Q4 2023 YPF Sociedad Anónima Earnings Call
Margarita Chun: Good morning, ladies and gentlemen. This is Margarita Chun, YPF IAR Manager. Thank you for joining us today for our full year and four quarter 2023 Earnings Presentation and Strategic Outlook. Before we begin, I would like to draw your attention to our cautionary statement on slide two. Please take into consideration that our remarks today and answers to your questions may include forward-looking statements, which are subject to risk and uncertainties that could cause actual results to be materially different from the expectations contemplated by these remarks. Also, note the exchange rate used in calculations to reach our main financial figures in U.S. dollars. Our financial figures are stated in accordance with IFRS, but during the presentation, we might discuss some non-IFRS measures, such as adjusted EBITDA. I will now turn to Horacio for a brief introduction; please go ahead. Thank you, Margarita, and good morning to all of you.
Good morning, ladies and gentlemen, this is Matt how are you.
Y P F.
Thank you for joining us today in our full year and fourth quarter 2020.
Patients on Saturday.
Before we begin I would like to draw your attention to our cautionary statement on slide two.
Taking into consideration that our remarks today and answers 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 note that exchange rates used in calculations to reach our main financial figures in U S dollars.
Our financial figures are stated in accordance with Ias RF, but during the presentation, we might discuss some non <unk> measures such as adjusted EBITDA.
I will now turn to <unk> to a brief introduction. Please go ahead.
[music].
Thank you Mark and good morning to all of you welcome to renew.
Horacio Marín: Welcome to this Renew Earnings webcast presentation from the YPF Corporate Building in Buenos Aires. I am Horacio Marn, the new CEO and Chairman of the Board of YPF. Before moving to the purpose of this video call, I would like to express how proud and honored I am to assume the responsibility to lead the largest integrated energy company in Argentina, leading more than 20,000 employees and more than 40,000 people that indirectly contribute to ADR. I have the firm commitment to take YPF to the next level by growing consistently in a profitable way and become a next exporter of energy in the long term, always maintaining a prudent financial strategy while keeping the Today I will conduct this presentation with our new CFO, Federico Barralta-Vea, who will go through the main highlights and financial results for the full year and Q4 2020. Also, our Strategy Vice President, Maximiliano Weston, will detail the most relevant operational performance figures of the year.
Cynthia them for White P S corporate building awareness ideas.
I am going ask somebody in the new CEO and chairman of the board of White P. S. B.
Before moving to the purpose of this video call I relate to spray, how proud and honored I am to assume the responsibility to lead the largest integrated energy company in Argentina.
And more than 20000 employees.
More than 40000 people that in the country with us.
I have the same commitment that they wipe it to the next level by growing consistently in a profitable way and become and Nexus sported a winners in the long term always maintaining a prudent financial strategy, while keeping the safety and sustainability of our operation.
The forefront of our day to day decision today.
Hey, I will conduct the presentation with our new CFO pretty equal one other area.
You go through the main highlights and financial results for the full year and Q4 2023.
So our strategy right prescient, Mike C media and the Westin.
We tell them more early on operational performance figures of the year. After this I will share our new strategy outlook for the next year.
Pablo Gonzales: After this, I will share our new strategy outlook for the next. The end of the presentation will open up for questions. I will now turn to Federico to begin with the main highlights and financial results. Thank you, Horacio, and good morning to all of you.
Dan.
After the presentation, we will open up for questions I will now turn it over he got to begin with the main highlights on financial results.
Okay.
[music].
Pablo Gonzales: Before we begin our presentation, I would like to express my pleasure and pride to be part of the new management team of this company. Now let me start by saying that 2023 was a very challenging year driven by a complex local macroeconomic environment with high inflation, strong volatility, and a downward trend in international Discont. Nevertheless, the company was able to grow total production for the second consecutive year, deploying its annual CAPEX plan while preserving a healthy financial position. Adjusted EBDA total will be around $4 billion in 2023, decreasing 18% annually. This lower outcome was the result of three main factors.
Thank you Joshua and good morning to all of you.
Before we begin our presentation I would like to express my pleasure I'm proud to be part of the new management team of the company now.
Now, let me start by saying that 2023 was a very challenging year driven by a complex located in macroeconomic environment with high inflation strong volatility in a downward trend in international prices.
In this context, the company was able to grow total production for the second consecutive year deploying its annual Capex plan, while preserving a healthy financial position.
Adjusted EBITDA totaled around 4 billion doors in 2023, decreasing 18% annually.
This lower outcome was the result of three main factors first a lower domestic fuel prices in euro terms taken a moderate reduction in prices of other refined products I'm finally, higher opex, particularly driven by an increasingly inflationary context. This was partially upset by DXP.
Pablo Gonzales: First, lower domestic fuel prices in dollar terms. Second, a moderate reduction in price for other refined products, and finally, higher opex, particularly driven by an increasing inflation rate. This was partially upset by the expansion in total production and processing levels. Now, moving on to the fourth quarter, there was an important turning point for some key variables by the end of the period. Adjusted EBDA for the fourth quarter represented the highest mark of the year, reaching almost $1.1 billion, 17% above the previous year.
In total production and processing levels now.
Now moving onto the fourth quarter. There was an important turning point for some key body was by the end of the period.
Adjusted EBITDA for the fourth quarter represented the highest mark of the year, reaching almost $1 $1 billion.
17% above the previous quarter.
Pablo Gonzales: This was the direct result of an almost 8% expansion in all products. Since the end of the year, the new pricing strategy of the company has increased local fuel prices by 6% sequentially in dollar terms, overpassing the strong devaluations recorded on average during the period. On the other hand, costs contracted by about 8% sequentially, mostly driven by the discrete devaluation that took place in mid-December.
This was a direct result of an almost 8% expansion in all products.
Actions.
Since the end of the year, the new pricing strategy of the company increased local fuel prices up 6% sequentially in dollar terms or passing this strong devaluations recorded on average during the period.
On the other hand cost contracted by about 8% sequentially, mostly driven by the discrete devaluation that took place in mid December lastly, the positive effects of the new exports increased program, which allowed to convert expert and international financing at especially fixed rate almost.
Pablo Gonzales: Lastly, the positive effects of the new Export Increase Program, which allowed to convert export and international financing at a special effects rate, almost compensated for the seasonal reduction in our natural gas prices. Our bottom line in 2023 came at a loss of near $1.3 billion and almost $1.9 billion in the fourth quarter. Enron's negative net income during the quarter was particularly affected by a non-cash impairment charge of $1.8 billion.
Compensation, the seasonal reduction in our natural gas hedges.
Our bottom line in 2023 came at the loss of near $1.3 billion and almost $1 9 billion in the fourth quarter.
This negative net income during the quarter it was particularly affected by a noncash impairment charge of $1 $8 billion pre tax.
This impairment came on the back of the new disposal strategy of convention on mature fields approved by our board last week.
The disposal decision requires the future reclassification to held for sale assets and triggered an impairment loss indicator and there are if it is.
Accordingly, the company performed a comprehensive review of the assets and recognize this impairment of PP&E as of December 31st.
Pablo Gonzales: This impairment came on the back of the new disposal strategy of conventional material fields approved by our board. The disposal decision requires a future reclassification to help for sale assets. Triggered, an impairment loss indicator that I am.
In terms of our operational performance total hydrocarbon production average 514000 barrels of oil equivalent per day in 2033, rising 2% Dennis was 2022, mainly.
Mainly driven by a sound performance in our shale operations that Max will explain later on the financial side and as expected by the company during Q4 free cash flow was slightly negative at $60 million.
Late in a negative free cash flow of seven Canada and $40 million in 2023.
The deployment of our investment plan and interest payments were not fully compensated by the cash flow from operations, taking our net debt to almost $6 $8 billion, while maintaining the net leverage ratio within the present levels of one seven times fully aligned with the target of the now.
Pablo Gonzales: Accordingly, the company performed a comprehensive review of the assets and recognized impairments. PPNE as of December. In terms of our operational performance, total hydrocarbon production averaged 514,000 bottles of oil equivalent per day in 2023, rising 2% versus 2022, mainly driven by the sound performance in our shale operations that Max will explain. Sponsored ADR Class D, Slightly negative at $60 million. Sponsored ADR Class, The deployment of our investment plan and interest payments was not fully compensated, taking our net debt to almost $6.8 billion while maintaining the net leverage ratio within the current levels of 1.7, fully aligned with the target. Now, let us start with the evolution of fuel pricing in the local market. Until the third quarter of 23, local fuel prices couldn't absorb them.
Let's start with the evolution of the pure pricing in the local market until the third quarter of 23 local fuel prices, causing absorbed.
Appreciation of the currency.
However, she is November the company has been adjusting fuel prices consistently narrowing the discount to the international body down from 20% in Q3, two 8% now.
Also local crude price has recorded a significant recovery during 2024, representing a discount versus export parity slightly above 10% in February.
Going forward.
Although he described to predict mostly due to the volatility in international prices the company still needs to preserve prices aiming at narrowing the gap and compensating for the evolution of the Argentine peso.
We will pursue this objective considering the daily Kate he leave you that needs to be maintained and the impact on the demand the ability to afford fuel cost within the local macroeconomic context.
Switching to the financial fronts annual cash flows from operations totaled $5 9 billion, 4% higher than the previous year. Despite the annual contraction in adjusted EBITDA higher cash flow from operation was a result of higher dividends collections from our subsidiaries as well as other positive.
Working capital variations.
However.
Given the full deployment of our Capex plans together with our regular interest payments annual free cash flow came at a negative seven kind of $40 million never.
Nevertheless during Q4.
Equation expansion of our EBITDA combined with some of the positive working capital variations.
How does two almost cover our capital expenditures and interest that we ended the quarter with a slightly negative free cash flow of $60 million.
Pablo Gonzales: Sponsored ADR Class D, However, since November, the company has been adjusting fuel prices, narrowing the discount to the international parties down from 28% in Q3 to 8% in Q4. Also, the local crude price has recorded a significant recovery during 2024, representing an export parity slightly above 10% in February. Going forward. Although it is hard to predict, mostly due to the volatility in international prices, the company still needs to preserve prices, aiming at narrowing the gap and compensating for the evolution. THE ARGENTINE PEST
The margin on a sequential increase of our net debt to almost $6 $8 billion and a stable net leverage ratio of 1.7 times.
