YPF Sociedad Anónima (NYSE:YPF) Q1 2026 Earnings Call Transcript

YPF Sociedad Anónima (NYSE:YPF) Q1 2026 Earnings Call Transcript May 9, 2026

Operator: Hello, everyone. Thank you for joining us, and welcome to YPF First Quarter 2026 Earnings Presentation. [Operator Instructions] I will now hand the conference over to Margarita Chun, Investor Relations Manager. Margarita, please go ahead.

Margarita Chun: Good morning, ladies and gentlemen. This is Margarita Chun, YPF’s IR Manager. Thank you for joining us today in our first quarter 2026 earnings call. Before we begin, please consider our cautionary statement on Slide 2. Our remarks today and answer 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. Today’s presentation will be conducted by our Chairman and CEO, Mr. Horacio Marin; our Finance Vice President, Mr. Pedro Kearney; and our Strategy, New Businesses and Controlling Vice President, Mr. Maximiliano Westen.

During the presentation, we will go through the main aspects and events that shape Q1 results. And finally, we will open the floor for Q&A session together with our management team. I will now turn the call over to Horacio. Please go ahead.

Horacio Marin: Thank you, Margarita. Good morning, everyone. We are glad to report a robust beginning of the year across our key operational and financial metrics, delivering on our ambition and guidance for the year. Let me translate the key milestones of the quarter into numbers. Revenues were $4.95 billion, growing 9% quarter-over-quarter, primarily explained by the rising trend of international prices since March, coupled with our policy to align domestic prices of gasoline and diesel with international parities. On a yearly basis, revenue increased by 7%, reflecting strong local fuel demand and record high refinery processing level. Adjusted EBITDA for the quarter amount to nearly $1.6 billion, representing the highest first quarter level in YPF’s history with an outstanding margin of 32%.

This represents an increase of 24% and 28% on a sequential and interannual basis, materially exceeding revenue expansions. The main factor that explained this growth were higher shale oil production, improved pricing dynamics and the cost matrix transformation of the upstream segment, now focused on the shale business. On the production side, our shale oil output reached 205,000 barrels per day. That mark represents an increase of 5% versus last quarter and a remarkable growth of 39% against a year ago, representing 76% of our total oil production. This milestone positions us on track to achieve our full year target of approximately 215,000 barrels per day with a December exit rate of 250,000 barrels per day. In addition, let me highlight several operational efficiencies achieved during the first month of the year.

First, we set a new fracturing record during the first quarter, pumping continually for almost 110 hours and completing 52 stages in less than 5 days on a pad at Loma Campana field. Moreover, in April, we signed a strategic agreement with a service company, Halliburton to incorporate 4 fracturing sets in Vaca Muerta through a new electrical fracturing technology. This new contract transform YPF into the first company outside the U.S. to develop this technology, improving efficiency by reducing the use of diesel engine, saving cost of the operation. In terms of investment, we deployed nearly $1 billion during Q1 with 78% allocated to our conventional operations. On a sequential basis, CapEx decreased by 10%, primarily due to increased maintenance activities in the downstream segment during Q4 2025, and a lower pace of investment in upstream facilities.

Interanually, the lower investment is explained by the reduced exposure to conventional assets and the impact of one-off item booked made last year to secure several unconventional concessions. Consistent with the production expansion expected for the rest of the year, we expect to accelerate capital deployment in the following quarters, reaffirming our guidance of the year in the range of $5.5 billion to $5.8 billion. Finally, let me point out that a standout result of the quarter was our free cash flow, which reached an outstanding $871 million. This mark represented an improvement of $1.8 billion against a year ago. This exceptional cash generation was supported by our strong operating performance and the collection of strategic M&A proceeds of around $500 million.

As a result, our net leverage ratio improved to 1.57x, down from 1.9x in Q4 ’25. Let me recall that in Q3 ’25, we reached the peak of 2.1x driven by the M&A of buying new Vaca Muerta assets. Before moving into the financial detail of the quarter, I would like to address a significant commercial decision announced at the beginning of April regarding our local fuel pricing strategy due to a sharp increase in international prices driven by the ongoing conflicts in the Middle East. During March, we were able to largely pass through this increase at the pump. However, in the last week of March, demand began to show signs of contraction for the first time in a while, particularly in gasoline. In response, in April, YPF decided to temporarily postpone further pass-through of international prices increases to customers for a period of 45 days.

This mechanism operates as a buffer, enabling the reduction of the gap between local prices and import parities after this period by recovering the buffer compensation through additional pump price. Importantly, let me clarify that this decision was made proactively with our own initiative by analyzing supply and demand by our commercial real-time intelligence center without any government interference and was subsequently adopted by all major operators in the industry. The final objective of this commercial decision was to mitigate potential adverse effect in local demand while reaffirming our import parity strategy in a free market environment. It’s also worth noting that during April, YPF maintained a very competitive fuel price level. Moreover, in April, according to our preliminary figures, our midstream and downstream segment reached a very healthy adjusted EBITDA margin of around $24 per barrel.

