YPF

Hello, everyone. Thank you for joining us, and welcome to the YPF second quarter 2026 earnings conference call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Margarita Chun, IR Manager. Margarita, please go ahead.

Good morning, ladies and gentlemen. This is Margarita Chun, YPF's IR Manager. Thank you for joining us today in our second quarter 2026 earnings call. Before we begin, please consider our cautionary statement on slide two. Our remarks today and answers to your questions may include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by these remarks. Our financial figures are stated in accordance with IFRS, but during the presentation we might discuss some non-IFRS measures such as adjusted EBITDA. Today's presentation will be conducted by our Chairman and CEO, Mr. Horacio Marín, our Finance Vice President, Mr. Pedro Kearney, and our Strategy, New Businesses, and Controlling Vice President, Mr. Maximiliano Westen.

During the presentation, we will go through the main aspects and events that shaped Q2 results, and finally, we will open the floor for a Q&A session together with our management team. I will now turn the call over to Horacio. Please go ahead.

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

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

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

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

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

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

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

Finally, regarding YPF's stock split, last week, we successfully completed a 10-for-one split in the local market, ByMA, with the goal of improving accessibility and affordability for local retail investors in comparison with our peers. In parallel, we adjust the ratio of ADR to shares from 1:1 to 1:10 with no economic impact on ADR holders. Importantly, this split doesn't affect shareholders' economic interest, ownership percentage, or voting rights. In addition, users of YPF application with cash accounts will be able to buy and sell YPF shares directly through the app starting this Friday, August 14. This represents another meaningful step in expanding access to YPF's equity story to a wider investor base. Now, let me share more details on our Loma La Lata Oil project, a key driver to accelerate the development of the South Hub in Vaca Muerta's oil window.

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

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

Thank you, Horacio. Good morning, everyone. As Horacio mentioned, this was a record-breaking quarter for YPF. We delivered record earnings, margins, and cash generations, reduced leverage to its lowest level in more than a decade, and achieved strong operational performance across all our businesses. Revenues reached approximately $6.6 billion in the second quarter, up 33% sequentially and 42% year-over-year. The increase was supported by stronger international prices as well as higher refinery processing levels, generating surplus of fuel exports, and seasonal demand for diesel and natural gas. Adjusted EBITDA totaled $2.8 billion, increasing 76% sequentially and 2.5x year-over-year. This performance reflects the shift to shale, high refinery utilization, disciplined cost management, efficiency gains across the company, and a better pricing scenario.

On the production side, our shale oil output continued expanding, reaching 213,000 bpd, increasing 4% sequentially and 47% interannually. As Horacio mentioned, excluding the conventional assets under the investment process, around 95% of our oil production would have come from shale formation. In terms of investment, during the second quarter, we deployed over $1.3 billion, allocating 77% to our unconventional operations. CapEx increased by 37% sequentially and 16% interannually, primarily due to the signing bonus for the unconventional concessions of the five blocks dedicated for Argentina LNG project. Also, it was driven by the higher investment in facilities at La Angostura Sur and Norte fields. For the rest of the year, we expect further acceleration in line with the production ramp-up. On the financial front, despite acceleration in capital expenditures, we generated a very strong free cash flow of $824 million, which I will discuss in greater detail later.

As a result, our net leverage ratio declined to 1.1x, marking the third consecutive quarterly reduction since the Q3 of last year and reaching its lowest level in 11 years. Now, let me walk through the evolution of our free cash flow during the second quarter. The positive free cash flow represents the third highest free cash flow in YPF history and was primarily driven by the all-time high EBITDA of $2.8 billion. This outstanding result comfortably funded our accelerated CapEx program of over $1.3 billion, aligned with the expansion of our shale operations and key infrastructure projects. It also covered the $188 million payment related to the acquisition of Equinor assets in Vaca Muerta, as well as the $150 million interest payments. In addition, the negative working capital variation was mainly explained by higher seasonal natural gas sales.

It is important to note that the higher planned gas price is fully reflected in the EBITDA during the quarter. However, given the related collection terms, most of these incremental sales are collected during the following quarter. This temporary working capital effect was partially offset by $85 million in dividends collected from affiliates. It is worth highlighting that excluding the M&A activity, the company will have delivered an even stronger performance, generating free cash flow of approximately $1 billion. As a result, our cash liquidity position increased to nearly $2.5 billion at the end of June, compared to approximately $1.7 billion at the end of March. This further strengthened the company liquidity position and marked the highest cash balance in our history. This improvement provided us with significant flexibility to execute our ambitious investment plan for the second half of the year, while comfortably covering our debt maturities.

Turning to our financial position, we have continued improving our net leverage ratio since the third quarter of last year. This quarter, it declined to 1.1x, nearly half the peak level reported in the third quarter of last year, primarily driven by a better international prices environment, reaching the lowest net leverage level in more than a decade. In addition, the strong liquidity position achieved during the quarter allowed us to pursue proactively liability management activities focused on reducing our overall cost of debt by prepaying higher-cost facilities with shorter tenors. In this context, in April, we issued a new local bond for $122 million with a four-year tenor and at 5.5% yield, taking advantage of a market opportunity to secure low-cost, long-tenor financing. The proceeds were used to prepay a higher-cost loan maturing in 2028, generating interest saving while further optimizing our debt maturity profile.

Additionally, we amended our $450 million syndicated export refunding facility executed in the fourth quarter of last year, extending the drawdown period by two months and pushing the final maturity by one year. As a result, most principal maturities are now concentrated in 2029. During the second quarter, we also prepaid approximately $220 million of local bonds and trade facilities maturing primarily in 2027 and 2028. Separately, in June, we signed a mandate letter with IDB Invest to establish the framework conditions to structuring a potential A/B loan facility of up to $500 million. Despite not representing a financial commitment, it provides additional flexibility and optionality to address potential funding needs for next year. More recently, in August, we successfully reopened a local bond originally issued in April, raising an additional $170 million with a 3.5 years tenor and a 5.5% yield.

The proceeds will be used to repurchase our $140 million bond maturing in February 2027, further improving our debt maturity profile while reinforcing our commitment to proactive liability management and funding optimization. Looking at our debt profile, remaining maturities for the second half of this year amount to approximately $700 million. Nearly 40% corresponds to local bonds, 28% corresponds to amortizing international bonds, while the remainder is composed of other local and international financial loans. Finally, following the recent sovereign rating upgrade, in May, Fitch upgraded our rating to B- with a stable outlook. S&P upgraded YPF's rating to B in June, and Moody's also upgraded the company from B2 to B1 in July. This last new rating is the highest YPF has achieved in recent years, broadly in line with the level the company held between 2017 and 2018.

Overall, these upgrades, together with our broad access to capital markets and financing opportunities, reinforce both the momentum and sustainability of our credit story, reflecting the strength of YPF's financial position and the market's confidence in our strategy and credit profile. I will now turn it to Max to walk through the operational performance.

Thank you, Pedro, and good morning to everyone. Let me dive into the evolution of our upstream performance in the quarter. Our upstream strategy continues to deliver outstanding results with shale oil driving growth, improving efficiencies, and consolidating YPF's position as a best-in-class Vaca Muerta player. Importantly, shale oil output continues to more than offset the conventional divestments, supporting a more resilient and higher-margin production base.

In that sense, shale oil production continues the growth path, hitting a new record high, reaching 213,000 bpd in the second quarter, representing a sequential increase of 4% and a 47% year-over-year. This performance was primarily driven by the strong contribution from La Angostura Sur, followed by higher production recorded in the North Hub of Vaca Muerta.

In addition, since May, we have incorporated the production associated with our 4.9% stake in Bandurria Sur block and our 15% stake in Bajo del Toro block, both recently acquired from Equinor. Looking ahead, we expect shale oil production growth to accelerate during the second half of the year as key infrastructure projects and other facilities, like the oil treatment plant in La Angostura Sur, continue to move closer to start-up, including VMOS, which reached around 77% completion as of June 2026. Shale oil expansion fully compensated the continuous divestment from conventional assets, which dropped 49% year-over-year. Excluding the conventional assets that are under the divestment process, conventional production would have been roughly 18,000 bpd in the second quarter.

