Q3 2020 YPF SA Earnings Call
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Seattle last night Investor Relations manager. Please go ahead.
Good morning, ladies and gentlemen, Nissan deal, which in a way P. EPS all your manager. Thank you for joining us today in our third quarter 2020 earnings call I Hope you're also.
The presentation will be conducted by a worse. He also to go from D. I wouldn't see a full 100 <unk> and myself during the presentation. We will go through the main aspects any band, but exactly where third quarter results and finally, we will open for questions before we begin.
[music] statement on slide two please.
Please take into consideration that our remarks today an answer to your questions may include forward looking statements, which are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by these remarks also known as the exchange rate using the calculations to which are were mainly national figures in dollar terms.
Our financial figures are stated in accordance while you're for us, but during the call we might discuss some known I first measures such as adjusted to be D.A.
I will now turn the call just had a few thank you Santiago Davison gentlemen, good morning.
Thank you for joining us on the call today.
Let me start by saying that after the severe economic slowdown that took place off.
After the Robson gold with 19.
There was no seems to be behind us on the performance of the company has just started to show signs of recovery.
We are far from being back to normal levels.
Buddies drops from Stuttgart, you've got your 50, though what I can see retail prices.
Have you started to subside first.
First and foremost safety of our people is our top priority.
As we gather what he started to assume the PBT Dane.
The index that measures the frequency of accidents per million hours at work.
To that zero point 19 doing.
During the first nine months old 2020, representing an improvement of over 50%.
When compared to the 2019, all ritual zero point 43.
Our goal with committee continue overseen about grid becomes how do we see some operations arming team. We've got the most <unk> our employees suppliers and customers.
Over 90% of our people cost well see shows do not require.
Face to face interactions artist.
Artist to the working remotely.
Our success, you know dumped into a reality piece imposed by the pandemic.
Well, it's clearly showcased during the measurement demons works down.
Our la Plata refinery through September October.
It's all done with less than 900 people work on the task.
Below the refund damage estimate of 1300.
Thanks to a 40 revised strategy, including a special night shift.
Bobby type working groups on the introduction, hoping nobody people technological solutions, but please central role in optimizing resources on issuing so it's going to be shows.
No.
It's cost concluded I am proud to say Dod we successfully achieved this works Phoenix.
Phoenix safety environment on our the lower overall cost when compared to a reasonable estimate.
Along the same line our subsidiary white be up loose.
Resume full activity on the construction site managed to reach Cod on several projects between September and October.
On our aggregate all 411 megawatts both.
Both terminal on renewable installed capacity.
When including this project now in commercial operation.
Well I'd be up loose accounts, where total installed capacity of over 2.2, Giga watts with an additional 230 megawatts on their way.
Moving to our economic performance for the quarter since the Wars monthly report April when gasoline and diesel volumes contracted by 69 on 34.6%.
Actively on a year over year basis, we.
We have seen a gradual recovery in volumes, but they look down Crosby inflicts he realized.
Sure so.
Hi, the positive sequential evolution in the third quarter and put it out in October we have seen demand recovery continues.
With the Gosling construction being close to 30% on diesel around 18% when compared to the previous year.
Taking into consideration the positive demand trends.
Coupled with the agreements with unions on contractors.
We are able to what other what is terrorists human upstream activity.
Which allowed for production and stabilization on a sequential basis.
During the third quarter were rigged up 37 rigs, including drilling Workover I'm pulling.
Reopened.
And shale wells.
Well the whole.
Production was flat quarter over quarter with shale Buck pre colby levels setting the contraction in conventional production.
Also just mentioned there was some sort of activity was supported by the initial results of our cost cotton in Fourq.
We have already reviewed 65% or four vendor contracts.
On revisited a good portion of our internal operating processes, achieving important savings in key activities.
For instance.
Total cost for shale well is estimated to be 15% lower on aggregate excluding potential additional savings for grown trucks is still under review.
For the efficiency gains that we are working on.
Another example can be found in our foreign intervention in conventional fields.
Where we have achieved significant reductions in the number of hours per intervention.
In addition to dotted for negotiations, bringing people in total cost down by over 30%. Additionally, the voluntary retirement program executed in the third quarter, reaching all non unionized workers workers.
We saw good the 12% headcount reduction in that label segment, we present in savings around $50 million per year.
During the quarter.
Also pursued periodic price increases at the bottom right.
Racing by a cumulative 20% north didn't impresses us off today.
Our profitability improves sequentially with adjusted EBITDA totaling $392 million during the quarter.
A significant recovery compared to the $20 million of the previous quarter.
Despite these partial recovery in profitability, we have continued prioritizing financial prudency.
As a result, although higher compared to the previous quarter Capex will remain at low levels and net debt.
Decrease further.
We have also taken an active liquidity management approach to mitigate currency exposure, while minimizing cost of gallery.
Looking forward, we estimate full year EBITDA to end up around $1.5 billion.
With a similar for your for Capex.
As production is expected to contract in the fourth quarter due to preventive shutdown of one surrounding fracking activity program pipeline maintenance.
Average production for the entire year continues to be estimated at minus 10%.
In comparison to 2019.
In terms of capital, Okay, some portfolio optimization.
We continue having active conversations with their strategic partners about potential for a museum Buck on what.
While also analyzing some potential investment opportunities in the much more conventional blocks.
Finally.
As we revised our plan going into Twentytwenty, one we anticipate a more ambitious got big Capex program to turn around the production decline trend seen during the last five years.
This will likely result in a need for net new funding that should stabilize and subsequently deliver in following years.
Cash flow generation capacity recovers on higher production, a normalized demand environment.
Furthermore, the new plan gas, which was announced.
Two weeks ago by precedent for none this should be formalized shortly on is expected to provide stability and incentives to develop our bus not regard themselves.
In summary.
While the pandemic trigger unprecedented negative conditions we.
We did notice done this deal and have been working very hard to reemerge much stronger with a leaner more efficient operation.
On its back to show the full scale benefits of these initiatives in the short term.
Once again thank.
Thank you everyone for joining us today and now I leave the floor to when it comes to turn.
Thank you Sergio and good morning to you all with regards to this quarter's main financial figures as mentioned by social our operating margins experienced a sequential recovery as the worst effects of the preventive locked down measures seem to be behind us.
Along these lines our revenues increased by 20% from the previous quarter, primarily as a result of a 27% increase in diesel and gasoline volumes. This much.
On the other hand, I would efficiency program has started delivering first and catching signs.
Total operating costs remained relatively unchanged, increasing by only 1% from the previous quarter, particularly benefiting from a 19% reduction in opex, while purchases of crude from third parties Biofuels. Another pitchers purchases increased on higher volumes.
