Equinor ASA and Royal Dutch Shell Plc are strengthening their presence in Argentina’s Vaca Muerta Shale play through a transaction worth $355 million.
In a Jan. 31 news release, Equinor said the duo completed a joint acquisition of the 49% interest held by Schlumberger Ltd. in the Bandurria Sur onshore block in the Neuquén province. Argentina state energy firm YPF SA, which currently holds a 51% interest, is operator of the block.
The Bandurria Sur block covers around 56,000 gross acres in the central area of the Vaca Muerta Shale play. The block is in the late pilot phase of development with current production of around 10,000 barrels of oil equivalent per day, according to the company release.
A U.S. Energy Information Administration (EIA) report last year cited increasing production from the Neuquén Basin’s Vaca Muerta as a key driver in growing domestic natural gas production from the South American country.
The Vaca Muerta shale formation is estimated to have technically recoverable resources of 308 trillion cubic feet of natural gas and 16 billion barrels of oil and condensate. The EIA estimates only 4% of Vaca Muerta’s 8.6 million acres has entered the development phase so far.
Nidia Álvarez Crogh, Equinor’s country manager for Argentina, said the acquisition on Jan. 31 support the Norwegian energy company’s strategy to build international growth options.
“We are very pleased to partner with Shell in the Bandurria Sur block, an asset in an area with significant potential, and to further develop our close partnership with YPF, with whom we are already exploring several onshore, offshore and renewable opportunities in Argentina,” Álvarez Crogh said in a statement.
Equinor and Shell each paid $177.5 million for a 24.5% interest as part of the joint transaction, effective Jan. 1. The companies have also reached a preliminary agreement to acquire a further 11% interest from YPF.
On completion of the additional transaction, which is subject to a number of conditions including authority approval, Equinor and Shell will each own a 30% nonoperated interest. YPF will continue as operator, owning a 40% interest.
Equinor participates in eight offshore blocks in Argentina, six as operator. Equinor is also a 50% partner with YPF (operator) in the Bajo del Toro onshore block and has a 90% operated interest in the neighboring blocks Bajo del Toro Este and Aguila Mora Noreste, with Gas y Petróleo de Neuquén (GyP).
In addition, Equinor has interests in the Cañadón León onshore wind farm in Santa Cruz and the Guañizuil 2A (G2A) solar asset.
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