Post by
DocPat on Jul 22, 2014 12:47pm
Excerpt from Stockhouse: Peter Kennedy's
The following is an excerpt from Peter Kennedy's article posted on Stockhouse in 2011: One of Canada’s top energy sector analysts said investors should be paying more attention to companies that are active in Argentina. Wellington West Capital Markets analyst Kevin Shaw sees five key reasons why investors should focus on growth prospects in the oil and gas sector in Argentina. ⦁ The Latin American country is home to underexploited hydrocarbon basins, hosting world-class conventional and unconventional resources that are amenable to North American technology. ⦁ Argentina boasts the world’s third largest recoverable shale gas resource. According to the U.S. Energy Information Administration (EIA), Argentina is host to shale resources with 774 trillion cubic feet of technically recoverable resources. ⦁ Established infrastructure. ⦁ An improving fiscal and geopolitical climate. ⦁ An impetus to attract foreign capital to avert a pending energy crisis that would result from energy price controls which have sparked a dramatic reduction in the country’s energy reserves. Oil and gas reserves have been falling in Argentina since the turn of the century. This is largely due to unfavourable pricing conditions, which have suppressed investment in the petroleum industry. But recent investments in Argentina’s petroleum sector by China national companies Sinopec Corp. (NYSE: SNP, Stock Forum) and CNOOC Ltd. (NYSE: CEO, Stock Forum) is a clear sign that the investment climate has turned a corner, Shaw notes in his report. CNOOC took a foothold in Argentina in March 2010 via its $3.1 billion purchase of Bridas Holdings. In December, Sinopec agreed to buy all of Occidental Petroleum Corp.’s (NYSE: OXY, Stock Forum) oil and gas assets in Argentina for $2.45 billion. “In our view, this speaks to the value proposition of investing in the petroleum industry in Argentina and we believe investment by the Chinese and others will continue in 2011, particularly as exploration and development efforts ramp up in the country,’’ he said. Shaw also notes that the efforts to attract investment mean opportunities not only for the majors but also for a select group of small cap firms, including: Americas Petrogas Inc. (TSX: V.BOE, Stock Forum), ArPetrol Ltd. (TSX: V.RPT, Stock Forum), Azabache Energy Inc. (TSX: V.AZA, Stock Forum), Crown Point Ventures Ltd. (TSX: V.CWV, Stock Forum) and Madalena Ventures Inc. (TSX: V.MVN, Stock Forum). The available opportunities include 26 identified hydrocarbon basins covering 456 million acres. Of that amount, only five are in production. Two of the five – the Neuquen and San Jorge basins – account for 75% of the oil and gas production in Argentina and 70 per cent of the reserves. The other three – the Noroeste, Cuyo , and Austral account for less than 15% of the oil production and reserves in Argentina. However, the gassier Austral Basin accounts for over 20% and 35% of the gas production and reserves, respectively.