YPF - YPF Sociedad Anónima

Margarita Chun: Good morning, ladies and gentlemen. This is Margarita Chun YPF IR Manager. Thank you for joining us today in our full year and fourth quarter 2023 earnings presentation and strategic outlook. Before we begin, I would like to draw your attention to our cautionary statement on Slide 2. Please take into consideration that our remarks today and answers to your questions may include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by these remarks. Also, note exchange rate used in calculations to reach our main financial figures in U.S. dollars. Our financial figures are stated in accordance with IFRS, but during the presentation, we might discuss some non-IFRS measures such as adjusted EBITDA. I will now turn to Horacio to a brief introduction. Please go ahead.
Horacio Marin: Thank you, Margarita, and good morning to all of you. Welcome to this renew earnings webcast presentation from YPF Corporate Building in Buenos Aires. I am Horacio Marin, the new CEO and Chairman of the Board of YPF. Before moving to the purpose of this video call, I would like to express how proud and honored I am to assume the responsibility to lead the largest integrated energy company in Argentina, leading more than 20,000 employees and more than 40,000 people that indirectly contribute with us. I have the firm commitment to take YPF to the next level by growing consistently in a profitable way and become a next exporter of energy in the long term, always maintaining a prudent financial strategy while keeping the safety and sustainability of our operation at the forefront of our day-to-day decision. Today, I will conduct this presentation with our new CFO, Federico Barroetave, who will go through the main highlights and financial results for the full year and Q4 2023. Also, our Strategy Vice President, Maximiliano Westen, we detailed a more relevant operational performance figures of the year. After this, I will share our new strategy outlook for the next year. At the end of the presentation, we will open up for questions. I will now turn to Federico to begin with the main highlands and financial results.
Federico Barroetave: Thank you, Horacio, and good morning to all of you. Before we begin our presentation, I would like to express my pleasure and pride to be part of the new management team of the company. Now let me start by saying that 2023 was a very challenging year driven by a complex local macroeconomic environment with high inflation, strong volatility and a downward trend in international prices. In this context, the company was able to grow total production for the second consecutive year, deploying its annual CapEx plan while preserving a healthy financial position. Adjusted EBITDA totaled around $4 billion in 2023, decreasing 18% annually. This lower outcome was a result of 3 main factors: first, the lower domestic fuel prices and the returns; second, a moderate reduction in prices of other refined products; and finally, higher OpEx, particularly driven by an increasing inflationary context. This was partially offset by the expansion in total production and processing levels. Now moving on to the fourth quarter, there was an important turning point for some key variables by the end of the period. Adjusted EBITDA for the fourth quarter represented the highest mark of the year, reaching almost $1.1 billion, 17% above the previous quarter. This was a direct result of an almost 8% expansion in all productions. Since the end of the year, the new pricing strategy of the company increased local fuel prices up 6% sequentially in dollar terms or passing the strong devaluations recorded on average during the period. On the other hand, costs contracted by about 8% sequentially, mostly driven by the discrete devaluation that took place in mid-December. Lastly, the positive effects of the new export increase program which allowed to convert export and international financing at a special FX rate almost compensated the seasonal reduction in our natural gas sales. Our bottom line in 2023 came at a loss of near $1.3 billion and almost $1.9 billion in the fourth quarter. This negative net income during the quarter was particularly affected by a noncash impairment charge of $1.8 billion pretax. This impairment came on the back of the new disposal strategy of conventional material fields approved by our Board last week. The disposal decision requires a future reclassification to held-for-sale assets and triggered an impairment loss indicator under IFRS. Accordingly, the company performed a comprehensive review of the assets and recognize this impairment of PP&E as of December 31. In terms of our operational performance, total hydrocarbon production averaged 514,000 barrels of oil equivalent per day in 2023, rising 2% versus 2022, mainly driven by a sound performance in our shale operations that Max will explain later. On the financial side and as expected by the company, during Q4, free cash flow was slightly negative at $60 million, accumulating a negative free cash flow of $740 million in 2023. The deployment of our investment plan and interest payments were not fully compensated by the cash flow from operations, taking our net debt to almost $6.8 billion while maintaining the net leverage ratio within the prudent levels of 1.7x, fully aligned with the target of the year. Now let's start with the evolution of the fuel pricing in the local market. Until the third quarter of '23, local fuel prices couldn't absorb the depreciation of the currency. However, since November, the company has been adjusting fuel prices consistently, narrowing the discount to the international parity, down from 28% in Q3 to 8% now. Also, local crude price has recorded a significant recovery during 2024, representing a discount versus export parity slightly above 10% in February. Going forward, although it is hard to predict, mostly due to the volatility in international prices, the company still needs to preserve prices, aiming at narrowing the gap and compensating for the evolution of the Argentine peso. We will pursue this objective considering the delicate equilibrium that needs to be maintained and the impact on the demand ability to afford