The 45-day period will end around mid-May, at which point we will assess the evolution of Middle East situation, international prices, domestic demand and macroeconomical conditions. I would like to dedicate a few minutes to share with you the successful development of La Angostura Sur, a block that, in our view, perfectly captures what YPF is capable of when we combine operational excellence with a strategic vision. Just 18 months ago, La Angostura Sur produced 2,000 barrels per day of shale oil. Today, it is producing approximately 55,000 barrels per day. This remarkable ramp-up is roughly 25x growth in 1.5 years. Moreover, La Angostura Sur is now ranked as the #5 Vaca Muerta block and it currently represents approximately 25% of YPF total shale oil production.

What makes this block even more compelling from an investment standpoint is its economics with a breakeven price below $40 per barrel, lifting cost of around $3 per barrel and a development level of approximately 19%. There is substantial upside ahead under unconventional concession value through 2059. Our plateau target for this block is approximately 100,000 barrels per day. We have 100% of the equity stake in La Angostura Sur. This means YPF capture the full value of this world-class asset. La Angostura Sur is not just a production story. It’s a proof of concept. It demonstrated YPF’s ability to rapidly develop Vaca Muerta at scale with capital discipline and competitive costs. We are committed to replicating this model across our portfolio.

Now I turn the call to Pedro to analyze in detail our financial results.

Pedro Kearney: Thank you, Horacio, and good morning to you all. Let me walk through our consolidated financial results for the first quarter of 2026. The headline is clear. This was a quarter of exceptionally strong free cash flow, which drove an accelerated deleveraging of our balance sheet, fueled by strategic M&A collections and a strong adjusted EBITDA. As Horacio briefly explained, M&A activity resulted in a net contribution of $504 million to the cash flow of the quarter. This was mainly driven by the final proceeds from the Profertil divestiture totaling approximately $410 million. Additionally, during the quarter, we received about $85 million as partial payment from the sale of the conventional Manantiales Behr field.

Total price of this field amounted $410 million with an earn-out of up to $40 million. The remaining balance is expected to be collected throughout the rest of this year, 2027 and 2028. These proceeds were partially offset by an initial payment of $16 million related to the acquisition of a portion of Equinor assets in Vaca Muerta through a joint venture with Vista Energy, which was closed yesterday and resulted in a total price of around $204 million. Together with the upcoming divestment of Metrogas and the remaining conventional assets from the Andes 2 program, these transactions will further strengthen our financial position and provide greater flexibility to focus on our most profitable core business, Vaca Muerta. The solid free cash flow evolution was also driven by our outstanding performance in all our operations, navigating international volatility and profitable margins and cost efficiencies as well as operating refineries at full capacity and continuously expanding our shale operation.

As a result, the higher first quarter adjusted EBITDA comfortably covered investment and interest payment of the quarter. As a result, this substantial improvement in operational cash flow for the quarter led to an increase in the company’s liquidity, which ended at $1.7 billion as of the end of March 2026, representing an improvement of $500 million during the quarter. Turning to our financial situation. Let me highlight that YPF balance sheet is on a strong and improving trajectory with a solid liquidity position and very manageable debt maturities. In terms of financing, we reconfirm our strong access to the capital markets by raising in the first quarter nearly $1 billion across international and local markets as well as bank credit facilities at attractive financing costs.

In the international capital market, during the first quarter, we successfully retapped our 2034 bond, adding $550 million at a yield of 8.1%, representing the lowest rate secured by YPF in the international market in the last 9 years. Moreover, we have been very active in the local capital market during the first 4 months of 2026. We successfully issued around $285 million in 2 local U.S. dollars MEP bonds, $161 million at a 3-year tenure with a yield of 6.5% and $122 million at a 4-year tenure with an outstanding yield of 5.5%. Regarding financial and trade-related loans, in February, we were able to partially refinance a local syndicated loan for $176 million, extending additional 36 months its average life. Moreover, this financing strategy, combined with a significant positive free cash flow generated in the first quarter, enabled the company to proactively refinance existing facilities.

During the first 4 months of the year, we prepaid approximately $750 million in debt obligations scheduled to mature between the remainder of 2026 and 2028, optimizing our capital structure and lowering our average cost of debt. Looking at our debt maturity profile, the remaining maturities for 2026 totaled approximately $1 billion, primarily composed of around $600 million in local bonds, of which we have already proactively repurchased $100 million as a hedge strategy of our liquidity position, around $300 million of international bonds and the rest corresponding to other local debt. We are well prepared to meet our debt obligations for this year, supported by the substantial liquidity generated during the first quarter at $1.7 billion. Finally, it’s worth noting the evolution of the company’s net leverage ratio.

