YPF Sociedad Anónima Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 8, 2025
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Operator

Thank you for standing by.

Operator

My name is Danica, and I will be your conference operator today. At this time, I would like to welcome everyone to the YPF First Quarter twenty twenty five Earnings Webcast Presentation. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

You.

Operator

I would now like to turn the call over to Margarita Chung, YPF's Investor Relations Manager. Please go ahead.

Margarita Chun
Investor Relations Officer at YPF

Good morning, ladies and gentlemen. This is Margarita Chung, YPF IR Manager. Thank you for joining us today in our first quarter twenty twenty five earnings call. Today's presentation will be conducted by our Chairman and CEO, Mr. Horacio Marin and our CFO, Mr.

Margarita Chun
Investor Relations Officer at YPF

Federico Barrettavenia. 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 and A session together with our management. Before we begin, please consider our cautionary statement on Slide two. Our remarks today and answer to our 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.

Margarita Chun
Investor Relations Officer at YPF

Finally, according to the relevant fact released last December, as from 2025, the new business structure of YPF is in place. The main changes are as follows: first, we split Gas and Power segment into two segments: LNG and Integrated Gas and New Energies second, we remain Downstream segment as Midstream and Downstream and third, we reallocated our midstream gas business that used to be in Gas and Power segment to midstream and downstream segment. You can find further details on the backup slide of this presentation. I will now turn the call over to Horacio. Please go ahead.

Horacio Daniel Marín
CEO & Chairman at YPF

Thank you, Maria Rita, and good morning, everyone. Let me begin today's presentation with the main highlights of the quarter. First, we recorded a strong level of adjusted EBITDA of 1,240,000,000 marking a significant sequential growth of 48%. This increase reflects the initial benefit and increasing profitability resulting from the initial divestment in mature fields in accordance with the first two pillars of the four:four plan. In addition, we report improved refining and marketing margins where our strategy efforts have played a crucial role in this performance to align our price to international priorities and enhance our operational efficiency metrics.

Horacio Daniel Marín
CEO & Chairman at YPF

Let me also highlight that without the negative contribution of our mature fields, our proxy adjusted EBITDA during this quarter would have been roughly 1,350,000,000 Interannually, adjusted EBITDA remained stable as the robust growth in our Shell operation and higher local fuel prices of Q1 this year was offset by the extraordinary low OpEx in Q1 last year after the discrete devaluation of December 2023, but partially softened by lower value of inventory due to this devaluation. In terms of shale oil, we produced 31% more than Q1 last year, now represented 55% of our total oil production. This outstanding growth was boosted by record drilling performance achieved especially in March. First, we record the fastest unconventional drilling speed of five fifty one meters per day in our El Genaer block for an oil well with 2,573 meters of lateral length in ten days. Second, in the same month, we drilled the deepest unconventional well of 7,828 meters with a useful lateral length of 4,501 meter in La Marghachica Block at a speed of three fifty three meters per day.

Horacio Daniel Marín
CEO & Chairman at YPF

In both cases, our real time intelligence center contributed to efficiently design the road map and casing process and mitigate vibrations. In downstream business, in Q1, we reached a record high refining utilization of 94%, even with a higher technical capacity of 338,000 barrels per day. Moreover, at the beginning of this month, we inaugurate our first real time intelligence center for the downtick cement in La Plata Refinery. This center is designated to facilitate data driven decision making in real time with a focus on profitability and maximizing the output value for every barrel of oil processed, while optimizing resource utilization. We plan to replicate this center in the other two refinery of YPF as well as in logistics and commercialization throughout this year and into 2026.

Horacio Daniel Marín
CEO & Chairman at YPF

Additionally, by the April, we signed an MOU with Globant to accelerate our digital transformation, implementing artificial intelligence that lends and evolves, incrementally making complex decision by using algorithm that are supervised by our experts, so that we can optimize efficiency across the world's supply chain. Regarding our LNG projects, last week, Southern Energy, also known as CISA, obtained FID approval for the twenty year bareboat charter agreement for 2.45 MTPA floating LNG, Hilli, which is expected to be operational in 2027. With respect to Hilli, a few weeks ago, the SPV already obtained a three year export permit from the Secretary of Energy for a maximum daily volume of 10,400,000 cubic meter per day as from 07/01/2027. Moreover, the Rio Negro province approved the Environmental Impact Assessment. Additionally, a few days ago, the Secretary of Energy approved the REGI for a total capacity range between one point five million and two point two million tons per year of LNG, depending on the ability of gas.

Horacio Daniel Marín
CEO & Chairman at YPF

In addition, CISA also signed a twenty year railroad charter agreement for 3,500,000 tons per year floating LNG MK2, subject to FID approval, which is estimated to be no later than July 31. If approved, it's expected to be operational in 2028. This second vessel allow the contraction of a 100% dedicated gas pipeline from Vaca Muerta to the San Mateo Gulf in the province of Rio Negro available during the whole year instead of using existing pipeline idle capacity during the OPEC season. To supply natural gas for the floating LNG helium and M8 Mark II, CESA signed a twenty year gas supply agreement with main gas producer of Argentina, including YPF, through its subsidiary, Sol Embraciones Energetica. Our equity stake in CESA is 25%, while our committed of gas production is 27.5%.

