YPF's 2025 Q3 Earnings Call: Contradictions Emerge on Vaca Muerta CapEx, Metrogas Divestment, and Production Growth Timelines

Date of Call: November 10, 2025

Financials Results

• Revenue: $4.6 billion, down 12% YOY (in line with ~13% YoY decline in Brent)

Guidance:

• Shale: FY2025 average target ~165,000 bpd; expect to slightly exceed a 190,000 bpd exit rate by Dec‑2025.
• Preliminary production outlook: ~215,000 bpd average in 2026 and ~290,000 bpd in 2027 (management preliminary).
• Argentina LNG Phase 3: technical FID expected H1 next year; first floating LNG commercial operations ~2030; project CapEx ~$20B–$25B with ~70% project leverage and non‑recourse project financing with partners.
• 2025 CapEx expected to finish slightly below initial guidance.

Business Commentary:

* Operational Performance and Shale Production: - YPF's crude oil production reached 240,000 barrels per day, down 3% from the previous quarter and 6% year-on-year, while shale oil production increased by 35% year-on-year and 17% quarter-on-quarter. - This was driven by a strategic exit from mature conventional fields and significant growth in shale production.

• Financial Performance and Free Cash Flow:
• YPF reported adjusted EBITDA of approximately $1.4 billion, remaining flat year-on-year despite a 12% decline in Brent crude oil prices.

• The negative free cash flow of $759 million was attributed to the acquisition of Shell assets and the exit strategy from mature fields.

• Capital Expenditure and Shale Development:

• CapEx was primarily focused on unconventional resources, with 70% of total quarterly investment directed to shale development.

• This strategy is aimed at enhancing operational efficiency and achieving further production increases.

• Midstream and Downstream Efficiency:

• La Plata refinery achieved the highest processing level since 2009, reaching 326,000 barrels per day.

• The efficiency improvements were due to technological innovations and operational excellence, leading to the refinery being named ''Refinery of the Year in Latin America.''

• Argentina LNG Project Progress:

• YPF signed a technical FID with Eni for a fully integrated LNG project of 12 million tons per year expandable to 18 million tons per year.
• The project is part of YPF's strategy to develop Vaca Muerta's potential and gain international investment for LNG exports.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management emphasized strong operational progress: "Adjusted EBITDA reached approximately $1.4 billion, representing a sequential increase of more than 20%, while remaining flat versus the previous year." Shale production up 35% year/year to 170k bpd (October ~190k bpd), record refinery processing of 326k bpd, lifting cost reductions of 28% QoQ and 45% YoY and successful $500M bond tap at improved yields.

Q&A:

• Question from Alejandro Anibal Demichelis (Jefferies LLC): Could you give us some indication of how you're seeing production growing into 2026, 2027? And could you please give us some indication of how you see the recently taken full control of the revenue asset developing within the rest of the refining portfolio?
  Response: Management gave preliminary production targets: average ~215k bpd in 2026 and ~290k bpd in 2027.

• Question from Leonardo Marcondes (BofA Securities): Regarding capital allocation and M&A: will the company continue pursuing new M&A opportunities or focus on developing existing assets? Plans for Metrogas and YPF Agro divestments/timing? And how do you expect to fund the LNG project—project finance?
  Response: Pillar‑2 active portfolio management continues but no major Vaca Muerta acquisitions expected next year; Metrogas will be extended then sold; YPF Agro to seek a strategic partner (possible 50/50); LNG financing will be via project finance with partners.

• Question from Unknown Analyst (Morgan Stanley): What drove the working capital losses this quarter and what to expect going forward? What drove the lifting cost decline—higher shale output only? And should we expect an acceleration of 4Q25 CapEx versus guidance?
  Response: Negative working capital ~ $360M driven by seasonal gas accruals (~$100M), longer gas collections (~$50M), inventory restocking (~$60M), payments related to exited mature fields and MTM bond moves.

• Question from Daniel Guardiola (Banco BTG Pactual S.A.): How do you envision the trajectory of lifting and D&C costs for 2026 and beyond (given asset sales and potential renegotiations)? What is the maximum leverage the company is comfortable with and have you considered hedging oil exposure?
  Response: Management is aggressively negotiating with service providers to reduce unit costs but gave no numeric 2026 targets; the recent leverage increase reflects acquisitions and they do not plan to increase leverage further and expect it to decline.

• Question from Guilherme Costa Martins (Goldman Sachs): On downstream pricing: why were you unable to price in line with international parity in 2Q and what competitive dynamics affected this? Update on Metro fields divestments: timing, production declines, and any additional cash outflows from exits?
  Response: Pricing uses a moving‑average/micro‑pricing approach and volatility (exchange rate, oil, biofuels, taxes) limited ability to fully track parities; most conventional divestments are effectively agreed with only a Rio Negro area pending—company expects to exit conventional assets soon.

