Mensajepor Tiger Gus » Vie Sep 26, 2014 10:15 am
Vaca Muerta Is A Goldmine For YPF
Sep. 25, 2014 8:14 AM ET | 1 comment | About: YPF Sociedad Anonima (YPF)
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Summary
YPF and Petronas have signed a deal worth $550 million to develop Vaca Muerta’s shale oil reserves.
The company is mulling an investment of over $1 billion to continue the project, depending on the results yielded in the pilot stage.
Petronas is going to finance the project. It would also provide YPF the technical resources needed to develop unconventional energy.
An agreement worth $550 million has been signed by YPF and Petronas to develop shale oil reserves in Vaca Muerta. Petronas would be contributing around $457 million towards the project at the La Amarga Chica oil fields. It will be divided into three phases involving the drilling of over 30 wells by Q1 of 2015.
The firm has decided on an investment of over $1 billion to continue the project, which is dependent on results yielded in the pilot stage.
Before putting pen to paper with Petronas, YPF signed a deal with Chevron worth $1.5 billion to develop a Loma Campana field - the second largest producer of unconventional oil outside of North America. It has around 245 wells with production exceeding 25,000 barrels per day. Chevron initially invested merely $1.2 billion in the project but in the next 15 years, the total investment could be worth $16 billion for both companies.
Importance for YPF
Not only would Petronas be providing cash for the project but it would also give YPF the needed technical resources to develop the unconventional energy source. Petronas is set to provide these resources through the Canadian company, Progress Energy Resources Corp. that it acquired in 2012 for $5.2 billion.
The move is in line with YPF's stratagem, and would build on the results from Loma Campana. Petronas being a world class company, would help YPF develop its massive shale and gas resources. With both firms planning on pursuing offshore developments in the short and long-term future, by exploring other Latin American fields, this is a massive opportunity for YPF.
The Argentinean Debt Crisis
Recent news revolving around Argentina's debt crisis has made it difficult for companies, including YPF, to obtain finance from the global financial markets. This could lead to devaluation in Argentina's currency and could exert pressure of YPF to raise the prices of gasoline. With an annual inflation rate pegged at 40% by economists, this could be an extremely unpopular move amongst consumers.
YPF, however, has managed to cushion itself with the $1.5 billion cash that it holds in reserves and through other finance management strategies. This could help the company overcome any obstacles that it might face in the future.
The Vaca Muerta project is not likely to face a lot of ramifications of Argentina's default. Considering the potential of the Argentinean oil sector, the default shouldn't result in any slowdown for the company. In the worst case scenario, it should slow the growth down slightly.
In a recent interview in a local newspaper, the CEO of YPF spoke about a decline in the drilling cost of the Vaca Muerta oil field. An earlier estimate indicated that vertical perforation of a single well could cost almost $7.5 million, but according to the recent figures, the costs incurred amount to $7 million per well.
Analyst rating about YPF shares led to a consensus rating of 'hold' with a target price of $43.97. Five analysts rated the share as a 'hold' while three rated it as a 'buy'. Analysts at JP Morgan Chase & Co rated the share as a neutral and set a target price of $43 for the share. Analysts at TheStreet upgraded the shares rating to a buy.
Vaca Muerta seems to be an extremely lucrative deal for YPF. Not only does the deal provide the Argentinean firm with financial backing from Malaysia's Petronas, but it is unlikely to be affected by the latest debt crisis of the country. What is even better is that the company has taken measures to fortify itself against any challenges that by stabilizing itself financially.
The project is looking at plans of expanding in the future and is likely to follow the path of the project YPF signed with Chevron.
YPF can expect the project to be successful and the expansion of the plan directly means that the company benefits out of the profits that it will bring in. With plans to expand offshore as well, the company is in the race to become one of the largest oil and gas companies in the country.
Investors can expect the company and their investments to grow, based on this assessment. Investors should be looking at increased share prices and higher earnings in future years.
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De cualquier forma el gobierno no la dejará caer, tiene mucho de político hacia afuera por posibles inversiones. 
