YPF Sociedad Anónima (YPF) Q4 2024 Earnings Report, Transcript and Summary

Good morning and welcome to the YPF Fourth Quarter and Full Year 2024 Earnings Conference Call and Webcast. All participants are in a listen-only mode. After the speaker's remarks, we'll conduct a question and answer session. [Operator Instructions] As a reminder, this conference call is being recorded. I would like to turn the call over to Margarita Chun, YPF's IR manager. Please go ahead.

Good morning, ladies and gentlemen. This is Margarita Chun, YPF's IR manager. Thank you for joining today in our full year and fourth quarter 2024 earnings call. 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. During the presentation, we will go through the main aspects and events that explain the annual and Q4 results, and then we will open the floor for Q&A session. Today's presentation will be conducted by our Chairman and CEO, Mr. Horacio Marin, our CFO, Mr. Federico Barroetavena, and our Strategy, New Businesses, and Controlling Vice President, Mr. Maximiliano Westen. I will now turn the call over to Horacio. Please go ahead.

Thank you, Margarita, and good morning to everyone present on this call. Let me begin by highlighting that 2024 was a transformational year of YPF. We have deployed our 4X4 plan designed to increase the value of the company. In the afternoon statement, we are reshaping our oil production matrix, leaving conventional mature fields and targeting to increase our shell oil production share from 50% to a minimum of 80%. As of today, we achieved significant progress in the majority of the total of 49 mature blocks. We signed SPAs for 24 blocks, and we're in the final stage of agreement to transfer and or revert 18 blocks located in the province of Santa Cruz and Tierra del Fuego. On the other hand, we are ready the largest shell oil production of the country, and we continue expanding in the coming years, reallocating and concentrating our investments on Vaca Muerta. In parallel, we are leading the missing project development of VMOS, a new oil export dedicated pipeline, engaging and consolidating the effort of all major producing in Argentina to ramp up production to 180,000 barrels per day in the second half of '26, jumping to more than 0.5 a million barrels per day by second half of '27. The contraction has already started and YPS initial capacity will be 120,000 barrels per day, accounting for 27% stake and expecting to reach more than $3 billion of additional export by the second half of '27. In the Downstream segment, despite challenging macro context, we have returned to a 100% free market where we were able to fully normalize local price of fuels and converging them to international parties. On the other hand, along '24, we have been implementing multiple operational efficiency measures to enhance productivity across all businesses. In the Upstream segment, our daily and completion speed for unconventional wealth of '24 are already near '25 targets, so comfortably exceeding '24 targets. In this sense, last month, we achieved the highest lateral length drilling speed for wine shell well in La Angostura Sur block, surpassing 1,747 meters in 24 hours. This lateral length is equivalent to 5,731 feet. We believe further improvement will be achieved through our new Real-Time Intelligence Center inaugurated last December. This new technology and process optimization plan will allow YPS to continue increasing the day-to-day efficiency by taking real-time data-driving decisions in drilling and well completion activities in Vaca Muerta with Starlink connectivity. This has been a transformational change in the business of YPS, moving from a monitoring room to a real-time decision-making process center. Thanks to this, we expect to materially improve our well construction cost in the near future. Moreover, we carry out the Toyota Well project based on the efficiency of the car industry to reduce the time of our well construction cycle, reducing our working capital and increasing our profitability from the acceleration in production. Our target by 2025 is to decrease by 30% of the well construction cycle from 312 days in 2023. At the initial stage, we developed two prototype lines to be implemented on a large scale Vaca Muerta in the near future, and the results are promising. We reached an average of 24% reduction at this initial stage. In the downstream segment, we reached a record high in the processing level of our refinery, exceeding 300,000 barrels per day in 2024 and exceeding the year with 318,000 barrels per day in December, with a refinery utilization of 92%, mainly driven by the revamping of our La Plata refinery, which increased its capacity and improved the quality of the fuel by reducing the sulfur content. In addition, we achieved a record high production level in 2024, 5,605 cubic meters per day of premium diesel and 13,915 cubic meters per day of gasoline. Regarding downstream efficiency, during 2024, we created a specialized industrial team to target and monitor the efficiency and productivity goals by implementing a series of initiatives, such as the optimization of our refinery output, maintenance, shutdowns, and power consumption in our industrial complexes, as well as a comprehensive improvement in product storage and logistics content. All in all, we record a total saving of $405 million in 2024. Moreover, we will inaugurate our Downstream Real-Time Intelligence center in mid-March combining artificial intelligence to boost our efficiency metrics. This center will be the first in Argentina. In terms of financing, YPF took the lead in reopening the markets of Argentine corporates. In January 2024, we successfully issued an international bond market, a seven-year bond of $800 million. Following this, we executed two additional bond transactions, $540 million in September and $1.1 billion last January. This progressive strategy approach enabled us to effectively lower yields to 8.5% while increasing tenors. Moreover, in the local market, we successfully arranged the first syndicate bond transaction in more than four years, setting another reopening of Argentine corporates. We secured a $400 million term loan structure in two- and three-year tranches with participation of 16 financial institutions. Finally, we changed the authorization matrix of the company, changing internal procedures, and increasing the control process compliance. Moving on to the next slide, let me highlight that through our exit from mature field, we are achieving the transformation of YPF since we managed to reduce losses, allocate capital efficiently, and focus on Vaca Muerta, our most profitable asset. Let me also clarify that this is a new process. We know precedent in Argentina in the owner of the resource at the province, and the approval requires several provincial authorities to complete each process. Now, let me briefly update on the progress we made so far. In the province of Mendoza, we already completed a transaction of Llancanelo cluster. In Mendoza North, after having received all provincial approval, we are in the final stage, expecting to close within the next two weeks. In Mendoza South Cluster, we already obtained the assignment approval, and we expect the extension approval of the concession to be done the next week. Immediately after, we will close the transaction with the buyer company. Regarding the province of Rio Negro, we completed the transaction for the Estacion Fernandez Oro cluster. In Señal Picada Punta Barda cluster, we are in the final stage of negotiations, targeting to execute the STA during March, and while the closing should be no later than April. In the province of Neuquén, we already received all the provincial approval for Neuquén North and South Clusters, just waiting for the corresponding decrease. In Chihuido, Puesto Hernández Cluster, we have initiated discussions to transfer reverted back to the province. Focusing on the province of Chubut, we already completed the transaction for El Trevo, El Escalante and Campamento Central Cañadón Perdido Clusters, while we are very advanced with the process of transferring or reverting Resting Ali to the province. Regarding the non-operative position in Chubut, we are in the ongoing negotiations. Lastly, in the province of Santa Cruz and Tierra del Fuego, we are making progress in negotiations, targeting to transfer or revert the remaining assets back to the provinces. In summary, during these 12 months, we have achieved a material province with no precedence in YPS and Argentina. This is the most transformational project that YPS needs to eliminate losses and inefficiencies. I continue to be committed to move forward with this project to be finished in the next few months. Now, to begin with numbers, I am pleased to share a quick overview of our key accomplishments obtained during this first year. I am proud to report that YPS has accounted for near one-third of our Vaca Muerta shale oil production, achieving an impressive output of 122,000 barrels per day in 2024. This marks a 26% increase compared to 2023 and is fully in line with the annual target we laid to the market in March 2024. Moreover, as of today, our net production is above 150,000 barrels per day. Looking ahead, we anticipate sustained growth in 2025, concentrating our effort on our most profitable asset, shale oil from Vaca Muerta. Also, let me highlight that as an operator, YPS produced more than half of Vaca Muerta shale oil production in 2024. The competitiveness of YPS is now more evident to the market based on the unique shale production scale and synergies that the company now consolidates between upstream and downstream segments. In line with this production ramp-up, we almost tripled our oil export revenues in 2024, achieving near $1 billion and averaging 35,000 barrels per day. In Q4, we jumped to 41,000 barrels per day, representing roughly 20% of the country's oil exports and making YPS the largest oil exporter of Argentina in 2024. In the downstream business, during the entire year, the company has been consistently adjusting local fuel price to be in line with international prices. As a result, we narrowed significantly the gap to import parties, decreasing from 20% in 2023 to just 2% in 2024, despite the significant devaluation that took place in December 2023, while our market share remained strong at 56%. Also, the recovering price coupled with the stereo efficiency initiatives mentioned before, that resulted in a better comprehensive refining and marketing EBITDA margin of $13.7 per barrel, growing 24% compared to 2023. This margin includes refinery, chemical, petrochemical, logistical, and lubricants. In parallel with increase in export with the newly fuel imports significantly in '24, mostly due to demand contraction and refinery capacity expansion. It's also worth mentioning that '23 with effective and extraordinary demand driving by local price considered below import parities. During '24 in line with price recovery, demand declined, particularly in the first half, but gradually improved during the second half, plus the improvement in refinery capacity mentioned before. All these positive outcomes contribute to a 15% growth in the company and sales EBITDA in '24 compared to '23. However, let me clarify that '24 figures have been higher but it was negatively impacted by 2 important factors: roughly $300 million negative EBITDA from mature fields and around $85 million of low EBITDA from the Patagonia weather impact on conventional production. We are confident that this factor will be almost permanently eliminated once we complete our exit program from mature field during '25. In terms of investment, we deployed $5 billion in '24, reducing by 5% compared to '23 and successfully meeting our target of $5 billion. Despite the total CapEx remained almost stable, the breakdown changed significantly lowering conventional activities, particularly in mature field and redirecting toward our coal share operation. Facilitating a ramp-up in shale oil production. Therefore, around 64% of the total CapEx of '24 was allocated in the unconventional asset, reaching an annual growth of 28%. On the financial side, we reported negative free cash flow of $760 million in '24. Our improved EBITDA during this year was driven by the strong performance of our shale oil assets and recovery of refining margin as well as tighter CapEx compared to the previous year. Nevertheless, '24 was affected by around $685 million negative impact. We consisted of $433 million from mature field, net of proceeds $166 million of import payment deferred from '23, and $85 million from Patagonia weather. Now I will turn the call to Maxi.

