Q2 2025 YPF SA Earnings Call
Speaker #1: By your manager. Thank you for joining us today in our second quarter 2025 earnings call. Today's presentation will be conducted by our chairman and CEO, Mr. Horacio Marin, our CFO, Federico Barroetave, and our strategy new businesses and controlling VP, Mr. Maximiliano Westen.
Speaker #1: During the presentation, we will go through the main aspects and events that explain the quarter results and then we will open the floor for Q&A session together with our management.
Speaker #1: Before we begin, please consider our cautionary statement on slide two. 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.
Speaker #1: 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 the call over to Horacio; please go ahead.
Speaker #2: Thank you, Margarita, and good morning, everyone. Despite international price volatility, we deliver not only solid results in Q2, but also significant progress in our 4x4 plan by achieving key remarkable milestones.
Speaker #2: This quarter's volatility actually demonstrated the right direction and implicit value of our 4x4 plan outlined since December 23. During this quarter, the international oil market experienced significant volatility with low prices.
Speaker #2: As a result, our realization price of oil decreased by 12% sequentially. Our shale oil production remained largely unchanged even after selling our 49% stake in Guadalcanal, which decreased its contribution by 6,000 barrels a day.
Speaker #2: Moreover, during July, we had just achieved a record high production of roughly 165,000 barrels per day. In fact, on Tuesday, the daily production was 163,800 barrels per day.
Speaker #2: Despite the challenging context, our continued delivery on our 4x4 plan substantially mitigated this negative price environment. During this quarter, we reached key milestones in the vesting program of mature fill, particularly in Santa Cruz.
Speaker #2: As a material result of this project, we can show a 24 interannual reduction in our lifting costs. Another key milestone was achieved financial closing at Bemos.
Speaker #2: After 18 months of hard work and dedication today, I would like to share with you the remarkable progress we achieved in our 4x4 plan.
Speaker #2: Delivering important results across all our four strategic pillars, especially since our last call in May. As we have always said, our first pillar is to focus on our most profitable business.
Speaker #2: Oil Vaca Muerta. We have continued to expand our shale oil operations and made significant progress in advancing midstream infrastructure projects to support future growth.
Speaker #2: YPF, as the largest shale oil producer in Argentina, continues to deliver solid performance. Back in November 23, YPF shale production was 110,000 barrels per day.
Speaker #2: By last month, production has increased to roughly 165,000 barrels per day. Even after the vestment 6,000 barrels per day in Guadalcanal, as I mentioned before.
Speaker #2: We purchased further growth, aiming to close the year at around 190,000 barrels per day. This will represent an outstanding organic production ramp-up of over 70% in just 25 months.
Speaker #2: Moreover, in the last 18 months since 2024, our oil export revenue reached 1.5 billion dollars. In terms of volume, this quarter we exported nearly 44,000 barrels per day.
Speaker #2: Moving to midstream expansion, since day one, we were convinced that Bemos represented the key and the best infrastructure vehicle to ramp up YPF production from 26 and beyond and also for all the industry.
Speaker #2: This new pipeline completely unlocks YPF growth plan to achieve roughly 250,000 barrels per day by the end of 2026 and allowing to reach half a million barrels per day by 2030.
Speaker #2: To this end, YPF led in record time the development of this project in collaboration with the rest of the shale industry. First, we aligned commitments that allow starting construction on January 25, then supported by a solid contractor structure.
Speaker #2: The project recently secured a syndicated loan for 2 billion dollars to finance the construction of Bemos. Besides economic benefits for YPF and entire shale industry, this transaction reopened the international project finance market for Argentina.
Speaker #2: It stands as the largest commercial loan for an infrastructure project in the country. It also is one of the top five largest financing in Latin America and oil and gas sector so far.
Speaker #2: The overall construction progress stands at 23%, as you like, with global net worth completed for around 120 kilometers. Additionally, assemblies of floor plates for the tanks have begun at both Allen and Punta Colorada Export Terminal.
Speaker #2: Let me now talk on pillar number two, that focuses on active portfolio management. From the very beginning, we committed to create value for YPF through the dynamic portfolio management approach.
Speaker #2: Over the past 15 months, after receiving initial approval from our board, we already completed the transfer of 28 out of 30 mature blocks. Identified in the initial plan called Andes.
Speaker #2: Moreover, we have successfully reverted 11 mature blocks to the provinces. One in Chubut and the other is in Santa Cruz. The most challenging blocks in terms of complexity, achieving another key milestone in our 4x4 plan.
