Thursday, September 4, 2014

Soros going big in Argentina Shale

Link:


One of the world’s legendary investors is upping his bet on Argentina’s shale oil and gas industry in a show of confidence for shale production in South America’s largest unconventional prize - and a big boost for both supermajors and smaller players making big waves in the heart of new discovery areas.
 
George Soros has doubled his stake in YPF SA, the state-owned oil company in Argentina, which sits atop some of the world’s largest shale oil and gas resources, and is about to get even larger following a new discovery over the last couple of weeks of a second key shale play.  


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And on Aug. 14, YPF announced the discovery of oil in another shale formation—Agrio shale--in the same basin.  


Some estimates suggest that combined, the two plays’ reserves could be worth as much as $3 trillion.


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There are only a few junior companies who have significant land holdings in Argentina’s Neuquen Basin, among them, Madalena Energy Inc. (MVN.V), which will benefit from Chevron’s plans to drill 300 wells just west of the junior’s Coiron Amargo block. 
  
The point is that as the supermajors drill, the smaller companies reap the benefits, positioning themselves for big rewards with big players who are eyeing their large tracts of land in this promising basin.




Activity and funds flow into the Vaca Muerta and Argentina is increasing. I am playing this via the junior E&P Madalena Energy. I suspect Madalena either farms out its acreage or is bought lock stock and barrel at a premium. My view remains positive.





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