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YPF(YPF) - 2021 Q2 - Earnings Call Transcript
YPFYPF(US:YPF)2021-08-11 19:31

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 reached $1.1 billion, a 41% increase compared to the previous quarter and 14% higher than Q2 2019 [5][19] - Revenues increased by 26% sequentially to over $3.3 billion, although still 9% below Q2 2019 levels [15][19] - Free cash flow before debt financing totaled $311 million, allowing for a reduction in net debt to $6.5 billion by June 30 [11][22] Business Line Data and Key Metrics Changes - Total hydrocarbon production grew by 6% sequentially, with shale gas production increasing by 35% [23][24] - Shale oil production rose by 7%, while conventional production remained almost flat [8][24] - Overall lifting costs per barrel of oil equivalent were around 10% below pre-pandemic levels, but increased by 5% sequentially [17][19] Market Data and Key Metrics Changes - Domestic demand for gasoline and diesel showed recovery, with diesel demand almost back to pre-COVID levels, while gasoline demand was still 18% below pre-pandemic levels [6][29] - Average realization price for natural gas was $3.80 per MMBTU, aligning with 2019 levels, while crude oil prices increased to $51.60 per barrel [25][31] Company Strategy and Development Direction - The company is focused on executing a $2.7 billion CapEx plan, with production targets for the year potentially biased to the upside [12][13] - The management is optimistic about the new hydrocarbon law that aims to incentivize investment and accelerate development in the sector [78][80] - Continuous efforts are being made to reduce costs and improve operational efficiencies, with a focus on maintaining structural cost reductions [16][64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving production targets and executing the CapEx plan despite challenges faced in the first half of the year [12][46] - Inflation is creating cost pressures, but the company aims to maintain cost efficiencies [63][64] - The company anticipates becoming a net exporter of crude oil in a few years as production in Vaca Muerta expands [91] Other Important Information - The company has successfully reduced its net leverage ratio to 2.7 times by the end of Q2, allowing for greater financial flexibility [38] - The company is actively managing its liquidity and FX exposure, maintaining a low net FX exposure of 6% [35][36] - Recent rating upgrades from credit agencies reflect improvements in the company's financial condition [40] Q&A Session Summary Question: CapEx deployment in the second half of the year - Management acknowledged the need to ramp up CapEx and expressed confidence in achieving the $2.7 billion target despite challenges faced in the first half [45][46] Question: Timeline for liability management for 2022 maturities - Management indicated comfort with upcoming maturities and plans to refinance through local bonds and bank facilities [50][52] Question: Expectations for production increase next year - Management expects significant growth in oil production, particularly in Vaca Muerta, while gas production growth may be limited [58][60] Question: Future pricing strategies and lifting costs - Management anticipates stable lifting costs around $11 per barrel of oil equivalent for the remainder of the year [71] Question: ESG investment plans - The company is focused on reducing CO2 emissions and investing in renewable energy projects through its subsidiary YPF Luz [73][74]