As of the end of the first quarter, our net leverage ratio stood at 1.57x, down 25% from its peak of 2.1x reached in the third quarter of 2025. The trend is clearly positive, and we expect continued improvement throughout the year as cash generation remains strong. I am now turning to Max to go through our operational performance.

Maximiliano Westen: Thank you, Pedro, and good morning, everyone. Let me start by taking a closer look at our upstream performance. Shale oil continued achieving new record high levels in the first quarter, reaching 205,000 barrels per day, a 5% sequential increase and a 39% year-over-year improvement. As Horacio mentioned before, this achievement was primarily driven by the outstanding performance of La Angostura Sur block, which has shown exponential production growth in recent months. These production levels are fully aligned with our plan, keeping us on track to meet our production targets of the year. The strong shale oil production growth fully offset the continuous divestment from conventional oil fields, which declined more than 45% interannually, recording 66,000 barrels per day in the first quarter.

On a pro forma basis, excluding the recently divested assets, Manantiales Behr, Malargüe and Tierra del Fuego blocks, our conventional production would have averaged only about 35,000 barrels per day by March. As a result, we continue delivering meaningful savings across our cost matrix, demonstrating a remarkable 42% year-over-year reduction in our upstream lifting costs which dropped to $8.8 per BOE in the first quarter. Furthermore, excluding divested assets, pro forma lifting cost would have averaged around $8 per BOE. Zooming into our shale oil hub blocks, lifting costs reached best-in-class levels of $4 per BOE, primarily driven by significant cost efficiencies in pooling activities, especially in the Loma Campana block as well as the growing share of La Angostura Sur blocks in our production portfolio, which notably has a lifting cost of around $3 per BOE, the lowest among all YPF fields.

On the other hand, the natural gas production averaged 32.8 million cubic meters per day down 12% year-over-year, mainly reflecting our continued exit from mature conventional fields, partially offset by shale gas expansion. Finally, let me highlight that on April 23, 2026, the shareholders’ meeting of VMOS approved the allocation to YPF of 44,000 barrels per day of additional available capacity of the pipeline. With this decision, YPF’s stake in VMOS increases from around 25% to 30%, which is key to supporting the company’s production growth in the coming years. In addition, Oldelval is expected to expand its transportation capacity by roughly 150,000 barrels per day by year-end through upgrades to pumping stations and using polymers. Of this incremental capacity, YPF will hold around 40,000 barrels per day and will support higher volumes of YPF’s shale oil to our La Plata refinery.

Overall, these results reconfirm our upstream strategy robustness, shale oil driving higher efficiency by reducing lifting costs and sustaining a more resilient production output. Now let me share the progress achieved in terms of productivity and operational efficiencies in our Upstream segment, where the continuous improvement in drilling and completion efficiency has positioned YPF as the best-in-class operator in Vaca Muerta. Our drilling speed in our shale oil hub reached 364 meters per day in the first quarter, reaching a 12% improvement compared to 2025. Moreover, our unconventional fracturing speed amounted to 11.2 stages per set per day, growing 15% compared to 2025, supported by a 10% increase in pumping hours to an average of 18.5 hours per day in the first quarter.

This performance reflects lower nonproductive time and greater operational consistency. In this sense, let me highlight that in January, we drilled a new horizontal well in just 10 days in La Amarga Chica block, reaching a drilling speed of 520 meters per day. Faster drilling and fracturing means more wells completed in less time, which directly translates into faster production ramp-up and lower costs per well. One of the most important efficiency levers we have been developing is the transition to longer horizontal wells design. We have moved from a standard horizontal length of around 3,000 meters in the previous years to nearly 3,450 meters in the first quarter of 2026. Finally, we would like to highlight the continued strengthening of our relationships with key suppliers.

In this context, in April, we signed a 5-year contract with Halliburton for electric fracturing services, combining electrification and automation to boost efficiency, maintaining greater operational consistency and helping to reduce emissions intensity. Moving to our midstream and downstream segment. Our processing levels averaged 344,000 barrels per day in the first quarter, growing by 3% sequentially and 8% interannually and setting another record high processing level. Moreover, this exceptional performance was coupled with record production of premium gasoline and mill distillates, allowing us to avoid imports, supply local peers and export to neighboring countries. Regarding domestic sales of gasoline and diesel, dispatch volumes declined by 3% quarter-over-quarter due to seasonality.

