Q3 2024 YPF Sociedad Anónima Earnings Call
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Speaker Change: Hello, Greetings and welcome to the <unk> third quarter 2024 earnings webcast presentation. All participants are in a listen only mode at this time.
We will conduct a question and answer session to ask a question simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, just press star one.
Speaker Change: As a reminder, this conference is being recorded.
At this time I would like to turn the conference over to Mark <unk> <unk> IR manager. Please go ahead.
Speaker Change: Okay.
Good morning, ladies and gentlemen, this is margarita children Ips IR manager thank.
Speaker Change: You for joining us today in our third quarter 2024 earnings call.
Speaker Change: This presentation will be conducted by our CFO, Mr affiliate, equilateral Davina and our strategy new businesses and controlling Vice President Mr. Massimiliano Westin.
Speaker Change: During the presentation, we will go through the main aspects and events that explain the quarter results.
Speaker Change: Then we will open the floor for Q&A session together with our CEO Mr. Raphael Muddied.
Before we begin please consider our cautionary statement on slide two.
Speaker Change: Our remarks today in answer to a question that 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.
Speaker Change: Our financial figures are stated in accordance with Ias forest, but during the presentation, we might discuss some non <unk> measures such as adjusted EBITDA.
Speaker Change: I will now turn the call over to fill that equal. Please go ahead.
Speaker Change: Thank you, Mike and good morning, everyone.
Speaker Change: After todays presentation by describing the main highlights of Q3 2024.
Speaker Change: First of all we achieved a strong level of EBITDA, 13% up sequentially and even high at 47% up annually. Despite the recent brand contraction and the extreme weather conditions, but I wouldn't yet during July that affected our conventional production.
Speaker Change: This positive result.
Speaker Change: The company's dedicated efforts since December and along this year to fully converged local fuel prices to international pilot.
Speaker Change: In parallel with our focus on production efficiencies.
Speaker Change: Asset back I'm glad that where we can now share improve process and efficiency metrics across all the businesses.
Speaker Change: Both of these we produced 36% more shallow than Q3 last year now representing almost half of our total production.
Speaker Change: Very important and in language. These international expansion, we became the largest oil exporter in the country exporting roughly 40000 barrels per day.
Speaker Change: We also made progress in the development of the key infrastructure projects, but more to the south pipeline also known as <unk> that <unk> is leading acid producers consortium export initiative.
Speaker Change: Also we advanced further with the end of this project and Max will share further details later.
Now, let's move on to the quarter's result.
Speaker Change: Revenues reached $5 3 billion, 7% up sequentially, mainly driven by higher seasonal sales of gas as well as growing oil exports to Chile, and better cube prices, which was boosted by higher gasoline demand.
Speaker Change: These effects were partially offset by contraction in diesel.
Speaker Change: And oil prices in addition to lower conventional production due to our Patagonia separation is affected by the extreme climate and deal earlier.
Speaker Change: Rose.
Speaker Change: Internationally revenues increased by 18%, mostly on the back of a rebound in fuel prices plus even higher oil exports, partially upset by lower fuel demand, which was exceptionally high last year in view of reduced prices.
Speaker Change: Adjusted EBITDA totaled almost $1 $4 billion, 13% up sequentially, primarily due to the higher seasonal sales of gas.
Speaker Change: We hired a shale hydrocarbon production.
Speaker Change: Fuel prices, partially offset by higher costs related to Patagonia us weather conditions and cost inflation, besides lower export prices linked to Brent.
Internally they.
Speaker Change: The increase was remarkable growing adjusted EBITDA by 47%, mainly boosted by the significant recovery of fuel prices. In addition to 29% expansion in shale hydrocarbon output combined with lower imports of fuels.
Speaker Change: Partially offset by higher costs and the weather impact mentioned before.
Speaker Change: Net result.
Speaker Change: <unk> significantly posting roughly $1 5 billion.
Speaker Change: Three times the previous quarter, mainly due to a positive income tax on the back of lower devaluation expected for tax assets, so decreasing future tax payable.
Internationally. Besides this impact the <unk>.
Speaker Change: Increase was even higher since Q3 last year.
Speaker Change: Affected by an impairment charge in natural gas assets.
Speaker Change: Total hydrocarbon production average 559000 barrels of oil equivalent per day, rising, 4% sequentially and 8% into annually driven by solid performance in our shale operations, which is our core business and focus since last December.
Speaker Change: This was partially offset by lower conventional output due to the conditions in <unk>.
Speaker Change: In terms of investments, we deployed $1 4 billion, 13% up sequentially, mostly on the back of <unk> activities in the upstream to ramp up shale oil production.
Speaker Change: Annually Capex was 7% down mainly due to last year inflationary context no.
Speaker Change: Currently 73% of the quarter's investment was concentrated in the upstream mostly for shale operations.
Speaker Change: On the financial side, we reported negative free cash flow of $173 million.
Speaker Change: Although the adjusted EBITDA was similar to the deployment of our Capex Q3 was mainly affected by higher debt service payment, partially upset by a growing activity in upstream business temporarily increasing accounts payable as.
Speaker Change: As a result, we maintained net debt at seven 5 billion.
But improved net leverage ratio to one five times fully aligned with the target of the year.
Now I turn the call to Max to continue with the quarter's operating performance.
Max: Thank you for your legal before starting with the quarter's performance. Let me briefly update on the mature field strategy in order to exit from our own 50 conventional docks. There on this project that grouped 30 blocks husband achieving successful results.
Max: So far we've executed nine SBA for a total of 25 blocks.
Max: Also we obtain the provincial approval for one of the clusters in the province of <unk>.
Max: Considering the positive performance.
Max: We recently decided to add seven blocks from the province of flavor to the on this project.
Now amounts to 37 blocks regarding the blocks not included in the end. This project there are continuous ongoing negotiations moving to the quarter's performance during the third quarter total hydrocarbon production grew by 4% quarter on quarter and 8% year on year.
Max: Once again, driven by shale contributions, which further continued its upward trend and now accounts for 55% of our total output compared to 46% in the third quarter last year.
