Global energy trader Mercuria Energy Group and Oklahoma-based Continental Resources have signed a heads of agreement (HOA) to create a 50-50 operating joint venture (JV) through Mercuria-controlled Phoenix Global Resources, an independent upstream company operating exclusively in Argentina’s Vaca Muerta shale.
The joint venture would span nearly 163,000 net acres across six blocks, combining Phoenix's interests in Mata Mora Norte, Mata Mora Sur, Confluencia Norte, and Confluencia Sur with Continental's operated interest in Los Toldos II Oeste.
Under the plan, the partners will also acquire additional assets in the Bajo del Toro Este block from Integra Capital, the private equity and merchant banking group, Mercuria said in an 20 August announcement.
The world’s largest privately held oil and gas exploration and production company, Continental is active in the Bakken of North Dakota, South Dakota, and Montana; Oklahoma's Anadarko Basin; Wyoming's Powder River Basin; and Permian Basin of Texas.
It operates internationally in Vaca Muerta and in Turkey’s Dyarbakır Basin through a JV with Turkish Petroleum Corp. (TPAO) and Dallas-based TransAtlantic Petroleum.
Phoenix Fast-Paces Production
Over the past 5 years, Phoenix, the sixth-largest crude oil producer in Vaca Muerta, has grown net production from zero to 25,000 B/D at its core operations in the Neuquén and Río Negro provinces, with only 15% of its acreage developed, Mercuria said.
The JV plans to drive Phoenix's production from 28,000 BOED to more than 100,000 BOED over the next 5 years by investing more than $4 billion in new capital, positioning Phoenix among the largest private operators and producers in Vaca Muerta.
The transaction transforms Continental's Argentine footprint from that of solo player to a co-leader of an established, fully operational regional platform, according to the press statement.
In the US, Continental partners with Mercuria in the Pecos Power Plant, a 452-MW natural gas-fired power generation facility being developed in West Texas.
Big Plans for Vaca Muerta
“By combining Phoenix's established operating platform and knowledge of Vaca Muerta with Continental's technical and operational experience developing unconventional resources at scale, we believe we have an exceptional opportunity to expand development and build one of the leading independent operators in the basin,” Phoenix CEO Pablo Bizzotto, said.
Doug Lawler, Continental president and CEO, added, “The reforms led by President Milei and his administration generated our interest in Argentina and strengthened our confidence in its future, ultimately helping pave the way for this significant partnership.”
Completion of the transaction is subject to the execution of definitive agreements, determination of closing conditions, and receipt of regulatory approvals.
Leveraging Argentina’s Large Investment Program
Mercuria noted that its JV with Continental Resources expects to qualify for Argentina's Large Investment Incentive Regime (RIGI), which provides tax, customs, and foreign exchange benefits, as well as legal and regulatory stability for 30 years.
To qualify, project investors must invest at least 40% of an agreed minimum investment within the first 2 years.
In mid-August, Argentina’s state-controlled oil and gas company YPF said it had submitted its $51-billion Argentina LNG project for RIGI benefits.
YPF and its partners, Italy’s Eni and Abu Dhabi National Oil Company (ADNOC)’s investment arm XRG, aim to export Vaca Muerta shale gas as LNG beginning in 2031 from two floating liquefaction units with a combined capacity of 12 mtpa located offshore Río Negro in the Gulf of San Matías.
YPF says the project aims to generate $10 billion in annual export revenue over a 20-year period.
During YPF’s second-quarter 2026 earnings call in August, CEO Horacio Marín reiterated that he expects a final investment decision on the project by year-end. YPF has already awarded engineering, procurement and construction contracts for pipelines to transmit gas to the Atlantic coast and for an integrated gas treatment plant, according to quarterly presentation.
YPF is also involved in the construction phase of the Southern Energy LNG project, Argentina's first LNG export project, through a tolling agreement.
YPF: Multiple Submissions, One Goal
In May, YPF applied for RIGI benefits for a $25-billion oil project aimed at accelerating development of the Vaca Muerta shale formation, a cornerstone of President Javier Milei's strategy to boost Argentina's economy through energy exports.
In total, $116 billion of proposed energy-sector investments are currently under review under the RIGI framework, according to Latin American energy and business intelligence platform BNAmericas, which published the following list:
- Natural gas liquids production project, TGS, $3 billion
- Bandurria Norte, Vista Energy, $5.8 billion
- YPF’s integrated Vaca Muerta oil development project, known as LLL Oil, $25 billion
- El Trapial, Chevron, $13.8 billion
- Bajo del Choique-La Invernada, Pluspetrol, $12 billion
- Los Toldos II Este, Tecpetrol, $2.4 billion
- Loma Jarillosa Este and Puesto Silva Oeste, GeoPark, $1 billion
- Gasoducto Manuel Belgrano, $1.5 billion