On a year-over-year basis, gasoline and diesel volumes grew by 8%, supported by stronger demand across all commercial segments, particularly in the agribusiness. As a result, we maintained a solid 57% market share, fully in line with our historical levels, which increases up to 60% when including gasoline and diesel produced by YPF and dispatch through third-party gas stations. Turning to our pricing strategy. Local fuel prices increased by 12% sequentially, primarily reflecting the rally in international reference prices that began in March, which were largely passed through the prices at the pump. Importantly, as Horacio explained earlier, fuel demand during late March fell by 10% approximately compared to early March, which supported our decision to temporarily delay further pass-through of international price increases to the local market for 45 days.

In addition, following the price adjustments recording in March, during April, fuel prices remained competitive. Lastly, our midstream and downstream adjusted EBITDA margin remained strong at $19.1 per barrel in the first quarter. This margin further strengthened to about $24 per barrel in April, driven by elevated processing volumes and the effective pricing strategy outlined earlier. I am now turning to Horacio for updates regarding our Argentina LNG and final remarks.

Horacio Marin: Thank you, Max. Finally, let me share updates on the LNG projects, the most transformational initiative in YPF’s history that is making solid progress on all fronts. Regarding the CESA tolling phase in which YPF holds a 25% equity stake. During the first quarter, CESA signed an SPA for an LNG supply partnership with SEFE, an international energy company based in Germany. This strategic agreement covers a period of 8 years for 2 million tons per year starting in late 2027, representing around 30% of CESA total capacity, which corresponds to the total capacity of the first vessel Hilli. In parallel, CESA awarded the engineering and construction contract for the 480 kilometers gas pipeline and has been advancing on the project finance of the project.

Turning to Argentina LNG projects. As flagged on our previous earnings call, this project contemplated the development, design, construction and operation of a fully integrated LNG condensate and NGL facilities. The founding partners are YPF, ENI and XRG, an international energy investment arm of ADNOC. The project contemplates a total investment, including the upstream segment of approximately $24 billion, which include the financial costs associated with the funding structure. These figures constitute an upward adjustment versus the most recent CapEx disclosed during the fourth quarter ’25 result presentation. However, this adjustment reflects a strategic reallocation of investment between the upstream and midstream businesses, further optimizing the aggregate CapEx of the integrated project.

Since the beginning of this year, we have been actively advancing the project financing process. In this context, we conducted a comprehensive market sounding exercise to assess investors’ appetite. The response was very strong. When interested from approximately 50 institutional investors and cumulative initial appetite exceeding the project financial requirement, reaffirming the project financial viability. In addition, during the quarter, we have been diligently developing both our commercial and procurement strategies. On the commercial front, we launched a competitive bidding process and the market response was very positive, far exceeding our initial expectation and demonstrating robust demand. On the procurement side, we are actively advancing the engineering phase for the various procurement packages required for the project.

Our goal is to ensure that all necessary preparations are in place to enable a final investment decision by year-end. Moreover, last month, the province of Neuquén approved the assignment of Pluspetrol 50% interest to YPF in the 3 wet gas block identified to develop the Argentina LNG project. Finally, I would like to emphasize that YPF continued to lead the key infrastructure debottlenecking initiatives required to fully monetize the best shale oil and gas resources of Vaca Muerta, one of the world’s most competitive basins in terms of breakeven prices. In this context, YPF was awarded the Argentine Country Brand Certification, recognizing the company’s role as a key contributor to the country productive development and its international positioning.

This distinction underscore YPF’s contribution to reinforce Argentina’s global image and supporting the attraction of long-term investment. So with this, we conclude our presentation and open the floor for questions.

Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Michael Furrow with Pickering Energy Partners.

Michael Furrow: Horacio, I was hoping to get your perspective on the local service market in the Vaca Muerta. The play is attracting more international attention. I think YPF is in a good position to offer some insight after signing the recent deal with Halliburton. We’ve noticed several U.S. oilfield service companies mentioned South America and Argentina specifically as emerging markets for their businesses on recent conference calls. So my question is, are you actively seeing new entrants? And do you think that this is resulting in a more competitive service pricing environment? And if not, what do you think needs to change before more service providers feel comfortable with the Vaca Muerta and Argentina in general?

Horacio Marin: First, I would like to say that today is Pedro’s birthday and also my birthday. So you have to be very polite with us, okay, because it is our birthday, okay? Thank you for the question. ’63, I was born in ’63, okay? So it’s a special day today. So you have to use 9, okay? Okay. Yes, in the service contract and the unit cost, you will see — I think next quarter, you will see a reduction in our cost because we make a very, I would say, strong, I don’t know if it’s exactly the question, strong bidding with all the international service companies. We get very good reduction because it’s illogical because Argentina is a new country. It’s business friendly, and there was a big reduction. Last — this week, I was also in the United States trying to convince service company to come Argentina.

