Thank you for standing by, and welcome to the YPF Full Year and Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. [Operator Instructions]. Thank you. I’d now like to hand the conference over to Santiago Wesenack, Investor Relations Manager. Mr. Wesenack, please go ahead.

Good morning, ladies and gentlemen. This is Santiago Wesenack, YPF's IR Manager. Thank you for joining us today in our fiscal year and fourth 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 explain our fiscal year and fourth quarter results. And finally, we will open up for questions. Before we begin, I would like to draw your attention to our cautionary 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 our calculations to reach our financial figure is in dollar terms. Our financial figures are stated in accordance with IFRS, but during the call, we might discuss some non-IFRS measures such as adjusted EBITDA, normalized EBITDA and normalized OpEx. I will now turn the call to Sergio.

Thank you, Santiago. Good morning, ladies and gentlemen. Thank you for joining us on the call. In our remarks today, I will first introduce you to the main highlights of YPF 2020 performance. And Alejandro will later give you further details on our main results. Afterwards, I will share with you our view on the 2021 outlook. And finally, we will open the floor for questions. Let me start by saying that despite 2020 having been one of the toughest years for the oil and gas industry worldwide, we are quite satisfied about YPF’s resilience and overall performance in this exceptional year. As you know, we have witnessed how the COVID-19 pandemic struck all economies much harder than anyone could have ever imagined, with the related lockdown measures making consumption collapse, particularly having a negative impact in oil prices as never before. Today, with the global progress achieved in understanding the situation, we are keeping a close track on the vaccine rollout, as it may hold the key to finally leave this challenging health situation behind. I rejoined the company last May as its CEO with a firm determination of steering YPF through this storm and prepare it to get back to profitable growth. I believe we took the right measures at the right time, acting swiftly to shield our finances, while protecting the health and safety of our employees and contractors and that of the communities where we operate. Despite the difficulties of the pandemic, critical activities continued with no interruptions following strict health protocols, which allowed us to keep providing energy to our clients in a safe way. We even achieved the lowest IFR level in our history. And by advancing new technological solutions and accelerating the digital transformation of our company, we were able to work remotely…

Thank you, Sergio, and good morning to you all. Before going into our financial results, let me go deeper on how we are working to protect our people and to address the energy transition. Sustainability is at the core of everything we do. And therefore, safety of our people is a top priority. As we have gradually started to assume activity, the index that measures the frequency of accidents per million hours worked reached its lowest historical value at 0.2 in 2020, improving more than 50% when compared to 2019. However, while we continue to strengthen safety precautions, we have to regret the casualty of a fellow worker who lost his life in January of this year, while performing maintenance tasks at one of our oilfields. As regards to our response to the pandemic, our COVID committee continues overseeing the critical services and operations are mundane with the utmost care for our employees, suppliers and customers. Over 90% of the people whose positions do not require face to face interactions are still working remotely. We are also monitoring the health of our employees and contractors on a daily basis to prevent contagion. And we have performed necessary testing and distributing more than 500,000 masks in our operational units. We are also helping the communities where we operate with equipment to face the COVID outbreak. We have helped hospitals and local municipalities and provide the essential workers with protection and equipment to face the pandemic. In addition, Y-TEC, our R&D subsidiary, has developed NEOKIT, a molecular test that can diagnose the COVID virus in a simple and fast way. So far, more than 1 million tests were produced, distributed, commercialized, and some of them even exported, besides 200,000 liters of hydroalcoholic were produced for use of our employees and the donations.…

