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YPF Sociedad Ties Up with Petronas to Invest in Vaca Muerta

Total System's (TSS) strong growth across all three segments should drive profitability.

Argentina-based YPF Sociedad Anonima ( YPF) and Malaysia-based Petronas recently inked a $2.3-billion joint venture deal to invest in Vaca Muerta shale play over the next four years. 

 

Importantly, the investment will be in the La Amarga Chica area, wherein both the companies have already spent $550 million, to achieve a production of 9,800 barrels of oil equivalent per day (BOE/d). With the current 50:50 JV deal of $2.3 billion, the companies target a daily production of 60,000 BOE/d by 2022, after which they plan to invest another  $4.7 billion over 20 years to ramp up the output to 75,000 BOE/d.

 

The investment in La Amarga Chica will increase Argentina’s oil production by 15% within 2022. Developments in Vaca Muerta are anticipated to double Argentina’s oil and gas output by 2023 (with 1 million barrels per day of crude and 260 million cubic meters of gas), thereby resulting in an increase in exports. 

 

The deal represents the third unconventional project that YPF Sociedad will be undertaking after the Loma Campana development, partnering with Chevron Corporation CVX, and the El Orejano project, in partnership with DowDuPont. In fact, YPF Sociedad, which is a Zacks Rank #2 (Buy) company, intends to ramp up its oil output by 26% by investing around $21.5 billion on oil and gas production over the next five years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Notably, Vaca Muerta is one of the most prolific plays, having the world’s second largest gas deposits and fourth largest oil deposits. In fact, companies like Exxon Mobil Corp. XOM, TOTAL S.A. TOT and Chevron have been actively investing in Vaca Muerta, which holds reserves estimated at 22.8 BOE. 

 

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TOTAL S.A. (TOT) : Free Stock Analysis Report
 
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
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