Northcote Energy announced that, alongside its joint venture partner Gaia Ecologica S.A. DE C.V it has formed the joint venture entity, Mayan Drilling Fluids SAPI de CV through which the development of the Tabasco remediation facility will be undertaken. This agreement follows the successful purchase of the 22-acre property, which will host the joint ventures first facility in the state of Tabasco, Mexico. The facility will recycle oil cuttings and provide other oil field services to both onshore and offshore wells.
Formation of the joint venture and the commencement of operations in Tabasco is in line with the company’s strategy to invest in cash generative opportunities in the Mexican energy sector.
Gaia has a long track record of providing services in Mexico to the oil and gas industry sector, including oil field waste remediation, making it the ideal partner due to its ability to manage operations from the initial build and commissioning through to full scale operations.
Phase 1 will see the joint venture build and commission the facility within six months, at an estimated cost of less than US$1million.
The facility will be capable of operating 24 hours a day, seven days a week, handling in excess of 700-tonne/day, with the potential to expand significantly as demand increases over time.
The joint venture partners contemplate that the facility will operate a pricing model in line with similar plants in South Texas where prices can range from $60-100 per tonne of waste processed, demonstrating significant revenue potential.
Northcote is the funding partner, owning 51% equity in the joint venture, and Gaia is the operating partner, owning the remaining 49%.
Northcote will fund 100% of the up-front expenditures associated with the implementation of Mayan's business plan and shall be entitled to 85% of distributable cash flow until pay-out plus a 9.0% internal rate of return on its investment.
Image from Northcote Energy.