(Zacks Equity Research, 19.Aug.2020) — Exxon Mobil Corporation was recently granted concession by the Neuquen provincial government for exploratory activities in another block, Los Toldos II Oeste, in the prolific Vaca Muerta shale play in Argentina, as said by the government of Neuquen.
The 35-year concession has called for a four-year pilot program, during which the leading integrated energy player is likely to drill and complete two wells in the block that spreads across 19,200 acres of land. If the energy major decides to transition to large scale development, only then will the company drill an additional 44 wells.
Investors should know that in the Los Toldos II Oeste block, ExxonMobil, the operator, has a 90% ownership stake. The block is located adjacent to other blocks of ExxonMobil like Bajo del Choique-La Invernada and Los Toldos I Sur in the Vaca Muerta play. The prolific shale play, where ExxonMobil’s prime focus lies, has been driving the company’s production in Argentina.
Per data from the Argentina Oil and Gas Institute, total oil production of ExxonMobil in the country surged more than fourfold from 1,227 Bbl/D in March 2019 to 5,510 Bbl/D in March this year. The data also suggested that natural gas production spiked more than twice over the same time frame.
Overall, the latest concession has signaled that the international energy majors have strong interest in the Vaca Muerta shale play, although they are delaying investment plans in Argentina. Many energy players even believe that the Vaca Muerta has all the potential to become more price competitive than America’s Permian basin.