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ECONOMY | 07-02-2024 11:38

YPF plans sweeping asset sale to focus on Argentina shale

Argentina’s biggest oil company, state-run YPF SA, is planning a sweeping asset sale to sharpen its focus on shale production and boost its share price.

Argentina’s biggest oil company, state-run YPF SA, is planning a sweeping asset sale under President Javier Milei to sharpen its focus on shale production and boost its share price.

The plan is part of a broader effort to streamline the company and increase its production and exports, according to a company official who asked not to be identified because they weren’t authorised to discuss the matter publicly.

The assets YPF plans to sell are mainly ageing oil fields across Patagonia that are less profitable than the crown jewel of its portfolio, shale patch Vaca Muerta, the official said. It will also aim to sell stakes in more than 20 companies if they are deemed to affect YPF's overall value. Those units are in the oil and gas, energy and research and development sectors. Holdings that are profitable or help YPF's equity history would be retained.

The effort is part of Milei's plan to boost the value of YPF shares and help the company finally tap the export potential of Argentina's abundant Vaca Muerta shale formation, which could produce one million barrels of crude oil per day by 2030, as well as plenty of natural gas.

To this end, YPF will also focus on spearheading plans with partners to build new pipelines and a liquefied natural gas terminal. And it will continue to explore a new shale frontier called Palermo Aike and offshore fields, as they could match the potential of Vaca Muerta, the official said.

The administration said YPF looked to Brazilian oil giant Petrobras and its divestments over the past decade for inspiration. YPF's New York-listed shares have fallen since it was nationalised in 2012.

During his election campaign, Milei said he would try to sort out the company and restore its value before selling it back to the private sector, although the path to a re-privatisation was excluded from signed legislation making its way through Congress.

Milei has hired new top executives from Argentine-Italian billionaire Paolo Rocca's oil and steel empire to execute the strategy, who will face questions from investors on an earnings call on MArch 4.

by Jonathan Gilbert, Bloomberg

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