From a different perspective, when compared to the same quarter last year total operating costs were down 20% on an even larger 26% when excluding nonrecurring items such as the cost of the voluntary retirement program an upstream standby costs.
Now combining the evolution of both revenues and costs adjusted EBITDA improved significantly in Q3 versus the previous quarter I will go through in more detail in a few moments.
Also as part of our cost cutting plan an hour to your brain on T. station of financial sustainability, we continue that administering capex activity and further reducing our net financial debt.
Total investments during the quarter reached $257 million, representing 70% year over year contraction, but increasing 59% from the second quarter on the back of a gradual resumption in activity.
The decision to movies will suddenly taken once we have managed to verify some initial progress from our efficiency program, which also led us to move along covering a major maintenance I'd love Plata refinery that had been postponed back in April.
Last but not least as a result of the increased cash flow generated in our operations not applied to Capex, we continued reducing net indebtedness considering.
Consequently by the end of September our net debt stood at $7.2 billion, resulting in a reduction of over $500 million when compared to September of last year.
Going into a breakdown of the evolution of adjusted EBITDA during the quarter, which totaled $392 million.
Sure first make a reminder, that this figure differs from reported EBITDA due to some adjustment that we understand better to reflect on what actual operations primarily related to a reclassification of leasing costs, otherwise recognized assets and liabilities.
As a comparison reported EBITDA was slightly higher and stood at $472 million for the quarter.
Now I will go briefly through the main drivers of each segment.
Upstream showed the highest recovery from the previous quarter.
Its adjusted EBITDA increased by 130% quarter over quarter, reaching $358 million, although still down 44% versus the same period of last year.
The segment benefited from higher transfer on realization prices for both crude oil and natural gas stable production and lower lifting cost.
All these factors largely outpacing higher royalties.
In contrast, adjusted EBITDA for our Dutch downstream segment declined by 68% sequentially.
On T.V. dealing with only $40 million in the quarter the.
The recovery in demand, particularly in gasoline and diesel was not enough to offset the lower margins, resulting from higher transfer prices of group and lower net prices at the pump measured in dollars, which despite the two increases of August and September averaged a minus 4% when compared to the previous quarter.
In the case of gas and power adjusted EBITDA reached $20 million compared to a $120 million loss in the previous quarter. It.
It is worth highlighting that the figure for Q2, including noncash accounting provision of about $120 million related to the potential enrollment of the GRI 10 53.
Even excluding that extraordinary item. This quarter also showed an improvement compared to the previous one driven by higher natural gas prices due to seasonality.
On the corporate and eliminations segment, the negative contribution of $26 million for the quarter compares very favorably with the negative $123 million in the previous quarter. This.
This evolution primarily results from a positive adjustment in the value of inventories of crude and products in Q3 in combination with a large negative charge in the previous quarter.
Let me now go a little deeper into our upstream business.
In the third quarter, we were able to stabilize production sequentially as we gradually started to wish him well activity grew.
Crude oil production averaged 202, and 2000 barrels of oil per day with shale production, increasing 14% compared to the previous quarter and representing 20% of total loan production.
The recording shale, which offsets the decline in conventional fields was mainly driven by Loma campana as we finalize the reopening of for the wells that were temporarily closed in April taking output for the quarter back at brick, albeit levels.
On the natural gas from production averaged 35 million cubic meters per day, almost unchanged sequentially, a slight growth in conventional and tight which increased 1% compensated the construction shale.
It is worth noting it is worth noting that during the quarter, our crude oil realization price averaged $40 per barrel up 39% sequentially well on the natural gas side, our selling prices averaged 2.7 dollars per million BT, you slightly up from the 2.5 dollars per million Btu.
In Q2.
Moving to the right side of the slide as mentioned before during the third quarter. We have gradually started to wish him activity after having gone into a full stop at some point in the second quarter.
By the end of the quarter, we have mobilized over 35 rigs most of them in September.
Including three drilling rigs in conventional fields in the South region.
One of them in August and the other two in September on another three drilling rigs in Bakken what up by the end of the quarter.
With regards to our backlog of drilled but uncompleted oil and gas shale wells. We have started the fracture in late September as we mobilized to one Frac said, one more should come online between now and the end of the year.
This should allow us to have a total of about 25 of those wells fracture by the end of the year.
All of which should be connected and fully operational by March of next year.
Let me now say that not only we are resuming activity.
Doing so in a more efficient way.
Picking examples from a couple of relevant performance indicators, such as average hours required for pulling intervention unconventionals and number of Frac stages per day in shale, we can show very promising improvements.
When compared to average parameters for 2019 pulling interventions are taking less than 80% of the time they used to require well frac stages per they have improved to over 18 October in comparison with an average of less than five into any 19.
Finally, I will elaborate on lifting cost for the quarter to that sampling $6 per barrel of oil equivalent down from 11.6, a year ago, and 9.4 last quarter, we both conventional and unconventional segments contributing to the decline.
It is fair to note that the low levels reached in the quarter our exceptional as they are in part the result from limited pulling on Workover activity.
However, as we resume activity in a more efficient way way lifting costs are expected to increase in coming quarters, primarily in the conventional segment. They should still come in well below the levels seen in 2019 ASCII with services are already showing total cost reductions between 15 and 30% combining both operational official.
This is a lower types switching.
Switching to our downstream business in the third quarter, we have seen a significant recovery in volumes of our main products for them some flexibility station of the streak loved done.
Volumes sold for gasoline and diesel although still well below the levels seen brick of either increased by 41% and 22% respectively compared to the previous quarter.
It is worth noting the diesel sales in the third quarter include a large volume sold to commit for the liberties to thermal generation plants in the months of July and August excluding this effect diesel volumes in the quarter would have increased by a lower 10%.
Furthermore, our preliminary data for Dover is showing additional recovery with gasoline and diesel volumes, expanding by 11, and 3% respectively compared to September further.
Further reducing the decline compared to the same period of last year to 32% for gasoline and 19% for the show.
Moving to the chart on the bottom left we show the evolution of the average price of our fuels measured in dollars against import party to him.
I think the national prices recover from May onwards, and the peso depreciated against the dollar our net prices went below import parity for some time until since August we have managed to start with periodic increases at the pump.
By this we have so far accumulating a 12% increase in pesos, which permitted to stabilize our net prices in dollars and besides simple party.
However, it is worth noting that even after the cumulative increase in solus, our net prices measured in dollars currently stand around 20% below the levels of last year.
