YPF SA (YPF) 2024 Q3 法說會逐字稿

Hello, greetings, and welcome to the YPF third-quarter 2024 earnings webcast presentation.

(Operator Instructions) As a reminder, this conference is being recorded.

At this time, I would like to turn the conference over to Margarita Chun, YPF's IR Manager.

Please go ahead.

Good morning, ladies and gentlemen.

This is Margarita Chun, YPF's IR Manager.

Thank you for joining us today in our third-quarter 2024 earnings call.

This presentation will be conducted by our CFO, Mr. Federico Barroetave; and our Strategy, New Businesses, and Controlling Vice President, Mr. Maximiliano Westen.

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 CEO, Mr. Horacio Marin.

Before we begin, please consider our cautionary statement on slide 2.

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.

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 Federico.

Please go ahead.

Thank you, Margarita, and good morning, everyone.

Let me start today's presentation by describing the main highlights of Q3 2024.

First of all, we achieved a strong level of EBITDA, 13% up sequentially and even higher 47% up interannually despite the recent brand contraction and extreme weather conditions in Patagonia during July that affected our conventional production.

This positive result reflects the company's dedicated efforts since December and along this year to fully converge local fuel prices to international parity in parallel with our focus on production efficiencies in our core asset, Vaca Muerta, where we can now share improved process and efficiency metrics across all the businesses.

As a result of this, we produced 36% more shale oil than in Q3 last year, now representing almost half of our total production.

Very important and in line with this interannual expansion, we became the largest oil exporter in the country, exporting roughly 40,000 barrels per day.

We also made progress in the development of the key infrastructure project, Vaca Muerta South oil pipeline, also known as VEMOS; that YPF is leading as a producer's consortium export initiative.

Also, we advanced further with the Andes project, and Max will share further details later.

Now let's move on to the quarter's result.

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 fuel prices, which was boosted by higher gasoline demand.

These effects were partially offset by contraction in diesel and oil prices, in addition to lower conventional production due to our Patagonia's operationals affected by the extreme climate until early August.

Interannually, revenues increased by 18%, mostly on the back of a rebound in fuel prices, plus even higher oil exports, partially offset by lower fuel demand, which was exceptionally high last year in view of reduced prices.

Adjusted EBITDA totaled almost $1.4 billion, 13% up sequentially, primarily due to the higher seasonal sales of gas, coupled with higher shale hydrocarbon production and better fuel prices, partially offset by higher costs related to Patagonia's weather condition and cost inflation besides lower export prices linked to Brent.

Interannually, the increase was remarkable, growing the 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 fuel, partially offset by higher costs and the weather impact mentioned before.

Net result grew significantly, posting roughly $1.5 billion, almost 3x the previous quarter, mainly due to a positive income tax on the back of a lower devaluation expected for tax assets, so decreasing future tax payable.

Interannually, besides this impact, the increase was even higher, since Q3 last year was affected by an impairment charge in natural gas assets.

Total hydrocarbon production averaged 559,000 barrels of oil equivalent per day, rising 4% sequentially and 8% interannually, driven by a solid performance in our shale operations, which is our core business and focus since last December.

This was partially offset by lower conventional output due to the conditions in Patagonia.

In terms of investments, we deployed near $1.4 billion, 13% up sequentially, mostly on the back of higher activities in the upstream to ramp up shale oil production.

Interannually, CapEx was 7% down, mainly due to last year's inflationary context.

Notably, 73% of the quarter's investment was concentrated in the upstream, mostly for shale oil operations.

On the financial side, we reported a negative free cash flow of $173 million, although the adjusted EBITDA was similar to the deployment of our CapEx, Q3 was mainly affected by higher debt service payment, partially offset by a growing activity in Upstream business, temporarily increasing accounts payable.

As a result, we maintained net debt at $7.5 billion, but improved net leverage ratio to 1.5 times fully aligned with the target of the year.

Now, I turn the call to Max to continue with the quarter's operating performance.

Thank you, Federico.

Before starting with the quarter's performance, let me briefly update on the mature field strategy in order to exit from around 50 conventional blocks.

The Andes project that grouped 30 blocks has been achieving successful results.

So far, we have executed nine SPAs for a total of 25 blocks.

Also, we obtained the provincial approval for one of the clusters in the province of Chubut.

Considering the positive performance, we recently decided to add seven blocks from the Tierra del Fuego to Andes project.

So the total now amounts to 37 blocks.

Regarding the blocks not included in the Andes 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, 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 recorded a new sequential 3% increase, averaging 256,000 barrels per day on the back of a solid 11% shale expansion, minimizing the impact on the conventional production decline, which remained constrained in July by the extreme weather in Patagonia.

Since the beginning of August, we were able to resume our operations and return to normal activity levels.

Despite this contraction, it is worth highlighting that 9% of the conventional output came from tertiary production, increasing by 2% sequentially and minimizing this impact and the natural decline in mature fields.

