(WO) — Continental Resources has signed a Heads of Agreement to acquire a 50% interest in Phoenix Global Resources, forming a joint venture with Mercuria Energy Group that plans to invest more than $4 billion in Vaca Muerta development over the next five years.
Under the proposed transaction, Continental and Mercuria will each own 50% of Phoenix, creating a joint venture operating company with approximately 163,000 net acres across six blocks in Argentina’s Vaca Muerta shale play.
The JV is targeting production growth from more than 28,000 boed currently to over 100,000 boed within five years, supported by the planned capital program.
The combined portfolio will include Phoenix’s interests in Mata Mora Norte, Mata Mora Sur, Confluencia Norte and Confluencia Sur, along with Continental’s operated interest in Los Toldos II Oeste and additional interests being acquired from Integra in the Bajo del Toro Este block.
Continental said the investment represents a significant expansion of its position in Argentina and will bring its U.S. unconventional development experience to Phoenix’s existing Vaca Muerta operating platform.
“Vaca Muerta is a world-class resource, and we believe the combination of Argentina’s tremendous potential, Phoenix’s established capabilities and Continental’s unconventional development expertise can help further establish the country as a global oil and natural gas leader,” Continental President and CEO Doug Lawler said.
Phoenix CEO Pablo Bizzotto said Continental’s involvement will add unconventional development and operating expertise as the company moves into its next phase of growth.
The companies expect the assets to qualify under Argentina’s Large Investment Incentive Regime (RIGI), which provides fiscal, customs and foreign exchange incentives for large-scale investments.
The proposed deal expands an existing relationship between Continental and Mercuria, which are also partners in the 452-MW Pecos natural gas-fired power plant under development in West Texas.
Completion remains subject to negotiation and execution of definitive agreements, customary closing conditions and required regulatory approvals.
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