Ypf Sa Class D · BCBA:YPFD
Ypf Sa Class D — Investor Day (October 2018)
53 slides from Ypf Sa Class D's investor day presentation, Oct 26, 2018
Slide 1: Investor Day
INVESTOR DAY New York | October 26, 2018
Slide 2: Important Notice
IMPORTANT NOTICE Safe harbor statement under the US Private Securities Litigation Reform Act of 1995. This document contains statements that YPF believes constitute forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. These forward-looking stateme
Slide 3: Welcome & Opening remarks
01 02 03 04 05 Welcome Strategic Business Upstream Q&A & Opening Review Outlook remarks Sergio Giorgi Miguel Gutierrez Daniel Gonzalez Pablo Bizzotto VP Strategy and Chairman CEO EVP Upstream Business Development 3
Slide 4: Opening remarks: second YPF Investor Day and 2019-2023 plan
Good morning, thank you Sergio, and all of you for being here today at our second YPF Investor Day, where we will be reviewing our strategic plan for 2019-2023. We promised to be here every year around this date, with several objectives in mind. • To review our progress, • Share our successes over t
Slide 5: Delivery on commitments and regulatory framework improvements
Let me start by addressing our delivery we had committed We keep strong focus on building an integrated energy company, that will deliver the type of energy that our clients will demand, at competitive prices, while committing to do it in a safe and sustainable manner. Despite the macro situation in
Slide 6: Natural gas market opportunity and LNG exports
On the natural gas front, the situation has been evolving. It is true that the incentive plans for the exploration and production of natural gas enacted last year fell short of our expectations. However, we were right on to be conservative on the general market pricing for this product. The Governme
Slide 7: Argentina macroeconomic and political outlook
Now I want to share a few thoughts on the macro economic situation and the political environment as we go into Presidential elections next year. No doubt Argentina’s economy is going through a very important transformation to a free market economy removing the obstacles to be a very competitive econ
Slide 8: Stock price performance and equity story
A word on our stock price performance, after touching the $27 dollars back in February we are now back to levels around $15 dollars. We are clearly very unhappy about this performance even though as shown in the chart continue to be in a better position than other comparable over the last 6 years. W
Slide 9: Leadership appointments and board changes
As we committed last years, we were ver pleased to appoint a CEO, Daniel Gonzalez, right before our annual shareholder meeting in April. Daniel knows YPF inside out from his previous position as CFO for almost 5 years. We are proud that a YPF executive was able to fill this role. Just recently, we h
Slide 10: Strategy: Profitable Growth
Let me now share my thoughts on our strategy and some of our key strategic moves and initiatives. Aligning the oil and gas markets to the international and free markets is the base case of our plan and a major step towards a full normalization of the marketplace in Argentina. In addition, we will be
Slide 11: Integrated Energy, Financial Discipline, Transformation
2. Integrated Energy Company a) We have also taken notice of the rapid change that is occurring in our industry worldwide, and the potential disruption that decarbonization and new mobility concepts are bringing to the business, like the electric vehicle. We intend to satisfy our client energy needs
Slide 12: Innovation and Technology; Operational excellence
5. Innovation and Technology a) We are achieving significant productivity gains as the result of incorporating new technologies, applying innovation to our industrial processes and thus defying new frontiers on how we manufacture and produce today. The implementation of our factory model in the unco
