Mexico's Vista to Buy Assets in Argentina

Vista Oil & Gas, a Mexican upstream firm backed by US private equity fund Riverstone, has agreed to acquire oil and gas producing and exploration assets in Argentina from Pampa Energia and Pluspetrol Resources, Vista said February 19.

Upon completion, expected in April 2018, Vista said it would become the fifth largest oil producer and operator in Argentina. Most of the acquired assets are located in the country's Neuquen basin in the west of the country.

According to Vista, the assets have proved oil and gas reserves of 55.7mn barrels of oil equivalent with average daily production of 27,472 boe/d (based on information for the first nine months of 2017). They include more than 137,000 acres in the Vaca Muerta unconventional play, including 54,000 acres in the core of Vaca Muerta's shale oil window that are ready for full scale development. Vista has summoned shareholders to a March 22 meeting to approve the proposed transaction. If not approved, or if there are insufficient funds to fund the acquisition, the deal will terminate without legal consequences for Vista.

“With this transaction, we found the right balance of current profitable production and reserves coupled with high-growth potential in Vaca Muerta, the most exciting emerging shale play globally – perfectly aligned with our vision. The platform and timing could not be better suited to start delivering on our plan of becoming the leading Latin American independent oil and gas company,” said Vista CEO Miguel Galuccio, former CEO of Argentina's state YPF from its renationalisation in May 2012 until March 2016.

Vista said it would raise $50mn from Riverstone and $100mn from other investors which, together with $650mn proceeds from a Vista initial public offering, would bring total equity available to fund the deals with Pampa and Pluspetrol to $800mn. However it did not explicitly say this was the purchase price, which some reports have put at $700mn. Neither Pampa nor Pluspetrol posted statements on their websites.

Vista also said it had entered into a commitment letter pursuant to which a credit facility, of up to $300mn, may be used as a "backstop with the purpose of increasing the certainty of closing the transaction."