YPF/Amoco accord marks latest U.S. toehold by non-U.S. firm

Non-U.S. companies continue to pursue strategic partnerships in key U.S. exploration and production theaters outside the Gulf of Mexico.

YPF SA and Amoco Corp. late last month formed a limited partnership that will own and operate about 1 tcf of natural gas reserves in western Oklahoma and the Texas panhandle (OGJ, Aug. 25, 1997, Newsletter).

The assets of newly formed Crescendo Resources LP include about 2,000 producing wells, two natural gas processing plants with a combined capacity of 230 MMcfd, a 2,400-mile gas gathering system, and more than 900,000 net acres of leases.

The parent companies will assign operations and technical support employees to the new partnership. In addition, the new partnership is contracting with Amoco to provide administrative and other services.

A subsidiary of Midgard Energy Co., which in turn is owned by YPF unit Maxus Energy Corp., Dallas, has about 64% equity interest in Crescendo, and an Amoco subsidiary has about a 36% equity interest in the partnership.

Amoco has an opportunity to increase its stake in Crescendo Resources with additional asset contributions. Governance of Crescendo Management LLC, a limited liability company formed to operate the limited partnership, is shared, with each parent company having an equal voice.

Strategy

"Crescendo should enhance overall business results for both parent companies, as it provides economies of scale, shares best practices and technology from both parent companies, leverages Amoco's automation expertise, and establishes strong strategic alliances with suppliers," said Dave Newman, a managing director of Amoco Energy Group North America. "We are particularly pleased to execute this venture with the U.S. affiliate of YPF, since Amoco's Argentina affiliate and YPF already have experienced a nearly 40-year history of successful business relationship."

In Argentina, Amoco operates the Anticlinal Grande/Cerro Dragon oil field complex in the Golfo San Jorge basin. The block produces about 56,000 b/d of oil and 38.5 MMcfd of gas. Amoco also is reportedly interested in acquiring a major stake in Buenos Aires company Bridas Sapic, a key producer in the country with more than 7% of Argentina's total gas reserves.

"Combining resources allows us to look at new opportunities, exchange know-how and reduce field operating and overhead expenses," said Mario Rosso, Maxus president and CEO.

He noted that Crescendo Resources plans to increase investment in drilling and expand the new partnership's third-party processing business.

"Applications of new technology and in particular automation will improve productivity," Rosso said.

YPF, the privatized former state oil company of Argentina, acquired Maxus in 1995 (OGJ, June 19, 1995, p. 29). It remains Argentina's biggest oil and gas producer.