GeoPark Ltd., Bogota, Colombia, signed a deal with Phoenix Global Resources (PGR), a subsidiary of Mercuria Energy Trading, to acquire non-operated working interest in four adjacent unconventional blocks in the oil window of the Vaca Muerta formation in Neuquén basin in Argentina.
The $190-million deal for a total of 122,315 gross acres (58,402 net acres) is comprised of a 45% interest in the producing Mata Mora Norte block and the Mata Mora Sur exploration block, both in Neuquén Province, and a 50% interest in exploration blocks Confluencia Norte and Confluencia Sur, in Rio Negro Province.
Average gross production of the assets was 11,220 boe/d in this year’s first quarter and 12,594 boe/d in March 2024. Gross exit production for 2024 is expected to be 13,500-14,000 boe/d.
The Mata Mora Norte block currently has a dedicated drilling rig that is scheduled to drill 12-15 wells in 2024. The full development and exploration plan for the block includes adding a second rig in late 2025 to continue growing production to expected plateau levels, which include risked estimates of seven committed wells on two exploration blocks.
The Mata Mora Sur, Confluencia Norte and Confluencia Sur blocks are currently in the exploration phase and the first exploratory well on the Confluencia Norte Block is under way.
In addition to the upfront consideration, GeoPark will fund 100% of exploratory commitments up to $113 million gross ($57 million of net carry), to be funded over 2 years, an acquisition of midstream capacity according to the working interest of $11 million, and a $10 million bonus contingent on results of the Confluencia exploration campaign.
Infrastructure is in place to handle 20,000 boe/d of gross production, and additional infrastructure will be in place by 2025-2026 to handle the expected plateau production.
The Vaca Muerta shale formation holds an estimated 16 billion bbl of oil and over 300 tcf of unconventional gas resources with less than 10% developed to date. Oil production from the formation has grown to 352,715 b/d of oil and currently contributes 50% of Argentina’s total oil production.
The transaction is expected to close before the end of 3Q2024, pending customary regulatory approvals.