Latin America-focused operator Vista Oil & Gas and Swiss commodity trading group Trafigura are teaming up in a $250 million investment to accelerate development of the Vaca Muerta shale formation in Argentina.
Vista earlier this year became the second-largest producer of non-conventional oil in the core onshore unconventionals play behind only state giant YPF.
According to official government data, Vista produced about 23,300 barrels per day of oil from Vaca Muerta in April, up 23% from 18,900 bpd in March.
In a bid to further increase output from the prolific play, Vista and Trafigura have signed a joint investment agreement worth $250 million for the drilling of 20 wells in the Bajada del Palo Oeste field in the Neuquen basin.
The deal will initially include the drilling of five pads of four wells each, with Trafigura having a contractual right over 20% of the hydrocarbons production of the wells.
Vista will remain the operator and sole owner of Bajada del Palo Oeste, while retaining its rights over 80% of the output from the wells included in the agreement with Trafigura.
The terms of the deal allow Trafigura to exercise an option to participate in up to two extra pads under the same conditions.
“The agreement further validates the performance of our company and the excellence of its management team, which has allowed us to lead the development in Vaca Muerta and to be the partner of choice of a global company for the development of shale in Argentina,” said Vista chief executive Miguel Galuccio.
Bajada del Palo Oeste is currently producing from 28 wells, but Vista has already identified approximately 550 new drilling locations in the field.
As part of the deal, Vista has also committed to supply Trafigura with 380,000 barrels of oil per month for its refinery in Bahia Blanca from July 2021 to December 2022.