UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
Commission file number: 1-12102
YPF Sociedad Anónima
(Exact name of registrant as specified in its charter)
Republic of Argentina
(Jurisdiction of incorporation or organization)
Avenida Pte. R. Sáenz Peña 777
C1035AAC Ciudad Autónoma de Buenos Aires, Argentina
Tel: (011-54-11) 4329-2000
Facsimile Number: (011-54-11) 5071-2113
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class
American Depositary Shares, each representing one Class D Share, par value 10 pesos per share
Class D Shares
Name of Each Exchange
on Which Registered
New York Stock Exchange
New York Stock Exchange*
* Listed not for trading but only in connection with the registration of American Depositary Shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
The number of outstanding shares of each class of stock of YPF Sociedad Anónima as of December 31, 2008 was:
Class A Shares
Class B Shares
Class C Shares
Class D Shares
3,764
7,624
104,177
393,197,228
393,312,793
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes No
⌧
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to
(cid:2)
⌧
Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes
No
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
No
⌧
(cid:2)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
(cid:2)
No
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
(cid:2)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
⌧
Accelerated filer
(cid:2)
Non-accelerated filer
(cid:2)
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing:
(cid:2)
U.S. GAAP
International Financial Reporting Standards
as issued by the International Accounting Standards Board:
(cid:2)
Indicate by check mark which financial statement item the registrant has elected to follow. Item 17
⌧
Other
(cid:2)
Item 18
⌧
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
(cid:2)
⌧
Exchange Act) Yes
No
TABLE OF CONTENTS
Conversion Table
References
Disclosure of Certain Information
Forward-Looking Statements
Oil and Gas Terms
PART I
ITEM 1. Identity of Directors, Senior Managers and Advisers
ITEM 2. Offer Statistics and Expected Timetable
ITEM 3. Key Information
Selected Financial Data
Exchange Controls
Risk Factors
Risks Relating to Argentina
ITEM 4. Information on the Company
History and Development of YPF
The Argentine Market
History of YPF
Business Segments
Exploration and Production
Exploration and Development
Refining and Marketing
Chemicals
Research and Development
Competition
Environmental Matters
Property, Plant and Equipment
Regulatory Framework and Relationship with the Argentine Government
ITEM 4A. Unresolved Staff Comments
ITEM 5. Operating and Financial Review and Prospects
Overview
Presentation of Financial Information
Segment Reporting
Factors Affecting Our Operations
Critical Accounting Policies
Principal Income Statement Line Items
Results of Operations
Liquidity and Capital Resources
Off-Balance Sheet Arrangements
ITEM 6. Directors, Senior Management and Employees
Board of Directors
The Audit Committee
Independence of the Members of our Board of Directors and Audit Committee
Disclosure Committee
Executive Officers
Compliance with NYSE Listing Standards on Corporate Governance
Compensation of Directors and Officers
Supervisory Committee
Employee Matters
ITEM 7. Major Shareholders and Related Party Transactions
i
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Share Purchase Agreement and Related Financing Agreements
Option Agreements
Shareholders’ Agreement
Registration Rights and Related Agreements
Related Party Transactions
Argentine Law Concerning Related Party Transactions
ITEM 8. Financial Information
Financial Statements
Legal Proceedings
Dividends Policy
ITEM 9. The Offer and Listing
Shares and ADSs
Argentine Securities Market
ITEM 10. Additional Information
Memorandum and Articles of Association
Directors
Foreign Investment Legislation
Dividends
Amount Available for Distribution
Preemptive and Accretion Rights
Voting of the Underlying Class D Shares
Certain Provisions Relating to Acquisitions of Shares
Taxation
Argentine Tax Considerations
United States Federal Income Tax Considerations
Available Information
ITEM 11. Quantitative and Qualitative Disclosures about Market Risk
ITEM 12. Description of Securities Other than Equity Securities
PART II
ITEM 13. Defaults, Dividend Arrearages and Delinquencies
ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
ITEM 15. Controls and Procedures
ITEM 16.
ITEM 16A. Audit Committee Financial Expert
ITEM 16B. Code of Ethics
ITEM 16C. Principal Accountant Fees and Services
ITEM 16D. Exemptions from the Listing Standards for Audit Committees
ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
PART III
ITEM 17. Financial Statements
ITEM 18. Financial Statements
ITEM 19. Exhibits
Signatures
ii
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Conversion Table
1 ton = 1 metric ton = 1,000 kilograms = 2,204 pounds
1 barrel = 42 U.S. gallons
1 ton of oil = approximately 7.3 barrels (assuming a specific gravity of 34 degrees API (American Petroleum Institute))
1 barrel of oil equivalent = 5,615 cubic feet of gas = 1 barrel of oil, condensate or natural gas liquids
1 kilometer = 0.63 miles
1 million Btu = 252 termies
1 cubic meter of gas = 35.3147 cubic feet of gas
1 cubic meter of gas = 10 termies
1000 acres = approximately 4 square kilometers
References
YPF Sociedad Anónima is a stock corporation organized under the laws of the Republic of Argentina (“Argentina”). As used in
this annual report, “YPF,” “the company,” “we,” “our” and “us” refer to YPF Sociedad Anónima and its controlled and jointly
controlled companies or, if the context requires, its predecessor companies. “YPF Sociedad Anónima” refers to YPF Sociedad
Anónima only. “Repsol YPF” refers to Repsol YPF, S.A. and its consolidated companies, including YPF, unless otherwise specified.
We maintain our financial books and records and publish our financial statements in Argentine pesos. In this annual report, references
to “pesos” or “Ps.” are to Argentine pesos, and references to “dollars,” “U.S. dollars” or “U.S.$” are to United States dollars.
Disclosure of Certain Information
In this annual report, references to “Audited Consolidated Financial Statements” are to YPF’s audited consolidated balance
sheets as of December 31, 2008, 2007 and 2006, and YPF’s audited consolidated statements of income for the years ended
December 31, 2008, 2007 and 2006.
Unless otherwise indicated, the information contained in this annual report reflects:
• for the subsidiaries that were consolidated using the global integration method at the date or for the periods indicated, 100%
of the assets, liabilities and results of operations of such subsidiaries without excluding minority interests, and
• for those subsidiaries whose results were consolidated using the proportional integration method, a pro rata amount of the
assets, liabilities and results of operations for such subsidiaries at the date or for the periods indicated. For information
regarding consolidation, see Note 1 to the Audited Consolidated Financial Statements.
The Audited Consolidated Financial Statements and other amounts derived from such Audited Consolidated Financial
Statements, included in this annual report, reflect the effect of changes in the purchasing power of money by the application of the
method for remeasurement in constant pesos. All the amounts were remeasured to constant pesos as of February 28, 2003. See Note 1
to the Audited Consolidated Financial Statements.
Forward-Looking Statements
This annual report, including any documents incorporated by reference, contains statements that we believe constitute forward-
looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements
may include statements regarding the intent, belief or current expectations of us and our management, including statements with
respect to trends affecting our financial condition, financial ratios, results of operations, business, strategy, geographic concentration,
production volume and reserves, as well as our plans with respect to capital expenditures, business strategy, geographic concentration,
cost savings, investments and dividends payout policies. These statements are not a guarantee of future performance and are subject
to material risks, uncertainties, changes and other factors which may be beyond our control or may be difficult to predict.
1
Accordingly, our future financial condition, prices, financial ratios, results of operations, business, strategy, geographic concentration,
production volumes, reserves, capital expenditures, cost savings, investments and dividend policies could differ materially from those
expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, currency fluctuations, the
price of petroleum products, the ability to realize cost reductions and operating efficiencies without unduly disrupting business
operations, replacement of hydrocarbon reserves, environmental, regulatory and legal considerations and general economic and
business conditions in Argentina, as well as those factors described in the filings made by YPF and its affiliates with the Securities
and Exchange Commission, in particular, those described in “Item 3. Key Information—Risk Factors” below and “Item 5. Operating
and Financial Review and Prospects.” YPF does not undertake to publicly update or revise these forward-looking statements even if
experience or future changes make it clear that the projected results or condition expressed or implied therein will not be realized.
Oil and Gas Terms
Oil and gas reserves definitions used in this annual report are in accordance with Rule 4-10(a) (1)-(17) of Regulation S-X and
relevant guidance notes and letters issued by the U.S. Securities and Exchange Commission (“SEC”) Staff.
The definitions of reserves estimate, reserves audit and reserves review as given below and used hereunder are not terms defined
under SEC rules or regulations effective as of December 31, 2008, and are terms used by YPF in this annual report as defined herein
and consequently such definitions may be defined and used differently by other companies.
For the purpose of this annual report, any reserves estimate, or any reserves audit or any reserves review invoked hereunder, are
in accordance with Rule 4-10(a) (1)-(17) of Regulation S-X of the SEC.
The following terms have the meanings shown below unless the context indicates otherwise:
“acreage”: The total area, expressed in acres or km2, over which we have interests in exploration or production. Net acreage is
our interest in the relevant exploration or production area.
“concession”: A grant of access for a defined area and time period that transfers certain entitlements to produce hydrocarbons
from the host country to an enterprise. The company holding the concession generally has rights and responsibilities for the
exploration, development, production and sale of hydrocarbon, and, typically, an obligation to make payments at the signing of the
concession and once production begins pursuant to applicable laws and regulations.
“hydrocarbons”: Crude oil and natural gas.
“natural gas liquids,” or “NGL”: The portions of gas from a reservoir that are liquefied at the surface in separators, field
facilities, or gas processing plants. NGL from gas processing plants is also called liquefied petroleum gas, or “LPG.”
“oil and gas producing activities”:
Such activities include:
(i)
A. The search for crude oil, including condensate and natural gas liquids, or natural gas (“oil and gas”) in their natural states
and original locations.
B.
C.
The acquisition of property rights or properties for the purpose of further exploration and/or for the purpose of removing
the oil or gas from existing reservoirs on those properties.
The construction, drilling and production activities necessary to retrieve oil and gas from their natural reservoirs, and the
acquisition, construction, installation, and maintenance of field gathering and storage
2
systems – including lifting the oil and gas to the surface and gathering, treating, field processing (as in the case of
processing gas to extract liquid hydrocarbons) and field storage. For purposes of this section, the oil and gas production
function shall normally be regarded as terminating at the outlet valve on the lease or field storage tank; if unusual physical
or operational circumstances exist, it may be appropriate to regard the production function as terminating at the first point
at which oil, gas or gas liquids are delivered to a main pipeline, a common carrier, a refinery, or a marine terminal.
(ii) Oil and gas producing activities do not include:
A. The transporting, refining and marketing of oil and gas;
B. Activities relating to the production of natural resources other than oil and gas;
C.
The production of geothermal steam or the extraction of hydrocarbons as a by-product of the production of geothermal
steam or associated geothermal resources as defined in the Geothermal Steam Act of 1970; or
D. The extraction of hydrocarbons from shale, tar sands or coal.
“proved oil and gas reserves”: Proved oil and gas reserves are the estimated quantities of crude oil, natural gas, and natural gas
liquids that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Prices include
consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based upon future
conditions.
(i) Reservoirs are considered proved if economic producibility is supported by either actual production or conclusive formation test.
The area of a reservoir considered proved includes:
A.
B.
that portion delineated by drilling and defined by gas-oil and/or oil-water contacts, if any; and
the immediately adjoining portions not yet drilled, but which can be reasonably judged as economically productive on the
basis of available geological and engineering data. In the absence of information on fluid contacts, the lowest known
structural occurrence of hydrocarbons controls the lower proved limit of the reservoir.
(ii) Reserves that can be produced economically through application of improved recovery techniques (such as fluid injection) are
included in the “proved” classification when successful testing by a pilot project, or the operation of an installed program in the
reservoir, provides support for the engineering analysis on which the project or program was based.
(iii) Estimates of proved reserves do not include the following:
A.
B.
C.
D.
oil that may become available from known reservoirs but is classified separately as “indicated additional reserves”;
crude oil, natural gas, and natural gas liquids, the recovery of which is subject to reasonable doubt because of uncertainty
as to geology, reservoir characteristics, or economic factors;
crude oil, natural gas, and natural gas liquids, that may occur in undrilled prospects; and
crude oil, natural gas, and natural gas liquids, that may be recovered from oil sales, coal, gilsonite and other such sources.
“proved developed reserves”: Proved developed oil and gas reserves are reserves that can be expected to be recovered through
existing wells with existing equipment and operating methods. Additional oil and gas expected to be obtained through the application
of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery
should be included as “proved developed reserves” only after testing by a pilot project or after the operation of an installed program
has confirmed through production response that increased recovery will be achieved.
3
“proved undeveloped reserves”: Proved undeveloped oil and gas reserves are reserves that are expected to be recovered from
new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. Reserves on
undrilled acreage shall be limited to those drilling units offsetting productive units that are reasonably certain of production when
drilled. Proved reserves for other undrilled units can be claimed only where it can be demonstrated with certainty that there is
continuity of production from the existing productive formation. Under no circumstances should estimates for proved undeveloped
reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is
contemplated, unless such techniques have been proved effective by actual tests in the area and in the same reservoir.
“recovery factor”: The recoverable amount of the original or residual estimated hydrocarbons in place in a reservoir, expressed
as a percentage of total hydrocarbons in place.
“refining capacity”: The crude oil processing capacity of refineries, expressed as an average over a period of time for the
quality of oil and under conditions for which the facility was designed. Such capacity could be improved through the application of
updated operation and maintenance techniques, increased availability, equipment revamps, de-bottlenecking, and the use of higher
qualities of crude oil than those for which the refinery was originally designed, among other improvements.
“reserves audit”: The process of reviewing certain of the pertinent facts interpreted and assumptions underlying a reserves
estimate prepared by another party and the rendering of an opinion about (i) the appropriateness of the methodologies employed,
(ii) the adequacy and quality of the data relied upon, (iii) the depth and thoroughness of the reserves estimation process, (iv) the
classification of reserves appropriate to the relevant definitions used, and (v) the reasonableness of the estimated reserves quantities.
“reserves estimate”: The process of performing a comprehensive evaluation by interpreting and assessing all the pertinent data
to generate such proved reserves estimates and cash flow analysis. The main product of this evaluation results in a report that
includes: (i) the actual reserve estimate quantities, (ii) the future producing rates from such reserves, (iii) the future net revenues from
such reserves, and (iv) the present value of such future net revenue. This report may also include maps, logs or other technical backup
used by the estimator.
“reserves review”: The process of conducting a high-level assessment of reserves estimates to determine if they are plausible.
The steps consist primarily of:
• inquiry;
• analytical procedures;
• analysis;
• review of historical reserves performance; and
• discussions with reserves management staff.
“Plausible” means the reserves estimate data appearing to be worthy of belief based on the available information. It may result
in a statement like “Nothing came to my attention that would indicate the reserves estimate has not been prepared and presented in
accordance with the applicable principles and definitions.”
“third party reserves engineer”: A person with sufficient educational background, professional training and professional
experience to exercise prudent professional judgment while in charge of the conduct of an audit, estimate or review of reserves. The
determination of whether a third party reserves engineer is qualified is made on a case-by-case basis with reference to the recognition
and respect of such third party reserves engineer’s peers. YPF would normally consider a third party reserves engineer to be qualified
if such person (i) has a minimum of 10 years’ practical experience in petroleum engineering or petroleum production geology, with at
least five years of such experience in charge of the estimates and evaluation of reserves information; and (ii) has either (A) obtained,
from a college or university of recognized stature, a bachelor’s or advanced degree in petroleum engineering, geology or other
discipline of engineering or physical science, or (B) received, and is maintaining in good standing, a registered or certified
professional engineer’s license or a registered or certified professional geologist’s license, or the equivalent thereof, from an
appropriate governmental authority or professional organization.
4
YPF’s standard of independence for a third party reserves engineer is that such person must not have any financial interest in the
properties under evaluation. This is to ensure that there is no incentive for the third party reserves engineer’s reports to be outcome-
oriented because there is no direct economic benefit for the third party reserves engineer as a consequence of the results of such
person’s work. An independent third party reserves engineer’s compensation is based only on professional services carried out to
deliver an unbiased analysis suitable for the public and financial communities. YPF also requires that a statement of such
independence is included in the third party reserves engineer’s report.
Abbreviations:
“bbl”
“bcf”
“bcm”
“boe”
“condensate”
“gas”
“GWh”
“HP”
“km”
“km2”
“m”
“m3”
“mbbl”
“mbbl/d”
“mboe/d”
“mcf”
“mcm”
“mm”
“mmbbl”
“mmboe”
“mmBtu”
Barrels based on 42 US gallons
Billion cubic feet
Billion cubic meters
Barrels of oil equivalent
Mixture of hydrocarbons that exist in the gaseous phase at original
temperature and pressure of the reservoir, but when produced condense into
liquid phase at temperature and pressure associated with surface production
equipment
Natural gas
Gigawatt hours
Horse Power
Kilometers
Square kilometers
Thousand
Cubic meter
Thousand barrels
Thousand barrels per day
Thousand barrels of oil equivalent per day
Thousand cubic feet
Thousand cubic meters
Million
Million barrels
Million barrels of oil equivalent
Million British thermal units
5
“mmcf”
“mmcf/d”
“mmcm”
“mmcm/d”
“mtn”
“MW”
“Oil”
“WTI”
“USA”
Million cubic feet
Million cubic feet per day
Million cubic meters
Million cubic meters per day
Thousand tons
Megawatts
Crude oil, condensate and natural gas liquids
West Texas Intermediate
United States
6
PART I
ITEM 1.
Identity of Directors, Senior Managers and Advisers
Not applicable.
ITEM 2. Offer Statistics and Expected Timetable
Not applicable.
ITEM 3. Key Information
Selected Financial Data
The following tables present our selected financial and operating data. You should read this information in conjunction with our
Audited Financial Statements and related notes, and the information under “Item 5. Operating and Financial Review and Prospects”
included elsewhere in this annual report.
The financial data as of December 31, 2008, 2007 and 2006 and for the years then ended is derived from our Audited
Consolidated Financial Statements, which are included in this annual report. The financial data as of and for the years ended
December 31, 2005 and 2004 is derived from our audited financial statements, which are not included in this annual report. Our
audited financial statements have been prepared in accordance with generally accepted accounting principles in Argentina, which we
refer to as Argentine GAAP and which differ in certain significant respects from generally accepted accounting principles in the
United States, which we refer to as U.S. GAAP. Notes 13, 14 and 15 to our Audited Consolidated Financial Statements provide a
description of the significant differences between Argentine GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S.
GAAP of net income and shareholders’ equity as of December 31, 2008, 2007 and 2006 and for the years then ended.
In this annual report, except as otherwise specified, references to “$,” “U.S.$” and “dollars” are to U.S. dollars, and references to
“Ps.” and “pesos” are to Argentine pesos. Solely for the convenience of the reader, peso amounts as of and for the year ended
December 31, 2008 have been translated into U.S. dollars at the exchange rate quoted by the Argentine Central Bank (Banco Central
de la República Argentina or Central Bank) on December 31, 2008 of Ps.3.45 to U.S.$1.00, unless otherwise specified. The exchange
rate quoted by Central Bank on June 26, 2009 was Ps.3.80 to U.S.$1.00. The U.S. dollar equivalent information should not be
construed to imply that the peso amounts represent, or could have been or could be converted into U.S. dollars at such rates or any
other rate. See “Item 3. Key Information—Exchange Rates.”
Certain figures included in this annual report have been subject to rounding adjustments. Accordingly, figures shown as totals
may not sum due to rounding.
7
Consolidated Income Statement Data:
Argentine GAAP(2)
Net sales(3)(4)
Gross profit
Administrative expenses
Selling expenses
Exploration expenses
Operating income
Income on long-term investments
Other expenses, net
Interest expense
Other financial income (expenses) and holding gains (losses), net
Income from sale of long-term investments
Reversal (impairment) of other current assets
Income before income tax
Income tax
Net income from continuing operations
Income on discontinued operations
Income from sale of discontinued operations
Net income
Earnings per share and per ADS(5)
Dividends per share and per ADS(5) (in pesos)
Dividends per share and per ADS(5)(6) (in U.S. dollars)
U.S. GAAP
Operating income
Net income
Earnings per share and per ADS(5) (in pesos)
Consolidated Balance Sheet Data:
Argentine GAAP(2)
Cash
Working capital
Total assets
Total debt(7)
Shareholders’ equity(8)
U.S. GAAP
Total assets
Shareholders’ equity
Other Consolidated Financial Data:
Argentine GAAP
Fixed assets depreciation
Cash used in fixed asset acquisitions
8
2008
(in millions
of U.S.$,
except for
per share
and per
ADS data)
As of and for Year Ended December 31,
2008
2007
2006
2005(1)
2004(1)
(in millions of pesos, except for per share and per
ADS data)
(805)
(522)
39
(545)
(459)
561
24
(109)
(143)
92
34
(439)
(292)
810
5
69
(552)
(674)
(2,120) (1,797) (1,650)
(280)
(460)
83
(376)
(492)
318
— —
— —
10,109 34,875 29,104 25,635 22,901 19,931
3,148 10,862 10,104 9,814 11,643 10,719
(463)
(305) (1,053)
(1,403)
(2,460)
(713)
(382)
(684)
(198)
1,932 6,665 6,657 6,883 9,161 8,471
154
183
(981)
(204)
(221)
(213)
359
667
11
15 —
(69) — —
1,797 6,198 6,844 7,258 8,772 7,782
(741) (2,558) (2,758) (2,801) (3,410) (3,017)
1,055 3,640 4,086 4,457 5,362 4,765
3
— — — — —
139
— — — — —
4,907
4,086 4,457 5,362
9.25 10.39 11.33 13.63 12.48
6.00 12.40 13.50
4.70
4.25
1.97
1,055
2.68
n.a. 23.61
7.37
n.a.
6.00
1.93
3,640
1,516 5,230 5,176 5,626 8,065 6,550
874 3,014 3,325 3,667 5,142 4,186
10.64
n.a.
9.32 13.07
8.45
7.66
118
196
391
113
492
(799) (2,758) 4,081 4,905 2,903 3,549
11,327 39,079 38,102 35,394 32,224 30,922
994 1,425 1,453 1,930
1,298 4,479
5,900 20,356 26,060 24,345 22,249 21,769
122
12,826 44,251 40,746 37,046 34,748 32,540
7,388 25,492 29,067 26,241 24,254 23,506
1,384 4,775 4,139 3,718 2,707 2,470
2,867
2,039
6,163 5,002 3,722
7,035
(1) Consolidated income and balance sheet data for the years ended December 31, 2005 and 2004 set forth above include the
retroactive effect from the application of new accounting rules in Argentina effective since January 1, 2006.
(2) The financial statements reflect the effect of changes in the purchasing power of money by the application of the method for
remeasurement in constant Argentine pesos set forth in Technical Resolution No. 6 of the Argentine Federation of Professional
Councils in Economic Sciences (“F.A.C.P.C.E.”) and taking into consideration General Resolution No. 441 of the National
Securities Commission (“CNV”), which established the discontinuation of the remeasurement of financial statements in constant
Argentine pesos as from March 1, 2003. See Note 1 to the Audited Consolidated Financial Statements.
Includes Ps.1,770 million for the year ended December 31, 2008, Ps.1,350 million for the year ended December 31, 2007,
Ps.1,451 million for the year ended December 31, 2006, Ps.1,216 million for the year ended December 31, 2005, and Ps.1,122
million for the year ended December 31, 2004 corresponding to the proportional consolidation of the net sales of investees in
which we hold joint control with third parties. See Note 13(b) to the Audited Consolidated Financial Statements.
(3)
(4) Net sales are net to us after payment of a fuel transfer tax, turnover tax and, from 2002, customs duties on hydrocarbon exports.
Royalties with respect to our production are accounted for as a cost of production and are not deducted in determining net sales.
See Note 2(g) to the Audited Consolidated Financial Statements.
Information has been calculated based on outstanding capital stock of 393,312,793 shares. Each ADS represents one Class D
share. There were no differences between basic and diluted earnings per share and ADS for any of the years disclosed.
(5)
(6) Amounts expressed in U.S. dollars are based on the exchange rate as of the date of payment. For periods in which more than one
dividend payment was made, the amounts expressed in U.S. dollars are based on exchange rates at the date of each payment.
(7) Total debt under Argentine GAAP includes nominal amounts of long-term debt of Ps.1,260 million as of December 31, 2008,
Ps.523 million as of December 31, 2007, Ps.510 million as of December 31, 2006, Ps.1,107 million as of December 31, 2005
and Ps.1,684 million as of December 31, 2004.
(8) Our subscribed capital as of December 31, 2008 is represented by 393,312,793 shares of common stock and divided into four
classes of shares, with a par value of Ps.10 and one vote per share. These shares are fully subscribed, paid-in and authorized for
stock exchange listing.
Exchange Rates
From April 1, 1991 until the end of 2001, the Convertibility Law (Law No. 23,928) established a fixed exchange rate under
which the Central Bank was obligated to sell U.S. dollars at one peso per U.S. dollar. On January 6, 2002, the Argentine Congress
enacted the Public Emergency Law (Law No. 25,561, the Public Emergency and Foreign Exchange System Reform Law), formally
putting an end to the Convertibility Law regime and abandoning over 10 years of U.S. dollar-peso parity. The Public Emergency Law,
which has been extended until December 31, 2009, grants the executive branch of the Argentine government the power to set the
exchange rate between the peso and foreign currencies and to issue regulations related to the foreign exchange market. Following a
brief period during which the Argentine government established a temporary dual exchange rate system pursuant to the Public
Emergency Law, the peso has been allowed to float freely against other currencies since February 2002 although the government has
the power to intervene by buying and selling foreign currency for its own account, a practice in which it engages on a regular basis.
The following table sets forth the annual high, low, average and period-end exchange rates for U.S. dollars for the periods
indicated, expressed in nominal pesos per U.S. dollar, based on rates quoted by the Central Bank. The Federal Reserve Bank of New
York does not report a noon buying rate for Argentine pesos.
Year ended December 31,
2004
2005
2006
Low
High
Average
(pesos per U.S. dollar)
Period End
2.80
2.86
3.03
3.06
3.04
3.10
2.94(1)
2.90(1)
3.07(1)
2.98
3.03
3.06
9
2007
2008
Month
December 2008
January 2009
February 2009
March 2009
April 2009
May 2009
June 2009(2)
Low
3.05
3.01
3.38
3.45
3.49
3.60
3.67
3.70
3.74
High
Average
(pesos per U.S. dollar)
Period End
3.18
3.45
3.45
3.49
3.56
3.72
3.72
3.75
3.80
3.12(1)
3.18(1)
3.42
3.46
3.51
3.66
3.69
3.73
3.77
3.15
3.45
3.45
3.49
3.56
3.72
3.71
3.75
3.80
Source: Central Bank
(1) Represents the average of the exchange rates on the last day of each month during the period.
(2) Through June 26, 2009.
No representation is made that peso amounts have been, could have been or could be converted into U.S. dollars at the foregoing
rates on any of the dates indicated.
Exchange Controls
Prior to December 1989, the Argentine foreign exchange market was subject to exchange controls. From December 1989 until
April 1991, Argentina had a freely floating exchange rate for all foreign currency transactions, and the transfer of dividend payments
in foreign currency abroad and the repatriation of capital were permitted without prior approval of the Central Bank. From April 1,
1991, when the Convertibility Law became effective, until December 21, 2001, when the Central Bank closed the foreign exchange
market, the Argentine currency was freely convertible into U.S. dollars.
On December 3, 2001, the Argentine government imposed a number of monetary and currency exchange control measures
through Decree 1570/01, which included restrictions on the free disposition of funds deposited with banks and tight restrictions on
transferring funds abroad (including the transfer of funds to pay dividends) without the Central Bank’s prior authorization subject to
specific exceptions for transfers related to foreign trade. Since January 2003, the Central Bank has gradually eased these restrictions
and expanded the list of transfers of funds abroad that do not require its prior authorization (including the transfer of funds to pay
dividends). In June 2003, the Argentine government set restrictions on capital flows into Argentina, which mainly consisted of a
prohibition against the transfer abroad of any funds until 180 days after their entry into the country. In June 2005, the government
established further restrictions on capital flows into Argentina, including increasing the period that certain incoming funds must
remain in Argentina to 365 calendar days and requiring that 30% of incoming funds be deposited with a bank in Argentina in a non-
assignable, non-interest-bearing account for 365 calendar days. Under the exchange regulations currently in force, restrictions exist in
respect of the repatriation of funds or investments by non-Argentine residents. For instance, subject only to limited exceptions, the
repatriation by non-Argentine residents of funds received as a result of the sale of the Class D shares in the secondary market is
subject to a limit of U.S.$500,000 per person per calendar month. In order to repatriate such funds abroad, non-Argentine residents
also are required to demonstrate that the funds used to make the investment in the Class D shares were transferred to Argentina at
least 365 days before the proposed repatriation. The transfer abroad of dividend payments is currently authorized by applicable
regulations to the extent that such dividend payments are made in connection with audited financial statements and are approved by a
shareholders’ meeting.
10
Risk Factors
YPF’s operations and earnings are subject to risks as a result of changes in competitive, economic, political, legal, regulatory,
social, industrial, business and financial conditions. Investors should carefully consider these risks.
As a result of the current global financial crisis and uncertain economic environment, certain risks may gain more prominence
either individually or when taken together. Certain oil and gas prices and margins may remain lower than in recent years due to
reduced demand and certain other factors.
Risks Relating to Argentina
Argentina’s economy may not continue to grow at current rates or may contract in the future
The Argentine economy has experienced significant volatility in recent decades, including numerous periods of low or negative
growth and high and variable levels of inflation and devaluation. Since the most recent crisis of 2001 and 2002, the Argentine
economy has grown at a rapid pace during recent years, with GDP increasing on a real basis by 9.0% in 2004, 9.2% in 2005, 8.5% in
2006, 8.7% in 2007 and 6% in 2008. However, no assurances can be given that current rates of growth will continue in 2009 or
subsequent years or that the economy will not contract. See “Item 5. Operating and Financial Review and Prospects—Factors
Affecting Our Operations—Macroeconomic Conditions.” Sustained inflation in Argentina could increase our costs of operation, in
particular labor costs, and without a corresponding increase in the price of our products, may negatively impact our results of
operations and financial condition. Substantially all of our operations, properties and customers are located in Argentina, and, as a
result, our business is to a large extent dependent upon economic conditions prevailing in Argentina. If economic conditions in
Argentina were to deteriorate, it would likely have an adverse effect on our financial condition and results of operations.
Political and regulatory developments in Argentina may affect our domestic operations
The Argentine government exercises significant influence over the economy. In particular, the oil and gas industry is subject to
extensive government regulation and control. As a result, our business is to a large extent dependent upon regulatory and political
conditions prevailing in Argentina and our results of operations may be materially and adversely affected by regulatory and political
changes in Argentina. We currently face risks and challenges relating to government regulation and control of the energy sector,
including those set forth below and elsewhere in these risk factors:
• limitations on our ability to pass increases in international prices of crude oil and other hydrocarbon fuels and exchange rate
fluctuations through to domestic prices, or to increase local prices of natural gas (in particular for residential customers),
gasoline and diesel;
• higher taxes on exports of hydrocarbons;
• restrictions on hydrocarbon export volumes driven mainly by the requirement to satisfy domestic demand;
• in connection with the Argentine government’s policy to provide absolute priority to domestic demand, regulatory orders to
supply natural gas and other hydrocarbon products to the domestic retail market in excess of previously contracted amounts;
• the import of certain hydrocarbon fuels at international market prices to satisfy domestic demand at significantly lower
domestic prices;
• regulatory developments leading to the imposition of stricter supply requirements, fines or other actions by governmental
authorities in response to fuel shortages at service stations;
• the implementation or imposition of stricter quality requirements for petroleum products in Argentina; and
11
• higher taxes on domestic fuel sales not compensated by price increases.
The Argentine government has made certain changes in regulations and policies governing the energy sector to give absolute
priority to domestic supply at low, stable prices in order to sustain economic recovery. As a result of the above-mentioned changes,
for example, on days during which a gas shortage occurs, exports of natural gas (which are also affected by other government
curtailment orders) and the provision of gas supplies to industries, electricity generation plants and service stations selling compressed
natural gas are interrupted for priority to be given to residential consumers at lower prices. We cannot assure you that changes in
applicable laws and regulations, or adverse judicial or administrative interpretations of such laws and regulations, will not adversely
affect our results of operations. See “Item 4. Information on the Company—Regulatory Framework and Relationship with the
Argentine Government.” Similarly, we cannot assure you that future government policies aimed at sustaining economic recovery or in
response to domestic needs will not adversely affect the oil and gas industry.
