Thursday, February 11, 2016

Former Chesapeake Oil and Gas CEO enters Vaca Muerta shale

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There is one and only one international shale oil play that has attained any significant momentum. It is the Vaca Muerta, located in Argentina. The Vaca Muerta today is the most attractive shale oil play in the world for a producer to spend money drilling wells in. I'll explain why in a moment.

And guess who has just become a major player in it? That good old shale oil and gas "land man," Aubrey McClendon.

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McClendon through American Energy Partners (where he is CEO) just agreed with YPF to invest $500 million over the next three years. The appeal for the Argentinians is McClendon's extensive experience in getting a major shale play up and running.


As noted in the press release announcing the deal, under McClendon's tenure, Chesapeake grew from a start-up in 1989 to the largest gas producer and driller of new wells in the U.S. in less than 20 years.

The Vaca Muerta is an outstanding shale play and that is confirmed by all of the big players entering the shale play. Argentina just elected a center right government which is unwinding all of the statist policies that have afflicted Argentina for years. In addition Argentina has set the price of oil at nearly $70 per barrel as a way to encourage development of its domestic oil supply. I am playing the Vaca Muerta through my position in Madalena Energy which has a huge acreage position in the main shale areas of Argentina.

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