(Bloomberg) -- Upstart Mexican driller Sierra Oil & Gas S de RL de CV, which co-owns a billion-barrel find in the Gulf of Mexico, has hired Canada’s Scotia Waterous to sell a stake in a nearby exploratory block.

“We are negotiating the final terms of the agreement with the buyer,” said Ivan Sandrea, Sierra’s chief executive officer, speaking over the phone from Houston. “It’s been a very competitive process.” He declined to identify the buyer, citing a confidentiality agreement.

Sierra, which has backing from EnCap Investment LP, Riverstone Holdings and BlackRock Inc., is seeking to sell a minority stake of the 195-square kilometer area in the Southeast basin where it has partnered with Talos Energy Inc. and Premier Oil Plc. Sierra has a 45 percent stake in the block, one of two awarded to the consortia group led by Talos in Mexico’s first competitive auction in 2015. The second block, where the Zama well was drilled last year, is estimated to contain as much as two billion barrels of oil-in-place and is one of Mexico’s biggest oil discoveries.

Sierra is among a growing number of companies seeking to sell Mexican oil assets, a development made possible by 2013 legislative changes that opened the market to private investment after almost eight decades of state monopoly.

Last month, Jaguar Exploracion y Produccion SA de CV and Vista Oil & Gas SAB de CV signed Mexico’s first farm-out deal -- a joint venture in which help developing an oil area is exchanged for a stake -- that didn’t include state-owned Petroleos Mexicanos. Eni Spa and Cnooc Ltd have also said they are considering farming out blocks, and Pemex will seek partners to develop seven onshore areas in an October 31 auction.

Bureaucratic challenges

While Mexico’s secondary market for oil contracts is heating up, the arrival of a new government in December could slow down new deals. Presidential front-runner Andres Manuel Lopez Obrador has promised to dial back Mexico’s energy reforms, including suspending auctions.

Pemex also could try to claim a bigger piece of the oil pie. Sierra’s giant Zama discovery touches on a neighboring block owned by Pemex, an unprecedented situation in Mexico that has led the government to devise new rules on how to divide the oil riches, known as unitization. The Talos-led consortia group is “close to signing the per unitization agreement and in two years, or after the appraisal, we will negotiate the split of the field,” Sandrea said.

Separately, gasoline storage and transport infrastructure projects have been bogged down by permitting delays. Construction of Sierra’s marine terminal complex in Tuxpan, a joint-venture with Canada’s TransCanada Corp. and Mexico’s Grupo TMM, has been delayed by more than a year as the project has only recently received all of the permits required. Work is expected to begin in the second half of 2018, and Sierra is in talks with several international companies to lease storage capacity.

“Everything is a bit slower because of the permits and the administrative process. But we are glad that we have advanced on the project,” said Sandrea. “We are very busy.”

(Updates paragraph 7 with additional comments from Sierra’s Ivan Sandrea.)

To contact the reporters on this story: Amy Stillman in Mexico City at astillman7@bloomberg.net;Kiel Porter in New York at kporter17@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Mike Jeffers, Stephen Cunningham

©2018 Bloomberg L.P.