fuel cost within the local macroeconomic context. Switching to the financial front, annual cash flows from operations totaled $5.9 billion, 4% higher than the previous year. Despite the annual contraction in adjusted EBITDA higher cash flow from operation was a result of higher dividend collection from our subsidiaries as well as other positive working capital variations. However, given the full redeployment of our CapEx plan together with our regular interest payments, annual free cash flow came at a negative $740 million. Nevertheless, during Q4, the sequential expansion of our EBITDA combined with some of the positive working capital variations, allowed us to almost cover our capital expenditures and interest. Thus, we ended the quarter with a slightly negative free cash flow of $60 million, a marginal sequential increase of our net debt to almost $6.8 billion and a stable net leverage ratio of 1.7x. In terms of financing, during Q4, we continued deploying our financial program by securing both local and cross-border trade-related loans obtained from relationship banks and by tapping the local capital markets at very attractive financing costs. In total, during the year, we were able to raise about $2.6 billion, 50% from local capital markets, 35% from trade finance loans and the remaining 15% from the cross-border A/B loan led by CAF. This represented net new funding of almost $1.3 billion after deducting debt amortization paid during the period. And more recently, on January 10, YPF successfully returned to the international capital market, leading the reopening for Argentine Corps by using an export secured bond for a nominal value of $800 million. The new bond has a 7-year final maturity, a fixed rate of 9.5% and a yield of 9.75%. Simultaneously, we launched a cash tender offer for the 2024 notes, which result in prepayments of near 40% of the outstanding notes. On the liquidity front, our cash and short-term investments as of December 31, remained almost unchanged on a sequential basis at almost $1.4 billion despite the large devaluation that took place in mid-December, thanks to the active asset management strategy to minimize FX exposure. Regarding our short-term financial obligations, our total consolidated financial maturities for 2024 amounted around $1.3 billion as of December of last year. However, the recent bond issued combined with the 2024 bond tender reduced considerably our short-term financing needs, leading to a very manageable maturities profile for the rest of the year. I now turn to Max Wester, who will continue the presentation with more details on our operating results.
Maximiliano Westen: Thank you, Federico, and good morning to everyone. Let me start by saying that the safety of our workers is our top priority and the development of the activities of the company. That is why we deeply regret one accident with fatal consequences that one of our upstream contractor workers suffered during last February, which commits us to increase our efforts to ensure operations at the minimum possible extent risk. Now regarding 2023 evolution, we recorded another year of substantial progress in our safety indicators achieving an accident frequency rate per million hours worth of 0.23 with 0 fatalities in our operations. These results were possible, thanks to several initiatives focused on preventing actions training, risk control activities and audits of critical processes and facilities, further focusing on sustainability and in line with our strong commitment to contribute to the reduction of carbon footprint. During 2023, we continued working hard to make progress on the reduction of our GHG emissions. In that sense, given the meaningfully lower emissions intensity of our growing shale operations and the several initiatives deployed so far. In 2023, we reached a further decrease in our upstream unconventional carbon intensity level, Scope 1 and 2, averaging 13 kilograms of CO2 equivalent per BOE, 30% below 2022 and surpassing the [ 50-kilogram ] targeted announced at the beginning of the year. Lastly, let me highlight that in terms of energy transition, we continued expanding our renewal energy portfolio through our subsidiary, YPF Luz, the second largest renewable power generator in the country with an installed capacity of 3.2 gigawatts. In this sense, during 2023, the company put in operation a new 100-megawatt solar farm project in the province of [indiscernible] and continued making progress on the construction of the new 155-megawatt wind farm to be installed in the province of Cordova, which is expected to get the COD by the end of 2024. Focusing on our upstream business. During 2023, our total hydrocarbon production continued to be upward trend initiated in 2022 by growing 2% versus 2022, and expanding 2% sequentially in the fourth quarter. Crude oil production recorded a remarkable annual increase of more than 7%, reaching in the fourth quarter, a production of 255,000 barrels per day, 8% above the third quarter and [ 3% ] higher than the previous year, fully complying the ambitious targets for the year. It is also worth noting that during the last quarter, we achieved the highest level of oil production of the company in the last 50 years. Beyond crude, natural gas production averaged 36 million cubic meters per day in 2023, declining around 3% versus the previous year, primarily due to lower demand in the second half of the year, which impacted particularly in the fourth quarter, where natural gas production contracted 4% interannually. On the other hand, annual NGL production increased by 3% over the year. Now let me walk you through the performance of our shale operations, the main pillar of our strategy. Firstly, it is important to point out that in the fourth quarter, shale production represented 48% of our total hydrocarbon production compared to only 18% in 2019, representing a substantial transformation of our production metrics over the last 5 years. In 2023, total shale production recorded a new annual expansion of more than 16%, particularly driven by shale oil, which continued delivering solid results expanding by 27% versus 2022, almost in line with the target for the year, averaging 97,000 