Norway’s Equinor SA and Royal Dutch Shell plc have have jointly purchased a 49% interest held by Schlumberger Ltd. in the Bandurria Sur onshore block in Argentina’s Neuquén province.
Each partner is acquiring a 24.5% interest for $177.5 million, according to Equinor.
The block covers around 56,000 gross acres in the central area of the prolific Vaca Muerta play. The operator is Argentina’s state oil firm YPF SA, which currently has a 51% interest.
The block is in the late pilot phase of development with current production of around 10,000 boe/d.
Equinor and Shell have also reached a preliminary agreement with YPF to acquire a further 11% interest from YPF. On completion of that additional transaction, which is subject to a number of conditions including authority approval, Equinor and Shell would each own a 30% non-operated interest, with YPF owning a 40% interest and continuing as operator.
“We are very pleased to partner with Shell in the Bandurria Sur block, an asset in an area with significant potential, and to further develop our close partnership with YPF, with whom we are already exploring several onshore, offshore and renewable opportunities in Argentina. We are broadening our activities in Argentina in support of our strategy to build international growth options,” said Nidia Álvarez Crogh, Equinor’s country manager for Argentina.
Shell Argentina president Sean Rooney said the deal “emphasizes the continuous commitment of the company to develop the energy resources of Argentina.”
Schlumberger has said the upstream sale is part of its efforts to refocus on the global oil services segment, where it remains a leader.
Despite the election of left-leaning Alberto Fernandez in October of last year, many of the largest operators in the world are working in Argentina, with most in Vaca Muerta. Chevron Corp. last year launched a pilot program on 162,000 net acres in the northern part of the formation. It is joined by operators that include BP plc, ExxonMobil Corp., Equinor ASA and Petroliam Nasional Berhad.
Equinor participates in eight offshore blocks in Argentina, six as operator. Equinor is also a 50% partner with YPF (operator) in the Bajo del Toro onshore block and has a 90% operated interest in the neighboring blocks Bajo del Toro Este and Aguila Mora Noreste, with Gas y Petróleo del Neuquén, which is owned by the Neuquén province government.
Last year, Shell began full-scale development at the Sierras Blancas, Cruz de Lorena and Coirón Amargo Sur Oeste blocks in the Vaca Muerta deposit.
The first development stage included bolstering infrastructure to increase Shell’s installed processing capacity in Vaca Muerta to 40,000 boe/d, from 12,000 boe/d. Shell is aiming to reach 70,000 boe/d at the three blocks by 2025.