YPF Q3 2026 Earnings Call Transcript

YPF (NYSE:YPF) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

YPF reported strong Q3 2026 financial results with revenue of $6.6 billion, up 41% year-over-year, and Adjusted EBITDA at $2.5 billion, marking the second-highest level in YPF’s history.

Shale oil production increased to 224,000 barrels per day, a 32% year-over-year rise, with expectations to reach 250,000 barrels per day by December 2026.

The company invested $1.3 billion in Q3, predominantly in shale operations, and aims to meet a full-year capex target of $5.8 to $6.2 billion.

YPF’s net leverage ratio improved to 0.81 times, the lowest level in over a decade, driven by strong cash generation and asset sales.

YPF completed the acquisition of the remaining 25% stake in YPF Luz for $430 million, fully consolidating it as a key asset in its integrated energy strategy.

The company has secured a $6 billion financing proposal from the U.S. EXIM Bank for the Argentina LNG project, marking a significant milestone in its long-term growth strategy.

YPF continues to divest non-core assets, with recent sales including a 70% stake in Metrogas for $780 million and Mendoza blocks for $405 million.

Operational highlights include La Plata refinery being named Refinery of the Year and advances in digital technology with Akon’s Matrix AI receiving an award.

Future outlook remains positive with plans to accelerate production growth, driven by infrastructure developments and strategic partnerships.

Full Transcript

OPERATOR

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.

Margarita Chun (Investor Relations Manager)

Good morning, ladies and gentlemen. This is Margarita Chun, YPF IR Manager. Thank you for joining us today in our third quarter 2026 earnings call. Before we begin, please consider our cautionary statement on slide 2. 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 Marin, our Finance Vice President, Mr. Pedro Kerni, and our Strategy, New Businesses and Controlling Vice President, Mr. Maximiliano Weston. During the presentation we will go through the main aspects and events that shaped Q3 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.

Horacio Marin (Chairman and Chief Executive Officer)

Thank you, Margarita, and good morning. Let me start by saying that this quarter YPF continued delivering strong financial and operational results. Margins remained high, cash generation was very strong, and both upstream and downstream performed very well. After a record Q2, revenue remained strong in Q3 and reached $6.6 billion, up 41% from last year. Adjusted EBITDA reached $2.5 billion, the second-highest level in YPF history and 84% above last year.

The main drivers were the change from conventional fields to shale, record levels of activity at our refineries, cost efficiency, and favorable prices. As a result, our Adjusted EBITDA margin remained high at 38%. Shale oil production continued to grow and reached 224,000 barrels per day in Q3, up 5% from Q2 and 32% from last year. If we exclude the conventional assets in process of divestment, about 95% of our oil output would have come from shale. This shows the scale of YPF’s change and our progress to become a leading shale oil company. We remain on track to reach 250,000 barrels per day by December. To support the continued ramp-up in shale oil production, last month we inaugurated the first train for the crude oil treatment plant at the La Amarga Sur block.

The facility has an initial processing capacity of 31,000 barrels per day, which is expected to double with the addition of a second train by Q4 this year. We continue working on new RIGI projects in the north half of Vaca Muerta. We expect to submit to the applicable authorities in the near term. I will share more detail later in the presentation. Also, it’s worth mentioning that in the downstream business, our La Plata refinery was named Refinery of the Year for the second consecutive year, one of the highest recognitions in Latin America’s refining industry. At the same time YPF was also awarded Digital Technology of the Year for Akon’s Matrix AI. This is a digital solution that predicts fuel blending specifications, improving efficiency and product quality. Moreover, we continue to reinforce the competitive differentiation of our premium fuels portfolio.

In this sense, in September, Infinia, YPF’s premium gasoline brand, became the first fuel in the region to achieve the new certification. This recognition reinforces our leadership in fuel quality and innovation. It also reflects our commitment to bringing Argentine consumers world-class products developed to the highest international standards. In addition, Santa Fe Bio, our joint venture with Essential Energy, signed a long-term offtake agreement with TotalEnergies for the future production of sustainable aviation fuel (SAF) and other renewable fuels from the San Lorenzo biorefinery. The project is expected to require more than $400 million in CapEx to be developed under a project finance structure. The production capacity is estimated to be around 170,000 tonnes per year of renewable fuels, SAF for aviation and HVO for diesel, mostly for export markets.

This agreement is a key milestone for the project, providing long-term commercial visibility and supporting its financing. Now let me turn to investment. We invested $1.3 billion in Q3 with 70% going to our shale operations. Capex was 26% higher than last year, mainly due to new wells, new facilities at La Amarga Sur, and maintained growth at our refineries. We expect upstream investment to increase in Q4, supporting higher output and the start of Vaca Muerta Sur (VMS), with first oil export expected early next year. For that reason, we remain on track to meet our full-year capex target of $5.8 to $6.2 billion.

