Argentine oil company YPF reduced losses by less than half and shares rose 14.9% on Wall Street

YPF's operating result surprised the market and as a result its shares flew up to 17.2% at Merval on Tuesday and closed with a 15.4% rise. The third quarter data was released today and revealed a reduction in losses in the order of 58.5% compared to the second quarter.

Net income for the quarter was a loss of $35.332 million, a significant improvement over the previous quarter, although the effects of the pandemic continued to be felt in economic results.

The increase was not due solely to improved economic performance. The news came after yesterday's announcement of the good results of Pfizer's vaccine, the oil price rose 10%. And it served to realign the actions of YPF that had been severely affected.

Although the net utility was negative, the improvement in the incomes and the handling of the costs that surpassed the expectations of the market that quickly took note and it caused the stock of the oil company to rise.

While net profit was negative, the improvement in revenue and cost management exceeded market expectations, which quickly took note and pushed up Argentina's flagship oil company's stock. On Wall Street, the ADR of YPF closed the round with a rise of 14.9% at 4.75 dollars, while, for example, the shares of Brazilian Petrobras rose 7.33% to 8.79 dollars.

With respect to the previous quarter, cost management allowed for a 19% reduction of costs in dollars while income increased by 19.5% thanks to the rebound in fuel sales and the stabilization of oil and gas production in the order of 468,500 barrels of oil equivalent per day.

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The company detailed that "the demand for refined products recovered significantly with respect to the previous quarter, driven by the 41% increase in volumes sold of naphtha and 22% in diesel, although pre-pandemic levels were not yet reached. Prices at the pump were adjusted twice during the quarter, accumulating an average increase of 8% in pesos".

"Also, the processing level at the refineries improved, reaching a 73% utilization level in the quarter compared to the minimum reached in April of 47%. It should be noted that during this period the programmed maintenance was carried out at the La Plata refinery which had been suspended in April", they added.

Between July and September, 35 teams were reactivated in the provinces of Chubut, Mendoza, Neuquén and Santa Cruz in agreement with the unions and under strict safety measures to protect the health of the workers. This allowed YPF to stop the drop in production, although at pre-pandemic levels.

Finally, the oil company pointed out that, although investments remain low compared to the same period last year, they began to recover as production resumed. "Quarter after quarter, investments grew 72.2% in dollars", they detailed.