In January 2007, Law No. 26,197 was enacted, which, in accordance with Article 124 of the National Constitution, provided that
Argentine provinces shall be the owners of the hydrocarbon reservoirs located within their territories. Pursuant to the law, the
Argentine Congress is charged with enacting laws and regulations aimed at developing mineral resources within Argentina, while the
provincial governments are responsible for enforcing these laws and administering hydrocarbon fields that fall within the territories of
their respective provinces. Certain provincial governments, however, have construed the provisions of Law No. 26,197 and Article
124 to empower the provinces to enact their own regulations concerning exploration and production of oil and gas within their
territories. There can be no assurance that regulations or taxes (including royalties) enacted or administered by the provinces will not
conflict with federal law, and such taxes or regulations may adversely affect our operations and financial condition.
Limitations on local pricing in Argentina may adversely affect our results of operations
In recent years, due to regulatory, economic and government policy factors, our domestic gasoline, diesel and other fuel prices
have frequently lagged substantially behind prevailing international and regional market prices for such products, and our ability to
increase prices has been limited. Likewise, the prices at which we sell natural gas in Argentina (particularly to the residential sector)
are subject to government regulations and currently are substantially below regional market prices for natural gas. For additional
information on domestic pricing for our products, see “Item 5. Operating and Financial Review and Prospects” and “Item 4.
Information on the Company—Regulatory Framework and Relationship with the Argentine Government—Market Regulation.” We
cannot assure you that we will be able to increase the domestic prices of our products in response to future increases in the
international market prices of such products, and limitations on our ability to do so would continue to adversely affect our financial
condition and results of operations. Similarly, we cannot assure you that hydrocarbon prices in Argentina will match the increases or
decreases in hydrocarbon prices at the international or regional levels.
We are subject to direct and indirect export restrictions, which have affected our results of operations and caused us to declare
force majeure under certain of our export contracts
The Argentine Hydrocarbons Law (Law No. 17,319) allows for hydrocarbon exports as long as they are not required for the
domestic market and are sold at reasonable prices. In the case of natural gas, Law 24,076 and related regulations require that the
needs of the domestic market be taken into account when authorizing long term natural gas exports.
During the last several years, the Argentine authorities have adopted a number of measures that have resulted in the substantial
restriction of exports of natural gas from Argentina, and the Argentine government’s current policy is not to allow any exports of
natural gas other than to the residential sector in certain other countries.
Due to the foregoing, we have been obliged to sell a part of our natural gas production previously destined for the export market
in the local Argentine market and have not been able to meet our contractual gas export commitments in whole or, in some cases, in
part, leading to disputes with our export clients and forcing us to declare force majeure under our export sales agreements. We believe
that the measures mentioned above constitute force
12
majeure events that relieve us from any contingent liability for the failure to comply with our contractual obligations, although no
assurance can be given that this position will prevail. See “Item 4. Information on the Company—Exploration and Production—
Production—Natural gas supply contracts and exports,” “Item 4. Information on the Company—Exploration and Production—The
Argentine natural gas market,” and “Item 8. Financial Information—Legal Proceedings.”
In addition, the effectiveness of certain of our natural gas export authorizations is subject to an analysis by the Argentine
Secretariat of Energy of natural gas reserves in the Noroeste basin. The result of such analysis is uncertain and may have an adverse
impact upon our performance of the export gas sales agreements related to such export authorizations should the Argentine Secretariat
of Energy determine that reserves are inadequate. See “Item 8. Financial Information—Legal Proceedings—Argentina.”
Crude oil exports, as well as the export of most of our hydrocarbon products, currently require prior authorization from the
Argentine Secretariat of Energy (pursuant to the regime established under Resolution S.E. No. 1679/04 as amended and supplemented
by other regulation). Oil companies seeking to export crude oil or LPG must first demonstrate that the local demand for such product
is satisfied or that an offer to sell the product to local purchasers has been made and rejected. Oil refineries seeking to export diesel
fuel must also first demonstrate that the local demand of diesel is duly satisfied. Because domestic diesel production does not
currently satisfy Argentine domestic consumption needs, we have been prevented since 2005 from selling diesel production in the
export market, and thereby obliged to sell in the local market at significantly lower prices.
We are unable to predict how long these export restrictions will be in place, or whether any further measures will be adopted
that adversely affect our ability to export gas, crude oil and diesel fuel or other products and, accordingly, our results of operations.
The imposition of new export duties and other taxes could adversely affect our results
In recent years, new duties have been imposed on exports. In March 2002, oil and gas companies were levied with a five-year,
20% tax on proceeds from the export of crude oil and a five-year, 5% tax on proceeds from the export of oil products. These duties on
exports were increased on May 11, 2004 to the following taxation rates: 25% on exports of crude oil, 20% on exports of butane,
methane and LPG, and 5% on exports of gasoline and diesel. On May 26, 2004, a 20% duty on natural gas and natural gas liquids
exports was imposed. On August 4, 2004, the Ministry of Economy and Production issued a resolution establishing a progressive
scheme of export duties for crude oil, with rates ranging from 25% to 45%, depending on the quotation of the WTI reference price at
the time of export and thereby modifying the fixed 25% tax rate established in May of that year.
Resolution 394/2007 of the Ministry of Economy and Production, published on November 16, 2007, amends the export duties
on crude oil and other crude derivative products. The new regime provides that when the WTI international price exceeds the
reference price, which is fixed at U.S.$60.9/barrel, the producer shall be allowed to collect at U.S.$42/barrel, with the remainder
being withheld by the Argentine government as an export tax. If the WTI international price is under the reference price but over
U.S.$45/barrel, a 45% withholding rate will apply. If such price is under U.S.$45/barrel, the applicable export tax is to be determined
by the Argentine government within a term of 90 business days. Notwithstanding that the WTI international price has recently traded
under U.S.$45/barrel from time to time, the Argentine government has not yet established a new withholding rate, and the 45%
withholding rate has continued to apply. The withholding rate determined as indicated above also currently applies to diesel, gasoline
and other crude derivative products. In addition, the calculation procedure described above also applies to other petroleum products
and lubricants based upon different withholding rates, reference prices and prices allowed to producers. See “Item 4. Information on
the Company—Regulatory Framework and Relationship with the Argentine Government—Market Regulation.”
With respect to natural gas products, in July 2006, the Ministry of Economy and Production issued Resolution 534/06, which
increased to 45% the export duty on natural gas. This resolution also required the Customs General Administration to apply the
natural gas price set by the Framework Agreement between Argentina and Bolivia (the “Framework Agreement”), which was
approximately U.S.$10.35/mmBtu in December 2008 (approximately U.S.$7.84/mmBtu in March 2009), as the valuation basis for
calculating export duties on natural gas sales,
13
irrespective of the actual price of such sales. In 2006, exports from the Tierra del Fuego province, which were previously exempted
from taxes, were made subject to export duties at the prevailing rates. Moreover, in May 2007 the Ministry of Economy and
Production increased to 25% the export duty on exports of butane, propane and LPG.
Resolution No. 127/2008 of the Ministry of Economy and Production increased export duties applicable to natural gas exports
from 45% to 100%, mandating a valuation basis for the calculation of the duty as the highest price established in any contract of any
Argentine importer for the import of gas, abandoning the previously applicable reference price set by the Framework Agreement
between Argentina and Bolivia mentioned above. Resolution No. 127/2008 provides with respect to LPG products (including butane,
propane and blends thereof) that if the international price of the relevant LPG product, as notified daily by the Argentine Secretariat
of Energy, is under the reference price established for such product in the Resolution (U.S.$338/m3 for propane, U.S.$393/m3 for
butane and U.S.$363/m3 for blends of the two), the applicable export duty for such product will be 45%. If the international price
exceeds the reference price, the producer shall be allowed to collect the maximum amount established by the Resolution for the
relevant product (U.S.$223/m3 for propane, U.S.$271/m3 for butane and U.S.$250/m3 for blends of the two), with the remainder
being withheld by the Argentine government as an export tax.
As a result of the aforementioned export tax increases, we may be and, in certain cases, have already been forced to seek the
renegotiation of our export contracts, despite, in most cases, the prior authorization of such contracts by the Argentine government.
We cannot provide assurances that we will be able to renegotiate such contracts on terms acceptable to us.
The imposition of these export taxes has adversely affected our results of operations. We cannot assure you that these taxes will
not continue or be increased in the future or that other new taxes will not be imposed.
We may be exposed to fluctuations in foreign exchange rates
Our results of operations are exposed to currency fluctuation and any devaluation of the peso against the U.S. dollar and other
hard currencies may adversely affect our business and results of operations. The value of the peso has fluctuated significantly in the
past and may do so in the future. We are unable to predict whether, and to what extent, the value of the peso may further depreciate or
appreciate against the U.S. dollar and how any such fluctuations would affect our business.
We may be subject to exchange and capital controls
In 2001 and 2002, as a result of the economic crisis, Argentina imposed exchange controls and transfer restrictions substantially
limiting the ability of companies to retain foreign currency or make payments abroad. Under current Argentine law, exporters are
required to convert proceeds from export operations into domestic currency, subject to certain exceptions applicable to the oil and gas
industry that permit us to retain abroad 70% of export proceeds. See “Item 4. Information on the Company—Regulatory Framework
and Relationship with the Argentine Government—Repatriation of Foreign Currency.” There can be no assurances regarding future
modifications to exchange and capital controls. The imposition of stricter exchange and capital controls could adversely affect our
financial condition or results of operations and our ability to meet our foreign currency obligations and execute our financing plans.
Our access to international capital markets is influenced by the perception of risk in Argentina and other emerging economies,
which may affect our ability to finance our operations and the trading values of our securities.
International investors consider Argentina to be an emerging market. Economic and market conditions in other emerging market
countries, especially those in Latin America, influence the market for securities issued by Argentine companies. Volatility in
securities markets in Latin America and in other emerging market countries may have a negative impact on the trading value of our
securities and on our ability and the terms on which we are able to access international capital markets.
14
Risks Relating to the Argentine Oil and Gas Business and Our Business
Oil and gas prices could affect our level of capital expenditures
The prices that we are able to obtain for our hydrocarbon products affect the viability of investments in new exploration,
development and refining, and as a result the timing and amount of our projected capital expenditures for such purposes. We budget
capital expenditures related to exploration, development, refining and distribution activities by taking into account, among other
things, market prices for our hydrocarbon products. In the event that current domestic prices prevail or decrease, our ability to
improve our hydrocarbon recovery rates, find new reserves and carry out certain of our other capital expenditure plans is likely to be
adversely affected, which in turn would have an adverse effect on our results of operations.
Our reserves and production are likely to decline
Argentina’s oil and gas fields are mature and our reserves and production are declining as reserves are depleted. In the last two
years our proved reserves declined by approximately 18.8%, and we replaced approximately 32.7% of our production with new
proved reserves during 2008; average daily production in 2008, on a boe basis, declined by approximately 4.1% from 2007. We are
engaged in efforts to mitigate these declines by adding reserves through technological enhancements aimed at improving our recovery
factors as well as through deepwater offshore exploration and development of tight gas. These efforts are subject to material risks and
may prove unsuccessful due to risks inherent to the oil and gas industry.
Our oil and natural gas reserves are estimates, in accordance with the guidelines established by the U.S. Securities and
Exchange Commission (SEC)
Our oil and gas proved reserves are estimated in accordance with the guidelines established by the SEC. Proved reserves are
estimated using geological and engineering data to determine with reasonable certainty whether the crude oil or natural gas in known
reservoirs is recoverable under existing economic and operating conditions.
The accuracy of proved reserve estimates depends on a number of factors, assumptions and variables, among which the most
important are:
• the results of drilling, testing and production after the date of the estimates, which may require substantial revisions;
• the quality of available geological, technical and economic data and the interpretation and judgment of such data;
• the production performance of our reservoirs;
• developments such as acquisitions and dispositions, new discoveries and extensions of existing fields and the application
of improved recovery techniques;
• changes in oil and natural gas prices, which could have an effect on the size of our proved reserves because the estimates
of reserves are based on prices and costs at the date when such estimates are made, and a decline in the price of oil or
gas could make reserves no longer economically viable to exploit and therefore not classifiable as proved; and
• whether the prevailing tax rules, other government regulations and contractual conditions will remain the same as on the
date estimates are made (as changes in tax rules and other government regulations could make reserves no longer
economically viable to exploit).
Many of the factors, assumptions and variables involved in estimating proved reserves are beyond our control and are subject to
change over time. See “Item 4. Information on the Company—Exploration and Development—Reserves.” Consequently, measures of
reserves are not precise and are subject to revision. Any downward revision in our estimated quantities of proved reserves could
adversely impact our financial results, leading to increased depreciation, depletion and amortization charges and/or impairment
charges, which would reduce earnings and shareholders’ equity.
15
The oil and gas industry is subject to particular economic and operational risks
Oil and gas exploration and production activities are subject to particular economic and industry-specific operational risks, some
of which are beyond our control, such as production, equipment and transportation risks, and natural hazards and other uncertainties,
including those relating to the physical characteristics of onshore and offshore oil or natural gas fields. Our operations may be
curtailed, delayed or cancelled due to bad weather conditions, mechanical difficulties, shortages or delays in the delivery of
equipment, compliance with governmental requirements, fire, explosions, blow-outs, pipe failure, abnormally pressured formations,
and environmental hazards, such as oil spills, gas leaks, ruptures or discharges of toxic gases. If these risks materialize, we may suffer
substantial operational losses and disruptions. Drilling may be unprofitable, not only with respect to dry wells, but also with respect to
wells that are productive but do not produce sufficient net revenues to return a profit after drilling, operating and other costs are taken
into account.
Argentine oil and gas production concessions and exploration permits are subject to certain conditions and may not be renewed
The Hydrocarbons Law provides for oil and gas concessions to remain in effect for 25 years as from the date of their award, and
further provides for the concession term to be extended for up to 10 additional years, subject to terms and conditions approved by the
grantor at the time of the extension. The expiration of part of our and other Argentine oil companies’ concessions occurs in 2017. The
authority to extend the terms of current and new permits, concessions and contracts has been vested in the governments of the
provinces in which the relevant area is located (and the federal government in respect of offshore areas beyond 12 nautical miles). In
order to be eligible for the extension, any concessionaire and permit holder must have complied with its obligations under the
Hydrocarbons Law and the terms of the particular concession or permit, including evidence of payment of taxes and royalties, the
supply of the necessary technology, equipment and labor force and compliance with various environmental, investment and
development obligations. Under the Hydrocarbons Law, non-compliance with these obligations and standards may also result in the
imposition of fines and in the case of material breaches, following the expiration of applicable cure periods, the revocation of the
concession or permit. We cannot provide assurances that our concessions will be extended or that additional investment, royalty
payment or other requirements will not be imposed on us in order to obtain extensions. The termination of, or failure to obtain the
extension of, a concession or permit could have a material adverse effect on our business and results of our operations.
Our acquisition of exploratory acreage and crude oil and natural gas reserves is subject to heavy competition
We face intense competition in bidding for crude oil and natural gas production areas, which are typically auctioned by
governmental authorities, especially those areas with the most attractive crude oil and natural gas reserves. Some provinces of
Argentina, including La Pampa, Neuquén and Chubut, have created provincial government-owned companies to develop activities in
the oil and gas industry. Energía Argentina S.A. (ENARSA), the Argentine state-owned energy company, has also entered the market,
particularly in the context of offshore exploration. As a result, the conditions under which we are able to access new exploratory or
productive areas could be adversely affected.
We may incur significant costs and liabilities related to environmental, health and safety matters
Our operations, like those of other companies in the oil and gas industry, are subject to a wide range of environmental, health
and safety laws and regulations in the countries in which we operate. These laws and regulations have a substantial impact on our
operations and those of our subsidiaries, and could result in material adverse effects on our financial position and results of operation.
A number of events related to environmental, health and safety matters, including changes in applicable laws and regulations, adverse
judicial or administrative interpretations of such laws and regulations, changes in enforcement policy, the occurrence of new litigation
or development of pending litigation, and the development of information concerning these matters, could result in new or increased
liabilities, capital expenditures, reserves, losses and other impacts that could have a material adverse
16
effect on our financial condition and results of operations. See “Item 8. Financial Information—Legal Proceedings,” “Item 4.
Information on the Company—Regulatory Framework and Relationship with the Argentine Government—Argentine Environmental
Regulations” and “Item 4. Information on the Company—Regulatory Framework and Relationship with the Argentine Government—
U.S. Environmental Regulations.” Environmental, health and safety regulation and jurisprudence in Argentina is developing at a rapid
pace and no assurance can be provided that such developments will not increase our cost of doing business and liabilities.
The cessation of natural gas deliveries from Bolivia may have a material adverse effect on our long-term natural gas supply
commitments
We rely on imports of natural gas from Bolivia pursuant to the Framework Agreement between the Bolivian and Argentine
governments. See “Item 4. Information on the Company—Exploration and Production—Argentine natural gas supplies.” The current
delivery capacity from Bolivia is 7.7 mmcm/d, and the delivery of volumes exceeding 7.7 mmcm/d is subject to the construction of
the North East Pipeline, which has not yet commenced. Bolivian natural gas imports pursuant to the Framework Agreement are
performed under a gas supply agreement between YPFB (the Bolivian state-owned oil and gas company) and ENARSA. The price
charged by Bolivia pursuant to this agreement was approximately U.S.$10.35/mmBtu in December 2008 (approximately
U.S.$7.84/mmBtu in March 2009). We have entered into a gas supply contract with ENARSA to buy a portion of such gas through
December 31, 2009. The price at which we buy this gas was approximately U.S.$2.32/mmBtu in March 2009. The difference between
our contractual price and the cost of the natural gas purchased pursuant to the Framework Agreement is currently absorbed by
ENARSA and financed by the Argentine government with the collection of export duties on natural gas.
Any suspension of natural gas deliveries from Bolivia under these contracts, or an increase in the subsidized price of gas
currently charged by ENARSA, could have a material adverse effect on our financial condition and results of operations, including
our inability to provide gas to certain clients, since we plan to fulfill our supply contracts of natural gas in part through import
volumes from Bolivia.
We are party to a number of legal proceedings
As described under “Item 8. Financial Information—Legal Proceedings,” we are party to a number of labor, commercial, civil,
tax, criminal, environmental and administrative proceedings that, either alone or in combination with other proceedings, could, if
resolved in whole or in part adversely to us, result in the imposition of material costs, fines, judgments or other losses. While we
believe that we have provisioned such risks appropriately based on the opinions and advice of our external legal advisors and in
accordance with applicable accounting rules, certain loss contingencies, particularly those relating to environmental matters, are
subject to change as new information develops and it is possible that losses resulting from such risks, if proceedings are decided in
whole or in part adversely to us, could significantly exceed any reserves we have established.
Our business depends to a significant extent on our production and refining facilities and logistics network
Our oil and natural gas field facilities, refineries and logistics network are our principal production facilities and distribution
network on which a significant portion of our revenues depends. Although we insure our properties on terms we consider prudent and
have adopted and maintain safety measures, any significant damage to, accident or other production stoppage at our facilities or
network could materially and adversely affect our production capabilities, financial condition and results of operations.
We could be subject to organized labor action
Although we consider our current relations with our workforce to be good, we have experienced organized work disruptions and
stoppages in the past and we cannot assure you that we will not experience them in the future, which could adversely affect our
business and revenues. Labor demands are commonplace in Argentina’s energy sector and unionized workers have blocked access to
and damaged our plants in the recent past. Our operations were affected by labor strikes in the first half of 2008. See “Item 5.
Operating and Financing Review and Prospects—Factors Affecting Our Operations—Macroeconomic conditions.”
17
Risks Relating to Our Class D Shares and ADSs
Repsol YPF controls a significant majority of our shares and voting rights
Following the Petersen Transaction, as defined in “Item 7. Major Shareholders and Related Party Transactions” Repsol YPF
controls approximately 84.04% of our capital stock and voting rights and Petersen Energía S.A. (“Petersen Energía”) controls
approximately 15.46% of our shares and voting rights, in each case subject to the shareholders’ agreement described below. In
addition, Repsol YPF has granted certain affiliates of Petersen Energía options to purchase an additional 10% of our capital stock held
by Repsol YPF. A number of YPF corporate matters are subject to the voting and other procedures set forth in a shareholders’
agreement entered into between Repsol YPF, certain affiliates of Repsol YPF and Petersen Energía. Repsol YPF will be able to
determine substantially all other matters requiring approval by a majority of our shareholders, including the election of a majority of
our directors. Subject to the terms of the shareholders’ agreement, Repsol YPF will also direct our operations and may be able to
cause or prevent a change in our control. See “Item 7. Major Shareholders and Related Party Transactions—Shareholders’
Agreement.” Repsol YPF’s and Petersen Energía’s interests may differ from those of our other shareholders.
Certain strategic transactions require the approval of the holder of our Class A shares or may entail a cash tender offer for all
of our outstanding capital stock
Under our bylaws, the approval of the holder of our Class A shares is required to undertake certain strategic transactions,
including a merger, an acquisition that results in the purchaser holding 15% or more of our capital stock or an acquisition that results
in the purchaser holding a majority of our capital stock. The interests of our Class A shareholder, the Argentine government, may
differ from those of our other shareholders, and, as result, we may not be able to undertake certain transactions on terms that are
advantageous to our other shareholders or at all.
In addition, under our bylaws, an acquisition that results in the purchaser holding 15% or more of our capital stock would
require such purchaser to make a public cash tender offer for all of our outstanding shares and convertible securities, which could
discourage certain investors from acquiring significant stakes in our capital stock. See “Item 10. Additional Information—Certain
Provisions Relating to Acquisitions of Shares.”
Active markets may not develop for our Class D shares or the ADSs
As of the date of this annual report, less than 0.5% of our capital stock is held by non-affiliates. As a result, the public markets
for our Class D shares and ADSs have had limited trading volume. Although the ADSs will continue to be listed on the NYSE and the
underlying Class D shares will continue to be listed on the BASE, we cannot assure you that more active and liquid markets will
develop or of the price at which the Class D shares or the ADSs may be sold.
Restrictions on the movement of capital out of Argentina may impair your ability to receive dividends and distributions on, and
the proceeds of any sale of, the Class D shares underlying the ADSs
Argentine law currently permits the government to impose temporary restrictions on capital movements in circumstances where
a serious imbalance develops in Argentina’s balance of payments or where there are reasons to foresee such an imbalance. Although
the transfer of funds abroad in order to pay dividends currently does not require Central Bank approval, restrictions on the movement
of capital to and from Argentina such as those that previously existed during the recent economic crisis could, if reinstated, impair or
prevent the conversion of dividends, distributions, or the proceeds from any sale of Class D shares, as the case may be, from pesos
into U.S. dollars and the remittance of the U.S. dollars abroad. We cannot assure you that the Argentine government will not take
such measures in the future.
Under the terms of our deposit agreement with the depositary for the ADSs, the depositary will convert any cash dividend or
other cash distribution we pay on the shares underlying the ADSs into U.S. dollars, if it can do so on a reasonable basis and can
transfer the U.S. dollars to the United States. If this conversion is not possible for any reason, including restrictions of the type
described in the preceding paragraph, the deposit agreement allows the
18
depositary to distribute the foreign currency only to those ADR holders to whom it is possible to do so. If the exchange rate fluctuates
significantly during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the
dividend distribution.
Under Argentine law, shareholder rights may be different from other jurisdictions
Our corporate affairs are governed by our bylaws and by Argentine corporate law, which differ from the legal principles that
would apply if we were incorporated in a jurisdiction in the United States or in other jurisdictions outside Argentina. In addition, rules
governing the Argentine securities markets are different and may be subject to different enforcement in Argentina than in other
jurisdictions.
Actual or anticipated sales of a substantial number of Class D shares could decrease the market prices of our Class D shares
and the ADSs
Repsol YPF owns Class D shares and ADSs representing a significant majority of our capital stock (which may be reduced by
approximately 10% if the Petersen Options described under “Item 7. Major Shareholders and Related Party Transactions—Option
Agreements” are exercised). Petersen Energía owns ADSs representing up to approximately 15.46% of our capital stock (which may
be increased up to approximately 25% if the Petersen Options described under “Item 7. Major Shareholders and Related Party
Transactions—Option Agreements” are exercised). In addition, as described in greater detail under “Item 7. Major Shareholders and
Related Party Transactions —Registration Rights and Related Agreements,” we have filed and undertaken to maintain an effective
shelf registration statement for the benefit of the lenders under the senior secured term loan facility provided to Petersen Energía to
enable it to enter into the Petersen Transaction. The lenders under the senior secured term loan facility, upon the acceleration of such
facility following the occurrence and continuation of an event of default under such facility, will be able to freely sell up to
approximately 15% of our outstanding capital stock (which may be increased to approximately 25% if the Petersen Options are
exercised) under the shelf registration statement. Sales of a substantial number of Class D shares or ADSs after the consummation of
this offering by Repsol YPF, Petersen Energía, such lenders or any other significant shareholder, or the anticipation of such sales,
could decrease the trading price of our Class D shares and the ADSs. See “Item 7. Major Shareholders and Related Party
Transactions.”
You may be unable to exercise preemptive, accretion or other rights with respect to the Class D shares underlying your ADSs
You may not be able to exercise the preemptive or accretion rights relating to the shares underlying your ADSs (see “Item 10.
Additional Information—Preemptive and Accretion Rights”) unless a registration statement under the U.S. Securities Act of 1933 (the
“Securities Act”) is effective with respect to those rights or an exemption from the registration requirements of the Securities Act is
available. We are not obligated to file a registration statement with respect to the shares relating to these preemptive rights, and we
cannot assure you that we will file any such registration statement. Unless we file a registration statement or an exemption from
registration is available, you may receive only the net proceeds from the sale of your preemptive rights by the depositary or, if the
preemptive rights cannot be sold, they will be allowed to lapse. As a result, U.S. holders of Class D shares or ADSs may suffer
dilution of their interest in our company upon future capital increases.
In addition, under the Argentine Corporations Law, foreign companies that own shares in an Argentine corporation are required
to register with the Superintendency of Corporations (Inspección General de Justicia, or “IGJ”) in order to exercise certain
shareholder rights, including voting rights. If you own our Class D shares directly (rather than in the form of ADSs) and you are a
non-Argentine company and you fail to register with IGJ, your ability to exercise your rights as a holder of our Class D shares may be
limited.
You may be unable to exercise voting rights with respect to the Class D shares underlying your ADSs at our shareholders’
meetings
The depositary will be treated by us for all purposes as the shareholder with respect to the shares underlying your ADSs. As a
holder of ADRs representing the ADSs being held by the depositary in your name, you will not have direct shareholder rights and
may exercise voting rights with respect to the Class D shares represented by the
19
ADSs only in accordance with the deposit agreement relating to the ADSs. There are no provisions under Argentine law or under our
bylaws that limit the exercise by ADS holders of their voting rights through the depositary with respect to the underlying Class D
shares. However, there are practical limitations on the ability of ADS holders to exercise their voting rights due to the additional
procedural steps involved in communicating with these holders. For example, holders of our shares will receive notice of
shareholders’ meetings through publication of a notice in an official gazette in Argentina, an Argentine newspaper of general
circulation and the bulletin of the BASE, and will be able to exercise their voting rights by either attending the meeting in person or
voting by proxy. ADS holders, by comparison, will not receive notice directly from us. Instead, in accordance with the deposit
agreement, we will provide the notice to the depositary. If we ask it to do so, the depositary will mail to holders of ADSs the notice of
the meeting and a statement as to the manner in which instructions may be given by holders. To exercise their voting rights, ADS
holders must then instruct the depositary as to voting the Class D shares represented by their ADSs. Due to these procedural steps
involving the depositary, the process for exercising voting rights may take longer for ADS holders than for holders of Class D shares,
and Class D shares represented by ADSs may not be voted as you desire. Class D shares represented by ADSs for which the
depositary fails to receive timely voting instructions may, if requested by us, be voted as we instruct at the corresponding meeting.
Shareholders outside of Argentina may face additional investment risk from currency exchange rate fluctuations in connection
with their holding of our Class D shares or the ADSs
We are an Argentine company and any future payments of dividends on our Class D shares will be denominated in pesos. The
peso has historically fluctuated significantly against many major world currencies, including the U.S. dollar. A depreciation of the
peso would likely adversely affect the U.S. dollar or other currency equivalent of any dividends paid on our Class D shares and could
result in a decline in the value of our Class D shares and the ADSs as measured in U.S. dollars.
20
Information on the Company
ITEM 4.
History and Development of YPF
Overview
We are Argentina’s leading energy company, operating a fully integrated oil and gas chain with leading market positions across
the domestic upstream and downstream segments. Our upstream operations consist of the exploration, development and production of
crude oil, natural gas and LPG. Our downstream operations include the refining, marketing, transportation and distribution of oil and
a wide range of petroleum products, petroleum derivatives, petrochemicals, LPG and bio-fuels. Additionally, we are active in the gas
separation and natural gas distribution sectors both directly and through our investments in several affiliated companies. In 2008, we
had consolidated net sales of Ps.34,875 million (U.S.$10,109 million) and consolidated net income of Ps.3,640 million (U.S.$1,055
million).
Most of our predecessors were state-owned companies with operations dating back to the 1920s. In November 1992, the
Argentine government enacted the Privatization Law (Law No. 24,145), which established the procedures for our privatization. In
accordance with the Privatization Law, in July 1993, we completed a worldwide offering of 160 million Class D shares that had
previously been owned by the Argentine government. As a result of that offering and other transactions, the Argentine government’s
ownership interest in our capital stock was reduced from 100% to approximately 20% by the end of 1993.
Since 1999, we have been controlled by Repsol YPF, an integrated oil and gas company headquartered in Spain with global
operations. Repsol YPF owned approximately 99% of our capital stock from 2000 until February 21, 2008, when Petersen Energía
purchased 58,603,606 of our ADSs, representing 14.9% of our capital stock, from Repsol YPF for U.S.$2,235 million. In addition,
Repsol YPF also granted options to Enrique Eskenazi, Sebastián Eskenazi, Ezequiel Eskenazi Storey and Matías Eskenazi Storey,
shareholders of Petersen Energía, or to companies that are, directly or indirectly, wholly-controlled by any of them (the “Option
Beneficiaries”) to purchase up to an additional 10.1% of our outstanding capital stock within four years. On May 20, 2008, Petersen
Energía Inversora S.A. (“PEISA”) exercised an option to purchase shares representing 0.1% of our capital stock. Additionally, PEISA
launched a tender offer to purchase all of the shares of YPF that were not already owned by them at a price of U.S.$49.45 per share or
ADS. Repsol, pursuant to its first option agreement with Petersen Energía, had stated that it would not tender YPF shares to PEISA.
The offer period commenced on September 11, 2008 and expired on October 20, 2008. A total of 1,816,879 shares (including Class D
shares and ADSs), representing approximately 0.462% of our total shares outstanding, have been tendered. See “Item 7. Major
Shareholders and Related Party Transactions.”
Upstream Operations
• We operate more than 70 oil and gas fields in Argentina, accounting for approximately 41% of the country’s total production
of crude oil, excluding natural gas liquids, and approximately 41% of its total natural gas production, including natural gas
liquids, in 2008, according to information provided by the Argentine Secretariat of Energy.
• We had proved reserves, as estimated as of December 31, 2008, of approximately 580 mmbbl of oil and 3,099 bcf of gas,
representing aggregate reserves of 1,133 mmboe.
• In 2008, we produced 115 mmbbl of oil (313 mbbl/d) and 607 bcf of gas (1,658 mmcf/d).
Downstream Operations
• We are Argentina’s leading refiner with operations conducted at three wholly owned refineries with combined annual refining
capacity of approximately 116 mmbbl (319.5 mbbl/d). We also have a 50% interest in Refinor, an entity jointly controlled
with and operated by Petrobras Energía S.A., which has a refining capacity of 26.1 mbbl/d.
21
• Our retail distribution network for automotive petroleum products as of December 31, 2008 consisted of 1,642 YPF-branded
service stations, which we estimate represented approximately 30.9% of all service stations in Argentina.
