Repsol’s REPYY Mexico affiliate, Repsol Exploración México, has entered into a sale and purchase agreement (“SPA”) with PTT Exploration and Production (PTTEP) to increase its stake in Block 29, offshore Mexico. Per the terms of the agreement, Repsol Exploración México will acquire PTTEP’s 16.67% stake in the Block 29 project from its Mexican subsidiary. The deal is anticipated to be finalized by year-end 2024, contingent upon the terms and conditions outlined in the SPA. After the deal’s closing, Repsol will own a 46.67% interest in the project. Currently, Repsol holds a 30% operating interest.

Drilling Campaigns in Block 29

The Block 29 project is situated off the southern coast of Gulf of Mexico. The project is in the exploration phase at present. In May 2020, Repsol carried out a drilling campaign in Block 29 using the Maersk Valiant drillship. The campaign involved drilling two exploratory wells,the Polok-1 and Chinwol-1. Repsol discovered promising results from the campaign. The wells encountered reservoirs of high quality, with a net oil pay of 200 meters and 150 meters, respectively.

Following the successful exploration efforts, Repsol had another drilling campaign scheduled for May or June 2021. The Stena IceMAX drillship was contracted for this campaign. Furthermore, in 2023, Repsol awarded a contract to DORIS for the development of the Block 29 project. The contract required DORIS to submit concept engineering of two major subsea components, the subsea production system (“SPS”) and subsea umbilical, riser and flowline (“SURF”).

Partners in Block 29

Repsol serves as the operator of the block. Other stakeholders in Block 29 include PC Carigali Mexico Operations, which is the Mexican subsidiary of the oil firm in Malaysia, Petronas, holding 28.33% and Harbour Energy holding 25%. Harbour Energy owns an interest in this block through its acquisition of Wintershall Dea’s assets in the region.

REPYY’s Zacks Rank and Key Picks

Currently, REPYY carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the energy sector are PEDEVCO Corp. PED,TechnipFMC FTI and VAALCO Energy EGY. PEDEVCO presently sports a Zacks Rank #1 (Strong Buy), while TechnipFMC and VAALCO Energy carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

PEDEVCO is engaged in the acquisition and development of energy assets in the United States and Pacific Rim countries. PED stands to benefit significantly from its holdings in the Permian Basin, one of the most prolific oil-producing regions in the United States, as well as in the D-J Basin in Colorado, which includes more than 150 high-quality drilling locations. Combined with bullish oil prices, this is expected to boost the company's production and overall profitability.

TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. The company’s total backlog witnessed a record high of $13.9 million in the second quarter of 2024, indicating a year-over-year increase of 4.51%. This growing backlog ensures strong revenue growth for FTI.

VAALCO Energy is an independent energy company involved in upstream business operationswith a diversified presence in Africa and Canada. Having a large inventory of drilling locations in premium Acreage of Canada, EGY’s production outlook seems bright.

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