Net crude oil production and recorded a new sequential 3% increase averaging 256000 barrels per day on the back of a solid 11% shell expansion minimizing the impact on the conventional production decline, which remained constrained in July by the extreme.
Max: Weather and Patagonia.
Max: The beginning of August we were able to resume our operations and returned to normal activity levels.
Max: Despite this contraction.
Max: Worth highlighting down 9% of the conventional output came from tertiary production, increasing by 2% sequentially and minimizing this impact and then agility decline in mature fields.
Max: Beyond crude oil natural gas production grew 4% on a quarterly basis, mainly driven by the completion of the compressor plant and the <unk> pipeline and the seasonal peak demand, while Ngls production increased 7% due to the increased shale gas production and the.
Max: Productivity achieved after the optimization implemented in the two expand they're located in the Loma La Lata block.
Max: Moving to lifting costs, we recorded $16 $1 per barrel of oil equivalent in the third quarter.
Max: <unk> essentially flat on a sequential basis, mainly due to higher hydrocarbon production offset by a higher pressure on our cost structure from quarterly inflation and lower conventional production mentioned before.
Max: In this sense the lifting cost in our core blocks recorded $4 $6 per barrel of oil equivalent on a gross basis decreasing 2% quarter on quarter on the back of higher oil shale production, considering the evolution of inflation, which has been higher than the old way.
Max: <unk> as well as the divestment of mature fields.
Max: <unk> to be completed in the following months, we expect our target lifting cost for the year to be in the range of $15 per barrel of oil equivalents instead of the original $13 regarding prices in the upstream segment crude oil realization prices are at $68 per barrel in the.
Max: Third quarter, 4% down quarter on quarter.
Max: Despite the decline in brands during the third quarter, the local pricing environment remains steady.
Max: On the natural gas side prices reached $4 $5 per million Btu, driven by the seasonal winter price of planned us.
Focusing on Operational Efficiencies
Max: The initiatives presented in March this year are showing important results.
Max: In the third quarter, we drilled 50 wells but completed 67 wells and tied in 68 wells at our operated blocks, being all from them oil-horizontal wells.
Max: Also, let me highlight, in the first nine months, we tied in 41% more wells and completed 28% more wells compared to last year.
Max: These improved KPIs at our core activities are fully in line with the anticipated ramp-up in our shale oil production for the second half of the year.
in this sense
Max: In the third quarter, our shale oil production set a new year record, delivering 126,000 barrels per day.
Max: increasing by 11% sequentially and 36% inter-annually. 86% of the total shale oil output came from our core hub oil blocks Loma Campana, La Marga Chica, Bandura Sur and Aguada de Chañá.
Max: In terms of efficiencies within our unconventional operations, we continued with high levels of drilling and fracking performance, averaging 314 meters per day of drilling and 240 stages per set per month on fracking.
Max: Considering all these metrics we were well on track to meet our target of more than 120,000 pilars per day on average for 2024.
Speaker Change: Let me highlight that our production in September has already surpassed 130,000 barrels per day.
Speaker Change: Moving on to our downstream segment, processing levels average 298,000 of barrels per day, recording once again refinery utilization rate of above 90%.
Speaker Change: It was mainly boosted by La Plata Refinery, where after working on the efficiency initiatives, we obtained the highest quarterly record of processing levels in the last 10 years.
Speaker Change: On the other hand, last year was affected by programmed shutdowns at Lujan de Cuyo and La Plata refinery.
Speaker Change: Fuel sales volumes were similar sequentially. Good news, since the 5% expansion in gasoline was partially offset by a 3% drop in diesel due to lower seasonal demand from industries.
Speaker Change: Interannually, fuel sales volumes declined by 9% since last year was affected by an exceptional high level of demand.
Speaker Change: On a cumulative basis though, during the first nine months of the year, we managed to maintain local fuel market share at 57%, similar to last year.
Speaker Change: Regarding fuel imports, during the quarter we only imported diesel, mainly preparing for the following stoppages, representing 4% of total fuel sales volumes, compared to 7% in the third quarter last year.
Speaker Change: In terms of prices, during the third quarter, we continued mitigating the impact of the devaluation and fuel tax increases, as well as converging to international parities.
Speaker Change: while the spread versus import parity became positive to 1% in the third quarter compared to negative 5% during the second quarter and 28% in the third quarter last year
Speaker Change: As mentioned before, this is a remarkable result we achieved after a continuous conviction to follow international priorities.
Speaker Change: Lastly, efficiency-wise, we continued moving forward with our plan to improve our downstream margins.
Speaker Change: In that sense, we have identified and implemented a series of initiatives.
Speaker Change: based on the optimization and maintenance stoppages processes and power and consumption in our industrial complexes as well as improvements in products storage and contracts and logistic rearrangements among others
Speaker Change: I will now turn back to Federico to go through the quarter financial results.
Thank you, Mike.
Federico: Switching to the financial front, let's start with cash flow evolution.
Federico: Although our adjusted VDA was similar to the deployment of our CAPEX,
Federico: Higher debt service and purchases of crude oil to third parties due to lower conventional production affected cash flows, but partially upset by the temporarily increased accounts payable in the absent shale activities.
Federico: As a result, free cash flow came at a negative $173 million.
Federico: In terms of financing, in Q3 we successfully issued a 7-year unsecured international bond for $540 million at a yield of $8.75 million and proceeded with the repayment
Federico: of $334 million for the 2025 notes and $166 million for the 2027 notes.
Federico: in addition to a $40 million exchange to the 2025 notes.
Federico: So, with this new issue, we continue reducing refinancing needs and costs for 2025 and at the same time consolidating the overall spread curve of YPF.
Federico: In the local capital market, we issued a two-year dollar-linked bond for $185 million at a 0% yield, as well as promissory notes issued for $100 million also at 0% yield.
with maturities of up to 18 months.
Federico: During this quarter, we also reopened the local bank-syndicated market with a $300 million syndicated loan with three local relationship banks.
After Q3, we issued two new dollar-denominated bonds.
