YPF Sociedad Anónima (YPFD) Earnings Call Transcript & Summary

Good morning, and welcome to the YPF Fourth Quarter and Full Year 2024 Earnings Conference Call and Webcast. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the call over to Margarita Chun, YPF's IR Manager. Please go ahead.

Good morning, ladies and gentlemen. This is Margarita Chun, YPF's IR Manager. Thank you for joining today in our full year and fourth quarter 2024 earnings call. Before we begin, please consider our cautionary statement on Slide 2. Our remarks today and answers to your questions may include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by these remarks. Our financial figures are stated in accordance with IFRS, but during the presentation, we might discuss some non-IFRS measures such as adjusted EBITDA. During the presentation, we will go through the main aspects and events that explain the annual and Q4 results and then we will open the floor for Q&A session. Today's presentation will be conducted by our Chairman and CEO Mr. Horacio Marin; our CFO, Mr. Federico Barroetave; and our Strategy, New Businesses and Controlling Vice President, Mr. Maximiliano Westen. I will now turn the call over to Horacio. Please go ahead.

Thank you, Margarita, and good morning to everyone present on this call. Let me begin by highlighting that '24 was a transformational year of YPF. We have deployed our 4x4 Plan designed to increase the value of the company. In the Upstream segment, we are reshaping our oil production matrix leaving conventional mature field and targeting to increase our shale oil production share from 50% to a minimum of 80%. As of today, we achieved significant progress in the maturity of the total of 49 mature blocks. We signed SPAs for 24 blocks and we are in the final stage of agreement to transfer and re vert 18 blocks located in the province of Santa Cruz and Tierra del Fuego. On the other hand, we are already the largest shale oil producing of the country. and we continue expanding in the coming years, reallocating and concentrating our investment on Vaca Muerta. In parallel, we are leading the midstream process development of VMOS, a new oil export dedicated pipeline, engaging and consolidating the effort of all measure producing in Argentina to ramp up production to 180,000 barrels per day in the second half of '26, jumping to more than 0.5 million barrels per day by second half of '27. The contraction has already started and YPF initial capacity will be 120,000 barrels per day, accounting for 27 percentage stake and expecting to reach more than $3 billion of additional export by the second half of '27. In the Downstream segment, the challenging macro context, we have returned to a 100% free market, where we were able to fully normalize local price of fuels and converting them to international parities. On the other hand, along '24, we have been implementing multiple operational efficiency measures to enhance productivity across all businesses. In the Upstream segment, our drilling and completion speed for unconventional wells of '24 are already near '25 targets, so comfortably exceeding '24 targets. In this sense, last month, we achieved the highest lateral drilling speed for 1 shale well in La Angostura Sur block, surpassing 1,747 meters in 24 hours. This lateral length is equivalent to 5,731 feet. We believe further improvement will be achieved through our new Real Time Intelligence Center, inaugurated last December. This new technology and process optimization plan will allow YPF to continue increasing the day-to-day efficiency by taking real-time data driving decision in drilling and well completion activities in Vaca Muerta with Starlink connectivity. These have been a transformational change in the Upstream business of YPF, moving from a monitoring room to a real-time decision-making process center. Thanks to this, we expect to materially improve our well contractual costs in the near future. Moreover, we carry out the Toyota Well project based on the efficiency of the car industry to reduce the time of our oil construction cycle, reducing our working capital and increasing our profitability from the acceleration in production. Our target by '25 is to decrease by 30% of the well construction cycle from 312 days in '23. As initial stage, we developed, 2 prototype lines to be implemented on a large scale in Vaca Muerta in the near future. And the results are promising, we reached an average of 24% reduction at this initial stage. In the Downstream segment, we reached a record high in the processing level of our refineries. Exceeding 300,000 barrels per day in '24, and exiting the year with 318,000 barrels per day in December with a refinery utilization of 92%, mainly driven by the revamping of our La Plata refinery, which increased its capacity and improve the quality of the fuel by reducing the sulfur content. In addition, we achieved record high production level in '24, 5,605 cubic meter per day of premium diesel and 13,915 cubic meter per day of gasoline. Regarding Downstream efficiency during '24, we created a specialized industrial team to target and monitor the efficiency and productivity goals, by implementing a series of initiatives such as the optimization of our refinery output, maintenance shutdowns, and power consumption in our industrial complexes, as well as a comprehensive improvement in product storage and logistics contracts. All in all, we record a total saving of $405 million in '24. Moreover, we will inaugurate, our Downstream Real Time Intelligence Center in mid-March combining artificial intelligence to boost our efficiency metrics. This center will be the first in Argentina. In terms of financing, IPF2 took the lead in reopening debt markets of Argentine corporates. In January '24, we successfully issued an international bond market, a 7-year bond of $800 million. Following this, we executed 2 additional bond transaction, $540 million in September, and $1.1 billion last January. This progressive and strategic approach enables us to effectively lower yields to 8.5%, while increasing tenure. Moreover, in the local market, we successfully arranged the first syndicated bank transaction in more than 4 years, setting another reopening Argentine corporates. We secured $400 million term loan structure in 2- and 3-year tranches with participation of 16 financial institutions. Finally, we changed the authorization matrix of the company, changing internal procedures and increasing the control of process compliance. Moving on to the next slide. Let me highlight that through our exit from mature field. We are achieving the transformation of YPF, since we managed to reduce losses, allocate capital efficiently, and focus on Vaca Muerta, our most profitable asset. Let me also clarify that this is a new process with no precedent in Argentina, since the owner of the resource at the provinces and the approval requires several provincial authority to complete each process. Now let me briefly update on the progress we made so far. In the province of Mendoza we already completed the transaction of Llancanelo cluster. In Mendoza North, after having received all provincial approval, we are in the final stage expecting to closing within the next 2 weeks. In Mendoza South cluster, we already obtained the assignment approval, and we expect the extension approval of the concession to be granted next week. Immediately after we will close the transaction with the buyer company. Regarding the province of Río Negro, we completed the transaction for the Estación Fernández Oro cluster. In Señal Picada-Punta Barda cluster, we are in the final stage of negotiation, targeting to execute the SPA during March and while the closing should be no later than April. In the province of Neuquén, we already received all the provincial approval for Neuquén North and South Cluster, just waiting for the corresponding decrease. In Chihuido-Puesto Hernández cluster, we have initiated discussions to transfer and revert it back to the province. Focusing on the province of Chubut, we already completed the transaction for El Trebol-Escalante and Campamento Central-Cañadón Perdido clusters, while we are very advanced with the process of transferring or reverting Restingali to the province. Regarding the non-operating position of Chubut, we are in ongoing negotiations. Lastly, in the province of Santa Cruz and Tierra del Fuego, we are making progress in negotiation, targeting to transfer or reward the remaining assets back to the provinces. In summary, during these 12 months, we have achieved a material province with new presence in YPF and Argentina. This is the most transformational project that YPF need to eliminate losses and inefficiencies. I continue to be committed to move forward with this project to be finished in the next few months. Now to begin with numbers. I'm pleased to share a quick overview of our key accomplishment obtained during this first year. I'm proud to report that YPF has accounted for nearly 1/3 of Vaca Muerta shale oil production, achieved an impressive output of 122,000 barrels per day in '24. This marks a 26% increase compared to '23 and is fully in line with the annual target we made to the market in March '24. Moreover, as of today, our net production is above 150,000 barrels per day. Looking ahead, we anticipate sustained growth in '25, concentrating our effort on our most profitable assets, shale oil from Vaca Muerta. Also, let me highlight that as operator, YPF produced more than half of Vaca Muerta shale oil production in Q4. The competitiveness of YPF is now more evident to the market based on the unique shale production scale and synergies that the company now consolidate between Upstream and Downstream segments. In line with this production ramp-up, we almost tripled our oil export revenues in '24, achieving near $1 billion and averaging 35,000 barrels per day. In Q4, we jumped to 41,000 barrels per day, representing roughly 20% of the country oil export and making YPF the largest oil exporter of Argentina in '24. In the Downstream business during the entire year, the company has been consistently adjusting local fuel price to be in line with international prices. As a result, we narrowed significantly the gap to import parities decreasing from 20% in '23 to just 2% in '24, despite the significant devaluation that took place in December '23, while our market share remained strong at 56%. Also the recovery in price, coupled with the steady of efficiency initiatives mentioned before, that resulted in a better comprehensive refining and marketing EBITDA, margin of $13.7 per barrel, growing 24% compared to '23. The margin include refinery, chemical, petrochemical, logistical, and lubricants. In parallel with increase in export, we reduced the fuel imports significantly in '24, mostly due to demand contraction and refinery capacity expansion. It's also worth mentioning that '23 was affected by extraordinary demand driving by local price considered below import parities. During '24 in line with price recovery, demand declined, particularly in the first half, but gradually improved during the second half, plus the improvement in refinery capacity mentioned before. All these positive on [ the company ] contribute to a 15% growth in the company and sales EBITDA in '24 compared to '23. However, let me clarify that '24 figures could have been higher, but it was negatively impacted by 2 important factors: roughly $300 million negative EBITDA from mature fields and around $85 million of low EBITDA from the Patagonia's weather impact on conventional production. We are confident that this factor will be almost permanently eliminated once we complete our exit program from mature field during '25. In terms of investment, we deployed $5 billion in '24, reducing by 5% compared to '23, and successfully meeting our target of $5 billion. Despite the total CapEx remained almost stable, the breakdown changed significantly lowering conventional activities, particularly in mature field and redirecting toward our coal shale operation, facilitating a ramp-up in shale oil production. Therefore, around 64% of the total CapEx of '24 was allocated in the unconventional assets, reaching an annual growth of 28%. On the financial side, we reported negative free flow of $760 million in '24. Our improving EBITDA during this year was driven by the strong performance of our shale oil assets and recovery of refining margin as well as tighter CapEx compared to the previous year. Nevertheless, '24 was affected by around $685 million negative impact, which consisted of $433 million from mature field net of proceeds, $166 million of import payment deferred from '23, and $85 million from Patagonia weather. Now I will turn the call to Maxi.