In terms of financing during Q4, we continue deploying our financial program by securing both local and cross border trade related loans obtained from our relationship banks and by tapping the local capital markets at very attractive financing costs.
In total during the year, we were able to raise about $2 $6 billion 50 per cent from local capital markets, 35% from trade finance loans and the remaining 15% from the cross border a below led by Caf.
This represented net new funding of almost $1 3 billion after deducting debt amortizations paid during the period.
And more recently on January 10, White P. F successfully returned to the international capital markets.
Leaving the reopening for Argentine course by using an export secured bond for a nominal value of $800 million.
The new bond has seven year final maturity, a fix rate of nine and a half and a yield of nine and three quarters.
Pablo Gonzales: We will pursue this objective, considering the delicate equilibrium that needs to be maintained and the impact on the demandability to afford fuel costs within the local macroeconomy. Switching to the financial front, annual cash flows from operations totaled $5.9 billion, 4% higher than the previous year. Despite the annual contraction in adjusted VDA, higher cash flow from aberration was a result of higher dividend collections from our subsidiaries, as well as other positive working capital values. However, given the fully deployment of our CAPEX plan together with our regular interest payments. Annual free cash flow came in at a negative $740 million.
Simultaneously, we launched a cash tender offer for the 'twenty 'twenty four nodes, which are solid.
In prepayments of near 40% of the outstanding notes.
On the liquidity front, our cash and short term investments as of December 31st remained almost unchanged on a sequential basis at almost $1 4 billion. Despite.
Despite the large devaluation that took place in mid December.
Thanks to the active asset management strategy to minimize effects exposure.
Regarding our short term financial obligations.
Our total consolidated financial maturities for 2024 amounted around $1 $3 billion as of December of last year. However, the recent bond issue combined with the 'twenty 'twenty four bonds tendered reduce considerably our short term financing needs, leaving.
Pablo Gonzales: Nevertheless, during Q4, the sequential expansion of our EBDA, combined with some of the positive working capital variations, allowed us to almost cover our capital expenditures. Thus, we end the quarter with a slightly negative pre-cash flow of $60 million, a marginal sequential increase of our net debt to almost $6.8 billion, and a stable net leverage ratio of 1.7 times. In terms of financing, during Q4, we continued deploying our financial program by securing both local and cross-border trade-related loans obtained from relationship banks and by tapping the local capital markets at very attractive financing costs. In total, during the year, we were able to raise about $2.6 billion. 50% from local capital markets, 35% from trade finance loans, and the remaining 15% from a cross-border A-B loan led by CAF.
Two a very manageable maturity profile for the rest of the year.
I now turn to Max Weston, who will continue the presentation with more details on our operating results.
Okay.
[music].
Thank you fed equal and good morning to everyone.
Let me start by saying that the safety of our workers as our top priority in the development of the activities of the company.
That is why we deeply regret one accident with fatal consequences that one of our upstream contractor workers suffered during last February which commits us to increase our efforts to ensure operations at the minimum possible extent risk.
Now regarding 2023 evolution, we recorded another year of substantial progress in our safety indicators, achieving an accident frequency rate per million hours worked off zero point 23 with zero fatalities in our operations. These results were possible. Thanks to several initiatives focused on.
Pablo Gonzales: This represented net new funding of almost $1.3 billion after the DACA, and amortization spread during the period. And more recently, on January 10th, YPF successfully returned to the international capital market, leading the reopening of Argentine Corp by using an export-secured bond for a nominal value of $800 million. The new bond has a 7-year final maturity, a fixed rate of 9.5%, and a yield of 9.75%
Renting actions training risk control activities and audits of critical processes and facilities.
Further focusing on sustainability and in line with our strong commitment to contribute to the reduction of carbon footprint. You're in 2023, we continued working hard to make progress on the reduction of our G. H G emissions.
That sense.
Given the meaningfully lower emissions intensity of our growing shale operations and the several initiatives deployed so far in 2023, we reach a further decrease in our upstream unconventional carbon intensity levels scope, one and two.
Maximiliano Weston: Simultaneously, we launched a cash tender offer for the 2024 notes, which resulted in prepayments of near 40% of the outstanding.. on liquidity. Our cash and short-term investments as of December 31st remained almost unchanged on a sequential basis at almost $1.4 billion, despite the large devaluation that took place in mid-December. Thanks to the active asset management strategy to minimize exposure to risk Regarding our short-term financial obligation. Our total consolidated financial maturities for 2024 amounted to around $1.3 billion as of December of last year. However, the recent bond issue combined with the 2024 bond standard significantly reduced our short-term financing needs, leading to a very manageable maturities profile for the rest of the year. I now turn to Max Weston, who will continue the presentation with more details on our Operating Results. Sponsored ADR Class D. Thank you, Federico, and good morning to everyone.
Seeing 13 kilograms.
C O two equivalent per view.
30% below 2022, and surpassing the 50 kilo ground target announced at the very beginning of the year.
Lastly, let me highlight that in terms of energy transition, we continued expanding our renewable energy portfolio through our subsidiary Y P. F youth the second largest renewal power generator in the country with an installed capacity of three two gigawatts and defense during 2023.
The company put in operations, a new 100 megawatt solar farm project in the province of Sun, One and continued making progress on the construction of the new 155 megawatt wind farm to be installed in the province of corridor, which is expected to get the C. O D by the end of 2024.
Focusing on our upstream business during 2023, our total hydrocarbon production continued to the upward trend initiated in 2022 by growing 2% there versus 2022 and expanding 2% sequentially in the fourth quarter.
Crude oil production recorded a remarkable annual increase of more than 7%, reaching in the fourth quarter. Our production of 255000 barrels per day, 8% above the third quarter and 3rd% higher than the previous year fully complying the ambitious targets for the year.
Maximiliano Weston: Let me start by saying that the safety of our workers is our top priority and the development of the activities of the company. That is why we deeply regret one accident with fatal consequences that one of our upstream contractor workers suffered during last February, which compels us to increase our efforts to ensure operations to the minimum possible extent possible. Now regarding 2023 evolution, we recorded another year of substantial progress in our safety indicators, achieving an accident frequency rate per million hours of 0.23 with zero fatalities in our operations. These results were possible thanks to several initiatives focused on preventive actions, training, risk control activities, and audits of critical processes and facilities. Further focusing on sustainability and in line with our strong commitment to contribute to the reduction of our carbon footprint, during 2023, we continued working hard to make progress on the reduction of our GHG emissions in that sense.
It is also worth noting that during the last quarter, we achieved the highest level of oil production of the company in the last 50 years beyond.
Beyond crude natural gas production average 36 million cubic meters per day in 2023 declining around 3% versus the previous year, primarily due to lower demand in the second half of the year, which impacted particularly in the fourth quarter, we're not through all the gas.
Production of contracted 4% interact nearly on the other hand on your NGL production increased by 3% over a year now.
Now, let me walk you through the performance of our shale operations. The main pillar of our strategy. Firstly it is important to point out that in the fourth quarter shape. We're actually represented 48% of our total hydrocarbon production.
Bert to only 18% in 2019, representing a substantial transformation of our production matrix over the last five years.
In 2023 total shale production recorded a new annual expansion of more than 16%, particularly driven by shale oil which continues delivering solid results.
Maximiliano Weston: Given the meaningfully lower emissions intensity of our growing shale operations and the several initiatives deployed so far in 2023, we will reach a further decrease in our upstream unconventional carbon intensity levels, scope 1 and 2, averaging 13 kilograms of CO2 equivalent per VOE, 30% below 2022 and surpassing the 15 kilograms targeted announced at the very beginning of the year. Lastly, let me highlight that in terms of the energy transition, we continued expanding our renewable energy portfolio through our subsidiary YPF Luz, the second largest renewable power generator in the country with an installed capacity of 3.2 gigawatts. In this sense, during 2023, the company put in operation a new 100 megawatt solar farm project in the province of San Juan and continued making progress on the construction of a new 155 megawatt wind farm to be installed in the province of Cordoba, which is expected to get the COD by the end of 2024.
Lightning by 27% versus 2022, almost in line with the target for the year, averaging 97000 barrels per day in the fourth quarter shale oil production reached a new historical record of 109000 barrels per day growing 19% sequentially and 28.
Sent into annually. In addition, during the last quarter of the year, we continued exporting roughly 20000 barrels per day.
I need to crude oil to Chile through the trans Andean pipeline and the new Buck and whatnot the pipeline.
The later operational since 2023, representing 7% of total crude oil production and 12% of our me they need the oil production in the fourth quarter.
Swimming into the evolution of our hydrocarbon reserves total proved reserves contracted by 10% in 2023. The decline was mainly driven by a significant decrease of 26% and our conventional reserve while shale reserves remained almost flat during the year now representing.
Maximiliano Weston: Focusing on our upstream business, during 2023, our total hydrocarbon production continued the upward trend initiated in 2022 by growing 2% versus 2022 and expanding 2% sequentially in the fourth quarter. Crude oil production recorded a remarkable annual increase of more than 7%, reaching in the fourth quarter a production of 255,000 barrels per day, 8% above the third quarter and 10% higher than the previous year, fully meeting the ambitious targets for the year. It is also worth noting that during the last quarter, we achieved the highest level of oil production for the company in the last 15 years. Beyond crude oil, natural gas production averaged 36 million cubic meters per day in 2023, declining around 3% versus the previous year. Primarily due to lower demand in the second half of the year, which affected it particularly in the fourth quarter, where natural gas production contracted 4% interannually.
71% of our total reserves up from 64% in 2022.
The addition of proved reserves totaled 128 million Boe.
On the progressive development and expansion of our unconventional operations, particularly in Loma La Lata unaudited and lack of later blocks. Moreover, we recorded an enhanced hydrocarbon.
A recovery of 17 million BOE. However, the downward revision of our 72 million Boe due to higher cost pressure and lower prices combined with the total hydrocarbon production resulted in a total proved reserves decline it is worth noting that proven development reserves.
Recorded an expansion of 2% year over year, mainly due to the effect of development activities, new extensions and discoveries previously mentioned exceeding the annual production on.
On the other hand proved undeveloped reserves decreased by 21% driven by the reclassification to develop reserves lower hydrocarbon prices and other revisions.
Considering the total hydrocarbon production of 2023.
