Continental Resources to take half stake in Phoenix Global

Continental Resources has signed a heads of agreement to acquire a 50 per cent interest in Phoenix Global Resources. The US based company will form a joint venture with Mercuria Energy Group, which currently controls the independent upstream oil and gas firm. The new operating entity will focus on developing assets located in the Vaca Muerta region of Argentina.

The joint venture will manage a portfolio spanning approximately 163,000 net acres across six blocks in the region. This combined asset base includes Phoenix’s positions in Mata Mora Norte, Mata Mora Sur, Confluencia Norte and Confluencia Sur. It also incorporates Continental’s operated interest in Los Toldos II Oeste. Additional interests from the Bajo del Toro Este block are expected to be acquired as part of the new structure. Current production across the portfolio exceeds 28,000 barrels of oil equivalent per day. The parties plan to increase output to more than 100,000 barrels of oil equivalent per day within five years.

Doug Lawler, president and chief executive of Continental, stated that Mercuria has been an exceptional partner. He expressed respect for the strong operating platform and track record Phoenix has established in Vaca Muerta. Lawler described the region as a world class resource and believed the combination of Argentina’s potential, Phoenix’s capabilities and Continental’s unconventional development expertise could help establish the country as a global oil and natural gas leader.

Pablo Bizzotto, chief executive of Phoenix, said the company has built a disciplined and technically strong operating platform. He noted that bringing Continental in as a joint venture partner alongside Mercuria adds decades of unconventional development expertise. Bizzotto added that combining Phoenix’s established platform with Continental’s technical experience creates an opportunity to expand development and build one of the leading independent operators in the basin.

Over the next five years, the joint venture expects to deploy more than four billion dollars, equivalent to 2.93 billion pounds, in capital to support production growth. 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. This is a 452 megawatt natural gas fired project in development in West Texas. Completion of the proposed transaction remains subject to negotiation of definitive agreements, the fulfilment of closing conditions and receipt of regulatory approvals.