Upstream sector in Mexico remains dynamic and moving forward

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1 November 12, 2018 ENERGY ALERT Upstream sector in Mexico remains dynamic and moving forward Summary 1. Lukoil and ENI sign an Agreement for the transfer of Working Interest on three shallow water blocks awarded by virtue of Round Approval of Working Interest transfer from Talos Energy Offshore Mexico 2 S.A. de R.L. de C.V and Sierra Blanca P&D, S. de R.L. de C.V to Hokchi Energy S.A. de C.V. in relation to Contractual Area 2 awarded by virtue of Round 1.1; 3. Approval for the constitution of a lien to Petrolera Cárdenas Mora, S.A.P.I. de C.V. (subsidiary of Cheiron Holdings Limited), in relation to the License Contract corresponding to Cárdenas Mora Contractual Area; 4. Approval of updates to Provisional Plans related to Contractual Areas awarded by virtue of Round 2.2 and 2.3; 5. Approval for modifications to the Appraisal Plan filed by Servicios de Extracción Petrolera Lifting de México, S.A. de C.V. in relation to Contractual Area #17 awarded by virtue of Round 1.3; 6. Update provided by CNH with respect to the progress of the Second and Third bids of Round 3 and Bid CNH-A6 7 Asociaciones/2018; 7. Authorizations granted by CNH of the drilling of wells during the 3rd quarter of Lukoil and ENI sign an Agreement for the transfer of Working Interest on three shallow water blocks awarded by virtue of Round 2.1 On November 6, 2018, ENI and Lukoil (the Parties ) entered into an Agreement for the transfer of Working Interest on three shallow water blocks corresponding to Round 2.1, which is still pending to be approved by the National Hydrocarbon Commission ( CNH, per its acronym in Spanish). Due to the proximity of the blocks, the objective of the Agreement is to diversify exploration risks, accessing broader opportunities and increasing mutual operational synergies. Please find below a map with the location of the corresponding blocks: According to the Agreement, Eni will grant Lukoil a 20% of Working Interest in Contractual Areas 10 and 14, in exchange of a 40% of Working Interest in Contractual Area #12. Given the above, please find below a summary of the Working Interest percentages agreed between the Parties in the aforementioned blocks once CNH approves the Agreement:

2 Round 2.1 Eni and Lukoil blocks subject to the Agreement Bidding Round # of Contractual Area Contractor Operator Working Interest (%) ENI 80% ENI Lukoil 20% Lukoil 60% Lukoil ENI 40% ENI 40% CITLA ENI 40% Lukoil 20% 2. Approval of Working Interest transfer from Talos Energy Offshore Mexico 2 S.A. de R.L. de C.V and Sierra Blanca P&D, S. de R.L. de C.V to Hokchi Energy S.A. de C.V. in relation to Contractual Area 2 awarded by virtue of Round 1.1 As it was announced weeks ago, Talos Energy Offshore Mexico 2 S.A. de R.L. ( Talos Energy ) came to an agreement with Hokchi Energy, S.A. de C.V (subsidiary of Pan American Energy) for transferring its Working Interest in Block 2 awarded by virtue of Round 1.1 in exchange of a Working Interest share in Block 31 awarded by virtue of Round 3.1. Also, it was mentioned that Hokchi Energy, S.A. de C.V ( Hochki Enery ) would be appointed as the Operator in both of the blocks. On October 30, 2018, CNH authorized the transfer of a 25% of Working Interest from Talos Energy and a 22.5% from Sierra Blanca P&D S. de R.L. de C.V to Hokchi Energy with respect to this transaction. Notwithstanding the above, CNH stressed the fact that this transaction would not take effect until the control of the operations (i.e. change of the Operator) is formally approved. Working Interest Percentage of the Parties in the Consortium will be as follows: Round 1.1 Contractual Area 2 Working Interest Consortium New Working Interest Hokchi Energy* 47.50% Sierra Blanca 22.50% Talos 20% Premier 10% *Operator highlighted in grey 3. Approval for the constitution of a lien to Petrolera Cárdenas Mora, S.A.P.I. de C.V. (subsidiary of Cheiron Holdings Limited), in relation to the License Contract corresponding to Cárdenas Mora Contractual Area On October 30th, CNH approved the request made by Petrolera Cárdenas Mora, S.A.P.I. de C.V. ( Cheiron Holdings Limited or Cheiron ) to constitute a lien with its Working Interest in Cárdenas Mora Contractual Area. Cheiron plans to finance its operations through a loan agreement with financial institution Natixis, New York Branch ( Natixis ) by granting its 50% Working Interest in the License Contract as a guarantee. It should be noted that the that the referred Contract establishes that the Contractors (i.e. Cheiron and PEP) cannot impose or allow the imposition of any kind of lien or restriction of ownership over the rights derived from the Contract unless there is a prior consent from CNH. In order to be able to constitute this lien, Cheiron executed a Pledge Agreement through which the transmission of ownership of its Working Interest is given to the affected party derived from a breach of the terms agreed. It is important to take into account that the constitution of a Pledge Agreement and CNH approval only represents the first stage of the process for constituting a lien. Second stage, would be the execution of the lien, which will be only triggered in the event that Cheiron fails to comply with its obligations towards the Pledgee (Natixis). In such case, the Pledgee shall request the transfer of ownership of the respective Working Interest.