Horacio Daniel Marín
CEO & Chairman at YPF

On the other hand, in mid April, we signed an MOU with ENI, the strategic partner for the Argentinian in C3 to analyze the development of upstream transportation and gas liquefaction facility through two floating LNG using six MTPA each for a total of 12,000,000 tons per year. Considering all these advance and the project development agreement signed last December, we show our strategic planning for the Argentina LNG two with a capacity of 10,000,000 tons per year, it allow us to reach almost 30,000,000 tons per year of the Argentina LNG project, which was defined when YPS launched its four to five plant in March. Moving to our quarterly results, we reported revenue of $4,610,000,000 in Q1, reflecting a 3% sequentially decline, mainly explained by lower seasonal local demand of diesel loin and fertilizers and reduced oil export volume as we increased the vertical integration with our La Plata refinery. These effects were partially offset by higher local fuel prices and peak seasonal demand on natural gas from power plants. Interannually, revenue grew by 7%, mainly boosted by shale activity, including increased oil exports.

Horacio Daniel Marín
CEO & Chairman at YPF

Improvement in tariff from Petrobras and slightly higher local fuel price and our agro business sale also plays a role in enhancing our Q revenues. Nevertheless, revenues were partially offset by discontinuation of jet fuel sales from our Chile subsidiary. Q1 adjusted EBITDA amount of $1,240,000,000 increasing by 48% sequentially, primarily driven by increased prices of fuels and other refined products, driven by higher Brent as well as OpEx savings related to the partially sale of mature fields, in addition to higher value inventories and processing level in our refineries to accumulate stock of our incoming program maintenance. On the other hand, EBITDA was negatively impacted by slightly higher cost of oil purchases to third parties. Interannually, adjusted EBITDA remained flat as the strong shale production was counterbalanced by the exceptional low OpEx record last year as a result of the December 2023 devaluation.

Horacio Daniel Marín
CEO & Chairman at YPF

This last effect was partially offset by lower value of inventories due to the same devaluation. Also, Q1 last year was affected by lower availability of crude oil and adverse weather condition that affect La Plata refinery, while Q1 this year record strong processing level to accumulate stock before the next maintenance stoppage, as mentioned before. Let me remark once more that without mature feel, our proxy adjusted EBITDA would have been $1,350,000,000 In the coming quarters, we expect it to continue to reduce this impact and deliver even stronger EBITDA to achieve guidance of the year, which range from $5,200,000,000 to $5,500,000,000 considering an annual average Brent of $72.5 per barrel. Q1 net result was a loss of $10,000,000 compared to a loss of $284,000,000 in Q4 last year, mainly explained by higher adjusted EBITDA and lower one off costs related to mature field, partially offset by income tax charges from subsidy and higher negative financial results, driven by lower gains for the holding of financial instruments and higher net interest expenses. On the other hand, Q4 last year accrued positive income tax driven by lower future tax payables.

Horacio Daniel Marín
CEO & Chairman at YPF

Internally, net result declined significantly compared to a gain of $657,000,000 primarily explained by one off costs related to mature fields in Q1 this year, in addition to higher depreciation and amortization due to increased unconventional activities. While during Q1 last year, we accrued positive income tax driven by lower future tax payables. As highlighted earlier, mature fields also impacted on our net results. Without mature fields, our proxy net result would have been a gain of $428,000,000 In terms of investment, in Q1, we deployed $1,210,000,000 and 75% was allocating to unconventional assets. Also, this level of CapEx is fully in line with our guidance for the year, ranging from between $5,000,000,000 and $5,200,000,000 Sequentially, Q1 CapEx declined by 8%, mainly because during Q4, we record higher CapEx in Downstream related to revamping works and seasonality, partially offset by higher sale activities.

Horacio Daniel Marín
CEO & Chairman at YPF

Interannually, CapEx increased 4%, mainly boosted by shale operations. On the financial side, we reported negative free cash flow of $957,000,000 in Q1. Although adjusted EBITDA was similar to deployment of our CapEx, Q1 was mainly affected by $336,000,000 of negative impact from mature fields net of proceeds. Moreover, Q1 free cash flow was impacted by $211,000,000 of net disbursement mainly for the acquisition of Sierra Jatta at 54.45% of stake that is in a shale gas block in Vaca Muerta. As a result, our net debt rose to $8,300,000,000 reaching a net leverage ratio of 1.8 times.

Horacio Daniel Marín
CEO & Chairman at YPF

We expect it to reach after divesting our mature fields returning to 1.5 times and 1.6 times level by year end, considering an annual average Brent of $72.5 per barrel. Focusing on the Upstream segment, Q1 total hydrocarbon production increased by approximately 5%, both on a sequential and an annual basis, reaching 552,000 barrels of oil equivalent per day, primarily boosted by shale contribution, which now account for an outstanding level of 58% of the total output. On the other hand, mature field output reduced by 11% versus the previous quarter, mainly due to the effect of already deveted block, recording 97,000 barrels of oil equivalent per day and represented 18% of the total. Crude oil production amounted to 270,000 barrels per day in Q1, recording an interannual increase of six percent, mainly driven by shale expansion, which effectively offset reduction in conventional oil, especially mature fields. Notably, shale oil production grew an impressive 31% year over year, underscoring our strategy focus in our Pillar one and in line with our 2025 annual target of over 165,000 barrels per day.

