YPF - Q4 2022

Transcript

Margarita Chun (Investor Relations Manager)

Good afternoon, ladies and gentlemen. Welcome and thank you for joining us in this special day. Today we celebrate the 30th anniversary of YPF on New York Stock Exchange. Before we start, I would like to point that you have some paper and pens on your table, in case that you have any question. We will collect it at the end. YPF is an integrating Argentinian energy company. We generate energy efficiently and reliably through the development and production of conventional and non-conventional gas and oil and renewable source such as wind, sun, land, and water. With the development of Vaca Muerta geological formation, YPF is a leader in the production of unconventional hydrocarbons in Latin America.

Through three industrial complexes located in La Plata, Luján de Cuyo and Plaza Huincul, it generates fuel, petrochemicals and lubricants, offering a full range of products with a strong commercial presence in retail, agriculture, industry, and LPG. YPF has as well a logistic network to supply more than 1,500 service stations across the country. Because of that, it has become the network with the largest coverage in Argentina. YPF is a leader in the fuel market. Its products ensure performance, adequate protection for each engine design, sustainability and environmental care. It provides electric power to Argentina with thermal generation plants and renewable energy source, as well as fertilizers and special products to the entire Argentinian countryside.

In addition, starting this year, YPF has embarked on the search and exploitation of lithium in the country, together with CONICET, the National Scientific and Technical Research Council. They formed Y-TEC, a technological innovation and development company for energy production. Now, yes, is the moment to hear from the director and chairman on the board of the directors, Pablo González. Later on, the CFO, Alejandro Lew, along with the CEO, Pablo Iuliano, are going to share with us the annual results for 2022. Thank you.

Pablo González (Director and Chairman of the Board of Directors)

Buen día a todas y todos los presentes. Muchas gracias por acompañarnos en este día tan importante para YPF y yo diría para la Argentina. Ustedes saben que YPF tiene una composición societaria del 51% del Estado nacional. De ese 51%, el 26% es del Estado nacional y el otro 25% de las provincias productoras y el otro 49% cotiza acá en la Bolsa de Nueva York. Por eso quiero agradecer a la Bolsa de Comercio de Nueva York habernos prestado el lugar para poder celebrar nuestros 30 años de ingreso a la bolsa. Hay muchos amigos. Espero, seguramente de alguno me voy a olvidar, pero voy a tratar de nombrar a quienes hoy nos acompañan y nos distinguen con su presencia.

Primero, al Embajador argentino de Estados Unidos, a mi amigo, mi querido amigo personal, Jorge Argüello, una persona que permanentemente está cerca de YPF y ayudando a YPF. Muchos de los logros que ahora nosotros le vamos a contar, que hemos tenido fundamentalmente el año pasado y el anterior también, Jorge es parte de eso. A Flavia Royón, a la Secretaria de Energía, que nos acompaña y que también trabaja obviamente con nosotros en el día a día. Agustín Gerez, el Presidente de ENARSA, que está haciendo una encomiable tarea con el Gasoducto Néstor Kirchner, entre otras, entre otros de sus trabajos. Gasoducto que va a estar finalizado el 20 de junio. Quiero agradecer la presencia del cónsul de Santiago Villalba. Quiero agradecer a Carlos Raimundi. A vos, Carlos, gracias por estar.

Quiero agradecer también a los periodistas que han venido de Argentina a acompañarnos a cubrir este evento. Gracias por estar. Quiero agradecer a las trabajadoras y a los trabajadores de YPF. Quiero agradecer también a los sindicatos relacionados con nuestra actividad. Ellos son quienes han logrado esto que ahora nosotros vamos a anunciar, mucho de lo cual se anunció ayer cuando el directorio aprobó el balance del año pasado. Los proyectos que nosotros ahora le vamos a contar solamente pueden ser llevados adelante por aquello que es lo más valioso que tiene YPF, que no son sus reservas, sino es su gente, sus trabajadoras y sus trabajadores, que han logrado revertir una situación que en el año de la pandemia determinó perder $1 billion a esta realidad de crecimiento que hoy le venimos a contar.

También, a agradecer la confianza del señor Presidente de la Nación y agradecer la confianza de la señora Vicepresidenta de la Nación, que tuvo la visión el 2012 de crear, de recuperar YPF y crear este sistema asociativo entre lo público y lo privado que está rindiendo frutos. Ayer el directorio aprobó la memoria del estado financiero del 2022. Yo le voy a dar dos o tres datos nada más, porque el resto lo van a, lo van a explicar mejor que yo Pablo y Alejandro. El salto de producción de 7.2% en barriles equivalentes es efectivamente el salto orgánico más importante en los últimos 25 years. Comparado con el 2014, hubo un salto orgánico interanual superior, pero fue por una absorción.

En ese momento, el año 2014, se compra la empresa Apache. Ustedes saben que no es lo mismo que perforar pozos y ponerlos en producción que comprar una empresa con pozos en producción. Digo esto por algo que he leído hoy en algún medio de mi país. 7.2% en barriles equivalentes hemos crecido el año pasado. El año pasado hemos tenido ingresos por $18,757 million. Hemos tenido gastos por $13,682 million. Hemos tenido un EBITDA de $4,947 million. Es uno de los EBITDA más altos de la historia de la compañía.

Ustedes saben que cuando les hablo de EBITDA le estoy hablando de desarrollo de pozos, le estoy hablando de eficiencia, le estoy hablando de trabajo, le estoy hablando de un crecimiento tanto en petróleo y gas, que es el corazón de YPF, que no se registraba hace muchos años. El CapEx, nosotros pospandemia tuvimos un año, $2,700 million. El año pasado el directorio había aprobado un CapEx de $3,700 million. Fíjense, sobre fin de año lo corregimos a $4,100 million. Este año el directorio ha aprobado un presupuesto de $5,500 million. Nosotros lo hemos prudentemente disminuido un poco para ver el año financiero y el contexto cómo nos indica seguir. Es un año de crecimiento, evidente y absolutamente es un año de crecimiento.

En materia de gas, ustedes saben, las reservas de Vaca Muerta son de 308 Tcf y Argentina consume 1.8 Tcf por año, con lo cual tenemos reservas por 170 años a este nivel de consumo. ¿Qué está haciendo YPF? Está llevando adelante un proceso asociativo con una de los proyectos más grandes de los últimos años, que significa nada más y nada menos que monetizar esas moléculas de gas y exportar GNL al mundo. Estamos esperando que el Estado nacional remita al Congreso de la Nación la ley marco y a partir de ahí ya empieza un trabajo diferente. Cada 3 meses tenemos comités de trabajo con PETRONAS. Hace 2 días estuvimos con el CEO de PETRONAS en Houston.

Era una charla muy buena y la verdad que la reflexión final del último comité... Yo, claro, soy abogado. La reflexión final del último comité fue: todos, tanto los ejecutivos de PETRONAS como de YPF, dijeron que bueno, se terminó el trabajo de los abogados y los contadores y ahora empieza el trabajo de los ingenieros. Es decir, venimos llevando adelante un proceso que va a determinar el día de mañana, exportar 25 millones de toneladas anuales en el pico del proyecto. Eso significa aproximadamente 460 barcos. Vamos a hacer un gasoducto igual, muy parecido al GNK. Nos ayuda un montón el expertise que ha tenido ENARSA y cómo ENARSA ha liderado ese proceso. Una vez que esté terminado ese gasoducto. Va a haber un buque de PETRONAS y a partir de ahí se van a ir construyendo las plataformas.

También hoy le vamos a contar a ustedes que uno de los objetivos que vamos a tener es ver cómo conseguimos, nos asociamos para poder explotar las reservas que tiene la Cuenca Austral en Palermo Aike. Cuando yo les decía que las reservas de Vaca Muerta eran de 308 Tcf, nosotros pensamos que el potencial de Palermo Aike está en los 130 Tcf. Ese es un desafío que ya empezamos a hablar con nuestros socios, con los socios de YPF, que nos han acompañado durante estos años. En materia de petróleo, ustedes saben que Vaca Muerta tiene 16 billion barrels of reserve. YPF viene creciendo la producción. El año pasado, en petróleo no convencional interanual, YPF creció un 47% de producción.

Todavía el petróleo convencional producido por YPF es superior al petróleo no convencional, pero no va a pasar mucho tiempo, obviamente, que lo supere en gas, ya lo está superando. En gas, el gas no convencional de YPF ya está superando la producción de gas convencional: 38 millones de metros cúbicos. Nosotros creemos que llegó el momento de también mirar Palermo-Aike en petróleo, donde pensamos... que puede haber 6.6 billones de barriles... para poder explotar. También hemos avanzado con offshore... y tenemos la posibilidad de llevar adelante una potencialidad, que yo no digo que va a ser parecido a Permian, pero también le da grandes posibilidades a YPF. Son unos 7.5 billones de barriles lo que se cree que puede estar ahí. Hemos tenido una reunión con Equinor hace 48 horas, aproximadamente.

Es la primera vez que las máximas autoridades de YPF se reúnen con la máxima autoridad de Equinor, donde estamos dispuestos a seguir avanzando. Siempre respetando las normas medioambientales, siempre invirtiendo en transición energética, siempre potenciando a YPF Luz. Dentro de 15 días vamos a inaugurar el primer parque solar de YPF en San Juan, un proyecto que se denomina el Zonda. Es una inversión de $300 million. Estamos por agregar $200 million más. Hemos incorporado, estamos incorporando un parque eólico nuevo, YPF El Valle, en Córdoba, con una inversión de $150 million. Hoy YPF es el second productor de energía renovable de la Argentina, con 400 MW.

Si bien el corazón de YPF es el petróleo y el gas, YPF va a seguir invirtiendo en energía renovable limpia, como también lo va a hacer YPF Litio y va a seguir proyectando una nueva Argentina a través de Y-TEC. Yo les quería dar algunos datos, nada más. El resto lo van a explicar, Pablo y Alejandro. Tengo que agradecer al director de YPF. Tengo que agradecer a todos los que permanentemente colaboran con nosotros. El año pasado un periodista me decía: «Está muy bien lo que usted está diciendo. Nosotros vemos que, no sé, genera confianza en los inversores». Algo está pasando.