barrels per day. In the fourth quarter, shale oil production reached a new historical record of 109,000 barrels per day, growing 19% sequentially and 28% interannually. In addition, during the last quarter of the year, we continued exporting roughly 20,000 barrels per day of Medanito crude oil to Chile through the trans-Andean pipeline and the new Vaca Muerta Norte pipeline. The latter operational since 2023, representing 7% of total crude oil production and 12% of our Medanito oil production in the fourth quarter. Zooming into the evolution of hydrocarbon reserves, total proved reserves contracted by 10% in 2023. The decline was mainly driven by a significant decrease of 26%, in our conventional reserves, while shale oil reserves remained almost flat during the year, now representing 71% of our total reserves, up from 64% in 2022. The addition of proved reserves totaled 128 million BOE, backed on the progressive development and expansion of our uncommercial operations particularly in Loma la Lata Norte and La Calera [ blocks ]. Moreover, we recorded an enhanced hydrocarbon recovery of 17 million BOE. However, the downward revision of our 72 million BOE due to higher cost pressure and lower prices combined with the total hydrocarbon production resulted in a total proved reserve decline. It is worth noting that proven development reserves recorded an expansion of 2% year-over-year, mainly due to the effect of development activities, new extensions and discoveries previously mentioned, exceeding the annual production. On the other hand, proved undeveloped reserves decreased by 21%, driven by the reclassification to develop reserves, lower hydrocarbon prices and other revisions. Considering the total hydrocarbon production of 2023, reserve replacement ratio stood at 0.4x for YPF and 1.0x for shale development. Switching to our downstream operations, our processing levels increased sequentially 5% in the fourth quarter, averaging 290,000 barrels per day after the completion of the program maintenance stoppages at Lujan de Cuyo and La Plata refineries that began in the third quarter. It is worth highlighting that during 2023, we managed to achieve a record high production of gasoline and mill distillates and maximize our refinery conversion levels, also driven by higher oil production getting back to 90% of refinery utilization factor. Lastly, our domestic sales of gasoline and diesel remained strong in the fourth quarter, increasing by 4% sequentially while reaching in 2023, the highest level ever dispatch in every year. To meet this high record demand besides the outstanding performance at our refineries, we increased fuel imports by 5% on an annual basis and slightly reduced our inventory levels, particularly in diesel. I will now switch back to Horacio to go through the updated strategic outlook for the next years.
Horacio Marin: Let me now walk you through our new strategic outlook. First of all, let me highlight that we are maintaining our long-term strategic pillars presented a year ago, committed to address the unique opportunities that we have ahead of us. Our strategic pillar remains to continue our focus on the monetization of our shale oil opportunities, taking advantage of the proven quality of the Vaca Muerta resources and the high quality achieved over the last 10 years. Secondly, as we move forward with the monetization of our conventional oil resources, we will set the base for the next phase in Vaca Muerta, the monetization of natural gas. Our goal is to become a global LNG player through the massive monetization of our shale gas resources by deploying a large-scale LNG facility in Argentina. Finally, as we take a comprehensive look at the global energy markets and increasing relevance of the energy transition by 2030, we envision further opportunities, expanding the company portfolio of energy solutions toward clean energies. We are convinced that this renewal strategy with a strong focus in short-term results has a tremendous opportunity to generate value for all our stakeholders. Before moving on the details of the new strategic plan, let me start by describing our midterm vision for the company in 2030. It's well known that Vaca Muerta has a tremendous potential given the level of recoverable resources that over this year has transformed from a dream into reality. Based on that strength, we expect to turn into world-class shale player, beating our record in oil and gas production. While at the same time, becoming a relevant exporter of crude oil [indiscernible] by 2030. If we manage to do this, we will transform into structural positive free cash flow generator with a strong financial profile, allowing us to continue investing in the long-term opportunities in the future. With that vision in mind, we have recently launched the YPF 4x4 program, a 4-pillar plan to deliver our vision. 4x4 represent our ambition to deliver outstanding performance to our stakeholders, multiplying the value of the company in the next 4 years. Firstly, in the short term, we aim to focus on our most profitable business, Vaca Muerta, which is around twice as profitable as our next investment alternative. Secondly, we expect to actively manage our portfolio with a strict capital allocation discipline. In that sense, we are targeting a significant reduction of our exposure to conventional mature fields during this year. In the third place, in order to increase YPF resiliency, we will focus on maximizing upstream and downstream operating efficiency, aiming to becoming a world-class shale player, we are still improving our downstream margin. Finally, our 4 strategic pillar relies on setting the race of our next phase, the monetization of natural gas. To that end, we are planning the construction of an ambitious large-scale LNG project, the unique in Argentina, we won a strategic partner, and other Argentine gas players. Now I will go in more detail in each pillar in a few minutes. Our plan is already ongoing. We feel very comfortable with the initial steps achieved so far. First of all, since the end of the last year, we have been deploying an active full price strategy, reducing the gap versus international parties. Secondly, in January of this