Australia is less effective than Argentina when it comes to...

Australia is less effective than Argentina when it comes to produce shale gas/oil ...

https://www.linkedin.com/posts/ted-cross-tx_oilgas-permian-vacamuerta-activity-7196135256968646657-ifJZ/

Oil production in Argentina’s Vaca Muerta play has breached 300,000 barrels a day, following 5 years of breakneck growth. After November’s election of Javier Milei ushered in a more business-friendly national government, many are wondering how high production can rise. On well performance alone, the Vaca Muerta looks like a world-class play. The Vaca Muerta, unlike the Permian but similar to the Eagle Ford, has both a gas window and an oil window. Recent wells in the oil window outproduce the Permian and Bakken by over 26%, thanks to lower decline rates. The gas window has not seen as much recent drilling, but wells there perform similarly to the Marcellus, making over 4 BCF in their first 18 months (normalized to 10k’).It’s thanks to this strong well performance that operators have been able to grow production despite higher per-well costs than found in the Lower 48. Vista Energy, in their May 2024 investor presentation, quoted their 2023 average from their Bajada Del Palo Oeste block at $14.3MM D&C per well. How does this growth rate compare to shale plays in Lower 48? The Vaca Muerta took ~5.5 years to grow from 50,000 bbl/d to 300,000 bbl/d, three months faster than the Bakken took. The Bakken, as the first unconventional oil play in Lower 48, is probably the best analog for development pace, even though other plays are more similar geologically. Supply chains have to be built, knowledge bases established, and offtake/infrastructure constructed.The Eagle Ford, DJ, and Permian went much faster from 50k to 300k bbl/d, taking 1 year, 2.7 years, and 2.8 years, respectively. It’s worth noting that the Vaca Muerta has accomplished this while having most of its development operated by YPF, which is majority-owned by the Argentine government since 2013, another big contrast with the Lower 48, where smaller operators could collectively accomplish a lot, quickly (not to mention the great rush to hold leases by production).When you look at the running room left in the Vaca Muerta, it’s obvious that the play is still very early in its development. The play has around 3 million acres in the oil window and 2.6 million acres in the gas window. Blocks that have seen development are <25% developed, and most of the basin has not achieved “development” stage (numbers from YPF). And our experience in the Permian shows that acreage math can mislead you to the running room, after taking into account new zones and density innovations.Some, like local Argentine billionaire Paolo Rocca, see the Vaca Muerta able to accomplish a million barrels a day with the right policies. Although we haven't done a formal supply forecast, we are inclined to agree, as the Vaca Muerta compares favorably to plays like the Eagle Ford and Bakken that have more than achieved that number.hashtag#oilgas hashtag#permian hashtag#vacamuertaActivate to view larger image,