YPF Sociedad Anónima (YPF) Q3 2024 Earnings Report, Transcript and Summary

Hello. Greetings and welcome to the YPF Third Quarter 2024 Earnings Webcast Presentation. All participants are in a listen-only mode at this time. Later, we will conduct a question and answer session. [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 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 Barroetavena 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 go to open the floor for Q&A session, together with our CEO, Mr. 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 in interannually, despite the recent rain 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 tariffs in parallel with our focus on production efficiencies in our core assets, 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 Q3 last year, now representing almost half of our total production. Very important and in line with these 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 projects Vaca Muerta South Oil Pipeline also known as VEMOS that YPF is leading as a Producers’ Consortium Expert 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 results. Revenues reach $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 upset by contraction in diesel demand 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 conditions, 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 cost and the weather impact mentioned before. Net result grew significantly, posting roughly $1.5 billion, almost three times 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 payouts. Interannually, besides these impacts, 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 nearly $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 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 upset by a growing activity in upstream in business temporarily increasing accounts payable. As a result, we maintain 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 FPAs for a total of 25 blocks. Also, we obtained a 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 Province of Tierra del Fuego to the Andes Project, so the total now amounts to 37 blocks regarding the blocks not included in the Andes Project, there are continuous ongoing -. 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 continues 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 impacts on the conventional production declines, 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 nature 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 - pipeline and the seasonal peak demand, while NGL’s production increased 7% due to the increased shale gas production and the productivity achieved after the optimizations implemented in the turboexpander 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 blocks recorded $4.6 per barrel of oil equivalent on a gross basis, decreasing 2% quarter-on-quarter on the back of higher oil shale production. Considering the evolution of inflation, which has been higher than the evaluation, 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 equivalent, instead of the original $13. Regarding prices, in the Upstream segments 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 plant gas. Now, walking through our select 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, all are 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. This improved PPIs at our core activities are fully in line when – deoxicipated front 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 year record delivering 126,000 of barrels as per day, increasing by 11% sequentially and 36% interanually, 86% of the total shale oil output came from our core hub oil blocks, Loma Campana, La Amarga Chica, Bandurria Sur, and Aguada del Chanar. In terms of efficiencies within our unconventional operations, we continued with high levels of drilling and fracking performance, averaging 340 meters per day of drilling and 240 stages per set per month of 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 the 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 about 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 ten years. On the other hand, last year was affected by programmed shutdowns at Luján de Cuyo and La Plata refineries. Fuel sales volumes were similar sequentially, good news since the 5% expansion in gasoline was partially offset by a 3% drop in diesel due to lower seasonal demand from industries. Interannually, fuel sales volumes declined by 9%, since last year it 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 a remarkable results we achieved after a continuous conviction to follow international parities. 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 consumption in our industrial complexes as well as improvements in products storage and contracts and logistic 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 me 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 eight and three quarters and proceeded with a repayment of $334 million for the 2025 notes and $166 million for the 2027 notes. In addition, a $40 million exchange to the 2025 notes. So, with this new issue, we continue reducing the financing needs and costs for 2025 and at the same time, consolidating of the overall spread curve of YPF. In the local capital market, we issued a two year dollar-linked bond for $185 million at a 0% yield, as well as promissory notes issued for $100 million also at 0% yield with maturities of up to 18 months. During this quarter, we also reopened the local bank syndicated market with $300 million syndicated loan with three local relationship banks. After Q3, we issued two new dollar-denominated bonds, $125 million in dollar net at a yield of 6.5 and $25 million in dollar coverage at a yield of 7%, both with a tenor of four years. On the liquidity front, by the end of Q3, our cash and short-term investments decreased 14% sequentially to $1.2 billion, a lower level of cash aligned with our short-term needs and improved confidence in pre-financing our schedule of debt. Our net debt remains similar at $7.5 billion and with better EBITDA quarter-on-quarter we improved the net leverage ratio from 1.7 to 1.5. Regarding our maturity profile, 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 $2o0 million. This 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 progress. 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 Q first ‘25 at Allen to be initially utilized by OldelVal 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 250,000 barrels by Q1 next year. The VEMOS first tranche shall be expanded to over 450,000 barrels per day by 3Q ‘26 and Allen. Once the second tranche starts in 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 trying 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 one of us to operate VLCCs the 2 million barrel mega bases 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 RIGI 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 contract 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] Our first question comes from the line of Vicente Falanga from Bradesco. Please go ahead.