Horacio Daniel Marín
CEO & Chairman at YPF

As a result of the production ramp up, our oil export mainly to Chile grew by 34% inter annually, reaching 36,000 barrels per day and representing 13% of our oil production. Sequentially, oil export reduced by 11, our expanded vertical integration with our refineries. Beyond crude oil, natural gas production in Q1 increased by 9% sequentially, delivering more than 37,000,000 cubic meter per day, mainly due to higher seasonal demand from power plants. NGL production amounted to 47,000 barrels per day, returning to normal levels, thanks to the reactivation of Mega's facilities after maintenance. In Q1, total lifting costs reached $15.3 per barrel of oil equivalent, a sequential 12% reduction, mostly driven by the completion of divestment of certain mature fields.

Horacio Daniel Marín
CEO & Chairman at YPF

If we exclude this mature field, our processing lifting cost of Q1 would have been below $9 per barrel of oil equivalent. Considering that we continue reducing our exposure to mature field, our best estimate for 2025 average lifting cost could be $12 per barrel of oil equivalent. Assuming our core cap blocks, lifting cost was $4.6 per barrel of oil equivalent on a gross basis. Regarding prices in the Upstream segment, crude oil prices recovered 3% sequentially averaging almost $68 per barrel. Despite Brent volatility during the quarter, local pricing environment was more gradual.

Horacio Daniel Marín
CEO & Chairman at YPF

On the natural gas side, price stood at similar level of $3 per million Btu, mostly derived from the off peak season price of plant gas. Now, walking through the performance of our shale activities, we continue focusing on operational efficiency in our oil blocks, in line with the production target set for the year. In that sense, we accelerated activity by drilling 51 horizontal wells on the gross basis, most of them in operating blocks, delivering a 16% increase compared to the same period last year. Our net working interest percentage also grew to 65%. This performance is in line with our estimated number of wells to be drilled during the year 2025, which amounts to 190 operated and 15 not operating shale oil wells on a gross basis, where net working interest should be around 55%.

Horacio Daniel Marín
CEO & Chairman at YPF

In terms of completion and tying of wells, we also accelerated activities in our operating blocks, completing 53 and timing, 47 horizontal ways on a gross basis, recording an increase of 8321%, respectively, when comparing to Q1 last year. Once again, we successfully set a new record high shale oil production, delivering 147,000 barrels per day in Q1, which is more than 50% growth compared to 23 annual average production. This production level indicates a positive start for the year to reach the 2025 target of 155,000 barrels per day. Seventy six percent of the total shale output came from our core have oil blocks, Loma Campana, La Marghachica, Bandurria Sur and Aguada De Gena. Moreover, it's important to highlight that sequential growth driven by the contribution from Lagos Tour Azur One, a block located in the south half of Vaca Muerta, which has shown outstanding productivity.

Horacio Daniel Marín
CEO & Chairman at YPF

In terms of efficiency with our unconventional operation on the drilling side, we reached an average speed of three zero four meters per day in our core hub blocks. Despite beginning the year with the drilling speed at a level below our expectation in certain wells in our Well Genaer block in March will recover successfully drilling the faster unconventional well in the same block I mentioned before. Expecting further improvements, we are confident of achieving the annual target of three sixty meter per day. On the fracking side, we record two thirty five stages per set per month in our unconventional operation, a strong performance in line with the target of the year of two fifty days per set per month. Moving on to our Downstream segment.

Horacio Daniel Marín
CEO & Chairman at YPF

During Q1, we continue adjusting local fuel price to fully converge with international parties, while preserving our leading market share. As a result, local fuel price measured in dollar were up 2% versus the previous quarter and 1% up versus the same period last year, while the gap within Port Palis stood in positive territory at 1% in Q1 compared to 3% in Q4 and minus 7% in Q1 last year. Moreover, let me mention that driven by the international price downward trend with reduced local fuel price by an average of 4% as from this month. Regarding fuel cell volume, it decreased by 5% sequentially to 3,400,000 cubic meters, but below the contraction of the competition. The main decrease came from diesel, which was affected by lower seasonal demand.

Horacio Daniel Marín
CEO & Chairman at YPF

Let me mention that in the April, diesel demand started to grow again. Also, it's worth noting that despite price normalization, our market share remained at historical level of 56% in Q1, while growing our refinery and marketing margin by 28% sequentially to $14.3 per barrel, mostly by our OpEx efficiency measures. In terms of efficiency, we continue moving forward with our plan to improve our downstream margins and become a world class refining player. In that sense, during Q1, we implemented more than 100 initiatives that allow us to capture efficiency for more than $70,000,000 such as energy consumption, steam and gas recovery optimization as well as service contract rearrangement and shutdown maintenance cost reduction. Lastly, regarding refining utilization, we processed 318,000 barrels per day in Q1, expanding 5% sequentially and recording a strong refinery utilization rate of 94%, offset by the better performance of Plata refinery during Q1, which was affected by the maintenance shutdown in Q4.