VMS is also moving ahead with about 85% completed by September. Early this month the two monobuoys arrived at the port in the Río Negro province. This marks a key step to making VMS operational, representing a world-class logistics solution for large-scale development. Cash generation was once again very strong, with free cash flow reaching $901 million, the second-highest level in our history. This was mainly driven by the strong Adjusted EBITDA mentioned before and the initial proceeds from the sale of non-core assets. As a result, our net leverage ratio reached the lowest level in more than a decade, to 0.81 times. Our balance sheet is now stronger and provides us with more financial flexibility.

Before we review the financial results, I would like to cover three recent updates: our RIGI projects for Vaca Muerta North Hub, the acquisition of the 25% stake of YPF Luz, and the progress on the sale of non-core assets. Let me start with an update on our RIGI pipeline. We are currently working on three RIGI projects in the north half of Vaca Muerta in window covering five blocks: Bajo El Toro, Bajo El Toro Norte, La Colonada, Rincón, La Seniza, and Narambuena.

YPF is the operator in all of these blocks and works with leading partners in the energy sector. We expect to submit these projects in the near term and will provide further detail as they progress. This project considers about $44 billion of total gross CapEx, with investment taking place over 16 to 26 years depending on each project. If we add Loma La Lata Oil, YPF will have filed close to $70 billion of oil investment under RIGI, making this the largest RIGI plan filed in Argentina so far.

This project includes close to 2,200 drilling locations which at plateau could produce about 270,000 barrels of oil per day and 28 million cubic meters of natural gas per day. These are gross figures and they show the large scale and long-term value of the north half. At full scale, the projects could generate about $8.2 billion of gross revenue per year based on a Brent price of $70 per barrel and a gas price of $3.50 per million BTU. YPF keeps an average asset stake of about 40% in these projects.

This large project shows the strength of our partner model in Vaca Muerta and YPF’s ability to lead major export projects under RIGI. They will support our next stage of growth and create long-term value for our shareholders. Regarding our portfolio optimization strategy, this month we acquired the remaining 25% stake in YPF Luz, obtaining full control of the company for an attractive valuation of $430 million. This transaction was structured through an acquisition finance. As a result, YPF now owns 100% of YPF Luz and will be fully consolidated in our financial statements. YPF Luz is a leading power generation company with a strong renewable energy business, represents a key asset in our long-term plan as power is one of the main areas of growth in the energy sector.

YPF Luz is the country’s third-largest power generator and second-largest renewable energy company, with 100% dollar-linked revenues. It operates 3.8 gigawatts of installed capacity across thermal and renewable power plants. Moreover, the company has grown nearly by five times in its initial capacity in the last decade. In addition, YPF Luz consistently delivers best-in-class thermal availability of 90%, well above the national average of 72%. Its renewable assets also perform at world-class levels, with load factors of 50% for wind and 31% for solar, significantly higher than the global average.

This result has supported high growth, with Adjusted EBITDA rising from about $56 million in 2017 to about $500 million in 2026. At the same time, net leverage is expected to fall from 3.8 times to around 1.5 times. This acquisition represents another step for YPF to become a world-class energy company. It will allow YPF Luz to accelerate its growth while remaining focused on the power sector and reinforces YPF’s integrated energy offering. Now let me share with you an update on recent asset sales. Since last December we have sold several non-core assets with total proceeds reaching above $2.2 billion. The two more recent deals represent more than half of this amount. First, we executed the agreement to sell the Mendoza non-operating and ChataGón conventional areas for $405 million in Q3. These areas produced about 16,000 barrels of oil per day and the deal is now waiting for approval from the province.

After closing, as it was mentioned, shale oil should account for about 95% of YPF’s total oil output. Second, we executed the agreement to sell our 70% stake in Metrogas for $780 million. Based on Q3 results, Metrogas generated about $195 million of annual EBITDA and recorded a net cash position of about $65 million. The 20-year concession extension was already approved last month and the deal now only needs final approval from the regulator Henrique and reached closing.

Finally, in Q3 we received the first 10% payment of both deals for a total of close to $120 million. I will now hand the call over to Pedro, who will review our financial results in more detail.

Pedro

Thank you, Horacio. Now let me walk through the evolution of our free cash flow during the third quarter. YPF once again delivered a strong free cash flow performance during the quarter, reaching the highest cash balance in its history. Adjusted EBITDA reached approximately $2.5 billion, marking YPF’s second best quarterly record and comfortably funding the capex of nearly $1.3 billion during the quarter. We also recorded approximately $175 million of net proceeds from M&A transactions, mainly related to the initial 10% collections from the sale of our interest in Metrogas and the divestment of the Mendoza blocks.