Beyond crude oil, natural gas production grew 4% on a quarterly basis, mainly driven by the completion of the compressor plants in the Huincul pipeline and the seasonal peak demand, while NGLs production increased 7% due to the increased shale gas production and the productivity achieved after the optimization implemented in the two expander located in the Loma La Lata block.

Moving to lifting costs.

We recorded $16.1 per barrel of oil equivalent in the third quarter, remaining essentially flat on a sequential basis, mainly due to higher hydrocarbon production, offset by higher pressure on our cost structure from quarterly inflation and lower conventional production mentioned before.

In this sense, the lifting costs in our core hub 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 devaluation, as well as the divestment of mature fields expected 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 third quarter, 4% down quarter on quarter.

Despite the decline in Brent during the third quarter, the local pricing environment remains steady.

On the natural gas side, prices reached $4.5 per million BTU, driven by the seasonal winter price of Plan Gas.

Now walking through our shale activities, we continued focusing on operational efficiencies.

The initiatives presented in March this year are showing important results.

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.

Also, let me highlight in the first nine months, we tied in 41% more wells and completed 28% more wells compared to last year.

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, in the third quarter, our shale oil production set a new record, delivering 126,000 barrels per day, increasing by 11% sequentially and 36% interannually. 86% of the total shale oil output came from our core hub oil blocks Loma Campana, La Amarga Chica, Bandurria Sur and Aguada Chanar.

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.

Considering all these metrics, we were well on track to meet our target of more than 120,000 barrels per day on average for 2024.

Let me highlight that our production in September has already surpassed 130,000 barrels per day.

Moving on to our downstream segment, processing levels averaged 298,000 barrels per day, recording once again refinery utilization rate of above 90%.

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.

On the other hand, last year was affected by programmed shutdowns at Lujan de Cuyo and La Plata refinery.

Fuel sales volumes was 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.

Interannually, fuel sales volumes declined by 9%, since last year was affected by an exceptional high level of demand.

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.

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.

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.

As a result, average fuel prices, measured in dollars, increased by 1% sequentially and 23% interannually, 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.

As mentioned before, this is our remarkable results we achieved after a continuous conviction to follow international parity.

Lastly, efficiency-wise, we continued moving forward with our plan to improve our Downstream margins.

In that sense, we have identified and implemented a series of initiatives 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 logistics rearrangements, among others.

I will now turn back to Federico to go through the quarter financial results.

Thank you, Max.

Switching to the financial front, let us start with cash flow evolution.

Although our adjusted EBITDA was similar to the deployment of our CapEx, higher debt service and purchases of crude oil to third parties due to lower conventional production affected cash flows, but partially offset by the temporarily increased accounts payable in the upstream shale activities.

As a result, free cash flow came at a negative $173 million.

In terms of financing, in Q3, we successfully issued a seven-year unsecured international bond for $540 million at a yield of 8.75% and proceeded with the repayment of $334 million for the 2025 notes and $166 million for the 2027 notes in addition to a $40 million exchange to the 2025 notes.

So with this new issue, we continue reducing refinancing needs and cost for 2025 and at the same time, consolidating the overall spread curve of YPF.

In the local capital market, we issued a 2-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.

During this quarter, we also reopened the local banks syndicated market with a $300 million syndicated loan with three local relationship banks.

After Q3, we issued two new dollar-denominated bonds, $125 million in dollar MEP at a yield of 6.5% and $25 million in dollar recovery at a yield of 7%, both with a tenure of four years.

On the liquidity front, 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.

Our net debt remained 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, 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.

The remaining portion includes local bonds for $150 million and bank loans and other facilities for another $140 million.

Now let me comment on the progress achieved in the oil midstream expansions to unlock the evacuation capacity in the Neuquina basin.

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.

The volume is 37% more than Q2 and represents more than 15% of our total oil production.

Regarding the evacuation to the Atlantic, the construction of the first tranche of VEMOS connecting Vaca Muerta formation to Allen achieved a 50% construction project.

Total CapEx for this first tranche amounts around $200 million.

We expect the first tranche starting capacity of more than 350,000 barrels per day by Q1 '25 at Allen to be initially utilized by Oldelval's system, which connects to the province of Buenos Aires.

In line with Oldelval's pipeline where YPF shipping stake is 25%, it continues with expansion, expected to gradually add around 30,000 barrels per day by year-end and roughly 215,000 barrels per day by Q1 next year.

The VEMOS first tranche shall be expanded to over 450,000 barrels per day by 3Q '26 at Allen once the second tranche strikes its operation, connecting also to the oil export dedicated port of Punta Colorada in the province of Rio Negro.

The plan of the second and most important tranche of VEMOS is designed to reach commissioning capacity of 180,000 barrels per day by Q3 2026 and increasing capacity up to 400,000 to 500,000 barrels per day by 2027.

