YPF - Earnings Call - Q2 2025

Transcript

Speaker 4

Good morning, ladies and gentlemen. This is Margarita Chun, YPF HR Manager. Thank you for joining us today in our second quarter 2025 earnings call. Today's presentation will be conducted by our Chairman and CEO, Mr. Horacio Daniel Marín, our CFO, Mr. Federico Barroetaveña, and our Strategy, New Businesses, and Controlling VP, Mr. Maximiliano Westen. During the presentation, we will go through the main aspects and events that explain the quarter results, and then we will open the floor for Q&A session together with our management. Before we begin, please consider our cautionary statement on slide two. Our remarks today and answers to your questions may include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by these remarks.

Our financial figures are stated in accordance with IFRS, but during the presentation, we might discuss some non-IFRS measures such as adjusted EBITDA. I will now turn the call over to Horacio. Please go ahead.

Speaker 5

Thank you, Margarita, and good morning, everyone. Despite international price volatility, we delivered not only solid results in Q2 but also significant progress in our 4x4 plan by achieving key remarkable milestones. This quarter's volatility actually demonstrated the right direction and implicit value of our 4x4 plan outlined since December 2023. During this quarter, the international oil market experienced significant volatility with low prices. As a result, our realization price of oil decreased by 12% sequentially. Our shale oil production remained largely unchanged, even after selling our 49% stake in Aguada del Cañar, which decreased its contribution by 6,000 barrels per day. Moreover, during July, we had just achieved record high production of roughly 165,000 barrels per day. In fact, on Tuesday, the daily production was 163,800 barrels per day. Despite the challenging context, our continued delivery on our 4x4 plan substantially mitigated this negative price environment.

During this quarter, we reached key milestones in the divestment program of mature fields, particularly in Santa Cruz. As a material result of this project, we can show a 24% interannual reduction in our lifting costs. Another key milestone was achieved: financial closing at BEMOS. After 18 months of hard work and dedication, today, I would like to share with you the remarkable progress we achieved in our 4x4 plan, delivering important results across all our four strategic pillars, especially since our last call in May. As we have always said, our first pillar is to focus on our most profitable business, oil Vaca Muerta. We have continued to expand our shale oil operations and made significant progress in advancing midstream infrastructure projects to support future growth. YPF, as the largest shale oil producer in Argentina, continues to deliver solid performance.

Back in November 2023, YPF's shale production was 110,000 barrels per day. By last month, production has increased to roughly 165,000 barrels per day, even after the divestment of 6,000 barrels per day in Aguada del Cañar, as I mentioned before. We project further growth, aiming to close the year at around 190,000 barrels per day. This will represent an outstanding organic production ramp-up of over 70% in just 25 months. Moreover, in the last 18 months since 2023, our oil export revenue reached $1.5 billion. In terms of volume, this quarter, we exported nearly 44,000 barrels per day. Moving to midstream expansion, since day one, we were convinced that BEMOS represented the key and the best infrastructure vehicle to ramp up YPF's production from 2026 and beyond, and also for all the industry.

This new pipeline completely unlocks YPF's growth plan to achieve roughly 250,000 barrels per day by the end of 2026 and allowing to reach half a million barrels per day by 2030. To this end, YPF led in record time the development of this project in collaboration with the rest of the shale industry. First, we aligned commitments that allow starting construction on January 25. Supported by a solid contractor structure, the project recently secured a syndicated loan for $2 billion to finance the construction of BEMOS. Besides economic benefits for YPF and the entire shale industry, this transaction reopened the international project finance market for Argentina. It stands as the largest commercial loan for an infrastructure project in the country. It's also one of the top five largest financing in the Latin American oil and gas sector so far.

The overall construction progress stands at 23% as of July, with welding works completed for around 120 kilometers. Additionally, assemblies of floor plates for the tanks have begun at both Allen and Punta Colorada export terminals. Let me now talk on pillar number two that focuses on active portfolio management. From the very beginning, we committed to create value for YPF through the dynamic portfolio management approach. Over the past 15 months, after receiving initial approval from our board, we already completed the transfer of 28 out of 30 mature blocks identified in the initial plan called ANDES. Moreover, we have successfully reverted 11 mature blocks to the provinces, one in Chubut and the other is in Santa Cruz, the most challenging blocks in terms of complexity, achieving another key milestone in our 4x4 plan.

