State-owned Argentinean energy company YPF has achieved a hugely promising well result that could have positive implications for other players in the South American country.
A 2,000 metre horizontal well drilled by YPF in conjunction with US integrated oil major Chevron (NYSE:CVX) at Loma Campana, in the Vaca Muerta territory, has clocked up an initial production of 1,630 barrels of oil per day (bopd).
It has been described as a “super-well”, reached through 28 stages of stimulation of the rock, and bodes well for future drilling efforts, not only of big players such as YPF and Chevron, but also the likes of Madalena Energy (CVE:MVN), which has sweet spot acreage directly offsetting the YPF “super-well” and is planning its own horizontal multi-stage fracked well in the Vaca Muerta shale.
Madalena holds over 950,000 net acres in five provinces of Argentina where it has been delineating its unconventional shale assets (oil and gas) and implementing North American horizontal technology in scalable oil resource plays. Madalena has been a leader in Argentina at implementing horizontal technology in the country and is focused on delineating and unlocking its four strategic unconventional plays in the Vaca Muerta shale, Lower Agrio Shale, Loma Montosa oil resource play and liquids-rich Mulichinco.
The Vaca Muerta shale is believed to be the world's second largest shale gas and fourth largest shale oil formation, with the area containing an estimated 27 billion barrels of recoverable hydrocarbon. Madalena Energy controls a significant stake in the Vaca Muerta shale today and is one of the only smaller explorers & producers with prime acreage in Argentina’s unconventional resources.
While other countries have dithered over whether to try to repeat the economic miracle in the US shale sector, Argentina has gone at it full on with billions of dollars of investments being made by the world’s largest energy players, including YPF, Chevron, Shell, Total SA, Wintershall, PlusPetrol, Pan American Energy and Petronas to name a few.
Madalena has secured prime acreage positions across four strategic oil resources and its assets are surrounded by not only by neighbors Chevron and YPF but also the likes of Shell, Petronas, Total, PlusPetrol and Wintershall (all of which are currently scaling up drill programs in Argentina).
Shell has also had some of the best results in the basin to date on the border of Madalena’s Vaca Muerta shale acreage with horizontals test rates in the 500 to 700 boepd (barrels of oil equivalent per day) range as an average of the first 30 days of production. Shell is proceeding to build plant infrastructure offset Madalena and moving into pilot pad projects for horizontal development in the Vaca Muerta.
Miguel Galuccio, president and chief executive officer of YPF, is clearly enthused by the possibilities opened up by horizontal technology.
"YPF is in the oil business to take risks, apart from being a large company and have major ambitions, [it] has the challenge of changing the energy future of the country, and that gives us more reasons to take the risk and let us be the first to know and discover how to do something,” he said at a standing room only presentation at the Argentina Oil & Gas exhibition.
Galuccio said he was confident the results at Loma Campana were repeatable and scalable in the Vaca Muerta shale.
Kevin Shaw, president and chief executive officer of Madalena Energy, reiterated the importance of horizontal technology in Argentina.
“The key to unlocking Argentina’s unconventional resources is to apply what has already worked successfully in North America in plays like the Bakken and Eagleford,” Shaw told Proactive Investors.
“Argentina is home to world class resource plays which are scalable and repeatable and there is a huge opportunity in not only the Vaca Muerta shale and Lower Agrio Shales but also in attractive resource plays like the Loma Montosa and Mulichinco tight sands. Utilizing horizontal technology is the key to unlocking significant upside for Argentina’s energy future,” he added.