YPF SA Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 4X4 Plan: Deployed a plan to transform YPF, exiting mature fields and focusing on Vaca Muerta. Achieved progress in exiting 49 mature blocks, with SPAs signed for 24 and close to finalizing 18 in Santa Cruz and Tierra del Fuego.
• Upstream Efficiency: Exceeded drilling and fracking targets in Vaca Muerta, inaugurated the Real-Time Intelligence Center, and implemented the Toyota Well project to reduce well construction cycle. Drilling speed in Vaca Muerta reached over 1,747 meters in 24 hours.
• Downstream Progress: Record high processing levels (301,000 barrels per day in 2024), 92% refinery utilization, and set to inaugurate the Downstream Real-Time Intelligence center in March 2025.
• Financing: Successfully issued international bonds and syndicated loans, lowering yields and increasing tenors; raised $800 million, $540 million, and $1.1 billion in international bonds, and a $400 million term loan in the local market.

Segment Performance

• Upstream: In 2024, total hydrocarbon production was 536,000 barrels of oil equivalent per day, a 4% increase from 2023. Shale output grew 26% to 138,000 barrels per day in Q4. Crude oil production rose 6% to 257,000 barrels per day. Natural gas production increased 3% to 37.4 million cubic meters per day. Lifting costs were $15.6 per barrel of oil equivalent in 2024, with core hub blocks at $4.2 per barrel.
• Downstream: Revenues reached $19.3 billion in 2024, up 11% year-over-year. Refining and marketing EBITDA margin was $13.7 per barrel, a 24% increase from 2023. Market share was 56%. Processing level was 301,000 barrels per day in 2024.

Guidance

• Production Growth: Expect sustained growth in 2025, concentrating on Vaca Muerta shale oil production. Net production was above 150,000 barrels per day in 2024, with plans to maintain growth in 2025.
• Free Cash Flow: Free cash flow expected to be neutral in 2025, details to be provided in the Investor Day on April 11, 2025.
• Midstream Projects: VEMOS project on track, with initial shipping capacity of 120,000 barrels per day targeting 2027 completion.

Risks

• Market Fluctuations: Impact of oil and gas price volatility on revenues and margins.
• Project Delays: Potential delays in midstream projects like VEMOS and Oldelval expansion affecting production ramp-up.
• Mature Field Exit: Challenges in completing mature field exit on schedule, which could impact production and cost reduction goals.

Question and Answer

• Q: About Vaca Muerta expansion ramp-up confidence. A: Horacio Marin expressed confidence in delivering production targets by the second half of 2026.
• Q: On prices and Sierra Chata acquisition. A: Discussed pricing strategy aligning with international prices and details of the Sierra Chata acquisition, including favorable pricing.
• Q: Free cash flow profile, LNG project, and lifting costs. A: Details on free cash flow, LNG project, and lifting costs to be provided in the Investor Day; positive on LNG project and focus on efficiency to manage lifting costs.
• Q: M&A activity and asset sales. A: YPF is selective in M&A, focusing on core assets and value creation, with a strategic approach to active portfolio management.
• Q: Upstream well inventory and Vaca Muerta development. A: Details on well inventory to be provided in the Investor Day; focus on improving metrics through operational efficiency in Vaca Muerta.
• Q: Fourth quarter results and lifting costs post-mature field exit. A: Oldelval expansion not significantly affecting YPF; lifting costs expected to fall with successful completion of mature field exit.
• Q: Shale oil production guidance and capital allocation. A: Confident in surpassing 2025 shale oil production guidance; focus on active portfolio management for capital allocation to ensure value creation for shareholders.