Cash generation was partially offset by approximately $278 million in regular interest payments and $225 million in income tax payments. On the other hand, working capital and other items contributed positively by approximately $15 million. Overall, YPF generated positive free cash flow of roughly $900 million during the third quarter. This performance reflects the strength of our underlying operations and our ability to simultaneously fund growth and continue reinforcing our financial position.

In addition, net debt issuance and other financing activities contributed by almost $280 million during the quarter. This reflected the successful issuance of the new $1.2 billion international bond maturing in 2035, together with the completion in September of tender offers of approximately $530 million of the 2027 and 2029 international bonds. As a result, our liquidity position increased from approximately $2.5 billion at the end of the second quarter to $3.7 billion at the end of September, the maximum level ever recorded by the company.

This strong liquidity position covers more than two and a half years of our debt maturity profile and provides YPF with significant flexibility to continue executing its investment program, proactively managing upcoming debt maturities, and preserving a global financial profile. Moving to our financial position, net leverage ratio declined to 0.8 times at the end of the third quarter compared with 1.1 times in June and 2.1 times a year ago. This represents a reduction of more than 60% year over year and the lowest net leverage level achieved by YPF in more than a decade. In addition, the strong liquidity position achieved during the quarter allowed us to proactively execute liability management initiatives focused on reducing our overall cost of debt by repaying higher-cost facilities with shorter tenors.

In August, we retapped our MEP bond in the local market for approximately $170 million at a very competitive yield of 5.5%, with maturity in April 2030. The proceeds were used to prepay local bonds maturing next year, optimizing our debt maturity profile and extending debt maturities. In parallel, we continued to repay our regular maturities with internally generated cash, reflecting our strong liquidity position and disciplined balance sheet management.

And let me highlight an important milestone achieved by YPF in terms of our financial strategy. In September, we successfully returned to the international capital market with a new bond of $1.2 billion, representing the largest corporate bond of Argentina in the last 11 years. The transaction attracted demand for approximately $2.2 billion, allowing us to issue $1.2 billion through a new nine-year bond maturing in 2035 at a 7.85% yield. The transaction was priced at a spread of 300 basis points over U.S. Treasuries, the lowest spread ever achieved by YPF.

This demonstrates our strong access to the international capital market and the continued improvement in our credit profile. It also allows us to further extend our debt maturity profile while pre-fund a portion of our 2027 financial needs. Following the issuance, we repurchased approximately $530 million of international bonds maturing between 2027 and 2029, reducing our near-term maturities and further improving the distribution of our debt profile.

The remaining proceeds are expected to support our 2027 investment program and provide additional liquidity and financial flexibility. I will now turn it to Max to walk us through our operational performance.

Maximiliano Westen (VP Strategy, Business Development and Control)

Thank you, Pedro. Let me now walk you through our upstream performance during the third quarter. Our upstream strategy continued to deliver solid results during the quarter, driven by continued growth in shale oil production and further progress in the transformation of our production base. Shale oil production averaged 224,000 barrels per day during the third quarter, increasing 32% year over year and 5% sequentially. Moreover, according to our preliminary figures of October, production reached above 245,000 barrels per day these days, bringing us closer to our year-end target of roughly 250,000 barrels per day.

This growth was driven by the continued development of our shale oil hubs, mainly supported by the contribution from Langotura Sur, Loma Campana, La Margachica, and Manduria Sur blocks. In September, we completed the start-up of new oil and gas integrated treatment facilities in Langotura Sur, representing approximately $400 million of investment. These facilities add processing capacity of approximately 60,000 barrels of oil per day and 4 million cubic meters of gas per day, supporting the continued development of the block towards its long-term production targets.

In addition, this new infrastructure further strengthens our readiness for the next phase of production growth and supports the future evacuation of volumes through the BMOS system. At the same time, conventional oil production declined to approximately 37,000 barrels per day, down 47% year over year, mainly reflecting the continued execution of our conventional asset divestment program. Excluding the recently divested Mendoza blocks, conventional oil production would have been approximately 17,000 barrels per day. Moving on to costs, the total lifting cost declined to $7.80 per boe, mainly driven by the continued shift towards higher share of shale and lower conventional volumes.

Excluding the blocks under divestment, lifting costs would have totaled below $7 per boe, underscoring the structural improvement in YPF’s cost base as shale continued to account for a larger share of production within our oil hub. Lifting costs remain at best-in-class levels of approximately $4.20 per boe, broadly stable compared with the previous quarter. Turning to natural gas, total production averaged 36.5 million cubic meters per day, a 5% decline year over year. However, this trend was mostly driven by the continued reduction of conventional and tight gas production. Year over year, shale gas production increased 3%, reaching 27.1 million cubic meters per day, representing 74% of total gas production, further improving the quality and competitiveness of our gas portfolio. Overall results during the quarter fully reflect the successful transformation of YPF’s upstream portfolio.

