Ladies and gentlemen thank you for standing by. At this time I would like to welcome everyone to the YPF First Quarter 2023 Earnings Webcast. [Operator Instructions]. It’s now my pleasure to turn today’s call over to Pablo Calderone, Investor Relations Manager. Sir, please go ahead.

Good morning ladies and gentlemen, this is Pablo Calderone YPF, IR Manager. Thank you for joining us today in our first quarter 2023 earnings call. This presentation will be conducted by our CEO, Pablo Iuliano, and our CFO, Alejandro Lew. During the presentation, we will go through the main aspects and events that explain our first quarter results, and finally, we will open up the call for questions. Before we begin, I would like to draw your attention to our customary statement on slide 2. Please take into consideration that our remark 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 expectation contemplated by industry remarks. Our financial figures are stated in accordance with IFRS, but during the call, we might discuss some non-IFRS measures such as adjusted EBITDA. I will now tell the call to Pablo. Please, Pablo, go ahead.

Thank you, Pablo, and good morning to you all. We are glad to report a solid beginning of the year across our operational and financial metrics, where our total hydrocarbon production continued with a positive trend, bringing to market over 511,000 barrels of oil equivalent per day, representing an increase of 2% on a sequential basis and 1% when compared with the same period of 2022. Moreover, I would like to highlight the evolution of our crude oil production, we just commented during our strategic outlook presented a few weeks ago, is the focus of our short-term growth strategy recording a 3% sequential increase and a robust 7% inter-annual expansion. Adjusted EBITDA remains strong in the quarter, surpassing once again the $1 billion mark, expanding 12% from the previous quarter and 5% on a year-over-year basis. Sequential improvements come as a result of higher hydrocarbon production and higher processing levels at our refineries, accompanied also by lower OpEx, partially offset by lower realization prices of our refinery products when compared to the previous quarter. The solid operating results permit our bottom line to come in positive territory once again, with net income reaching $341 million in Q1. In terms of our investment activities, we started the year investing $1.3 billion, 78% higher than the first quarter of 2022. Contract to meet our ambitious plan for the year where the main focus was once again directed to shale operations, which concentrated more than 50% of the total investment. On the financial side, free cash flow was almost flat during the first quarter at a negative $17 million, stacking our net debt to $6 billion, resulting in a flat net leverage ratio at 1.2 times. On a final note, let me briefly comment on the positive recent development related to the international…

Thank you, Pablo. Let me begin by expanding on Pablo's comments about the evolution of our oil and gas production. During the quarter, our total hydrocarbon production delivered 511,000 barrels of oil equivalent per day, highlighting a strong interannual expansion in our crude production, reaching the highest quarterly mark since 2016 at 238,000 barrels per day. And beyond crude, natural gas production increased 2% on a sequential basis, while NGLs remained essentially flat. The positive evolution in oil and gas production on a sequential basis came once again, and as expected, on the back of the solid increase of 6% in our total shale production. Moreover, during this quarter, our total conventional production remained flat when compared to the previous quarter, mainly as a result of our continuous strategy of extending tertiary production, which recorded an expansion of 7% versus the previous quarter, and almost 50% against the same quarter of 2022. In that sense, in Manantiales Behr, our flagship project, tertiary production represents almost one-third of the total production of the block. And in the other three pilots being deployed at Chachahuen, in Mendoza, El Trebol in Chubut, and Los Perales in Santa Cruz, we have continued harvesting promising results. Moving to costs, lifting averaged $14.6 per barrel of oil equivalent across our upstream operations, representing a minor increase when compared to the $14.5 in the previous quarter. More particularly for our shale core hub operations, lifting costs increased by about 8% as higher activity and energy costs during the quarter overran the expanded production, but still remaining at a very competitive level of $4 per barrel. Regarding prices within the upstream segment, crude oil realization prices averaged $67 per barrel in the first quarter, representing a minor increase compared to the previous quarter, but leading to a significant…

[Operator Instructions] Your first question comes from the line of Walter Chiarvesio with Santander. Your line is open.

Hello, good morning, Alejandro and Team. Congratulations for the results. I would have two questions. If you could first develop a little bit more on the export potential for the company. I understand that the company has a crude oil deficit in the short term, but if there is some potential of exports, even the connection to the Transandino pipeline, and if you can provide some details on the volume you think that you can deliver to the pipelines this year and the next one, for example. That is one thing, and the other thing is, what do you see in the next six months regarding pump prices given that we are in an inventory year, inflation is running high, and probably the company is receiving some pressure. This is a question, of course, for the government to try to keep pump prices stable. Thank you.