Total lifting cost, excluding specific well service costs, continued the downward trend, decreasing 31% year-over-year at $8.4 per BOE in the second quarter, reflecting the structural improvement in our cost base. Excluding the divestment assets mentioned before, lifting cost would have been below $7 per BOE. Focusing on our shale oil hub, we continue to operate at best-in-class levels at around $4 per BOE, essentially flat on a sequential basis. Turning to natural gas, the production averaged 37.3 MMcm per day, down 6% year-over-year, primarily reflecting the exit from conventional fields, partially offset by the expansion of shale gas production, mainly led by La Calera block. Additionally, let me point out that during the second quarter, a well located in Rincón del Mangrullo block reached production of 1.3 MMcm per day, becoming the highest-producing well within the basin's dry gas window.

Our capital allocation is currently focused on the oil window of Vaca Muerta, reflecting the greater flexibility of oil demand supported by higher evacuation capacity, while natural gas still remains largely constrained by domestic consumption. Looking ahead, the development of integrated LNG projects is expected to unlock significant incremental demand, leveraging YPF's substantial acreage position, world-class resource base in Vaca Muerta gas window. Overall, these results highlight the consistency of our upstream strategy, where shale development not only drives production growth but also enhances efficiency, lower cost, and supports structurally stronger and more profitable results. Moving to our midstream and downstream segment, our processing levels set a new record in the second quarter, averaging 351,000 bpd, reconfirming the reliability and flexibility of our refining system. It grew by 2% sequentially and 16% interannually, where during the second quarter last year, La Plata refinery was under maintenance.

This exceptional operational performance, together with a new record production of gasoline and middle distillates, enable us not only to fully meet domestic demand without imports, but also to supply local refiners and expand exports. Looking ahead, we expect processing to gradually normalize towards ordinary levels as scheduled maintenance activities will take place during the second half of the year, thereby ensuring sustained operational reliability and long-term efficiency. Regarding domestic sales of gasoline and diesel, dispatch volumes increased by 7% quarter-over-quarter, driven by an expansion in diesel seasonal demand. On a year-over-year basis, gasoline and diesel volumes grew by 10%, supported by stronger demand, particularly in diesel, across all commercial segments. As a result, we increased our market share to 59% from 57% in the first quarter and up to 61% when we consider gasoline and diesel produced by YPF and dispatched through third-party gas stations.

It is worth mentioning that beyond local demand in the second quarter, YPF exported nearly 100,000 cu m of gasoline and diesel. In terms of pricing strategy, as Horacio explained before, in April, we decided to temporarily postpone further price adjustments alongside a 1% increase. This temporary measure, which concluded in late June, acted as an effective buffer, allowing us to preserve fuel demand during a period of elevated volatility while progressively reducing the gap with import parity as market conditions evolved, maintaining a competitive position in the local market. Lastly, let me highlight that our midstream and downstream adjusted EBITDA margin expanded to nearly $30 per barrel in the second quarter, benefiting from strong processing volumes and the successful execution of our commercial and pricing strategy. Now let me briefly walk you through the progress of our upstream efficiencies during the quarter.

We continue to deliver consistent improvements in productivity across our shale operations, driven by execution and ongoing efficiency gains. Starting with drilling activity, we continued setting new efficiency gains in our core shale hubs. During the first half of 2026, we reached 354 m per day, 9% above 2025's average, and recording roughly 30% increase compared to 274 m per day recorded in 2023. In our unconventional fracking activities, we also delivered strong efficiency gains across our key operating metrics. During the first half of the year, we recorded 11.4 stages per day, 18% higher against 2025 levels, and representing a remarkable expansion of 50% compared to 2023, while pumping hours per day rose to 19.2 hours, 14% and 32% above the average of 2025 and 2023 respectively.

It is worth highlighting that in June, we achieved record levels of fracking, completing nearly 1,400 stages and representing around half of the country's activity. Moreover, during July, we achieved another major hydraulic fracturing milestone by pumping continuously for 203 hours and completing 86 stages at Bandurria Sur block. It represents over 8 days and 11 hours of uninterrupted operations. This achievement was monitored through our real-time intelligence center and reflected a fully remote and autonomous fracturing operation completed with zero incidents. All these records performances in Vaca Muerta brings us even closer to Permian-level operating standards. In the downstream business, in the second quarter, we continued to strengthen YPF's position as a key player in Argentina's energy transformation.

As part of our innovation program, we visited Tesla's Gigafactory in Texas, one of the most advanced industrial facilities in the world, and signed a letter of intent to explore collaboration opportunities in fast-charging networks and energy storage, combining Tesla's technology leadership with YPF's nationwide infrastructure platform. This initiative reflects our commitment to modernizing our energy system, advancing innovation, and supporting the adoption of next-generation energy and mobility solutions that will enhance the country's competitiveness and long-term sustainability. Moreover, as I mentioned before, our outstanding processing levels resulted in a surplus of gasoline and mid-distillates production, enabling YPF to avoid imports, supply local peers, and expand our exports. Additionally, during the quarter, we completed the works related to the new fuel specification project at our Luján de Cuyo refinery, marked by the successful start-up of the new diesel hydrotreating unit in July.

In parallel, we made progress on engineering works for new hydrotreating units at La Plata and Plaza Huincul refineries to ensure full compliance with diesel specifications. Importantly, all these improvements are the result of continuous optimization efforts across all of our operations, supported by better well planning, disciplined execution, and a more efficient integration with our service providers. I am now turning to Horacio to continue with updates regarding LNG projects.

Thank you, Max. Let me share the progress we achieved on the LNG projects. Regarding the tolling phase, I would like to highlight the recent approval of San Matías Gas Pipeline SPV under the RIGI framework. The project contemplates the contraction of a 470-km gas pipeline connecting Tratayén in Vaca Muerta to the San Matías Gulf. It's expected to have transportation capacity of approximately 27 MMcm per day by mid-2028. The project will require a total investment of around $1.3 billion and is expected to be funded by a project finance scheme with 70% debt and 30% equity. Importantly, the project finance is progressing very well and is already at the advanced stage with financial closing expected during Q3 this year. Turning to Argentina LNG project, the most relevant milestone of the quarter was the agreement signed in June between YPF and the government of Neuquén.

This step, the long-term regulatory and fiscal framework applicable to Argentina LNG, all of these steps provide a more predictable and competitive foundation to continue advancing the project. We also made significant progress in the upstream segment of the project through the agreement to incorporate Eni and XRG into the UPCO Argentina LNG I, the upstream SPV that will hold 100% of the five wet gas blocks dedicated to the project. Under this structure, Eni and XRG will each hold 32% interest, while YPF remains the operator with a 36% stake. This reinforces alignment across the entire value chain, enhances execution capabilities, and represents another important step toward reaching the final investment decision. On the execution front, we have recently selected the front runners of the EPC of the gas NGL pipeline, as well as the integrated gas treatment plant.

In addition, on the financial side, we have completed all the documentation required to open the virtual data room with the ECAs, which was successfully launched in July. This marks another important milestone in the project finance process and further demonstrates the continued progress of Argentina LNG. Overall, Argentina LNG continues to gain momentum. This project will not only accelerate the development of Vaca Muerta, but also has the potential to reshape Argentina's export profile over the coming decade. Finally, I would like to share our revision to our 2026 guidance. This reflects a stronger international price environment and its direct impact on profitability, cash generation, and balance sheet strength. We are assuming a Brent price of $75 per barrel for the second half of the year. This assumption remains subject to the high volatility seen in international markets over recent weeks.

Under this scenario, the average Brent price for the year 2026 will be around $82 per barrel, 30% above our previous assumption of $63 per barrel. As a result, we now expect adjusted EBITDA in the area of $8 billion, representing a significant increase from our previous guidance for around $6 billion. This improvement is supported by a higher Brent environment, operational efficiency, and strong refined product crack spreads. Let me highlight that this new guidance compares very favorably with YPF's 2023 EBITDA. In fact, under exactly the same comparable Brent condition, in just three years, YPF is doubling the adjusted EBITDA from $4 billion to $8 billion. This clearly reflects the strength and discipline of the 4X4 plan and our ability to create tangible and sustainable value for our shareholders. On the operating side, we remain fully on track with our shale oil production targets.

We continue to expect average shale oil production of around 215,000 bpd during 2026, and to reach an exit rate of approximately 250,000 bpd by the year-end. With respect to investment, we expect to accelerate deployment during the second half of the year. This is mainly driven by progress in facility construction, maintenance activity rescheduled for the second half, and the faster development of the southern half of Vaca Muerta through Loma La Lata Oil. As a result, we are increasing our full-year CapEx guidance by approximately 5%. The new range is $5.8 billion-$6.2 billion, remaining around 70% allocated to shale operations. Despite the minor increase in our CapEx plan, we expect to end the year with a positive free cash flow position of around $2 billion. This figure includes M&A proceeds already collected and assumes the proceeds expected from transactions currently under execution.