Federico: $125 million in dollar MEP at a yield of 6.5% and $25 million in dollar CABLE at a yield of 7% both with a tenure of 4 years.
on the liquidity front.
Federico: By the end of Q3, our cash and short-term investment decreased 14% sequentially to $1.2 billion. A lower level of cash aligned with our short-term needs and improved confidence in refinancing our schedule of debts.
Federico: Our net debt remains similar at $7.5 billion, and with better EBITDA quarter-on-quarter, we improved the net leverage ratio from 1.7 to 1.5.
Regarding our maturity profile,
Federico: As of the end of September, the company faces debt maturities in the next 12 months for $1.7 billion, mostly international bonds for $1 billion, and short-term trade finance for almost $400 million, both with local and international banks.
Federico: The remaining portion includes local bonds for $150 million and bank loans and other facilities for another $140 million.
Federico: Now, let me comment on the progress achieved in the oil midstream expansions to unlock the evacuation capacity in the Neuquena Basin.
Federico: Continuing our focus on growing oil exports, during Q3 we increased our sales to Chile, delivering 39,000 barrels per day through the Trans-Andean Pipeline, reaching net export revenues of over $200 million.
Federico: This volume is 37% more than Q2 and represents more than 15% of our total oil production.
Federico: Regarding the evacuation to the Atlantic, the construction of the first tranche of BEMOS connecting Bacamuerta Formation to Island achieved a 50% construction progress.
Federico: Total capex for this first tranche amounts around 200 million dollars.
Federico: to be initially utilized by Old El Valls system which connects to the province of Buenos Aires.
Federico: In line with Old El Val's pipeline, where YPF shipping stake is 25%, it continues with expansion.
Federico: expected to gradually add around 30,000 barrels per day by year-end and roughly 215,000 barrels per day by QE1 next year.
Federico: The Bemos first challenge shall be expanded to over 450,000 bars per day by 3Q26 at Allen
Federico: Once the second tranche starts its operation, connecting also to the oil export dedicated port of Punta Colorada in the province of Rio Negro.
Federico: The plan of the second and most important tranche of demos is designed to reach commissioning capacity of 180,000 bars per day by Q3 2026.
Federico: an increase in capacity up to 400,000 to 500,000 barrels per day by 2027.
Federico: This new pipeline will also be able to reach more than 700,000 barrels per day of design capacity if the basin requires it.
Federico: Total capex amounts to roughly 2.5 billion dollars and includes the 440 kilometers
Federico: oil export-dedicated pipeline, storage and control room facilities, as well as monoboys to operate BLCCs, the 2 million-barrel megabassels that will allow Argentina producers to have access to the Asian markets.
Federico: In terms of progress to date, we have signed term sheets with different producers for around 370,000 barrels per day.
Federico: We also created the SPV that will develop the Producers Consortium Export Pipeline and we are preparing this SPV to apply for the RIGI as soon as possible.
Federico: Also, before month end, we expect to announce the initial shippers where YPF expects to have around 30 to 40% of shipping and equity interest.
Federico: The plan is for the SPD to award the EPC contracts for the pipes and the EPCM contracts for the export terminal to start construction between December and January.
Federico: Regarding the project finance, we are developing the consortium agreements with the target to structure 70% debt and 30% equity.
Federico: So far, we have received banks LOIs in line with this purpose and indicating a strong international financial backing for the project.
Federico: So, with this, we conclude our presentation and open the floor for questions.
Speaker Change: And just as a reminder, if you would like to ask a question, simply press star followed by the number one.
Speaker Change: Our first question comes from the line of Vicente Falanga from Bradesaco. Please go ahead.
Vicente Falanga: Hi, hello Rastro, Federico, all YPS team, thank you for taking my questions. I basically have two questions here.
Vicente Falanga: First of all, Horacio, if you can mention and share with us...
Vicente Falanga: How was your roadshow to sell Argentina's LNG and Asia and Europe? How was the receptivity of potential buyers and how is the process to potentially get equity investors to the LNG plant? That's my first question.
Vicente Falanga: And then my second question is on listing cost, which right now is at $16 a barrel. I know the company has a target to get to $8 a barrel at some point next year. It seems a little bit far away. If you could provide a road map of how to get there.
Vicente Falanga: and then also during the call I think you mentioned something about $13 a barrel of lifting costs but I but I missed the message there if you could repeat it. Thank you very much.
Thank you. Have a good day.
Speaker Change: Hello Vicente, thank you very much. Do you hear me? Because I have a problem hearing you, okay?
Yes, I can hear you well, yes.
Speaker Change: Okay, okay, this is Horacio Marin. I am in Austin because this evening I will receive a Distinguished Alumni Award in the University of Texas from my Master of Science of Petroleum Engineering.
Speaker Change: We have a little problem with the communication, but if you hear me from the telephone, it's okay.
I didn't hear the beginning.
Could you repeat? Because I have a problem.
Speaker Change: Yes, the first question was if you could share how was your roadshow to sell Argentina's LNG in Asia and Europe.
Speaker Change: And how is the process to get an equity investor, a possible equity investor to the LNG plant? Okay. And then my second is how to get the lifting cost from $16 to $8?
Okay.
Speaker Change: Okay, to the energy, I think I have to clarify a little bit. For investor on equity, maybe what you are more interested in
is a little different than the off-takers.
Speaker Change: Investors, there are the companies of Argentina that they have the reserves, the gas reserves.
Speaker Change: plus Petronas is one that they have to decide at the end of December if to continue or not.
Speaker Change: But because our job is to maximize the shareholder value, we are continuing to discuss with supermajors to enter as a...
Speaker Change: equity and I cannot tell the name of the companies because it's confidential at that moment.
Speaker Change: And we are going to declare that when we have the final document signed, okay?
Speaker Change: We went to India, as you know, and we went also to Europe.
Really, I'm very, very positive because we have.
Speaker Change: A lot of NDA signs, I think it's in the order of 14 so far.
Speaker Change: and MOU with different companies and also countries like India, we are in the process of signing.
one of these MOU for the big number of selling.