• We are one of the leading petrochemical producers in Argentina and in the Southern Cone of Latin America, with operations
conducted through our Ensenada and Plaza Huincul sites. In addition, Profertil S.A. (“Profertil”), a company that we jointly
control with Agrium Investments Spain S.L. (“Agrium”), is one of the leading producers of urea in the Southern Cone.
The following chart illustrates our organizational structure, including our principal subsidiaries, as of the date of this annual
report.
22
The map below illustrates the location of our productive basins, refineries, storage facilities and crude oil and multi-product
pipeline networks.
23
The Argentine Market
Argentina is the second largest producer of natural gas and the fourth largest producer of crude oil in Latin America based on
2008 production, according to the BP Statistical Review.
In response to the economic crisis of 2001 and 2002, the Argentine government, pursuant to the Public Emergency Law (Law
No. 25,561), established export taxes on certain hydrocarbon products. In subsequent years, in order to satisfy growing domestic
demand and abate inflationary pressures, this policy was supplemented by constraints on domestic prices, temporary export
restrictions and subsidies on imports of natural gas and diesel. As a result, until 2008, local prices for oil and natural gas products had
remained significantly below those prevalent in neighboring countries and international commodity exchanges, heightening domestic
demand for such products. In the case of natural gas, the price at which Bolivia exports natural gas to Argentina was approximately
U.S.$10.35/mmBtu in December 2008 (U.S.$7.84/mmBtu in March 2009), while our average sales price for such gas in Argentina
during 2008 was approximately U.S.$2.00/mmBtu.
Argentina’s gross domestic product, or GDP, has grown at an average annual real rate of approximately 8.5% from 2003 to
2008, after declines during the economic crisis of 2001 and 2002. Driven by this economic expansion and low domestic prices,
energy demand has increased significantly during the same period, outpacing energy supply (which in the case of oil declined). For
example, Argentine natural gas and diesel consumption grew at average annual rates of 6.7% and 4.7%, respectively, during the
period 2003-2008, according to the BP Statistical Review and the Argentine Secretariat of Energy. As a result of this increasing
demand and actions taken by the Argentine regulatory authorities to support domestic supply, exported volumes of hydrocarbon
products, especially natural gas, diesel and gasoline, declined steadily over this period. At the same time, Argentina has increased
hydrocarbon imports, becoming a net importer of certain products, such as diesel, and increased imports of gas (including NGL). In
2003, Argentina’s net exports of diesel amounted to approximately 1,349 mcm, while in 2008 its net imports of diesel amounted to
approximately 836 mcm, according to information provided by the Argentine Secretariat of Energy. Significant investments in the
energy sector are expected to be required in order to support continued economic growth, as the industry is currently operating near
capacity.
Demand for diesel in Argentina exceeds domestic production. In addition, the import prices of refined products have been
substantially higher than the average domestic sales prices of such products, rendering the import and resale of such products
uneconomic. As a result, service stations experience temporary shortages and are required to suspend or curtail diesel sales. While we
are operating our refineries at or above capacity, during peak demand periods we are forced to prorate supplies among our service
stations according to historical sales levels.
As the largest integrated oil and gas company in Argentina, we believe that we are well positioned to benefit from potential
reform in the energy sector, although we cannot assure that reforms will be implemented or, if implemented, that they will be
advantageous to our business.
History of YPF
Beginning in the 1920s and until 1990, both the upstream and downstream segments of the Argentine oil and gas industry were
effectively monopolies of the Argentine government. During this period, we and our predecessors were owned by the state, which
controlled the exploration and production of oil and natural gas, as well as the refining of crude oil and marketing of refined
petroleum products. In August 1989, Argentina enacted laws aimed at the deregulation of the economy and the privatization of
Argentina’s state-owned companies, including us. Following the enactment of these laws, a series of presidential decrees were
promulgated, which required, among other things, us to sell majority interests in our production rights to certain major producing
areas and to undertake an internal management and operational restructuring program.
In November 1992, Law No. 24,145 (referred to as the Privatization Law), which established the procedures by which we were
to be privatized, was enacted. In accordance with the Privatization Law, in July 1993, we completed a worldwide offering of
160 million Class D shares that had previously been owned by the Argentine government. As a result of that offering and other
transactions, the Argentine government’s ownership percentage in our capital stock was reduced from 100% to approximately 20% by
the end of 1993.
24
In January 1999, Repsol YPF acquired 52,914,700 Class A shares in block (14.99% of our shares) which were converted to
Class D shares. Additionally, on April 30, 1999, Repsol YPF announced a tender offer to purchase all outstanding Class A, B, C and
D shares (the “Offer”). Pursuant to the Offer, in June 1999, Repsol YPF acquired an additional 82.47% of our outstanding capital
stock. Repsol YPF acquired additional stakes in us from minority shareholders and other transactions in 1999 and 2000.
Between 2004 and 2005 we made non-strategic asset divestitures totaling U.S.$239.5 million.
On February 21, 2008, Petersen Energía purchased 58,603,606 of our ADSs, representing 14.9% of our capital stock, from
Repsol YPF for U.S.$2,235 million. In addition, Repsol YPF also granted certain affiliates of Petersen Energía options to purchase up
to an additional 10.1% of our outstanding capital stock within four years. On May 20, 2008, PEISA exercised an option to purchase
shares representing 0.1% of our capital stock. Additionally, PEISA launched a tender offer to purchase all of the shares of YPF that
were not already owned by them at a price of U.S.$49.45 per share or ADS. Repsol, pursuant to its first option agreement with
Petersen Energía, had stated that it would not tender YPF shares to PEISA. The offer period commenced on September 11, 2008 and
expired on October 20, 2008. A total of 1,816,879 shares (including Class D shares and ADSs), representing approximately 0.462%
of our total shares outstanding, have been tendered. Repsol YPF will retain a majority of our capital stock and, subject to the
shareholders’ agreement entered into between Repsol YPF and Petersen Energía, will be able to determine substantially all issues
decided by our shareholders. See “Item 7. Major Shareholders and Related Party Transactions.”
Business Segments
We organize our business along the following segments:
• Exploration and Production;
• Refining and Marketing; and
• Chemical.
The Exploration and Production segment’s sales to third parties in Argentina and abroad include sales of natural gas and
services fees (primarily for the transportation, storage and treatment of hydrocarbons and products). In addition, crude oil produced
by us in Argentina, or received from third parties in Argentina pursuant to service contracts, is transferred from Exploration and
Production to Refining and Marketing at transfer prices established by us, which generally seek to approximate Argentine market
prices.
The Refining and Marketing segment purchases crude oil from the Exploration and Production segment and from third parties.
Refining and Marketing activities include crude oil refining and transportation, as well as the marketing and transportation of refined
fuels, lubricants, LPG, compressed natural gas and other refined petroleum products in the domestic wholesale and retail markets and
the export markets.
The Chemical segment sells petrochemical products both in the domestic and export markets.
Additionally, we record certain assets, liabilities and costs under the Corporate and Other segment, including corporate
administration costs and assets and certain construction activities.
25
The following table sets forth net sales and operating income for each of our lines of business for the years ended December 31,
2008, 2007 and 2006:
Net Sales(1)
Exploration and Production(2)(3)
To unrelated parties
To related parties
Intersegment sales and fees(3)
Total Exploration and Production
Refining and Marketing(4)
To unrelated parties
To related parties
Intersegment sales and fees
Total Refining and Marketing
Chemical
To unrelated parties
Intersegment sales and fees
Total Chemical
Corporate and Other
To unrelated parties
Intersegment sales and fees
Total Corporate and Others
Less intersegment sales and fees
Total net sales(5)
Operating Income (Loss)
Exploration and Production
Refining and Marketing
Chemical
Corporate and Other
Consolidation adjustments
Total operating income
For the Year Ended December 31,
2008
2007
(in millions of pesos)
2006
3,288
724
4,016
939
3,076
774
12,663 14,056 14,033
17,883
17,618 18,068
25,364 20,375 17,651
1,624
1,526
28,017 24,278 20,801
1,508
1,145
2,045
1,858
2,829
1,094
3,923
2,563
892
3,455
2,401
647
3,048
109
440
549
219
461
680
109
282
391
(15,363) (17,246) (16,488)
34,875 29,104 25,635
3,315
3,089
1,178
(815)
(102)
6,665
5,679
1,234
500
(620)
(136)
6,657
6,564
258
572
(540)
29
6,883
(1) Net sales are net to us after payment of a fuel transfer tax, turnover tax and customs duties on exports. Royalties with respect to
our production are accounted for as a cost of production and are not deducted in determining net sales. See Note 2 (g) to the
Audited Consolidated Financial Statements.
Includes exploration and production operations in Argentina and the United States.
Intersegment sales of crude oil to Refining and Marketing are recorded at transfer prices established by us, which generally seek
to approximate Argentine market prices.
Includes LPG activities.
(4)
(5) Total net sales include export sales of Ps.7,228 million, Ps.8,400 million, and Ps.8,649 million for the years ended December 31,
(2)
(3)
2008, 2007 and 2006, respectively. The export sales were mainly to the United States, Brazil and Chile.
26
Exploration and Production
Principal properties
Argentine properties
Our production is concentrated in Argentina and our domestic operations are subject to numerous risks. See “Item 3. Key
Information—Risk Factors.”
Argentina is the fourth largest hydrocarbon producing nation in Latin America and the fourth largest in terms of reserves, after
Mexico, Venezuela and Brazil. Oil has historically accounted for the majority of the country’s hydrocarbon production and
consumption, although the relative share of natural gas has increased rapidly in recent years. A total of 23 sedimentary basins have
been identified in the country. Six of these are combined onshore/offshore and three are entirely offshore. Total onshore acreage is
composed of approximately 421 million acres, and total offshore acreage includes 176 million acres on the South Atlantic shelf within
the 200-meter depth line. A substantial portion of the 571 million acres in sedimentary basins has yet to be evaluated by exploratory
drilling. Commercial production is concentrated in five basins: Neuquina, Cuyana and Golfo San Jorge in central Argentina, Austral
in southern Argentina (which includes onshore and offshore fields), and the Noroeste basin in northern Argentina. The Neuquina and
Golfo San Jorge basins are the most significant basins for our activities in Argentina. As of December 31, 2008, we had an interest in
18.9 million net acres onshore and offshore (within the 200-meter depth line), of which 6.5 million net acres were under production
concessions and 12.4 million net acres were under exploration permits.
The following table shows our gross and net interests in productive oil and gas wells and exploration permits and production
concessions in Argentina by basin, as of December 31, 2008.
Onshore
Neuquina
Golfo San Jorge
Cuyana
Noroeste
Austral
Offshore
Wells
Acreage
Oil
Gas
Production
Concessions(1)
Exploration
Permits(1)
Gross(2) Net(2)
Gross(2) Net(2) Gross(2) Net(2) Gross(2) Net(2)
(thousands of acres)
3,472 2,941.4
6,924 6,097.3
809 732.9 — —
608 440.9 4,097 3,216 3,097 1,857
67 66.5 2,462 2,336 4,931 2,465
418 365 2,157 1,861
49 13.9 1,331 389 — —
599 180 — —
83 24.9
63 18,477 6,226
116
4.5 — —
7.9
51.3
27
171
9
(1) Production concessions are granted after commercially exploitable quantities of oil or gas are discovered, are based upon the
estimated field size as determined by geological and geophysical techniques and are subject to adjustment based upon new
information concerning the reservoir. Accordingly, not all acreage covered by production concessions is, in fact, producing.
Acreage held under exploration permits is unproved and non-producing.
“Gross” wells and acreage include all wells and acreage in which we have an interest. “Net” wells and acreage equals gross
wells and acreage after deducting third party interests.
(2)
27
The table below provides certain information with respect to our principal oil and gas fields in Argentina at December 31, 2008,
all of which are mature:
Production 2008
Reserves as of December 31, 2008
Areas(1)
Barrancas
Cerro Fortunoso
La Ventana
Vizcacheras
El Portón-Chihuido La Salina
Chihuido Sierra Negra
Paso Bardas Norte
Señal Picada
Aguada Toledo – Sierra Barrosa
Loma la Lata
El Trébol
Manantiales Behr
Seco León
Barranca Baya
Lomas del Cuy
Los Perales
Interest
Oil (mbbl) Gas (mmcf) Oil (mbbl) Gas (mmcf) BOE (mboe) Basin/Location
100%
100%
(2)
100%
100%
100%
100%
100%
100%
100%
2,146
1,849
1,848
3,335
12,708
9,579
360
2,039
762
82
—
247
356
59,289
2,972
15,134
149
44,287
16,196 245,611
15,035
9,337
12,570
22,065
54,270
40,329
870
16,309
7,083
456
0
1,807
2,319
326,818
11,458
26,333
1,239
139,400
80,589 1,543,979
15,116 Cuyana
12,892 Cuyana
22,478 Cuyana
Development
stage of the
area
Mature Field
9,337 Neuquina Mature Field
Mature Field
Mature Field
112,475 Neuquina Mature Field
42,370 Neuquina Mature Field
5,560 Neuquina Mature Field
16,529 Neuquina Mature Field
31,909 Neuquina Mature Field
355,563 Neuquina Mature Field
100%
2,016
307
8,838
964
9,010
100%
5,888
4,323
25,196
10,285
27,027
100%
2,638
2,138
18,592
11,672
20,670
100%
3,868
626
24,211
5,047
25,109
100%
2,890
1,672
14,717
7,120
15,985
100%
6,705
18,434
34,223
65,191
45,834
Golfo San
Jorge
Golfo San
Jorge
Golfo San
Jorge
Golfo San
Jorge
Golfo San
Jorge
Golfo San
Jorge
Mature Field
Mature Field
Mature Field
Mature Field
Mature Field
Mature Field
(1) Exploitation areas.
(2)
69.6% for crude oil and 60% for natural gas liquids and natural gas.
Approximately 87% of our proved crude oil reserves in Argentina are concentrated in the Neuquina (57%) and Golfo San Jorge
(30%) basins, and 96% of our proved gas reserves in Argentina are concentrated in the Neuquina (77%), Noroeste (12%) and Austral
(7%) basins.
As of December 31, 2008, YPF held 113 production concessions and exploration permits in Argentina. YPF directly operates 77
of them, including 62 production concessions and 15 exploration permits.
As of December 31, 2008, YPF held 21 exploration permits in Argentina, 15 of which are onshore exploration permits and 6 of
which are offshore exploration permits. YPF has 100% ownership of 3 onshore permits, and its participating interests in the rest vary
between 50% and 90%. YPF’s interests in the offshore permits vary between 30% and 67%.
As of December 31, 2008, YPF had 92 production concessions. YPF has a 100% ownership interest in 55 production
concessions, and its participating interests in the remaining 37 production concessions vary between 12.2% and 98%.
28
Joint ventures and contractual arrangements in Argentina
We participate in 13 exploration and 25 production joint ventures and contractual arrangements (18 of them non-operated) in
Argentina. Our interests in these joint ventures and contractual arrangements range from 12.2% to 98%, and our obligations to share
exploration and development costs vary under these agreements. In addition, under the terms of some of these joint ventures, we have
agreed to indemnify our joint venture partners in the event that our rights with respect to such areas are restricted or affected in such a
way that the purpose of the joint venture cannot be achieved. For a list of the main exploration and production joint ventures in which
we participate, see Note 6 to the Audited Consolidated Financial Statements. We are also a party to a number of other contractual
arrangements that arose through the renegotiation of service contracts and risk contracts and their conversion into production
concessions and exploration permits, respectively.
International properties
Our operations in the United States, through YPF Holdings, are subject to certain environmental claims. See “—Environmental
Matters—YPF Holdings—Operations in the United States.”
As of December 31, 2008, we had mineral rights in 58 blocks in the United States, comprised of 53 exploratory blocks, with a
net surface area of 873 square kilometers and five development blocks, with a net surface area of 17 square kilometers.
The Neptune Field is located approximately 120 miles from the Louisiana coast within the deepwater region of the Central Gulf
of Mexico. The unitized field area comprises Atwater Valley Blocks 573, 574, 575, 617 and 618. Our indirect subsidiary, Maxus
(U.S.) Exploration Company, has a 15% working interest in the field. The other joint venture participants are BHP Billiton (35%),
Marathon Oil Corp. (30%) and Woodside Petroleum Ltd (20%). BHP Billiton is the operator of the Neptune Field and the associated
production facilities.
The Neptune reserves are being produced using a standalone, tension leg platform (TLP) located in Green Canyon Block 613
within 4,230 feet of water. Production began on July 8, 2008, with up to six sub-sea development wells which are tied back to the
TLP via a subsea gathering system.
Our U.S. subsidiaries’ net proved reserves in the United States as of December 31, 2008 were 1.7 mmboe.
Our U.S. subsidiaries’ net petroleum production in the United States for 2008 was 0.9 mmboe.
YPF Holdings has entered into various operating agreements and capital commitments associated with the exploration and
development of its oil and gas properties. Such contractual, financial and/or performance commitments are not material, except
perhaps those commitments related to the development of the Neptune Project located in the vicinity of the Atwater Valley Area,
Blocks 573, 574, 575, 617 and 618. Total commitments remaining as of December 31, 2008 for the Neptune Project are capital
expenditures of U.S.$31 million.
In addition, as of December 31, 2008, we held through YPF Guyana Ltd, a wholly owned subsidiary of YPF International, an
undivided participating interest of 30% in a Petroleum Prospecting License and Petroleum Agreement in Guyana, with a net surface
exploratory area of 3,330 square kilometers.
Exploration and Development
The following table shows the number of wells drilled by us in Argentina, or in which we participated, and the results obtained,
for the periods indicated.
29
Gross wells drilled(1)
Exploratory
Oil
Gas
Dry
Total
Development
Oil
Gas
Dry
Total
Net wells drilled(1)
Exploratory
Oil
Gas
Dry
Total
Development
Oil
Gas
Dry
Total
For the Year Ended December 31,
2007
2006
2008
3
1
13
17
529
61
12
602
2
1
7
10
396
43
12
451
4
2
17
23
622
75
14
711
4
1
12
17
488
51
13
552
1
1
17
19
703
42
12
757
1
1
13
15
580
15
10
605
(1)
“Gross” wells means all wells in which we have an interest. “Net” wells means gross wells after deducting interests of others.
The exploration activity in 2008 had two main focuses:
•
Offshore: perforation efforts in shallow water projects began in October 2008 using the Ocean Scepter Jack Up equipment.
The first exploratory well was drilled in the GSJM-1 block (which is operated by us, and in which we hold a 67% working
interest), without successful results. We also began the perforation of the well Helix x-1 in the E2 block (operated by
Sipetrol, and in which we hold a 33.3% working interest). In February 2009, the well drilled proved to be unproductive.
•
Onshore: drilling activity was focused on exploration of remaining areas within production blocks. In terms of seismic
acquisition, drilling activity was focused mainly in areas with low exploratory activity so far (Río Barrancas, La Banda and
GAN-GAN).
In 2008, a total of 1,357 km2 were subject to three-dimensional seismic testing in areas operated by YPF and 937 km2 in areas
operated by other companies (in which YPF participates). Also, 821 km2 were subject to two-dimensional seismic testing in areas
operated by other companies (in which YPF participates).
During 2008, 17 exploratory wells were drilled: 11 in the Neuquina basin, three in the Golfo San Jorge basin (one of them
offshore), two in the Austral basin and one in the Noroeste basin. Successful wells included Borde Sur del Payún e-4 (crude oil) and
Las Flechas x-2001 (crude oil) in the Austral basin.
With respect to production initiatives, we continued to improve our facilities and operating efficiencies at our key oil and gas
properties. For example, our U.S.$13 million 6th Stage Low Pressure Compression Project at the Loma La Lata natural gas field,
which began in February 2008, will become operational at the end of 2009. The aim of the project is to add compression and align
surface facilities to produce wet gas in the Loma La Lata Field in low pressure to mobilize the reserves.
30
Our key production asset capital improvement projects include a water injection project at Rincón de los Sauces in the Neuquina
basin, in the Chihuido de la Sierra Negra field, to mitigate the natural production decline attributable to the maturity of that field (this
project is expected to be completed in 2009 at a total cost of approximately U.S.$133 million). In the year ended December 31, 2008,
we also repaired 49 wells, drilled 8 new wells to replace collapsed wells and commenced the revamping of the water treatment plant
in Chihuido de la Sierra Negra (we invested U.S.$29.9 million in these projects in 2008).
A pilot project study evaluating the Water Alternating Gas (WAG) process in Chihuido de la Sierra Negra has already been
completed, concluding that an expansion was not economically feasible. Our current effort is focused on evaluating the Enhanced Oil
Recovery (EOR) opportunities by chemical methods (ASP – Alkaly Surfactant Polymer). Delineation and development work has
been focused on Manantiales Behr, Cañadón Yatel, Barranca Baya, Desfiladero Bayo, Señal Picada and Cañadón Amarillo. Tight gas
opportunities are being evaluated through a pilot project study in the Lajas formation, in the Cupen Mahuida area. Significant work is
being devoted to optimizing the secondary waterflooding recovery efforts in Chihuido de la Sierra Negra, Los Perales and Cañadón
Seco-Cañadón León.
In block CNQ7A, operated by Petro Andina Resources Inc., in which we have a 50% interest, the delineation of the El Corcobo
Norte, Jagüel Casa de Piedra, Cerro Huanunl Sur and Puesto Pinto Reservoirs has been completed and the development of those
reservoirs has begun. In the El Corcobo Norte and Jagüel Casa de Piedra water injection projects have been implemented with good
early results. A steam injection pilot project in Puesto Pinto has started.
The pipeline installation from Corcobo Norte to Puesto Hernandez, which will facilitate the transport of crude oil to our refinery
in Lujan de Cuyo, replacing the current truck transport to the Medanito Plant has been completed.
In October 2008, eight of our concessions in the province of Neuquén were extended for 10 years (up to the year 2027): Cerro
Bandera, Señal Cerro Bayo, Chihuido de la Sierra Negra, El Portón, Filo Morado, Octógono and Señal Picada-Punta Barda (100%
owned and operated by YPF), and Puesto Hernández (operated by another company, and in which YPF has a 61.55% working
interest).
Additionally, the concessions in blocks Aguada Pichana (in which we have a 27.27% working interest) and San Roque (34.11%
working interest) were extended for ten years, until 2027.
Our production declines in recent periods are attributable mainly to the continuing maturity of our fields, although work
stoppages and pipeline issues have on occasion contributed to production declines and capital project delays. During 2008, a series of
labor and community conflicts halted the production of approximately 4.88 million of barrels of oil equivalent. Due to some problems
that affected the main pipeline of Magallanes UTE (Unión Transitoria de Empresas) located in the Tierra del Fuego province, oil and
gas production was stopped between December 2006 and March 2008. In 2007, our joint venture partner replaced 18.6 km of pipeline
(17 km offshore and 1.6 km onshore), which connects the A3 platform and the battery. In addition, 3.7 km of pipeline that links the
AM2 and AM3 platforms was replaced. These works, long-delayed by unfavorable weather conditions, were completed in early 2008
and began operating in March 2008, restoring the production of the fields. YPF’s total contribution to this project was U.S.$20.9
million.
We are engaged in efforts, through the Plan de Desarrollo de Activos (asset development program or “PLADA”), to mitigate the
decline in our reserves and production by adding reserves through field delineation, and technological enhancements aimed at
improving our recovery factors through secondary recovery and geologically-optimized infill drilling. The PLADA initiative started
in late 2006, following a rigorous Project Management methodology. During 2008, a total of 44 conceptualization studies were
completed in 38 areas of reserves. The updated database of resources now contemplates 479 development opportunities, forming the
base for YPF’s strategic planning, to which a significant portion of YPF’s exploration and development budget is dedicated. As of
December 2008, our portfolio of projects included 1,400 projects to develop proven, probable and possible exploration and
development resources focused mainly on crude oil development and measuring tight gas in the Neuquén basin. Nevertheless, the
financial viability of these investments and reserve recovery efforts will generally depend on the prevailing economic and regulatory
conditions in Argentina, as well as the market prices of hydrocarbon products.
31
Reserves
YPF’s proved reserves include the estimated quantities of crude oil and natural gas which geological and engineering data
demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating
conditions, under concessions. In each concession, we or the consortium of which we are a part are entitled to the reserves that can be
produced over the license period, which may be the life of the field.
Net reserves are defined as that portion of the gross reserves attributable to the interest of YPF after deducting interests owned
by third parties. In determining net reserves, we exclude from our reported reserves royalties due to others, whether payable in cash or
in kind, where the royalty owner has a direct interest in the underlying production and the option and ability to make lifting and sales
arrangements independently.
In December 2008, the SEC approved revisions to its oil and gas reporting requirements which will be in effect as of January 1,
2010 and will apply to registration statements filed on or after such date and to annual reports for fiscal years ending on or after
December 31, 2009. See Item 5. “Critical Accounting Policies,” for additional information concerning these new oil and gas reporting
requirements. YPF is currently evaluating the impact that adopting these revisions will have on its financial statements.
The following table sets forth our estimated proved reserves and proved developed reserves of crude oil and natural gas at
December 31, 2006, 2007, and 2008, which are subject to the explanations and qualifications that follow.
Proved Developed and Undeveloped Reserves
Reserves as of December 31, 2006(3)
Revisions of previous estimates(4)
Extensions, discoveries and improved recovery
Production for the year(5)
Reserves as of December 31, 2007(3)
Revisions of previous estimates(4)
Extensions, discoveries and improved recovery
Production for the year(5)
Reserves as of December 31, 2008(3)
Proved Developed Reserves
As of December 31, 2006
As of December 31, 2007
As of December 31, 2008
Crude Oil(1)
(mmbbl)
Gas
(bcf)
Combined(2)
(mmboe)
680
46
17
(120)
623
31
41
(115)
580
4,015
319
9
(635)
3,708
(134)
132
(607)
3,099
521
460
451
2,571
2,441
2,219
1,396
100
19
(232)
1,283
8
65
(223)
1,133
979
894
847
Includes crude oil, condensate and natural gas liquids.
(1)
(2) Volumes of gas in the table above and elsewhere in this annual report have been converted to boe at 5.615 mcf per barrel.
(3) Our proved reserves of crude oil, condensate and natural gas liquids as of December 31, 2006, 2007 and 2008, include
approximately 81.2 mmbbl, 74.5 mmbbl and 69.7 mmbbl, respectively, of crude oil, condensate and natural gas liquids in
respect of royalties, whether payable in cash or in kind, where the royalty owner does not have a direct interest in the underlying
production and the option and ability to make lifting and sales arrangements independently. Our proved reserves of gas as of
December 31, 2006, 2007 and 2008, include approximately 458.9 bcf, 423.1 bcf and 377.4 bcf, respectively, of gas in respect of
such royalties. Our combined proved reserves as of December 31, 2006, 2007 and 2008, include approximately 162.9 mmboe,
149.8 mmboe and 136.9 mmboe, respectively, of crude oil, condensate, natural gas liquids and gas in respect of such royalties.
32
(4) Revisions in estimates of reserves are performed at least once a year. Revision of oil and gas proved reserves are considered
prospectively in the calculation of depreciation.
(5) Crude oil, condensate and natural gas liquids production for the years 2007 and 2008 includes approximately 14.5 mmbbl and
13.7 mmbbl, respectively, of crude oil condensate and natural gas liquids in respect of royalties, whether payable in cash or in
kind, where the royalty owner does not have a direct interest in the underlying production and the option and ability to make
lifting and sales arrangements independently. Gas production for the years 2007 and 2008 includes approximately 71.9 bcf and
68.7 bcf, respectively, of gas in respect of such royalties. Combined production for the years 2007 and 2008 includes
approximately 27.3 mmboe and 26.0 mmboe, respectively, of oil and gas in respect of such royalties.
Net crude oil, condensate, natural gas liquids and gas proved reserves as of December 31, 2008 were 1,133 mmboe (51% oil,
and 49% gas), a 12% decrease compared to net crude oil, condensate, natural gas liquids and gas proved reserves of 1,283 mmboe
reported as of December 31, 2007. Excluding production of the year, we added 73 mmboe in proved reserves during 2008.
Changes in our estimated net proved reserves
— Changes in our estimated net proved reserves during 2008
1.
Revisions of previous estimates
During 2008, our proved reserves were revised upwards by 8 mmboe (an increase of 31 mmbbl of oil and decrease of 134 bcf of
gas).
The principal changes to proved reserves have been due to:
• Law 2,615, which was passed in the province of Neuquén on October 9, 2008, resulted in eight exploitation concession
contracts originally awarded to YPF being extended for ten more years (until November 2027). Extended concessions include
reserve areas: Chihuido Sierra Negra, Desfiladero Bayo, Puesto Molina, Señal Picada, Piedras Negras-Señal Lomita, El
Portón, Puesto Hernández, Filo Morado, Cerro Bandera, Octógono Fiscal and Señal Cerro Bayo. Due to these concession
extensions and to reflect year-end economic conditions, 18 mmboe were added as net proved reserves.
• Better than expected production in some fields has resulted in an increase in proved reserves of 91 mmboe, mainly in the
areas Aguada Pichana, Ramos, Los Perales, Lomas del Cuy, Barranca Baya, Desfiladero Bayo and Cerro Fortunoso; while the
production response below forecasts for other fields (mainly in Magallanes, Chihuido de la Sierra Negra, Aguaragüe and
Puesto Hernández) have resulted in a decrease of 28 mmboe in our proved reserves in Argentina, including dissolved gas
adjustments.
• The result of our development wells was generally below expectations, which contemplated the development of around 60%
of the undeveloped proved reserves concerned, and resulted in a downward revision of 34 mmboe in proved reserves. The
main field affected was Sierras Blancas in Loma de la Lata, with a reduction of 12 mmboe. In addition, poor results in
marginal drilling in Los Perales and Manantiales Behr have resulted in a reduction of 3 mmboe in undeveloped proved
reserves.
• There was a reduction in proved reserves of 19 mmboe due to the cancellation, postponement or modification of development
projects, mainly in the San Roque and Aguaragüe fields.
• The completion of new studies of certain areas has resulted in an increase in proved reserves of 15 mmboe, with the most
significant contributions attributable to the free gas study in Los Perales and the oil studies in CNQ7A and Barranca Baya.
• Due to changes in economic conditions, especially toward the end of the year (falling prices and increasing costs), downward
adjustments of 18 mmboe in proved reserves were made in some marginal exploitation areas, including El Manzano, El
Medanito, Puesto Molina, Río Mayo, Sarmiento and CAM 2A Sur. In addition, development projects in undeveloped proved
reserves which were not economically viable had to be cancelled (particularly in Cañadón Amarillo, Rincón Blanco and Las
Manadas), resulting in a reduction of 5 mmboe in proved undeveloped reserves.
33
• In the Neptune field in the United States, net reserves have suffered a drop of 4 mmboe due to lower than expected production
and the prevailing year-end economic conditions.
2.
Improved recovery
In the CNQ7A area, definition for a secondary recovery project in the El Corcovo Norte reservoir as part of the overall
development plan established for the field resulted in the addition of 5 mmbbl of oil to proved reserves based on the successful results
of a pilot injection project.
In the rest of Neuquina Basin, proved reserves increased by 9 mmbbl due to the new production and injection wells drilled
within the improved recovery projects, mainly in the fields Chihuido de la Sierra Negra, Desfiladero Bayo and Chihuido de la Salina.
In the Golfo de San Jorge basin, 7 mmbbl of proved oil reserves have been added on account of the completion of
technical/economic feasibility studies on project extensions scheduled to be implemented between 2009 and 2011.
3.
Extensions and discoveries
Exploratory activities in the Tierra del Fuego UTE were successful with the completion of two exploratory wells: Las Flechas
X-2001, located in a low block of the San Sebastián field and Arroyo Gamma Sudeste x-1001 in Los Chorrillos, adding 0.6 mmboe.
Wells drilled in unproved reserves areas in the UNAO (Unidad Argentina Oeste) added 6 mmbbl to proved oil reserves and 30
bcf to gas proved reserves. The activity carried out in Aguada Toledo-Sierra Barrosa accounted for 21 bcf of such total, with the
“Lajas Project” contributing 10 bcf of tight gas reserves and 3 bcf of undeveloped proved gas reserves.