During the past 18 months since 2024, the mature blocks that we already left produced roughly 61,000 barrels of oil per day and 3.2 million cubic meters of gas per day. However, it's worth noting that they were very mature and carried high lifting costs, around $42 per barrel. As a result, during these 18 months, the overall negative impact on our free cash flow was around $840 million. This amount includes the operational cash flow and the exit cash flow. Additionally, we have successfully divested our subsidiaries in Brazil and Chile, besides closing unprofitable chemical plants. All these milestones were critical to our 4x4 plan, as it simplified our portfolio and enabled us to concentrate our effort and the majority of our capital on our most profitable asset, Vaca Muerta.

Regarding this exit program from mature fields, I want to highlight the constructive agenda that we were able to develop in collaboration with governors and unions. This represents an unprecedented level of cooperation among key stakeholders. I'm confident that with the same spirit, we will reach an agreement in the ongoing negotiation with Tierra del Fuego during Q3. As a result of all these efforts, we can report today a remarkable reduction in lifting costs of 24% interannually. With the decision to make YPF a very profitable company, we have recently decided to expand the scope of assets to be divested to become next year a pure and conventional offshoring company. We have identified the other 16 performing conventional blocks. We will open these assets for divestment with the superior objective to continue upgrading our portfolio and making YPF much more profitable and more resilient to low growth prices.

Completely aligned with the same portfolio rationale, this week, we executed a bidding agreement to acquire prime tier one shale acres from TotalEnergies for $500 million, subject to certain conditions. This acquisition follows the same value dynamics of our active portfolio management, divesting non-core, less profitable assets, while securing long-term productive value for the company. In this case, La Escalonada and Rincón de la Ceniza blocks are located in the most promising area in the oil and wet gas window of North Vaca Muerta, close to Bajo del Choique La Invernada blocks that Pluspetrol has recently acquired from Exxon. La Escalonada is a first-class crude oil producing block that will generate synergy with the development of Vaca Muerta North Half. Rincón de la Ceniza has a strategic potential for the development of wet gas and the Argentina LNG project.

We expect to assume the operating role of these two blocks, holding a 45% working interest, partnering with Shell and Compañía de Hidrocarburos No Convencionales. Together, these blocks are 100% encompassing nearly 115,000 acres of Vaca Muerta, with an outstanding oil inventory of over 500 wells. Wells drilled on the volatile oil window during the early stage of development demonstrate quite promising productivity levels that underscore their long-term potential. Our expectation is to accelerate the development plan to fast-track the monetization of this production. This new asset increases our future oil production curve, extending the duration of our plateau and reinforcing our leading position in Vaca Muerta reserves. Furthermore, when we complete the divestment program of our conventional asset, YPF will become a pure integrated shale player with superior size synergies and economics of scale, as I mentioned before.

Now, pillar number three focuses on maximizing our upstream and downstream efficiencies. Since our last call in May, we have inaugurated three real-time intelligence centers. Two of them are in La Plata and Luján de Cuyo Refinery, respectively. The third one is based in our headquarters to support our downstream commercialization business. The latter one has been key for the implementation of micropricing and cell fuel initiatives. This real-time is unique in Latin America. We can follow the demand at each gas station during 24 hours, besides our all-product at convenience stores. We are changing the way of delivering fuel and products in the country. It's really a rapid marketing change. We have an impressive positive image from the people in the polls. This 100% technology-driven and in-house management project was launched last month to seek a win-win strategy.

