Why Mexico Needs Standard Farmouts

Why Mexico Needs Standard Farmouts

This report was prompted by a seminar held at Rice University’s Baker Institute on November 1, 2016, on the subject of recent trends in the Mexican economy. During Q&A, the speaker, a deputy secretary from Mexico’s Finance Ministry, responded with surprise at the comment that Pemex and the government were using the term “farmout” in a non-standard way.

This report provides a basic description of the standard farmout model, as used in the United States, and also offers reasons for choosing “farmout” by Mexican authorities.

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Written by

Baker & Associates offers niche-market consulting services and business intelligence related to Mexico's oil and gas, power and chemical industries. Subject matter expert and publisher George Baker, who spearheads the firm, carried out consulting assignments starting in the late 1970s at the height of the Oil Boom in Mexico. His knowledge and familiarity in these industries runs deep.

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