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.

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 resume 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 had 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 oil fields. As regards to our response to the pandemic, our COVID committee continues overseeing that critical services and operations are maintained 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 provided essential workers with protection and equipment to face the pandemic. In addition, ETEC, 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 donations. Further focusing on sustainability, we have significantly improved our ranking position within the oil and gas industry to the tenth place, based on a voluntary participation in the Corporate Sustainability Assessment designed for the Dow Jones Sustainability Index. In addition, YPF was included in S&P's The Sustainability Yearbook 2021, which includes companies with top-tier sustainability and ESG practices, ranking in the top 15% among oil and gas companies. In line with our policy to promote cleaner and more efficient energy solutions, we have been working hard on reducing our direct greenhouse gas emissions. We have set a target of 0.34 tons of CO2 equivalent per unit produced by 2023, and we are making good progress. In 2020, we reduced the intensity of direct emissions by more than 2% as compared to 2019, already reaching 0.367. Moreover, natural gas, which accounts for almost half of our hydrocarbon production mix, plays a key role not only as a transition fuel, but also as a smart, flexible partner for renewables intermittency. We are committed to a cleaner oil and gas production by minimizing flaring, venting, and methane leaks along our supply chain. In addition, nearly 20% of the energy used in our operations in 2020 came from renewable sources, significantly advancing our target that was originally set for 2025. In this front, YPF Luz, a power company controlled jointly with GE, represents our strategic arm for the energy transition. Despite the pandemic, YPF Luz managed to reach COD on several power generation projects between September and October for an aggregate capacity of over 400 megawatts, including efficient thermal assets and renewables. When including these projects, now in commercial operation, the company has reached a total installed capacity of over 2.2 GW, including more than 200 MW from wind farms. In addition, another 231 MW are expected to be commissioned in the first half of this year, including 174 MW of renewable energy. I will now go through our financial results for the year. 2020 figures were fully impacted by the effects of the pandemic. It was an extremely challenging year for the worldwide oil and gas industry, and we were not the exception. Top of the list, our revenues for the year contracted by 32%, mainly explained by a similar decline in fuel sales, both on lower volumes dispatched as well as lower prices. while natural gas revenues and jet fuel sales also contributed to the decline, as natural gas prices dropped by about 30%, while jet volumes collapsed by more than 70%. Compensating at least partially the severe decline in revenues, We managed to achieve a significant reduction in total costs that went down by 25% during the year, or an even larger 30% when normalizing OPEX by eliminating some one-off items, as I will comment in a few moments. While this was partially generated by the contraction in purchases and royalties on the back of lower volumes and prices, a key aspect was the reduction in OPEX, which produced savings of about $1 billion when eliminating one-off items. This was the result of a company-wide structural cost-cutting program initiated last year that has already started delivering initially encouraging results. But even more critically, as already commented by Sergio, we have reacted quickly and decisively upon the adverse of the unexpected pandemic to prioritize financial discipline by halting our investment plan, which was cut by about $2 billion when compared with the previous year. And on this same line, we managed to reduce our net debt by about $500 million along the year. However, as conditions started to normalize in the second half, we have been gradually increasing activity, leveraging on the cost efficiencies already secured, with CapEx reaching $538 million in Q4, more than doubling the amount invested in the previous quarter. Based on the key variables already laid out, adjusted EBITDA for the year totaled $1.5 billion, contracted 60% year-over-year. This figure was significantly impacted by non-recurring charges in 2020, totaling close to $600 million, mainly related to abnormally high operating costs from rigs in standby mode, the voluntary retirement program for non-unionized employees, the reversal of Decree 1053, and the charge related to the termination fee of the floating LNG contract with Exmar. When adjusting for these charges, normalized EBITDA would have reached over $2 billion, or 40% higher than reported adjusted EBITDA, but still contracting by 44% year-over-year. In terms of operating income, it is worth highlighting that during the fourth quarter, we recorded a reversal of an impairment charge of over $820 million, resulting in positive operating income for the quarter and leaving the cumulative figure for the year at a loss of $911 million. The impairment reversal was driven by the revaluation of certain gas projects on the back of the confirmation of the new plant gas. which resulted in improved economics and mid-term visibility for these projects, which was taken into consideration for the reassessment of the economics of our resources. On a quarterly basis, adjusted EBITDA reached $183 million in Q4, or $385 million after normalizing for the non-recurring items affecting this quarter. This normalized adjusted EBITDA figure represented a 30% sequential decline, mainly driven by lower oil and gas production and higher OPEX, resulting from the resumption in pulling and workover activities, despite the steady improvement in demand for refined products and the gradual recovery in fuel prices, all of which is fully in line with the guidance provided during the previous quarter's webcast. Going into the upstream business, total hydrocarbon production for the year declined by 9%, in light with the guidance provided in previous quarters, as we adjusted investment and welfare activity to face the effects of the pandemic on our financial situation. Crude oil production went down by 9% year over year, averaging 207,000 barrels of oil per day during 2020, with lower conventional production being partially offset by higher shale oil. On the natural gas front, production came at 36 million cubic meters per day, a decline of 10% versus the previous year, aligned with the company's objective taken in late 2019 to reduce natural gas production on the back of prevailing low prices as the supply overhang remained in place. Finally, NGL production decreased by 5% year over year, mainly associated to lower gas production. As economic conditions recovered on the back of the flexibilization of the lockdown measures, we have gradually resumed investment and wellhead activity, which had a net negative impact in production in Q4, as total output decreased by 10% sequentially due to the temporary closing of wells to avoid interference while fracking and connecting new ones, as well as program maintenance activities in natural gas pipelines. During the year, our crude oil realization price averaged $40 per barrel, 24% down from the previous year. This decline was lower than the close to 35% drop in Brent, as local prices were not fully impacted by the collapse in international prices, given the introduction of the Baril Criollo on May 20th, which established a minimum reference price for Medanito quality crude at $45 per barrel. However, after the Baril Criollo expired in mid-August on the back of the recovery in Brent prices, local oil has since been freely negotiated following export parity. On the natural gas side, and still as a consequence of the excess offer, market prices were also below the previous year's realization price. Our selling price averaged $2.6 per million BTU, compared to $3.6 per million BTU in the previous year. Going forward, we expect higher average realization prices, given that about 60% of our natural gas production will be sold through the four-year contracts granted on the back of the new Plant Gas 4, at average prices of $3.66 per million BTU. In terms of