Micropricing allows our gas station clients to access a different price at fuel at night, from midnight to 6:00 A.M. Cell fuel provides these clients with greater savings if the payment is made through the YPF application in certain gas stations. YPF has pioneered this method of pricing in Argentina with the objective of reducing our fixed costs and growing our night-time sales and generating more profit for YPF. The results so far are impressive. In the first months since launching this project, our sales volume at the gas station line grew roughly 30% compared to Q2 this year. On the industrial efficiency side, we have reduced significantly the duration of program maintenance. Especially in La Plata Refinery, we complete the maintenance between 40% to 60% faster than historical records.

Regarding the Toyota Oil Project, we have been able to reduce the construction cycle for a pile of four wells of roughly 230 days, which represents a reduction of around 80 days compared to 2023 levels. The same methodology and focus are in the upstream real-time intelligence center for drilling and completion that start to deliver results, as you will see in the next slides. We are the last operator in Vaca Muerta working upstream real-time intelligence center 24/7 remotely from YPF headquarters. As a record, one of the biggest service companies, last week, it was the first time that delivered a work from remote all around the world. In the third week of August, we are opening the upstream real-time intelligence center for operation and maintenance, pooling and logistics in Neuquén to improve our efficiency and coordination in all the operations of Vaca Muerta.

This achievement reflects our integrated approach, working closely with our strategy suppliers at every stage of the oil production process. Additionally, we enhanced our operational dashboard to enable real-time anomaly detection and implement corrective action plans rapidly. All of these initiatives represent a critical cultural change for YPF's entire management and production processes. Finally, pillar number four is the Argentina LNG project, and since our last call in May, we signed the heads-up agreement with ENI for the consolidation of first three for 12 million tons per annum, expecting the approval of the final investment decision in Q1 2026. In the same direction, we are working with Shell for phase two in order to speed up the FID and obtain synergy between both projects in the infrastructure. Moreover, this week, our SPV CESA obtained the FID approval for the 20-year Bayarbot Charter Agreement for its second floating LNG named MAR2.

This vessel has a capacity of 3.5 million tons per year, as expected to be operational in 2028. We are also working on the project RIJI, as well as environmental and export permits for MAR2. Considering the first vessel HILI, the total capacity amounts to roughly 6 million tons per year. Let me mention that this second vessel allows the construction of a 100% dedicated gas pipeline from Vaca Muerta to the San Matías Gulf in the province of Río Negro, available during the whole year, instead of the original plan of using the existing pipeline's idle capacity during off-peak season, operating only HILI. Now, moving on to Q2 results, revenue remains stable sequentially, reaching over $4.6 billion, with record high seasonal sales on natural gas and fuels, and increased export volume of crude oil and agro products.

However, the volatility in international price negatively impacts our refined product prices, especially local fuels. Additionally, Q2 was affected by lower seasonal gasoline demand. Interannually, despite a 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 was $1.12 billion in Q2, decreasing 10% sequentially. It was mainly explained by Brent contraction impact in refined product prices, exit from mature fields, and value of inventories. On the positive side, this negative effect was softened with lower lifting costs on the back of less exposure to mature fields. Interannually, adjusted EBITDA declined by 7%, also reflecting Brent volatility, but it was partially mitigated by the significant ramp-up in shale oil production and even better conventional lifting costs.

Also, bear in mind that Q2 last year was affected by the extreme weather conditions experienced in Patagonia. At this point, I would like to note that excluding the negative contribution from mature fields, our proxy adjusted EBITDA could have been $1.25 billion. Looking at the bottom line, Q2 net profit was $58 million, compared to a loss of $10 million in the previous quarter. This turnaround was mainly driven by one-off items related to mature fields in Q1. Interannually, net profit declined sharply, explained by higher depreciation from shale activity expansion and lower gains from financial securities in 2024. Also, this quarter included an income tax charge due to higher future tax payable, while Q2 2023 was the opposite. Mature fields also impacted on the net results. Excluding them, our net profit result would have been a profit of $264 million.