Hi, hello Horacio and Federico. YPF team thank you for taking my question. So I basically have two questions here. First of all, Horacio, if you can mention and share with us, how was your roadshow to sell Argentina’s LNG, and Asia, and Europe? How was the receptivity of potential buyers and how was 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 at some point next year. It seems a little bit far away if you could provide a roadmap of how to get there. And then also, like 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.

Hey, hello, Vicente. Thank you very much for… Do you hear me? Because I have problems in here hearing you, okay?

Yes, I can hear you well. Yes.

Okay. Okay, this is Horacio Marin. I am in Austin because to this evening I will receive a distinguished alumni award in the University of Texas for my Master's Science of Petroleum Engineer. We have a little problem with the communication, but if you hear me from the telephone, it's okay. Can I being hear at the beginning?

Yes. Sorry. No, go ahead.

Yeah, so 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 – possible equity investor to the LG plant, okay. And then my second is how to get the lifting cost $16 per day.

Okay, to the LG I have, I think I have to clarify a little bit. For investor or equity maybe it was you are more interested in. It's a little different than the offtakers. Investor, there are the companies of Argentina that they have the reserves, they have reserve plus the Petronas is one that they have to decide at the end of December is continuing up. But because our job is to maximize the shareholder value, we are continuing to discuss with super major to enter us equity. And I cannot tell the names of the companies because it's confidential at that moment. And we are going to declare that when we have this final document signed, okay? In what is about the offtakers, we want to India, as you know, we will - we went also to Europe. And really, I'm very, very positive because we have a lot of NDAs signed. I think it's 14 so far MoU with different companies and also countries like India, we're in the process of signing one of this MoU for the big number of selling. And all the travel to the different countries that if we know that we were to Hungary, we have also in Italy, in German – in Germany, Sorry. And also, we went to London and there, there several companies. In all the meetings, it was positive. That doesn't mean that we signed contract. It does means that we pass to the next phase, but need to sign NDAs MoU and start the negotiation as soon as possible. So from the LNG I am very positive. The second question was about the lifting cost that you feel say how you can go to 18.2, I don't remember. I say, - say 15. no?

Yeah, 16, yeah.

It's okay. Yeah, yes. The answer is the - remember we are going to be almost a non-conventional 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 4X 4, what this first pillar and the second pillar, third pillar is concentrate our investment in the more profitable business with this Vaca Muerta oil. Second that is to work for a new ecosystem for various small companies, what we call mature fields, we are now in the process - we that was a highlight remark in Argentina, that was two weeks or three weeks ago, that they come to the FERC area. So we are all in the process that that the provinces because it's a new process in Argentina, beginning from the new constitution in 1984 and the province 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 - very, very tight one. We still want to be out of the process in the beginning of next year. for 25 areas and we are still negotiations in one of the province with this Santa Cruz, and also, we make the net number the second and the second - that is for oil price. I think it's okay for you or you need more details?

That is great. Thank you very much and good luck on your Masters. Thank you.

Okay. Thank you very much.

Our next question comes from the line of Bruno Montanari from Morgan Stanley. Please go ahead.

Good morning, everyone. Thanks for taking my question. I have only one question. I want to switch for a little bit how you are envisioning your free cash flow trends into 2025. So when could we start 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. Thank you very much.

Okay, our idea it is same that in yours that I think was the first call that this year, the cash flow is neutral for operational point of view, because we have a mature field. Next year with the mature field, the majority of mature field out, we continue still thinking. Now we all want to have a neutral cash flow for the - all the company, 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% or so after then we have received the approval of the partner I can be more in detail but I'm thinking it will be in the next call in April. But that this 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 operationally from the ‘26 going on, it will be positive cash flow. And the CapEx.

All right.

