Argentina to divest in non-core businesses in Vaca Muerta shale drilling push

(Bloomberg) – Argentina’s state-run oil company, YPF SA, is moving to sell several business units and stakes as a divestment plan aimed at focusing its efforts on heralded shale patch Vaca Muerta gathers steam.

YPF is receiving bids for its businesses in Brazil and Chile, where it sells refined products like lubricants and jet fuel, Chief Executive Officer Horacio Marin said Friday on an earnings call.

Argentina’s biggest oil and gas producer has also started the process of selling its 50% stake in refiner Refinor. And it is committed to divesting a 70% stake in natural gas distributor Metrogas SA — but only once President Javier Milei’s free-market reforms, which feature utility price hikes, have driven up Metrogas’ value.

It’s all part of a strategy to streamline YPF and boost the company’s share price by prioritizing drilling in Vaca Muerta. YPF expects to finish up selling aging conventional oil fields — freeing up hundreds of millions of dollars for shale spending — in the second half of the year.

Shale accounted for 52% of YPF’s second-quarter production of the equivalent of 539,000 bopd, up from 45% in the same period last year. Industry plans that it’s spearheading for a new shale oil pipeline are also accelerating, with drillers already negotiating to fill two thirds of capacity, Marin said.

Shale fields that Exxon Mobil Corp. has put up for sale in Argentina are a strong fit for YPF, but Marin wouldn’t comment further on the confidential bidding process.

YPF isn’t exiting all of its non-core businesses. Marin said it will keep its 50% stake in Profertil SA, which turns natural gas into fertilizers, and look for a new partner to help it boost production there as Canadian giant Nutrien Ltd. eyes the door.

Research and development arm Y-TEC won’t be sold either. But it will have a strict mandate to work on projects for shale drilling, shrinking a portfolio that’s included farming and the energy transition.

“Our goal is to improve profits for you,” Marin said on the investor call. “There is no other goal.”