Thank you, Alejandro. Now, let me briefly go through what we expect for the year 2021 before moving into our Q&A section. First of all, although we shall continue prioritizing our financial commitments on top of the investment activities, we expect to be able to accommodate our CapEx plan for the year set at $2.7 billion. Funding should come from an enhanced cash flow from operations and increase in net debt within manageable levels, and the potential sale of some non-strategic assets. Given efficiency gains secured in 2020 and those that are still expected to be achieved, each dollar invested from 2021 onwards will be more powerful, allowing us to progressively revert oil and gas production. In this regard, we expect to invest close to 80% in the upstream segment, a 90% increase compared to 2020. We’re still focusing investments including at $1.5 billion and around $600 million towards developing gas assets, mainly in line with our commitments under the Plan Gas 4. When comparing full year production in 2021 versus 2020, we expect it to be relatively flat at around 2,100 barrels per day in crude and 35 million cubic meters per day in natural gas. However, we expect production to increase in the second half by about 5%, including 9% in natural gas compared to the same period in 2020. So far, we're looking at data to for January and February. We are performing slightly better than our plan. In addition, it was recently announced by Argentina's President that the executive power will send to Congress a new oil and gas bill with a special conditions to attract new investments such as export promotion, foreign currency access, a stable pricing mechanism and special fiscal benefits. Although we are not aware of the timing or the specific details of…

[Operator Instructions]. Bruno Montanari with Morgan Stanley, your line is open.

Good morning and thanks for taking my questions. I have plenty of questions, but I’m going to stick to three. The first one is about the potential new view that is going to pass. So why would this time be different? Over the past decade, I think we saw a lot of incentives and new laws trying to be passed. So I wanted to get your view on why an international company could be comfortable to invest again aggressively in shale in Argentina? Second question is about working capital. It seems that an important part of the cash flows in the quarter came from working capital release, mostly receivables and inventory. So I was wondering how we should think about working capital in the coming quarters? And the third question is about the asset sales potential. So what would the company be willing to divest at this point? I know you mentioned non-core. But could we eventually see YPF selling exploratory acreage in Vaca Muerta and some of the more perhaps non-core assets to raise a more significant amount of cash and then really be able to have a more comfortable short and medium-term amortization schedule? Thank you very much.

Thank you, Bruno. Good morning to you. Let me start by addressing I would say a more simple question and then we’ll go into a more strategic one. Let me start with the working capital one. Let me say that probably you are commenting on the difference between the cash flow from operations and the EBITDA level for the year, which roughly has a difference of about $1.5 billion. Part of that is not purely working capital. Part of that differential comes from accounting reclassifications primarily related to leasing expenses in the order of – a little less than half of that amount, about $700 million are represented by those reclassifications. Then we also have some non-cash items mostly related to non-recurring items, including EBITDA for about $400 million I would say, which includes a portion of the voluntary retirement program that was non-cash this year, also a portion of the cost associated with the early termination of the Exmar contract. Also, it's non-cash in '21 and I think it’s being paid in installments. So you have something here where you have non-cash items in EBITDA that are having working capital, because we are financing them. And then we will have specifically about $400 million in positive working capital in the year, mostly related with collection of legacy Plan Gas programs. And going forward, I would say that we would expect positive working capital impacts in this year, in 2021. Probably in the other, similar to what we have in last year in the order of about $500 million, I would say, roughly speaking. Going to one of your other questions, more generally speaking, and then I will turn to Sergio to comment a little bit more on the potential hydrocarbon law that is being discussed and potential asset sales.…

Thank you, Bruno, for your questions. In respect to the new hydrocarbon law, as you may know, last Monday, Argentina’s President announced that the executive power was sent to Congress a new oil and gas law with a special condition to attract new investments. And we understand that this potential reform of the law is targeting three main goals. The first one is to incentivize for investments of crude oil and natural gas to generate structural incremental volumes for exports by freeing up hard currency for producers related to affordable balances providing then for some tax benefits. The second goal is to encourage the execution of hydrocarbon penetration, such as LNG and petrochemicals, through tax extensions that in turn will contribute to substitute high value imports and generate exportable surpluses and significantly improve the quality of fuels in the case of also refining. And finally, regarding natural gas, we understand the focus from incentivizing the production of natural gas under a scheme that allows for users to export 365 days a year, enabling for long-term contracts, while ensuring the supply of the local market. At the same time, activities such as underground storage and development of LNG could be promoted in this year. While we have an active and constructive dialogue with government authorities, we are not aware of the timing of the actual nature, if any at all, that the executive power might end up presenting to Congress. And with respect to your question about potential investments of assets, let me first summarize recent activities. First, we reviewed our stake at Bandurria Sur by 11% which was acquired by Equinor and Shell. Second, we sold 15% stake in the offshore block and 100 to Shell. And third, we sold a non-operated office building to the local water utility company.…

All right. Thanks.

