Investment momentum builds in Vaca Muerta
Tuesday, Apr 04, 2017
Investment activity continues to gather momentum in Argentina’s Vaca Muerta shale, with four companies signing a deal last week to invest US$500 million in exploring two blocks.

State-run YPF, the first big developer in the play, signed a memorandum of understanding (MoU) with BP-controlled Pan American Energy (PAE), France’s Total and Germany’s Wintershall.

The companies said they will seek government approval to split a block and merge in another as a first step toward putting them into development, according to a YPF filing with the Buenos Aires Stock Exchange.

If approved, Aguada Pichana will be split into two: Aguada Pichana Oeste (APO), measuring 629 square km, and Aguada Pichana Este (APE), which has an area of 604 square km.

APO will then be merged with Aguada de Castro (ACA), a 163 square km block on the western border of APO, taking the combined block’s area to 767 square km, YPF said. The next step will be to request 35-year development licences, the company added.

The companies intend to invest US$300 million in exploring APE and US$200 million to do the same on the combined APO/ACA. Total will be the operator of APE and PAE the operator of the latter.

The blocks are in the gas window of Vaca Muerta, to the west of Loma Campana, the most productive block in the play so far. YPF is currently producing about 63,000 boepd from Loma Campana with Chevron.

Another block in the vicinity is Fortin de Piedra, where Argentina’s Tecpetrol intends to invest US$2.3 billion over the next three years.
In related news, Andes Energia has secured US$60 million in two credit facilities to fund drilling work in the Vaca Muerta.

In a statement, the company said it took out the credit facilities with Mercuria Energy Trading, a unit of global energy and commodity group Mercuria.

One of the credit facilities, worth US$20 million, will be used to finance drilling activities in Chachaheun, in partnership with the country’s state-run YPF. The second, for US$40 million, will support drilling work in other blocks that are also targeting Vaca Muerta.

Andes’ chairman, Nicolas Mallo Huergo, said the credit facilities would help the company to “capitalise on the positive business environment in Argentina.”

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