Well, good morning, Walter, and thanks a lot for your questions. Let me address first the question about the export potential. As was recently announced in the media, we have reached an agreement with ENAP to take advantage of the availability now of the Transandino pipeline that, after several months of work and after performing in-line inspection, should be back in operations in the coming weeks. This is a milestone, a key milestone, given the over 15 years that that pipeline has been idle, and that clearly is on the back of the increased production, not only based on YPF's production, but also from all the other players in the Neuquina Basin and in the country as a whole. So we believe that that will continue to expand the total export potential of the country, and more specifically for YPF, that should allow us to become a structural exporter once again. So as mentioned, there is a short-term agreement to start with a volume of up to 40,000 barrels a day that should start to be pumped as early as the first days of June, so in a few weeks from now. And out of that volume, YPF will probably have a share of about 40% to 45%. That total volume should increase over time, primarily on the back of the new pipeline that we are building, the Vaca Muerta North pipeline, that will connect the core hub with Puesto Hernández. That should allow total pumped volumes to increase. And at the first stage, we believe that that volume will probably be in the order of about 70,000 barrels a day or so before the end of this year. And hopefully over time, that should continue to grow as we move along the following months until probably the end of…

Thank you very much, Alejandro.

Your next question comes from the line of Carlos Moraes with Morgan Stanley. Your line is open.

Hi everyone. Thanks for taking my questions. I have 2 questions. The first question is about funding. Can you talk about your funding requirements and strategy for the 2023 and 2024? The second question is about FX devaluation. How is YPF preparing the company in the event of a sharp currency devaluation? How do you see fuel prices evolving in that scenario to ensure margins remain healthy? Thank you.

Thank you, Carlos, for your questions. In terms of funding, as commented during the presentation, we have started the year on the right footage. We have already in the first 4 months of the year have already raised over $1 billion, tapping mostly the local capital markets and relationship banks -- as expected and as commented as it was our funding plan for the year. With those exercises, we have already reached a net funding of about $500 million. And we expect to continue with a similar strategy for the remainder of the year. We clearly have tackled most -- the most relevant international amortizations that we had during the year. So we only have left a smaller amount of international cross-border amortizations for the following months. And so in that regard, we expect to continue to mostly focus our exercises in the local market, where clearly, we see very competitive financing costs. As commented also both in the January and the April local bonds that we issued, we achieved a very interesting funding costs and also increasing our trade lines. On top of that, there is also a possibility -- a high probability of enlarging -- refinancing and enlarging the CAF-led A/B loan that was secured last year. We are working on potentially extending that that loan, both in terms of tenure and in terms of size. And that we expect to be -- to finalize negotiations and documentation for that in coming weeks. So all-in-all, clearly, mostly focused on the local market and in trade lines, but then also looking into other instruments, such as this enlargement of this A/B loan potentially. For the next year, clearly, still too early to say. But most likely, we believe that there will still be room for us to continue to…

[Operator Instructions] Your next question is from the line of Paula La Greca with TPCG. Your line is open.

Hi, good morning. I have a couple of questions. First, I would like to know how our [Indiscernible] collections they're doing? Could you tell us how much money spend into collect? And then a follow-up on this one is, if collections continue to deteriorate rate on our earnings calls of peers and, let's say, to 115 days how is it going to impact the plans in crude production?

Hi, Paula, good morning and thanks for your questions. Clearly, we have seen some deterioration in collections, particularly in -- related to the planned gas, where we have seen some further delays in collection. But from a net -- from a nominal perspective, this amount on the lower seasonality of the planned gas invoicing. So in terms of actual working capital during the first quarter, we had a positive effect because we've been collecting on high seasonal invoices and while the delays took place on lower seasonality invoicing. So from a net working capital perspective, it was a positive variation in the first quarter. Down the road, we definitely expect, and we are doing our best to try to collect and to get the normalization of the collection on the planned gas. In terms of CAMMESA delays, we are not seeing any major impact there. But all-in-all, and as you probably recall, our focus is on crude oil production, which clearly has no relationship whatsoever to this collection timeframes because, of course, we monetize that through pump prices and there, we see no delays in collections. And then also now, as we are going to move forward with a portion of our production being exported, also, it's completely separated from the realities of what is more a natural gas issue related to both CAMMESA and the government payment on the planned gas program. So I would say that all-in-all, of course, it could potentially have an effect in future working capital balances. It does not affect our production growth plans or our investment plans as it has less of an impact on YPF than it might have in other companies that have a larger proportion of gas in their businesses or in their plans. So I would say that so far, we are not seeing or expecting any relevant impact in our activities or in our investment decisions, and we continue to focus mostly on -- and assigning most of our capital investment to our crude oil opportunities.