In terms of investment, in Q2, we deployed $1.16 billion, remaining similar sequentially and interannually. It's very important to remark that 71% of the total was now directly allocated to unconventional assets. In Q2, we recorded a negative free cash flow of $365 million. It was mainly affected by $315 million of negative impact from mature fields. Moreover, we had negative working capital due to peak winter sales on natural gas and our subsidiaries paid income tax. However, the negative impact was softened by dividend collection from affiliates. As a result, our net debt rose to $8.8 billion, reaching a net leverage ratio of 1.9 times as expected while divesting mature fields. Please take into account our acquisition of this year, and also in the rest of this year we are selling performing conventional assets and Petrogas after extension of the concession.

Now, I will turn the call over to Max.

Speaker 2

Thank you, Horacio, and hello to everyone. Focusing on the upstream segment, the second quarter total hydrocarbon production was 546,000 barrels of oil equivalent per day. It remains stable both sequentially and interannually. Shale production keeps driving the growth, now representing an impressive 62% of the total output. It nearly offsets the divestment of mature fields and, to a minor extent, the lower working interest in Aguada del Cañar. In the case of mature fields, hydrocarbon production decreased by 26% versus the previous quarter as we kept divesting them. It recorded 72,000 barrels of oil equivalent per day, representing only 13% of the second quarter total production. Crude oil production amounted to 248,000 barrels per day in the second quarter, decreasing 8% sequentially. It was primarily driven by lower mature fields and, to a lesser extent, Aguada del Cañar, as explained before.

Interannually, while total crude oil production remains stable, the remarkable 28% expansion in shale output fully offsets the decrease in exposure to mature fields. Let me mention that last month's shale oil production was approximately 165,000 barrels per day. We expect continuing significant growth in the second half of the year to achieve our 2025 annual target of over 165,000 barrels per day. Oil exports in the second quarter totaled 44,000 barrels per day, increasing by 20% sequentially. The main growth came from redirecting Escalante heavy oil to the foreign market as La Plata refinery was under program maintenance. Interannually, it grew by 43%, also boosted by shale expansions. Natural gas production increased by 6% in the second quarter sequentially to 40 million cubic meters per day, primarily supported by higher seasonal demand.

NGL production was 48,000 barrels per day, a modest growth of 2% sequentially, driven by high associated gas output in certain shale oil blocks. Total lifting cost was $12.3 per barrel of oil equivalent. This is a remarkable sequential reduction of 19%, reflecting further divestment of mature fields. Excluding mature fields, our proxy lifting cost for the second quarter would have been roughly $7.5 per barrel of oil equivalent. Zooming into our core hub blocks, lifting cost at 100% of working interest was $4.9 per barrel of oil equivalent. It grew by 7% sequentially due to higher pooling and maintenance costs. Regarding prices in the upstream segment, crude oil price was $59.5 per barrel, 12% lower sequentially, in line with Brent volatility. Natural gas price was $4.1 per million BTU, growing by 38% sequentially, primarily influenced by the peak season plant gas price.

Now, let me walk you through the performance of our shale activities. In the second quarter, we drilled 54 horizontal oil wells on a gross basis, mostly in operated blocks, while maintaining our net working interest of 55%. In this sense, in the first half of the year, we drilled 105 horizontal oil wells on a gross basis. This is in line with our estimate of 205 wells for the year. In terms of completion and tied-in of wells, we accelerated our activity. In the second quarter, we completed 70 horizontal wells and tied in 76 on a gross basis. They represented an increase of 35% and 69%, respectively, when compared to the second quarter last year. Shale oil production in the second quarter remained stable sequentially at 145,000 barrels per day.

This is because the lower stake in Aguada del Cañar block was fully compensated by the growing contribution from La Angostura Sur 1 block. This block is 100% YPF, located in the south hub, with a shale oil production of 20,000 barrels per day in the second quarter. Considering the acceleration in our activities mentioned before and July's production level of 165,000 barrels per day, we are in good shape to reach the 2025 target of 165,000 barrels per day. In our unconventional core hub blocks, we achieved an average drilling speed of 331 meters per day. We remain optimistic about reaching our annual target of 360 meters per day. On the fracking side, we completed 259 stages per set per month in our unconventional operations, now very close to achieve our annual target of 260 stages per set per month.