Okay, sorry the CapEx we are going to maximize the CapEx in the non-conventional, 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 in Vaca Muerta and in the other parts. For sure, we are going to maximize your shareholders and we think that this is important, like we are going to reduce the CapEx initially. Our work here is to be very efficient. So reducing the tax, as much as possible because we have a 14 weeks. But we are working in that issue a lot which if you see that the tax is increasing for sure. Then what we have to do is to reduce the CapEx it has happened, okay?

Perfect. Thank you very much.

Thank you.

Our next question comes from the line of Daniel Guardiola from BTG. Please go ahead.

Hi, good morning. Horacio, Federico, Maximiliano and Margarita. I have a couple of questions. The first one will be on infrastructure and more specific on Midstream infrastructure. So in the case of the Duplicar expansion projects, 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 like to know also how ready you are to fulfill this capacity at this pipeline once it is ready, And if you're foreseeing as per capacity in the pipeline in 2025 and perhaps in 2026, so that’s regarding Oldelval Duplicar projects. RegardingVaca Muerta, I would like to know if you can share with us when do you expect to start construction of the second tranche of the project? And also, it would be great if you can share with us if already have secured all the required environmental permits to develop this pipeline? So those would be my questions on infrastructure. And just a third one if I may squeeze? During the last days, we saw YPF grabbing to 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 start if I think. Burford, if you remember that in Burford, we are out of the trials and from the forestsequencing writ. They will be next year in the second sequence. So I cannot answer by the Republic that this is confidential and we have to answer the Republic. The - I have the same information that you have on the newspaper and because of the document that the United States Government putting in the press club okay, for in New York. That’s for Burford., And the other you say about VEMOS. In VEMOS, we have all the permits, all the permits – environment, social, everything is done. We are going to pass in the - in our part of director - November the 14th. The approval, the internal approval of the of the Board for the that investment for the part of YPF. We are a little late, I’ll say two weeks because our first purpose, as you see in the median was to sign everything for the November the 14th, but because we have several companies working lot of lawyers, lot of financing guys a lot of operational guys, I think we need a couple of weeks more that it will be in there. We have only building process done. We have the tubulars, and we have also in building process for the civil work and they will be given to the company as soon as we have designed, 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 3 weeks. But we have in communication that we need to have in the forest delivery for second - the third quarter, I’d say the beginning of third quarter of 2026, The other question on - that you asked me is about the Oldelval. I don't know, you ask me the Oldelval is one is will be in December or January? They will need the first part. I think it's 50,000 barrels for all the company and at the end of the May will be done all the parts. We always follow in our processes to follow the capacity of the old pipes. We try to fill up everything that remember, that when you are an operational company, if you if you lose the capacity, you lose a lot of money. If you have a little capacity, spare capacity is like it’s works got secure, okay? So, but we have followed that. We have followed our production. We always trying to follow the production with decremental capacity that because they are in the spikes every company we have a defense situation. I don't know if answer all the questions. I don't know.

Yeah, thank you, Horacio. But 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, to make sure you know that once the pipeline comes online, you're able to fill your capacity as soon as possible.

Yes, the main production today - yesterday, the day before yesterday, and now we have 50%. 50%. even though we have all the - okay? We are in 135 to sell somebody today. For the end of the year, we think we are going to grow, but a lot that we think one month, okay, because we will have a new type work I think it’s all in all 16, \if I don't remember. But, it will be more than 140 sell somebody at the end of the year. That is our purpose, okay? For the - I know remember the capacity of Oldelval. I don't know if, Max, if you remember exactly the number? I don't remember. Sorry, our capacity.

Yeah, it's about 25% and regarding trucking it’s marginal. It's about 10,000 barrels per day. So it's quite marginal.

Okay. Now, 25, I remember this is 10,000 is not, okay.And what is - it's okay or Daniel or you need more?

All right. And our next question comes from Andres Cardona from Citigroup. Please go ahead.

Thank you. Good morning. Horacio, Fed, YPF team. I want to follow on one of the answers that you use is 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 on 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 around how relevant this upside could be?

Okay. Remember, when you made forecast production all with these uncertainties and it depends on the different areas that you are going to invest. And it depends on the approval of the different partner that we have. But we you have for everybody, you have to expect for the next year that we will increase the – and the unconventional production in the order of 30% to 40%. In that range it will be the incremental production. That's why we can - we can achieve our average of 160 that we talked to you in the first quarter I think. It could conserve really, I don't know. I hope so, if I hope so because we are going to make more money for you. But it’s the number that we have today. Okay?

