YPF SA Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Recorded adjusted EBITDA of $1.24 billion, a 48% sequential growth, driven by mature field disbursements and improved refining/marketing margins.
• Shale oil production grew 31% year-over-year, with 51 horizontal oil wells drilled and 53 completed. Drilling speed aimed for 350 meters per day, and fracking target of 260 days per se per month.
• Downstream segment adjusted local fuel prices to converge with international parities, maintaining 56% market share and achieving a refinery utilization rate of 94%.
• LNG projects advanced with SESA securing approvals for floating LNG HILLI and MKII, and MOUs signed with ENI for LNG development.

Segment Performance

• Upstream: Reported adjusted EBITDA of $1.24 billion, a 48% sequential growth. Shale oil production grew 31% year-over-year, accounting for 55% of total oil production. Crude oil production was 270,000 barrels per day in Q1, up 6% interannually. Natural gas production increased 9% sequentially to over 37 million cubic meters per day. Lifting costs were $15.3 per barrel of oil equivalent in Q1, with an expected average of $12 per barrel for 2025.
• Downstream: Refining and marketing margins improved. Local fuel prices converged with international parities, with a market share of 56% in Q1. Refinery utilization was 94%, processing 318,000 barrels per day in Q1.
• LNG and Integrated Gas and New Energies: SESA secured approvals for floating LNG projects, with HILLI expected to be operational in 2027 and MKII in 2028. Signed gas supply agreements and MOUs with ENI for LNG projects, aiming for 30 million tons per year of Argentina LNG production.

Guidance

• Adjusted EBITDA for the year expected to range from $5.2 billion to $5.5 billion, assuming an annual average Brent price of $72.50 per barrel.
• CapEx for the year guided to range from $5 billion to $5.2 billion, with 75% of Q1 CapEx allocated to unconventional assets.
• Net result for Q1 was a loss of $10 million, with expectations to improve in coming quarters as mature field impact lessens.

Risks

• Oil price volatility: A $10 reduction in Brent price could impact EBITDA by approximately $900 million.
• Divestment challenges: Potential delays or issues with mature field divestments, though efforts are ongoing to complete divestments by Q3 2025.
• LNG project execution: Uncertainties in final investment decisions for LNG projects, including potential pushback from clients on pricing and contract terms.

Question and Answer Q: How resilient is the company amid bearish oil prices, and what is the current Brent breakeven level for EBITDA and cash flow?

A: A $10 reduction in Brent price could impact EBITDA by around $900 million. To maintain production, roughly $2 billion in CapEx is needed, but the company is positioned to grow even with price fluctuations.

Q: Update on divestment of mature assets and final investment decisions for LNG projects?

A: Mature field divestments are nearly complete, with expectations to finish by Q3 2025. For LNG projects, FID for SESA's first ship was in May, with FID for the second ship due by end of July, and ongoing processes for other projects.