Production, blocks and reserves
Amid a broader global strategic realignment, it emerged in recent days that Anglo-Dutch oil major Shell has begun preliminary talks with potential buyers to assess a possible sale of its assets in Vaca Muerta, the Neuquén Basin’s flagship unconventional shale formation in Argentina.
The information comes from an exclusive Reuters report published Jan. 22, 2026, citing three sources with direct knowledge of the process. While the company has not officially confirmed the transaction — and could still opt to retain the assets — the move raises questions about their underlying value in an energy market marked by price volatility and heightened geopolitical risk.
Several think tanks have circulated a detailed estimate of Shell’s Vaca Muerta valuation, based on financial and operational metrics updated through late 2025 and aligned with what Reuters described as assets “valued in billions of dollars.”
Shell’s Vaca Muerta assets: Production, blocks and reserves
Shell holds a significant position in Vaca Muerta, with operated majority stakes in four core blocks: Cruz de Lorena (90%), Sierras Blancas (90%), Coirón Amargo Suroeste (80%) and Bajada de Añelo (50%), as well as minority interests in other areas.
According to Shell’s annual report and data consistent with Bloomberg, Reuters, Enverus and Rystad Energy, these assets generated average production of about 43,000 barrels of oil equivalent per day (boe/d) in both 2024 and 2025, equivalent to roughly 15.6 million boe per year.
Argentina closed December with a record national oil output of 868,712 barrels per day, nearly 68% of which came from unconventional formations. In that context, Shell’s proved and probable (2P) reserves in Vaca Muerta are conservatively estimated at between 300 million and 400 million boe, with additional upside potential in still-underdeveloped acreage.
Reports note that Vaca Muerta’s geology supports competitive breakeven costs, below $50 per barrel Brent, driven by the quality of its light crude (API gravity of 35 to 50), net pay thicknesses exceeding 400 meters (about 1,300 feet), and high per-well productivity.
However, analysts also point to structural constraints on development, including currency volatility, Argentina’s sovereign risk and infrastructure bottlenecks, particularly in pipeline and evacuation capacity.
How the assets are valued: DCF methodology and key assumptions
The valuation estimate is based on a two-stage discounted cash flow (DCF) model, inspired by frameworks developed by finance professor Aswath Damodaran and adapted to Argentina’s local market conditions.
Key assumptions include a Brent price of $70 per barrel, net margins of 15% after royalties, taxes and operating costs, and normalized annual free cash flow of about $220 million.
The model assumes a five-year high-growth phase at an annual rate of 10%, followed by terminal growth of 2.5%.
The weighted average cost of capital (WACC) is set between 12.5% and 14%, incorporating a country risk premium of roughly 14%. Incentives such as Argentina’s Large Investment Incentive Regime (RIGI) partially mitigate that risk, though they do not eliminate it.
Under this framework, the valuation yields the following scenarios:
- Base case: $3.0 billion to $3.4 billion
- Downside case (Brent at $60 and WACC at 14%): $2.6 billion to $2.9 billion
- Most likely case, adjusted for volatility: $2.9 billion to $3.2 billion
As a reference point, a $10 increase in Brent prices lifts valuation by about 20% to 25%, while a 1 percentage point change in WACC shifts value by roughly 10% to 15%.
These figures are consistent with market multiples for shale assets, typically ranging from $50,000 to $80,000 per boe/d of production, implying a total value of $2.5 billion to $4.0 billion when current output and future potential are considered.
Why Shell is weighing an exit from Vaca Muerta
According to the reports, the potential divestment reflects a broader strategic recalibration under CEO Wael Sawan rather than a negative assessment of the assets themselves.
Key drivers include:
- Optimization of Shell’s global portfolio, with a focus on larger-scale, higher-return projects, particularly liquefied natural gas (LNG).
- Freeing up capital to reinvest in priority businesses such as LNG, downstream operations and renewable energy.
- Persistent Argentine macroeconomic risk, which raises the cost of capital relative to more stable regions like the Permian Basin in the United States.
- The wind-down of related projects, including Shell’s exit from the initial phase of Argentina LNG in December 2025, reducing upstream synergies.
- Higher relative costs, with drilling expenses up to 35% higher than in the Permian, according to Chevron estimates.
- In this context, Shell appears to be shifting into a harvest mode, seeking to maximize current value without pursuing aggressive expansion.