YPF(US:YPF)2022-11-10 18:27Financial Data and Key Metrics Changes - Total hydrocarbon production remained stable compared to the previous quarter but showed a healthy growth of about 9% year-over-year for the first nine months of 2022, primarily due to strong shale operations [7] - Adjusted EBITDA reached $1.5 billion for the second consecutive quarter, representing a 50% increase year-over-year [7] - Net income for the quarter was $678 million, accumulating over $1.7 billion for the first nine months of the year [8] - Free cash flow was positive for the tenth consecutive quarter, totaling $262 million, with a year-to-date accumulation of close to €1 billion [10] - Net debt declined to $5.7 billion, resulting in a net leverage ratio below 1.2x, the lowest since Q2 2015 [10][32] Business Line Data and Key Metrics Changes - Crude oil production averaged 225,000 barrels per day in Q3, with a 2% year-over-year increase and a 7% expansion in crude oil production [14] - Natural gas production increased by 2% sequentially, while NGLs decreased by about 9% due to maintenance activities [15] - Shale production increased by 4% for oil and 11% for gas on a quarterly basis, with shale oil production expanding by almost 50% year-over-year [20] - Domestic sales of diesel and gasoline increased by 1.7% compared to the previous quarter and stood 11% above pre-pandemic levels [24] Market Data and Key Metrics Changes - Average crude oil realization price was $67.5 per barrel in Q3, a 4% increase sequentially [17] - Natural gas prices increased by 13% quarter-over-quarter to an average of $4.4 per million BTU [18] - Total fuel imports represented 13% of total fuels sold in Q3, driven by strong demand and inventory rebuilding [25] Company Strategy and Development Direction - The company is focused on ramping up capital expenditures (CapEx) with a 27% sequential increase and a 71% increase year-over-year, totaling close to $1.2 billion for the quarter [9] - Plans to expand operations in Vaca Muerta and improve efficiencies in shale operations are central to the company's strategy [21][40] - The company is also investing in downstream operations to revamp refineries and reduce sulfur content in fuels [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting ambitious targets for the year, citing solid operational and financial results [6] - The recent presidential decree regarding the expansion of Plan Gas 4 and potential new Plan Gas 5 is expected to provide stability and incentivize the development of natural gas reserves [11] - Management acknowledged ongoing cost pressures from local inflation and international service providers, but they are working to mitigate these through operational efficiencies [45][46] Other Important Information - The company received an upgrade to its local ratings, increasing its local issuer rating by 2 notches to AAA, reflecting continuous improvement in performance [33] - The company is exploring further increases in capacity and potential LNG projects, with discussions ongoing regarding the feasibility of such initiatives [47][49] Q&A Session Summary Question: Update on CapEx plan and drilling speed in shale blocks - Management indicated that they expect a more ambitious CapEx plan for the next few years, particularly in Vaca Muerta operations, and anticipate maintaining or slightly increasing drilling activity [37][40] Question: Comments on cost pressures and future capacity - Management acknowledged cost pressures from local inflation and international service costs, and they expect to partially mitigate these through operational efficiencies [45][46] - Discussions are ongoing regarding the need for further pipeline capacity to support increased production, particularly for LNG projects [47][48] Question: EBITDA guidance and fuel imports - Management confirmed they are sticking with the guidance of $5 billion for full-year EBITDA and expect fourth-quarter fuel imports to be below 10% due to reduced diesel demand [53][56] Question: Resilience of local market sales in a recession - Management noted that diesel demand is significantly correlated with economic activity, and a slowdown could reduce total needs for imported diesel [60] Question: Progress on the Nestor Kirchner pipeline and capital allocation - Management believes the pipeline could be operational by winter 2023 and is considering capital allocation for potential shareholder remuneration, depending on the final budget [64][68]