Repsol Jumps on Higher Estimate for Argentine Shale Reserves

Repsol YPF SA (REP) rose the most in five weeks in Madrid trading after its Argentine unit said its shale oil resources probably hold almost half that of Brazil’s pre- salt reserves.

The shares gained 2.1 percent, the most since Dec. 29, to 21.13 euros. YPF, producer of more than half of Argentina’s crude, said yesterday the Vaca Muerta formation in Patagonia probably contains about 23 billion barrels of oil.

The resources at Vaca Muerta compare with the 50 billion barrels of oil Brazil estimates it’s found under a thick layer of salt beneath the seabed, which include the largest fields discovered in the Americas in three decades. YPF had previously discovered about 927 million barrels at the Loma La Lata field in the Vaca Muerta formation.

“We value the shale upside at 3 euros a share,” said Stuart Joyner, an analyst at Investec Securities Ltd. in London. “It certainly is a relief after the relentless political pressure on Repsol’s share price out of Argentina.”

Before today, Repsol had fallen almost 13 percent this year. In October, Argentina’s government ordered oil and mining companies to repatriate export revenues and in November opposed a dividend payment for YPF as it seeks to stem capital flight. YPF was one of nine companies that also lost financial incentives for oil exploration and production on Feb. 3., following speculation that the government may consider nationalizing the company.

Shale Boom

Shale resources are drilled by blasting underground rocks with sand and chemicals. The process sparked the boom that made the U.S. the world’s biggest producer of natural gas.

Global shale oil reserves are conservatively estimated at 2.6 trillion barrels, and the amount of shale oil that can be recovered depends on “many factors,” according to the Energy Minerals Division of the American Association of Petroleum Geologists.

YPF’s new estimates come after further drilling in Argentina’s Neuquen province and reviews of the area by independent auditor Ryder Scott, YPF said.

The Vaca Muerta formation in Patagonia is 12,997 square kilometers (5,018 square miles), almost the size of Connecticut. Ryder Scott’s study covered an area of 8,071 square kilometers, in which YPF holds 5,016 kilometers.

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To contact the editor responsible for this story: Will Kennedy at

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