I'm posting the full WSJ story for those of you who don't suscribe to the WSJ: Argentina's YPF, Exxon In Deal On Unconventional Oil - ReportFont size: A | A | A12:45 PM ET 3/29/12 | Dow Jones By Ken Parks
Of DOW JONES NEWSWIRES
BUENOS AIRES (Dow Jones)--Argentina's largest oil and gas company, YPF SA (YPF, YPFD.BA), has reached an agreement with Exxon Mobil Corp. (XOM) to jointly develop unconventional oil and gas deposits in the South American country, according to local financial newspaper El Cronista.
The deal involves the sprawling Vaca Muerta area in Neuquen and Mendoza provinces where energy companies have made a number of important discoveries in the last two years, Cronista reported Thursday, without citing sources.
Argentina's Planning Ministry said in a statement that Exxon executives expressed an interest in investing in Argentina at a March 22 meeting with Deputy Economy Minister Axel Kicillof, Energy Secretary Daniel Cameron and the government's representative on YPF's board, Roberto Baratta.
A YPF spokesman declined to comment. Exxon officials weren't immediately available for comment.
Exxon Mobil has already agreed to invest up to $76.3 million to explore with Canada's Americas Petrogas (BOE.V) for unconventional oil and gas in Argentina.
Argentina's oil and gas production has steadily fallen for years owing to government price caps and export taxes that have discouraged exploration.
The fact that Argentina has gone from being a net energy exporter a decade ago to a net importer today is even more startling given the country is thought to have some of the largest shale oil and gas reserves in the Americas.
Companies like YPF have made several significant discoveries of unconventional oil and gas locked in shale formations.
In a filing with the Buenos Aires Stock Exchange on Thursday, YPF said its exploration program indicates the presence of an additional 1 billion barrels of unconventional oil resources and 60 million barrels of conventional oil resources in Mendoza Province.
In February, YPF raised its estimate for unconventional oil and gas resources to 22.8 billion barrels from 927 million. The company said developing those resources would require annual investments of $25 billion for a decade.
But analysts say the lack of price incentives and clear rules will likely delay the massive boom in investment and production witnessed in North America's unconventional oil and gas fields.
In recent months, Kirchner has angrily accused the energy industry of failing to invest in exploration and production, which has forced Argentina to import growing volumes of fuel and natural gas from abroad. Argentina's energy import bill doubled to $9.4 billion in 2011.
Planning Minister Julio De Vido, who oversees energy policy, has demanded that companies bring their unconventional resources into commercial production as soon as possible. But he has made only vague assurances that producers will get an adequate return on their investment.
The report of a commercial venture between YPF and Exxon comes amid an uncertain outlook for YPF, in which Spain's Repsol YPF SA (REP.MC) owns a controlling 57.4% stake.
Cronista also reported Thursday on its front page that the Kirchner administration is studying a draft proposal to buy up to 35% of YPF with government control of its board of directors likely.
YPF's ADR was recently trading 1.8% higher at $28.98 in New York, giving the company a market capitalization of almost $13 billion.
-By Ken Parks, Dow Jones Newswires; 54-11-4103-6740, email@example.com
Easy...First you have to have control of Congress; K has control of Congress. Next you pass a bill in which the energy enterprise is referred to as being in the National Interest. Then you sit on the board with veto power. They've done it twice already with other enterprises and so far it has worked. It has given the Government veto power and control.