The National Hydrocarbons Commission (Comisión
Nacional de Hidrocarburos or "CNH") is responsible
for conducting acreage tenders and the Ministry of Finance
(Secretaría de Hacienda y Crédito
Público "SHCP" or Treasury) is responsible of
managing Mexico's E&P fiscal regime. After six completed
bid rounds, they have moved up rapidly in the learning curve. The
CNH and the SHCP have a better market understanding of how the oil
industry values underground hydrocarbon resources. Mexican
authorities have learned to apply common tender and fiscal
practices widely used in Colombia, Brazil and the US Gulf of Mexico
(US GOM), among others. These common practices consist in not only
offering smaller blocks, but also favoring upfront signature
bonuses over other future government take instruments (Royalties
and/or Governmental Production Share). We expect this trend to
continue as Mexican geology is "de-risked" by
new knowledge and smooth contract management is demonstrated.