Americas Petrogas, Exxon In $76 Million Argentina Shale Deal
August 30 2011 - 1:17PM
Dow Jones News
Canada's Americas Petrogas Inc. (APEOF, BOE.V) said Friday that
Exxon Mobil Corp. (XOM) has agreed to invest as much as $76.3
million to jointly explore for unconventional oil and gas in
Argentina.
Exxon will invest $53.9 million for exploration and $22.4
million if the companies proceed to the exploitation phase, America
Petrogas said in a statement.
In exchange, Exxon will gets a 45% stake in the project, with
Americas Petrogas retaining 45% and the provincial oil and gas
company, Gas y Petroleo del Neuquen, 10%.
Americas Petrogas shares traded on the Toronto Stock Exchange
were recently up 29% at $2.19 Canadian dollars (US$2.24), but still
down from their 52-week high of C$2.99.
The deal highlights rapidly growing interest in potentially vast
unconventional oil and gas resources in hydrocarbon-rich Neuquen
Province. It also comes on the heels of recent joint exploration
efforts by Americas Petrogas and Apache Corp. (APA) in the
area.
According to recent U.S. Energy Information Administration
report, Argentina ranks No. 3 in the world in terms of technically
recoverable shale-gas resources with 774 trillion cubic feet of
gas.
"We believe the next major shale development outside of North
America will be in the Neuquen Basin," Daniel De Nigris, Exxon's
general manager for Argentine exploration, said in the
statement.
Americas Petrogas and Exxon will focus their exploration
activities in the Los Toldos blocks, a 660-square-kilometer
(264-square-mile) area in the western region of the Neuquen
Basin.
Americas Petrogas is the operator of the blocks and expects to
drill the first well in the fourth quarter of 2011.
The blocks are "in a favorable location relative to other recent
discoveries of shale oil and shale gas in the Vaca Muerta
formation," Americas Petrogas said in a statement.
The Vaca Muerta shale formation spreads across some 21,250
square kilometers, or around 8,500 square miles. Its depth varies
between 5,500 and 14,000 feet and is up to 2,000 feet thick in some
areas.
"The Vaca Muerta characteristics are believed to be similar to
shale reservoirs such as the Eagle Ford, Haynesville and Horn River
in North America which have so far resulted in discoveries of both
shale gas and shale oil," the statement said.
Other companies, including Argentine oil and gas firm YPF SA
(YPF.BA, YPFD), are also exploring in the region. In July, YPF said
it made a shale-oil discovery in Neuquen that will add between 10
million and 50 million barrels of crude oil to its resources in
Vaca Muerta.
YPF said last December it had found an estimated 4.5 trillion
cubic feet of unconventional gas in that area. YPF has earmarked
$270 million for Neuquen exploration this year, and $200 million
for 2012.
-By Taos Turner, Dow Jones Newswires; 5411-4103-6728;
taos.turner@dowjones.com