In terms of capacity utilization at our refineries.
It has improved significantly in line with the evolution of the man.
Google volumes processed averaged 232000 barrels per day in the third quarter, 21% higher than the second quarter, resulting in an average capacity utilization rate of 73%.
Up from 60% in the previous quarter, but still down from an average of 90% during the third quarter of last year.
Within the quarter capacity utilization fluctuated as we embarked on major Londoners works at that will apply to a refinery in September.
Das utilization averaged 80% in July and August why it dropped to 60% in September.
Excluding this effect utilization for the quarter, who have averaged an estimated 78%.
Finally also worth mentioning.
Utilization of our refineries recovered in the third quarter, we increased crude oil purchases from third parties to an average of 11% of all group processed in comparison with a 6% of the PD l. for the previous quarter.
On the historical average of around 20%.
Turning to cash flow, let me start by reiterating something that was already mentioned last quarter about the impact of Central Bank communication number 70, 30 on our liquidity position.
The regulation established by that communication, which restricts clearbridge in Argentina from holding liquid assets abroad. If they want to continue being granted access to the official effects market has led us to hold most of our liquidity locally.
Therefore, the pace a portion of our cash and cash equivalents has increased to 61%, which compares to 22% a year ago even.
Given the situation and our decision to Minimise FX exposure by hedging our bets on liquidity with bissell denominated debt and locally fixed futures.
The cost of carrying our liquidity increased significantly leading us to voluntarily reduce our liquidity position, although establishing a minimum level that is consistent with a prudent cash management strategy.
Along this line financial discipline continues to be a key priority for us, particularly during these uncertain times.
During the third quarter cash generation from our operations reached a total of $666 million after netting the effects of all non cash items that were deducted from EBITDA and including among others collections from legacy plan gas programs.
As we have already mentioned during the quarter, we have started to gradually resume activity, but that process only took relevant speed in September.
Secondly, cash used in connection with investment activities contracted by 33% on a sequential basis to $191 million as we usually pay vendors with a one month lag.
With regards to what we're financing activities as we already commented during the last quarters webcast. We successfully managed to refinance 58.7% of our 2021 bonds through a market friendly liability management exercise back in July.
Based on these results. We retired all notes for a total of 587 million and issued new 2025 amortizing notes for $543 million, while also paid $90 million in cash, including the upfront incentive payment and accrued interest.
In addition to this we have used excess cash to pay down other debt maturities during the quarter, including over $150 million of an international peddling bond that matured in July about $100 million of maturing local bonds and about $80 million of trade facilities.
In summary by the end of the quarter, our consolidated cash position stood at $1 billion or about $300 million below the level at the end of June.
At the same time, our gross debt shrunk, even further including the impact of FX devaluation, our peso denominated debt, resulting in a reduction in net debt of $184 million during the quarter.
Moving into our debt profile, although we have managed to successfully secured a significant shorten that relief to the market friendly liability management exercise executed back in July.
Recent regulations introduced by the Central Bank through communication 71, or six have significantly affected investors' perception of our financial risk, which has translated into a negative performance of our international bonds in the secondary markets since mid September.
The new regulation establishes that corporates with debt denominated in foreign currency orders on trade related with maturities falling between October 15th of this year to March 31st of next year shall be able to access the official effects market for up to 40% of the maturing amount as long as they present the refinancing plan.
For the remainder 60% with a minimum I read us life extension of two years in.
In this regard the receivable amount of $413 million of our March 2021 bond could be affected by this regulation.
Nevertheless.
Although were exchanged was perform ahead of the enactment of the new regulation. We still believe there is a chance for such exercise to be considered as part of the refinancing effort and in such case, we should be granted access to the official effects market for up to $400 million as long as we present the refinancing plan for the reminder, $13 million.
Yeah.
However, as of today, we don't have a formal confirmation from the central bank about this and therefore cannot provide any certainty to the market.
Beyond these particular issue when current market volatility requires a methodic proactive and cautious approach. We believe that the rest of our short term maturities are fairly manageable as they are mostly trade related or in the hands of local financial institutions.
We therefore do not foresee a major short term refinancing risk as we should be able to roll over most of our maturing facilities. While also take advantage of the ample liquidity currently available in the local market to raise the remainder of our financing needs.
Separately. It is fair to note that although we have continued reducing our net indebtedness index took water our libertas ratio calculated as net debt balance over last 12 months EBITDA jumped to three 3.7 times on the back of the contraction in EBITDA during the last two quarters.
This takes on for the relevance as it has surpassed the incurrence covenants on some of our financial instruments that limits our ability to take on new that when the ratio is over three times.
However, we do not foresee a material negative impact as they come in and provides for specific exceptions for that refinancing as well as a general basket for new that which should provide us ample maneuvering room for the foreseeable future.
Finally, before we move into the Q and a section allow me to go into more detail on what Sergio mentioned during his opening remarks related to the outlook for the rest of the year and how we are preliminary thinking about next year.
Looking into the fourth quarter, although fuel volume sales are expected to improve further and we will continue with our efforts to secure more cost efficiencies, we estimate a sequential contraction in EBITDA as total oil and gas production is forecasted to go down in Q4, and as we recognize the extraordinary loss related to the early termination.
Of the floating LNG contract with Exmar, which was already announced back in October.
To provide more clarity on the forecasted decline in production in Q4, it will be related to temporary shutdown of wells to avoid interference with fracking activity as well as planned pipeline maintenance and integrity works.
This should result in full year, 2020 oil and gas production about 10% below 2090 levels as already anticipated last quarter.
Combining all these effects, we estimate full year 2020, adjusted EBITDA to end at around $1.5 billion, while total capex for the year will likely reach a similar amount.
Now moving into a preliminary guidance for next year profitability is expected to continue improving our soil and gas production reacts positively to the resumed activity of the fourth quarter of this year.
Fuel demand continues a gradual normalization path net prices remained stable in dollar terms and cost efficiencies our consolidated.
In that context, and with the intention to start turning around the production decline trend of the last five years, we expect to continue ramping up activity, thus pushing total capex higher.
Just in the first quarter, we expect to connect close to 50, new shale wells about 75% of them for crude oil production.
These expanded Capex plan could potentially result in total investments, but go beyond our cash flow from operations net of interest payments dusk.
Thus broadly requiring us to take on net new funding along the year would this have reached the end of our presentation and now we'll open the floor for your questions.
Thank you.
Yes. Good question you would need to press Star then one on your telephone to withdraw your question. Please press the pound key.
Our first question will come from the line of Frank Mcgann with Bank of America. Your line is now open.
Okay. Thank you very much and good day.