Slide 13: YPF 2040 vision
This year’s plan was prepared within our newly-developed YPF 2040 vision making sure that we tackle these issues systematically and with discipline forcing ourselves to think outside the box and pushing the boundaries of our current business model to understand how our company will look like the fut
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Slide 15: Safety and sustainability as core values
SAFETY AND SUSTAINABILITY AS CORE VALUES TOTAL IFR # of people injured for each million hours worked 2012 - 2018 (1) 1.89 YPF IFR ARPEL TIDLP ESG TARGETS BY 2022 1.05 1.05 0.91 0.91 0.74 10% CO2 emissions reduction 0.84 0.76 0.80 0.73 0.60 70% ofbefuels produced will low-sulphur content 0.51 #1 Rene
Slide 16: Our targets: 5-year business plan 2019-2023
OUR TARGETS 5-YEAR BUSINESS PLAN / 2019-2023 (2) PRODUCTION RESERVE Adj. EBITDA CAPEX NET DEBT CAGR R.R (1) CAGR PER YEAR TO EBITDA 2019 - 2023 2019 - 2023 2019 - 2023 2019 - 2023 2023 5-7% >1x 10% 4-5 BUSD <1.5x (1) Reserve Replacement Ratio. (2) Adj. EBITDA = Operating income + Depreciation and im
Slide 17: Planning for outstanding production growth
PLANNING FOR OUTSTANDING PRODUCTION GROWTH Building on our strength as unconventional leader outside USA PRODUCTION (KBOE/DAY) Oil NGL Gas 2018-2023 5-7% CAGR +20% Favoring High return & Short cycle developments 3 FIDs before end 2018 +55% Supported by strong portfolio with low break even price 2018
Slide 18: Shale gas development drives a new paradigm in gas market
SHALE GAS DEVELOPMENT DRIVES A NEW PARADIGM IN GAS MARKET Similar to USA, Argentina is shifting from gas importer to gas exporter 240 Domestic base demand Mm3/d 220 200 180 160 140 120 100
Slide 19: Shale gas development drives a new paradigm in gas market
SHALE GAS DEVELOPMENT DRIVES A NEW PARADIGM IN GAS MARKET Similar to USA, Argentina is shifting from gas importer to gas exporter 240 Domestic base demand Potential production Mm3/d Mm3/d 220 200 180 160 140 120 100
Slide 20: Opportunities along the integrated gas value chain
OPPORTUNITIES ALONG THE INTEGRATED GAS VALUE CHAIN UPSTREAM MIDSTREAM EXPORTS POWER GENERATION PETROCHEMICALS # 1 acreage holder MEGA: Potential 2019 Expect 3 to 4 GW Under study: outside USA expansion under study Exporting gas to Chile of new thermal - Urea Small scale LNG installed capacity in - M
Slide 21: YPF Luz to increase power-generation capacity
WE EXPECT YPF LUZ TO INCREASE ITS POWER-GENERATION CAPACITY 7 YPF POWER GENERATION CAPACITY 900 2018-2023 800 6 Pipeline + M&A Current capacity + awarded / under construction 700 5 Pipeline and 600 M&A opportunities 4 500 3 400 2.4 GW 300 2 1.9 GW 1.7 GW 200 Renewable energy 1 representing 20% 100 o
Slide 22: Downstream building on leading position
DOWNSTREAM BUILDING ON OUR LEADING POSITION TO DELIVER VALUE OPTIMIZING PURSUING LOGISTIC OUR OPERATIONS EFFICIENCY 100% Crude oil self sufficiency by 2021 Oil pipelines expansion +15% Crude processing Road trains improvement +20% Diesel and gasoline production Export infrastructure development -5%
Slide 23: Reshaping our business to profit from shale growth and new technology
RESHAPING OUR BUSINESS TO PROFIT FROM SHALE GROWTH AND NEW TECHNOLOGY A CLEANER PLATFORM DIGITAL TRANSFORMATION IMO 2020 full compliance Analytics to optimize our processes, asset integrity and predictive maintenance Low sulphur fuel specs Satellite monitoring Low carbon project integration of pipel
Slide 24: Providing energy solutions for all types of clients
PROVIDING ENERGY SOLUTIONS FOR ALL TYPE OF CLIENTS BTB BTC COMPLETE PORTFOLIO COMPREHENSIVE WITH SOLUTIONS FOR RANGE OF PRODUCTS KEY INDUSTRIES AND SERVICES #1 BRAND AGRO INFRASTRUCTURE INFINIA ELAION RECOGNITION IN ARGENTINA CUSTOMER JOURNEY MINING AVIATION BOXES CONVENIENCE PROGRAM STORE
Slide 25: We are dynamically adjusting prices
WE ARE DYNAMICALLY ADJUSTING PRICES (1) FUELS PRICE EVOLUTION Fuels Blended Price (% VARIATION) Oct-17 oct-17 Nov-17 nov-17 Dec-17 ene-18 dic-17 Jan-18 Feb-18 feb-18 Mar-18 mar-18 Apr-18 abr-18 May-18 may-18 Jun-18 jun-18 Jul-18 jul-18 Aug-18 ago-18 Sep-18 sep-18 Oct-18 oct-18 (1) Based on monthly a
