YPF to exit aging Argentine oil fields to free $800 million for Vaca Muerta shale push

Jonathan Gilbert, Bloomberg March 07, 2024

(Bloomberg) – Argentina’s biggest oil and gas producer, state-run YPF SA, said its sweeping plan to divest aging oil fields will free up hundreds of millions of dollars to invest in its shale push in the heralded Vaca Muerta formation.

A truck leaves a YPF facility in Plaza Huincul, Neuquen province, Argentina. (Photographer: Anita Pouchard Serra/Bloomberg)

“Exiting some of our mature conventional fields will release around $800 million in capex to be reallocated primarily to shale oil activity,” Horacio Marin, the company’s new chief executive officer, said in his first earnings call.

YPF is hiring a bank to manage the divestments, with the sales process set to start at the end of the month, Max Westen, head of strategy and business development, said on the call. The company unveiled the divestiture plan in early February.

YPF will add three more drilling rigs in the Vaca Muerta this year as it narrows its focus on the shale patch in a bid to spur a 24% year-on-year jump in shale oil production, Marin said. YPF’s shale oil output last year was almost 100,000 bpd.

The company has been sharply hiking fuel prices at the pump to help fund its $5 billion investment plan this year. Some $3 billion of that is earmarked for Vaca Muerta, mainly to drill for crude. Marin underscored current industry efforts to increase oil pipeline capacity as key to YPF’s shale targets, since that has been a major bottleneck.

The new management — much of which has come from the Techint oil and steel empire of Italian-Argentine billionaire Paolo Rocca — also updated analysts on the company’s shale gas ambitions, where it is analyzing a liquefaction export terminal with Malaysia’s Petroliam Nasional Bhd. It would like to bring in new partners for that project and will be ready to make a final investment decision by as soon as mid-2025, Westen said.

“Our goal is to become a global LNG player through the massive monetization of our shale gas resources,” Marin said.

Connect with World Oil
Connect with World Oil, the upstream industry's most trusted source of forecast data, industry trends, and insights into operational and technological advances.