The results of the third quarter of YPF They weren’t good, but they offer a long-term opportunity for investors. The state oil company reported on Wednesday losses of 137 million of Dollars in the third quarter, while the company was affected due to a drop in local fuel prices in dollars and increased expenses, according to the company.
The losses are compared to profits of US$693 million that the company recorded the same period of the previous yearand well below the LSEG analysts’ forecast of about US$175 million in net profits.
The oil company added that it had revenues of US$4,504 million in the period between July and September15.9% below of the US$5,357 million it had in the same quarter of 2022.
YPF: balance of the third quarter
Your earnings before interest, taxesdepreciation and amortization (EBITDA) stood at US$992 million, 37.2% below that registered in the same period a year beforeaffected by local fuel prices, highly controlled by the Government.
In operational termsthe company appears stable, with a high-performance shale segment that compensates for wear and tear in conventional production. However, the income both upstream as midstream leave exposed to the lag in local prices of gasoline that is transferred to a Creole barrel of $61 while the average Brent price for the quarter was $86. This decoupling means even more if we add the (low) need to import fuels to supply local demand..
Despite this context, the company continues to invest heavily in Dead cow, where it has the potential to become a world leader in shale production. In the first nine months of the year, YPF invested more than US$4.2 billion in training, an increase of more than 50% in dollars compared to the same period in 2022.
These investments are paying off. YPF’s unconventional oil and gas production increased 16% in 3Q23, driven by the growth of Vaca Muerta.
In the long term, Vaca Muerta’s growth should help YPF reduce its exposure to the lag in local prices. In addition, the company has a solid financial balance and a leadership position in the Argentine fuel market.
Therefore, the results of YPF’s 3Q23 offer a long-term opportunity for investors who are willing to take on some short-term risk.
What are the main short-term risks?
- The lag in local fuel prices.
- The need to import fuels.
- Increasing competition in the fuel market.
If these risks are reduced or eliminated, YPF’s results should improve significantly in the future.
Source: Ambito
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