What The $1.2B Argentina Investment Plan Means For BP Unit
Zacks Investment Research | Jun 28, 2017 09:51PM ET
As per Reuters, Pan American Energy – a subsidiary of British energy giant BP (LON:BP) Plc (NYSE:BP) – has decided to spend as much as $1.2 billion in Argentina this year. The amount is lower than the $1.4 billion invested in 2016.
Vaca Muerta Fund Allocation
According to the company spokesman, almost $400 million of the investment budget will likely be allocated for exploration and production activities at the Vaca Muerta shale formation, located in the southern Patagonia area of Argentina.
Investors should know that the geologic formation has the second largest reserve of shale gas in the world. Mauricio Macri – the current President of Argentina – has been seeking prospective investors for the development of the shale area. The energy and mining minister of the country confirmed in April that around $6 billion to $8 billion will be spent in Vaca Muerta during 2017.
Benefits in Store
The exploration program in Argentina is likely to prove beneficial for the BP unit given that natural gas production is expected to rise in the near future. The demand for natural gas is rising all over the world as the commodity emits significantly less carbon dioxide than oil and coal when burned for generating energy.
We expect the development to generate considerable cash flow for BP shareholders.
About the Company
BP is one of the largest integrated energy firms in the world and has a strong portfolio of upstream projects that are expected to fetch significant cash flow. The company expects the projects to add 800 Mboe/d to net production capacity by 2020, once online. It is to be noted that 90% of these upstream developments are either under construction or have been completed. Quarter-to-date, the stock gained 2.2% against 2.6% downfall for the Zacks categorized Zacks Investment Research
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