Speaker #2: During the past 18 months since 2024, the mature blocks that we already left produce roughly 61,000 barrels of oil per day, and 3.2 million cubic meters of gas per day.
Speaker #2: However, it's worth noting that there were very mature and carry high lifting costs. Around $42 per barrel. As a result, during these 18 months, we overall negative impact on our free cash flow was around $840 million.
Speaker #2: This amount includes the operational cash flow and the exit cash flow. Additionally, we have successfully divested our subsidies in Brazil and Chile, besides closing and profitable chemical plants.
Speaker #2: All these milestones were critical to our 4x4 plan, as it simplified our portfolio and enabled us to concentrate our effort on the majority of our capital on our most profitable asset.
Speaker #2: Vaca Muerta. Regarding this exit program from mature fills, I want to highlight the constructive agenda that we were able to develop in collaboration with governance and unions.
Speaker #2: This represents an unprecedented level of cooperation among key stakeholders. I'm confident that with the same spirit, we will reach an agreement in the ongoing negotiation with Tierra del Fuego during Q3.
Speaker #2: As a result of all these efforts, we can report today a remarkable reduction in lifting costs of 24% interannually. With the decision to make YPF a very profitable company, we have recently decided to expand the scope of asset to be divested.
Speaker #2: To become next year, a pure and conventional after-in company. We have identified the other 16 performing conventional blocks. We will open this asset for divestment with a superior objective to continue upgrading our portfolio and making YPF much more profitable and more resilient to low fuel prices.
Speaker #2: Completely aligned with the same portfolio rationale, this week we execute a bidding agreement to acquire prime tier one shale acres from total for $500 million.
Speaker #2: Subject to certain conditions. This acquisition follows the same value dynamics of our active portfolio management, divesting non-core less profitable assets while securing long-term productive value for the company.
Speaker #2: In this case, La Escalonada Rincón La Ceniza Blocks are located in most promising area in the oil and wet gas window of North Vaca Muerta.
Speaker #2: Close to Bajo del Choque La Bernada Blocks, that plus petrol has recently acquired from Exxon. La Escalonada is a four-class crude oil producing block that will generate synergies with the development of Vaca uerta know-how.
Speaker #2: Rincón de La Ceniza has strategic potential for the development of wet gas and the Argentina LNG project. We expect to assume the operative role of these two blocks, holding a 45% working interest, partnering with shale and gas and petroleum.
Speaker #2: Together, these blocks encompass nearly 115,000 acres of Vaca Muerta, with an outstanding well inventory of over 500 wells. Wells drilled in the volatile oil window during the early stages of development demonstrate quite promising productivity levels that underscore the long-term potential.
Speaker #2: Our expectation is to accelerate the development plan to fast track the monetization of this production. This new asset increases our future oil production curve extend the duration of our plateau and reinforce our leading position in Vaca Muerta reserves.
Speaker #2: Furthermore, when we complete the divestment probe of our conventional asset, YPF will become a pure integrated shale player with superior size synergies and economic scale.
Speaker #2: As I mentioned before, now pillar number three focuses on maximizing our after-in and out-in efficiencies. Since our last call in May, we have inaugurated three real-time intelligence centers.
Speaker #2: Two of them are in La Plata and Luján de Cuyo Refinery, respectively. The third one is based in our headquarters to support our downstream commercialization business.
Speaker #2: The latter one has been key for the implementation of micropricing and self-fuel projects. These real-time is unique in Latin America, we can follow the demand, but each has a station to the 24 hours besides our all-product accompaniment store.
Speaker #2: We are changing the way of delivering fuel and products in the country. It's really a disruptive marketing change. We have an impressive positive image from the people in the polls.
Speaker #2: This 100% technology-driven and in-house management project will launch last month to seek a win-win strategy. Micropricing allows our gas station clients to access a different price at fuel at nine from midnight to six AM.
Speaker #2: Self-fuel provides these clients with greater savings if the payment is made through the YPF application in certain gas stations. YPF is pioneering this method of pricing in Argentina.
Speaker #2: With the objective of reducing our fixed costs and growing our nighttime sales and generating more profits for YPF. The results so far are impressive.
Speaker #2: In the first month since launching this project, our sales volume at the gas station line grew roughly 30% compared to Q2 this year. On the industrial efficiency side, we have reduced significantly the duration of program maintenance.
Speaker #2: Especially in La Plata Refinery, we complete the maintenance between 30 to 60% faster than historical records. Regarding Toyota oil project, we have been able to reduce the construction cycle for a part of four wells of roughly 230 days with represent a reduction of around 80 days compared to 2023 levels.
