American Oil and Gas Reporter - February 2016 - 53

Area 4 has water depths ranging from
100-150 feet, McCarroll notes. "It has
complicated geology and objectives that
typically do not produce in the U.S. Gulf
of Mexico, so many companies shy away
from it," he acknowledges. "However, it
is near major fields, infrastructure and
major pipelines. We think it has several
hundred million barrels of oil to produce.
"The area contains two fields, Ichalkil
and Pokoch, with exploration wells that
have been tested for commercial production,
but have never produced," McCarroll says.
"We intend to start a two-year appraisal
this year, where we will drill a few appraisal
wells to determine the potential size of
the fields. With success there, we hope to
have a development plan in place within
the next three or four years."
In making its bid, Fieldwood Energy
partnered with PetroBal S.A.P.I. de C.V.,
a subsidiary of a 50-year-old Mexican
conglomerate called Grupo Bal, which is
involved in mining, finance, retail and
education. "We wanted a local partner
that could help us work with the Mexican
government and Mexican banks," McCarroll explains.
"PetroBal is run by Carlos Morales,
the former president of Pemex Exploration
& Production, and has an extremely talented
staff," McCarroll says. "We are pleased to
have the company as a partner, and we
hope to do other projects together."
McCarroll says he sees a vast opportunity set in Mexico's shallow water. "Pemex has produced oil and gas from big
fields, but there are many small fields
that were discovered, but never developed,
as well as ones that have yet to be discovered. They may not produce enough
to move the needle for a big company,
but they can be significant for us."
He adds that the Mexican government
has been good to work with. "I would
not call the process easy, because it is
new for us as well as the agencies we are
working with," he allows. "But the process
has been transparent, and everyone involved is happy we are there and wants
to make everything work."
On the U.S. side of the Gulf, McCarroll
says Fieldwood Energy is focusing on
keeping its cash flow positive. "We have
reduced our capital budget more than 50
percent. Instead of drilling new wells,
we are maintaining our production through
recompletions," he relates.
Fieldwood also has reduced its operating costs 25-30 percent by finding safe
ways to operate more efficiently. "One
of our big costs is transportation. Today,
we are not sending out transportation
until the vessel or helicopter is full," McCarroll illustrates.
He adds that the company has length-

ened offshore workers' rotations from
one week to two weeks and closed three
shore bases.
Fieldwood's cost reductions have not
included laying off internal staff, McCarroll
reports. In fact, he says the company has
added a few people since the downturn
began. "We have a long-term view of our
company and our business," he emphasizes. "When we have a need and find
talented people who can add value to the
company, we are going to hire them.
"We have seen service costs come down,
but we are not relying on service providers
to reduce our costs," he says. "We are
trying to work with them so we can keep

their people and equipment active."
As an example, McCarroll cites a
year-long contract with a large drilling
rig under which the rate Fieldwood pays
varies based on the job being done. "If
we are drilling wells, we will pay a higher
rate. But if we are doing plugging and
abandonment work, we will pay a lower
rate because that does not generate new
income," he illustrates.
"We also have tied the price of the rig
to the price of oil, so the contractor will
benefit if the price goes up," McCarroll
adds. "That will keep a great rig busy
and allow us to have a win-win relationship
with the contractor."
❒

FEBRUARY 2016 53

http://www.ocsbbs.com http://www.ocsbbs.com

American Oil and Gas Reporter - February 2016

Table of Contents for the Digital Edition of American Oil and Gas Reporter - February 2016