On Nov. 24, 2023, the National Hydrocarbons Commission (CNH) initiated and instructed the processing of the early termination procedure due to the resignation of the entire contract area, submitted by Shell Exploracion y Extraccion de Mexico, S.A. de C.V.

The license agreement for the extraction of hydrocarbons stipulates that the contractor will provide and be responsible for all technical and financial resources required for the execution of the operations and will have the right of ownership over the hydrocarbons extracted in the contractual area. The Contractor will pay a royalty, based on audited Hydrocarbons.

The State is a partner of the contractor. The contributions for the State are:
1. The contractual fee for the exploration phase
2. Consideration based on gross income before deducting costs
3. Adjustment mechanism based on production volume and prices

It is important to clarify that all the exploration risk is assumed by the operator, that is, if the assigned operator does not find economically viable hydrocarbons to be extracted, the Mexican State has no payment obligation.

There are two possible extensions in the contract term subject to the area being in regular commercial production, the first extension of 10 years and a second extension for an additional period of 5 years.

Prospective Resources: The volume of hydrocarbons estimated at a certain date, of accumulations that are not yet discovered but have been inferred and are estimated to be potentially recoverable, through the application of future development projects.