YPF Sociedad Anónima — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021, with comparisons to FY2020 and FY2019. This is an annual report, not a standalone Q4 filing; the filing gives some fourth-quarter operating comparisons. Financial statements are prepared under IFRS as issued by the IASB and presented in Argentine pesos. Unless otherwise stated, amounts below are in millions of pesos (Ps.).
Business context and key metrics
YPF is Argentina’s leading integrated energy company, operating primarily in Argentina across upstream, downstream, and gas and power. The Argentine Republic owns 51% of its shares. The company reported that domestic sales of fuels and natural gas represented 69.1% of FY2021 revenue.
| Metric | FY2021 | FY2020 | Change / context |
|---|---|---|---|
| Revenue | Ps. 1,271,330 | Ps. 669,186 | Up 90.0% nominally |
| Gross profit / margin | Ps. 243,150 / 19.1% | Ps. 42,974 / 6.4% | Margin improved 12.7 percentage points |
| Operating profit (loss) / margin | Ps. 58,170 / 4.6% | Ps. (58,397) / (8.8%) | Returned to operating profit |
| Profit (loss) before tax | Ps. 63,601 | Ps. (56,428) | Turned positive |
| Consolidated net profit (loss) | Ps. (808) | Ps. (71,017) | Loss narrowed substantially; income attributable to parent shareholders was Ps. 257 |
| Operating cash flow | Ps. 400,014 | Ps. 209,216 | Up 91.2% |
| Investing cash flow | Ps. (243,992) | Ps. (109,161) | Higher investment spending |
| Financing cash flow | Ps. (150,659) | Ps. (121,112) | Included net debt repayment of Ps. 63,596 and interest payments of Ps. 58,454 |
| Cash and cash equivalents, year-end | Ps. 62,678 | Ps. 54,618 | Net increase in cash of Ps. 8,060 in FY2021 |
| Total loans, year-end | Ps. 757,215 | Ps. 678,306 | 95% denominated in U.S. dollars; 94% at fixed rates |
Current assets were Ps. 466,243 and current liabilities Ps. 391,078 at year-end. YPF reported that liquidity was 70.5% in pesos and 29.5% in foreign currency, primarily U.S. dollars. A separate contractual-commitments disclosure gives total debt of Ps. 1,083,949, including interest, with Ps. 118,743 due in less than one year; this is not the same measure as the balance-sheet loans figure. The company said it complied with its debt covenants at December 31, 2021. No dividend was paid for 2021.
Operations and reserves: YPF reported FY2021 crude oil production of 77 million barrels (211,000 bbl/d), NGL production of 13 million barrels, and natural gas production of 403 bcf in its detailed production table. It also reported 1,143 million boe of proved reserves, up from 922 million boe in 2020, and a 229% reserve replacement ratio. Unconventional production was 162 kboe/d, or 32.8% of total production.
Material changes versus FY2020
- Revenue rose 90.0% in pesos as fuel demand recovered, product prices increased, and natural gas sales benefited from the GasAr program. Argentina’s CPI rose 50.9% in 2021 and the peso depreciated 22.1% against the U.S. dollar, so nominal peso growth should not be read as equivalent real or dollar growth.
- Downstream operating profit improved to Ps. 86,496 from Ps. 4,839, supported by demand recovery and higher prices and volumes. Gas and Power returned to a Ps. 1,333 operating profit from a Ps. 18,994 loss. Upstream reported Ps. 1,688 operating profit versus a Ps. 25,878 loss.
- Costs increased 64.2%, including higher production costs and purchases; imports of diesel and gasoline also increased as domestic demand recovered. Selling expenses rose 41.9% and administrative expenses 33.1%.
- Impairment expense was Ps. 11,258 in FY2021, compared with a net impairment recovery of Ps. 6,851 in FY2020. FY2021 included a Ps. 9,776 impairment charge for the Gas–Austral Basin cash-generating unit. FY2020 included significant impairment charges and reversals, in part reflecting the launch of GasAr.
- Operating cash flow increased, but investing cash outflow also rose materially. Cash capital expenditure and investment was Ps. 258,312, 81% of it allocated to Upstream, compared with Ps. 112,456 in FY2020.
Outlook, commentary and key risks
Management’s 2022 plan contemplated US$3.7 billion of capital expenditure, approximately 40% above 2021, including US$2.8 billion for Upstream and US$0.7 billion for Downstream. YPF forecast total hydrocarbon production growth of about 8% year over year, with oil up 6%, natural gas up 5%, shale oil up 45%, and shale gas up 40%. These are forward-looking estimates, not guarantees. Management said spending could be reduced if operating cash flow falls short of budget and set a reference maximum net leverage target of 2 times EBITDA.
Management expects pump prices to be adjusted prudently to help offset peso depreciation and narrow the gap between local and international fuel prices. The outlook depends on the company’s ability to adjust domestic prices, access financing and foreign currency, deliver planned production, and secure transport and processing capacity, particularly for Vaca Muerta. Natural gas export authorizations and domestic supply priorities may also affect contracted deliveries.
- Argentina exposure: High inflation, currency depreciation and controls, import restrictions, changing energy regulation, price controls, and sovereign financing constraints may affect costs, pricing, capital spending, debt service and dividend remittances.
- Market and operating risks: Volatile oil and product prices, reserve estimates, field decline, project execution, infrastructure constraints, joint-venture dependencies, labor disruptions, and environmental, safety and climate-transition requirements could affect results.
- Contingencies: The filing describes material litigation, including the Maxus Liquidating Trust claim seeking up to US$14 billion and the Petersen/Eton Park U.S. litigation. Plaintiffs later claimed US$15.9 billion in damages; YPF and the Republic dispute liability and damages. YPF’s reported provisions do not establish the ultimate exposure. A February 2022 appellate judgment in the TGN matter affirmed US$231 million plus interest for damages, as well as unpaid invoices to be determined; YPF pursued further appeals.
- Unusual items: YPF recorded insurance recoveries related to the 2020 methanol plant incident; the reported material damage and lost profits were US$20.5 million, and Ps. 1,889 was collected in 2021. The company also recorded a Ps. 1,855 gain from the 2021 debt exchange. In 2020, it recorded an Ps. 8,285 loss related to termination of the Tango FLNG agreements with Exmar; the US$150 million settlement is payable in installments.
- Subsequent developments: The filing discusses 2022 IMF and Paris Club agreements, the Russia–Ukraine conflict and higher commodity-price volatility. These events occurred after the reporting date and their effects were uncertain.
Important facts for investors to verify
- Reconcile the filing’s production disclosures: one section reports 171 million boe and 460 bcf of gas for 2021, while its detailed production table reports 162 million boe and 403 bcf. Confirm the company’s final comparable production basis.
- Confirm debt and liquidity definitions, including the difference between Ps. 757,215 of balance-sheet loans and Ps. 1,083,949 of stated debt commitments including interest, and review maturity schedules, currency access and refinancing needs.
- Test the 2022 capital plan and production guidance against actual cash generation, domestic fuel pricing, GasAr obligations, and Vaca Muerta transport and processing capacity.
- Monitor the status, possible damages and provisions for the Petersen/Eton Park, Maxus and TGN proceedings, along with environmental and well-abandonment obligations.
- Assess whether the 2021 revenue and margin recovery is sustainable after considering inflation, peso depreciation, regulated prices, import costs and the continuing need for substantial capital investment.