Good morning and thank you for standing by, and welcome to the YPF Third Quarter 2020 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session, and instructions will follow at that time. Please be advised, that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your host, Santiago Wesenack, Investor Relations Manager. Please go ahead.

Good morning, ladies and gentlemen. This is Santiago Wesenack, YPF's IR Manager. Thank you for joining us today in our third quarter 2020 earnings call. I hope you're all safe. The presentation will be conducted by our CEO, Sergio Affronti; our CFO, Alejandro Lew; and myself. During the presentation, we will go through the main aspects and events that is [technical difficulty] our third quarter results and finally, we will open for questions. Before we begin [technical difficulty] statement on Slide 2. Please take into consideration that 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. Also note, the exchange rate used in the calculations to reach our main financial figure is in dollar terms. Our financial figures are stated in accordance to IFRS, but during the call, we might discuss some non-IFRS measures, such as adjusted EBITDA. I will now turn the call to Sergio.

Thank you, Santiago. Ladies and gentlemen, good morning. Thank you for joining us on the call today. Let me start by saying that after the severe economic slowdown that took place after the eruption of COVID-19, the worst now seems to be behind us, and the performance of the company has started to show signs of recovery. We're far from being back to normal levels, but these eruptions that critically affected our activity and prices have started to subside. First and foremost, safety of our people is our top priority. As we have gradually started to resume activity, the index that measures the frequency of accidents per million hours at work stood at 0.19 during the first nine months of 2020, representing an improvement of over 50% when compared to the 2019 average of 0.43. Our COVID committee continue overseeing that critical services and operations are maintained with utmost care for our employees, suppliers and customers. Over 90% of our people whose positions do not require face-to-face interactions are still working remotely. Our success in adapting to the realities imposed by the pandemic was clearly showcased during the major maintenance works done at our La Plata refinery through September and October. And now, that it has concluded, I am proud to say that we successfully achieved these works in a safety environment on the lower overall cost when compared to original estimates. Along the same line, our subsidiary, YPF Luz resumed full activity at their construction sites and managed to rate COD on several projects between September and October for an aggregate of 411 megawatts of both thermal and renewable installed capacity. When including this project now in commercial operation, YPF Luz accounts for total installed capacity of over 2.2 gigawatts with an additional 230 megawatts underway. Moving into our…

Thank you, Sergio, and good morning to you all. With regards to this quarter's main financial figures, as mentioned by Sergio, our operating margins experienced a sequential recovery as the worst effects of the preventive lockdown measures seem to be behind us. Along this line, our revenues increased by 20% from the previous quarter, primarily as a result of a 27% increase in diesel and gasoline volumes dispatched. On the other hand, our efficiency program has started delivering first encouraging signs, as total operating costs remain relatively unchanged, increasing by only 1% from the previous quarter, particularly benefiting from a 19% reduction in OpEx, while purchases of crude from third-parties biofuels and other purchases increased on higher volumes. From a different perspective, when compared to the same quarter last year, total operating costs were down 20% and an even larger 26% when excluding non-recurring items, such as the cost of the voluntary retirement program and upstream standby costs. Now, combining the evolution of both revenues and costs, adjusted EBITDA improved significantly in Q3 versus the previous quarter, as I will go through in more detail in a few moments. Also, as part of our cost-cutting plan and our clear prioritization of financial sustainability, we continue administering CapEx activity and further reducing our net financial debt. Total investments during the quarter reached $257 million, representing a 70% year-over-year contraction, but increasing 59% from the second quarter on the back of a gradual resumption in activity. The decision to do this was only taken once we have managed to verify some initial progress from our efficiency program, which also led us to move along, covering a major maintenance at the La Plata refinery that had been postponed back in April. Last but not least, as a result of the increased cash flow…

Thank you. [Operator Instructions] Our first question comes from the line of Frank McGann with Bank of America. Your line is now open.

Okay, thank you very much and good day. Two questions, if I might. One is just in terms of the comments you've made on the fourth quarter. I was wondering if you exclude the payments for the FLNG facility that you're letting go the contract? How you would see EBITDA perhaps comparing to the third quarter? How much of any decline that might still be there would be related to weaker pricing in dollars versus the third quarter? And then secondly, perhaps if you could just provide a little bit of more guidance in terms of the growth you see in non-conventional in 2021 and '22. I know it's far away, perhaps for now, but and just in terms of the activity you're seeing with the joint venture partners and like you said your planned expansion of CapEx how - you know, what type of growth could we expect to be able to achieve over the next several years?