This new pipeline will also be able to reach more than 700,000 barrels per day of design capacity if the basin requires it.

Total CapEx amounts to roughly $2.5 billion and includes the 440 kilometers oil export dedicated pipeline, storage and control room facilities as well as mono buoys to operate VLCCs, the 2 million-barrel mega vessels that will allow Argentina producers to have access to the Asian markets.

In terms of progress to date, we have signed term sheets with different producers for around 370,000 barrels per day.

We also created the SPV that will develop the producers' consortium export pipeline, and we are preparing this SPV to apply for the deal as soon as possible.

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.

The plan is for the SPV to award the EPC contract for the pipes and the EPCM contracts for the export terminal to start construction between December and January.

Regarding the project finance, we are developing the consortium agreements with a target to structure 70% debt and 30% equity.

So far, we have received banks' LOIs in line with this purpose and indicating a strong international financial backing for the project.

So with this, we conclude our presentation and open the floor for questions.

(Operator Instructions) Vicente Falanga, Bradesco.

Hi.

Hello, Horacio, Federico, all YPF team.

Thank you for taking my questions.

I basically have two questions here.

First of all, I would ask you if you can mention and share with us how was your roadshow to sell Argentina's LNG in 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.

And then my second question is on lifting costs, which right now is at $16 a barrel.

I know the company has a target to get to $8 a barrel some point next year.

Seems a little bit far away.

If you could provide a road map of how to get there.

And then also during the call, I think you mentioned something about $13 a barrel of lifting cost, but I missed the message there, if you could repeat it.

Thank you very much.

Hello, Vicente.

Thank you very much for -- do you hear me because I have problem hearing you, okay?

Yes, I can hear you well.

Yes.

Okay.

Okay.

This is Horacio Marín.

I am in Austin because to -- this evening, I will receive a Distinguished Alumni Award in the University of Texas for my Master of Science of Petroleum Engineering

.

We have a little problem with the communication.

But if you hear me from the telephone, it's okay.

Can -- I didn't hear the beginning

--

Yeah. sorry.

Could you repeat -- because I have a problem.

Yes.

No, the first question was if you could share how was your roadshow to sell Argentina's LNG in Asia and Europe?

And how is the process to get an equity investor -- a possible equity investor to the LNG plant?

And then my second is how to get the lifting cost from $16 to $8?

Okay.

Okay.

To the LNG, I have -- 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 offtakers.

Investor, there are the companies of Argentina, they have the reserves -- the gas reserves.

Plus Petronas is one that they have to decide at the end of December, if it continues or not.

But because our job is to maximize the shareholder value, we are continuing to discuss with super major to enter as an equity.

I cannot tell the name of the companies because it's confidential at the moment.

We are going to declare that when we have the final document signed, okay?

In -- about the offtakers, we went to India, as you know, and we went also to Europe.

And really, I'm very, very positive because we have a lot of NDA signed, I think it's in the order of 14 so far, and MOU with different companies and also countries.

Like India, we are in the process of signing one of these MOUs for the big number of selling.

All the travel to the different countries that we know that we went to Hungary, we have also in Italy, in German -- in Germany, sorry.

Also, we went to London, and there are several companies.

And in all the meetings, it was positive.

That doesn't mean that we signed contracts, doesn't means that we passed to the next phase, what's to sign NDAs, MOU and start the negotiation as soon as possible.

So from the LNG, I'm very positive.

The second question was about the lifting cost that you say how you can go to $18 to -- I don't remember if I say, you said $16, no?

Yes.

It doesn't matter, the number, what is -- okay.

Yes.

Yes, the answer is the -- remember, we are going to be almost a nonconventional company from the next year and so on.

That's why we can get down because the difference in the lifting cost from one to the other is huge.

And that's why in the 4x4 -- YPF 4x4 were this first pillar and the second pillar.

Third pillar is concentrate our investments in the more profitable business, what is Vaca Muerta oil.

Second, that is to work for a new ecosystem for very small companies, what we call mature fields.

We are now in the process -- that was a highlight trademark in Argentina that it was two weeks or three weeks ago, that they come to the fourth area.

So we are all in the process that the province is because it's a new process in Argentina, beginning from the new constitution in 1984, and the provinces have to sign -- from constitutional law, to sign the approval and that we are in that process that is new for everybody in the massive way that we are doing.

So we are still -- we have a very -- econogram, very tight one.

We still want to be out of the process in the beginning of next year for the 25 areas.

We are still in negotiation in one of the province, which is Santa Cruz.

And also, we make the number, the second, understood that is for Tierra del Fuego premises.

I think -- it's okay for you or you need more details?

That is great.

Thank you and good luck on your Masters.

Okay.

Thank you very much.

Bruno Montanari, Morgan Stanley.

Good morning, everyone.

Thanks for taking my question.

I have only one question.