Reserve replacement ratios stood at 0.4 X four Y P F and 1.0 X for shale development switching to our downstream operations are processing levels increased sequentially, 5% in the fourth quarter, averaging 290000 barrels per day after day.
Maximiliano Weston: On the other hand, annual NGL production increased by 3% over a year. Now, let me walk you through the performance of our shale operation. The main pillar of our strategy. First, it is important to point out that in the fourth quarter, shale production represented 48% of our total hydrocarbon production, compared to only 18% in 2019, representing a substantial transformation of our production matrix over the last five years. In 2023, total shale production recorded a new annual expansion of more than 16%, particularly driven by shale oil, which continued delivering solid results, expanding by 27% versus 2022, almost in line with the target for the year, averaging 97,000 barrels per day. In the fourth quarter, shale oil production reached a new historical record of 109,000 barrels per day, growing 19% sequentially and 28%
Completion of the program maintenance stoppages aglucon exposure in La Plata refinery that began in the third quarter. It is worth highlighting that during 2023, we managed to achieve a record high production of gasoline and middle distillates and maximize our refinery conversion levels also drew.
Given by higher oil production getting back to 90% of refinery utilization factor lastly, our domestic sales of gasoline and diesel remains strong in the fourth quarter, increasing by 4% sequentially, while reaching in 2023, the highest level ever dispatch in every.
Year.
To meet this high record demand besides the outstanding performance of our refineries, we increased fuel imports by 5% on an annual basis and slightly reduce our inventory levels, particularly in diesel.
I will now switch back toward asks you to go through the updated strategic outlook for the next years.
Let me now walk you through our new outlook.
First of all let me caveat that we are maintaining our long term thought the heap pillar presented a year ago committed to address the unique opportunity that we have ahead of us.
Our third pillar remains to continue our focus on the monetization of our shale oil opportunities taking advantage of the brewing quality of their work on water resources and the high quality of cheese over the last 10 years.
Maximiliano Weston: In addition, during the last quarter of the year, we continued exporting roughly 20,000 barrels per day of Medanito crude oil to Chile through the Trans-Andean Pipeline and the new Vaca Muerta Norte Pipeline, the latest operational since 2023, representing 7% of total crude oil production and 12% of our Medanito oil production in the fourth quarter. Zooming in on the evolution of hydrocarbon reserves, total proof reserves contracted by 10% in 2023. The decline was mainly driven by a significant decrease of 26% in our conventional reserves, while shale reserves remained almost flat during the year, now representing 71% of our total reserves, up from 64% in 2022. The addition of proof reserves totaled 128 million BOE, backed by the progressive development and expansion of our unconventional operations, particularly in Loma La Lata Norte and La Calera blocks.
Secondly, we'll move forward with the monetization of our conventional oil resources.
We will set the base for the next five embargo more of them. They want the decision not to really go out.
Our goal is to become lower.
And then he player through the massive monetization on our shale gas resources by deploying a large scale LNG facility in Argentina. Finally, as we take a comprehensive look at the global energy markets and increasing relevance of then is it transition by 'twenty four.
He will be here on further opportunities.
Turning the company portfolio of NFC solution Dulworth clean Air annuities, we are convinced that these renewal strategy with their own photos.
In short term result has had tremendous opportunity to create a value for all our stakeholders before moving on the days of the New authority. She plan, let me start by describing our midterm ambition for the company in 'twenty Authority.
It's well known that back on what has it remained as potential even the level or a Colorado resources that over these here just around form from a dream into reality.
Maximiliano Weston: Moreover, we recorded an enhanced hydrocarbon recovery of 17 million BOE. However, the downward revision of over 72 million BOE, due to higher cost pressure and lower prices, combined with total hydrocarbon production, resulted in a total proof-to-reserve decline. It is worth noting that proven development reserves... recorded an expansion of 2% year-over-year, mainly due to the effect of development activities, new extensions, and discoveries previously mentioned exceeding annual production. On the other hand, approved and developed reserves decreased by 21%, driven by the reclassification to developing reserves, lower hydrocarbon prices, and other revisions.
Based on that trend, we expect to turn into World class shale play here.
Beating our record in oil and gas production, while at the same time became in a relevant part of crude oil.
And he by 'twenty three.
If we manage to do this we will transform into through positive free cash flow came in at April with a strong financial profile.
I know enough to continue investing in the long term opportunities in the future.
That vision in mind, we have recently aligned the ypa walk for why you brought them.
A four pillar plan to deliver our vision for why four represent our ambition to deliver outstanding performance to our stakeholders.
Maximiliano Weston: Considering the total hydrocarbon production of 2023, the reserve replacement ratio stood at 0.4x for YPF and 1.0x for shale development. Switching to our downstream operations, our processing levels increased sequentially 5% in the fourth quarter, averaging 290,000 barrels per day after the completion of the program maintenance stoppages at the Lujan de Cuyo and La Plata refineries that began in the third quarter. It is worth highlighting that during 2023, we managed to achieve a record high production of gasoline and mill distillates and maximize our refinery conversion levels, also driven by higher oil production, getting back to 90% of the refinery utilization factor. Lastly, our domestic sales of gasoline and diesel remain strong in the fourth quarter, increasing by 4% sequentially, while reaching, in 2023, the highest level ever dispatched in every year. To meet this high record demand, besides the outstanding performance at our refineries, we increased fuel imports by 5% on an annual basis and slightly reduced our inventory levels, particularly in December.
We play in the value of the company in the next four years.
Firstly in the short term, we aim to focus on our most profitable business, but gum Wilder, which is around twice as profitable as it.
Our next investment alternative secondly, we effect to actively manage our portfolio with strict capital allocation discipline.
In that sense.
Targeting a significant reduction of our exposure to conventional mature field during this year.
In the third place in Orlando in Greece, wipe it resiliency, we will focus on maximizing upstream and nothing operating efficiency aiming to becoming a world class shale player. We are still improving our downstream margin.
Finally, our 43rd pillar lies.
Lies on seeding the base of our next phase they wanted decision or not to Rodriguez.
And we are planning to grow the construction of an ambitious large scale LNG project. The unique in Argentina, We won a strategic partner another island thing gas player.
Now I will go in more detail in each pillar in a few minutes.
Our plan is already ongoing we feel very comfortable with the initial steps achieved so far.
First of all since the end of the last year, we have been deploying an active fall pricing strategy, reducing the gap versus international parties.
Horacio Marín: I will now switch back to Horacio to go through the updated Strategic Outlook for the next. Let me now walk you through our new Strategic Outlook. First of all, let me highlight that we are maintaining our long-term strategy pillar presented a year ago, committed to address the unique opportunities that we have ahead of us. Our strategic pillar remains to continue our focus on the monetization of our shale oil opportunities, taking advantage of the proven quality of the Vaca Muerta resources and the high quality achieved over the last 10 years. Secondly, as we move forward with the monetization of our conventional oil resources. We will set the basis for the next phase in Bacamor, monetization of natural gas.
Secondly in January of this year, we'll return to international capital markets.
Finally last week, our board of directors approved a new plan for us some of our mature conventional fields, thus initiating our active portfolio management.
At the end of the presentation I will share with you more of these days about this program.
Let me now walk you through the four pillars of our strategic outlook.
Deepening our forests at 30, he pillar given the tremendous potential increase in unconventional activity of diesel power.
Wayne.
Cell editing I might just parcel our share of production growth in that regard we are planning very ambitious production goal.
Horacio Marín: Our goal is to become a global LNG player through the massive monetization of our shale gas resources by deploying a large-scale LNG facility in Argentina. Finally, as we take a comprehensive look at the global energy markets and the increasing relevance of the energy transition by 2030, we anticipate further opportunities to expand the company's portfolio of energy solutions towards clean energy. We are convinced that this renewed strategy, with a strong focus and short-term results, has a tremendous opportunity to generate value for all our stakeholders. Before moving on to the details of the new strategic plan, let me start by describing our mid-term vision for the company in 2030. It's well known that Vaca Muerta has tremendous potential given the level of recoverable resources that this year has transformed from a dream into reality.
For the next two years targeting at expansion of 24% in 'twenty 'twenty four.
A further 35% next year.
Reaching over 160000 barrels per day of shale per action by 2025.
In order to achieve these goals we have already secured three additional really embrace totaling 15 breaks operating by ypa feedback on what that 80% of which will be allocated to oil wells.
Align to our strategy of prioritizing all development.
At the same time, we are moving forward with development of new blocks to the north and south of our calls have moving from one half in 'twenty 'twenty 323 halves in 'twenty 'twenty four to unlock the tremendous opportunity.
Horacio Marín: Based on that strength, we expect to turn into world-class shell players, beating our record in oil and gas production while at the same time becoming a relevant exporter of crude oil and energy by 2030. If we manage to do this, we will transform into a structural, positive, free cash flow generator with a strong financial profile, allowing us to continue investing in long-term opportunities in the future. With that vision in mind, we have recently launched the YPF 4x4 program.
The massive development of Vaca more of that the midstream capacity deal. They never came base in Miami the bottleneck.
To that end, we have already device and implemented a detailed program based on three main projects.
The trends and then I'm like I'm, what Dino Broche go unseated input and existing infrastructure.
The 10th and Indian oil by back on line in Midland and new pipe of around 150 kilometers from our oil core Hap to Boston and.
Horacio Marín: A four-pillar plan to deliver our vision. Four by four represents our ambition to deliver outstanding performance to our stakeholders, multiplying the value of the company in the next four years. Firstly, in the short term, we aim to focus on our most profitable business, Vaca Muerta, which is around twice as profitable as our next investment alternative. Secondly, we expect to actively manage our portfolio with a strict capital allocation discipline. In that sense, we are targeting a significant reduction in our exposure to conventional mature fields during this year.
The transcend the unpaved runway assume activity in may of 2023.
After more than 15 years.
Being idle.
I'm Martin or buy blind become operational last November offering and additional growth capacity or one country and 10000 barrels per day.
The project is allowing us and other producer debasing to detect the crude oil produced in the core operation of like I'm Walter to the trends and the M. Five land through exports to Chile, and further north into our Waterloo handy crucial refinery.
Horacio Marín: In the third place, in order to increase YPF resiliency, we will focus on maximizing upstream and downstream operating efficiency, aiming to become a world-class shell player while still improving our downstream march. Finally, our fourth strategy pillar relies on setting the basis for our next phase, the monetization of natural gas. To that end, we are planning the construction of an ambitious large-scale energy project, The Unique in Argentina, with one strategic partner, another Argentine gas player. Now I will go in more detail on each pillar in a few minutes. Our plan is already ongoing. We feel very comfortable with the initial steps achieved so far.