This stronger cash flow outlook is also reflected in our balance sheet expectation. We now anticipate net leverage to decline significantly to nearly 1x. This compares with our previous guidance range from 1.6x-1.7x. In summary, this revised guidance reinforces the strength and resilience of YPF's business model. A more favorable pricing environment is translated into higher profitability, strong cash generation, and lower debt. At the same time, our strategic priorities remain unchanged. Most importantly, this provides further evidence that the 4X4 plan is delivering concrete results, positioning YPF for a stronger, more profitable, and more financially robust future. With this, we conclude our presentation and open the floor for questions.

We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Michael Furrow with Pickering Energy Partners. Michael, your line is open. Please go ahead.

Hello, good morning and nice quarter. Thanks for having us on the call and for taking our questions. I'd just like to start with CapEx. It came in notably below expectations this quarter, particularly on the upstream side, at just under $1.1 billion. So, just given the strong start to the year and the acceleration of spending and activity in the second half of this year, could you help us get a better understanding of the shape of CapEx or activity levels for the remainder of 2026?

Okay. Good morning. Thank you very much for the question. You saw the guidance, no? We are going to accelerate because our results, and we secure the rigs and we secure also the sets, the fracture sets. At the end of the year, we are going to have 19 rigs, and now we have 16 rigs. The level that we think that we are going to finish at the end of the year, it will be $6 billion. The end of the production for in December, 250,000 bpd. For sure, we are going to accelerate next year. We secured the rigs also for next year. In February, we are going to have 21 rigs.

Great. Appreciate that, Horacio. Maybe just following up on that point, the shale productivity continues to look strong across the asset base. To us at least, it seems like the company's more than on track to hit its 2026 guidance and 250,000 bpd shale exit rate. Horacio, are you seeing the same thing? And what would need to happen in the back half of the year to put that target out of reach?

You are talking for next year? Ah, okay.

No, for the 250,000 bpd shale exit rate. Correct.

Okay. We have the rigs, and we are finished with the drilling, so we need to fracture all the wells. The only thing that we have to have from the facility point of view is a PTC in La Angostura Sur. We think that in September it will be the COD. With that, we can reach the number without problems.

All right. Thanks for your time and nice quarter. I will turn it back.

Okay, thank you.

Your next question comes from the line of George Gasztowtt with Latin Securities. George, your line is open. Please go ahead.

Good morning to you, and congratulations on the good quarter. I have two related questions this morning on Vaca Muerta's evacuation capacity. For the first one, we have seen a few reports of delays to the Vaca Muerta Sur monobuoy delivery out of the Middle East. I was wondering if you had any comments on that? As a follow-up, Oldelval is looking to temporarily increase capacity in Duplicar using polymers and upgrade the pumping stations. As its largest shareholder, I was wondering what your expectations for that initiative were and whether the additional capacity could allow YPF to sustain its production ramp if Vaca Muerta Sur were delayed? Thank you.

Okay. Regarding VMOS for the monobuoy, we are closing our figures. We have in the vessel, and now is passing the Strait of Hormuz. So maybe next week, we will have very good news. Okay? Regarding, as we say, plan B from VMOS, we bought another one that is going for sure not to refill in Dubai because of the Strait. Okay? So we think that we have everything on track. It will be success, the path of the vessel from the Strait. That is what we have today. The Oldelval, we are going to use all our capacity. Remember that we need capacity for the three refineries and also for export. Our plan is to export by VMOS.

Because of the production that we are going to have next year, that I will go on to say in better way, I think it's in April next year in New York. We are going to use the majority of the capacity that we have.

Thank you. Very clear.

No, thank you.

Your next question comes from the line of Andres Cardona with Citi. Andres, your line is open. Please go ahead.

Hi, good morning. Horacio, Pedro, congratulations on this very strong record quarter and also on the execution on the capital allocation front. Two quick questions on my side. Given the projects being approved under the RIGI regime, does the industry see a need to accelerate the development of the Vaca Muerta Sur phases that were originally planned for 2028 and beyond? On the capital allocation front, you have completed many of the processes previously announced. Which ones are still pending? Are you also reviewing the portfolio to assess potential additional divestments? Thank you.

Okay. To answer the first one, well, I know what is our north for YPF. Also, as I said before, we are going to present to you next April. Our numbers is all industry need to improve the VMOS. If they go as quick as us, I think it could be 2028. If not, from 2029 beyond, okay? We have the plans to do that. Okay, we have. From the capital allocation for the portfolio with Metrogas, we have finished all the selling that was no core. From the core ones, I would say no core. From Andes, what is the conventional, after the signature last week from Mendoza fields, YPF is going to be a company with 95% of production from Vaca Muerta. That means that we can say that we are almost just one, I say, unconventional integrated company.

The other thing that is necessary to sell, we are in process to sell those fields also. So maybe at the end of the year, it could be 100% or 98% or 99%. But I think we finished that very difficult process that when we start, that everybody could doubt at that moment because it was something difficult to do in Argentina, and I think we were very success. I think I answered your question. I don't know if it's okay, or you need more explanation. I don't know if I answered your question.

I think it helped. Yes, it answered. Thank you.

Okay, thank you.

Your next question comes from the line of Milene Carvalho with JPMorgan. Milene, your line is open. Please go ahead.

Hello, everyone. Good morning. Congrats on the very solid results, and thank you for taking my question. I would like to explore a little bit more on the downstream side. You had very strong results, very strong margin, despite prices being a little bit below international parity. Could you comment on what are your plans for the rest of the year in terms of fuel prices? If oil declines, should fuels follow, or should we see YPF sustaining prices to compensate for what we are seeing in this period below parity? Additionally, on the utilization rate, you have been running above the 100%. Should we expect maintenance in the second half? Thank you.

Okay. Thank you for the two questions. I am going to the second. After to the first, it will be more, I would say, long. For the second, we think because we have some topic at the, I would say, in the fourth quarter. In the fourth quarter, we think that we are going to have an average of 100% from the refinery, all YPF. From the prices, as everybody, I do not know. Well, people that follow YPF, we can remember that we make a buffer prices because the demand was very difficult. It is going down, down, down, and it could be negative. We call at that moment for the buffer. We call YPF help you. Now we are in the phase of you have YPF. That is a compensation, and it depends on the prices what will happen.

Our policy is international prices, and also we see the offer and the demand, the supply and demand, sorry. And remember that we have a real-time intelligence center where we are a unique company that we can see all the pumps in real time. We see the demand minute by minute, so we have plenty of information to take very good decisions, okay? So we have different policies, micro prices policies that will continue. We see the price of oil, I think nobody knows 15 days ago, it was in almost $70. Today, it is $85, $86. So it is very volatile, and it depends on that what will happen there in the second half of the year. It is okay or I miss something?

Thank you.

Okay. Thank you.

Your next question comes from the line of Matias Cattaruzzi with Adcap. Matias, your line is open. Please go ahead. Your next question comes from the line of Daniel Guardiola with BTG. Daniel, your line is open. Please go ahead.

Good morning, Horacio, and congrats on the results. I have one question on my side. Following the incorporation of Eni and XRG into the upstream JV, what are the next key milestones towards FID? Perhaps, what remaining commercial or regulatory risks still need to be addressed before the project becomes fully sanctioned? Thank you.

Because I am still sick, I will ask the guys and we'll open, so you will see that, and after I answer. [Foreign language]. Tell me in English what was [Foreign language].

It was about the project of Argentina LNG, and what are the things that are pending--

Oh, okay.

-- on that project.

Okay, sorry. I was confused. Sorry about my English. The Argentina LNG, we are working very hard. We finish all the documents. We are in the VDR process with ECAs and banks. We have all the technical finishes, and we already build the plant in Neuquén, the EPC of the pipelines, what is the gas pipeline and the oil pipeline. We are going to build in two months, no more than that. The material of the pipelines, also in a couple of months, no more than that. It will be also build the big, I would say a refinery, but it's not a refinery. It's the big plant of NGLs and conditioning the gas for the LNG, that will be in Rio Negro. That is a big, big one area.