Understood, thank you. And then I have another question that is regarding the contract with if you could tell us what was the price grade of crude oil and -- or in terms of revenue, how much is it going to represent in quarter?

Yes. Well, in terms of the commercial agreement, it's a formula that basically relates to export parity prices at Puerto Rosales. And on top of that, it adds some logistics premium, basically taking into consideration the -- to share the benefit of the improved logistics that both of sites will have both the suppliers, not just YPF, but the other producers as well versus that is substituting imported crude from sea imports to this inland imports through pipe. So basically, it's going to be an export parity plus pricing on this commercial agreement, at least for this initial agreement that is for the first 2 months. In terms of impact for revenues during the second quarter, it's going to be very marginal because, as mentioned before, we are only going to start pumping in the first days of June. So it's going to be only less than a month of exports that will actually be recorded in the second quarter. And even in the third quarter, it's going to be limited to this smaller amount or the smaller volume until the Vaca Muerta North pipeline is up and running, which is expected at some point in late September or early October. So we should start seeing the full benefit of this new exports into Chile by the fourth quarter of this year, where it should start representing around 10% of our total production.

Thank you so much.

Welcome Paula.

Your next question comes from the line of Luis Carvalho with UBS. Your line is open.

Hi, thanks for taking the question. I have basically two here. The first one is about infrastructure I mean there has been some discussions about the construction of pipelines and of course, how this will tie in terms of the production growth over the next couple of years. So if you may, I don't know, give a bit more color in terms of what are the main challenges that you're seeing in terms of potentially, I don't know, suppliers or licenses and so on, will be great? The second question, in the past, I mean, Argentina, announced some specific rules for the export on agri of soft commodities in terms of, I would say, accessing the FX rate, for example, right? And the company, YPF, has potentially becoming larger export So would be great to hear your views on the conditions that the company is seeing in terms of the rules to follow to match additional levels of oil exports and potential revenue dollars from now on? Thank you.

Hi, Luis good morning. In terms of bottlenecks or pipeline expansion, again, as commented, we are seeing very good progress, and we are very comfortable with the progress that we are achieving directly and indirectly, right? Because some of these projects are being executed directly by YPF and some of them by third-parties like our participating companies Oldelval and OTE. In both those cases, we are making good progress. As expected, the transaction pipeline should be up and running and in operations now in late May, early June. So that's a key milestone. We are making good progress on the construction of the Vaca Muerta North pipeline, which we are still seeing or expecting COV in early fourth quarter or late September, early October. So we are making good progress there. Clearly, access to -- or the flow of imports is somewhat more troublesome these days, of course. But at the end of the day, the relevancy of these projects finally get things moving, and we are not expecting any major impact from this particular situation in the finalization of these projects. And then in terms of Oldelval and OTE, again, we follow that from our side. But clearly, those projects are being run by those companies. And we are seeing good progress there, both in terms of the actual construction or the actual works that are being performed as well as the financing. As we mentioned, both companies tap the local market, and they are making good progress in terms of the financing as well. So at this point, we feel comfortable. We believe that the potential restrictions or noises related to imports, we so far don't expect them to have a significant impact in the evolution of these projects. And then finally, on the Vaca Muerta South or…

Okay, super. Thanks very much. I’m very clear. Thanks for the answers.

Thank you Luis.

Your next question is from the line of Marcelo Gumiero with Credit Suisse. Your line is open.

Hey good morning everyone. Thanks for taking my questions. I have two from my end. The first one is on costs. So we saw lifting costs almost flat sequentially, but I mean, coming from an increase compared to the last year. I would like to know, I mean, how do you see lifting cost evolution looking forward into 2023 or 2024? I mean as we advance and have more conventional production in the mix, should we expect lifting costs to reduce? And the second question is on fuel imports. So we saw an increase of imports despite an increased refinery utilization rate. You explained that you were like building up inventories during the quarter. I mean I just wanted to understand what should we expect from that side going forward? I mean should imports go down or should YPF keep the current level? Thank you very much.