The second project involves more than doubling deals that involve.
Not the capacity Garen me think capacity is a while 300000 barrels per day after adding 75000 barrels per day through the initial if they deploy between 22 and detail and 2023.
Going forward. The next phases should be adding around 45000 barrels per day by the end of 'twenty four and the remaining 200000 barrel per day race by mid 'twenty five.
Horacio Marín: First of all, since the end of last year, we have been deploying an active oil price strategy to reduce the Gap Versus International Partnership. Secondly, in January of this year, we return to international capital markets.
Stalin and Alistair <expletive> save our Guizhou capacity of 315000 barrels per day.
Horacio Marín: Finally, last week, our Board of Directors approved a new plan for some of our mature conventional fields, thus initiating our Active Portfolio Management. At the end of the presentation, I will share with you more details about this program. Let me now walk you through the four pillars of our strategic outlook. Deepening our first strategy pillar, given the tremendous potential for increasing unconventional activity achieved so far, we aim at accelerating as much as possible our share production growth. In that regard, we are planning very ambitious production goals for the next two years, targeting a distribution of 24% in 2024 and a further 35% next year, reaching over 160,000 barrels per day of shell production by 2025. In order to achieve these goals, we have already secured three additional drilling rigs, totaling 15 rigs operating by YPF in Baca Muerta, 80% of which will be allocated to oil wells, aligned to our strategy of prioritizing oil development.
Finally, there are gone what the South project Gonna see.
In the construction of a new pipe and export telling me now connecting back on more debt to the Atlantic. The project is planned to several stages. The first is state of the Brushy will conduct no my companion to the entrance of the existing or the like net.
War by the fourth quarter of this ear.
The second half they expect it to be up and running by the third quarter of 2026, we'll have around 180000 barrels per day of at Guizhou capacity unnecessary states is affected by the end of 'twenty seven.
Adding an additional capacity of 180000 barrels per day.
So far wipe if gossipy guy the design competition process for the new pipeline or terminated and obtain their environmental pardon me for the first eight days. Additionally, the total capacity of deep approaches could be expanded.
More of that savings.
Same 800000 barrels per day via the pumping station.
Good means that there are solution of all water next embark on more of that.
Our second pillar active portfolio management in close increasing the share of shelf per action from around 50%.
Horacio Marín: At the same time, we are moving forward with the development of new blocks to the north and south of our core hub, moving from one hub in 2023 to three hubs in 2024. To unlock the tremendous opportunity of the massive development of Vaca Muerta, the midstream capacity of the Neuquén Basin must be the bottleneck. To that end, we have already devised and implemented a detailed program based on three main projects. The Trans-Andean and Bacamuerta North projects consisted in putting existing infrastructure of the Trans-Andean Oil Pipe back online and building a new pipe of around 150 kilometers from our oil core hub to Puesto Hernando. The Trans-Andean Pipeline resumed activity in May of 2023, after more than 15 years of being idle.
Around 80% of our total production.
Well it will allow us to reduce the average lifting cost by almost 50% by 2025 be serviced 2023.
We will focus on investments with high returns on ethics alignment with our core business.
Therefore, we plan to exit from some of our mature conventional fields.
We'll release around a $70 million in Capex do we reallocate the primary two shale oil activity.
This will result in higher profitability, our shale oil brush eggs.
Two times more profitable than conventional brushy.
And the repayment for you pretty well are lower than those related to conventional fields.
Besides the exit strategy for mature fields will represent a substantial decrease on our lifting costs.
Horacio Marín: And the Bacamuerta North Pipeline became operational last November, offering an additional growth capacity of 110,000 barrels per day. The project is allowing us and other producers at the basin to direct the crude oil produced in the core operation of Aca Muerta to the Trans-Andean Pipeline for export to Chile and further north into our Lujan de Cuyo refinery. The second project involves more than doubling the other valve and not the capacitor.
Following the same capital allocation discipline, we are reviewing our investment indefinitely companies to ensure the area that the cheap feed and profitability.
Therefore, we aim to focus our efforts on companies aligned with our ambition of Bayou Chenette Asia.
The third strategy pillar looks for four mics, maximizing offering and downstream efficiencies.
We met our increased shale oil production with improved efficiency to maximize our operational performance in order to become a world class shale play here.
Horacio Marín: Current mixing capacity is about 300,000 bars per day after adding 75,000 bars per day through the initial stage deployed between 2022 and 2023. Going forward, the next stages should be adding around 45,000 barrels per day by the end of 24, and remaining 200,000 barrels per day rest by mid-25, totaling an additional gross evacuation capacity of 315,000 barrels per day. Finally, the Vaca Muerta South project consists of the construction of a new pipe and export terminal connecting Vaca Muerta to the Atlantic. The project is planned for several states. The first stage of the project will connect Loma Campana to the entrance of the existing Odelbach network by the fourth quarter of this year.
This will improve the returns of our investment.
We have an excellent track record in fracking and drilling we plan to continue to enhance our industrialisation model and thus the increase our drilling and fracking speed, even farther therefore will blend two ways our industrialisation efficiency.
On three pillars, our demand decision off of operational decision, making through real time data analytics interaction of new technology and solution side.
Just directional tools and seem more frac techniques, and aetna recession of operational processes to reduce nonproductive Annick say cushion times.
As a result.
We'll see our valent spin in shale oil accelerating in our core have do more density.
Can he 10 meters or they are in our completion of phase E shale oil increasing to over 200 I'm sorry.
Horacio Marín: The second stage is expected to be up and running by the third quarter of 2026 and will add around 180,000 barrels per day of evacuation capacity. And the third stage is expected by the end of 2017, adding an additional capacity of 180,000 barrels per day. So far, YPF has begun the design competition process for the new pipeline and export terminal and obtained the environmental permits for the first.
She's Birdman Wolff by 2025.
As part of our downstream efficiency program, we are starting at the new efficiency and productivity was at our roofing area. Therefore, we have ongoing initiatives in order to improve our margin for Barbara suggest maximizing processing.
Production levels.
And radio in our it costs dietary ingredients in our labor productivity.
By revamping our top bins, we will reach the highest processing levels from the shale oil of like Armada since 2015, increasing foiled pricing capacity by 1.2 million cubic meter per year and reducing grew though.
Horacio Marín: Additionally, the total capacity of this project could be expanded to more than 700,000 barrels per day by adding pumping stations, which would mean that the resolution of all bottlenecks is back and forth. Our second pillar, Active Portfolio Management, includes increasing the share of shale production from around 50% to around 80% of our total product, which will allow us to reduce the average lifting cost by almost 50% by 2025, vis-a-vis 2025. We will focus on investments with high returns and strict alignment with our Core B. Therefore, we plan to exit some of our mature conventional fields and will release around $800 million in capex to be reallocated primarily to shale oil activity. This will result in higher profitability. Our shale oil projects are two times more profitable than conventional projects, and the repayment periods per wall are lower than those related to conventional fields. Besides the exit strategy for mature fields, we represent a substantial decrease in our lifting.
Imports.
Additionally, our moity ear brushy aims at reducing the sulfur component of our local foil production our language international has done them.
Also we are optimizing all of our operation refinery, who have already reveal of our global process map.
We are now reviewing each.
Cfe process with a continuous improvement mindset, particularly we are optimizing maintain is unplanned stoppages, we will increase crude oil processing by more than 10% and we are also reducing logistics and energy costs improving now.
Our machine per barrel by more than $3.
For our commercial area.
What Dino beaten on their fourth demand as.
They got the most prevalent toys.
We expect to maintain white P F leadership maximizing by using aeration by offering and in Peru, with Brinci, who digitalisation on segmentation, our four unless it that the key pillar set the foundation for the monetization of natural gas.
Horacio Marín: Following the same capital allocation, this... We are reviewing our investment in affiliate companies to ensure their strategy fits and profits. Therefore, we aim to focus our effort on companies aligned with our ambition of value generation. The third strategy pillar looks forward to maximizing upstream and downstream efficiency. We will match our increased shale oil production with improved efficiency to maximize our operational performance in order to become a world-class shell player. This will improve the returns of our investment, as we have an excellent draft rate. In fracking and drilling, we plan to continue to enhance our industrialization model, and thus to increase our drilling and fracking speed even further. Therefore, we plan to base our industrialization efficiency on three pillars. Automatization of Operational Decision Making through Real-Time Data Analytics Introduction of New Technology and Solutions, such as Directional Tools and SimulFract Techniques, and Standardization of Operational Processes, to reduce non-productive and execution time.
It's well known dialogue I'm one of the chest.
Word class exactly Sir.
Far exceeding local demand.
To capture this opportunity and look in our shale potential we plan to list the unique Argentinian LNG project as well.
The full project target.
Total processing capacity between 25, and 30 M. D. P E and should represent the key way to place back up more with the shale gas in the global market turning Ypa's in Argentina in the war class any T sport.
The first stage of the project aimed to bring to Argentina and existing flow DNA if at the facility.
With an initial capacity, we doing one and two am DPA by 2027.
The second day conceived in the contact June of two new floating LNG facility in representing a capacity for around eight to nine M D.
<unk> be a bite 2030, which if I. These effective by mid 2025 and requires embankment on Iran 200 million on a gross basis.
Horacio Marín: As a result, we will see our drilling speed in shale oil accelerate in our core hub to more than 310 meters per day and our completion speed in shale oil increase to over 230 stages per month, both by 2025. As part of our downstream efficiency program, we are targeting new efficiency and productivity goals at our refinery. Therefore, we have ongoing initiatives in order to improve our margin per barrel, such as maximizing processing and production levels and reviewing our cost structure, increasing our labor productivity. By revamping our toppings, we will reach the highest processing levels from the shale oil of Vaca Muerta since 2015, increasing fuel production capacity by 1.2 million cubic meters per year and reducing crude oil imports. Additionally, our multi-year project aims at reducing the sulfur component of our local fuel production, aligned with international standards. Furthermore, we are optimizing all of our refinery operations. We have already reviewed our global process map.
Finally, let me point out the importance of the once the project is completed with EMEA and addition of total export revenue of about $15 billion annually to Washington, Dina balance of payments.
