YPF Continues To Look Attractive But Remains High Risk
Aug. 6, 2015, 12:44 PM
- YPF (YPF +1.7%) posted Q2 earnings that beat expectations, rising to 2.3B pesos ($250M) from 1.5B pesos in the year-ago quarter, as it increased production and sold crude at a premium to international prices.
- YPF has been somewhat cushioned from the collapse in oil prices because the government-controlled Argentina price is near $78/bbl, while the international Brent benchmark has dropped below $50.
- Q2 EBITDA jumped 13.3% Y/Y to 12.4B pesos, total sales rose 12% to 39.6B pesos, and downstream sales increased 6.6% to 35.3B pesos.
- YPF’s Q2 total hydrocarbon production rose 2.6% Y/Y, with natural gas output higher by 2.3% higher and crude oil increasing by 3.7%
Jul. 17, 2015, 5:54 PM
- As exploration costs fall, Morgan Stanley's emerging markets analysts see the most upside for China's Cnooc (NYSE:CEO), Argentina's YPF and India's ONGC.
- Cnooc boasts the third-largest production growth rates among emerging markets E&P players, the highest realized oil prices and lowest costs within China's top three oil companies, and better production and development know-how than PetroChina (NYSE:PTR) and Sinopec (NYSE:SNP) on offshore reserves, Stanley says.
- YPF's current valuation is attractive due to the near-term growth of the existing asset base, leaving a sizable unconventional upside as a free option, and forex pass-through in fuel prices has been working over the past five months and protecting margins, the firm says.
- Stanley suggests avoiding Gazprom (OTCPK:OGZPY), Ecopetrol (NYSE:EC) and Petrobras (NYSE:PBR), which it calls its least favorite stock as the company will continue to generate negative free cash flow through 2018 and cash flows primarily will service bondholders to the detriment of equity holders.
Jul. 17, 2015, 5:32 PM
- Petrobras (NYSE:PBR) is selling the controlling stake in its Argentine unit, says the governor of Neuquen province that is home to the Vaca Muerta formation, the world’s second-largest shale gas deposit.
- YPF, Pan American Energy, Pluspetrol and Tecpetrol are said to be among the companies planning to jointly buy the ~70% of Petrobras Argentina (NYSE:PZE) owned by the Brazil-based parent.
- Selling the whole stake to a group rather than separate assets to different buyers would speed up the deal and allow the unit to continue operating as a single company, according to the governor.
Jul. 14, 2015, 11:43 AM
- Argentina oil spending is going up, and that's a major reason to buy oil and gas explorer YPF (YPF +5%), according to Credit Suisse, which has an Outperform rating on the stock and a $32 target price implying more than 23% upside from current levels.
- The firm says that from a wider country perspective, there is "a willingness to believe the country can undergo a meaningful de-risking, regain access to international markets, and start to move past its economic issues in a new presidential mandate," while from a company-specific perspective, YPF is uniquely positioned to benefit from all those themes, and is one of the most liquid investment vehicles for investors to get exposure to Argentina.
- In a Credit Suisse measure of return on invested capital, YPF’s upstream performance is ranked only behind peers OMV and Marathon Oil, and just ahead of Chevron; in the downstream, it is just behind Repsol and Chevron.
Jun. 3, 2015, 12:38 PM
- Petrobras (PBR +0.7%) extends recent gains following its sale of $2.5B in 100-year bonds despite a junk rating and a new Buy rating from Tudor Pickering analysts who believe the company will come out of the other side of the corruption scandal in better shape.
- The firm paints an optimistic picture that PBR “will abandon the loss-making refinery projects and be able to freely set pump prices, eliminating some of the massive losses of the past [which] should allow the market to focus on the key upstream positives, in particular its huge pre-salt [deepwater oil] resource... where break-even on the fields are generally less than $50 per barrel."
- Tudor prefers PBR above Latin American E&P companies YPF, which the firm says has less economic oilfields, and Ecopetrol (NYSE:EC), which trades at 8.2x 2016 estimated earnings and has “no growth assets.”
Apr. 23, 2015, 4:49 PM
- Argentina's YPF says it has sold $1.5B of new 10-year bonds at 8.5%, raising its planned issuance from $500M because of strong demand - a far better result than its February sale of $500M of bonds, a third less than it had offered, when many bids were for higher yields than it would accept.
- YPF needs to raise cash to invest in its vast but barely tapped Vaca Muerta shale field in order to reverse Argentina's energy sector trade deficit that is pressuring foreign reserves.
- Separately, Russia's Gazprom (OTCPK:OGZPY) and YPF sign an agreement that sets out plans to jointly explore, produce and transport hydrocarbons in the shale gas-rich South American country and in third countries.
Apr. 16, 2015, 6:19 PM
- The cost of drilling wells in Argentina's Vaca Muerta shale oil and gas formation will fall at least 10% by the end of 2016, after already cutting drilling costs at the vast formation to $6.9M per well from $11M, YPF CEO Miguel Galuccio says.
- YPF currently imports fracking sand from China, the U.S. and Brazil, but Galuccio says Argentina will produce all sand it needs for shale drilling by the end of 2016, which the CEO says will on its own save 10% on well drilling costs.