I wanted to explore a little bit how you are envisioning your free cash flow trends into 2025.

So when could we start to see perhaps the free cash flow turn positive into next year?

Or if that only happens in 2026?

And if you could give us a hint of what your CapEx plan looks like for next year, excluding the conventional assets, that would be very helpful.

Okay.

Our idea is the same that it was, I think, the first call that this year, the cash flow is neutral for operational point of view because we have the mature field.

Next year, with the mature field -- the majority of matured field out, we continue still thinking that we are going to have a neutral cash flow for the -- all the companies, including the financing.

We are working now in the budget 2025.

Remember that YPF has plenty of assets, and we have partners and we have 100% assets.

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.

But that is the way that we are thinking on that.

So for next year, to be clear, we think we still continue thinking that we are going to be neutral with the -- including all the company financing, operational way.

From the '26 going on, it will be positive cash flow.

And the CapEx -- okay, sorry, the CapEx.

The CapEx, we are going to maximize the CapEx in the nonconventional.

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 part.

For sure, we are going to maximize your -- the shareholders.

And we think that this bottleneck, we are going to reduce the CapEx if necessary.

Our work here is to be very efficient.

So reducing the DUCs as much as possible because we have 14 rigs, but we have -- we are working in that issue a lot.

And if we see that the DUC is increasing, for sure, what we have to do is to reduce the CapEx, if that happened, okay?

Perfect.

Thank you very much.

Thank you.

Daniel Guardiola, BTG.

Hi.

Good morning, Horacio, Federico, Maximiliano and Margarita.

I have a couple of questions.

The first one will be on infrastructure and more specifically on midstream infrastructure.

So in the case of the Duplicar expansion project, I would like to know if you can share with us 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?

And I would love to know also how ready you are to fulfill this capacity at this pipeline once it is ready and if you're foreseeing a spare capacity in the pipeline in 2025 and perhaps in 2026.

So that's regarding all the Val Duplicar 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 projects.

And also, it would be great if you can share with us if you already have secured all the required environmental permits to develop this pipeline.

So those will be my two 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 Burford.

And I would like to know if you can share with us an update on these legal disputes.

Thank you.

Okay.

I will start from the end to the first, I think.

Burford, if you remember that in Burford, we are out of the trial from the forest

(inaudible).

They will be next year in the second sequence.

So I cannot answer by the Republic.

That is confidential and we had to answer the Republic.

The -- I have the same information that you have from the newspaper and because of the document that the United State government put in the press for -- in New York.

That's for Burford.

The other, you say about the VEMOS.

In VEMOS, we have all the permits, all the permits, environment, social, everything is done.

We are going to pass as -- in the -- in our Board of Directors of November 14, the approval -- the internal approval of the Board for that investment for the part of YPF.

We are a little delayed, I would say, two weeks because our first purpose, as you see in the media, was to sign everything from November 14 but -- because we have several companies working, a lot of lawyers, a lot of financing guys, a lot operational guys, I think we need a couple of weeks more or three weeks more that they will be done.

We have all the bidding process done.

We have the tubulars.

We have also in -- we have all bidding process for the civil work, and they will be given to the company as soon as we have signed.

But we will decide with all the partners next week who will be the winner of that process.

We don't see a delay -- or some couple of weeks only, I think or three weeks.

But we have in communication that we need to have the first delivery for second -- the third quarter, I'd say beginning of third quarter of 2026.

The other question that you asked me is about the Oldelval.

The Oldelval, I don't know if you asked me.

The Oldelval is one -- is will be in December or January, there will be the first part.

I think it's 50,000 barrels for all the companies.

And at the end of May, it will be done all the part.

We always follow in our processes to follow the capacity of the oil pipes.

We try to fill up everything, that.

Remember that when you are an operational company, if you lose the capacity, you lose a lot of money.

If you have a little capacity -- spare capacity, is like it works as a secure, okay?

So -- but we are following that.

We are following our production.

We always trying to follow the production with incremental capacity that -- because they are in spikes, every company will have a different situation.

I don't know if I answered all the questions.

I don't know

--

If I can ask just a clarification, can you share with us what percentage of the additional capacity do you have in Oldelval?

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?

Yes.

The daily production today -- yesterday -- the day before yesterday -- now, we are 50%, 50%, even though we have all the conventionals.

We're having 135,000 barrels a day.

And for the end of the year, we think we're going to improve a lot.

By a lot, I will say in one month, okay, because we have new type wells in, I think, is 16, if I don't remember.

But it will be more than 140,000 barrels a day at end of the year, and that is our purpose, okay?

For the -- I don't remember the capacity of Oldelval.

I don't know, if -- Max, if you remember exactly the number?

I don't remember.

Sorry?

Our capacity.

Yes, it's about 25%, Horacio.

And regarding trucking, it's marginal.

It's about 10,000 barrels per day.

So it's quite marginal.