Horacio Daniel Marín
CEO & Chairman at YPF

Also, let me clarify once more that the higher processing level enabled us to accumulate inventory or refined products before the incoming maintenance stoppage. In terranual, processing level increased by 6%. Now let me share the progress so far in terms of the midstream oil expansions. Regarding the existing Odeloy pipeline expansion and the Duplica Plus project, it was successfully completed in early April, increasing its transportation capacity from 330,000 barrels per day by the December to 540,000 barrels per day today. Let me highlight that the original capacity of El Val before the execution of the project was roughly two and twenty five thousand barrels per day.

Horacio Daniel Marín
CEO & Chairman at YPF

Therefore, Odelwal more than doubled its capacity in close to two years, contributing significantly to the evacuation of the shale oil from Vaca Muerta. YPF's shipping stake in Odelwal is roughly 25%. YPF will use this expansion to transport our shale oil to our La Plata refinery, optimizing our vertical integration. Regarding the Vamos Vaca Muerta oil pipe south, the new 100% oil export dedicated pipeline that started construction in the beginning of this year, the SPV was already started receiving the pipes and started the contraction work in the oil pipe routes and the trench excavation. Moreover, it received initial steel plates to initial tank assembly at the export terminal, where we are now working on ground movements and civil works.

Horacio Daniel Marín
CEO & Chairman at YPF

The operational progress of this project is roughly 4.5% by the March. Now I will turn the call over to Federico.

Federico Barroetaveña
Chief Financial Officer at YPF

Thank you, Gracio. Switching to the financials, let us start with the cash flow evolution. In Q1, we posted a negative free cash flow of $957,000,000 Although adjusted EBITDA was consistent with the deployment of our CapEx, the quarter was significantly impacted by the performance of the mature fields. Specifically, these fields resulted in an adjusted EBITDA loss of $106,000,000 and a one off cash flow loss of $230,000,000 net of proceeds. Additionally, we disbursed a net amount of $211,000,000 in M and A activity, primarily for the acquisition of Sierra Charter and provided contributions and prepayments to our affiliates for $102,000,000 mostly to Bemos and Old El Val.

Federico Barroetaveña
Chief Financial Officer at YPF

Considering also the negative working capital, mainly due to lower sales accrual in addition to the regular debt service, we added approximately $1,000,000,000 of new net debt including the reduction of our cash and equivalent position by 18%. In terms of financing, as mentioned during the last call, in January, we issued a nine year unsecured international bond for $1,100,000,000 at a yield of 8.5%. The proceeds were mainly directed to refinance $757,000,000 of the 2025 notes maturing in July and acquire 54% of the Sierra Chata block. Regarding the '20 '20 '5 notes, we executed a cash tender offer, prepaying $350,000,000 in January and exercised the make whole call option for the remaining balance in February to complete the refinancing. In addition, we have also been active in the local bond market.

Federico Barroetaveña
Chief Financial Officer at YPF

We issued two Dollar Map local bonds in February, '1 for $140,000,000 with a two year tenure at six point two five percent and $60,000,000 bill with a six month tenure at 3.5%. After the quarter, we also issued a $2.00 $4,000,000 Linde bond in April and more recently in May, another $140,000,000 hard dollar bond. The first one with a fifteen month tenure at 3.95% and the second one with a two year tenure at 7%. For the remaining nine months of 2025, the company faces around $800,000,000 consisting of 71% of local maturity and only 29% international. Also, as mentioned in the last call, as a consequence of the recent sovereign rating upgrade, lower country risk and a better outlook, during Q1, '2 global rating agencies raised YPF credit ratings.

Federico Barroetaveña
Chief Financial Officer at YPF

Moody's upgraded from CAA three to CAA one with a stable outlook, while S and P upgraded from CCC to B-. On the liquidity front, in line with the free cash flow and debt issuance, our cash and short term investment decreased by 18% versus previous quarter to $1,200,000,000 while our net debt increased amounting to $8,300,000,000 Consequently, our net leverage ratio also increased from 1.6 to 1.8 times as anticipated during our Investor Day last month. Once we fully divest mature fields, we estimate to end the year with a net leverage ratio of 1.5 times or 1.6 times considering an annual average Brent of $72.5 per barrel. So with this, we conclude our presentation and open the floor for questions.

Operator

Thank you. Your first question comes from the line of Daniel Guardiola with BTG. Your line is now open.

Daniel Guardiola
Executive Director - Equity Research at BTG Pactual

Hi, good morning. Actually, it's Daniel Guardiola. But thank you, Horacio and Federico for the presentation. Before we dive in, I just want to take a moment and wish Horacio a very happy birthday. Congrats and I hope the market gets the chance to give you a decent present today.

Daniel Guardiola
Executive Director - Equity Research at BTG Pactual

Looking at the questions, my first question is on how resilient the company is amid the current uncertain and bearish environment of prices. And I wanted to know, Rasio and Ferri, if you could please share with us what is the current Brent breakeven level in terms EBITDA and cash flow that the company currently has? My second question will be also in the same line, but just to better understand what is the required CapEx that you need to keep your current production stable, especially considering that right now the bulk of your production is shale oil and shale gas and the declining rates are very steep? Those are my two questions. Thank you.

Horacio Daniel Marín
CEO & Chairman at YPF

Okay. Thank you very much. Because you tell me happy birthday, I answer second question, okay? If not, I will say no, okay? Okay.