Thank you, Horacio, and hello to everyone. Turning to our annual and fourth quarter financial results. Revenues reached $19.3 billion in 2024 marking an 11% annual increase, mainly driven by the rebounded fuel prices and a rise in all exports. These gains were partially offset by a contraction in fuel demand, which was exceptionally high during the second half of 2023 due to reduced fuel prices, coupled with more than 200% gap between the official and the parallel FX rate. Adjusted EBITDA totaled $4.7 billion in 2024, reflecting a 15% annual increase, mainly boosted by higher revenues and hydrocarbon production. However, as mentioned before, 2024 was affected by mature fields and Patagonia weather, while 2023 was impacted by the high level of fuel imports and a wide gap to import parities. Net results improved substantially, posting a gain of $2.4 billion in 2024, compared to a loss of $1.3 billion in the previous year. In 2023, the company recorded a non-cash impairment charge from mature fields, while in 2024, there was a positive income tax accrual driven by lower future tax payables. Investments and free cash flow was also explained in the previous slide. And as a result, our net debt rose to $7.4 billion, a 9% increase from 2023, but we successfully reduced our net leverage ratio to 1.6x fully aligned with the target. Now let me briefly explain the quarter financial results. Fourth quarter revenues were 10% down sequentially, mostly due to the lower seasonal sales of gas and international reference prices partially offset by higher demand of fuels. Fourth quarter adjusted EBITDA was 39%, down sequentially, primarily explained by lower revenue said before, reduced value of inventories of fuel and oil in line with price and marginally a $60 million of extraordinary environmental provision in the Downstream segment, partially offset by the shale oil expansion and recovery of Patagonia conventional. In the bottom line, in the fourth quarter, we reported a net loss of $284 million compared to a net gain of $1.5 billion in the third quarter, mainly attributable to a lower EBITDA impairment and a one-off cost related to mature fields as well as reduced deferred income tax benefit. Fourth quarter investments remained stable compared to the previous quarter, while in terms of free cash flow, we saw a positive turnaround reaching $64 million. Although EBITDA was not fully compensated by CapEx, we collected overdue natural gas receivables and proceeds from certain mature fields in addition to paying lower debt service. Now moving on to the Upstream performance. Our total hydrocarbon production amounted to 536,000 barrels of oil equivalent per day in 2024 an increase of 4% versus 2023, mostly boosted by the remarkable growth in shale output, representing 53% of the total compared to 46% in 2023. Also, let me mention that 22% of the total hydrocarbon production came from mature fields, which amounted to 117,000 barrels of oil equivalent per day in 2024. Crude oil production reached a 6% annual growth in 2024, reaching 257,000 barrels per day on the back of a solid 26% shale function, more than compensating the lower conventional output decline significantly affected by reducing mature field productivity and extreme weather in Patagonia during almost 2 months. Beyond crude oil, natural gas production grew 3% in 2024, reaching 37.4 million cubic meters per day mainly driven by the expansion of the Neuquina Basin evacuation capacity through the Perito Moreno gas pipeline and the following commissioning of the compressor plants in the same pipeline during July. Focusing on the fourth quarter, natural gas production remained essentially flat inter-annually, while declining sequentially mainly due to the off-peak season. Let me mention that moving forward, our focus for the long term is grow natural gas exports on a large scale. Therefore, we are not aiming to expand our share in the local market. Lastly, NGL production in 2024 stood at the same level versus 2023, averaging 43,000 barrels of oil equivalent per day. Fourth quarter NGL production decreased by 29% sequentially, mainly due to the maintenance at Mega facilities. Moving to lifting costs, we recorded $15.6 per barrel of oil equivalent in 2024, remaining similar to 2023 as a lower productivity from mature fields and Patagonia weather were partially offset by the ramp-up in shale hydrocarbon production. Excluding mature fields, our total lifting costs could have been below $9 per barrel of oil equivalent. Very remarkable during 2024, the lifting cost in our core hub blocks recorded $4.2 per barrel of oil equivalent on a gross basis reinforcing our 4x4 strategy to focus the entire company on its core production. Fourth quarter total lifting cost illustrates the lower productivity of mature fields increasing 7% sequentially, while core hub blocks on a gross basis posted 8% reduction, thanks to its outstanding productivity and operational efficiencies achieved along 2024. Regarding prices in the Upstream segment, our crude oil prices rebounded to an average of $68 per barrel in 2024, 9% higher than 2023, while during the fourth quarter, it was almost $66 per barrel, reflecting a sequential construction of 4% aligned to the downward trend in Brent. On the natural gas side, prices reached $3.7 per million BTU in 2024, similar to 2023 and in line with planned gas contracts, while the fourth quarter decreased by 30% sequentially, mostly due to the Plan Gas of peak season price. Now walking through the performance of our shale activities, the steady focus on operational efficiencies allowed us to completely surpass the initial targets set for 2024 and last March. In this sense, during 2024, we drilled 207 and completed 189 horizontal wells at our operated blocks increasing 14% and 17%, respectively, versus 2023. Regarding tied-ins, in accordance with our shale oil production targets for the year, we accelerated the activity reaching 195 tied-in horizontal wells at our operated blocks, representing a remarkable growth of 29% versus 2023. Moreover, we continued setting new records in shale oil production, delivering 138,000 barrels per day in the fourth quarter growing 10% sequentially and 26% inter-annually. As a result, we achieved the annual production target of more than 120,000 barrels per day in 2024. 