Cheiron/PICO Petroleum Corporation Wins Mexican Cardenas-Mora Onshore License Bid

Cheiron Petroleum Corporation is pleased to announce that its wholly owned subsidiary Cheiron Holdings Ltd (the “Company”) placed the winning offer to partner with Pemex on Mexico’s onshore Cardenas-Mora license. The offer included a cash bonus of $41.5 million plus an amount to be paid in recognition of Pemex’ previous investments on the block. Under the terms of the license contract, the Company will acquire Operatorship and a 50% interest in the block and Pemex will retain the remaining 50% interest.  The contract represents one of the first new tax and royalty based agreements to be awarded after the recent liberalisation of the Mexico’s oil and gas sector.

The Cardenas-­Mora block is located approximately 35 km south-east of Comacalcoand covers an area of 168 sq km. The block contains two mature oil fields (Cardenas and Mora) which contain significant remaining reserves held in fractured carbonates reservoirs in the Upper Jurassic and Lower Cretaceous formations. The fields have historically been produced under primary depletion and the Company plans to increase withdrawal rates through a production optimisation program involving workovers, sidetracks and artificial lift enhancements.

Cheiron has been active in Mexico for the past eight years, partnering with Pemex under a number of service contract arrangements, most notably on the Altamira field.   The new Cardenas-Mora acquisition will allow the Company to leverage its extensive local operating expertise and relationships to improve the expected field recoveries and add value for the field owners.