In the Golfo San Jorge basin, delineation and offset wells in the vicinity of proved areas (principally in Manantiales Behr,
Cañadon Yatel and Barranca Baya) added 7 mmbbl of proved oil reserves with 3 mmbbl in proved undeveloped reserves.
In the Aguaragüe field, 14 net bcf of free gas proved reserves were added due to the start of production in the sidetracks of the
wells Ag.xp-1 and Ag.ap-1002.
In the CNQ7A field, 4 net mmbbl of proved oil reserves were added due primarily to extensions generated by drilling activities
carried out in the four oil fields that are part of the CNQ7A field.
Internal controls on reserves and reserves audits
All of our oil and gas reserves held in consolidated companies have been estimated by our petroleum engineers. In order to meet
the high standard of “reasonable certainty,” reserves estimates are stated taking into consideration additional guidance as to reservoir
economic productivity requirements, acceptable proved area extensions, recovery factors and improved recovery methods,
marketability under existing economic and operating conditions and project maturity.
Where applicable, the volumetric method is used to determine the original quantities of petroleum in place. Estimates are made
by using various types of logs, core analysis and other available data. Formation tops, gross thickness, and representative values for
net pay thickness, porosity and interstitial fluid saturations are used to prepare structural maps to delineate each reservoir and
isopachous maps to determine reservoir volume. Where adequate data is available and where circumstances are justified, material-
balance and other engineering methods are used to estimate the original hydrocarbon in place.
34
Estimates of ultimate recovery are obtained by applying recovery factors to the original quantities of petroleum in place. These
factors are based on the type of energy inherent in the reservoir, analysis of the fluid and rock properties, the structural position of the
reservoir and its production history. In some instances, comparisons are made with similar production reservoirs in the areas where
more complete data is available.
Where adequate data is available and where circumstances are justified, material-balance and other engineering methods are
used to estimate recovery factors. In these instances, reservoir performance parameters such as cumulative production, production
rate, reservoir pressure, gas oil ratio behavior and water production are considered in estimating recovery factors used in determining
gross ultimate recovery.
In certain cases where the above methods could not be used, reserves are estimated by analogy to similar reservoirs where more
complete data are available.
Proved reserves are limited to:
a.
b.
the portion of the reservoir delineated by drilling and defined by gas-oil and/or oil-water contacts, if any, and in the
absence of information on fluid contacts, the lowest known structural occurrence of hydrocarbons controls the lower
proved limit of the reservoir; and
the economic limit, the expiration data of a production license or, in the case of gas reserves, the expiration of applicable
gas sales contracts.
All proved reserves estimates are also evaluated and tested based on all technical constraints and restrictions, including, but not
limited to:
• For depletion-type reservoirs or other reservoirs where performance has disclosed a reliable decline in production-rate trends
or other diagnostic characteristics, reserves are estimated by the application of appropriate decline curves or other
performance relationships. In analyzing decline curves, reserves are estimated to the calculated economic limits based on
current economic conditions.
• Reserves on undrilled acreage are limited to those drilling units offsetting productive units that were reasonably certain of
production when drilled. Proved reserves for other undrilled units are claimed only where it could be demonstrated with
certainty that there was continuity of production from the existing productive formation.
• The reserves estimated are typically expressed as gross and net reserves. Gross reserves are defined as the total estimated
petroleum to be produced from the properties at the year end. Net reserves are defined as that portion of the gross reserves
attributable to our interest after deducting interests owned by third parties. In particular, we exclude royalties due to others,
whether payable in cash or in kind, where the royalty owner has a direct interest in the underlying production and the option
and ability to make lifting and sales arrangements independently.
• Historical cost of operations and development of the properties evaluated, as well as product prices, including agreements
affecting revenues and future operations, form an integral part of the estimates and form the basis for the economic evaluation
for the engineer to assist in its estimates.
To control the quality of reserves booking, a process has been established that is integrated into the internal control system of
YPF, and aligned with the control of quality of reserves booking of Repsol YPF. This process to manage reserves booking is centrally
controlled and has the following components:
a) The Quality Reserve Coordinator (QRC), which is a professional assigned at each Exploration and Production Business
Unit of YPF to ensure that there are effective controls in the proved reserves estimation and approval process of the estimates of
YPF and the timely reporting of the related financial impact of proved reserves changes. These QRCs are responsible for
reviewing proved reserves estimates.
35
b) A formal review through technical review committees to ensure that both technical and commercial criteria are met prior
to the commitment of capital to projects.
c) The Internal Audit, which examines the effectiveness of YPF’s financial controls, designed to assure the reliability of
reporting and safeguarding of all the assets and examining YPF’s compliance with the law, regulations and internal standards.
d) A quarterly internal review from the Reserves Control Direction of YPF which is separate and independent from the
operating business units, over the movement of proved reserves submitted by the Business Unit and associated with properties
where technical, operational or commercial issues have arisen.
e) Booking proved reserves in any given property at any given time requires central authorization. Furthermore, the
volumes booked are submitted to a third party reserves engineer for a reserves audit, reserves estimate or reserves review on a
periodic basis. The initial selection of the properties for a reserves audit, reserves estimate or reserves review is performed by
the Reserves Control Direction with the approval of YPF’s Audit and Control Committee. The properties selected for a reserves
audit, reserves estimate or reserves review in any given year are selected on the following basis:
i.
ii.
all properties on a three year cycle, and
recently acquired properties not submitted to a reserves audit, reserves estimate or reserves review in the previous
cycle and properties with respect to which there is new information which could materially affect prior reserves
estimates.
The properties to be submitted to a reserves audit, reserves estimate or reserves review in any given year may be modified for
various reasons, such as the presence of new technical or production information or legal, tax or regulatory changes.
For those areas submitted to third party reserves engineering, YPF’s proved reserves figures have to be within the lesser of 7%
or 10 million boe of the third party reserves engineer’s figures for YPF to declare that the volumes have been ratified by a third party
reserves engineer. In the event that the difference is greater than the tolerance, YPF will reestimate its proved reserves to achieve this
tolerance level or should disclose the lowest figures.
In 2008, DeGolyer and MacNaughton (“D&M”) audited certain areas operated by us in the Golfo San Jorge basin, and
Netherland, Sewell & Associates, Inc. (“NSAI”) audited certain areas operated by us in the Cuyana and Neuquina basins. All these
third party audits were performed as of September 30, 2008, and cumulatively covered 12.5% of our proved reserves in Argentina as
of that date.
Our total estimated proved reserves as of December 31, 2008 were 1,133 mmboe. As of September 30, 2008, third party
reserves audits were performed on fields which, in our estimates as of such date, contained proved reserves of 147 mmboe in the
aggregate.
We are required, in accordance with Resolution S.E. No. 324/06 of the Argentine Secretariat of Energy, to file annually and by
March 31 of every year details of our estimates of reserves of oil and gas and resources with the Argentine Secretariat of Energy, as
defined in that resolution and certified by an external auditor. The aforementioned certification and external audit only have the
meaning established by Resolution S.E. No. 324/06, and are not to be interpreted as a certification or external audit of oil and gas
reserves under SEC rules. We last filed such a report for the year ended December 31, 2008 and the estimates of our proved oil and
gas reserves filed with the Argentine Secretariat of Energy are materially higher than the estimates of our proved oil and gas reserves
contained in this annual report mainly because: i) information filed with the Argentine Secretariat of Energy includes all properties of
which we are operators, irrespective of the level of our ownership interests in such properties; ii) information filed with the Argentine
Secretariat of Energy includes other categories of reserves and resources different to proved reserves that are not included in this
annual report, which contains estimates of proved reserves consistent with the SEC’s guidance; and iii) the definition of proved
reserves under Resolution S.E. No. 324/06 is different from the definition of “proved oil and gas reserves” established in Rule 4-10(a)
(2) of Regulation S-X. Accordingly, all proved oil and gas reserve estimates included in this annual report reflect only proved oil and
gas reserves consistent with the rules and disclosure requirements of the SEC.
36
Production
The following table shows our historical average net daily oil (including crude oil, condensate and natural gas liquids) and gas
production in Argentina by basin and average sales prices for the years indicated, as well as total average daily oil and gas production.
Oil production(1)(2)
Neuquina
Golfo San Jorge
Cuyana
Noroeste
Austral
Total oil production
Gas production(1)
Neuquina
Golfo San Jorge
Cuyana
Noroeste
Austral
Total gas production
Average sales price
Oil (U.S.$ per barrel)(3)
Gas (U.S.$ per mcf)
For the Year Ended December 31
2008
2007
(mbbl/d)
2006
187
89
25
5
5
311
192
101
27
5
3
329
201
105
28
7
5
346
(mmcf/d)
1,302
104
3
167
78
1,655
1,381
126
3
167
60
1,737
1,392
112
3
172
100
1,779
42.32
2.32
44.60
1.67
42.65
1.60
(1) Oil and gas production amounts are stated before making any deductions with respect to royalties. Royalties are accounted for as
a cost of production and are not deducted in determining net sales (see Note 2 (g) to the Audited Consolidated Financial
Statements).
Includes crude oil, condensate and natural gas liquids.
(2)
(3) The average sales price per barrel of oil represents the transfer price established by us, which approximates the Argentine market
price.
In 2008, crude oil and natural gas production, on a boe basis, decreased by 4.8% compared to 2007. As compared to 2007, crude
oil (including condensate and natural gas liquids) production (including production from our foreign operations) decreased by 4.9% in
2008. With respect to natural gas, production (including production from our foreign operations) decreased by 4.6% in 2008
compared to 2007.
The composition of the crude oil produced by us in Argentina varies by geographic area. Almost all crude oil produced by us in
Argentina has very low or no sulfur content. We sell substantially all the crude oil we produce in Argentina to our Refining and
Marketing business segment. Most of the natural gas produced by us is of pipeline quality. All of our gas fields produce commercial
quantities of condensate, and substantially all of our oil fields produce associated gas.
Our lifting cost per boe amounted to Ps.20.8, Ps.15.7 and Ps.11.8 in 2008, 2007 and 2006, respectively. We calculate our lifting
costs based on the figures presented in the results of operations of oil and gas producing
37
activities under “Supplemental information on oil and gas producing activities (unaudited)” in the Audited Consolidated Financial
Statements. We calculate lifting cost as the quotient of production costs (excluding royalties, local taxes, and other costs) divided by
annual production (in terms of boe). In 2008, production costs amounted to Ps.8,394 million, royalties, local taxes, and other costs
amounted to Ps.3,767 million, and our annual production was 223 mmboe.
Natural gas transportation and storage capacity
Decree No. 180/2004 created two trust funds to help finance an expansion of the North Pipeline operated by TGN
(Transportadora Gas del Norte), whose capacity increased by 1.8 mmcm/d (63.6 mmcf/d) in 2005, and an expansion of the San
Martín Pipeline operated by TGS (Transportadora Gas del Sur), whose capacity increased by 2.9 mmcm/d (102.4 mmcf/d) in 2005.
Both expansions are currently operating. In 2008, there has been an additional expansion of approximately 67 mmcf/d in the pipelines
operated by TGS, and additional works are expected to be completed in 2009.
Natural gas is delivered by us through our own gathering systems to the trunk lines from each of the major basins. The firm
capacity of the natural gas transportation pipelines in Argentina is mainly used by the distribution companies under long-term firm
transportation contracts. All of the available capacity of the transportation pipelines is taken by firm customers mainly during the
winter, leaving capacity available for interruptible customers in varying degrees throughout the rest of the year.
We have utilized natural underground structures located near consuming markets as underground natural gas storage facilities,
with the objective of storing natural gas during periods of low demand and selling the natural gas stored during periods of high
demand. The gas storage facility, “Diadema,” is located in the Patagonia region, near Comodoro Rivadavia City. The injection of
natural gas into the reservoir started in January 2001.
Natural gas supply contracts and exports
As a consequence of the energy crisis in Argentina, since 2002 the Argentine government has established resolutions and
regulations which regulate both the export and internal market. These regulations have affected Argentine producers’ ability to export
natural gas. We have appealed the validity of the aforementioned regulations and resolutions and have invoked the occurrence of a
force majeure event under certain export natural gas purchase and sales agreements, although certain counterparties to such
agreements have rejected our position. See “Item 4. Information on the Company—Regulatory Framework and Relationship with the
Argentine Government—Market Regulation” and “Item 8. Financial Information—Legal Proceedings.”
We have entered into a number of natural gas purchase and sale agreements pursuant to which we are frequently required to
“deliver or pay” or under which our customers are required to “take or pay.” Such contracts have been entered into only with
domestic industrial users and power plants and in the export markets, while the domestic residential market is served through the
injection of natural gas into the Argentine pipeline system, often pursuant to regulatory requirements (and not on a contractual basis
with customers).
Since 2004 we have had trouble meeting all of our principal contractual supply obligations as a result of export restrictions
imposed by the government. See “Item 8. Financial Information—Legal Proceedings—Argentina.” The principal contracts among
these are described briefly below.
We are currently committed to supply a daily quantity of 104 mmcf/d to the Methanex plant in Cabo Negro, Punta Arenas, in
Chile (under three 20-year agreements entered into in 1997, 1999 and 2005). In 2010, we are scheduled to begin to supply an
additional 21 mmcf/d of natural gas to the plant.
We have a 12-year contract (entered into in 1999 and subsequently modified) to supply 28 mmcf/d of natural gas to the
Termoandes power plant located in Salta, Argentina. The natural gas comes from the Noroeste basin. This power plant provides
power to a high voltage line running from Salta to Región II in Chile.
38
We currently have several supply contracts with Chilean electricity producers (through the Gas Andes pipeline linking
Mendoza, Argentina, to Santiago, Chile, which has a transportation capacity of 353 mmcf/d (*-designed capacity with compression
plants)), including a 15-year contract (signed in 1998) to provide 63 mmcf/d to the San Isidro Electricity Company (Endesa) in
Quillota, Chile (all of this plant’s natural gas needs), a 15-year contract (signed in 1999) to supply 20% of the natural gas
requirements of the electricity company, Colbun (approximately 11 mmcf/d), and a 15-year contract (signed in 2003) to supply 35
mmcf/d to Gas Valpo. We also have an 18-year contract (entered into in 1999) to deliver 99 mmcf/d of natural gas to a Chilean
distribution company that distributes natural gas to residential and industrial clients through a natural gas pipeline (with a capacity of
318 mmcf/d (*)) connecting Loma La Lata (Neuquén, Argentina) with Chile. Finally, in Chile we also have natural gas supply
contracts with certain thermal power plants in northern Chile utilizing two natural gas pipelines (with a carrying capacity of 300
mmcf/d each (*)) connecting Salta, Argentina, to Northern Chile (Región II).
In Brazil, we had entered into a 20-year supply contract (in 2000) to provide 99 mmcf/d of natural gas to AES’s thermal power
plant through pipeline linking Aldea Brasilera, Argentina, to Uruguayana, Brazil (with a capacity of 560 mmcf/d (*)). We also have a
contract to supply Petrobras with natural gas for its planned natural gas pipeline from Uruguayana to Porto Alegre, although the
project has been delayed as a result of the excess of energy currently offered in the Southern and South-eastern parts of Brazil. See
“Item 8. Financial Information—Legal Proceedings—Argentina—Alleged defaults under natural gas contracts—Innergy, et al” and
“—Arbitration with AES Uruguaiana Empreendimentos S.A. (AESU), Companhia de Gás do Estado do Río Grande do Sul (Sulgás)
and Transportadora de Gas del Mercosur S.A. (TGM).”
Because of certain Argentine government’s restrictions (See “—The Argentine natural gas market,” below), we could not meet
our export commitments and were forced to declare force majeure under our natural gas export sales agreements. As a result of
actions taken by the Argentine authorities, through measures described in greater detail under “Item 4. Information on the
Company—Regulatory Framework and Relationship with Argentine Government,” we have been forced to reduce the export volumes
authorized to be provided under the relevant agreements and permits as shown in the chart below:
Year
2006
2007
2008
Maximum Contracted
Volumes (MCV)(1)
(mmcm)
6,015.1
5,979.1
5,995.5
Restricted Volumes(2)
(mmcm)
1,240
3,682
3,473
Percentage of
Restricted Volumes
vs MCV
20.6%
61.6%
57.9%
(1) Reflects the maximum quantities committed under our natural gas export contracts. Includes all of our natural gas export
contracts pursuant to which natural gas is exported to Chile and Brazil.
(2) Reflects the volume of contracted quantities of natural gas for export that were not delivered.
The Argentine natural gas market
We estimate (based on preliminary reports of amounts delivered by transport companies) that natural gas consumption in
Argentina totaled approximately 1,563 bcf in 2008. We estimate that the number of users connected to distribution systems
throughout Argentina amounted to approximately 7.2 million as of December 31, 2008. The domestic natural gas market has grown
significantly over recent years, driven by the forces of economic growth and domestic price and export constraints, although we do
not believe that the natural gas market will continue to grow at the same rate as it has recently done so.
In 2008, we sold approximately 31% of our natural gas to local residential distribution companies, approximately 65% to
industrial users (including Compañía Mega S.A. (Mega) and Profertil S.A. (Profertil)) and power plants, and approximately 3% in
exports to foreign markets (principally Chile). Approximately 81% of our natural gas sales were produced in the Neuquina basin.
During 2008, our domestic natural gas sales volumes were 5% less than those in 2007, due to a lower consumption of residential
markets because of milder winter temperatures.
39
Demand for natural gas has been driven by domestic constraints on natural gas prices that commenced in 2002 following the
currency devaluation, which created very low prices for natural gas as compared to alternative fuels. Consequently, demand for
natural gas has soared.
In January 2004, Decree No. 181/04 authorized the Argentine Secretariat of Energy to negotiate with producers a pricing
mechanism for natural gas supplied to industries and electric generation companies. Domestic market prices at the retail market level
were excluded from these negotiations. Subsequently, the Argentine government has taken a number of additional steps aimed at
satisfying domestic natural gas demand, including pricing regulations, export controls and higher export taxes and domestic market
injection requirements. See “Item 4. Information on the Company—Regulatory Framework and Relationship with Argentine
Government.”
During the last several years the Argentine authorities have adopted a number of measures restricting exports of natural gas from
Argentina, including issuing injection orders pursuant to Resolutions No. 659 and No. 752 (which require exporters to increase supply
of natural gas into the Argentine domestic market), issuing express instructions to suspend exports, suspending processing of natural
gas and adopting restrictions on natural gas exports imposed through transportation companies and/or emergency committees created
to address crisis situations.
These restrictions were imposed on all Argentine exporting producers, affecting natural gas exports from every producing basin.
Exporting producers, such as us, have no choice but to comply with the Argentine government’s directions to curtail exports in order
to supply gas to the domestic market, whether such directions are issued pursuant to resolutions or otherwise. The above-mentioned
Resolutions provide penalties for non-compliance. Rule SSC No. 27/2004 issued by the Undersecretary of Fuels (“Rule 27”), for
example, punishes the violation of any order issued thereunder by suspending or revoking the production concession. Resolutions
No. 659 and No. 752 also provide that producers not complying with injection orders will have their concessions and export permits
suspended or revoked and state that pipeline operators are prohibited from shipping any natural gas injected by a non-complying
exporting producer.
The Argentine government began suspending natural gas export permits pursuant to Rule 27 in April 2004, and in June 2004 the
Argentine government began issuing injection orders to us under Resolution No. 659. Thereafter, the volumes of natural gas required
to be provided to the domestic market under the different mechanisms described above have continued to increase substantially. The
regulations pursuant to which the Argentine government has restricted natural gas export volumes in most cases do not have an
express expiration date. Likewise, we have not received any documentation indicating that the Argentine government will suspend or
withdraw these actions. Accordingly, we are unable to predict how long these measures will be in place, or whether such measures or
any further measures adopted will affect additional volumes of natural gas.
In June 2007, we were compelled pursuant to Resolution No. 599/07 of the Argentine Secretariat of Energy to enter into an
agreement with the Argentine government regarding the supply of natural gas to the domestic market during the period 2007 through
2011 (the “Agreement 2007-2011”). The purpose of the Agreement 2007-2011 is to guarantee the supply of the domestic market
demand at the levels registered in 2006, plus the growth in demand by residential and small commercial customers (the “agreed
demand levels”). Producers that have signed the Agreement 2007-2011, such as us, would commit to supply a part of the agreed
demand levels according to certain shares determined for each producer based upon such producers’ shares of total Argentine
production for the 36 months prior to April 2004. For this period, our share of production was approximately 37%, or 37 mmcm/d.
The Agreement 2007-2011 also provides guidelines for the terms of supply agreements for each market segment, and certain pricing
limitations for each market segment.
In September 2008, the Argentine Secretariat of Energy, through Resolution No. 1070, increased the price of natural gas for
certain regulated segments, including the residential, NGV (Natural Gas Vehicle) and power plant segments, with part or all of the
proceeds of the increases to be paid into a fiduciary fund to subsidize the price of LPG consumed by lower income customers.
Additionally, Resolution No. 1417 (December 2008) increased the price of natural gas for the residential segment with highest energy
consumption rates, as defined under such Resolution. Pursuant to the Resolution, such increase in prices is effective with respect to
consumption since November 2008.
40
Argentine natural gas supplies
Most of our proved natural gas reserves in Argentina are situated in the Neuquina basin (approximately 77% as of December 31,
2008), which is strategically located in relation to the principal market of Buenos Aires and is supported by sufficient pipeline
capacity during most of the year. Accordingly, we believe that natural gas from this region has a competitive advantage compared to
natural gas from other regions. The capacity of the natural gas pipelines in Argentina has proven in the past to be inadequate at times
to meet peak-day winter demand, and there is no meaningful storage capacity in Argentina. Since 1993, local pipeline companies
have added capacity allowing for approximately an additional 66 mmcm/d of natural gas to be provided, improving their ability to
satisfy peak-day winter demand but no assurances can be given that this additional capacity will be sufficient to meet demand.
In order to solve the gap between supply and demand, especially with respect to peak-day winter demand, the Argentine
government has entered into gas import agreements. The Framework Agreement between the Bolivian and the Argentine
governments (executed on June 29, 2006) provides that the natural gas imports from Bolivia to Argentina are managed by ENARSA.
The Framework Agreement establishes a 20-year delivery plan of between 7.7 and 27.7 mmcm/d of Bolivian gas to Argentina. The
delivery of volumes exceeding 7.7 mmcm/d is subject to the construction of the North East Pipeline, with an expected capacity of 20
mmcm/d. The agreed upon price was approximately U.S.$10.35/mmBtu in December 2008 (approximately U.S.$7.84/mmBtu in
March 2009), and is periodically adjusted according to a formula based upon a basket of fuels. The increased cost of the natural gas
purchased pursuant to the Framework Agreement is currently absorbed by ENARSA and financed by the Argentine government with
the collection of export duties on natural gas. In the context of the Framework Agreement, on April 25, 2007, we accepted the offer
made by ENARSA for the sale of natural gas obtained by ENARSA from the Republic of Bolivia through December 31, 2009. The
principal terms and conditions of our agreement with ENARSA are as follows: (i) maximum contracted quantity of up to 4.4
mmcm/d; (ii) annual take-or-pay quantity equal to 80% of the maximum contracted quantity; (iii) price of U.S.$1.6/mmBtu for the
natural gas (subject to monthly adjustments from January 2009), plus U.S.$0.237/mmBtu for the liquid components contained therein;
(iv) price adjustments may be made at any time in relation to changes in the Argentine government’s compensation to ENARSA; and
(v) limited allowed curtailments or interruptions of supply due to operative conditions and scheduled maintenance. This agreement is
effective through December 31, 2009. See “Item 3. Key Information—Risk Factors—Risks Relating to the Argentine Oil and Gas
Business and Our Business—The cessation of natural gas deliveries from Bolivia may have a material adverse effect on our long-term
natural gas supply commitments.”
In 2008, YPF, jointly with ENARSA, contracted a regasification ship to operate in the Bahía Blanca Port using a ship-to-ship
process for the conversion of liquefied natural gas (LNG) into its gaseous form. Once converted, the natural gas is injected into a
newly built pipeline linking to the national network. As a result, an additional supply of up to 8 mmcm/d of natural gas to the
Argentine market was provided during the peak demand period.
Other investments and activities
Natural gas liquids
We participated in the development of Mega to increase its ability to separate liquid petroleum products from natural gas. Mega
allowed YPF, through the fractionation of gas liquids, to increase production at the Loma La Lata gas field by approximately 5.0
mmcm/d in 2001.
We own 38% of Mega, while Petrobras and Dow Chemical have stakes of 34% and 28%, respectively.
Mega operates:
• A separation plant, which is located in Loma La Lata, in the province of Neuquén.
• A natural gas liquids fractionation plant, which produces ethane, propane, butane and natural gasoline. This plant is located in
the city of Bahía Blanca in the province of Buenos Aires.
• A pipeline that links both plants and that transports natural gas liquids.
41
• Transportation, storage and port facilities in the proximity of the fractionation plant.
Mega required a total investment of approximately U.S.$715 million and commenced operations at the beginning of 2001.
Mega’s maximum annual production capacity is 1.35 million tons of natural gasoline, LPG and ethane. YPF is Mega’s main supplier
of natural gas. The production of the fractionation plant is used mainly in the petrochemical operations of Petroquímico Bahía Blanca
(“PBB”) and is also exported by tanker to Petrobras’ facilities in Brazil.
Mega’s LPG production is acquired by Petrobras pursuant to the sale contract executed between Petrobras and Mega in 1999
(the “LPG Contract”), which defines the LPG sale price in relation to the Mont Belvieu quotation. In 2005, Petrobras requested Mega
to review the price of the LPG Contract since it considered that the Mont Belvieu quotation had departed from other quotations and
become more expensive and, therefore, alleged that such variation in the quotations was a case of hardship. Mega did not agree with
that request and, pursuant to the terms of the LPG Contract, the parties appointed an expert, Purvin & Gertz, whose final report was
issued in 2006 concluding that it was not a case of hardship. In 2008, Petrobras brought an arbitration claim against Mega regarding
this matter, requesting a compensation of U.S.$91 million and the amendment of the LPG Contract with respect to future transactions
in a way that would reduce the Mont Belvieu quotation and transform such long term contract into a spot contract. As of the date of
this annual report, the proceedings are in an advanced state and it is expected that a final resolution will be issued in July or August
2009. Mega’s legal advisors believe that there is no case of hardship and that the claim brought by Petrobras is likely to be
unsuccessful.
Electricity market – generation
We participate in three power stations with an aggregate installed capacity of 1,622 megawatts (“MW”):
• A 45% interest in Central Térmica Tucumán (410 MW combined cycle) through Pluspetrol Energy Sociedad Anónima
(“Pluspetrol Energy”);
• A 45% interest in Central Térmica San Miguel de Tucumán (370 MW combined cycle) through Pluspetrol Energy;
• A 40% interest in Central Dock Sud (775 MW combined cycle and 67 MW gas turbines), directly and through Inversora
Dock Sud S.A.
Additionally, we operate assets that are part of Filo Morado, which has an installed capacity of 63 MW.
In 2008, these plants collectively generated approximately 8,971 GWh in the aggregate.
We also own and operate power plants supplied with natural gas produced by us, which produce power for use by us in other
business units:
• Los Perales power plant (74 MW), which is located in the Los Perales natural gas field;
• Chihuido de la Sierra Negra power plant (40 MW);
• The power plant located at the Plaza Huincul refinery (40 MW).
Natural gas distribution
We currently hold through our subsidiary YPF Inversora Energética S.A. (“YPF Inversora Energética”) a 45.33% stake in Gas
Argentino S.A. (“GASA”), which in turn holds a 70% stake in Metrogas S.A. (“Metrogas”), which is a natural gas distributor in
southern Buenos Aires and one of the main distributors in Argentina. During 2008, Metrogas distributed approximately 22.9 mmcm
of natural gas per day to 2 million customers in comparison with approximately 23.8 mmcm of natural gas per day distributed to
2 million customers in 2007.
42
The economic crisis that affected the country at the end of 2001 and beginning of 2002 caused a severe deterioration of the
financial and operational situation of GASA. Thus the decision was made on March 25, 2002 to suspend payment of principal and
interest on its entire financial debt. From then on, Metrogas’ management has focused on an efficient and rational use of its cash flow
in order to be able to comply with all of the legal requirements agreed with the Argentine government with respect to its services.
After negotiating a restructuring of the outstanding debt with its creditors, GASA reached and executed on December 7, 2005 an
agreement (the Master Restructuring Agreement or “MRA”) with its creditors, by which they would exchange debt for equity in
GASA and/or Metrogas. After this exchange was completed, YPF Inversora Energética would hold a 31.7% stake in GASA. The
agreement was presented to the Argentine National Antitrust Protection Board (Comisión Nacional de Defensa de la Competencia or
“CNDC”), and the National Gas Regulatory Authority (Ente Nacional Regulador del Gas or “ENARGAS”) and was subject to their
approval as condition precedent to the closing of the MRA. The MRA included a creditors’ option to terminate the agreement if, the
closing of the debt restructuring had not occurred, by December 7, 2006. The MRA obtained ENARGAS’ approval but the CNDC’s
approval is pending. On May 15, 2008, certain holders of the bonds communicated to YPF Inversora Energética that they were
terminating the MRA. After the termination of the MRA and until this date, three different entities claiming to be holders of GASA
bonds, have started three different judicial proceedings against GASA aiming to collect a total of U.S.$37 million, including interests
and fees. On April 1, 2009, GASA received a note from the BASE mentioning that a bankruptcy petition against GASA brought by
one of GASA’s creditors before a commercial tribunal in Buenos Aires had come to the BASE’s attention. On May 11 2009, GASA
has been formally notified of such bankruptcy petition. On May 19, 2009 GASA filed a voluntary reorganization petition (“Concurso
preventivo”), which was approved on June 8, 2009.
At the same time, Metrogas has reached an agreement with its main creditors in order to restructure its financial debt and align
its future financial commitments to the expected generation of funds. The main objective of the restructuring process was to modify
certain terms and conditions included in its outstanding loans and negotiable agreements by adjusting interest rates and the
amortization period so as to align them with the expected cash flow required for repayment of the indebtedness. Accordingly, on
April 20, 2006, Metrogas entered into an out-of-court preventive agreement with creditors representing approximately 95% of its
unsecured indebtedness, which became effective in May 2006. In October 2008, Metrogas executed an interim agreement (Acuerdo
Transitorio) with the Unit for the Renegotiation and Analysis of Public Service Contracts (Unidad de Renegociación y Análisis de
Contratos de Servicios Públicos or “UNIREN”), including a limited tariff increase that is intended to fund certain projects that
Metrogas is required to undertake. The government has approved this agreement and it has been published in the Official Gazzette on
April 14, 2009. The negotiation of the general tariff of Metrogas (Acta Acuerdo de Renegociación Contractual Integral) with the
UNIREN remains pending.
Metrogas’ financial condition continues to deteriorate due to the delay in the license and tariff renegotiation process with the
Argentine Government. If the new tariffs charts, including the increase in distribution tariffs agreed in the Transitional Agreement
signed with the UNIREN in October 2008, are not issued by the second half of 2009, Metrogas is likely to face financial difficulties
that could lead to the suspension by it of payments on its outstanding indebtedness.
As of December 31, 2008, YPF had an allowance for the total value of its investment in YPF Inversora Energética.
Refining and Marketing
During 2008, our Refining and Marketing activities included crude oil refining and transportation, and the marketing and
transportation of refined fuels, lubricants, LPG, compressed natural gas and other refined petroleum products in the domestic
wholesale and retail markets and certain export markets.
The Refining and Marketing segment is organized into the following divisions:
• Refining and Logistic Division;
•
•
Refining Division
Logistic Division
43
•
Trading Division
• Domestic Marketing Division; and
• LPG General Division.
We market a wide range of refined petroleum products throughout Argentina through an extensive network of sales personnel,
YPF-owned and independent distributors, and a broad retail distribution system. In addition, we export refined products, mainly from
the port at La Plata. The refined petroleum products marketed by us include gasoline, diesel, jet fuel, kerosene, heavy fuel oil and
other crude oil products, such as motor oils, industrial lubricants, LPG and asphalts.
Refining division
We wholly own and operate three refineries in Argentina:
• La Plata Refinery, located in the province of Buenos Aires;
• Luján de Cuyo Refinery, located in the province of Mendoza; and
• Plaza Huincul Refinery, located in the province of Neuquén (together referred as the “Refineries”).