We expect to own 25% of the total energy capacity bear in mind that this will be the unique Argentina LNG projects. We are working nowadays in order to lead this barrage at what he said that he can partner and engaging the rest of the industry.
Thus, we expect to.
To position on white beer as a global player.
Capitalizing on our watermark I'm one of the World class resources.
Before ending our presentation I would like to provide you with a quick glance of our 24 outlook.
In tariffs or production can see and that is too early to define the timing or the exit braun for our conventional mature field.
We cannot provide an overall average annual production guidance.
Nevertheless in 'twenty four we expect our shale oil production direct core and new remark over annual increase of 24 person.
Horacio Marín: And we are now reviewing each specific process with a Continuous Improvement Mindset. Particularly, we are optimizing maintenance and plan stops. We will increase crude oil processing by more than 10%. And we are also reducing logistics and energy costs, improving our margin per barrel by more than $3. As for our commercial areas, we continue focusing on the efforts that make us the customer's preferred choice.
Regarding the program the drive above let me share with you the key fee or <unk> or the strategy with.
We plan to exit thrown around 50 conventional blogs representing around.
90000 barrels of oil production per day, and around $6 5 million cubic meter of natural gas production, partly based on 23 fields.
That represents around 60% or the commission not really per action in Iraq.
Horacio Marín: We expect to maintain YPF leadership, maximizing value generation by offering an improved experience through digitalization and segmentation. Our four and last strategic pillars set the foundation for the monetization naturally. Well-known, Vaca Muerta has world-class gas, far exceeding local demand.
40% of the conventional natural gas production. Moreover, this blocks account in less than 1% of White P. F. 2023.
The.
A b D a.
And require no investment or around $800 million swing.
Switching to our cafes 24, we are targeting to invest around $5 billion during the year.
Horacio Marín: To capture this opportunity and lock in our shell potential, we plan to lead the unique Argentinian LNG project. Previously announced, the full project target, total processing capacity between 25 and 30 MTPA, should represent the key way to place VACA shale gas in the global market, turning YPF and Argentina into a world-class energy sport. The first stage of the project aims to bring to Argentina an existing flow-to-energy facility with an initial capacity between 1 and 2 MTPA by 2027. The second stage consists in the construction of two new floating LNG facilities, representing a capacity of around 8 to 9 MW.
This investment will once again be concentrated in our chain development well.
Where we plan to deploy $3 billion.
Within the assay investment we shall invest 75% is in our oil development.
They naturally you guys had said that he would like.
Father, Spain in the midterm.
Within our unconventional Capex plan will be allocated around 30% on facilities.
On the downstream segment, we will continue with the multiyear investment plan to revamp, our lifeblood and Johan the crucial refineries to comply the new fuel efficiency gains.
They show no our refineries to process lighter crudes.
The three main.
Missing oil projects finally in terms of EBITDA for 'twenty 'twenty four with legacy Kneehigh Ganesh can is back on the new yoga pricing strategy.
Cost efficiency.
Oil production growth.
However, the EBITDA recovery will not be enough to compensate the deployment of our aggressive plan or they will not entertain payment, resulting in negative free cash flow this year as.
Horacio Marín: TPA by 2030, which FID is expected by mid-2025 and requires investment of around $200 million on a gross basis. Finally, let me point out the importance of the once the project is completed, we estimate an addition of total export revenue of about $15 billion annually to Argentina's balance of payments. We expect to own 25% of the total energy capacity.
As we shall continue prioritizing finanza and prudency in a challenging macro environment full of uncertainties. We can meet the Monday and a leverage ratio below 2023 levers on a range of 1.5 and warm bind seven times.
Before ending our presentation and some being into Q&A, let me highlight the specific target by 2027.
On the upstream business, we expect to achieve a shale oil production of around 250000 barrel per day by 2027.
Horacio Marín: Bearing in mind that this will be a unique Argentinian LNG project, we are working now in order to lead this project with our strategic partner and engage in the rest of the year, as we expect, to position YPF as a global player, capitalizing on Aguarvaca Muerta's world-class research. Before ending our presentation, I would like to provide you with a quick glance at our 24 hours. In terms of production, considering that it's too early to define the timing of the exit program for our conventional mature field. We cannot provide an overall average annual production guide.
And we will do it by reshaping our portfolio, increasing from 50% to 80% our shale oil production based on the remarkable efficiency too.
So far the led to bake breakeven price below $40 per barrel in a constant currency, assuming a long term cost of capital and therefore, we expect our business model and get a basic focus on the monetization of Buckeye Martha oil.
To remain resilient Mount changing the overall dynamics on the downstream segment, we are targeting a challenging margin improvement of $33 per barrel by 2027, and Moreover, we plan to close the gap between local and international.
Horacio Marín: Nevertheless, in 24, we expect our shallow hyperaction to record a new remarkable annual increase of 24%. Regarding the program described above, let me share with you the key figures of the strategy. We plan to exit from around 50 conventional blocks, representing around 90,000 barrels of oil production per day and around 6.5 million cubic meters of natural gas production per day, based on 23 figures that represent around 60% of the conventional oil production and around 40% of the conventional natural gas production. Moreover, these blocks accounted for less than 1% of YPF 2023's total.
Prices, while maintaining our market share in fuels safe at around 50%.
On the gas and power business by 'twenty, 'twenty server, which should be ending the first phase of our global scale LNG plant.
I mean, our self for next phase of White P. F E strategy.
At the same time.
Meeting to reduce our carbon footprint by region at 25% of our annual she matrix from renewable resources.
Finally, let me remark that we are targeting this challenging goal very deicing three capital allocation discipline and active portfolio management, focusing in profitable and the strategic opportunities.
Horacio Marín: A, B, D, F, and require annual investment of around $800 million. Switching to our CAPEX 24, we are targeting to invest around $5 billion during the year. This investment will once again be concentrated in our jail development, where we plan to deploy $3 billion.
We are a silly me a focus I'm proud about ypa future I'm totally sure that we will achieve this ambition of 30 show Myfico a Max we are now open to take questions.
Okay.
[music].
Yeah.
Thank you I would ask you and thanks, everyone for listening to our presentation now we may start with the Q&A session.
Horacio Marín: Within the afternoon investment, we shall invest 75% in our oil development, as the natural gas strategy will have further Spain in the mid-term, and within our unconventional CAPEX plan, we will allocate around 30% of facilities. On the downstream segment, we will continue with the multi-year investment plan to revamp our La Plata and Lujan de Cuyo refineries to comply with the new fuel specifications. The adaptation of our refineries to process lighter crude and the frame main. Methane Oil Project. Finally, in terms of VTI for 2024, we expect a significant increase back on the new local pricing strategy, cost efficiency, and shale oil production growth. However, the AVTI recovery will not be enough to compensate for the deployment of our aggressive plan, a regular interest payment, resulting in a negative free cash flow decision.
Our first question comes from Scott <unk> from UBS.
Okay.
Okay.
Yes, Hello can you hear me yeah.
Yes, okay perfect.
Sure.
Thank you for the very.
The interesting presentation that you just provided with lots of details.
And pleasure to meet Euro six vehicles Massimiliano.
And all the IR team.
If I made by these states start to two questions here. The first one is.
Maybe what I'll see if you can share a couple of thoughts on on the relationship between the company and the controlling shareholder.
That has been I would say one of the main topics of attention from investors in most of the Latin American companies.
And of course why PFS.
Superb superb embedded in this process so it would like to understand them.
Horacio Marín: As we shall continue prioritizing finance and prudence in a challenging macro environment full of uncertainty, we commit to maintain a net leverage ratio below 20-23 levers on a range of 1.5 and 1.7 times. Before ending our presentation and jumping into Q&A, let me highlight the specific target by 2026. For the Afton business, we expect to achieve a shale oil production of around 250,000 barrels per day by 20
About the relationship between the company the management and the controlling shareholder.
Second one I'm not going to be too specific but.
You presented a very.
A broad blend with lots of details I would just like to know from your perspective.
What are the main challenges that you face over the next two years will be the year to date.
So the price adjustments on the downstream.
Bottlenecks on the offshore on the on the onshore production. So just trying to understand where you see the main challenges.
Horacio Marín: And we will do it by reshaping our portfolio, increasing from 50% to 80% our shale oil production based on the remarkable efficiency achieved so far that led to a break-even price below $40 per barrel in a constant currency, assuming a long-term cost of capital. Therefore, we expect our business model and key strategic focus on the monetization of Vaca Muerta's oil to remain resilient against changing global dynamics On the downstream segment, we are targeting a challenging margin improvement of $3 per barrel by 2026.
Within this discipline. Thank you.
Okay. Thank you Luis for your question.
<unk>.
First question is.
<unk> as you know is a major oil company in Argentina and is the leader of the energy sector.
Therefore has an important role in the energy sector.
All we have awarded all the governments all the all the states and all the unions and all industry.
And so I think we are working very very well.
Horacio Marín: Moreover, we plan to close the gap between local and international prices while maintaining our market share in fuel sales at around 50%. In the gas and power business, by 2027, we should be ending the first phase of our global-scale LNG plant, preparing ourselves for the next phase of YPF's strategy.
All this sector so far.
In this second question, you're saying what I am.
Well my thoughts.
What did I say barrels and this program is if youll see is like you.
So tight it's all die.
D C R.
We are focusing the this been this venture off the mature fields.
Horacio Marín: Committing to reduce our carbon footprint by reaching 25% of our energy matrix from renewable resources. Finally, let me remark that we are targeting this challenging goal, prioritizing a strict capital allocation discipline and active portfolio management. Focusing on profitable and strategic opportunities, We are extremely focused and proud about YPF's future. I'm totally sure that we will achieve this ambitious strategy. Show me Federico and Max, we are now open to take questions, www.adclinic.com. Thank you, Horacio. And thanks, everyone, for listening to our presentation. Now we may start with a Q&A session. Our first question comes from Luis Carvalho from UBS. Hello, can you hear me?
And also to build the debottlenecking in but more of them.
And what is the back of more of the sewer.
They've all got more vessel oil pipe.
Diesel by US I mentioned before it will be the final de bottleneck or was that more of that so all the industry will be.
Available to only invest and increase the production.
And.
Thank you I would ask you.
Thank you I would ask you I don't know Luis if we answer your questions.