Speaker #2: The same methodology and focus are in the after-in real-time intelligence center for drilling and completion that start to deliver results as you will see in the next slides.
Speaker #2: We are the lighter operator in Vaca Muerta working upstream real-time intelligence center 24/7 remotely from YPF headquarters. As a record, one of the biggest service companies last week it was the first time that delivered a work from remote all around the world.
Speaker #2: In the third week of August, we are opening the after-in real-time intelligence center for operation and maintenance. Pulling and logistics in Neuquén. To improve our efficiency and coordination in all the operations of Vaca Muerta.
Speaker #2: This achievement reflects our integrated approach, working closely with our strategy suppliers at every stage of the oil production process. Additionally, we enhanced our operational dashboard to enable real-time anomaly detection and implement corrective action plans rapidly.
Speaker #2: All of these initiatives represent a critical two cultural change for YPF's ire management and production processes. Finally, pillar number four is Argentina LNG project and sees our last call in May we signed the heads of agreement with ENI for the consolidation of first three for 12 million tons per annum, expecting the approval of final investment decision in Q1 26.
Speaker #2: In the same direction, we are working with shale for phase two in order to speed up the FID and obtain synergy between both projects in the structure.
Speaker #2: Moreover, this week our SPV CESA obtained the FID approval for the 20-year railroad charter agreement for its second floating LNG named March 2. This vessel has a capacity of 3.5 million tons per year as expected to be operational in 2028.
Speaker #2: We are also working on the project Rigi as well as environmental and export premise for March 2. Consider the first vessel Hili the total capacity amount to roughly 6 million tons per year.
Speaker #2: Let me mention that this second vessel allows the contraction of a 100% dedicated gas pipeline from Vaca Muerta to the San Matías Gulf in the province of Rio Negro.
Speaker #2: Available during the whole year, instead of the original plan of using existing pipeline idle capacity during off-peak season operating only Hili. Now, moving on Q2 results, revenue remains stable sequentially.
Speaker #2: Reaching over 4.6 billion dollars. We record high seasonal sales on natural gas and fuels. An increased export volume of crude oil and agro products.
Speaker #2: However, the volatility international price negative impacts our refined product prices, especially local fuels. Additionally, Q2 was affected by lower seasonal gasoline demand. In third annually, despite roughly 20% drop in brand, revenues only decline by 6%.
Speaker #2: The drop in brand prices were mitigated by the operational efficiency. The increase of shale export and the recovery in local fuel demand. At just a bit that was 1.12 billion dollars in Q2.
Speaker #2: Decreasing 10% sequentially. It was mainly explained by brand contraction impact in refined product prices exit from mature fill and value of inventories. On the positive side, this negative effect was softened with lower lifting costs on the back of less exposure to mature fills.
Speaker #2: In T3 annually, at just a bit that declined by 7%, also reflecting brand volatility. But it was partially mitigated by the significant ramp-up in shale oil production and even better conventional lifting costs.
Speaker #2: Also, bear in mind that Q2 last year was affected by the strained weather condition experienced in Patagonia. At this point, I would like to note that excluding the negative contribution from mature fill, our proxy adjust a bit that would have been 1.25 billion dollars.
Speaker #2: Looking at the bottom line, Q2 net profit was 58 million dollars, compared to a loss of 10 million dollars in the previous quarter. This turned around was mainly driving by one of items related to mature fills in Q1.
Speaker #2: In third annually, net profit declined sharply. Explaining by higher depreciation from shale activity expansion and lower gains from financial securities in 2024. Also, this quarter included an income tax charge due to higher future tax payable by Q2 24 was the opposite.
Speaker #2: Mature fill also impacted on the net results, excluding them, our profit net result would have been a profit of 264 million dollars. In the terms of investment in Q2, we deployed 1.16 billion dollars remaining similar sequentially and third annually.
Speaker #2: It's a very important to remark that 71% of the total was now directly allocated to unconventional assets. In Q2, we record a negative free cash flow of 365 million dollars.
Speaker #2: It was mainly affected by $315 million of negative impact from mature fields. Moreover, we had negative working capital due to peak winter sales of natural gas and our subsidies paid income tax.
Speaker #2: However, the negative impact was softened by dividend collection from affiliates. As a result, our net debt rose to 8.8 billion dollars, reaching a net leverage ratio of 1.9 times as expected while divesting mature fills.
Speaker #2: Please take into account our acquisition this year, and also that for the rest of this year we are selling performing conventional assets and natural gas after the extension of the concession.
