Mexico Will Pare Oil, Gas Exploration

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Mexico's state-run oil producer Pemex said today it will drastically reduce the number of wells used for oil and natural gas exploration this year as it shuffles plans for two of its largest onshore developments. Pemex said it will have 580 wells in operation this year, 42% lower than 2010's count.

Despite the lower well count, Pemex still expects to boost oil output by 2% to 2.627 million barrels a day by the end of this year with the help of increased production from fields close to the massive Cantarell field. Pemex is paring natural gas production at the Burgos field amid slumping prices for the commodity.

The company will also scale back oil production at the Chicontepec field. Chicontepec, a massive, challenging onshore area has sucked in billions of dollars in investment but consistently failed to yield as much oil as Pemex has promised, Reuters reported. Mexico has been struggling to boost oil output for several years due to maturing fields and a lack investment in oil infrastructure.

Even with fewer wells, Pemex is forecasting that production at Chicontepec will increase this year. Pemex contractors include Schlumberger (SLB) and Halliburton (HAL), the world's two largest oil services firms, and Weatherford International (WFT).