Los números nos venían indicando que estábamos creciendo en producción, que veníamos teniendo muy buenos estándares de eficiencia, que estamos cerca de Permian en nuestros niveles de eficiencia, que nuestra gente ha aprendido, que ese costo de desarrollo es un costo de desarrollo que nos ha llevado 10 años. Hemos pasado de una explotación convencional en declino a una explotación no convencional que hoy marca el futuro de la Argentina. Desde esa charla con ese periodista, acá, en la Bolsa de Nueva York, donde supongo que, digamos, algo se entiende del sistema financiero del mercado de capitales, la acción de YPF ha crecido 1 año 130% en dólares. Les agradezco su presencia acá.

Les pido que nos sigan acompañando en estos desafíos de crecimiento, que sigamos pensando y creamos entre todos que este sistema público-privado sí que funciona. Sí que funciona. Y acá están los números, que ellos le van a explicar muchísimo mejor que yo. A los que nos están escuchando en Argentina, felices 30 años a los trabajadores de YPF y muchas gracias por acompañarnos. Muy buen día. Muchas gracias. Les cedo la palabra a Pablo y Alejandro Lew.

Siempre bromeamos con Pablo, desde que él es CEO de YPF creció la acción. Creció la acción un 130%. Quiero agradecer el trabajo de todo YPF en nombre de un gran CEO que tenemos, como Pablo Iuliano. Una persona de una enorme capacidad de trabajo, que conoce el terreno de Vaca Muerta como ninguno. Una persona honesta y trabajadora como pocos. Gracias, Pablo. Gracias, Ale, para vos lo mismo. Gracias a explicar los números.

Alejandro Lew (CFO)

Bueno, gracias. Gracias, Pablo. Thank you all for coming. Both of you listening on the live streaming. Thank you for joining us and all of you here coming to Downtown Manhattan on a Friday afternoon. I know it's a lot of effort. Thank you very much for being here with us today. In terms of the financial release for the 2022 fiscal year and also the 4th quarter, we decided to spare you from the trouble of listening to us for like 30 or 40 minutes. We decided to modernize ourselves and put it together in a 10-minute video, which we believe is gonna be much more comfortable than listening to us.

After the video, Pablo and myself, we go through a strategic outlook presentation, which we believe it's gonna be also even more relevant for you to listen to us on that and, of course, then into Q&A. If we can please go ahead with the video. Thank you.

Speaker 5

2022 was a very special year for us at YPF. We celebrated our 100th-year anniversary, and we managed to deliver exceptional results. After being able to stabilize our hydrocarbons production decline in 2021, in 2022, we achieved the largest organic growth in our oil and gas production of the last 25 years. A remarkable 7%, backed by a CapEx plan of $4.2 billion, almost 60% higher than in 2021. Our focused CapEx deployment in unconventionals permitted us to maintain a healthy reserve replacement ratio of 124%, permitting our total audited proven hydrocarbon reserves to record a new annual increase of 4%, totaling close to 1.2 billion barrels of oil equivalent.

We also led the process of putting forward major infrastructure projects related to the debottlenecking of Vaca Muerta, including the new Vaca Muerta Oil Norte pipeline to connect to the existing Trans-Andean oil pipeline to export into and through Chile; the major expansion of the Oldelval and OTASA systems to more than double current export capacity through the Atlantic; and the engineering of a completely new pipeline and terminal system to enable further export growth potential from 2026 onwards through the Atlantic. All in all, these projects shall involve investments of around $4.5 billion over the next three years, to be shared among participating oil-producing companies. Despite intense cost pressures, we still managed to consolidate an adjusted EBITDA of almost $5 billion, the third-highest mark in the company's history, and we recorded an all-time high net income of more than $2 billion.

Safety and ESG. During 2022, we continued prioritizing the safety of our people. Although we had to regret two fatal accidents that further increased our focus and our commitment to secure operations with zero fatalities. In 2022, we expanded by more than 70% the total training hours for our direct and indirect workforce, contributing to achieving the lowest mark of injury frequency rate for the last five years at 0.32. We also continued working hard on reducing our direct greenhouse gas emissions, deepening the path to become not only a low-cost, but also a low-carbon energy producer. Our total GHG emissions declined in absolute terms by 7% compared to the previous year.

More particularly, within our shale operations, during 2022, we achieved meaningful progress by reducing our carbon intensity by 20% to an average of 15 kg of carbon dioxide per barrels of oil equivalent. During 2022, we also continued expanding our boundaries in relation to new energy solutions, not only advancing on a solar project in the province of San Juan through YPF Luz, but also launching our first lithium exploration project in an area of 20,000 hectares in the province of Catamarca.

Shale operations. The positive evolution in our shale output was once again the result of a determined strategy to accelerate the monetization of these unique resources, taking advantage of the world-class competitiveness already achieved. In that sense, in 2022, shale oil and shale gas expanded 45% and 47% year-over-year, respectively, as we continued accelerating our well construction activity, reaching a total of 154 horizontal operated drill wells, 36% higher than in 2021. During 2022, we also continued with the strategy of developing Vaca Muerta beyond our core hub blocks. To the south, we tied in two wells at our fully-owned Lajas Este block and drilled two new shale gas wells in Las Tacanas. While in the north, we completed six new wells along the year at Bajo del Toro block and drilled four wells at our fully-owned Loma Amarilla block.

Conventional operations. On the conventional side, we've continued making progress in stabilizing our oil output, which remained flat on a sequential basis in the fourth quarter. We continued extending tertiary recovery techniques, reaching new production records in the Manantiales Behr block, and obtaining promising results from the key three pilots deployed at Chachahuén in Mendoza, El Trébol in Chubut, and Los Perales in Santa Cruz.

Downstream review. During 2022, we managed to reach historical levels of supply of fuels into the domestic market, effectively facing the largest ever demand of diesel and gasoline. Our sales of diesel increased by 10%, while dispatched gasoline grew 14% compared to 2021 levels. This incremental demand was partially faced through a successful effort in maximizing processing levels, which increased by 5.7% year-over-year, and also through higher than average imported volumes during certain times of peak demand.

However, a reduction in domestic diesel demand in the fourth quarter, even higher capacity utilization rates of around 89% at our refineries, allowed for a normalization of imported volumes, which represented 9% of all fuels sold in the fourth quarter. The average local fuels price in dollar terms increased by 28% during the year, partially tracking the rapid rally in international reference prices. Although the volatile global environment led to a widening of the gap between local and international prices in the second quarter, such differential has been reduced over time, standing at 25% in the fourth quarter and between 15%-20% so far in 2023.

Financials review. Even though our free cash flow in the fourth quarter turned negative on the back of the acceleration of our CapEx activities and an extraordinary income tax prepayment for 2023, we closed 2022 as the third consecutive year delivering positive free cash flow. With more than $750 million of FCF accumulated in 2022, we ended the year with a net leverage ratio of 1.2x. Going forward, our healthy liquidity position, which comfortably covers our debt amortizations for the next 12 months, and the low outstanding debt levels within the local capital markets and with our relationship banks, should provide us with enough flexibility to tackle our even more ambitious plans for next year.

Targets 2023. For 2023, we're targeting a CapEx plan of around $5 billion, once again focused on our shale blocks, in which we're allocating about 50% of the total. With this focused plan, which also contemplates the allocation of resources to the midstream initiatives and the continuation of our multi-year investments in upgrading our refineries, we anticipate another year of very healthy production growth, with particular emphasis in the expansion of crude oil output. In summary, we are proud of our achievements during 2022. And are even more excited with the opportunities ahead of us. We envision 2023 to be a challenging year on the back of both global and local uncertainties. We are committed to remain focused on delivering the historical opportunities that we have in front of us.

The capital efficiency achieved in our Vaca Muerta operations along the last 10 years, and the financial flexibility gains along three years of prudent deleveraging, coupled with the talented group of professionals that form our company, should pave the way for us to deliver outstanding value to our shareholders, employees, partners, suppliers, and the Argentine population. We are YPF. We are the past, we are the present, and we definitely are the future.

Pablo Iuliano (CEO)

Hello. Hello, everyone. Thank you very much for joining us today. Those of you are physically here with us, as well as the many of you that connected to the live streaming. It's very important for us to know that we count with all of you on the very special day for YPF. It's been a while since YPF management presented a strategic plan beyond the bits and pieces that we have been commenting on certain events, events. And we understood that this occasion of celebrating the 30th anniversary of our stock being listed in this institution, the New York Stock Exchange, was the right one to share with you our strategic outlook focused on addressing the unique opportunities that we have in front of us. Our company celebrated its 100th anniversary last year. It would be very strange to imagine such a long trajectory being smooth or linear.

Many things have happened along the way, some very positive and others not so. Together, they have set the grounds for building into the future. At this very juncture, we find ourselves facing unique opportunity to grow our company in a leapfrog way. With a very focused approach on what we know how to do best, which is generating value by providing affordable and reliable energy that also contributes to the global decarbonization process. Since we initiated our journey in Vaca Muerta over 10 years ago, we understood we have a tremendous opportunity in front of us. The challenges and fears abounded. 10 years later, after going through a remarkable learning curve, where we have invested over $10 billion on a net basis, we are proud to say that we have managed to make the dream come true.

Having proven the quality of the resources and having achieved level of competitiveness that rival those top of the class within the U.S. shale industry. Achieving these levels of competitiveness in Vaca Muerta makes the cornerstone of our focused strategic path going forward, particularly within the global geopolitical context that puts energy back at the center of economic and social debate. Piggybacking on the global trends, we have immersed ourselves into the task of accelerating the monetization of Vaca Muerta, with a first stage prioritizing the crude oil opportunity targeting to become once again a net exporter of crude oil. Then overlap in coming years with the massive monetization of our shale gas resources through the development of LNG capabilities.