Horacio Daniel Marín
CEO & Chairman at YPF

For the first question, if you see the I think it's

Horacio Daniel Marín
CEO & Chairman at YPF

the Life 37, if my memory is not bad because now I am old man of 62 years old. Remember for all the market, I'm two years more

Horacio Daniel Marín
CEO & Chairman at YPF

than Federico. So Federico is 60, okay? If you go to that slide, you can see that every $10 of reduction as an average in all the year, the for the sensitivities in only of $900,000,000 okay? That is the answer. If I take Brent of 60 our EBITDA will be 4.4.

Horacio Daniel Marín
CEO & Chairman at YPF

That is everything I explained that in New York. That is the I think it's the first. The second one is in the order of 2,000,000,000, okay, to maintain our production. But we are going to grow, okay?

Daniel Guardiola
Executive Director - Equity Research at BTG Pactual

Thank you, Razio.

Horacio Daniel Marín
CEO & Chairman at YPF

Okay.

Operator

All right. Our next question comes from Alejandro Demerques. Please go ahead.

Alejandro Demichelis
Alejandro Demichelis
Managing Director - Equity Research at Jefferies Financial Group

Good morning. Alejandro Demerques here from Jefferies. Gracias, Ferrico, one question please as a bit of a follow-up. So in the current oil price scenario that we are seeing, when you were in New York, you talked about some flexibility on your plants. What is your latest thinking in terms of how you're seeing CapEx, activity levels and also the risk that some of these disposals that you have been doing may not complete because some of your buyers may actually have some trouble financing those?

Horacio Daniel Marín
CEO & Chairman at YPF

Okay. First, I would like to say that if we have to change our program, we will change, okay? And never, never I will take decision in panic, okay? And also, there is a lot of uncertainties and uncertainty, no, there is a lot of volatility, sorry, in the price. The Huawei down, the Sao go down.

Horacio Daniel Marín
CEO & Chairman at YPF

If there is a very one new that is positive, you can get back, okay? So we wait. If we need to stop, we will stop. But not it's not the moment today, okay, to do that. And our another thing is that we have the CapEx to do when the price is down.

Horacio Daniel Marín
CEO & Chairman at YPF

It's a very good news for you, for investors, because I can't reduce the price of the unit cost because service company when it goes down, they goes down the price and I can reduce the investment. And when they go back, we make much more money. But we will wait. I think now it's not for me, the market is not stabilized to say that that is the new number, the new price that it will be still steady, okay? Okay.

Horacio Daniel Marín
CEO & Chairman at YPF

Okay. Thank you.

Operator

All right. Our next question comes from Leonardo Macondas with Bank of America. Please go ahead.

Leonardo Marcondes
Leonardo Marcondes
VP - Equity Research at Bank of America

Hi, everyone. Horacio, Federico, Margarita. Thanks for taking my questions here. I have two. My first one is related to the divestment of the mature assets.

Leonardo Marcondes
Leonardo Marcondes
VP - Equity Research at Bank of America

In this quarter, we saw an impact of around $230,000,000 on the cash flow related to the mature assets, right? So I was wondering if you could provide more color on this impact. And also if we could expect a further impact related to the divestments of the assets that are yet to be divested, right? My second question is regarding the LNG projects. I mean, could you walk us through the necessary steps for the final investment decision for the LNG projects that are more advanced?

Leonardo Marcondes
Leonardo Marcondes
VP - Equity Research at Bank of America

And by more advanced, I mean, the Southern Energy JV, right? Because there's still another vessel to be brought, if I'm not mistaken. And also the project with Shell because you already have the off takers and so on, right? So what are the necessary steps for the FID of this project? Thank you very much.

Horacio Daniel Marín
CEO & Chairman at YPF

Okay. The first question, what I can tell you that in the we are very proud what we did in the mature fields. And today with the lower price, you have to be proud of us also because we made YPF to be very good at low price, okay? Regarding the mature fields, we yesterday was a decrease of the province of Santa Cruz. We've seen that in a couple of months, we are finishing all going out from Santa Cruz.

Horacio Daniel Marín
CEO & Chairman at YPF

The same is in we are working hard for Quirapu, what is a small one. And the others that we have are we are in the last, last stay. So I think we are going to be out during this year, I would say, Q3 is my our purpose because of all the delays that you need for sign all the documents and follow all the law for the different provinces. Regarding if you have to spend more this month in this investment, we think that it could be some immaterial, but not a lot. We have almost all done, okay?

Horacio Daniel Marín
CEO & Chairman at YPF

There will be comparing with all the process, it's very it's marginal, what we expect on that, okay? The second question, you paid about the LNG project. For the CESA, what is the Fogo, I call Argentina, Argentina One LNG. That is the one that we made with CESA, the one that we signed FID for the first ship May. For the second, we have to sign FID before the July.

Horacio Daniel Marín
CEO & Chairman at YPF

The second, what is Argentina Energy two, what is Windchell, you know I don't know you remember, but we are in a process today to forbidden the FEED. And after FID, it will be, I would say, end of next year or so for I cannot exactly tell you one because it depends we are going to receive the bidding process during those days for the FEED and after we can have a better date. And with the Argentine Free, what is with A and I, the purpose that we have both company is to sign FID by the end of the year. That is our goal. But things can change while you are working and see what is happening in the world, okay?