We need more competition. But I learn United States to reduce the price, there is 2 ways. One by competition, big competition. The second one is to take one out. There are 3, 2. If 2, 1. There are 4, 3 or there are 4, 2. And we did that process, and we were very success for the shareholders’ value. For this year, we are going to improve. In December, you will see 19 rigs. We secured all the rigs. Also, we secured all the fracs fleet. And now we are working for next year. Also, we are importing the last technology equipment from United States. Halliburton is trying — it will be in Argentina, the first electrical frac fleet. And our real-time intelligence center is working very well and improving a lot. And we really we need good equipment, good technology because it’s the one that we are investing and the one that we see that we are improving a lot every quarter, we have also procedure to improve our standard times in all drilling and completion by the rig flooring automatically.

So every quarter when it’s finished, the people in YPF we know that we have a new standard and are always more challenging than it was before. That is the way that we work. And I agree with your question that we try to come more service company and try also — we are working that service company, small service company they have to be in joint venture with Argentine companies to improve the quality, and how you say it? The efficiency. Because we know that every — tomorrow must be better than today. Tomorrow, we have to be more efficient than yesterday, and that is the way that we’re working in YPF.

Michael Furrow: Thank you for the context. As a follow-up, I’d like to ask about the concession sales that Neuquén province is offering in August. Particularly interested in your opinions on the prospectivity of the northern acreage given YPF’s adjacent position and knowledge of the area. Without giving away too much information, are there certain blocks that YPF is interested in? Or is the company comfortable with the current asset portfolio?

Horacio Marin: In the North, we have — sorry, yes. In the — you know that we have what we call North hub, a hub core and south core. South core, we have all that, and we are going to present RIGI, I think, next week. But this is the big, big, big RIGI. For the North, we are working — we have more partners. In the South, we are 100%. We are working with our partners to have the RIGI and to start. And so after that, we have always to make our projection and to have the best value for shareholders is a mixture between the capital that we arrange from partners and 100%. And in that way, we always try to put the maximum or the optimum way of making value for you, for shareholders.

Operator: Your next question comes from the line of Daniel Guardiola with BTG Pactual.

Daniel Guardiola: I have a couple of questions from my end. One is on prices. I see that the quarter somehow benefited from a sharp increase in oil prices in March, but I get the feeling that much of the pricing benefit in both upstream and downstream appears to be delayed. So I wanted to ask you, in the case Brent remains high as it is today, above $90, how quickly can you guys now pass through price changes domestically under the current market framework? And it will be awesome if you could please provide some sensitivities in terms of your EBITDA generation for 2026 if oil prices range in 2026 around $80 to $90. So that would be my first question. And my second one is on the lifting costs. We have seen a very sharp decline in lifting costs, declining 42% year-over-year.

And of course, we are seeing a more efficient structure in the core hub in the shale oil core hub. And I want to ask you how much further room do you think there is for a structural reduction, especially considering that the company is transitioning from conventional assets towards unconventional assets. But at the same time, high oil prices are perhaps creating inflation pressures in Vaca Muerta. So those will be my 2 questions.

Horacio Marin: Thank you for the questions. The first one, I don’t know if I agree with you that the core business is only because of the sharp increase in prices during March because look in detail and you will see that it is a big, big difference because our strategy to be more unconventional. But I will answer the — that is in your introduction. I will answer the question. I’m not worried in the prices that you are saying that if it remains in $90 or it is going to $80 or $90, we are very okay and we can pass the — quickly pass through the prices. And no, I don’t see that problem. I will not say what is our price today because you know that it’s a buffer. I prefer not to say because of the competition even that everybody, we are doing the same.

But I don’t see at all that it will be a problem for us if we are — the price of Brent remains in the order of $90 or it remains in the $80 to $90 range. For the second question, you say we are really — we are working very, very hard on people in YPF, always try to optimize. That’s why you can see the big difference in both upstream and downstream during those years. And I don’t take account what you are saying, why you say inflation pressure. I don’t know what you are talking about because a country is okay, and that means that we are improving in the country. So we’re not adding on that. My job is to work and be always, always more efficient. But here, you see that we are reducing the lifting costs. And also, if you see how we can — we are developing the way of developing.

You see how Vaca Muerta and [indiscernible] was increasing and you compare the way that we are developing now is totally different. We are growing very fast. And so there, we can reach better efficiency. And we have also in our operation, I would say, very sophisticated real-time intelligence center for the operation, we can see everything. We have drones, we have everything on that. And we are improving a lot every time that every day that we are there, every month that we are following the prices — sorry, the management control, we see that all the KPIs going in a good direction. So I’m positive the way that YPF quarter-over-quarter are doing their job. And so we are very proud of why we are reducing and we are going to reduce more. We have very low now, very few assets in conventional and our idea is to try to sell out during 2026 and be a special company.