costs, during 2020, we were able to reduce our average lifting cost by 19%, averaging $9.7 per barrel of oil equivalent, driven by operational efficiencies achieved on the back of our cost-cutting program, as well as lower pooling and work-over activities, primarily in the second and third quarters. Therefore, although we expect cost reductions to be maintained and even increase in the future as the focus on efficiency became the new norm, Lifting costs could increase in 2021, but still be well below 2019 levels as activity is fully restored and natural decline in conventional fields impacts the overall average. Looking deeper into our shale production, despite the challenging environment, we were able to increase average production for the year by 9% when compared to 2019. However, in Q4, share production contracted 14% sequentially due to the maintenance works in gas pipelines and the temporary closing of wells, in addition to a technical adjustment in the way we account for the NGL production coming from some non-operated blocks that generated a recategorization between natural gas and liquids for the previous quarters, with a net negative impact in total production in Q4. More recently, in January, our oil and gas shale production has already started to recover, reaching 95,000 barrels of oil equivalent per day, up 7% versus average levels in the fourth quarter, while preliminary figures for February show a historical high from our operated areas, showcasing our investment focus on these assets. Going into the right side of the slide, oil and gas conventional production for the year contracted by 12% compared to the previous year, with similar performance in both crude and natural gas production. However, I would highlight that full natural decline was partially offset through the advancement of secondary and tertiary recovery techniques with encouraging results. As an example, Manantial Sber closed 2020 with the highest production in its history, reaching 21.6 thousand barrels per day, increasing by 8% year-over-year, thanks to innovation and top-notch technology that allow us to improve the oil recovery factor. Tertiary production averaged 2.2 thousand barrels per day during the year, compared to just about 100 barrels per day in 2019. and further increasing to 4.5 thousand barrels per day last January. YPF's ambitious EOA strategy in Argentina has included the risking of areas with high polymer potential to further expand those areas with proven pilot response. The successful experience with tertiary recovery commenced in 2015 through an initial pilot using polymer flooding techniques at the Green Big Field in Manantialesburg. becoming the basis for the current operation of five polymer injection units at that field, while three additional PIUs are expected to be connected in 2021. In addition, full planning for 2021 also includes the installation of seven more PIUs, four for the massification production at Chachahuén in Mendoza, as well as three pilots at Los Perales and Cañadón León in Santa Cruz and El Trebol in Chubut. Total investment for EOR development in 2021 is estimated between $60 and $90 million. Moving into the next slide, as mentioned before, we have gradually started to resume activity in Q4 after having gone into a full stop during the second quarter. As of the end of the year, we had over 80 weeks back in operation, including drilling, workover, and pulling towers, which compares to an average of less than 20 pulling equipment in operation during the second quarter. We have resumed activity in a more efficient way, as each dollar invested having more power than in the past. We have seen a significant improvement in frag speed, reaching seven stages per day in Q4, And while we expect this figure to be slightly worse in 2021, as the resumption in activity has mainly focused on our core HAB, which has better logistics due to lower distances, it should still result significantly better than the average figure for 2019. In addition, in January, we reached our historical record in terms of monthly stages totaling 412 fracs, outpacing the previous record of 385 reached in September of 2019. We have also drilled the longest horizontal well in Banduria Sur, which reached a lateral length of 3,800 meters and an IP of 2.2 thousand barrels per day. On the conventional side, we have accomplished a significant reduction in pulling intervention time, as total hours per intervention in Q4 were 26% below the average for 2019. And in terms of future opportunities, For 2021, we count with efficient sources of growth thanks to the drilled but uncompleted wells that we have in our backlog. By the end of 2020, we have already connected 18 of the 81 duct wells that resulted from the complete activity halt in Q2 and plan to connect 48 additional wells during the first half of this year. with their assessed associated production expected to reach 33,000 barrels of oil equivalent per day by the end of the second quarter. Going into the evolution of hydrocarbon reserves, in 2020, 1P reserves contracted to 922 million BOEs. This decline was mainly driven by the reduction in investment activity. while also being negatively affected by the impact from lower prices, which generated a downward revision of over 100 million barrels of oil equivalent, which more than offset the upward revision related to OPEC savings for about 50 million BOEs. Despite this, the reserves replacement ratio for shale stood close to 150%. with our high-quality NET Shell reserves expanding by 5% year-over-year, now representing 39% of total approved reserves, up from 31% in 2019, led primarily by the incorporation of natural gas reserves, given the viability of new projects associated with the new plant gas that was already commented in this presentation. Finally, The price visibility provided by the new plant gas, together with the overall lower cost base, also led to a significant addition of 2P and 3P reserves. Total reserves, including proved, probable, and possible, grew by 7% during the year, as 3P reserves increased by more than 100%. Switching to our downstream business, Demand for refined products dropped significantly during the year, affected by the lockdown measures in place since late March. During 2020, gasoline contracted by 30% and diesel by 11%. The worst monthly record was in April, when gasoline and diesel volumes contracted by about 70% and 35% year over year, respectively. Since then, demand has gradually but steadily improved, closing the year with gasoline and diesel demand at minus 7% and minus 5% respectively, compared to December 2019 levels. Additionally, preliminary data for this year shows further improvement in diesel and stabilization for gasoline. Separately, given the collapse in local demand, we explored the regional export market as an opportunity to take advantage of our idle refining capacity. On this front, We managed to once again export fuels to Bolivia after 12 years and to Uruguay after more than five years, thus regaining our ability to act as a regional exporter of refined products. In terms of refinery utilization, we reacted quickly to the fall in demand and immediately adjusted our processing levels. Thus, capacity utilization averaged 73% in 2020, down from 87% in 2019. However, utilization has been increasing in line with recovery in demand after reaching its lowest level in April at 47%. Utilization for the fourth quarter averaged 75%, and data for January shows average refinery utilization already at 86%. On this topic, it is worth highlighting that despite the logistics complications generated by the pandemic, we decided to move forward with a program major maintenance at our La Plata refinery, taking advantage of the low demand environment to minimize economic impact. Excluding these works, which ended in October, utilization would have been at 79% during the fourth quarter. With regards to prices, the pandemic affected international reference oil and refined product prices in a very significant way. reaching levels not seen since 2003. In this context and on the back of a weak macroeconomic local environment, our net fuels realization prices in dollar terms were on a sliding scale until we have managed to start with periodic adjustments back in August. This permitted to stabilize our net prices in dollars and more recently regain some margin. However, Even after the cumulative increases since August, our average net prices for 2020 measured in dollars still stood about 15% below the average levels of 2019 and about 