Repsol Rejects Argentina’s $5 Billion YPF Compensation

Repsol SA, Spain’s largest oil driller, said its board rejected an offer by the Argentine government meant as compensation for the expropriation of a 51 percent stake in YPF SA in April 2012.

Repsol was offered a 47 percent stake in a joint venture in the Vaca Muerta shale formation valued by Argentina at $3.5 billion, as well as $1.5 billion toward development, according to a filing sent to Spain’s securities regulator. The proposal “does not equal the losses suffered by Repsol,” the Madrid-based company said. YPF would hold a 51 percent stake, while Petroleos Mexicanos SA would own 2 percent in the venture.

Any potential agreement in which the company obtained stakes in Vaca Muerta “would force Repsol back to Argentina,” Societe Generale analysts, who lowered Repsol’s price target to 17.25 euros from 19 euros, said in a note yesterday.

Repsol, which lost almost one-quarter of its market value in the month following the nationalization, has filed numerous lawsuits including ones in Madrid and New York seeking compensation of $10.5 billion for the seizure of the Buenos Aires-based oil producer.

Shares in the Spanish company fell as much as 1.4 percent to 15.89 euros in Madrid and pared the loss to 0.3 percent as of 10 a.m. local time.

‘Negotiated Solution’

“The board of directors of Repsol and its executive team are pleased to note the interest of the Argentinean government in a negotiated solution,” Repsol said in the filing.

Jessica Rey, a spokeswoman for Argentine Deputy Economy Minister Axel Kicillof, didn’t reply to a call seeking comment on the rejection. Kicillof oversees the country’s energy policies and has a seat on YPF’s board.

YPF said it had informal talks with Repsol’s shareholders and denied the government sent an official compensation offer. In an e-mailed statement, it also said it is open to finding a negotiated solution.

The offer values the Vaca Muerta formation at $42,000 per acre. Argentina holds the world’s second-largest shale gas reserves and fourth-largest shale oil reserve, according to U.S. Energy Information Administration data.

Petroleos Mexicanos, known as Pemex, is a minority shareholder in Repsol.

YPF’s American depositary receipts gained 2.6 percent to $14.50 at close in New York. The ADRs earlier rose as much as 5.2 percent to $14.87, the biggest intraday increase since May 29. Repsol’s ADRs added 1.6 percent to $21.10.

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