Vista (VIST.US) invests $1.5 billion to acquire Petronas' Argentina shale assets.

Argentine Vaca Muerta shale area's second largest producer, Vista Energy (VIST.US), recently acquired a 50% stake in an oil field in the shale area from Malaysian national oil company Petronas for approximately $1.5 billion. Vista will immediately pay $900 million in cash to acquire the assets of the Amarga Chica block in the basin, with one-third of the funds coming from a loan from Banco Santander S.A. Sponsored ADR. In addition, Petronas will also receive approximately 7% of Vista's shares, worth around $300 million. Vista will pay the remaining balance in two installments in 2029 and 2030. Analysts at Jefferies Financial Group Inc. said in a report to investors that the Argentine oil producer is acquiring a high-quality block at an attractive price. They reiterated a "buy" rating on Vista. As of Wednesday's close, Vista rose nearly 11%, marking its largest increase since the election of liberal president Milei in November 2023. The analysts wrote that the production costs of La Amarga Chica are lower than Vista's current asset portfolio, and it is adjacent to its flagship project, the Bajada de Palo Oeste oil field, potentially bringing significant synergies. With Petronas exiting a joint venture with Argentine state-owned oil company YPF SA in the liquefied natural gas sector, this deal almost solidifies their exit from the Argentine market. This also shows that the development of Vaca Muerta will increasingly be led by local drilling companies, rather than multinational corporations: Exxon Mobil Corporation (XOM.US) sold its shale oil assets in Argentina last year, and TotalEnergies (TTE.US) is also seeking to follow suit. YPF, which owns the other 50% stake in La Amarga Chica, will continue to operate it. Vista, founded by Miguel Galuccio, a member of the SLB (SLB.US) board of directors, attracted Petronas to the area ten years ago when he was operating YPF. Vista's shareholders approved the management's plan to finance this acquisition through debt or share issuance last month. Amid the uncertainty in the global oil industry due to Trump's trade war causing oil prices to fall, Vista is expanding. Galuccio warned a few weeks ago that if Medanito light crude produced in Vaca Muerta fell below $55, closely linked to Brent crude, the management would consider cutting the budget. But with Milei relaxing long-standing capital controls on investment this week, and pipeline construction gradually taking shape, the Argentine shale oil industry is also experiencing favorable factors. This deal will bring rapid growth to Vista. Prior to this acquisition, the company planned to increase its daily production from 70,000 barrels in 2024 to 100,000 barrels this year through investments of over $1 billion. With the addition of the La Amarga Chica block, its daily production will immediately increase by 40,000 barrels, but the corresponding capital expenditure will also need to increase accordingly.