s third-smallest producer, pumping 620,000 barrels a day of crude oil in May, data compiled by Bloomberg show, and ships most of its crude and condensate to Asia.”

“Aside from sending LNG and oil by ship, Qatar exports natural gas through a pipeline operated by Dolphin Energy, which is owned by Abu Dhabi’s Mubadala Development Co., Total SA and Occidental Petroleum Corp. The link supplies gas to the U.A.E. and Oman and can send 3.2 billion cubic feet per day, though it only uses about two-thirds of that capacity.”

“Gas continues to flow normally through the Dolphin pipeline to the U.A.E. and Oman, according to two people with knowledge of the matter. There is no sign that supplies will be cut, they said, asking not to be identified because the information isn’t public.”

“A potential shutdown of the pipeline would cause a “severe problem” in the U.A.E. as demand for electricity peaks in the summer, Mills said. But he played down the likelihood that either country would halt supplies due to the hardship this would cause the U.A.E. and the damage it would inflict on Qatar’s reputation as a reliable energy provider.”

“Qatar Petroleum, Qatar’s LNG producers Qatargas and RasGas, and Dolphin Energy didn’t immediately respond to requests for comment.”

Link: https://www.bloomberg.com/news/articles/2017-06-05/saudi-led-isolation-of-lng-giant-doesn-t-stop-gas-or-oil-exports