Okay. So our next question comes from Bruno Montanari from Morgan Stanley.
Bruno.
You you can turn on your camera, if you won and and you can turn on your microphone and we can check.
Hello, everyone. Thank you for the presentation.
Opportunity.
Very interesting to see.
The details of the of the new strategic plan very exciting growth ahead, some changes with the divestments as well. So I have two questions. One I wanted to explore a little bit.
Horacio Marín: Yeah. Yeah. Okay, perfect. Thank you. Thank you for the very interesting presentation that you just provided with lots of details and the pleasure to meet you, Horacio, Federico, Maximiliano, and all the IR team. If I may, I'll start with two questions here. The first one is, maybe, Horacio, if you could share a couple of thoughts on the relationship between the company and the controlling shareholder. That has been, I would say, one of the main topics of attention from investors in most Latin American companies. And of course, YPF is very embedded in this process. We would like to understand the relationship between the company, the management, and the controlling shareholder.
The divestment efforts.
So if we think about say the next.
A few years through 2027 is there a financial targets you would expect to raise.
From selling the upstream Andy's affiliated companies. So any type of financial magnitude you could share with us would be super interesting I would use that.
I'd say its a lot of production youre willing to divest, but yet it's 1% of Aviv you don't only so are you seeing interest.
Horacio Marín: The second one, I'm not going to be too specific, but you presented a very broad plan with lots of details. I just would like to know, from your perspective, what are the main challenges that you face over the next two years? Will it be price adjustments on the downstream, bottlenecks on the offshore, and onshore production? So just trying to understand where you see the main challenges within this plan. Thank you.
From third parties to look at those assets and are those Argentine company. So what can they do better.
Would make the market.
Truck did through the assets.
And then the second question is about the LNG project.
I understand this is very long term and the bulk of the Capex is going to come in the outer years, but can you share with us your.
Expected IRR levels or investing in these project visa V investing in your core shale. So wanted to try to understand what the differential returns are.
Horacio Marín: Okay. Thank you, Luis, for your question. First question: YPF, as you know, is a major oil and gas company in Argentina and is the leader in the energy sector. DR4 has an important role in the energy sector, and we always work with all the governments, all the states, all the unions, and all the industry.
On LNG, Thank you very much.
Okay.
Thank you Mike for the question. The first one is a little longer.
Yeah.
Horacio Marín: And so I think we are working very hard and very well with all the sectors so far. In the second question, you are saying what I am, what my thoughts are. One, there are several, and this program is, if you see, is like a tie between all the candidates. This year, we are focusing on the disbenture of the mature fields and also building deep bottlenecking in Baca Muerta. What is the Vaca Muerta Sur, the Vaca Muerta Sur Oil Pipe?
But they kind of stay for for the <unk>.
For the the <unk>.
In mature fields.
We think that we are going to finish the proceeds due to the this year.
There are.
From now on.
We see a lot of interest in Argentina for different.
Morris Moore gum, but in that way.
And it will be a good process.
And they will be based on currency with the bank.
Horacio Marín: And with this oil pipeline, as I mentioned before, it will be the final bottleneck of Vaca Muerta. So all the industry will be available to only invest in and increase production, and Thank you, Horacio. Thank you, Horacio.
And we envision that this year, we will finish the all the all the process.
And that will be very important for <unk> to increase our brokerage double by by dollar.
And the second question in and then he IRR I can't know Gavial ecosystem. This is.
I can tell you that is very competitive in the war wireless scale.
Horacio Marín: I don't know, Luis, if we can answer your question. Okay, so our next question comes from Bruno Montanari from Morgan Stanley. Bruno, you can turn on your camera if you want, and you can turn on your microphone so that we can check. Hello, everyone.
That is the only thing done.
I apologize, but I cannot tell you exactly the number.
The other thing that I think is important for you to know.
We call the origin, Daniela and cheaper okay.
Because it will be done by all the Argentine industry. So we will get a good is a scale economically scale in all the infrastructure and all the all the investment so.
Horacio Marín: Thank you for the presentation. Thank you for the opportunity. And it was very interesting to see the details of the new strategic plan, very exciting growth ahead, and some changes with the divestments as well. So I have two questions.
That's why we make these kind of frozen.
Horacio Marín: One, I wanted to explore a little bit the divestment effort. So if we think about, say, the next few years through 2027, is there a financial target you expect to raise from selling the upstream and these affiliated companies? So any type of financial magnitude you could share with us would be super interesting.
<unk> Big approach. It then why based on money, but equally for all the Argentine gas player.
So we didn't blow the the efficiency and the internal rate of return for everybody.
Thank you I would ask you.
Thank you so much at ICR. Thank you Bruno for the question. Our next question comes from why is that a service you from Santander.
Horacio Marín: I found good news that there is a lot of production you're willing to divest, but yet it's 1% of EBITDA only. So are you seeing interest from third parties to look at those assets? And are those Argentine companies, what can they do better that would make the market attracted to the asset?
Why is that you can if you want you can turn on your camera.
And your microphone so that we can hear you.
Oh, we still cannot hear you we contest.
We don't hear you I don't know what's coming.
Okay.
Okay, sorry, we may and we okay no.
Horacio Marín: And then the second question is about the LNG project. I understand this is very long term and the bulk of the CAPEX is going to come in the later years, but can you share with us your expected IRR levels for investing in this project vis-a-vis investing in your core shale hubs? So I wanted to try to understand what the differential of returns is on LNG.
Yes.
Oh, yes, sorry.
Okay, sorry, thank you for the presentation I'm very comprehensive thank you for taking my questions.
Probably dig in deeper details.
What else you saw related to the exiting the mature fields.
Uh huh.
I, probably missed the details but in your comments about.
Horacio Marín: Thank you very much. Okay, thank you very much for the question. The first one is a little longer.
This is partnering with new companies doesn't mean that the wire will get out.
Italy from the fields.
Horacio Marín: But I can explain for the..., for the mature field. We think that we are going to finish the process this year, and there will be from now on.
Only the Capex will be done by partners.
Secondly.
This plan entails returning blocks to the provinces.
Horacio Marín: We see a lot of interest in Argentina for different, more small companies than YPF, and it will be a good process, and there will be very much transparency with the bank, and we anticipate that this year we will finish all the processes. And that will be very important for YPF to increase our profitability by dollar. The second question on LNG, IRR, I cannot give you because this is, I can tell you that it's very competitive on a worldwide scale. That is the only thing, and I apologize, but I cannot tell you the exact number.
Because there were news in the <unk>.
In the media regarding a place of Govs seen within.
With an access code bunnies for white specifically.
Leaves the.
The blocks such like that.
Such in jail for example.
It might know mental liability go all sorts of things.
We should take into account.
And this $800 million couple of releases for the next few years I mean, it's hundreds per year I missed that.
Horacio Marín: The other thing I think is important for you to know that we call the Argentine LNG Project because it will be done by all the Argentine industry. So we will get a good scale, economical scale in all the infrastructure and all the investment. So that's why we make this kind of project a bigger project than YPF can manage, but it will be for all the Argentine gas players. And so we improve efficiency and the internal rate of return for everybody. Thank you, Horacio.
Such as the one sorry, the last part of my question on Capex is downstream $900 million in 2024.
Is that that should be extended over the year. So this the last part of the reality that you have been making.
Since last year.
That's it for myself.
Okay. Thank you very much for for your question Walter.
I will pass to two Max.
Horacio Marín: Thank you so much, Horacio, and thank you, Bruno, for the question. Our next question comes from Walter Chiarvesio from Santander. Walter, if you want, you can turn on your camera and your microphone so that we can hear you. Oh, we still cannot hear you. If we can test it, we don't hear you. I don't know what happened.
So you might see.
The only thing.
So are you that this is not like him.
Our main floor or is it.
Going out of the well.
Of the areas or the fields okay.
It will be the different way also there is something that you are asking.
We are in.
All we.
Discussing with the governors in the year on year.
And we are embedding Bailey would shapes.
Horacio Marín: Okay, so we may continue. Are we okay now? Yes, sorry.
The well you read in the newspaper is while you're in newspaper Bud light.
Horacio Marín: Okay, sorry. Well, thank you for the presentation. It was very comprehensive. And thank you for taking my questions, probably digging deeper into the details.
They could be different ways too.
They go out of the well, they're yeah, they're equally.
Selling some on also.
I don't know the name in English.
Horacio Marín: Two things. One is related to exit in mature fields. I probably missed the details in your comments, but this is partnering with new companies. It doesn't mean that YPF will get totally out of the fields, only that CAPEX will be done by partners. Secondly... This plan entails returning blocks to the provinces because there were news in the media regarding complaints from governors saying that they wouldn't accept that companies, or YPF specifically, leave the blocks such as that. And that entails, for example, environmental liability costs or things that we should take into account. And this $800 million CAPEX release is for the next year. I mean, it's $800 million a year.
Regarding reverting is no reverting because at some for is to some.
Robbins.
Robin.
It always come Bunny.
And the other that you say that the we take into account everything in the sell in okay.
What are you all on the way to rollout is a clean exit.
So now for more of these daily bus to Max Thank you Joshua.
Yes, definitely we are still we are doing the pre work.
And that's where you work, where you're going to you're going to hire a bank. We are in the process of finishing that up now.
We will know who we are going to be working with.
Within the next one.
One or two weeks.
Our expectations are to go out to the market.
Horacio Marín: I missed that. That's on one side. And the last part of my question on CAPEX is downstream, $900 million in 2024. Is that supposed to be extended over the year? So this is the last part of the revamping that you have been making since last year. That's it from my side.
By the end of March.
During the third quarter, we should have offers we're going to test the market. We should have the offers and like or as you mentioned, we are want to close this started shot transactions within.
Horacio Marín: Okay, thank you very much for your question, Walter. And I will pass it to Max. So you make it as a big detail.
This year.
So with that said I think that which blocks, we going to sell it to the market or if at all.
Horacio Marín: The only thing I will answer you is that this is not like farming or going out of the areas or the fields. OK, and it will be a different way. Also, there is something that you are asking that we are always discussing with the governments and the unions, and we are in very, very good shape, and what you read in the newspaper is what you read in the newspaper, but it's like there could be different ways to go out of the other areas there could be, selling some, and also, I don't know the name in English of this. Reverting. Reverting, reverting.
Other players in which we're going to revert back to the provinces. It's confidential.