Okay. Hi, Frank. Good morning and thank you for your questions. Going into the first one for Q4, even beyond the non-recurrent expense that we are going to reduce there on the back of the cancellation or early termination of the floating LNG contract, we do still expect a contraction in EBITDA which is further developed of the combination of two effects. On the one hand, the lower production that we are estimating, as was mentioned during the presentation, we estimate lower oil and gas production on the back of, well, first of all, closing down some shale wells to avoid interference with the resumed activity on fracing. And then also some pipeline maintenance mostly related to natural gas. So all-in-all, we see production going down. And at the same time, we do see operating expenses also primarily on the Upstream side, we see OpEx going up, particularly as we were ramping up activity both on pulling and workover. So clearly, what we see is, it's a temporary trend where production is going to go down and OpEx is going to go up. But that clearly is going to - is expected to reverse as we move into the following year. On the Downstream side, and just tackling briefly on your question on prices, we do see relatively stable prices, we expect to see relatively stable prices. And we don't see a deterioration in dollar terms there. So all-in-all, mostly the evolution of EBITDA in the next quarter in the last quarter of this year, as I was mentioning was, is going mostly related to lower production in the Upstream side and higher OpEx in that segment. Into your second question. And clearly, as you're saying, it's hard to predict for the long-term. But we do see an increase in activity in our non-conventionals particularly in Vaca Muerta in shale, mostly focused in oil in the long run, but clearly on the back of what we are expecting to be announced shortly, the formalization of the plan gas, also in the first part of next year, and clearly in the fourth quarter with some increased activity in natural gas as well. But all-in-all, we will see the proportion of non-conventionals going up in coming years, probably looking if for the third quarter, we were at 20% in the case of oil production, shale oil production as a percentage of total oil production for the company, we do see that number going closer to 25% or even more into 2021. And probably as we look into the long run 2022 or 2023, we do expect that to go closer to 45% or 50%. And that is a combination of clearly our higher activity in non-conventionals, as well as the natural decline in conventional which is going to - which is expected to be only partially offset with CapEx activity in coming years.

Okay, thank you very much.

Sure.

Thank you. Our next question comes from the line of Marcelo Gumiero with Credit Suisse. Your line is now open.

Thank you very much. Congratulations on the results. Just a couple of questions here guys. So continuing within the CapEx side, I mean CapEx still at a very low level, we should expect that as you provided the guidance and I mean how we should see CapEx going forward? I mean, for 2021 or even in the low ground? And how do you plan to match CapEx commitment with that the amortization schedule for next year? And if I may, another question regarding leasing costs. I mean we saw lifting costs going down, you said there is no recurring, of course, but how much, if you can provide, how much you offset those costs savings would be reversed if we go back to normality? Thank you very much.

Thank you, Marcelo. On your first question in terms of CapEx activity, clearly, we are coming from very low levels in the second quarter, an activity started to be resumed primarily by the end of August, and then a little bit more in September. And as we move along, we are further improving or further increasing activity, both in conventionals and in non-conventionals, just as an example and it was mentioned in the presentation, we read that about 35 towers during the quarter and we expect to continue, we are actually continuing that activity and expect to activate another roughly 30 equipment or rigs by the end of the year. So, all-in-all, we will probably end up with a little bit over 80 rigs by December, comparing to less than 20 before June. So, when comparing that to pre-COVID levels, clearly, we are still will be low to roughly 120 rigs that we used to have before this crisis erupted. And we don't expect to go back to those levels anytime soon. And so probably is about 65% of activity of rigs in operation is probably going to be here to stay. Nevertheless, as we mentioned also during the presentation, we have increased the efficiency very significantly, both examples that we put in the presentation are the times or the hours in operation for every intervention in conventionals with pulling equipment, which has come down by about 20% from 2019 levels of fracing activity, where stages per day have gone up very significantly to about 8 as we resumed activity, fracing activity now in October versus the averages for 2019. So, we therefore can be more efficient and more productive with less equipment. And that also means that every dollar in CapEx should be more, should have more power. So…

Thank you very much for the answer.

Thank you. Our next question comes from the line of Barbara Halberstadt with JPMorgan. Your line is now open.