Speaker Change: and in all the travels to the different countries that we know that we were to Hungary, we have also in Italy, in Germany.
Can you turn the money soaring?
Speaker Change: Also, we went to London and there, there are several companies.
Speaker Change: and in all the meetings it was positive. That doesn't mean that we signed contracts, that means that we passed to the next phase, which is to sign NDAs, MOUs, and start the negotiation as soon as possible.
So, from there I am very positive.
Speaker Change: The second question was about the lifting code that you say, how you can go to 18-2. I don't remember if I say 15, no? 16, yeah. Yeah.
Speaker Change: It doesn't matter the number, which is okay. Yes, the answer is the ring number. We are going to be almost in...
Speaker Change: non-conventional company from the next year and so on. That's why we can get down because the the difference in the lifting cost from one to the other is huge and that's why in the 4x4, YPF 4x4 what this
Speaker Change: The first pillar, and the second pillar, the third pillar is to concentrate our investment in the most profitable business, which is Bacamorta Oil.
Speaker Change: Second, that is to work for a new ecosystem for very small companies, what we call mature fields.
Speaker Change: We are now in the process, that was a highlight, trademark in Argentina, that was two weeks or three weeks ago, that they come to the fourth area.
Speaker Change: So, we are all in the process that the provinces, because it's a new...
and the province have to sign from constitutional law.
Speaker Change: to sign the approval and that we are in that process that is new for everybody in the massive way that we are doing.
Speaker Change: So, we are still, we have a very tight conogram, and we still want to be out of the process in the beginning of next year for the 25 areas.
Speaker Change: We are still negotiating in one of the provinces, which is Santa Cruz.
Speaker Change: and also we make the number, the second and the stew that is for Tierra del Fuego premises.
Speaker Change: I think it's okay for you, or do you need more details?
Speaker Change: That is great. Thank you very much, and good luck on your master's. Thank you.
Okay, thank you very much.
Speaker Change: Our next question comes from the line of Bruno Martinari from Morgan Stanley. Please go ahead.
Thank you.
Speaker Change: So, when could we start to see perhaps the pre-cash flow turn positive into next year or if that only happens in 2026 and if you could give us a hint of how
Speaker Change: what your capex plan looks like for next year, excluding the conventional assets, that would be very helpful. Thank you very much.
Speaker Change: Okay, our idea is the same that it was that I think was the first call that this year the the cash flow is neutral for operational point of view because we have the macho field.
Speaker Change: Next year, with the majority of the mature field out, we continue still thinking that we are going to have a neutral cash flow for all the companies, including the financing.
Speaker Change: We are working now on the budget for 2025. Remember that YPF has plenty of assets.
Speaker Change: and we have partners and we have 100%. And so after we have received the approval of the partner, it can be more in detail that I think it will be in the next call in April.
Speaker Change: But that is the way that we are thinking on that.
Speaker Change: So, for next year, to be clear, we still continue thinking that we are going to be neutral, including all the companies financing operationally. From the 26th, all is going on.
It will be positive cash flow.
and the Cuppix, sorry, the Cuppix, the packet Cuppix.
Speaker Change: The CAPEX, we are going to maximize the CAPEX in the non-conventional.
Speaker Change: We think that we are going to be in the order of the capex that we have this year, but it will be more in Vaca Muerta than in the other parts. For sure, we are going to maximize the shareholders, and we think that this bottleneck, we are going to reduce the capexes if necessary.
Speaker Change: Our work here is to be very efficient, so reducing the DAX as much as possible, because we have 14 rigs.
Speaker Change: But we are working in that issue a lot, and if we see that the DAX is increasing, for sure, what we have to do is to reduce the capex if that happens, okay?
Perfect, thank you very much.
Yes, thank you.
Speaker Change: Our next question comes from the line of Daniel Gordiola from BTG. Please go ahead.
Hi, good morning, Horacio, Federico, Maximiliano, Margarita.
Speaker Change: I have a couple of questions. The first one will be on infrastructure, and more specifically on midstream infrastructure.
Speaker Change: So in the case of the Duplicar expansion project, I would like to know if you can share with us.
Speaker Change: What share of the additional capacity have you secured going forward? How do you see the progress of the construction of this pipeline? And when do you expect the pipeline to come online?
Speaker Change: And I would like to know also how ready you are to fulfill this capacity at this pipeline once it is ready, and if you are foreseeing a spurred capacity in the pipeline in 2025 and perhaps in 2026.
Speaker Change: So that's regarding all the evolved Dupli-Car projects. And regarding Vaca Muerta South, I would like to know if you can share with us when do you expect to start construction of the second tranche of the project.
Speaker Change: And also it would be great if you can share with us if you already have secured all the required environmental permits to...
Speaker Change: to develop this pipeline. So those will be my questions on infrastructure. And just a third one, if I may squeeze. During the last days, we saw YPF grabbing the headlines because of the legal dispute with Borgford. And I would like to know if you can share with us an update on this legal dispute. Thank you.
Speaker Change: Okay, I will start from the end to the first, I think.
Speaker Change: a tryout from the first circuit and they will be next year in the second circuit.
Speaker Change: So, I cannot answer by the Republic, that is confidential, I have to answer the Republic.
Speaker Change: I have the same information that you have from the newspaper and because of the document that the United States government put in the press card, okay, in New York.
That's all for now.
Speaker Change: The other you say about the VEMOS, in VEMOS we have all the permits, all the permits, environment, social, everything is done.
Speaker Change: We are going to pass in our Board of Directors of November the 14th.
Speaker Change: the internal approval of the board for that investment for the part of YPS. We are a little late, I would say two weeks, because our first purpose, as you see in the media, was to
Speaker Change: to sign everything for the November the 14th, but because we have several companies working, a lot of lawyers, a lot of financing guys, a lot of operational guys.
Speaker Change: I think we need a couple of weeks more, a few weeks more.
and that they will be done.
Speaker Change: We have the bidding process done, we have the two dollars, we have also the bidding process for the civil work and there will be
Speaker Change: We will decide with all the partners next week who will be the winner of that process.
