Renta 4 | Repsol (REP), in alliance with Eni as operator with a 50% stake, has made an important oil discovery in Mexico.
According to information published by the Italian company, the field is located some 63 km off the coast of Mexico, in the medium-deep waters of the Salina Basin in the Southeast Basin. The well has been drilled to a depth of 525 metres and has reached a total depth of 2,931 metres.
Preliminary estimates indicate a potential of around 300-400 million boe of oil and gas.
It should be recalled that in 2020, the Company already made two significant oil discoveries in deepwater Mexico with its Polok-1 and Chinwol-1 exploration wells in Block 29 of the Salina Basin. Both wells confirmed high quality reservoirs with excellent properties.
Assessment: Positive news that could increase the Company’s proved reserves by close to 10%, above 2.1 billion barrels, so we expect a positive impact on the share price. We recall that the Company’s strategy in the exploration and production business is to a) increase the efficiency and profitability of the business, reducing breakevens and gaining scale in unconventional crudes; and b) improve the quality of the portfolio, focusing on fields with competitive advantages and with greater potential for value creation; c) while rotating assets in less attractive jurisdictions; d) all with the objective of listing the business in the US by 2026.
We reiterate our recommendation of Overweight with a Target Price of €19.5/share.