Thank you, Horacio, and hello to everyone. Turning to our annual and fourth quarter financial results, revenues reached $19.3 billion in 2024, marking an 11% annual increase, mainly driven by the rebounded fuel prices and a rise in oil exports. These gains were partially offset by a contraction in fuel demand, which was exceptionally high during the second half of 2023, due to reduced fuel prices coupled with more than 200% gap between the official and the parallel FX rates. Adjusted EBITDA totaled $4.7 billion in 2024, reflecting a 15% annual increase, mainly boosted by higher revenues in hydrocarbon production. However, as mentioned before, 2024 was affected by mature fields and Patagonia weather, while 2023 was impacted by a high level of fuel imports and a wide gap to import parties. Net results improved substantially, posting a gain of $2.4 billion in 2024, compared to a loss of $1.3 billion in the previous year. In 2023, the company recorded a non-cash impairment charge from mature fields, while in 2024, there was a positive income tax accrual, driven by lower future tax payables. Investments and free cash flow was also explained in the previous slide, and as a result, our net debt rose to $7.4 billion, a 9% increase from 2023, but we successfully reduced our net leverage ratio to 1.6 times, fully aligned with the target. Now, let me briefly explain the quarter results. Fourth quarter revenues were 10% down sequentially, mostly due to the lower seasonal sales of gas and international reference prices, partially offset by higher demand of fuels. Fourth quarter adjusted EBITDA was 39% down sequentially, primarily explained by lower revenue set before, reduced value of inventories of fuel and oil in line with price, and marginally, a $60 million of extraordinary environmental provision in the downstream segment, partially offset by shale oil expansion and recovery of Patagonia Conventional. In the bottom line, in the fourth quarter, we reported a net loss of $284 million, compared to a net gain of $1.5 billion in the third quarter, mainly attributable to a lower EBITDA impairment and a one-off cost related to mature fields, as well as reduced deferred income tax benefits. Fourth quarter investments remained stable compared to the previous quarter, while in terms of free cash flow, we saw a positive turnaround reaching $64 million. Although EBITDA was not fully compensated by CapEx, we collected overdue natural gas receivables and proceeds from certain mature fields, in addition to paying lower debt service. Now, moving on to the upstream performance, our total hydrocarbon production amounted to 536,000 barrels of oil equivalent per day in 2024, an increase of 4% versus 2023, mostly boosted by the remarkable growth in shale output, representing 53% of the total, compared to 46% in 2023. Also, let me mention that 22% of the total hydrocarbon production came from mature fields, which amounted to 117,000 barrels of oil equivalent per day in 2024. Crude oil production reached a 6% annual growth in 2024, reaching 257,000 barrels per day, on the back of a solid 26% shale expansion, more than compensating the lower conventional output decline, significantly affected by reducing mature fields productivity and extreme weather in Patagonia during almost two months. Beyond crude oil, natural gas production grew 3% in 2024, reaching 37.4 million cubic meters per day, mainly driven by the expansion of the Neuquina Basin evacuation capacity through the Perito Moreno gas pipeline and the following commissioning of the compressor plant in the same pipeline during July. Focusing on the fourth quarter, natural gas production remained essentially flat inter-annually, while declining sequentially, mainly due to the off-peak season. Let me mention that moving forward, our focus for the long term is to grow natural gas exports on a large scale. Therefore, we are not aiming to expand our share in the local market. Lastly, NGL's production in 2024 stood at the same level versus 2023, averaging 43,000 barrels of oil equivalent per day. Fourth quarter NGL's production decreased by 29% sequentially, mainly due to the maintenance at mega facilities. Moving to lifting costs, we recorded $15.6 per barrel of oil equivalent in 2024, remaining similar to 2023, as the lower productivity from mature fuels in Patagonia weather were partially offset by the ramp up in shale hydrocarbon production. Excluding mature fields, our total lifting cost has been below $9 per barrel of oil equivalent. Very remarkable, during 2024, the lifting costs in our core hub blocks recorded $4.2 per barrel of oil equivalent on a gross basis, reinforcing our 4X4 strategy to focus the entire company on its core production. Fourth quarter total lifting cost illustrates the lower productivity of mature fields, increasing 7% sequentially, while core hub blocks on a gross basis posted 8% reduction, thanks to its outstanding productivity and operational efficiencies achieved along 2024. Regarding prices in the upstream segment, our crude oil prices rebounded to an average of $68 per barrel in 2024, 9% higher than 2023, while during the fourth quarter it was almost $66 per barrel, reflecting a sequential construction of 4% aligned to the downward trend in Brent. On the natural gas side, prices reached $3.7 per million BTU in 2024, similar to 2023, and in line with plant gas contracts, while the fourth quarter decreased by 30% sequentially, mostly due to the plant gas off-peak season price. Now, walking through the performance of our shale activities, the steady focus on operational efficiencies allowed us to completely surpass the initial targets set for 2024 in last March. In this sense, during 2024, we drilled 207 and completed 189 horizontal wells at our operated blocks, increasing 14% and 17% respectively versus 2023. Regarding tied-ins, in accordance with our shale oil production target for the year, we accelerated the activity, reaching 195 tied-in horizontal wells at our operated blocks, representing a remarkable growth of 29% versus 2023. Moreover, we continued setting new records in shale oil production, delivering 138,000 barrels per day in the fourth quarter, growing 10% sequentially and 26% inter-annually. As a result, we achieved the annual production target of more than 120,000 barrels per day in 2024. 