Speaker Change: We don't see a delay of a couple of weeks only, I think over three weeks.
Speaker Change: But we have in communication that we need to have the first delivery for the third quarter of 2026.
Speaker Change: The other question that you asked me is about the Odelval.
Speaker Change: I don't know if you asked me, the other one will be in December or January, the first part, I think it's 50,000 bars for all the companies, and at the end of May it will be done, all the bars.
Speaker Change: the capacity of the oil pipes. We try to fill up everything that. Remember that when you are an operational company if you if you lose
Speaker Change: If you lose the capacity, you lose a lot of money. If you have a little capacity, spare capacity, it's like it works as a secure, okay?
Speaker Change: So, but we are following that. We are following our production. We always try to follow the production with incremental capacity, that because they are in spikes, every company will have.
I don't know if I answered all the questions.
Speaker Change: Just a clarification, can you share with us what percentage of the additional capacity do you have?
Speaker Change: in Old El Val, and just to confirm with you, how many barrels are you trucking right now just to make sure you know that once the pipeline comes online, you're able to fill your capacity as soon as possible?
Speaker Change: South San Baris a day, and for the end of the year, we think we are going to grow.
Speaker Change: It will be more than 140,000 barrels a day at the end of the year. That is our purpose, okay? I don't remember the capacity of Odelval. I don't know.
Speaker Change: Max, if you remember exactly the number, I don't remember, sorry.
Our capacity. Yeah, it's about...
Speaker Change: 25% ratio and regarding tracking it's marginal, it's about 10,000 barrels per day so it's quite marginal. Okay, now the 35 I remember, this 10,000 is not a lot, okay.
Is it okay, Daniel, or do you need more?
Thank you. Bye.
Thank you.
Speaker Change: Alright, our next question comes from Andres Cardona from Citigroup. Please go ahead.
Speaker Change: Thank you. Good morning Horacio, Fede, YPF team. I want to follow on one of the answers that you just gave to Daniel.
Speaker Change: You said that your exit production for this year will be...
$140,000 a day
Speaker Change: And it's quite a strong growth, but my question is about 2025. Don't you think that 160,000 average production for the next year could be a conservative assumption? And if you can provide some color about...
How relevant the subsite could be?
Speaker Change: Okay, remember that when you make a forecast production all with this uncertainty, it depends on the different areas that you are going to invest.
Speaker Change: and independent of the approval of the different partners that we have.
But we, you have.
For everybody, you have to expect for next year...
Speaker Change: that will increase the unconventional production in the order of 30 to 40%. In that range, it will be the incremental production. That's why we can...
Speaker Change: We can achieve our average of 160 that we talked to you in the first quarter, I think.
Speaker Change: It could be conservative, really. I don't know. I hope so, if I hope so, because we are going to make more money for you. But these are the numbers that we have today, okay?
and many more. Thank you. Thank you. Thank you.
Okay, Horacio, and the second question that I have is...
Speaker Change: Prepaid is that issuing anyone is something that you are considering at this point?
Speaker Change: Okay, I will answer about MetroGas. From the beginning, I think, when I started alone in my house to say what we have to do in YPF,
Speaker Change: We say that the affiliates have to be focused where we make value. And also, Metro Gas is a distribution gas company that is not the core for YPF.
Speaker Change: From the beginning, I always say that we are going to solve metrogas, and it's something that is logical from the law of Argentina, and it's totally logical that YPS must do that.
Speaker Change: The last nine months I spoke, I don't know how many, maybe 100 times, that is a big number, but a lot of time talking for what is YPF 4x4 project or program.
Speaker Change: Always, like I said, MetroGas is in our range, and to maximize, we need the moment that we can maximize the value for YPF.
Speaker Change: Because of the big, big, big employment that we have in Argentina, and so the...
Speaker Change: People think that that would be the moment, and it could be the moment. And that's why I was in the media when I was talking, I don't know, two weeks ago in a big meeting.
and people from the economic groups.
Speaker Change: So, if now we have companies that put a good value, that we think that is good for the shareholder, we have something in our mind on the team of APF, for sure we are going to sell.
Speaker Change: But it's not that we start the process, we continue to talk about that.
Speaker Change: We have to decide when is the proper time to do that.
Speaker Change: But I again am saying, if somebody has a good number and give us a good number,
Speaker Change: unsolicited offer or the we have offered that much our our process our number we must do a transparent
bidding process for selling Metro Gas to maximize CR value.
From the maturity of the bones, I pass to...
and Federico.
Speaker Change: Hi Andres, thank you Horacio. Well Andres, we have just reduced our 2025 bond coming due in July by around 40% with the issue we did in September.
So...
Speaker Change: Let's say, it's not dependent on Metrogras. I think that the market is quite open now. Let's say we see several...
options.
Speaker Change: So we are much more confident now in having different alternatives to refinance this next year.
Speaker Change: Let's say we have international markets, we have also the possibility of doing prepayments of products, also local markets.
Speaker Change: And that all depends on how Argentina is going to evolve.
Speaker Change: But in essence, we are not linking in any way Metrogas to the bond maturities in next year.
Andres G
Thank you, Racio and Federico.
Speaker Change: Our next question comes to the line of Marina Vambertens from Latin Securities, please go ahead.
Hi, good morning. Thanks for taking my questions.
Speaker Change: or to factors such as the narrowing of the gap between prices in Argentina and neighboring countries.
Speaker Change: And then I have another question. Do you plan at some point to show an adjusted EBITDA including the contributions from companies such as Prosperity, MEGA, YPF Loans?
Speaker Change: And if so, can you give us an idea of how much these companies could add to YPF's savings?
Thank you.
Okay, thank you for the question, Marina. As I said,
Speaker Change: We have like a fair, but I cannot tell you the process because if not I give the competition how we are working.
and Juan Sebastián Trullo.
Speaker Change: It's a process of pricing with the consumers, and so if the price goes up, we have to go up. If the price goes down, we have to go down. We have to work in a normal, we have to think that Argentina is today a normal country.
We are, we shall be.
Speaker Change: in a way of maintaining the prices, the import parity prices as a normal one.