Leonardo Marcondes
Leonardo Marcondes
VP - Equity Research at Bank of America

That's very clear. Thank you very much for the answers.

Horacio Daniel Marín
CEO & Chairman at YPF

Thank you for the questions.

Operator

All right. Our next question comes from George Gestalt with Latin Securities. Please go ahead.

George Gasztowtt
Research Analyst at Latin Securities

Hi, good morning and thank you for taking my question. Following the gasoline price cut in May, what is your fuel pricing strategy for the rest of the year? As the most competitively priced provider, do you expect to capture additional market share? And did this drive quarterly improvement in market share?

Horacio Daniel Marín
CEO & Chairman at YPF

Okay.

Horacio Daniel Marín
CEO & Chairman at YPF

The pricing strategy that we have is saying that any company that can have around the world in a free market is as simple as that. So what I saw, I was in United States last it was on Sunday and Monday for some meetings, and I saw the price of that and it goes up. So that is our strategy. There is no different than that. So I cannot answer more than that, okay?

Horacio Daniel Marín
CEO & Chairman at YPF

It's import parity, price of oil, taxes, price of biofuels that we have to buy and the share rent of Argentina.

George Gasztowtt
Research Analyst at Latin Securities

Thank you. Okay.

Operator

All right. Our next question comes from Andres Cardolo with Citigroup. Please go ahead.

Andrés Cardona
Andrés Cardona
Director at Citi

Hi, good morning everyone. I have two questions. The first one is about the update you provide about Vaca Muerta Sur. I noticed you are moving forward the 550,000 barrels that originally was scheduled for the third quarter twenty twenty seven to the first half of the year. But the slide you are showing us today, there is not mentioning today 180,000 barrels are issued by the fourth quarter twenty twenty six.

Andrés Cardona
Andrés Cardona
Director at Citi

Are you still targeting that first stage by the end of the next year? And the second one is, Niria is reporting that the South Energy is negotiating already the gas pipeline with an international company. Do you know the size of the pipeline investment and the technical characteristics? And why not to go with an open process?

Andrés Cardona
Andrés Cardona
Director at Citi

Thank you.

Horacio Daniel Marín
CEO & Chairman at YPF

Okay.

Horacio Daniel Marín
CEO & Chairman at YPF

The COD of Vemos is was affected. The is in line with what we say. But the first is 4Q between end of say, Q3 or 4Q twenty twenty six, that is for 01/1980 For May is in the first, I will say, end of I can say end of quarter two of twenty seven. And as I would say at the beginning, there is no delay. There is no delay.

Horacio Daniel Marín
CEO & Chairman at YPF

And we are working very hard on that. For sure, we're going to put a lot of effort to reduce if we can, okay? For you're talking about the CapEx in the gas pipeline, okay? You're right. We are talking with an international company and why not to an optional open process because if we can have a company that is a good price for all the partners, that this tariff is a good deal for the project.

Horacio Daniel Marín
CEO & Chairman at YPF

And we are for a tariff that it works for everybody. And we think that that if that happen, it will be an excellent news for all our company, all the partners. To that, there is a period on that. And if that's finished and we don't agree with tariff, we are making an auction open process as you say, exactly as you say, okay?

Andrés Cardona
Andrés Cardona
Director at Citi

Thank you.

Operator

Okay. Our next question comes from Guilherme Martin with Goldman Sachs. Please go ahead.

Guilherme Costa Martins
Guilherme Costa Martins
Equity Research Associate at Goldman Sachs

Hey, everyone. Thanks for having my questions. I have three quick ones. The first one is a follow-up on the divestment of Nitro Fuels. I understand roughly 11 blocks were already fully divested, right?

Guilherme Costa Martins
Guilherme Costa Martins
Equity Research Associate at Goldman Sachs

I would like to get a sense on terms of production contribution from those close blocks. And my second question is to know divestment of Natural Fields is correct me if I'm wrong, but you mentioned you are expecting to bring leverage now as you divest from the from those legacy fields. I would like to understand if this reduction in leverage is more on the back of you exiting EBITDA negative assets or if you're expecting some relevant cash inflow from the divestments? And my third and final question is on CapEx. I understand you mentioned it's still too early to reassess your investment program for the year.

Guilherme Costa Martins
Guilherme Costa Martins
Equity Research Associate at Goldman Sachs

But I would like to understand better for how long would Brent prices have to stay at the 60s in order for you to revise your drilling and CapEx activity? Thanks so much for the questions further, please.

Horacio Daniel Marín
CEO & Chairman at YPF

The Deventer Mature field, the production contribution for those blocks, we can as we mentioned and you show in all our calls,

Horacio Daniel Marín
CEO & Chairman at YPF

we are changing from within improving production from Vaca Muerta.

Horacio Daniel Marín
CEO & Chairman at YPF

So there is no for us, no deploy. And also, I don't care a lot of the production because the EBITDA was almost nothing.

Federico Barroetaveña
Chief Financial Officer at YPF

Negative in some cases.