85% of total shale oil output for 2024 came from our core hub oil blocks, Loma Campana, La Amarga Chica, Bandurria Sur, and Aguada del Chanar. This outstanding performance along 2024 reaffirms our confidence on our shale production ramp-up plans and the recent commitments on the upcoming midstream expansions of Oldelval and VEMOS. In terms of efficiencies within our unconventional operations, as Horacio anticipated at the beginning of the presentation, we fully surpassed the target set in March 2024 for drilling and fracking performance during the year, averaging 309 meters per day of drilling in our core hub fields and 235 stages per set per month of fracking for the unconventional operations. Zooming into the evolution of our hydrocarbon reserves, total proof reserves according to the SEC criteria grew by 2% in 2024. The increase was mainly on the back of a 13% increase in our Vaca Muerta shale reserves, which now represents 78% of our total P1 reserves, partially offset by decline in conventional reserves. Proof reserves addition total 250 million BOE driven by the progressive developments and expansions of our unconventional operations, particularly in Aguada del Chanar., Loma La Lata Norte, and La Calera blocks. It was partially offset by high total hydrocarbon production, a downward revision of 17 million BOE, mainly due to the strategy change in drilling schedules, as well as a 13 million BOE reduction, mostly due to lower enhanced hydrocarbon recovery and the divestment of conventional blocks, [indiscernible]. It is worth noting that proved developed reserves regarded an annual expansion of 3% in 2024, mainly explained by development activities, new extensions, and discoveries mentioned exceeding the annual production. On the other hand, proved undeveloped reserves increased by 1%, mainly because of new additions offset the volumes developed in drilling of new wells. Considering the shale hydrocarbon production ramp up in 2024 and the development of our shale reserves, the reserve replacement ratio increased to 1.9 times, with 8.3 years of reserve life. Regarding total proved reserves, this ratio was 1.1 times, with 5.6 years of reserve life. Important also to clarify that excluding mature fields, the total organic ratio for our proved reserves improved to 1.5 times, with 6.8 years of reserve life. Finally, since the SEC proved reserves do not encompass the huge potential of Vaca Muerta, let me tell you in advance that we are going to share our inventory of wells in Vaca Muerta during our Investor Day, which will take place on April 11 in the New York Stock Exchange. Moving on to our downstream segment, during 2024, the company has been constantly updating crude prices to converge to international parities and mitigate the impact of the currency devaluation while preserving the market share. As a result, we were able to reduce the gap of import parity from 20% in 2023 to only 2% in 2024. In line with price recovery and several operational efficiencies achieved during the year, refining and marketing EBITDA margins in 2024 was $13.7 per barrel, achieving an improvement of 24% compared to 2023. However, fuel sales volumes decreased by 7% along 2024 to 13.9 million cubic meters, mainly because 2023 was affected by an exceptional high level of demand driven by low prices, especially in the second half of the year. Despite this, demand started to slightly increase in the second half of 2024. During the year, YPS maintained a strong fuel sales market share of 56%, fully in line with our historical levels and leadership in the market. In terms of processing levels, it was 301,000 barrels per day in 2024, 2% higher than 2023 and surpassing our annual target. This was mainly driven by the revamping of topping day at La Plata refinery in November 2023, combined with the completion of additional works within the new fuel specification projects framework. In addition, we also expanded our oil pumping capacity from Puesto Hernandez to Lujan de Cuyo complex during 2024. It is worth mentioning that the utilization rate remained around 90% in 2024. Now, let me provide a brief update on the progress achieved in the oil midstream expansions to unlock the evacuation capacity in the Neuquena Basin. By the end of 2024, Oldelval achieved a total transportation capacity of 330,000 barrels per day, and during this month, its capacity will jump to 540,000 barrels per day. YPS holds 25% shipping state in Oldelval. It is worth mentioning that the filling process will be gradual, aligning with the production ramp up and after successfully passing the testing period. We plan to use this additional capacity to deliver our shale oil to La Plata refinery. Achieving another major objective that the management team targeted for 2024, last December, we formally announced the signing of the project documents and initial shipping commitments to start construction of VEMOS, together with the major oil producers of Vaca Muerta. The project consists of a 440-kilometer oil export-dedicated pipeline and a marine terminal capable of receiving VLCCs to deliver Vaca Muerta shale oil to Asian markets. YPS initially shipping capacity will be 120,000 barrels per day, roughly 27% of over 450,000 barrels per day committed capacity at COD targeted by 2027. The design of the pipeline allows to further increase the capacity to roughly 700,000 barrels per day if needed. The construction of the facilities already started last January and now follows with contractors' mobilization, earth-moving works, and line pipe delivery. In parallel, VEMOS is making progress on two key avenues. First, the rigging application for governmental approval, and second, the process to secure project finance, targeting 70% debt and 30% equity. On this front, VEMOS has just mandated five international banks for an initial syndicated loan of $1.7 billion. I will now turn the call over to Federico to go through the financials.