So if I close out, it will be down.
Speaker Change: So, regarding, I don't know, downturn in demand, okay, it depends. Now we are seeing a difference.
Speaker Change: We are seeing that we are increasing in the last, if you will, July, I'm talking about WPF, we are increasing, the demand is increasing, no, decreasing the demand.
So we have to have a fair value.
Speaker Change: That is what we are doing, is to do that, and that's why I think it's one of, there are several reasons why we are successful in YPF.
Speaker Change: That is the taxes, that is the good financing program, capital allocation, and efficiency. And that is our job. So we are very happy how we are working on that.
Speaker Change: And just a bit there, including contribution for associate companies is the second one.
We have in our area approximately 300 phone phone participations.
and we are looking how to can improve our evidence.
in the different companies, okay?
and the 1PF news.
It's an excellent company, I think it's the most profitable.
Speaker Change: I don't know why, what is your purpose of the question or maybe I didn't understand very well what you want from us or for me to answer.
The interview concludes at this time.
I think the question is...
I think that the question is on...
Speaker Change: Consolidating the EBDA and the answer it's Marina that we go control these companies
Speaker Change: So, we cannot and we do not consolidate those on our financial statement.
but let's say just to give you a sense
Speaker Change: 262, and Profertile was something in the range of 200 also year-to-date.
Okay, thank you. Thank you very much.
Speaker Change: Our next question comes to the line as Paso Vasconcelos from UBS. Please go ahead
Speaker Change: Hi, thanks for taking my question. Horacio, I think taking advantage here of this nearly one year in the position as CEO of YPF,
Speaker Change: Could you share with us the main challenges faced so far, and how different has been leading YPF as a state-owned company compared to leading a private company amid this context?
Speaker Change: How have the interactions with the government related to the investments, the assets of the investments, adjusting fuel prices and so on? That's my question. Thank you.
Speaker Change: Five years in Empirica, we are working here as a private company.
Speaker Change: What we are doing is, I would say, a big change in management, management control, capital allocation.
Speaker Change: and based on the portfolio analysis, what is more efficient and more profitable for shareholders. And that is as simple as that.
Speaker Change: how we are working. It's a big challenge. It's a big change. Yes, it's a big change.
Speaker Change: But you see the results. YPF is unbeatable. If you work as we are working, all the employees how we are working today.
Speaker Change: And really, I would like to say thank you for all of them, for the effort that we are doing. Everybody is doing, not only us, but all the employees.
Speaker Change: And so we see a big change in everything, and the efficiency is the key for us, the productivity is the key for us, profitability is the goal, the other is a medium to achieve the profitability.
Speaker Change: The big changes that we are doing, December 13th we are going to open a real-time intelligence center in the YPF in Buenos Aires where we have all the knowledge and we are going to work as a measure.
Speaker Change: Supermeasures, but in real time decision making for all the drilling and completion.
Speaker Change: We don't need to go anymore to the walls because we have the real thing, everything, intelligence, artificial intelligence inside. We have everything now. This is a big change. The other that is more disruptive, I think that we are going to be...
Speaker Change: I think and I can say because I was working on there, I couldn't do that, but I say always in YPS it must be done.
for Disney's Toyota WOW.
Speaker Change: Toyota World means we are working with Toyota and we are making all the efficiency of Toyota first in the car industry, in the construction of the world, and that will be very disruptive.
Speaker Change: I think, and we have seen why we are doing that, because we have to reduce the equal cycle. We have to reduce the working capital of the company a lot.
Speaker Change: We are seeing measures different now, and we are going to have strategic partners, as Toyota did when they made the Hylux in Argentina, or in all the world.
Speaker Change: And so that is in the way that we are working to save as an industrial power.
Speaker Change: We are working for the efficiency in all the refineries, but La Plata is the biggest one. I am from the La Plata city.
Speaker Change: And we have to have the best refinement in the operational margin point of view.
and we have hundreds of initiatives.
Speaker Change: We are responsible to improve our margin and that is the way that we have to do. We came to YPS to do something very, very extraordinary for the company, for the shareholders.
Speaker Change: and that is why we are working and what we are focused on. I don't know if I answered or I talked more than you wanted, or less, I don't know.
That's clear. Thank you, Horacio.
and many more. Thank you. Thank you.
Speaker Change: Our next question comes from the line of Bruno and Maureen from Goldman Sachs. Please go ahead.
Speaker Change: Hi, good morning. Thanks for taking my question. I have a follow-up on the outlook for production growth going forward.
Speaker Change: On the shale side, it's very clear what's your view for 2025. You also have a guidance, you correct me if I'm wrong, but you have a guidance for 250,000 barrels per day shale oil production by 2027. So the question is...
Speaker Change: Is this issue a valid guidance and what are kind of the upside risks here and what are the challenges as well? To what extent does the...
Speaker Change: depend on for the improvements in midstream or or not so that that would be my main question and then just a quick follow-up on the conventional
Speaker Change: year-on-year decline that we saw in third quarter good reference for the next few years or not Of course considering on a like-for-like basis without considering the divestitures. Okay. Thank you so much
Our guidance for 2027, maintain value today, we are working.
Speaker Change: to tie up all the company, what we call the full development, and it's an iterative process. It's not as easy as if you make cash flow easy in Excel in five minutes.
Speaker Change: because that means that you have to do in the proper way, taking care of all the capital and we are working. So maintain that balance, but I try, I would like for April to, that I think is it.
more time presentation that we can update you.
Speaker Change: And I promise that for that moment, I will update for everybody that guidance, okay?
Speaker Change: For the part of the conventional, remember I was always to have in the south, it would be Manantiales Verde, which is the biggest one that is produced in the northern north.
Speaker Change: 25,000 barriers a day, and that we have tertiary, secondary, primary, and it's an excellent path, and that you can not expect that it's declining.
Speaker Change: because we have a more approach of touch added to the point is working very well the torsially polymers in that area.
Speaker Change: Some areas that we are not the operator, that also they have a potential on that, and so it's not that you have to expect that it's going to go 10% per year, it depends on that investment.