85% of total shale oil output for 2024 came from our core hub oil blocks Loma Campana, La Amarga Chica, Bandurria Sur and Aguada del Chañar. This outstanding performance along 2024 reaffirms our confidence on our shale production ramp-up plans and the recent commitments on the upcoming midstream expansions of Oldelval and VMOS. In terms of efficiencies within unconventional operations, as Horacio anticipated at the beginning of the presentation, we fully surpassed the targets set in March 2024 for drilling and fracking performance during the year averaging 309 meters per day of drilling in our core hub fields and 235 stages per set per month of fracking for the unconventional operations. Zooming into the evolution of our hydrocarbon reserves. Total proved reserves according to the SEC criteria grew by 2% in 2024. The increase was mainly on the back of a 13% increase in our Vaca Muerta shale reserves, which now represents 78% of our total P1 reserves, partially offset by a decline in conventional reserves. Proved reserves addition totaled 250 million BOE driven by the progressive developments and expansions of our unconventional operations, particularly in Aguada Pichana Este, Loma La Lata North and La Calera blocks. It was partially offset by higher total hydrocarbon production, a downward revision of 17 million BOE mainly due to the strategy change in drilling schedules, as well as a 13 million BOE reduction, mostly due to lower enhanced hydrocarbon recovery and the divestment of conventional blocks, El Trebol-Escalante and Llancanelo. It is worth noting that proved developed reserves recorded an annual expansion of 3% in 2024, mainly explained by development activities new extensions and discoveries mentioned, exceeding the annual production. On the other hand, proved undeveloped reserves increased by 1% mainly because of new additions offset the volumes developed in drilling of new wells. Considering the shale hydrocarbon production ramp-up in 2024 and the development of our shale reserves, the reserve replacement ratio increased to 1.9x with a 8.3 years of reserves life. Regarding total proved reserves, this ratio was 1.1x with 5.6 years of reserves life. Important also to clarify that excluding mature fields, the total organic ratio for our proved reserves improved to 1.5x with 6.8 years of reserves life. Finally, since the SEC proved reserves do not encompasses the huge potential of Vaca Muerta, let me tell you in advance that we are going to share our inventory of wells in Vaca Muerta during our Investor Day, which will take place on April 11 in the New York Stock Exchange. Moving on to our Downstream segment. During 2024, the company has been constantly updating fuel prices to convert to international parties and mitigate the impact of the currency devaluation, while preserving the market share. As a result, we were able to reduce the gap of import parity from 20% in 2023 to only 2% in 2024. In line with price recovery and several operational efficiencies achieved during the year, refining and marketing EBITDA margins in 2024 was $13.7 per barrel, achieving an improvement of 24% compared to 2023. However, fuel sale volumes decreased by 7% along 2024 to 13.9 million cubic meters, mainly because 2023 was affected by an exceptional high levels of demand driven by low prices, especially in the second half of the year. Despite this, demand started to slightly increase in the second half of 2024. During the year, YPF maintained a strong fuel sales market share of 56% fully in line with our historical levels and leadership in the market. In terms of processing levels, it was 301,000 barrels per day in 2024, 2% higher than 2023 and surpassing our annual target. This was mainly driven by the revamping of Topping D at La Plata refinery in November 2023, combined with the completion of additional works within the new fuel specification projects framework. In addition, we also expanded our oil pumping capacity from Puesto Hernández to Luján de Cuyo complex during 2024. It is worth mentioning that the utilization rate remained around 90% in 2024. Now let me provide a brief update on the progress achieved in the oil midstream expansions to unlock the evacuation capacity in the Neuquina Basin. By the end of 2024, Oldelval achieved a total transportation capacity of 330,000 barrels per day and during this month, its capacity will jump to 540,000 barrels per day. YPF holds 25% shipping state in Oldelval. It is worth mentioning that the filling process will be gradual, aligning with the production ramp-up and after successfully passing the testing period. We plan to use this additional capacity to deliver our shale oil to La Plata refinery. Achieving another major objective that the management team targeted for 2024, last December, we formally announced the signing of the project documents and initial shipping commitments to start construction of VMOS, together with the major oil producers of Vaca Muerta. The project consists of our 440 kilometers oil export-dedicated pipeline and a marine terminal capable of receiving VLCCs to deliver Vaca Muerta shale oil to Asian markets. YPF initially shipping capacity will be 120,000 barrels per day roughly 27% of over 450,000 barrels per day committed capacity at COD targeted by 2027. The design of the pipeline allow us to further increase the capacity to roughly 700,000 barrels per day, if needed. The construction of the facilities already started last January and now follows with contractors mobilization, earthmoving works, and line pipe delivery. In parallel, VMOS is making progress on 2 key avenues: first, the [ rig ] application for governmental approval; and second, the process to seek project finance, targeting 70% debt and 30% equity. On this front, VMOS has just mandated 5 international banks for an initial syndicated loan of $1.7 billion. I will now turn the call over to Federico to go through the financials.

