YPF, Argentina’s state-run oil company, is selling several business units and stakes to focus on drilling in the Vaca Muerta shale patch. The company is receiving bids for its businesses in Brazil and Chile, where it sells refined products like lubricants and jet fuel. YPF has also started the process of selling its 50% stake in refiner Refinor and is committed to divesting a 70% stake in natural gas distributor Metrogas SA.
The sale of Metrogas will only proceed once President Javier Milei’s free-market reforms, which include utility price hikes, have increased the company’s value. The strategy is designed to streamline YPF and boost the company’s share price by prioritizing drilling in Vaca Muerta. YPF expects to complete the sale of aging conventional oil fields in the second half of the year, freeing up hundreds of millions of dollars for shale investment.
In the second quarter, shale accounted for 52% of YPF’s production, up from 45% in the same period last year. Plans for a new shale oil pipeline are also accelerating, with drillers already negotiating to fill two-thirds of its capacity, according to CEO Horacio Marin. Marin did not comment on the confidential bidding process but noted that shale fields Exxon Mobil Corp.
has put up for sale in Argentina are a strong fit for YPF. YPF isn’t exiting all of its non-core businesses. The company will keep its 50% stake in Profertil SA, which converts natural gas into fertilizers, and look for a new partner to boost production as Canadian giant Nutrien Ltd.
considers an exit.
YPF’s asset sale streamlining strategy
YPF’s research and development arm, Y-TEC, will also be retained but will have a stricter mandate to focus on shale drilling projects, reducing its diversified portfolio.
“Our goal is to improve profits for you,” Marin said on the investor call. “There is no other goal.”
As part of this divestment push, YPF has signed agreements to sell six of the 11 clusters of conventional assets it has put on the block. The company is working on deals for the remaining packages.
The assignments are contingent upon meeting commercial and regulatory conditions. YPF will submit the agreements to each provincial government for validation of the definitive assignment process. Negotiations for the remaining conventional blocks, part of the “Andes” project, are expected to progress in the coming hours.
The project, initiated in February of this year, aims to optimize YPF’s portfolio of conventional upstream areas, seeking to enhance investment efficiency and focus on developing more profitable non-conventional areas. The process has generated significant interest, with over 60 offers received from approximately 30 national and international companies. This underscores the attractiveness of the proposal.
In the oil industry, “mature fields” are those that have surpassed their peak production. Large companies like YPF find it inefficient and less profitable to continue operations in such fields. These areas are often better managed by SMEs or smaller operators who can maintain production continuity.
- WorldOil.”Argentina to divest in non-core businesses in Vaca Muerta shale drilling push”.
- EnergyIntel.”YPF Advances Conventional Asset Divestment Push”.
- BNamericas.”YPF signs the first 6 agreements for the assignment of 15 conventional areas”.