May 25, 2023
Billionaire Buys Stake in Mexico’s Mega Oil Field from Talos
(Bloomberg) -- Billionaire Carlos Slim is making one of his biggest oil investments after agreeing to purchase a minority stake in a local producer that allows his Grupo Carso SAB to enter the Zama field, one of Mexico’s most promising energy projects.
Grupo Carso is purchasing a 49.9% minority stake in the local unit of Houston-based Talos Energy Inc. for $125 million. The deal gives Carso a 17.4% stake in Zama, with the price implying a minimum valuation of about $250 million for the oil field stake. Talos will keep control of the remaining 50.1% of its local unit. The transaction is pending approval from the local regulator.
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Slim, Latin America’s wealthiest person with a fortune estimated at $90 billion, is expanding his energy bets in Mexico at a time when President Andres Manuel Lopez Obrador has rolled back some of the previous administration’s opening of the industry as he insists that the government maintain control of key assets through Petroleos Mexicanos and utility CFE.
Slim’s vast empire was built on telecommunications company America Movil SAB, while Grupo Carso also has retail, construction, manufacturing and real estate interests. The group has exploration, oil drilling and services operations through Carso Energy in Mexico and Colombia, and exploration contracts in Mexico. The company also operates several natural gas pipelines in northern Mexico and Texas.
Talos previously had sparred with Pemex, as the state-run energy company is known, over the development of Zama after authorities said Pemex would operate it following the discovery that it bled into a reservoir owned by the state oil behemoth. The companies finalized in March a plan to develop the field through a partnership.
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The divestment by Talos comes at a time when companies are facing increasing uncertainty after a series of unfriendly business moves by Lopez Obrador, including the expropriation of a rail line that led Grupo Mexico SAB to back away from a plan to buy Citigroup Inc.’s local unit. Slim’s Inbursa fund owns a 17% stake in the Grupo Mexico transport unit that operated the rail line.
“We celebrate yesterday’s announcement, also because it’s a Mexican company that’s going to be part of the partnership,” Lopez Obrador said Friday during his daily press conference. “Grupo Carso’s participation is important because they own oil rigs, so it’s not going to take long. This is good news.”
The expectation is for Zama to start producing oil by 2025 and for it to produce 150,000 to 180,000 barrels a day by 2029, the president said.
Slim’s drilling unit performs work for Pemex, while his construction units are involved in the Dos Bocas refinery project along with Lopez Obrador’s Maya Train project in the Yucatan peninsula.
Shares of Grupo Carso, which has a market value of about 234.5 billion pesos ($13.3 billion), rose 2.6% at 8:40 a.m. local time. Talos shares fell 0.5% in New York.
Lopez Obrador’s six-year term ends late next year.
--With assistance from Andrea Navarro.
(Updates to add details of Slim’s holdings in fourth paragraph.)
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