Chevron Corp. has announced its intention to buy the second largest oil exporter in Argentina to boost its exploration and production overseas.
The companies did not disclose financial details of the deal, but industry sources had valued the privately-held Petrolera Argentina San Jorge at some $1 billion. "This transaction will have an immediate positive impact on earnings and cash flow," Dick Matzke, president of Chevron Overseas Petroleum Inc., said.
The venture is Chevron's first exploration and production deal in Argentina. Privately held San Jorge produces about 78,000 bpd of oil and 40 million cubic feet of natural gas, Chevron officials said.
San Jorge has proven reserves of 180 million barrels of oil equivalent and potential reserves of more than 400 million barrels oil equivalent, Chevron said.
The acquisition fits with Chevron's strategy of expanding oil and natural gas exploration
and production overseas, company officials said. San Jorge also has exploration acreage in Colombia, Ecuador, Peru, Bolivia and Chile.
Chevron has exploration interests in Bolivia, Colombia, Peru and Venezuela. It plans to expand its lubricant business in Argentina with the acquisition, company spokesman Fred Gorell said.
"San Jorge's strong position in Argentina, coupled with their highly skilled employees, will provide the foundation for further growth opportunities for Chevron in Latin America," Matzke said.
The deal follows Chevron's failed merger talks with Texaco Inc., and rumors that Chevron was interested in purchasing smaller rival Phillips Petroleum
San Jorge also owns a 14-percent equity interest in Oldeval, a major export pipeline to Argentina's Atlantic coast. The company, owned by the Ostry and Priu families of Argentina, accounts for about eight percent of the nation's oil production
. Argentina's dominant oil producer is Repsol-YPF.
Oil companies interested
in bidding for San Jorge reportedly included Repsol-YPF, Exxon Corp., Texaco Inc., Unocal Corp., France's Total SA and Pan American Energy - a joint venture between Argentina's Bridas and BP Amoco Plc.