Moody's attributes "disappointing" results of the first round to weak oil prices

Moody's attributed the "disappointing" results of the first round of public auctions of oil blocks in 77 years to weak oil prices.

"Weak oil prices were a key driver of this disappointing result for the first auction under the new energy law," the rating agency said. 

The 14 contracts were for areas with nearly 3.8 billion barrels of oil equivalent (boe) in proven, probable and possible (3P) reserves thanks to prior drilling by state oil firm Pemex.

The Mexican company Sierra Oil & Gas, a consortium that includes Houston-based Talos Energy LLC. and Premier Oil PLC U.K., won the second block for auction in shallow waters of the southern Gulf of Mexico. The winning group offered to pay the government 55.99% of the operating profit from the block, and agreed to invest 10% above the minimum required.

"Without doubt, the start of round one didn't have the momentum we were hoping for," said Juan Carlos Zepeda, president of Mexico's oil regulator, known as the CNH.

Moody's added that the fact that Petróleos Mexicanos did not participate in the auction "is credit positive for Pemex’s ratings because it will reduce potential future pressure on its capital spending needs and leverage."

(With information from Reuters)