Exxon Mobil Corp., Chevron Corp., and Hess Corp. have agreed to bid together for rights to drill for crude oil in Mexico’s deepwater areas, according to a Bloomberg report.

The three US-based producers have reached a joint operating agreement which allows the consortium to bid to produce oil in the 10 areas up for auction on Dec. 5, according to the report, which cited a person with direct knowledge of the plans.

A joint operating agreement is a contract that establishes the role and obligation of each company in the accord, and designates the party that will act as the operator of a production area should it be awarded in the auction. This type of agreement can be dissolved if one of the companies withdraws its intention to participate in the contract, and the companies may opt not to bid even if the consortium is still in place.

Mexico hopes to raise $44 billion in its first-ever sale of deepwater drilling rights in the Gulf of Mexico, located in the Perdido area near the maritime border with the US and in the southern Gulf’s Cuenca Salina. Seventy-six percent of the country’s prospective oil resources are located offshore in deepwaters, according to Energy Minister Pedro Joaquin Coldwell.

All 26 of the companies that qualified to bid in the auction, including Royal Dutch Shell Plc, Statoil ASA, and BP Plc, are expected to sign similar agreements, because the government’s capital requirements for bidding are considered too large for individual producers to do so alone.

Petroleos Mexicanos, the country’s state-owned oil company, announced in May that they were in talks with Exxon, Chevron, and Total SA to sign agreements of mutual interest to consider the possibility of bidding together in the deepwater round.

Source: http://www.offshore-mag.com/articles/2016/08/exxon-chevron-hess-to-make-joint-deepwater-bid-for-offshore-mexico.html