Speaker #2: Now, I will turn the call over to Max.
Speaker #3: Thank you, Horacio, and hello to everyone. Focusing on the upstream segment, the second quarter total hydrocarbon production was 546 thousand barrels of oil equivalent per day.
Speaker #3: It remained stable both sequentially and interannually. Shale production keeps driving the growth, now representing an impressive 62% of the total output. It nearly offset the divestment of a mature fills and to a minor extent the lower working interest at our El Chañal.
Speaker #3: In the case mature fills, hydrocarbon production decreased by 26% versus the previous quarter as we kept divesting them. It recorded 72,000 barrels of oil equivalent per day representing only 13% of the second quarter total production.
Speaker #3: Crude oil production amounted to 248,000 barrels per day in the second quarter, decreasing 8% sequentially. It was primarily driven by lower mature fills and to a lesser extent our El Chañal as explained before.
Speaker #3: Interannually, while total crude oil production remained stable, the remarkable 28% expansion in shale output fully offset the decrease in exposure to mature fills. Let me mention that last month's shale oil production was approximately 165,000 barrels per day.
Speaker #3: We expect continuing significant growth in the second half of the year to achieve our 2025 annual target of over 165,000 barrels per day. Oil exports in the second quarter totaled 44,000 barrels per day increasing by 20% sequentially.
Speaker #3: The main growth came from redirecting Escalante heavy oil to the foreign market, as La Plata Refinery was under program maintenance. Interannually, it grew by 43%, also boosted by shale expansions.
Speaker #3: Natural gas production increased by 6% in the second quarter sequentially to 40 million cubic meters per day, primarily supported by higher seasonal demand. NGL production was 48,000 barrels per day, a modest growth of 2% sequentially driven by higher associated gas output in certain shale oil blocks.
Speaker #3: Total lifting cost was 12.3 dollars per barrel of oil equivalent, this is a remarkable sequential reduction of 19% reflecting further divestment of mature fills.
Speaker #3: Excluding mature fills, our proxy lifting cost for the second quarter would have been roughly 7.5 dollars per barrel of oil equivalent. Zooming into our core hub blocks, lifting costs at 100% of working interest was 4.9 dollars per barrel of oil equivalent, it grew by 7% sequentially due to higher pulling and maintenance costs.
Speaker #3: Regarding prices in the upstream segment, crude oil price was 59.5 dollars per barrel, 12% lower sequentially in line with brand volatility. Natural gas price was 4.1 dollars per million BTU, growing by 38% sequentially primarily influenced by the peak season plant gas price.
Speaker #3: Now, let me walk you through the performance of our shale activities. In the second quarter, we drilled 54 horizontal oil wells on a gross basis, mostly in operated blocks, while maintaining our net working interest of 55%.
Speaker #3: In this sense, in the first half of the year, we drilled 105 horizontal oil wells on a gross basis. This is in line with our estimate of 205 wells for the year.
Speaker #3: In terms of completion and tidying of wells, we accelerated our activity. In the second quarter, we completed 70 horizontal wells and tidying 76 on a gross basis.
Speaker #3: They represented an increase of 35% and 69% respectively when compared to the second quarter last year. Shale oil production in the second quarter remained stable sequentially at 145,000 barrels per day.
Speaker #3: This is because the lower stake in our El Chañal block was fully compensated by the growing contribution from Langostura Sur one block. This block is 100% YPF located in the south hub with a shale oil production of 20,000 barrels per day in the second quarter.
Speaker #3: Considering the acceleration in our ities mentioned before, in July's production level of 165,000 barrels per day we are in good shape to reach the 2025 target of 165,000 barrels per day.
Speaker #3: In our unconventional core hub blocks, we achieved an average drilling speed of 331 meters per day. We remain optimistic about reaching our annual target of 360 meters per day.
Speaker #3: On the fracking side, we completed 259 stages per set per month in our unconventional operations now very close to achieve our annual target of 260 stages per set per month.
Speaker #3: In our downstream segment, local fuel prices remained closely aligned with international priorities, reflecting brand volatility. As a result, local fuel prices measured in dollars were down 8% sequentially and 10% year-on-year.
Speaker #3: Also, second quarter local fuel prices were just 1% below import priorities. Fuel sales volume was 3.5 million cubic meters in the second quarter, growing by 4% sequentially primarily explained by seasonality.
Speaker #3: Interannually, it increased by 3% mostly driven by demand recovery. We also maintained our leading market share of 55%. In the second quarter, we processed 31,000 barrels per day recording a 5% sequential contraction due to the maintenance stoppage at La Plata Refinery.