Our three wholly-owned refineries have an aggregate refining capacity of approximately 319,500 barrels per calendar day. The
refineries are strategically located along our crude oil pipeline and product pipeline distribution systems. In 2008, our crude oil
production, substantially all of which was destined to our refineries, represented approximately 78% of the total crude oil processed
by our refineries. Through our stake in Refinor, we also own a 50% interest in a 26,100 barrel-per-calendar-day refinery located in the
province of Salta, known as Campo Durán.
The following table sets forth the throughputs and production yields for our refineries for each of the three years ended
December 31, 2008, 2007 and 2006:
Throughput crude/Feedstock
Production
Diesel fuel
Gasoline
Jet fuel
Base oils
Fuel oil
Coke
LPG
Asphalt
For the Year Ended December 31,
2008
2007
(mmbbl)
2006
120.6
122.0
118.1
46.1
31.4
6.1
1.5
46.9
32.6
6.1
2.0
47.7
31.1
5.7
2.8
(thousands of tons)
2,163
875
554
148
2,132
919
607
201
1,548
929
595
186
In 2008, overall volumes of crude oil/feedstock processed decreased by 3.8% compared with 2007 due to major overhauls at our
Luján de Cuyo and La Plata refineries, and sales volumes in foreign markets decreased 8.8% compared with 2007. In 2008, refinery
capacity utilization reached over 100%, as in 2007.
In 2007, overall volumes of crude oil/feedstock processed increased by 3.3% compared with 2006, and sales volumes in foreign
markets decreased 4.5% compared with 2006. In 2007, refinery capacity utilization reached over 100%, compared with 98.4% in
2006.
The La Plata refinery is the largest refinery in Argentina, with a capacity of 189,000 barrels of crude oil per calendar day. The
refinery includes three distillation units, two vacuum distillation units, two catalytic cracking
44
units, two coking units, a coker naphtha hydrotreater unit, a platforming unit, a gasoline hydrotreater, a diesel fuel hydrofinishing
unit, an isomerization unit, an FCC (Fluid Cracking Catalysts) naphtha splitter and desulfuration unit, and a lubricants complex. The
refinery is located at the port in the city of La Plata, in the province of Buenos Aires, approximately 60 kilometers from the City of
Buenos Aires. In 2008, the refinery processed approximately 192,600 barrels of crude oil per calendar day. The capacity utilization
rate at the La Plata refinery for 2008 was 0.1% higher than in 2007. The capacity utilization rate at the La Plata refinery for 2007 was
7.4% higher than in 2006. The crude oil processed at the La Plata refinery comes mainly from our own production in the Neuquina
and Golfo San Jorge basins. Crude oil supplies for the La Plata refinery are transported from the Neuquina basin by pipeline and from
the Golfo San Jorge basin by vessel, in each case to Puerto Rosales, and then by pipeline from Puerto Rosales to the refinery.
In September 2003, we commenced the construction of a new FCC naphtha splitter and a desulfuration unit in the La Plata
refinery, and in 2004, we commenced the construction of a new naphtha splitter in the Luján de Cuyo refinery. Both projects, which
were completed during 2006, have allowed us to meet higher technical requirements imposed by legislation in Argentina that limit the
level of sulfur in fuels (gasoline). In 2006, we began revamping the FCC unit in the La Plata refinery and it was finished in August
2008. This project allows us to process reduced crude for the first time in order to increase the production of gasoline and diesel.
The Luján de Cuyo refinery has an installed capacity of 105,500 barrels per calendar day, the third largest capacity among
Argentine refineries. The refinery includes two distillation units, a vacuum distillation unit, two coking units, one catalytic cracking
unit, a platforming unit, a Methyl TerButil Eter (“MTBE”) unit, an isomerization unit, an alkylation unit, a naphtha splitter, and
hydrocracking and hydrotreating units. In 2008, the refinery processed approximately 103,800 barrels of crude oil per calendar day. In
2008, the capacity utilization rate was 2.4% lower than in 2007, due to maintenance overhauls. In 2007, the capacity utilization rate
was 2.5% lower than in 2006. Because of its location in the western province of Mendoza and its proximity to significant distribution
terminals owned by us, the Luján de Cuyo refinery has become the primary facility responsible for providing the central provinces of
Argentina with petroleum products for domestic consumption. The Luján de Cuyo refinery receives crude supplies from the Neuquina
and Cuyana basins by pipeline directly into the facility. Approximately 88.2% of the crude oil processed at the Luján de Cuyo
refinery is produced by us. Most of the crude oil purchased from third parties comes from oil fields in Neuquén or in Mendoza.
The Plaza Huincul refinery, located near the town of Plaza Huincul in the province of Neuquén, has an installed capacity of
25,000 barrels per calendar day. In 2008, the refinery processed approximately 27,600 barrels of crude oil per calendar day. In 2008,
the capacity utilization rate was 1.6% higher than in 2007. In 2007, the capacity utilization rate was 4.9% higher than in 2006. The
only products currently produced commercially at the refinery are gasoline, diesel fuel and jet fuel, which are sold primarily in nearby
areas and in the southern regions of Argentina. Heavier products, to the extent production exceeds local demand, are blended with
crude oil and transported by pipeline from the refinery to La Plata refinery for further processing. The Plaza Huincul refinery receives
its crude supplies from the Neuquina basin by pipeline. Crude oil processed at the Plaza Huincul refinery is mostly produced by us. In
2008, 28% of the refinery’s crude supplies were purchased from third parties.
In 2008, we began the construction of tanks and facilities for the reception and blending of biodiesel in order to facilitate
compliance in the future with new specifications for diesel fuel as established pursuant to Law 26,093. See “—Domestic Marketing
Division.”
During 1997 and 1998, each of our refineries and our Applied Technology Center were certified under ISO (International
Organization for Standardization) 9002 and ISO 14000 (environmental performance) and were recertified under ISO 9001 (version
2000) in 2003.
Capital expenditures in 2008 for efficiency and environmental projects and other improvements at the three refineries amounted
to U.S.$100.3 million.
45
Logistic division
Crude oil and products transportation and storage
We have available for our use a network of five major pipelines, two of which are wholly owned by us. The crude oil
transportation network includes nearly 2,700 kilometers of crude oil pipelines with approximately 640,000 barrels of aggregate daily
transportation capacity of refined products. We have total crude oil tankage of approximately seven mmbbl and maintain terminal
facilities at five Argentine ports.
Information with respect to YPF’s interests in its network of crude oil pipelines is set forth in the table below:
From
Puesto Hernández
Puerto Rosales
La Plata Refinery
Brandsen
Puesto Hernández/ P.
Huincul/Allen
Puesto Hernández
To
Luján de Cuyo Refinery
La Plata Refinery
Dock Sud
Campana
Puerto Rosales
Concepción (Chile)
YPF Interest
100%
100%
100%
30%
37%
(4)
Length
(km)
528
585
52
168
888(1)
428(2)
Daily Capacity
(barrels per
day)
85,200(3)
316,000
106,000
120,700
232,000
114,000
(1)
Includes two parallel pipelines of 513 kilometers each from Allen to Puerto Rosales, with a combined daily throughput of
232,000 barrels.
(2) This pipeline ceased operating on December 29, 2005.
(3) The incorporation of new pumps in 2007 allowed an increase in the pumping volume of the Puesto Hernandez-Luján de Cuyo
pipeline.
(4) We hold a 36% interest in Oleoducto Transandino Argentina S.A., which operated the Argentine portion of the pipeline, and a
18% interest in Oleoducto Transandino Chile S.A., which operated the Chilean portion of the pipeline.
We own two crude oil pipelines in Argentina. One connects Puesto Hernández to the Luján de Cuyo refinery (528 kilometers),
and the other connects Puerto Rosales to the La Plata refinery (585 kilometers ) and extends to Shell’s refinery in Dock Sud at the
Buenos Aires port (52 kilometers). We also own a plant for the storage and distribution of crude oil in the northern province of
Formosa with an operating capacity of 19,000 cubic meters, and two tanks in the city of Berisso, in the province of Buenos Aires,
with 60,000 cubic meters of capacity. We own 37% of Oleoductos del Valle S.A., operator of an 888-kilometer pipeline network, its
main pipeline being a double 513 kilometer pipeline that connects the Neuquina basin and Puerto Rosales.
As of December 31, 2008, we held, through Oleoducto Transandino Argentina S.A. and Oleoducto Transandino Chile S.A., an
interest in the 428-kilometer Transandean pipeline, which transported crude oil from Argentina to Concepción in Chile. This pipeline
ceased operating on December 29, 2005, as a consequence of the interruption of oil exports resulting from decreased production in the
north of the province of Neuquén. The assets related to this pipeline were reduced to their recovery value.
We also own 33.15% of Terminales Marítimas Patagónicas S.A., operator of two storage and port facilities: Caleta Córdova
(province of Chubut), which has a capacity of 314,000 cubic meters, and Caleta Olivia (province of Santa Cruz), which has a capacity
of 246,000 cubic meters. We also have a 30% interest in Oiltanking Ebytem S.A., operator of the maritime terminal of Puerto
Rosales, which has a capacity of 480,000 cubic meters, and of the crude oil pipeline that connect Brandsen (60,000 cubic meters of
storage capacity) to the ESSO refinery in Campana (168 km), in the province of Buenos Aires.
In Argentina, we also operate a network of multiple pipelines for the transportation of refined products with a total length of
1,801 kilometers. We also own 16 plants for the storage and distribution of refined products with an approximate aggregate capacity
of 983,620 cubic meters. Three of these plants are annexed to the refineries of Luján de Cuyo, La Plata and Plaza Huincul. Ten of
these plants have maritime or river connections. We operate 53
46
airplane refueling facilities (40 of them are wholly owned) with a capacity of 24,000 cubic meters, own 27 trucks, 112 suppliers and
16 dispensers. These facilities provide a flexible countrywide distribution system and allow us to facilitate exports to foreign markets,
to the extent allowed pursuant to government regulations. Products are shipped mainly by truck, ship or river barge.
Capital expenditures in 2008 for efficiency and environmental projects and other improvements at the logistic division amounted
to U.S.$10.4 million.
Trading division
Our Trading Division sells crude oil and refined products to international customers and oil to domestic oil companies. Sales to
international customers for the years 2008 and 2007 totaled Ps.5,916 million and Ps.4,664 million, respectively, 84% and 90% of
which, respectively, represented sales of refined products, 5% and 2% of which, respectively, represented crude oil deliveries and the
remaining 11% and 8% of which, respectively, represented sales of marine fuels. On a volume basis, in 2008 and 2007 sales consisted
of 2.02 million and 2.68 mmbbl of crude oil, 17.8 million and 14.7 mmbbl of refined products and 1.93 million and 1.42 mmbbl of
marine fuels, respectively. Exports include crude oil, unleaded gasoline, diesel fuel, fuel oil, LPG, light naphtha and virgin naphtha.
This Division’s export sales are made principally to the United States and Brazil. Domestic sales of crude oil reached Ps.377 million
and Ps.438 million and 2.7 mmbbl and 3.45 mmbbl in the years 2008 and 2007, respectively. Domestic sales of marine fuels, reached
Ps.379 million and Ps.255 million and 1.5 and 1.3 mmbbl in 2008 and 2007, respectively.
Domestic marketing division
Through our Marketing Division, we market gasoline, diesel fuel, LPG and other petroleum products to retail and wholesale
customers. We also sell convenience food products through our service stations, although such sales do not account for a material
amount of our revenues.
In 2008, retail, wholesale, lubricants and specialties and aviation sales reached Ps.19,800 million, representing 70.6% of the
Refining and Marketing segment’s consolidated revenue, with Ps 9,645 million generated by retail customers.
As of December 31, 2008, the Marketing Division’s sales network in Argentina included 1,642 retail service stations (compared
to 1,692 at December 31, 2007), of which 94 are directly owned by us, and the remaining 1,548 are affiliated service stations.
Operadora de Estaciones de Servicio S.A. (“OPESSA”) (a wholly owned subsidiary of ours), operates 165 of our retail service
stations, 77 of which are directly owned by us, 25 of which are leased to ACA (Automovil Club Argentino), and 63 of which are
leased to independent owners. Additionally, we have a 50% interest in Refinor, which operates 71 retail service stations, one of which
are directly owned by Refinor. We will continue our efforts to eliminate nonstrategic existing stations, and dealer-operated stations
which do not comply with the level of operational efficiency that we require.
We estimate that, as of December 31, 2008 and as of December 31, 2007, our points of sale accounted for 30.9% and 31.1% of
the Argentine market, respectively. In Argentina, Shell, Petrobras and Esso are our main competitors and own approximately 15.2%,
12.8% and 10.5%, respectively, of the points of sale in Argentina, according to the latest information available to us. During 2008, we
believe all oil companies decreased the number of their points of sales.
During 2008, we slightly increased our market share in the diesel fuel and gasoline markets from 54.6% to 55%, according to
our analysis of data provided by the Argentine Secretariat of Energy.
The “Red XXI” marketing program, launched in October 1997, which has significantly improved operational efficiency and
provides us with immediate performance data from each station, is aimed at connecting most of our service stations network. As of
December 31, 2008, 1,467 stations were linked to the Red XXI system.
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In 2007, we launched the Escuela Comercial YPF (YPF Business School), which focuses on performance, employability,
operational excellence and customer satisfaction. In 2008, we worked to give the YPF Business School greater regional and thematic
focus. The YPF Business School is aligned with our business strategy to promote a sense of belonging and common vision shared by
all the members of our business chain. During 2008, we complemented its global approach with the development of more specific
content, focusing on particular areas of our business. In 2008, the YPF Business School carried out 1,011 courses, visits to service
stations and other business development-related activities, involving 1,832 of our employees or business partners (owned and branded
service stations and distributors).
We began an ISO 9001 certification process involving our gas station network in 1998. Currently, we allow each gas station
operator to certify its management system. YPF-owned service stations have been certified under ISO 9001 and 14000 standards for
the past ten years, and a small number of such service stations have been certified under OHSAS 18001 and ISO 22000 in the past
three years.
YPF-owned service stations have replaced ISO standards with a self-certification quality standards model which is expected to
encourage our network of affiliated service stations operators to adopt as an operating model. This model was under development in
2008 and will begin to be phased in throughout in the YPF-owned service stations network in 2009.
Our sales to the agricultural sector are principally conducted through a network of 117 distribution bases operated by 104
distributors (eight of which are owned by us). Sales to transportation, industrial, utility, and mining sectors are made primarily
through our direct sales efforts. The main products sold in the domestic wholesale market include diesel fuel and fuel oil.
Sales to the aviation sector are made directly by us. The products sold in this market are jet fuel and aviation gasoline.
Our lubricants and specialties unit markets a wide variety of products that includes lubricants, greases, asphalt, paraffin, base
lubricant, decanted oil, carbon dioxide and coke. This unit is responsible for the production, distribution and commercialization of the
products in the domestic and exports markets. These operations are ISO 9001: 2000 and Tierra 16949 certified. The lubricants
production facilities are also ISO 14001 certified.
During 2008, our lubricants and specialties sales to domestic markets increased by 19% from Ps.1,335 million in 2007 to
Ps.1,586 million in 2008. We export lubricants to 20 countries, including the United States. Sales to export markets increased by 40%
from Ps.234 million in 2007 to Ps.327 million in 2008. During 2008, total lubricants sales increased by 26%, total asphalt sales
decreased by 5% and total derivatives sales increased by 26%.
In a market of increasing costs, the strategy of differentiation followed by our lubricants and specialties unit allowed it to
maintain its position of leadership in the Argentine market despite experiencing a slightly decreased market share, from 36.4% in
2007 to 36.2% in 2008. Lead domestic automotive manufacturers Ford, Volkswagen, Scania, Seat, Porsche and General Motors,
which represent more than 60% of the automotive industry in Argentina, exclusively use and recommend YPF-branded lubricant
products.
With respect to biofuels, our main objectives in this area are to secure our biofuel needs for the domestic market and to create
associations for the production and marketing of biofuels in light of Argentina’s potential as a biofuels exporter to the European
Union and other international markets.
In January 2010, every oil company in Argentina will be obligated under Argentine law (Law 26,093) to blend all fuels with 5%
of biofuels.
Continuing with our commitment to the environment and the development of alternative fuels, the Bioenergy Program 2007-
2010 has completed its first full year of activity. This nationwide research and development program is being developed together with
a university and other official entities with the objective of developing alternative crops to be used in the production of biofuels,
thereby also promoting development in regional economies in Argentina.
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LPG general division
Production
We are one of the largest LPG producers in Argentina, with a yearly production of 554,899 tons in 2008 (not including
production of LPG destined for petrochemical usage).
We also have a 50% interest in Refinor, a jointly-controlled company, which produced 310,160 tons of LPG in 2008.
The LPG division obtains LPG from natural gas processing plants and from its refineries and petrochemical plant. It also
purchases LPG from third parties as detailed in the following table:
LPG from Natural Gas Processing Plants:(1)
General Cerri
Filo Morado
El Portón
San Sebastián
Total Upstream
LPG from Refineries and Petrochemical Plants:
La Plata Refinery
Luján de Cuyo Refinery
Ensenada Petrochemical Plant
Total Refineries & Petrochemical Plants(2)
LPG purchased from jointly controlled companies:(3)
LPG purchased from unrelated parties
Total
Purchase
(tons)
2008
24,255
23,635
144,408
17,725
210,024
210,272
115,077
19,526
344,875
105,272
36,970
697,141
(1) The San Sebastian plant is a joint-venture in which we own a 30% interest; El Portón is 100% owned by us; General Cerri
belongs to a third party with which we have a processing agreement. Filo Morado comprises assets that are operated by us.
(2) This production does not include LPG used as petrochemical feedstock (olefins derivatives, polybutenes and maleic).
(3) Purchased from Refinor.
LPG marketing
We sell LPG to the foreign market, the domestic wholesale market and to distributors that supply the domestic retail market. The
LPG general division does not directly supply the retail market and such market is supplied by Repsol YPF Gas, which is not a YPF
company.
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Our LPG sales for the years 2008 and 2007 can be broken down by market as follows:
Domestic market
Retail to related parties under common control
Other bottlers/propane network distributors
Other wholesales
Foreign market/exports
Exports
Total sales
Sales
2008
2007
(tons)
246,210 245,429
93,116 106,608
91,775 101,877
248,420 247,115
679,521 701,029
Total sales of LPG (excluding LPG used as petrochemical feedstock) to all markets (domestic and foreign markets combined)
were Ps.967 million and Ps.889 million in 2008 and in 2007, respectively.
Chemicals
In 2008 and 2007, our revenues from chemical sales were Ps.3,923 million and Ps.3,455 million, respectively, and our operating
income of the Chemicals segment was Ps.1,178 million and Ps.500 million, respectively.
In 2008, operating income reached historical highs, mainly due to a significant increase in margins during the first three
quarters, and maximum benefits of synergies with Exploration and Production and Refining activities.
Petrochemicals are produced at our petrochemical complexes in Ensenada and Plaza Huincul, as well as in Bahía Blanca, where
Profertil’s petrochemical complex is located.
Our petrochemical production operations in Ensenada are closely integrated with our refining activities (La Plata Refinery). This
close integration allows for a flexible supply of feedstock, the efficient use of byproducts (such as hydrogen) and the supply of
aromatics to increase gasoline octane levels.
The main petrochemical products and production capacity per year are as follows:
Ensenada:
Aromatics
BTX (Benzene, Toluene, Mixed Xylenes)
Paraxylene
Orthoxylene
Cyclohexane
Solvents
Olefins Derivatives
MTBE
Butene I
Oxoalcohols
TAME
LAB/LAS
LAB
LAS
Polybutenes
PIB
Maleic
Maleic Anhydride
Plaza Huincul:
Methanol
Capacity
(tons per year)
244,000
38,000
25,000
95,000
66,100
60,000
25,000
35,000
105,000
52,000
25,000
26,000
17,500
411,000
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Bahía Blanca(1):
Ammonia/Urea
(1) Corresponds to our 50% interest in Profertil.
Capacity
(tons per year)
933,000
Natural gas, the raw material for methanol, is supplied by our upstream unit. The use of natural gas as a raw material allows us
to monetize reserves, demonstrating the integration between the petrochemical and the upstream units.
We also use high carbon dioxide-content natural gas in our methanol production, allowing us to keep our methanol plant
working at 50% of its production capacity during the winter period.
The raw materials for petrochemical production in Ensenada, including virgin naphtha, propane, butane and kerosene, are
supplied mainly by the La Plata refinery.
In 2008 and 2007, 48% and 58% respectively, of our petrochemicals sales were made in the export market. Petrochemicals
exports are destined to Mercosur countries, Latin America, Europe, and the United States.
We also participate in the fertilizer business directly and through Profertil, our 50%-owned subsidiary.
Profertil is jointly controlled by us and Agrium (a worldwide leader in fertilizers), that produces urea and ammonia and started
operations in 2001.
Our Ensenada petrochemical plant was certified under ISO 9001 in 1996 and recertified in October 2007. The La Plata
petrochemical plant was certified under ISO 14001 in 2001 and recertified (version 2004) in October 2007. The plant was also
certified under OHSAS 18001 in 2005 and recertified in October 2007.
Our Methanol plant was certified under ISO 9001 (version 2000) in December 2001, under ISO 14001 (Version 2000) in
October 2007 and OHSAS 18001 in December 2008.
Repsol YPF’s presence has strengthened our position in the global markets, improving our access to these markets due to a
better negotiating position derived from Repsol YPF’s ability to offer a more complete portfolio of products and a sales force of its
own, now located in regions previously served only by distributors.
Research and Development
We have a research and development facility in La Plata, Argentina, which works in cooperation with research and development
activities of Repsol YPF. To carry out research and development programs of mutual interest, Repsol YPF maintains different
cooperation agreements with universities, companies and other technological centers, both public and private. In 2008, Repsol YPF
spent more than U.S.$17 million under these agreements.
Repsol YPF participates actively in the research and development programs sponsored by different government administrations,
taking part during 2008 in 24 projects sponsored by the Spanish Administration and in 7 European Union projects.
The research and development projects and activities apply to the entire value chain of the business – including exploration of
new deposits of crude or gas, extraction and conditioning for transportation, transformation and manufacture of products at industrial
complexes, and distribution to the end customer. Repsol YPF’s two technology centers, one in Spain (Móstoles) and another in
Argentina (La Plata), together employ a total of 450 people. In 2008, the Repsol YPF Technology Unit allocated U.S.$108 million to
the activity, to which another U.S.$13 million were added in projects executed through the business units.
In the Hydrocarbon Exploration and Production area, Repsol YPF, in consortium with universities and other companies in the
industry, is developing new seismic technologies aimed at improving the analysis and
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interpretation of seismic images. R&D is also directed at improving recovery technologies through the improvement of the recovery
factor of oil and gas from mature fields in decline. Repsol YPF also develops and adapts technologies to improve the production of
non conventional hydrocarbons (both for heavy and extra-heavy crudes as well as for gas trapped in low permeability fields) and to
improve production in offshore fields.
In Petroleum Product Refinery and Marketing, the technology unit provides specialized technological support for the refineries,
allowing the refineries to obtain the best quality gasolines and diesel oils beyond international regulatory requirements, while trying
to maximize operating margins on a sustainable basis, complying with environmental requirements and promoting energy efficiency.
In addition, new products are being developed, such as better-performing vegetable based biofuels, lubricants and asphalts that have
been adapted to new environmental standards.
In Petrochemicals, Repsol YPF continued its significant effort with resources geared toward the consolidation of the proprietary
technology developed in the last few years.
Repsol YPF develops its own technology when it has a competitive advantage and acquires available technology (optimizing
and adapting them for the markets in which it competes) when it proves to be more advantageous to its business goals. Repsol YPF’s
goal is to increase the collaboration with the surrounding technological environment, universities and centers of public investigation,
as well as with other companies, for a better use of and flexibility in the employment of resources and to decrease the risks in those
areas in which it is involved.
Competition
The deregulation and privatization process created a competitive environment in the Argentine oil and gas industry. In our
Exploration and Production business, we encounter competition from major international oil companies and other domestic oil
companies in acquiring exploration permits and production concessions. Our Exploration and Production business may also encounter
competition from oil and gas companies created and owned by certain Argentine provinces, including La Pampa, Neuquén and
Chubut, as well as from ENARSA, the Argentine state-owned energy company, especially in light of the recent transfer of
hydrocarbon properties to ENARSA and the provinces described under “Item 4. Information on the Company—Regulatory
Framework and Relationship with the Argentine Government—Law No. 26,197.” In our Refining and Marketing and Chemicals
businesses, we face competition from several major international oil companies, such as Esso (a subsidiary of ExxonMobil), Shell and
Petrobras, as well as several domestic oil companies. In our export markets, we compete with numerous oil companies and trading
companies in global markets.
We operate in a dynamic market in the Argentine downstream industry and the crude oil and natural gas production industry.
Crude oil and most refined products prices are subject to international supply and demand and Argentine regulations and, accordingly,
may fluctuate for a variety of reasons. Some of the prices in the internal market are controlled by local authorities. See “Item 4.
Information on the Company—Regulatory Framework and Relationship with the Argentine Government.” Changes in the domestic
and international prices of crude oil and refined products have a direct effect on our results of operations and on our levels of capital
expenditures. See “Item 3. Key Information—Risk Factors— Risks Relating to the Argentine Oil and Gas Business and Our
Business—Oil and gas prices could affect our level of capital expenditures.”
Environmental Matters
YPF—Argentine operations
Our operations are subject to a wide range of laws and regulations relating to the general impact of industrial operations on the
environment, including emissions into the air and water, the disposal or remediation of soil or water contaminated with hazardous or
toxic waste, fuel specifications to address air emissions and the effect of the environment on health and safety. We have made and
will continue to make expenditures to comply with these laws and regulations. In Argentina, local, provincial and national authorities
are moving towards more stringent enforcement of applicable laws. In addition, since 1997, Argentina has been implementing
regulations that require
52
our operations to meet stricter environmental standards that are comparable in many respects to those in effect in the United States
and in countries within the European Community. These regulations establish the general framework for environmental protection
requirements, including the establishment of fines and criminal penalties for their violation. We have undertaken measures to achieve
compliance with these standards and are undertaking various abatement and remediation projects, the more significant of which are
discussed below. We cannot predict what environmental legislation or regulation will be enacted in the future or how existing or
future laws will be administered or enforced. Compliance with more stringent laws or regulations, as well as more vigorous
enforcement policies of regulatory agencies, could require additional expenditures in the future by us, including for the installation
and operation of systems and equipment for remedial measures, and could affect our operations generally. In addition, violations of
these laws and regulations may result in the imposition of administrative or criminal fines or penalties and may lead to personal injury
claims or other liabilities.
In 2008, we continued to make investments in order to comply with new Argentine fuel specifications that are scheduled to
come into effect gradually between 2008 and 2016, pursuant to Resolution No. 1283/06 (amended by Resolution No. 478/2009) of the
Argentine Secretariat of Energy (which replaces Resolution No. 398/03) relating to, among other things, the purity of diesel fuels. In
addition, we have completed basic engineering packages and begun detailed engineering studies for the construction of diesel fuel oil
desulfuration units at La Plata and Luján de Cuyo refineries. These projects have been delayed due to the postponement of the
implementation of the fuel specification regulations, but will be have to be completed by July 2012. Construction strategies oriented
to meet the July 2012 deadline are already outlined. Additionally, in La Plata Refinery, an FCC Naphtha Hydroteater unit to reduce
sulphur in gasoline was completed in 2007 and begun operating in 2008, and a basic engineering package has been developed for the
construction of a similar unit at Lujan de Cuyo Refinery.
The basic engineering packages and detailed engineering studies for projects related to biofuels, such as the addition of
bioethanol and FAME to gasoline, were developed during 2008. These projects will enable YPF to comply with governmental
requirements and to enter into the renewable energy sources market.
We have approved a plan which contemplates total investments of approximately U.S.$795 million between 2009 and 2012 to
comply with the above-mentioned motor fuels quality environmental specifications.
At each of our refineries, we are performing, on our own initiative, remedial investigations and feasibility studies and pollution
abatement projects, which are designed to address liquid effluent discharges and air emissions. In addition, we have implemented an
environmental management system to assist our efforts to collect and analyze environmental data in our upstream and downstream
operations.
In addition to the projects related to the new fuel specification standards mentioned above, we have begun to implement a broad
range of environmental projects in the domestic Exploration and Production and Refining and Marketing and Chemical segments.
Capital expenditures for those environmental projects associated with the Refining and Marketing segment during 2008 were
approximately U.S.$62 million. The primary projects at La Plata that were started in 2007 and continued during 2008 include the
installation of separation and water treatment systems to replace existing systems, air pollution control devices, hydrocarbon recovery
systems, double bottoms in several tanks and site remediation. In addition, during 2008, through the facility upgrade program, various
equipment at certain gasoline stations was replaced by new and safer technologies, such as double wall tanks, and hot oil furnaces
were replaced by gas boilers.
Capital expenditures associated with domestic Exploration and Production environmental projects during 2008 were
approximately U.S.$144 million and included expenditures relating to Health Safety Environment management systems, waste
management, remediation of well sites, tank batteries’ integrity and remediation of oil spills in the gathering systems of fields.
Expenditures will also be made to improve technical assistance and training and to establish environmental contamination
remediation plans, air emissions monitoring plans and ground water investigation and monitoring programs.
We and several other industrial companies operating in the La Plata area have entered into a community emergency response
agreement with three municipalities and local hospitals, firefighters and other health and safety
53
service providers to implement an emergency response program. This program is intended to prevent damages and losses resulting
from accidents and emergencies, including environmental emergencies. Similar projects and agreements were developed at other
refineries as well.
In 1991, we entered into an agreement (Convenio de Cooperación Interempresarial, or “CCI”) with certain other oil and gas
companies to implement a plan to reduce and assess environmental damage resulting from oil spills in Argentine surface waters to
reduce the environmental impact of potential oil spills offshore. This agreement involves consultation on technological matters and
mutual assistance in the event of any oil spills in rivers or at sea due to accidents involving tankers or offshore exploration and
production facilities.
Regarding climate change, as a part of Repsol YPF Group, YPF has actively contributed to the Group’s climate change
strategies since 2002. Within the Group’s efforts on climate change, YPF is working on the following:
• actively promoting the identification and pursuit of opportunities to reduce greenhouse gas emissions within our
operations;
• intensifying the execution of internal projects for generating credit by the clean development mechanisms through the
efficient use of resources, contributing to the transfer of technology and to the sustainable development of Argentina;
• collaborating with competent authorities, in particular the Argentine Clean Development Mechanism Office
(“OAMDL”);
• in July 2007, the United Nations Clean Development Mechanism Executive Board approved the methodology proposed
by YPF for the recovery of waste gases from refinery flares, based on a project that is being developed at La Plata
Industrial Complex. With its approval, the AM0055 “Baseline and Monitoring Methodology for the recovery and
utilization of waste gas in refinery facilities” may serve as a reference for other companies in the sector;
• verifying the CO2 inventory of the Ensenada Industrial Complex under the ISO 14064 Standard. To date, YPF has
received a Preliminary Verification Report from Lloyd’s Register Quality Assurance.
Our estimated capital expenditures and future investments are based on currently available information and on current laws, and
new information or future changes in laws or technology could cause a revision of such estimates. In addition, while we do not expect
environmental expenditures to have a significant impact on our future results of operations, changes in management’s business plans
or in Argentine laws and regulations may cause expenditures to become material to our financial position, and may affect results of
operations in any given year.
YPF Holdings—Operations in the United States
Laws and regulations relating to health and environmental quality in the United States affect YPF Holdings’ operations in the
United States. See “Item 4. Information on the Company—Regulatory Framework and Relationship with the Argentine
Government—U.S. Environmental Regulations.”
In connection with the sale of Diamond Shamrock Chemicals Company (“Chemicals”) to a subsidiary of Occidental Petroleum
Corporation (“Occidental”) in 1986, Maxus agreed to indemnify Chemicals and Occidental from and against certain liabilities relating
to the business and activities of Chemicals prior to the September 4, 1986 closing date (the “Closing Date”), including certain
environmental liabilities relating to certain chemical plants and waste disposal sites used by Chemicals prior to the Closing Date.
