IFC loans Pan American $520 million for drilling

Pan American Energy has secured a $520-million loan from the International Finance Corporation (IFC), a member of the World Bank Group, for drilling activity in Argentina. Under the deal, the IFC will contribute $120 million, while a syndicate of banks will put up the remaining $400 million.

Pan American plans to use the money to further exploit its producing Cerro Dragón offshore block in the Golfo San Jorge Basin, as well as develop the recently awarded Lindero Atravesado block in the Neuquén Basin.

The latter unconventionals play was given to Pan American last week by the Neuquén provincial government together with a 62.5-percent operating interest. Argentina’s state-owned energy company, Yacimientos Petrolíferos Fiscales, holds the remaining 37.5 percent. The pair plan to employ horizontal drilling techniques to tap oil at the Vaca Muerta formation and gas at the Lajas tight sand formation. The same bidding round saw Pan American also win a 100-percent stake in the nearby Bandurria South block.

The agreement marks the second collaboration between the IFC and Pan American. In 2007, the IFC organised a $550-million long-term debt package for the Argentine energy giant.

While investors have typically been wary of the Argentine market due to the country’s shaky financial history, Pan American is aided by the backing of super-major BP, which owns a 60-percent stake in the company together with Argentine independent Bridas’ 40-percent. Bridas itself is 50-percent owned by China National Offshore Oil Corporation.