Sure. Thank you.

Marcelo Gumiero with Credit Suisse, your line is open.

Good morning, Sergio, Alejandro and Santiago. Thank you for taking the questions. I have two questions here, first one on the lifting costs. So lifting costs decreased substantially year-on-year and I wanted to know -- as you mentioned, in 2021 this could be higher. I wanted to know how much of the 2020 lifting cost was continuous measures or one-offs? And if you could provide a breakdown of those measures, and how much we should expect with the cost to rebound into 2021? And the second question on CapEx and maturities, and congratulations on being able to roll out the 2021 maturities and getting access to U.S. dollars and to service the debt. But going forward, are YPF already comfortable with the maturity schedule? And are you foreseeing the [indiscernible] to continue to rollout maturities? And if that was the case, could we expect a great level of CapEx spend in 2021? Thank you.

Thank you, Marcelo, for your questions. In terms of lifting costs, as we basically anticipated meeting our previous goal in the third quarter, we were expecting lifting costs to increase somewhat in the fourth quarter, as we amounted and assumed activity, mostly well [ph] activity related to pooling and workover and O&M type cost. So definitely we should expect more of that next year. But in terms of the overall 2020 figure, what I would say is that roughly we could assume that about 60% or two thirds of the actual cost reductions in lifting were related to actual cost efficiencies achieved along the year, while I would say that about a third of the reduction in lifting costs was related to lower production and lower activity. So all-in-all, that would basically mean that about 15% cost reductions were achieved during the year in average when compared to the previous year. And that would translate into what we have presented in the -- during the presentation. I mentioned during the presentation that we expect actual OpEx efficiencies, primarily lifting cost efficiencies, to be in the order of 20% going forward. So basically what we expect is -- when we compare operating cost and primarily lifting cost in 2021 versus pre-pandemic levels, normalizing for activity, we will be or we should be about 20% more efficient, thanks to all the efforts that were put together as part of our company-wide cross cutting plan, but mostly focused on the upstream business. In terms of financial maturity and CapEx, your second question, what I would say is that after the liability management -- they do liability management exercise actually and they will perform one in July and the second one very recently, we now have a relatively smooth upcoming maturity profile not only…

Our next question comes from the line of Frank McGann with Bank of America. Your line is open.

Great. Thank you very much. I was wondering if you could provide a little bit more information on the adjustments that were made for the abandonment costs because that seemed to be relatively significant. And I was just wondering what were the exact amounts if you have them in the fourth quarter? And then what really caused the change in terms of what your assumptions for the abandonment reserves that you have? And how much of any adjustment, if any, was cash? And then second, I was just wondering, 2021 looks like it's going to be a year where you see good improvement as you go through the year in terms of a little bit of acceleration in production. I didn't know if you had any thoughts about the potential beyond 2021 in terms of what type of growth you are targeting? Thank you very much.

Sure. Thank you, Frank. In terms of the adjustment in abandonment costs, basically that is mostly related to depreciation charges. So, first of all, it's fair to say that it's a non-cash item affecting the evolution of the depreciation of the asset that is being booked as a counterpart to the contingent liability for future liabilities for the cost of abandonment or the cost for abandonment of wells in the future. So roughly speaking, the adjustment was related to primarily the estimated reduction in costs, in part aligns with the overall cost reduction that the company secured in the last few months. And also part of that is accounting issues related to the risk and value of those future costs. So all-in-all, what I would say is that it's -- of course, it has an impact on our results and our income statement. But as I said, it's a non-cash item. And it's something that relates to the liability that the company has on the road. And I would say for the next 30 to 40 years as they’ll become non-operative and the company actually has to go ahead and proceed with the abandonment of those wells. So all-in-all, in recent years we've been standing on average between $30 million and $50 million actually cash on well abandonment and for security purposes and we expect that level to remain the same in the future. And again, so the adjustment is mostly related to depreciation issues, but more of an accounting than anything else. And, of course, if you have further questions from the technicalities on that, I will revert later on after this call for our technical team to provide you with further details on that, because it's very technical. Then in terms of production, as was commented during the…

Okay. Thank you very much.

