Welcome to the Fourth Quarter 2017 YPF Sociedad Anónima Earnings Conference Call. My name is Sophia, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] I will now turn the call over to Diego Celaá. Mr. Celaá, you may begin. Diego Celaá: Great. Thank you, Celia. Good morning, ladies and gentlemen. My name is Diego Celaá, Head of Investor Relations at YPF. I would like to thank you for joining us in this occasion. We will discuss YPF 2017 full results. We will be making forward-looking statements, so we ask you to carefully review the cautionary statement on Slide 2. In addition, our financial statement figures are stated in Argentine pesos and in accordance with International Financial Reporting Standards, IFRS. However, certain financial figures have been adjusted to reflect additional information to let you better-understand our key financial and operating results. I will be providing an overview of the year-end and quarterly results. Then, our CFO, Daniel Gonzalez will explain in more detail those results. And finally, the Chairman of our Board of Directors, Miguel Angel Gutierrez will share his conclusions for the year and perspective for the year ahead before we start taking questions. As you are all aware, 2017 was a special year for the industry in Argentina after a decade-and-a-half of local crude oil prices being depreciated from international prices. In the last quarter of the year, local prices finally converged with international benchmarks. In line with this, local fuel prices are now aligned with import parity and we are now in a free market for determining fuel prices. Consequently, Upstream business continue to adapt to this new reality and we are now at a level of activity,…

Thank you, Diego, and good morning, everybody. Let me start with section by focusing briefly on our financial results for the full year expressed in U.S. dollars. Revenues in dollars increased 7% in the year as average gasoline and diesel prices were higher in dollar terms by 6% and 3% respectively. Export prices were also up in line with the recovery of international prices and the price for natural gas was also up in average 3.7%. In addition, demand was strong in the year, and therefore, we benefitted from an increasing volume sold for most of our products, especially those with higher value-added. Cash costs expressed in U.S. dollars increased by approximately 8.7%, but heavily impacted by an increase in purchases. Lifting cost on the other hand increased only 2% in dollars in absolute terms, although, it was 6.7% up on a BOE basis, due to the reduction in total production. Royalties, which is the only cost component fully denominated in dollars were down close to 9%, as domestic crude oil prices and production declined more than the growth in natural gas sales. The reason for the increase in purchases had to do with higher crude oil purchases, up 30% in dollars, as our own production was down while we processed in our refineries similar levels of crude than the previous year. EBITDA was then up by 2.3% in dollars. And it's worth highlighting here that 2016 EBITDA included some onetime gains, which makes the comparison a little bit unfair. Again, we will be explaining those effects later to the presentation. Finally, higher depreciation expense contributed to the 6.4% reduction in operating income before impairment charges. During the last quarter of the year, we had a better performance in terms of revenues and EBITDA, up 12% and 6% respectively in…

Thank you, Daniel. Good morning and thank you for your participation in this call. Daniel just reviewed our results for the fourth quarter and the full year for 2017. No doubt, we consider this result as very good and especially when we put them in the context of the year 2017. Some points I would like to highlight. The year - 2017 was a year of growth for Argentina. GDP grew 2.8% following a decline of 2.2% in 2016. It was also a year where the government normalized the energy sector by regularizing the oil and gasoline and diesel markets in October, after a gradual convergence between the price of the domestic oil barrel and the international markets that Daniel has explained. Remember that in the year 2015 the domestic barrel price was around $75. And we came down to levels of $55 per barrel last year, a decline of 36%. In other sectors of the energy market, it was a year in which the natural gas markets were regularized as well and clear price path was introduced, paving the way to restructure the debt between producers, transportation and distribution companies. It was also the year where the government consolidated an aggressive push, an incentive for investment in the thermal generation sector as well as development of the renewable energy sector among other initiatives. No doubt, the energy sector is a critical driver for investments in the country. Testimony of that was a non-conventional new labor contract that led by YPF, the industry signed with the unions in January 2017. That agreement that was developed with the leadership of President Macri Ministry of Energy, Aranguren, with an active participation by the Province of Neuquén, where significant productivity and efficiency gains were achieved. But we also progressed in the conventional areas,…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Bruno Montanari from Morgan Stanley.