Thank you, Max. Switching to the financials let us start with cash flow evolution. In 2024, we posted a negative free cash flow of $760 million. First of all, although our CapEx of 2024 was lower than 2023, it was not fully offset by the improvement in our adjusted EBITDA. It is important to highlight that this annual EBITDA includes 2 negative effects, around $300 million from mature fields and about $85 million from severe climate in Patagonia. From a cash flow consideration, in 2024, we also recorded a negative $133 million from mature fields, which includes a negative $269 million of additions of assets held for sale, net of $136 million of divestment net proceeds. Finally, when analyzing the company cash performance during 2024, we must consider that we paid $166 million of temporary deferred import liabilities from 2023, collected lower dividends from affiliates, and disbursed higher debt service. In terms of financing, in Q4, we issued two dollar bonds with a tenure of 4 years totaling $150 million at the yield ranging between 6.5% and 7%. Also, we added $100 million of syndicated loan and around $60 million of short-term trade financing facilities. After the closing of 2024 in January, we successfully issued a 9-year unsecured international bond for $1.1 billion at a yield of 8.5%. The proceeds were mainly allocated to refinance the $757 million of the 2025 notes and to acquire 54% of Sierra Chata block, one of the most prospective Vaca Muerta shale gas block. Regarding the 2025 notes, we executed a cash tender offer, prepaying $315 million and the make-whole call options for the balance in February. Additionally, last month, we issued two dollar MEP local bonds, $140 million with a 2-year tenure at 6.25%, and $60 million with a 6-month tenure and 3.5%. With this last international bond issuance, we successfully completed our initial plan to derisk the company debt profile aligning it with our 4x4 Plan. The company now faces less than $1 billion of manageable and mostly local maturities during 2025, consisting of $400 million of short-term trade facilities with local and international banks, $281 million of mainly export-backed bonds, $147 million of local bond, and $51 million with CAF. Having achieved the refinancing of our 2025 bond early this year and considering that most of our '26 maturities consist primarily of bank trade lines and issuance with the local capital markets. As of today, we do not need to reenter the international bond market until approaching the 2027 bond maturity. On the other hand, following the upgrade in sovereign rating as well as country risk improvement and current perspectives, 2 global rating agencies have just raised YPF trade rating. Moody's upgraded from Caa3 to Caa1 with a stable outlook, and S&P upgraded from CCC to B- (sic) [ B+ ]. On the liquidity front, by the end of 2024, our cash and short-term impairments increased 9% versus previous year to $1.5 billion in line with our net debt increase, which amounted to $7.4 billion. Despite the increase in net debt, higher adjusted EBITDA reduced the net leverage ratio from 1.7x to 1.6x, in line with the target for the year. Now I will return the call to Horacio for final remarks.