In addition, under the agreement pursuant to which Maxus sold Chemicals to Occidental, Maxus is obligated to indemnify
Chemicals and Occidental for certain environmental costs incurred on projects involving remedial activities relating to chemical plant
sites or other property used to conduct Chemicals’ business as of the Closing Date and for any period of time following the Closing
Date which relate to, result from or arise out of conditions, events or circumstances discovered by Chemicals and as to which
Chemicals provided written notice prior to September 4, 1996, irrespective of when Chemicals incurs and gives notice of such costs.
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Tierra Solutions Inc. (“Tierra”) was formed to deal with the results of the alleged obligations of Maxus, as described above,
resulting from actions or facts that occurred primarily between the 1940s and 1970s while Chemicals was controlled by other
companies.
See “Item 8. Financial Information—Legal Proceedings—YPF Holdings” below for a description of environmental matters in
connection with YPF Holdings.
Property, Plant and Equipment
Most of our property, consisting of interests in crude oil and natural gas reserves, refineries, storage, manufacturing and
transportation facilities and service stations, is located in Argentina. We also own property in the United States. See “—Exploration
and Production—Principal properties—International properties—United States.”
There are several classes of property which we do not own in fee. Our petroleum exploration and production rights are in
general based on sovereign grants of concession. Upon the expiration of the concession, our exploration and production assets
associated with the particular property subject to the relevant concession revert to the government. In addition, as of December 31,
2008, we leased 88 service stations to third parties and also had activities with service stations that are owned by third parties and
operated by them under a supply contract with us for the distribution of our products.
Regulatory Framework and Relationship with the Argentine Government
Overview
The Argentine oil and gas industry is currently subject to certain policies and regulations that have resulted in domestic prices
that are substantially lower than prevailing international market prices, export restrictions, domestic supply requirements that oblige
us from time to time to divert supplies from the export or industrial markets in order to meet domestic consumer demand, and
increasingly heavy export duties on the volumes of hydrocarbons allowed to be exported. These governmental pricing limitations,
export controls and tax policies have been implemented in an effort to satisfy increasing domestic market demand at prices below
international market prices.
The Argentine oil and gas industry is regulated by Law No. 17,319, referred to as the “Hydrocarbons Law,” which was adopted
in 1967 and amended by Law No. 26,197 in 2007, which established the general legal framework for the exploration and production
of oil and gas, and Law No. 24,076, referred to as the “Natural Gas Law,” enacted in 1992, which established the basis for
deregulation of natural gas transportation and distribution industries.
The executive branch of the Argentine government issues the regulations to complement these laws. The regulatory framework
of the Hydrocarbons Law was established on the assumption that the reservoirs of hydrocarbons would be national properties and
Yacimientos Petrolíferos Fiscales Sociedad del Estado, our predecessor, would lead the oil and gas industry and operate under a
different framework than private companies. In 1992, Law No. 24,145, referred to as the “Privatization Law,” privatized YPF and
provided for transfer of hydrocarbon reservoirs from the Argentine government to the provinces, subject to the existing rights of the
holders of exploration permits and production concessions.
The Privatization Law granted us 24 exploration permits covering approximately 132,735 square kilometers and 50 production
concessions covering approximately 32,560 square kilometers. The Hydrocarbons Law limits to five the number of concessions that
may be held by any one entity, and also limits the total area of exploration permits that may be granted to a single entity. Based on our
interpretation of the law, we were exempted from such limit with regard to the exploration permits and production concessions
awarded to us by the Privatization Law. Nevertheless, the National Department of Economy of Hydrocarbons (Dirección Nacional de
Economía de los Hidrocarburos), applying a restrictive interpretation of Section 25 and 34 of the Hydrocarbons Law, has objected to
the award of new exploration permits and production concessions in which we have a 100% interest. As a result, our ability to acquire
100% of new exploration permits and/or production concessions has been hindered, although this interpretation has not impeded our
ability to acquire any permits or concessions where an interest is also granted to
55
other parties. As a consequence of the transfer of ownership of certain hydrocarbons areas to the provinces, we participate in
competitive bidding rounds organized since the year 2000 by several provincial governments for the award of contracts for the
exploration of hydrocarbons.
In October 2004, the Argentine Congress enacted Law No. 25,943 creating a new state-owned energy company, Energía
Argentina S.A. The corporate purpose of ENARSA is the exploration and exploitation of solid, liquid and gaseous hydrocarbons, the
transport, storage, distribution, commercialization and industrialization of these products, as well as the transportation and distribution
of natural gas, and the generation, transportation, distribution and sale of electricity. Moreover, Law No. 25,943 granted to ENARSA
all exploration concessions in respect to offshore areas located beyond 12 nautical miles from the coast line up to the outer boundary
of the continental shelf that were vacant at the time of the effectiveness of this law (i.e., November 3, 2004).
In addition, in October 2006, Law No. 26,154 created a regime of tax incentives aimed at encouraging hydrocarbon exploration
and which apply to new exploration permits awarded in respect of the offshore areas granted to ENARSA and those over which no
rights have been granted to third parties under the Hydrocarbons Law, provided the provinces in which the hydrocarbon reservoirs are
located adhere to this regime. Association with ENARSA is a precondition to qualifying for the benefits provided by the regime
created by Law No. 26,154. The benefits include: early reimbursement of the value added tax for investments made and expenses
incurred during the exploration period and for investments made within the production period; accelerated amortization of
investments made in the exploration period and the accelerated recognition of expenses in connection with production over a period
of three years rather than over the duration of production; and exemptions to the payment of import duties for capital assets not
manufactured within Argentina. As of the date of this annual report, we have not used the tax incentives previously mentioned.
Ownership of hydrocarbons reserves was transferred to the provinces through the enactment of the following legal provisions
that effectively amended the Hydrocarbons Law:
• In 1992, the Privatization Law approved the transfer of the ownership of hydrocarbons reserves to the provinces where they
are located. However, this law provided that the transfer was conditioned on the enactment of a law amending the
Hydrocarbons Law to contemplate the privatization of Yacimientos Petrolíferos Fiscales Sociedad del Estado.
• In October 1994, the Argentine National Constitution was amended and pursuant to Article 124 thereof, provinces were
granted the primary control of natural resources within their territories.
• In August 2003, Executive Decree No. 546/03 transferred to the provinces the right to grant exploration permits,
hydrocarbons exploitation and transportation concessions in certain locations designated as “transfer areas,” as well as in
other areas designated by the competent provincial authorities.
• In January 2007, Law No. 26,197 acknowledged the provinces’ ownership of the hydrocarbon reservoirs in accordance with
Article 124 of the National Constitution (including reservoirs to which concessions were granted prior to 1994) and granted
provinces the right to administer such reservoirs.
Law No. 26,197
Law No. 26,197, which amended the Hydrocarbons Law, transferred to the provinces and the City of Buenos Aires the
ownership over all hydrocarbon reservoirs located within their territories and in the adjacent seas up to 12 nautical miles from the
coast. Law No. 26,197 also provides that the hydrocarbon reservoirs located beyond 12 nautical miles from the coast to the outer limit
of the continental shelf shall remain within the ownership of the federal government.
Pursuant to Law No. 26,197, the Argentine Congress shall continue to enact laws and regulations to develop oil and gas
resources existing within all of the Argentine territory (including its sea), but the governments of the provinces where the
hydrocarbon reservoirs are located shall be responsible for the enforcement of these laws and regulations, the administration of the
hydrocarbon fields and shall act as granting authorities for the exploration permits and production concessions. However, the
administrative powers granted to the provinces shall be exercised within the framework of the Hydrocarbons Law and the regulations
which complement this law.
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Consequently, even though Law No. 26,197 established that the provinces shall be responsible for administering the
hydrocarbon fields, the Argentine Congress retained its power to issue rules and regulations regarding the oil and gas legal
framework. Additionally, the Argentine government retained the power to determine the national energy policy.
It is expressly stated that the transfer will not affect the rights and obligations of exploration permit and production concession
holders, or the basis for the calculation of royalties, which shall be calculated in accordance with the concession title and paid to the
province where the reservoirs are located.
Law No. 26,197 provides that the Argentine government shall retain the authority to grant transportation concessions for:
(i) transportation concessions located within two or more provinces territory and (ii) transportation concessions directly connected to
export pipelines for export purposes. Consequently, transportation concessions which are located within the territory of only one
province and which are not connected to export facilities shall be transferred to the provinces.
Finally, Law No. 26,197 grants the following powers to the provinces: (i) the exercise in a complete and independent manner of
all activities related to the supervision and control of the exploration permits and production concessions transferred by Law
No. 26,197; (ii) the enforcement of all applicable legal and/or contractual obligations regarding investments, rational production and
information and surface fee and royalties payment; (iii) the extension of legal and/or contractual terms; (iv) the application of
sanctions provided in the Hydrocarbons Law; and (v) all the other faculties related to the granting power of the Hydrocarbons Law.
Public Emergency
On January 6, 2002, the Argentine Congress enacted Law No. 25,561, the Public Emergency and Foreign Exchange System
Reform Law (“Public Emergency Law”), which represented a profound change of the economic model effective as of that date, and
rescinded the Convertibility Law No. 23,928, which had been in effect since 1991 and had pegged the peso to the dollar on a one-to-
one basis. In addition, the Public Emergency Law granted the executive branch of the Argentine government authority to enact all
necessary regulations in order to overcome the economic crisis in which Argentina was then immersed.
After the enactment of the Public Emergency Law, several other laws and regulations have been enacted. The following are the
most significant measures enacted to date in Argentina to overcome the economic crisis:
• Conversion into pesos of (i) all funds deposited in financial institutions at an exchange rate of Ps.1.40 for each U.S.$1.00 and
(ii) all obligations (e.g., loans) with financial institutions denominated in foreign currency and governed by Argentine law at
an exchange rate of Ps.1.00 for each U.S.$1.00. The deposits and obligations converted into pesos would be thereafter
adjusted by a reference stabilization index, the Coeficiente de Estabilidad de Referencia (“CER”), to be published by the
Argentine Central Bank. Obligations governed by non-Argentine law have not been converted to pesos under the new laws.
Substantially all of our dollar-denominated debt is governed by non-Argentine law.
• Conversion into pesos at an exchange rate of Ps.1.00 for each U.S.$1.00 of all obligations outstanding among private parties
at January 6, 2002 that are governed by Argentine law and payable in foreign currency. The obligations so converted into
pesos would be adjusted through the CER index, as explained above. In the case of non-financial obligations, if as a result of
the mandatory conversion into pesos the resulting intrinsic value of goods or services that are the object of the obligation are
higher or lower than their price expressed in pesos, either party may request an equitable adjustment of the price. If they
cannot agree on such equitable price adjustment, either party may resort to the courts. Executive Decree No. 689/02
established an exception to the Public Emergency Law and regulations and provides that the prices of long-term natural gas
sale and transportation agreements executed before the enactment of the Decree and denominated in U.S. dollars will not be
converted into pesos (Ps.1.00 for each U.S.$1.00) when the natural gas is exported.
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• Conversion into pesos at an exchange rate of Ps.1.00 for each U.S.$1.00 of all tariffs of public services, the elimination of the
adjustment of tariffs by foreign indexes such as the Purchaser Price Index (PPI)/Consumer Price Index (CPI) index, and the
imposition of a period of renegotiation with the governmental authorities thereafter.
• Imposition of customs duties on the export of hydrocarbons with instructions to the executive branch of the Argentine
government to set the applicable rate thereof. See also “—Taxation” below.
Exploration and Production
The Hydrocarbons Law establishes the basic legal framework for the regulation of oil and gas exploration and production in
Argentina. The Hydrocarbons Law empowers the executive branch of the Argentine government to establish a national policy for
development of Argentina’s hydrocarbon reserves, with the principal purpose of satisfying domestic demand.
Pursuant to the Hydrocarbons Law, exploration and production of oil and gas is carried out through exploration permits,
production concessions, exploitation contracts or partnership agreements. The Hydrocarbons Law also permits surface reconnaissance
of territory not covered by exploration permits or production concessions upon authorization of the Argentine Secretariat of Energy
and/or competent provincial authorities, as established by Law No. 26,197, and with permission of the private property owner.
Information obtained as a result of surface reconnaissance must be provided to the Argentine Secretariat of Energy and/or competent
provincial authorities, which may not disclose this information for two years without permission of the party who conducted the
reconnaissance, except in connection with the grant of exploration permits or production concessions.
Under the Hydrocarbons Law, the federal and/or competent provincial authorities may grant exploration permits after
submission of competitive bids. Permits granted to third parties in connection with the deregulation and demonopolization process
were granted in accordance with procedures specified in Executive Decrees No. 1055/89, 1212/89 and 1589/89 (the “Oil Deregulation
Decrees”), and permits covering areas in which our predecessor company, Yacimientos Petrolíferos Fiscales S.A., was operating at
the date of the Privatization Law and that were granted to us by such law. In 1991, the executive branch of the Argentine government
established a program under the Hydrocarbons Law (known as Plan Argentina) pursuant to which exploration permits were
auctioned. The holder of an exploration permit has the exclusive right to perform the operations necessary or appropriate for the
exploration of oil and gas within the area specified by the permit. Each exploration permit may cover only unproved areas not to
exceed 10,000 square kilometers (15,000 square kilometers offshore), and may have a term of up to 14 years (17 years for offshore
exploration). The 14-year term is divided into three basic terms and one extension term. The first basic term is up to four years, the
second basic term is up to three years, the third basic term is up to two years and the extension term is up to five years. At the
expiration of each of the first two basic terms, the acreage covered by the permit is reduced, at a minimum, to 50% of the remaining
acreage covered by the permit, with the permit holder deciding which portion of the acreage to keep. At the expiration of the three
basic terms, the permit holder is required to revert all of the remaining acreage to the Argentine government, unless the holder
requests an extension term, in which case such grant is limited to 50% of the remaining acreage.
If the holder of an exploration permit discovers commercially exploitable quantities of oil or gas, the holder has the right to
obtain an exclusive concession for the production and development of this oil and gas. The Hydrocarbons Law provides that oil and
gas production concessions shall remain in effect for 25 years as from the date of the award of the production concession, in addition
to any remaining exploration term at the date of such award. The Hydrocarbons Law further provides for the concession term to be
extended for up to 10 additional years, subject to terms and conditions approved by the grantor at the time of the extension. Under
Law No. 26,197, the authority to extend the terms of current and new permits and concessions and has been vested in the
governments of the provinces in which the relevant block is located (and the Argentine government in respect of offshore blocks
beyond 12 nautical miles). In order to be entitled to the extension, a concessionaire, such as us, must have complied with all of its
obligations under the Hydrocarbons Law, including, without limitation, evidence of payment of taxes
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and royalties and compliance with environmental, investment and development obligations. Upon the expiration of the 10-year
extension period of the current concessions, the provinces are entitled to award new concessions or contracts in respect of the relevant
blocks.
A production concession also confers on the holder the right to conduct all activities necessary or appropriate for the production
of oil and gas, provided that such activities do not interfere with the activities of other holders of exploration permits and production
concessions. A production concession entitles the holder to obtain a transportation concession for the oil and gas produced. See “—
Transportation of Liquid Hydrocarbons” below.
Exploration permits and production concessions require holders to carry out all necessary work to find or extract hydrocarbons,
using appropriate techniques, and to make specified investments. In addition, holders are required to:
• avoid damage to oil fields and waste of hydrocarbons;
• adopt adequate measures to avoid accidents and damage to agricultural activities, fishing industry, communications networks
and the water table; and
• comply with all applicable federal, provincial and municipal laws and regulations.
According to the Hydrocarbons Law, holders of production concessions, including us, also are required to pay royalties to the
province where production occurs. A 12% royalty is payable on the value at the wellhead (equal to the price upon delivery of the
product, less transportation, treatment costs and other deductions) of crude oil production and the natural gas volumes
commercialized. The value is calculated based upon the volume and the sale price of the crude oil and gas produced, less the costs of
transportation and storage. In addition, if a concession holder allots crude oil production for further industrialization processes at its
plants, the concession holder is required to agree with the provincial authorities or the Argentine Secretariat of Energy, as applicable,
on the reference price to be used for purposes of calculating royalties.
Considering, among other things, that as a result of Resolution 394/2007 of the Ministry of Economy and Production, Argentine
companies began to negotiate the price for crude oil in the domestic market, which would in turn be used as the basis for calculation
of royalties, the Argentine Secretariat of Energy passed Disposition No. 1, which sets a minimum reference price for the calculation
of royalties and does not permit downward adjustments of this price based upon the quality of crude oil. As of the date of this annual
report, we have negotiated with certain third parties sale prices of crude oil that we have used as the basis for calculating and paying
royalties according to the methodology set forth in the Hydrocarbons Law.
In addition to the above, the Public Emergency Law, which created the export withholdings, established that export
withholdings were not to be deducted from the export price for purposes of calculating the 12% royalties. The royalty expense is
accounted for as a production cost. Any oil and gas produced by the holder of an exploration permit prior to the grant of a production
concession is subject to the payment of a 15% royalty. See “Item 8. Financial Information—Legal Proceedings—Argentina—
Neuquén royalty disputes.”
Furthermore, pursuant to Sections 57 and 58 of the Hydrocarbons Law, holders of exploration permits and production
concessions must pay an annual surface fee that is based on acreage of each block and which varies depending on the phase of the
operation, i.e., exploration or production, and in the case of the former, depending on the relevant period of the exploration permit.
Executive Decree No. 1,454/07, dated October 17, 2007, which significantly increased the amount of exploration and production
surface fees expressed in Argentine pesos that are payable to the provinces in which the hydrocarbon fields are located or, in the case
of offshore and certain other fields, to the Argentine government. In all cases, the surface fee increased by at least eight times,
although the effect of this increase has not been material to us due to the relatively low sums involved.
Exploration permits and production or transportation concessions may be terminated upon any of the following events:
• failure to pay annual surface taxes within three months of the due date;
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• failure to pay royalties within three months of the due date;
• substantial and unjustifiable failure to comply with specified production, conservation, investment, work or other obligations;
• repeated failure to provide information to, or facilitate inspection by, authorities or to utilize adequate technology in
operations;
• in the case of exploration permits, failure to apply for a production concession within 30 days of determining the existence of
commercially exploitable quantities of hydrocarbons;
• bankruptcy of the permit or concession holder;
• death or end of legal existence of the permit or concession holder; or
• failure to transport hydrocarbons for third parties on a non-discriminatory basis or repeated violation of the authorized tariffs
for such transportation.
The Hydrocarbons Law further provides that a cure period, of a duration to be determined by the Argentine Secretariat of
Energy and/or the competent provincial authorities, must be provided to the defaulting concessionaire prior to the termination.
When a production concession expires or terminates, all oil and gas wells, operating and maintenance equipment and facilities
automatically revert to the province where the reservoir is located or to the Argentine government in the case of reservoirs under
federal jurisdiction (i.e., located on the continental shelf or beyond 12 nautical miles offshore), without compensation to the holder of
the concession.
Certain of our production concessions expire in 2017. The granting of an extension is an unregulated process and normally
involves lengthy negotiations between the applicant and the relevant government. Although the Hydrocarbons Law provides that
applications must be submitted at least six months prior to the concession expiration date, it is industry practice to commence the
process far earlier, typically as soon as the technical and economic feasibility of new investment projects beyond the concession term
become apparent.
On March 16, 2006, the Argentine Secretariat of Energy issued Resolution S.E. No. 324/06 establishing that holders of
exploration permits and hydrocarbon concessions must file with such agency details of their proved reserves existing in each of their
areas, certified by an external reserves auditor, each year. Holders of hydrocarbon concessions that export hydrocarbons are obliged
to certify their oil and gas proved reserves. The aforementioned certification only has the meaning established by Resolution S.E.
No. 324/06, according to which it is not to be interpreted as a certification of oil and gas reserves under the SEC rules. See “Item 4.
Information on the Company—Exploration and Development—Reserves.”
Extension of Exploitation Concessions in the province of Neuquén
i.
Agreement with the province of Neuquén in the year 2008. In September 2008, pursuant to the notice provided to
companies holding exploitation concessions by the province of Neuquén, through Provincial Decree No. 822/08, YPF
entered into a memorandum of agreement and an Addendum to such agreement (hereinafter, the “Memorandum of
Agreement”) to extend the term of the exploitation concessions identified below, which was to become effective upon its
approval by the Legislature of the province of Neuquén.
In October 2008, Provincial Act No. 2615 approved the Memorandum of Agreement, which was enacted by Provincial
Executive Decree No. 1830/08, and was published in Official Gazette No. 3109 of the province of Neuquén.
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The principal terms of the Memorandum of Agreement entered into by YPF and the province of Neuquén are described
below:
• Concessions involved: Cerro Bandera, Señal Cerro Bayo, Chihuido de la Sierra Negra, El Portón, Filo Morado,
Octógono, Señal Picada – Punta Barda and Puesto Hernández.
• Extension of concession terms: exploitation concession terms, which were originally set to expire on November 14,
2017, are extended for a 10-year term; therefore, they will expire on November 14, 2027.
• Pursuant to Provincial Decree No. 822/08, YPF has undertaken to do the following upon the execution of the
Memorandum of Agreement: (i) to make, on the date specified in the Memorandum of Agreement, initial payments of
U.S.$109 million, U.S.$26 million, and U.S.$40 million, to be applied to different accounts of different provincial
agencies; (ii) to pay the province of Neuquén an “Extraordinary Production Royalty” of 3% of the production of the
areas involved in the Memorandum of Agreement. In addition, the parties agreed to make additional adjustments of up
to an additional 3% in the event of extraordinary income due to lower export duties or if YPF actually received a higher
price for the sale of crude oil and/or natural gas according to a mechanism and reference values established in the
Memorandum of Agreement; (iii) to carry out exploration activities in the remaining exploration areas and make certain
investments and expenditures in a total amount of U.S.$3,200 million until 2027, as stipulated in the Memorandum of
Agreement, on the exploitation concessions that constitute the subject-matter of the mentioned Memorandum of
Agreement; and (iv) to make “Corporate Social Responsibility” contributions to the province of Neuquén in an amount
of U.S.$20 million in the years 2008, 2009 and 2010. The purpose of such contributions is to contribute to the
development of the province of Neuquén in terms of education, environment, health, culture, science and research and
community development.
ii.
Agreement with the province of Neuquén regarding Aguada Pichana and San Roque Concessions. In addition, in January
2009, YPF, jointly with Total Austral S.A., Pan American Energy LLC Sucursal Argentina and Wintershall Energía S.A.
entered into a memorandum of agreement with the province of Neuquén, to extend until 2027 the term of Aguada Pichana
and San Roque concessions. In March 2009, such memorandum was approved by all parties. The parties also agreed to the
following: (i) to make a total initial payment of U.S.$88.3 million, with each company paying a share that is pro rata to its
working interest in the area (YPF is to pay U.S.$26.3 million based on its interest); (ii) to pay the province an
“Extraordinary Production Royalty” of 3% of the production of the areas involved and to make additional adjustments to
royalty payments of up to 3% in the event of “extraordinary income” as defined in the agreement (the additional
adjustments to royalty payments are incremental and are contingent upon the average price of oil and diesel, as charged by
YPF, being above certain specified thresholds during a given period); (iii) to carry out exploration activities in the
remaining exploration areas and make certain investments and expenditures in a total amount of U.S.$883 million through
2027; and (iv) to make “Corporate Social Responsibility” contributions to the province of Neuquén in an amount of
U.S.$10.1 million (YPF is to pay U.S.$3.0 million based on its interest).
iii. Agreement with the province of Neuquén regarding Lindero Atravesado Concession. In May, 2009, YPF, jointly with Pan
American Energy LLC Sucursal Argentina entered into a memorandum of agreement with the province of Neuquén, to
extend until the year 2026 the term of Lindero Atravesado Concession. In June 2009, the memorandum was approved by
all parties. The parties also agreed to the following: (i) to make a total initial payment of U.S.$7.8 million, with each
company paying a share that is pro rata to its working interest in the area (YPF is to pay U.S.$2.9 million based on its
interest); ii) to pay the province an “Extraordinary Production Royalty” of 3% of the production of the areas involved and
to make additional adjustments to royalty payments of up to 3% in the event of “extraordinary income” as defined in the
agreement (the additional adjustments to royalty payments are incremental and are contingent upon the average price of oil
and diesel, as charged by YPF, being above certain specified thresholds during a given period); iii) to carry out exploration
activities in the remaining exploration areas and make certain
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investments and expenditures in a total amount of U.S.$131.9 million through 2026; and iv) to make “Corporate Social
Responsibility” contributions to the province of Neuquén in an amount of U.S.$0.9 million (YPF is to pay U.S.$0.3 million
based on its interest). Notwithstanding the approval of the memorandum by the province of Neuquén, it will become
effective with the publication of a Decree of the province. As of the date of this annual report, such publication is still
pending.
Security Zones Legislation
Argentine law restricts the ability of non-Argentine companies to own real estate, oil concessions or mineral rights located
within, or with respect to areas defined as, security zones (principally border areas). Prior approval of the Argentine government is
required:
• for non-Argentine shareholders to acquire control of us; or
• if and when the majority of our shares belong to non-Argentine shareholders, such as is currently the case, for any additional
acquisition of real estate, mineral rights, oil or other Argentine government concessions located within, or with respect to,
security zones.
Because approval of Class A shareholders is required for a change in our control under our bylaws, and approval of the
executive branch of the Argentine government or provincial governments is required for the grant or transfer of hydrocarbon permits
and concessions, we believe that possible additional requirements under the security zone legislation will not have a significant
impact on our operations.
Natural Gas Transportation and Distribution
In June 1992, the Natural Gas Law was passed, providing for the privatization of Gas del Estado and the deregulation of the
price of natural gas. To effect the privatization of Gas del Estado, the five main trunk lines of the gas transmission system were
divided into two systems principally on a geographical basis (the northern and the southern trunk pipeline systems). This was
designed to give both systems access to gas sources and to the main centers of demand in and around Buenos Aires. These systems
were transferred into two new transportation companies. The Gas del Estado distribution system was divided into eight regional
distribution companies, including two distribution companies serving the greater Buenos Aires area. Shares of each of the
transportation and distribution companies were sold to consortiums of private bidders. Likewise, in 1997, a distribution license for the
provinces of Chaco, Formosa, Entre Ríos, Corrientes and Misiones was granted to private bidders.
The regulatory structure for the natural gas industry creates an open-access system, under which gas producers, such as us, will
have open access to future available capacity on transmission and distribution systems on a non-discriminatory basis.
Cross-border gas pipelines were built to interconnect Argentina, Chile, Brazil and Uruguay, and producers such as us are
currently exporting natural gas to the Chilean and Brazilian markets, to the extent permitted by the Argentine government. During the
last several years the Argentine authorities have adopted a number of measures restricting exports of natural gas from Argentina,
including issuing domestic supply instruction pursuant to Resolutions Nos. 659 and 752 (which require exporters to supply natural
gas to the Argentine domestic market), issuing express instructions to suspend exports, suspending processing of natural gas and
adopting restrictions on natural gas exports imposed through transportation companies and/or emergency committees created to
address crisis situations. See “—Market Regulation—Natural gas export restrictions and domestic supply preferences.”
Transportation of Liquid Hydrocarbons
The Hydrocarbons Law permits the executive branch of the Argentine government to award 35-year concessions for the
transportation of oil, gas and petroleum products following submission of competitive bids. Pursuant to Law No. 26,197, the relevant
provincial governments have the same powers. Holders of production concessions are entitled to receive a transportation concession
for the oil, gas and petroleum products that they produce. The term of a transportation concession may be extended for an additional
ten-year term upon application to the executive branch. The holder of a transportation concession has the right to:
• transport oil, gas and petroleum products; and
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• construct and operate oil, gas and products pipelines, storage facilities, pump stations, compressor plants, roads, railways and
other facilities and equipment necessary for the efficient operation of a pipeline system.
The holder of a transportation concession is obligated to transport hydrocarbons for third parties on a non-discriminatory basis
for a fee. This obligation, however, applies to producers of oil or gas only to the extent that the concession holder has surplus capacity
available and is expressly subordinated to the transportation requirements of the holder of the concession. Transportation tariffs are
subject to approval by the Argentine Secretariat of Energy for oil and petroleum pipelines and by the National Gas Regulatory
Authority (Ente Nacional Regulador del Gas or “ENARGAS”) for gas pipelines. Upon expiration of a transportation concession, the
pipelines and related facilities automatically revert to the Argentine government without payment to the holder. The Privatization Law
granted us a 35-year transportation concession with respect to the pipelines operated by Yacimientos Petrolíferos Fiscales S.A. at the
time. Gas pipelines and distribution systems sold in connection with the privatization of Gas del Estado are subject to a different
regime under the Natural Gas Law.
Additionally, pursuant to Law No. 26,197, all transportation concessions located entirely within a province’s jurisdiction and not
directly connected to any export pipeline are to be transferred to such province. The executive branch retains the power to regulate
and enforce all transportation concessions located within two or more provinces and all transportation concessions directly connected
to export pipelines.
Refining
Crude oil refining activities conducted by oil producers or others are subject to the prior registration of oil companies in the
registry maintained by the Argentine Secretariat of Energy and compliance with safety and environmental regulations, as well as to
provincial environmental legislation and municipal health and safety inspections.
In January 2008, the Argentine Secretariat of Domestic Commerce issued Resolution No. 14/2008, whereby the refining
companies were instructed to optimize their production in order to obtain maximum volumes according to their capacity.
Executive Decree No. 2014/2008 of November 25, 2008, created the “Refining Plus” program to encourage the production of
diesel fuel and gasoline. The Argentine Secretariat of Energy, by Resolution S.E. No. 1312/2008 of December 1, 2008, approved the
regulations of the program. Refining companies that undertake the construction of a new refinery or the expansion of their refining
and/or conversion capacity, whose plans are approved by the Argentine Secretariat of Energy, will be entitled to receive export duty
credits to be applied to exports of products within the scope of Resolution No. 394/2007 and Resolution No. 127/2008 (Annex) issued
by the Department of Economy and Production.
Market Regulation
Overview
Under the Hydrocarbons Law and the Oil Deregulation Decrees, holders of production concessions, such as us, have the right to
produce and own the oil and gas they extract and are allowed to dispose of such production in the domestic or export markets, in each
case subject to the conditions described below.
The Hydrocarbons Law authorizes the executive branch of the Argentine government to regulate the Argentine oil and gas
markets and prohibits the export of crude oil during any period in which the executive branch finds domestic production to be
insufficient to satisfy domestic demand. If the executive branch restricts the export of crude oil and petroleum products or the free
disposition of natural gas, the Oil Deregulation Decrees provide that producers, refiners and exporters shall receive a price:
• in the case of crude oil and petroleum products, not lower than that of imported crude oil and petroleum products of similar
quality; and
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• in the case of natural gas, not less than 35% of the international price per cubic meter of Arabian light oil, 34° API.
Furthermore, the Oil Deregulation Decrees expressly required the executive branch to give twelve months’ notice of any future
export restrictions. Notwithstanding the above provisions, certain subsequently-enacted Resolutions (Resolution S.E. 1679/04,
Resolution S.E. 532/04 and Resolution of the Ministry of Economy and Production 394/2007) have modified the aforementioned
price mechanism, resulting, in certain cases, in prices to producers below the levels described above.
Production of crude oil and reserves
Executive Decree No. 2014/2008 of November 25, 2008, created the “Petroleum Plus” program to encourage the production of
crude oil and the increase of reserves through new investments in exploration and development. The Argentine Secretariat of Energy,
by Resolution S.E. No. 1312/2008 of December 1, 2008, approved the regulations of the program. The program entitles production
companies, whose plans are approved by the Argentine Secretariat of Energy, which increase their production and reserves within the
scope of the program, to receive export duty credits to be applied to exports of products within the scope of Resolution No. 394/2007
and Resolution No. 127/2008 (Annex) issued by the Department of Economy and Production.