Thank you, Max. Switching to the financials, let's start with cash flow evolution. In 2024, we posted a negative free cash flow of $760 million. First of all, although our CapEx of 2024 was lower than 2023, it was not fully offset by the improvement in our adjusted EBITDA. It is important to highlight that this annual EBITDA includes two negative effects, around $300 million from mature fields and about $85 million from severe climate in Patagonia. From a cash flow consideration, in 2024, we also recorded a negative $133 million from mature fields, which includes a negative $269 million of additions of assets held for sale, net of $136 million of divestment net proceeds. Finally, when analyzing the company cash performance, during 2024, we must consider that we paid $166 million of temporary deferred import liabilities from 2023, collected lower dividends from affiliates and disbursed higher debt service. In terms of financing, in Q4, we issued $2 bonds with a tenure of four years totaling $150 million at a yield ranging between 6.5% and 7%. Also, we added $100 million of syndicated loan and around $60 million of short-term trade financing facilities. After the closing of 2024 in January, we successfully issued a nine-year unsecured international bond for $1.1 billion at the yield of 8.5%. The proceeds were mainly allocated to refinance the $757 million of the 2025 notes and to acquire 54% of Sierra Chata block, one of the most prospective Vaca Muerta shale gas block. Regarding the 2025 notes, we executed a cash tender offer prepaying $315 million and the make-hold call options for the balance in February. Additionally, last month, we issued $2 MEP local bonds, $140 million with a two-year tenure at 6.25% and $60 million with a six-month tenure at 3.5%. With these last international bond issuance, we successfully completed our initial plan to de-risk the company debt profile, aligning it with our 4X4 plan. The company now faces less than $1 billion of manageable and mostly local maturities during 2025, consisting of $400 million of short-term trade facilities with local and international banks, $281 million of mainly export-backed bonds, $147 million of local bonds, and $51 million with cash. Having achieved the refinancing of our 2025 bond early this year and considering that most of our '26 maturities consist primarily of bank trade lines and issues with the local capital markets, as of today, we do not need to re-enter the international bond market until approaching the 2027 bond maturity. On the other hand, following the upgrade in sovereign rating, as well as country risk improvement and current perspectives, two global rating agencies have just raised YPF trade rating. Moody's upgraded from CAA3 to CAA1 with a stable outlook, and S&P upgraded from CCC to B minus. On the liquidity front, by the end of 2024, our cash and short-term investments increased 9% versus previous year to $1.5 billion in line with our net debt increase, which amounted to $7.4 billion. Despite the increase in net debt, higher adjusted EBITDA reduced the net leverage ratio from 1.7 to 1.6 times in line with the target for the year. Now, I will return the call to Horacio for final remarks.

