According to The Latin American Tribune, Argentine oil company, YPF, and US-based Chevron Corp. plan to invest $1.6 billion this year to develop non-conventional oil and gas reserves in the Loma Campaña area, part of the massive Vaca Muerta shale formation.
Both companies will share equally in the investment outlay, which will go toward drilling 170 wells and building production facilities in Loma Campaña, located in the southwestern Argentine province of Neuquen, YPF said in a statement Thursday (April 24).
This new investment marks the beginning of the mass development phase of that area, where a pilot-drilling program was concluded in March.
YPF and Chevron signed an agreement for the pilot program in July 2013. Under the terms of the deal, Chevron is to evaluate at the conclusion of the program whether to remain YPF’s joint-venture partner in Vaca Muerta.
Chevron’s decision to make new investments in Vaca Muerta is a “very important” development because it will substantially boost levels of oil and gas production in Argentina and help achieve the country’s goal of “achieving energy self-sufficiency,” Argentine Cabinet chief Jorge Capitanich said Friday (April 25) in a press conference.
A total of $1.24 billion was invested in the pilot phase, which involved the development of 20 sq. kilometers (7.7 sq. miles) and the drilling of 161 wells.
In this new stage, the companies are to drill a total of 1,500 wells and invest an estimated $15 billion to fully develop the 395 square-kilometer (152 square-mile) Loma Campaña concession.
COMMENT: Once full production is reached, the area is expected to yield 50,000 barrels of oil and 3 million cubic meters (105.7 million cubic feet) of associated natural gas per day.
YPF and Chevron are currently producing 20,000 barrels of oil equivalent per day at Loma Campaña.
The Argentine company has production rights to 12,000 sq. kilometers (4,630 sq. miles) of Vaca Muerta, which covers a total area of some 30,000 sq. kilometers (11,583 square miles).
YPF has been under Argentine government control since Congress gave the green light in May 2012 for the expropriation of a 51% stake in the company from Spain’s Repsol, whose stake in the Buenos Aires-based company has been reduced to 12%.
YPF posted net income last year of 5.7 billion pesos ($710.1 million), up 45.6% from 2012.