Thank you, Federico. Before concluding our presentation and jump into the Q&A session, let me briefly announce that after an important knowledge, results and experience of the new management team during this first year, on April 11, we'll be holding our Investor Day at The New York Stock Exchange. There, we will present our 5-year plan and go through the main drivers of our 4x4 plan, focusing on our financial and production outlook, including certain sensitivity analysis, productivity matrix in Vaca Muerta and the progress of our main products, among other key aspects of our strategy. This presentation will be led by YPF Executive team, followed by Q&A session. We are pleased to invite you to our Investor Day and look forward to your participation. Finally, let me close today's presentation by saying we are confident that investors have appreciated the significant agenda that YPF has deployed along last year in almost all critical areas of the company, focusing primarily on profitability and growth. We are very focused in making value and putting YPF as one of the best energy company. This has been just the beginning, we will continue driving our 4x4 Plan during 2025 with even more knowledge, confidence and conviction. So with this, we conclude our presentation and open the floor for questions.

[Operator Instructions]. Our first question comes from Andres Cardona from Citigroup.

Horacio, looking forward to the strategy update. My question, it's about the Vaca Muerta South expansion shale expansion and how we should expect the ramp-up? How confident are you to add in the 180,000 barrels by the fourth quarter 2026, because when talking with some industry players, they doesn't seem to count with those volumes by then, they only expect to see the incremental capacity by the third quarter 2027. And yes, we want to understand why is the different perception? And why are you so confident to deliver by the third quarter -- the fourth quarter '26? Can you hear me?