Speaker #3: This resulted in a refining utilization rate of almost 90% at anticipated in our previous call. However, let me highlight that La Plata Refinery achieved a record high monthly processing level of the past 15 years reaching nearly 201,000 barrels per day in April.
Speaker #3: Our refining and marketing margins declined by 17% sequentially. It was mostly due to lower prices combined with higher costs related to maintenance. However, it was mitigated by lower costs of oil on top of the OPEX efficiencies measured set before.
Speaker #3: Now, I will turn the call over to Fed.
Speaker #4: Thank you, Max. Switching to the financials, let us start with the cash flow evolution. In Q2, we posted a negative free cash flow of 365 million dollars mainly explained by the performance and closing agreements of mature fills.
Speaker #4: They recorded an adjusted EBITDA loss of 126 million dollars and one-off cash flow loss for almost 190 million. Moreover, our subsidiaries, Metro Gas and AESA, paid income tax while the regular debt service remained stable.
Speaker #4: On the other hand, the dividend collection from our affiliates, net of contributions and prepayments mostly offset the negative working capital. The latter was mainly explained by higher seasonal gas sales and payroll.
Speaker #4: In the same line, exports of agriculture products grew, boosted by reduced export duties. As a summary, for the first half of the year, we recorded a negative free cash flow of 1.3 billion dollars mainly explained by the impact of mature fills.
Speaker #4: This asset recorded an adjusted EBITDA loss of over $230 million and a negative one-off cash flow of around $420 million, totaling an aggregate of $650 million.
Speaker #4: In addition, year to date, we dispersed a net amount of roughly 210 million dollars in M&A activity mainly the acquisition of Sierra Chata. Therefore, during this six-month period, the proxy free cash flow excluding mature fills and M&A activity was 460 million dollars negative which is mostly explained by the regular interest payment for roughly 320 million and income tax payments from our subsidiaries for around 100 million dollars.
Speaker #4: Now, in Q2 financing, we ended with $8.8 billion of net debt, representing a net leverage ratio of 1.9 times, as anticipated during our Investor Day in April.
Speaker #4: During this quarter, we issued a 204 million dollar link bond and 140 million hard dollar bond. The first one was with a 15-month tenor at 3.95% and the second one with a two-year tenor at 7%.
Speaker #4: We also secured around 190 million dollars in another local financing. After the quarter, we also issued two local bonds. A 250 million dollar MEP bond and a 167 million dollar Cable bond.
Speaker #4: The first one was a two-year tenor, and the second one a five-year tenor. Considering the recent acquisition of shale assets, we will complement the last issuance of dollar Cable bond with cross-border acquisition financing.
Speaker #4: We anticipate this M&A will take our net leverage ratio to near two times during Q3. However, for the second half of the year, we expect that the increase in EBITDA driven by the ramp-up in production and the sale of our mature fills combined with the divestment of additional non-mature fills that Horacio anticipated will lead to a normalized net leverage ratio of 1.8 times by year end.
Speaker #4: In terms of refinancing activities, during the rest of the year, we will be targeting dead maturities of nearly 800 million dollars 78% local and only 22% international.
Speaker #4: In this process, it is important to highlight that last month Moody's upgraded YPF's credit rating from CAA1 to V2 with a stable outlook. Following the recent sovereign rating improvement, so with this we conclude our presentation and open the floor for questions.
Speaker #5: At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad.
Speaker #5: If you would like to withdraw your question, press star one again. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Tasso Vescomuelos with UBS.
Speaker #6: Hi, Horacio Federico. Thanks for taking my question here. I would like, Horacio, to get a broader, update on the development plans that that you guys have planned ahead.
Speaker #6: The company just announced the acquisition of this block that you mentioned during the presentation. How does that impact the current production plan for the upcoming years?
Speaker #6: And how do you view the risks of an increased development plan amid an already accelerated plan that you guys have released before? And in parallel, Horacio, you recently, said in an interview that you view the acceleration in the CAPEX in Vaca Muerta.
Speaker #6: can you also give some additional feedback on this view of yours? Those are my two questions here. Thank ou.
Speaker #7: Good morning. How are you? Tasso?
Speaker #6: Pretty well.
Speaker #7: The why we bought that is because this fill is one of the best fills in the north of Vaca Muerta, where the tight well is more to say if you see from different consultants, the average production of you are of wells for all Vaca Muerta in order one million.
Speaker #7: But if you see this area, it could be 1.5 or more. So that means that it's more profitable than anyone else. They are in the very, how you say, sweet spot, as in the United States, they want to say.