Shale oil continues to drive growth, more than offsetting the impact of conventional divestments, while the evolving production mix and ongoing operational efficiencies support a structurally stronger and more competitive cost base. Moving on to our midstream and downstream segments, processing levels remained robust during the third quarter at an average of 344,000 barrels per day, reflecting the strong reliability and efficiency of our refining system. Sequentially, it declined by 2%, primarily due to the scheduled maintenance shutdown at our La Plata refinery in September. On a year-over-year basis, processing volumes rose 5%, mainly driven by stronger utilization rates at La Plata and Luján de Cuyo refineries.

Once again, this outstanding operational performance, together with strong gasoline and middle distillates production, allowed us to fully meet domestic demand without fuel imports, supply local refiners, and further expand fuel export volumes, while also driving record premium gasoline production during the quarter. Looking ahead, we expect refinery throughput to gradually normalize by year-end as further maintenance activity is scheduled for the fourth quarter.

Turning to domestic fuel sales, gasoline and diesel volumes declined by 4% on a quarterly basis, mainly driven by lower diesel demand from the industrial and agribusiness segments. In the third quarter, these effects were partially offset by stronger gasoline demand. On a year-over-year basis, fuel sales increased by 2%, supported by stronger demand for both diesel and gasoline. As a result, YPF maintained its leadership position, reaching a 58% market share during the quarter and 61% when including gasoline and diesel volumes produced by YPF and sold through third-party gas stations.

Beyond the domestic market, we also continued growing fuel exports during the third quarter, shipping 166,000 cubic meters of gasoline and diesel, around 4% of our total fuel sales. In terms of pricing, local fuel prices remained under the buffer scheme, allowing us to preserve fuel demand during a period of elevated volatility, maintaining a competitive position in the local market and expecting to recover the gap between the local prices and the import parities once markets normalized. During certain periods in the third quarter, the decline in international prices partially allowed us to recover the gap as domestic prices remained stable.

However, as the international conflict intensified again, YPF resumed temporarily absorbing part of the impact to support domestic demand while continuing to deliver strong downstream EBITDA margins. In late September, we implemented a modest 1% increase at the pump. Looking ahead, we will continue to closely monitor international price trends, domestic demand, competitors’ pricing, market conditions, and fiscal costs. We will use targeted micro pricing adjustments to maintain our competitive position in the local market while protecting margins.

Lastly, our midstream and downstream adjusted EBITDA margins expanded to about $332 per barrel in the third quarter, reflecting strong processing levels, a favorable production mix, no fuel imports, and effective execution of our commercial and pricing strategy. Now let me briefly highlight the continued progress we are making on the efficiency front. During the first nine months of the year, our shale operations continued to achieve significant productivity gains across both drilling and completion activities. Drilling speed in our shale oil hub reached roughly 354 meters per day, growing by 29% compared to 2023. At the same time, the unconventional fracking activity also continued improving, completing 11.1 stages per day and pumping 18.8 hours per day, representing improvements of 46% and 30%, respectively, compared to 2023 levels.

This sustained growth is the result of our continued support from our Real-Time Intelligence Center focused on operational excellence and learning-curve gains across our shale developments. It is also reflected in a new operational milestone achieved during the quarter with a new drilling record of 4,770 meters lateral length in a single run. Regarding our downstream business, as Horacio explained at the beginning of the presentation, we continued to strengthen our operational excellence, technology, and product differentiation. La Plata refinery was named Refinery of the Year for the second consecutive year, while YPF received the Digital Technology of the Year award for Econs Matrix AI, our fuel blending solution. In addition, Infinia Turboclear became the first fuel in the region to achieve Top Tier Plus certification, reinforcing our leadership in premium fuels and innovation.

I will now turn to Horacio for an update on our LNG projects.

Horacio Marin (Chairman and Chief Executive Officer)

Thank you, Max. Finally, let me share the progress on Argentina LNG project. As mentioned in previous call, this phase included the development of the fully integrated LNG and liquids project based on five wet gas blocks in Vaca Muerta, with about 1,400 well inventory. The project targets 12 million tons per year on liquefaction capacity, supported by two floating LNG vessels of 6 million tons per year each. Additionally, it targets roughly 3.5 million tons per year of liquids, 70,000 barrels per day of condensate, as well as dedicated gas and NGL pipelines and required onshore infrastructure.

