Since 2022, the UK-headquartered supermajor has been quietly but consistently scaling back its drilling activity in the basin. The company also withdrew from Argentina’s liquefied natural gas (LNG) export project last year, approximately one year after signing a project development agreement with state-owned YPF, signaling a broader reassessment of its long-term commitment to the basin. Over the same period, sustaining operational momentum in the country has been challenging for Shell: production across its core assets has mainly remained flat since 2022, despite the company previously being viewed as a peer to Vista Energy, now the second-largest operator in Vaca Muerta. Adding to these challenges, Shell Argentina has experienced notable leadership turnover, with three chief executives between 2022 and 2025, underscoring the difficulty of maintaining strategic continuity in the region.

Shell’s Vaca Muerta story

Shell has operated in Argentina for over 111 years and was an early pioneer of Vaca Muerta’s shale development. The company holds interests in seven blocks: four operated—Cruz de Lorena, Coirón Amargo Sur Oeste (CASO), Bajada de Añelo, and Sierras Blancas—and three non-operated—Bandurria Sur, Rincón La Ceniza, and La Escalonada. These assets cover about 179,700 net acres, mainly in Vaca Muerta’s oil and condensate zones. Cruz de Lorena, CASO, and Sierras Blancas are contiguous and form part of the so-called “Core Hub,” part of the basin’s mature, infrastructure-rich development zone, benefiting from proximity to key infrastructure, such as the Sierras Blancas–Allen pipeline, which connects directly to the Oldelval system.

Shell began exploring Vaca Muerta in 2012 and drilled its first shale well in 2013. Still, it was only after the Covid-19 pandemic that the company appeared to consider full-scale shale development seriously. Today, Shell produces approximately 30,000 bpd from its operated assets and around 20,000 bpd net from non-operated positions, for a total of roughly 50,000 bpd. Production from operated blocks has mainly remained flat since 2022, though volumes have shifted internally between assets.

Shell’s most recent infrastructure investment dates back to 2021, when it expanded processing capacity to 42,000 bpd through the construction of a central processing facility (CPF). In 2024, the company announced plans to increase production to 70,000 bpd by 2025, but these targets were not achieved. This gap between stated ambitions and realized outcomes further underscores the operational headwinds the company faces.

The decline in Shell’s activity levels has been particularly pronounced. Between 2016 and 2022, the company steadily ramped up drilling, peaking at 37 spudded wells in 2022. Activity then dropped sharply, reaching a low of just four spuds in 2024. While only four spudded wells are currently reported for 2025, reporting delays suggest actual activity may be closer to 10 wells. Shell typically operates one to two rigs in the basin; however, operations were further disrupted in 2025 when its primary rig, Ensign 771, collapsed during transportation.

From a subsurface perspective, Shell’s well performance is broadly in line with the Vaca Muerta average, albeit with somewhat steeper decline rates. Cruz de Lorena delivers the strongest performance among Shell’s operated blocks, followed by Sierras Blancas and CASO. On a normalized estimated ultimate recovery (EUR) per foot basis, Shell averages approximately 94 barrels of oil per lateral foot, compared with a basin-wide average of around 117 barrels per foot.

Shell’s withdrawal from Argentina’s LNG export project reinforces the company’s broader strategic narrative. In 2024, the company was announced as YPF's partner for the second phase of Argentina’s floating LNG initiative. One year later, Shell exited the project, citing material changes to scope and scale that no longer aligned with its commercial and technical expectations. Specifically, the LNG phase associated with Shell was downsized from an initial concept of roughly 12 million tonnes per annum (Mtpa) to about 6 Mtpa, significantly changing project economics. This mirrors Petronas’ earlier exit from the same LNG project, followed by the sale of its La Amarga Chica stake to Vista Energy for $1.5 billion. The key distinction is that Shell maintains active upstream operations in Vaca Muerta, whereas Petronas’ exposure was limited to a single non-operated position.

Should Shell ultimately divest from Vaca Muerta, the transaction would represent one of the rare opportunities for another operator to acquire large-scale, contiguous, and well-developed premium acreage in the play, complete with existing infrastructure, production, and material remaining inventory.

Regional players dominate the buyer landscape.

Since 2023, regional players have invested around $4.9 billion, or 72% of the total deal value, in Vaca Muerta shale, underscoring their appetite for Vaca Muerta assets amid international companies' efforts to exit their operations in the play. Considering this, we expect players such as Pluspetrol, Vista Energy, YPF, and Pan American Energy to emerge as potential buyers. The scale of Shell’s portfolio, which would mark one of the largest deals in Vaca Muerta, could prompt regional players to form a consortium/joint venture or to partner with YPF for a potential acquisition. However, US shale-focused exploration and production (E&P) companies could also emerge as potential buyers amid their hunt for inventory internationally, given that Shell’s operated blocks contain around 1,000 drilling locations. While Continental Resources has proven this appetite through its recent entry into Vaca Muerta, Rystad Energy understands that several other US-based E&Ps are evaluating investment opportunities in Vaca Muerta.

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Andres Villarroel
Senior Analyst, Shale Research
andres.villarroel@rystadenergy.com

Atul Raina
Vice President, Oil & Gas Research
atul.raina@rystadenergy.com

Julia Duailibi Ameijeira
Analyst, Oil & Gas Research
julia.ameijeira@rystadenergy.com