YPF increases capex forecast for 2014

Mar 10, 2014 12:00 AM

YPF boosted its capex guidance for 2014 to US$5.5bn from a US$5b forecast for 2013.

The Argentine NOC earmarked US$4.5 bn for upstream activity and US$1 bn for downstream, CEO Miguel Galuccio said on the company's 2013 earnings conference call.

The capex figure is not subject to financing restrictions, according to CFO Daniel González.

With the bulk of this year's investment going towards E&P activity, YPF expects production to increase approximately 3% for oil and 6% for natural gas.

The 2014 production goals are in line with the levels reported for 4Q13: 239,300 b/d of oil, a 6.3% increase compared to 4Q12, and 35.5 Mm3/d of natural gas, up 10.2%.

González said these production goals do not include added production stemming from the US$800 mm acquisition of Apache's Argentine assets. The deal with the nation's fourth largest gas producer is expected to be finalized end-March.

Vertical wells continue to be YPF's preferred method for tapping the Vaca Muerta shale oil deposits, although the company continues to evaluate horizontal drilling techniques, according to Galuccio. The thicker Vaca Muerta play makes vertical wells more viable that in the US, where shale pay zones tend to be thinner, making horizontal drilling more reasonable, he added.

Galuccio expects the US$5 bn agreement between Repsol and Argentina to facilitate more partnerships. Debate on the expropriation compensation deal is slated to begin in the senate on Thursday and submitted to a vote later this month, according to state news agency Télam.

2013 RESULTS

YPF's proved reserves grew 10.6% in 2013 to 1.08 bnboe, with the addition of 140 mmb of oil and 144mmboe in natural gas for a 158% reserve replacement ratio, according to a company press release.

Revenues increased 34.1% to 90.1 bn Argentine pesos (US$11.4 bn), attributed to increased domestic sales of gasoline, diesel and natural gas.

Net income attributable to the controlling shareholder, the Argentine state, was up 45.6 % to 5.681 bn pesos, as both upstream and downstream businesses posted double digit increases in profitability on higher sales volumes and prices in both segments, outstripping local cost increases.

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