Okay.

No, the 25%, remember, the 10,000 is not a lot, okay?

It's okay or -- Daniel?

Or you need more?

All right.

Andres Cardona, Citigroup.

Thank you.

Good morning, Horacio and YPF team.

I want to follow on one of the answers that you just gave to Daniel.

You said that your exit production for this year will be 140,000 barrels a day, and it's quite a strong growth.

But my question is about 2025.

Don't you think the 160,000 average production for the next year could be a conservative assumption?

And if you can provide some color on how relevant this upside could be?

Okay.

It's -- remember that when you forecast production, all with this uncertainty, and it depends on the different areas that you are going to invest and it depends on the approval of the different departments that we have.

But we -- you have -- for everybody, you have to expect for next year that we 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 achieve the -- our average of 160,000 that we talked to you in the first quarter, I think.

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 this is the number that we have today, okay?

Okay, understood.

And the second question that I have is you have been talking about the potential divestiture of Metrogas.

I wanted to understand how this process should go.

Maybe also with the falling rates in Argentina and the maturity that you have in third quarter '25, if there is not a window to perhaps prepay this debt issuing.

And is that something that you are considering at this point?

Okay.

I will answer about Metrogas.

From the beginning, I think when I stare in my -- alone in my heart to say what we have to do in YPF, we say that the affiliates have to be focused where we make value.

And also Metrogas is a distribution gas company that is not the core for YPF.

From the beginning, I always said that we are going to sell Metrogas and is something that is logical from the law of Argentina.

And it's totally logical the way YPF might do that.

I -- there is the last nine months, I spoke, I don't know how many, maybe 100x, that is a big number, but a lot of time, talking for what is YPF 4x4 project program.

Always, I said tha Metrogas is in that -- in our range.

And to maximize, we need the moment that we can maximize the value for YPF.

Because of the grand -- the big, big improvement that we have in Argentina, and so the people think that, that will be the moment, and it could be the moment.

And that's why I was in the media, I was talking, I don't know, two weeks ago in a big meeting with people from the economical -- the economy -- private economy.

So if now we have companies that put a good value, that we think that is good for the shareholders, we have something in our mind, all the team of YPF, for sure, we are going to sell.

But it's not that we start the process.

We continue to talk about that.

It could be -- we have to decide when's the proper time to do that.

But I again say, if somebody has a good number and give us an unsolicited offer or we have offers that match our process, our number, we must do a transparent bidding process for selling Metrogas to maximize shareholder value.

From the maturity of the bonds, I pass to Federico.

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 let's say, it's not dependent on Metrogas.

I think that the market is quite open now.

Let's say, we see several options to, let's say, cancel these maturities.

We are just having 750, coming due in July.

So I -- we are much more confident now in having different alternatives to refinance this next year.

Let's say, we have international bond markets, we have also possibility of doing prepayments or -- of products, also local market, let's say.

And that all depends on how Argentina is going to evolve.

But in essence, let's say, we are not linking in any way Metrogas to the bond maturities in next year.

Thank you.

Marina Mertens, Latin Securities.

Hi.

Good morning.

Thanks for taking my questions.

My first question is on the Downstream segment.

How does the decision-making process to adjust prices at the pump work?

Do you plan to maintain the spend to import parity?

And then on the downturn in demand, do you think this has more to do with reduced economic activity or to factors such as the narrowing of gap between prices in Argentina and neighboring countries?

And then I have another question.

Do you plan, at some point, to show an adjusted EBITDA including the contributions from companies such as Profertil and Luz?

And if so, can you give us an idea of how much these companies could add to YPF's EBITDA?

Okay.

Thank you for the question, Marina.

The -- as I say, we have like a fair -- but I cannot tell you the process because you know the competition, how we are working.

We have a fair process of pricing with the consumer, and so if the price goes up, we have to go up.

If 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.

And we are -- we have a way of maintaining the price as import parity prices as a normal one.

So if the price goes up, it will be down.

So I -- regarding, I don't know, downturn in demand, okay, it depends -- now we are seeing a difference.

We are seeing that we are increasing since the last July.

I'm talking about YPF.

We are increasing -- the demand is increasing, no decrease in the demand.

So we have to have a fair value price.

That is what we are doing, is to do that.

And that's why I think this is one of -- there are several reasons why we are successful in YPF, that is prices, 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.

Adjusted EBITDA including contribution for associated companies is the second one.

We have, in our EBITDA, approximately 300,000 from participations.

And we are looking how to improve our EBITDA in the different companies, okay?

The YPF Luz is an excellent company as the same Profertil.

I don't know why -- what is your purpose of the question or maybe I didn't understand you well, what you want from us or for me to answer.

I think the question is on the consolidating the EBITDA.

And the answer, it's, Marina, that we co-control these companies.

So we cannot -- and we do not consolidate those on our financial statements.

