ExxonMobil partners with Canada's Americas Petrogas for shale oil, gas exploration of AP's Los Toldos blocks in Neuquén, Argentina; ExxonMobil to fund US$53.9M during exploration, US$22.4M more if companies proceed to exploitation phase
August 30, 2011
– Americas Petrogas (TSX VENTURE:BOE) ("Americas Petrogas" or the "Company"), a Canadian company, is pleased to announce that it has, through its wholly-owned Argentina subsidiary, Americas Petrogas Argentina S.A., entered into a farm-out agreement (the "FOA") with ExxonMobil Exploration Argentina S.R.L., a wholly-owned subsidiary of Exxon Mobil Corporation (NYSE:XOM) ("ExxonMobil") for the exploration and potential exploitation of Americas Petrogas's Los Toldos blocks (163,500 gross acres or 255 sections or 660 square kilometers) located in Neuquén, Argentina. The Los Toldos blocks are located in the western region of the Neuquen Basin and are in a favorable location relative to other recent discoveries of shale oil and shale gas in the Vaca Muerta formation.
Barclay Hambrook, President and CEO of Americas Petrogas, stated "As the world's largest publicly-owned integrated oil and gas company, ExxonMobil brings vast experience, technology, research and financial resources to this joint venture with Americas Petrogas."
Pursuant to the terms of the FOA, ExxonMobil has committed to fund US$53.9 million (including taxes) during the exploration phase with a further US$22.4 million (including taxes) if the parties proceed to the exploitation phase, for a total potential initial investment of US$76.3 million. This focus of exploration, exploitation and other related activities is expected to be directed towards the Los Toldos 1 and 2 blocks. ExxonMobil will earn a 45% interest in the Los Toldos blocks with Americas Petrogas retaining a 45% interest and the government entity, Gas y Petroleo del Neuquen ("G&P"), maintaining a 10% interest. ExxonMobil will also provide technical assistance on the Los Toldos blocks. The FOA is subject to approval by G&P.
Americas Petrogas is the operator of the Los Toldos blocks and expects to spud the first well in the fourth quarter of 2011 with the primary target being the unconventional Vaca Muerta formation and potential secondary targets in other conventional and unconventional formations.
In addition to the Los Toldos blocks, Americas Petrogas has five other blocks within the Neuquén Basin's western shale corridor, including the Huacalera block which is located south of the Los Toldos blocks and which was recently drilled, cased and cemented, having intersected 1,742 feet of Vaca Muerta shale. In published reports, the U.S. Energy Information Administration has cited a risked, recoverable resource of 240 trillion cubic feet ("TCF") of gas for the Vaca Muerta shale in the Neuquén Basin.
Mr. Guimar Vaca Coca, Managing Director of Americas Petrogas' Argentina subsidiary, said, "We believe the next major shale development outside of North America will be in the Neuquen Basin. Our Argentina management and technical personnel look forward to working with ExxonMobil to explore the substantial hydrocarbon potential of the Los Toldos blocks."
Daniel De Nigris, General Manager of ExxonMobil Exploration Argentina, said, "We are pleased to be working with Americas Petrogas on the highly prospective Los Toldos blocks and if successful, look forward to providing clean and reliable energy for Argentina."
About Americas Petrogas Inc.
Americas Petrogas Inc. is a Canadian company whose shares trade on the TSX Venture Exchange under the symbol "BOE". Americas Petrogas has oil and gas interests in numerous blocks involving exploration, development and production. Americas Petrogas has proven conventional oil and gas reserves, as well as evolving unconventional resource plays including shale gas, shale oil, and tight sand oil and gas in Argentina's prolific Neuquen Basin. For more information about Americas Petrogas, please visit www.americaspetrogas.com
About Vaca Muerta Shales
The Vaca Muerta Shale is one of two principal source rocks in the Neuquen Basin of Argentina. The shale is late Jurassic-early Cretaceous in age, covers an area of approximately 8,500 square miles, varies in depth between 5,500 to 14,000 feet and in places is up to 2,000 feet in thickness.
The Vaca Muerta characteristics are believed to be similar to shale reservoirs such as the Eagle Ford, Haynesville and Horn River in North America which have so far resulted in discoveries of both shale gas and shale oil. The shale has recently become the focus for many of the important shale gas players in North America, including Apache, ExxonMobil, Total as well as YPF in Argentina.