Talos Energy Inc. (NYSE: TALO) has signed a definitive agreement to farm into Block 29, an offshore Mexico development operated by Repsol, S.A., according to a press release from the company.

Under the terms of the deal, Talos will acquire a 50% working interest in the block for a contingent $30 million payment at final investment decision (FID), a cash carry of up to $20 million on the next exploration well, and reimbursement of certain pre-closing costs. Upon closing, Talos and Repsol will be the sole participants in the block.

Block 29 is located in the Salinas-Sureste Basin in the southern Gulf of Mexico and contains the Polok and Chinwol oil discoveries, which are estimated to hold more than 200 million barrels of oil equivalent of gross recoverable resource. The block also includes multiple additional exploration prospects.

The partners expect to progress the project toward FID in 2027. The transaction requires approval from Mexico's Secretaría de Energía and the National Anti-trust Commission of Mexico.

Talos President and CEO Paul Goodfellow said the farm-in "adds a high quality, large-scale development opportunity and meaningful exploration upside in a proven deepwater basin."

The development concept is based on a floating production, storage and offloading vessel anchored by the existing oil discoveries. The block targets Miocene reservoirs that Talos describes as analogous to fields it has developed in the Gulf of America.