Thank you, Federico. Before concluding our presentation and jumping to the Q&A session, let me briefly announce that after important knowledge, results, and experience of the new management team during this first year, on April 11th, we'll be holding our Investor Day at the New York Stock Exchange. There, we will present our five-year plan and go through the main drivers of our 4X4 plan, focusing on our financial and production outlook, including certain sensitivity analysis, productivity metrics, in Vaca Muerta and the progress of our main project, among other key aspects of our strategy. This presentation will be led by YPF executive team, followed by Q&A session. We are pleased to invite you to our Investor Day and look forward to your participation. Finally, let me close today's presentation by saying we are confident that investors have appreciated the significant agenda that YPF has deployed along last year in almost all critical areas of the company, focusing primarily on profitability and growth. We are very focused in making value and putting YPF as one of the best energy companies. This has been just the beginning. We will continue driving our 4X4 plan during 2025 with even more knowledge, confidence, and conviction. So, with this, we conclude our presentation and open the floor for questions.

[Operator Instructions] Our first question comes from Andres Cardona from Citigroup. Please go ahead. Your line is open.

Hi. Good morning, everyone. Horacio, Max. Looking forward to the strategy update. My question, it's about the Vaca Muerta expansion and how we should expect the ramp-up. How confident are you to add in the 180,000 barrels by the fourth quarter 2026? Because when talking with some industry players, they doesn't seem to count with those volumes by then. They only expect to see the incremental capacity by the third quarter 2027. And, yes, we want to understand why is the different perception and why are you so confident to deliver by the fourth quarter 2026? Hi. Can you hear me?

I was muted. Sorry. Sorry. I don't know who talked mute. Now, you are hearing me? You are here?

Yes.