But let's say, just to give you a sense of the EBITDA of YPF Luz, for this last nine months, the EBITDA was 262, and Profertil was something in the range of 200, also year-to-date.

Okay, thank you.

Thank you very much.

Tasso Vasconcellos, UBS.

Hi.

Thanks for taking my question.

I think taking advantage here of this nearly one year in the position as CEO of YPF, could you share with us the main challenge you faced so far?

And how different has been leading YPF as a state-owned company compared to leading a private company?

And in this context, how have been interactions with the government related either to the divestments, the assets on the divestments, the assets on the investments, adjusting fuel prices and so on?

That's my question.

Okay.

We are working -- you know that I am a 61-year-old guy.

I was working for 35 years in

(inaudible).

We are working here as a private company.

What we are doing is, I would say, a big change in management, management control, capital allocation and investing in a portfolio analysis, what is more efficient and more profitable for shareholders.

And that is, as simple as that, how we are working.

It's a big challenge.

This is a big change.

Yes, it's a big change.

But you see the results.

YPF is unbeatable, if you work as we are working with all the employees, how we are working today.

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.

And so we see a big change in everything.

And the efficiency is a key for us, the productivity is a key for us.

Profitability is the goal.

The other is in medium to achieve the profitability.

Big changes that we are doing.

The December 13, we are going to open a real-time intelligence center in YPF in the -- in Buenos Aires, where we have all the knowledge, and we are going to work as a major -- super major, but in the real time, decision-making for all the drilling and completion.

We don't need to go any more to the wells because we have in real-time everything, artificial intelligence inside, we have everything on that.

This is a big change.

The other that is more disruptive, I think that we are going to be -- I think and I can say because I was working on there.

I couldn't do that, but I say always, in YPF, it must be done, what is the Toyota World.

Toyota World means we are working with Toyota, and we are making the -- all the efficiency of Toyota has in the car industry, in the contraction of the world, and that will be very disruptive.

I think -- and we are -- why we're doing that?

Because we have to reduce the well cycle, we have to reduce the working capital of the company a lot.

We are seeing major difference now, and we are going to have strategic partners as Toyota do when they make the high books in Argentina or in all the world.

And so that is the way that we are working to sales.

As an industrial part, we are working for the efficiency in all the refineries.

But La Plata, which is the biggest one, I am from the La Plata City; and we have to have the best of refinery in the operational margin point of view, and we have hundreds of initiatives and with times, are responsible to improve our margin.

And that is the way that we have to do.

We came to YPF to do something very, very extraordinary for the company and for the shareholders.

And that is why we are working and what we are focused, okay?

I don't know if I answered or I talked more than you wanted or less, I don't know.

No.

That's clear.

Thank you.

Bruno Amorim, Goldman Sachs.

Hi.

Good morning.

Thanks for taking my question.

I have a follow-up on the outlook for production growth going forward.

On the shale side, it's very clear what's your view for 2025.

You also have a guidance, 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, is this is a valid guidance?

And what are kind of the upside risks here?

And what are the challenges as well?

To what extent does it depend on further improvements in midstream or not?

So that would be my main question.

And then just a quick follow-up on the conventional side of the production.

I understand that's not your focus, but just so we have an idea, what's the expected decline rate going forward?

Is the 10% year-on-year decline that we saw in third quarter a good reference for the next few years or not?

Of course, considering on a like-for-like basis without considering the divestitures.

Okay.

From the guidance of the oil for the -- our guidance for 2027 maintain value today.

We are working to tie up all the company, what we call the full development.

And we are -- it's an iterative process, not as easy as if you make -- cash flow easy is in excelling in five minutes because that means that you have to do in the proper way, taking all the capital.

And we are working.

So maintain that guidance, but I try -- I would like for April to -- that I think is more timed presentation that we can update you.

And I promise that for that moment, I will update for everybody that guidance, okay?

For the part of the conventional, remember, our goal is to have in the South, it will be -- Manantiales Behr is the biggest one that is producing in the order of 25,000 barrels a day.

And now we have tertiary, secondary, primary and is an excellent part.

And that you cannot expect that it is declining because we have more project of tertiary to do, and it's working very well, the tertiary polymers in that area.

We have in (inaudible) some areas that we are not the operator that also they have potential on that.

And so it's not that you have to expect that it's going to reduce 10% per year.

It depends on that investment.

But I would say that, that will be the two only the -- it will be the biggest one.

The other, I think, for YPF, for the industry and for the country is better, they have small companies working.

Remember that I start working in my career in mature fields, and I know how to work in mature field and also in the biggest field.

And you have to know when you have to go out and the others can make more value, okay?

And so don't expect that it will be the reduction as the others because remember that today, we have 50 and 50.

When we have 50 -- only 50, it will be like almost -- we are going to be almost unconventional one.

And it's not important that production, it will be not important as it was before the conventional for YPF.