From the point of the project, we are very ready to have the FID at the end or in the fourth quarter, and they start as soon as possible after that, all the work and all the, how do you say, constructions, and everything on that. From the point of the contracts, as I say, we finish all of that with the province of Neuquén and the province of Rio Negro. We have everything done. We have all the laws of LNG. We have all the proceeded. Also, we have our partners now are partners of us in the upstream. We are very ready to have the FID this year. That will be very important for YPF, for all the partners, and I think also for our country.

Thank you.

Your next question comes from the line of Leonardo Marcondes with Bank of America. Leonardo, your line is open. Please go ahead.

Hi, everyone. Thank you for picking my questions. I have two from my end here. The first one is also on the Argentina LNG project. What LNG price are you assuming for the FID, and what is the IRR target are you underwriting for the project? My second question is regarding the CapEx for the upstream, right? With the improvement in drilling and frack speed, could you share your current drilling and completion costs? Additionally, on that point, is there still room for further efficiency gains? Thank you very much.

Okay, let's go to the first. This project is very robust. I do not know if you know that it is so good because we are in the window of wet gas that this project produce, or the revenues is half, roughly, half-liquid, half-gas. So it is very, very robust. What are the price that we use? It is futures. In general, in YPF, we use market prices, okay? But it is very robust. Really, this is a very good project because you have a natural catching between the fluids for the project and for the investment.

Talking about, you say you will totally do a different one, that is our cost for the wells. If you take 3,000 m of horizontal length, I have to explain to every one of you that we are using 3,500 m now. What is more profitable because we have very good efficiency because of the real-time intelligence center, because our professionals. But if I take a 3,000 m of lateral length, we are around $11.5 million for the cost of the wells.

Got it. Thank you very much.

Your next question comes from the line of Matias Cattaruzzi with AdCap Grupo. Matias, your line is open. Please go ahead.

Hi, Horacio. How are you doing? Hi, team. This was an amazing quarter that you presented, so congratulations on it. I have a few questions regarding capital allocation and the divestment process. You will be having $1.2 billion of extra cash this year, combined with an excellent EBITDA for this year with high oil prices. Are you expecting to accelerate CapEx, deleverage this year, or are you preparing for CapEx contributions for the Argentina LNG project? Is inorganic growth on the pipeline, or will you bring forward the dividend distribution expected for 2028? I got one more question about what should be the second half of the year, R&M margins going forward, and how do you see the buffer so far? It ended in July, but how do you see downstream prices going forward?

Will be seeing a trajectory back to the $12-$14 per barrel of R&M margins you previously guided, or should expect it to keep at these levels?

First of all, with the capital allocation, you have to remember now, the year was totally different that all the analysts thought. We prepared for very low prices and the life was different. It was high prices. We have better results, but also we work always. It does not matter the price, in optimization and efficiency. Operational efficiency in YPF are extremely good today. We have that, as I explained, in February, we had 21 rigs. If you are comparing, in last December, we had 12 rigs for Vaca Muerta. We say be incremental, and you will see in April when we talk with you at the Investor Day. What else you ask me for capital allocation? No, I think it is okay there. Also--

LNG--

-- also Argentina LNG, and also about the VMOS and the evacuation. We think that we have a good program. We have the capital, and also, we are working in improve our debt. If we need more money, it depends on the price. I think the market should know that we are doing very well and manage very well YPF. We don't see big difficulties for developing Argentina LNG at all. That's why we're preparing for that. We're preparing for all those projects, but with low prices. I think we are in very good shape. Regarding the prices in downstream, we don't see that it's going to work down, okay, to $12 per barrel or $14 per barrel. We think that we can have good margin. Why? Because we improve so much the operational efficiency in all our refineries.

Also we are improving a lot in the, no, in the logistics, in the logistics that we have excellent margin because we have an excellent system. YPF has, in my point of view, the best global system for downstream. As I explained before of the prices, I already explained what we think, okay?

Okay. One last question on YPF Agro. Is it still considered core? Do you have a sale process ongoing?

YPF Agro. In YPF Agro, we made a bidding process, and it was not success. Because it was not success, we decide, because it was very difficult to take out, really, okay? What we thought that to make for a private investor was no good with us now. What we decide is to take out, we make like YPF Agro out of downstream. We put now in another vice president what is in the new energies, because we are making more focus. Today I was discussing before this call for two hours how to deliver more efficient that. I think we are going to have very good results in the future, and we are going to make a new company, YPF Agro, but it will be 100% of YPF.

Okay. Thank you so much, and congratulations on the quarter.

We have reached the end of our Q&A session. I will now turn the call back to Horacio for closing remarks.

Okay. Thank you very much for everybody, and thank you very much for the congrats. All the team of YPF, we are very proud to work in our company and to make value for all of you. We are going to continue to make value. That is our goal, and that is our proud. Thank you very much.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, everyone. Thank you for joining us, and welcome to YPF first quarter 2026 earnings presentation. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Margarita Chun, Investor Relations Manager. Margarita, please go ahead.

Good morning, ladies and gentlemen. This is Margarita Chun, YPF's IR Manager. Thank you for joining us today in our first quarter 2026 earnings call. Before we begin, please consider our cautionary statement on slide 2. Our remarks today and answer to your questions may include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by these remarks. Our financial figures are stated in accordance with IFRS, but during the presentation, we might discuss some non-IFRS measures, such as adjusted EBITDA. Today's presentation will be conducted by our Chairman and CEO, Mr. Horacio Marín, our Finance Vice President, Mr. Pedro Kearney, and our Strategy, New Businesses and Controlling Vice-President, Mr. Maximiliano Westen.

During the presentation, we will go through the main aspects and events that shape Q1 results, and finally, we will open the floor for Q&A session together with our management team. I will now turn the call over to Horacio. Please go ahead.

Thank you, Margarita, and good morning, everyone. We are glad to report a robust beginning of the year across our key operational and financial metrics, delivering on our ambition and guidance for the year. Let me translate the key milestones of the quarter into numbers. Revenues were $4.95 billion, growing 9% quarter-over-quarter, primarily explained by the rising trend of international prices since March, coupled with our policy to align domestic prices of gasoline and diesel with international parities. On a yearly basis, revenue increased by 7%, reflecting a strong local fuel demand and record high refinery processing level. Adjusted EBITDA for the quarter amount to nearly $1.6 billion, represented the highest first quarter level in YPF's history, with an outstanding margin of 32%.

This represents an increase of 24% and 28% on a sequential and interannual basis, materially exceeding revenue expansions. The main factor that explained this growth was higher shale oil production, improved pricing dynamics, and the cost matrix transformation of the upstream segment, now focused on the shale business. On the production side, our shale oil output reached 205,000 barrels per day. That mark represents an increase of 5% versus last quarter and a remarkable growth of 39% against a year ago, representing 76% of our total oil production. This milestone positions us on track to achieve our full year target of approximately 215,000 barrels per day with a December exit rate of 250,000 barrels per day. Let me highlight several operational efficiencies achieved during the first months of the year.

First, we set a new fracturing record during the first quarter, pumping continually for almost 110 hours and completing 52 stages in less than 5 days on a pad at Loma Campana field. Moreover, in April, we signed a strategic agreement with the service company Halliburton to incorporate 4 fracturing sets in Vaca Muerta through a new electrical fracturing technology. This new contract transformed YPF into the first company outside the U.S. to develop this technology, improving efficiency by reducing the use of diesel engine, saving costs of the operation. In terms of investment, we deployed nearly $1 billion during Q1, with 78% allocated to our conventional operations. On a sequential basis, CapEx decreased by 10%, primarily due to increased maintenance activities in the downstream segment during Q4 2025, and it's a lower pace of investment in upstream facilities.

Interannually, the lower investment is explained by the reduced exposure to conventional assets and the impact of one-off item booked last year to secure several unconventional concessions. Consistent with the production expansion expected for the rest of the year, we expect to accelerate capital deployment in the following quarters, reaffirming our guidance of the year in the range of $5.5 billion-$5.8 billion. Finally, let me point out that a standout result of the quarter was our free cash flow, which read an outstanding $871 million. This mark represented an improvement of $1.8 billion against a year ago. This exceptional cash generation was supported by our strong operating performance and the collection of a strategic M&A proceeds of around $500 million.

As a result, our net levered ratio improved to 1.57x, down from 1.9x in Q4 2025. Let me recall that in Q3 2025, we reached the peak of 2.1x, driven by the M&A of buying new Vaca Muerta assets. Before moving into the financial detail of the quarter, I would like to address a significant commercial decision announced at the beginning of April regarding our local fuel pricing strategy. Due to a sharp increase in international prices, driven by the ongoing conflicts in the Middle East, during March, we were able to largely pass through this increase at the pump. However, in the last week of March, demand began to show signs of contraction for the first time in a while, particularly in gasoline.

