One of my smaller positions:
LONDON, May 20, 2015 /PRNewswire/ —
Argentina is quickly becoming the venue for the next shale boom, and now the race is on to get in on the oil and gas potential, with Russian Gazprom staking out the place, while investors wonder how they can play this momentous game.
If there were any doubts over the past year that Argentina is on the cusp of a US-style oil and gas revolution from shale, Gazprom’s overtures should put them to rest.
Russian state-run news agency Interfax is making sure the world knows that Gazprom plans to be a key player in this game, announcing late in April that the Russian energy giant may begin drilling for shale oil and gas in Argentina as early as 2016.
Indeed, on 23 April, Gazprom and Argentina’s state-owned YPF signed a memorandum of understanding on exploration and pipelines, with more concrete plans said to be in the works.
Gazprom’s telling flirtations aside, most of the rest of the oil and gas world seems to agree that Argentina is the place to be right now for anyone hoping to get in on the ground floor of the world’s next shale and unconventional resource boom.
According to Morgan Stanley, Argentina is by far the best candidate. Not only does it have favorable geological conditions, an unutilized infrastructure grid and low investment costs, but the country has an urgent demand for energy and its resources are conveniently located in established provinces such as Neuquen and Rio Negro, which cover much of the emerging hot bed plays.
Argentina is home to 27 billion barrels of recoverable oil and 802 trillion cubic feet of natural gas, primarily in and around multiple prolific shale basins in the central Neuquen province, including the prized Vaca Muerta shale.
According to Business Insider, Vaca Muerta alone represents 40% of the country’s shale gas resources and 60% of its shale oil. Moreover, the basin is in the Neuquen province, which is at the core of Argentina’s production history and where the necessary infrastructure for oil production is already present.
For investors who are looking to get in on this before the shale boom explodes, there is really only one way to do so without getting involved with the international supermajors, such as ExxonMobil (NYSE:XOM), which has made two major discoveries on its Vaca Muerta acreage, and Chevron (NYSE: CVX), which is expected to have over 300 wells in production by the end of 2015 in a joint venture with Argentina’s YPF. This is where the only sustainable junior left on the scene – a junior which is building an impressive and attractive oil business in Argentina -has positioned itself with prime shale acreage, scaleable horizontal resource plays and a prolific portfolio of conventional oil & gas assets.
With over 950,000 net acres and 13 blocks, this key Argentina player got in on the shale plays long before the supermajors -and is becoming a sensational story as it strategically builds forward.
Canada’s Madalena Energy (TSXV: MVN; OTC:MDLNF) – trading at less than 3 cents per recoverable barrel – is sitting on an astounding 2.9 billion boe of net estimated recoverable resources and drilling in four strategic resource plays including the Vaca Muera shale, Loma Montosa Oil Resource Play, Lower Agrio Shale and Liquids-rich Mulichinco, all of them offset by major drilling campaigns by the supermajors.
With Argentina producers like Madalena getting USD $77/bbl, nearly every supermajor is eyeing the Vaca Muerta shale right now, despite the plunge in global oil prices outside of Argentina.
In addition to ExxonMobil and Chevron, Royal Dutch Shell (NYSE: RDS.B), France’s Total SA (NYSE:TOT) and Petronas (PNAGF/PTG:Kuala Lumpur) have committed more than $1 billion to the Vaca Muerta shale since the start of this year alone. The oil-hungry Chinese, among others, are also said to be eyeing sweet-spot acreage here through Sinopec (NYSE:SNP).
Right in the middle of this flurry of activity, Madalena holds core acreage positions which continue to rise in value as the industry de-risks what is becoming the next big unconventional shale play, making it a highly attractive target by bigger players.
As this junior actively implements horizontal technology in the world’s next hot bed for unconventional shale and resource play development, it’s four strategic resource plays surrounded by supermajor drilling are detailed in a new summary presentation unveiled on oilprice.com.