Precision-BJ Services expand Mexican contract in country’s Burgo Basin

Gary Park, Petroleum News Calgary correspondent

Mexico’s burgeoning natural gas sector is turning into a lucrative opportunity for Precision Drilling, Canada’s largest oilfield services company, and its joint owner, Houston-based BJ Services.

They received a contract extension of $339 million July 7 for at least 285 wells in Mexico’s northern Burgo Basin, adding to an initial contract of $270 million.

Precision chief executive officer Hank Swartout said the extension will see his company increase its Mexican rig fleet to 10 from seven.

The two companies, operating under their joint venture PD Mexicana, finished 240 wells sooner than expected and continued to drill another 60 for the same contracted price.

That lowered the average well costs to $900,000 from an estimated $1.1 million and encouraged state-owned Pemex to extend the deal, which is expected to earn the partners about $1.2 million a well.

Precision Chief Financial Officer Dale Trembaly said about 36 percent of the contract value will flow to Precision, as the lead contractor, with the balance going to BJ and other third parties.

The Burgos basin, covering about 13,000 square miles, is one of Mexico’s largest gas basins.

Precision, which drills about 40 percent of Canada’s oil and gas wells, also has operations in the Middle East and South America, but Mexico has become its hottest international project for more than two years.