YPF(US:YPF)2020-11-11 20:45Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $392 million for Q3 2020, a significant recovery from $28 million in the previous quarter, although still down 44% year-over-year [17][30]. - Revenues increased by 20% from the previous quarter, primarily due to a 27% increase in diesel and gasoline volumes dispatched [24]. - Net debt decreased to $7.2 billion, down over $500 million compared to September of the previous year [28]. Business Line Data and Key Metrics Changes - Upstream adjusted EBITDA increased by 130% quarter-over-quarter to $358 million, benefiting from higher crude oil and natural gas prices, stable production, and lower lifting costs [30]. - Downstream adjusted EBITDA declined by 68% sequentially to $40 million, as demand recovery was insufficient to offset lower margins from higher crude transfer prices [31]. - Gas & Power segment adjusted EBITDA reached $20 million, a recovery from a $128 million loss in the previous quarter, driven by higher natural gas prices [32]. Market Data and Key Metrics Changes - Fuel sales showed a positive sequential evolution, with gasoline contraction close to 30% and diesel around 18% compared to the previous year [13]. - Crude oil production averaged 202,000 barrels per day, with shale production increasing 14% compared to the previous quarter [34]. - Average crude oil realization price was $40 per barrel, up 39% sequentially, while natural gas selling price averaged $2.7 per million BTU [36]. Company Strategy and Development Direction - The company plans a more ambitious CapEx program for 2021 to reverse the production decline trend seen over the last five years, which may require net new funding [20][64]. - Active discussions with strategic partners regarding potential formations in Vaca Muerta and analyzing divestment opportunities in mature conventional blocks [19]. - The new gas plan announced by President Fernandez is expected to provide stability and incentives for developing natural gas reserves [21]. Management's Comments on Operating Environment and Future Outlook - Management indicated that the worst effects of the COVID-19 pandemic are behind, with signs of recovery in performance [7]. - The company anticipates a sequential contraction in EBITDA for Q4 due to lower production and higher operating expenses, but expects profitability to improve in 2021 as production ramps up [62][64]. - Management emphasized the importance of cost reduction and efficiency improvements to manage high leverage while pursuing aggressive CapEx [119]. Other Important Information - The company achieved a 12% cumulative price increase at the pump in Argentine pesos, stabilizing net prices in dollars [17][44]. - Cash generation from operations reached $666 million, with cash used for investment activities contracting by 33% sequentially [50][51]. - The company’s consolidated cash position stood at $1 billion, with gross debt shrinking further [54]. Q&A Session Summary Question: What is the expected EBITDA for Q4 excluding the FLNG contract payments? - Management expects a contraction in EBITDA due to lower production and higher operating expenses, despite the non-recurrent expense reduction from the FLNG contract [70][72]. Question: What growth can be expected in non-conventional production in 2021 and 2022? - Management anticipates an increase in non-conventional production, particularly in Vaca Muerta, with expectations of shale oil production rising from 20% to closer to 25% in 2021 [74]. Question: What is the outlook for CapEx in 2021? - Management indicated that CapEx levels are expected to increase in 2021, with a more aggressive plan needed to reverse production declines [84]. Question: How is the company addressing potential liquidity issues? - Management acknowledged the delicate balance of high leverage and aggressive CapEx, emphasizing cost reduction and efficiency as key strategies [119]. Question: What is the expected sustainability of Gas & Power segment results? - Management expects the Gas & Power segment's adjusted EBITDA to remain stable, influenced by seasonal prices and the new gas plan [112].