Okay. Got it. And the second question that I have is, you have been talking about the potential divestiture of Metro Gas. We 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 prepaid, is that issuing anyone it’s something that you are considering at this point?

Okay. I will answer about Metro Gas. From the beginning I think, when I start in my, alone in my house to say, look we have to do in YPF. We say that the affiliate have to be focused where we make value and also Metro Gas is a gas company that is not the core for YPF. From the beginning, I always say that we are going to solve Metro Gas. I mean, something that this is all given from the law of Argentina and it’s totally logical that YPF and Metro Gas.I - that in the last nine months I spoke, I don't know how many - maybe 100 times, that is something a big number, but a lot of time talking for what is YPF 4X4production program. Always I say that Metro Gas is 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 big wins though that we have in Argentina and so the people think that that would be the moment and it could be the moment. And that's why it was in the media when I was talking - I don't know two weeks ago in a big meeting with people from the economicals - economy - private economy. So, if now we have company that put the good value that we think that is good for the shareholder 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. And it could be - we have to decide when is the proper time to do that. But I - again I’d say, if somebody has a good number and give us a unsolicited offer or we have offered that that much of our process, our number we must do a proper bidding process for selling Metro Gas to maximize shareholder value. From the maturity of the bonds, I pass to Federico.

Hi, Andres. Thank you, Horacio Well, Andres, we have just reduced our 2025 bond coming due in July by around 40% with the issue we did in September. So, let's say, it's not dependent on, Metro Gas. I think that the market is quite open now. But 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 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 Metro Gas to the bond maturities in next year.

Thank you, Horacio and Federico.

Our next question comes from the line of Marina Mertens from Latin Securities. Please go ahead.

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 this trend to import pricing? And then on, on the downturn in demand, do you think this has more to do with use economic activity or to factors such as in the narrowing of the gap between prices in Argentina and in 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 [Indiscernible] in EMEA will be a float? And if so, can you give us an idea of how much this company could add to YPF’s EBITDA? Thank you.

Okay. Thank you for the question, Marina. In the – as I say, we have like a fear, but I cannot tell you that the process, because it’s not I give the competition, how we are working.And we have this fear in process of pricing with the consumer. And so, if the price was up, we have to go up. If prices goes down we have to go down. We have to work in a normal what's up to things that Argentina is today a normal country. And we have a way of maintaining the prices in property prices as a normal one. So, if the price goes up, it will be down.So regarding, I don't know, if down to in demand, okay? It depends, if now we are seeing a different. WE are seeing that we are increasing in the last issue where we should not I am talking about YPF. We are increasing the manage increase – decreasing the demand. And 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 one there are several reasons why we are successful doing YPF that these prices that is the – a good financing product, capital allocation and efficiency. And that is also. So we are very happy how we are working on that. On adjusted EBITDA through these contribution for associate companies in the second one. We have in our EBITDA performance especially from participation. And we are looking how to can improve our EBITDA in difference – in the different companies okay? The YPF is some company at the same property and I don't know why what is your purpose of your question of maybe I do not done very well what you want from us to for me to answer.

Yeah, I think the question is, I think that the question on consolidating the EBITDA and the answer is Marina, that we co-control these companies. So we cannot and we do not consolidate those on our financial statements. But just to give you a sense of the EBITDA of YPF loose for this last nine months, the EBITDA was 262 and property was something in the range of 200 also year-to-date.

Okay. Thank you. Thank you very much.

Our next question comes from the line of Tasso Vasconcellos from UBS. Please go ahead.

Hi. Thanks for taking my question. Horacio, I think taking advantage here of this yearly one year in the position as CEO of YPF. Could you share with us the main challenge faced so far and how different has been leading YPF as a state owned company compared to leading a private company. And I mean, this context, how has the interactions with the government related to the net investments. The assets under investments, adjusting your prices and so on. That’s my question. Thank you..

