Oil Investment in Mexico is a Boost for Talos

Off the coast of Mexico in the state of Tabasco there is an oil well that has been fought over for decades. Previously, the fighting only went on with Pemex, Mexico’s monopoly. That’s because the oil well was ruled to be only for local investment. Mexico has an almost 80 year history of outlawing other companies from using their oil resources.

The developing nation had good reason for this when they started the policy back in 1938. They wanted to expand the tax base and keep the proceeds and leverage in international negotiations. However, with the recent economic climate in Mexico, leadership was forced to make change. They decided that instead of only allowing Mexican owned companies to drill and produce oil products, they would open it up to outside investors. The move caused a frenzy in the industry, with analysts making all sorts of predictions.

The crucial moment was in 2015 when a series of bidding rounds saw tough competition. Three companies rose to the top in that battle. One company is from Mexico and the other two are from London and Houston. Premier Oil, Sierra, and Talos are the three winners. Talos, out of Houston, will run the operations on a daily basis. They will receive about 30% of the proceeds from the well. Premier will get about 25% and Sierra will receive 40%, keeping the majority of the proceeds for Mexican people. The well is estimated to hold up to 500 million gallons of crude oil, no small sum by any stretch of the imagination.

Talos Energy, LLC is a company that was founded by venture funding of $600 million. Their parent company wanted to grow quickly, investing additional funds to acquire a competitor called Helix Energy for about $500 million soon after. From just 15 employees when they started, they have grown quickly to over 120 employees.

The company is based out of Houston, pulling around 16,000 barrels of oil per day. This results in a revenue of about $475 million per year. The employees are all able to participate in profit sharing, making one of the number one small businesses in the nation.

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