Orrick represented Merlin Energy, Inc., an international energy company focused on oil and natural gas exploration and production, in a multi-million dollar financing transaction which has broad implications for the Mexican oil and gas industry.

We guided our client in the negotiation and implementation of the first ever Mexican overriding royalty interest for certain onshore blocks located in Eastern Mexico with Compania Petrolera Perseus.

While royalty interests are fairly common in the international oil and gas industry, this is the first time that such an instrument was used in the nascent, privately-managed Mexican oil and gas sector. The royalty is calculated based on the gross production of one of the onshore conventional oilfields awarded by the Mexican government to a private operator as part of Round 1.3.

This innovative transaction has introduced a new financial instrument to the recently opened Mexican oil and gas industry and creates an interesting financing option for Mexican operators going forward. The Orrick team included partners Rodrigo Dominguez and Peter Roberts, of counsel Joanna Kay and associate Ryan Giggs.