In response, in April, YPF decided to temporarily postpone further pass-through of international prices increases to customers for a period of 45 days. This mechanism operates as a buffer, enabling the reduction of the gap between local prices and import parities after this period by recovering the buffer compensation through additional pump price. Importantly, let me clarify that this decision was made proactively with our own initiative by analyzing supply and demand by our commercial real-time intelligence center without any government interference and was subsequently adopted by all major operators in the industry. The final objective of this commercial decision was to mitigate potential adverse effect in local demand while reaffirming our import parity strategy in a free market environment. It's also worth noting that during April, YPF maintained a very competitive fuel price level.

Moreover, in April, according to our preliminary figures, our Midstream and Downstream segment reached a very healthy adjusted EBITDA margin of around $24 per barrel. The 45-day period will end around mid-May, at which point we will assess the evolution of Middle East situation, international prices, domestic demand, and microeconomic condition. I would like to dedicate a few minutes to share with you the successful development of La Angostura Sur, a block that, in our view, perfectly captures what YPF is capable of when we combine operational excellence with a strategic vision. Just 18 months ago, La Angostura Sur produced 2,000 barrels per day of shale oil. Today, it's producing approximately 55,000 barrels per day. This remarkable ramp-up is roughly 25x growth in one year and a half.

La Angostura Sur is now ranked as the number 5 Vaca Muerta block, and it currently represents approximately 25% of YPF total shale oil production. What makes this block even more compelling from an investment standpoint is its economics. With a break-even price below $40 per barrel, lifting cost of around $3 per barrel, and a development level of approximately 19%, there is substantial upside ahead, and an unconventional concession value through 2059. Our plateau target for this block is approximately 100,000 barrels per day. We have 100% of the equity stake in La Angostura Sur. This means YPF capture the full value of this world-class asset. La Angostura Sur is not just a production story, it's a proof of concept. It demonstrated YPF's ability to rapidly develop Vaca Muerta at scale with capital discipline at competitive cost.

We are committed to replicating this model across our portfolio. Now, I turn the call to Pedro to analyze in detail our financial results.

Thank you, Horacio, and good morning to you all. Let me walk through our consolidated financial results for the first quarter of 2026. The headline is clear: This was a quarter of exceptionally strong free cash flow, which drove and accelerated the leveraging of our balance sheet, fueled by strategic M&A collections and a strong adjusted EBITDA. As Horacio briefly explained, M&A activity resulted in a net contribution of $504 million to the cash flow of the quarter. This was mainly driven by the final proceeds from the Profertil divestiture, totaling approximately $410 million. Additionally, during the quarter, we received about $85 million as partial payment from the sale of the conventional Manantiales Behr field. Total price of this field amounted $410 million, with an earn-out of up to $40 million.

The remaining balance is expected to be collected throughout the rest of this year, 2027, and 2028. These proceeds were partially offset by an initial payment of $16 million related to the acquisition of a portion of Equinor assets in Vaca Muerta through a joint venture with Vista Energy, which was closed yesterday and resulted in a total price of around $204 million. Together with upcoming divestment of Metrogas and the remaining conventional assets from the Proyecto Andes program, these transactions will further strengthen our financial position and provide greater flexibility to focus on our most profitable core business, Vaca Muerta. The solid free cash flow evolution was also driven by our outstanding performance in all our operations, navigating international volatility and profitable margins and cost efficiencies, as well as operating refineries at full capacity and continually expanding our shared operation.

The higher first quarter adjusted EBITDA comfortably covered investment and interest payment of the quarter. This substantial improvement in operational cash flow for the quarter led to an increase in the company's liquidity, which ended at $1.7 billion as of the end of March 2026, representing an improvement of $500 million during the quarter. Turning to our financial situation, let me highlight that YPF's balance sheet is on a strong and improving trajectory with a solid liquidity position and very manageable debt maturities. In terms of financing, we reconfirm our strong access to the capital markets by raising in the first quarter, nearly $1 billion across international and local markets, as well as bank credit facilities at attractive financing costs.

In the international capital market, during the first quarter, we successfully re-tapped our 2034 bond, adding $550 million at a yield of 8.1%, representing the lowest rate secured by YPF in the international market in the last nine years. Moreover, we have been very active in the local capital market during the first four months of 2026. We successfully issued around $285 million in 2 local U.S. dollars MEP bonds, $161 million at a 3-year tenure with a yield of 6.5%, and $122 million at a 4-year tenure with an outstanding yield of 5.5%.

Regarding financial and trade-related loans, in February, we were able to partially refinance a local syndicated loan for $176 million, extending additional 36 months its average life. Moreover, this financing strategy, combined with a significant positive free cash flow generated in the first quarter, enabled the company to proactively refinance existing facilities. During the first four months of the year, we prepaid approximately $750 million in debt obligations scheduled to mature between the remainder of 2026 and 2028, optimizing our capital structure and lowering our average cost of debt.

Looking at our debt maturity profile, the remaining maturities for 2026 total approximately $1 billion, primarily composed of around $600 million in local bonds, of which we have already proactively repurchased $100 million as a hedge strategy of our liquidity position, around $300 million of international bonds, and the rest corresponding to other local debt. We are well-prepared to meet our debt obligations for this year, supported by the substantial liquidity generated during the first quarter at $1.7 billion. Finally, it's worth noting the evolution of the company's net leverage ratio. As of the end of the first quarter, our net leverage ratio stood at 1.57x, down 25% from its peak of 2.1x, reached in the third quarter of 2025.

The trend is clearly positive. We expect continued improvement throughout the year as cash generation remains strong. I am now turning to Max to go through our operational performance.

Thank you, Pedro, and good morning, everyone. Let me start by taking a closer look at our upstream performance. Shale oil continued achieving new record high levels in the 1st quarter, reaching 205,000 barrels per day, a 5% sequential increase and a 39% year-over-year improvement. As Horacio mentioned before, this achievement was primarily driven by the outstanding performance of La Angostura Sur Block, which has shown exponential production growth in the recent months. These production levels are fully aligned with our plan, keeping us on track to meet our production targets of the year. The strong shale oil production growth fully offsets the continuous divestment from conventional oil fields, which declined more than 45% interannually, recording 66,000 barrels per day in the 1st quarter.

On a pro forma basis, excluding the recently divested assets, Manantiales Behr, Malargüe, and Tierra del Fuego blocks, our conventional production would have averaged only about 35,000 barrels per day by March. As a result, we continue delivering meaningful savings across our cost matrix, demonstrating a remarkable 42% year-over-year reduction in our upstream lifting costs, which dropped to $8.8 per BOE in the first quarter. Excluding divested assets, pro forma lifting cost would have averaged around $8 per BOE. Zooming into our shale oil hub blocks, lifting costs reach best-in-class levels of $4 per BOE, primarily driven by significant cost efficiencies in pulling activities, especially in the Loma Campana Block, as well as the growing share of La Angostura Sur blocks in our production portfolio, which notably has a lifting cost of around $3 per BOE, the lowest among all YPF fields.

On the other hand, the natural gas production averaged 32.8 million cubic meters per day, down 12% year-over-year, mainly reflecting our continued exit from mature conventional fields, partially offset by shale gas expansion. Finally, let me highlight that on April 23rd, 2026, the shareholders' meeting of VMOS approved the allocation to YPF of 44,000 barrels per day of additional available capacity of the pipeline. With this decision, YPF's stake in VMOS increases from around 25%-30%, which is key to supporting the company's production growth in the coming years. In addition, Oldelval is expected to expand its transportation capacity by roughly 150,000 barrels per day by year-end through upgrades to pumping stations and using polymers.

Of this incremental capacity, YPF will hold around 40,000 barrels per day and will support higher volumes of YPF's shale oil to our La Plata Refinery. Overall, these results reconfirm our upstream strategy robustness, shale oil driving higher efficiency by reducing lifting costs and sustaining a more resilient production output. Now, let me share the progress achieved in terms of productivity and operational efficiencies in our upstream segment, where the continuous improvement in drilling and completion efficiency has positioned YPF as the best-in-class operator in Vaca Muerta. Our drilling speed in our shale oil hub reached 364 meters per day in the first quarter, reaching a 12% improvement compared to 2025.

