Investing with Carlos Slim is just one way to bet on Mexico's oil revival. Ending the state's crude monopoly promises a surge in energy drilling and output. That won't much move the stock of incoming giants like Exxon Mobil . But it could meaningfully boost Carlos Slim's Grupo Carso , which owns a stable of drillers and services firms; along with local talent like Alfa and Grupo Mexico .
Mexico's inefficient, state-run Pemex will soon be joined by a host of more motivated and technologically advanced rivals. On Tuesday, committees in the Mexican Senate approved laws that will allow private firms to explore for crude for the first time since 1938. After a decade of sliding production, Mexican officials believe the overhaul will lead to a 20 percent rise in output by 2018 and an extra $30 billion in annual foreign direct investment.
Riding this wave as an equity investor, however, isn't simple. Even the discovery of big new fields in Mexico won't shift the needle for Exxon or Chevron. Daily output of oil and gas at Exxon is already some 44 percent larger than Mexico's entire crude production.
Slim's $13 billion Grupo Carso is one pick. Mexico's richest man is still a relative novice in energy and is unlikely to bid alone for complex deepwater or shale projects. That said, Carso has been expanding its oil expertise. A drilling boom would benefit the group's platform builder Swecomex - especially since the new rules insist that a quarter of supplies be sourced inside Mexico. And driller Carso Energy would make a tempting local partner for outsiders needing help negotiating Mexico's political process.
Another possible homegrown champion is Alfa, a $15 billion conglomerate, which has experience in shale drilling in the United States. Mining firm Grupo Mexico, with a market capitalization of $27 billion, has also been venturing into oil drilling and would be a natural partner for foreign explorers.
True, none of these firms offers a pure play on energy. Carso gets less than a quarter of its income from drilling and oil services. And Alfa produces everything from frozen foods to auto parts. But all now have a powerful incentive to beef up their energy businesses. And as they grow, with a little nudging from shareholders they might be spun off in the future.
Source: Reuters
Mexico's inefficient, state-run Pemex will soon be joined by a host of more motivated and technologically advanced rivals. On Tuesday, committees in the Mexican Senate approved laws that will allow private firms to explore for crude for the first time since 1938. After a decade of sliding production, Mexican officials believe the overhaul will lead to a 20 percent rise in output by 2018 and an extra $30 billion in annual foreign direct investment.
Riding this wave as an equity investor, however, isn't simple. Even the discovery of big new fields in Mexico won't shift the needle for Exxon or Chevron
Slim's $13 billion Grupo Carso is one pick. Mexico's richest man is still a relative novice in energy and is unlikely to bid alone for complex deepwater or shale projects. That said, Carso has been expanding its oil expertise. A drilling boom would benefit the group's platform builder Swecomex - especially since the new rules insist that a quarter of supplies be sourced inside Mexico. And driller Carso Energy would make a tempting local partner for outsiders needing help negotiating Mexico's political process.
Another possible homegrown champion is Alfa, a $15 billion conglomerate, which has experience in shale drilling in the United States. Mining firm Grupo Mexico, with a market capitalization of $27 billion, has also been venturing into oil drilling and would be a natural partner for foreign explorers.
True, none of these firms offers a pure play on energy. Carso gets less than a quarter of its income from drilling and oil services. And Alfa produces everything from frozen foods to auto parts. But all now have a powerful incentive to beef up their energy businesses. And as they grow, with a little nudging from shareholders they might be spun off in the future.
