Argentina’s YPF to present conventional asset divestment process in North America

Argentine state-controlled hydrocarbons company YPF has cut the ribbon on its Andes project, an initiative to divest a portfolio of mature conventional fields.

Company officials will outline the process to the private sector in Houston and Calgary, a statement said.

A meeting with the Argentine-Canadian chamber of commerce is also planned. 

YPF’s board recently greenlit a plan to offload 55 areas, a move that would release capex that, in turn, would be redirected into the Vaca Muerta unconventionals formation, on which the company is betting heavily. YPF, along with other big players, is eyeing increased oil exports, with appetites whetted by prices and by midstream expansion work being carried out to support higher production.  

A definitive list of the areas has not yet been published although YPF confirmed they were grouped into clusters in Mendoza, Neuquén, Río Negro, Chubut and Tierra del Fuego provinces.

The statement says YPF will “optimize its investment to concentrate on those conventional and non-conventional areas that generate the most value for the company and shareholders and are more aligned with its scale.”

The million-dollar question being asked is what level of interest will be shown in YPF’s conventional assets, which are not expected to be among the company’s most profitable, and given the challenging economic backdrop.

Chilean state oil and gas company Enap, which produces hydrocarbons with YPF in Tierra del Fuego and Chubut provinces, recently said it was putting its Argentine assets on the auction block. Enap's Argentine unit, Enap Sipetrol Argentina, posted a US$110mn loss for 2023 amid a natural decline in output from its two main areas, Magallanes (offshore, Enap-operated) and Campamento Central-Cañadón Perdido (onshore, YPF-operated). As of end-2023, Enap Sipetrol Argentina had net negative equity of US$66.3mn, reflecting the recognition of an US$173mn impairment charge, driven primarily by an expected drop in gas prices in the local market linked to forecast supply growth. 

YPF also cited dampened domestic gas price prospects as a factor behind a non-recurring US$2.29bn impairment charge logged in 4Q23.