Moreover, our unconventional fracturing speed amounted to 11.2 stages per set per day, growing 15% compared to 2025, supported by a 10% increase in pumping hours to an average of 18.5 hours per day in the first quarter. This performance reflects lower non-productive time and greater operational consistency. In this sense, let me highlight that in January, we drilled a new horizontal well in just 10 days in La Amarga Chica Block, reaching a drilling speed of 520 meters per day. Faster drilling and fracturing means more wells completed in less time, which directly translates into faster production ramp-up and lower costs per well. One of the most important efficiency levers we have been developing is the transition to longer horizontal well design.

We have moved from a standard horizontal length of around 3,000 meters in the previous years to nearly 3,450 meters in the first quarter of 2026. We would like to highlight the continued strengthening of our relationships with key suppliers. In this context, in April, we signed a 5-year contract with Halliburton for electric fracturing services, combining electrification and automation to boost efficiency, maintaining greater operational consistency, and helping to reduce emissions intensity. Moving to our midstream and downstream segment, our processing levels averaged 344,000 barrels per day in the first quarter, growing by 3% sequentially and 8% interannually, and setting another record high processing level. This exceptional performance was coupled with record production of premium gasoline and middle distillates, allowing us to avoid imports, supply local peers, and export to neighboring countries.

Regarding domestic sales of gasoline and diesel, dispatch volumes declined by 3% quarter-over-quarter due to seasonality. On a year-over-year basis, gasoline and diesel volumes grew by 8%, supported by stronger demand across all commercial segments, particularly in the agribusiness. As a result, we maintained a solid 57% market share fully in line with our historical levels, which increases up to 60% when including gasoline and diesel produced by YPF and dispatched through third-party gas stations. Turning to our pricing strategy, local fuel prices increased by 12% sequentially, primarily reflecting the rally in international reference prices that began in March, which were largely passed through the prices at the pump.

Importantly, as Horacio explained earlier, fuel demand during late March fell by 10% approximately compared to early March, which supported our decision to temporarily delay further pass-through of international price increases to the local market for 45 days. In addition, following the price adjustments recorded in March, during April, fuel prices remained competitive. Lastly, our midstream and downstream adjusted EBITDA margin remained strong at $19.1 per barrel in the first quarter. This margin further strengthened to about $24 per barrel in April, driven by elevated processing volumes and the effective pricing strategy outlined earlier. I am now turning to Horacio for updates regarding Argentina LNG and final remarks.

Thank you, Max. Finally, let me share updates on the LNG projects, the most transformational initiative in YPF's history that is making solid progress on all fronts. Regarding the CESA tolling phase, in which YPF holds a 25% equity stake, during the first quarter, CESA signed an SPA for an LNG supply partnership with SEFE, an international energy company based in Germany. This strategic agreement covers a period of 8 years for 2 million ton per year starting in late 2027, representing around 30% of CESA total capacity, which correspond to the total capacity of the first vessel, Gimi. In parallel, CESA award the engineering and construction contract for the 480km gas pipeline, and has been advancing on the project finance of the project.

Turning to Argentina LNG project, as flagged on our previous earnings call, this project contemplates the development, design, construction, and operation of a fully integrated LNG condensate and NGL facilities. The founding partners are YPF, Eni, and XRG, an international energy investment arm of ADNOC. The project contemplates a total investment, excluding the upstream segment, of approximately $24 billion, which includes the financial cost associated with the funding structure. These figures constitute an upward adjustment versus the most recent CapEx disclosed during the Q4 2025 result presentation. This adjustment reflects a strategic reallocation of investment between the upstream and midstream businesses, further optimizing the aggregate CapEx of the integrated project. Since the beginning of this year, we have been actively advancing the project financing process. In this context, we conducted a comprehensive market sounding exercise to assess investors' appetite. The response was very strong.

When interested from approximately 50 institutional investors and cumulative initial appetite exceeding the project financial requirement, reaffirming the project financial viability. In addition, during the quarter, we have been diligently developing both our commercial and procurement strategies. On the commercial front, we launched a competitive bidding process, and the market response was very positive, far exceeding our initial expectation and demonstrating robust demand. On the procurement side, we are actively advancing the engineering phase for the various procurement packages required for the project. Our goal is to ensure that all necessary preparation are in place to enable a final investment decision by year-end. Moreover, last month, the province of Neuquén approved the assignment of Pluspetrol 50% interest to YPF in the three wet gas block identified to develop the Argentina LNG project.

Finally, I would like to emphasize that YPF continue to lead the key infrastructure debottlenecking initiatives required to fully monetize the vast shale oil and gas resources of Vaca Muerta, one of the world's most competitive basins in terms of breakeven prices. In this context, YPF was awarded the Argentine Country Brand Certification, recognizing the company's role as a key contributor to the country's productive development and its international positioning. This distinction underscore YPF's contribution to reinforce Argentina's global image and supporting the attraction of long-term investment. With this, we conclude our presentation and open the floor for questions.

We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Michael Furrow with Pickering Energy Partners. Your line is now open. Please go ahead.

Hello, and good morning. Thanks for having us on the call and for taking our questions. Horacio, I was hoping to get your perspective on the local service market in Vaca Muerta. The play is attracting more international attention. I think YPF is in a good position to offer some insight after signing the recent deal with Halliburton. We've noticed several U.S. oilfield service companies mention South America and Argentina specifically, as emerging markets for their businesses on recent conference calls. My question is, are you actively seeing new entrants, and do you think that this is resulting in a more competitive service pricing environment? If not, what do you think needs to change before more service providers feel comfortable with Vaca Muerta and Argentina in general?

Great. Thank you very much. First, I would like to say that today is Pedro's birthday and also my birthday. You have to be very polite with us, okay. Because it is our birthday, okay. Okay.

Happy birthday to both of you.

Thank you for your question. Thank you very much. Thank you very much. 63. I was born in 63, okay? It's a special day today, yeah? You have to use 9, okay? Okay. Yes. In the service contract and the unique cost, I think next quarter you will see a reduction in our cost because we make a very, I would say, strong, I don't know if that is exactly the question, a strong meeting with all the international service companies. We get very good reduction because it's illogical, because Argentina is a new country. It's business friendly. There was a big reduction. This week I was also in United States trying to convince service company to come Argentina. We need more competition.

You know, learning U.S., to reduce the price, there is two ways. One, by competition, big competition. The second one is to take one out. If they are three, two. If two, one. If they are four, three. They are four, two. We did that process, and we were very success for the shareholders' value. For this year, we are going to improve. In December, you will see 19 rigs. We secure all the rigs. Also, we secure all the fracs fleet. Now we are working for next year also. We are importing the last technology equipment from U.S. Halliburton is trying, it will be in Argentina, the first electrical frac fleet. Our real-time intelligent center is working very well and improving a lot.

We really need good equipment with technology because is the one that we are investing, the one that we see that we are improving a lot every quarter. We have also a procedure to improve our standard times in all drilling and completion by the rig flooring automatically. Every quarter when it's finished, the people in YPF will know that we have a new standard and are always more challenging than it was before. That is the way that we work. I hear your question, that we try to come a more service company. We are working that service company is more service company United States have to be in joint venture with Argentine companies to improve the quality and the, how you say it? The efficiency.

We know that every tomorrow must be better than today. Tomorrow we have to be more efficient than yesterday. That is the way that we work in YPF.

Thank you for the context. As a follow-up, I'd like to ask about the concession sales that Neuquén province is offering in August. Particularly interested in your opinions on the prospectivity of the northern acreage given YPF's adjacent position and knowledge of the area. Without giving away too much information, are there certain blocks that YPF is interested in, or is the company comfortable with the current asset portfolio?

In the north we have, sorry, yes. You know that we have what we call north hub core and south core. South core, we have all that, we are going to present Vaca Muerta I think next week. This is the big Vaca Muerta. For the north, we are working, we have more partners. In the south, we are 100%. We are working with our partners to have the Vaca Muerta and to start. After that, we have always to make our projection and to have the best value for shareholders is a mixture between the capital that we raise from partners and 100%.

In that way, we always try to put the maximum or the optimum way of making value for you, for shareholders.

All right. Thanks for your time. Hope you and Pedro have a nice birthday.

Okay.

Your next question comes from the line of Daniel Guardiola with BTG Pactual. Your line is now open. Please go ahead.

