Archer announces that Pan American Energy ("PAE") is renewing the contracts for 9 pulling units and 8 workover units working in the south of Argentina. The current contract expires in June 2025 and have been renewed for 3 years with
options for two additional years. The estimated backlog for the renewed contract scope is around $210 million.
In parallel, Archer announces reduced activity in the region. Archer is working closely with the local unions to reduce the impact on employees and the community. The reduction in activity will in isolation reduce our backlog by about $125 million.
We estimate an annualized revenue reduction for Archer of around 5%, but limited impact on the annual cash flow for the group, as we reduce overhead cost, working capital and maintenance investments in Argentina.
"Argentina's energy landscape is undergoing a significant transformation, with investments and production shifting from mature conventional fields in the south
to the expanding shale resources of Vaca Muerta" comments Dag Skindlo, CEO of Archer. "We see that investments are increasing in the Vaca Muerta field, which
has grown from about 6% of Argentina's total oil and gas output in 2017 to over 50% in 2024. Vaca Muerta is often compared to the more known fields like Permian
and Bakken in the US. With significant export pipeline projects ongoing from Vaca Muerta, the drilling activity is set to grow meaningfully over the medium to long term."
We will update our full year financial guidance during our first quarter release but expect only minor revisions if any.