Hi, good morning and thank you for the opportunity. So I know you mentioned about the refinancing options for the bonds and there still not a lot of clarity on what's going to be the decision from the government. But if you could just explore a little bit more how the local capital market is currently, and if that would be an option for the company to address some of the short-term financing needs? And then my second question is on the cash position, also as you mentioned there has been a transition from the balance between dollars and local currency in your cash balance. And we do see a slight increase from last quarter. So I just wanted to understand a little bit better what the dynamic to build up the cash in dollars currently, should we continue to expect this new mix of 60%, 70% in local currency and the rest in dollars? Or should we be looking at more of a 100% in local currency going forward? And also, if you could comment on what's the minimum cash balance for the company? Thank you.

Sure. Thank you, Barbara. In terms of our refinancing abilities, yes, as was mentioned during the presentation, we still cannot predict what the final decision from the Central Bank will be in terms of granting access to the official FX market, although we still expect that we'll be refinancing it for it back in July should be taken into consideration to be able to comply with our commitments without major problems. But in terms of achieving or raising new funding, yes, we do see significant liquidity in the local market. And we have been absent from that market in this quarter, primarily given our decision to reduce our overall cash position, liquidity position and hence, we will net - we that repaid local bonds about the $100 million as was mentioned in the presentation about $100 million in local bonds were repaid during the quarter. And as we look into next year, we have about including an amortization that we have in December, we have about $350 million that mature in the local market. So when considering that, we do believe that we should be able to go into that market for an amount that are larger than that. So we do expect the local market to be a net provider of financing from now and into the end of next year which should be - and through that we should be able to largely compensate the probably what's going to probably be and an availability of significant new cross border funding. So clearly, we will probably rely more significantly on local opportunities and we will see the liquidity there to do that. Into your second question about the cash position. Yes, the regulations from the Central Bank basically preclude corporates from accessing the local - the official FX market…

Perfect, thank you and I'm sorry, if you can just like follow-up on what's the minimum cash level that the company feels comfortable with operating?

Sure. That is on YPF on - yeah we perform our analysis on the YPF on a standalone basis, without the subsidiaries and in that front, and excluding also the dollar-denominated bonds that we hold, we are - we set a number that is not clearly written in stone, but we feel comfortable with the level of around $700 million equivalent in liquid cash position as a general rule.

Perfect. Thank you so much.

Sure.

Thank you. Our next question comes from the line of Bruno Montanari with Morgan Stanley. Your line is not open.

Good morning. Thanks for taking the question. And thanks for the new shape of the release with more information, very useful. So thanks to the team. A few follow-up questions on refinancing, you have quite a substantial trade financing line maturing now in the fourth quarter. Have you already been able to roll that over? So what can we expect on that specific line? And I have to get back to CapEx, we lost a little bit of the reference of what a more normal CapEx level is for YPF. I understand you are making plans for $1.5 billion this year. But should we think that the normal level is closer to $2 billion or $3 billion, so any ranges you could provide that would be very helpful. And a quick third one, the results from Gas & Power in the third quarter were quite strong. Should we expect that level of results to be sustained? Or should it also decline into the fourth quarter now? Thank you very much.

Hi, Bruno and thank you for highlighting the changes in the press release. It's good that the market takes it positively. Going into your questions in terms of the refinancing of the trade facilities for the rest of this year. So basically, November and December, we have about $300 million in trade facilities that come due. I would say that for the most part, I cannot say that all of them are agreed upon to be rolled over. But we are in the process of doing that. For the most part, we see banks very constructive. And for the most part, we don't see any major risk in rolling those facilities over. And also, we do have some room in some other bank facilities, both for financial instruments as well as trade that we could tap on to in case that we need to use that to compensate for any bank that might not be ready to roll over by now. But as a general comment, I would say that for the most part, we see banks very constructive and clearly taking advantage that the Central Bank regulation has not affected trade facilities. They are in no obligation or they don't feel the constraint or the allegation to roll over 100% of that or 60% of that as is the case for cross border financial lines. But still, for the most part, we see banks willing to roll over practically all that is coming due in the next couple of months. In terms of CapEx, I would say that the new normal should probably be somewhere in between what it used to have in the old days up until 2019. And what you've seen in 2020. Clearly, the number for 2020 is not enough. That's why we are basically saying that we need to have a more aggressive plan. But clearly that doesn't mean that we are going to go back to the $3 billion level of the past or more right. Also, it's interesting or important to highlight and to bear in mind that, as we are managing and seeing some encouraging signs from the steps that we took to improve our costs, in general, we do see that our cost structure is going to be more efficient, not only in OpEx, but primarily in CapEx, as was mentioned in the presentation. For example, the well cost in shale has come down already by about 15%. And we are seeing also new signs that will allow us to reduce that even further, probably getting closer to 25% as we move along in 2021. So that means that basically we are going to be much more efficient and effective when putting new rollers into CapEx. And so we feel comfortable that even not going back to the levels of the past, the company should be able to revert the production decline that we have seen in the last few years. I'm sorry, Bruno, was there a third question?