Good morning, Horacio, Pedro, Marga, and Maxi, and thank you for your presentation. I have a couple of questions from my end. One is on prices. I see that the quarter somehow benefited from a sharp increase in oil prices in March, but I get the feeling that much of the pricing benefit in both upstream and downstream appears to be delayed. I wanted to ask you, in the case Brent remains high as it is today, above $90, how quickly can you guys now pass through price changes domestically under the current market framework? It would be awesome if you could please provide some sensitivities in terms of your EBITDA generation for 2026 if oil prices range in 2026 around $80-$90. That would be my first question.

My second one is on the lifting costs. We have seen a very sharp decline in lifting costs, declining 42% year-over-year. Of course, we are seeing a more efficient structure in the core hub, in the shallow core hub. I want to ask you how much further room you think there is for structural reduction, especially considering that the company is transitioning from conventional assets towards unconventional assets, but at the same time, higher oil prices are perhaps creating inflation pressures in Vaca Muerta. Those will be my two questions. Thank you, guys.

Great. Thank you for your questions. The first one, I don't know if I agree with you that this at the core is only because of the sharp increase in prices during March because looking in detail, you will see that there's a big difference because our strategy to be more unconventional. That is in your introduction. I will answer the question. I'm not worried what in the prices that you are saying, that if it remains in $90 or if it's going to $80 or $90, we are very okay, and we can quickly pass through the prices. No, I don't see that problem. I will not say what is our price today because it's a, you know, that it's a buffer.

I prefer not to say because of the competition, even that everybody, we are doing the same. I don't see at all that it will be a problem for us if we are the price of Brent remains in the order of 90, so it remains in the 80-90 range. For the second question, We are really working very, very hard, people in YPF, always trying to optimizing. That's why you can see the big difference in both upstream and downstream during those years. And I don't take on account what you are saying, why you say inflation pressure. I don't know what you are talking about because a country with is okay, and that means that we are improving in the country. We're not arguing on that.

My job is to work and be always more efficient. Really you see that we are reducing the lifting costs. Also if you see how we are developing the way of developing. You see, how Vaca Muerta and YPF was increasing, and you compare the way that we are developing now, is totally different. We are growing very fast, we can reach a better efficiency. We have also in our operation, I would say, very sophisticated real-time intelligence center for the operation. We can see everything. We have drones, we have everything on that.

We are improving a lot every time that every day that we are there, every month that we are following the prices is already the management control. We see that all the KPIs go in a good direction. I'm positive the way that YPF quarter-over-quarter are doing their job. We are very proud of why we are reducing, and we are going to reduce more. We have very low now, very few asset in conventional, and our idea is to try to sell out during 2026 and be an special company. We'll be selling conventional integrate company.

Your next question comes from the line of Bruno Montanari with Morgan Stanley. Your line is now open. Please go ahead.

Good morning. Thanks for taking my question, and happy birthday. The first question is about the LNG project. You do mention you have the two foundation partners, Eni and XRG. I'm wondering if on the back of all the energy security and the conflict in the Middle East, YPF is seeing now interest of potential additional partners coming into Argentina LNG, and potentially making it viable, discussions about the potential expansion of 6 million tons per year. That is my first question. My second question is about the drilling pace, drilling completion pace in the first quarter now. There seems to have been a temporary slowdown in the beginning of the year.

I do understand you are reiterating all the production guidance. I just wanted to have more color, on what happened specifically in the first quarter that led to a slower, activity level. Thank you very much.

Okay. Thank you very much. With the LNG, we are working the three founders. In fact, today we are in Milan, the three teams working very hard to finish all the contracts because our idea to be in the VDR as soon as possible for a project finance. Really, we don't need another partner, could be potentially another one. We are working the three, and we are very proud of what we are doing. What we think, from my point of view, I think from the conflict of Middle East, there are two things that is happening. They are speeding up. There is more appetite for finance our project.

This is a very, a big and robust project. It's, it's one of the various profitable projects in the world today. The other thing that I see is that is going. That is my point of view, that it's going to speed up a lot what we call the expansion. I think the expansion, it will be quickly than we thought before. Maybe we can make like one. I don't say one, but it will be speed up a lot. There is also before the conflict, we have a lot of appetite from off-takers, and we see good, I would say, good, not contract, good negotiation with the possible off-takers.

We are in very good moment and very good path for to have a FID at the end of the year. I'm very happy on that. In the second part, the slowdown in the drilling and completion, I would pass to Max Westen, but I will tell you that it's a question of a bottleneck that is in our infrastructure. Next year, we will not see that anymore. You will see an improvement, incremental production month by month. To there, you have to take into account there was a big change in the system. I pass to Max.

Thank you, Horacio. Hello, Bruno. How are you? No, there wasn't a slowdown. What happened is that what we've did in the first quarter compared to the fourth quarter last year is that we drilled longer lateral wells about as an average 6% higher and longer laterals compared to the fourth quarter. We've drilled pretty much the same amount of wells. On top of that, there was an effect that at the end of last year, during the fourth quarter, we've there was a window where in which we've accelerated our plan of reducing our DUCs that we had, the drilled and completed wells. We had some extraordinary CapEx at the fourth quarter to reduce DUCs.

Over the first quarter, we've drilled longer lateral wells. What I can tell you is that we are maintaining our production targets for this year, and you will see a ramp-up in the level of activity starting next month, with Horacio Marín commented this, going up to 19 rigs at the end of the year. We've did that at the pace, at the correct pacing because there's not much more that we can evacuate until VMOS is COD. That's our, that's our plan.

Perfect. Thank you very much.

Your next question comes from the line of Vicente Falanga with Bradesco BBI. Your line is now open. Please go ahead.

Hi, Horacio, Pedro. [Foreign language]. Thank you for taking my question. I had one. YPF has, now been very successful in accelerating the de-risking of the southern cluster. I was wondering, what is the timeline for the northern cluster, in terms of development? What are the key milestones, we can expect for the next couple of years maybe? Thank you very much.

Hello, Vicente. As I tell before, the north part is not where we are in 100%. We are now negotiating with our partners. I'm very positive that we will reach very soon a development phase on how to develop. After we present, we will present the rig. For sure next year we will start the risking that part. We need that because at the end of that, we have to develop very well all that not to have challenges, and also to go to the places where we make more value for us to the shareholder.

Thank you very much.

You need more details?

Your next question comes from the line of Andres Cardona with Citi. Your line is now open. Please go ahead.

Hi, good morning, Horacio Marín. Happy birthday. What unexpected synergy here. One quick question about the productivity of La Angostura Sur. How does it compare with your key Vaca Muerta fields and versus your initial expectations? Do you think there is upside on the numbers on the south hub? How many acres and drilling locations do you have in this new developing area? Thank you.

Okay. In general, the productivity that we have in last, like a hardcore, is very good. Also you can have better results comparing with the history, because now we have more lateral is longer. We have more efficient on that, okay? The all that we call, what we call the south hub, because it is 100% of YPF, it will be very productive, very profitable. It's extremely good. We have a lot of work to do. You will see next week the rig. There will be the order of 1,200 plus location to drill.

They will be very important for the incremental production that we have in the long term for our peak production in the beginning of next decade. You say also about the possibility of the timing of the 6 million. That is something that we have to discuss with the partners. I have the idea. I will start discussing, I prefer that we are very good partners that the three of them same moment say that. In my point of view, because they are of us, of course, is the Argentina LNG, that they will be sped up. Sorry not to answer.

I don't like also to not answer questions, but I think I have to be a very good partner with them.

Thank you.

Your next question comes from the line of Leonardo Marcondes with Bank of America. Your line is now open. Please go ahead.

Hi, everyone. Good morning. Thank you for picking my questions. Happy birthday to you guys as well. I have two questions from my end. The first one is related to the inclusion of the upstream projects into the RIGI framework, right? My question is, what blocks do you expect to register for RIGI? How should they change your drilling plans in the middle term, right? My second question is regarding the LNG project. It seems that you guys have implemented some changes since the last quarter, right? Because as we compare both presentations, we see that CapEx for phase one have increased to $24 billion from $20 billion. Now you're contemplating what seems to be two pipelines, right? I mean, one for wet gas and one for C5+.

If you could walk us through these main changes here, it would be great. Thank you.

Okay. Thank you for the question. The first one, we are going to include all the possible blocks that can be applied to RIGI. Okay? The RIGI, because it's the same for everybody, all the blocks, they will not change the relative reference for one to the other. They are not going to change our drilling plan. Also our idea was always to develop quickly. Maybe we can because of the RIGI is very, makes simple. They could speed up our peak. That we are going to show big detail in the next investor day that we are going to travel to New York in April, and you will see the big difference.

