YPF Sociedad Anonima 2026 Q3 Earnings Call

Margarita, please go ahead. Good morning, ladies and gentlemen.

This is Margarita Chun, YPF IR Manager. Thank you for joining us today in our third quarter 2026 earnings call. Before we begin, please consider our cautionary statement on slide 2. Our remarks today and answer to your questions may include forward-looking statements, which are subject to risk and uncertainties that could cause actual results to be materially different from the expectations contemplated by these remarks. Our financial figures are stated in accordance with IFRS, but during the presentation we might discuss some non-IFRS measures, such as adjusted EBITDA. Today's presentation will be conducted by our Chairman and CEO, Mr. Horacio Marín, our Finance Vice President, Mr. Pedro Kearney, and our Strategy, New Businesses and Controlling Vice President, Mr. Maximiliano Westen.

During the presentation, we will go through the main aspects and events that shaped Q3 results, and finally, we will open the floor for a Q&A session together with our management team. I will now turn the call over to Horacio.

Please go ahead. Thank you, Margarita, and good morning.

Let me start by saying that this quarter, YPF continued delivering strong financial and operational results. Margin remained high, cash generation was very strong, and both upstream and downstream performed very well. After a record Q2, revenue remained strong in Q3 and reached $6.6 billion, up 41% from last year. Adjusted EBITDA reached $2.5 billion, the second highest level in YPF history, and 84% above last year. The main drivers were the change from conventional fields to shale, record level of activity at our refineries, cost efficiency, and favorable prices. As a result, our adjusted EBITDA margin remained high at 38%. Shale oil production continued to grow and reached 224,000 barrels per day in Q3, up 5% from Q2, and 32% from last year.

If we exclude the conventional assets in process of divestment, about 95% of our oil output would have come from shale. This shows the scale of YPF's change and our progress to become a leading shale oil company. We remain on track to reach 250,000 barrels per day by December. To support the continued ramp-up in shale oil production, last month, we inaugurated the first train for crude oil treatment plant at Luján de Cuyo block. The facility has an initial processing capacity of 31,000 barrels per day, which is expected to double with the addition of a second train by Q4 this year. We continue working on new RIGI projects in the north half of Vaca Muerta. We will expect to submit to the applicable authorities in the near term. I will share more details later in the presentation.

Also, it is worth mentioning that in the downstream business, our La Plata refinery was named Refinery of the Year for the second consecutive year, one of the highest recognition in Latin America's refining industry. At the same time, YPF, we also award Digital Technology of the Year for Ekons Matrix AI. This is a digital solution that predicts fuel blending specification, improving efficiency and product quality. Moreover, we continue to reinforce the competitive differentiation of our premium fuels portfolio. In this sense, in September, Infinia Turboclean, YPF premium gasoline brand, became the first fuel in the region to achieve the new TOP TIER™+ certification. This recognition reinforced our leadership in fuel quality and innovation. It also reflects our commitment to bringing Argentine consumer world-class product developed to the highest international standards.

In addition, Santa Fe Bio, our joint venture with Essential Energy, signed a long-term offtake agreement with TotalEnergies for the future production of sustainable aviation fuel, SAF, another renewable fuels from San Lorenzo biorefinery. The project is expected to require more than $400 million in CapEx to be developed under the project finance structure. The production capacity is estimated to be around 170,000 tons per year of renewable fuels. SAF for aviation and HVO for diesel, mostly for export markets. This agreement is a key milestone for the project, providing long-term commercial visibility and supporting its financing. Now let me turn to investment. We invested $1.3 billion in Q3, with 70% going to our shale operation. CapEx was 26% higher than last year, mainly due to new wells, new facilities at La Angostura Sur, and maintain work at our refineries.

We expect upstream investment to increase in Q4, supporting higher output and the start of VMOS. VMOS first oil export expected early next year. For that reason, we remain on track to meet our full-year CapEx target of $5.8 billion-$6.2 billion. VMOS is also moving ahead, with about 85% construction completed by September. Early this month, the two monobuoys arrived at the port in the Río Negro province. This marks a key step to making VMOS operational, representing a world-class logistics solution for large-scale development. Cash generation was once again very strong, with free cash flow reaching $901 million, the second highest level in our history. This was mainly driven by adjusted EBITDA mentioned before, and the initial proceed from the sale of non-core assets. As a result, our net leverage ratio reached the lower level in more than a decade to 0.81 times.

Our balance sheet is now stronger and provides us with more financial flexibility. Before we review the financial results, I would like to cover three recent updates: our RIGI project for upstream North Hub, the acquisition of 25% stake of YPF Luz, and the progress on the sale of non-core assets. Let me start with an update on our RIGI pipeline. We are currently working on three RIGI projects in the north half of Vaca Muerta oil window, covering five blocks: Bajo del Toro, Bajo del Toro Norte, La Escalonada, Rincón La Ceniza, and Narambuena. YPF is the operator in all of these blocks and works with leading partners in the energy sector. We expect to submit these projects in the near term and will provide further detail as they progress.

This project consists about $44 billion of total gross CapEx, with investment taking place over 16 to 26 years, depending on each project. If we add LLL Oil, YPF will have filled close to $70 billion of oil investment under RIGI, making this the largest upstream plan filled in Argentina so far. This project includes close to 2,200 drilling locations, which at plateau, could produce about 270,000 barrels of oil per day and 28 million cubic meter of natural gas per day. These are gross figures, and they show the large scale and long-term value of the North Hub. At full scale, the projects could generate about $8.2 billion of gross revenue per year based on Brent price of $70 per barrel and a gas price of $3.50 per million BTU. YPF keeps an average stake at about 40% in these projects.

This large project shows the strength of our partner model in Vaca Muerta and YPF's ability to lead major export projects under RIGI. They will support our next stage of growth and create long-term value for our shareholders. Regarding our portfolio optimization strategy, this month, we acquired the remaining 25% stake in YPF Luz, obtaining full control of the company for an attractive valuation of $430 million. This transaction was structured through an acquisition finance. As a result, YPF now owns 100% of YPF Luz and will be fully consolidated in our financial statements. YPF Luz is a leading power generation company with a strong renewable energy business, represents a key asset in our long-term plan, as power is one of the main areas of growth in the energy sector. YPF Luz is the country's third largest power generator and second largest renewable energy company, with 100% dollar-linked revenues.

It operates 3.8 gigawatts of installed capacity across thermal and renewable power plants. Moreover, the company has grown nearly by five times in its initial capacity in the last decade. In addition, YPF Luz consistently deliver best-in-class thermal availability of 90%, well above the national average of 72%. Its renewable asset also perform at world-class level, with load factors of 50% for wind and 31% for solar, significantly higher than the global average. These results have supported high growth, with adjusted EBITDA rising from about $56 million in 2017 to about $500 million in 2026. At the same time, net leverage is expected to fall from 3.8 times to around 1.5 times. This acquisition represents another step for YPF to become a world-class energy company. It will allow YPF Luz to accelerate its growth while remaining focused on the power sector and reinforces YPF's integrated energy offering.