The founding partners are YPF with 36% stake and EA9 and XRC with 32% stake each. Once operational, cash flow will be supported by long-term offtake agreements with investment grade counterparties including the project sponsors. By 2031, investment is expected to reach around $29 billion. It includes $24 billion associated with the integrated LNG infrastructure, of which 60% to 70% is expected to be debt, and around $5 billion for upstream development. Regarding progress today, last month we received a long-term financial proposal up to $6 billion from U.S. EXIM Bank, one of the largest potential financing proposals ever associated with Argentina energy project. This support marked a new transformational milestone for the project and underscored the project relevance and international confidence in execution.

We expect FID to be reached by November 26th of this year. This will allow us to keep advancing toward becoming a key platform for monetizing Vaca Muerta and positioning Argentina as a global energy exporter. Overall, YPF continues making significant progress on Argentine energy projects. Beyond unlocking the full potential of Vaca Muerta, it will position Argentina as a competitive LNG exporter and a relevant player in global energy markets over the next decade. With this we conclude our presentation and open to the floor for questions.

OPERATOR

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. Please remember to unmute your device. Please stand by while we compile the Q and A roster. Your first question comes from the line of Michael Furrow with Pickering Energy Partners.

Please go ahead. Your line is now open.

Michael Furrow (Analyst)

Good morning, Horacio and the rest of the YPF team. Congrats on another strong quarter. Look, I understand it may be a little early to talk about 2027 activity plans, but at the current level of commodity prices and just the advancements on reheat projects, an acceleration of activity looks highly compelling to us. We understand there’s ultimately infrastructure constraints, but the VMOs coming online shortly. What would really prevent YPF from accelerating upstream activity next year?

Horacio Marin (Chairman and Chief Executive Officer)

Good morning and thank you much for your question. First of all, I would like to tell you that when I hear me, I am a big monkey. I don’t like how we read, because there is very long statements. So we are going to improve, and we are working with artificial intelligence. So next quarter I will think that you can hear me, but with artificial intelligence, so it will be more clear for you. Second, yesterday Vaca Muerta daily production was 252,330 barrels, which is a record high. Okay, record high will be every day, but it’s a record high that is more than we said it was at the end of this year. So I think it’s a very good production. So congratulations to all the upstream guys that are working very hard every day.

Regarding your question, we were working for this year expecting a very low price of oil, so we accelerated all our M&A, and we were expecting very low price and not to stop our development in Vaca Muerta. The year was totally different. So that’s why you see that our cash generation and our cash is high. And so for next year we are in a very good financial position to speed up. I have a number. I will not say that. Why? Because I have to go to the Board of Directors and to be approved next year budget.

So I will explain to you in April. But what I have to tell you is that you will be very surprised by the production of Vaca Muerta for YPF in December ’27. I repeat, you will be very surprised by the production of Vaca Muerta in December of ’27. Regarding what else you asked me.

Michael Furrow (Analyst)

No, no, that’s great. You answered my question. And for what it’s worth, I can hear you just fine, and I think we got the message loud and clear. For a follow up, there’s been a lot of topic of conversation in the U.S. on inflation. A lot of that is our global issues. But ultimately Argentina is a bit of a different market for some items such

Horacio Marin (Chairman and Chief Executive Officer)

as steel and diesel. When you talk about inflation, the inflation in Argentina is very low compared to what was in the history. And really we don’t care in the inflation. And you see that our cost is in a very good fashion, because our business is to be efficient tomorrow, more efficient than today. And that is our work. Our price of our product is free market. So inflation is another. I don’t think that is the problem in Argentina, in the market I was before in all my life.

So really it’s not something that I preoccupied at all.

Michael Furrow (Analyst)

That’s great. Good to hear that. So thanks again for your time and congrats. Another good quarter.

Horacio Marin (Chairman and Chief Executive Officer)

Okay, thank you very much.

OPERATOR

Okay, your next question comes from the line of Jacob Roberts with TPH Research. Your line is open. Please go ahead.

Jacob Roberts (Analyst)

Good morning. I wanted to start on operations. You guys are hitting 15,600 feet per lateral in a few of the wells. You’ve done 4,700 meters or so. You know, in the U.S. I think we’re seeing 15,000 feet becoming pretty routine. And so I’m just curious where you see the best opportunity set to keep extending those laterals. And when we think about 2027, you know, how much of the program do you think you can start seeing those longer laterals on?

Horacio Marin (Chairman and Chief Executive Officer)

I will tell you, our operation is 5 million. Okay. In general, when we talk with you, we talk about our net production. But yes, our operation production is much more. In what you say about the wells, today our routine is more. I will tell you in meters; you have to multiply. To be precise, it is 3,500 meters our standard. Okay. If you are not in a limit of area, you will see that in general, our wells are 3,500 lateral. At the beginning, I think it was 2,800 meters.

