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01/10 16:56
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong shale production growth, strategic acquisitions in Vaca Muerta, and reduced lifting costs, which are positive indicators. Despite a slight increase in net debt, the company is managing leverage ratios well. The Q&A session reassures profitability from acquisitions and strategic focus on unconventional operations. While management avoided specifics on divestment proceeds, this doesn't overshadow the overall positive outlook. Given these factors, the stock price is likely to experience a positive movement in the short term.
Revenue Revenue remained stable sequentially, reaching over $4.6 billion. Interannually, despite roughly 20% drop in Brent, revenues only declined by 6%. The drop in Brent prices was mitigated by operational efficiency, the increase of shale export, and a recovery in local fuel demand.
Adjusted EBITDA Adjusted EBITDA was $1.12 billion in Q2, decreasing 10% sequentially. Interannually, adjusted EBITDA declined by 7%, reflecting Brent volatility, partially mitigated by the significant ramp-up in shale oil production and better conventional lifting costs. Excluding the negative contribution from mature fields, adjusted EBITDA would have been $1.25 billion.
Net Profit Q2 net profit was $58 million compared to a loss of $10 million in the previous quarter. Interannually, net profit declined sharply, explained by higher depreciation from shale activity expansion and lower gains from financial securities in 2024. Excluding mature fields, net profit would have been $264 million.
Free Cash Flow In Q2, free cash flow was negative $355 million, mainly affected by $315 million of negative impact from mature fields. Negative working capital due to peak winter sales on natural gas and income tax payments also contributed. However, the negative impact was softened by dividend collection from affiliates.
Net Debt Net debt rose to $8.8 billion, reaching a net leverage ratio of 1.9x. This was expected while divesting mature fields. The acquisition of shale assets is anticipated to increase the net leverage ratio to near 2x during Q3.
Total Hydrocarbon Production The second quarter total hydrocarbon production was 546,000 barrels of oil equivalent per day, stable both sequentially and interannually. Shale production represented 62% of the total output, offsetting the divestment of mature fields.
Crude Oil Production Crude oil production amounted to 248,000 barrels per day in Q2, decreasing 8% sequentially. Interannually, total crude oil production remained stable, with a 28% expansion in shale output fully offsetting the decrease in exposure to mature fields.
Oil Exports Oil exports in Q2 totaled 44,000 barrels per day, increasing by 20% sequentially and 43% interannually. Growth was driven by redirecting Escalante heavy oil to the foreign market and boosted by shale expansions.
Natural Gas Production Natural gas production increased by 6% sequentially to 40 million cubic meters per day, primarily supported by higher seasonal demand.
Lifting Costs Total lifting cost was $12.3 per barrel of oil equivalent, a sequential reduction of 19%, reflecting further divestment of mature fields. Excluding mature fields, proxy lifting cost for Q2 would have been roughly $7.5 per barrel of oil equivalent.
Shale oil production: Achieved record high production of roughly 165,000 barrels a day in July 2025, with plans to reach 190,000 barrels per day by year-end.
Midstream infrastructure: Progressed on VMOS pipeline project, securing a $2 billion syndicated loan and achieving 23% construction progress as of July 2025.
Portfolio expansion: Acquired Prime Tier 1 Shell acreage from Total for $500 million, adding 115,000 acres in Vaca Muerta with over 500 wells.
Oil exports: Exported nearly 44,000 barrels per day in Q2 2025, generating $1.5 billion in oil export revenue over the last 18 months.
LNG project: Signed agreements with ENI and Shell for LNG projects, with plans for a second floating LNG vessel operational by 2028.
Operational efficiencies: Reduced lifting costs by 24% interannually, with core hub blocks achieving $4.9 per barrel of oil equivalent.
Real-time intelligence centers: Launched three centers to enhance downstream and upstream efficiencies, including micro-pricing strategies that increased nighttime fuel sales by 30%.
Divestment of mature fields: Completed transfer of 28 mature blocks, reducing lifting costs and focusing on profitable assets like Vaca Muerta.
Shift to unconventional assets: YPF aims to become a pure unconventional player by divesting 16 conventional blocks and focusing on shale operations.
International Oil Price Volatility: The international oil market experienced significant volatility with low prices, leading to a 12% sequential decrease in the realization price of oil, negatively impacting revenues.
Divestment of Mature Fields: The divestment of mature fields, while reducing lifting costs, resulted in a negative impact on free cash flow of approximately $840 million over 18 months and a sequential 26% decrease in hydrocarbon production from these fields.