Speaker #7: What is the affection? Nothing because it's good. We are going to make more money for you and so we are going to prioritize with we shall for sure to vote go very quickly because it will be one of the best fills as rentability of Argentina.
Speaker #7: I don't know if I answered the estion or you need more detail. Facility, we are it's clear? Okay. Thank ou.
Speaker #6: I think that's clear. From you on this interview that you recently gave on this potential de-acceleration on Vaca Muerta activities as a whole.
Speaker #7: The okay. Why I say that in an interview because they asked me in an interview but there's no YPF. It's not the problem for us to do that so we are delivering what we say and every in everything that we say in 4x4 we are delivering.
Speaker #7: I answer at that moment because there are people saying the market of Argentina they said that it will be a reduction in some number of rigs but there's no YPF.
Speaker #7: So I think it's not not I would say not logic and and fair. That I would say which companies are reducing the the rigs, okay?
Speaker #6: Okay. That's clear. Thanks.
Speaker #5: Your next question comes from Leonardo Marcondes with Bank of America.
Speaker #8: Hi everyone. Thank you for taking my question. I had two from my end. The first one is regarding the news on this project. Could you provide some color on your expectations in terms of timing for the conclusion of the whole Phase One?
Speaker #8: And also some more details on phase two on what is the total production should be divested from, what is it the representativeness and also your expectations in terms conclusion for the second phase as well.
Speaker #8: My second question is regarding the export tariff for oil, right? We haven't recently seen the government reducing the export tariffs for other segments. So, is there any expectation or discussion with the government to reduce the export tariff for oil as well in the short term?
Speaker #8: Thank you.
Speaker #6: Okay. Thanks for the question. In let's go by number one on this. On this one, in this one we are finishing. There is only one block that is in Rio Negro that is the expectation they have to be approved by the government of Rio Negro but it's in the final phase.
Speaker #6: And we are totally out. When there is something that I have to explain to you, it is that on this, what we saw, we saw everything.
Speaker #6: But there were two provinces; one is in Santa Cruz, and we are out now because we are no longer the owners of the blocks.
Speaker #6: We are operating for up to the up to December at most and but we operate for the I may know the province company. Okay?
Speaker #6: Because they don't have the people to do that. Okay? But we are out there. In Tierra del Fuego, that is very small compared to Santa Cruz—very, very small.
Speaker #6: We are I think next week we can have maybe we can have good news because we are in the last phases to to agree with with the province.
Speaker #6: Okay? That is on this one. What is on this two? On this two are all the conventional blocks that we have left.
Speaker #6: Because remember, if you see some interviews, I say that the goal of all the people that work in YPF, in the management, is to be an unconventional company next year.
Speaker #6: And so now we are we are delivering and and to sell the goal well, you can call core conventional fills. That they have good results for conventionals.
Speaker #6: Okay? But why do we do that? Because we can make more money as you realize that we have a good portfolio and can invest in Vaca Muerta. This one, with lifting costs that are more than $20 per barrel, is not a priority.
Speaker #6: I don't know how to say in English. Priority. Priority for us because of the profitability. And so, there is all, is all the others is in Chubut or in Mendoza and in Salta.
Speaker #6: There are oil and gas. The production of all the assets is in the order of 50,000 barrels a day. The production of us is 2 million cubic meters per day.
Speaker #6: Debit that all of this is in the order of 8% at 2024. Okay? And I think I answered the question or I left something.
Speaker #6: There is a second one. I work I am a guy that work in a private company. I'm not the guy that regulates the Argentina tariff or export tariffs.
Speaker #6: I don't know. You have to ask the government.
Speaker #8: Very, very clear, Horacio. Just a follow-up on the first question. Regarding the second phase, in terms of production and EBITDA representativeness, what what should be the impact on the company?
Speaker #6: I said maybe I because my English maybe is not good. I know that. Okay? But it doesn't matter. The production is 50,000 barrels a day.
Speaker #6: Of all together, the production of oil and gas is 2 million cubic meters per day. The EBITDA for all that, in figures of 2024 that you have, is in the order of 8%.
Speaker #6: It was more clear.
Speaker #8: Yeah. No, that's that's very lear. Thank you very much.
Speaker #6: Thank you.
Speaker #5: Your next question comes from Matthias Cateruzzi with Abcat.
Speaker #9: Hi. Good morning. I have a question about the CAPEX guidance. You gave us this five point zero to five point two billion guidance with the brand of turn to dollars per barrel.
