UPDATE 1-Repsol board to study YPF offer - source

Mon Jun 24, 2013 5:22am EDT

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MADRID, June 24 (Reuters) - Spanish oil major Repsol's board will this week study a non-cash compensation offer from Argentina over the expropriation of its majority stake in energy firm YPF, a source with knowledge of the matter said.

"Argentina has made an offer through (Repsol shareholder Mexico's) Pemex and the board is expected to study it on Wednesday," the source said on Monday.

A separate source told Reuters that Pemex, which holds 9.2 percent of Repsol, has been acting as an intermediary in negotiations with YPF with the hope of getting a stake in Argentina's valuable Vaca Muerta shale field.

Argentina's government seized YPF in May 2012, claiming Repsol had underinvested in the company. Repsol has launched several legal claims against the expropriation.

Bankia Bolsa analysts said Repsol had told them the offer from YPF was worth $5 billion, including a 47 percent stake in a joint venture to develop a small part of Vaca Muerta and $1.5 billion in Argentine bonds, well below Repsol's claims.

YPF would hold 51 percent of the joint venture and Pemex 2 percent, Bankia Bolsa said in a note to clients, noting that the offer is below the 5.5 billion euros book value for the 51 percent stake in YPF that belonged to Repsol and a $9 billion valuation for the stake according to YPF's by-laws.

Repsol has said it is open to negotiating an out-of-court settlement over the loss of YPF but wants fair compensation in the form of cash, bonds or liquid assets for a loss valued at $10.5 billion.

"Although we welcome the potential intensification of talks with Argentina, we believe there is a low probability that Repsol would accept a deal that involves further investments in Argentina," Espirito Santo Investment Bank said in a note.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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