Yes, about the results of Gas & Power, which seems to be very strong in the third quarter. And I was wondering if that level of profitability sustainable now into the fourth quarter?

Okay. Yeah, clearly there is a big difference when compared to the previous quarter. As was explained during the previous quarter, the number in the second quarter was affected by a specific provision on potential annulment of Decree 1053, which basically is the recovery of FX losses on sales to distribution companies back in 2018. But so excluding that item, our adjusted EBITDA for this quarter is in the order of $20 million. And that is basically on the back of when taking aside that non-recurring effect of the second quarter, that is mostly related to higher seasonal prices. So, of course, that will depend on seasonality. But also, as the new plan gas come online, this should also somehow help the margins on this segment, but nothing major we expect to change or no material changes we expect in coming quarters in this particular segment.

Got it, thank you.

Thank you. Our next question comes from the line of Luiz Carvalho with UBS. Your line is now open.

Thanks for taking the question. Looking to the presentation and maybe I'm coming from a different, you know, different understanding, but EBITDA for this year is $1.5 billion, CapEx, $1.5 billion, you have that interest in dollars of 7.5%, which I mean, according to our numbers, close to $400 million per quarter. And this quarter you basically had a cash burn of something close to $300 million per quarter with a cash position of $1 billion, right. And as you pointed out, the leverage is close to 4 times and production is dropping close to 10% over the past few years, right. So I do see some, I don't know liquidity issues, potentially, you know, in the -- say the next one year, one and a half years, if the oil price do not rebound, right. So and in the last slide, you mentioned about a potential I’d say, incremental CapEx or incremental net debt in order to cope with a bit more aggressive CapEx, right. So just trying to understand how this scenario would [indiscernible], with everything that you pointed out let’s say in the presentation in terms of the guidance for this year and potentially next year, which in my understanding would not be too much different, right. And the second question is that I mean, I've been, you know, one of these questions in previously, conference call, wouldn't be the time to be more aggressive on divestments instead of CapEx, I mean, what the company can do in order actually to reduce the leverage and potentially even reduce a bit here the CapEx need over the next couple of years? So that will be the second question. And last question is about, in the case that we see an oil price rebound, that of course would have helped you through the Upstream business. But over the past let's say, couple of years, we saw, you know, prices being frozen in the incentive Downstream. So what is your take if the oil price rebound? How can it be able to actually to follow the international clarity in the Downstream business? Thank you.

Hi, Luiz. Thank you for your questions. On the first one, clearly, it's a delicate balance to move along with in - as we move along in the coming months and years to address on the one hand, the high leverage that we currently have, and with the more aggressive CapEx program that we need to put at work to revert the production decline. And that's why the main objective that we set ourselves on, is the cost reduction and efficiency, because that's going to be the enabler, the lever that we have to trigger to be able to do this. And so far, as was mentioned, before, we are seeing some first encouraging signs, we have managed to reduce costs significantly in several fronts, as I was mentioned before, well cost for shale, which already is down already by 15%, and probably getting closer to minus 25% next year, but also pulling activity that when we combine efficiencies with tariff reductions, we had over 30% in terms of cost efficiencies, and the same is happening in drilling and workover for example. So all-in-all, you know, probably we are not - it's going to be very hard for us to get to the 30% companywide cost reduction that we set up as a target, but we definitely are doing and pulling all our efforts towards that objective. And hopefully and probably we will end up at least in the range of 20% or more in terms of cost reduction. So and that is both for OpEx and CapEx. So that should be the main enabler, we are not betting on higher prices, if they get out of the situation, we are betting on efficiencies, to do the job. And that's why we believe that in - during 2021, of course, we will depend on availability of financing. And we will need to explain probably in even more detail these efficiencies to be able to get or to be joined by you guys by the market in terms of providing the financing that we will need, that will probably keep our leverage high at least for the next year. And as we manage to ramp up activity and production, even with current prices but as we are successful in our efficiencies which provide us with, for example, breakevens in shale, which are well below current market prices. So we do expect that as we combine all those efforts by 2022, we should be able to once again, reduce leverage and probably try to be closer or even below 3 times. So that's our long-term trajectory expectation, I would say. In terms of your second question of divestments, of course, and I will let Sergio talk a little bit about that.