In our downstream segment, local fuel prices remained closely aligned with international parities, reflecting Brent volatility. As a result, local fuel prices measured in dollars were down 8% sequentially and 10% interannually. Also, the second quarter local fuel prices were just 1% below import parities. Fuel sales volume was 3.5 million cubic meters in the second quarter, growing by 4% sequentially, primarily explained by seasonality. Interannually, it increased by 3%, mostly driven by demand recovery. We also maintained our leading market share of 55%. In the second quarter, we processed 301,000 barrels per day, recording a 5% sequential contraction due to the maintenance stoppage at La Plata refinery. This resulted in a refining utilization rate of almost 90% as anticipated in our previous call.

However, let me highlight that La Plata refinery achieved a record high monthly processing level of the past 15 years, reaching nearly 201,000 barrels per day in April. Our refining and marketing margins declined by 17% sequentially. It was mostly due to lower prices combined with higher costs related to maintenance. However, it was mitigated by lower costs of oil on top of the OPEX efficiency measures said before. Now, I will turn the call over to Fede. Thank you, Max. Switching to the financials, let us start with the cash flow evolution. In Q2, we posted a negative free cash flow of $365 million, mainly explained by the performance and closing agreements of MATUREFIL. They recorded an adjusted EBITDA loss of $126 million and one-off cash flow loss for almost $190 million. Moreover, our subsidiaries, Metro Gas and AESA, paid income tax, while the regular debt service remained stable.

On the other hand, the dividend collection from our affiliates, net of contributions and prepayments, mostly offset the negative working capital. The latter was mainly explained by higher seasonal gas sales and payroll. In the same line, exports of agricultural products grew, boosted by reduced export duties. As a summary, for the first half of the year, we recorded a negative free cash flow of $1.3 billion, mainly explained by the impact of MATUREFIL. These assets recorded an adjusted EBITDA loss of over $230 million and a negative one-off cash flow for around $420 million, totaling an aggregate of $650 million. In addition, year to date, we dispersed a net amount of roughly $210 million in M&A activity, mainly the acquisition of Sierra Chata.

Therefore, during this six-month period, the proxy free cash flow, excluding MATUREFIL and M&A activity, was $460 million negative, which is mostly explained by the regular interest payment for roughly $320 million and income tax payments from our subsidiaries for around $100 million. Now, in terms of Q2 financing, we ended with $8.8 billion of net debt, representing a net leverage ratio of 1.9 times as anticipated during our investor day in April. During this quarter, we issued a $204 million LINQ bond and a $140 million Hardollar bond. The first one was with a 15-month tenor at 3.95%, and the second one with a two-year tenor at 7%. We also secured around $190 million in another local finance. After the quarter, we also issued two local bonds: a $250 million MEP bond and a $167 million CABLE bond.

The first one was a two-year tenor and the second one a five-year tenor. Considering the recent acquisition of shale assets, we will complement the last issuance of the CABLE bond with cross-border acquisition financing. We anticipate this M&A will take our net leverage ratio to near two times during Q3. However, for the second half of the year, we expect that the increase in EBITDA driven by the ramp-up in production and the sale of our mature fields, combined with the divestment of additional non-mature fields that Horacio anticipated, will lead to a normalized net leverage ratio of 1.8 times by year-end. In terms of refinancing activities, during the rest of the year, we will be targeting debt maturities of nearly $800 million, 78% local and only 22% international.

In this process, it is important to highlight that last month, Moody’s upgraded YPF’s credit rating from Caa1 to B2 with a stable outlook, following the recent sovereign rating improvement. With this, we conclude our presentation and open the floor for questions.

Speaker 4

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. If you would like to withdraw your question, press star one again. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Tasso Vasconcellos with UBS.

Hi, Horacio, Federico. Thanks for taking my question here. I would like, Horacio, to get a broader update on the development plans that you guys have planned ahead. The company just announced the acquisition of this block that you mentioned during the presentation. How does that impact the current production plan for the upcoming years? How do you view the risks of an increased development plan amid an already accelerated plan that you guys had released before? In parallel, Horacio, you recently said in an interview that you view the acceleration in the CAPEX in Vaca Muerta. Can you also give some additional feedback on this view of yours? Those are my two questions here. Thank you.

