Chevron, YPF to invest $1.6B in Argentina shale wells


Chevron (CVX -1.8%) signs a deal with YPF (YPF -1.2%) to invest $1.6B this year to continue development of Argentina’s Vaca Muerta shale formation and become the country’s largest foreign producer of shale oil and natural gas.

Chevron says it will build off the progress of its 2013 drilling program with YPF, investing in drilling 170 wells in the 96K-acre Loma Campana concession.

The joint venture partners are targeting eventual daily output of 50K barrels of shale oil and 3M cubic meters of shale gas by drilling 1,500 wells.

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Comments (6)
  • salvatort
    , contributor
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    And what measures have they taken to make sure that their $1.6 bln investment will not be lost/nationalized in a similar way to Repsol's?
    10 Apr 2014, 02:44 PM Reply Like
  • Caiman Valores
    , contributor
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    Given the need for increased domestic O&G production coupled with hard capital in Argentina, along with a potential balance of payments crisis if O&G exports increase, the government will do everything it can to attract such large investments in O&G in Argentina. So I doubt there is any threat to Chevron's investment.
    As for Repsol, the company was essentially running YPF into the ground and using it solely to generate income and not reinvesting in the company or developing its O&G plays. Overall Repsol has no one else to blame than themselves and their mismanagement of YPF for the company being nationalized.
    10 Apr 2014, 09:12 PM Reply Like
  • JohnMac2002
    , contributor
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    Totally disagree. If politicians of the current ilk continue to be elected in Argentina, then Chevron will find its investment in Argentina nationalized, or rendered uneconomic by spurious tax changes, AFTER their shareholder funds have been invested and the gas is pumping. Argentina ranks in the bottom third of the world’s most corrupt countries (Transparency International), and has the weakest international integrity (The Economist, March 15 2014). It is a pariah state for good reason, and Chevron is making a big mistake investing there.
    11 Apr 2014, 07:16 AM Reply Like
  • JohnMac2002
    , contributor
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    Totally disagree. If politicians of the current ilk continue to be elected in Argentina then Chevron's investment will eventually be nationalized, or rendered uneconomical by spurious tax changes, AFTER they have sunk their shareholders' money and the gas is pumping. Argentina ranks in the bottom third of the world's most corrupt countries (per Transparency International) and tops the world for weakest institutional integrity (the Economist, March 15 2014). Chevron is making a big mistake investing in Argentina.
    11 Apr 2014, 09:18 AM Reply Like
  • salvatort
    , contributor
    Comments (409) | Send Message
     
    Since when using an oil field, or any other investment, solely to generate income is a bad thing? Isn't that the purpose of investing? You will re-invest earnings only if its accretive, and if it fits your strategy. Respol did nothing wrong. Suggesting otherwise is, to put it simply, communism.
    11 Apr 2014, 09:32 AM Reply Like
  • Caiman Valores
    , contributor
    Comments (2256) | Send Message
     
    I am certainly not suggesting government's have a right to nationalize private assets at a whim. But there is more to the story than solely a corrupt government stealing YPF from Repsol.

     

    Obviously nationalizing YPF was very damaging for the Argentine government in the eyes of investors and the international community. But there were issues from both sides which needed to be addressed. It is clear the government has recognized many of its errors and is attempting to remedy the situation, because it is in its economic interests to do so.
    I certainly accept Argentina is a pariah state after defaulting on debt payments but as it is unable to access international credit markets any balance of payments crisis would have a significant impact on its economy and potentially cause it to collapse. Given energy makes a up a significant growing portion of Argentina's imports increasing domestic production is a must do and the only way that can be done is by getting foreign investors and energy companies to finance that investment. 
    11 Apr 2014, 10:14 AM Reply Like
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