Americas Petrogas Eyes Takeover as Shale Output to Start

Americas Petrogas Inc. said it’s pursuing new partners and may become an acquisition target as the Calgary-based company prepares to start producing oil in Argentina’s Vaca Muerta shale formation. Shares surged.

“We are looking at potential joint ventures with some pretty big companies,” Chief Executive Officer Barclay Hambrook said in an interview yesterday, without identifying them.

Petrogas may start commercial production in “several months” at the Los Toldos block it owns with Exxon Mobil Corp. after an exploratory well flowed at 800 barrels per day, Hambrook said from an Oil Council conference in Bogota.

Petrogas, which also has a venture with Apache Corp. in Argentina, will need new partnerships to continue to develop its assets in the country, he said. The company plans to drill its first horizontal well this year and expects to be producing from at least five shale blocks by 2018, Hambrook said. Petrogas has 16 blocks in the Neuquen basin, where Vaca Muerta is located, four of which are part of the venture with Exxon.

As Petrogas develops assets in Argentine, the company probably will generate interest from prospective buyers, said Hambrook, who co-founded the company.

“Our biggest risk is probably staying an independent company,” he said. “I think the writing is on the wall.”

Petrogas’s stock jumped 7.3 percent to C$2.49 at 10:40 a.m. New York time, heading for the steepest gain since Dec. 20.

Worst Performer

While the shares have gained 20 percent in the past three months, they have lost 32 percent over the last year, the worst performance among 15 global peers tracked by Bloomberg. The shares trade at 2.8 times book value compared with a peer group average of 2.56, according to data compiled by Bloomberg. The company’s market value is C$530 million.

Los Toldos is in the 30,000-square kilometer (11,600-square mile) Vaca Muerta shale formation, Latin America’s largest. Vaca Muerta is estimated to hold at least 23 billion barrels of oil equivalent, according to a report by independent auditor Ryder Scott released in February after surveying about a third of the formation. YPF SA, Argentina’s state-owned producer, is the formation’s largest operator, with 12,000 square kilometers.

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