Good morning, everyone. Thanks for taking my questions. First question is about production. I understand the target inclined to 3% production decline in the year. But when can we expect an inflection point in the curve, because it's been a few quarters now the production continues to decline? So just wondering if we should see things getting better in the first, second quarter of the year or is this is more towards second half of 2018? My second question is on Downstream. Margins were very resilient in Q4, despite all the noise with inflation and the price liberalization. So should we expect margins to remain sustainable at current levels? And also, following the removal of all the trade restrictions, has the company seen movements that imply fuel imports could start to come more aggressively into Argentina? And if I could ask a third one, just following up on Mr. Gutierrez' comments, just to get an update on Plan Gas, especially now with the new rules seems to be defined. If remember correctly, the last payment the company received from the government was still related to Q4 2016. So just wondering when we should actually see the 2017 receivables be paid, and in that regard also what exchange rate does the company believe will be used for those? Thank you very much.

Morning, Bruno. Thank you for the questions. In terms of production, what we can say is that the first quarter seems to be aligned with the fourth quarter, so the decline in production in absolute terms is kind of behind us. Still the comparison of the first quarter vis-à-vis the first quarter of last year is going to be negative, right? And that's why Miguel guided on this minus 2, minus 3 for the full year. But in absolute terms as I said, I think that the worst is behind us and we should not expect additional declines in production. Now, the turning point will be towards the second half of the year. It will come from different sources. It will come clearly from the shale. We are expecting growth in shale oil, in shale oil and gas production of 35% plus this year vis-à-vis the previous year. It will also come from the Province of Santa Cruz, where we didn't have any drilling activity last year. And we started drilling the last couple of months and we'll have to the required dedicated rigs for the full year. And it will also come from Magallanes where we have this project jointly with ENAP that will only come interim - at some point during the second quarter of the year, so definitely the second half of the year should be better. In terms of our Downstream margins, yes, they have been resilient. We don't see any reason why they would be different going forward than where we are today. We continue to have a very strong competitive position, a unique brand and footprint. So as Miguel said, we are establishing. We are putting in place a pricing policy based, obviously, on import parities and based also on other market dynamics, including competition. We haven't seen yet that increasing competition that you outlined in the question. But that doesn't mean that we will not see it in the future. That's why we are preparing the company for that. And finally, regarding Plan Gas, we are owed approximately $780 million that was accrued last year of subsidies. We didn't get paid anything of the subsidies of 2017. And that's also was mentioned by Miguel, we will have news about this hopefully very, very soon. I think we'd rather not comment at this point of what kind of a payment-tenure we are anticipating or what kind of interest rates we have in mind. But as I said, between the - or in the next few weeks we will be able to provide more detail.

Excellent. It's very helpful. Thank you very much.

Our following question comes from Frank McGann from Bank of America.

Yes, good morning. Just a couple of questions. One, just in terms of asset sales and the sale of your stake in Metrogas, any thoughts on that at this stage, what - where we are in that process? And then, I missed - the line cut out - I missed the percentage increase. You said you are expecting shale to show for 2018, if you could repeat that, that would be helpful.

Hi, Frank. Yes, the percentage increase was 35% for shale production in 2018 vis-à-vis 2017. In terms of our asset sales of specifically Metrogas, all we can say is that we have hired an investment bank that has very recently started the process to review what the strategic options we have. You should not expect any news in the short-term. And hopefully, it would definitely be a second half of the year event. And as I said, it's all very confidential and very difficult for us to provide any kind of color before we are very close to having some kind of transaction in the future. But first, we need to define what kind of interest is out there, what kind of percentage of stake we should sell in order to maximize valuation. Luckily, we are in a very comfortable position from a liquidity perspective and we're just being proactive in terms of trying to realize value of certain assets, including Metrogas that we think might be worth more for other people than for ourselves. But other than that, Frank, there isn't any process ongoing.

