Royal Dutch Shell Plc and Equinor ASA have completed a joint acquisition of Schlumberger Ltd's 49 percent stake in the Bandurria Sur block in Neuquén province, the firms confirmed in a statement Friday.
Each partner will pay US$ 17.5 million to hold a 24.5 percent stake in Argentina's fledgling shale-rich area in Vaca Muerta.
The resources in Vaca Muerta have the potential to rival places like the Permian Basin in the United States, according to industry experts.
However, the Patagonian formation has held back by infrastructure bottlenecks, abrupt changes in government subsidies and sovereign risk that is being amplified by political volatility and an impending debt restructuring.
The block is in the late pilot phase of development with current production of approximately 10,000 barrels of oil equivalent per day.
It covers about 22,662 gross hectares in the central area of the prolific Vaca Muerta, one of the largest unconventional hydrocarbon formations in the world.
Shell and Equinor also reached a preliminary agreement with Argentina's state oil company YPF SA, which has an operating interest of 51 percent, to acquire an additional 11 percent stake.
"YPF leads today the development of non-conventionals in the country and the results obtained place the company as the partner of choice for large companies in the world that want to come to the country to develop Vaca Muerta," stated Guillermo Nielsen, president of YPF Argentina.
Subject to conditions, the two will each have a 30 percent non-operational interest, and YPF will own 40 percent and continue as the operator.
"The investment further strengthens Shell's position in Vaca Muerta and is in line with the company's 'Upstream' strategy, which seeks to deliver growing levels of production in a competitive manner," claimed a statement from Shell.
Schlumberger, which bought Bandurria Sur in 2017, uttered in September that it was looking to sell its stake as part of a wider sale of its production assets.
Bandurria Sur is one of YPF's three flagship shale areas. The other two are joint ventures with Chevron Corp. and Petroliam Nasional Bhd of Malaysia.
Production in Bandurria Sur will stabilize within a decade at 58,000 barrels per day, according to a presentation by YPF investors.