year, we returned to international capital markets. Finally, last week, our Board of Directors approved a new plan for some of our mature conventional field thus initiating our active portfolio management. At the end of the presentation, I will share with you more details about this program. Let me now walk you through the 4 pillars of our strategic outlook. Deepening our first strategic pillar, given the tremendous potential and increasing unconventional activity achieved so far, when accelerating as much as possible our shale production growth. In that regard, we are planning very ambitious production goal for the next 2 years, targeting an expansion of 24% in 2024, and a further 35% next year, reaching over 160,000 barrels per day of shale production by 2025. In order to achieve these goals, we have already secured 3 additional drilling rigs, totaling 15 rigs operating by YPF in Vaca Muerta, 80% of which will be allocated to oil well, align to our strategy of prioritizing oil developments. At the same time, we are moving forward with the development of new blocks to the north and south of our [ core hub ], moving from one hub in 2023 to 3 hubs in 2024. To unlock the tremendous opportunity of the massive development of Vaca Muerta, the midstream capacity of the Neuquina basin, must be debottleneck. And to that end, we have already devised and implemented a detailed program based on 3 main projects: the trans-Andean and Vaca Muerta North project consisted in putting existing infrastructure of the trans-Andean oil pipe back online and building a new pipe of around 150 kilometers from our oil core hub to [indiscernible]. The trans-Andean pipeline resume activity in May of 2023. After more than 15 years for being idle, our Vaca Muerta North pipeline became operational last November, offering an additional growth capacity of 110,000 barrels per day. The project is allowing us and other producers are debasing to detect the crude oil produced in the core operation of Vaca Muerta to the trans-Andean pipeline through export to Chile and further north into our Lujan de Cuyo refinery. The second project involves more than doubling the Del Valle and Norte capacity. Current [ meeting ] capacity is about 300,000 barrels per day after adding 75,000 barrels per day through the initial stages deployed between 2022 and 2023. Going forward, the next stages should be adding around 45,000 barrels per day by the end of '24, and remaining 200,000 barrels per day, rest by mid-'25, totaling an additional gross evacuation capacity of 315,000 barrels per day. Finally, the Vaca Muerta South project consists in the construction of a new pipe and export terminal connecting Vaca Muerta to the Atlantic. The project is planned to several stages. The first stage of the project will conduct Loma Campana to the entrance of the exiting [indiscernible] network by the fourth quarter of this year. The second stage is expected to be up and running by the third quarter of the 2026, will add around 180,000 barrels per day of evacuation capacity. And the third stage is effected by the end of '27, adding an additional capacity of 180,000 barrels per day. So far, YPF has begun the design competition process for the new pipeline and export terminal and obtained the environmental permits for the first stage. Additional, the total capacity of this project could be expanded to more than 700,000 barrels per day by adding pumping station, what would mean that the resolution of all bottlenecks in Vaca Muerta. Our second pillar, active portfolio management includes increasing the share of shale production from around 50% to around 80% of our total production will allow us to reduce the average lifting cost by almost 50% by 2025, vis-a-vis 2023. We will focus on investments with high returns and strict alignment with our core business. Therefore, we plan to exit from some of our mature conventional fields, but will release around $800 million in CapEx to be reallocated primary to shale oil activity. This will result in higher profitability. Our shale oil projects are 2x more profitable than conventional projects and the repayment periods per well are lower than those related to conventional fields. Besides, the exit strategy for mature fields will represent a substantial decrease on our lifting cost. Following the same capital allocation discipline, we are reviewing our investment in affiliate companies to ensure their strategy fit and profitably. Therefore, we aim to focus our efforts on companies aligned with our ambition of value generation. The third strategic pillar looks forward for maximizing upstream and downstream efficiency. We will match our increased shale oil production with improved efficiency, to maximize our operational performance in order to become a world-class shale player. This will improve the returns of our investments. We have an excellent track record in fracking and drilling. We plan to continue to enhance our industrialization model, and thus, to increase our drilling and fracking speed even further. Therefore, we plan to base our industrialization efficiency on 3 pillars: automatization of operational decision-making through real-time data analytics; introduction of new technology solutions, such as directional tools and Simul-Frac techniques; and eternalization of operational processes to reduce nonproductive execution times. As a result, we will see our drilling speed in shale oil accelerating in our core hub to more than 310 meters per day and our completion [ skill ] in shale oil increasing to over 230 [indiscernible] per month, both by 2025. As part of our downstream efficiency program, we are targeting new efficiencies and productivity goals at our refineries. Therefore, we have ongoing initiatives in order to improve our margin per barrel such as maximizing processing and production levels and reviewing our cost structure, increasing our labor productivity. By revamping our [ toppings ], we will reach the highest processing levels from the shale oil of Vaca Muerta since 2015, increasing full production capacity by 1.2 million cubic meter per year and reducing crude oil imports. Additionally, our multiyear project aims at reducing the sulfur component of