Okay. Thank you very much.

So a very significant process ongoing. Let me make a clarification there. We are in the process of selling a few small marginal oilfields in the Neuquen basin. It's a very small transaction. But I just didn't want to confuse by saying that there is nothing else. This is something and hopefully will be announced in the next couple of months.

Okay. Great. Thank you very much.

Our next question comes from Juan Vazquez from Puente.

Yeah, thank you, Daniel, Miguel, Diego, Pablo, and everybody. And thank you for the detailed presentation. The first question is related to the seasonality problem that exists in the natural gas market in Argentina. As increase in production took over the demand peak in the winter is unrealistic, we'd like to have your thoughts on what sources of demand you see materialize in the short-term and especially in summer months to incentivize additional gas production, and therefore, the development of Vaca Muerta and other conventional assets? And then the second question, in the presentation you showed that your 2018 expected average realization price for natural gas still includes subsidies. So are these expected subsidies come from your conventional pilots to be launched? And that's it. Thank you.

Good morning, Juan. Thank you for the questions. Let me start with the second one. Yes, we are included - including in our realization price expectations for natural gas for 2018. The subsidies of the new gas plant for unconventional. We have an account of, like, seven or eight different projects that we actually filed for the benefit of the subsidy and we have all the expectations, but all of them we'll get it. So we will have some positive effect this year coming from those subsidies, as I said during the presentation, the good news is that subsidies as a whole will only represent approximately 10% of that weighted average price. Regarding - the first very good question regarding seasonality of natural gas demand, we are clearly working for the short, but especially for the long-term in order to find and secure different alternatives of gas demand. Miguel mentioned that the petrochemicals, where Argentina has company advantages is definitely a place where we want to grow and we will grow with partners there that is long-term, because it takes a while to build petrochemical facilities. But that will definitely take care of good part of the gas demand. Gas-fired generation, all the projects that were sanctioned and that obtained contracts from CAMMESA for new power to be generated that using natural gas will also be an important driver, and that is short to medium term, and then there is the exports, and that you also have short-term exports like what we are doing with Methanex and other potential short-term exports to Chile and on the medium-term, I think even more exports. Now it is not unthinkable to assume that few years down the road, Argentina will continue to have LNG coming in re-gasified to fill the peaks of the winter. And may be natural gas being liquefied out of Argentina with the excess production of the summer. And also, if that occurs, we would be thinking about seasonal pricing, which is not what we have today. But today we are talking about $5, give or take, per million BTU as an annual price, but it is reasonable to assume that we might have a lower price during the summer, and a substantially higher price during the winter. All of that is in the process of the whole gas industry is being redefined in Argentina. But we continue to be very optimistic regarding the prospects for natural gas. The last thing, I should mention is import substitution, right, not just LNG, but also gas coming from Bolivia after Argentina continues to grow, it's home production, we should also expect over the medium-term that gas coming from Bolivia should trend to come down.

Okay. Just a quick follow-up, so that would imply your renegotiation of the take or pay contract with Bolivia, so you think that could be a reality?

No, we are not a party to that agreement that is federal government and we are not implying in any way that that contracts are going to be renegotiated. All we are saying is gas production for Argentina is important, good news is, it is growing. The government is paying - or helping the industry with - in the form of subsidies. So over the medium and long-term, you should assume that volumes coming from Bolivia should trying to come down, is that implies or not ratification of agreement we have nothing to do with that.

And I will add to that, this is Miguel. That also regional integration with other countries, in the region like the Chile agreement is going forward as well as some agreements with Brazil to sell electricity in the summer time, are also in the agenda for us to really work with government really to execute those agreements. And that obviously, will entitled gas consumption for the summer.