Even though we expect that the crude and natural gas opportunities have many years to be played out, particularly natural gas, given its now well-accepted role as a transition fuel, we also envision further opportunities in the long run that should further expand the company's portfolio of energy solutions toward clean energies. We are therefore already positioned ourselves to take advantage for our unique stance within Argentina to participate in the development of alternative clean energies. Given that our country is also blessed with other unique natural resources beyond Vaca Muerta, including particularly renewables as a key factor for green hydrogen and lithium. We are convinced that this renewed strategy has a tremendous opportunity to generate value for all our stakeholders while contributing to the global decarbonization process.

In that sense, developing and exporting crude oil and shale gas from Vaca Muerta will contribute to replace carbon inefficient energy source such as coal, the most carbon emitter of the three main fossil fuels, which still represents over 25% of the global energy matrix. When looking at sustainability in this full conception and not just a pure environmental approach, the monetization of our hydrocarbon resources shall generate an extraordinary transformation of the country's energy balance of payment. The country's energy, sorry, providing the international monetary reserves that are so critical to unlock economic growth and in turn, improve living standards for the Argentine society. Let me now walk you through the main pillars of our strategic outlook.

When looking to our key short-term opportunity concentrate in the monetization of oil, we clearly focus on our activity in our Vaca Muerta blocks, including not only our key core hub assets but-

Sergio Massa (Minister of Economy)

Hola. Sí, sí. Aquí está. Uno probando. Uno, dos, tres.

Pablo Iuliano (CEO)

... also expanding in other areas confirming the north and south hub.

Sergio Massa (Minister of Economy)

Probando. 1, 2, 3, 4, 5, 6, 7, 8.

Pablo Iuliano (CEO)

A short interruption. I continue. To that end, we have already devised and implemented a detailed program of midstream debottlenecking, including the expansion of existing pipelines, the construction of a new pipeline expanding the connection between Vaca Muerta and the Pacific while putting back in operation the Trans-Andean oil pipeline. And engineer an initial delineation of a completely new system connecting Vaca Muerta to the Atlantic, expected to be up there running by 2026, and that should serve as a key enabler for future growth from 2026 onwards. Beyond Vaca Muerta, we also have the opportunity to establish our conventional oil production. Even through our mature conventional blocks have been in constant decline for many years, the successful introduction of EOR in Manantiales Behr field has transformed that reality.

On the back of that experience, we are finalizing the pilot stage in three other areas in the provinces of Santa Cruz, Chubut, and Mendoza. That are so far rendering very encouraging results, providing the possibility to increase recovery rate from those reservoirs and expecting them to serve as the main contributors to the stabilization of crude oil conventional production in coming years. We also expect to move forward with multiple exploration opportunities in coming years. For instance, during 2023, we expect to drill the RDLH well, the first ultra-deep water exploratory well in Argentina to be drilled at 105,000 m below sea level in the CAN-100 block, where we partner with Equinor, the operator, and Shell.

Should this prospect render positive results, we could be entering an appraisal phase in the upcoming years and then a capital-intensive developing phase not before 2028. Moving to our second strategic growth vector, natural gas. We expected only moderate growth in the next few years, with opportunities concentrated in the local markets and limited to supplying our renewable and increased commitment under the recent Plan Gas auction. Even with moderate growth, we shall be tackling immediate midstream debottlenecking needs, particularly involving the expansion of our subsidiaries Mega gas natural gas system to separate and monetize the richer gas out of Vaca Muerta, as well as local gathering and overground facilities. To truly unlock our shale gas potential, we will continue to move forward in coming months, together with our partner, PETRONAS, with the technical and economic analysis of large-scale LNG project.

As previously announced, the full project targets total processing capacity of 25 million tons per year and should represent the key way to place Vaca Muerta's shale gas in the global markets, turning YPF and Argentina into a world-class LNG exporter. Finally, as we take comprehensive look at the global energy markets and the transition towards clean energy solutions, we believe there is also a very relevant role for us to play, given Argentina's world-class resources in lithium and renewables. In that sense, in the next few years, we shall continue expanding our footprint in renewables through YPF Luz by developing about 100 to 150 wind and solar capacity per year, reinforcing the penetration of renewables within the local power mix and over time becoming the basis for an attractive green hydrogen opportunity.

On this particular topic, we have recently led the formation of a consortium to participate in the German initiative, H2Global, that will provide funding for a pilot project involving 30,000 tons a year of green ammonia to be sourced from outside of Europe. We also recently stepped into the lithium business by signing an exploratory concession in province of Catamarca with processing techniques to make lithium carbonate production more efficient and sustainable, still under development. We decide to tackle the lithium opportunity in a conservative way. That is why we decide to take advantage of our geology and exploration expertise, going for a greenfield project as opposite to validating elevated entry price for project that are a few years ahead in their development phase. I will now dive a little deeper on three main growth vectors.

Before concentrating in the outstanding opportunity that we have ahead of us in Vaca Muerta with total recovery resources of about 16 billion barrels of oil, let me just briefly mention that there are other opportunities for further growing oil production in Argentina in the medium to long term. The two largest and most attractive of those opportunity are the shale formation of Palermo Aike, located in the Austral Basin, particularly in the province of Santa Cruz, with total recovery resource in the order of 6.6 billion barrels, and the offshore Canseco block located out of the coast of Buenos Aires with estimated recoverable resources of about 7.5 billion barrels, where we have set ourselves on the path to explore the potential in coming years.

In that sense, we shall drill one or two horizontal wells in Palermo Aike before the end of this year, while, as previously mentioned, also planning on drilling the Argerich ultra-deep offshore well. It is clear that our major opportunity for the next five years shall be the efficient development of our Vaca Muerta acreage. Since we start with the delineation of Vaca Muerta back in 2012, we have concentrated on the development of our core hub at 215,000 acres extension are composed of the Loma Campana, La Amarga Chica, Bandurria Sur, and Aguada del Chañar blocks. The former three working in JVs with the international partners, Chevron, PETRONAS, Equinor, and Shell, and the latter being a more recent initiative, 100% owned by YPF.

Even though we have tremendous progress in terms of operational performance, we are still at a very large stage of development. In this regard, we estimate an aggregate portfolio of about 3,000 horizontal wells for full field development of the core hub assets. So far, we have only drilled about 20% of that, expecting not to exceed 50% in the next five years, despite the acceleration of our development plan. More recently, we have also moved forward with the delineating new blocks in the north and the south of our core hub, estimating total full field development potential of another 2,850 wells just considering the main blocks.

Within these blocks during 2022, we drilled six new horizontal wells - four at Loma Amarilla and two at Sur de Los Lagos blocks - and completed and tied in total of eight wells - two drilled in Sur de Los Lagos and another six drilled in the previous year in Bajo del Toro - all of which complementing activity from previous years in those same blocks. We are also verifying the efficient limits of Vaca Muerta by drilling two horizontal wells in South Mendoza and potentially drilling one or two horizontal exploratory wells in the province of Río Negro next year. Let me highlight the economic behind this development.

Based on the experience, accumulated so far in the main blocks within our Vaca Muerta portfolio, in the next five years, we expect an average development cost of around $8-$10 per barrel of oil equivalent and a lifting cost between $4-$5, leading to breakeven at net price of around $55-$40 per barrel in constant currency.

Alejandro Lew (CFO)

35.

Pablo Iuliano (CEO)

35. $35-$40 per barrel in constant currency, assuming a long-term cost of capital. Therefore, we expect our business model and key strategic focus on the monetization of Vaca Muerta oil to remain resilient among changing global dynamics. Now, turning into our second pillar. Let me start by highlighting that given the vast estimated recoverable shale gas resources in Argentina subsoil, which could last for centuries at current level of local consumption. We are committed to development LNG infrastructure to enable its rapid and efficient monetization. As is already very well known, based on estimated from the International Energy Agency, Argentina holds the second-largest shale gas reserves in the world, hosting recoverable shale gas resources of around 800 Bcf, with Vaca Muerta representing the lion's share of those resources to about 300 Bcf.

In addition, another interesting but yet untapped formation, Palermo Aike, in the offshore basin, is estimated to hold another 130 Bcf. With this level of resources and having already proven the efficiency of Vaca Muerta shale's gas on the back of different initiative plans put forward by the Argentine Government, we believe we should now embark in an ambitious journey to unlock its full potential. To that end, last year we announced the signing of an MoU with PETRONAS, which has been a partner of YPF in Amarga Chica block since 2015, to analyze technically and economically a large-scale integrated LNG project. The project under analysis considers a total liquefaction facility of 25 million tons per year to be developed in several stages, the first of which is being designed for a capacity of around five million tons per year.

It is key for the project to consider a minimum scale to justify a dedicated pipeline connecting the upstream blocks in Vaca Muerta with this facility. Under a new regulatory framework that is expected to be enacted in coming months, the export-oriented project should have no interference from local imbalances that could affect its normal operation. Far, we have been making steady progress in firming up technical considerations, and we expected FID for the first stage by the second half of next year. Also, there are alternatives under analysis that could accelerate the time to market at a smaller scale to as close as 2026. The full capacity of the first stage would probably not be ready for commercial operation before 2028.

Once and only if the whole capacity is built, we estimate this project could add total export revenues of about $20 billion annually to Argentina's balance of payment, becoming a game changer in terms of international monetary reserves, still having plenty of room to growth even further. The last growth vector of our strategic path stands for clean energies, which despite not having a major value-generating visibility in the short term and medium term, it does involve a tremendous opportunity in the long term. As mentioned before, Argentina has unique resources that can help it become a world-class player of the energy transition. With an estimate to over 100 billion tons of lithium carbonate equivalent reserves, our country stands as the second-largest lithium reservoir in the world, representing more than 20% of worldwide lithium resources.