Two questions if I might one is just in terms of the comments you made on the fourth quarter.
Was wondering if you exclude the payment for the ethylene.
LNG facility that Youre.
Letting go of the contract.
How you would see EBITDA, perhaps comparing to the third quarter, how much of any declines that might still be there would be related to a weaker pricing in dollars versus the third quarter and then secondly, perhaps if you could just provide a.
A little bit of.
More guns in terms of the growth you see in non conventional and in 2021 and 22 I know, it's far away, perhaps for now but just.
And just in terms of the.
Activity, you're seeing really joint venture partners and.
Sure like you said your plant expansion in Capex, how what type of growth could we expect to be able to achieve over the next several years.
Okay, Hi, Frank Good morning, and thank you for your question.
Going into the first one for Q4 even.
Even beyond the non recurrent.
Expenses.
We are going to register on the back of the cancellation or early termination of the floating LNG our country.
Contract we.
We do still expect.
A contraction in the Vidara would you throw the develop of the combination of two effects on the one hand, the lower production, but we are estimating as was mentioned during the presentation.
We estimate lower oil and gas production on the back of.
Before closing down some shale wells to avoid interference with the resumed activity on trucking and then also biplane maldonado, mostly related to natural gas. So all in all we keep production going down and at the same time, we do see operating expenses.
So primarily on the upstream side, we see opex going up, particularly as we were ramping up activity both on pulling on Workovers. So clearly what we see is it's temporary trend where production is going to go down and Opex is going to go up but that clearly is gonna is expected.
Reverse as we move into into the following year.
On the downstream side.
And just battling briefly on your question on pricing, we do see relatively stable prices, we expect to see relatively stable prices.
And we don't see a deterioration in dollar terms there.
So all in all mostly the evolution of it the next in the next quarter in the last quarter of this year as I was mentioning what is going on mostly related to lower production in the upstream side and how your opex in that same segment.
Into into your second question.
Clearly, if you're saying it's hard to predict.
For the long for the long term.
But we do see an increase in activity in our non conventional particularly in back on one thing shale.
Mostly focused.
No in the long run, but clearly on the lack of what we are expecting to be announced shortly the formalization of the blood gas also in.
The first part of next year.
During the fourth quarter with some.
Police activity in natural gas as well, but.
But all in all we do see the proportion of non conventional.
Going up in coming years.
Broadly looking.
For the third quarter, we were up 20% in the case of oil production shale production.
As a percentage of total production for the company, we do see that number going closer to 25 or more into 2021 and broadly as we look into the long run.
20 to 2023.
We do expect that to go closer to 245 or 50% and that is a combination of the iwear.
Hi, good activity in unconventional as well as the.
The natural decline in conventional which is scanner, which is expected to be only partially upset.
With capex activity in coming years.
Okay. Thank you very much.
Sure.
Thank you. Our next question comes from a line of my fellow who Merrill at Credit Suisse. Your line is now open.
Oh.
Thank you very much congratulations on the results.
Just a couple questions here guys. So.
Continuing with the Capex right I mean topic still with a very low level.
Correct.
As you provided the guidance.
Oh, how how we should see Capex going forward, then fortune 2021, or even the low growth and how do you plan to match cut expenses that.
That concludes the original schedule for next year.
Finally, another question.
Regarding leasing costs.
So we've got is going down you said the lower growing of course, but how much you can provide how much of that.
Those cost savings.
The reversal.
If we go back to normality they covered.
Which.
Thank you Marcelo.
On your first question in terms of Capex activity clearly, we are coming up from very low levels in the second quarter.
An activity started to we were shielding primarily by the end of August and then a little bit more in September and as we move along we are further improving or further increasing activity both in conventional and unconventional Jeff as an example, and as was mentioned in the presentation.
We read up about.
35, southworth during during the third quarter and we expect to continue we are actually continue we've got activity and expect to.
Activate another roughly 30 equipment or weeks by the end of the year. So while we know we will probably end up with a little bit over a week by December compared.
Comparing to less than 20.
Before before June.
So when comparing that to recall the levels clearly we are still well below.
The roughly 120 rig that we used to have before this grace interrupted and we don't expect to go back to those levels anytime soon and so broadly we said about 65% of activity or weeks integration, it's probably going to be here to stay.
Nevertheless.
As we mentioned also during the presentation, we have increased efficiency very significantly both.
Examples that we put in the presentation the tying all that.
I was in operation, but every intervention conventionals pulling equipment, which has come down by about 20%.
On my 2019 levels of fracking activity, where our stages, but they haven't gone up very significantly to our aid.
As we resumed activity fracking activity now in October versus.
The average is for 2019, so we therefore can be more efficient and more productive with less equipment and that also means.
That every dollar in Capex should be.
More should have more power so going forward, we do expect.
An increase in the volume of Capex overall in 2021.
That was also mentioned that the guideline for 2021, we do expect those capex levers to Ohio of course that will.
How about an impact in our financial release and that's why we are.
We are thinking that we have the writing a short term plan, where we might need to take on some extra net new funding to be able to.
To accommodate that more aggressive capex plan for next year.
But that will definitely be needed to regard the.
Production train decline that we haven't seen in the last few years and particularly during 2020 and the lack of of Cowen.
And into your second questions about second question or lifting yes as was mentioned in the presentation. The number for the third quarter is exceptional exceptionally low it's a combination of.
Still reduce activity when compared to normal levels, mostly in well service activity in terms of putting on workover.
Services.
We do see that those numbers going up already in the fourth quarter and we do expect a stabilization.
As we move along to 2021.
Just to give you an idea the more normalized excluding some exceptional operations.
Were reversed in the third quarter, which is.
Exceptionally lowered the overall lifting number for that quarter.
And more normalized or taking aside those provisions during the quarter, we will be closer to $9.
But one of the whole equivalent in the third quarter and that number should probably stabilize as we go forward.
We normalized volatility that number should probably go up to 11 around $10 to be a week.
Thank you very much murkier.
Thank you. Our next question comes from the line of Barbara how the state with JP Morgan. Your line is now open.
Hi.
Good morning, Thank you for for the opportunity. So I know you mentioned about a refinancing options for the pipeline there.
Still not a lot of clarity on what's going to be the decision from the government, but if you could just explore a little bit more how local capital market.
Currently and if that would be an option for the company to address some of the short term financing I need.
And then my second question is on the cash position also as you mentioned there has been a transition from the balance between dollars in local currency in your cash balance and we do see a slight increase from last quarter. So I just wanted to understand a little bit better what's the dynamic to build up the cash in dollars our current.
