Argentina's state-run YPF (YPF -1.6%), Total (TOT +0.1%), Wintershall and BP (BP -0.3%) unit Pan American Energy announce a $1.15B joint investment to increase gas production at the Vaca Muerta shale formation.
The provincial government in Neuquen, where Vaca Muerta is located, will split the Aguada Pichana area into two parts; TOT will operate the eastern part of Aguada Pichana with a 41% stake and Pan American Energy will operate the western part as well as the neighboring Aguada de Castro area with a 45% stake.
Vaca Muerta is estimated to contain 308T cf of shale gas and 16.2B barrels of shale oil.
YPF (YPF -1.2%) is lower despite securing $220M in financing for two jointly owned electricity projects in Argentina with partner General Electric (GE -0.5%), in the first power plant project financing in the country in nearly 20 years.
The financing is for the 267 MW Tucumán and 107 MW Loma Campana II projects, ensuring their completion with both more than halfway through construction; commercial operations are expected to begin in February 2018 and December 2017, respectively.
YPF says the project finance is an important milestone as it completes the funding of all its power projects under construction, but Dimitra DeFotis of Barron's notes that local lenders may be tapped out.
The plunge in YPF’s (YPF +4%) stock price is unwarranted and offers a "buy on weakness" opportunity, Morgan Stanley analysts say.
MSCI's negative decision on Argentina was a technical event, and hydrocarbon prices in the country will remain on healthy levels throughout 2017, the firm says, adding that YPF's valuation is attractive as it trades at a discount to large-cap integrated oil stocks and to global oil stocks.
YPF ADRs fell as much as 8% yesterday before finishing 5% lower after MSCI refused to upgrade Argentina to emerging from frontier market status.
MSCI last night surprised by not upgrading Argentina (NYSEARCA:ARGT) to emerging market status - meaning its stocks will not be able to be added to emerging markets indices.
Probably the most popular of Argentine ADRs is YPF, and it's down 10% premarket. BBVA Banco Frances (NYSE:BFR) fell 7.6% after hours. Cresud S.A. (NASDAQ:CRESY) dropped 6.5%. Grupo Financciero (NASDAQ:GGAL) -5.8%; Pampa Energia (NYSE:PAM) -7%.
Other ADRs of note: Banco Macro (NYSE:BMA), Grupo Supervielle (NYSE:SUPV), Petrobas Argentina (NYSE:PZE), Telecom Argentina (NYSE:TEO), Irsa Inversiones y Representaciones (NYSE:IRS), Tenaris (NYSE:TS), Ternium (NYSE:TX), Transportadora de Gas del Sur (NYSE:TGS)
Alongside the long-awaited addition of China A shares to its Emerging Markets index, MSCI delays doing so for Argentina (it remains in the frontier markets club).
Saudi Arabia moves to the watch list for potential classification as an emerging market, with MSCI noting a number of improvements, including the introduction of short selling and securities borrowing and lending facilities.
Argentina ADRs are sharply lower after-hours: YPF -12.2%, EDN -10%, CRESY -5.7%, TGS -2.1%.
YPF's Maxus Energy wins confirmation of a Chapter 11 liquidation plan that spells out how its assets will be used to address New Jersey’s contaminated Passaic River.
Maxus, one of several companies on the hook for cleanup costs, filed for bankruptcy in June 2016; YPF continues to disavow any responsibility for the cleanup but dropped its objections to Maxus’s Chapter 11 plan, clearing the way for confirmation today by a U.S. bankruptcy court.
YPF faces continued litigation with Maxus creditors over whether it can be held to account for a share of the cleanup, but Maxus for now is handing off its cleanup tasks to Occidental Chemical (NYSE:OXY) to make sure efforts continue while creditors round up cash from real estate and lawsuits.
New Jersey lawmakers today voted to ask state and federal officials to investigate Argentina’s YPF for possible violations of the law in what they said was a premeditated plan to use U.S. Bankruptcy Court to shirk its responsibility for cleaning up the Passaic River.
The dispute involves a riverfront site in Newark owned by YPF’s Maxus Energy unit where pesticides and herbicides including Agent Orange were produced in the 1950s and 1960s; a New Jersey court ruled in 2011 that Maxus and another affiliate were responsible for dumping dioxin, a highly toxic chemical and likely carcinogen, into the river decades ago.
The lawmakers accuse YPF, which bought Maxus in 1995, of embarking on a decades-long plan to strip the company of its $2B in oil and gas assets and then force it into bankruptcy to avoid the full extent of its environmental liabilities.
Argentina's YPF (YPF +1.1%) says it reached agreement with Schlumberger (SLB -0.1%) for a $390M investment in the Vaca Muerta shale field.
In a letter to the Buenos Aires stock exchange, YPF says SLB would invest the full amount and obtain a 49% stake in the Bandurria Sur concession, where the two companies would develop a two-phase shale oil pilot project.
SLB is the largest energy company - including BP, Total and Shell - to invest in pilot projects at Vaca Muerta, which contains the world's second largest reserves of shale gas.
Argentina's state-run oil company YPF (YPF +1.4%) says it, along with its partners, will make a joint $500M investment in the giant but largely untapped Vaca Muerta shale gas formation.
YPF and partners Total Austral (TOT +0.3%) and BP (BP +0.3%) unit Pan American Energy already were operating in the Aguada Pichana area and are now asking regulators to split it in two, with TOT in charge of the eastern area and Pan American heading the western section.
Argentina's government is trying to encourage investment in Vaca Muerta; Tecpetrol said last week it would invest $2.3B in the area through 2019, the largest oil and gas announcement in Argentina in years.