Refined products
In April 2002, the Argentine government and the main oil companies, including us, reached an agreement on a subsidy provided
by the Argentine government to public bus transportation companies. The Agreement on Stability of Supply of Diesel Fuel (Convenio
de Estabilidad de Suministro de Gas Oil) was approved by Executive Decree No. 652/02 and assured the transportation companies
their necessary supply of diesel fuel at a fixed price of Ps.0.75 per liter from April 22, 2002 to July 31, 2002. Additionally, it
established that the oil companies are to be compensated for the difference between the fixed price and the market price through
export duty credits. This agreement was extended through August 31, 2002. Through new price-stabilization agreements, the subsidy
was extended through June 30, 2005 and the fixed price was increased up to Ps.0.82 per liter. After June 25, 2005, the price paid by
transporters was reduced to Ps.0.42 for local public transportation and to Ps.0.62 for the rest of public transportation. Subsequently,
the price paid by urban and suburban transporters was increased, up to Ps.0.55 per liter, the price for the rest of public transportation
remaining at Ps.0.62. In March 2008, Executive Decree No. 449/2008 empowered the Chief of Cabinet to sign annual agreements
extending the diesel fuel subsidy to transportation companies for the fiscal year 2008 and instructed such official to incorporate the
necessary modifications in order to extend the possibility to compensate with export duty credits on all hydrocarbon products
currently exported, and in defect thereof, in cash. As of the date of this annual report, the annual agreement for the fiscal year 2009 is
under negotiation.
The Argentine Secretariat of Energy has issued a series of resolutions affecting the fuel market. For example, Resolution S.E.
No. 1,102/04 created the Registry of Liquid Fuels Supply Points, Self Consumption, Storage, Distributors and Bulk Sellers of Fuels
and Hydrocarbons, and of Compressed Natural Gas; Resolution S.E. No. 1,104/04 created a bulk sales price information module as an
integral part of the federal fuel information system, as well as a mechanism for communication of volumes sold by fuel manufacturers
and by sellers; Resolution S.E. No. 1,834/05 compels service stations and/or supply point operators and/or self consumption of liquid
fuels and hydrocarbons who have requested supply, and have not been supplied, to communicate such situation to the Argentine
Secretariat of Energy; and Resolution S.E. No. 1,879/05 established that refining companies registered by the Argentine Secretariat of
Energy, who are parties to contracts that create any degree of exclusivity between the refining company and the fuel seller, shall
assure continuous, reliable, regular and non-discriminatory supply to its counterparties, giving the right to the seller to obtain the
product from a different source, and thereupon, charging any applicable overcosts to the refining company.
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Disposition S.S.C. No. 157/06 of the Undersecretariat of Fuels provides that fuel sellers who are parties to contracts that create
any degree of exclusivity between the refining company and the fuel seller, and which for any reason are seeking to terminate such
contract, shall report the termination in advance with the Undersecretariat of Fuels in order to inform the Argentine Secretariat of
Domestic Commerce of the situation. In that case, the Argentine Secretariat of Domestic Commerce is to: (i) issue a statement
regarding the validity of the termination of the contract and (ii) use all necessary means to allow the fuel seller terminating the
contract to execute another agreement with a refining company and/or fuel broker in order to guarantee its fuel supply.
Resolution S.E. No. 1,679/04 reinstalled the registry of diesel fuel and crude oil export transactions created by Executive Decree
No. 645/2002, and mandated that producers, sellers, refining companies and any other market agent that wishes to export diesel fuel
or crude oil to register such transaction and to demonstrate that domestic demand has been satisfied and that they have offered the
product to be exported to the domestic market. In addition, Resolution S.E. No. 1338/06 added other petroleum products to the
registration regime created by Executive Decree No. 645/2002, including gasoline, fuel oil and its derivatives, aviation fuel, coke
coal, asphalts, certain petrochemicals and certain lubricants. Resolution No. 715/2007 of the Argentine Secretariat of Energy
empowered the National Refining and Marketing Director to determine the amounts of diesel fuel to be imported by each company, in
specific periods of the year, to compensate exports of products included under the regime of Resolution No. 1679/04; the fulfillment
of this obligation to import diesel fuel is necessary to obtain authorization to export the products included under Decree No. 645/2002
(crude, fuel oil, diesel fuel, coke coal and gasoline, among others). In addition, Resolution No. 25/06 of the Argentine Secretariat of
Domestic Commerce, issued within the framework of Law No. 20, 680, imposes on each Argentine refining company the obligation
to supply all reasonable diesel fuel demand, by supplying certain minimum volumes (established pursuant to the resolution) to their
usual customers, mainly service station operators and distributors.
Resolution S.E. No. 459/07, of July 12, 2007, created the “Energy Substitution Program,” which is intended to mitigate gas and
electricity shortages. This program encourages industrial users to substitute natural gas and electricity use with diesel, fuel oil and
LPG. The Argentine government allocated approximately U.S.$310 million in 2007 in subsidies to fund the gap between the price of
natural gas and electricity on the one hand, and the price of the substitute fuel on the other hand.
Resolution No. 1451/2008 extended until December 31, 2009 the Energy Substitution Program and Rule No. 287/2008, issued
by the Sub-secretary of Coordination and Control on December 19, 2008, approved the following general plans for the
implementation of the Energy Substitution Program in 2009:
1) General Plan for the Supply of Gaseous Fuels, including:
(i) a plan for the supply of regasified liquefied natural gas (LNG), which provides for the construction, maintenance,
management and administration of a system for the regasification of LNG and the supply of natural gas to the Argentine market,
and empowers ENARSA, directly or through third parties, to take all necessary actions, including the purchase of the LNG, for
such purpose;
(ii) a plan for the supply of propane, which provides for the management of a system to acquire and deliver propane to be
injected into the natural gas distribution network of the province of Buenos Aires, and empowers ENARSA, directly or through
third parties, to take all necessary actions, including the purchase of propane, for such purpose; and
(iii) a plan for the provision of imported gas that may be necessary to fulfill the objectives of the Energy Substitution Program.
In this respect, ENARSA will purchase the natural gas necessary to fulfill domestic demand.
2) General Plan for the Supply Liquid Fuels, including:
(i) a plan designed to guarantee that demand for liquid fuel in the Argentine market is met. For such purpose, ENARSA, directly
or through third parties, is empowered to buy and sell liquid fuels; and
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(ii) a plan to encourage and subsidize replacement of natural gas and/or electric power consumption with the use of alternative
fuels in productive activities and/or electric power generation through an efficient use of gas. ENARSA, directly or through third
parties, is empowered to manage the mechanisms for the supply of liquid fuels to replace the natural gas.
Natural gas
In January 2004, Executive Decree No. 180/04 (i) created the Mercado Electrónico del Gas (MEG) for the trade of daily spot
sales of gas and a secondary market of transportation and distribution services and (ii) established information duties for buyers and
sellers of natural gas in relation to their respective commercial operations, required as a condition to be authorized to inject into and
transport through the transportation system any volume of natural gas (further regulated by Resolution No. 1,146/04 issued on
November 9, 2004 and Resolution No. 882/05 issued by the Argentine Secretariat of Energy). According to Executive Decree
No. 180/04, all daily spot sales of natural gas must be traded within the MEG.
In January 2004, Executive Decree No. 181/04 authorized the Argentine Secretariat of Energy to negotiate with natural gas
producers a pricing mechanism for natural gas supplied to industries and electric generation companies. On April 2, 2004, the
Argentine Secretariat of Energy and gas producers signed an agreement which was ratified by Resolution No. 208/04 issued by the
Ministry of Federal Planning, Public Investment and Services. The aim of the agreement was to implement a scheme for the
normalization of natural gas prices following the 2001 crisis. The main aspects of the agreement were: (i) initial price adjustments
applied exclusively to gas supplied by producers to industrial users, new direct consumers and electricity generators (to the extent that
electricity was destined for the domestic market); (ii) prices were adjusted as of May 10, 2004; and (iii) the Argentine Secretariat of
Energy would implement a progressive scheme for the normalization of the price of natural gas destined to residential end-users and
small commercial users, which was never implemented. This agreement expired on December 31, 2006.
On June 14, 2007, Resolution No. 599/07 of the Argentine Secretariat of Energy approved a proposal of agreement with natural
gas producers regarding the supply of natural gas to the domestic market during the period 2007 through 2011 (the “Propuesta de
Acuerdo,” or “Agreement 2007-2011”), giving such producers a five-business-day term to enter into the Agreement 2007-2011. If
within that term, the Agreement 2007-2011 was not executed by a sufficient number of producers to make it viable, the Argentine
Secretariat of Energy would disregard the Agreement and enact the Procedures for Complementary Supply of the Internal Market
2007-2011 (Procedimientos de Abastecimiento Complementario al Mercado Interno 2007-2011) (not described in Resolution
No. 599/07). We executed the agreement taking into account that natural gas exports and certain domestic sales of producers that do
not enter into the Agreement 2007-2011 are to be called upon first in order to satisfy domestic demand, before the export sales of the
producers that have signed the Agreement 2007-2011 are affected. While producers are authorized to withdraw from the Agreement
2007-2011 under its terms, if they do so such producers will be treated as any producer that has not entered into the Agreement 2007-
2011 in the first place.
The purpose of the Agreement 2007-2011 is to guarantee the supply of the domestic market demand at the levels registered in
2006, plus the growth in demand by residential and small commercial customers (the “agreed demand levels”). Producers that have
entered into the Agreement 2007-2011 would commit to supply a part of the agreed demand levels according to certain shares
determined for each producer based upon its share of production for the 36 months prior to April 2004. For this period, our share of
production was approximately 36.5%, or 36.8 mmcm/d (or 1,300 mmcf/d), which in 2008 represented approximately 78% of our
production and was sold at an average price of U.S.$2.0 per mmBtu. The Agreement 2007-2011 also provides guidelines for the terms
of supply agreements for each market segment, and certain pricing limitations for each market segment of the agreed demand levels.
In order to guarantee any domestic market demand of natural gas in excess of the agreed demand levels, Resolution S.E. No. 599/07
maintains the effectiveness of the Resolutions that implemented the curtailment of natural gas export commitments and the re-routing
of such natural gas volumes to certain sectors of the domestic market. See “—Natural gas export restrictions and domestic supply
priorities.” The Resolution also states that the Agreement 2007-2011 does not prevent the possible suspension or termination of
export permits.
We were compelled to execute the Agreement 2007-2011, among other reasons, in order to mitigate our potential damages.
Producers failing to sign the Agreement 2007-2011 could be penalized and subject to other
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unfavorable measures by regulatory authorities. However, we expressly stated that the execution of the Agreement 2007-2011 did not
entail any recognition by us of the validity of the terms and conditions of the various Resolutions of the Argentine Secretariat of
Energy establishing programs for the curtailment or re-routing of exports to satisfy domestic demand. We challenged Resolution
No. 599/07 and stated that we signed the Agreement 2007-2011 taking into account the potential consequences of not doing so. While
the challenge is pending, we are complying with the terms of the Agreement.
The Department of Federal Planning, Public Investment and Services, by its Resolution S.E. No. 459/07 of July 12, 2007,
created the “Energy Substitution Program,” which was designed to mitigate shortages of gas and electricity during the Argentine
winter of 2007. The program encouraged industrial users to substitute natural gas and electricity use with diesel, fuel oil and LPG.
Resolution N° 1451/08 extended the Energy Substitution Program until December 31, 2009.
The Argentine Secretariat created, by its Resolution No. 24/2008 issued on March 13, 2008, a program named “Gas Plus” to
encourage natural gas production resulting from new reserves discoveries, new fields and tight gas, among other factors. The natural
gas produced under the Gas Plus program will not be subject to Agreement 2007-2011 and will not be subject to the price conditions
established under such Agreement.
The Argentine Secretariat of Energy, through Resolution No. 1031/2008 issued on September 12, 2008, modified Resolution
No. 24/2007, establishing the specific conditions petitioners must meet in order to qualify for the Gas Plus program.
The Argentine Secretariat of Energy, through Resolution No. 1070/2008 issued on October 1, 2008, ratified the Complementary
Agreement entered into between Argentine natural gas producers and the Argentine Secretariat of Energy on September 19, 2008,
which (i) modified gas prices at the wellhead and segmented the residential sector in terms of natural gas demand, and (ii) established
the requirement that natural gas producers contribute to the fiduciary fund created by Law No. 26,020. See “—Market Regulation—
Liquefied Petroleum Gas.”
Additionally, Executive Decree No. 2067/2008 of December 3, 2008, created a fiduciary fund to finance natural gas imports
destined for injection into the national pipeline system, when required to satisfy the internal demand. The fiduciary fund will be
funded through the following mechanisms: (i) various tariff charges to be paid by users of regular transport and distribution services,
gas consumers that receive gas directly from producers and companies that process natural gas; (ii) special credit programs that may
be arranged with domestic or international organizations; and (iii) specific contributions assessed by the Argentine Secretariat of
Energy on participants in the natural gas industry. To date, the competent authorities have only imposed the tariff on users of
transport and distribution services.
Natural gas export restrictions and domestic supply priorities
In March 2004, the Argentine Secretariat of Energy issued Resolution S.E. No. 265/04 adopting measures intended to ensure the
adequate supply of natural gas to the domestic market and regulate its consequences on electricity wholesale prices. Among the
measures adopted were:
• the suspension of all exports of surpluses of natural gas;
• the suspension of automatic approvals of requests to export natural gas;
• the suspension of all applications for new authorizations to export natural gas filed or to be filed before the Argentine
Secretariat of Energy; and
• authorizing the Undersecretariat of Fuels to create a rationalization plan of gas exports and transportation capacity.
In March 2004, the Undersecretariat of Fuels, pursuant to the authority given to it under Resolution S.E. No. 265/04, issued
Regulation S.S.C. No. 27/04 establishing a rationalization plan of gas exports and transportation capacity. Among other things,
Regulation No. 27/04 established a limit on natural gas export authorizations, which, absent an express authorization by the
Undersecretariat of Fuels, may not be executed for volumes exceeding exports registered during 2003.
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In June 2004, the Argentine Secretariat of Energy issued Resolution S.E. No. 659/04, which established a new program to assure
natural gas supply to the domestic market (which substitutes for the program created by Regulation No. S.S.C. 27/04). Under
Resolution S.E. No. 659/04 (amended by Resolution S.E. No. 1,681/04), natural gas exports may be restricted due to shortages of
natural gas in the domestic market, because exporting producers may be required to supply additional volumes of natural gas to the
domestic market beyond those that they are contractually committed to supply. The export of natural gas under current export permits
is conditioned on the fulfillment of additional supply requirements imposed on exporting producers by governmental authorities.
This program was further amended and supplemented by Resolution S.E. No. 752/05 issued by the Argentine Secretariat of
Energy in May 2005, which further reduced the ability of producers to export natural gas, and created a mechanism under which the
Argentine Secretariat of Energy may require exporting producers to supply additional volumes to domestic consumers during a
seasonal period (Permanent Additional Supply), which volumes of natural gas are also not committed by the exporting producers.
Based on the provisions of Rule No. 27/04, Resolution S.E. No. 659/04 and Resolution S.E. No. 752/05, the Argentine Secretariat of
Energy and/or the Undersecretariat of Fuels have instructed us to re-direct natural gas export volumes to the internal market, thereby
affecting natural gas export commitments. We have challenged the validity of the aforementioned regulations and resolutions, and has
invoked the occurrence of a force majeure event under the corresponding natural gas export purchase and sale agreements. The
counterparties to such agreements have rejected our position. See “Item 8. Financial Information—Legal Proceedings.”
Resolution S.E. No. 752/05 also establishes (i) a special market, open and anonymous, for compressed natural gas stations to
purchase natural gas under regulated commercial conditions, with the demand being ensured by the Argentine Secretariat of Energy
through Permanent Additional Supply required of exporting producers, and (ii) a mechanism of standardized irrevocable offers for
electric power generators and industrial and commercial consumers to obtain supply of natural gas, with the demand being ensured by
the Argentine Secretariat of Energy through the issuance of the Permanent Additional Supply mentioned above.
Pursuant to the standardized irrevocable offers procedure mentioned above, which operates at the MEG, any direct consumer
may bid for a term gas purchase at the export average gas price net of withholdings by basin. The volume necessary to satisfy the
standardized irrevocable offers which have not been satisfied will be required as a Permanent Additional Supply only until the end of
the seasonal period during which the unsatisfied requests should be made (October–April or May–September). Such Additional
Supply will be requested from the producers that export gas and that inject the natural gas from the basins that are able to supply those
unsatisfied irrevocable offers. Resolution of the Argentine Secretariat of Energy S.E. No. 1886/2006, published on January 4, 2007,
extended the term of effectiveness of this mechanism of standardized irrevocable offers until 2016, and empowered the
Undersecretariat of Fuels to suspend its effectiveness subject to the satisfaction of internal demand of natural gas achieved by means
of regulations, agreements or due to the discovery of reserves.
By means of Resolution S.E. No. 1329/06, later supplemented by Note SSC No. 1011/07, the Argentine Secretariat of Energy
forced producers to give first priority in their injections of natural gas into the gas pipelines to certain preferential consumers and
obligates transportation companies to guarantee these priorities through the allocation of transportation capacity. In general, these
regulations subordinate all exports of natural gas to the prior delivery of natural gas volumes that are sufficient to satisfy domestic
market demand.
Also, beginning during the severe Argentine winter in 2007 and continuing thereafter, we and most of gas producers as well as
the transportation companies received instructions from the government to cut off all exports to zero, except for certain volumes
addressed to satisfy Chilean residential consumptions and other specific consumptions.
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Liquefied petroleum gas
Law No. 26,020 enacted on March 9, 2005 sets forth the regulatory framework for the industry and commercialization of LPG.
This law regulates the activities of production, bottling, transportation, storage, distribution, and commercialization of LPG in
Argentina and declares such activities to be of public interest. Among other things, the law:
• creates the registry of LPG bottlers, obliging LPG bottlers to register the bottles of their property;
• protects the trademarks of LPG bottlers;
• creates a reference price system, pursuant to which, the Argentine Secretariat of Energy shall periodically publish reference
prices for LPG sold in bottles of 45 kilograms or less;
• required the Argentine Secretariat of Energy to comply with the following tasks: (i) create LPG transfer mechanisms, in order
to guarantee access to the product to all the agents of the supply chain; (ii) establish mechanisms for the stabilization of LPG
prices charged to local LPG bottlers; and (iii) together with the CNDC, analyze the composition of the LPG market and its
behavior, in order to establish limitations on market concentration in each phase, or limitations to the vertical integration
throughout the chain of the LPG industry (such limitations apply to affiliates, subsidiaries and controlled companies);
• grants open access to LPG storage facilities; and
• creates a fiduciary fund to finance bottled LPG consumption for low-income communities in Argentina and the extension of
the natural gas distribution network to new areas, where technically possible and economically feasible. The fiduciary fund
will be funded through the following mechanisms: (i) penalties established by Law 26,020, (ii) assignments from the General
State Budget, (iii) funds from special credit programs that may be arranged with national or international institutions, and
(iv) funds that may be assessed by the Argentine Secretariat of Energy on participants in the LPG industry.
The Argentine Secretariat of Energy established, through several subsequent resolutions, reference prices applicable to sales of
LPG bottles of less than 45 kilograms, and to sales of bulk LPG exclusively to LPG bottlers. Also, the Argentine Secretariat of
Energy approved the method for calculating the LPG export parity to be updated monthly by the Undersecretariat of Fuels. The
Argentine Secretariat of Energy in 2007 increased the LPG volumes to be sold to bottlers at the reference prices set forth in the
above-mentioned resolutions.
Disposition 168/05 of the Undersecretariat of Fuels requires companies intending to export LPG to first obtain an authorization
from the Argentine Secretariat of Energy. Companies seeking to export LPG must first demonstrate that the local demand is satisfied
or that an offer to sell LPG to local demand has been made and rejected.
On September 19, 2008, the Secretariat of Energy and Argentine LPG producers entered into an Agreement for the stability of
the price of LPG in the domestic market. The Agreement applies only to LPG sold to bottlers that declare their intention to bottle such
LPG in LPG bottles of 10, 12 or 15 kilograms. The Agreement requires LPG producers to supply LPG bottlers with the same volume
of LPG supplied the prior year and to accept the price per ton set forth in the Agreement. The Agreement expires on December 1,
2009, and it may only be extended by express consent of both parties.
Argentine Environmental Regulations
The enactment of Articles 41 and 43 in the National Constitution, as amended in 1994, as well as new federal, provincial and
municipal legislation, has strengthened the legal framework dealing with damage to the environment. Legislative and government
agencies have become more vigilant in enforcing the laws and regulations regarding the environment, increasing sanctions for
environmental violations.
Under the amended Articles 41 and 43 of the National Constitution, all Argentine inhabitants have both the right to an
undamaged environment and a duty to protect it. The primary obligation of any person held liable for
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environmental damage is to rectify such damage according to and within the scope of applicable law. The federal government sets
forth the minimum standards for the protection of the environment and the provinces and municipalities establish specific standards
and implementing regulations.
Federal, provincial and municipal laws and regulations relating to environmental quality in Argentina affect our operations.
These laws and regulations set standards for certain aspects of environmental quality, provide for penalties and other liabilities for the
violation of such standards, and establish remedial obligations in certain circumstances.
In general, we are subject to the requirements of the following federal environmental regulations (including the regulations
issued thereunder):
• National Constitution (Articles 41 and 43);
• Law No. 25,675 on National Environmental Policy;
• Law No. 25,612 on Integrated Management of Industrial and Service Industry Waste;
• Law No. 24,051 on Hazardous Waste;
• Law No. 20,284 on Clean Air;
• Law No. 25,688 on Environmental Management of Waters;
• Law No. 25,670 on the Management and Elimination of Polychlorinated Biphenyls;
• Criminal Code; and
• Civil Code, which sets forth the general rules of tort law.
These laws address environmental issues, including limits on the discharge of waste associated with oil and gas operations,
investigation and cleanup of hazardous substances, workplace safety and health, natural resource damages claims and toxic tort
liabilities. Furthermore, these laws typically require compliance with associated regulations and permits and provide for the
imposition of penalties in case of non-compliance.
In addition, we are subject to various other provincial and municipal regulations, including those relating to gas venting, oil
spills and well abandonment, among other matters.
By Resolution No. 404/94, the Argentine Secretariat of Energy amended Resolution No. 419/93, and created the Registry of
Independent Professionals and Safety Auditing Companies (Registro de Profesionales Independientes y Empresas Auditoras de
Seguridad), which may act with respect to areas of hydrocarbons storage, oil refineries, gas stations, fuel commercialization plants
and plants for fractionation of LPG in containers or cylinders. The Resolution provides that external audits of oil refineries, gas
stations and all fuel storage plants must be carried out by professionals registered in the Registry. Domestic fuel manufacturing
companies and companies that sell fuels are prohibited from supplying these products to any station failing to comply with its
obligations. Penalties for failure to perform the audits and remedial or safety tasks include the disqualification of plants or gas
stations. In addition, a set of obligations is established in relation to underground fuel storage systems, including a mechanism for
instant notification in cases of loss or suspicion of loss from the storage facilities.
On July 19, 2001, the Secretariat of Environmental Policy of the province of Buenos Aires issued Resolution No. 1037/01
ordering us to clean up certain areas adjacent to the La Plata refinery. The resolution was appealed through an administrative
procedure which has not yet been resolved. Nevertheless, we have commenced certain works in order to identify potential technical
solutions for the treatment of the historical contamination, while reserving that the remediation must be made by the parties
responsible for the environmental damage. Under current law, the Argentine government has the obligation to indemnify us against
any liability and hold us harmless for events and claims arising prior to January 1, 1991, according to Law No. 22,145.
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During 2005, the Argentine Secretariat of Energy, by means of Resolution No. 785/05, created the National Program of
Hydrocarbons Warehousing Aerial Tank Loss Control, a measure aimed at reducing and correcting environmental pollution caused
by hydrocarbons warehousing-aerial tanks. We have commenced the development and implementation of a technical and
environmental audit plan as required by this Resolution.
The above description of the material Argentine environmental regulations is only a summary and does not purport to be a
comprehensive description of the Argentine environmental regulatory framework. The summary is based upon Argentine regulations
related to environmental issues as in effect on the date of this annual report, and such regulations are subject to change.
U.S. Environmental Regulations
In addition, federal, state and local laws and regulations relating to health, safety and environmental quality in the United States,
where YPF Holdings Inc. (“YPF Holdings”) operates, affect the operations of this subsidiary. YPF Holdings’ U.S. operations,
conducted primarily through Maxus Energy Corporation (“Maxus”), are subject to the requirements of the following U.S.
environmental laws:
• Safe Drinking Water Act;
• Clean Water Act;
• Oil Pollution Act;
• Clean Air Act;
• Resource Conservation and Recovery Act;
• National Environmental Policy Act;
• Occupational Safety and Health Act;
• Comprehensive Environmental Response, Compensation and Liability Act; and
• various other federal, state and local laws.
These laws and regulations set various standards for many aspects of health, safety and environmental quality (including limits
on discharges associated with oil and gas operations), provide for fines and criminal penalties and other consequences (including
limits on operations and loss of applicable permits) for the violation of such standards, establish procedures affecting location of
facilities and other operations, and in certain circumstances impose obligations concerning reporting, investigation and remediation,
as well as liability for natural resource damages and toxic tort claims.
Taxation
Holders of exploration permits and production concessions are subject to federal, provincial and municipal taxes and regular
customs duties on imports. The Hydrocarbons Law grants such holders a legal guarantee against new taxes and certain tax increases
at the provincial and municipal levels.
Pursuant to Sections 57 and 58 of the Hydrocarbons Law, holders of exploration permits and production concessions must pay
an annual surface fee that is based on acreage of each block and which varies depending on the phase of the operation, i.e.,
exploration or production, and in the case of the former, depending on the relevant period of the exploration permit. On October 17,
2007, the Official Gazette published Executive Decree No. 1,454/07, which significantly increased the amount of exploration and
production surface fees expressed in Argentine pesos that are payable to the different jurisdictions where the hydrocarbon fields are
located. See “—Exploration and Production.”
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In addition, “net profit” (as defined in the Hydrocarbons Law) of holders of permits or concessions accruing from activity as
such holders might be subject to the application of a special 55% income tax. This tax has never been applied. Each permit or
concession granted to an entity other than us has provided that the holder thereof is subject instead to the general Argentine tax
regime, and a decree of the executive branch of the Argentine government provides that we are also subject to the general Argentine
tax regime.
Following the introduction of market prices for downstream petroleum products in connection with the deregulation of the
petroleum industry, Law No. 23,966 established a volume-based tax on transfers of certain types of fuel, replacing the prior regime,
which was based on the regulated price. Law No. 25,745, modified, effective as of August 2003, the mechanism for calculating the
tax, replacing the old fixed value per liter according to the type of fuel for a percentage to apply to the sales price, maintaining the old
fixed value as the minimum tax.
Dividends distributed by us to our shareholders, regardless of their country of residence, are exempt from income tax in
Argentina. However, dividends distributed in excess of the accumulated earnings, determined according to the provisions of the
Argentine Income Tax Law by the end of the fiscal year prior to the year when the dividends are distributed, shall be subject to a 35%
tax on such excess. The tax must be withheld by the distributing company.
Holding of our shares by individuals resident in Argentina or abroad and corporations, any type of legal entity, enterprise,
permanent establishment, estate or resident abroad shall be subject to personal assets tax on the holdings by December 31st every
year. The tax basis shall be the percentage net equity of each shareholder, and the tax rate is 0.5%. We shall act as a substitute obligor
and pay the tax. It shall be entitled to recover the amount paid even withholding and/or foreclosing the assets that generated the tax
liability.
Export taxes
In 2002, the Argentine government began to impose customs duties on the export of hydrocarbons. Export tax rates were
increased on crude oil 20%, on butane, methane and LPG to 20% and gasoline and diesel fuel to 5%. In May 2004, Resolution
No. 337/04 of the Ministry of Economy and Production increased export duties on crude oil to 25%. These export tax rates were
increased again in 2004, when the Ministry of Economy and Production issued Resolution No. 532/04, establishing a progressive
scheme of export duties for crude oil, with rates ranging from 25% to 45%, depending on the quotation of the WTI reference price at
the time of the exportation. In addition, in May 2004, pursuant to Resolution No. 645/04 of the Ministry of Economy and Production,
an export duty on natural gas and natural gas liquids was established at a rate of 20%. The export duty on natural gas was increased
again in July 2006, when the Ministry of Economy and Production increased the rate to 45% and instructed the Customs General
Administration to apply the price fixed by the Framework Agreement between Argentina and Bolivia as the base price to which to
apply the new tax rate, irrespective of the actual sales price. In addition, on October 10, 2006, the Ministry of Economy and
Production imposed prevalent export duties on exports from the Tierra del Fuego province, which were previously exempted from
taxes. Moreover, in May 2007 the Ministry of Economy and Production increased to 25% the export duty on butane, propane and
LPG. There can be no assurances as to future levels of export taxes.
Resolution No. 394/2007 of the Ministry of Economy and Production, effective as of November 16, 2007, increased export
duties on Argentine oil exports (as defined by the regulator) on crude oil and other crude derivatives products. The new regime
provides that when the WTI international price exceeds the reference price, which is fixed at U.S.$60.9/barrel, the producer shall be
allowed to collect at U.S.$42/barrel, with the remainder being withheld by the Argentine government as an export tax. If the WTI
international price is under the reference price but over U.S.$45/barrel, a 45% withholding rate will apply. If such price is under
U.S.$45/barrel, the applicable export tax is to be determined by the Argentine government within a term of 90 business days.
Notwithstanding that the WTI international price has recently traded under U.S.$45/barrel from time to time, the Argentine
government has not yet established a new withholding rate, and the 45% withholding rate has continued to apply.
Resolution No. 127/2008 of the Ministry of Economy and Production increased export duties applicable to natural gas exports
from 45% to 100%, mandating a valuation basis for the calculation of the duty as the highest
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price established in any contract of any Argentine importer for the import of gas (abandoning the previously applicable reference
price set by the Framework Agreement between Argentina and Bolivia mentioned above). Resolution No. 127/2008 provides with
respect to LPG products (including butane, propane and blends thereof) that if the international price of the relevant LPG product, as
notified daily by the Argentine Secretariat of Energy, is under the reference price established for such product in the Resolution
(U.S.$338/m3 for propane, U.S.$393/m3 for butane and U.S.$363/m3 for blends of the two), the applicable export duty for such
product will be 45%. If the international price exceeds the reference price, the producer shall be allowed to collect the maximum
amount established by the Resolution for the relevant product (U.S.$223/m3 for propane, U.S.$271/m3 for butane and U.S.$250/m3
for blends of the two), with the remainder being withheld by the Argentine government as an export tax.
In addition, the calculation procedure described above also applies to other petroleum products and lubricants based upon
different withholding rates, reference prices and prices allowed to producers. See “—Market Regulation.”
Antitrust Agreement
On June 16, 1999, the Argentine Ministry of Economy and Public Works delivered a letter to Repsol YPF setting forth a series
of obligations that Repsol YPF was required to assume after the acquisition of the majority of our share capital.
Repsol YPF met all of the requirements upon execution of the asset swap agreement entered into with Petrobras in December
2001.
Repsol YPF believes that the acquisition of YPF will not be subject to further antitrust scrutiny in Argentina under existing law.
However, the Ministry has not stated that there will be no further antitrust scrutiny and no assurances can be given that Repsol YPF
will not be required to accept additional undertakings or other measures intended to address any perceived anti-competitive effects of
the YPF acquisition.
Repatriation of Foreign Currency
Executive Decree No. 1,589/89, relating to the deregulation of the upstream oil industry, allows us and other companies engaged
in oil and gas production activities in Argentina to freely sell and dispose of the hydrocarbons they produce. Additionally, under
Decree No. 1,589/89, we and other oil producers are entitled to keep out of Argentina up to 70% of foreign currency proceeds they
receive from crude oil and gas export sales, but are required to repatriate the remaining 30% through the exchange markets of
Argentina.
In July 2002, Argentina’s Attorney General issued an opinion (Dictamen No. 235) which would have effectively required us to
liquidate 100% of our export receivables in Argentina, instead of the 30% provided in Decree No. 1,589/89. The Attorney General’s
opinion was based on the assumption that Decree No. 1,589/89 had been superseded by other decrees (Decree No. 530/91 and
1,606/01) issued by the government. Subsequent to this opinion, however, the government issued Decree No. 1,912/02 ordering the
Central Bank to apply the 70%/30% regime set out in Decree No. 1,589/89. Nevertheless, on December 5, 2002, representatives of
the Central Bank of Argentina, responding formally to an inquiry from the Argentine Bankers Association, stated that the Central
Bank would apply the Attorney General’s opinion. On December 9, 2002, we filed a declaratory judgment action (acción declarativa
de certeza) before a federal court requesting the judge to clarify the uncertainty generated by the opinion and statements of the
Attorney General and the Central Bank of Argentina, and requesting confirmation of our right to freely dispose of up to 70% of our
export receivables. On December 9, 2002, the federal judge issued an injunction ordering the Argentine government, the Central Bank
and the Ministry of the Economy to refrain from interfering with our access to and use of 70% of the foreign exchange proceeds from
our exports. This decision was appealed by the Central Bank and the Ministry of Economy and Production.