Good morning Marcelo and thank you for your questions. In terms of costs, we are working hard in trying to contain cost pressures. And clearly, we've been mostly successful during the first quarter. However, we continue to see cost pressures affecting our overall performance. But as you have said, the higher proportion of shale or unconventional within our total portfolio, should allow us to, over time, decline the average cost -- the average lifting cost for our total upstream operations. All-in-all, even within both sides, well, clearly on conventional, we've been -- we have seen our costs in previous quarters increasing, and that was mostly related to the decline that we were experiencing in production. As far as we managed to maintain production stable within crude -- conventional crude and mitigate to some extent, the decline in conventional natural gas, we should also see or be able to contain the increase in lifting costs there to a large extent. And so while we do that and we increased the share of total shale within our portfolio. Then as you have said, even though we might continue to see some cost pressures, we would expect the average lifting to trend downwards over time. And in terms of fuel inputs, clearly, as you mentioned, the main reason for having -- continue to have a relatively large percentage of imports related to our total sales was mostly related to the build-up in inventories. We are now at average historical inventory levels. So we got to a point where we are comfortable with inventory levels. But for the following quarters, particularly the third quarter, we might also see import levels relatively high compared to historical averages mostly because of program maintenance on our refineries. So I would say on average for the year, we should be close to somewhat below the current level of imports, but with some potential reduction in the second quarter, but then probably some increase again in the third quarter. But that's -- that will also depend on the overall level of demand and whether we -- beyond the program maintenance, how we continue to perform on our processing capacity, which as commented, will reach a historical high in the first quarter, and we will do our best outside or besides this program maintenance to maintain processing levels to the maximum possible extent.

Awesome, very clear. Thank you very much.

Thank you.

Your next question is from the line of Ezequiel Fernandez with Balanz. Your line is open.

This is Ezequiel Fernandez from Balanz. Thank you to the whole YPF finance team for the materials and for staying late in the call to take my questions. I have three questions. I would like to run them one by one, if you do not mind. The first one is related to the Vaca Muerta South project that you mentioned. If you could provide us a little bit more details about potential pipe capacities or upgrades, if this is going to be geared toward Swissmax or VLLC exports, anything that might be worth mentioning?

Hi, Ezequiel good morning. Well, let me address it with information that we can comment at this point. This is a project that is still on a design stage, although we are moving fast with it. As we commented, we are well advanced with the engineering design process. And so far, we expect this project to be a project that could be expanded over time in a way to address the growing need for evacuating Vaca Muerta's production from 2026 onwards. And so far, we are looking at a project that could go from a minimum flow of about 30,000 cubic meters a day to be expanded to a total of about 120,000 barrels a day once it's fully expanded -- sorry, meters -- cubic meters per day. So from an initial of 30,000 cubic meters a day to a total of 120,000 cubic meters a day once it's fully expanded. And that will be an efficient way from a capital perspective to handle that and move along with that project while we and the rest of the industry, we will likely continue to see the expansion of Vaca Muerta's operations from 2026 onwards. In terms of the design of that project, we are seeing the pipeline that will, for the most part, go parallel to the existing Oldelval pipeline, but then connect to a new port further south. Location is still being fine-tuned but most likely, and as commented before, is going to be new ports in an area in the province of Rio Negro, where we can exploit or we can take advantage of natural deeper waters that should allow for the entrance of VLCCs and hence, making exports more efficient. So that's the general idea of that project.

That's great. Now -- sorry, but I would like to go into another question -- another project that you might not be able to fully comment on. But regarding the offshore initiatives in either the Austral basin or off the coast of the province of Buenos Aires, what else can you share about this initial maybe testing wells? And if they're going to be geared towards gas or oil and anything on economics would be useful, too?

Yes. Economics is definitely still too early to comment. What we are seeing there is clearly on the project outside of the coast of Buenos Aires of Mar del Plata, that's a key project that we are targeting to drill the first deepwater exploratory well in ever in Argentina. That's a project that is in the block CAN-100 and where we are partners with Equinor and Shell and that's a project that is being -- or a block that is being operated by our partner, Equinor. So as mentioned, we are expecting and working towards being able to drill or to start drilling before the end of the year or at the latest, early next year. And we -- well, we have high expectations for such a project, but there's still much work to be done to be able to comment on all the potential that we expect there. Even though as we have already disclosed or mentioned, we are targeting resources in the order of 7 billion barrels of oil. So clearly, the focus there is oil. And so the expectations are very high for that project. And in terms of the Austral basin, we are looking into some opportunities there to enter into some existing concessions that some other players have. We are looking into that and in that case, mostly for gas. But again, there, it's an analysis that we are performing and it's a little too early to comment.

Okay. Great. And I don't know if you have anything to add on Petronas and the LNG project?

Well, not much to add. We continue to work together with them in performing the -- both the technical and economic analysis to get us comfortable with a final investment decision. As previously commented, we are still away from that decision. There's still much work that has to be done. And at best, we would expect to have -- to enter into an FID not before the end of next year. So that's, as mentioned, still much work to be done there to be able to move on with the actual development of the project.

Okay, that’s great. That’s all from my side, thank you very much.

Sure. My pleasure.

There are no further questions at this time. I will now turn the call back over to management for closing remarks.

Well, thank you very much, everyone, for joining this call and for your continued support. And we definitely remain open for any further questions that you may have, and have a great day.

Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now disconnect.