We’ll be selling unconventional integrate company.

Operator: Your next question comes from the line of Bruno Montanari with Morgan Stanley.

Bruno Montanari: So the first question is about the LNG project. You do mention you have the 2 foundation partners, ENI and XRG. I’m wondering if on the back of all the energy security and the conflict in the Middle East, YPF is seeing now interest of potential additional partners coming into Argentina LNG and potentially making it viable discussions about the potential expansion of 6 million tons per year. That is my first question. My second question is about the drilling pace, drilling and completion pace in the first quarter now. There seems to have been a temporary slowdown in the beginning of the year. I do understand you are reiterating all the production guidance, but I just wanted to have more color on what happened specifically in the first quarter that led to a slower activity level.

Horacio Marin: Okay. Thank you very much. With the LNG, we are working the 3 founders. In fact, today, we are in Milan, the 3 teams working very, very hard to finish all the contracts. Because our idea is to be in the BDR as soon as possible for the project finance. Really, we don’t need another partner, but it could be potentially another one. But we are working the 3, and we are very proud of what we are doing. What we think from my point of view, what I think from the conflict of Middle East, there are 2 things that is happening. They are speeding up the — there is more appetite for the — for finance our project. This is a very big and robust project. It’s one of the best profitable projects in the world today. The other thing that I see is that is going — that is my point of view, that is going to speed up a lot what we call the expansion.

I think the expansion will be quickly than we thought before. So maybe we can make like one. I don’t say one, but it will be speed up a lot. And there is also before the conflict, we have a lot of appetite from offtakers, and we see, I would say, good — not contract good negotiation with the possible offtakers. And so we are in a very, very, very good moment and very good path for — to have FID at the end of the year. So I’m very happy on that. In the second part, the slowdown in the drilling and completion, I will pass to Max later on. But I will tell you that it is a question of bottlenecks that is in our infrastructure. But next year, we will not see that anymore. You will see an improvement in incremental production month by month. But today, you have to take into account that it was a big change in the system.

I pass to Max.

Maximiliano Westen: No, no, there wasn’t a slowdown. What happened is that what we did in the first quarter compared to the fourth quarter last year is that we drilled longer lateral wells about at an average 6% higher — longer laterals compared to the fourth quarter. But we’ve drilled pretty much the same amount of wells. And on top of that, there was an effect that at the end of last year, during the fourth quarter, we — there was a window in which we’ve accelerated our plan of reducing our DUCs that we had the drilled uncompleted wells. So we had some extraordinary CapEx at the fourth quarter to reduce DUCs. And over the first quarter, we’ve drilled longer lateral wells. What I can tell you is that we are maintaining our production targets for this year, and you will see a ramp-up in the level of activity starting next month with Horacio commented this going up to 19 rigs at the end of the year.

And we did that at the pace — at the correct pacing because there’s not much more that we can evacuate until VMOS is COD. So that’s our plan.

Operator: Your next question comes from the line of Vicente Falanga with Bradesco BBI.

Vicente Falanga Neto: I had one. YPF has now been very successful in accelerating the derisking of the southern cluster. I was wondering what is the time line for the northern cluster in terms of development? And what are the key milestones we can expect for the next couple of years maybe?

Horacio Marin: As I tell before, the north part is not where we are in 100%. So we are now negotiating with our partners, and I’m very positive that we will reach very soon, I would say, a development phase and how to develop. And after we will present the rig. And for sure, next year, we will start derisking that part. We need that because at the end of that, we have to develop very well all that, not to have [indiscernible] and also to go to the places where we make more value for us to the shareholders.

Operator: Your next question comes from the line of Andres Cardona with Citi.

Andres Cardona: Unexpected synergy here. One quick question about the productivity of La Angostura Sur. How does it compare with the key Vaca Muerta fields versus your initial expectations. Do you think there is upside on the numbers on the south hub? And how many acres and drilling locations do you have in this new developing area?

Horacio Marin: Okay. In general, the productivity that we have, is like, the hub core, is very good. Also, you can have better results comparing with the history because now we have more lateral is longer. And so we are more efficient on that, okay? All that what we call the south hub because it is 100% of YPF, it will be very productive, very profitable. It’s extremely good. And we have a lot of well to do. You will see next week the rig. There will be the order of 1,200 wells location to drill. And and there is — they will be very important for the incremental production that we have in the long term for our peak production in the beginning of next decade. You say also about the possibility of the timing of the 6 million.

That is something that we have to discuss with the partners. And I have the idea, I was started discussing, but I prefer that we are very good partners that the 3 of the same moment say that. But in my point of view, there is because there are of us, of course, is the Argentina LNG that there will be a speed up. Sorry not to answer, I don’t like also to answer questions, but I think I have to be a very good partner with them.