I was on mute, sorry, sorry. I don't know who [ touched ] mute. Now you are hearing me? Do you hear?

Yes.

Hello? Okay. I am sorry. It was mute, I don't know why. We are very confident that with VMOS, we are going to deliver in the fourth quarter '26 and also in the second half of '27. We are very exciting that we are -- all the partners are in. We finished with all that in. So the tariff will be very low comparing what we expect at the beginning because we expect more than $0.5 million that was -- I don't know how you say committed for everybody. What I can answer you explicitly for the fourth quarter, I don't know which person you are talking about. But I'm talking about the production of YPF, we are going to deliver that. I think that with the efficiency that we have, production that we have, the team that we have in the Upstream, I think we can deliver more, but I expect that, okay? So I'm not totally -- I'm very confident that from YPF, we are going to deliver what we say.

Our next questions comes from Daniel Guardiola from BTG Pactual.

Horacio, Federico and Max. Thank you for your presentation. I would like to touch on 2 topics, one on prices and the second one on the Sierra Chata acquisition. On prices, I would like to know, guys, if you could please share with us at which prices are you currently selling your crude? And considering that recently, we saw a very significant bearish movement in oil prices. I would like to know if -- or if you can share that at which levels of prices will you consider to start reducing your CapEx for 2025? And in this environment, if you are considering to hedge a portion of your expected production for 2025? So that's on prices. And the second one is a very short question on Sierra Chata. Can you please share with us guys, what is the price that you pay for the acquisition of this stake of Exxon in this field? And what is the expected ramp up in terms of production?

Okay. Because I'm very transparent guy, and we have a problem with the microphone, I will have people that have better than me because at the beginning. [Foreign Language]

[Foreign Language] We couldn't -- I couldn't hear you the last part of the first question.

Sorry we have a problem because if Margarita can understand me. We probably might have problem with the microphone...

The quality of the microphone, we are sorry.

So I'm going to go move the...

Yes.

Okay. Horacio, can you share with us at which prices are you selling your crude right now?

What? Can you recall the price of crude oil?

Price of the crude oil?

Yes, at which prices are you selling your crude right now? Your oil right now?

Yes. What we have is the -- when you say gasoline, our prices in the import parity product. I was in [ ATB ] the other day, I would say, 2 or 3 months ago. And what they said to everybody that we are going to increase the price of gasoline when the price of oil goes up, and we are going to go down when the price goes down. And why that? Because we try to maintain the import parity of product, okay? What is the price that we sell when we export, export parity, what the price that we buy, export parity. What's the price of the gasoline import parity of product. I don't know if I answered that question first.

But I mean, Horacio, considering that oil prices are below $70 in terms of Brent, at which level are selling right now your oil?

No. No. The -- remember that the oil -- when you sell the oil, there is a time frame when you make an average of the price, okay? I don't know if that the price of -- the oil will be -- if it will be more, I would say, 3 months, we are going to sell in the export parity and the price will go down $5 compared with last week. The same will happen with the gasoline. In the gasoline, we have a strategy that I cannot explain here because our competition, if I explain, that's how we work. But we have, let's say, a procedure to put the prices to avoid, I would say, short spikes, I would say, spikes up, spikes down. A majority because in Argentina was -- Argentina was not the country to -- in general, from now on it's like this, and I'm sure that we will continue with this present that we are going to be open and so free market. And so in that way, people are not accustomed to go out or as in the United States or Europe. And so we prepare like a procedure to avoid spikes, so people will not be nervous. But at the end for YPF's almost the same, okay?

And at which prices.

Yes, sorry?

I just wanted to ask you, at which level of oil prices will you consider to start reducing your CapEx for 2025?

Great. Okay. Remember, we are going out almost -- I would say it's not your question, but I think in 2, 3 months from now, we are almost out of all the mature field. And you can calculate with your excel simple way of seeing YPF, that we are resilient for very low prices. But also, if that happen and the brand goes down, down, down and maintain for sure, we are going to have it changes, okay, for sure. I don't think that today is the day to do that. But if it continue going down and it maintains, for sure, we will see because remember what our CFO always say is capital -- strict capital allocation.

Okay. And the last question was on Sierra Chata?

Yes. Sierra Chata which is very difficult to see there because I remember that we buy a company. But what I can tell you that we think that we make a very good business because all -- I would say, all the undeveloped, call you as you want, resources or on reserves because this is unconventional way. We buy [ $0.02 ] per million BTU. What I think is a very good price.

Our next question comes from Bruno Montanari from Morgan Stanley.

