TotalEnergies announced, in a statement posted on its site recently, that its affiliate Total Austral has signed an agreement with YPF SA for the sale of its 45 percent operated interest in two unconventional oil and gas blocks in Argentina “for an amount of $500 million at a valuation of around $10,000/acre”.
The blocks comprise Rincon La Ceniza and La Escalonada, TotalEnergies highlighted in the release. The company pointed out that these concessions are located in the Vaca Muerta area in the Neuquén Basin, comprise 51,000 net acres, and are currently in a “pilot development phase”.
Completion of the transaction is subject to customary conditions, TotalEnergies noted in the statement.
“The sale of Rincon La Ceniza and La Escalonada blocks is part of our active portfolio management strategy,” Javier Rielo, TotalEnergies Senior Vice President Americas, Exploration & Production, said in the statement.
“TotalEnergies remains fully committed to Argentina, where it operates a large unconventional area of 183,000 nets acres in the Vaca Muerta play, after the divestment of these two blocks which represented around 20 percent of our net acreage in that play,” he added.
“The company is currently producing gas and condensates from the operated blocks Aguada Pichana Este and San Roque, with a combined production of around 50,000 barrels of oil equivalent per day in TotalEnergies share in 2024,” he continued.
“This transaction allows us to unlock value from part of our portfolio, while focusing on the development of our core assets in the Neuquén Basin and in the offshore of Tierra del Fuego,” Rielo went on to state.
In a translation of a letter to the Argentine Securities Commission dated August 6, which was included in a Securities and Exchange Commission document posted on the YPF website recently, YPF said it entered into a share purchase agreement with Total Austral S.A. “whereby, subject to the fulfillment of the conditions precedents set forth in the agreement, YPF will acquire one hundred percent … of the shares and capital stock of Vaca Muerta Inversiones S.A.U.”.
“The total transaction amount is $500,000,000, subject to adjustments at closing based on the company’s cash flows between January 2025 and the closing date,” YPF added.
“If precedent conditions are fulfilled, Vaca Muerta Inversiones S.A.U. will hold a 45 percent interest in the Joint Venture Agreement and Joint Agreement (contrato de union transitoria) corresponding to the La Escalonada and Rincón La Ceniza blocks in the Province of Neuquén,” it continued.
Commenting on the deal, Andy McConn, Director at Enverus Intelligence Research (EIR), told Rigzone, “we view the Vaca Muerta as one of the most attractive global targets for acquiring high-quality unconventional inventory at buyer-friendly prices”.
“The discount to pricing for North American shale inventory remains wide and, in our opinion, more companies should be evaluating opportunities to enter the play considering the scarcity of high-quality, low-breakeven oil resource available in the global M&A market,” he added.
“However, the recent major deals have all gone to established leaders in the play, with Vista acquiring Petronas’ position and now YPF adding to its position with the Total transaction,” he continued.
Total Austral’s partners in the Rincon La Ceniza and La Escalonada blocks are Gas y Petroleo de Neuquen, which has a 10 percent stake, and O&G Developments LTD S.A, which has a 45 percent stake, TotalEnergies’ statement highlighted.
TotalEnergies pointed out in its statement that it has been operating in Argentina since 1978 and added that, today, it “employs more than 1,100 people in its business segments, in exploration and production, renewable electricity (solar and wind), and lubricants”.
The company noted in the statement that, through its Total Austral affiliate, it is the country’s leading international gas producer, “operating some 25 percent of production”. The company’s equity share of production averaged 95,000 barrels of oil equivalent per day in 2024, TotalEnergies said in the statement.
YPF describes itself on its website as the largest integrated hydrocarbons company in the Southern Cone.
To contact the author, email andreas.exarheas@rigzone.com
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