But.
But yeah.
Yeah.
Like whereas you commented, we're going to seek either a clean exit when we transferred to other players or are we going to negotiate with the province.
In order to.
Comply to whatever.
Outstanding.
Components of commitment we have.
Thank you I'm, sorry, I don't know if there was another question yeah. So regarding the downstream capex.
I think that yes. This year, we're still finishing up.
Horacio Marín: It's not reverting because it's transferred to some province company, and the other that you say that we take into account everything in the selling process. Okay, this was our goal, and the way to go out is a clinic. So now, for more detail, I pass to Max. Thank you, Horacio. Yes, definitely.
The big investments that we are doing in our two main refineries or to adopt those to the low sulphur low sulphur content and this are we going to finish by the end gasoline by the end of this year and in gas and diesel by then but by next year.
Horacio Marín: We are still doing the pre-work. And in that pre-work, we're gonna, we're gonna hire a bank. We are in the process of finishing that up. And we will know who we are going to be working with within the next one or two weeks. Our expectations are to go out to the market by the end of March. And during the third quarter, we should have offers.
And.
And also adapting our refinery to the new reality, which is the crude oil back on where it's growing so we need to be prepared in order to be efficient in our refinance we need to be prepared to refine lighter crude oil so.
That's why the level of Capex is still.
At those levels that you commented this year.
Horacio Marín: We're going to test the market. We should have offers by tomorrow. And like Horacio mentioned, we want to close these transactions within this year. So with that said, I think that which blocks we're going to sell to the market or other players and which we're going to revert back to the provinces are confidential, but, as Horacio commented, we're going to seek either a clean exit when we transfer to other players or we're going to negotiate with the province in order to comply with whatever outstanding compromis Thank you. Sorry, I don't know if there was another question. Yes, regarding the downstream topics. I think that, yes, this year we're still finishing up.
But sometime down the road in the next day it should.
It should go lower to the 500 million.
Per year.
Not including the midstream efforts as you asked what else you commented that a couple of minutes ago during the presentation.
We can we are still in the process of Debottlenecking back on what the end those bringing those additional capex at fortune.
And particularly in back on one vessel and they become one of our school system.
Thank you I would ask Jan Thank you, Matt and thank you Walter for the question. Please keep in mind that if we have some trouble with your microphone. The operator will help you. Meanwhile, we will move on to the next question and come back to your question. So don't worry about it and our next question comes from Danielle <unk>.
BTG Pactual Danielle you may turn on your microphone and if you're one youre kind of guy.
Thank you Margherita.
Horacio Marín: The big investments that we are doing in our two main refineries are to adapt those to low sulfur content, and we're going to finish the conversion of diesel by the end of this year and gas and diesel by next year. And also, to adapt our refineries to the new reality, which is the crude of Bacamorta. It's growing.
Great to meet you around <unk>.
Jonathan.
Okay great.
I have a couple of questions.
One is regarding the very comprehensive strategic plan that you just announced.
And I wanted to know if we.
And that plan, if you are including inorganic growth in Vaca <unk>.
Horacio Marín: So we need to be prepared in order to be efficient in our refineries. We need to be prepared to refine lighter crude oil. So that's why the level of traffic is still at those levels that you commented on this year. But sometime down the road, it should go lower to five hundred million dollars per year.
I'm being more specific I would like to know if you were taking a look at the assets not ex Chinese currency. These policy mean, Banco Marcos so.
So that will be my first question.
My second question is related to the Debottlenecking price.
You mentioned <unk> many projects to evacuate alright from bank of America today, it's not that sure eventually.
Horacio Marín: That's not including the midstream efforts, as Horacio commented a couple of minutes ago during the presentation. We're going to we are still in the process of bottlenecking Bacamorta and that those bring those have an additional capex effort. And particularly in Bacamorta and the Bacamorta system.
The increase the exports.
Yeah.
And I wanted to know what does it mean.
Thank you and now youre going to face when trying to deploy all of these new infrastructures.
Connected to this you Didnt mentioned and now the project back on where does the sewer.
Horacio Marín: Thank you, Horacio. And thank you, Max. And thank you, Walter, for the question. Please keep in mind that if we have some trouble with your microphone, the operator will help you. Meanwhile, we will move on to the next question and come back to your question. So don't worry about it.
Literally this week, you know that all the ball or the body is announcing the.
The triply calculate and I wanted to know if those two brands are complementary.
We are competing with each other or if both are going to happen.
And just a third one if I may squeeze can you share with us what is the expected trajectory of your EBITDA generation sonar.
Horacio Marín: And our next question comes from Daniel Guardiola from VTJ PAC-12. Daniel, you may turn on your microphone and, if you want, your camera. Thank you, Margarita. And great to meet you, Orazio Federico Ricciardo.
The generation for the next three or four years.
He says.
Okay. Thank you Daniel for.
Your three questions two questions.
Okay.
The first point.
Sorry, I I looking for or your.
Horacio Marín: Okay, great. I have a couple of questions. One is regarding the very comprehensive strategic plan that you just announced. And I wanted to know if, within that plan, you're including inorganic growth in Vulcan World. And being more specific, I would like to know if you're taking a look at the assets that Exxon is currently disposing of in Bacamorza.
Your video and they will now look at the deal that you see.
Okay. So the our kids meal.
Okay.
The first question.
We are here all the management, the new and all the management that we are here.
Our goal is to maximize the value of all this year.
Therefore.
We are growing embarked on what the organic or inorganic inorganic cause more internal rate of return than the organic.
Horacio Marín: That would be my first question. My second question is related to the bottlenecking price that you mentioned, Horacio. There are many projects, you know, to evacuate oil from Vaca Muerta to the Atlantic shore and to eventually, you know, further increase the exports of oil. And I wanted to know, what are the main risks that you think, you know, you're going to face when trying to deploy all these new infrastructures? And connected to this, you did mention the project Vaca Muerta Sur, but I learned this week that Old El Valle is announcing the triplicar project. And I wanted to know if those two projects are complementary, if they are competing with each other, or if both are going to happen. And just a third one, if I may, Chris, could you share with us what is the expected trajectory of your epigeneration, total epigeneration, for the next three, four years? Sponsored ADR Class D, OK, thank you, Daniel.
We're going to follow that in Peru.
The profitability of our shareholders that is the first question the second question.
How about deep de bottleneck.
And you'll see all that about three big on Mike.
Mike on what vessel they work on more of the store.
Either one.
But we are going to follow and there are all the industry. There is follow us because he said big time line they can improve the capacity.
To the.
So somebody per day I know so it will be in a new board now we can sell the vessel of 2 million barrels per day, so reducing the discount of the of the crude oil for export. So we are focusing on this project.
The third question and thank you for that question because if not.
So they are equal or not.
So I bust through Saturday.
Oh yeah.
Hi, Danielle on EBITDA.
Horacio Marín: Your three questions, not two questions. Okay, the first question I'm sorry. I'm looking for your video, and I was not looking at the video that you see me in. Okay, so they are kidding me here.
We expect D C to be stronger than last year.
I can see it in the.
Increases in prices and also considering that.
Within this year, we should have I know at all cost.
Horacio Marín: Okay. In the first question, we are here, all the management, the new and all the management that we have been here. Our goal is to maximize the value of all the shareholders. Therefore, we are growing, back and forth, organic or inorganic.
Sure you can dollar terms lower than than last year.
I'd.
As I said, we are expecting a stronger EBITDA for 2024.
Thank you <unk> and thank you for that vehicle. Our next question comes from <unk> from <unk>, either you may turn on your microphone and if you want your Colorado as well.
Horacio Marín: If the inorganic has a higher internal rate of return than the organic, we are going to follow that to improve the profitability of our shareholders. That is the first question. The second question was about the bottleneck. And you see other VALTs, TRIPLICAR, and VACA Muerta Sur.
Okay. So we may move on to the next person and then come back together.
Our next question comes from Marina America from Lapping Securities Martina you May turn on your microphone.
Horacio Marín: VACA Muerta Sur is the one that we are going to follow, and there are all the industries that follow us because it's a big pipeline. They can improve the capacity to 800 or 1,000 barrels per day.
And if you're one your comment as well.
Hi. Thank you. Thank you. Thank you for the presentation and as for.
Okay.
You can hear me.
Horacio Marín: And also, it will be in a new port that we can sell the vessel carrying 2 million barrels of crude oil per day, so reducing the discount of the crude oil for export. So we are focusing on this project. The third question, and thank you for that question, because if not, Federico was not talking so far, so I passed on Federico. Now, Kai Daniel, on the BDA, we expect this year to be stronger than last year, considering the increases in prices and also considering that within this year, we should have an overall cost measured in dollar terms lower than last year. But, as I said, we are expecting a stronger BDA in 2024. Thank you, Horacio.
Yes, yes, yes, okay.
Okay. Okay, Okay, Hi, I have two questions. So one and the first one even though the conventional assets currently accounts for roughly half of it might be a squirrel traction and then they would they would eventually be an.
Exiting your portfolio what change she has seen the supply stretchy the refineries after it.
Divestment.
And the second one is considering that the peso has strengthened over this first quarter, where the prices at the pump stand in terms of import parity and what trends are you observing costs.
Yeah.
Yes.
Horacio Marín: And thank you, Federico. Our next question comes from Guido Bisocero from Alaria. Guido, you may turn on your microphone and, if you want, your camera as well. OK, so we can move on to the next person and then come back to Guido.
The first question I think is.
The production of the convention.
The mature field is.
Is not sick.
60% of the convention I know, 60% of all liberal election.
And we will find out who they would all hope.
Horacio Marín: Our next question comes from Marina Mertens from Latin Security. Marina, you may turn on your microphone. And, if you want, your camera as well.
<unk> got more of that.
You will see in the future that we surpassed.
In the future and I'll say one.
Easily double.
Production.
Horacio Marín: [inaudible] Can you hear me? Yes, go ahead. Okay, okay, perfect. Hi, I have two questions. So one, the first one, given that conventional assets currently account for roughly half of YPF's production, and then they would eventually be exiting your portfolio, what changes will there be in the supply strategy of the refineries after this divestment? And the second one is, considering that the peso has strengthened over this first quarter, where do prices at the pump stand in terms of import parity?
The second question remember when you do the there is a reduction in the.
In the.
