Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- YPF SA (YPF, Financial) produced 20% more shale oil in Q2 2024 compared to Q2 2023, highlighting a successful focus on shale operations.
- The company achieved a 25% increase in crude oil exports through the Trans-Indian pipeline compared to the previous quarter.
- YPF SA (YPF) set a new record in drilling and fracking speed, demonstrating operational efficiency.
- The downstream segment reached an all-time high production record of gasoline in May at La Plata Refinery.
- Revenues grew 13% year-over-year, driven by higher fuel prices and increased oil exports.
Negative Points
- Adjusted EBITDA decreased by 3% sequentially due to cost increases in dollar terms and a drop in conventional output.
- The bottom line fell by 19% sequentially, mainly due to lower equity income and increased exploration expenses.
- Total hydrocarbon production was affected by extreme snowstorms in Patagonia, leading to a temporary shutdown of facilities.
- Free cash flow was negative at $257 million, impacted by higher seasonal sales and increased working capital.
- Net debt increased to $7.5 billion, with a slightly higher leverage ratio of 1.7 times.
Q & A Highlights
Q: Would the company still be interested in potential shale oil acreage available for sale in Argentina, such as Exxon's assets?
A: Horacio Marin, CEO: YPF is always interested in acquiring profitable assets like Vaca Muerta oil to improve shareholder returns. However, specific details about ongoing negotiations are confidential.
Q: What are the trends for lifting costs in the coming quarters?
A: Horacio Marin, CEO: The lifting costs are expected to stabilize. We foresee an average lifting cost of $4.4 per barrel for our core shale hub in the second half of the year.
Q: How does YPF plan to manage its free cash flow and debt profile given the upcoming maturities?
A: Horacio Marin, CEO: We expect to be cash flow neutral in 2024 and aim for positive cash flow from 2025 onwards. We are focused on efficiency and resilience, even in low-price environments, and are working on project financing for LNG projects.
Q: What are the expectations for crude and fuel prices, and how will they impact CapEx and OpEx?
A: Horacio Marin, CEO: We aim to align local fuel prices with international parities. Efficiency programs are in place to optimize costs and improve margins, particularly in our refineries.
Q: Is there room to further increase drilling speed metrics, and what is the target?
A: Horacio Marin, CEO: We always strive for improvement and do not see a technical limit. We aim to push boundaries and achieve higher efficiency in drilling and fracking operations.
Q: When will the interest split for the Vaca Muerta Sur pipeline be decided?
A: Horacio Marin, CEO: We expect to finalize the interest split within a few weeks. The project is progressing well, and we aim to mobilize equipment by November.
Q: What are the production targets for shale oil in the coming years?
A: Horacio Marin, CEO: We plan to provide detailed guidance for the next three years in our March 2025 investor meeting. For now, we expect to reach 140,000 barrels per day of unconventional oil by the end of 2024.
Q: How will exiting conventional fields impact refining margins?
A: Horacio Marin, CEO: We expect to maintain refining margins as Argentina moves towards international pricing. Increased production and export capabilities will offset any potential impact from buying third-party oil.
Q: What is the progress on non-core asset divestitures?
A: Horacio Marin, CEO: We are in the process of divesting YPF Brazil, YPF Chile, and Refinor. We are also considering the sale of Metrogas and exploring options for Profertil.
Q: How will the gap between local prices and international parities evolve if Brent prices decline?
A: Horacio Marin, CEO: If Brent prices decline, local prices may converge with or exceed export parity. We aim to operate in a free market environment, adjusting prices based on supply and demand dynamics.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
