Chevron Agrees With YPF to Develop Shale Wells in Argentina

Chevron Corp., the second-biggest U.S. oil company, agreed with YPF SA, the nationalized Argentine oil producer, to develop oil and natural-gas wells in the country’s Vaca Muerta shale formation.

YPF and San Ramon, California-based Chevron also agreed to study the recovery of oil from aging wells through new technologies, the Buenos Aires-based company said today in an e-mailed statement.

“This is the first step for a long relationship,” YPF Chief Executive Officer Miguel Galuccio said in the statement.

Galuccio on Aug. 30 unveiled three types of partnerships to tap the Vaca Muerta shale formation, a Connecticut-size area in southern Argentina that contains at least 23 billion barrels of oil. YPF is seeking financial and strategic partners and operators for its $37.2 billion business plan to boost production, he said.

Spain’s Repsol SA said it plans to take legal action against the development accord. The Argentine government seized 51 percent of YPF from Repsol in April.

“Repsol will take legal action against this agreement, which our legal team is currently studying,” Kristian Rix, a Repsol spokesman, said today in a telephone interview from Madrid. “We will not let third parties benefit from illegally confiscated assets.”

Shale Agreements

James Craig, a spokesman for Chevron’s operations in Africa and Latin America, declined to comment on Repsol’s legal action in an e-mail. Pablo Dorfman, a YPF spokesman, declined to comment in an e-mail statement.

Repsol is seeking as much as $10 billion in compensation from the government takeover. The Madrid-based company still owns a 12 percent stake in YPF, making it the second-biggest shareholder behind the Argentine government.

The shale accord with Chevron is the third obtained by YPF since it was seized by the government.

Galuccio said on Aug. 30 the company had signed a $500 million deal with local businessman Eduardo Eurnekian to develop wells in Vaca Muerta. It also said it had signed a deal with Bridas Corp., a joint venture between China’s Cnooc Ltd. and Argentina’s Bulgheroni family, without elaborating on how much money was involved.

YPF and Chevron didn’t provide additional details on today’s accord.

“Chevron has had an ongoing, collaborative relationship with YPF since the early 1990s,” Craig said in an e-mail.

Seeking Investors

The YPF-Chevron development accord was signed by Galuccio and Ali Moshiri, Chevron’s president for Africa and Latin America exploration and production.

YPF’s American depositary receipts slid 2.7 percent to close at $12.75 in New York trading. Chevron added 0.6 percent to $117.25.

YPF plans to start next week a two-week trip to the U.S. and Europe seeking financial and strategic investors for its five-year business plan, a YPF official briefed on the matter, said yesterday. Galuccio and YPF Chief Financial Officer Daniel Gonzalez will meet with Exxon Mobil Corp. and Apache Corp. as well as other producers during an oil conference in Houston on Sept. 18-21, the official has said.

Other stops include New York, London, Los Angeles and Boston.

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