Argentina Shale – Neuquen basin

Drilling results to date suggest that Argentina’s Neuquen Basin holds vast amounts of shale gas, tight gas and shale oil. The 137,000 km² basin, situated entirely onshore, is part of the Sub-Andean trend which extends the entire length of South America. Many analysts believe Neuquen shale’s geology to be better than that of Texas’ Eagle Ford. Continue reading here..

Ecopetrol acquires 30% interest in Peru field from Repsol

Ecopetrol SA has entered into an agreement with Repsol to acquire 30% interest in Lot 109 exploration field in Peru. Continue reading here..

Argentina- a tough place to do business!! Repsol dilutes maturing Argentina assets and concentrates on Brazilian pre-salt discoveries

Repsol has agreed to sell a 3.83% stake of YPF to Lazard Asset Management and other investment funds for $639 million ($42.4/share). YPF's shares were last traded for $48.3/share on 14^th Mar, 2011. In addition to this, Repsol announced a public offering of 24.27 million shares of YPF, in the form of American Depositary Shares, representing 6.17% of the company’s stock. Additionally, Repsol has granted the underwriters an option to purchase an additional 3.64 million shares, representing 0.93% of YPF.

At the end of last year, Repsol agreed the sale of 3.3% of YPF for $500 million to funds managed by Eton Park Capital Management, Capital Guardian Trust Company and Capital International Inc. Additionally, shares of YPF totalling 1.06% of the company have been sold on the stock markets in the last few months. Following the latest transactions, YPF’s shareholding structure is as follows: Repsol Group (75.9%), Petersen Group (15.46%) and 8.64% free float.

Repsol’s strategy- Dilute maturing assets in Argentina and focus more on Brazlian assets!

This deal is part of Repsol’s strategic aim to rebalance its global assets portfolio as laid out in the Horizon 2014 plan, allowing new shareholders into YPF. Repsol is seeking to reduce business in maturing fields in Argentina while investing in exploration in Brazil’s offshore Santos Basin. At the end of 2010, Sinopec signed agreement to invest $7.1 billion in Repsol’s Brazilian unit. Repsol forecasts annual production growth of as much as 4% through 2014 as projects in Brazil and Peru start. It plans to invest 28 billion euros from 2010 to 2014 on fields in Venezuela, Bolivia and Algeria. The company will invest about 6 billion euros this year and plans to drill 25 to 30 exploration and evaluation wells. Recently, Repsol signed agreement to invest at least $768 million in oil exploration and development on Alaska's North Slope.

Is doing business in Argentina tough??

Buying YPF could be a good business – Repsol in Argentina announced a large unconventional gas discovery in December 2010, which it is keen to explore with partners. But monetising that and any future discoveries of that type will take time, and the reality is that with its maturing markets and heavy regulation which discourages investment, Argentina is, for many energy companies, a tough place to do business.

Argentina has some of the lowest gas prices in the world, in large part because of governmental controls designed to curb inflation and bolster the competitive edge for manufacturers. Barclay Hambrook, CEO of Americas Petrogas, in an interview about Argentina's shale reserves potential said, “The Argentine government has to do a little more in terms of encouragement, especially in terms of higher prices, as the wells are deeper and require a lot of capital and expertise to complete. If there is some improvement in gas prices, then I think there could be a significant upturn in investment and exploration in the Neuquen Basin.”

To know more on shale gas projects in Argentina click here: http://docsearch.derrickpetroleum.com/research/q/%22argentina%20shale%20%22.html

Shell postpones Alaskan exploration program to 2012 but Repsol steps in with $768 million kit to explore Alaskan leases!!!

Repsol agreed to acquire 70% interest in the leasehold held by 70 & 148 LLC and GMT Exploration LLC on the North Slope of Alaska. The blocks are located close to large producing fields and cover an area of 2,000 sq km. Repsol has agreed to carry out the investment necessary to explore and evaluate the economic viability of the resources contained in these blocks. The estimated minimum exposure of this investment for Repsol, including amount to be paid to its partners and the cost of exploration to be carried out over several years, amounts to $768 million. The start of exploratory work is scheduled for next winter.

Hurdles in exploring Alaskan leases:

A lengthy US regulatory process has forced Shell to postpone offshore drilling plans in Alaska to 2012 from 2011, although the company expects it will eventually obtain the permits it needs to proceed, a company executive said in February. Shell has invested $3.5 billion in exploration programs in Beaufort and Chukchi Seas of Alaska, but the company's plans have been held up amid legal challenges by environmental groups and native villagers concerned that oil exploration could hurt wildlife and habitat without adequate safeguards.

In addition, last week the US Interior Department had cancelled leasing offshore tracts in Alaska's Cook Inlet that was tentatively scheduled for later this year. So-called lease sale 219 was called off because of lack of sufficient interest by energy companies to search for oil or natural gas in the area. Read more: http://mergersandacquisitionreviewcom.blogspot.com/2011/03/companies-showed-less-interest-in.html

Alaska North Slope - has rooms to grow:

The North Slope of Alaska, holding North America’s largest oil field Prudhoe Bay, is an especially promising area for Repsol as it has already shown to be oil-rich and carries low exploratory risk. This acreage also helps increase the company’s presence in OECD countries.

In the last decade, the smaller oil companies leased hundreds of thousands of acres across the North Slope and drilled dozens of exploratory wells, leading to the first independently operated oil production in the history of the North Slope. If that trend continues, Alaska will become home to many smaller oil companies this decade.

"When we can produce a barrel, and prove to everybody else that we can produce a barrel, I think there's going to be a flood of independents coming to the North Slope," said Jim Winegarner, vice president of land for Brooks Range Petroleum Corp., an independent operator leading a joint venture of small companies on the North Slope. Repsol believes so!!