Chevron costs at Vaca Muerta shale drop 20% nearing goals

Bloomberg

The cost to drill wells at Argentina’s Vaca Muerta, site of the world’s second-biggest shale reserves, has dropped 20 percent this year, putting Chevron Corp. and its partners closer to meeting spending goals.
Drilling costs at the Loma Campana field in Vaca Muerta have declined to $11.2 million per well from $14 million in the last three months of 2015, Ali Moshiri, president for Latin America and Africa, said in an interview with Bloomberg News in Buenos Aires. That’s putting the joint venture with YPF SA closer to its goal of drilling wells at less than $10 million, he said.
“There are a lot of companies watching Chevron and YPF in Argentina,” Moshiri said. “The performance of those wells is coming very close, very competitive to the United States.”
Oil companies including Exxon Mobil Corp. are rushing to tap Argentina’s shale reserves, the largest after the U.S., as low oil prices put pressure on American producers. Output in the U.S. has dropped this year as prices plunged, while producers in Argentina have maintained production levels because of government subsidies to stimulate extraction.

Joint Venture
Chevron signed an agreement with state-owned YPF in 2013 to initially invest $1.6 billion in a pilot program to drill at Vaca Muerta in the Neuquen province. As the pilot was successful, the companies agreed to extend the venture for 35-years in 2014. The joint venture has drilled about 400 wells, Moshiri said.
The government of former President Cristina Fernandez de Kirchner raised the price of oil produced domestically to $75 a barrel from $45, gave drillers tax exemptions and capped royalties at 15 percent since 2012, creating a boom in the oil industry domestically as it struggled globally because of falling prices. President Mauricio Macri has set the subsidized price of the local oil at around $68 a barrel.