Horacio Daniel Marín
CEO & Chairman at YPF

Negative in some cases. So it's better for investors, okay? So we are not worried about that. And also Argentina is a free market today, so I can get the oil. Either way, at the same price, it's not a problem.

Horacio Daniel Marín
CEO & Chairman at YPF

So I can make much more money if I buy. And also, you're going to ask that question, but we have an excellent result in the Downstream. So

Horacio Daniel Marín
CEO & Chairman at YPF

no problem at all.

Federico Barroetaveña
Chief Financial Officer at YPF

Regarding the leveraging I think the question from Gilharme on this is basically how we are going to be slowing down on the debt after the peak that we announced in New York because of the divestment of the mature fields. We predict that to be happening end of the second Q or during the third Q. So once we finish with that, Guilherme, what is going to happen is we are going to be taking out all the negative EBITDA from the mature fields that are affecting our overall EBITDA. So once we finish, we are going to start seeing the YPF and that is going to be mostly unconventional and that will have a higher EBITDA and you will start to see that most likely third Q and fourth Q of this year.

Federico Barroetaveña
Chief Financial Officer at YPF

With that, we are going to be, let's say, switching or reducing the leverage by the end of the year. We are also, let's say, as anticipated in New York, considering other divestments that may happen towards the end of the year or beginning of next year. Let's say, we don't know exactly, let's say, the timing, but we have some considerations there.

Horacio Daniel Marín
CEO & Chairman at YPF

And with the CapEx, really with 60,000,000 I explained that we are in lower price to be our breaking price for development in Vaca Muerta. So what's at 16 Vaca Muerta, we made money and we made good money for sure. It's lower money than 70,000,000 It's lower money than 80,000,000 and also for $100,000,000 But after the time passed, you need always less capital because you are making money with that So we will see and I tell before, if I have to change, I will change. But today, I don't see that it's necessary.

Guilherme Costa Martins
Guilherme Costa Martins
Equity Research Associate at Goldman Sachs

Clear. Thanks so much.

Operator

Okay. Our next question comes from Taso Vasconcelos with UBS. Please go ahead.

Tasso Vasconcellos
Tasso Vasconcellos
Equity Research at UBS Group

Hi, Raso, Federico. Thanks for taking my questions here. I have actually one follow-up on the CapEx and one on the LNG project. Starting with the CapEx, you have released a $5,000,000,000 guidance for 2025. And during the first Q right now, you just separated the $100,000,000 disbursement to affiliates.

Tasso Vasconcellos
Tasso Vasconcellos
Equity Research at UBS Group

So could you please clarify the disbursement on this affiliate and overall infrastructure projects such as Vaca Muerta, Oil Sul, South Energy and so on. Are these already included in the 5,000,000,000 CapEx for the full year? And what's the total expect breakdown here for the full year? How much you're aiming to disburse on these affiliates in 2025? The second question or follow-up on the LNG project.

Tasso Vasconcellos
Tasso Vasconcellos
Equity Research at UBS Group

You have been commenting that the project is more resilient given this profile from the contracts and so on. But given that you're still negotiating this contract, have you already noticed some pushback from potential clients regarding the pricing for this contract? And in this context, do you believe that potential Brent lower for longer or the tension and uncertainties from the U. S. Government?

Tasso Vasconcellos
Tasso Vasconcellos
Equity Research at UBS Group

Could this lead you to reassess the CapEx and the size of this project at an extent? Those are my two questions or follow ups. Thank you.

Horacio Daniel Marín
CEO & Chairman at YPF

Sorry. Thank you for the question. Regarding the CapEx, the $100,000,000 remember that we are growing, growing. Argentina was a country that was producing for four or five different places and now produced for only one. So it's a big bottleneck for growth production, not for white beer, for all the countries, right?

Horacio Daniel Marín
CEO & Chairman at YPF

So that money is for infrastructure to grow because if now we can now grow. That's why we have one company. And it's all included because it's our business.

Federico Barroetaveña
Chief Financial Officer at YPF

Yes. I think that, Tassos, maybe I don't know if we understood correctly your question, but the $5,000,000,000 doesn't include the contributions to affiliates. Mostly, what you see in this quarter is the finishing of Oil del Valle and the initial construction of Belemos. So if that's your question, let's say, let us know. That's all.

Tasso Vasconcellos
Tasso Vasconcellos
Equity Research at UBS Group

Okay. Yes, that was the question before it's included on the guidance or And the second one on the LNG project.

Horacio Daniel Marín
CEO & Chairman at YPF

The LNG project, remember that our we have very I would say that I'm very proud of the partners that we have and it's all project finance. So and the world needs gas, needs LNG and they need a lot of LNG and there is no way that the world can supply the gas without United States. And we are in a better way than United States. So I'm very quiet and I know that we can deliver the LNG in Argentina

Horacio Daniel Marín
CEO & Chairman at YPF

and we can be very profitable. And if they

Horacio Daniel Marín
CEO & Chairman at YPF

make money, we will make money. So there is no I'm not real worried about that. And also for the quality of the company that we have is a good direction. You cannot see a crazy company that goes along. In all the projects, we are in the area of 25%.