I don't know -- the challenge, I don't know what challenge you are talking about the midstream, you say.

The midstream, I think we are, as I explained, in a good shape to make VEMOS, where we have the VEMOS, I think the VEMOS, the Vaca Muerta South oil pipe, it will be change -- changing for the country, not only for YPF.

So all the oil companies that they have assets in Vaca Muerta, they will improve the production.

And if you add up the capacity that they will have remember that after for incremental capacity.

In there are only pumping units and so the investment is not low.

And as I think we were not as emphasizing in the call at the beginning, but we say 360,000 barrels, but you have to adapt the winner of Exxon assets.

And so the total production for the first phase, it will be much more than we expect at the beginning, at least when we start working in this project that we continue working with this project in YPF.

We expect that the first phase to be lower appetite of the companies, but it seems that they will be a big incremental.

I don't know -- dependence on midstream, for sure, as every company, we are dependent on the Vaca Muerta South oil pipe.

That's why we put so emphasis during this year.

We are going to present the [RICI] for, I think, in very, very short time.

We have the company that -- we made the company for the (inaudible), we will present that.

And as soon as all the document is signed, it will be done, all the process, to start that one.

And we think that we are going to maintain that for the third quarter of '26.

And after that, the dependency will be on capital, I think prices of oil, sure and result of that would -- well, that is good thing that everybody wants is our shop.

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 we can in the lower time.

Very helpful.

Thank you so much.

Leonardo Marcondes, Bank of America.

So everyone, thank you.

Thank you for picking my questions here.

Most of them have already been answered, but I have two from my side.

First one is on the new well that you guys drilled.

We saw the news that you guys have drilled the longest horizontal well in Vaca Muerta recently.

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 the Exxon assets.

We saw some news that Pluspetrol was the winner for these assets and that Exxon has already communicated the other participants about the results.

So my question is, can you confirm that?

Or is the process still ongoing?

Okay.

Yes, the -- we drilled the longest well in Loma La Lata in Loma Campana block.

I think it was LL 183, if I -- don't remember the name of the well, okay?

This is a trademark.

But I'll tell you one thing for you that this -- from the reservoir point of view, the longest the well, the best form the profitability.

But the question is -- sometimes it is a question of the cost.

You have to see the cost and you have to be -- more than the cost is the mechanical issue that you have because -- if you have the capacity of all the mechanical.

So we always see also in United States, and we have in the order of -- sorry, 3,000 meters is the average that we have.

Why sometimes we drill so high those wells is to make -- we make there when you have the increase of the investment, but when you have to make two wells that is one 3,000 and the other 1,000 or 1,500.

We try to go along as well, okay?

But in general, our goal is 3,000 because we have optimized all the costs.

If we -- always, we try to go further, okay?

The farther you go as an (inaudible), the better in general, the better you have more profit, okay?

That is in the first part.

The second part of the question was disposal -- what do you say disposal of -- disposal assets, what do you mean with disposal assets?

Leonardo, can you repeat the second question, please?

Sure.

Sorry, I apologize.

I was on mute here.

The second question is regarding Exxon asset, right?

Exxon is selling their assets in Vaca Muerta.

And we saw some news that Pluspetrol was the winner for these assets and that Exxon has already communicated the other participants in the process about the results.

So my question is, if you guys can confirm that to us?

Or is the process still ongoing?

Okay.

Remember that our message of ExxonMobil, so it is confidential.

And it's ExxonMobil that said would -- is the -- we communicated Pluspetrol was the winner of the bidding process, as they say, ExxonMobil.

So that is confidential.

You have -- it's not -- I will not answer, but I have to ask to ExxonMobil, what is the owner of the asset and is the only decision-making company for that, okay?

That's very clear.

Thank you.

Thank you.

Ezequiel Fernández, Balanz.

This Ezequiel Fernández, Balanz.

Can you hear me all right?

Yes.

Yes, we can.

Okay.

Great.

So good morning, gentlemen, Margarita, Valentina, too.

Congratulations on the operational upgrades, acceleration of shale completion, the higher utilization on 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 '26?

If you could share that, of course.

Yes.

In general, we are not doing -- well, we have, but we are not doing like forecasted production official for that.

The only thing that I can tell you that the chamber, the oil and gas chamber of Argentina making work, I think, was a year before -- last year.

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 million to 1.4 million barrels a day into

(inaudible).

That is what is in general, all the industry, is the last official document.

It was prepared by the oil and gas chamber, will be called set in Argentina.

Okay.

Sorry, that was 1.2 million, 1.4 million for which year?

Yes, per day -- 1 million barrels per day for all the Argentina with the capacity of VEMOS.

And the other one, we can -- you can reach from the

[UK plus].

I remember that in Rio, you have Otasa that goes to Chile, Oldelval that goes to Bahia Blanca and you have the VEMOS that is going to Rio Negro, the -- and plus our oil pipes that go to our refinery to refinery Lujan de Cuyo.