Speaker 5

Okay, good morning.

How are you?

Taso.

Pretty well.

Why we bought that is because this field is one of the best fields in the north of Vaca Muerta, where the tight wall is more, let's say, if you see from different consultants, the average production of URF walls for all Vaca Muerta is in order of 1 million. If you see this area, it could be 1.5 or more. That means that it's more profitable than anyone else. They are in the very, how you say, sweet spot, as in the United States, they want to say. What is the affection? Nothing, because it's good. We are going to make more money for you. We are going to prioritize with Shell, for sure, to go very quickly because it will be one of the best fields as a rentability of Argentina. I don't know if I answered the question or you need more detail.

It's clear.

It's clear? Okay, thank you.

I think that's clear. From you on this interview that you recently gave on this potential debt acceleration on Vaca Muerta activities as a whole.

Okay. Why I say that in an interview? Because they asked me in an interview, but it's not YPF. It's not the problem for us to do that. We have delivered what we say, and in everything that we say in 4x4, we have delivered. I answer at that moment because there are people saying the market of Argentina, they said there will be a reduction in some number of rigs, but it's not YPF. I think it's not, I would say, not logic and fair that I would say which company is reducing the rigs. Okay?

Okay. That's clear. Thanks.

Speaker 4

Your next question comes from Leonardo Marcondes with Bank of America.

Hi, everyone. Thank you for taking my question. I had two from my end. The first one is regarding the new ANDES divestment program. Could you provide some color on your expectations in terms of timing for the conclusion of the whole phase one? Also, some more details on phase two, on what is the total production to be divested from, what is the representativeness, and your expectations in terms of conclusion for the second phase as well. My second question is regarding the export tariff for oil, right? We have recently seen the government reducing the export tariff for other segments. Is there any expectation or discussion with the government to reduce the export tariff for oil as well in the short term? Thank you.

Speaker 5

Okay. Thanks for the question. Let's go by number one, ANDES. ANDES one. In ANDES one, we are finishing. There is only one block that is in Rio Negro that is the expectation. They have to be approved by the government of Rio Negro, but it's in the final phase. We are out, totally out. There is something that I have to explain for you that ANDES, we solved everything. There were two provinces. One is in Santa Cruz that we are out now because we are no more the owners of the blocks. We are operating for up to December at most. We operate for the, I may not know, the promised company, okay? Because they don't have the people to do that, okay? We are out there. In Tierra del Fuego, that is very small compared with Santa Cruz, very, very small.

I think next week we can have, maybe we can have good news because we are in the last phases to agree with the province, okay? That is ANDES one. What is ANDES two? ANDES two is all the conventional blocks that we have left. Remember, if you see some interviews, I say that the goal of all the people that work in YPF, in the management, is to be a conventional company next year. Now we are delivering and to sell what you can call core conventional fields that have good results for conventionals, okay? Why we do that? We can make more money as you realize that we have a good portfolio and to invest in Vaca Muerta. This one that have lifting costs that is more than $20 per barrel is no prioritary. I don't know how to say in English.

Speaker 4

Priority.

Speaker 5

Priority for us because of the profitability. There is all the others. It's in Chubut or in Mendoza and in Salta. There are oil and gas. The production of all the assets is in the order of 50,000 barrels per day. Production of gas is 2 million cubic meters per day. Debit of all of this is in the order of 8% at 2024, okay? I think I answered now the question, or I left something. There is a second one. I work. I am a guy that works in a private company. I'm not a guy that regulates the Argentina tariff or export tariffs. I don't know. That you have to ask the government.

Very, very clear, Horacio. Just to follow up on the first question, regarding the second phase in terms of production and EBITDA representativeness, what should be the impact on the company?

