Talks between Mexico's state-owned Pemex and Talos Energy about developing a major offshore oil deposit are continuing, the U.S. company said on March 26, although the two sides missed this week’s deadline to reach a deal on key details of the project.

The nearly 700 million barrel Zama discovery made by a Talos-led consortium in 2017 extends into Pemex’s neighboring block in the southern Gulf of Mexico.

The two sides have been negotiating a deal, known as a unitization agreement, to jointly operate the area.

“As we transition into this new phase in the process, we look forward to continuing to engage constructively with both (Mexico’s energy ministry) and Pemex and we are confident we can achieve a positive outcome for all parties,” Talos CEO Tim Duncan said in the statement.

He said “significant progress” had been made and “a common understanding has been largely achieved,” without giving details.

The two sides failed to meet the deadline to submit an operating agreement, under which the two sides agree on one company to run operations, among other technical decisions. No deal has been reached on details, such as the preliminary split of Zama’s oil riches.

Reuters reported this week that talks between the two companies would be extended past the deadline and that Pemex was open to Talos operating Zama provided it met certain conditions.

Talos said the energy ministry was now required to propose its own unitization deal. Industry analysts said they did not expect Mexico to do this quickly as the two sides were still negotiating.

Offshore