ExxonMobil, Americas Petrogas seek shale gas in Argentina

Looking for shale oil and shale gas outside North America, ExxonMobil is helping to finance the exploration of shale in Argentina. 

ExxonMobil, through its wholly-owned subsidiary ExxonMobil Exploration Argentina S.R.L., has signed a farm-out agreement with Americas Petrogas, a Canadian company, through its wholly-owned Argentina subsidiary, Americas Petrogas Argentina S.A., for the exploration and potential exploitation of Americas Petrogas's Los Toldos blocks (163,500 gross acres or 255 sections or 660 square kilometers) in Neuquen, Argentina. The Los Toldos blocks are located in the western region of the Neuquen Basin and are in a favorable location relative to other recent discoveries of shale oil and shale gas in the Vaca Muerta formation.

Barclay Hambrook, president and CEO of Americas Petrogas, stated "As the world's largest publicly-owned integrated oil and gas company, ExxonMobil brings vast experience, technology, research and financial resources to this joint venture with Americas Petrogas."

Pursuant to the terms of the FOA, ExxonMobil has committed to fund US$53.9 million (including taxes) during the exploration phase with a further US$22.4 million (including taxes) if the parties proceed to the exploitation phase, for a total potential initial investment of US$76.3 million. This focus of exploration, exploitation and other related activities is expected to be directed towards the Los Toldos 1 and 2 blocks. ExxonMobil will earn a 45% interest in the Los Toldos blocks with Americas Petrogas retaining a 45% interest and the government entity, Gas y Petroleo del Neuquen (G&P), maintaining a 10% interest. ExxonMobil will also provide technical assistance on the Los Toldos blocks. The FOA is subject to approval by G&P.

Americas Petrogas is the operator of the Los Toldos blocks and expects to spud the first well in the fourth quarter of 2011 with the primary target being the unconventional Vaca Muerta formation and potential secondary targets in other conventional and unconventional formations.

In addition to the Los Toldos blocks, Americas Petrogas has five other blocks within the Neuquen Basin's western shale corridor, including the Huacalera block which is located south of the Los Toldos blocks and which was recently drilled, cased and cemented, having intersected 1,742 feet of Vaca Muerta shale. In published reports, the US Energy Information Administration has cited a risked, recoverable resource of 240 trillion cubic feet (tcf) of gas for the Vaca Muerta shale in the Neuquen Basin.

Guimar Vaca Coca, managing director of Americas Petrogas' Argentina subsidiary, said, "We believe the next major shale development outside of North America will be in the Neuquen Basin. Our Argentina management and technical personnel look forward to working with ExxonMobil to explore the substantial hydrocarbon potential of the Los Toldos blocks."

The Vaca Muerta Shale is one of two principal source rocks in the Neuquen Basin of Argentina. The shale is late Jurassic-early Cretaceous in age, covers an area of approximately 8,500 square miles, varies in depth between 5,500 to 14,000 feet and in places is up to 2,000 feet in thickness.

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