YPF S.A. (NYSE:YPF) Q3 2019 Earnings Conference Call - Final Transcript

Nov 08, 2019 • 08:30 am ET

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YPF S.A. (NYSE:YPF) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Welcome to the Third Quarter 2019 YPF Earnings Conference Call. My name is Paulette, and I will be your operator for today's call. [Operator Instructions] Later, we will conduct a question-and-answer session. [Operator Instructions]

I will now turn the call over to Ignacio Rostagno. You may begin.

Executive
Ignacio Rostagno

Great. Thank you, Paulette. Good morning, ladies and gentlemen. This is Ignacio Rostagno, IR Manager. I'd like to thank you for joining us today. In this presentation, we'll present YPF 2019 third quarter results. The presentation will be conducted by our CEO, Daniel Gonzalez; Sergio Giorgi, VP of Strategy, Business Development and Investor Relations; and myself. During the presentation, we'll go through the main aspects and events that explain our third quarter results. And finally, we will open up the call for questions.

We'll be making forward-looking statements. So I ask you to carefully review the cautionary statement on Slide 2. Also, although our functional currency is the U.S. dollar, our financial statements figures are published in Argentine pesos based on international financial reporting standards. In this occasion to let you better understand our key financial and operating results, unless otherwise explained, the calculation of the main financial figures in U.S. dollar is derived from the calculation of the consolidated financial results expressed in Argentine pesos using the average exchange rate for each period.

With this, I would like Daniel to start with the presentation.

Executive
Daniel Cristian Gonzalez Casartelli

Thank you, Ignacio, and good morning, everybody. Although I typically do not participate in the quarterly calls, this is clearly a very particular moment and we know there are several questions out there, so we wanted to make sure that we remain as visible as we have always been.

If anything, this quarter is saying a few things about YPF. First, that we are clearly going through a difficult operating environment; then, that management is reacting rapidly and making tough decisions; and third, that YPF is incredibly resilient.

With regards to the operating environment, the unexpected results of the primary elections of August and the political volatility that followed resulted, among other things, in a significant devaluation of the currency and a spike in inflation. In addition, an already slow economy, where we obtain 90% of our products, deteriorated further. To make things worse, the government came out with a broad 90-day price freeze for fuels and crude oil. At the time of the freeze, as Sergio will be showing during the presentation, fuel prices are pretty much converged with international prices.

We reached out to you at that moment on the same day of the announcement, by the way, to explain the implications, and the measures that we would be taking to minimize the negative impact. The negative trajectory of natural gas prices is also part of our challenging environment for us. And although this is not new, and we have been preparing for this for several quarters now, it does affect our revenue base and our growth plans for the near future.

But I want to highlight