Argentina-focused Andes Energia plans to separate its exploration and production assets from its electricity assets into separately listed companies, the firm announced Tuesday.
Andes – which has onshore oil and gas assets in four different regions of Argentina – wants to de-merge the two parts of its overall operation because of increasing activity expected in both of these business units, and particularly because of the progress being made by the firm's current drilling campaign.
Westhouse Securities, Andes' London-based broker, said the move should enable the firm to "achieve a more appropriate value for its E&P business", pointing out that the newly spun out E&P business would likely be listed in London.
"The proposed demerger of Andes Energia should be a key value creation event and will lead to separation of two businesses which have very different risk‐reward profiles, valuation metrics and capital requirements. The Argentina focused E&P business would join a growing peer group of London listed oil & gas companies focused on the Latin America market," added Westhouse.
Andes also announced Tuesday that it has successfully drilled two wells on its concessions in the Neuquen basin in Argentina, where it is targeting the Vaca Meurta shale.
The Corr.x-1 well on the firm's Corralera concession encountered 1,135 feet of pay. This well has been logged and will be prepared for future fracture stimulation and flow testing.
Its well on the Mata Mora Block has been drilled, fracked and tested and has encountered 446 feet of pay. It produced at an average rate of 374 barrels of oil per day and 50.6 million standard cubic feet of gas per day during a 16-day test. The oil produced was light, with an API of 31 degrees.
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