We should we continue to expect this new mix 60, 70% in local currency and adulterers or should we be looking at more of a 100% in local currency going forward.
And also if you could comment on what minimum cash balance.
The company. Thank you.
Yeah.
Sure. Thank you Barbara.
In terms of.
Our refinancing ability yes.
Yes that was mentioned during the presentation, we still cannot predict what the final decision from the Central Bank will be in terms of granting access to the official effects market, Although we do still expect.
That will be financing it flowed back in July should.
Should be taken into consideration to be able to comply with our commitment without major problem.
But in terms of achieving or racing new funding.
Yes, we do we do see.
Significant liquidity in the local market.
We have been absent from that market in this quarter.
Finally, given our decision to reduce I will I would overall cash position liquidity position and then we.
We were the net.
We met we paid.
Local bonds.
About 600 million as was mentioned in the presentation about $100 million in look at launch where we paid during the quarter and as we look into next year.
We have about including on amortization that we had in December we have about $350 million that mature.
In the local market so when considering that.
We do believe that we should be able to.
[music].
Go into that market for an amount what amounts that are larger than that so we do expect the local market to be a net provider of financing into from now and into the end of next year.
It should be.
And through that we should be able to largely compensate.
The probably what what's going abroad levy on another availability of significant new cross border funding.
So clearly we would probably rely more significantly on on local opportunities and we will see the liquidity there to do that.
Into the into your second question about the cash position.
Yes.
The regulations from the Central Bank device, you get basically preclude coatbridge from accessing the local officials the official effects market.
Two increasing.
Dollar reserves or dollar cash position.
So basically the only authorization to access the market is today imports and due to servicing debt.
Of course with the restrictions I would mentioned before.
So the dollar position is.
He is not increasing but rather the dollar amounts that we still have other ones that work on from.
The dollars that we used to have abroad that after the liability management exercise that was executed in July we brought back into the country. So.
On the white be EPS level.
Aside from our subsidiaries, we do have all of our liquidity locally a portion of that is in dollar denominated government bonds and so that is also included in the dollar proportional dollar portion of our of our liquidity. So in the in the roughly 40% that was mentioned by September.
It includes the cash dollar position at White Beard, and its subsidiary as well as the cash sorry, the dollar position in in government bonds, which we consider us relative as a liquid financial investment.
If we look into the numbers that's of today and excluding those dollar denominated bonds, we would roughly be on.
White beer aloft Standalone basis, we will probably be on a 10%.
Dollar portion of our liquidity and on a consolidated basis, probably closer to 20%.
Yes.
Perfect. Thank you and I'm sorry, if you can just like all up and what's the minimum cash level that the company feels comfortable with operating.
Sure Barry.
That he thought on why be on air with either with the formal analysis on the white beer.
On a standalone basis, we held the subsidiary.
And in that front and excluding also the dollar denominated bonds that.
We hold.
We are.
So we set a number that is not.
Clearly weve been stone, but we feel comfortable with the level of around 700 million dollar equivalent.
In liquid cash position as a general rule.
Perfect. Thank you so much.
Sure. Thank you.
Next question comes from the line of Bruno Montanari with Morgan Stanley. Your line is now open.
Good morning, Thanks for taking the question and thanks for the.
The newspaper the release with more information very useful thank you.
A few follow up questions on refinancing you have.
Quite a substantial trade financing.
Line maturing now into fourth quarter have you already been able to roll that over so what can we expect on on that specific line.
And I have to get back to Capex, we will.
We lost a little bit of the reference of what a more normal capex level.
Then you were making plans.
Plans for 1.5 billion this year.
But.
Should we think that the normal level is closer to 2 billion or 3 billion. So any ranges you could provide this would be very helpful.
Weak third one.
Results from gas and power in the third quarter.
Quite strong.
Should we expect.
That level of results to be sustained or should also decline into the fourth quarter now. Thank you very much.
Hi, Bruno and thank you for highlighting the changes in the in the press release, it's good that the market takes it positively.
Going into your questions.
In terms of the refinancing of the trade facility.
For for the rest of this year. So they trickle in November and December we have about $300 million.
Trey the facilities that come due.
I would say that for the most part.
I cannot say that all of them idle agreed upon to be rolled over but we are in the process of doing that.
For the most part we see banks very constructive.
For the most part we don't see any major risk in that rolling those those facilities over.
And also we do and how.
Some some room in some other bank facilities, both for financial instruments as well as trade that we could tap on to engage that we need to use that to to compensate for any bank that might not be.
Ready to roll over by now, but as a general.
Comment I would say that for the most part with Keybanc very constructive and clearly.
Taking advantage that the central bank regulation has not affected.
Trade facility.
They are adding no obligation or they don't feel the constrain realization to well over a one.
90% of that or 60% of that off.
Case for cross border financial lines, but still for the most part we see banks willing to to roll to.
The rollover practically all that is coming due in the next couple of months.
In.
In terms of Capex.
I would say that the new normal should dror levy somewhere in between what you used to have.
In deal days up until 2019, and what you've seen in 2020 clearly the number for 2020 is is not enough.
That's why we are basically saying that we need to to have a more aggressive plan, but clearly that does that mean that we are going to go back to the 3 billion dollar level of the past or more right.
Also interesting or important to highlight and to bear in mind that as we are managing and seeing some encouraging signs from the steps that we took to improve.
Our costs in general.
We do see that.
But that would cost cut cost structure is going to be more efficient not only not bad but for modeling capex.
As mentioned in the presentation.
For example.
The well cost in shale has come down already by about 15% and we are seeing also new signs that will allow us to to use that even further broadly to getting closer to 25%.
As we move along 2021, so that means that basically we are going to be much more efficient and effective in when putting new dollars into capex and so we feel comfortable that.
Even not going back to the levels of the past the company should be able to to be good.
The production decline that we have seen in the last few years.
And I'm sorry, Bruno was there is no question.
Yes, the bulk of the results of gas and power, which seems to be seem to be very strong in the third quarter and I was wondering.
That level of profitability sustainable now into the fourth quarter.
Okay, Yes, clearly there is.
A big deal.
Difference when compared to the previous quarter.
As was explained in the previous quarter the number in the in the second quarter was affected by a specific provision on the potential enrollment of degree 10, 53, which basically.
If the recovery of FX losses on sales to distribution companies back in 2018.
But so excluding that item.
Adjusted EBITDA for this quarter in the amount of $20 million and that is basically on the lack of when taking aside the nonrecurrent effect of the second quarter that is mostly related to higher seasonal price Heath.
Of course that will depend on seasonality.