Why that? Because we improved. And also sometimes very important, when you see, for example, the record that is 4,800 meters. Why we drill those wells is because we are in limits. So there sometimes we take the risk, we go further in our knowledge growing more there. Why that? Because we make more money. Because if not we cannot drill another well. And also the guys from drilling and completion, they are going up in their knowledge. And after in the 3,500 meters, maybe next year we go 200 meters more and so on.

The records are not important for me; the records are important for the newspaper. I don’t care the record. What is important is you make more knowledge and you pass what you think is your limit. So when you have a record it means that you can pressure the guys and grow and make more efficient and more money for the shareholders.

Jacob Roberts (Analyst)

Thanks, I appreciate that color. And then I did want to follow on to some of the comments just made on production. So it sounds like you guys are already at the 250,000 barrels per day coming off of shale. And so I’m curious maybe where you see the December exit rate truly being at this point. And then if I could, how many wells do you plan to tie in during the fourth quarter?

Horacio Marin (Chairman and Chief Executive Officer)

Here is the vice president of Huffing. You know all the guy, you have to write a number. I check it out. No, he’s checking out now and he told me that we will be in 250, 55, 58. I tell you, 250, 260. It could be not the average, it could be one daily production day, it could be that one or more the average. We think that it could be 255,000 barrels a day. But this, remember, we are more than we thought at the beginning, okay, at the beginning of the year.

Now I tell you what, I pressure the guy, okay? When I tell that they have to do, all right? So I know the Farina is going to be very good and he will reach that number. And why I talk only about Vaca Muerta is because it is what I care. Vaca Muerta makes money for you today. With all the sales that we have, we are 95% unconventional. So our goal was to reach that I told you two years ago, that this year has to be the year that we are an unconventional, integrated company.

I think we reached the goal because the other is minor.

Jacob Roberts (Analyst)

I appreciate the time guys and congrats on the quarter.

OPERATOR

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

Bruno Montanari (Analyst)

Good morning. Thanks for taking my questions. I have two on my end here. First, can you comment on how the northern hub has compared with the current core shale hub in terms of productivity and well economics, so what the experience has been there? And then as a follow up from the presentation, when we look at the LNG financing structure, what needs to happen for the U.S. EXIM Bank proposal to become binding at this point? Thank you very much.

Horacio Marin (Chairman and Chief Executive Officer)

The northern hub is—I tell you how will be the development of YPF. You have the LNG hub, which is in the southwest. Okay, you have the hub core, but the hub core now includes South. South hub is 100% of YPF. The LNG, you know that we have 36%. North hub is not 100% of YPF; it is with partners Chevron, Vista, Shell, plus Petrol and CMP, which is the province company of Neuquén. The northern—remember the Reiki was one of the best, I think, policy of Argentina because it allowed some places where internal rate of return could be more difficult to be very economical.

In the north hub there is a place where we don’t have so far as EUR as in the south, but it is very good. The wells are very good. We think our profit will be very, very good, but a little less EUR than in the south. But it’s not big difference. I would say 10% less. No more than that. The second question was about the EXIM Bank. The EXIM Bank—we have a letter of intent. I think we are going to have that finished by, let’s say, middle of next year. There will be the final closing. But there is no doubt that we have up to the $6 billion. And so that was very important for our LNG project. And we have the same for other ACA. And the FID of the LNG will be next month, November 26th, Thursday in Argentina. Perfect. Thank you very much.

OPERATOR

Your next question comes from the line of George Gastrott with Latin Securities. Please go ahead.

Horacio Marin (Chairman and Chief Executive Officer)

Sorry. Price is the price. We are in a buffer. We have, I think — I don’t know how many companies can say that — we have real-time prices of all the pumps around the country. You have to see the demand. The demand was elastic. That’s why when we see there was in general — and you know that the demand for gasoline and diesel are totally inelastic in Argentina — after some incremental at the beginning of the conflict, the demand started to be very elastic.

Only it was not elastic in the city of Buenos Aires. That continues to be in the same manner. But all around Argentina, demand is elastic. So we cannot increase more than that. And we have an honest and clear program with all consumers, and we are explaining on all TV shows, in all the media. You have to be very clear with consumers. It’s very important in life to be clear and honest. So there is a — when I explained the buffer and I went to the supermarket, the person at the grocery — the woman in the grocery — she said, I saw you on TV last night. Tell me what you understand. She told me, you help me; now I’m happy after.

Okay, so that is our way to work. Also, Argentina was never in a free market. Never was in a free market in a way that you can go directly there. So what you have to be — the people are not here. And also you see, in Europe there are — it’s very difficult to increase 20%, reduce 10, increase 30%, reduce 15. It’s impossible. So the people cannot afford that because it makes very high uncertainty. So what we did is to maintain the buffer. We increase from — we start some percentage, small percentage we pass through when there is an incremental in taxes or an incremental in biofuels that we pass directly to the price. The way that it works and people understand and they maintain is as follows: when the prices are up, we have two vice presidents that calculate every day how much we finance the people. And when it goes down, we are collecting what we financed.