That's very clear. Thank you so much. And a quick follow-up to the first question, some of the investors are worried about the entry - the potential entry of traders. Assuming that traders may have distribution capacity and this is a big assumption, isn't the lack of storage facility in the country, a huge entry barrier for traders. And if they wanted to compete in Argentina, what are your thoughts on that?

Clearly, logistics is an important part of the equation and both the tanking and pipelines are restriction. Distribution in itself it's also a restriction, and as you said, you're - it's a very huge assumption believing that that distribution is available to anybody. So I think that, the market is open, anybody can come in. Prices are - international prices are based on international prices. There are no import duties at all, but the incumbents, and we think YPF at the top of the incumbents. Have all the elements to compete favorably. So we are not saying that this is not going to happen, we're just saying that if it does, we are in a very, very strong position to defend our portion of the market.

Perfect. Thank you so much, Miguel and Daniel.

Our following question comes from Alejandra Aranda from Itau BBA.

Yes. Hi, this is actually Ricardo Cavanagh. Well, first of all, I would like to ask like holistic view on the industry. I see that the impressive improvement that you have achieved over the past few years, while in Vaca Muerta, and honestly think you're doing all of the right things. Now yet when I look at the outlook for production and YPF on the industry as a whole. The trend is definitely downwards for growth has been well for more than 20 years and for us it's very hard to pick it up. So conceptually, what do you think could make the trick for industry fundamentals to revert, given that extrapolating the situation would mean that crude production will continue going down, industry as a whole. So it is cost, is it productivity, is it new fields? What do you think? Thank you.

Well, thank you, Ricardo, for the question. I think, what we are seeing and we only seeing the tip of the iceberg here is a huge replacement of, let's call it, legacy production for shale production, okay. To what extent the shale production in case of oil will be able to offset the decline of the mature fields, difficult to say, especially if you're talking about the whole industry not just YPF. The natural gas is very, very clear that shale and tight production not only will offset the decline of the existing production, but we'll also provide significant growth in order to take natural gas production in Argentina back to where it was 10 years ago, which was substantially higher level than where we stand today. How we get there clearly it's about continuing this de-risking of unconventional and making sure that the results - very positive results have to say that we are seeing in the only two development projects that we have in Vaca Muerta can be replicated in the rest of the acreage. That's why I made reference during the presentation of 20 different Vaca Muerta areas, where we have participation and our projects ongoing. 18 of those 20 are pilot projects, okay. So only two are in development mode, okay, between our own pilots - as we said, are 10 of them, plus the pilots being conducted by some of our partners, will we have a minority stake. There is a plenty of activity going on to make sure that we can replicate this success of Loma Campana and El Orejano. And the great news is that different to what it was three, five years ago where it was only YPF, the one that was doing this. Now there is a bunch of other very big players also making significant investments here. You can see that those names that have teamed up with us and have signed agreements especially in last 12 months, we've been extremely active with that. But also in other areas, where the likes of Total or Rex-TO [ph] or Shell and so on, are investing heavily, same thing with the petrol in natural gas. So I - we believe that this is a kind of reverse of the Argentine oil and gas industry. We will continue to fight the decline of the mature fields. We will put a lot of emphasis in massification of the secondary recovery and starting territory recovery seriously to fight decline. But the bulk of the growth will come from the unconventionals.

Okay. Thank you very much.

Our next question comes from Regis Cardoso from Credit Suisse.