Okay. I'm sorry. I was muted. I don't know why. We are very confident that the demos we are going to deliver in the fourth quarter 2026 and also in the second half of 2027. We are very exciting that we are -- all the partners are in. We finish with -- all are in. So, the tariff will be very low comparing what we expect at the beginning because we expect more than 0.5 million that was, I don't know how you say, the committee for everybody. And what I can answer you specifically for the fourth quarter, I don't know which person you are talking about, but I'm talking about the production of YPS. We are going to deliver that. I think that it will be efficient that we have production that we have. The thing that we have in the afternoon, I think we can deliver more, but I expect that, okay? So, I'm not totally -- I'm very confident that from YPS we are going to deliver what we say.

Thank you.

Our next question comes from Daniel Guardiola from BTG Pactual. Please go ahead. Your line is open.

Hi. Thank you. And good morning, Horacio, Federico, and Max. Thank you for the presentation. I would like to touch on two topics, one on prices and the second one on the Sierra Chata decision. On prices, I would like to know, guys, if you could please share with us at which price are you currently selling your goods? And considering that recently we saw a very mixed and bearish movement in our prices, I would like to know if -- or if you can share with us at which levels of prices would you consider to start reducing your CapEx for 2025? And in this environment, if you are considering to hedge a portion of your expected production for 2025. So, that's on prices. And the second one is a very short question on Sierra Chata. Can you please share with us, guys, what is the price that you pay for the acquisition of this stake of Exxon in this field? And what is the expected run path in terms of production? Thank you very much.

Okay. Because I'm a very transparent guy, and if we have a problem with the microphone, I will ask people that have better English than me because at the beginning, I'm in the third field.

Daniel, we couldn't -- I couldn't hear you the last part of the first question.

So, we have a problem because if Margarita doesn't understand me, so we have a very bad microphone.

The quality of the microphone, we are sorry.

So, I'm going to go one more time?

Yes.

Okay. Horacio, can you share with us at which prices are you selling your crude oil right now?

Price of the crude oil?

Yes. At which prices are you selling your crude oil right now? Your oil right now?

Yes, yes. What we have is the -- what is the gasoline, our prices in the import quality product. I was on a TV -- in the TV the other -- no, the other day, I would say two or three months ago, and what I said to everybody that we are going to increase the price of gasoline when the price of oil goes up, and we are going to go down when the price goes down. And why that? Because we try to maintain the import quality of product, okay? What is the price that we sell when we export? Export quality. What's the price that we buy? Export quality. What's the price of the gasoline? Import quality of product. I don't know if I answered that question.

Of course. But I mean, considering that oil prices are below $70 in terms of Brent, at which levels are you selling right now your oil?

No, no. The -- remember that the oil -- when we sell the oil, there is a time frame when you make an average of the price, okay? I don't know if that's the price of that -- the oil will be -- if it will be more, I would say, three months, we are going to sell in the export quality, and the price will go down $5 compared with last week. The same will happen with the gasoline. In the gasoline, we have a strategy that I cannot explain here because our competition is explaining how we work, but we have a procedure to put the prices to avoid, I would say, short spikes, I would say. Spikes up, spikes down. The majority of Argentina was not the country to -- in general from now on, it's like this, and I'm sure that we will continue this precedent, that we are going to be open and so free market, and so in that way, people are not accustomed to go up and down as in the United States or Europe, and so we prepare like a procedure to avoid spikes so people will not be nervous. But at the end for YPS, it's only the same, okay?

Thank you, Horacio. And at which prices…

Yes, sorry, sorry?

I just wanted to ask you, at which level of oil prices would you consider to start reducing your CapEx for 2025?

Okay. Remember, we are going out almost -- I would say it's not your question, but I think in two, three months from now, we are almost out of all the mature field, and you can calculate in your simple way of seeing YPS that we are receiving for very low prices. But also, if that happens and the Brent goes down, down, down, down, down, and maintains, for sure, we are going to have changes, okay? For sure. I don't think that today is the day to do that, but if it continues going down and it maintains, for sure, we will see, because remember what our CFO always says, it's capital, strict capital allocation.

Okay. And the last question was on Sierra Chata.

Does that answer your question?

Yes, thank you, Horacio. And on Sierra Chata?

Yes. With Sierra Chata, which is very difficult to see there, because remember that we are a company, but what I can tell you is that we think that we make a very good business, because all, I would say, all the undeveloped call you as you want, resources or results, because this is a conventional way. We buy in $0.02 per million BTU, which is what I think is a very good price.

Thank you. Thank you, Horacio and guys and team.

Our next question comes from Bruno Montanari from Morgan Stanley. Please go ahead. Your line is open.

Hi, good morning, everyone. Thanks for taking my questions. The first question is about your free cash flow profile for 2025. I know you will give more color on the Investor Day, but just focusing on next year, the company has been in a way pointing to neutral cash flow in 2025. So I wanted to confirm if that is still the plan, if the base case is for neutral cash flow in 2025. My second question is if you can provide us with an update on the LNG project, so when we could expect the final investment decisions for both the Golar project and then the YPS-led project? My third question is about your lifting costs. I assume that part of the cost increase in the fourth quarter was because of the strong peso. So I'm wondering what we can expect now in the first quarter of the year in terms of lifting costs? Thank you very much.