Speaker #9: Are you planning on changing that or adjusting it in the upcoming quarters?
Speaker #6: Okay, no. We are not going to change them. And also, if you had our figures, we are very, very, very close to what is our budget.
Speaker #6: And we are going to continue.
Speaker #9: Okay, thanks. And then could you provide an update on the equity contributions to the Vaca Muerta oil source for the upcoming two years?
Speaker #6: Sorry? The equity contributions.
Speaker #9: Yes.
Speaker #6: Sorry, sorry. I will I will pass to to Federico that they are they are in charge of all the financing. Okay?
Speaker #10: Hi, Matthias. Well, basically, after the financial close of demos, based on a total investment of 3.1 billion for the project and a 70% debt equity ratio, the total number for our share of the equity will be in the range of 230 million.
Speaker #10: Out of which, close to $75 million to $76 million has already been contributed up to June. So, the remaining amount will be $155 million until COD.
Speaker #10: I would say that at least 50 million dollars will come along 2025 and the rest mainly concentrated in 2026. That will be our disbursement of demos.
Speaker #9: Great. Thank you.
Speaker #5: Your next question comes from Juan Muñoz with BTG.
Speaker #11: Hi. Thank you for the opportunity taking my question. The first one is a follow-up of the divesting of the conventional assets. So regarding the proceeds that you expect with fully divesting those assets, if you could provide us an estimation of those proceeds.
Speaker #11: That's my first question. And the second one is regarding the recent acquisition of the shale assets from Total Energies. A more strategic question is, how are you seeing the competitive M&A landscape in Vaca Muerta in the recent months?
Speaker #11: So that's my two questions. Thank ou.
Speaker #6: For a question, okay. Thank you, I cannot answer. Imagine that if I say what is our expectation, it will be in all the newspaper tomorrow.
Speaker #6: I cannot tell you, okay? But we think that this is a good number because they are very good assets. However, I cannot tell you exactly the number.
Speaker #6: Okay? With all our selling, I really think that we are going to get much more than the total acquisition. Okay?
Speaker #6: That is something that I think I can answer you. Okay? I cannot—I don't know if I can understand what you say: competitive landscape.
Speaker #6: Well, in which sense do you?
Speaker #9: Oh, yeah.
Speaker #6: I cannot.
Speaker #9: How do you view the competition regarding the current assets that are available for sale in Vaca Muerta right now?
Speaker #6: Okay. Okay. But I think there are not not a lot more. The companies that we have all the all now all the assets, they are all focused in the development.
Speaker #6: Okay? It could be another company, or it could be changed. It's normal. But we don't see that there are more during this... it seems that there's no more during this year at least.
Speaker #6: Okay?
Speaker #11: Okay. Thanks.
Speaker #6: It's okay? Okay.
Speaker #5: Your next question comes from Bruno Montanari with Morgan Stanley.
Speaker #11: Hi. Good morning. Thanks for taking my questions. I have one follow-up and one question. On going back to the total acquisition, can you share with us maybe the timeline for when you would start to invest in the area?
Speaker #11: And if there is any CAPEX expectation, just like a quick math, if it's a 500 well inventory at around, say, $14 million or $15 million per well, over the full development, it would be at least around $7.5 billion in CAPEX.
Speaker #11: So I just wanted to know if that makes sense. And what type of facilities you would potentially have to invest as well. And the second question is, maybe to on the financial side, when we look at 2026, the company has some concentration of maturities, especially in domestic bonds.
Speaker #11: So when would you start to work on the refinancing of the 26 maturities? Thank you very much.
Speaker #6: Okay. I will answer the first. Federico will answer the second. Okay? With the total acquisition, our partner is Shell. What is Shell and the province company CMP.
Speaker #6: We are going to have a meeting with them to decide the development. Okay? Because we are partners. So I cannot say exactly there. We are going to prioritize as much as we can is necessary facilities.
Speaker #6: And also, we are talking with companies that are near the earth. So you can get if you know Vaca Muerta to have synergy in the in the plants in the CPF.
Speaker #6: Okay? So there, everybody we can reduce the investment per barrel. That is our idea. Okay? The second question, I pass to Federico. Okay?
Speaker #10: Hey, Bruno. How are you? So, looking for refinancing first, we need to work on, let's say, what we have for the rest of the year.
Speaker #10: Our total let's say refinancing and acquisition finance now for 500 million dollars to be done in this in other words, we have 1.1 billion of additional debt to be acquired until the end of the year.