Good morning, Miguel, Daniel, Diego, everyone. Thanks for the very comprehensive presentation for taking the questions. Two questions. First one, in regards to Downstream market. You mentioned you are working on a pricing policy, right? And I guess, that's a key point on YPF investment case going forward with increasing competition from trading companies. So last time, we talked one of the key question marks is what are you would pass through volatility or not to domestic markets. So I wanted to get a sense of how are your latest thoughts and in regards to pricing policy eventually having daily volatility or not? And then second question, in regards to the Plan Gas, I wanted to touch base on the implications of the change, because I understand from when you presented to business plan, the interpretation to Plan Gas were different, right? So I wanted to understand what does that change in terms of both short-term EBITDA, and I see you're looking at similar gas prices. But also in terms of longer-term, how has that changed your five year plan in terms of which investments you're making and whether that impacts or not the five year production growth target? Thank you.

Okay. Thank you, Regis. First on Downstream pricing policy, we included a graph on that - of today's presentation, I think, on Slide 15 that pretty much shows how we're looking at this. We are definitely incorporating the effects of that volatility, we're just not doing it on a daily basis, okay. We have been increasing prices as needed, taking into account what was going on with international markets, and also what it's going on with market dynamics in Argentina. As you can see on that graph, at this point in time, we are exactly converge at some point in December, we have local prices, which were above the parities, and in January, we were below the parities. And you should continue to see that, because the way that we planned is with a quarterly and an annual margin as a target, both for refining margin as well as our commercial margin, right. And we are pricing our products always with an eye in protecting and enhancing those margins. We are not saying that we will never have a daily pricing policy, we don't know, but we have a pricing policy today that we think it's a good one and as allowed us to catch-up with prices and it allowed us to maintain, or even slightly increased market share, and all of this without any push pack from the market, which is also very, very positive. The demand in Argentina continues to be very strong. So you should rest assured that in determining prices, protecting are always healthy margins and Downstream will continue to be a priority going forward. With respect to Plan Gas, it is true that when we laid out the plan in October, the details of the plan had not been arrowed out and that it came…

Thanks, Daniel. If I can make just two quick follow-up questions, one is regarding the charts you mentioned in Slide 15. Are those charts in anyway accounting for freight? Is this a clear representation of import parity? Or is it simply RBOB and ethanol costs? And also a second follow-up question, tight gas production it seems to be down in first quarter this past year 2017, right? Is it in anyway related to what you've just mentioned above the changing in which projects you all carry out? Thanks.

I didn't hear the last question, Regis. But the first question regarding the import parity is yes, absolutely, it's not just RBOB plus bios. It's a full import parity including freights. So the answer is yes. I think, second part of your question?

Thanks. Yeah, the second question was about tight gas production in the fourth quarter. It seems it was down on a quarter-on-quarter basis. Is it in anyway related to the change in investments as a follow-up of the Plan Gas, or is it something else as soft demand?

No, it's not related to the changing the gas plan, it's related to the restriction to demand of the - that we've experienced in last quarter, that I made reference to, which actually the areas that were most affected or the area that was most affected is our largest tight gas area, which is Lajas formation. And that's why we lost production out of Lajas, basically because we had to cut because of lack of demand. But now have nothing to do with gas plan.

Very clear. Thank you very much.

Our next question comes from Pavel Molchanov from Raymond James.

Yeah, thanks for taking the question. This is Muhammad on behalf of Pavel. So you guys added the third rig to your acreage with Chevron in October, have you already begin to see the impact form the rig, if not when do you expect to see the rise in production as a result of the rig?

Hi, Muhammad, I know, we have not yet seen additional production out of that rig, because it only came in operation, I think it was in October, November of last year. And then the full cycle of a full part coming into production takes - even take 150 days between drilling completion and put in production. So that is embedded in that 35% increase in shale production for a year that we're estimating.

Okay. And can you talk a bit about your plan for Santa Cruz, how many will - how many wells do you plan to drill in 2018, and what areas are you targeting?

No, Muhammad. We never disclosing that kind of detail how many wells in each of the areas or each area specifically that we are going to be investing now, because I mentioned that we will have two dedicated drilling rigs, we should assume it's going to be around 30 new wells during the year.

Okay. That's all for me. Thank you.