3 Please note that the approval given to constitute a lien, DOES NOT validate the Pledgee as a Contractor, as it would still have to demonstrate technical and financial capabilities to become a Contractor in terms of the terms applicable to the bidding process in which this block was awarded. 4. Approval of updates to Provisional Plans related to Contractual Areas awarded by virtue of Round 2.2 and 2.3 I. Contractual Area 1 - Round 2.2 On October 25, CNH approved the update of the Provisional Program submitted by Iberoamericana de Hidrocarburos ( Iberoamericana ) in relation to Contractual Area 1 awarded by virtue of Round 2.2, which is located in Burgos Basin. As a result of this approval, Iberoamericana plans to develop the following activities: Drilling of 4 development wells Major repairs (3) Evaluation of artificial production systems Development of infrastructure Said activities will represent a total investment of $12.77 MM USD. Once the drilling is completed, a peak of production between 220 and 230 bpd of condensates and 18 MMscfd of natural gas is expected to be reached. II. Contractual Area 1 of Round 2.3 On October 25, CNH approved an update to the Provisional Plan submitted by Iberoamericana in relation to Contractual Area 1 awarded by virtue of Round 2.3, which is located in Burgos Basin. As a result of the approval, Iberoamericana will perform the following activities: Drilling of 4 wells (3 in Campo Picadillo and 1 in Campo Carlos) Evaluation of inactive wells Said activities will represent a total investment of $17.7 MM USD. A breakdown of these investments is depicted in the following table: Round 2.3 Contractual Area 1 Budget associated with the modified Provisional Program Year Total Investment (MM USD) $0.29 $17.49 $17.77 III. Contractual Area 7 - Round 2.3 On October 25, CNH approved the update an update to Provisional Program submitted by Jaguar Exploración y Producción 2.3 S.A.P.I. de C.V. ( Jaguar ) in relation to Contractual Area 7 awarded by virtue of Round 2.3, which is located in Veracruz Basin. As a result of this approval, Jaguar plans to develop the following activities: 2 major repairs 2 minor repairs Studies for the construction of infrastructure Studies to establish strategic access routes to the Contractual Area Said activities will represent a total investment of $42.63 MM USD. 5. Approval for modifications to the Appraisal Plan filed by Servicios de Extracción Petrolera Lifting de México, S.A. de C.V. in relation to Contractual Area #17 awarded by virtue of Round 1.3 On October 25, 2018, the CNH approved the modification to the Appraisal Plan submitted by Servicios de Extracción Petrolera Lifting de México, S.A. de C.V. ( Lifting ) in relation to Contractual Area 17 awarded by virtue of Round 1.3.