You have expected next year because of the difference of prices in this year and the rate and all that. I'm very positive that you can see there a speed up of our program. For the second part, maybe, we were not clear with that maybe to make a key decision for us because there was no changes because it could be confuse you because we put 24-20, but this is same. I explain why. With all the partners in the engineering part, we follow and see in big details all the projects, and we realized that it will be more profitable.

It would make more all the plant is still to be in the separation plant in Neuquén, is there will be the first phase, and after there will be regulate the road directly to the port, and there we make a big plan. It was a shift of investment from what we call upstream to, let's say midstream or midstream plus downstream. That is the difference. The other difference that we see from the beginning that you have now, the gas, the gas pipeline will take a lot of that, but the rest of it is a Y-grade. That they go all condensate, plus all the different liquids. After in Río Negro, they're going to separate the NGLs more.

There will be three products out, what is the gas for LNG, NGLs for export, and also the liquids of the oil for export. That is the difference. Really there is not a more cost. I would say that it's less cost than we thought because we were not clear when we talk about there was in the upstream, because the upstream is not in project finance in general. You will not see all the hitting on that. That is not the big. I would say that it's better than before, but you see in the project finance $4 million more, okay? Maybe it was our fault. Apologize. Okay.

Your next question comes from the line of George Gasztowtt with Latin Securities. Your line is now open. Please go ahead.

Hi, good morning, and happy birthday to you both. I was wondering if you could please unpack the 102% refinery utilization in 1Q, and how sustainable that is. Relatedly, how are fuel inventories running so far in 2Q, and do you think you'll be able to sell some to other refineries again? Thank you.

Okay. Thank you. Yes, it's sustainable because we made in YPF, the people of downstream made excellent efficiency without big investments. That is sustainable. The only day when there is quarter that you have to make a stoppage, for sure it will be lower. If not, I would say there could be that number including more, okay? We are, all the transformation that people from upstream made in YPF in the last two years, you see that YPF used to import, and now it's not importing anymore. Also we sell to the domestic market when the other make the stoppage. Also we export for the neighborhood countries, also we can sell diesel for electric generation.

There is big change in YPF, is good news for the shareholders.

Thank you.

Your next question comes from the line of Claudia Rivera with Santander. Your line is now open. Please go ahead.

Hi, good morning, YPF team, and happy birthday to both. My question is, given Brent prices have remained above $100, how should we think about downstream margin dynamics in the second quarter? Do you expect to pass through higher crude costs into domestic pump prices? What will be the timing and pass-through dynamics look like?

If the Brent has remained above $100, you are saying some sensitivity we are talking? The margin of dynamic or the margin of boundary will be more than $3 per barrel. This excellent margin. I answered your question. There I don't, I don't know whether it will be 100, 90, 80. I have no idea when the conflict or the it's going to stretch. It price on its own, it will be open. We have a real policy of import price of international prices, we are going to pass on. The question why we didn't pass through, because we saw the demand going. It was a question of demand and supply.

It was reducing the demand so fast in the last two weeks there for that to improve was worse for YPF and for the shareholder than to make like a buffer. After the buffer, we see also instead of the demand going down, instead going up. Why? Because people were without uncertainties because when you have one week that it was 90, the other 100, 110, 112, it was like it make uncertainty for the consumers. At the end, we are going to pass through the dynamics, and also we have I would say an account that we see how much we have to take out the dynamics of the conflict is on. Okay? It's our policy and it will not be a problem.

I don't see a problem to pass through.

Perfect. Thank you very much.

Your next question comes from the line of Matías Cattaruzzi with AdCap Securities. Your line is now open. Please go ahead.

Hi, Horacio, Pedro, and Max. Happy birthday to you both. I have a few questions. First, and a simple one, what's gonna happen after the fuel freeze after May 15th? Then, in your 2026 guidance, of CapEx, you guided to a neutral to slightly negative free cash flow, at a Brent of $63-$65, and now we are well over that range. Is your CapEx gonna change? You got the infrastructure constraints. We are seeing a really low CapEx in the first quarter. Can you guide us through what's gonna be 2026, and then what's gonna be 2027? Then I got an additional question about the acquired capacity at VMOS.

Can you tell us if it's going to affect the production curve in 2026, if you're going to expect a higher ramp in the beginning and middle of the year?

Okay. First question. Beginning of next week, we are going to have a big meeting in YPF between us. We will decide what will happen after May 15th. We are going to communicate what the decision that we are going to make. Okay? I think I answered you what happen after May 15th in the previous question that they asked me. About the 2026 guidance of the CapEx or for sure, if the price is higher, you have to pay, as we say in New York, let's see, I think it was last year that the, I would say simple sensitivity is 80 million per dollar that it will increase in EBITDA. You have to have rough numbers if you want.

We cannot accelerate this year because we have bottlenecks, and we will reach, I think we are going to reach a bottleneck of the evacuation between October and November. That's why we cannot accelerate, because if we accelerated, we improve the capital in the ground, but not taking out. Next year, and I think I say before that we are going to accelerate, so we can have, in 2027, I think we are going to have a better production than we thought.

That I cannot, I prefer to show you in New York in April, and you will see that because if we have less necessity of CapEx, and we have the evacuation out, and you have more money in, more cash of YPF, we are going to put that for improve the production and make more value for the shareholders and to reach the plateau before.

Okay. Thank you so much. Happy birthday.

Your next question comes from the line of Tasso Vasconcellos with UBS. Your line is now open. Please go ahead.

Hi, Horacio, Pedro, Max. Horacio, I wanted to move back here on your how you're thinking in terms of capital allocation for YPF. Get some additional color from your side. You had a lot of success in the 4x4 Plan that you released when you first assumed the company. You had a lot of success in focusing the core assets and the operations of the core assets, divesting from some other assets. Maybe if you can make a summary on everything that you accomplished since you assumed the company. Of course, looking forward, what do you still view as adjustments required for YPF? Where would you want to invest more, especially in the scenario of a higher Brent and like perhaps making more money? Of course, if anticipating dividends at some point could also be a possibility.

I think just to get some additional color on how you're thinking about capital allocation as a whole for YPF. That's the question. Thank you.

Thank you for your question. The capital allocation is always what we call, we have I tell you something that is more our cooking. We have a week, we call CapEx week, and there we discuss all the projects in detail, all the economics, and we allocate what is more economical to the less economical, okay. That the way that we always allocate. If you allocate that in the upstream, unconventional is first. At the beginning when I arrive YPF, say, "I am unconventional." Yeah, I know because I love unconventional and not the conventional, because when it's all are, they are very young, it's better the conventional than unconventional. In Argentina, the conventional is old.

We allocate all in unconventional, and it's our, my goal, personal goal, and the company goal to be a unconventional integrate company. Really, we are very close to over there. We are negotiating going out from the last one. The allocation in upstream is going to be clear that it will be unconventional, and always is a portfolio in our portfolio that you have to decide the economics and between the one that we are with partners and the 100. What is a good news for us is the big stake that we have in 100% are wonderful. They are very profitable, and we are locating more than we are there. Is a new way of YPF.

It's not that we need if the partners don't want, we can increase the production very fast, and this is our idea, okay? If the price that is same now, that it will be this year, next year, in a better level, in higher level, for sure our people are making more revenues, and we will have a better results. That result, it will be allocated for increasing the production. It will be better for the LNG. We are very, I would say, positive of the result of the 4x4. I expect that you are the same that us, even if by violence, you have to say yes, okay? You are the same as us in the success of the 4x4.

Really, I tell you, I see now every month when I see all the results of the company in detail that this, I would say, this engine that is YPF is working very hard on making value in all the business that we have.

We have reached the end.

Very clear. Thank you, Horacio.

We have reached the end of the Q&A session. I will now turn the call back to Horacio Marín for closing remarks.

Thank you very much for all the questions. Thank you, Manuel, to be in the call. I say for all the guys that we work here, that I'm very proud to work with YPF. We are working hard but with passion. That is the reason. Company with passion has extraordinary results. That what YPF is doing now. I, well, I try always to say at the end that in the memory of my grandmother, I breathe YPF, I sweat YPF, I think YPF, I love YPF. Thank you very much.

This concludes today's call. Thank you for attending. You may now disconnect.