With Argentina emerging as an area of focus for operators in the unconventional space, we're beginning to see more activity in the Vaca Muerta shale play. This week's US Upstream Week in Brief reports on a new US$500 million agreement between American Energy Partners and Argentina's state oil company to explore hundreds of square kilometres in the area, augmenting interest in the region's tight oil and shale gas.
American Energy Partners (AEP)signed a preliminary agreement last week with Argentina's state oil company, Yacimientos Petrolíferos Fiscales (YPF), to invest more than US$500 million over the next three years exploring the Vaca Muerta shale play. Several significant industry players, including ExxonMobil, Dow Chemical and Wintershall, invested in the play prior to AEP's recent deal, proving strong interest in accessing the Neuquén Basin's tight oil and shale gas assets.
Together, AEP and YPF will begin a shale gas pilot at Bajada de Añelo, a 200-square-kilometre block in the Vaca Muerta's condensate window, as well as launching exploration operations at Cerro Arena, a 375-square-kilometre block in its gas window. Depending upon their exploration outcomes, the operators plan to expand into manufacturing-style production in the second half of 2018.
For AEP, this follows announced entries into Mexico and Australia, both targeting technically promising unconventional assets as well. For Argentina, newly elected President Mauricio Macri is aligning the country's economy with more market-based policies. This platform has also prompted Argentina's internal operators to increase investments there as well, and we expect YPF to learn much from AEP's aggressive development strategies.
For more analysis on where US Upstream market dynamics are going, read our full Insight report, US Upstream: what to look for in 2016. Our detailed Vaca Muerta development study is also available online and on demand.
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