September 21, 2018 / 4:08 AM / a year ago

UPDATE 1-Mexico's Pemex reaches deal to see if Talos find reaches its block

(Adds background on contract)

MEXICO CITY, Sept 20 (Reuters) - Mexican state oil firm Pemex has reached a preliminary agreement with a consortium led by Talos Energy to evaluate whether the group's find in the Gulf of Mexico extends into a neighboring Pemex block, the companies said in a statement on Thursday.

The deal, which covers territory in the shallow waters of the Gulf of Mexico, is the first of its kind for Pemex and will be in force for two years.

The Talos consortium, which includes Britain's Premier Oil and Mexico's Sierra Oil & Gas, won development rights for two blocks during the first oil auction launched by President Enrique Pena Nieto. Held in 2015, the auction marked the end of Pemex's decades-long monopoly.

Last year, the consortium said its Zama-1 well drilled in the Area 7 shallow water block confirmed the discovery of a deposit that could hold between 1.2 billion to 1.8 billion barrels of crude oil.

Pemex plans to drill a well in its neighboring block by the end of this year in order to better understand whether or not the major find extends into the Pemex area, a source with knowledge of the plans said.

The project won by the Talos consortium will also be subject to a review by the incoming government of Mexican president-elect Andres Manuel Lopez Obrador. (Reporting by Diego Ore and Ana Isabel Martinez; Writing by Julia Love; Editing by Darren Schuettler)

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