This Oil Stock Is Betting Big on Discoveries

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

The situation seen in the U.S. oil and gas industry in the past decade might be replayed in Argentina. Oil and gas production in the U.S. was on the decline until unconventional reserve discoveries turned the fortunes of the industry. Similarly, the discovery of unconventional energy resources in Patagonia by YPF S.A. (NYSE: YPF  ) seems to bolster the company's prospects.

What it's all about
According to the U.S. Energy Information Administration, Argentina holds the world's third-largest reserves of shale oil, behind the U.S. and China. The discovery of 927 million barrels of oil equivalent (BOE) by YPF is more than double the country's annual consumption of 400 million to 450 million barrels. This discovery is expected to boost Argentina's production, and position it among the world's leading producers of shale oil.

In recent years, production from Argentina-based YPF has declined due to depletion of its reserves. The discovery of huge quantities of unconventional oil to be extracted from tight sands or shale rock formations has given a new lease on life to the company. The icing on the cake? According to consulting firm Wood Mackenzie, the discovered shale formation is among the "best in the world."

The prospect
Argentina, Latin America's third-largest economy, is facing high energy demands due to strong economic growth. Against the backdrop of decreasing production, the country is constantly dependent on oil imports. The already discovered 4.5 trillion cubic feet of unconventional gas in the Loma Lata Norte area in Neuquen province is expected to improve production. Along with YPF's latest discovery, it should help Argentina bridge the gap between demand and supply.

The Neuquen province, which is the second most sought after oil and natural gas reserve in Argentina, is attracting companies like Apache (NYSE: APA  ) , ExxonMobil (NYSE: XOM  ) , and Total (NYSE: TOT  ) to take advantage of the shale reserves.

Foolish takeaway
YPF now has the opportunity to reverse its declining production and tap the burgeoning demand of Argentina's growing economy. The stock is worth keeping an eye on as it has the potential to see growth in the near term.

To stay updated about YPF's latest groundbreaking discovery and its future performance, click here to add the stock to your personalized stock watchlist. It's free, and helps you to stay updated on news and analysis on your favorite companies.

Fool contributor Amitabha Chakraborty does not own shares of any of the companies mentioned in this article. Motley Fool newsletter services have recommended buying shares of Total. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1591087, ~/Articles/ArticleHandler.aspx, 10/24/2016 12:49:04 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,217.76 72.05 0.40%
S&P 500 2,147.50 6.34 0.30%
NASD 5,298.70 41.29 0.79%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2016 12:33 PM
YPF $18.85 Down -0.14 -0.74%
YPF S.A. (ADR) CAPS Rating: ***
APA $60.69 Down -1.50 -2.41%
Apache CAPS Rating: ***
TOT $48.24 Down -0.04 -0.08%
Total CAPS Rating: ****
XOM $86.20 Down -0.42 -0.48%
ExxonMobil CAPS Rating: ****