Okay. Free cash flow when you talk on CapEx, I'm going to present on April 11 Investor Day all that in very detail. You can have a question on there. We say the free cash flow will be neutral. It depends what you call neutral. We think we are going to deliver that idea. It will be minus plus what is logical in this company, okay? But I'm going to present -- we are going to present, but personally I'm going to present that on April. Update of LNG, we are in a very good situation. We will see there, and also I will explain in more detail on April 11 because at that moment I think we will have a better way and we'll be more sure what I have to deliver. But I'm very positive with the two, with the Argentine LNG project. Very positive that Argentina and YPF itself will deliver this project for us, for the country, and for the shareholders, okay? The last is the cost. As you see, we are maintaining the cost because we work every day in efficiency. Our goal every day that I come 6:45 is to deliver efficiency. You cannot imagine how is the guy, the VP, or a thing. Every day I go to him and I don't know how he loves me today because every day I go and we are working in efficiency line by line. That's why we are very good on that. I don't know if there is another one.

No, that was it. Thank you.

Our next question comes from Tasso Vasconcellos from UBS. Please go ahead, your line is open.

Hi Horacio, hi Federico, hi Margarita. Thanks for taking my questions here. Let me start with one here on the M&A activity. We are actually seeing some increased activity in Argentina. Exxon recently sold their assets. You actually acquired Sierra Chata. Recent news also indicates that both Total and Equinor could eventually evaluate selling their assets as well. We know that Raizen is looking for a potential buyer for its refinery in Argentina. And amid this context here, YPF is for sure a potential buyer for these assets, right? So maybe split the question into two parts. The first one, does any of these assets actually interest YPF at all? Or do you like one better than the others? And maybe the second part of the question, if not these specific assets that I just mentioned here, any other ones that you would be interested in acquiring in Argentina at the moment? These are my questions. Thank you.

Okay. The first in the capital allocation in Raizen, from my first year I only hear that Raizen, but it's not, I'm not the person to answer that, ask to Raizen or Shell, but I cannot answer that. But even if you are interested to see if you are going to be wanting to buy a new refinery, the answer is no. Okay. We have, so far, you know that we have 58% of the market share. We have, I think we are very good in, we are improving a lot, improving a lot in the refinery sector, YPF, but it's not in our thinking that we are going to increase, not that. The second part would say the Equinor that the other is seen, so I have no official that, even the -- some they say, but in what is the, remember our role, the active management, is something that is in Vaca Muerta, that I would think is in a core, in a very core, and because now we are very selective, I would say very core. The best price, only we are going to see, but it's not the moment today that I tell you that that one. It depends also -- remember the active portfolio management and the strict capital allocation, the, we will see at the moment. That is not for sure for everybody that, that sells there, that sells very good assets here at YPF, and one of the possible active guys to take over that. So I can't answer exactly, as always explained. If something is very good, we will see prices, we will see all that, and if we think that we make value for shareholders, you will see YPF in that process. I don't know if I answered the question, and you need more details, I have no idea.

I think it's very clear. Appreciate it. Thank you.

Our next question comes from Leonardo Marcondes from Bank of America. Please go ahead, your line is open.

Hi, good afternoon, everyone. Hi, Horacio, Federico, and Maximiliano. Thank you for picking my questions here. I have two from my side, specifically on the upstream segments. So the first one, we know that YPF is the largest player in Vaca Muerta, and that the company also owns many blocks in this area, right? So my question is, could you provide a color on what's the company's current well inventory? I mean, how many derisked wells do you guys have, and how many years would it take for YPF to drill all these wells, considering the company's current capacity to tied-in wells per year? My second question is, with the conclusion of the divestment, what should we expect from the development of Vaca Muerta? More times per year, higher RRR, and additionally, the company has improved a lot the development of Vaca Muerta, right? Like a better frac speed and so on. So what is the target there? What else can be done to improve these metrics even further? Thank you.

Okay, thank you for all the questions. I try to follow, okay? Remember, I am a fungi, okay? First, when you say -- I would say some of that well inventory, I will explain that in much more detail on April 11, but if I say roughly number, are you sitting while you're eating up?

Yes, I can't hear.

Okay, okay. We have in the order of 10,000 wells. You can say 50, but I will say gross, okay? Inventory is a gross inventory. I will say that it's in the order of 50% of all but this is a roughly number that I have in my mind, okay? On April 11, we are going -- we will have there the full development of all YPS, and I will answer in detail at that moment, okay? Now, if you see, we are drilling in the order of '28. We are drilling in the order of 200 wells, so the capacity of timing, I don't see it's a problem. Sometimes it's a question of the built-in valve that there is -- and also the first year was the way that YPS had before the way of working with partners. Now, what we are working is to have every, all the budget tied first with the partners, and after we feed up with our 100% blocks, sorry, 100% blocks. Why we are in that? Two reasons. The first reason, the more important reason why we are in the order of 200 wells is because we try not to invest and have tax, okay? Our idea is to make properly, and so now, because of the capacity that we have, the incremental that we see for all the evacuation way, it's not the number. When the demos will be finished, and after it's a question of all CapEx, at that moment, we will increase the activity in the oil, for sure. And the other was the conclusion of the investment of what? Of the other companies. You say, for example, to have the idea you are talking about of ExxonMobil and the others?

