• 2 hours Oil Nears $52 With Record OPEC Deal Compliance
  • 5 hours Saudi Aramco CEO Affirms IPO On Track For H2 2018
  • 7 hours Canadia Ltd. Returns To Sudan For First Time Since Oil Price Crash
  • 8 hours Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 3 days New Video Game Targets Oil Infrastructure
  • 3 days Shell Restarts Bonny Light Exports
  • 3 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 4 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 4 days Rosneft Signs $400M Deal With Kurdistan
  • 4 days Kinder Morgan Warns About Trans Mountain Delays
  • 5 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 5 days Conflicting News Spurs Doubt On Aramco IPO
  • 5 days Exxon Starts Production At New Refinery In Texas
  • 5 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 6 days VW Fails To Secure Critical Commodity For EVs
  • 6 days Enbridge Pipeline Expansion Finally Approved
  • 6 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 6 days OPEC Oil Deal Compliance Falls To 86%
  • 7 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 7 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
Alt Text

OPEC Looks To Permanently Expand The Cartel

OPEC Secretary General Mohamed Barkindo…

Alt Text

Saudi Arabia Looks To Shelve Aramco IPO

Saudi sources have confirmed that…

Soros Signals Argentina’s Shale is Biggest Place to Be

Soros Signals Argentina’s Shale is Biggest Place to Be

One of the world’s legendary investors is upping his bet on Argentina’s shale oil and gas industry in a show of confidence for shale production in South America’s largest unconventional prize - and a big boost for both supermajors and smaller players making big waves in the heart of new discovery areas.

George Soros has doubled his stake in YPF SA, the state-owned oil company in Argentina, which sits atop some of the world’s largest shale oil and gas resources, and is about to get even larger following a new discovery over the last couple of weeks of a second key shale play.  

Argentina holds an estimated 27 billion barrels of technically recoverable oil and 802 trillion cubic feet of technically recoverable shale gas, much of it located in the Vaca Muerta, an enormous shale formation in the Neuquen basin -- the second-largest shale gas deposit and the fourth-largest shale oil deposit in the world.

And on Aug. 14, YPF announced the discovery of oil in another shale formation—Agrio shale--in the same basin.  

Some estimates suggest that combined, the two plays’ reserves could be worth as much as $3 trillion.

“I am very excited with this [Agrio] discovery that proves that Vaca Muerta and Chubut’s D-129 formation aren’t the only shale deposits we have to exploit in Argentina,” YPF CEO Miguel Galuccio told reporters, according to Bloomberg. “The tests are very promising but still, it is too soon to provide figures.”  

In the meantime, Soros’ confidence helps override some negative incidents that had held back investment in Argentina’s shale, including the government’s 2012 expropriation of YPF, then owned by Spanish firm Repsol, and the government’s failure to make a July 30 bond payment, which has resulted in a standoff with a hedge fund over unpaid bills back to the last default in 2001.

The government of Cristina Fernandez de Kirchner, however, has taken steps to repair Argentina’s relationship with international markets, and even tweaked tax laws in 2013 to give special benefits to big oil companies willing to invest more than $1 billion in the country.

The move was immediately followed by Chevron’s announcement that it would enter into a joint venture with YPF. To incentivize the global energy industry to further invest, additional steps are being taken, including discussions for a new hydrocarbon bill that could further standardize and incentivize the industry for both supermajors and mid-sized companies.   

The newest discovery is certainly vindication for Soros’ gamble on Argentina. His company, Soros Fund Management LLC, took a strong position in YPF in the second quarter of this year, doubling its position. It now controls 3.5 percent of YPF’s American depositary receipts, worth $450.5 million.

Soros’ move suggests that his firm is not focusing on the short-term problems facing Argentina, but believes that the geological fundamentals are more important. By increasing his stake in YPF, he is betting that Argentina is sitting on some lucrative plays that could be bigger than the Eagleford or Bakken in the United States.

According to the Financial Times, “Some of the world’s largest hedge funds have been snapping up Argentine stocks, betting on an economic recovery in the country even though it defaulted on its debt for the second time in 13 years.”

And while the market has caught on to the ‘Soros Factor,’ it hasn’t yet caught on to the smaller companies that are positioned to benefit from the Vaca Muerta shale and the new Agrio find.

The Neuquen basin is also where YPF, in partnership with Chevron, is producing crude from the Vaca Muerta shale and is expecting to have nearly 300 wells drilled in the Loma Campana/Loma La Lata area.

It’s great news for Chevron, but it’s also great news for smaller players with big footprints on this scene who will benefit from all the supermajor drilling in the emerging Vaca Muerta and the new Agrio shale formations—as well as from the confidence boost provided by Soros.

There are only a few junior companies who have significant land holdings in Argentina’s Neuquen Basin, among them, Madalena Energy Inc. (MVN.V), which will benefit from Chevron’s plans to drill 300 wells just west of the junior’s Coiron Amargo block.   

The point is that as the supermajors drill, the smaller companies reap the benefits, positioning themselves for big rewards with big players who are eyeing their large tracts of land in this promising basin.

“Given the size of the resource prize in both Vaca Muerta and Agrio, Argentina is home to one of the biggest unconventional plays in the world,” said Kevin Shaw, CEO of Madalena Energy, which controls around 1 million net acres in Argentina and plans to begin shale development in the Agrio formation later this year or in early 2015.

“Some of the largest oil companies around the globe are continuing to actively drill and appraise     Argentina’s Vaca Muerta shale and  are now starting to do work in the Agrio shale,” Shaw said.

For oil and gas explorers both big and small, Argentina is back--with possibly more shale than the United States, and the industry is more active than ever..  

Like Warren Buffet, when George Soros makes a big move, people notice. Their decisions, which sometimes run counter to conventional wisdom, are often seen in hindsight as signals of trends that few investors are noticing.

By. James Stafford of Oilprice.com




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News