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Article updated: 12/31/2012 11:03 AM

Billionaire Bbulgheronis agree to $1.5 billion in YPF shale deal

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By Bloomberg News

Bridas International SA, an oil holding controlled by Argentina's billionaire Bulgheroni brothers, agreed to invest $1.5 billion with YPF SA to develop shale oil reserves in Patagonia.

Bridas and state-controlled YPF will have 60 days to negotiate terms of the accord, which will give Bridas 50 percent stakes in the Bajada Anelo and Bandurria areas in southwestern Argentina, the Buenos Aires-based company said late Dec. 28 in a regulatory filing. The partnership plans to drill 130 wells, YPF said in a separate statement.

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The agreement with Bridas is the second venture announced by YPF since the government seized control of Argentina's largest oil producer from Repsol SA in April. An agreement to develop shale with Chevron Corp., the second-largest U.S. oil company, was announced earlier this month and is also pending settlement of terms.

YPF is seeking to develop the Vaca Muerta shale formation in Argentina's Neuquen province, which is estimated to hold at least 23 billion barrels of oil equivalent, according to a report released by independent auditor Ryder Scott in February. YPF owns about 13 billion barrels, the report said.

Bridas will also loan $500 million to YPF to help it develop the reserves, according to the Dec. 28 accord.

Brothers Carlos and Alejandro Bulgheroni own a 50 percent stake in Bridas Corp. through their holding Bridas Energy Holding Ltd. The remaining 50 percent in Bridas Corp. is owned by China National Offshore Oil Corp., or Cnooc. Carlos Bulgheroni declined to say at a press conference Dec. 28 whether Bridas International, which signed the agreement with YPF, was a subsidiary of Bridas Corp. or Bridas Energy.

Strategic Partners

Bridas Corp. owns a 40 percent stake in and operates Pan American Energy LLC, Argentina's second-largest oil producer. BP Plc owns the remaining shares.

YPF Chief Executive Officer Miguel Galuccio in August said that to boost output YPF needs to invest $37.2 billion during the next five years, $2.5 billion of which is to come from strategic partners and $5 billion from bond sales and bank loans. The remainder should come from its own cashflow, he said.

YPF delayed a foreign bond sale after the Argentine government was told Oct. 26 by a U.S. court to repay owners of defaulted sovereign debt who declined to join creditors in restructuring borrowings.

Delayed Sales

YPF's bond sale, which is seeking as much as $500 million, has probably been postponed until March, Galuccio said earlier this month. The producer is considering a second international bond sale next year, he said. Galuccio made the Dec. 28 announcement along with the Bulgheroni brothers in Buenos Aires.

Chief Financial Officer Daniel Gonzalez on Nov. 7 said YPF signed a contract with three banks to organize an international bond sale and would proceed when market conditions allowed. This would be YPF's first international bond sale since its nationalization.

The agreement with Bridas was announced after markets closed on Dec. 28. YPF's American depositary receipts fell 1.6 percent to close at $14.52 in New York. The ADRs have dropped 58 percent this year.

--Editors: Robin Saponar, Jasmina Kelemen

To contact the reporter on this story: Rodrigo Orihuela in Rio de Janeiro at rorihuelabloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3bloomberg.net

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