Vaca Muerta development study 2017 Report

Insight 25 April 2017

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Report summary

Our Vaca Muerta development study is available for purchase. Can the Vaca Muerta compete with the best US shale plays? Findings from our latest well-by-well analysis indicate it can. As Argentinian operators continue to move up the learning curve, strong well performance and lower costs can unlock scale comparable to US shale plays. We forecast that just seven of the most advanced developments, representing only 8% of play acreage, will produce over 400,000 boe/d by 2025. Our scenarios are also informed by recent, high-performance type curves intended to showcase the further upside waiting to be realized. Improvements in logistics and service capacity can only improve well economics and further drive play scalability. An overview of current company holdings across the gas, condensate and oil windows along with drilling activity trends informs investors on the best play entry strategies. We conclude with multiple scenarios analyzing the entire play’s full production potential.

Key Facts
Summary and key issues
- Production up 43% in 2017 and keeps climbing
- Gas wells lead performance and drive potential
- Drilling has transitioned to horizontal wells
- Inflection point for investment commitments
- Costs are lower, but sand could be cheaper
- Looking towards the US learning curve
  - 26 charts tables and maps showing macroeconomic indicators, production, historical drilling trends and geology.
  - Block and operator positioning
    - 16 charts and maps showing company positions across the gas, condensate and oil window.
  - Applying the US learning curve to Vaca Muerta
    - 20 charts and tables analysing learning curve trends in the US, focusing on Pioneer Natural Resources' achievements in the Midland Basin and applying those trends to Vaca Muerta.
  - Type well analysis
    - 36 charts and tables presenting two type curve scenarios (one based on the US learning curve uplift and another focusing on high-performing Vaca Muerta wells) as well as a series of cost sensitivities.
  - Development scenarios
    - 12 charts and tables forecasting future production based on the uplifted and high-performance scenarios, including how Vaca Muerta can close Argentina's natural gas demand gap.