TotalEnergies to sell Argentine shale assets to YPF, Vaca Muerta faces market dynamics

TotalEnergies has agreed to sell its 45% stake in two unconventional oil and gas blocks in Argentina's Vaca Muerta shale formation to Argentina's national oil company YPF for $500mn, as the French energy giant refocuses its portfolio on higher-return projects.
The transaction involves approximately 20% of TotalEnergies' acreage in the world's second-largest unconventional gas reserve, though the blocks represent an underdeveloped portion of the Vaca Muerta shale play, according to Oilprice.com.
YPF has been the dominant operator in Vaca Muerta, drilling over 800 wells between 2015 and 2021, far exceeding other operators like Tecpetrol, which drilled 150 wells during the same period. TotalEnergies matched Tecpetrol's drilling activity with 150 wells.
Javier Ravelo, TotalEnergies' senior vice president for exploration and production in the Americas, expressed the company's continued commitment to Argentina while explaining that the sale allows focus on core assets, particularly the Fenix gas field offshore Tierra del Fuego and projects in the Neuquen basin.
CEO Patrick Pouyanne justified the divestment as part of the company's low-cost, low-emissions strategy, citing production costs above the company's $20 per barrel ceiling for new projects. "We prefer to allocate the capital to expand Block 53 in Suriname and... the huge portfolio in Brazil," Pouyanne explained, as quoted by Reuters.
This transaction highlights the evolving dynamics within Vaca Muerta as international operators reassess their portfolios amid changing economics and strategic priorities, while Argentina's state-owned YPF continues consolidating its dominant position in the country's most important shale formation.
This comes as the Vaca Muerta shale formation faces a near-term drilling slowdown as companies pull back crews amid declining oil prices and recent merger activity, despite strong production growth in the world's second-largest shale gas deposit.
YPF CEO Horacio Marín acknowledged the temporary reduction in activity, stating his company "might have to pull out a couple of fracking crews" due to "the slowdown we are seeing from international partners," as quoted by Oilprice.com. However, he emphasised this represents a "new normal" for Argentina, where operations adjust to oil price fluctuations.
Despite the short-term challenges, Vaca Muerta's fundamentals remain robust. First-quarter 2025 data from Rystad Energy showed oil output surging 26% and gas production rising 16% y/y. The formation holds an estimated 16bn barrels of recoverable oil and 308 trillion cubic feet (87.2bn cubic metres) of natural gas.
Recent major transactions underscore continued investor confidence, including Vista Energy's acquisition of Petronas's stake in La Amarga Chica and TotalEnergies' $500mn sale of two blocks to YPF. Norway's Equinor notably reversed its planned exit, choosing to remain in the region.
"Personally, I believe nothing can stop Vaca Muerta anymore," Marín declared, highlighting what he said is the play's viability at oil prices as low as $45 per barrel.
This temporary slowdown reflects broader market dynamics rather than fundamental concerns about Argentina's energy potential.
As the country pursues ambitious LNG export projects and infrastructure development, Vaca Muerta's long-term trajectory toward becoming a major global energy supplier appears increasingly secure, despite current operational adjustments.
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