The first question is about your free cash flow profile for 2025. I know you will give more color on the Investor Day, but just focusing on next year, the company has been in a way, pointing to neutral cash flow in 2025. So I wanted to confirm if that is still the plan if the base case is for neutral cash flow in 2025? My second question is if you can provide us with an update on the LNG projects. So when we could expect the final investment decisions for both the Golar project and then the YPF led project? And my third question is about your lifting costs. I assume that part of the cost increase in the fourth quarter was because of the strong peso. So wondering what we can expect now in the first quarter of the year in terms of lifting costs?

Okay. Free cash flow, you talk on CapEx, we are going -- I'm going to present on April 11, Investor Day all that in very detail, you can ask a question when you went there. We said the free cash flow that will be neutral. It depends what you call neutral, we think we are going to deliver that idea. It will be minus plus what is logical in this company, okay? But I'm going to present -- we are going to present but personally, I'm going to present that on April. Update of LNG, we are in a very good situation we will see there. And also, I will explain in more detail on April 11 because at that moment, I think we will have a better way and will be more sure about what I have to deliver. But I'm very positive with the -- with the Argentina LNG project, very positive that Argentina and YPF itself will be delivered this project and for us, for the country and for the shareholders, okay? The last is the cost, as you see, we are maintaining the cost because we work every day in efficiency. Our goal every day that I come 6:45 is to deliver efficiency. You cannot imagine how is the guy of the [ BPO]. Every day, I go to him, and I don't know how he [ lasts ] me today because every day I go and we are working in efficiency line by line. That's why we are very good on that. And I don't know if there is another one.

No, that was it.

Our next question comes from Tasso Vasconcellos from UBS.

Horacio. Let me start with one here on the M&A activity. We are actually seeing some increased activity in Argentina. Exxon recently sold their assets, you actually acquire Sierra Chata. Recent news also indicate that both Total and Equinor could eventually evaluate selling their assets as well. We know that Raizen is looking for a potential buyer for its refinery in Argentina. And amid this context here, YPF is for sure a potential buyer for these assets, right? No, not sure if you're interest. So maybe split the question in 2 parts. The first one, does any of these assets does actually interest YPF at all? Or do you like one better than the others? And maybe the second part of the question, if not these specific assets that I just mentioned here, any other ones that you would be interested in acquiring in Argentina at the moment? These are my questions.

Okay. The first in the capital allocation, Raizen, from my start here, I always hear that Raizen, but it's not -- I'm not the person to answer that as to Raizen or Shell, but I cannot answer that. But even if you are interested to see if we are going to be -- want to buy a new refinery, the answer is no, okay -- we have so far, you know that we have 58% of the market share. We have -- I think we are very good in -- we are improving a lot improving a lot in the refinery sector, YPF, but it's not in our thinking that we are going to increase, not that. The second part, we say Equinor or the other is seen. So I have no official that, even some, let's say, but in what is the -- remember, our all the active portfolio management is something that is in Vaca Muerta that we think is in the core -- in a very core, because now we are very selective, I would say, very core. The best priced [ oil ], we are going to see. But it's not the moment today that I say you that one. It depends also, remember the active portfolio management and the strict capital allocation, we will see at the moment. That is not -- for sure, everybody that sells very good assets, see YPF as one of the possible active guys to take over that. So I can answer exactly as always explained. If something is very good, we will see pricing, we will see all of that. And if we think that we make value for shareholders, you will see YPF in that process. I don't know if I answered all the question and you need more detail. I have no idea.

Our next question comes from Leonardo Marcondes from Bank of America.

I have two from my side, specifically on the Upstream segment. So the first one, we know that YPF is the largest player in Vaca Muerta and that the company also owns many blocks in this same area, right? So my question is, could you provide a color on what's the company's current well inventory? I mean, how many derisked wells you guys have? And how many years would take for YPF to drill all these wells considering the company's current capacity to tied-in wells per year? My second question is with the conclusion of the divestments? What should we expect from the development of Vaca Muerta, more tied-ins per year, higher RRR. And additionally, the company has improved a lot the development of Vaca Muerta, right, like the better frac speed then so on. So what is the target there? What else can be done to improve these metrics even further.

Okay. Thank you for all the questions. I try to follow, okay? Remember that I am [Foreign Language]. First, when you say -- I would say, summarize when you say well inventory. I will explain that in much more detail on April 11. But if I say roughly numbers, are you sitting or you're still up?

Yes, I can hear.

Okay. Okay. We have in the order of 10,000 wells, you can say [ 50 ] -- I will say gross, okay? Inventory is a gross inventory. I will say that it's in the order of 50% of oil, 50% of [ high ], but this is a roughly number that I have in my mind, okay? On April 11, we are going -- we will have there the full development of all YPF, and I will answer in detail at the moment, okay? Now if you see we are drilling in the order in [ 28 ], we are drill in the order of 200 wells. So the capacity of timing, I don't see it as a problem. And sometimes it's a question of the [ built-in well ] that there is -- and also the first year was the way that YPF had before the way of working with partners. Now what we are working is to have every -- all the budget tied with the -- first with the partners and after we fed up with our 100% active commercial blocks -- sorry, 100% block. Why we are in that? 2 reasons. The first -- the more important reason why we are in the order of 200 wells is because we tried to not to invest and have tax, okay? Our idea is to invest properly. And so now because of the capacity that we have, the incremental that we see for all the evacuation way is that the number. When the VMOS will be finished and after it's a question of only CapEx at that moment, we will increase the activity in the oil for sure. And the other was the conclusion of divestment of the other company. You say, for example, to have the idea, you are talking about ExxonMobil and the other.