And that is the way that is going to continue. Nobody knows when it’s going down. It’s impossible that we continue with the conflict. So when the price goes down, we are going to maintain the price of gasoline. And there we are going to collect. When we see the demand, there is no room to increase in Argentina because the demand cannot afford more increments. And when I see the war in Europe and different places, it’s impossible. Why is it impossible? Because this is a unique case in the world. Why? Because it’s not only a big crisis, but it’s a big crisis in spread. So it’s a double. It’s exponential. So that’s why we think, and we are proud in YPF, to maintain that policy. And you see excellent results.

Because the price of gasoline is high — not as high as it has to be if you make the spot — but people cannot afford it. And so we are going to maintain that because YPF — we call Argentina palo. Tell somebody to translate that. Because people love our company. Our company is the company of Argentina. And so we cannot put there, because it will be a very difficult situation with the demand. If the demand was low, we are in trouble. We need more investment to put all our gasoline in condition to be export. And that is our policy.

OPERATOR

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

Leonardo Marcondes (Analyst)

Hola, Horacio, Pedro, Maximiliano and Margarita, thank you for picking my questions. Here I have one from my side and then one follow-up. So my question is on the asset sale program for the upstream assets. I mean, when do you expect it to be completed? Which assets are still for sale and how far along are those processes? And the follow-up question is regarding the new wells with longer lateral length. I was wondering if you guys could share in which blocks were these wells drilled and if they are more productive than your standard wells and, if so, by how much, and what is the EUR you guys expect from them? Thank you very much.

Horacio Marin (Chairman and Chief Executive Officer)

Okay, I think the first question is — first, thank you for the question. The first question I already answered. I think we prepared — I said that in April you will be surprised by our production. You will be surprised by the production of us in December 27th. That means that we are accelerating compared to what we said in the Investor Day — I think it was one or two years ago, I don’t remember, a year and a half or two. So in April, because of all the change in the market prices, we are going to go again to New York to update.

Because of what you are asking, really, we are going very fast and we cannot be faster than you will see there — not because of financing, but because of bottlenecks in evacuation, not in the oil pipe, but in facilities, because we are developing new areas. Okay, but we are going the fastest that we can. Regarding the lateral length, when we go there, yes, the well has more EUR. In general, our EUR is — you can extrapolate. When you go more than 3,500, you make the — I would say the additional investment and the profitability increases. But when you go farther and farther, the question is not the reservoir and the quality of the reservoir. The question is the mechanical bottleneck of the drilling rig and also the pressure that you lose during the fracture.

Okay, so when you go to 4,800, the last fracture has lower EUR than the first one. Okay, so there is a — and you can see in all the books and all the magazines in the United States how they go down. So in general, the EUR curve is nonlinear, but it’s much more. Okay, thank you very much.

OPERATOR

Your next question comes from the line of Milena Carvalho with JP Morgan, please go ahead.

Milena Carvalho (Analyst)

Good morning everyone and thank you very much for taking my questions. I would like to understand a little bit better the M&A potential here. So 2026 has been a very strong year. We have production expansion associated with very high levels of oil prices, and this translated into very solid free cash flow generation. So when we look at the leverage of the company right now, we do see a lot of room for more to come. So I wanted to understand a little bit on your side: what can we expect? Are there still M&A opportunities in Vaca Muerta? Would there be more diversification or the focus right now would be on the LNG project? Thank you very much.

Horacio Marin (Chairman and Chief Executive Officer)

Okay, we bought — as you remember, I would say three full blocks from Vaca Muerta. We bought YPF Luz. Why we bought Luz? Because that within is a future company. But it’s very important YPF to have no more YPF Luz and YPF. YPF — why? Because we are working very hard to be delivering data centers — the energy for the data center, to be precise. Not that we are going to make data centers. Okay. But with all the knowledge that we have and all the strength that we have from the upstream, plus the knowledge of YPF Luz, we are doing that.

Always you have — when there are opportunities and M&A in Argentina and Vaca that are in the core and within the score that we make more profits for the shareholder, we will see, and always we will see also our financial situation. If we can enter and make stronger, we will do; at that moment we will see that it’s not good for our financial situation because we are going to develop not only the oil, but also LNG. We have to be very serious in the growth of YPF.

OPERATOR

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

Andres Cardona (Analyst)

Hi, good morning. Horacio. Pedro. I have a question about 2027 production outlook. Because when looking at your latest strategy update, there have been many changes, right? You launched LLO Rigi project. So I was wondering if you could share any color about how you see these two projects potentially affecting this production growth outlook? Thank you and congratulations for these very solid results.