That is all the evacuation for Vaca Muerta.

If you add up all of that, they give you in the other 1.5 million barrels a day or it will have all the capacity -- the evacuation capacity of oil for Vaca Muerta and conventional fields of Neuquina.

But the camera forecast of 1.2 billion, 1.4 million, for which year, is it 2026, '27, '28, '30?

Let me

--

No, it's okay.

Don't worry.

I can take it with the IR team.

No, I don't want to

--

No, it's in 240, it's between 239 and 240.

And always, there is a bet the other day, they were -- I didn't mention that, but several were talking about that and is in that order for 240.

And that, it could be because of VEMOS, okay, because VEMOS can be up to 2027, you can go up with the pumping.

So in general, people talking here for Argentina that they can reach the peak, even it could be bigger to the peak of that for 230.

And that works if we choose -- I think 1.2, 1.4, I don't remember.

I think 1.2, it's almost doubling the production.

In general, when you see 240 and you put in the oil and gas, taking into account all the LNG that is all doing by the camera in equivalent barrels of oil per day is 2.2 times the actual production of Argentina or the real production of Argentina, of the last one.

Yes.

The second one is related, gasoline and diesel sales.

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 to -- for gasoline and diesel demand to start growing again?

As I tell you, we are seeing a compare with sun.

I don't like to compare with previous year because previous year was another country, another country, another prices, another -- everything another.

So I'm not comparing that because I think you mix up the numbers.

But I compare what happened this year.

And July, you can take out because it's like a driving season in Argentina, because there is like holidays that people use a lot of cars.

So you cannot look and compare that.

But I compare with sun, and I see that this is increasing the oil of us.

And we are also increasing a little bit our market share.

And there is in gas, in diesel, there is -- from YPF numbers, we see a lot of improvement in transportation.

And also, you are seeing that we are -- I'm not the economy guy, but you see that the -- everybody is saying and the numbers saying that Argentina is increasing now from out of the recession.

And so that will be a good news for the country and for us because we are going to have more selling or -- even that we are in -- it's a mix up because we look at the -- our refinery percentage that we are in a very good shape, okay?

And so we think that we are -- it will be sustainable.

And so there is -- we see change.

We see change, but we are improving our sales, okay?

And diesel, what is difficult for you, I tell you what is difficult is because the farm is seasonable and now it's not consuming a lot.

So when you see, you see it flat.

But you have to open in the different markets for this B2B, B2C, the different one, transportation, also industry and also the industry including flights, and you see that difference, okay?

Okay.

Perfect.

My third question is related to the cash flow statement.

There is a $205 million inflow in the first nine months of 2024 related to asset sales.

I wanted to maybe ask you if you can tell us if this is entirely related to the Andes project?

And if it's only partial and you expect more proceeds to come in the final quarter of the year or the beginning of 2025?

We are selling

--

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.

You're absolutely correct.

I apologize for that.

So I will move on to my fourth question then.

For the mature fields, mature fields, it was not the -- we have a transparent process.

We have the -- we hired a company from the United States that makes auditing, and we have that number and we compare with that number, and we will finish, we are going to open or -- the total number.

We are really in the expectations, okay?

We are -- maybe it depends, on the end, what we say are the -- in what is the last two provinces.

But we think that altogether, we will be in the expectation because it's okay, the number that we receive, okay?

In some, we are more.

In some, we are less, usual because there's a lot of assets, okay?

Great.

My final one is related.

Have you considered floating international bonds at the Oldelval and Vaca Muerta, Sur level?

It might help you with getting some extra cash flows at the -- for the YPF holding and for CapEx.

You're saying -- sorry?

If you want, I can take this one.

Well, Ezequiel, we are working on the financing plan for Vaca Muerta South.

It's going to be a range on a project finance basis.

So we are looking at different potential lenders from the international market.

Principally, we have received LOIs for around $1.5 billion.

So we believe that we have, let's say, good support and a strong interest to finance this deal.

We are working on the different project documents and arrangements we need to do in order to secure these project finances.

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.

Okay.

Got you.

That's perfect.

That's all from my side and, and sorry for taking a little bit of time at the end of the call.

Have great week, guys.

And those are all the questions in our queue.

So I'd like to turn it over to YPF CEO, Horacio, for closing remarks.

Okay.

Thank you very much for all the questions.

We are really working hard to obtain those results.

And I wish you were, I would say, happy with our job, And so that is my final remarks today.

And next -- for the next quarter, we are going to present much more numbers and figures, and we will see next -- I think, in April.

Thank you very much everybody for the questions, the support because we are -- I'm thinking that we have a lot of support from you and that helps a lot for the YPF for the improvement of our company and the price of our share.

And so we are -- say thank you.

And for our part, you have the management and employees that are working very hard 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.

That does conclude today's presentation.

Have a pleasant day.