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Argentina’s GyP seeks spot on Toronto exchange

The company is seeking funds to develop shale resources in the Argentine province of Neuquén

Gas y Petroleo (GyP), which is owned by the Argentine province of Neuquén, home to the multi-billion barrel Vaca Muerta shale formation, is eyeing a public listing on the Toronto stock exchange as early as March 2013 as the company seeks funds to develop the provinces shale resources.

The initial public offering is aimed at “opening the door to international capital”, Guillermo Coco, the energy minister for Neuquén province told the Latin Oil and Gas conference in Miami.

“We want to transform GyP into a publicly-owned company that operates to international standards,” Coco said.

Many details of the listing remain to be worked out, but it will follow the private-public model seen by state-run companies across Latin America, with Neuquén province remaining the majority shareholder in the company and a minority of shares publicly traded.

In addition to the Toronto market, a favourite for Latin America-focused resource companies, GyP plans to list on the Buenos Aires stock exchange and eventually in New York.

GyP has been transformed by the discovery of major unconventional oil and gas resources in Neuquén province. A Ryder Scott survey published earlier this year for Repsol-YPF, before its operations in the country were nationalised, estimated recoverable resources across its acreage at over 22bn barrels of oil equivalent, most of which is thought to be oil.

Argentina has a unique regulatory framework in which the provinces own the resources within their borders and are charged with issuing exploration and production licences.

GyP owns stakes in more than 60 licences across the province, mostly acquired before the discovery of unconventional resources, covering around 15,000 square km.

The acreage position presents a major growth opportunity for the previously obscure company, but it will also require a significant capital commitment, especially in the early development phases. GyP has estimated that it will have to invest around $2.5bn through 2016, far beyond the company’s current financial capacity.

GyP has already started to lay the groundwork for meeting international listing standards. The company hired Gaffney-Cline and Associates to carry out a reserves assessment at its Aguada del Chañar licence. The survey estimated possible reserves at the block of around 3.5m barrels of oil and 1.4bn cubic metres of gas, though this likely only scratches the surface of the company’s resource potential.

While GyP holds a major acreage position in the Vaca Muerta shale, one of the most prospective unconventional plays discovered outside North America, it may struggle to find investment abroad.

The Argentine government’s decision to nationalise Repsol’s stake in YPF, although domestically popular, drew widespread condemnation from abroad. And there appears to be little confidence in Argentina’s energy sector as an investment destination.

Shares in state-run YPF traded on the New York stock exchange, for instance, have fallen by more than two-thirds, from around $35 a share to around $11.75 a share, since the start of this year, when nationalisation rumours first emerged.

Other Argentine unconventional-focused companies have also seen their share prices battered as investor sentiment towards Argentina has soured. Americas Petrogas, which is listed on the Toronto stock exchange, has seen its share price fall by nearly 70% from C$4.51 ($4.36) a share in February this year to $D1.53 a share as of 28 June.

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