Given the expectation for lithium-based energy storage to become mainstream in the not-so-distant future, we find ourselves extremely well-positioned to advance on this opportunity. To this end, as mentioned before, we have entered into our exploration concession agreement in Catamarca Province on a 20,000 hectares block to explore for economically viable lithium brine concentration. We have already finished work on surface exploration through seismic surface sampling and vertical electric sounding, and now plan to drill our first exploratory well within the next two months. Subject to positive results, we shall continue with subsequent development phases which, within five years, will require about $50 million in total investment.

Finally, should the different exploratory phases render positive results, we should enter a commercial phase involving the construction of industrial-scale ponds, carbonate plants, and other facilities required, with an aggregate investment of about $300 million-$500 million to reach a production plateau of about 15,000 tons-25,000 tons per year by 2030. As I already commented, YPF has a unique opportunity in coming years to participate in the development of green hydrogen, taking advantage of Argentina's competitive renewable energies resources. It is important to highlight that electricity costs represent a large portion of the electrolysis process to produce hydrogen. Making efficient the renewables are key factors to be competitive in green hydrogen generation.

The opportunity to build large scale onshore wind farms in southern Argentina with average capacity factors well exceeding the world average that could be conveniently located near deep-water ports on the Atlantic Ocean, provides for a unique competitive advantage for future green hydrogen development. This potential efficiency has been laid out in recent research piece released by Bloomberg New Energy Finance that shows Argentina as a potential top three green hydrogen producers. Based on a comparison of levelized cost of production and adding the scalability of wind power generation in Patagonia, we could consider a scalable green hydrogen project that could grow to be as large as 8.5 MTPA in a single location.

If we limit it only to the maximum wind power capacity that could be gathered through an efficient isolated transmission system, aggregating about 100 GW of installed capacity, equivalent to 2.5x the total installed capacity currently available in Argentina. Although we are convinced of the opportunity of monetize our vast high hydrocarbon resources, we remain very conscious of the effort required to minimize our carbon footprint. We are well aware that global energy transition is not going to happen overnight, and that the diversification of 80% fossil-based current energy matrix will require a decisive commitment and will definitely not be cheap.

In that sense, when considering sustainability in a broader way, the social impact of more expensive energy will crash with the address of climate change if we do not contribute with more affordable, more reliable, and less carbon-intensive fossil while transition to a cleaner matrix. To that end, given our growth prospects and value generation proposition coming primarily out of our Vaca Muerta development in coming years, we are identify the key opportunities to reduce our Scope 1 and Scope 2 CO2 emissions, even though our Vaca Muerta operations already reached related, relatively low carbon intensity levels in 2022, averaging 16 kg of carbon dioxide by BOE. When have many initiatives that should allow us a further reduce that metric to about 15 kg by 2023 and to less than 10 kg by 2030. Let me give you some examples of these initiatives.

With more than 50% of current carbon dioxide equivalent emissions in our Vaca Muerta operation coming from flaring. When have already designed a plan that should continue to evolve over time to invest in liquid separation, compression reliability, and gathering, that should allow us to completely eliminate routine flaring and minimize total flaring by 2030. In addition, deploy an leak detection and repair program and with vapor recovery units, furnished facilities now being our norm. We also expect a significant reduction in methane fugitive emissions, well above the 30% commitment by Argentina during COP26. Last but not least, incorporated technology to electrify our operations, including a first electrical powered rig and introducing dual fuel frac sets should also contribute to reduce our carbon footprint as early as this year.

Beyond that, we are challenging ourselves towards an even more ambitious objective, yet to be firmed up to commit to net zero Vaca Muerta operations by 2030. We shall continue our lenses in coming months to put together a comprehensive plan to reduce the carbon intensity of Vaca Muerta operation and to identify different alternatives to manage reducible emission, including nature-based solution, CCS, CCUS projects and or carbon bonds that will allow us to determine the real viability of such a commitment. Now let me turn to Alejandro to go through the main figures that relate to the strategic outlook.

Alejandro Lew (CFO)

Thank you very much, Pablo. Well, let me, as couldn't be in any other way, right? The CFO talking about the numbers. Let me just start by commenting a little bit and tackling on what the platform from which we are gonna start our plan for the next five years, which is what happened in the, in the last two. Very quickly, we went through the video already. Just to summarize it, we clearly managed to stabilize our production in 2021. That was the big challenge that we had ahead of us after five years of continuous decline, which was further accelerated in the pandemic where we declined by 10% in our hydrocarbon production.

2021 was the year where we challenged ourselves to manage to stabilize the total oil and gas production, and we managed to do that through a very conscious approach and focusing on our CapEx plan since very early on at that year, even though we were still in the middle of or coming out of the worst-ever crisis that the company had lived in its hundred-year history. After that, we managed to go into 2022, projecting or forecasting the largest organic growth in the company's history. Sorry, in the last 25 years, actually. We managed to achieve that, even though we were slightly behind our expectations, where we started the year announcing a guidance of 8%, which then increased by almost 9%.

Finally, the number came at 7.2 in oil and gas. Still, that was primarily the result of a decline in our gas production in the fourth quarter due to lack of demand. At the end of the day, we still feel very comfortable with our achievement and particularly with how we managed to grow our oil production, which is, as we have mentioned already, our key priority. When looking into that also, Vaca Muerta, our shale operations, continue to be the main responsibles for all of this growth. In 2021, we managed to grow our shale oil and gas operations by 36%. In 2022, as mentioned in the video, it grew by 45% and 47% for oil and gas, respectively.

Clearly we feel very proud of those achievements and of the operating efficiencies that we managed to achieve in our Vaca Muerta operations along these last few years. This clearly has allowed us to improve profitability, recover a healthy operating cash flow. In that way we went back to levels of EBITDA, which top the best years that this company had. As we mentioned, 2022, we reached almost $5 billion. That was in line with our target. That represents the third-largest EBITDA mark in the company's history.

While we did that, we clearly managed to accomplish our investment plan's objectives, being able to not only tackle the initial investment plan that we announced at the beginning of the year, but further than that, we increased that by another 10% and we deployed with an exceptional amount of activity in the fourth quarter of $1.4 billion invested. We accomplished our target of $4.2 billion of CapEx, which does not only accomplish, as I said, our aims at production growth, with the exception of, as I said, the natural gas decline in the fourth quarter because of lack of demand.

Also positions us very well for taking or tackling the opportunity that we have ahead of us to continue the acceleration of the monetization of the Vaca Muerta resources, as we are gonna comment in a minute. Finally, clearly, as a result of this, the positive free cash flow that we had in the last three years. 2020, for the bad reason, clearly, we had to cut back on the CapEx plan on an aggressive way because of the financial restrictions. After that, clearly 2021 and 2022 ended up being very positive years for cash flow generation. All in all, among these three years, we accumulated about $2 billion in net cash flow.

Even though in the fourth quarter of this year, due to the acceleration of the CapEx plan, we had a negative free cash flow of a little bit over $150 million. Through that, we ended the year with a very healthy net leverage ratio of 1.2x, which clearly forms one of the pillars or the basis in terms of financial flexibility for tackling the opportunity that we have ahead of us. What, as mentioned in the video, what does this mean for our plans for 2023? We have established ourselves in an even more ambitious plan than in the last couple of years.

We are targeting for 2023 to invest about $5 billion in, clearly, in all of our operations, but with a focus remaining in our upstream operations, where shale will remain clearly the largest or will gather the largest of our attention or our focus. On that regard, we are expecting about $2.3 billion to invest in our shale operations. Clearly, our focus, as mentioned before will remain in oil. We believe that, as Pablo mentioned in the strategic path, we believe that the short term, the next five years, is gonna be mostly about monetizing or accelerating the monetization of our crude portfolio.

Clearly, with a slower growth in gas, knowing that gas we will have further room or further time to tackle that opportunity as we move into LNG and become a net exporter of natural gas in the future. Clearly, our CapEx plan is aligned to that with about 2/3 of our upstream investments going to oil and 1/3 roughly going into natural gas. We're looking into the breakdown of shale. What we have is that, of course, the main focus is gonna be on well construction in drilling and completion activities. Still in this year, we are having a larger proportion of investment in facilities than is the norm for the long run.

For this year, we are targeting slightly over 30% or roughly $700 million in facilities investment related to not only tackling the facilities that are needed in the short term, but also preparing ourselves for the outstanding opportunity that we have in the years to come. Many of these infrastructure investments, it includes a portion of midstream, but mostly it has to do with gathering of natural gas and, or on-ground facilities for oil treatment and gas treatment that will unlock and enable the opportunity, the growth opportunity that we see in front of us. With this CapEx plan, we are targeting to grow our overall hydrocarbon productions by about 5% this year, 2023.

Clearly, focusing on the oil growth, which we are expecting to achieve about 8% year-over-year growth in oil. While we expect end of year, basically December, or fourth quarter 2023 compared to the year before, to be growing by about 10%, so closing on very low double-digit rates, but of course, very healthy and ambitious growth rates. On the other hand, as consistent with what I was and what Pablo mentioned before, given our low expectation for growth in natural gas in the coming years, we are targeting only a 3% growth in natural gas, mostly related to tackling or supplying our commitments or renewed commitments under the most recent Plan Gas auction.

Here, one relevant thing, you probably recall, last year we had announced, so we committed to a maximum net leverage of 2x for 2022. We clearly over-accomplished that, finalizing or finishing the year at 1.2x. For next year, as we are expecting this ambitious plan to result in a negative free cash flow for the year, we would expect to take, or we are planning to take on extra net new debt. We are committing to still a prudent financial policy, but allowing ourselves to grow or enlarge our indebtedness, given the very healthy level that we are starting with.

For next year, we are basically committing to not exceed 1.75x in terms of net debt-to-adjusted EBITDA along the year. Now into the longer run, I would say. These are clearly not a full-blown business plan, but at least some broad ideas in terms of the numbers that we are working on. As we said in the video, next year or this year, 2023, is clearly gonna be a challenging year. We expect volatility both coming from international markets, as you well all know, and as well as in the local market. It's difficult to put together a comprehensive medium-term business plan with that volatility right in front of us.

