YPF Sociedad Anonima 2026 Q2 Earnings Call

This is Margarita Chun, YPF's IR Manager. Thank you for joining us today in our second quarter 2026 earnings call. Before we begin, please consider our cautionary statement on slide 2. 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. 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 Q2 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.

Q2 was a landmark quarter in YPF's history, with 10 major milestones achieved across all our operations. These results reflect the magnitude of the transformation that YPF has achieved since the launch of the 4X4 plan, supported by strong market dynamics. The main drivers of this transformation are shale growth, the replacement of conventional assets, cost control, capital discipline, and operational efficiency. As a result, we are reshaping the company into a very profitable, integrated shale player. We are building a more profitable, more resilient, and more export-oriented integrated shale company. Adjusted EBITDA reached $2.8 billion, positioning the quarter as the best in the company's history, a 70% increase versus the second-highest record that goes in Q3 2014, and the third one was last quarter.

To put this in perspective, in the first half of 2026, we generated nearly $4.4 billion of adjusted EBITDA, already above the full-year EBITDA reported in 2023. This exceptional performance drove adjusted EBITDA margin to 43%, its highest level in the last two decades, supported by higher prices, seasonal demand, solid operational execution, and operational efficiency. As a result, the outstanding performance was reflected in the income statement. Operating results reached $1.8 billion, a new record high in the company history, while net result was $1.2 billion, representing the second-best quarterly performance ever achieved by YPF. The first net result was Q3 last year. In terms of cash generation, free cash flow reached $824 million, top three in our history, while liquidity closed at the highest level ever achieved of $2.5 billion.

As a result, net leverage decreased to 1.1 times, its lowest level in more than a decade, underscoring the continued improvement in YPF's financial position. From an operational standpoint, the quarter reinforced the continued transformation of YPF's production mix. Shale oil production reached 213,000 barrels per day, with shale oil now representing 80% of total oil production. This confirms the increased relevance of unconventional assets with the company portfolio and the continued progress in scaling up Vaca Muerta as YPF's key growth driver. In parallel, we continue increasing the number of rigs operated by YPF in Vaca Muerta oil window. As of today, we are operating 16 rigs, significantly higher than the 12 rigs by December last year, and expecting to reach 21 rigs by early 2027. On the other hand, let me share with you an important step to accelerate Vaca Muerta.

In May, we submitted the RIGI application of Loma La Lata Oil, a project 100% owned by YPF, with a production plateau of roughly 240,000 barrels per day. It represents the largest oil export program in Argentina's history and the largest project submitted under RIGI so far. The project requires cumulative investment of $25 billion over 15 years and is expected to generate more than $100 billion in oil export revenue over its lifetime. Loma La Lata Oil positions YPF and Argentina to build a world-class energy export platform. Given the scale of the project, the approval process may be structured across separate SPVs. We will provide more details later when we have news. Finally, our downstream operations continue to deliver exceptional performance. Refinery processing reached 351,000 barrels per day, reflecting the highest level of refinery utilization ever achieved.

It enabled us to generate surplus production in gasoline and middle distillates, reaching 43,000 cubic meters per day and setting a new record high. Overall, these results reflect a quarter of exceptional execution, with record profitability, a strong cash generation, a reinforced balance sheet, and continued operational improvement across the company's main business segments. Before moving to the next slide, let me take a moment to highlight several recent developments that are highly important to the execution of our 4X4 planning strategy. First, regarding the second pillar of our 4X4 plan, active portfolio management. Last week, we signed an agreement for the sale of two clusters of the under projects in the province of Mendoza, the operating Chachahuén field and the non-operating El Corcovo and CNQ7A blocks. Together, these transactions were closed at a sale price of $405 million and remain subject to the final approval before closing.

Importantly, once these conventional fields are excluded from our production profile, approximately 95% of our oil production would come from shale operations. It marks another concrete step toward our objective of becoming a pure shale player. More recently, we have just obtained the approval of our board and signed the sale of the 70% equity stake in Metrogas subject to closing. Moving to midstream oil, VMOS remains on track to reach COD by the end of Q4 this year, with the progress of around 80% as of July, expecting first oil by early 2027. Turning to Argentina LNG, we have signed an agreement with the province of Neuquén to establish the project's regulatory and fiscal framework.

In addition, we successfully brought Eni and XRG into the upstream development, with each partner acquiring a 32% interest in the five blocks that will be fully dedicated to Argentina LNG, while YPF retains the remaining 36% stake. This is a highly relevant milestone on the path toward the final investment decision as it improves the project's upstream foundation and reinforces the development of an integrated LNG value chain. We will provide further details later in the presentation. In terms of our local fuel pricing strategy, in mid-May, we extended the buffer mechanism for another 45 days alongside a 1% adjustment. The buffer mechanism successfully preserved local fuel market dynamics during a very volatile international context while allowing our midstream and downstream to reach a very healthy EBITDA margin of around $30 per barrel.

Finally, regarding YPF's stock split, last week, we successfully completed a 10-for-one split in the local market, BYMA, with the goal of improving accessibility and affordability for local retail investors in comparison with our peers. In parallel, we adjust the ratio of ADR to shares from one to one to one to 10 with no economic impact on ADR holders. Importantly, this split doesn't affect shareholders' economic interest, ownership percentage, or voting rights. In addition, users of YPF application with cash accounts will be able to buy and sell YPF shares directly through the app starting this Friday, August 14. This represents another meaningful step in expanding access to YPF's equity story to a wider investor base. Now, let me share more details on our Loma La Lata Oil project, a key driver to accelerate the development of the South Hub in Vaca Muerta's oil window.

In late May, YPF applied to join the RIGI, the Large Investment Incentive Regime for the SPV Loma La Lata Oil. This is the largest RIGI project and Argentina's major upstream oil export initiative. The SPV is fully owned by YPF, developing five blocks with well inventory of over 1,150 wells, an unconventional concession until 2059. These blocks are La Angostura Sur One and Two, already delivering exceptional productivity with solid economics, currently with seven rigs in operation. Besides the expansion to Barreal Grande, La Angostura Suroeste and La Angostura Norte. In terms of investment, we estimate total CapEx of around $25 billion over the next 15 years. It will be mainly allocated to drilling and completion activities, liberation, shares infrastructure to maximize efficiency.

At plateau beyond 2032, production is expected to reach around 240,000 barrels per day, 100% dedicated to export markets through VMOS, while also contributing around 10 million cubic meter per day of gas to the local market. This will translate into estimated annual revenue of approximately $7 billion, considering both oil and gas with an average Brent price of $70 per barrel. It's worth mentioning that given the scale, long-term horizon, and strong export focus supported by RIGI, this project is a transformational initiative of Argentina long-term oil development and important value creation for our shareholders. In this sense, based on the scale of the project, the approval process may be structured across different SPVs. Now, I turn the call to Pedro to analyze in detail our financial results.