Slide 26: We are dynamically adjusting prices
WE ARE DYNAMICALLY ADJUSTING PRICES (1) FUELS PRICE EVOLUTION Fuels Blended Price Import Parity (1) (2) (% VARIATION) Oct-17 oct-17 Nov-17 nov-17 Dec-17 ene-18 dic-17 Jan-18 Feb-18 feb-18 Mar-18 mar-18 Apr-18 abr-18 May-18 may-18 Jun-18 jun-18 Jul-18 jul-18 Aug-18 ago-18 Sep-18 sep-18 Oct-18 oct-18
Slide 27: We are dynamically adjusting prices
WE ARE DYNAMICALLY ADJUSTING PRICES (1) FUELS PRICE EVOLUTION Fuels Blended Price Import Parity) (1) (2) Inflation rate (% VARIATION) Oct-17 oct-17 Nov-17 nov-17 Dec-17 ene-18 dic-17 Jan-18 Feb-18 feb-18 Mar-18 mar-18 Apr-18 abr-18 May-18 may-18 Jun-18 jun-18 Jul-18 jul-18 Aug-18 ago-18 Sep-18 sep-1
Slide 28: Transformation strategy
SIMPLIFYING CURRENT PROCESSES 2018 MAIN INITIATIVES TRANSFORMATION STRATEGY Well construction optimization Upstream operational efficiency Logistic optimization 15 +1,000 Energy efficiency Key People people with fully dedicated transformation Downstream operational efficiency objectives 130 66 compa
Slide 29: Management by objectives
MANAGEMENT BY OBJECTIVES INCENTIVE-BASED COMPENSATION Company-wide objectives cover Approximately Sustainability, Efficiency, Capital 82% 1,000 Discipline, Financial Discipline of employees receive short-term cash bonus employees and Transformation based on objectives receive long-term and performan
Slide 30: Investing with focus on profitable growth
INVESTING WITH FOCUS ON PROFITABLE GROWTH (1) ADJUSTED EBITDA CAPEX BREAKDOWN 2019-2023 CAGR +10% 5% 19% ~4.5 BUSD per year 76% Upstream Downstream Other segments 2018 2019 2020 2021 2022 2023 (1) Adjusted EBITDA = Operating income + Depreciation and impairment of property, plant and equipment and i
Slide 31: Increasing free cash flow
INCREASING FREE CASH FLOW CFFO Net debt/ CASH BUILD-UP (BUSD) EBITDA 2019-2023 1.4x 0.7x 2019 2020 2021 2022 2023
Slide 32: Increasing free cash flow
INCREASING FREE CASH FLOW CFFO Net debt/ CAPEX CASH BUILD-UP (BUSD) EBITDA + interest 2019-2023 + taxes 1.4x 0.7x 2019 2020 2021 2022 2023
Slide 33: Increasing free cash flow
INCREASING FREE CASH FLOW CFFO Net debt/ CAPEX Dividends CASH BUILD-UP (BUSD) EBITDA + interest 2019-2023 + taxes 1.4x 0.7x 2019 2020 2021 2022 2023
Slide 34: Increasing free cash flow
INCREASING FREE CASH FLOW CFFO Net debt/ CAPEX Dividends CASH BUILD-UP (BUSD) EBITDA + interest 2019-2023 + taxes 1.4x 0.7x Cumulative 1.5 BUSD free cash flow 2019 2020 2021 2022 2023
Slide 35: Increasing free cash flow
INCREASING FREE CASH FLOW Net debt/ EBITDA at 1.5x CFFO Net debt/ CAPEX Dividends CASH BUILD-UP (BUSD) EBITDA + interest 2019-2023 + taxes 1.5x 1.5x Up to (1) Additional cash 1.4x 4.2 BUSD for investments 0.7x Cumulative 1.5 BUSD free cash flow 2019 2020 2021 2022 2023 (1) Considers the maximum pote
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Slide 37: Focus on delivering profitable growth
FOCUS ON DELIVERING PROFITABLE GROWTH Operational Manage the Accelerate Drive down Excellence decline rate in shale projects break-even conventionals price Organization Technology Optimize Transform to add value the Portfolio resources into reserves
Slide 38: Production growth driven by unconventional projects
PRODUCTION GROWTH DRIVEN BY UNCONVENTIONAL PROJECTS TOTAL PRODUCTION (KBOE/DAY) Unconventional CAPEX Unconventional 2018-2023 Conventional 2019-2023 Conventional 5-7% CAGR [PORC ~70% ENTAJ 33% E] ~3.6 BUSD [PORC per year ENTAJ E] 67% ~30% 2018 2019 2020 2021 2022 2023
Slide 39: Actively managing the decline of conventional fields
WHILE ACTIVELY MANAGING THE DECLINE OF OUR CONVENTIONAL FIELDS CONVENTIONAL PRODUCTION (KBOE/DAY) Secondary Natural gas 2018-2023 Primary Tertiary Base curve -14% -5% Per year Per year Smoothing the decline rate by accelerating implementation of IOR/EOR Deploy technology to optimize in real time and