our local [ oil ] production, aligned with international standards. Also, we are optimizing all of our operations' refinery, we have already review of our global process map, and we are now reviewing each specific process with a continuous improvement mindset. Particularly, we are optimizing maintenance and planned stoppages. We will increase crude oil processing by more than 10%, and we are also reducing logistics and energy costs, improving our margin per barrel by more than $3. For our commercial areas, we will continue [ betting ] on the efforts that made us the customer preference choice. We expect to maintain YPF leadership, maximizing value generation by offering and improve efficiency through digitalization and segmentation. Our fourth and last strategic pillar sets the foundation for the monetization of natural gas. It's well known that Vaca Muerta has world-class gas reserve, far exceeding local demand. To capture this opportunity and locking our shale potential, we plan to lead the unique Argentinian LNG project. As previously announced the full project targets, total processing capacity between 25 and 30 MTPA, and should represent the key way to place Vaca Muerta shale gas in the global markets, turning YPF and Argentina into a world-class LNG exporter. The first stage of the project aims to bring to Argentina an existing floating LNG facility with an initial capacity between 1 and 2 MTPA by 2027. The second stage consists in the construction of 2 new floating LNG facilities, representing a capacity for around 8 to 9 MTPA by 2030, which FID is effective by mid-2025 and requires in payments on around $200 million on a gross basis. Finally, let me point out the importance of the -- once the project is completed, we estimate an addition of total export revenue of about $15 billion annually to Argentina balance of payments. We expect to own 25% of the total LNG capacity. Bear in mind that this will be the unique Argentinian LNG project, we are working nowadays in order to lead this project with our strategic partner and engage in the rest of the industry. Thus, we expect to position YPF as a global player, capitalizing on our Vaca Muerta's world-class resources. Before ending our presentation, I would like to provide you with a quick plans of our '24 outlook. In terms of production, considering that it's too early to define the timing of the exit program for our conventional mature field, we cannot provide an overall average annual production guidance. Nevertheless, in '24, we expect our shale oil production to record a new remarkable annual increase of 24%. Regarding the program described above, let me share with you the key figures of the strategy. We plan to exit from around 50 conventional blocks representing around 90,000 barrels of oil of production per day, and around 6.5 million cubic meters of natural gas production per day. Based on '23 figures, that represent around 60% of the conventional oil production and around 40% of the conventional natural gas production. Moreover, these blocks account to less than 1% of YPF 2023 total [ ABDA ] required [indiscernible] investment of around $800 million. Switching to our CapEx '24, we are targeting to invest around $5 billion during the year. These investments will once again be concentrated in our shale developments, where we plan to deploy $3 billion. Within the upstream investment, we shall invest 75% in our oil development. And the natural gas strategy, we will have further spend in the midterm. And within our unconventional CapEx plan, will be allocated around 30% on facilities. On the downstream segment, we will continue with a multiyear investment plan to revamp our La Plata and Lujan de Cuyo refineries to comply the new fuel specification, the adaptation of our refineries to process lighter crudes and the 3 main [indiscernible] oil projects. Finally, in terms of EBITDA for 2024, we expect a significant increase back on the new local pricing strategy, cost efficiency and shale oil production growth. However, the EBITDA recovery will now be enough to compensate the deployment of our aggressive plan, our regular interest and payment, resulting in a negative free cash flow this year as we shall continue prioritizing finance and prudency in a challenging macro environment full of uncertainty, we commit to maintain a nil leverage ratio below 2023 levels on a range of 1.5 and 1.7x. Before ending our presentation and jumping into the Q&A, let me highlight the specific targets by 2027. On the upstream business, we expect to achieve a shale oil production of around 250,000 barrel per day by 2027, and we will do it by reshaping our portfolio, increasing from 50% to 80% our shale oil production based on the remarkable efficiency achieved so far that led to breakeven price below $40 per barrel in a constant currency, assuming a long-term cost of capital. Therefore, we expect our business model and get a [ strategic ] focus on the monetization of Vaca Muerta's oil to remain resilient among changing global dynamics. On the downstream segment, we are targeting a challenging margin improvement of [ $3 ] per barrel by 2027. And moreover, we plan to close the gap between local and international prices while maintaining our market share in fuel sales at around 50% on the gas and power business by 2027 which should be ending the third phase of our global-scale LNG plant, preparing ourselves for next phase of YPF strategy. And at the same time, committing to reduce our carbon footprint by reaching a 25% of our energy metrics from renewal resources. Finally, let me remark that we are targeting this challenging goal, prioritizing a strict capital allocation discipline and an active portfolio management, focusing in profitable and strategic opportunities. We are extremely focused and proud about YPF future. I'm totally sure that we will achieve this ambition strategy. [indiscernible] -- Federico and Max, we are now open to take questions.
Margarita Chun: Thank you, Horacio, and thanks, everyone, for listening to our presentation. Now we may start with a Q&A session. Our first question comes from Luiz Carvalho from UBS.
Luiz Carvalho: Can you hear me?
Margarita Chun: Yes. We can hear you. Yes.