We still believe that the levels of capital efficiency that we have already achieved in our Vaca Muerta operations, we believe that provides us with enough resiliency, as Pablo was mentioning. For the first time ever, we are announcing break-even prices for our shale oil operations. As Pablo was saying, net break even at net prices of $35-$40 per barrel for the next five years in constant prices. Clearly that provides us with enough resiliency to be able to show or demo or explain the views that we have for the next five years, right? Which could be faster or slower, we believe that in five years' time, we should be definitely around the variables or the metrics that we are presenting here.

In summarizing it, we are expecting to double our total oil production when comparing 2027 to 2022 results. We are expecting to grow a moderate 30%, roughly 30% our gas, total gas production. We are planning on doing that by achieving to stabilize our conventional oil production, and this is mostly through the investing in EOR, in tertiary production, where we expect total tertiary production to reach about 20% of our total conventional production by 2027. That is part of investing about $800 million in tertiary production along the years. Through all of that, we expect to be able by the end of this five-year period to be exporting about 35%-40% of our total oil production.

That is roughly in terms of numbers, that would be about 150,000 barrels of oil per day. If we manage to do that, and based on, of course, some assumptions in terms of prices, that could potentially be representing about 1/3 of our EBITDA by 2027. If we manage to do all this, we will be probably reaching the largest levels of oil and gas production in the company's history, by reaching about 800,000 barrels of oil equivalent by 2027, and reaching about 450,000 barrels of oil just in terms of oil.

As we also see in the second column there, in terms of, particularly in terms of shale, we are expecting to multiply by four our total oil production and doubling our shale gas production. This would basically represent about 70% of our total hydrocarbon productions by 2027. In doing this, it's not that we are projecting or assuming, I would say, let me say, lunatic levels of further operating efficiencies, but rather we definitely believe that there is some room to further improve in terms of drilling, particularly in drilling and completion. Given cost pressures, we are not projecting massive reductions in development cost, but rather assuming about a 10% door-to-door in this five-year period, 10% reduction in our overall development cost.

Going into numbers for this, if we manage to do all this, we would require an average of $5 billion-$6 billion in annual CapEx, so similar levels to the ones that we are putting in place for this year, probably slightly higher. Within that range, we could accomplish, given the combination of factors that we are putting in place, we believe that with a level of $5 billion-$6 billion in annual CapEx, we could accomplish these levels of growth opportunity.

As Pablo was saying before, it was implied in the charts when he was talking about monetization of oil, we would be drilling in this plan about 1,200 wells or horizontal wells of oil and about 500 horizontal wells of gas in our shale operations. That is consistent with this amount of CapEx, and that would be consistent with the production growth that we are showing here. In doing that, as mentioned before, 2023 is likely to be a year of negative free cash flow and probably 2024 as well.

We clearly see with a ramp-up in production that we expect to be accomplished through this focused CapEx plan, we expect to become a structural positive free cash flow generator from 2025 onwards. In that way, we are establishing an objective to top our net leverage ratio at 1.5x at the end of this five-year period. We expect to continue achieving further decline in our net leverage ratio. Even in doing that and capping it at 1.5x by the end of 2027, we are estimating to have a total of about $6 billion-$9 billion in remaining resources, cash resources to be deployed to long-term investments.

I know that many of you are wondering when we are talking about the massive or large LNG project, how we are assuming to finance that. Clearly, it's part of the plan and of course, we have to deliver on this ambitious plan. We believe that the capital efficiency that has already been achieved in Vaca Muerta allows us to think of this not as a dream, but as a palpable reality that we, of course, need to put in place in coming years. To finish up on these numbers, and let me take some time on this chart or on this slide.

We are here putting, sort of, sources and uses, comparing what was the period of the two years of 2021, 2022 with the next two years, 2023, 2024, and then the three years beyond that, 2025-2027, clearly separating between a negative free cash flow period on 2023, 2024 and then a positive free cash flow period in the three years after that. When looking at this, of course, in 2021, what we are seeing is that the way our cash flow of operations was more than enough to cover for our interest expenses and our CapEx plan, and that's why we had excess cash that was deployed towards reducing our net leverage.

For the future, of course, we try to put some sensitivity analysis to different scenarios in terms of international oil prices. There we are playing with levels of Brent at $60, $80, and $100. I would say that our clearly we are centering it around $80 because that's sort of where we expect Brent prices to be, I would say in a conservative way in the coming years. Clearly, forecasts in the industry are all over the place and it's gonna be extremely hard to pinpoint a specific number at this specific point in time. That's why we wanted to show a number range of what our cash flow could be under these different scenarios.

When we look into 2023, 2024, the range of the years for the average for 2023, 2024, we see that with the roughly average of our estimates, which would be the second part of the blue chart, the middle light or middle solid blue column in the middle of the chart, we see that that will be slightly short of cash to completely fund our interest expenses and our CapEx plan. And that's why we are saying that we are likely to be a negative free cash flow generator during those two years. However, if Brent prices were to rally once again, of course, we would not, and let me tackle clearly local prices.

We would probably not expect, as was the case last year and probably is gonna be remaining this year, we would not expect to fully track those international prices, although we are not expecting to be completely decoupled from the international reality either. For as long as we see international prices going either rallying too fast or well beyond historical averages, we believe that there is a higher chance for the local market and YPF to have to absorb some distortion in terms of local prices to international parities, of course, both in the crude oil side and in the fuel side. That is just, you know, looking at reality. That's has been the case, in the history.

For as long as international prices go back to more or closer to historical levels, we assume that the local market tends to converge to international prices. That's how we are sensitizing also our numbers. In this sensitivity analysis, it's not that we are assuming that if Brent goes to $100, that we are gonna capture locally the full benefit of that. Of course, as we grow our export base and clearly as the rest of the market benefits from a larger export base, that will also allow the local market or the local prices to absorb some of that distortion.

In summary, for 2023, 2024, under the scenario of rallying international prices, even though considering some further gap in local prices to international parities, we could become or we could be, again, cash flow positive. Clearly, this is a combination of, you know, 20%, about 20% of our revenues that are priced at international prices. Those are products out of our refineries. We keep on saying this, probably we are boring you on this, but we have about 20% of our revenues coming from products of our refineries other than fuels that are sold either through exports or in the local market, but priced at international parities. Also clearly some correlation in local prices to international parities that also help us in benefiting from that rally. That's the sensitivity analysis.

Let me just mention it's very small in there. There is a very light green portion of that bar in the 2023-2024 period. We are considering the possibility of resuming an active dividend policy strategy. Of course, that will depend on whether we manage during those two, first two years of our five-year outlook, whether we manage to make sure that we can fund, first of all, our opportunity in terms of capital investments, which we believe that that's the first priority to generate value for our shareholders. For as long as we manage to do that within the levels of financial prudency that we mentioned, keeping at below 1.75x net leverage, we would expect to at least have some dividend being paid out.

And that would also depend on the ability to access the FX market on the back of regulation that would provide that, but that still requires further implementation to be fully in place. Subject to those two variables, we would expect as early as this year and same for next year, which are similar years in terms of financial flexibility, to have at least a modest dividend to be paid out. Again, depending on those two variables, right? Prioritizing capital investments and also depending on the ability to access the official FX under the current regulation, which is basically Decree 277.

Moving into the third range, the years 2025-2027. Clearly, we there see that our plan becomes resilient even under much lower global prices. What we see is that even with Brent prices at $60, we should be able to fully fund not only our interest expenses, but also our capital investment plan, as well as more, I would say more reasonable or more in line, with I'm not gonna say industry standards because there is no standard these days, but clearly a larger dividend payout ratio.

Of course, when we look into the range of expected prices and closer to the $80, that's where we start to be cash flow, significantly cash flow positive, and that's where we generate the resources that we were mentioning that could be generated and be freed up to invest in long-term capital plans or projects in the future. With that, I will turn to Pablo for some key takeaways. Pablo?

Pablo Iuliano (CEO)

Thank you, all. Thank you, Alejandro. Before ending our presentation and jumping into the QA, let me briefly recap the key takeaways from our strategic outlook. It was well known for many years that Vaca Muerta had a tremendous potential, given the level of recoverable resource that set the Neuquén Basin as one of the few super basins around the world. Over the years, we have led the industry in transforming Vaca Muerta from a dear dream into a palpable reality. Teaming up since the very early days with reliable international partners that brought their experience to Vaca Muerta was a key factor that not only contributed with capital injections, but also incentivized technical innovation and operational efficiencies.

Those partnerships have allowed us to undergo a very productive learning curve, enabling us to rival top of the class shale producers into the USA in terms of capital efficiency, in spite of our smaller scale and younger development stage. We therefore have aligned our short- and medium-term strategy to be as focused as we can in accelerating the monetization of these very unique resources. In doing so, we should grow Argentina's role as a relevant energy exporter, expanding on the crude oil export, replacing the current natural gas imports, and allowing the country to become a relevant worldwide LNG player.

In the long term, we shall embrace clean energy solutions based on Argentina's unique natural resources, with opportunities to become a world-class producer and exporter of green hydrogen and a large exporter of lithium, a key mineral that should enable further penetration of intermittent renewables within the global energy matrix. The opportunity is clear, and we are determined to grasp it.

Alejandro Lew (CFO)

Thank you very much, Pablo. Sorry for... We are trying to coordinate for some closing remarks from the Ministry of Economy, who was unable to join us physically, but who wanted to give at least a virtual, I would say a salutation, if you may, call it, and provide some closing remarks. We are trying to coordinate. That's why I was looking at my phone. We are trying to coordinate the specific timing, but I think he's gonna be with us in just one or two minutes, the virtual connection. In the meantime, I just wanna mention we are of course gonna handle a Q&A session mostly directed to our analysts.

As you know, this is formally also the conference for the financial results of 2022. We wanna provide, as we typically do, a space for analysts to ask any questions that they want. There are some of they here present in this room and many of them virtually connected. We will try after the closing remarks, we will handle that Q&A, and we will prioritize those questions. Of course, then any question from the audience here physically, we can of course undertake that as well, if time permits.

