Shale Daily / NGI All News Access

ExxonMobil Teams Up to Explore Argentine Shale

Wrapping up a busy Tuesday of transactions with an overarching theme of cooperation on different continents, an ExxonMobil Corp. subsidiary has entered a farm-out agreement with a subsidiary of Canada-based Americas Petrogas for the exploration and potential exploitation of shale in Americas Petrogas's Los Toldos blocks (163,500 gross acres) located in Neuquen, Argentina.

The deal was inked between the companies' Argentine subsidiaries, ExxonMobil Exploration Argentina S.R.L. and Americas Petrogas Argentina S.A. Under the agreement, ExxonMobil committed to fund US$53.9 million (including taxes) during the exploration phase with a further US$22.4 million (including taxes) if the parties proceed to the exploitation phase, for a total potential initial investment of US$76.3 million. The focus of exploration, exploitation and other related activities is expected to be directed towards the Los Toldos 1 and 2 blocks. ExxonMobil said it will earn a 45% interest in the Los Toldos blocks with Americas Petrogas retaining a 45% interest and the government entity, Gas y Petroleo del Neuquen, maintaining a 10% interest. ExxonMobil will also provide technical assistance on the blocks.

Americas Petrogas is the operator of the Los Toldos blocks and expects to spud the first well in 4Q2011 with the primary target being the unconventional Vaca Muerta shale formation and potential secondary targets in other conventional and unconventional formations.

"As the world's largest publicly owned integrated oil and gas company, ExxonMobil brings vast experience, technology, research and financial resources to this joint venture with Americas Petrogas," said Americas Petrogas CEO Barclay Hambrook. The U.S. Energy Information Administration has cited a risked, recoverable resource of 240 Tcf of gas for the Vaca Muerta shale in the Neuquen Basin.

"We believe the next major shale development outside of North America will be in the Neuquen Basin," said Guimar Vaca Coca, managing director of Americas Petrogas Argentina S.A. "Our Argentina management and technical personnel look forward to working with ExxonMobil to explore the substantial hydrocarbon potential of the Los Toldos blocks."

The companies said the Vaca Muerta characteristics are believed to be similar to shale reservoirs such as the Eagle Ford, Haynesville and Horn River in North America, which have so far resulted in discoveries of both shale gas and shale oil.

Daniel De Nigris, general manager of ExxonMobil Exploration Argentina, added, "We are pleased to be working with Americas Petrogas on the highly prospective Los Toldos blocks and if successful, look forward to providing clean and reliable energy for Argentina."

The Argentine announcement comes on the same day ExxonMobil and Russia's OAO Rosneft announced an agreement to jointly explore and develop projects in North America, including the tight oilfields of Texas and the Gulf of Mexico, as well as in Russia and other countries around the world (see related story).

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