The allocation of CapEx?

No, no, I mean...

Ah, okay. It's okay. I now understood. Okay, for the, when we reduce all the mature field, and we did in the '24 also, we reduced a lot the investment, much as we could, and we put in Vaca Muerta. The idea of this is to try to maximize Vaca Muerta and not go into more than we need to fill up all the capacity that we have today, okay? And so for next year, we put -- for '25, you know, $5 billion for all YPF. It's almost maintaining the investment that we had the year before, and we are very confident in incremental of production in Vaca Muerta. After we asked me for the reserve replacement ratio, the reserve replacement ratio is, remember that we have to do, and the way to do it is 1.9. Why that? Because it's a rule. In fact, you have to have a rule that if you make physics, and say the physics, I will explain that better in April 11 that is for location. So there I can explain block by block how many locations that we have, and you can make it very good, and you will have a good feeling of what we have in hand, and the possibility of YPF to increase, and this wonderful company can increase in the next year.

That's very clear. Thank you.

Our next question comes from Vicente Falanga from Bradesco. Please go ahead. Your line is open.

Thank you very much, Horacio, Federico, and Max. I had two questions. Basically, first one on the fourth quarter results. To what extent did the feeling of the Oldelval expansion affect the fourth quarter results? Some of your partners in Vaca Muerta highlighted that because of the fill-up of Oldelval, production did not convert into revenues. I wanted to understand if that's the case for YPF, and do you have an estimate of how much? The second question, one very quick one. With the asset sales for the mature fields hopefully being concluded by the middle of this year, where can we expect the lifting costs to fall to immediately? Thank you very much.

Okay. The Oldelval result, if there is a delay or not, it doesn't change a lot today for YPF. Why? Because I don't know if we were very clear one day that we explained. How we see the evacuation figure or evacuation map for us. Now we export for Chile, we depend for Chile, okay? And the Oldelval for us is internal consumption, okay? So we are not affected a lot in our case, okay? It could affect, I don't know, who company, because I'm not looking at all the companies all day. I'm looking only at YPF. So it's not that. It could be affected if we delay the demo, not here, okay? That is the answer there. With the mature field, hopefully I'm sure that also, hopefully I'm sure, I'm sure, okay, that we are going to be very out there. The holistic going to go to very low number, what is it, 9? No, 9, because it's 9. Because also we have two more mature fields that are the best that you can have. One is in, we have only two, but in the fourth, in the, look at the sub-core that we are in the range of four. So we are very resilient from the future. And that was the initial idea when we come to YPF that is to reduce the -- go out of the mature field because it was not for YPF. That was not the logical way of working for this size of the company. Reduce the lifting cost a lot, as we are doing, and be resilient for very low prices. And so when the price goes up, we make a lot of money. And that is the way that we see YPF.

Great. Thank you, Horacio. Thank you very much.

Our next question comes from Guilherme Martins from Goldman Sachs. Please go ahead. Your line is open.

Thanks so much for having my questions. I have two quick ones from my side here. The first one is on your guidance for shale oil production, right? Please correct me if I'm wrong, but you said you're currently running roughly 150,000 barrels of oil shale, right? While your guidance for 2025 is something above 160. So it could seem as quite conservative, given your current run rate. I know you mentioned you provide further details on your Investor Day on April, but as of today, do you see room for maybe an upward revision of this target? And my second question is on capital allocation. If you could please share your thoughts on what you think global entities are seeking to divest from Argentina and Vaca Muerta, and what are the competitive advantages you believe YPF has over those players? Thanks so much.

Okay. You are anxious like me, okay? I'm anxious, okay? Really, I'm very anxious. April 11th, 40 days from now, Mauricio is going nothing. I will explain later, but I have to, I would like to answer. So today, not today, but the yesterday or the day before yesterday, the production of Vaca Muerta was 156,000 per day. So if you see the guidance, 2025, you can realize that we are investing $3 billion there. I'm very confident that we are going to pass the guidance, okay? That is the first question. Second question, capital allocation in this investment in Vaca Muerta. I explained that before. If the opportunities come and we see that some part is better than we have, we are going to do what we call active portfolio management. And so what we are going to do is to take this and maybe in the full development, if we see that we are not making value for the shareholders, we will sell the others, okay? But that is the way it works, okay? And I think that's what I have to work and what you want from me to do, okay?

Okay. Thank you.

Sorry to those that are still in queue. We are out of time for questions today. I would like to turn the call back over to Horacio Marin for any closing remarks.

Okay. Thank you very much for all the questions. Thank you very much for your help. And we will see in April 11 where you can have hundreds of questions. We are going to be live there. And so we can be up to midnight if you want, okay? Thank you very much.

This concludes today's conference call. Thank you for your participation. You may now disconnect.