Sure.

Barbara Halberstadt with JPMorgan, your line is open.

Hi. Thank you. Most of my questions have been answered, but I would like to follow up on two of them. One is on liquidity and I just wanted to hear from you what is your thinking in terms of minimum cash levels that if you're comfortable running the company with after, of course, the payment now in March of '21, then all of this increase the need for funding CapEx. So just trying to understand what that level would be? And also on the funding side, you said you're cautiously optimistic that you'll be able to find the necessary resources to fund CapEx. So just wanted to get a little bit more color on the debt side, how much you're thinking in terms of incremental debt and if that would be sourced mostly locally or if there are – the company is thinking of tapping international markets again? Thank you.

Thank you, Barbara. In terms of liquidity, and that was commented in the previous call and also in the presentation, we have voluntarily targeted a lower overall liquidity position mostly related to Central Bank regulations which prohibited us and the same as other corporates to hold a large position of our liquidity in dollars and abroad. Basically that requires us to bring all of our liquidity onshore and being mostly held in local currency. So because of that, and because of the FX exposure that that creates, we decided to work with an overall lower liquidity position. So generally speaking, we feel comfortable with the total liquidity position that we had at the end of last year. So we will try to maintain roughly those levels. Of course, seasonality will clearly -- depending on the cash flow seasonality that we have, that could be somewhat modified along the year, but I will say that mostly within limited ranges, I would say no more than 10% to 15% plus/minus the liquidity position that we had at the end of last year. And that would include the upcoming payment on the receivable amount of the 2021 bonds that is coming due on next March 23. So based on that, we will maintain that liquidity target in mind and as Sergio was saying, we continue to prioritize our financial commitments the same way that was done in 2020. So I would say that the adjustment variable will continue to be our overall CapEx level. But hopefully, we will be able to secure all the funding needed to comply with our CapEx target as was mentioned before. So in that front, again, it will depend -- the total amount needed from in terms of financing will depend on the final cash flow from operations and the potential divestitures. But in any case, we do have -- we are working on different alternatives in terms of funding financial securities or financial instruments. A good part of that we expect to come from the local market. And also we are exploring potential cross border alternatives, but mostly related to trade finance and potential multilateral agencies or multilateral type financing that we are exploring as well. At this point, and based on how our bonds are trading and the perception of investors, we do not expect to tap the international bond market in coming months or even the rest of the year to cover our funding there.

Thank you.

Andres Cardona with Citigroup, your line is open.

Thanks and good morning, everyone. I have two questions. The first one is with the shale projects in which you are investing $1.5 billion over the next four years. Can you break down the lifting costs and cost per barrel in general? What I'm looking for is the breakeven for these types of projects. And the second one is when looking at the abandonment program for Bandurria Sur, La Amarga Chica and Loma Campana, I would like to understand how many wells are going to be drilled in each of these fields? And if you can share some details about the 2021-2024 program in terms of CapEx on wells also [indiscernible]? Thanks.