Apr. 9, 2015, 5:57 PM
- Shale oil output from Argentina's vast but barely tapped Vaca Muerta formation has increased, but low world oil prices and high drilling costs threaten profitability, YPF CEO Miguel Galuccio says.
- "It is not profitable with an $11M well and prices at $50/bbl. We drilled our vertical wells with the expectation that they would be profitable at $84/bbl and with wells that cost $6.5M-$7M," the CEO says.
- YPF has said lower global oil prices have not affected its exploration plans, defying the industry trend of multibillion-dollar spending cuts.
- Vaca Muerta's March output rose to 44K-45K bbl/day of oil from 41K bbl/day reported in February.
Mar. 9, 2015, 12:58 PM
- YPF (YPF +0.6%) has carried out a successful production test on an oil discovery in Argentina’s Vaca Muerta shale play, according to partner Andes Energia.
- Initial tests showed the well naturally flowed oil at an average rate of 90 bbl/day, enough for Andes Energia to say it is very encouraged by the results of the play.
- The Las Varillas exploratory well is a vertical well, unlike the majority of shale wells internationally which are typically horizontal, so it is cheaper to both drill and complete; the project also benefits from comparatively high domestic oil prices, as in Argentina there is a regulated price of $77/bbl.
Feb. 26, 2015, 5:57 PM
- Argentina's YPF says its Q4 net income fell 28% to 1.38B pesos ($16M) from 1.92B pesos a year earlier, missing analyst estimates, as exploration costs soared 145% Y/Y in the quarter.
- Earnings were hit as YPF set aside 1.2B pesos to cover a potential legal settlement after the company inherited a lawsuit from Repsol that alleges contamination of the Passaic River from dioxin and various pesticides.
- Q4 oil and natural gas output rose 14% Y/Y, with crude production rising by 5.3% and gas output surging 25%.
Jan. 28, 2015, 9:48 AM
- Aregntina's YPF and China's Sinopec (NYSE:SNP) sign an MOU aimed at eventually partnering to develop oil and gas projects in the South American country.
- SNP, which is already Argentina's fourth-leading oil producer, has no experience in unconventional oil in the country, but a potential partnership could entail YPF helping develop its conventional output while the Chinese company would invest alongside YPF to raise shale oil production.
- YPF already has partnered with Chevron and Malaysia's Petronas to develop shale oil in Vaca Muerta, and has been courting international investors to boost unconventional energy output one of the world's top shale oil and gas prospects.
Jan. 15, 2015, 2:08 PM
- Argentina's YPF (YPF -2.1%) says a workers strike in Mendoza province may trigger fuel shortages in 13 provinces, including Buenos Aires and Cordoba.
- YPF says it is not dispatching trucks to half of the country, as the strike has lowered production by 6K bbl/day from its wells and its Lujan de Cuyo refinery, which produces 35% of the company’s total fuel sold in Argentina.
Dec. 10, 2014, 9:55 AM
- Malaysia's Petronas signs a $550M deal with Argentina’s YPF (YPF -3.2%) to develop the South American country’s vast shale resources, despite fears that falling oil prices could undermine the profitability of unconventional energy projects.
- The joint venture follows earlier deals amounting to $2.8B with Chevron to develop Argentina's huge Vaca Muerta shale formation; it will be similar in structure to the Chevron deal, with Petronas providing most of the financing for the initial three-year pilot project that aims to drill 35 wells which, if successful, could lead to another $10B in investments.
Nov. 17, 2014, 5:41 PM
- Argentina's YPF and Chile's ENAP say they plan to invest an additional $200M to increase natural gas production off the southern tip of South America in an attempt to raise output to ~4M cm/day from the current 2.4M cm/day.
- YPF and ENAP also extend the joint production deal beyond the existing Aug. 2016 expiration date, with the length of extension depending on negotiations between YPF and government officials.
Nov. 12, 2014, 12:40 PM
- Argentina's domestic price controls are shielding bondholders of state-run oil company YPF (YPF -0.7%) from the bear market in crude, as YPF’s $587M of notes due 2018 have returned 6.4% since oil prices began falling, the most among junk bonds of emerging market integrated oil producers which have lost an average of 20%.
- U.S. oil prices “aren’t that relevant in Argentina, and in fact domestic prices are near their highest on record," says Fitch analyst Gabriela Curutchet.
- YPF also is less exposed to global price fluctuations because it does not export crude and relies on the sale of refined products abroad for just a fraction of revenue.
Oct. 30, 2014, 6:27 PM
- YPF rose 2.5% today as Argentina lawmakers voted to approve a law revamping regulations on energy investment, which could help the country boost its oil and gas production over the next two decades.
- The package of new laws cuts the minimum investment needed for companies to be exempt from import controls to $250M from $1B.
- Argentina offers considerable energy potential, ranking no. 3 in the world in shale gas reserves and no. 4 in shale oil, yet its refining capacity is limited and it imports energy products.
- Oil majors Total (NYSE:TOT) and Chevron (NYSE:CVX) have invested in Argentina, and Exxon (NYSE:XOM) has talked with YPF about energy exploration opportunities in the country.
YPF SA engages in the exploration, production and distribution of oil and gas. It operates through the following segments: Exploration and Production, Downstream, and Corporate and Other. The Exploration and Production segment includes contractual purchases of natural gas and purchase of crude... More
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Industry: Oil & Gas Refining & Marketing
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