I said maybe because my English maybe is not good. I know that, okay? It doesn't matter. The production is 50,000 barrels per day of oil together, and the production of oil. The production of gas is 2 million cubic meters per day. The EBITDA for all that, all that in figures of 2024 that you have is the order of 8%. It was more clear?

Yeah, no, that's very clear. Thank you very much.

Thank you.

Speaker 4

Your next question comes from Matthias Cattaruzzi with ADCAP.

Hi. Good morning. I have a question about the CAPEX guidance. You gave us this $5.0 to $5.2 billion guidance with a Brent of $72 per barrel. Are you planning on changing that or adjusting it in the upcoming quarters?

Speaker 5

No, we are not going to change. Also, if you have our figures, we are very, very, very close to what is our budget, and we are going to continue.

Okay. Thanks. Could you provide an update of the equity contributions to Vaca Muerta Oil Sur for the upcoming two years?

Sorry, the equity contribution?

Yeah.

Sorry. I will pass to Federico. They are in charge of all the financing, okay?

Hi, Matthias. Basically, after the financial close of BEMOS, based on a total investment of $3.1 billion for the project and a 70% debt equity ratio, the total number for our share of the equity will be in the range of $230 million, out of which close to $75, $76 million have been already contributed up to June. The remaining amount will be $155 million until COD. I will say that at least $50 million will come along 2025, and the rest mainly concentrated in 2026. That will be our disbursement of BEMOS equity.

Great. Thank you.

Speaker 4

Your next question comes from Juan Munoz with BTG.

Speaker 5

Hi. Thank you for the opportunity to take my question. The first one is a follow-up of the divesting of the conventional assets. Regarding the proceeds that you expect would fully divest in those assets, if you could provide us an estimation of those proceeds, that's my first question. The second one is regarding the recent acquisition of the Shell assets from TotalEnergies. More a strategic question is, how are you seeing the competitive M&A landscape in Vaca Muerta in the recent months? That's my two questions. Thank you. Thank you. I cannot answer. Imagine that if I say what is our expectation, it will be in all the newspapers tomorrow. I cannot tell you that, okay? We think that it's a good number because they are very good assets. I cannot tell you exactly the number, okay?

With all our selling, I really think that we are going to get much more than the total acquisition, okay? That is something that I think I can answer you, okay? I don't know if I can understand when you say competitive landscape. In which sense do?

How are you seeing the competition regarding the current assets that are available for sale in Vaca Muerta right now?

Okay, okay. I think there are not a lot more. The companies that we have now, all the assets, they are all focused in the development, okay? It could be another company or it could be changed. It's normal. We don't see that there are more during this season. That is no more during this year at least, okay?

Okay. Thanks.

It's okay? Okay.

Speaker 4

Your next question comes from Bruno Montanari with Morgan Stanley.

Hi. Good morning. Thanks for taking my questions. I have one follow-up and one question. On the coming back to the TotalEnergies acquisition, can you share with us maybe the timeline for when you would start to invest in the area? If there is any CapEx expectation, just like a quick math, if it's a 500 well inventory and around, say, $14 million or $15 million per well, over the full development, it would be at least around $7.5 billion in CapEx. I just wanted to know if that makes sense and what type of facilities you would potentially have to invest as well. The second question is maybe on the financial side. When we look at 2026, the company has some concentration of maturities, especially in domestic bonds. When would you start to work on the refinancing of the 2026 maturities? Thank you very much.

Speaker 5

Okay. I will answer the first. Federico will answer the second, okay? With the total acquisition, our partner is Shell. This is Shell and the province company, CMP. We are going to have a meeting with them to decide the development, okay? Because we are partners. I cannot say exactly. We are going to prioritize as much as we can its necessary facilities. We are also talking with companies that are near there. If you know Vaca Muerta, you can get synergy in the plans, in the CPF, okay? There, everybody, we can reduce the investment per barrel. That is our idea, okay? The second question, I pass to Federico, okay?