Hi, Andres. Look, unfortunately we are at this point not clearly disclosing some of the information that you're requesting. But let me give you some general idea that I would expect to use for the purpose of getting you comfortable with our expectations. First of all, in terms of the 2021 to 2024 CapEx plan that we have related, when you mentioned shale broadly, I would assume that you're referring to the CapEx plan related to our commitments towards a New Plan Gas, which is mostly sourced from shale fields, although we also have some conventional fields that it contributes, such as [indiscernible]. But generally speaking, on those projects and again we only now we're assuming significant activity in terms of exploiting more aggressively our natural gas resources. So, of course, our breakeven there are still to be materialized, although we do see the new prices provided -- the new price guidance or the new price opportunities provided by the New Plan Gas that was commented, this $3.6 per million BTU, flat on average for the next four years. We do expect those prices to be more than enough to leave reasonable profitability for us to work on the development of our natural gas projects. So down the road, we expect -- as we do see the materialization of those efforts come to reality, we expect to be able to provide you more color on the actual development costs and hopefully also potentially the actual breakeven on those projects. Now in terms of the core hub for oil, as you were asking for Loma Campana, Bandurria Sur and La Amarga Chica, as was commented we are expecting an overall investment this year of somewhat over $500 million, expecting to drill about 90 wells during the year. The breakdown between the different three fields or the three different projects is roughly the same, probably you have a little bit less wells that are going to be drilled in Bandurria Sur than the other two, but roughly we are talking about similar amounts invested in the three different projects. And down the road, we expect similar level of activity in coming years. I would say mostly '22 to '24, we will expect a similar amount of CapEx and amount of wells to be connected or completed in coming years, and then probably expect a ramp up in activity from '25 onwards to get closer to the plateau that was mentioned during the presentation by Sergio that we are expecting by 2027 of reaching a plateau of over $130,000 per day among the three projects. And for that, I will say that [indiscernible] how we are planning on that. And by that time, of course, this oil production coming from our key shale fields will probably represent more than 50% of our total production by then.

Thank you.

Sure.

Ezequiel Fernández with Balance, your line is open. Ezequiel Fernández López: Thank you very much. Good morning. So basically, I have three questions. I would like to go one by one, if you don't mind. The first one is related to fuel demand in Argentina, if you could share with us your thoughts on what has been or what do you think has been the structural impact of the pandemic, thinking about changes in mobility patterns, remote work and so on, on fuel demand in Argentina? And more on the long term, what you're seeing or thinking about electric vehicles adoption and the impact on the Argentina fuel demand as well?

Sure. Thanks, Ezequiel. Let’s start with that one. In terms of structural impact of the COVID pandemic into fuel demand, it is hard to predict yet as we are still at the early stages of potentially understanding structural impact. However, what I would say is that by the end of last year, and as was mentioned in the presentation, fuel demand recovered very significantly and I would say that even faster than we have anticipated, closing the year with ranges in the 5% to 7% between diesel and gasoline in comparison to pre-pandemic levels. And as of today, we have seen demand further improving basically almost being flat in terms of diesel flat and about 5% down on gasoline. So it's still early to say. Those numbers, those figures would tend to imply that there might not be a significant structural impact. But again, as I said, it's – I would say that it’s too early to predict. And we do expect to close the year based on our budget for the year. We do expect to end the year still a little bit below pre-pandemic levels, but in the order of 5% below pre-pandemic levels, although current levels might imply that we will be conservative on them. But, of course, it's hard to predict. We don’t know whether there's going to be a second wave of contagion and the potential impact on lockdown measures down the road. We are not predicting that. And so, again, unfortunately, it's still early to call it a final decision on structural impact. And in terms of potential impact from electric vehicles, also in Argentina at this point, it’s very hard to predict when and how that will actually penetrate our market. We still see an important evolution in developed countries, but still when we look at proportions, it’s very timid. And so it's -- I would say at this point it’s very hard to predict the impact in coming years from the introduction of electric vehicles in our country. Ezequiel Fernández López: Great, thank you. My second question is related to the refineries output. If we look into 2019 and if we are doing the math right, the diesel and gasoline output mix was roughly 80%. And now we seem to be closer to 70% mix for diesel and gasoline, basically more diversified output mix. Do you expect to revert back to that 80% mix as fuel demand recuperates?

Give me one second, because it's a little bit technical. I'm getting some color that. Bear with me for a second. Ezequiel Fernández López: If it’s -- we can take it off the call if it's better, no worries about that.