Operator: Your next question comes from the line of Leonardo Marcondes with Bank of America.

Leonardo Marcondes: So I have 2 questions from my end. The first one is related to the inclusion of the upstream projects into the RIGI framework, right? So my question is, what blocks do you expect to register for RIGI? And how should they change your drilling plans in the middle term, right? My second question is regarding the LNG project. It seems that you guys have implemented some changes since the last quarter, right? Because as we compare both presentations, we see that CapEx for Phase 1 have increased to $24 billion from $20 billion. And now you’re contemplating what seems to be 2 pipelines, right? I mean, one for wet gas and one for C5+. So if you could walk us through these main changes here, it would be great.

Horacio Marin: Okay. Thank you for the question. The first one, we are going to include all the possible blocks that can be applied to RIGI, okay? So — and — because it’s the same for everybody, all the blocks, they will not change the relative preference for one to the other. So I think it’s — they are not going to change our drilling plan. So — and also our idea was always to develop quickly, quickly. Maybe they can — because of the RIGI is an excellent program, they could speed up our peak, okay? That we are going to show in big detail in the next Investor Day that we are going to travel to New York in April, and you will see the big difference. So you have expect that next year because of the difference on prices in this year and the RIGI and all that, I’m very positive that you can see the speed up of our program.

For the second part, maybe we were not clear. We have maybe to make a key decision for us because there was no change because it could be confused because we put $24 billion to $20 billion, but it’s the same. I explained why. With all the partners in the engineering part, we follow and see in details all the projects, and we realize that it will be more profitable if we make more all the plant is still to be in the separation plant in Neuquén, is there will be the first phase and after there will be RIGI take the road directly to the port and there we make a big plan. So it was a shift of investment from what we call upstream to, let’s say, midstream or midstream plus downstream. And so that is the difference. The other difference that we see from the beginning that you have now the gas pipeline will take a lot of that, but the rest of it is a wide rate.

They go all condensate plus all the different liquids. And after in Río Negro, they’re going to separate the NGLs more. And so there will be 3 products out, what is the gas for LNG, NGLs for export and also the liquids of the oil for export. That is different. But really, there is not more cost. I would say that it’s less cost than we thought because we were not clear when we talk about there was in the upstream because the upstream is not in project finance in general. And so you cannot see all the hitting on that. But it’s not the big — I would say that it’s better than before, but you see in the project finance $4 million more, okay? So maybe it was our fault. So apologize, okay?

Operator: Your next question comes from the line of George Gasztowtt with Latin Securities.

George Gasztowtt: I was wondering if you could please unpack the 102% refinery utilization in 1Q and how sustainable that is? And relatedly, how are fuel inventories running so far in 2Q? And do you think you’ll be able to sell some to other refiners again?

Horacio Marin: Okay. Yes, it’s sustainable because we made in YPF, the people of downstream made excellent efficiency without big investments. And so that is sustainable. The only — when there is a quarter that you have to make stoppage, for sure, it will be lower. But if not, I would say that could be that number, including more, okay? We are — because all the transformation that people from upstream made in YPF in the last 2 years, you see that YPF used to import and now it’s not importing anymore. And also, we sell to the domestic market when the other make the stoppage. And also, we export for the neighborhood countries. And also, we can sell diesel for electric generation. And so there is big change in YPF, it’s good news for the shareholders.

Operator: Your next question comes from the line of Claudia Rivera with Santander.

Claudia Rivera Morillo: My question is, given Brent prices have remained above $100, how should we think about downstream margin dynamics in the second quarter? Do you expect to pass through higher crude costs into domestic farm prices? And what will be the timing and pass-through dynamics look like?

Horacio Marin: Okay. If the Brent has remained above $100, you are saying some sensitivity we are talking? The margin of dynamic or the margin of downstream will be more than $3 per barrel. This excellent margin, okay? I answered your question, okay there. I don’t know what will be $100, $90, $80. I have no idea when the conflict or how long it’s going to stretch? The price, on the price, it will be open, okay? We have a real policy of international prices. So we are going to pass through. The question why we didn’t pass through because we saw the demand going very — there was a question of demand and supply. There was reducing the demand so fast in the last 2 weeks for us to improve was worse for YPF and for the shareholders to make like a buffer.

And after the buffer, we see also the demand going down instead going up. Why? Because people were without uncertainties because when you have 1 week that it was $90 then it is $100, $110, $112, it was like it make uncertainty for the consumers. But at the end, we are going to pass through the dynamics and also we have, I would say, account that we see how much we have to take out the dynamics of the conflict is on, okay? But it’s our policy and it will not be a problem. I don’t see a problem to pass through.

