Woodside has announced the approval of a final investment decision to develop the Trion resource in Mexico.
According to Woodside, the development’s estimated returns surpass its capital allocation strategy expectations and provide long-term shareholder value. The first oil is scheduled for 2028.
The Trion development is subject to joint venture approval and regulatory approval of the field development plan (FDP), both of which are expected in the fourth quarter of 2023. Woodside is the operator, with a 60% stake, while PEMEX Exploración y Producción (PEMEX) owns the other 40%.
The overall capital investment is projected to be US$7.2 billion (US$4.8 billion for Woodside and about US$460 million for PEMEX), with the development expected to generate excellent returns to Woodside shareholders and economic and social benefits to Mexico.
The investment is anticipated to provide an internal rate of return (IRR) of more than 16% and a payback period of less than four years. The expected IRR, excluding capital carry, is greater than 19%.
The project will aim to develop 479 MMboe of Best Estimate (2C) Contingent Resource oil and gas (287 MMboe 2C Contingent Resources, Woodside net economic interest). Woodside’s understanding of the vast, high-quality conventional resource has been informed by a thorough appraisal of the subsurface, with six well penetrations conducted across the field.
The resource will be developed using a floating production unit (FPU) capable of producing 100,000 barrels of oil per day. The FPU will be linked to a 950,000-barrel-capacity floating storage and offloading (FSO) vessel.
According to Woodside, the decision to invest in Trion has not impacted its greenhouse gas emissions reduction targets. The starting point for this aim will not be changed due to the investment decision.
Woodside CEO Meg O’Neill stated that Trion is an appealing addition to Woodside’s portfolio of high-quality producing assets in the Gulf of Mexico.
“Trion is a valuable resource with a mature development concept. Our strong balance sheet and disciplined approach enable us to invest in opportunities such as Trion, expanding our global portfolio and delivering long-term value,” O’Neill said.
“We have considered a range of oil demand forecasts and believe Trion can help satisfy the world’s energy requirements. Two-thirds of the Trion resource is expected to be produced within the first 10 years after start-up,” O’Neill noted.
She added, “We are developing Trion because we believe it will deliver value for Woodside shareholders and benefit for Mexico, including generation of jobs, taxation revenue and social benefit. We value the ongoing relationship with PEMEX and the support of the Mexican Government and regulators.”