But also as a new blood gas come on line.
You should also somehow help the margins on the on this on the segment but.
Nothing major we expect to change or no material changes, we expect income.
In coming quarters in this particular segment.
Got it thank you.
Thank you. Our next question comes from the line of Louise Cardello wet Yes. Your line is now open.
I think thanks for taking the question.
You can see the presentation that may be an issue.
Question in a different understanding.
Even after this year's 1.5 cap ex smoker, five you haven't that interest in dollars or 7.5%, which according to our members.
Close to $400 million water.
And this quarter, you basically had a cash burn of something closer to 300 million.
What are the cash position of $1 billion and.
And as you pointed out due to the leverage is close to four times and production is dropping at close.
Close to 10%.
The past years so.
I do see some liquidity issues potentially I know you'll.
Your next one here.
A few years, if the oil price to Navidea.
So and then the last slide you mentioned about a potential.
Three incremental capex, where incremental net debt.
To cope we'll be more aggressive coverage so.
Just try just trying to understand how this this is Mary will eventually lead to give you see with everything that you pointed out the victory in the presentation GP guidance.
For this year potentially next year.
Which my understanding when we will not be doing too much different brands and the second question is is that again.
No one of this question in previously and conference calls.
What would be the time to be more aggressive on divestments and instead of Capex I mean.
The company can do you need to actually to reducing leverage and potentially even reduce it get you to the capex need.
Over the next couple of years.
She has done with your second question.
And last question is about indicated that we see in oil price rebound.
Of course, we have.
You see the industry and business.
On the cash to take couple of years, we saw.
You know prices being chosen.
If you change the downstream so what did you say if you want to actually gone arguably even to actually to follow the international parity in the downstream business. Thank you.
Hi, Lisa.
Thank you for your questions.
On the first one.
Clearly.
It's a delicate balance to move along with.
In as we move along in in the coming months and years to address on the one hand, the leverage that we would that we currently have and we the more aggressive capex program that we need to put at work to lever the production decline and that's why.
The main objective we set ourselves on is the cost reduction and efficiency because that's going to be the enabler. The let the lever that we have to to to treat.
To be able to do this and so far as.
As was mentioned before we are seeing some first encouraging signs we have managed to.
Views.
Costs.
Significantly in several fronts as I was mentioning before well cost for shale, which already is down or whether you like 15% I'm, probably getting closer to minus 25 next year.
But also pulling activity that when we combine efficiencies with Barrick reactions, we had over 30% in terms of cost efficiency.
The same is happening in in drilling and Workover. For example, so all you know broadly we are not it's going to be very hard for us to that to the 30%.
Company wide cost reduction that we we set up us as a target.
But we definitely ugly and putting all our efforts towards that towards that objective and hopefully and probably we will end up at least in the range of 20% or more in terms of cost reduction so and that is both for opex and capex. So that should be the main enabler, we're not betting.
On higher prices it take us out of the situation we are betting on efficiencies.
To do that job.
And that's why we believe that in doing 2021.
Of course, we will depend on availability of financing and we will need to explain clearly in even more detail.
Efficiencies.
To be able to get to be joined by by you guys by the market.
In terms of providing the financing that we will need.
Well broadly keep our leverage high.
At least for the next year and as we managed to ramp up activity and production.
Even with current prices.
For us we are successful in our efficiency, which provide us with for example, a breakeven in shale, which I will below current market prices.
So we do expect that.
As we.
Combine all those efforts by 2022, we should be able to.
Once again reduce leverage and broadly tried to be closer to or even below three times. So that's our long term trajectory expectation I would say.
In terms of your second question of divestment of course.
And I will Perkier talk a little bit about that thank you. Thank you want to handle on thank you also for public once you're on.
I'm going to take the question about it I guess then.
As we commented on the second quarter results.
Got it.
Yeah no pools.
On our core oil and gas activities.
And optimizing our portfolio.
And in that regard and taking into consideration Goran financial restrictions or company.
Cash generation through divestitures of non core assets.
Who provide us.
Additional capital or meet the more rapid deployment.
Oh resources.
Into oil and gas.
We are maintaining maintaining an open dialogue with key international player for.
For the possibility of entering.
Two new farming agreements in Vaca Muerta.
And we're also analyzing a group of mature conventional area.
Both the oil and gas.
That might be subject to potential this investment.
Should we conclude that they could be operated.
More efficiently by a more flexible.
Pocos Nish operator.
Permitting us to follow Craig.
Our resources.
To those assets, where we can create the tigers the value for our stakeholders.
Also worth mentioning White board of Directors has approved recently sold non operated office building for about.
$30 million.
On along this line, we will we continue analyzing our portfolio of non operating.
Or non strategic assets.
And will likely move for war with him on T. station should potential deal value valuations.
Felt reasonable.
Okay and this is with respect to that.
Yes.
So and I think as I can and lease on your on your third question.
In terms of.
The potential rebound in oil prices.
As was mentioned before we are not.
Putting or betting our our future on that.
Clearly no one knows and the.
A complete lack of visibility on how the world on on our sector in particular globally, we'll that will evolve.
However to your question about you know what happens to pump prices if oil rebounds.
Of course that will depend on how franchise or both strong our macroeconomic variables will be hopefully.
Hopefully and as we have shown recently, we managed to align our prices to improve party and but mostly we're focused on at least maintain current prices in dollar terms, so what happens before it rebounds.
We will see hopefully we will be able to to keep up.
Aligning ourselves to impropriety by we cannot assure you that that's actually going to be the case.
Okay. Thank you.
Come back to the first quarter century, so you seem to be better taking 22 for you to do naturally de leveraging if you lose a few times.
That also considers a municipality.
Function in terms of Detroit clusters protection as you want.
And I believe that liquidity issues might be might be faced I mean before that.
Is there any discussion in the board within the management, capturing reserve something something like this at this moment.
HM backing.
Right.
The last part of the question.
The answer would be no women.
Remember that.
The company is 51% owned by the by the Argentine government and in that way so far we're not seeing.
The possibility of racing.
Capital in ER through that to the market.
And then of course, you know the the way for for the government itself to to increase capital in the company.
It's a complicated of course is a complicated type solution. So what I would say that liquidity issues.
We probably need to be addressed.
By first of all performing Oreo or managing correctly, our financial liabilities and our liquidity.
And again hopefully not the case.
It was comes to the to do reality.
Clearly adjusting capex activity, which is not the best.
I'll turn the day, because that that has a long term impact in our production, but once again, he we don't want to bet our future on prices.
And that's why all our efforts are put into efficiency.
And that we believe that through that.