30% below the average for the past 10 years. As mentioned before, we launched a cost-cutting plan across the company, and this effort should not only render very significant savings in our structural operating expenses, but also, and equally or even more importantly, on our capex costs. We have already reviewed about 90% of all vendor contracts and revisited a good portion of our internal operating processes, achieving important savings in key activities, and have renegotiated conditions with the unions, introducing KPI-related compensation and flexibilizing working conditions. Furthermore, in July we launched a voluntary retirement program for non-unionized employees, which closed by the end of August and will allow us to organically reduce our overall size and G&A costs. This program resulted in a reduction of 13% of our non-unionized workforce having a total estimated cost of $125 million and generating future savings of over $50 million per year. Early results are very encouraging for both OPEX and CAPEX. Normalized OPEX was done 24% year-over-year, both for full year 2020 and in Q4. Normalized OPEX was calculated by excluding one of items affecting the figure in 2020, such as the termination charge for the contractual agreement with Exmar, the cost of the voluntary retirement program, standby costs, and the provisioning of gas distribution companies' receivables related to effects variations granted by Decree 1053. However, while it is fair to highlight that this decline was also the result of reduced activity during 2020, we expect cost efficiencies secured primarily during the second half of 2020 to render overall OPEC savings for 2021, when compared to pre-pandemic levels, in the order of 20%. On the CAPEX side, further to the significant reductions in development costs already achieved along recent years at our core oil hub at Vaca Muerta, We are very confident about the investment efficiencies that we are currently achieving through renegotiated contracts and new well designs. We therefore expect average development costs for our core shale oil hub to decline by an additional 15% in 2021 when compared with pre-pandemic levels. Turning to cash flow, let me start by reiterating something that was already mentioned in previous quarters about the impact of central bank communication 70-30 on our liquidity position. The regulation established by that communication, which restricts corporates in Argentina from holding liquid assets abroad if they want to continue being granted access to the official FX market, has led us to hold most of our liquidity locally and in pesos. Given this situation, and taking into consideration the dollarized nature of our long-term business, we have been monitoring our liquidity exposure related to FX variations, net of the stock of peso-denominated debt, which acts as a natural hedge. And based on the residual exposure, we have decided to reduce the overall liquidity position while at the same time actively entering into FX derivatives to further hedge, at least partially, our net exposure. As a result of this, as of December 31st, our net FX exposure related to our liquidity position stood at less than 30%. Along this line, financial discipline continues to be a key priority for us, particularly during these uncertain times. During 2020, our conservative approach on the back of the effects of the pandemic led to positive net cash flow from our operation, as the results in operating cash flow was more than compensated by a further decline in investment activities. This, together with the decision to reduce our cash position, resulted in net negative borrowing of $471 million during the year. Moving into our debt profile, in July 2020, we managed to successfully secure a significant short-term debt relief after refinancing almost 60% of our $1 billion 2021 bond. However, the enactment of Central Bank Communications 7106 in September changed the landscape. Within this new regulation in place, And despite the refinancing executed earlier in July, we were required to either refinance at least 60% of the residual amount of $413 million on our 2021 bond, or otherwise secure an equivalent amount of cross-border financing to be able to fully honor our commitments. Given the limited options at hand and after formal confirmation from the central bank of our obligation to comply with the regulation, in spite of the earlier refinancing performed on the March 2021 bond, we launched a broader exchange offer last January, not only inviting residual holders of the 2021s, but also holders of the rest of our international dollar denominated notes with an aggregate face value of $6.2 billion. It is important to highlight the rationale behind the decision to invite all outstanding bonds into the exchange offer. As was commented during the transaction, we considered that it was inequitable to offer such an alternative only to holders of the 2021 bonds and not to the rest of our investor base in case those investors considered it convenient to also exchange their short-term cash flows for a piece of the enhanced senior security that was being offered. And if investors were to see value in the offer, the company would, in exchange, get a much-needed cash relief to help in the process of obtaining indirect financing to fund the CAPEX program for 2021 and at reverting the oil and gas production decline of the last five years. The exchange resulted in a global participation of 32% and 60% in the case of holders of the 2021s. allowing us to comply with the central bank regulations, thus avoiding a potential and voluntary non-payment situation, and generating a financial relief of around $600 million on aggregate for 2021 and 22. We understand the successful result was possible primarily due to the reasonable proposal that was presented to the market and the open and constructive dialogue that we held with investors along the process, which permitted us to adjust the offer to accommodate investors' concerns while staying within parameters that we could commit to in the long term. As a final demonstration of the success of this transaction, earlier this week, S&P announced a two-notch upgrade to our international credit rating, taking it to CCC+, and mentioning it now being limited by the sovereign rating, while the standalone credit profile was further raised to B-. Supporting this decision, the rating agency quoted the post-debt exchange cash flow relief that will free up capital to invest in production and recover volumes. Looking forward, we have included a performer amortization schedule of our consolidated debt to reflect the post-exchange adjustment of our debt stock as of December 31st. In summary, with this exercise, We have managed to significantly reduce refinancing risk for 2021, as most of the debt that comes due is in the local markets, both local bonds and bank loans, while cross-border maturities, excluding subsidiaries, debt that was already repaid or refinanced during January and February, and after netting the $165 million of the residual amount of 2021 to be canceled on March 23rd, stand at $275 million and are primarily concentrated in trade finance bank loans, which are typically easier to roll over. Furthermore, very recently in February, after the consummation of the international exchange, We access the local capital markets, being able to successfully raise over $120 million equivalent through the combination of a reopening of a three-year dollar-linked security at a yield of 3% and a new 42-month inflation-linked note at a real rate of 3.5%, both providing very competitive financing conditions. Finally, let me add that although we have managed to further reduce our net indebtedness in the fourth quarter, our net leverage ratio calculated as net debt over the last 12 months EBITDA has jumped to 4.9 times on the back of the contraction in EBITDA during the most recent quarters. And also worth noting, this ratio stood at the lower 3.7 times when calculated based on the definitions for covenant purposes. However, while leverage is likely to continue to increase this quarter as the full effect of the pandemic will be included in the rolling 12-month use for EBITDA calculation purposes, although we anticipate adding net new funding during the year, we expect net leverage to decrease in coming years as net indebtedness stabilizes while EBITDA recovers, provided that market conditions continue to normalize and no particular contingencies materialize. I will now switch back to Sergio to go through the outlook for 2021.