And our next question comes from Florencia Torres from TPCG. Florencia, if you're online please un-mute yourself. Our next question comes from Santiago Vigini [ph] from AR partners.

Hi, everyone, good morning. I just had a couple of questions. The first question, just quick follow-up on the price of gas that you mentioned before, where should we expect to see the price in the first quarter of 2018, once we factor in the amendment to Plan Gas? I mean, how much could it fall versus the figure quoted in 4Q? Two questions, could I get a breakdown of the reserves at the end of 2017 between conventional shale for oil, and conventional tight and shale for gas? And a last question if I may. I wanted to get a sense of your financing needs for this year considering the CapEx plan? Thank you.

Okay, Santiago, thank you. Your first question regarding expected price of gas for the first quarter, we - I usually say, we don't usually give those kind of projections. But you should assume it's going to be around the same level that we have today. We have - we are projecting a similar price for the year as whole. We are not breaking it down on a per quarter basis. Maybe it's a couple of cents below the $4.90, but in that range. Okay. Regarding breakdown of reserves, I don't have here a full breakdown. What I can tell you is that shale oil and gas reserves represent give-or-take 80 million barrels of oil equivalent out of almost 1 billion for total P1 reserve. So it's 8% or 9% of our total reserves, still small. I don't have the numbers for tight gas. They are quite significant, but we can follow up without at this moment providing that. In terms of financing, as we said, we are in a very liquid situation. We anticipated the financing needs for the year in December. So we started the year with a strong cash position. We don't have any intention in addressing the capital markets for now. And at the same time, we have entered a new cycle in which we start having positive free cash flow before interest. So whatever, we fund, finance is basically to replace or refinance debt coming due. And we don't have any significant debt coming due this year. We have approximately $400 million or $450 million of bonds maturing in December of 2018, end of December. That is our first sizeable maturity this year. So no significant financing needs for the year, and clearly, no new issue, no debt reissue activity in the coming months.

Okay, Daniel. Thank you very much.

Our next question comes from Pedro Medeiros from Citigroup.

Hello. Good morning. Thank you so much for taking the question. Thanks, Daniel. Congratulations on the results. So I have a couple of questions. First one is you guys like can provide any extra color on the contribution from your shale resources, your updated reserves figure for this year. And on that same line of thought, do you mind commenting on the results for drilling the first 3,000 meter plus lateral wells in Loma Campana in terms of cost and initial productivity or the recovery per well targets that you have for these wells. And is the plan is that these will become the norm, the new norm to pursue within Loma Campana?

Thank you, Pedro. We don't have any results for the 3,200 meter long lateral well. Basically, we consider as been drilled, but as not yet been completed, that we expect to be completed in April of this year. So hopefully, probably not for the first quarter results, but definitely at some point after that we will be able to start providing with some details, some color in terms of the cost or in terms of the IP. If it's the way to go or not; it will depend on these results. We are still trying to find what is the sweet-spot, in terms of length of laterals. But you should assume because of the significant increase, the number of frac stages that we can put in those longer wells that the cost of development of those wells should be much lower than the 1,500 meter wells that we had been drilling in the past. So we will see. Bear with us for a couple of months, while we give you - or while we give our own results in order to share with the rest of the market. First question was regarding additional color on those 5 billion barrels of oil equivalent of resources. There is very little we can say about this other than saying that we have just huge resources in Vaca Muerta. That's why the discussion regarding reserves we try to put in context, so that nobody thinks that we don't have the ability of replacing production every year, as we have been doing, right, because we produce 200 million barrels of oil equivalent per year. We have been producing that for the last few years. And always the reserves seem to be around that 1 billion barrel mark. We will have the ability of transforming these resources in reserves over time. Okay. But there are very strict rules in terms of what kind of reserves or how to certify reserves coming from unconventional. And we have very little history. Again, to my point of 20 pilots ongoing, only two of them which are in production or in full development I must say. I said that, that we have 80 million barrels of oil equivalent of P1 reserves coming from the shale. Well, 80% of that is just coming from one area, which is Loma Campana. So clearly, what we are saying with this is us, we grow in the number of pilots. Those reserves will start coming in. Don't ask me, please, for a specific projection of what reserves are going to look like this year. But we stick to our objective of increasing reserves by around 50% over five years.

