• 3 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 5 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 9 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 minutes China's Blueprint For Global Power
  • 44 mins Science: Only correct if it fits the popular narrative
  • 48 mins Crazy Stories From Round The World
  • 9 hours What are the odds of 4 U.S. politicians all having children working for Ukraine Gas Companies?
  • 7 hours China's Renewables Boom Hits the Wall
  • 14 hours EU has already lost the Trump vs. EU Trade War
  • 1 day Pioneer's Sheffield in Doghouse. Oil upset his bragging about Shale hurt prices. Now on campaign to lower expectations, prop up price.
  • 1 day ''Err ... but Trump ...?'' *sniff
  • 8 hours Do The World's Energy Policies Make Sense?
  • 8 hours Forget out-of-date 'dirty oil' smear, Alberta moving to be world's cleanest oil industry
  • 40 mins Impeachment Nonsense
  • 1 day Tesla Launches Faster Third Generation Supercharger
  • 13 hours Water, Trump, and Israel’s National Security
  • 2 days Passerby doused with flammable liquid and set on fire by peaceful protesters

Breaking News:

Russia Plans To Boost Crude Oil Exports

Alt Text

Has Global Oil Production Really Peaked?

The lack of significant new…

Alt Text

OPEC Is Desperate For A Trade War Resolution

OPEC’s Secretary General is desperate…

Alt Text

Chinese Oil Imports Soar To Record High

China’s crude oil imports reached…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

A $14 Billion Mega-Deal For This Leading International Shale Nation

Critical development on the international shale scene this week. With one of the world’s largest E&P companies signing a massive investment deal in a play that’s emerging as the leader for unconventional development globally.

The play is Argentina’s Vaca Muerta shale — and the company is ExxonMobil. Which had a mega-deal approved Monday by the local government, that could see billions poured into drilling over the coming years.

As reported by Platts, the government of Argentina’s southwestern province of Neuquen said that it has finalized an investment plan with ExxonMobil across the Vaca Muerta — which will see the major contribute an initial $229 million to development work. Related: Gazprom Rapidly Losing Grip On European Markets

That will include the drilling of five horizontal wells — with lateral sections up to 2,500 meters, and a reported 25 frac stages.

The deal will also include associated infrastructure like an oil separation and storage facility, and natural gas pipeline.

If that work is successful, stage two of the program gets absolutely enormous. With the Neuquen government saying this phase will feature an investment of $13.8 billion — for the drilling of 556 horizontal wells across the license blocks. Related: Fed Rate Hike Bad Timing for Crude Oil

In return for the investment Exxon will get a 90% interest in the project — with state energy firm Gas y Petroleo del Neuquen being a 10% partner.

There are a few important points to note here. The biggest being the sheer scale of the deal.

The initial $229 million investment likely works out to $30 to $40 million per well (even after infrastructure costs are subtracted from the total). Which is expensive by North American standards — and suggests that Exxon sees a substantial prize here, justifying the pricey outlay. Related: Forget Oil Majors, Stripper Wells Offer Better Returns

Presumably, per-well costs would be reduced in phase two, when the petroleum system is better understood and drilling achieves economies of scale. But the simple fact is, $13.8 billion is a massive commitment — even for a major like Exxon.

Such a deal is unprecedented in international shale. And firmly puts Argentina in the lead for the next global unconventional leader (aided by the country’s recent election of a new, apparently pro-business government). Watch for knock-on deals from major and junior E&Ps in this space.

Here’s to a billion-dollar coming out party

By Dave Forest

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play