Yes, maybe that's better, because it's a little bit technical at least for me. And maybe it's better to -- yes, if we can follow up after the call, that will be better. But clearly 2020 was a very particular year and we adjusted -- on a general concept we adjusted the refinery output to actual demand. We managed to compensate mostly the reviews for all the lower demand for jet fuels to compensate for further output of diesel. But the general rebalancing between gasoline and diesel and other products, clearly, we may have some other refined output that was refined to different markets. But yes, maybe it's better to follow up after the call. Ezequiel Fernández López: Okay, perfect. So my last question is -- I think that's clear anyway, it's helpful. My last question is related to the latest Plan Gas 4 auction that we saw for adjustable winter volumes, the small one. I was wondering why you opted not to participate.

So I think that's a more tactical and commercial decision, the way our natural gas business unit decided to make or maybe the best use of the opportunity created by the New Plan Gas, and different companies have different approaches there. And we understood that the way to maximize the benefit for us on year-long basis or along the year was to the way we did it with one bulk participation without seasonal adjustment. And that's -- but no particular region. Basically a decision on how to maximize and optimize the opportunities created by the plan.

Remember, Ezequiel, we participated in the Plan Gas with almost 21 million of cubic meters per day from the 70 million, 21 million cubic meters per day come from the prices that we explained before, $3.66 per million BTU. That was also a commercial reason not to participate in this new plan. Ezequiel Fernández López: Understood. Commercial reasons. That's great. That's all from my side. Thank you.

Luiz Carvalho with UBS, your line is open.

Thanks for taking the question. I'm sorry, maybe to come back to your cash flow discussions. When we tried to reconsolidate the numbers here, we have a CapEx of 2.7 and debt interest of around $900 million plus some amortization this year despite the dollar debt maturity that you were successful. And when we look to the – we had cash availability of $1 billion and the potential EBITDA that you will be able to deliver, we still see a significant cash burn for this year. And looking to your average of close to 5x and the recent debt negotiation, we still struggle to see how the company will succeed in terms of -- become again or take free cash flow positive and reduce the debt. So just first question is can you help me to try to reconsider how you plan to address the situation apart from cost reduction and so on? And the second question is basically a follow up on a previous question. Maybe why not be more aggressive on divestments, I don’t know, the non-core assets or even core assets in order to try to reduce the debt in a bit more short term? Thank you.

Yes. Thank you, Luiz, for your questions. In terms of cash flow, basically, the way we look at it is yes, we have this plan of sequencing $1 million in terms of CapEx, which is the amount of CapEx primarily related to $1 billion targeting the option business. And the basis for that is primarily reversing the production decline trend that the company experienced in last five years, which was particularly effective in the last year in 2020, on the back of the clear hope that we had to pursue on our investment activities last year on the back of the pandemic. So to be able to get to that level, it will depend on a number of – the key number there is what's going to be the cash flow from operations during 2021. Unfortunately, given still some uncertainties that we have ahead of us, we are not providing a particular guidance on our EBITDA figures. We did say we expect in terms of working capital improvements or working capital contributions already in this call. But we are not yet fully mentioning or disclosing our EBITDA projection for the year. Of course, we do expect a significant recovery in EBITDA last year. And as was mentioned, during the presentation, even though we report that adjusted EBITDA is in the order of $1.5 billion when netting for one-off effects, the EBITDA level for the year was $2 billion and that is through the collapse in demand and either with very low realization prices. So we do expect all of our – it will continue to revert and continue to improve along this year. So clearly the 2 billion, excluding one-off items of last year in terms of purpose of providing you with a clear flow in terms of our expectations…

Okay. Thank you.

There are no further questions at this time. It is now my pleasure to turn the call back over to the YPF management team for final remarks.

Okay. Thank you everyone for joining us today on this call. And thank you for your continued support. And, of course, we remain open for any further questions that you may have. Our team, as always, is open and ready to answer all your questions and concerns. And with that, I will just close it and thank you all and have a good day.

This concludes the YPF full year and fourth quarter 2020 earnings call. We thank you for your participation. And you may now disconnect.