Speaker Change: I would say that it would be the two only, that it would be the biggest one. The other, I think for YPF, for the industry, for the country, is better.
Speaker Change: They have small companies working. Remember that I started working in my career in the macho field, and I know how to work in the macho field and also in the bigger field.
Speaker Change: And you have to know when you have to go out and the others can make more.
So don't expect that it will be...
with the reaction of the others because remember that
Speaker Change: Today we are 50 on 50. When we have 50, only 50.
Speaker Change: It will be like, almost, we are going to be almost unconventional at once, and it's not important that production, it will be as not important as it was before the conventional for YPS.
Speaker Change: I don't know the challenge, I don't know which challenge you are talking about, the mystery you say, the mystery I think we are in a good shape to make
Speaker Change: The BEMUs, when we have the BEMUs, I think the BEMUs in the Bacamulta South qualify. It will be a change, a change for the country, not only for YPF.
So all the companies, they have assets in Bacamorta.
Speaker Change: They will improve the production and if you adapt the capacity that they would have, they must remember that after for incremental capacity.
Speaker Change: in their only pumping units, and so the investment is not low, and I think we were not as emphasizing.
in the call at the beginning, but...
Speaker Change: You would say 360,000 bars, but you have to adapt the...
the winner of Exxon Asset.
Speaker Change: And so the total production for the first phase, it will be...
Speaker Change: Much more than we expected at the beginning, at least when we started working.
Speaker Change: in this project, that they continue working in this project in YPF. We expect the fourth phase to be lower appetite of the companies, but it seems...
Speaker Change: They will be big incremental. I don't know the dependence on me stream for sure as every every
Speaker Change: every company, we are dependent on the back and mortar cells, oil pipe, that's why we put so emphasis during this year, and we are going to present the RIGI for I think in a very short time.
Speaker Change: We have the company, we made the company for the regime, and we will present that as soon as all the documents are signed, it will be signed.
Speaker Change: done all the process to start that one, and we think that we are going to maintain that for the third quarter of 2016.
After that, the dependency will be on capital.
I think Prices of Oil, as you were.
and Richardo Rubals. That was the thing that everybody...
Speaker Change: want is a workshop. So I think we are going to increase a lot of the production and be sure that we will work as much as we can to improve the production as much as you can in the lower time.
Very helpful, thank you so much.
Speaker Change: Our next question comes from Leonardo Marcondes from Bank of America. Please go ahead.
Thank you. Thank you. Thank you.
Speaker Change: Hi everyone, thank you for picking my questions here. Most of them have already been answered, but I have a few of you from my side.
Speaker Change: The first one is on the Newark well that you guys drilled.
Speaker Change: We saw the news that you guys have the longest horizontal wear on Wakan Mata recently.
Speaker Change: So I was wondering if you guys could provide some color on what are the expectations for this well and if we should see wells like this one being the standard going forward.
My second question is regarding dextroacid.
We saw some news that first patrol
Speaker Change: was the winner for this asset, and that Exxon has already communicated to other participants about the results. So my question is, can you confirm that, or is the process still ongoing? Thank you.
Speaker Change: Okay, yes, we drilled the longest one in Loma Lalata, in Loma Campana block.
Speaker Change: I think it was LL183, if I don't remember the name of the wall, okay.
Speaker Change: This is a trademark, but I tell you one thing for you that this...
Speaker Change: From the reservoir point of view, the longest the well, the best from the profitability. But the question is sometimes, it's a question of the...
Speaker Change: of the course. You have to see the course and you have to be more than the course is the mechanical, the mechanical issue that you have.
and David. Thank you very much. Bye-bye.
Speaker Change: Because if you cut them, the capacity of all the mechanism...
Speaker Change: And so, we always see also in the United States, and we have in the order of three.
Speaker Change: Three thousand meters is the average that we have. Why sometimes we dream so high, those walls, is to make, we make the earth when you have
Speaker Change: The wealth increase, the investment, but when you have to make two wealths, that is one
We try to be as long as we can.
Speaker Change: But in general, our goal is $3,000 because we have optimized all the costs.
Speaker Change: If you always try to go further, the further you go as an analyst, the better, in general, the better if you have more profit.
Speaker Change: That is in the first part. The second part of the question...
was a disposal of
What do you mean by disposable assets?
Hello?
Speaker Change: Leo, can you repeat the second question, please? Sure, sorry, apologies, I was on mute here. The second question is regarding Exxon Asset, right? Exxon is selling their assets in Guacamoleta.
Speaker Change: and we saw some news that Flos Petrol will be the winner for these assets and that Exxon has already communicated to other participants in the process about the results.
Speaker Change: So my question is, if you guys can confirm that to us, or is the process still ongoing? Thank you.
Speaker Change: Okay, remember that this is an ExxonMobil, so it's confidential, and it's ExxonMobil that
The communicator, Professor Petralbo, was there.
Speaker Change: Exxon Mobil. So that is confidential. You have, it's not I will not answer but the I have to ask to Exxon Mobil what is the owner or
Speaker Change: of the Asset and is the only decision-making company for that, okay?
That's very good. Thank you.
Thank you.
and the
Speaker Change: Our final question comes from the line of Ezequiel Fernandez from Belon. Please go ahead.
Speaker Change: Buenos dias a todos, soy Ezequiel Fernandez de Balance, can you hear me all right?
Yes. Yes, we can.
Speaker Change: Okay, great. So, good morning, gentlemen. Margarita and Valentina, too. Congratulations on the operational upgrades.
Speaker Change: acceleration of shed completion, the higher utilization and refineries. It was great to see all that. I have four questions. I apologize for that, but I promise they will be quick and maybe we can take them one by one. My first one is what is your expectation for nationwide crude production in Argentina, which is now above 700,000 barrels per day for the end of 2025 and 2026?
If you could share that, of course.
Speaker Change: Yes, in general we are not doing, well we have, but we are not doing like a production official for that. The only thing that I can tell you that the chamber, the oil and gas chamber of Argentina making a work I think was a year before, last year.
