By America Hernandez
(Reuters) -TotalEnergies said on Wednesday that its affiliate Total Austral had agreed to sell its 45% interest in two unconventional oil and gas blocks to Argentina’s YPF.
The deal has been valued at $500 million, TotalEnergies said in a statement, and represents about 20% of the French group’s acreage in Argentina’s sought-after Vaca Muerta shale formation, the world’s second-largest unconventional gas reserve.
TotalEnergies is Argentina’s largest private operator, responsible for about a quarter of the country’s gas production.
Javier Ravelo, TotalEnergies’ senior vice president of exploration and production in the Americas, said the company remained committed to Argentina and that the sale freed it up to focus on developing its core assets there, notably the Fenix gas field offshore Tierra del Fuego, and in the Neuquen basin.
YPF said in a statement the assets came with fracking licences valid through 2051, which are key to the Argentinian company’s growth strategy.
It said the Rincon La Ceniza asset was well-located to potentially feed gas into a future Argentina LNG export facility, while the La Escalonada asset had mainly crude oil that could contribute to a developing northern hub in Vaca Muerta.
TotalEnergies CEO Patrick Pouyanne said on a July 24 results call that the company had accepted binding offers for its Argentinian shale oil licence and two upstream assets.
Pouyanne said it made sense to sell TotalEnergies’ minority stakes in areas where production costs were above the company’s new project ceiling of $20 per barrel, and invest in its larger projects being developed in Suriname and Brazil, as part of its low-cost, low-emissions oil and gas strategy.
“We prefer to allocate the capital to expand Block 53 in Suriname and … the huge portfolio in Brazil, with Sepia-2, Atapu-2, the Lapa extension, all that,” Pouyanne told analysts last month.
The stake sales are in assets partly owned by Shell (45%) and local firm Gas y Petroleo de Neuquen (10%).
(Reporting by Gianluca Lo Nostro in Gdansk, Walter Bianchi in Buenos Aires and America Hernandez in Paris. Editing by Kirsten Donovan and Mark Potter)
