eagle ford shale consortium april 3, 2019

Project introduction

AN UPDATE ON MEXICO’S ENERGY SECTOR

EAGLE FORD SHALE CONSORTIUM

APRIL 3, 2019

Briefing on Mexico’s Current Situation

JULY 1ST, 2018MEXICAN GENERAL ELECTIONS

THREE WORDS THAT DEFINE AMLO’S ADMINISTRATION

Power Nostalgia

Populism

Power & Control

Nostalgia

NAIMNuevo Aeropuerto Internacional de México

TREN MAYA REFINERIA DOS BOCAS

HELICOPTER ACCIDENT

CRISIS OF REFINED

PRODUCTS IN MEXICO

But what happened?

• December is traditionally a month with high-demand for fuels

• Inventories were extremely low

• Production of gasolines was low

• The country imported less

150

CRISIS OF REFINED PRODUCTS IN MEXICO“Huachicol”

ENERGY REFORM

Coordinadordel Sector de

Energía:Secretaría de

Energía

OrganosReguladoras

ComisiónNacional de

Hidrocarburos

ComisiónReguladora de

Energía

Operadores de Sistemas

Empresasproductivas del

Estado

Institutos de Investigación

Petróleo, Electricidad y Nuclear

Institutional Framework

Centro Nacional de Control de Gas

Natural

Centro Nacional de Control de la Energía Eléctrica

PEMEX CFE

Secretaría de Hacienda

Fondo Nacional del Petróleo

Agencia de Seguridadindustrial y

Medio Ambiente

PresupuestoY Finanzas 17

ENERGY CABINET

WHAT DOES AMLO WANTS IN ENERGY?

1. Achieve Energy Independence2. Achieve Energy Security3. Stronger PEMEX4. Stronger CFE5. Build Energy Infrastructure

ENERGY SECURITY-A GRIMM PICTURE-

Oil and Gas: Declining Production

Refined Fuels:Importation at 80% rates of national

consumption

Poor Storage and Transportation infrastructure

MEXICO: LARGE ENERGY MARKETS

3425.021

1925.114

0

500

1000

1500

2000

2500

3000

3500

4000

Oil & Gas Production México 2005-2018

Fuente: CNH

THE PRIVATE SECTOR IN THE MEXICAN UPSTREAM… MOVING SLOWLY BUT STEADILY.

HOWEVER THERE IS AN INTERRUPTION FOR OIL TENDERS AND REVISION OF CURRENT

CONTRACTS IN THREE YEARS

NATURAL GAS MARKET

NATURAL GAS DEMAND HAS DOUBLED SINCE 2017

FORECAST: NATURAL GAS CONSUMPTION

KEEPS GROWING

Production of Gasoline 2013-2018

26

437Mbpd 422

Mbpd

381Mbpd

325Mbpd

257Mbpd

192Mbpd

MEXICO NEEDS INVESTMENT IN OIL PRODUCTS

INFRASTRUCTURE

New investments in the refined products infrastructure sector

Source: CRE

ENERGY STRATEGY UNDER NEW ADMINISTRATION

• CONSTRUCTION OF A NEW REFINERY IN DOS BOCAS, TABASCO: AMLO has announced theconstruction of a new refinery with capacity of 320,000 BPD.

• REHABILITATION OF SIX REFINERIES: AMLO has announced the rehabilitation of six existent refineriesin Mexico that overall have been working at less than 30% of their original capacity

• STRATEGY TO REDUCE ILEGAL TAPING OF PIPELINES AND REFINED PRODUCTS: Mexico has seen anincrease in its rate of illegal taping of refined products, in January the country faced a shortage ofsupply of refined products throughout the country. The administration informed that the shortage wasa consequence of the strategy implemented to decrease the illegal tapping.

• STRENGHTENING OF PEMEX AND CFE (Comisión Federal de Eectricidad):• CAPITAL INFUSION• PEMEX PLANS FOR E&P• REVISION OF ALL CONTRACTS (ULTIMATUM)

• NO FRACKING

…BUT PEMEX IS THE MOST INDEBTED OIL COMPANY IN THE WORLD

…AND A SYSTEM OF CHECKS AND BALANCE IS ALREADY IN PLACE

…ON THE GOOD SIDE, PERHAPS LESS AND SIMPLIFIED REGULATIONS

Q & A

TEXAS

18503 Sigma Rd., Ste. 200-50

San Antonio, Texas, 78258

MEXICO

Prol. Paseo de la Reforma 61-9 A

Paseo de las Lomas 01330

Del. Alvaro Obregon

CDMX

ADDRESS

P: (210)399-0824

C: (210)844-5921

abueno@energyrisolutions.com

Alejandra Bueno

www.energyrisolutions.com

PHONE & EMAIL