If you have any question that you would like to raise, in the order of organization, if you would please write it down. There is a piece of paper and pens on the tables, and we will collect them. Again, depending on how many questions we get from analysts, then of course we could also leave some space for answering some of the questions of you here in the room. I'm not very good at that. Okay, very good, they're asking me to extend this. As you know, I'm a financial guy, so I don't know how to do that. I could be talking a lot more numbers, if you want, but I guess that will bore you.

Maybe what I would suggest, I know it's gonna be a discoordination, maybe the people coordinating this will kill me, maybe you can grab some coffee while we wait for the Minister's closing remarks, then we go into the Q&A. Maybe that's a good idea, no? Yeah, let's do that. There he is. Sorry. Okay. I didn't see that.

Sergio Massa (Minister of Economy)

Bueno, muy buenas tardes ya para nosotros en Argentina. Muy buen mediodía para ustedes en Nueva York. La verdad es que me hubiese gustado estar allá acompañándolos, y ese era el objetivo. Desgraciadamente, obligaciones propias del cierre de la revisión del cuarto trimestre y la prospectiva 2023 de Argentina en su programa con el fondo me obligaron a seguir trabajando en Buenos Aires para anunciárselo cuanto antes al mercado. Así que por eso estoy acá, en Buenos Aires, en el edificio de YPF, un símbolo de Buenos Aires y de Argentina, y un símbolo del liderazgo de nuestra empresa en términos de lo que representa para el sector empresario y para el sector energético de Argentina.

Estoy convencido que con lo hecho hasta ahora en nuestro país, logrando atraer compañías internacionales al desarrollo de Vaca Muerta, con miles de pozos perforados y una producción cada vez más importante en la matriz energética argentina, hemos sembrado la semilla para tener un país exportador de energía y ser un actor relevante en el mercado de crudo, pero aún más en el de gas, sea este a través de gasoductos en nuestra región o a través de la licuefacción y el GNL para todo el mundo. Hoy tenemos niveles récords de producción: hidrocarburos con 573,000 barriles por día de petróleo y 134 millones de metros cúbicos de gas por día, cifra que nuestro país no veía desde hace 10 años.

Cuando digo que hemos plantado la semilla, significa que todavía nos quedan grandes desafíos y proyectos para que esa semilla crezca fuerte y en el futuro dé sus frutos. Estos desafíos son reales y concretos, y significa la siguiente etapa en el desarrollo de nuestros recursos energéticos. Hoy Vaca Muerta es una realidad. Cientos de miles de barriles se producen y todos los años se perforan cientos de nuevos pozos. El desafío ahora es arriba del subsuelo, cómo ampliamos la capacidad de transporte existente, que hace décadas no tiene mayores cambios en nuestro país, y la adaptamos, mejoramos y repensamos para no solo llegar a lugares donde aún hoy no llega el gas, sino también para facilitar nuestra exportación al mundo. Más allá de Vaca Muerta, Argentina tiene como en Estados Unidos u otros plays no convencionales, también desafíos por explorar y desarrollar.

Ese potencial es enorme y estoy seguro de que la oportunidad es ahora de ponerlos en valor. Es así como YPF, junto a Compañía General de Combustibles, está próxima a explorar la Cuenca Austral en la formación Palermo-Aike. Esa formación es la roca generadora que, como Vaca Muerta, ha generado buena parte de los hidrocarburos que hoy se producen en Santa Cruz y Tierra del Fuego en los últimos 40 años. Nuestros geólogos estiman que puede llegar a contener más de 10 billion barriles equivalentes de petróleo. Hoy existe infraestructura cercana y el potencial de exportación a Chile o también vía Tierra del Fuego al océano Atlántico. El programa es perforar este año los primeros pozos y de alguna manera confirmar el potencial para un eventual desarrollo.

Para que se entienda, estamos hablando de que Palermo-Aike representa un tercio de lo que representa Vaca Muerta en términos de barriles y en términos de TCF de gas. Representa la oportunidad de la Argentina de multiplicar aún más su capacidad y su sueño exportador de energía. Estas oportunidades de crecimiento nos pueden llevar en los próximos cuatro años a superar largamente el millón de barriles por día de petróleo y alcanzar 170 millones de metros cúbicos diarios de gas, un 30% superior a lo actual. Estoy convencido de que el rol de YPF en empujar la mayoría de estos proyectos es una enorme oportunidad para la industria de hidrocarburos en general y para el país en su conjunto.

Para ello hace falta decisión y acompañamiento con políticas públicas acordes que incentiven la producción y el trabajo de esta industria, cuyo efecto multiplicador en nuestro país es enorme. Quiero mencionarles algunos de esos proyectos más relevantes que una vez realizados nos permitirán alcanzar esos objetivos de producción, destrabando e impulsando el sueño y el potencial energético verdadero de nuestro país. La reactivación del Oleoducto Trasandino, un ducto que nos permite exportar petróleo crudo a Chile y que, producto de la caída de producción en el país, se encontraba cerrado y abandonado desde hace más de 10 años. Hoy YPF ha iniciado la reactivación de ese Oleoducto, que en los próximos meses nos permitirá exportar petróleo a nuestro hermano país de Chile con una capacidad de 18,000 metros cúbicos días. Esto implica divisas y trabajo argentino de calidad, ampliando los horizontes productivos de nuestro país.

Se suma la construcción de un nuevo oleoducto llamado Vaca Muerta Norte, con una inversión de $260 million, que permitirá conectar Vaca Muerta con el oleoducto Trasandino. Poniendo en marcha la ampliación de Oldelval, oleoducto de 40 años aproximadamente, que lleva el crudo de Neuquén a los puertos de la provincia de Buenos Aires. Con la consecuente ampliación de la terminal Oiltanking a los efectos de darle storage a ese nivel o a ese volumen de crudo. En este caso, vamos a duplicar la capacidad de transporte para mediados de 2025. Para finalizar, el otro gran proyecto en inversión logística que YPF está impulsando es el oleoducto Vaca Muerta Sur, que permitirá conectar Neuquén con el océano Atlántico.

Este proyecto, que en esta etapa de ingeniería básica y adquisición material, una vez finalizado, implicará la inversión de $200 million y permitirá transportar 60,000 metros cúbicos de petróleo, ampliable a futuro. Todos estos proyectos de ampliación de la capacidad de transporte de petróleo implican una inversión superior a los $4 billion para los próximos 2-3 years, con una capacidad de exportación de más de $10 billion. Se suman, obviamente, a estos proyectos los nuevos gasoductos para evacuar el gas de Vaca Muerta. Entre ellos, el que ya está en construcción y que aspiramos finalizar el 20 de junio: el Gasoducto Néstor Kirchner, con una capacidad de 24 million metros cúbicos para la primera fase y otros 20 million metros cúbicos para la segunda fase.

Este proyecto contempla una inversión de $3,400 million de dólares y además, la sustitución de $2,000 million de dólares al año de importaciones para la Argentina. Otro proyecto fundamental para nuestro país, obviamente, es el Reversal del Norte, con el objetivo de abrir Vaca Muerta a Bolivia, a Brasil y a Chile desde el norte, con una inversión de $740 million de dólares, que tiene un primer tramo de financiamiento ya aprobado por la CAF de $540 million de dólares. El proyecto más importante para transformar nuestras moléculas en exportaciones, que puede significar un cambio de paradigma en Vaca Muerta, es la posibilidad de que Argentina se convierta en un jugador mundial en la producción de GNL o gas licuado.

Para ello, YPF se asoció con PETRONAS, la compañía estatal malaya, cuarto jugador mundial en la producción de GNL, con más de 40 años de experiencia en esta actividad. Esto implica una inversión aproximada de $10 billion solo en la primera etapa, lo que le permitirá a nuestro país producir hasta 5 million toneladas año de GNL. La inversión en pozos, ductos y plantas de tratamiento de gas producirá un impacto en varias generaciones, miles de puestos de trabajo, impulsando el desarrollo de nuevas industrias y fortaleciendo la economía de cientos de pequeñas y medianas empresas proveedoras de insumos y de servicios. Cuando el proyecto esté finalizado, se podrán exportar más de 25 million toneladas año de GNL, convirtiendo a nuestro país en un actor muy relevante en el mercado mundial de gas.

En este sentido, y para acompañar esta iniciativa de YPF, es que hemos decidido impulsar un proyecto de ley que establezca un régimen y marco adecuados desde el punto de vista de la disponibilidad de divisas y de los regímenes impositivos para darle seguridad jurídica en los próximos años a quienes desarrollen inversiones de este tipo. Esto es poner en valor nuestros recursos con decisiones políticas que no miran el corto plazo, sino que apuestan a desarrollar y agregar valor a nuestros recursos naturales. Son proyectos de ampliación de capacidad de transporte que nos permiten resolver los cuellos de botella ya existentes y, a lo largo de los próximos años, triplicar la capacidad instalada de Argentina, lo que permitirá al país ser un verdadero exportador de energía. Es clave para eso que tengamos la capacidad de asociarnos con los jugadores mundiales y de financiarnos con reglas de mercado.

Por eso, YPF llevará adelante proyectos de joint venture para empujar, impulsar y promover la exploración y explotación en Palermo Aike, a los efectos de acelerar los procesos de inversión.

Por otro lado, también a los efectos de consolidar el crecimiento que los resultados de balance mostraron como resultados de revalúo de la acción del último año, es que es decisión del Ministerio de Economía y de quienes conducen, centralmente Pablo González, la compañía, que a la próxima asamblea de accionistas del mes que viene, el Estado argentino vaya con una propuesta de distribución de dividendos para consolidar a YPF como un jugador, no solo en el mercado energético de hidrocarburos, sino también en el sistema financiero, a los efectos de seguir recuperando el valor de una compañía que es la nave insignia del crecimiento y desarrollo hidrocarburífero argentino, pero además es una de las naves insignias de la Argentina en el mercado financiero internacional.

