YPF SA (YPF:US), Argentina’s largest crude company, led gains by major Latin American stocks after saying that it discovered as much as a 1 billion barrels of shale oil resources in the western province of Mendoza.
YPF’s American depositary receipts rose as much as 8.8 percent intraday, the biggest gain among 457 stocks in major Latin American indexes, according to data compiled by Bloomberg. It gained 5.3 percent to close at $28.60 in New York.
YPF, based in Buenos Aires, could double Argentine oil and gas output in a decade developing shale deposits it said Feb. 8, after announcing it holds about 13 billion barrels of oil equivalent as part of its share of the Vaca Muerta formation located in the south of the country. The company said today the geology of that formation continues northwards into Mendoza.
“The news is positive, now what they need is the money to extract the oil,” Guido Bizzozero, an equity analyst at Buenos Aires-based brokerage Allaria Ledesma & Cia., said today in a telephone interview. “The company doesn’t have that money, it has to partner with someone or take on debt in the market.”
The company, which recently lost concessions in Mendoza and other provinces including Rio Negro and Neuquen in a dispute over investment, will spend about $300 million to develop the shale oil, exploration head Tomas Garcia Blanco told reporters today in Malargue, Mendoza province.
Mendoza, located in western Argentina, withdrew two YPF oil concessions on March 23 as part of disagreements with the national government over oil imports and dividends. The Argentine government says the company must boost oil production.
Exxon Mobil Corp., the largest U.S. oil company, is in talks with YPF to jointly tap the shale oil found at Vaca Muerta, in Neuquen province, YPF spokesman Sergio Resumil also said in Malargue today.
Newspaper El Cronista reported today that Argentina is seeking to buy a 33 percent stake in the company, without saying where it got the information. YPF hasn’t received an offer from the government, Resumil said.
YPF also said it began production at its conventional oil at its Vizcacheras field that holds 20 million barrels.
YPF filed a complaint with Argentina’s supreme court against the province of Chubut after it revoked some of the company’s concessions in the southern province earlier this month, said a company official today who can’t be named under corporate policy.
A decade-long freeze on oil prices, which set the maximum producers could charge for exports at $42 a barrel, cut investment. Production dropped to 35.3 million cubic meters in 2010 from 45.4 million in 2001, according to the most recent data published by the Buenos Aires-based Argentina Oil and Gas Institute. In the past three years, international crude prices have more than doubled to about $103 per barrel.
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