Last month I wrote about soaring profits for resource companies working in Argentina. With local costs for such firms plunging following the devaluation of the Argentinean peso.
And this week the government here confirmed this as one of the best crude markets going on the planet.
That’s because of the oil price in the country. Which officials said will be fixed at US$67.50 per barrel for 2016.
Unlike most global oil markets, Argentina currently mandates oil sale prices — to provide profitability for drillers and ensure development of domestic oil fields and security of local supply. Related: 10 Key Energy Trends To Watch For In 2016
And that looks to be a great situation for E&P firms working in the country.
The 2016 price of $67.50 is more than double the $33.26 per barrel that WTI closed at yesterday. With most major crude blends worldwide currently trading near (or below) such levels.
That means Argentina’s oil producers will be seeing some of the highest revenues going anywhere in the world.
The government did say it may adjust the price throughout the coming year — with this week’s announced price being a 10 percent decrease from the $75 per barrel price that prevailed across Argentina in December. Related: Petro Currencies Under Fire As Oil Keeps Sliding
But even a few more cuts of that magnitude would still leave Argentina’s oil market as the best on the planet. By far.
The high oil price is especially good news in the wake of the recent peso devaluation. Which should push down costs for labor and local supplies for E&P firms — further ramping up profits.
Combine that with recent successful work in Argentina’s emerging Vaca Muerta shale oil and gas play, and it looks like this may be the world’s best spot in the petroleum business today. Watch for financial statements from firms producing here to see if profits are super-charging over the coming months.
Here’s to not crying for me
By Dave Forest
More Top Reads From Oilprice.com:
- Crude Hits New Lows Despite Geopolitical Unrest
- How Capital Inflows Can Affect Oil Service Activity In 2016
- Saudi Arabia Throws Down The Gauntlet, But To Whom?