• Question from Tasso Vasconcellos (UBS Investment Bank): What legislation or regulatory changes does YPF still rely on to move projects forward (e.g., export taxes, treatment for LNG)? Any updates on proposed rules requiring 72‑hour notice before adjusting fuel prices?
  Response: Management had no concrete regulatory updates to share; they noted reports of discussions (e.g., export duties) but cannot confirm changes and have no definitive impact to report.

Contradiction Point 1

Vaca Muerta CapEx and Rig Usage

It involves differing statements about the acceleration of CapEx in Vaca Muerta and the use of rigs, which are critical for production and cost management in the company's key unconventional operations.

How do you expect production to grow by 2026 and 2027, and how do you see the asset developing across the rest of the refining portfolio? - Alejandro Anibal Demichelis (Jefferies LLC, Research Division)

2025Q3: YPF expects production to grow steadily, with projections of around 215,000 barrels of oil per day in 2026 and around 290,000 barrels in 2027. - Horacio Marin(CEO)

What are your development plans for the recently acquired block and your views on accelerating CapEx in Vaca Muerta? - Tasso Sousa Vasconcellos (UBS Investment Bank)

2025Q2: Regarding CapEx acceleration, YPF is not reducing rigs, contrary to market rumors. We focus on delivering on our 4x4 plan. - Horacio Marin(CEO)

Contradiction Point 2

Divestment of Metrogas and Strategy

It involves changes in the company's strategy regarding the divestment of Metrogas and the approach to integrating new assets, which are crucial for financial and operational performance.

Will YPF prioritize pursuing new M&A opportunities or focus on developing existing portfolio assets? What are the plans for Metrogas and YPF Agro, and what is the timeline for updates on these initiatives? - Leonardo Marcondes (BofA Securities, Research Division)

2025Q3: YPF aims to sell Metrogas post its concession extension and is open to strategic partnerships for YPF Agro. - Horacio Marin(CEO)

Are there other assets for divestiture besides Andes, and how does the micro pricing strategy improve profitability? - Andres Felipe Cardona Gómez (Citigroup)

2025Q2: We receive an offer that we consider to be the best for the company. And we will start to date the discussion with that company and finalize it this year. - Horacio Marin(CEO)

Contradiction Point 3

Production Growth and Unconventional Output

It involves the company's production growth expectations, which are crucial for investors to assess the company's financial performance and growth potential.

How do you expect production to grow through 2026 and 2027? How do you expect the rest of the refining portfolio to develop? - Alejandro Anibal Demichelis (Jefferies LLC, Research Division)

2025Q3: YPF expects production to grow steadily, with projections of around 215,000 barrels of oil per day in 2026 and around 290,000 barrels in 2027. - Horacio Marin(CEO)

How resilient is the company amid current environmental prices? What is the current Brent breakeven for EBITDA and cash flow? What CapEx is needed to maintain current production? - Daniel Guardiola (BTG)

2025Q1: At a Brent price of $60, our EBITDA would be 4.4%. We need around $2 billion to maintain current production. - Horacio Marin(CEO)

Contradiction Point 4

Production Growth and Timelines

It involves discrepancies in the company's production growth projections and timelines, which are crucial for investor expectations and strategic planning.

What's your outlook for production growth through 2026 and 2027? - Alejandro Anibal Demichelis (Jefferies LLC, Research Division)

2025Q3: YPF expects production to grow steadily, with projections of around 215,000 barrels of oil per day in 2026 and around 290,000 barrels in 2027. - Horacio Marin(CEO)

How confident are you about reaching 180,000 barrels per day by Q4 2026 in Vaca Muerta? - Andres Cardona (Citigroup)

2024Q4: We have very high confidence that the VEMOS pipeline will deliver 120,000 barrels per day by Q4 2026. - Horacio Marin(CEO)

Contradiction Point 5

capex Allocation and Funding Strategy

It involves the company's capital expenditure allocation and funding strategy, which are critical for investors assessing the company's financial health and growth plans.

Will YPF prioritize pursuing new M&A opportunities or focus on developing its existing portfolio assets? What are the plans for Metrogas and YPF Agro, and when might updates be provided? How will the LNG projects be funded, and what role will project finance play? - Leonardo Marcondes (BofA Securities, Research Division)

2025Q3: YPF anticipates a project finance approach with non-recourse financing, involving multiple funding sources. - Horacio Marin(CEO)

How do divesting mature fields reduce leverage? What impact does the $100 million affiliate disbursement have on CapEx guidance? - Guilherme Martins (Goldman Sachs)

2025Q1: 80% of our CapEx is under ECA or other financing. - Federico Barroetave(CFO)