Source: Pampa Energia
Pampa Energia S.A. (NYSE: PAM), through its subsidiaries Petrolera Pampa S.A. and Central Termica Loma de la Lata S.A., has executed a letter of intent with Apache Energia Argentina S.R.L. (NYSE:APC) to jointly engage in the development and exploitation of unconventional gas reservoirs, and an irrevocable bid for the purchase of natural gas within the framework of the Gas Plus program launched by the Argentine Government.
According to a report from Bloomberg, this agreement is an effort by Pampa, which is the largest power producer in Argentina, to ensure natural gas supplies for its power plants because Argentina faces power shortages.
The partnership with Apache would allow the production of an additional 700,000 cubic meters a day of unconventional natural gas, from reservoirs with low permeability, at the Anticlinal Campamento and Estacion Fernandez Oro areas in the provinces of Neuquen and Rio Negro. Pampa would have a 15% participation in the necessary investments for the development of this gas production, estimated to be approximately US $ 8 million, allowing Pampa to obtain its proportional participation in the production. All of this additional production will be assigned to supply Loma de la Lata's gas needs.
Simultaneously, Pampa signed an irrevocable bid for the acquisition of 800,000 cubic meters a day of Gas Plus from Apache for a three year period, seeking also to ensure the gas supply required by Loma de la Lata. The agreed upon price for the Gas Plus, authorized by the Secretariat of Energy, is US$5.00/MMBtu.
In this manner, once the definitive investment terms are reached, Pampa would be in a position to ensure approximately 60% of the provision of gas for Loma de la Lata.
These initiatives that we undertake together with Apache, aimed at ensuring the supply of gas for the Loma de la Lata thermal station, come on top of the agreement executed between Pampa and YPF in November 2009 whereby Pampa agreed to invest up to US$ 29,000,000 in the Rincon del Mangrullo field in the province of Neuquen and that would allow Pampa to supply 11% of the consumption of Loma de la Lata.