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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