YPF Announces Two Shale-Gas Finds in Argentina

YPF SA (YPFD), Argentina’s biggest energy company, made two shale-gas discoveries in the Vaca Muerta region, one of which is part of a venture with Exxon Mobil Corp. (XOM)

The state-controlled producer will announce the finds to the U.S. Securities and Exchange Commission this afternoon, Chief Executive Officer Miguel Galuccio said in Buenos Aires.

Presenting a five-year business plan today, Galuccio said the company is looking for the “keys to unlock” potential at Vaca Muerta and other fields through partnerships with local and foreign companies to reverse falling output. Galuccio was appointed after Argentina seized 51 percent of YPF from Repsol SA in April following government accusation that the Spanish company had under-invested.

YPF plans to invest $37 billion over the next five years including $1.4 billion on 250 wells, he said. The company wants to increase oil output by 29 percent and refining by 37 percent over that period.

Galuccio is seeking to boost output at the mostly untapped 30,000 square-kilometer (11,600 square-mile) Vaca Muerta region in southern Argentina, which holds at least 23 billion barrels of oil in resources, according to a survey by Ryder Scott.

While the Repsol expropriation may scare off some companies, others will invest in the country, Galuccio said. YPF signed shale agreements with local companies including Bridas Corp. and is in “advanced talks” with Chevron Corp. (CVX) to develop two areas, he said.

YPF also made three shale-oil discoveries in the San Jorge basin, which is also home to Argentina’s largest conventional oil field, Galuccio said.

Repsol Finds

The discoveries announced by Galuccio today were all made before the company was nationalized, according to Repsol documents, copies of which were seen by Bloomberg.

The company plans to sell bonds locally next week through six banks and has picked a bank to handle an international bond issuance as it seeks funds to increase production, he said.

YPF plans to meet with bond investors abroad in September and seeks to sell an international bond by the first quarter, Galuccio said.

Galuccio declined to specify the size of the bond sales, saying that YPF will need to cover 20 percent of its financing needs with debt, with the company itself funding the other 80 percent.

To contact the reporters on this story: Rodrigo Orihuela in Rio de Janeiro at rorihuela@bloomberg.net; Pablo Gonzalez in Buenos Aires at pgonzalez49@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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