Okay. We are working in – you know that I am a 61 year old guy I got working 35 years in a private company. We are working here as a private company. What we are doing is and we say, it big changing management control, capital allocation and investing that in the portfolio, and obviously what is more efficient and more profitable for our shareholders. And that is as simple as that how weare working. And it’s a big challenge. It’s a big change, yes, it's a big change. But you see the results. YPF is unbeatable. If you work - as we are working all the all 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 employees. And, so we see a big change in everything. And the efficiency is the key for us. The productivity is the key for us. Profitability is the goal. The other is a medium to achieve the profitability. Big changes that we are doing. The December 13, we are going to open a Real-Time Intelligence Center in YPF in Buenos Aires on which we are working all these. How we are going to work as a major super major, but in a real time decision-making for all the drilling and completion. We don’t need to go anymore to the wells because we have in real-time everything artificial intelligence inside. We have everything from that. This is the big change. The other that is more direct and I think we are going to be - I think and I can say because I work they are - I couldn't do that, but I say, always in YPF in months we’ve done working with Toyota Well. Toyota Well means, we are working with Toyota. And we are making the - all the efficiency of Toyota, first in the car industry, in the contraction of the oil, and that it will be very interruptive. I thinking and we have seen, why we're doing that because we have to use the whole 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 a strategic partner of Toyota do when they make the high looks in Argentina or work. And so that is in the way that we are working to say as an interesting part we are working for the efficiency in all thefinancing but the plan that was B is on, I am from the La Plata City. And we have to have the base of finally in the operational margin point of view and we have tonnage of initiatives and we - our responsible to improve our margin and that is the way that we have to do. We came to work. We have to do something very, very extraordinary for the company, and for the shareholders . And that is why we are working and what we are focus, okay? I don't know if I answer or I talking more than you wanted or less or I don't know?

No, that that's clear. Thank you, Horacio.

Our next question comes from the line of Bruno Amorim from Goldman Sachs. Please go ahead.

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, you correct me if I'm wrong, but you have a guidance for 250,000 barrels per day of shale oil production by 2027. So the question is, is this to a valid guidance and what are kind of the upside risks here and what are the challenges as well? To what extent does this depend on for the improvements in Midstream or not? So that that would be my main question. And then, just a quick follow-up on the conventional side of the production. I understand that’s now 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 find third quarter could reference for the next few years or not? Of course, considering on a like-for-like basis without considering the divestitures? Okay. Thank you so much.

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 and being able we call the full development and we are – it’s an interactive process. It’s not as easy as if you make a cash flow is in Excel in 5 minutes. Because that means that you have to do in the proper way, taking in all the capital and we are working. So maintain that guidance. But I try - I would like for improve to – that I think is more time presentation that we can we can update it. And I promise that for that moment I will update for everybody that guidance. Okay? For the part of the conventional, remember I was – as we’ve always having the results, it will be managing where it would be the biggest one that is producing the all in all 2025 is sell some barrels today and now we tertiary, secondary, primary and is an excellent part and that you cannot expect that is declining, because we have a more a project of tertiary to do point is working very well the tertiary polymers in that area. We are having – other some areas that we are not the operator that is also they have the potential on that. And so is not that you have to expect that the year is going to 10% per year. It depends on that investment. But it’s, I would say that that I will be the two only the, - that it will be the that is one. The other, I think, for YPF for the industry, now for the country is better. They have a small companies working. And 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, when you have to know, when you have to go out and the others can still make more value, okay? And so don't expect anybody with the reaction, as the others. Remember that today we are 50 on 50. When we have 50 only 50, it will be like an almost we are going to be almost on unconventional ones and it’s not the important net production will be not important as it was before the conventional for YPF. I don’t know, the challenge, I don’t know the challenge you are talking about, that each time you say, the missing I think we are in as a plan and negotiate to make the VEMOS, where have the BEMS I think the name of a Vaca Muerta South qualified. It will be an intrinsic for the country, not only for YPF. So, all the companies that they have asset in Vaca Muerta they will improve the production and if you love that the capacity that they would have – remember that for incremental capacity in only part units. And so the investment is no low and as I’ve seen we will not have emphasizing in the call at the beginning but we would say 316,000 barrels but you have to adapt the winner of Exxon assets. And so the total production for the first place it will be much more than we expect at the beginning of at least, when we start working in this project that is continue working with this project anything YPF, we expect the first phase to be lower appetite of the companies, but it seems that they will be incremental. I don't know, it is dependent on Midstream, for sure, as every, every company. And we are dependent on the Vaca Muerta South oil pipe. That's why we put so infrastructure in this year, and we are going to present the - for in very, very short time. We have the, the company that we made the company for the RIGI. We will present that and as soon as positive document is signed it will be done – all the process will done that one. And we think that we are going to maintain that in the third quarter 2026 and the afterwards the dependency will be on capital. I think prices of all assure and – what’s only thing that thing goes same for everybody wants is a ourselves. So I think we are going to keep a lot of the production and be sure that I will that - we will work as much as we can to improve the production, as much as you can in the lower time.

