Repsol Surges on Higher Estimate for Argentine Shale Reserves
February 10, 2012, 3:19 AM ESTBy Brian Swint
Feb. 9 (Bloomberg) -- Repsol YPF SA surged in Madrid trading after its Argentinian unit said its shale oil resources probably hold almost half the size of Brazil’s so-called pre- salt reserves.
Shares jumped as much as 4.4 percent, the most since Nov. 30, and traded at 21.33 euros as of 9:05 a.m. in Madrid. YPF, producer of more than half Argentina’s crude, said yesterday the Vaca Muerta formation in the south of the country probably holds about 23 billion barrels of oil.
The resources at Vaca Muerta compare with the 50 billion barrels of oil Brazil estimates it’s found underneath a thick layer of salt beneath the seabed. which include the largest fields discovered in the Americas in three decades. YPF had previously discovered about 927 million barrels at the Loma La Lata field in the Vaca Muerta formation.
“We value the shale upside at 3 euros a share,” said Stuart Joyner, an analyst at Investec Securities Ltd. in London. “It certainly is a relief after the relentless political pressure on Repsol’s share price out of Argentina.”
Before today, Repsol had slipped more than 12 percent this year. In October, Argentina’s government ordered oil and mining companies to repatriate export revenues and in November opposed a dividend payment for YPF as it seeks to stem capital flight. YPF was one of nine companies that also lost financial incentives for oil exploration and production on Feb. 3., following speculation that the government may consider nationalizing the company.
Shale Boom
Shale resources are drilled by blasting underground rocks with sand and chemicals. The process sparked the boom that made the U.S. the world’s biggest producer of natural gas.
The world’s shale oil reserves are conservatively estimated at 2.6 trillion barrels, and the amount of shale oil that can be recovered depends on “many factors,” according to the Energy Minerals Division of the American Association of Petroleum Geologists.
YPF’s new estimates come after further drilling in Argentina’s Neuquen province and reviews of the area by independent auditor Ryder Scott, YPF said.
YPF’s previous 927 million barrel estimate came from surveying 3 percent of the 12,000 square kilometers of Vaca Muerta licensed to the company, Chief Executive Officer Sebastian Eskenazi said in November. That’s an estimate of so- called prospective resources while the 23 billion are so-called contingent resources. Contingent resources include resources that may not be commercially viable.
The Vaca Muerta formation, located in Patagonia, is almost the size of Connecticut, which is 12,997 square kilometers, or 5,018 square miles. Ryder Scott’s study covered an area of 8,071 square kilometers, in which YPF holds 5,016 kilometers.
--With assistance from Ben Sills in Madrid and Rodrigo Orihuela in Rio de Janeiro. Editors: Will Kennedy, Stephen Cunningham
To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net
To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net