Quiero felicitar por la performance al equipo de conducción de YPF, no solamente por el resultado en los balances, sino por volver a poner a YPF como un jugador central en el mercado energético y en el mercado financiero internacional. Desde Buenos Aires les mando un abrazo y les transmito un enorme sueño, que es que así como el sector de agronegocios ha sido durante muchos años uno de los grandes impulsores de la generación de divisas en la Argentina, en los próximos 20 años, el gas y el petróleo transformen a la Argentina definitivamente teniendo una matriz exportadora con dos ruedas o dos turbinas que alimenten ese desarrollo económico. Un abrazo enorme y muchísimas felicitaciones por estos 30 años.

Margarita Chun (Investor Relations Manager)

Thank you so much for your time, Minister, Economy Minister Sergio Massa. Now, we are gonna start to read the questions that we have been receiving during the whole event, so you can tell us. Third question... Third person have four questions. Frank McGann from BofA. He wants to know if the official FX weakness, more notably over the next six to 12 months, how is this likely affect your cash flow generation? How long could it take to adjust gasoline and diesel prices? Follow up on effects on CapEx.

Alejandro Lew (CFO)

Thank you, Frank, for your question. I guess you're listening. Clearly that's the million-dollar question, right? Of course, how we are gonna tackle price adjustments. Of course, as was mentioned before, we would expect to continue in a global environment with prices well above average. We would expect to continue, of course, aiming at aligning ourselves. Although we understand that reality to be hard to achieve as was demonstrated in recent months or in the last couple of years. Still, if you look at how 2022 price adjustments took place, we managed to improve our dollar-denominated prices or our dollar equivalent prices of fuels in the local market by close to 30%.

Tracking very closely what happened in the international markets, of course, with some lags, like what we have in the second quarter, where we got to a point where we were almost at 40% discount to international reference prices. We finished the year at closer to 25%. What had been seeing along 2023, so far we've been in a range of 15%-20% discount to international prices. We will expect to continue adjusting prices in a way to compensate to the largest possible extent for the devaluation of the currency.

Then also, depending on the evolution of international prices, of course, maintaining a relevant correlation to those variables. In terms of how quickly we could adjust among a steep devaluation scenario, if that were to occur, which no one have the ability to predict precisely, that will depend. In the past, there were periods where there was a faster adjustment and periods where there was a slower adjustment. Clearly, we would aim at adjusting as fast as possible to avoid any deterioration in our dollar margins. That is very hard to predict. Of course, we will need to remain very conscious of the realities of the local economy, the inflationary environment.

Of course, taking all of those variables into account, we will aim at maintaining our dollar margins as close to current prices as possible. Of course, if we were to suffer, if the country were to have a steep devaluation and if we wouldn't manage to adjust very quickly, of course, that will affect our cash flow generation. That's why, you know, we said that we are going to prioritize capital investment because we believe that that's the way to generate the most value for our shareholders. If we were to require to cut back on those CapEx plans to maintain financial prudency, that would be the idea to tackle that. So far, we are not expecting that to happen. We will expect to maintain healthy cash flow generation in the months to come.

Margarita Chun (Investor Relations Manager)

The second question that Frank McGann from BofA has is: How are you planning to structure the investment in LNG and Vaca Muerta Sur? What stake would take YPF? Will be structure and independent equity entities. Sorry. How much should be financed through loans from export agencies or other sources?

Alejandro Lew (CFO)

Okay. In terms of the LNG project, we are still on an early stage of analysis of the project. Of course, we have signed the MoU with PETRONAS. We are working very closely together on the technical and economic analysis to get to a final investment decision, as was mentioned in at some point next year, with the idea of having an FID before the end of next year. We have not fully tackled the financing of the project yet. Of course, we still have some time ahead of us. We definitely are not aiming at...

Clearly, we would love to, but being realistic, we are not aiming at a typical 80%-90% project financing for such a project, but rather a much more conservative level significantly lower than that. Both parties understand that to get to FID, we need to clearly put together a clear financing plan that we will, of course, discuss internally first and negotiate or work with a financial institution towards that. Definitely we would expect probably some multilateral support, even though many multilaterals are closed these days for financing hydrocarbons.

We still believe that there are some others that are capable of looking at financing natural gas, like, you know, the Corporación Andina de Fomento has recently announced a potential financing of infrastructure, pipeline infrastructure in Argentina, understanding that natural gas is a transition fuel. We believe that the same way that CAF has done, we expect to be able to work with some multilateral agencies and ECAs to also put together a reasonable financing plan for that. All in all, of course, it's gonna require a further equity contribution from the partners.

That's why, as mentioned in the presentation, we believe that our plan for coming years should enable us to provide our fair share of that investment with the amount of resources that we are likely to release through primarily the monetization of our crude oil opportunities.

Margarita Chun (Investor Relations Manager)

Third question is, what is the minimum level of CapEx necessary to maintain your operations with existing levels of oil and gas output?

Alejandro Lew (CFO)

Okay. We tackled that question in the past. Of course, the larger proportion of shale in our mix makes capital intensity more relevant, as well as cost pressures or cost increases also have increased our overall minimum CapEx required. There is no specific number that I can provide, but I would say that probably it's in the range of $3 billion-$3.5 billion per year, at current prices, at current cost levels, to stabilize our hydrocarbon production level.

Margarita Chun (Investor Relations Manager)

Last question from Frank McGann from BofA is, how should we think of the decline in oil reserves? Given the oil growth expected, do you see significant upside reserves?

Alejandro Lew (CFO)

If I understood the question correctly, in terms of our forward-looking for the evolution of reserves, clearly there is a particularity when considering P1 reserves for shale resources, because it's a different way of assessing and appraising those than comparing to conventional resources. You need to be developing your resources to be able to fully transform them into P1.

Clearly, as we move into full development of Vaca Muerta and mostly the core hub and also the North and South blocks, we would expect to continue generating healthy recovery ratios in terms of how we manage to maintain our reserves, P1 reserves in a healthy level compared to our production levels, which is what we have managed to achieve last year and this year as well. Even though we clearly this year have grown our production by 7%, both in BOEs and also in oil in particular, and still we managed to grow our P1 reserves by 4%, with a reserve replacement ratio of around 124%.

Margarita Chun (Investor Relations Manager)

Luiz Carvalho from UBS has three questions. What are the challenge, risk in case the country continue facing tough economy environment, high inflation and devaluation?

Alejandro Lew (CFO)

Sorry, can you repeat the question?

Margarita Chun (Investor Relations Manager)

Yeah, sure. What are the challenge or risk in case the country continue facing tough economy environment, high inflation and/or devaluation?

Alejandro Lew (CFO)

I'm not sure that the question is clearly understood. If it's clearly a political question on how, you know, the country could evolve and the different political scenarios, of course, I'm not the person to talk about that definitely. If the question is more related to, you know, how we would expect YPF to continue, you know, evolving and the different scenarios, I would just say that, you know, we heard it from the Minister, we heard it from our Chairman and our CEO. I think the resilience that has already been achieved and the focus that the country has on monetizing and transforming the energy sector into a sector that can help transforming or leading a transformation of Argentina's balance of payment.

I think that the realities for the sector and for YPF should be positive in any political scenario. Clearly, we believe that if anything, the sector should be part of the solution to any complicated economic situation.

Margarita Chun (Investor Relations Manager)

Second question from Luiz Carvalho from UBS. Company had a good year managing to increase prices and balancing cash flow. What is the outlook for 2023? What can we expect in terms of further price adjustment?

Alejandro Lew (CFO)

I already tackled that, so, I guess for the interest of time, I would just keep it. Clearly, yeah, I think, it was more than answered before.

Margarita Chun (Investor Relations Manager)

Okay. YPF and Argentina has relevant infrastructure projects undergoing. What are the main priorities? How are they going to be finances? Please update on main projects.

Alejandro Lew (CFO)

I think it was already also... Most of it tackled in the presentation. We, for coming years, we have a very focused approach and strategy in investing in mostly and monetizing our oil opportunities, as a primary objective, while we continue to supply our commitments of natural gas, and while we work in pilot projects for the long-term energy opportunities, as Pablo mentioned in lithium and in hydrogen, that we definitely believe that are part of the future.

In the short term, the main objectives or the main focus is monetizing oil and investing in the infrastructure that is required to be able to monetize that oil and of course, to continue to handle the largest portion of our Vaca Muerta gas production out of our total portfolio. Midstream, the bottlenecking, the Minister mentioned, you know, the several projects of oil midstream that YPF is leading, some of them being joined by the industry, some of them, or, I would say, most all of them joined by the industry at different levels of participation.

Those are key to being able to generate the opportunity or to truly make the opportunity come true of becoming a relevant and large oil exporter. As you probably know, the country has already become a net exporter in 2022. YPF has still focused in fully supplying our own needs in our refineries. Down the road, we believe that the opportunity to continue to grow exports it's very appealing. It's a great opportunity for the country and the pipelines that need to be in place and the new Vaca Muerta South project that YPF is leading for putting together a whole new pipeline system connecting Vaca Muerta to the Atlantic into a new port terminal.

Those are the clear key projects that infrastructure projects that we have ahead of us. Of course, while we do that, we continue to invest in our multi-year program for revamping our refineries. That's part of also becoming clearly updating our refineries or improving our refineries to reduce the sulfur content of our fuels, where I didn't mention it, but in our plan, we expect to be our fuels having 80% of our fuels becoming low sulfur fuels produced in our refinery. Those are clearly our main projects.

Margarita Chun (Investor Relations Manager)

Another question come from Credit Suisse from Regis Cardoso. She wants to know if you can give us more details on YPF's plans for lithium exploration, size of the opportunity, CapEx and timing.

Alejandro Lew (CFO)

Well, some of that was already tackled also. Clearly, so far we have become involved in an exploration project in the province of Catamarca. It's a 20,000 hectares site where we believe that there is interesting brine concentration for us to work on. Of course, I, there is a competitive advantage that YPF has in terms of the seismic information that our company has from past works in the northern of the country, in the north part of the country. That is a competitive advantage for YPF to work on lithium exploration as well. Because that's clearly, not that I'm an expert, but our geologists tell us that that's a key competitive advantage.