Very helpful. Thank you so much.

Our next question comes from Leonardo Marcondes from Bank of America. Please go ahead.

Hey, everyone. Thank you. Thank you for taking my questions here. Most of them have already been answered, but I have, two from my side. First one is on the new works well that you guys drilled. We saw the news that you guys have drilled the longest hole down to Vaca Muerta recently. So I was wondering if you guys could provide some color on, what are the expectations for this well? And I appreciate the wells like this one being the standard going forward? My second question is regarding the external assets. We saw some news that first of all working – 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? Thank you.

Okay. The long – we drilled the longest one in Loma la Lata in Loma Campana block. I assume it was in another one 83 if I don’t remember that in nine – well, okay? This is a trimmer, but I’ll tell you one thing for you that this – front of you have the longest well based on the profitability. But the question is sometimes is a question of this of the cost. You have to see the cost and you have to be more down the cost is this we can’t tell lot, the mechanical issue that you have. Because if you contend that the capacity of OldelVal, and so, we always see also invested and we have in the order of - we have sorry. 3,000 meters is in the average that we have. Why sometimes we drill so high those well is to make we make this when you have the one increase a lot of the different the investment. But when you have to make two works, that is one 3,000 and the other 1,000 or 1,500. We try to be a longest well. Okay? But in general, our goal is 3,000, because we have optimized all the cost. And if always, we try to go further, okay? The further you go as an average the better. In general, the better, is you have more profit, improve your profit, okay? That is in this first part. The second part of the question was disposal, what is a disposal of – value enhance the disposal assets will remain with disposal assets. Hello.

Leo, can you repeat the second question, please?

Sure, sure. I apologize. I was on mute here. The second question is regarding Excel assets, right. Excel is selling their assets in Vaca Muerta. And it’s also news that close the drill what the winter produced assets and Excel has already communicated the other participants in the process about the result. So my question is, as you guys can confirm that to us, or is the process still ongoing? Thank you.

Okay, remember that I have this – it’s a more info is confidential and is Excel moving the safe mode is the – they communicate but also - the winner of be in process as they say is Excel. So that is confidential. you have – it’s not that I will not answer about the - I have to ask to Excel more in what is the owner of the asset and it’s the only decision-making company for that, okay?

That's, very good. Thank you.

Thank you..

Our final question comes from the line of Ezequiel Fernandezfrom Balanz. Please go ahead.

Yes it’s Ezequiel Fernandez, Balanz. Can you hear me alright?

Yes.

Yes, we can.

Okay. Great. So, good morning, gentlemen, Margarita and Malantena too, congratulations on the operational upgrades, completion, the higher utilization in 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, about 700,000 barrels per day for the end of 2025 and ’26? If you could share that, of course.

In general, we are not doing, well, we have, but we are not doing like a production official for that. The only thing that I can tell you that the chamber, the oil and gas chamber of Argentina of make a work I think it 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 rise between 1.2. to 1.4 million barrels a day in June, sorry, that is what is in general on the industry is the last official document. It was prepared by the Oil & Gas Sector in Argentina.

Okay. Sorry, that was1 2, 1.4 for which year?

Yes, per day - minimum barrels per day, for all the Argentina, with the capacity of VEMOS and OldelVal we can - you can reach prominent plus and remember that when you have that goes to Chile on OldelVal that goes to Bahía Blanca and you have the VEMOS that is going to Rio Negro and plus our, oil pipes that go to our refinery to the refinery Luján de Cuyo. That is all the evacuation for Vaca Muerta. If you adapt all of that, they give you in the other one 1.5 million barrels a day or it would have all the capacity the capacity of oil for Vaca Muerta and conventional fields of Neuquina.