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, an 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. Still focusing investments in crude at $1.5 billion, and around $600 million towards developing gas assets, mainly in line with our commitments under the planned gas form. When comparing four-year production in 2021 versus 2020, we expect it to be relatively flat at around 208,000 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% in crude and 9% in natural gas compared to the same period in 2020. So far, when looking at data 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 special conditions to attract new investments such as export promotion, foreign currency access, stable pricing mechanism, and special fiscal benefits. Although we are not aware of the timing or the specific details of this new law, We are hopeful that it will incorporate attractive incentives. And so, once enacted, it should be a very useful tool to increase production levels, not just for YPF, but for the whole Argentine oil and gas industry. I am optimistic about reaching a new growth cycle for YPF. The efforts made in 2020 towards becoming linear and more efficient shall continue in the future as part of the new normal. And it should provide for a better shaped company, more resilient in its operations and with a disciplined approach towards capital allocation. I truly believe that we will have a much stronger 2021 both for the company and its stakeholders. As I stated before, we will continue focusing on shale oil as our main driver for future growth. Within unconventionals, more than $500 million will be deployed in our shale oil-operated core hub, which is integrated by Loma Campana, Banduria Sur, and La Marga Chica Blocks. These projects, with proven track record in terms of productivity, have key facilities already in place which drastically improve their cash flow profile as we will only need to direct about 15% of the total capex to incremental facilities. During 2021, we expect to drill 90 wells in these three blocks. taking our net crude oil production from the current 33,000 barrels per day to almost 53,000 barrels per day at the end of 2021, a 60% increase. Even after achieving the results, the average development rate for these blocks will continue being relatively low. So we still see huge potential going forward. estimating a net production plateau of more than 130,000 barrels per day by 2027, with further potential from the future development of the Aguada del Chanier block, also projecting very competitive break-even prices in all four blocks. Following the new planned gas incentives during 2021, we will invest $500 million in gas developments, over 80% of the total capex for the gas segment. Also, when looking at the entire program, we plan to invest more than $1.5 billion in aggregate during the 2021-2024 period, drilling more than 250 wells, including both operated and unoperated blocks. The key projects that will provide new production in the immediate future are mainly those fully owned and operated by us, such as Rincón del Mangrullo and Aguada de la Arena. But other projects, such as La Calera and Rio Neuquén, where we have joint ventures in place while also contributing in 2021, are projected to have a more significant contribution in coming years. That would be all from our side. Before taking your questions, let me once more thank you and the whole investor community for your support.

