ExxonMobil takes Argentina shale farmout

ExxonMobil Exploration Argentina SRL and a unit of Americas Petrogas Inc., Calgary, will explore and possibly exploit the Canadian company’s 163,500-acre Los Toldos blocks in the western Neuquen basin of Argentina for oil and gas in shales.

Americas Petrogas said the four blocks along the Chihuidos high are “in a favorable location relative to other recent discoveries of shale oil and shale gas in the Vaca Muerta formation.” The company is operator and expects to spud the first well in the fourth quarter of 2011. Potential secondary targets are conventional and other unconventional formations.

ExxonMobil has committed to fund $53.9 million during the exploration phase and a further $22.4 million if the parties proceed to the exploitation phase. Both amounts include taxes. The focus is on the Los Toldos 1 and 2 blocks.

ExxonMobil will earn a 45% interest, Americas Petrogas will retaining 45%, the government entity, Gas y Petroleo del Neuquen, will maintaining 10%. ExxonMobil will provide technical assistance.

Americas Petrogas has five other blocks in the Neuquen basin’s western shale corridor, including the Huacalera block south of the Los Toldos blocks and on which a recently drilled and cased well intersected 1,742 ft of Vaca Muerta shale.

In published reports, the US Energy Information Administration has cited a risked, recoverable resource of 240 tcf of gas for the Vaca Muerta shale in the basin (OGJ Online, Apr. 18, 2011).

Americas Petrogas said the Jurassic-early Cretaceous Vaca Muerta, one of two principal source rocks in the basin, covers 8,500 sq miles at 5,500-14,000 ft and in places is as thick as 2,000 ft with characteristics believed similar to those of the Eagle Ford, Haynesville, and Horn River basin shales in North America.