Okay. But the camera forecast as 1.2, 1.4 for which year? Is it 2026, ’27, ’28, 30?

Let me, let me say one.

No it’s okay. Don’t worry. I can take it with the IR team. No, I don't want.

No, no, it's in between 239 to 240. I know, it’s is the best the other day they were. I didn't mention that but several they were talking about that and it’s in that order for 200 Sorry. And that it could be because of VEMOS, okay? Because VEMOS can be up to just 2027, you can go up with the pumpings. So, in general people are talking here for Argentina that they can reach the big even it could be biggest big of that for the 230. And that work they produce the 1 point - I think it was on 1.2, 1.4, I don't remember, I think 1.2 is only the production. In general, when you see 230 and you are putting the oil and gas taking into account or the LNG that is all doing by the camera in equivalent in barrels of oil per day is 2.2 times the actual operation of Argentina. Okay, re-opertional of ..

Okay, perfect. Thank you. 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?

The - as I tell you, we are seeing in -. I compared with June. I don't like to compare with previous year because previous year was another country. And another country, another prices, another, everything another.So I'm not compare that because I think you mix up the numbers. But I compare what was up this year and July, you can take out because it's like a dry season in Argentina because there is like holidays and people use a lot of cars. So you cannot look and compare that, but I compare with June and I see that is increasing the oil of us and we are also increasing a little bit, our market share and the reason in gas. In diesel there is a big – strong YPF numbers, we see in in a lot of perimeter rotation. And also you are seeing that they are, I am not the economy guy. But you see that the everybody is saying and the numbers saying, that Argentina is increasing now from out of utilization. And so, that will be a good news for the country and for us, because we are going to have a more, more selling or even that we are in let’s say 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 there we are improving our sales, okay? And the reason what is difficult for you, I’ll tell you what is difficult is because the forum is seasonable and it’s not because I mean a lots of what you see flat, but you have to open the sales different markets or this B2B, B2C, the different one on interpretations. also industry and also the industry including in flags and you see that difference, okay?

Okay, perfect. Thank you. My third question is related to the cash flow statements. 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 then, if it’s only partial and you expect more proceeds to coming in the final quarter of the year or the beginning of 2025?

I can take this. I think Ezequiel that what you are seeing 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.

On the mature fields, mature fields, it was not the – we have back on process, we have hired in the – a company from the United States that makes auditing. And we have that number and we could pay out with that number and we will see we are going to open on the total number of that. But we are really in the expectations. Okay, we are there. Maybe, it depends on the end, what we say at the beginning – and what is the two province is. But we think that altogether will be in the expectation because it's okay. The, the number that we are going, we are we received, okay? In some, we are more, in some we are less, we shall, because it's a lot of assets, okay?

Great. Thank you. My final one is related, have you considered floating International bonds at the OldelVal and Vaca Muerta South level? It might help you with getting some extra cash flows at the – for the YPF Holdings and for CapEx?

Okay. You are saying - you want… sorry?.

If you want, I can take this one. Well, Ezequiel, we are working the financing plan for Vaca Muerta South. It's going to be arranged on a project finance basis. So we are looking at different potential lenders from the international and 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 this project finance. 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 sorry for taking a little bit of time at the end the call. Have a great weekend.

And those are all the questions. Those are all the questions. I would like to turn it over to YPF CEO. Horacio for closing remarks.

Okay. Thank you for many much for all the questions. We are really working hard to obtain the results and I wish you’re I’d say happy we are and so that is our - my final remarks today. And next, for the next quarter, we are going to present much more numbers on the years and we will see next, I think in [Indiscernible]. Thank you very much, everybody for the question, the support, because we are thinking that we have a lot of support from you. And that helps a lot for the improvement of our company and the price of our share. And so, we are sorry thank you. And for our part, you have to spare the management and per employees that we are working very hard to improve our company and reach of all of the YPF 4X4 that is our I would say pass to the next four years, okay?

That does conclude today’s presentation. Have a pleasant day.