Pampa Energia will acquire Petrobras' stake in Petrobras Argentina (PESA) in a US$903 million deal. The transaction includes interests in several upstream, petrochemical, pipeline and power generation assets. The upstream blocks hold mainly mature assets. Petrobras will, however, retain 33.6% in the Rio Neuquén block and the company's assets in Bolivia and Venezuela are excluded from the deal. We estimate that Pampa will acquire 31,000 boe/d of production in 2016. Our valuation represents a discount to the price Pampa paid as we do not account for the non-upstream assets in the transaction. Pampa Energia likely sees upside from the tight gas potential in the El Mangrullo, Rio Neuquén and Sierra Chata blocks. The same blocks also give exposure to the Vaca Muerta shale oil and gas windows.