Okay. Perfect. That's very good. And just if you don't mind, a follow-up on that, and based on the map shown on the presentation and the comments you have made and recently we have had the renewal, the budget approval for La Amarga Chica for 2018. Like how many of your pilot projects are expected to potential to have a decision on a commercial development sanctioning in 2018? And if you don't mind, like conceptually that commercial development approval will mean typically what, like adding three, four rigs on each of these projects?

Okay. Pedro, that project that you mentioned, La Amarga Chica with Petronas is the first one of those pilots ongoing that we expect to be converted into full development this year. But we also expect Bandurria, which is a JV that we have with Schlumberger also to be transformed from a pilot to full development at some point very late this year.

Okay, okay. And generally, like if we take the Loma Campana example, it will mean like targeting somehow between three or four rigs per year, as - just so I can try to figure out scenarios for your production growth from shale over time?

We still have not discussed in detail the development plan with our partner here. So we should not get into any specific details regarding La Amarga Chica. But generally speaking, any of these areas can easily support two to three drilling rigs when moving to full development. At the end of the day, it will depend on the pace of investment that the partners intend to engage in. What we can tell you is we don't see ourselves going back to the early Loma Campana days in which we had 20 rigs in one area. That I don't think will happen. Will it be two or three? Will it be five? It will depend. And again, this comment is not just about La Amarga Chica. It's about all of the developments in Vaca Muerta.

And, Daniel, just as a last follow-up on that thing, is there any project that is fully owned by YPF and could face a decision on commercial development this year? And I mean, regarding shale specifically than in the Vaca Muerta resource development?

Not from those that are going to full development. As I said, it's only La Amarga Chica and the Bandurria. Also then we have partners. But in terms of the pilots that we showed in the presentation, yeah, definitely, yes. We have many of those pilots like Rincón del Mangrullo for Vaca Muerta, La Ribera 1 and 2, Aguada de la Arena and a few others that we are engaging in this year that are all fully owned by YPF, yes.

Okay. perfect. Thank you so much. One - my last question is regarding the deal with GE it's just to understand one very simple and objective point. Is there any take-or-pay for your natural gas regarding this project? And do you mind sharing? If so, like how does the price compare with your current natural gas price sale?

I don't recall exactly if there are take-or-pay agreements. I think there are - clearly, they are preferential shale gas agreements as they are preferential equipment agreements with GE. In all cases what is very clear is that it should be on an arm's length basis, okay? And always in the best interest of YPF EE, meaning YPF EE will not subsidizing any of YPF or GE.

Okay, perfect. It makes sense. Thank you so much. Congratulations once again. Okay.

Our next question comes from Florencia Torres from TPCG.

Hi, thanks for taking my questions. I would like to ask you a follow-up regarding the result, which is the strategy that the company has to improve the reserve replacement ratio currently at 9%.

Thank you, Florencia. The strategy of the company has is engaging in the best projects that we have for oil and gas development, meaning we have very thorough prioritization of projects. And not just managing according to research. What I'm trying to say with this is, if we are successful with all these projects, results will clearly increase and that's why we have set up this target of increasing reserves by 50% in five years. The one thing that we are not doing and we will not be doing is just doing CapEx that might have a short-term positive effect in reserves if that CapEx cannot prove that should return or should provide returns above our threshold 30% rate, okay? I think that's the best way to elaborate how we are seeing reserves.

Okay. Perfect. thank you so much.

Our final question comes from Luiz Carvalho from UBS.