At this time, if you'd like to ask a question, please press star 1 on your telephone keypad. 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... this potential new bill that is going to pass. So why would this time be different? I mean, 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 potentials. So, what would the company be willing to divest at this point? I know you mentioned non-core, but could we eventually see YTF 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 mid term debt amortization schedule. Thank you very much.

Thank you, Bruno, and good morning to you. Let me start by addressing, I would say, a more simple question, and then we'll go into more strategic ones. 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 about a little bit less than half, Of that amount, about $700 million are represented by those reclassifications. Then you also have some non-cash items, mostly related to non-recovering items, including the RIGDA, 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 Ex-Mart contract Also, it's non-cash in 2021, and it's being paid in installments. So you have some things there where you have non-cash items in EBITDA or that are adding working capital because we are financing that. And then we do have specifically about $400 million in positive working capital in the year, mostly related with collection of legacy planned gas programs. And going forward, I would say that we would expect positive working capital impact in this year, in 2021, probably in the order similar to what we had in last year in the order of about $500 million, I would say, roughly speaking. Going to 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. But generally speaking, what I would say is that, well, clearly the landscape of the industry as a whole is changing significantly on the back of this improved reference international prices for our industry, for oil in particular. Then also what I would say is that, you know, once again, I think we are, you know, the achievements that we made in the latter part of last year, of 2020, and the cost reductions that we secured during the last few months and that we expect to maintain or even improve in the coming years, basically puts our Vaca Muerta resource in particular at a very special point, right? Basically providing us with attractive break-evens to consider aggressive investments for as long as we can accommodate those within our capital structure and maintaining financial prudency, which, as was mentioned by Sergio and during our presentation, is at the core of our strategic decisions. So generally speaking, I would say that there is a tremendous opportunity for us to invest in developing this tremendous natural resource, which is still at a very low stage of development or an early stage of development. But then also there are, as we expect, regulatory evolutions or regulatory considerations that could further improve the ability and the visibility, such as the planned gas that was recently put in place, where we expect more of that down the road to further incentivize investments, not only by YPF, but also by international players. But with that, I will let Sergio comment a little bit more. Thank you, Bruno, for the question.

