Argentina Cuts Shale Drilling Costs But No New Joint Ventures Expected
BUENOS AIRES, Aug 6 (Reuters) - Argentina needs $200 billion in investment to develop its vast but barely tapped shale fields, but no joint ventures were expected soon because of low oil prices and uncertainty ahead of a presidential election, state oil company YPF said on Thursday.
YPF, nationalized in 2013, is improving drilling efficiency and developing its Vaca Muerta shale formation in Patagonia so that international companies will invest once prices recover, Chief Financial Officer Daniel Gonzalez said in a conference call with investors.
"I would not expect any significant joint ventures to be announced soon," Gonzalez said.
He cited the drop in global oil prices and uncertainty ahead of October's presidential election in Argentina among the reasons.
The biggest joint venture so far was a 2013 pact with Chevron, under which the two companies have put about $3 billion in the Belgium-sized Vaca Muerta formation.
Brent crude was at just above $49 a barrel on Thursday, down from $115.71 intraday on June 19, 2014.
YPF nonetheless posted a second quarter net income of $252.8 million on Wednesday, a 50.5 percent increase on the same period last year.
"During the second quarter we connected a total of 46 wells, including 38 verticals and eight horizontal wells, taking the total to 360 shale wells already in production," Gonzalez said.
Shale gas production reached 43,300 barrels of oil equivalent per day primarily from the Loma Campana field, where YPF has a 50 percent stake with Chevron Corp..
"We have extended the length of the horizontal sections from 1,200 meters to 1,500 meters, and are now in the process of further extending them up to 2,000 meters," Gonzalez said.
He said YPF has also added three fracture stages, taking them to 15 to 18 per well.
"Another important improvement regarding horizontal wells is that the costs have been consistently below $14 million a well, including those with 18 fracking stages."
YPF had previously said its horizontal wells cost about $14 million per well.
"During the second quarter we drilled and completed two slim-hole wells and have two more pending completion. This can prove to be a cost efficient way to develop less productive areas of Vaca Muerta," Gonzalez said.
YPF will continue improving efficiency in order to be ready to enter joint ventures when conditions improve, Gonzalez said.
"For the time being we have a lot on our plate with Loma Campana and El Orejano," he added.
(Editing by Grant McCool)
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