We can be much more efficient in we working the production decline.
Much less capex than this company used to me.
Up until last year, So that's basically where we can comment for now.
Okay. Thank you.
Thank you. Our next question comes from the line of and Nail Me with Bank of America. Your line is now open. Okay. Thank you very much for the call to questions. One I just want to follow up on that on some pricing question.
If there were to be so both on the upstream and downstream and upstream we know you're trying to keep import parity if prices were to decline again.
Would there be a possibility.
Implementing them, but increase that.
Now to went out I guess in August.
Since we're about $45 and at what point would you.
Talk to the government about that and then if inflation were to be higher than expected next year and.
How what is sort of the process for sitting down and negotiating or discussing price increases on the downstream side. So that you can maintain import parity and not not really sure value.
The question on pricing second just wanted to know for 2020, what are your level of exports and can you use any of those funds for helping to prepaid debt repaid offshore.
And then my third question is.
It's one that you discussed several times you have you're going to perhaps increase that next year, yet you're already above your current level covenants do you have baskets that allow you to increase your indebtedness next year to meet a higher capex levels. Thank you.
Thank you Ron.
On your first question about pricing.
Clearly there where we could use your question is.
It's very difficult to answer of course that.
Regulatory decision.
Primarily.
Neely or asked for previously by Europe streamers on the provinces of course.
Because royalties depend much on on crude prices or local crude prices clearly for a company like our selves, which we are practically fully integrated we mine mine or a purchase of crude from third parties.
In regular times, clearly that the wind down in the second quarter to practically Vito and has increased to an average of 10% in the second quarter.
But for us, it's more the though to lower pricing than the specific pricing of crude oil that affects our our financials and our economic we.
Reality, so we would not be the company most affected by by Rogrio show and to be honest, it's hard to say whether.
If prices go down significantly from current levels, which clearly they have recovered significantly in the last two days to closer to the 45.
Dollars per barrel that were but equally osha was dismantled back at the end of August body.
Body fat prices go back to lower levels as we've seen in recent days.
Of course, they're doing some rumors.
And some discussions as far as we understand but.
But nothing has really materialized, so it's hard to say.
Whether you know if prices move significantly lower whether that it's going to have even implemented.
Or not but again as I said before if not something that affects our our businesses that's significantly because.
If anything it changes the allocation between one segment and the other between upstream and downstream, but the overall impact for our company is is limited.
In terms of the adjustments in a in downstream or in bond prices.
That is clearly related to the answer that I brought it to the previous question.
Base.
Basically it's all going to depend on how the macro economic reality for Argentina evolve.
As you probably understand pump prices are not regulated so it's not that you need to negotiate those of course, we do.
We are you know baby very realistic about macroeconomic realities and the impact that.
Fuel prices for the pump.
On inflation, particularly.
So of course, when considering adjustments we look both on the impact that it's gonna have on demand as well as the early impact on inflation inflation figures for the country. So at the end of the day, it's that being.
Being realistic and also being conservative in terms of understanding that adjustments of the bomb have also negative impact on demand. So I didn't know today.
It's not a negotiation but of course, we do have.
A very realistic.
Approach on that front.
Going to your experts question.
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Average numbers for exports in the past in the last few years. So for about a $1.5 billion. This year is probably going to be a little bit lower than that closer to 1.1 to 1.2 affected mostly by lower prices for some of our products, which are correlated to oil prices.
As well as the collapse in a in the exports of jet fuel due.
Due to the you know clearly collapsing the activity of the ideation sector worldwide.
So.
As we move forward, we would expect.
I would expect levels to roll back to more average levels around the $1.5 billion or so we're also putting a lot of focus into to.
The business related to the other factor.
So we do expect to potentially have more exports of soil.
Sodium flower some annoyance also in coming years, as we put more commercial commercial.
Commercial and what aggressive approach on that commercial side.
But again this is clearly something that will depend on how.
The realities of the market evolve.
In terms of being able to use those dollars.
To pay that debt is only possible.
When you structure the debt.
Finally of course as pre financing of exports or as Neal Central Bank regulations.
Permit once again, if you structure, a new deal where you establish that you will use those future export flows to.
To repay the new debt to do that you have to bring the dollars that you that you raised through the new financing in the official FX market to then be able to use those flows to repay interest or principal loan on those.
On those instruments so on.
On previously issued instruments that were not export related you cannot use future export flows to to pay that as you know that central Bank regulations.
Create the obligation for exporters to being all dollars from exports back into the country and today. There is no basket of of dollars that can be kept abroad.
As it happened in the past for example in all day.
And then to your final question about the prominence years I was be briefly commented in.
In the presentation, we do have a first of all the possibility in a in the covenant.
First of all on the instruments that do have these financial covenants we.
We do have the ability to really.
We financed debt that comes due and then also we do have the basket.
Each day.
Generally speaking allows for new that.
As long as it is within the range or within a 5% of consolidated assets. So that should provide ample maneuvering room us as commented before.
To tackle the mean in 2021.
Okay, great. Thank you so much.
Sure.
Thank you. Our next question comes from the line of let's yes, what's the Mac with partners. Your line is now open.
Hi, good morning, and thank you for the call I have two questions about the downstream segment first.
Firstly I see the gasoline sales are sold up 30% year on year on he said that the wrong, 20%, even with the look down leasing.
And what what factors explain this nation is this a new normal and my second question is relating to the pricing the pricing policy will follow.
I understand that.
It's important to.
I understand the impact.
Discuss some other economics, but.
Well what are you expecting to we did prices you mentioned that they are 20% below 29 genes.
In the near term.
I want to know if you expect to recover those those fully or and how long you expect.
We'll take tools such a.
Thank you.
Thank you thinking about here.
I'm going to your last question first.
He policy.
And as was commented before yes, we will be in a adjusting.
Several times since August.
Primarily.
Trying to accommodate our prices to impropriety by primarily to recover some margins in dollar terms.
Going forward and as we've said before we have to be very cognizant of the reality macroeconomic realities, but we would expect to at least keep.
Truck.
We the evolution of the effect.
To at least maintain the current margins that we that we have in dollar terms.
When comparing to the previous year, and she said clearly gasoline and diesel at about 20% to 25% down versus the same quarter last year in dollar terms.
But you have to also bear in mind.
International prices for Glu basically when prices.
Went down went down in the same period by about 30%. So we are clearly.
Not able to move.
Two were way Oh from from reality, so off of our sector.
So when you when you compare to that you can see that actually from spread point of view, we had improved b.
The Saudis.
International crude prices.
So the I think this is a reality for the whole industry.