With respect to the new hydrocarbon law, as you may know, last Monday, Argentina's president announced that the executive power will send to Congress a new oil and gas law with special conditions to attract new investment. And we understand that this potential reform of the law is targeting three main goals. The first one is to incentivize further investment of crude oil and natural gas to generate structural incremental volumes for exports by freeing up hard currency for producers related to exportable balances, providing for some tax benefits. The second goal is to encourage the execution of hydrocarbon industrialization, such as LNG and petrochemicals, through tax extensions that in turn will contribute to substitute high-value imports and generate exportable and significantly improve the quality of fuel in the case of the refining. And finally, regarding natural gas, we understand the focus is on incentivizing the production of natural gas under a scheme that allows producers 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 law. While we have an active and constructive dialogue with government authorities, they are not aware of the timing of the actual measures, if any at all, that the executive power might end up presenting to Congress. And with respect to the question about potential investments of assets, let me first summarize recent activities. First, we reduced our stake at Bandura Sur by 11 percent, which was acquired by Equinor Second, install a 15% stake in the offshore block, can 100 to Shell. And third, install a non-operative office building to ISA, the local water utility company. But going forward, as we commented in the past, we are focused on the oil and gas business and our core activities and optimizing our portfolio. And in that regard, I'm taking into consideration current financial restrictions. Cash generation through divestitures of non-strategic assets could provide us additional capital to permit a more rapid deployment of resources into oil and gas. We are having conversations with several key international players for the possibility of entering into new farming agreements in Vaca Muerta. And in addition, and at the same time, we are also analyzing a group of mature conventional areas of both oil and gas that might be subject to potential disinvestment should we conclude that they could be operated more efficiently by a more flexible and focused niche operator, permitting us to allocate our resources to those assets where we can create the highest value for our stakeholders. Finally, we will continue analyzing our portfolio of non-operating and non-strategic assets, and we'll likely move forward with the monetization should potential deal valuations result reasonable. Although we are working on some alternatives at this point in time and within the market environment we are living in, there is nothing material to comment on any particular relevant transaction.

All right. Thanks for the thoughts. Sure. Thank you.

Marcelo Gomiero with Credit Suisse. Your line is open.

Good morning. Sergio Alejandro in Santiago. Thank you for taking the questions. I have two questions here. First one on lifting costs. So lifting costs decrease substantially year on year. And I wanted to know, as you mentioned, in 2021 it could be higher. I wanted to know how much of the 2020 lifting cost was, I mean, continuous measures or not. And if you could provide a breakdown of those measures. measures and how much we should expect with the cost to rebound in 2021. And the second question on CAPEX and maturities and congratulations on being able to roll out the 2021 maturities and getting access to the dollars and to service the debt. But going forward, aren't YPF already comfortable with the maturity schedule? And, I mean, are you foreseeing the sensitivity continues to allow maturities? And, I mean, if that was the case, I mean, could we expect a great level of capex still in 2021? Thank you.

Thank you, Marcelo, for your questions. In terms of lifting costs, And as we basically anticipated during our previous call in the third quarter, we were expecting lifting costs to increase somewhat in the fourth quarter as we remounted and resumed activity, mostly welfare activity related to pooling and workover and O&M type costs. 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. Well, 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 on average when compared to the previous year. And that would translate into what we have presented during the presentation or 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 that when we compare operating costs and primarily lifting costs in 2021 versus pre-pandemic levels, Normalizing for activity, we should be about 20% more efficient thanks to all the efforts that were put together as part of our company-wide cost-cutting plan, but that mostly focused on the upstream business. In terms of financial maturities and capex, your second question. What I would say is that after the liability management, the two liability management exercises actually that were performed, one in July and the second one very recently, we now have a relatively smooth upcoming maturity profile, not only for the rest of this year, but also for the next few years. Probably the next important bar of maturity only comes in 2025. But looking more shortly, you know, to the next few months, I would say that for the most part, we have less than $100 million in maturities per month, averaging, I would say, more in line with 50, with the exception of a couple of months related to two particular maturities, one which is a syndicated, a local syndicated loan for $250 million that comes due next June. and then one local bond that matures in November for an amount of about $90 million. So I would say that those are the only, I would say, relatively large maturities that we have ahead of us. But again, both of them related to local market financing, both bank and local securities. And we do not expect any significant or material risk in being able to refinance those maturities. And on top of that, I would say that we do expect to even be able to access the local market for getting net new funding, as was commented also in the previous quarter and also during the presentation. So we still believe and we are cautiously optimistic that our CAPEX plan for the year even though it has some risk, that it should be achievable. Of course, that will imply obtaining energy funding, and the exact amount will depend on how our cash flow from operations end up resulting. And of course, there is still some uncertainties on that front, given the uncertain environment that we are living in, mostly related to the pandemic. And then also depending on actually, as was explained by Sergey before, depending on how we move on with the potential divestitures of non-strategic assets. So depending on all of that, we will have a resulting financial need for the rest of the year. But in any case, we are feeling cautiously optimistic, as I said before, that we will be able to manage to secure the financing needed to comply with the CAPEX program that we had presented for the year of about $2.7 billion.

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

Okay, 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're targeting. Thank you very much.

