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US judge orders Argentina to relinquish 51% stake in YPF

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Argentina government says will appeal ruling

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YPF leads development of major Vaca Muerta shale region

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Argentina pushing shale production to bring in exports

dollars

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Legal standoff could hit aims to return to global markets

By Eliana Raszewski, Leila Miller and Jorge Otaola

BUENOS AIRES, July 1 (Reuters) - A dramatic ruling by a

U.S. court ordering Argentina to hand over the 51% stake it

holds in state energy firm YPF has cast a shadow over

the country's plans for its huge Vaca Muerta shale formation and

hopes to return to global markets.

U.S. District Judge Loretta Preska said on Monday that

Argentina must transfer its YPF shares within 14 days to

partially satisfy an earlier $16.1 billion court judgment

against the country over its 2012 nationalization of the firm.

The government of pro-market libertarian Javier Milei said

it would appeal the ruling to "defend national interests."

The judgment adds uncertainty to Argentina's plans to turn

Vaca Muerta, the world's No. 2 shale gas reserve and No. 4 for

shale oil, into a key global energy producing region that would

help bring in foreign currency needed to prop up the economy.

YPF leads development of Vaca Muerta, often partnering with

other local and international firms including Shell and

Chevron ( CVX ). Vaca Muerta has hit production of over 400,000

barrels per day of oil and some 70 million cubic meters of gas

per day.

"Control of YPF is important for Milei; that's why an appeal

is the only option for him," said Marcelo García, director for

the Americas at New York-based risk consultancy Horizon Engage.

"YPF leadership in Vaca Muerta is crucial for the medium- to

long-term sustainability of his economic program, because it

should bring the U.S. dollars the economy lacks."

The legal dispute arose from Argentina's 2012 seizure of the

51% YPF stake held by Spain's Repsol, without tendering

for shares held by minority investors Petersen Energia Inversora

and Eton Park Capital Management.

In 2023, Preska awarded $14.4 billion to Petersen and $1.7

billion to Eton Park in the same case, which Argentina is also

appealing. The plaintiffs are represented by litigation funder

Burford Capital, which expects to receive some 35% and

73% of Petersen's and Eton Park's respective damages.

The legal ruling could also dent Argentina's ability to

tap global markets, something the country is keen to do to

bolster its depleted reserves after years of currency crises,

regular fiscal deficits draining state coffers and high

inflation.

"These unresolved disputes could hinder, or even block,

Argentina's return to the international capital markets,"

BancTrust & Co said in a note on Tuesday.

García added that surrendering the shares in YPF would

constitutionally need the approval of Argentina's Congress,

which was unlikely to happen, adding a more realistic outcome

was that it would force Milei to negotiate.

"Surrendering YPF is politically not viable in Argentina

today. But the ruling does force the administration to the

negotiating table and gets Milei's attention on the case."

Argentina's government must urgently build up foreign

currency reserves to pay its debts and meet targets as part of a

$20 billion loan program

agreed with the International Monetary Fund in April, the

indebted country's 23rd IMF program.

YPF's U.S.-listed shares slumped more than 5% on Monday,

while Burford's stock price jumped. Both steadied on Tuesday.

YPF's current market capitalization is around $12.5 billion.