Luiz Carvalho: Okay. Perfect. Thank you for the very interesting presentation that you just provided with lots of details and pleasure to meet you, Horacio, Federico, Maximiliano and all the IR team. If I may -- I'll state -- to start to 2 questions here. The first one is, maybe Horacio, if you can share a couple of thoughts on the relationship between the company and the controlling shareholder, that has been, I would say, one of the main topics of attention from investors in most of the Latin American companies. And of course, YPF is super embedded in this process. So I would like to understand about the relationship between the company, the management and the controlling shareholder. The second one, I'm not going to be too specific, but you presented a very broad plan with lots of details. I just would like to know from your perspective, what are the main challenges that you face over the -- to the next 2 years, will be the -- let say, the price adjustments on the downstream, bottlenecks on the onshore production. So just trying to understand where you see the main challenges within this plan.
Horacio Marin: Okay. Thank you, Luiz, for your question. First question, YPF as you know, is a major oil gas company in Argentina and is the leader of the energy sector. Therefore, has an important role in energy sector. All we work with -- all the governments, all the states and all the unions and all the industry. And so I think we are working very hard and very well with all the sector so far. In the second question, you are saying what I am -- what are my thoughts, there are several. And this program is, if you see it's like, it's all tight, it's all tight. This year, we are focusing this venture of the mature fields and also to build the debottlenecking in Vaca Muerta, what is the Vaca Muerta Sur, the Vaca Muerta Sur oil pipe. And with this oil pipe, as I mentioned before, it will be the final debottlenecking of Vaca Muerta. So all the industry will be available to only invest and increase the production.
Margarita Chun: I don't know, Luiz, if we answered your question. Okay. So our next question comes from Bruno Montanari from Morgan Stanley. [Operator Instructions]
Bruno Montanari: Thank you for the presentation. And very interesting to see the details of the new strategic plan, very exciting growth ahead. Some changes with the divestments as well. There are 2 questions. One, I wanted to explore a little bit, the divestment effort. So if we think about, say, the next few years through 2027, is there a financial target you expect to raise from selling the upstream and these affiliated companies? So any type of financial magnitude you could share with us would be super interesting. I found [ good news ], that it's a lot of production, you're willing to divest, but yet, it's 1% of EBITDA only. So are you seeing interest from third parties to look at those assets? And are those Argentine companies? So what can they do better that would make the market attracted to the assets? And then the second question is about the LNG project. I understand this is very long term, and the bulk of the CapEx is going to come in the outer years. But can you share with us your expected IRR levels for investing in these projects, vis-a-vis investing in your core sale of hubs? So I wanted to try to understand what the differential of returns are on LNG.
Horacio Marin: Okay. The first one is a little longer. But I can say for the mature fields, we think that we are going to finish the process during this year. And they are -- from now on, we see a lot of interest in Argentina for different -- more small companies than YPF, and it will be a good process and there will be very transparency with the bank. And we envision that this year, we will finish all the process. And that will be very important for YPF to increase our profitable by dollar. The second question in LNG IRR, I cannot give you because this is -- I can tell you that it's very competitive in the worldwide scale. That is the only thing, and I apologize but I cannot tell you exactly the figure number. The other thing, I think it's important for you to know, that we call the Argentine LNG project because it will be done by all the Argentine industry. So we will get a good scale, economical scale in all the infrastructure and all the investment. So that's why we make this kind of project, a bigger project than YPF can manage but they will be for all the Argentine gas players. And so we improved the efficiency and the internal rate of return for everybody.
Margarita Chun: Thank you so much, Horacio. Our next question comes from Walter Chiarvesio from Santander. [Operator Instructions] We still cannot hear you. We can test. Okay. So you may continue now.
Walter Chiarvesio: Yes, sorry.
Margarita Chun: Now we can hear you.
Walter Chiarvesio: Okay, sorry. Probably digging deeper on details, 2 things. One is related to the exit in the mature fields is I probably missed the details, but in your comments, but this is partnering with new companies, doesn't mean that YPF will get out totally from the fields, only that CapEx will be done by partners. Secondly, this plan entails returning blocks to the provinces because there were news in the media regarding complaints of governor saying that they wouldn't accept that companies or YPF specifically leaves the blocks such like that. And if that entails for example, environmental liability costs or things that we should take into account. And this $800 million [ capital ] release is for the next year, I mean, it's $800 million per year. I missed that. That is on one side. And the last part of my question on CapEx is downstream $900 million in 2024, is that -- that should be [ standing ] over the years? So this -- the last part of the revamping that you have been making since last year?
Horacio Marin: Okay. Thank you very much for your question, Walter. I will pass to Max because you make -- ask a big detail. The only thing I will answer you that this is not like farming or is going out of the areas or the fields, okay? It will be the different way. Also, there is something that you are asking that we are always discussing with the governance and the unions, and we are in very, very good shape. The -- what you read in the newspaper is what you read in the newspaper, but it's like there could be different ways to go out of the area. There could be selling some and also, I don't know the name in English, [indiscernible]?
Walter Chiarvesio: Reverting.
Horacio Marin: It's not reverting because it's transferred to some province company. And the other you say that we take into account everything in the selling, okay? This our goal and the way to go out is a clean exit. So now for more detail, I pass to Max.