Speaker #10: For the acquisition finance, we already issued a bond last month in the local market for $167 million. So, more than 30% of the total acquisition is already funded.
Speaker #10: The rest we have acquired financing committed. And the rest, I think, will be mostly in the local market. Now, looking at the tower of financing that we have for 2026, we have $2.3 billion, out of which more than 50% is local.
Speaker #10: And refinancing. And only 350 are international bonds we finance. So we are going to be looking at the opportunities that we have in the local markets and in the international market.
Speaker #10: Starting, I will say from the last view of this year, and also entering into early beginning of next year as, for example, as we did in January of this 2025.
Speaker #10: But bear in mind that more than 50% of the refinancing required is coming from local bonds.
Speaker #11: Very clear. Thank you very much.
Speaker #10: I'm Ry. So far, we have been very successful in refinancing locally. We just, together with the dollar cable bond that we issued last month, issued another dollar debt bond for $250 million.
Speaker #10: So in total, it was $417 million. That is the highest bond ever in the local market. There is a growing appetite for our paper in the local market.
Speaker #11: Yes. Thank you.
Speaker #10: You're welcome.
Speaker #11: Thank you.
Speaker #5: The company appreciates the questions, but since we are running out of time, we're going to accept one last question from Andres Cardona with Citigroup.
Speaker #10: Hi. Good morning. Thank you for the opportunity to discuss the capital location team. I just wondered if you could provide any updates about assets that are for divestiture, excluding the Andes project.
Speaker #10: Maybe you can walk us through the rationale of the strategy of the discounts on the downstream business during the night. How it improves profitability or increase volumes.
Speaker #10: I don't know. Just help to understand the rationale from a profitability perspective. Thank you.
Speaker #6: One question because I understand silt. Explícame qué o.
Speaker #12: El primero es, ¿qué está pasando del lado de desinversión? Es si hay algo más para además de Andes para desinvertir.
Speaker #6: Okay. Y la segunda?
Speaker #12: La segunda es la estrategia de precios bajos.
Speaker #6: Okay. Okay. Thank you. Now I can answer. The first question, besides Andes, I said in the media several times: there is also Metro Gas. When we arrived, we will reach the extension.
Speaker #6: That is expected to be this year. And after that, we are going to be in the market. Also, there is another refinery that we are trying to go out from.
Speaker #6: What is Refinor? Even though that refinery is not refining now, it's close. We are seeing how we can get out, if we can.
Speaker #6: Okay? And the second one during the night is lovely what we are doing because you have to come here to see what we did.
Speaker #6: It's amazing. It's unique. I would say unique in in Spanish word is unique. I don't know. It's in someone else. We have E&I for everything, cars, everything that you want.
Speaker #6: And we see the demand for each gas pump. You hear me? Each gas pump around all Argentina. So we are doing the same as you were.
Speaker #6: Okay? So it depends on demand, it depends on hours, and that's why we are planning to get more more profit to YPF. Why at night?
Speaker #6: Because after we decide and we start seeing something that nobody knows in minute by minute, we realize at night in the after midnight, there is a very low demand.
Speaker #6: What is logical? Because it's logical. At night, people people sleep. So we realize that there our profitability as the gas station is negative. What is that also logic?
Speaker #6: And you have to reduce that. To make more more to reduce your your loss. Because that is an essential service you cannot close. Because it's by law.
Speaker #6: And also it's logical that you have to be opening at night. So what we did is to reduce and it's amazing. The response of the people.
Speaker #6: Because our market share increased a lot, and in one month, we reduced the loss by half. Our incremental demand during the night is more than 30% across all of Argentina.
Speaker #6: All Argentina. And also there is some province that they are more in elastic and they are more other than much more elastic. And so we are playing with that.
Speaker #6: It's amazing. It's the I would love I don't I'm doing that that job. But if I work 25, I would like to work there.
Speaker #6: Really, I want to work more there than I was working in in my life in the at the beginning or on my career in in reservoir.
Speaker #6: I tell you that it's amazing what those guys are doing.
Speaker #10: Thank you, oracio.
Speaker #5: That concludes our Q&A session. I'll now turn the conference back over to Horacio Marin for closing remarks.
Speaker #6: Okay. Thank you very much for all the questions. Really, we are proud of what we are doing in YPF. We are working very hard. In fact, I am today with an infection, and I have been coming all day long, all week long, with this infection because I love to be at YPF.
Speaker #6: I love what we are doing. I like what people are response in in in the profitability in all the company. And and so thank you very much.
Speaker #6: And we will see in three months. Well, no, see. We will talking in three months. Okay?