Sure. Thank you, Frank. In terms of the adjustment in abandonment costs, in real 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 liabilities or future liabilities for the cost abandonment or the cost for abandonment of wealth in the future. So roughly speaking, the adjustment was related to primarily the estimated reduction in costs, in part aligned 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 down the road, and I would say for the next 30 to 40 years, as wells 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 spending on average between $30 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 on 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 presentation, we expect total oil and gas production during the year for 2021 to be relatively stable vis-a-vis 2020. However, on a sequential basis, we see production increasing both in oil and in gas. actually when when you look at uh and i was connected look at the second half uh production noise should be around five percent higher than that of the second half of last year of 2020 and then in terms of natural gas it should be closer to 10 higher so that demonstrate clearly the the capex program that we are anticipating and that we are predicting and aiming for and uh and going forward We expect that to continue in 2022, of course, always depending on our ability to work around the financial constraints that we expect to start subsiding in the incoming future. So all in all, and providing that no major modifications take place in terms of the possibilities to industrialize natural gas, as was commented by Sergio, as part of the potential new hydrocarbon law or anything like that. We are right now anticipating natural gas production to remain relatively flat in coming years. And then, yes, of course, devoting all of our resources and our focus on improving and growing our crude oil production, primarily related to shale and primarily related to our have in terms of Vaca Muerta oil fields. So to the most part, I would say that that's our look into future production.

Okay. Thank you very much.

Sure. Barbara Halberstad with J.P. Morgan. 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 you're 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 the 21s and all of this increased 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 you'll be able to find the necessary resources to fund capitalists. Just wanted to get a little bit more color on the debt side, how much we're thinking in terms of incremental debt, and if that would be sourced mostly locally, or if the company is thinking of tapping international markets again. Thank you.

Thank you, Barbara. In terms of liquidity, and as 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 prohibit us, as 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 effects 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, you know, seasonality will clearly, depending on the cash flow seasonality that we have, that could be somewhat modified along the year. But I would 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 residual amount of the 2021 bonds that is coming due on next March 23rd. So based on that, is 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 in terms of financing will depend on the final cash flow from operations and the potential investitures. But in any case, 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 some 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 during the rest of the year. to cover our funding needs.

Thank you.

Andres Zerdona with Citigroup. Your line is open.

Thanks and good morning everyone. I have two questions. The first one has to do with the Shell projects in which you are investing $1.5 billion over the next four years. Can you break down the the lifting cost and cost per barrel in general, what I'm looking for is the break-even for this time of projects. And the second one is when looking at the investment program for Bandurria Sur, La Marga 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 and wheels also ideally fulfilled. Thanks.

Thank you, Andrés. Well, unfortunately, we are at this point not fully disclosing some of the information that you're requesting, but let me give you some general idea that I would expect to serve 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 probably, I would assume that you're referring to the CAPEX plan related to our commitments towards a new plant gas, which is mostly sourced from shale fields, although we also have some conventional fields that would contribute, such as 3 and 10. But generally speaking, on those projects, and again, we are only now resuming significant activity in terms of exploiting more aggressively our natural gas resources. So of course, our break-evens 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 planned gas that was commented is $3.66 per million BTU flat on average for the next four years. We do expect those prices to be more than enough to 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 will expect to be able to provide with more color on the actual development cost and hopefully also potentially the actual break-evens on those projects. Now, in terms of the core hub for oil, as you were asking for Loma Campana, Banjulia Sur, and La Marga Chica, as was commented, we are expecting an overall investment this year of somewhat over $500 million, expecting to yield about 90 wells during the year. The breakdown between the different three fields or the three different projects is roughly... Probably have a little bit less wells that are going to be drilled in Banduria soon than in the other two, but roughly you 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, you know, 22 to 24. we will expect a similar amount of capex and amount of wealth to be connected or completed in coming years, and then probably expect a ramp-up in activity from 2025 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 barrels per day among these three projects. And for that, I would say that you basically have an idea of 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 oil production by then.

Thank you.

Thank you for the answers.

Sure.

Ezequiel Fernandez with Balnas. Your line is open.

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 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. Thank you, Ezequiel. Let's start with that one. In terms of structural impact of the COVID pandemic into field 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, close to 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, I would say that it's still early to predict. And we do expect to close the year based on our budget 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, you know, current levels, you know, might imply that we were conservative on that. But, of course, it's hard to predict. We don't know whether there is going to be a second wave of contagion and a potential impact on lockdown measures down the road. You know, we are not predicting that. And so it's... 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, I think 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 you look at proportions, it's very thin, and so I would say at this point it's very hard to predict the impact that we will face in coming years from the introduction of electric vehicles in our country.

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 a 70% mix for diesel and gasoline, basically a more diversified output mix. Do you expect to revert back to that 80% mix as fuel demand recuperates?

Just give me one second because it's a little bit technical. I'm getting some call out on that. Bear with me for a second.

We can take it off the call if it's better. No worries about that.

Yeah, maybe that's better because it's a little bit technical, at least for me. And maybe it's better to, yeah, if we can follow up after the call, that would be better. But, yeah, I feel it. 2020 was a very particular year, and we adjusted. On a general concept, we adjusted refinery output to actual demand. We managed to compensate mostly with use of the lower demand for jet fuel to compensate for further output of diesel. And then, but the general rebalancing between gasoline and diesel and other products, clearly we may have some other refined output that was this time to different markets. So, but yeah, maybe it's better to follow up after the call.