Operator: Your next question comes from the line of Matthias Cattaruzzi with AdCap Securities.

Matias Cattaruzzi: I have a few questions. First, a simple one. What’s going to happen after the fuel freeze after May 15? Then in your 2026 guidance of CapEx, you guided to a neutral to slightly negative free cash flow at a Brent of $63, $65, and now we are well over that range. Is your CapEx going to change? You got the infrastructure constraints. We are seeing a really low CapEx in the first quarter. Can you guide us through what’s going to be 2026 and then what’s going to be 2027? And then I got an additional question about the acquired capacity at VMOS. Can you tell us what’s — if it’s going to affect the production curve in 2026? If you’re going to expect a higher ramp in the beginning and middle of the year?

Horacio Marin: Okay. First question. Beginning of next week, we are going to have a big meeting in YPF between us, and we will decide what will happen after May 15. And we are going to communicate the decision that we are going to make, okay? I think I answered you what happened after May 15 in the previous question that they asked me. About the 2026 guidance of the CapEx or — for sure, if the price is higher, you have to expect, as we say in New York, I think it was last year that the — I would say, simple sensitivity is [ $80 ] million per dollar that they will increase in EBITDA. You have to have rough numbers, if you want. We cannot accelerate this year because we have some bottlenecks, and we reach — I think we are going to reach the bottleneck of the evacuation between October and November.

And that’s why we cannot accelerate because it will accelerate that we improved the capital in the ground, but not taking out. But next year, and I think I said before that we are going to accelerate — so we can have in 2027, I think we are going to have a better production than we thought, but that I cannot — I prefer to show you in New York in April, and you will see that because if we have more — less necessity of CapEx and we have the evacuation out and you have more money — more cash of YPF, we are going to put that for improve the production and make more value for the shareholders and to reach the plateau before.

Operator: Your next question comes from the line of Tasso Vasconcellos with UBS.

Tasso Vasconcellos: Horacio, I wanted to move back here on your — how you’re thinking in terms of capital allocation for YPF, get some additional color from your side. You had a lot of success in the 4×4 plan that you released when you first assumed the company. You had a lot of success in focusing the core assets and the operations of the core assets, divesting from some other assets. So maybe if you can make a summary on everything that you accomplished since you assumed the company. And of course, looking forward, what do you still view as adjustments required for YPF? Where would you want to invest more, especially in this scenario of higher Brent and YPF making more money? And of course, if anticipating dividends at some point could also be a possibility. Anyway, I can just get some additional color on how you’re thinking about capital allocation as a whole for YPF. That’s the question.

Horacio Marin: Thank you for your question. The capital allocation is always what we call, we have — I tell you something that is more about cooking that is we have a week that we call CapEx week. And there, we discuss all the process in detail, all the economics, and we allocate what is more economical to the less economical, okay? That is the way that we always allocate. If you allocate that in the upstream, unconventional is first. And at the beginning, when I arrived, I say I am unconventional guy, no because I love unconventional and not the conventional because when it’s all they are very young, it’s better the conventional than unconventional. But in Argentina, the conventional is old. So we allocate all in unconventional and it’s our — my personal goal and the company goal to be unconventional integrate company.

Really, we are very close to go there. We are doing — we are negotiating, going out from the last one. And so the allocation in upstream, we have to be clear that it will be unconventional and always it’s a portfolio in our portfolio that you have decide the economics and between the one that we are with partners and the 100. What is a good news for us is that the big, big stake that we have in 100% are wonderful. They are very profitable, and we are allocating more than we are there. So it’s a new way of YPF. So it’s not that we need — if the partners don’t want, we can increase the production very fast, very fast, and this is our idea, okay? If the price that it seems now that it will be this year, next year and so in a better level and higher level, for sure, our people are making more revenues and we will have better results.

And that result, it will be allocated for increasing the production. It will be better for the LNG. And so we are very, I would say, positive of the result of the 4×4. I expect that you are the same that us, even if by [indiscernible], so you have to say yes, okay? But you are the same as us in the success of the 4×4. Really, I tell you, I see now every month when I see all the results of the company in detail that this, I would say, this engine that is YPF is working very, very hard and making value in all the business that we have.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Horacio Marin for closing remarks.

Horacio Marin: Okay. Thank you very much for all the questions. Thank you very much to be in that call. I say for all the guys that we work here that I’m very proud to work with YPF. We are working hard, but with passion. That is the reason. Company with passion has extraordinary results. That what YPF is doing now. So I try always to say at the end that in the memory of my grandmother, I breathe YPF, I breathe YPF, I sweat YPF, I think YPF, I love YPF. Thank you very much.

Operator: This concludes today’s call. Thank you for attending. You may now disconnect.