The churn rate you are talking about the the blue or the CCL. Yeah. There is no radius is increasing 2% per month.
So there.
There is.
A change in that in that way.
The.
We are as I mentioned in the presentation, we are close.
We envision that during this year, we will reach the international markets.
<unk>.
With the I don't know I've seen they something more you don't get them all the operating costs, if I know Ron Okay, Yes, yes.
Horacio Marín: And what trends are you observing in cost? The first question I think is, The production of the convention in the mature field is 60% of the conventional, not 60% of all the production, and we will balance with the growth of Vaca Muerta. You will see in the future that we have surpassed, in the future, I'm not saying when, easily that product. The second question, remember when you told me that there is a reduction in the chain rate; you are talking about the blue or the CCL.
India, but they do cause if you'll see a reason.
Year by year.
We're into reduce.
But the PUC.
Next year.
We are going out of the mature field.
The resurrection of the reaction of course, everybody will be.
Important I would say.
Thank you <unk>.
Thank you Martina for the question. Our next question comes from David <unk> of Wednesday.
Horacio Marín: The other is not reducing; it is increasing 2% per month. So it's not that there is no change in that way. We are, as I mentioned in the presentation, we are closed, and we anticipate that during this year, we will reach the international market and with the I don't know, I think there is something more you're talking about the operating cost. If I run okay, yes, okay, in the operating cost, if you see average year by year, we are going to reduce it, But if you see, next year... When we are going out of the mature field, the reduction of cough per body will be important, I would say.
David You May turn on your microphone.
And also if you want your camera.
Can you hear me.
Yes, we can hear you.
Perfect well.
Thank you for having me most of my questions have been answered, but I have one regarding.
Maybe the previous one.
Uh huh.
Prices against input commodity are you expecting to are you targeting a gap to the <unk>.
Joining me for.
That's the first question and the second one is one of the stages you need to follow.
None of this will be LNG projects to be a reality, so let's say like was the.
The different steps that becomes a reality.
Absolutely. Thank you.
Horacio Marín: Thank you, Horacio, and thank you, Marina, for the questions. Our next question comes from David Pardo of Puente. David, you may turn on your microphone, and also, if you want, your camera. Can you hear me?
I didn't understand that the reunion niggle skier Samsung the gang.
Who didn't hear very well between the price. It was one one war like with him.
He was asking if you are targeting a specific gap.
Horacio Marín: Yes, we can hear you. Perfect. Well, thank you for having me. Most of my questions haven't been answered, but I have one regarding, maybe the previous one, prices against impropriety. Are you expecting to are you targeting a gap to the impropriety of train journeys for? That's the first question. And the second one is, what are the stages you need to follow in order for the LMG project to be a reality, let's say, like what are the different steps that it takes to become a reality? That's all.
Yes.
Does he will be a lot of commercial now.
Commercial.
All his seed Saudi I cannot give you because you've not the other ryzen and the other.
Action, they would know what it would be our target.
Yeah.
Yeah.
Focus into rate.
During the year.
The extra body they will grow because.
<unk> is the.
Is it for the group.
Now what our feeling is the import body umbrella.
Horacio Marín: Thank you. I didn't understand at the beginning; it was here, something that I couldn't hear very well between the prices. There was one word I couldn't hear.
Our show will be to increase for all this year.
The margin or the.
Find that this is our show.
Horacio Marín: I think he was asking if you are targeting a specific gap. That will be our commercial, Policy. Sorry, I cannot give you that because, if not the other, Ryzen and the other.
Sorry sure.
It's why we are here.
In the in the LNG Dale I will pass to two months that he was involved with loved in the in the Brushy.
Thank you Alicia.
Horacio Marín: Action, they will know what our target is, and we are focusing on achieving during the year the export parity accrued because Argentina is the, is supporting the group. And now what our ceiling is the import parity of product, and our show will be to increase, for all the shareholders, the margin of the refinery. This is our show, a sorry show, and that's why we are here.
So the next steps in the LNG project.
We are moving into their feet stage, we need to develop the engineering there are several packages of engineering so.
During most of this year and most of us.
Yeah part of next year, we can be working on the engineering.
Our targeting to a Friday, the first stage of a project, but meet our second half of 2025.
Horacio Marín: And on the LNG detail, I will pass to Max that he was involved a lot in the project. Thank you very much. So, the next steps in the LNG project are that we are moving into the feed stage. We need to develop the engineering. There are several packages of engineering.
In parallel there are many things that need to move forward.
Of course, we are going to be open for additional partners.
Also we are going to be working on the project financing.
And in parallel.
Awesome.
There's a there's a lot of it.
Horacio Marín: So, during most of this year and most of, yeah, the big part of next year, we're gonna be working on engineering. We are targeting FID, the first stage of our project by mid or second half of twenty twenty five. In parallel, there are many things that need to move forward.
Also permitting and environmental.
We will reach that needs to be performed so I think that does it all of this is what we're going to be working on the next year and a half 18 months or so.
Thank you I would ask you and Max.
And since we are we have been extending some minutes more we are going to take the last question. So the last question will come from Leo Mark on this from Bank of America, Neil You May turn on your microphone and.
Horacio Marín: Of course, we're gonna be open to additional partners, and we're also going to be working on project financing and, in parallel, there's a lot of permitting and environmental pre-works that need to be performed. So I think that all of this is what we're going to be working on for the next year and a half or so. Thank you, Horacio, and Max. And since we have been extending the time for some more minutes, we are going to take the last question. So the last question will come from Leo Marcondes from Bank of America. Leo, you may turn on your microphone and, if you want, your camera.
If you want your kind of.
Hey, guys. Thank you can you hear me.
Yes, yes. Thank you.
Okay. Okay. Great. So my first question is regarding the lifting cost you guys showed draws that you.
You expect a reduction in costs.
Conventional assets to $16 from $25 per barrel right.
So how do you guys expect should decrease.
This lifting cost.
Potential divestment in.
Keep the.
Best conversion of assets or do you expect you should sell your entire.
Horacio Marín: Hey, guys. Thank you. Can you hear me?
Horacio Marín: Yes, we can hear you. Okay. Okay, great. So my first question regarding the lifting costs, you guys showed to us that you expect a reduction in lifting costs at the conventional assets to $16 from $25 per barrel, right? So how do you guys expect to decrease these lifting costs via potential divestment and keep the best conventional assets? Or do you expect to sell your entire conventional asset base?
Your entire conventional.
Asset base.
My second question here is more of a follow up here on the LNG question.
Just just true true understood, maybe a bit better.
We understand that you guys are.
You'll need the regulatory framework.
So you guys can move on with the RFID and so on right.
But.
Do you guys have already started discussing this with the government for something ideas or.
Is it still a very new show initial phase so.
So far thank you.
Okay.
But to Mike's, but first I will tell you that.
Horacio Marín: My second question here is more of a follow-up on the LNG question, just to understand maybe a bit better. We understand that you guys still need a regulatory framework so you can move on with the FID and so on, right? But, Do you guys have already started discussing this with the government or something like this, or is it still in the very initial phase so far? Thank you. Okay, I will pass this on to Max.
Action in.
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Okay.
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<unk>.
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Horacio Marín: But first, I will tell you that the reaction in, Sponsored ADR Class Sponsored ADR Class, Good. Hello. Okay, I'll resume. I'll start over. Sorry for the technical inconvenience. But, Horacio, you put it together very well. It's a combination.
Hello.
Okay, Rajeev I'll start over.
Sorry for the technical inconvenience.
But what I'll show you put it together very good it's a combination first the impact of of selling mature fields that doesn't mean that we're not going to have a conventional projects. We just going to keep the ones I wouldn't say, it's the better ones but.
Horacio Marín: First, the impact of selling the mature fields. But that doesn't mean that we are not going to have conventional projects. We're just going to keep the ones, I wouldn't say the better ones, but the most profitable. And also, it's not only about profitability but also materiality. We're going to keep those projects, and we're going to develop those we think we can add value to, and also our hard work and efficiency in our unconventional field. So it's a combination of those two factors.
Profit double and also it's not only about profitability, but also materiality.
Are we going to keep those projects and we are going to develop.
Those we think we.
We can add value.
And also.
Hard work and efficiencies in our unconventional field. So it's a combination of those two factors.
Horacio Marín: Regarding the, of course, yes, thank you for asking. I forgot when I was talking before about what we were going to be working on in parallel. Of course, the bill, sorry, the LNG project needs long-term visibility, and long-term visibility means that, Sorry, it means long-term visibility and also a tax package that's competitive at a global level. The bill that the government is working on, I think it provides for both, and definitely this, we will need to have it in place to have FID. Otherwise, it's going to be very challenging to have a profitable project. Also, it is not necessary to comment that project financing would be off the table, I think, if we cannot provide for this long-term visibility. But there is, like, an agreement between all the governments and also the national government to pass those laws to increase investment in Argentina. And LNG, I can tell you that it's like... The project of all the politicians, all the companies, for Argentina.
Regarding the of course, yes. Thank you for asking I forgot when I was at.
Talking before about what are we going to be working on in parallel of course.
The bill.
Sorry, the LNG project needs long term visibility.
And long term visibility means.
That's it.
Sorry, it means long term visibility and also tax bucket just that it's competitive at the global level.
The bill that the government is working on.
I think it provides four for both.
And definitely this we will need to have it in place.
Javier <unk>, otherwise, it's going to be very challenging to have a profitable project also.
Not not necessary to commence that project financing would be off the table I think if we cannot provide for this long term visibility, but there is like now getting them between all of the government.
Also the the Gaba and that shall I go over into two bus those low to increase the investment in our Indiana on LNG I can tell you that this like.
The proceeds or all.
All the OLED.
All in all the company for Argentina. So we are positive we will end up with a good result.
Horacio Marín: So we are positive that we will end up with a good result. Thank you so much, Max and Horacio. We apologize, everyone, for the technical inconvenience. And thank you for joining us for today's presentation. Keep in mind that we have uploaded the full, complete presentation on our website, which you may find there. And thank you for joining us today. Please, we can close today's presentation. Thank you so much. Have a good day! Thank you for watching!
Thank you so much Mark I know last year, we apologize everyone for the technical inconvenience.
And thank you for joining today's presentation keep in mind that we have a loaded the full complete presentation at our website you may find there.
Thank you for joining today please.
We can we can close todays presentation. Thank you so much have a good day.
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