Oil and spread I'm, sorry oil and refined.
Brother prices have come down very significantly and as was mentioned before we don't want to bet, our future on expectations for future price increases so we rather assume prices to be relatively stable in dollar terms.
Of course, not achieving either a significant reduction from current levels, which which we don't see happening.
The structure they see it and so we are.
Doing I would estimate.
In the west possible, but.
But basically taking on current dollar prices.
Relatively constant in the near future.
And then.
Two down and no doubt your downstream question, but can you repeat that but because I didn't think no.
Yeah Yeah.
So you know the demand in the dancing sentiment seems so I still down 30%.
Gosling on Sunday percent units over what was expenses.
This is a new norm.
Yes, sorry.
Isn't that not no clearly that that is not the new normal.
We will see.
Further gradual recovery.
After the end of September so the number, especially on there for the for the quarter.
If we look into into October.
You know clearly demand into the little bit further and as we moved along and now exceeding the first weeks of November we.
We're probably closer to a minus 25% in in gasoline and and allowed minus 15% in diesel. So we we expect to end the year roughly around these levels, probably a little bit better.
Again, as we love the measures continuing flick civilized, we do see activity, increasing we do we don't see.
Demand coming back to peak all these levels in the coming months and as we move along in 2021, although it's hard to predict.
How the pandemic will evolve and assuming there is no second outbreak.
You know.
The world is seeing in the north in Europe, but primarily I assume that there is no second outbreak.
We do expect demand to continue normalizing along the year broadly reaching levels of five.
5% to 10%.
Below.
Peak of either by the end of the year. So basically December 21 versus December 2019, both for gasoline and diesel will probably be in the order book we are estimating.
Probably we were estimating to be between five and 10% below the previous Norman.
And in terms of our jet fuel gear.
Clearly, we don't see that significant improvement on proven not to be that significant.
In that segment and broadly we expect to end 2021 will.
Demand for jet fuel closer to about 50%, but we have we have what it used to be.
On a pre pandemic people at any level.
Okay. Thank you.
Sure. Thank you.
Our next question comes from the line of Andrew Dilutive Barclays. Your line is now open.
Yes, Hi, Hello, and thanks for thanks for the question. Most most of them have been asked but I just wanted to follow up on the covenants on the 5% of our total assets that you mentioned I think that currently translates to about a billion up incremental debt.
Being crunch is that it's all about available as of now that.
That would be my first question and the second question is.
You answered it a bit in barber's question earlier, and it's about the possibility of local funding options. But you also mentioned that you can look to the international markets to help on Capex, if I understood correctly.
Just given where your unsecured bonds are trading. It seems you know obviously is quite challenging. So so is it safe to say that when you mentioned that it's that you're looking or youre exploring the possibility of issuing some sort of secured funding.
Yes.
Thank you Andrew.
Clearly we are we are not analyzing all possible options in terms of our funding to cover our funding needs I've mentioned before and we have a very realistic about where our secondary levels for our unsecured bonds are trading.
That's why also we mentioned that we will see the ample liquidity currently available in the local market us broadly being a relatively large source of funding next year and for the rest of this year as well.
So clearly you know.
Looking at potential secured financing costs for the financing who will also be on the table.
But there is no decision no decision has been taken yet ourself out what the right mix that should be.
As you probably know there is a very interesting that arbitrage currently available in the local market where our.
Dollar linked bonds have been issued.
At very low rates.
So we do believe that we have the capacity to take advantage of that as well as also racing peso denominated funding, which is very important to also.
Maintain our hedging of four of our local liquidity as well.
So I would say that we're primarily focused on the local market for now we these companies to have significantly larger funding locally than what we currently have so back in 2014 2015.
Financing from the local market, we presented a significantly larger portion or over total funding for this company and we believe that broadly we should we should move along in coming months.
With his strategy.
To to get back to two that to EPS situation right. So relying more on the local market.
In terms of the governance. Your calculation is relatively correct. So it's a little bit over a billion dollars or two to be fair, but.
But that is only related to new funding right. So.
So that is also the possibility all that all that that comes view can be.
We should without any restriction, so basically refinancing if not precluded or restricted by the government but.
But only the new the encountering soft net new that and that front, yes. The limitation would be on roughly about $1.2 billion as of now based on the latest.
Consolidated asset figure.
That would be the total available on net new funding based on on the continent.
Great. That's really helpful and I just two very quick follow ups just one on the local market funding I mean, we're hearing about a lot from from a bunch of corporates in Argentina, there haven't been that many transactions over the last couple of months, obviously, but can you just help us understand how deep do you think that market is really right now.
And the second one is just going back to the secured capacity is there. Some update that you can provide us with in terms of how much. Your capacity you had at the end of third quarter.
Thank you.
Yeah and.
In terms of capacity from a negative pledge standpoint, we do have ample ample capacity. So there is I wouldn't say that there is any any major restriction there.
And we can we can have enough flexibility.
To move along there and ER and again, probably the restrictions are more related to our.
X.
Export flows if that security comes from exports.
Which is probably more you know the most reasonable way of putting up a security secured financing.
But again I said before as mentioned before.
We don't have any final decision as to whether we want to actually move along in that front in the near future.
And again as long as we do have as long as we ended up having access to the official effects market to Warner our commitment or our own or our maturity of the March 21 bond.
We do believe that the local market.
Could still provide a very efficient funding source and the efficient funding alternative.
Total capacity in that market awarded the final depth of that market. He it's hard to say for sure. It's a it's not a market. It's a market that has been increasing its liquidity very significantly.
You know the effects restrictions for generally speaking for corporates unfold for people you know generally that the common people.
That means that both the.
The population and companies have to retain liquidity on shore and that means more liquidity available in the hands of institutional investors. So.
That that's happened in the past as well and and again this is.
A mutual beneficial.
Situation for both the local institutional investor audience incorporates like us.
To come up with new products to.
To do well that liquidity can be invested that's.
Thats why we believe that the Ivy thrush east is coming from exactly that situation and that's why we believe that there should be ample capacity to top on that market in coming months much.
Much further beyond you know does that that comes view.
For what you have in that market, which as I was saying it's in the order of $350 million in bonds that come due between now and the end of 2021.
Great. Thanks very much.
Sure.
Thank you there are no further questions at this time I would now like to turn the call back to Alejandro Lu for closing remarks.
Thank you very much and on one thing again to everyone.
Joining the call. This morning, we know that these are very volatile times and taking the time to.
To follow us.
It's a it's very appreciated by us and so we keep an open.
To having a continuous dialogue and ER and then once again, thank you all and have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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