YPF Sociedad Anonima

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 speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. Thank you. I'd now like to hand the conference over to Santiago Wesenac. investor relations manager. Mr. Wessonak, please go ahead.

Good morning, ladies and gentlemen. This is Santiago Wessonak, YPF 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 Franti, our CFO, Alejandro Leo, 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 two. Please take into consideration that 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. Also, note the exchange rate used in our calculations to reach our financial figures in dollar terms. Our financial figures are stating accordance with IFRS, but during the call, we might discuss some non-IFRS measures such as adjusted VDA, normalized VDA, 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 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 the firm determination of steering YPF through this storm and preparing 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 in an efficient and agile way. Our digital agenda is aimed at generating and preserving value by deploying a wide range of world-class technologies and solutions. Current priorities are to continue increasing efficiencies and achieving sustainable cost reductions over time. Given our efforts, we were able to be net cash flow positive along the year, despite the contraction in profitability that we experienced as the pandemic heavily affected demand and prices of our products. We did so by reacting quickly in adjusting investment activity to accommodate to the changing market conditions to prioritize financial discipline. We therefore managed to reduce our net debt by about $500 million along the year. partially reversing the increase in the net leverage ratio as a consequence of the reduction in our EBITDA. In the same line, we proactively engaged in a market-friendly liability management exercise last July, addressing the upcoming $1 billion maturity of our March 2021 notes, and we successfully we financed close to 60% of that maturity. Nevertheless, new regulations introduced by the central bank in September obliged us to launch a broader exchange offer last January. This exercise allowed us to comply with the foreign exchange regulations resulted in a financial relief of around 600 million dollars for 2021 and 2022. It shall provide partially indirect funding to our capex program aimed at reverting the oil and gas production decline trend of the last five years. We not only work on the financial front but also took the pandemic as an opportunity to rethink the way in which we conduct our operations and refocus on our core business, the oil and gas value chain. We embarked in a company-wide cost-cutting plan aiming at achieving structural cost reductions and operational efficiencies. Efforts were made not only in YPF, but also involving our suppliers and the unions to adapt to this new normal and enable virtual growth for all. So far, we see early results as encouraging, having reduced 17% average cost per well and over 20% in OPEX after netting one-off effects. And we achieved key milestones in our sustainability track improving our ranking position within the oil and gas industry, as we will further explain, and working towards the energy transition by consistently reducing greenhouse gas emissions and increasing the share of renewables in our total energy consumption. During the second half, as demand gradually recovered, we started with periodic price increases. at the time to stabilize prices in US dollars and, more recently, recover margins. That process continues today as we monitor market conditions to adjust prices, although remaining conscious on the overall macroeconomic situation and the price effect on demand. In the retail segment in particular, our digitalization process has allowed us to be closer to consumers and consolidate our market presence. Nowadays, 12% of fuel sales take place through our app, which has already reached 2 million users and 1.8 million monthly transactions. All these actions helped us create the basis for gradually resume activity in a more efficient way once economic conditions started to show signs of stabilization and partial recovery. We were able not only to go back to prepandemic production levels at Vaca Muerta, but have also reached record production this February for our oil-operated areas. And in Banduria Sur, we have drilled the longest horizontal well in all Vaca Muerta. with productivity being at the top of the shale play. A similar case can be found on the conventional side, where we have continued beating record production levels at Manantiales Vera, despite being a 90-year-old block, thanks to successful tertiary recovery techniques. In addition, we have recently recovered a pre-pandemic utilization rate of our refineries as demand for diesel and gasoline continued improving during January and February of this year. Let me end this introduction by saying that we are fully satisfied with the company's performance in such a challenging year, and that I am especially proud of our employees, of their commitment and efforts. I also want to thank our clients for their fidelity and our investors, partners, and suppliers for their renewed support. And now I leave you with Alejandro.