So far we did decide that we were not going to enter into a more evolved project, paying, you know, prices or costs that we cannot, you know, at this point, make sure that those are fair prices. We decided to go for an early exploration, so a greenfield project. Clearly we are looking for further opportunities. So far, that is our main project. We expect to enter probably into production if we are successful in our exploration, to enter into a production phase before 2030. To get there, we probably need about...

It's not a large investment, probably in the order of $50 million-$60 million in the next three years, to prove the available of resources and to appraise them. Then if we enter into a production, clearly into a production phase, that would probably be somewhere north of $300 million in investment. To put together the facilities required to enter into a full production mode, targeting somewhere in the order of 25,000 tons per year at this site.

Margarita Chun (Investor Relations Manager)

Regis Cardoso has another question. Can you also provide more details on what you believe will be YPF's right in green hydrogen capital requirements?

Alejandro Lew (CFO)

At this point, is very difficult to answer that question. Clearly, what we do have in mind is that a key variable or a key input for the future evolution of green or the competitiveness of green hydrogen depends on the capacity to provide efficient renewable electricity. That is where Pablo tackled also in his presentation. We see Argentina having a tremendous potential there with capacity factors well above the world average. Particularly in our case, through YPF Luz, our capacity factors in wind farms in the south of the country is also above the Argentine average, where we have one wind farm at 60% capacity, average capacity factors in Manantiales Behr, for example, and on average are at 52.

We definitely think that Argentina, and as was put out by BCG, a few months ago, Argentina is a top three competitive player, potential competitive player for green hydrogen production given its low cost for renewable electricity. At this point, again, we mapped out in the presentation that we could put together efficiently, in a very ambitious way, a group of wind farms in Patagonia aggregating 100 MW of total capacity. That would be a size that our technicians consider that would be efficient to transmit to a center point that could be an H2 producing facility. That would imply a total or a plant for producing about 8.5 million tons per annum of green hydrogen. Clearly, that's extremely ambitious.

You know, 100 MW is 2.5x the current total installed capacity in Argentina in terms of power, electricity or power generation. That's just to give an idea of, you know, the potential scalability of such opportunity. Of course, it depends, going into that will depend on how, you know, technology electrolysis evolves and whether H2, actually a green hydrogen becomes mainstream as many are expecting, which, still, is still difficult to know, right?

Margarita Chun (Investor Relations Manager)

Andres Cardona from Citi has the following question: Regarding Maxus, what is the status of the claim? Do you expect any update on the near future?

Alejandro Lew (CFO)

What to expect for the near future is difficult to say. As probably many know, the trial was scheduled to start around these days in March and to last until late April. Recently, the different parties to the claim have submitted a joint request to the court to postpone the beginning of the full trial, and that was postponed to late June, and that should take place between June and July. The latest that we can comment is that the trial process was postponed by request of the different parties on the claim. The court basically accepted that and authorized that on the same day that it was requested.

That's the latest that we can comment on the Maxus case.

Margarita Chun (Investor Relations Manager)

From Morgan Stanley, Bruno Montanari. How sticky is the CapEx budget in coming years?

Alejandro Lew (CFO)

How what, sorry?

Margarita Chun (Investor Relations Manager)

How sticky is the CapEx budget in coming years?

Alejandro Lew (CFO)

I mentioned also, when talking about the numbers, that we expect CapEx to be in the $5 billion-$6 billion range for the next five years, and that should be enough for us to tackle the opportunity that we see ahead of us. Yeah, I believe that we should remain within the levels that we are expecting or estimating for this year, for 2023. We shouldn't be doing anything beyond that. Of course, that does not include any significant capital investment on the LNG project, which is still subject to FID. Clearly, a footnote on that chart was that the five to six does not include any relevant capital investment in the LNG project.

Margarita Chun (Investor Relations Manager)

From Barclays, David Herzberg wants to know what type of debt do you anticipate raising in 2023? Will it be local market debt line, the two local issues you placed in January, or will it come from different sources?

Alejandro Lew (CFO)

Well, clearly, as mentioned, we are expecting a year of negative free cash flow, unless, you know, there is any positive surprise. In doing or in tackling those needs, we are concentrating mostly in the local markets and in our relationship banks. On both to our sources of funding, we have lowered our exposure in a very meaningful way along the last three years. You know, when reducing our total indebtedness, most of the reduction came from the local capital market bonds and the debt outstanding in the financial institutions. Clearly, that was shorter in generally nature, and that's why we at maturity, we pay down all of that debt.

At this point, we are at very low levels of outstanding, so we believe we have ample room to grow or to tap those two sources mainly. Having said that, we are also working on potentially enlarging and extending the existing A/B loan facility, that is led by CAF. It's a multilateral A/B loan facility. We are working together with CAF and some financial institutions to potentially extend and enlarge that facility. All in all, our key focus would be mostly in the local capital markets and in tapping on mostly trade financing.

Recently, we have issued a $300 million equivalent, or a combination of two bonds in the local market for a total of about $300 million equivalent. The main portion of that being a $230 million dollar-linked bond with a three-year tenure at 1%. Of course, there is a very interesting arbitrage to take advantage of in tapping the local capital markets. Also in trade financing. We just raised a couple of pre-export financing with two-year tenors at 2.5%. Clearly, we would definitely tackle those opportunities before considering other sources.

Margarita Chun (Investor Relations Manager)

From Puente, Konstantinos Papalias is asking, could you provide an estimate on fuel imports for 2023?

Alejandro Lew (CFO)

It clearly will depend on how demand continues to evolve. What we have seen so far in the last few months, diesel demand has come down, primarily on the back of the realities in the agribusiness sector. Gasoline continues to go higher. All in all, we ended the year 2022 at an average of 11% in terms of total fuel imported as a proportion of our total local sales. That is slightly above average and above historical average, after, you know, a peak that we had in the third quarter. We will expect probably similar levels for 2023 as well.

Margarita Chun (Investor Relations Manager)

From Itaú, Alejandra Aranda is asking, could you give us an idea in terms of YPF crude oil exports going forward?

Alejandro Lew (CFO)

Clearly, as a five-year plan, we would expect to reach those 150,000 or so barrels per day that we are targeting. Clearly, that would depend on us being able to deliver on our growth expectations. We should be starting to become an exporter of crude as early as this year.

You know, hopefully, if things go well, we should start exporting through the OTASA pipeline, that the Minister mentioned also, into Chile as early as May of this year, on an initial phase before the new Vaca Muerta Norte pipeline that will connect and will increase the capacity to transport oil from the center of Vaca Muerta into the northern part of Neuquén, where the Transandine pipeline starts. We would expect an early stage export of about 40,000 barrels. That's not only YPF and some partners that are teaming up with us for that opportunity. Probably raising that to about 70,000 barrels a day once the Vaca Muerta Norte pipeline is fully up and running, probably at some point in the fourth quarter.

Margarita Chun (Investor Relations Manager)

The last question come from Santander. Walter Chiarvesio wants to know, what is your EBITDA margin expectations in 2027 by shifting to sell cheaper oil?

Alejandro Lew (CFO)

I'm not sure about the cheaper oil, last part of the question. Basically, based on the numbers that we put out, the margin would be probably in the order of 35%-40%. Again, assuming the, you know, clearly there are a lot of sensitivities that need to be taken into consideration for that. Roughly speaking, we believe that total margin should trend upwards. Clearly Vaca Muerta being very profitable. So we would see probably margins trending upwards from where we are today and getting closer to the 40% mark. Somewhere in the mid-30s to high 30s would be our expectation.

Margarita Chun (Investor Relations Manager)

Thank you so much for your accurate answers. Now we are gonna hear again Pablo González, the Director of YPF.

Pablo González (Director and Chairman of the Board of Directors)

Muy breve. Solamente para agradecerles la presencia nuevamente a todos ustedes acá. Hemos brindado la información. Hemos contado nuestros proyectos sobre una base sólida y es una situación financiera y económica que ustedes vieron. Tenemos una deuda 1.2 del EBITDA. Hemos bajado nuestra deuda y los invitamos a seguir acompañándonos. Vi me llamó la atención por ahí algunas preguntas relacionados con el hidrógeno y con el litio, ¿no? Ustedes saben que YPF a través de YPF Tecnología, donde hay 260 científicos que todos los días están trabajando, pensando en una Argentina mejor, está el Consorcio del Hidrógeno, liderado por YPF con 50 compañías que están trabajando sobre el desarrollo del hidrógeno. En materia de litio, nosotros creamos YPF Litio a mediados del año 2021.

Paralelamente, en Y-TEC, nuestros científicos han desarrollado el know-how de las celdas de litio, con lo cual hoy nosotros ya estamos fabricando celdas y baterías de litio. Me gustaría proponerles a todos aquellos que estén interesados en, a través de una plataforma, nosotros poder informar sobre los proyectos que están llevando adelante tanto YPF Litio como el Consorcio del Hidrógeno e Y-TEC. Ese interés de muchos inversores y de ustedes nos motiva también a difundir con mucho agrado todo el trabajo que estamos haciendo en nuestro país en materia de renovables. Muchas gracias a todos por acompañarnos. Aquellos que se quieran quedar, a las 16 vamos a cerrar la ronda tocando la campana.

Y estos 30 años de existencia de YPF en la bolsa, a nosotros nos lleva a reafirmar el compromiso de seguir en este camino. Vuelvo a insistir, vamos a seguir trabajando de la misma forma, entendiendo que la única forma que tenemos nosotros de hacer crecer a estos proyectos y llevar adelante estos proyectos que ustedes vieron, es de la mano del capital privado. No hay otra forma. Muchas gracias nuevamente para todos. Y bueno, los invitamos a que nos acompañen si se pueden quedar. Muchas gracias.