Maximiliano Westen: Thank you, Horacio. Yes, definitely. We are still -- we are doing the prework. And in that prework, we're going to hire a bank. We are in the process of finishing that up, and we will know who we are going to be working with within the next 1 or 2 weeks, our expectations are to go out to the market by the end of March. And during the third quarter, we should have offers. We're going to test the market. We should have the offers. And like Horacio mentioned, we want to close these transactions within this year. So with that said, I think that which blocks we're going to sell to the market or other players in which we're going to revert back to the provinces, it's confidential. But like Horacio commented, we're going to seek either a clean exit when we transfer to other players or we're going to negotiate with the province in order to comply to whatever outstanding [Foreign Language] commitment we have. Sorry, I don't know if there was another question, yes, regarding downstream CapEx. I think that, yes, this year, we're still finishing up the big investments that we are doing in our 2 main refineries are to adapt those to the low sulfur content. And this we're going to finished by the -- and gasoline by the end of this year and diesel by the end -- by next year. And also adapting our refineries to the new reality, which is the crude of Vaca Muerta, it's growing. So we need to be prepared in order to be efficient in our refineries, we need to be prepared to refine lighter crude oil. So that's why the level of CapEx is still at those levels that you commented this year, but sometime down the road in the next -- it should go lower to the $500 million per year. That's not including the midstream efforts. As Horacio commented a couple of minutes ago during the presentation, we're going to -- we are still in the process of debottlenecking in Vaca Muerta and those bring -- those have additional CapEx efforts in particularly in Vaca Muerta Sur and the Vaca Muerta Sur system.
Margarita Chun: Thank you, Horacio, and thank you, Max. And thank you, Walter, for the question. [Operator Instructions] And our next question comes from Daniel Guardiola from BTG Pactual. [Operator Instructions]
Daniel Guardiola: Thank you, Margarita. And great to meet you Horacio, Federico, Maximiliano. Okay. Great. I have a couple of questions, and one is regarding the very comprehensive strategic plan that you just announced. And I wanted to know if within that plan, if you are including inorganic growth in Vaca Muerta. And being more specific, I would like to know if you're taking a look at the assets that Exxon is currently disposing in Vaca Muerta. So that will be my first question. My second question is related to the debottlenecking projects that I mentioned Horacio, many projects to evacuate oil from Vaca Muerta to the Atlantic Shore and to eventually further increase the exports of oil. And I wanted to know what are the main risks that you think you're going to face when trying to deploy all these new infrastructure? And connected to this, you did mention now the project Vaca Muerta Sur. But I learned this week, you know that [indiscernible] announcing the [ Tripica ] project. And I wanted to know if those 2 [ place ] are complementary, if they are competing with each other or if both are going to happen. And just after one, if I may squeeze. Can you share with us what is the expected trajectory of your total EBITDA generation for the next 3, 4 years?
Horacio Marin: Okay. Thank you, Daniel, for your 3 questions, 2 questions. Okay. The -- sorry, I'm looking for your video, and I was not looking at the video that you see me, okay? So they are [ cheating ] me here. Okay. The first question. We are here all the management, the new and all the management that we are here. Our goal is to maximize the value of all the shareholders. Therefore, we are growing in Vaca Muerta organic or inorganic. If the inorganic, has more internal rate of return than the organic, we are going to follow that to improve the profitability of our shareholders. That is the first question. The second question was about the debottleneck. And you see the [indiscernible] and Vaca Muerta Sur. The Vaca Muerta Sur is the one that we are going to follow, and there are all the industry that is follow us because it's a big pipeline, they can improve the capacity to 800,000 barrels per day. And also it will be in a new port that we can sell the vessel of 2 million barrels per day, so reducing the discount of the crude oil for export. So we are focusing on this project. The third question, and thank you for that question because if not, Federico were not talking so far. So I pass through Federico.
Federico Barroetave: Daniel, on EBITDA, let's say, we expect this year to be stronger than last year, considering the increases in prices and also considering that within this year, we should have an overall cost measured in dollar terms lower than last year. But as I said, we are expecting a stronger EBITDA for 2024.
Margarita Chun: Thank you, Horacio, and thank you, Federico. Our next question comes from Guido [indiscernible] from [ Alaria ]. [Operator Instructions] Okay. So we may move on to the next person and then come back to Guido. Our next question comes from Marina Mertens from Latin Securities. [Operator Instructions]
Marina Mertens: Thank you. Thank you for the presentation.
Margarita Chun: Yes, we can hear you.
Marina Mertens: You can hear me?
Horacio Marin: Yes, go ahead.
Marina Mertens: Okay. Okay. Perfect. I have 2 questions. So the first one, given the conventional assets currently account for roughly half of YPF's crude oil production, and then they would eventually be exiting your portfolio. What changes in the supply strategy of the refineries after this divestment? And the second one is considering that the peso has strengthened over this first quarter, where do prices advance stand in terms of our parity? And what trends are you observing costs?
