Independent exploration and production company Talos Energy Inc. said Oct. 18 it has entered into a swap deal in the Sureste Basin offshore Mexico with Hokchi Energy, S.A. De C.V., a subsidiary of Pan American Energy LLC Sucursal Argentina.

Under the agreement, Talos will give a 25% participating interest in Block 2 to Hokchi in exchange for a 25% participating interest in Block 31, which is to the south of Block 2. Once the transaction is completed, Hokchi will be the operator of both blocks, while Talos will own a 25% PI in both Block 2 and Block 31.

Talos will use the Hokchi swap as a way to aggregate and accelerate its investment in the prospects existing in both blocks, specifically the Acan prospect in Block 2, as well as other high potential drilling opportunities in Block 31.

Exploration will begin on Block 2 in the second quarter of 2019, as two wells will be drilled, starting with Acan. Then, Talos plans to participate in two wells in Block 31.

"On both of our Mexican assets, we are taking action to facilitate quicker, more robust investment and shorter cycle time to production, and potentially a more material level of production. The swap with Hokchi is a great way to pool resources between two operators that have a proven track-record in offshore Mexico. And this trade also allows us to aggregate our neighboring opportunities," Talos President and CEO Timothy Duncan said.

Talos was awarded the production sharing contract, or PSC, for Block 2 in September 2015, while Hokchi won the PSC for Block 31 in June.

The transaction is subject to approval by Mexico's National Commission of Hydrocarbons.