Speaker 6

Hey, Bruno. How are you? Looking for refinancing, first, we need to work on what we have for the rest of the year. Our total refinancing and acquisition finance now for $500 million to be done in this. In other words, we have $1.1 billion of additional debt to be acquired until the end of the year. For the acquisition finance, we already issued a bond last month in the local market for $167 million. More than 30% of the total acquisition is already funded. The rest, we have acquisition finance committed. The rest, I think, that will be mostly in the local market. Now, looking at the tower of financing that we have for 2026, we have $2.3 billion, out of which more than 50% is local and refinancing, and only $350 million are international bonds refinancing.

We are going to be looking at the opportunities that we have in the local markets and in the international market, starting, I would say, from the last year of this year and also entering into early beginning of next year, for example, as we did in January of 2025. Bear in mind that more than 50% of the refinancing required is coming from local bonds.

Speaker 5

Very clear. Thank you very much.

Speaker 6

So far.

Speaker 5

I'm sorry. So far, we have been very successful in refinancing locally. Together with the Dollar Cable bond that we issued last month, we issued another Dollar MEP bond for $250 million. In total, it was $417 million. That is the highest bond ever in the local market. There is a growing appetite for our paper in the local market.

Thank you.

You're welcome.

Speaker 4

The company appreciates the questions, but since we are running out of time, we're going to accept one last question from Andres Cardona with Citigroup.

Speaker 6

Hi. Good morning. Thanks for the opportunity. Here in the capital allocation team, I just wondered if you could provide any update about the assets that are for divestiture, excluding the ANDES divestment program. Maybe you can walk us through the rationale of the strategy of the discounts on the downstream business during nights. How it improves profitability or increased volumes? I don't know. Just help us to understand the rationale from a profitability perspective. Thank you.

Speaker 5

One question because I understand. Silk, explícame qué dijo.

El primero es qué está pasando del lado de desinversiones, si hay algo más para además de ANDES para desinvertir.

Okay. And the second?

La segunda es la estrategia de precios bajos.

Okay. Thank you. Now, I can answer. The first question, besides ANDES, I said in the media several times, there is also Metro Gas, and we will reach the extension that is expected to be this year. After, we are going to be in the market. Also, there is another one small refinery that we are trying to go out from there with the refiner. Even that refinery is not refining now, but it's closed. We are seeing how we can go out if we can, okay? The second one, you didn't deny it, is lovely what we are doing because you have to come here to see what we did. It's amazing. It's unique. I would say unique in the Spanish word. It's unique. I don't know. It's in something else. We have E&I for everything, cars, everything that you want. We see the demand for each gas pump.

You hear me? Each gas pump around all Argentina. We are doing the same as you were, okay? It depends on demand. It depends on hours. That's why we are planning to get more profit to YPF. Why at 9:00 P.M.? Because after we decide and we start seeing something that nobody knows, in minute by minute, we realize at 9:00, after midnight, there is a very low demand, which is logical because it's logical. At night, people sleep. We realize that there, our profitability at the gas station is negative. What is that? All also logic. You have to reduce that to make more reduce your loss because that is an essential service. You cannot close because it's by law. It's logical that you have to be open at 9:00.

What we did is to reduce, and it's amazing, the response of the people because our market share increased a lot. In one month, we reduced the loss at half. Our incremental demand during the night is more than 30% around all Argentina. All Argentina. Also, there is some province that they are more inelastic and there are more others that are much more elastic. We are playing with that. It's amazing. I would love, I'm not doing that job, but if I were 25, I would like to work there. Really, I want to work more there than I was working in my life at the beginning of my career in reservoirs. I tell you that it's amazing what they are doing those guys.

Thank you, Horacio.

Speaker 4

That concludes our Q&A session. I'll now turn the conference back over to Horacio Daniel Marín for closing remarks.

Speaker 5

Okay. Thank you very much for all the questions. Really, we are proud of what we are doing in YPF. We are working very hard. In fact, I am today with infection, and I was coming all day long, all the week with infection because I love to be in YPF. I love what we are doing. I like what people respond in the profitability in all the companies. Thank you very much. We will see you in three months. No, see. We will talk in three months, okay?

Speaker 4

This concludes today's conference call. You may now disconnect.