Horacio Marin: The first question I think is the production of the conventional that the mature field is 60% of the conventional, 60% of all the production. And we will balance with the growth of Vaca Muerta, you will see in future that we surpassed in the future. I'm not saying when, easily than production. The second question, remember, when you told that there is a reduction in the churn rate, you are talking about the blue or the CCL. The other is not reducing, its increasing 2% per month. So know that there is a change in that way. The -- we are, as I mentioned in the presentation, we are close. We envision that during this year, we will reach the international markets. And with the -- I don't know, I think there is something more you're talking about the operating cost, if I'm not wrong, okay? Yes.
Marina Mertens: Yes.
Horacio Marin: In the operating cost, if you see average year-by-year, we are going to reduce. But if you see next year when we are going out of the mature field the reduction of cost per barrel will be important, I would say.
Margarita Chun: Thank you, Horacio. And thank you, Marina, for the question. Our next question comes from David [ Parvo ] of Puente. [Operator Instructions]
Unknown Analyst: Can you hear me?
Margarita Chun: Yes, we can hear you.
Unknown Analyst: Perfect. Well, thank you for having me. Most of my questions have been answered, but I have one regarding maybe the previous one. I was -- prices against import parity. Are you expecting to -- are you targeting a gap to the import parity for 2024. That's the first question. And the second one is, what are the stages you need to follow in order for the LNG project to be a reality, let's say, like what are the different steps that becomes a reality.
Horacio Marin: I didn't understand at the beginning it was here something that I couldn't hear very well between the price. There was one word I couldn't hear.
Maximiliano Westen: I think he was asking if we are targeting a specific gap between prices and the import parity.
Horacio Marin: That will be our commercial policy. Sorry, I cannot give you because if not the other [indiscernible] and the other action they will know what will be our target. We are focusing to reach during the year, the export parity of crude because Argentina is supportive of crude and our ceiling is the import parity product and our show will be to increase for all the shareholders, the margin of the refinery. This is our show -- sorry, show, and that's why we are here. And in the LNG detail, I will pass to Max that he was involved a lot in projects.
Maximiliano Westen: Thank you, Horacio. So the next steps in the LNG project we are moving into the [ FEED ] stage. We need to develop the engineering. There are several packages of engineering. So during most of this year and most of -- yes, a big part of next year, we're going to be working on engineering. We are targeting to FID the first stage of our project by mid or second half of 2025. In parallel, there are many things that need to move forward. Of course, we're going to be opened for additional partners. Also, we're going to be working on the project financing and in parallel, also a, there's a lot of permitting and environmental pre-work that needs to be performed. So I think that all of this is what we're going to be working on the next 1.5 years, 18 months or so.
Margarita Chun: Thank you, Horacio and Max. Since we are -- we have been extending some minutes more. We are going to take the last question. So the last question will come from Leo Marcondes from Bank of America. [Operator Instructions]
Leonardo Marcondes: Can you hear me?
Margarita Chun: Yes, we can hear you.
Leonardo Marcondes: Okay. Okay. Great. So my first question is regarding the lifting costs. You guys showed to us that you expect reduction in lifting costs at the conventional assets to $16 from $25 per barrel, right? So how do you guys expect to decrease these lifting costs via potential divestment and keep the best conventional assets? Or do you expect to sell your entire conventional asset base? My second question here is more of a follow-up here on the LNG question. Just to understand maybe a bit better. We understand that you guys still need a regulatory framework. So you guys can move on with the FID and so on, right? But do you guys have already started discussing this with the government or something like this? Or is it still a very initial phase so far?
Horacio Marin: Okay. I will pass to Max, but first, I will tell you that the reduction in [Technical Difficulty]
Maximiliano Westen: Good. Hello. Okay. I'll resume. I'll start over. Sorry for the technical inconvenience. But Horacio, you put it together very good. It's a combination. First, the impact of selling the mature fields. That doesn't mean that we are not going to have conventional projects. We're just going to keep the ones, I wouldn't say the better ones, but the most profitable and also it's not only about profitability, but also materiality. We're going to keep those projects and we're going to develop. And those we think we can add value, and also hard work and efficiencies in our unconventional field. So it's a combination of those 2 factors. Regarding the -- of course, yes, thank you for asking. I forgot when I was talking before about what we're going to be working on in parallel. Of course, the bill -- sorry, the LNG project needs long-term visibility and long-term visibility means that -- sorry, means long-term visibility and also our tax packages that is competitive at a global level. The bill that the government is working on, I think it provides for both -- and definitely, this -- we will need to have it in place to have FID. Otherwise, it's going to be very challenging to have a profitable project also, not necessary to comment that project financing would be off the table, I think, if we cannot provide for this long-term visibility.
Horacio Marin: But there is like an agreement between all the governments and also the national government to pass those law to increase the investment in Argentina. And LNG, I can tell you that it's like the project, all the politicians, all the companies for Argentina. So we are positive that we will end up with a good result.
Margarita Chun: Thank you so much, Max and Horacio. We apologize, everyone, for the technical inconvenience. And thank you for joining today's presentation. Keep in mind that we have uploaded the full complete presentation at our website, you may find there. Thank you for joining today. Please, we can close today's presentation. Thank you so much. Have a good day.