YPF SA (YPF:US), Argentina’s largest oil producer, will invest $1.2 billion in shale oil next year as it seeks to boost crude output after the government nationalized the company and opposed dividend payments.
YPF will invest a total of $7 billion in 2013 as it plans to double exploration in five years and boost refining, Chief Executive Officer Miguel Galuccio said at a press conference in Buenos Aires yesterday. YPF will drill 1,019 wells in 2013, up from 746 this year, including 132 shale oil wells and 14 shale gas wells, according to a presentation filed with Argentina’s stock exchange.
Argentina seized control (YPF:US) of YPF in April and nationalized 51 percent of the company’s shares formerly owned by Madrid- based Repsol SA. It seeks to halt declining oil and gas output and stem fuel imports that doubled to $9.4 billion last year. President Cristina Fernandez de Kirchner’s government is seeking to tap shale reserves that may hold at least 23 billion barrels of oil equivalent, according to a Ryder Scott audit.
A month before seizing control, the government with its one YPF board seat voted against a semi-annual dividend payment of $650 million and said the money should be reinvested. The government also opposed last year’s YPF dividend payments of about $1.3 billion, which weren’t distributed.
Increasing YPF’s oil production will help make Argentina a net exporter of crude, Galuccio said. YPF’s shale discovery in Patagonia in southern Argentina is the company’s largest ever.
YPF will also lease 20 additional rigs in 2013, after using an estimated 38 this year, the company said in its filing. YPF will seek to increase oil and gas production by 6 percent annually by 2017, Galuccio said.
YPF on June 4 appointed a new 17-member board (YPF:US), in which Repsol’s representative Luis Garcia del Rio is the sole minority stakeholder member. Repsol, which holds a 12 percent stake in YPF, said the nationalization was illegal.
Fernandez picked former Schlumberger Ltd. (SLB:US) executive Galuccio to run YPF after ousting the previous management, including Chairman Antonio Brufau and Chief Executive Officer Sebastian Eskenazi. The government has said that Repsol under- invested since it acquired YPF in 1999.
YPF’s American depositary receipts gained 5.1 percent to $12.69 at 10:19 a.m. in New York. The ADRs have plunged 63 percent this year.
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