Expro's Deepwater Triumph: A Strategic Play on Mexico's Energy Future and Tech Leadership

Mexico's energy sector is at a crossroads. With production projected to plummet by 2030, the nation's first ultra-deepwater oil project, Trion, has emerged as a critical lifeline. For Expro Group (XPRO), the £2.3 billion energy services firm, this represents a defining moment—a chance to showcase its technological prowess and secure a foothold in Latin America's budding deepwater boom. The Trion contract isn't just a win for Expro; it's a blueprint for how specialized firms can capitalize on the world's shifting energy landscape.

A New Era in Mexican Deepwater

The Trion project, located 180 km off Mexico's Gulf Coast in 2,500 meters of water, is a landmark venture. With first oil slated for 2028, it will produce 100,000 barrels per day—7% of Mexico's projected output—and generate over $10 billion in taxes and royalties for the government. For a country where production has fallen by 60% since 2004, this is a lifeline. Yet Trion's true significance lies in its technical complexity: it's Mexico's first deepwater facility, requiring cutting-edge engineering to navigate ultra-deepwater challenges.

Expro's Tech Edge: From Margins to Market Share

Expro's three-year contract with Woodside Energy positions it as the project's well-construction architect. Its role spans advanced tubular running (TRS) and cementing services, leveraging proprietary systems like the Skyhook®—a robotic casing deployment tool that reduces well completion time by up to 40%. This isn't just equipment; it's a moat against competitors.

The firm's differentiation matters. In an industry where margins thin as oil prices fluctuate, Expro's focus on high-value, technically demanding work ensures profitability. Its TRS services command premium pricing, while its integration of automation and data analytics (e.g., real-time cementing diagnostics) minimizes delays. As Latin America's deepwater projects—Brazil's Libra field, Colombia's CPO-10—expand, Expro's niche is primed to grow.

Note: A visual comparison would show XPRO's outperformance during energy market volatility, reflecting its specialized, high-margin focus.

Low-Risk, High-Reward Partnerships

The Trion project's risk profile is bolstered by its backers. Woodside, a seasoned operator with a 98% on-budget track record in major projects since 2010, leads the venture. PEMEX's 40% stake provides local expertise, though its governance challenges remain a distant risk—the project is already 25% complete and on schedule. For Expro, this reduces execution uncertainty.

Moreover, Woodside's 60% stake ensures steady cash flows: Trion's $7.2 billion budget is fully funded, and Woodside's capital allocation framework prioritizes projects with clear returns. Expro's fixed-fee contract insulates it from commodity price swings, making this a stable revenue stream.

The Bigger Picture: Latin America's Deepwater Surge

Trion isn't an outlier—it's a harbinger. The IEA forecasts that Latin America's deepwater output could rise by 1.5 million barrels per day by 2030, driven by underdeveloped reserves in Brazil, Mexico, and Colombia. Expro's early entry into this market positions it as a go-to partner for operators seeking advanced well-construction tech.

Meanwhile, the project aligns with global trends. Even as renewables grow, oil demand in emerging markets will remain robust, and deepwater fields—often more efficient than onshore projects—are critical to meeting it. Expro's tech also supports decarbonization: its cementing systems reduce well emissions by optimizing casing integrity, a key ESG selling point for clients under regulatory pressure.

A Call to Action: Buy XPRO for Deepwater Dominance

Expro's Trion contract is more than a single deal—it's a signal of its strategic acumen. The firm is betting on two unassailable trends: the inexorable rise of deepwater projects in energy-hungry markets and the irreplaceable value of specialized technology in an increasingly complex industry.

Investors should view XPRO as a leveraged play on both. With a market cap of £2.3 billion and a dividend yield of 3.2%, it offers stability and growth. Risks? PEMEX's broader operational issues could delay future projects, but Trion's progress and Expro's backlog of $2.2 billion in signed contracts (as of Q1 2025) provide near-term certainty.

The verdict? Expro's combination of technical differentiation, low-risk partnerships, and exposure to a multi-decade deepwater boom makes it a compelling buy. In a world hungry for energy—and increasingly reliant on complex, offshore solutions—this is a company poised to drill deeper into investor portfolios.

Disclosure: The author holds no position in XPRO at the time of writing.