The allocation of CapEx...

No, no. I mean...

Okay. Okay. Okay. Now I understood. Okay. For the -- when we reduce all the mature field and we did in the '24 also, we reduced a lot of the investment much as we could, and we put in Vaca Muerta. The idea of this -- is to try to maximize Vaca Muerta and not going to more than we need to feed up all the capacity that we have today, okay? And so for next year, we put for '25 in order of $5 billion for YPF, which is almost maintaining the investment that we had the year before, and we are very confident in incremental of production in Vaca Muerta. After you asked me for the reserve replacement ratio, the reserve replacement ratio is remember that we have to do and is way to do the 1.9x. Why that? Because it's a rule in SEC, you have to have a rule that if you make physics, I say the physics, I will explain that better in April 11 that is 4 locations. So there, I can explain block by block how many locations that we have, and you can make a very good -- you will have a good feeling of what we have in hand and the possibility of YPF to increase and this wonderful company can increase in the next years, okay?

Our next question comes from Vicente Falanga from Bradesco.

I had two questions basically. First one on the fourth quarter results. To what extent did the filling of the Oldelval expansion affect the fourth quarter results. Some of your partners in Vaca Muerta highlighted that because of the fill-up of Oldelval production did not convert into revenues. I wanted to understand if that's the case for YPF. And do you have an estimate of how much? The second question -- with the asset sales for the mature fields, hopefully being concluded by the middle of this year, where can we expect the lifting costs to fall to immediately?

Okay. The Oldelval result, if there is delay or not, it doesn't change a lot today for YPF, why? Because I don't know if we were very clear with 1 day that we explained. How we see the evacuation figure or evacuation map for us. Now we export for Chile will depend -- for Chile, okay? And the Oldelval for us is internal consumption, okay? So they are not affected a lot in our case, okay? It could affect, I don't know, who company because I'm not looking all the company all day, and I'm looking only YPF. So it's not that it could be affect if we delay the VMOS here, okay? That is the answer there. With the mature field, hopefully, I'm sure that also hopefully but sure, I'm sure, okay, that we are going to be very out there. The lifting cost go to very low number, but is it 9 no, 9 because it's 9, 9 because also we have 2 more mature fields that are the best that you can have in one is in -- we have only 2. But in the -- if you look at the 4 that we are in the range of 4. So we are very resilient from the future. And that was the initial idea when we come to YPF. That is to reduce the -- go out of the mature field because it was not for YPF. That was not a logical way of working for this size of the company, reduce the lifting costs a lot as we are doing and be resilient for very low prices. And so when the price goes up, we make a lot of money, and that is the way that we see YPF.

Our next question comes from Guilherme Martins from Goldman Sachs.

I have two quick ones from my side here. The first one is on your guidance for shale oil production, right? Please correct me if I'm wrong, what you said you are currently running roughly 150,000 barrels of oil in shale, right? While your guidance for 2025 is something above 160. So it would seem as quite conservative given your current run rate. I know you mentioned you provide further details on your Investor Day on April, but as of today, do you see room for maybe an upward revision in this target? And my second question is on capital allocation. If you could please share your thoughts on what you think global E&Ps are seeking to divest from Argentina and Vaca Muerta? And what are the competitive advantages do you believe YPF has over those players?

Okay. You are anxious like me, okay? I'm anxious, okay? Real, I'm very anxious. April 11, 40 days from now, [ nothing ]. I will explain there. But I have to -- I would like to answer. So today, not today, but yesterday or the day before yesterday, the production of Vaca Muerta was 156,000 per day. So if you see the guidance '25, you can realize that we are investing $3 billion there. I'm very confident that we are going to pass the guidance, okay? That is the first question. Second question, capital allocation in this investment in Vaca Muerta. I explained that, before, I think if the opportunities come and we see that some part is better than we have, you are going to do what we call active portfolio management. And so what we are going to do is to take this and maybe in the full development, if we see that we are not making value for the shareholders, we will sell the others, okay? That is the way we work, okay? And I think what I have to work and what you want from me to do, okay?

Sorry to those that are still in queue. We are out of time for questions today. I would like to turn the call back over to Horacio Marin for any closing remarks.

Okay. Thank you very much for all the questions. Thank you very much for your help, and we will see you in April 11, where you can have hundreds of questions, we are going to be on live there. And so we can be up to midnight, if you want, okay? Thank you very much.

This concludes today's conference call. Thank you for your participation. You may now disconnect.