Thank you. Thank you, Alejandro and thank you, Luiz also for the question. I'm going to take the question about the divestments. As we commented on the second quarter result webcast, we are focused on our core oil and gas activities, I mean optimizing our portfolio and, in that regard, and taking into consideration current financial restrictions that our company has cash generation through the divestitures of non-core assets could provide us additional capital to permit a more rapid deployment of resources into oil and gas. We are maintaining an open dialogue with key international players for the possibility of entering to new farming agreements in Vaca Muerta. And we're also analyzing a group of mature conventional areas of both oil and gas that may be subject to potential disinvestment, should we conclude that they could be operated more efficiently by a more flexible and focused niche operator permitting us to allocate our resources to those assets, where we can create the highest value for our stakeholders. Also worth mentioning, YPF Board of Directors has approved recently sold a non-operative office building for about $30 million and along this line, we continue analyzing our portfolio of non-operating or non-strategic assets, and will likely move forward with the monetization should potentially deal valuations we felt reasonable. Okay, and this is with respect to divestments.

Yep. So thank you, Sergio. And Luiz on your third question. In terms of a potential rebound in oil prices as was mentioned before, we are not putting or betting our future on that. Clearly, no one knows and it is a complete lack of visibility of how the world and our sector, in particular, globally will evolve. However, to your question about, you know, what happens to pump prices, if oil rebounds, of course, that will depend on how fragile or strong our macroeconomic variables will be, hopefully, and as we have shown recently, we managed to align our prices to import parity. And, but mostly we are focused on at least maintaining current prices in dollar terms. So what happens if oil rebounds? We will see, hopefully, we will be able to keep up aligning ourselves to import parity, but we cannot assure you that that's actually want to be the case.

Okay, thank you. Just if I may come back to the first answer. So you say that by mid by 2022, the exit to net debt to EBITDA, our leverage will be below 3 times. But that also considers I mean a certain type of that you know assumptions in terms of the oil price and production and so on. And I believe that liquidity issues my might be faced, I mean, before that, then discussion with the board or within the management about a capital increase or something, something like this at this moment?

Tackling, right, the last part of the question, the answer would be, no. Remember that this company is 51% owned by the by the Argentine government. And in that way, so far, we are not seeing the possibility of raising capital through the market. And, of course, you know, the way for the government itself to increase capital in the company, it's a complicated, of course, a complicated solution. So what I would say that, liquidity issues, will probably need to be addressed by, first of all, performing or managing correctly our financial liabilities and our liquidity. And again, hopefully not the case, if worse comes to the reality, clearly adjusting CapEx activity, which is not the best alternative, because that has a long-term impact in our production. But once again, we don't want to bet our future on prices. And that's why all our efforts are put into efficiencies. And we believe that through that, we can be much more efficient in reverting the production decline with much less CapEx than this company used to meet up until last year. So that's basically where we can comment for now.

Okay, thank you.

Thank you. Our next question comes from the line of Anne Milne with Bank of America. Your line is now open.

Okay, thanks very much for the call. A few questions. One, I just want to follow-up on the - on some pricing questions. If there were to be, so both on the Upstream and Downstream. On Upstream, we know you're trying to keep import parity, if prices though, were to decline again, would there be a possibility of re-implementing The Barril Criollo that went out I guess in August when prices were above $45. And at what point would you talk to the government about that? And then if inflation were to be higher than expected next year, how - what is sort of the process for sitting down and negotiating or discussing price increases on the Downstream side, so that you can maintain import parity and not lose your value? That was the question on pricing. Second, just wanted to know for 2020, what are your level of exports of and can you use any of those funds for helping to repay debt if you've repaid offshore? And then my third question is one that was you discussed several times you have - you're going to perhaps increase debt next year. Yet you're already above your incurrence level covenants, do you have baskets that allow you to increase your indebtedness next year to meet a higher CapEx levels? Thank you.

