US-based Continental Resources has signed a heads of agreement (HoA) to acquire a 50% interest in Phoenix Global Resources, an independent upstream oil and gas company controlled by Mercuria Energy Group.
The agreement outlines plans to create a 50/50 joint venture (JV) operating company comprising Continental and Mercuria, focused on developing Phoenix’s assets in the Vaca Muerta region of Argentina.
The new JV will manage a portfolio spanning approximately 163,000 net acres across six blocks in Vaca Muerta.
The combined assets include Phoenix’s positions in Mata Mora Norte, Mata Mora Sur, Confluencia Norte and Confluencia Sur, along with Continental’s operated interest in Los Toldos II Oeste.
Additional interests from the Bajo del Toro Este block are also expected to be acquired as part of the JV.
Current production across the portfolio exceeds 28,000 barrels of oil equivalent per day (boepd), with plans to increase output to more than 100,000boepd within five years.
Continental president and CEO Doug Lawler said: “Mercuria has been an exceptional partner, and we have tremendous respect for the strong operating platform and track record Phoenix has established in Vaca Muerta.
“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.”
Over the next five years, the JV expects to deploy more than $4bn (£2.93bn) in capital to support production growth.
The combination leverages Mercuria’s global energy and investment expertise, Continental’s experience in unconventional resource development and Phoenix’s operational knowledge of Vaca Muerta.
Phoenix CEO Pablo Bizzotto said: “Phoenix has built a disciplined, technically strong operating platform with a team that brings deep knowledge and experience in Vaca Muerta. Bringing Continental into Phoenix as a JV operating partner, alongside Mercuria, adds decades of unconventional development and operating expertise that will strengthen our capabilities as we enter the next phase of growth.
“By combining Phoenix’s established operating platform and knowledge of Vaca Muerta with Continental’s technical and operational experience developing unconventional resources at scale, we believe we have an exceptional opportunity to expand development and build one of the leading independent operators in the basin.”
The portfolio is expected to meet the criteria for Argentina’s Large Investment Incentive Regime, based on its asset size and capital requirements.
The move strengthens the existing partnership between Mercuria and Continental, who are already jointly involved in the Pecos Power Plant, a 452MW natural gas-fired project in development in West Texas, US.
Completion of the proposed transaction remains subject to negotiation of definitive agreements, the fulfilment of closing conditions and receipt of regulatory approvals.