Slide 40: Conventional production management plan based on successful results
CONVENTIONAL PRODUCTION MANAGEMENT PLAN BASED ON SUCCESSFUL RESULTS Example Example SECONDARY RECOVERY IN CUYANA BASIN TERTIARY RECOVERY IN GRIMBEEK FIELD Primary Secondary Water Primary Secondary Polymer 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2007 2008 2009
Slide 41: Expanding unconventional output from Vaca Muerta
EXPANDING UNCONVENTIONAL OUTPUT FROM VACA MUERTA UNCONVENTIONAL PRODUCTION (KBOE/DAY) 2018-2023 Tight gas La Amarga Chica Rincón del Mangrullo Other Shale Projets Base curve Loma Campana Bandurría Sur A. De la Arena +150% VACA MUERTA 2019-2023 ~18 Average operated rigs ~1,700 shale wells 2018 2019 2
Slide 42: Major shale projects
MAJOR SHALE PROJECTS GAS OIL 2019 Rincón del Mangrullo Loma Campana Ph2 La Ribera La Amarga Chica Bandurria Sur 2020 Aguada de la Arena San Roque La Calera Bajada de Añelo A. Pichana Oeste Pampa de las Yeguas I 2021 Bajo del Toro LLL West Chihuido de la SN 2022 LLL Sur Operated Operated Non operated
Slide 43: Loma Campana phase development
LOMA CAMPANA PHASE 2 DEVELOPMENT PHASE 2 METRICS ~4 to 5 rigs ~300 wells 2019-23 120 KBOE/D ~680 MUSD gross production by 2023 gross capex per year ~550 Remaining locations ~ 50% Remaining acreage Loma Campana 2023+ 2023+ 97,600 acres Base curve Incremental production Gross production +150% 2018 201
Slide 44: Loma Campana continuously increasing well productivity
LOMA CAMPANA CONTINUOUSLY INCREASING WELL PRODUCTIVITY AVERAGE CUMULATIVE OIL PRODUCTION (KBOE) 200 Cum. Production 150 + 40% (2016 - 2018) 100 Avg 2018 (27 stg) 22 wells - EUR 900 kboe 50 Avg 2017 (21 stg) 30 wells - EUR 720 kboe + 35% 40% increase in IP 270 Avg 2016 (17 stg) 56 wells - EUR 660 kbo
Slide 45: While improving operational efficiency
WHILE IMPROVING OPERATIONAL EFFICIENCY WELL COST / # STAGES Well cost / # stages METERS OF HORIZONTAL LENGTH / TOTAL DRILLING DAYS 1,40 1.40 80 M of Hz length / total drilling days 14 # stages 70 1,20 1.20 2,250m 60 29 d 1.00 1,00 3.6x -70% 50 0.80 0,80 40 0.60 0,60 30 0,40 0.40 27 20 # stages 1,100
Slide 46: Reducing development cost and opex
AND REDUCING DEVELOPMENT COST AND OPEX DEVELOPMENT COST (USD/BOE) OPEX (USD/BOE) 29 16 -62% -56% ~[VALO -14% -27% R] ~[VALO ~11 R] ~8 2015 Q3 18 2023 2015 2018 2023
Slide 47: With several new initiatives being applied
WITH SEVERAL NEW INITIATIVES BEING APPLIED LLL-1524H Longer laterals 21,300 ft (MD) High Density Completion (HDC) 10,500 ft 3,200 m lateral length 6+ Wells in line per PAD ~1,500 BOPD Soluble Plugs peak production ~1.5 MBOE New Well Design EUR Spuder Rig + Hi-Spec Rig 40 STAGES ~ 9,000 BBL fluid per
Slide 48: Next FIDs
NEXT FIDs GAS OIL A. DE LA ARENA LA AMARGA CHICA Acres 22,000 Acres 46,600 Wells 19-23 ~130 Wells 19-23 ~280 Rigs by 2020 3 Rigs by 2020 5 La Amarga Chica Additional Additional locations ~280 locations ~380 A. de la Arena R. DEL MANGRULLO BANDURRIA SUR Acres 45,000 Acres 56,200 Rincón del Mangrullo
Slide 49: We built an efficient platform to facilitate future growth
WE BUILT AN EFFICIENT PLATFORM TO FACILITATE FUTURE GROWTH CAPEX IN FACILITIES 2014 - 2018: 3.6 BUSD 2019 - 2023: ~3.9 BUSD
Slide 50: Expanding Vaca Muerta and offshore exploration
1.2 BUSD EXPLORATION EFFORT IN THE NEXT 5 YEARS EXPANDING VACA MUERTA > 2,000 KM2 and 1,900 MBOE to be investigated OFF-SHORE EXPLORATION ON-SHORE Strategic agreements EXPLORATION signed with international Other shale players opportunities, new basins and tight gas
Slide 51: Contents
CONTENTS : STRATEGIC REVIEW BUSINESS OUTLOOK UPSTREAM ;
Slide 52: Q&A YPF Investor Day
Miguel Gutierrez Daniel González Pablo Bizzotto Santiago Marcos Browne Chairman CEO EVP Upstream Martinez Tanoira EVP Gas & Power EVP Downstream Luís Sas Sergio Giorgi Carlos Alfonsi Sebastian Mocorrea CFO VP Strategy EVP Operations EVP Corporate Affairs and Business & Transformation Communications
Slide 53: Investor Day
INVESTOR DAY New York | October 26, 2018