Thank you, Anne. On your first question about pricing. Clearly, The Barril Criollo, your question is very difficult to answer, of course, that's a regulatory decision primarily needed or asked for previously by peer upstreamers, and the provinces of course, because royalties depend much on crude prices or local good prices. Clearly, for a company like ourselves, which we are practically fully integrated with minor purchases of crude from third-parties, in regular times, clearly that went down in the second quarter to practically zero and has increased to an average of 10% in the third quarter. But for us, it's more of the low to lower pricing than the specific pricing of crude oil that affects our financials and our economic reality. So we would not be the company most affected by the Barril Criollo sure. And to be honest, it's hard to say whether if prices go down significantly from current levels, which clearly, they have recovered significantly in the last two days to closer to the $45 per barrel that where Barril Criollo was dismantled back at the end of August. But if prices go back to lower levels, as we've seen in recent days, of course, there been some rumors and some discussions as far as we understand, but nothing has really materialized. So it's hard to say whether, you know, if prices move significantly lower, whether that is going to be re-implemented or not. But again, as said before, it's not something that affects our businesses that significantly, because if anything, it changes the allocation between one segment and the other, between that Upstream and Downstream. But the overall impact for our company is limited. In terms of the adjustments in Downstream or in pump prices, that is clearly related to the answer that I provided…

Okay, great. Thank you so much.

Sure.

Thank you. Our next question comes from the line of Mattias Wesenack with Partners. Your line is now open.

Hi, good morning. Thank you for the call. I have two questions about the Downstream segment. Firstly, I see that gasoline sales are sold at 30% year-on-year and diesel at around 20% even with the lockdown easing. And what factors explain this stagnation? Is this a new normal? And my second question is relating to the pricing policy will follow? I understand that it's important to understand the impact that this has on macroeconomics, but what are you expecting to do with the prices? You mentioned that they are 20% below 2019 in dollar terms, and I want to know if you expect to recover those levels fully or and how long you expect to take to achieve them? Thank you.

Thank you. Thank you, Mattias. Going through your last question, first. Pricing policy as was commented before, yes, we've been adjusting several times since August primarily trying to accommodate our prices to import parity, but primarily to recover some margins in dollar terms. Going forward and as was said before, we have to be very cognizant of the macroeconomic realities. But we would expect to at least keep track with the evolution of the FX to at least maintain the current margins that we have in dollar terms. When comparing to the previous year, as you said, you know clearly gasoline and diesel are about 20% to 25% down versus the same quarter last year in dollar terms. But you have to also bear in mind that international prices for crude basically Brent prices went down in the same period by about 30%. So, we are clearly not able to move to away or from realities of our sector. So when you compare to that, you can see that actually from a spread point of view, we have improved vis-a-vis international crude prices. So I think this is a reality for the whole industry, oil and spread - sorry, oil and refined product prices have come down very significantly. And as was mentioned before, we don't want to bet our future on expectations for future price increases. So we rather assume prices to be relatively stable in dollar terms. Of course, not assuming either a significant reduction from government levels, which we don't see happening on a structural basis. And so we are doing our estimates in the best way possible. But basically taking on current dollar prices relatively constant in the near future. And then sorry I took down the note about your Downstream question, but can you repeat that, but because I didn't take notes.

Yeah, yeah. I was asking about the demand in the Downstream segment, that it seems to - that is still down 30% for gasoline and 20% in October, why don't you explain this and if this is the new normal?

Yeah, sorry. Yeah, I didn't take note. No, clearly that is not the new normal, we do see a further gradual recovery after the end of September, so the numbers that shown there are for the quarter. If we look into October, you know, clearly demand improved a little bit further. And as we moved along and now sitting in the first weeks of November, we are probably closer to minus 25% in gasoline and about minus 15% in diesel. So we expect to end the year roughly around these levels probably a little bit better. Again, as the lockdown measures continuing flexibilized, we do see our activity increasing. We don't see demand coming back to pre-COVID levels in the coming months. And as we move along in 2021, although it's hard to predict, you know how the pandemic will evolve and assuming there is no second outbreak, as you know, the world is seeing in the north, in Europe but primarily assuming that there is no second outbreak, we do expect demand to continue normalizing along the year, probably reaching levels of 5% to 10% below pre-COVID by the end of the year. So basically December '21 versus December 2019, both for gasoline and diesel will probably in the order of - we are estimating not only be, we are estimating to be between 5% and 10% below the previous normal. And in terms of jet fuel, clearly, we don't see that significant improvement or improvement not to be that significant in that segment. And broadly, we expect to end 2021 with the demand for jet fuel closer to about 50% that we - of it what it's used to be on pre-pandemic level.