Hey, Daniel. Thank you. Just two quick questions, the first one is regarding reserves if I may come back to this point. I just would like to understand how that you'd say the change of the pricing policy or the, let's say, the change of the crude policy affected your reserves this year, because for the past - couple of past years, I mean, the reserves were somehow close to 1.2 million, 1.1 million, and now, basically dropped a bit, I don't know, 16%. I just would like to understand the impact of the, let's say, the change of the pricing policy itself on the reserves. And second, that's kind of recurrent question from my end in the conference call. But I'd like to understand a bit more; is there any update on the potential additional JVs for the unconventional areas then where we are on top of this. Thank you.

Thank you, Luiz. Well, the first thing regarding reserves and specifically crude oil reserves that we all need to understand is that the price, the crude oil price used to determine those reserves decreased by 11% in dollars from 2016 to 2017, okay. And that is by far, I would say almost, not the only by - but by far the most important contributor to reduction in reserves. We actually lost like 70 million or 80 million barrels of oil equivalent just because of the price reduction, okay. Of course, we should assume that prices will or are recurring this year. The average price that we used for reserves in 2017 was - $57 per barrel. Sorry, I'm asking the rest of the team here. And we have enjoyed a price in the $65 range in the first couple of months of this year. So if prices remain flat in 2018 we will be making calculation with prices just $7 or $8 above those used in 2017. Should that have a positive effect on reserves? Yes, but very difficult to predict today what the effect will be. In terms of additional JVs, as we - you always asked the question and we always provide a similar answer, which is we are talking with a number of different interested parties. If there is one thing that we have to say is the interest from different parties within Argentina and outside of Argentina regarding Vaca Muerta is stronger than it has ever been; clearly, based on the very positive results of the pilot and the development of Vaca Muerta so far, and also because of the improvements in Argentina as whole. I really think, we really think that this convergence of prices will be a major contributor to increasing that interest even further, okay, because people like to have the possibility of having their oil produced in Argentina being benchmarked against their oil produced and sold in other places of the world. We didn't have that luxury before. We will have it going forward, so that should be a positive also. Now, we are not expecting an eminent announcement of any additional JVs. We like the idea of doing a good part of that de-risking in areas that where we own a 100%; and eventually, moving to JVs once we have been able to realize additional value in all those areas, because as opposed to couple of years ago, where we didn't have the financial resources, we do have the financial resources today to do all these - this de-risking by ourselves. So we continue to be - to like JVs. We are associative as a company. We have very good partners and we put a lot of value in the relationship with those partners. So you will continue to see us doing JVs. It's just not a need of doing them too early on and diluting our property at low value.

The only thing I will add to that is that as we have said in our long-term plan, we will be very active in managing our portfolio. And that means, not only doing JVs with existing assets that we have, are also looking for new assets. So we will be very active in the marketplace one way or the other.

Okay. If I may just come back to the first question, Daniel, how is the certification company that certify your reserves? Because - but I understand that you mentioned that you're going to use this type of oil that I just would like to understand what was the approach for this year. But how is the certification company certifying the reserves.

This year it was Gaffney and Cline, the one that certified a third of our reserves. We have a protocol of certifying one third of our reserves every year. So every three years we have 100% of our reserves certified. And we - this year as I said, it was Gaffney. The previous year it was also Gaffney. I'm not sure who is going to be doing it this year. We put that for bid from time to time. But it's always the usual suspects, the big companies that certify reserves to the majors and all the relevant E&P companies globally.

Okay. Good enough. Okay. Thank you.

At this time, we have no further questions. I will now turn the call over to our host for final remarks.

Okay. On behalf of all of us here with YPF thank you very much for bearing with us for what's a little over an hour-and-a-half. And, of course, if there are follow-up questions, you can call me, Diego, Pablo, the rest of the team at any time. Have a good day.

Thank you. Bye. Diego Celaá: Thank you.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.