ConocoPhillips Exits Vaca Muerta Shale Partnership in Recent Sale

ConocoPhillips Co. is exiting its Vaca Muerta Shale partnership in a recent sale to Vista Oil & Gas SAB de CV.

Through its subsidiary, ConocoPhillips Argentina, the Houston-based independent holds a 50% nonoperating interest in the Aguada Federal and Bandurria Norte exploitation concessions in the Vaca Muerta shale oil play. ConocoPhillips first acquired the assets through a joint venture with Wintershall Dea GmbH in July 2019.

Under the terms of the transaction, Vista made no upfront payment and assumed the outstanding carry consideration amounting to $77 million that ConocoPhillips Argentina had agreed to pay to Wintershall by bearing 50% of Wintershall’s share in all capex corresponding to the assets, according to a release from Vista Oil & Gas on Sept. 16.

“This is a unique opportunity to strengthen our position as one of the leading producers in Vaca Muerta,” Miguel Galuccio, Vista’s chairman and CEO, commented in the company release.

Located in the Neuquina Basin in the Province of Neuquén, Argentina, the Aguada Federal and Bandurria Norte exploitation concessions cover a surface area of 24,058 and 26,404 gross acres, respectively. Each of the assets has been awarded by the Province of Neuquén with unconventional exploitation concessions that expire in 2050, and has no remaining investment commitments.

Through the transaction, Vista said it has acquired 25,231 net acres, increasing its total acreage in Vaca Muerta to 157,853 acres. The company also added up to 150 new well locations to its Vaca Muerta portfolio, totaling up to 700 identified new well locations.

“We are not only adding core assets to our existing portfolio,” Galuccio continued in the release, “further enhancing our growth potential and shareholder value, but will also contribute our know-how in efficient developments, as well as safe and sustainable operations.”

Aguada Federal is located in the black oil window of Vaca Muerta where a total of six horizontal wells have been drilled since 2017, all of which proved hydrocarbon production. Total production in second-quarter 2021 was 832 boe/d. There were no proved reserves booked at year-end 2020. Vista estimates there are up to 150 new well locations (gross) to be drilled in this block.

Bandurria Norte is located in the volatile oil window of Vaca Muerta and have a total of four horizontal wells drilled since 2017. All of the wells have proved hydrocarbon production, prior to being shut-in in 2019. There were no proved reserves booked at year-end 2020. Vista estimates there are up to 150 new well locations (gross) to be drilled in this block. 

German oil and gas producer Wintershall will continue to operate the assets and holds the remaining 50% working interest in both concessions.

Concurrently with the transaction, Vista and ConocoPhillips BV entered into an unsecured credit agreement, whereby ConocoPhillips BV shall make available to Vista, during a 24-month period, a loan for a principal amount of up to $25 million, which shall accrue interest at LIBOR plus 2% per annum and mature on September 2026, the company release said.