Okay, thank you.

Sure.

Thank you. Our next question comes from the line of Andrew De Luca with Barclays. Your line is now open.

Yeah. Hi, Alejandro. Thanks for the question. Most of them have been asked, but I just wanted to follow up on the covenants on the 5% of total assets that you mentioned. I think that currently translates to about $1 billion of incremental debt above the incurrence. Is that - is all of that available as of now? That would be my first question. And the second question is, you answered it a bit in Barbara's question earlier, and it's about the possibility of the local funding options. But you also mentioned that you could look to the international markets to help fund CapEx if I understood correctly, just given where your unsecured bonds are trading, it seems, you know, obviously, quite challenging. So is it safe to say that when you mentioned that it's that you're looking or you're exploring the possibility of issuing some sort of secured funding?

Thank you, Andrew. Clearly, we are now analyzing all possible options in terms of our funding to cover our funding needs. As mentioned before, and we are very realistic about where our secondary levels for our unsecured bonds are trading. That's why also we mentioned that we will see the ample liquidity currently available in the local market as probably being a relatively large source of funding next year, and for the rest of this year as well. So, clearly, you know, looking at potential secured financing, cross border financing could also be on the table. But that is no decision - no decision has been taken yet as of what the right next step should be. As you probably know, there is a very interesting arbitrage currently available in the local market, where dollar-linked bonds have been issued at very low rates. So we do believe that we have the capacity to take advantage of that as well as also raising peso-denominated funding, which is very important to also maintain our hedging of our local liquidity as well. So I would say that, we are primarily focused on the local market for now. We, this company used to have significantly larger funding locally than what we currently have. So back in 2014, 2015, financing from the local market represented a significantly larger portion over total funding for this company. And we believe that probably we should move along the coming months with a strategy to get back to that situation, right. So relying more on the local market. In terms of the covenant, your calculation is relatively correct. So it's a little bit over $1 billion dollars, to be fair, but that is only related to new funding, right. So that is also the possibility all that that comes due can be reissued without any restriction. So basically, refinancing is not precluded or restricted by the government, but only the new - the incurrence of net new debt and in that front, yes, the limitation would be on roughly about $1.2 billion as of now based on the latest consolidated asset figure that will be the total available on net new funding based on the covenants.

Great, that's really helpful. And I just - two very quick follow-ups, just one on the local market funding. I mean, we're hearing that a lot from a bunch of corporates in Argentina. There haven't been that many transactions over the last couple of months, obviously. But can you just help us understand how deep do you think that market is really right now? And the second one is just going back to the secured capacity? Is there some update that you can provide us with in terms of how much secured capacity you had at the end of third quarter? Thank you.

Yeah, in terms of capacity from a negative clutch standpoint, we do have ample capacity. So there is, I wouldn't say that there is any major restriction there. And we can have enough flexibility to move along there. And, again, probably, the restrictions are more related to our export flows, if that security comes from exports, which is probably more, you know, the most reasonable way of putting up a secured financing. But again, as said before, as mentioned before, we don't have any final decision as to whether we want to actually move along in that front in the near future. And again, as long as we do have - as long as we end up having access to the official FX market to honor our commitment or honor our maturity of the March '21 bond, we do believe that the local market could still provide a very efficient funding source a very efficient funding alternative. Total capacity in that market or the final debt of that market it's hard to say for sure. It's not a market - it's a market that has been increasing its liquidity very significantly, you know, as you know, the FX restrictions for generally speaking, for corporates and for people, you know, generally the common people that means that both the population and companies have to retain liquidity on short and that means more liquidity available in the hands of institutional investors. So that happened in the past as well. And, again this is a mutual beneficial situation for both the local institutional investor audience and corporates like us to come up with new products to where that liquidity can be invested. That's why we believe that the arbitrage is coming from exactly that situation. And that's why we believe that there should be ample capacity to tap on that market in coming months, much further beyond, you know, that comes view for YPF in that market, which, as I was saying, it's in the order of $350 million in bonds that come due between now and the end of 2021.

Great, thanks very much, Alejandro.

Sure.

Thank you. There are no further questions at this time. I would now like to turn the call back to Alejandro Lew, for closing remarks.

Thank you very much. And well thanks again to everyone that have joined the call this morning. We know that these are very volatile times and taking the time to follow us, it's really appreciated by us. And so we keep open to having a continued dialogue and then once again, thank you all and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.