Horacio Marin (Chairman and Chief Executive Officer)

Okay. We are going — today we have 18 rigs and one rig that is going to Mendoza. So in February we are going to have 22 rigs. But you have to wait. I know that you would like to know all the data today, and I wish to tell you, but I’m going to tell you in April. In April you will have all that answered very, very clearly. But I can explain how we do the development. All of what is Loma La Lata oil — comparing, we say, let’s take out the LNG because the LNG is like something that is focused there — focus, focus for the oil. And they have their own infrastructure for LNG. So LNG, it could be another company — in fact will be another — with the oil.

With the oil, you have either north or south. South YPF has 100% and the north not, and there we have partners. So it’s logical that the partner can invest at a different pace or more pace than you. It depends, because it’s their own decision. So when we have the decision of partners, we know how much we are investing in the hub north. But there we know how much money we can invest for our project to be very high and going to have the peak of our production in 2031, when I’m going to leave YPF.

So the south we invest a lot because the investment in the north are not the same as the south. So it’s the swing of our development, okay? And also we are developing now in a new way that we avoid the maximum that we can the child. We are now drilling — that’s why you see the incremental production — we are drilling in the way that we maximize the parent wells. Okay? Because the child lose 30% of EUR. So we try to do it in a very good fashion and try to copy the best companies of the United States and to reduce that a lot.

That will be a lot of money for the shareholders.

OPERATOR

Your next question comes from Daniel Guardiola with BTG Pactual. Please go ahead.

Daniel Guardiola (Analyst)

Thank you for taking my questions. I have a question on YPF Luz for Horacio and Max and Pedro as well. And I wanted to know if you could elaborate on the strategic and financial rationale behind the transaction. Was there any contractual put option, liquidity obligation, or other arrangement with the minority shareholder that ultimately influenced the decision? And just to get some color on this, what ultimately led you to pursue a direct acquisition of that minority stake rather than proceed with the IPO that had been under consideration?

And if I may squeeze just a little one very rapidly, very easily for you guys, regarding Metrogas, could you clarify the expected payment schedule for the remaining $700 million? Thank you very much.

Horacio Marin (Chairman and Chief Executive Officer)

Thank you very much. I pass the answer to Pedro.

Pedro

Hey, Daniel, thank you very much for the question. So, regarding the YPF Luz deal, there was no contractual put option obligation for the deal. Actually, as Horacio mentioned before, the strategic path of that acquisition is based on the main future that we are foreseeing for that company in the energy sector in general and the electricity sector in particular. So that’s the real reason. Actually, we found a very attractive valuation and we negotiated with GE Vernova.

So that was the main rationale behind that decision. Your second question, regarding Metrogas, we expect that the final approval will come from ENARGAS. That’s the only pending approval for the transaction. So once we get that approval, we will get the closing for the remaining $700 million.

OPERATOR

Your next question comes from Guilher Martins with Goldman Sachs. Please go ahead when you’re ready.

Guilher Martins (Analyst)

Hi everyone. Morning. Thank you for taking my questions. I have two quick ones since most of mine were already answered. The first one is on discount for Brent. We’ve been noticing increased volatility in differentials between ICE and dated Brent as well as in global freight prices. So do you have any color you’d share on what you’re seeing in terms of Brent discounts going into the fourth quarter? And my second question is in terms of schedule for drilling next year. You have van going online by early next year. How should we think in terms of production growth quarter by quarter next year? Thank you.

Horacio Marin (Chairman and Chief Executive Officer)

I have no idea. You know, nobody knows. What happened now is that there is a discount for the freight because freight is 10 times what it was in the normal. But I have no idea what will happen in the fourth quarter. Nobody knows yet. I was with a big trader of the world and I asked them, what do you think of the priorities? I have no idea. Nobody knows. Okay. It depends on—it’s a conflict. It’s a conflict. That’s geopolitics. So I cannot answer that.

I have no idea. Regarding Bemos—Bemos—we are going to finish on time, on schedule, on cost, in everything. Okay? And in January we start to fill the oil pipe and we are expecting that in March everybody will start exporting. YPF is going to export at the pace that they have in the next-year budget. That I cannot tell today because our next-year budget is not approved. But it will be bigger than we thought two years ago.

OPERATOR

There are no further questions at this time. We have reached the end of our Q and A session. I will now turn the call back to Horacio for closing remarks. Please go ahead.

Horacio Marin (Chairman and Chief Executive Officer)

Okay. Thank you very much for all your questions, and we are, I would say, very proud and happy how we are working. The result is a consequence of working hard and well. So our goal is to make always value for all shareholders. And thank you very much for your questions.

OPERATOR

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

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