YPF to sell flagship office tower to keep shale dream alive

YPF SA plans to sell its iconic office tower in the heart of Buenos Aires as Argentina's state oil company looks to boost  resources to continue drilling amid an industry slowdown, according to a person familiar with the matter.

The value of the 33-story glass-clad tower, from which executives enjoy panoramic views of the Río de la Plata estuary, could bring in US$400 million, the person said.

YPF declined to comment.

The company is struggling to adapt to a low price environment caused by the pandemic at the same time that it needs to invest billions of dollars to increase production. YPF has already sold an office building for US$30 million and is in talks to sell stakes in Vaca Muerta, the second-largest shale gas formation in the world.

The skyscraper in Puerto Madero, one of the tallest in the Argentine capital, was built between 2005 and 2008, when the oil markets were booming.

To maintain exploitation of the fledgling Vaca Muerta shale patch in Patagonia, which includes 50 wells this quarter, YPF requires more money than its flow can provide, CFO Alejandro Lew said in a conference call on the results of the company in November.

With limited access to debt markets, the company is selling assets, from offices to stakes in the shale field, and cutting costs across the company by 20 to 30 percent, Lew said.

The company is in talks with rivals such as Indian oil company Oil & Natural Gas Corp on farm-out contracts in Vaca Muerta, where it has joint ventures with Chevron Corp. and Malaysia Petroliam Nasional Bhd.

The possible sale of the office tower was originally reported by local newspaper Ámbito Financiero.