On March 27, 2018, the Comisión Nacional de Hidrocarburos ("CNH") completed the Presentation and Opening of Bid Proposals for the First Tender of Round Three ("Round 3.1"), which was first announced on September 29, 2017. Round 3.1 attracted 30 oil and gas companies from around the world including Royal Dutch Shell, ExxonMobil, Premier Oil, Pemex, Lukoil, BP, Deutsche Erdoel, Repsol, ENI and Total, among others.

Round 3.1 included 35 shallow water contract areas located in the Burgos, Tampico-Misantla and Cuencas del Sureste regions (shown in the following map). The main focus of Round 3.1 was to offer exploration and development opportunities for wet and dry gas and light crude oil prospective reserves totaling 1,988 MMboe. The prospective resources offered in Round 3.1 accounted for 70% of the available shallow water resources under the Five Year Plan. The blocks were offered under a production sharing contract, similar to the shallow water form used by the CNH in Round 2.1, which has an exploration period of 4-8 years, an evaluation period of 2- 3 years and a development/production period of 19-24 years.

Even though there had been some uncertainty due to the upcoming elections, the results for Round 3.1 exceeded expectations by awarding 16 of 35 contract areas (45% of the available areas) to companies with significant experience in shallow waters or existing assets and operations in Mexico's GOM. Companies showed a moderate appetite for wet and dry gas contract areas in the Burgos and Tampico- Misantla regions where only 8 of the 27 available blocks were awarded. In contrast, companies were very active on the Cuencas del Sureste region where all available contract areas were awarded and in some cases decided under the Tie-Breaker Bonus. Mexico's Energy Ministry estimates that the 16 production sharing contracts will generate over US$8.6 billion in investments. The biggest winners in Round 3.1 were Pemex with 7 contract areas, and Deutsche Erdoel, Total and Premier Oil, each with 3 contract areas. It is noteworthy that since the enactment of the Energy Reform in 2013, the Mexican government has awarded 107 licenses and production sharing contracts to domestic and international companies, who have agreed to drill 138 wells thereunder. The Mexican energy industry continues to attract international companies while promoting joint ventures with domestic players, creating a competitive and active market that only five years ago was a mere goal.

The CNH evaluated the bids based on proposed additional royalty and investment factors. The results of the bidding process are shown in the following chart:

Footnotes

1 Tie-Breaker Bonus: US$59,800,000; Second Place was the DEA & Premier Oil Consortium.

2 Tie-Breaker Bonus: US$13,000,000; Second Place was the DEA, Premier Oil & Sapura Consortium.

3 Tie-Breaker Bonus: US$51,147,000; Second Place was the Eni & Lukoil Consortium.

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