Oct. 30 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, will “continue to work in Chicontepec,” said the company’s head of exploration and production.

Pemex continues with its Chicontepec drilling program, unit head Carlos Morales said today on an earnings conference call with investors. Recent comments about the future of the project are “rather speculative,” he said.

Chicontepec is “an important project for Pemex that is obviously under evaluation all the time,” Chief Financial Officer Esteban Levin said today in the call. “We need to take in consideration not only the technical aspects but also the economic aspects.”

Since 2007, the Mexico City-based company has awarded at least $3.8 billion of contracts for Chicontepec, betting it will help offset falling output elsewhere. Pemex said Oct. 27 in an e-mailed statement it may not renew Chicontepec drilling contracts worth $870 million with Weatherford International Ltd. because it has the equipment it needs for next year’s exploration program.

“It appears as though Pemex is trying to sort out all of the moving parts and significant technical challenges associated with development of the Chicontepec field,” said Gianna Bern, president of Brookshire Advisory & Research Inc. in Flossmoor, Illinois.

“This doesn’t appear to be a situation that is going to be settled anytime soon,” Bern said today in an e-mail.

Production Target

Pemex had an original Chicontepec target of more than 100,000 barrels per day for 2009. September daily output was 29,907 barrels.

Pemex is reviewing the profitability of all its projects, including the $11.1 billion Chicontepec development, before deciding how to proceed, Mexican Energy Minister Georgina Kessel said in an interview Oct. 21.

Mexico plans to stabilize oil production at 2.5 million barrels a day through 2012, she said.

“The backbone of this plan is the development of Chicontepec,” said Scott Gruber, an analyst at Sanford C. Bernstein & Co. in New York in a report Friday.

“The probability that spending within Chicontepec will continue at the current pace appears low and changes are likely to be instituted upon renewal of the contracts.”

To contact the reporter on this story: Carlos M. Rodriguez in Mexico City at carlosmr@bloomberg.net.

Last Updated: October 30, 2009 13:47 EDT