Speaker Change: and all the companies, we passed our internal forecast and that is one of my general presentation that they said that they can reach between 1.2.
to 1.4.
Emilio Juarez Ribey
Speaker Change: in 2004. That is what is in general on the industry is the last official document. It was prepared by the Oil and Gas Chamber, what we call CEP in Argentina.
Speaker Change: Okay, sorry, that was 1.2, 1.4, for which year? Yes, per day, a median virus per day for all the Argentina. With the capacity of Remos and the Odelval, you can reach...
Speaker Change: From Neuquén, plus, and remember that in Neuquén you have Otaza that goes to Chile, Odelval that goes to Vallablanca, and you have the Bemos that is going to Rio Negro, and plus our oil pipes that go to our refinery.
Speaker Change: to the fire in Lujan de Cuyo. That is all the evacuation for Bacamora.
Speaker Change: the evacuation capacity of oil for Bagamorta and unconventional fields of Neuquén.
Thank you.
Okay, but the camera...
Speaker Change: But the camera forecast of 1.21.4 for which year is it, 2026, 2027, 2028, 2030?
Speaker Change: Let me, let me take one. No, it's okay. Don't worry. I can take it with the IRT. No, I don't want to bother you. No, it's in 240.
in between 239-240.
Speaker Change: And always there is a bet, the other day there was, I didn't mention that, but several were talking about that, and it's in that order for 230. And that it could be because of VEMOS, okay? Because VEMOS...
Speaker Change: can be up to 2027, you can go up with the pumpings. So, in general, people talking here for Argentina that they can reach the
Speaker Change: The peak, even it could be the biggest peak of that, for $230,000, and that was, I think it was $1.2 or $1.4, I don't remember, I think $1.2.
Speaker Change: The actual projection of Argentina, or the real projection of Argentina of the last one.
Okay, perfect. Thank you.
Speaker Change: Yes, the second one is related to gasoline and diesel sales.
Speaker Change: We have been seeing them contracting all year long, of course, due to the economic activity and the new pricing levels. I was wondering what have you seen in terms of your market share, and when would you expect for gasoline and diesel demand to start growing again?
As I tell you,
Speaker Change: I don't like to compare with previous year, because previous year was another country. Another country, another crisis, everything another.
Speaker Change: So I'm not going to compare that because I think you mix up the numbers.
Speaker Change: But I compare what happened this year and July you can take out because it's like a drabby season in Argentina because there is a...
Speaker Change: There is like holidays and people use a lot of cars so we you cannot look and compare that But I compare with Chun and I see that this increasing
Speaker Change: the the oil of us and we are also increasing a little bit our microchip and there is in gas in diesel there is a from YPS numbers we see
Speaker Change: in a lot of proven interpretations. And also you are seeing that the... I'm not an economic guy, but you see that the...
Speaker Change: The numbers are saying that Argentina is increasing now from out of the recession, and so that will be good news for Argentina.
Speaker Change: for the country and for us, because we are going to...
Speaker Change: to have a more more selling or even that we are in a mix up because we look at the our our refinery percentage that we are in a very good shape okay
So, we see change, we are improving our size, okay?
Speaker Change: And if this is what is difficult for you, I tell you what is difficult is because the farm is seasonable.
Speaker Change: also industry, and also the industry including flights, and you see that difference, okay.
Speaker Change: Okay, perfect. Thank you. My third question is related to the cash flow statement.
Speaker Change: There is a $205 million inflow in the first nine months of 2024 related to asset sales.
Speaker Change: More proceeds to come in the final quarter of the year or the beginning of 2025.
and we are sending this.
Speaker Change: I think, Ezequiel, that what you are seeing are the sale of financial assets. So that's what you see in the statement of cash flows. These are financial instruments.
Speaker Change: You are absolutely correct. I apologize for that. I will move on to my fourth question. For the mature fields, it was not the...
We have...
In the time-consuming process, we have the...
Speaker Change: We hired a company from the United States that makes auditing, and we had that number, and we compared with that number, and we will see if we are going to...
Speaker Change: to open the total number, but we are really in the expectations, okay? We are real. Maybe...
Speaker Change: It depends on the end what we say and what is the last two promises, but we think that all together will be in the expectation because it's okay the number that we receive, okay.
Speaker Change: In some we are more, in some we are less, it's usual because it's a lot of assets.
Speaker Change: Great, thank you. My final one is related. Have you considered floating international bonds at the Oldeval and Bacamorca Sur level? It might help you with, you know, getting some extra cash flows for the YPF holding and for CAPEX.
Speaker Change: You are saying that the... If you want I can speak to...
Sorry.
Speaker Change: If you want, I can take this one. Well, Ezequiel, we are working on the financing plan for Bacamorta South. It's going to be arranged on a project finance basis. So we are looking at...
different potential lenders from the international bank market.
Speaker Change: So we believe that we have, let's say, good support and a strong interest.
to finance this deal.
Speaker Change: We are working on the different project documents and arrangements we need to do in order to secure these project finals.
Speaker Change: but it will be a process that will take, let's say, some time. We are working first on consolidating the consortium with the other shippers.
Speaker Change: Okay, I got you. That's perfect. That's all from my side. I'm sorry for taking a little bit of time at the end of the call. Have a great week, guys.
Bruno Montanari
Speaker Change: And those are all of the questions in our queue, so I'd like to turn it over to YPF CEO Horacio for closing remarks.
Horacio Marín: Okay, thank you very much for all the questions. We are really working hard to obtain those results.
I wish you a happy World Show.
Horacio Marín: And so that is my final remark today, and for the next quarter we are going to present much more numbers and figures, and we will see next, I think in April, no?
Thank you very much everybody for the question, the support.
Horacio Marín: because I'm thinking that we have a lot of support from you.
And that helps a lot for the...
Horacio Marín: for the improvement of our company and the price of our share. And so we are saying thank you. And for our part, you have to spur management and spur employees.
We are working very hard.
Horacio Marín: to improve our company and reach our goal of the YPF 4x4 that is our, I would say, path.
to the next four years, okay?