Horacio Daniel Marín
CEO & Chairman at YPF

So there is 75% of good partners that they think that are very good business. And Vaca Muerta is huge, the reserve that they have. And I feel that I need for us a CEO and and president of IPS to develop

Horacio Daniel Marín
CEO & Chairman at YPF

the LNG for all the shareholders because if not, I'm not going I'm not doing a good job.

Tasso Vasconcellos
Tasso Vasconcellos
Equity Research at UBS Group

That's clear. Thank you, Rafael. Thank you.

Operator

Our

Operator

next question comes from Ann Milne with Bank of America. Please go ahead.

Anne Milne
Anne Milne
Managing Director - Emerging Markets Corporate Research at Bank of America Merrill Lynch

Good morning, good afternoon. Thank you very much for the call. Federico and Margarita. My first question is for Federico. I know you went over the balance of your debt maturities for 2025, but you have a fairly large amount in 2026.

Anne Milne
Anne Milne
Managing Director - Emerging Markets Corporate Research at Bank of America Merrill Lynch

I do see that it's mostly in the local market. So my question is, do you plan to refinance most of that in the local market? And how is the local market these days? I've heard a few mixed comments that might not be quite as liquid as it was at one point. And then the second question I have is on exports.

Anne Milne
Anne Milne
Managing Director - Emerging Markets Corporate Research at Bank of America Merrill Lynch

I know your exports decreased this quarter. You mentioned it was because of greater vertical integration. Could you give us an idea of when you expect your exports to increase in a more meaningful fashion? Thank you.

Federico Barroetaveña
Chief Financial Officer at YPF

Hey, Jan, how are you? Well, on the first question, yes, for 2026, let's say, of what we have, it's going to be roughly speaking, we have 1.5, let's say, of refinancing in the local market and only less than 400,000,000 in the international bond market. So based on this and at the current situation, we maintain, let's say, our eyes open for the different alternatives that we have. The local market continues to be quite open for YPF. We just priced a new issue.

Federico Barroetaveña
Chief Financial Officer at YPF

I think that it was Monday or Tuesday. We priced $140,000,000 for two year at 7%. So this was a bigger amount of what we are looking at the lower interest rate of what we originally anticipated. So YPF continues to be one of the key names into the local markets. And let's say the market has been reacting very well for all our divisions in the different alternatives that we offer from time to time.

Federico Barroetaveña
Chief Financial Officer at YPF

So broadly speaking, I will maintain my eyes open on what is the best alternative to refinance these maturities in 2026. As you know, bond market, let's say, from time to time, it's reopened for Argentina since last year. And from time to time, give us let's say very good opportunity to refinance long term at low rates as we did back in January. So we will see we have different pockets of liquidities to tap and we are going to be playing like that. And but the local markets continue to be very supportive to IPF.

Federico Barroetaveña
Chief Financial Officer at YPF

And let's say, I'm very confident that this amount that we have in 2026, we are going to have no problem in refinancing in the local market.

Anne Milne
Anne Milne
Managing Director - Emerging Markets Corporate Research at Bank of America Merrill Lynch

Thank you.

Federico Barroetaveña
Chief Financial Officer at YPF

Second question, it's for Oil exports. Well, I think that, let's say, we are right now reducing a little bit what we export in fourth Q. Now when we are going to be increasing definitely related to the first oil expectation that we have for Bimos, most likely that will be as Oraziano just mentioned the end of twenty twenty six, the last quarter there. The pipeline will be releasing 180,000 barrels. We have a share of 27% and that will continue to grow up until final COD in, I would say, end of the first quarter or during the second quarter of twenty twenty seven.

Federico Barroetaveña
Chief Financial Officer at YPF

At that time, the pipeline will have a total capacity of five fifty and our commitment is to undertake 120,000 barrels. So that will be our export ramp up for the coming year on top of what we can marginally add to Chile depending on the price. And let's say that we can obtain and the circumstances.

Anne Milne
Anne Milne
Managing Director - Emerging Markets Corporate Research at Bank of America Merrill Lynch

Okay. So just to clarify, so when the Vimos is up and running, so 27% of the 180 initially and that will increase to 120 out of the five fifty in 2027 or 2020 whenever that's finished, Chile?

Federico Barroetaveña
Chief Financial Officer at YPF

Yes. It starts with the first oil of 01/1980 and then COD will be the pipeline will be delivering up to five fifty, out of which the seven initial shippers have committed a total capacity of four fifty, out of which YPF owns 120.

Horacio Daniel Marín
CEO & Chairman at YPF

Totally logical. Our incremental production depends of the capacity that we have, okay? Why this year you see the same investment CapEx than last year, okay?

Anne Milne
Anne Milne
Managing Director - Emerging Markets Corporate Research at Bank of America Merrill Lynch

Very clear. Thank you very much.

Federico Barroetaveña
Chief Financial Officer at YPF

Okay. You're welcome.

Operator

All right. I will now turn the call back over to Horacio Marin for closing remarks.

Horacio Daniel Marín
CEO & Chairman at YPF

Okay. Thank you very much for the question. We are very happy to work here in YPF, and I will switch to Spanish. Okay? Alright.

Horacio Daniel Marín
CEO & Chairman at YPF

Alright.

Operator

Thank you all for joining. That concludes today's call.

Analysts
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Earnings Conference Call
YPF Sociedad Anónima Q1 2025
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