Vista Oil & Gas SAB de CV recently announced several agreements with commodities trading firm Trafigura, which the independent producer hopes will accelerate its development in Argentina’s Vaca Muerta Shale.
In a company release on June 28, Vista said it had established an un-incorporated joint venture (JV) and entered into an investment agreement with Trafigura Argentina SA for the joint development of the Bajada del Palo Oeste concession. The companies also entered into a crude oil marketing agreement.
“We believe this transaction will help Vista accelerate its development in Bajada del Palo Oeste, contribute towards the supply of Trafigura’s refinery and generate incremental crude oil volumes for export,” the company said in a release.
Bajada del Palo Oeste is Vista’s main shale oil development in Vaca Muerta. Field development began in the second half of 2018 and there are currently 28 wells on production. The company has identified approximately 550 new well locations in Bajada del Palo Oeste.
Under terms of the JV agreement, the companies will jointly develop initially five pads of four wells each in Bajada del Palo Oeste.
Trafigura will have a contractual right over 20% of the hydrocarbon production of the wells included in the agreement and bear 20% of the capex as well as the corresponding royalties and direct taxes with respect to the wells included in the agreement. Additionally, the company agreed to pay $25 million to Vista comprising a $5 million payment on the transaction’s effective date plus four additional installments when the second, third, fourth and fifth pads commence production.
Vista shall remain operator of the block and 100% title holder of the Bajada del Palo Oeste concession. The company will also retain its rights over 80% of the hydrocarbon production and bear 80% of the capex.
The JV agreement takes effect as of July 1. The crude oil marketing agreement includes the sale of 380,000 barrels of crude oil per month to Tranfigura until December 2022 at a purchase price to be agreed by the parties.
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