Brent Price Decline: A 20% drop in Brent prices interannually led to a 6% decline in revenues, despite operational efficiencies and increased shale exports.
Refining and Marketing Margins: Margins declined by 17% sequentially due to lower prices and higher maintenance costs, despite some mitigation from lower oil costs and operational efficiencies.
Debt and Leverage: Net debt rose to $8.8 billion, with a net leverage ratio of 1.9x, expected to increase to near 2x in Q3 due to acquisitions, before normalizing to 1.8x by year-end.
Mature Field Exit Costs: The exit from mature fields incurred significant one-off cash flow losses of $190 million in Q2 and $420 million year-to-date, contributing to a negative free cash flow of $1.3 billion in the first half of the year.
Operational Challenges in Refining: Program maintenance at La Plata refinery led to a 5% sequential contraction in processing, impacting refining utilization rates and margins.
Economic and Financial Risks: The company faces risks from high debt levels, refinancing needs of $800 million in the second half of the year, and exposure to international price volatility.
Shale Oil Production: YPF projects further growth in shale oil production, aiming to close 2025 at around 190,000 barrels per day, representing a 70% organic production ramp-up over 25 months. By 2026, the company plans to achieve 250,000 barrels per day, with a long-term goal of 500,000 barrels per day by 2030.
Midstream Infrastructure Expansion: The VMOS pipeline project is expected to unlock YPF's growth plan, with construction progress at 23% as of July 2025. The project is anticipated to support production growth to 250,000 barrels per day by 2026 and 500,000 barrels per day by 2030.
Portfolio Management and Divestments: YPF plans to divest 16 additional conventional blocks in 2026 to become a pure unconventional ethane company. This strategy aims to enhance profitability and resilience to low crude prices.
Acquisition of New Assets: YPF has executed a $500 million agreement to acquire Tier 1 Shell acreage in Vaca Muerta, with plans to accelerate development and monetize production. This acquisition is expected to increase future oil production and extend the production plateau.
Argentina LNG Project: YPF expects the final investment decision for the Argentina LNG project in Q1 2026. The project includes a second floating LNG vessel operational by 2028, with a total capacity of 6 million tons per year.
Operational Efficiency: YPF aims to continue reducing lifting costs, with a proxy lifting cost of $7.5 per barrel of oil equivalent in Q2 2025. The company is also implementing real-time intelligence centers to enhance operational efficiency.
Debt and Financial Leverage: YPF anticipates a normalized net leverage ratio of 1.8x by the end of 2025, supported by increased EBITDA from production ramp-up and divestments.
The selected topic was not discussed during the call.
The earnings call indicates strong production growth plans, strategic asset acquisitions, and operational efficiencies, which are positive indicators. However, management's lack of clarity on certain issues and working capital losses are concerns. The Q&A session provided additional insights, reinforcing positive sentiment with a focus on shareholder value and operational improvements. Overall, the positive elements outweigh the negatives, suggesting a positive stock price movement in the short term.
The earnings call highlights strong shale production growth, strategic acquisitions in Vaca Muerta, and reduced lifting costs, which are positive indicators. Despite a slight increase in net debt, the company is managing leverage ratios well. The Q&A session reassures profitability from acquisitions and strategic focus on unconventional operations. While management avoided specifics on divestment proceeds, this doesn't overshadow the overall positive outlook. Given these factors, the stock price is likely to experience a positive movement in the short term.
The earnings call reveals several challenges including supply chain issues, negative free cash flow, and a net loss despite improved EBITDA. The Q&A section highlights management's unclear responses on critical issues like cash flow impacts and LNG project timelines, raising concerns. Despite some positive elements like increased production and reduced lifting costs, the lack of a share buyback program and uncertainties in guidance due to Brent price fluctuations contribute to a negative sentiment. Additionally, the negative free cash flow and high net debt are worrying factors, leading to a likely negative stock price reaction.
Despite strong revenue growth and increased oil production, YPF's significant EPS miss, negative free cash flow, and absence of shareholder return plans weigh heavily on sentiment. Challenges like mature fields losses, weather impacts, and regulatory hurdles compound concerns. While management expresses confidence in future targets, vague responses during Q&A and lack of clear guidance further dampen investor confidence. Overall, the financial instability and absence of clear shareholder incentives suggest a negative stock price movement in the short term.
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