State oil company Petroleos Mexicanos, or Pemex, has awarded a $646 million drilling contract to Weatherford International Ltd. (WFT), expanding the oil service company's workload in Mexico, Pemex said Monday.

In a statement, Pemex said the project will start April 15 and last over three years. The contract is for 500 wells in the Chicontepec region in northern Mexico. Chicontepec involves high drilling costs and low productivity at oil wells.

Pemex has been behind schedule on reaching production goals at Chicontepec. The company is relying on the region to compensate for plummeting production at Cantarell, the country's second-largest oil field.

Weatherford won two drilling contracts in Chicontepec last year and was fined by Pemex for an undisclosed amount for falling behind schedule. But Weatherford does not consider the delays a large problem.

The company has said the 2008 Chicontepec drilling contracts will be completed this year. Industry experts said Weatherford's experience at Chicontepec and the fact that it has equipment in place will help the company with future work.

Mexican oil production fell to a 13-year low in February of about 2.7 million barrels a day. By 2015, Pemex expects Chicontepec to produce 511,000 barrels a day, helping to get overall production back above 3 million barrels a day.

-By Peter Millard, Dow Jones Newswires; 5255-5001-5724; peter.millard@dowjones.com