Okay, perfect. So my last question is, I think that's clear anyway, it's helpful. My last question is related to the latest PlanGas4 auction that we saw just for winter volumes, the small one. I was wondering why you opted not to participate.

I think that's a more tactical and commercial decision, the way our natural gas business unit decided to make or make 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 a year-long basis or along the year was to, you know, the way we did it with one bulk participation without seasonal adjustment. And that's, you know, no particular reason, basically a decision on how to maximize and optimize the opportunities created by the plan.

And remember, Ezequiel, that Sergio, we participated in the plan gap with almost 21 million of cubic meters per day from the 70 million, 21 million cubic meters per day can come from YPF. The prices that we explained before, 3.66 dollars per million BTU. But it was a commercial reason not to participate in this new plan.

Understood. Commercial reasons. That's great. That's all from my side. Thank you.

Luis Caraballo with UBS. Your line is open.

Thanks for taking the question. I'm sorry, maybe to come back to the The cash flow discussion. When we try to reconciliate the numbers here, have a CapEx of 2.7, a debt interest of around $900 million, plus some amortization this year, despite of the better, you know, debt maturity that you were successful. And when we look to the, you know, your cash availability of $1 billion and the potential that you would be able to deliver, We still see, you know, a significant cash burn to this year. And looking to leverage up close to five times in the recent, you know, debt negotiation, we still struggle to see how the company will succeed in terms of become again, let's say, free cash flow positive and reduce the debt. So just first question is, can you help me to try to reconciliate the, you know, how you plan to address the situation apart from, you know, 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, non-core assets or even core assets in order to try to reduce the debt? in the, it's a bit more short-term. Thank you.

Yeah, thank you, Luis, for your questions. In terms of cash flows, basically, the way we look at it is, yes, we have this plan of $2.7 billion in terms of CAPEX, which is the amount of CapEx primarily related to the $2.1 billion targeting the upstream business. And the basis for that is primarily reverting the production decline trend that the company experienced in the last five years, which was particularly affected in the last year, in 2020, on the back of the clear halt that we had to pursue on our investment activities last year on the back of the pandemic. To be able to get to that level, it will depend on a number. The key number there is what's going to be the cash flow from operations during 2021. Unfortunately, given the still some uncertainties that we have ahead of us, we are not providing a particular guidance on our EBITDA figures. We did say what 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 projections for the year. Of course, we do expect a significant recovery in EBITDA. Last year, and as was mentioned during the presentation, even though the report that adjusted EBITDA is in the order of $1.5 billion, we're netting for one-off effects the EBITDA level for the year was of $2 billion, and that is with a collapse in demand and with very low, you know, realization prices. So we do expect all of that to continue to revert and continue to improve along this year. So clearly the $2 billion, excluding one of items of last year, which, you know, which have the purpose of providing you with a clear floor in terms of our expectations for EBITDA for next year. And of course, we are expecting something significantly better than that, probably not yet reaching the levels that we see pre-pandemic. So when you combine those two figures and including the working capital contributions that we expect, yes, we still have an amount or a gap that will need to be financed and that will come or that should come from the combination of divestitures and net new debt. And we've been saying that since the previous call that most likely within 2021 we were going to have to go for the market to increase the amount of net debt. And the reason for that is, of course, we need to put together a more aggressive CapEx program this year while our cash flow from operations or our ability to generate cash is still somewhat limited. However, as we manage to get or to fund that capex, that amount needed to comply with our capex target, and as we start putting our production back in line for stabilizing it this year and sequentially growing and expecting that to continue next year. We do see the combination of the incremental EBITDA or the normalization in EBITDA in itself stabilizes our net leverage in terms of proportions and so we do not see a tremendous need at this point to more aggressively reduce net debt. That's why The idea for the objectives of divestitures are more related to funding, partially our CapEx program, but not that much aggressively targeting a net reduction in debt, because we believe that the overall net debt should stabilize itself by the improvement in EBITDA in coming years, and not that much the need for a nominal reduction in the amount of debt. So that relates to your second question in terms of being more aggressive in divestitures. Again, we do actively pursue divesting non-strategic assets, and as was commented in the press, we even are considering selling our iconic headquarters office building and to generate cash because all that is non-producing, we are willing to contemplate and to put up for sale. But in terms of the most strategic Vaca Muerta assets, at this point we are not considering a full day vestiges, but rather, as Sergio mentioned before, potential JDs for further fundings. Definitely that's an efficient way of, you know, accelerating the development of those assets, which is not only good for YPF, but also for the country in terms of accelerating the development of the hydrocarbon reserves and producing more oil and gas as soon as possible. So I hope that I answered your questions, but that will be the general answer.

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 IR 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.