4 In accordance with the Minimum Work Program ( MWP ), the Appraisal Plan considers the drilling of 2 wells (Paso de Oro-1 DEL and Paso de Oro-B) and the execution of 4 core studies, crediting a total of 8,100 Work Units. The estimated investment associated to those activities will be of $18.1 MM USD, which represents an increase in $5.2 MM USD in comparison to the original Plan. 6. Update provided by CNH with respect to the progress of the Second and Third bids of Round 3 and Bid CNH-A6 7 Asociaciones/2018 On October 25, 2018, CNH announced the authorized entities to perform the Registration payment for the ongoing bidding processes. Bellow, please find a summary of companies that were authorized: No. Round 3.2 Companies authorized to perform the Registration payment Entity* 1 Avanzia Exploración y Producción, S.A. de C.V. 2 CMM E&P, S. de R.L. de C.V. 3 CNE Oil and Gas, S.A.P.I. de C.V. 4 Deutsche Erdoel México, S. de R.L. de C.V. 5 Galem Energy, S.A.P.I. de C.V. 6 Gat Oil and Gas, S.A.P.I. de C.V. 7 Geopark Limited 8 Gran Tierra México Energy, S. de R.L. de C.V. 9 Grupo R Exploración y Producción, S.A. de C.V. 10 Jaguar Exploración y Producción de Hidrocarburos, S.A.P.I. de C.V. 11 Newpek Exploración y Extracción, S.A. de C.V. 12 Pacific Rubiales E&P México, S.A.P.I. de C.V. 13 Petrobal, S.A.P.I. de C.V. 14 Petróleos Mexicanos 15 Petroleum Incremental Inc, S. de R.L. de C.V. 16 Quimica Apollo, S.A. de C.V. 17 Southerngeo México, S.A.P.I. de C.V 18 Tecpetrol Internacional, S.L.U. 19 Tonalli Energía, S.A.P.I. de C.V. 20 Trafigura México, S.A. de C.V *The entities in grey have already started the Pre-qualification process No. Round 3.3 Companies authorized to perform the Registration payment Entity 1 Petróleos Mexicanos 2 Shell Exploración y Extraccin de Mexico, S.A. de C.V 3 Southerngeo México, S.A.P.I. DE C.V. 4 Tonalli Energía S.A.P.I. DE C.V. 5 Tecpetrol Internacional, S.L.U. 6 Trafigura México, S.A. DE C.V. *The entities in grey have already started the Pre-qualification process

5 No. Farm Outs Companies authorized to perform the Registration payment Company 1 California Resources Corporation 2 Compañía Española de Petróleos, S.A.U. 3 Deutsche Erdoel México, S. de R.L. de C.V. 4 ECP Hidrocarburos México, S.A. de C.V. 5 Frontera Energy Corporation 6 Galem Energy, S.A.P.I. de C.V. 7 Gran Tierra Mexico Energy, S. de R.L. de C.V. 8 Petrobal, S.A.P.I. de C.V. 9 Southerngeo México, S.A.P.I. de C.V. 10 Tecpetrol Internacional, S.L.U. *The entities in grey have already started the Pre-qualification process 7. Lastly, CNH authorized the drilling of 11 wells in the third quarter of the current year. A summary of the aforementioned wells is shown below: Oil wells authorized by the CNH 3rd quarter of 2018 # Operator Well Asignación/Contract Type of field Estimated investment (MM MXP) 1 Kinbe-2DEL Okom-01 Shallow water 2 Pox-101EXP Amoca-Yaxche-05 Shallow water 3 Betan-1EXP Mezcalapa-02 Conventional Onshore 4 Kokitl-1EXP Cinturón Subsalino-07 Ultra-deepwater 5 PEP Tohkin-1EXP Okom-04 Shallow water $7,313 6 Kili-1EXP Cinturón Subsalino-13 Deepwater 7 Ixcanul-1EXP Mezcalapa-05 Onshore 8 Mulach-1EXP Mezcalapa-01 Shallow water 9 Chaxán-1EXP Puchut Total E&P Etzil-1SON 11 Secadero Petróleo y Gas Secadero-1002EXP Contractual Area 2 (Round 1.4) Secadero (Round 1.3) Non-conventional Onshore Ultra-deepwater $1,735 Onshore $118

6 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. How EY s Global Oil & Gas Center can help your business The oil and gas sector is constantly changing. Increasingly uncertain energy policies, geopolitical complexities, cost management and climate change all present significant challenges. EY s Global Oil & Gas Center supports a global network of more than 10,000 oil and gas professionals with extensive experience in providing assurance, tax, transaction and advisory services across the upstream, midstream, downstream and oilfield service sub-sectors. The Center works to anticipate market trends, execute the mobility of our global resources and articulate points of view on relevant key sector issues. With our deep sector focus, we can help your organization drive down costs and compete more effectively EYGM Limited. All Rights Reserved. CSG No SW ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com/oilandgas For more information regarding this EY Alert, please contact our team of professionals: Contacts: Alfredo Álvarez Mexico City Office - Energy Leader alfredo.alvarez@mx.ey.com Rodrigo Ochoa Mexico City Office Oil & Gas Tax Leader rodrigo.ochoa@mx.ey.com Enrique Pérez Grovas New York City Office - Tax enrique.perezgrovas@ey.com Javier Noguez Houston Office - Tax javier.noguez@ey.com Yuri Barrueco Mexico City Office Tax yuri.barrueco@mx.ey.com Mario Karim Mexico City Office Tax mario.karim@mx.ey.com Salvador Meljem Mexico City Office Tax salvador.meljem@mx.ey.com Salvador Ugalde Mexico City Office - Tax salvador.ugalde.mancilla@mx.ey. com