On December 27, 2002, the government issued Decree No. 2,703/02, effective as of January 1, 2003, setting forth a minimum
repatriation limit of 30% with respect to proceeds from the export of hydrocarbons and byproducts, with the remaining portion freely
disposable. However, when referring to the minimum repatriation limit of 30%,
73
the decree only mentions the foreign exchange proceeds from freely disposable exports of crude oil and its byproducts. Although the
recitals and the first part of Section 1 of Decree No. 2,703/02 mention natural gas and LPG as covered by this regime, there are no
express references to natural gas or LPG in the rest of Section 1. However, taking into account the rights granted by Decree
No. 1,589/89, we apply this regime to the export of crude oil, LPG and natural gas. It is worth noting that the recitals of Decree
No. 2,703/02 restate the interpretation maintained by the Attorney General in the sense that Decree No. 1,589/89 has been repealed by
Decree No. 530/91 and No. 1,606/01. This interpretation prompted the filing of the above-mentioned declaratory judgment action.
Moreover, since Decree No. 2,703/02 is effective as from January 1, 2003, and, in light of the Attorney General’s opinion, it is
unclear whether hydrocarbon exporters would be required to repatriate the total amount of their 2002 export proceeds or whether the
existing hydrocarbons regulatory framework will prevail, we have expanded the object of the declaratory judgment action before the
federal court to request that the judge expressly state that Decree No. 530/91 did not abrogate Decree No. 1,589/89 and, thus, that the
right of free disposal of export receivables was effective between the issuance of Decree No. 1,606/01 and Decree No. 2,703/02. On
December 1, 2003, the National Administrative Court of Appeals decided that the issuance of Decree No. 2,703/02, which allows
companies in the oil and gas sector to keep abroad up to 70% of the export proceeds, rendered the injunction unnecessary. On
December 15, 2003, we filed a motion for clarification asking the court to clarify whether the exemption was available to oil and gas
companies during the period between the issuance of Decree No. 1,606/01 and the issuance of Decree No. 2,703/02. On February 6,
2004, the Court of Appeals dismissed our motion for clarification, indicating that the regulations included in Decree No. 2,703/02
were sufficiently clear, and confirmed the lifting of the injunction that prohibited the Central Bank and the Ministry of Economy and
Production from interfering with our access to foreign exchange proceeds, as described above. On February 19, 2004, we filed an
extraordinary appeal before the Argentine Supreme Court challenging the December 1, 2003 decision of the Court of Appeals and
requesting the restatement of the injunction against the Central Bank and the Ministry of Economy and Production. The Federal Court
of Appeals dismissed the extraordinary appeal. Taking into account the fact that there is a new special system in place allowing for
the free disposal of up to 70% of the foreign currency proceeds from the exports of crude oil and its derivatives, it was deemed
advisable to abandon the suit as a procedural strategy.
On October 12, 2007, we were notified of the initiation of an administrative summary proceeding for alleged late repatriation of
foreign currency proceeds, and lack of repatriation of the remaining 70%, in connection with some hydrocarbon export transactions
made in 2002. In this administrative summary proceeding, charges were brought against us in the amount of U.S.$1.6 million, and the
tribunal has advised that the conduct of a bank that handled other of our export transactions made in 2002 be investigated, which
could give rise to the initiation of further proceedings. Nevertheless, a judicial judgment recently issued by a First Instance Court in
Criminal Economic Matters in a similar administrative summary proceeding against a different company for an alleged violation of
the criminal exchange law (lack of repatriation of 70% of foreign currency proceeds) regarding export transactions made in 2002
resolved the matter in favor of that company based on legal arguments that were not challenged by the prosecutor. See “Item 8.
Financial Information—Legal Proceedings—Argentina.”
ITEM 4A. Unresolved Staff Comments.
YPF does not have any unresolved Staff comments.
On August 28 and November 5, 2008 Repsol YPF, our parent company, received written comments from the Staff of the SEC
relating to its 2007 Annual Report on Form 20-F. As of the date of filing of this annual report Staff comments regarding Repsol
YPF’s inclusion in its reported estimated proved reserves of certain barrels of oil equivalent relating to payments Repsol YPF is
required to make to foreign governments in certain countries remain unresolved. Some of such barrels relate to YPF’s reserves in
Argentina. Repsol YPF, as well as YPF, believes that its reserves reporting complies with FAS 69 and is working with the Staff to
resolve these comments.
74
ITEM 5. Operating and Financial Review and Prospects
The following discussion should be read in conjunction with, and is qualified in its entirety by reference to, our audited
consolidated financial statements as of December 31, 2008, 2007 and 2006 and for the years then ended (the “Audited Consolidated
Financial Statements”).
Overview
We are Argentina’s leading energy company, operating a fully integrated oil and gas chain with leading market positions across
the domestic upstream and downstream segments. Our upstream operations consist of the exploration, development and production of
crude oil, natural gas and liquefied petroleum gas. Our downstream operations include the refining, marketing, transportation and
distribution of oil and a wide range of petroleum products, petroleum derivatives, petrochemicals, LPG and bio-fuels. Additionally,
we are active in the gas separation and natural gas distribution sectors both directly and through our investments in several affiliated
companies. In 2008, we had consolidated net sales of Ps.34,875 million (U.S.$10,109 million) and consolidated net income of
Ps.3,640 million (U.S.$1,055 million).
Most of our predecessors were state-owned companies with operations dating back to the 1920s. In November 1992, the
Argentine government enacted the Privatization Law (Law No. 24,145), which established the procedures for our privatization. In
accordance with the Privatization Law, in July 1993, we completed a worldwide offering of 160 million Class D shares that had
previously been owned by the Argentine government. As a result of that offering and other transactions, the Argentine government’s
ownership interest in our capital stock was reduced from 100% to approximately 20% by the end of 1993.
Since 1999, we have been controlled by Repsol YPF, an integrated oil and gas company headquartered in Spain with global
operations. Repsol YPF owned approximately 99% of our capital stock from 2000 until February 21, 2008, when Petersen Energía
purchased 58,603,606 of our ADSs, representing 14.9% of our capital stock, from Repsol YPF for U.S.$2,235 million. In addition,
Repsol YPF also granted options to certain affiliates of Petersen Energía to purchase up to an additional 10.1% of our outstanding
capital stock within four years. On May 20, 2008, Petersen Energía Inversora S.A. (“PEISA”) exercised an option to purchase shares
representing 0.1% of our capital stock. Additionally, PEISA launched a tender offer to purchase all of the shares of YPF that were not
already owned by them at a price of U.S.$49.45 per share or ADS. Repsol, pursuant to its first option agreement with Petersen
Energía, had stated that it would not tender YPF shares to PEISA. The offer period commenced on September 11, 2008 and expired
on October 20, 2008. A total of 1,816,879 shares (including Class D shares and ADSs), representing approximately 0.462% of our
total shares outstanding, have been tendered. See “Item 7. Major Shareholders and Related Party Transactions.”
Upstream Operations
• We operate more than 70 oil and gas fields in Argentina, accounting for approximately 41% of the country’s total production
of crude oil, excluding natural gas liquids, and approximately 41% of its total natural gas production, including natural gas
liquids, in 2008, according to information provided by the Argentine Secretariat of Energy.
• We had proved reserves, as estimated as of December 31, 2008, of approximately 580 mmbbl of oil and 3,099 bcf of gas,
representing aggregate reserves of 1,133 mmboe.
• In 2008, we produced 115 mmbbl of oil (311 mbbl/d) and 607 bcf of gas (1,655 mmcf/d).
Downstream Operations
• We are Argentina’s leading refiner with operations conducted at three wholly owned refineries with combined annual refining
capacity of approximately 116 mmbbl (319.5 mbbl/d). We also have a 50% interest in Refinor, an entity jointly controlled
with and operated by Petrobras Energía S.A., which has a refining capacity of 26.1 mbbl/d.
75
• Our retail distribution network for automotive petroleum products as of December 31, 2008 consisted of 1,642 YPF-branded
service stations, which we estimate represented approximately 30.9% of all service stations in Argentina.
• We are one of the leading petrochemical producers in Argentina and in the Southern Cone of Latin America, with operations
conducted through our Ensenada plant and Plaza Huincul sites. In addition, Profertil S.A. (“Profertil”), a company that we
jointly control with Agrium Investments Spain S.L. (“Agrium”), is one of the leading producers of urea in the Southern Cone.
Presentation of Financial Information
We prepare our audited consolidated financial statements in accordance with Argentine GAAP, which differ in certain
significant respects from U.S. GAAP. Notes 13, 14 and 15 to the Audited Consolidated Financial Statements provide a summary of
the effect of these significant differences on net income and shareholders’ equity under Argentine GAAP and U.S. GAAP.
We fully consolidate the results of subsidiaries in which we have a sufficient number of voting shares to control corporate
decisions and proportionally consolidate the results of companies that we control jointly.
Under Argentine GAAP, we currently are not required to record the effects of inflation in our financial statements. However,
because Argentina experienced a high rate of inflation in 2002, with the wholesale price index increasing by approximately 118%, we
were required by Decree No. 1269/2002 and CNV Resolution No. 415/2002 to remeasure our financial statements in constant pesos
in accordance with Argentine GAAP. On March 25, 2003, Decree No. 664/2003 rescinded the requirement that financial statements
be prepared in constant currency, effective for financial periods on or after March 1, 2003. According to the Argentine statistics and
census agency (Instituto Nacional de Estadísticas y Censos, or “INDEC”), the wholesale price index increased 7.9% in 2004, 10.6%
in 2005, 7.1% in 2006, 14.4% in 2007 and 8.8% in 2008. We cannot assure you that in the future we will not be again required to
record the effects of inflation in our financial statements (including those covered by the financial statements included in this annual
report) in constant pesos. See “—Critical Accounting Policies—U.S. GAAP Reconciliation” for an explanation of how the effect of
inflation is treated under U.S. GAAP.
Additionally, certain oil and gas disclosures are included in this annual report under the heading “Supplemental information on
oil and gas producing activities (unaudited).”
Segment Reporting
We organize our business into the following four segments: (i) exploration and production, which includes exploration and
production activities, natural gas and crude oil purchases, sales of natural gas, and to a lesser extent crude oil, to third parties and
intersegment sales of crude oil, natural gas and its byproducts and to a lesser extent electric power generation (“Exploration and
Production”); (ii) the production, transport and marketing of crude oil that we sell to third parties and of refined products that we sell
to third parties and other segments of our business (“Refining and Marketing”); (iii) the production, transport and marketing of
petrochemical products (“Chemical”); and (iv) other activities not falling into the previously described categories (“Corporate and
Other”), principally including corporate administration costs and assets and construction activities.
Sales between business segments are made at internal transfer prices established by us, which generally seek to approximate
market prices.
Summarized Income Statement
Net sales
Cost of sales
Gross profit
76
For the Year Ended December 31,
2008
2006
2007
34,875 29,104 25,635
(15,821)
(24,013) (19,000)
9,814
10,862 10,104
For the Year Ended December 31,
2006
(674)
(1,797)
(460)
6,883
183
(204)
454
11
(69)
7,258
(2,801)
4,457
2008
(1,053)
(2,460)
(684)
6,665
83
(376)
(174)
—
—
6,198
(2,558)
3,640
2007
(805)
(2,120)
(522)
6,657
34
(439)
518
5
69
6,844
(2,758)
4,086
Administrative expenses
Selling expenses
Exploration expenses
Operating income
Income on long-term investments
Other expenses, net
Financial income, net and holding gains
Income from sale of long-term investments
Reversal (impairment) of other assets
Net income before income tax
Income tax
Net income
Factors Affecting Our Operations
Our operations are affected by a number of factors, including:
• the volume of crude oil, oil byproducts and natural gas we produce and sell;
• domestic price limitations;
• export restrictions and domestic supply requirements;
• international prices of crude oil and oil products;
• our capital expenditures;
• inflation and cost increases;
• domestic market demand for hydrocarbon products;
• operational risks;
• taxes, including export taxes;
• capital controls;
• the Argentine peso/U.S. dollar exchange rate;
• dependence on the infrastructure and logistics network used to deliver our products;
• laws and regulations affecting our operations; and
• interest rates.
Our margins and our consolidated operating profits have recently trended downwards. This has principally been the result of:
production declines and increased asset depreciation, principally due to the increasing maturity of our oil and gas fields; increases in
other operating costs, due in part to higher domestic demand and local market supply obligations (which required us to purchase
certain hydrocarbon inputs from third parties); inflation and higher labor costs; and limitations on our ability to offset those increased
costs due to, among other things, domestic limitations on the prices at which we sell gas and refined products. Notwithstanding the
improvement in trends in 2008, given the recent deterioration in Argentine and global economic conditions and the impact of such
conditions on our export prices and, in certain cases, domestic prices of our products, we cannot guarantee that such improved trends
in our margins and operating income will continue in future periods.
77
Our operating income in 2008 increased slightly by 0.1% compared with 2007, mainly as a result of higher average sales prices
(despite decreases in average sales prices of certain products towards the end of the year). The impact of higher sales prices was
mostly offset by: our continuing decline in production, increased export taxes, increased depreciation of fixed assets as a result of
increased assets subject to depreciation (principally exploration and production assets that entered into production and the
acceleration of depreciation resulting from the decline in our proved reserves), and higher costs as a result of the renegotiation of
certain service contracts and inflation adjustments.
Our operating income in 2007 decreased 3.3% compared with 2006 mainly as a result of: our continuing decline in production,
principally as a result of the maturity of our fields; increased export taxes; increased depreciation of fixed assets as a result of
increased assets subject to depreciation (principally exploration and production assets that entered into production) and also
considering the decline in our proved reserves and increasing domestic fuel demand, which, as a result of regulatory requirements,
obliged us to decrease exports and import certain products (such as diesel) in order to satisfy domestic demand at substantially lower
prices. Domestic prices for diesel, for example, in January 2008, were approximately U.S.$250/cubic meter lower, after tax refunds,
than international market prices, ensuring a loss on diesel imports that are used to satisfy domestic diesel demand.
Macroeconomic conditions
The Argentine economy has experienced volatility in recent decades, characterized by periods of low or negative growth and
high variable levels of inflation. Inflation reached its peak in the late 1980s and early 1990s. The annual inflation rate as measured by
the consumer price index was approximately 388% in 1988, 4,924% in 1989 and 1,344% in 1990. Due to inflationary pressures prior
to the 1990s, the Argentine currency was devalued repeatedly and macroeconomic instability led to broad fluctuations in the real
exchange rate of the Argentine currency relative to the U.S. dollar. To address these pressures, past Argentine governments
implemented various plans and utilized a number of exchange rate systems.
With the enactment of the Convertibility Law in 1991, inflation declined progressively and the Argentine economy enjoyed
seven years of growth. In the fourth quarter of 1998, adverse international financial conditions caused the Argentine economy to enter
into a recession and GDP to decrease, in real terms, by 3.4% in 1999, 0.8% in 2000 and 4.4% in 2001. By the end of 2001, Argentina
suffered a profound deterioration in social and economic conditions, accompanied by high political and economic instability. The
restrictions on the withdrawal of bank deposits, the imposition of exchange controls, the suspension of payment of Argentina’s public
debt and the abrogation of the peso’s one-to-one peg to the dollar (with the consequent depreciation of the peso against the dollar)
caused a decline in economic activity. Real GDP declined by 10.9% in 2002, annual inflation rose to 41%, the exchange rate
continued to be highly volatile, and the unemployment rate rose to more than 20%. The political and economic instability not only
curtailed commercial and financial activities in Argentina but also severely restricted the country’s access to international financing.
Strong economic growth in the world’s developed economies and favorable raw material pricing from 2003 through the first half
of 2008 paved the way for Argentina’s economic recovery. Real GDP grew by 9.0% in 2004, 9.2% in 2005, 8.5% in 2006 and 8.7%
in 2007. According to data from the Argentine Central Bank, real GDP grew by 6.0% in 2008, while in 2009, the most recent
projection of the International Monetary Fund (“IMF”) expects a contraction of GDP of approximately 1.5%.
Public finances both at national and provincial levels recorded a consolidated primary surplus of approximately 5.5% of GDP in
2004, 4.5% in 2005, 3.5% in 2006, 3.2% in 2007 and 3.2% in 2008.
The annual wholesale price index, according to the INDEC, increased by 2% in 2003, 7.9% in 2004, 10.6% in 2005, 7.1% in
2006, 14.4% in 2007 and 8.8% in 2008. According to reports published by the IMF, however, most private sector analysts believe that
actual inflation is considerably higher than reflected in official data. The government’s main strategy to fight increasing inflation has
been the establishment of agreed price controls with private companies.
78
In 2005, Argentina completed the restructuring of a substantial portion of its bond indebtedness and cancelled all of its debt with
the IMF. The country is working to renegotiate the remaining portion of its external public debt and to resolve the claims brought
before international courts by foreign companies affected during the crisis of the years 2001-2002. Before the outbreak of the current
global financial crisis, the Argentine government had announced that it would repay U.S.$6,700 million in “Paris Club” debt, and that
it would negotiate with certain government bondholders who had not accepted the previous debt restructuring proposal. Though the
government has recently announced that it still intends to resolve these pending claims, the schedule of negotiation and any payments
to be made by the Argentine government is currently uncertain.
After years of strong growth, the world economy is slowing quickly, and, according to the IMF, is now entering a major
downturn in the face of the most significant shock to mature financial markets since the 1930s. The world’s major advanced
economies are already in or close to recession, while growth in emerging economies has weakened significantly. Since the second
half of 2007, the global financial system has experienced difficult credit and liquidity conditions and disruptions leading to less
liquidity, greater volatility and general widening of credit spreads. In September 2008, global financial markets deteriorated sharply
following the bankruptcy filing by Lehman Brothers Holdings Inc. in the United States. In the days that followed, it became apparent
that a number of other major financial institutions, including some of the world’s largest, were experiencing significant difficulties.
Intensifying solvency concerns have led numerous global financial institutions, especially in the United States and Europe, to
seek additional capital. In response, U.S. and European authorities have taken extraordinary measures aimed at stabilizing markets.
Central banks around the world have coordinated efforts to increase liquidity in the financial markets by taking measures such as
increasing the amounts they lend directly to financial institutions, lowering interest rates and significantly increasing temporary
reciprocal currency arrangements (or “swap lines”). In an attempt to prevent the failure of the financial system, the U.S. and European
governments have intervened on an unprecedented scale.
Many emerging economies are currently still expected to grow in 2009, albeit at substantially slower rates than recent years. The
global economic situation remains highly uncertain, with low investor confidence and relatively scarce credit. Looking ahead,
financial conditions are likely to remain very difficult, restraining global growth prospects. According to outlooks published by the
IMF, output is forecast to contract in advanced economies in 2009, the first such fall in the post-war period. In emerging economies,
growth is projected to slow considerably, though it is currently still expected to reach 1.6% in 2009. Downward revisions in the IMF’s
projections have varied considerably across regions. Among the most affected are commodity exporting countries, given that
commodity price projections have been marked down sharply, and countries with acute external financing and liquidity problems.
Weakening global demand is currently continuing to depress commodity prices. Oil prices have declined sharply since their
peak of over U.S.$145 per barrel (WTI) in July 2008, reflecting the major downturn in the global economy, the strengthening of the
U.S. dollar, and the financial crisis, despite the decision by the Organization of Petroleum Exporting Countries (OPEC) to reduce
production. In line with market developments, the IMF’s baseline petroleum price projection for 2009 has been revised down to
U.S.$52 a barrel, although between December 2008 and March 2009, oil (WTI) has traded in a range of between approximately
U.S.$35 and U.S.$70 a barrel.
Latin American economies are facing an awkward combination of slowing activity, more difficult external conditions, and
inflation. After four years of strong output growth, the pace eased in most economies of the region during the first half of 2008,
largely because of moderating exports. Overall, after a growth of 5.5% in 2007 and 4.5% in 2008, the region’s GDP growth is
expected to decrease by 1.5% in 2009. External positions (current account balances) are generally robust, although the turbulence in
the global economy may erode the cushions that have been built up over the past few years. The region’s current account balance is
expected to move to deficit in 2009, after being in surplus since 2003, but the deficit is expected to remain quite low according to the
IMF.
79
In Argentina, higher WTI market prices (and the higher prices of refined products) have resulted in the highest increase in
petroleum import prices in the last decade, according to information published by the Argentine Central Bank. Argentine domestic
fuel prices have increased in 2008 compared to 2007, but have not kept pace with either increases or decreases in international market
prices for petroleum products due to the regulatory characteristics of the domestic market, although the magnitude of difference in the
prices of many products has decreased as a result of decreases in international market prices. See “—Differences between Argentine
and international prices for hydrocarbon products.”
During the first half of 2008, conflicts in certain sectors of the Argentine economy, including blockades by agricultural
producers in response to an export tax increase and strikes by oil workers, have affected the development and productivity of these
and related sectors.
Total exports from Argentina increased by 26.6% to U.S.$70,588 million in 2008, compared to 2007, mainly driven by higher
average prices, while imports increased by 28.4% in the same period due mainly to increases in the volume and prices of imported
assets, particularly capital assets, fuels and lubricants and passenger vehicles. Notwithstanding the general upward trend, growth in
both exports and imports decelerated sharply during the fourth quarter of 2008. According to the Argentine Central Bank, during
2009 exports could decrease for the first time in seven years as a result of lower commodity prices and a decrease in the exported
volumes of corn and wheat. Industrial exports could be affected as well as a result of deceleration in demand from other countries.
Accordingly, imports are also expected to contract in 2009, due mainly to the lower prices of fuels, lubricants, and capital assets. As a
result, the Argentine trade balance is expected to maintain a surplus, though significantly lower than the U.S.$13,172 million trade
surplus reached in 2008.
According to INDEC, the unemployment rate corresponding to the fourth quarter of 2008 showed that 7.2% of the active
population was unemployed, 0.3 percentage points lower than the 7.5% rate in the fourth quarter of 2007. The unemployment rate is
expected to increase during 2009 according to the Argentine Central Bank. After several years of consistent growth in average real
wages, in 2008 such increases moderated their pace, as nominal wage increases (as high as 28% in the case of minimum wage) were
partially offset by higher consumer prices, and increased social security contributions, according to the Argentine Central Bank.
The Argentine Central Bank reserves were at U.S.$46 billion at the end of 2007 After a decline in the second quarter of 2008,
the Argentine Central Bank continued its policy of maintaining a competitive exchange rate during 2008, while international reserves
remained stable. As of December 31, 2008, Argentine Central Bank reserves stand at U.S.$46.4 billion. The exchange rate of the
Argentine peso against the U.S dollar as of December 31, 2008 was Ps.3.45/ U.S.$1.00, reflecting nominal depreciation of 9.5%
compared to December 31, 2007.
Government fiscal revenues increased by 33% (year over year, in nominal terms) in 2007 and extraordinary revenues of
Ps.7,814 million were generated as a result of pension reform, but an even higher increase in public expenditures (46%) led to a
reduction in the national primary fiscal surplus from 3.5% of GDP in 2006 to 3.2% of GDP, in 2007. According to the Argentine
Central Bank, fiscal revenues continued to increase in 2008 (35% year over year, in nominal terms), though the pace of growth
slowed by the end of the year. During the first half of 2008, the increase in fiscal revenues was driven mainly by export taxes and
increased value added tax (“VAT”), while, as a result of the decrease in international prices of the main Argentine exports during the
second half of 2008, the growth in fiscal revenues was sustained mainly by social security collections. Primary government
expenditures increased by nearly 34%.
In November 2008, the Argentine National Congress passed Law No. 26,425, pursuant to which the administration of the private
pension system, first set up in 1994, was transferred to the ANSES (the National Social Security Administration), which will now
manage the portfolios previously held by the private pension funds.
80
According to the Argentine Central Bank, Argentina’s expected increase in public expenditures in 2009 could be financed
through alternative sources of financing and various liability-management strategies in the event that external credit remains scarce in
the current global economic environment.
In relation to public debt, two issues remain pending: (i) a portion of the defaulted debt that was not included in the 2005 debt
swap (the so-called “Paris Club”), which the Argentine government announced it would repay, and (ii) certain government
bondholders have not accepted the government’s debt restructuring proposal. Standard & Poor’s (S&P) recently downgraded
Argentina’s credit rating one notch to “B-” while Moody’s has maintained its credit watch of Argentina as “stable” since August
2008.
We cannot predict the evolution of future macroeconomic events, or the effect that they are likely to have on our business,
financial condition and results of operations. See “Item 3. Key Information—Risk Factors—Risks Relating to Argentina.”
According to the Argentine Central Bank, the Argentine economy is expected to grow at a slightly higher pace than the
economies of other countries in South America, though at a slower pace than that of recent years. However, the IMF expects a
contraction of 1.5% in the Argentine economy.
Energy consumption in Argentina has increased significantly since 2003, driven in part by price limitations that have kept
Argentine energy prices substantially below international prices. Continued growth in demand and a particularly harsh winter in 2007
have recently led to fuel shortages and power outages, prompting the Argentine government to take additional measures to assure
domestic supply. At the same time, growth in the production of certain hydrocarbon products has slowed, and in the case of crude oil
production has recently declined, due to Argentina’s maturing oil and gas fields. As a result of this increasing demand and actions
taken by the Argentine regulatory authorities to prioritize domestic supply, exported volumes of hydrocarbon products, especially
natural gas, declined steadily over this period. At the same time, Argentina has increased hydrocarbon imports.
The table below shows Argentina’s total sales, production, exports and imports of crude oil, diesel and gasoline products for the
periods indicated.
Year ended December 31,
2007
2006
2008
Crude Oil in Argentina
Production (mmbbl)
Exports (mmbbl)
Imports (mmbbl)
Diesel in Argentina
Sales (mcm)(1)
Production (mcm)
Exports (mcm)
Imports (mcm)
Gasoline in Argentina
Sales (mcm)(1)
Production (mcm)
Exports (mcm)
Imports (mcm)
229.7
15.3
0.0
234.7
20.8
0.3
240.7
32.0
0.6
14,753.5 14,754.9 13,903.4
12,472.0 12,915.6 12,570.3
108.8
446.9
7.1
843.6
46.6
847.1
5,898.5 5,285.6 4,608.4
5,849.1 5,965.2 5,889.3
68.6 1,400.9 1,732.0
33.2
23.0
51.7
Includes domestic market sales.
(1)
Sources: Argentine Secretariat of Energy and ENARGAS.
Policy and regulatory developments in Argentina
The Argentine oil and gas industry is currently subject to certain governmental policies and regulations that have resulted in:
(i) domestic prices that have usually been substantially lower than prevailing international market
81
prices; (ii) export restrictions; (iii) domestic supply requirements that oblige us from time to time to divert supplies from the export or
industrial markets in order to meet domestic consumer demand; and (iv) increasingly higher export duties on the volumes of
hydrocarbons allowed to be exported. See “Item 4. Information on the Company—Regulatory Framework and Relationship with the
Argentine Government.” These governmental pricing limitations, export controls and tax policies have been implemented in an effort
to satisfy increasing domestic market demand at prices below international market prices. As discussed in “Item 3. Key Information—
Risk Factors” and elsewhere in this annual report, actions by the Argentine government have had and will continue to have a
significant effect on Argentine companies, including us.
Policy and regulatory developments relating to the oil and gas industry in Argentina include, among others:
• Price limitations. In order to support economic growth, the Argentine government has sought to limit increases in
hydrocarbons prices through a number of policies and measures. As a result, fluctuations in Argentina’s domestic
hydrocarbon prices have not matched the recent increases or decreases at the pace of international and regional prices, as
described in “—Differences between Argentine and international prices for hydrocarbon products.”
• Export restrictions. Since 2004, the Argentine government has prioritized domestic demand and adopted policies and
regulations restricting the export of certain hydrocarbon products. These restrictions have impacted our export sales as
described in “—Declining export volumes.”
• Export duties. Since the economic crisis in 2002, the Argentine government has imposed export taxes on certain hydrocarbon
products. These taxes have increased substantially in the following years as international prices have surged. For a description
of the most recent export duties on hydrocarbon exports, see “—International oil and gas prices and Argentine export taxes.”
• Domestic supply requirements. The Argentine government has at times issued regulatory orders requiring producers to inject
natural gas in excess of contractual commitments and supply other hydrocarbon products to the domestic market. As a result,
we have had to limit our exports. In addition, we have imported diesel in order to satisfy domestic demand, which has
increased our operating costs, as described in “—Increasing cost of sales.”
• Energy Substitution Program. The Department of Federal Planning, Public Investment and Services, by Resolution
No. 459/07 of July 12, 2007, created the “Energy Substitution Program” (Programa de Energía Total), which is designed to
mitigate shortages of natural gas and electricity by encouraging industrial users to substitute natural gas and electricity during
the Argentine winter with imported diesel, fuel oil and LPG subsidized by the government. Resolution No. 1451/2008 of the
Department of Federal Planning, Public Investment and Services extended the Energy Substitution Program until
December 31, 2009, and Rule No. 287/08 of the Sub-Secretary of Coordination and Control, issued on December 19, 2008,
approved the general plans for implementation of the Energy Substitution Program for 2009. See “Item 4. Information on the
Company—Regulatory Framework and Relationship with the Argentine Government—Market Regulation—Refined
Products.” Under this program, ENARSA imports diesel, fuel oil, LPG and natural gas that we buy from ENARSA at the
prevailing domestic prices and then sell to consumers in Argentina, mostly at similar prices. As a result, this program has the
effect of increasing our net sales and volumes sold, but is mostly operating income-neutral since we do not earn any
significant margin on products sold under this program.
• Gas Plus. The Argentine Secretariat of Energy, by Resolution S.E. No. 24/2008 of March 13, 2008, created the “Gas Plus”
program to encourage the production of natural gas from newly discovered reserves, new fields and tight gas, among other
sources. Natural gas produced under the Gas Plus program will not be subject to the prices set forth in the Agreement 2007-
2011 regarding the supply of natural gas to the domestic market during the period 2007 through 2011. See “Item 4.
Information on the Company—Regulatory Framework and Relationship with the Argentine Government—Market
Regulation—Natural Gas.”
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• Refining and Petroleum Plus Programs. Decree No. 2014/2008 of the Department of Federal Planning, Public Investment and
Services of November 25, 2008, created the “Refining Plus” and the “Petroleum Plus” programs to encourage (a) the
production of diesel fuel and gasoline and (b) the production of crude oil and the increase of reserves through new
investments in exploration and operation. The Argentine Secretariat of Energy, by Resolution S.E. No. 1312/2008 of
December 1, 2008, approved the regulation of these programs. The programs entitle refining companies that undertake the
construction of a new refinery or the expansion of their refining and/or conversion capacity and production companies that
increase their production and reserves within the scope of the program to receive export duty credits to be applied to exports
of products within the scope of Resolution No. 394/2007 and Resolution No. 127/2008 (Annex) issued by the Department of
Economy and Production. In order to be eligible for the benefits of both programs, companies’ plans must be approved by the
Argentine Secretariat of Energy.
Declining export volumes
The exported volumes of many of our hydrocarbon products have declined significantly in recent years, driven mainly by
increasing domestic demand and export restrictions, as well as by declines in production. This shift from exports to domestic sales has
impacted our results of operations as the prices for hydrocarbons in the domestic market have, due to price limitations, generally not
kept pace with international and regional prices.
The table below presents, for the periods indicated, the exported volumes of certain of our principal hydrocarbon products.
Product
Oil (mcm)
Natural gas (mmcm)
Diesel (mcm)
Gasoline (mcm)
Fuel oil (mtn)
Petrochemicals (mtn)
Year Ended December 31,
2006
2008
2007
(units sold)
321
874
425
580 1,358 3,090
149
133
140
880 1,272 1,695
903
700
1,138 1,187
689
530
Due to the decreased export product volumes indicated above and increasing export duties, the portion of our net sales
accounted for by exports decreased steadily between 2006 and 2008. Exports accounted for 20.7%, 28.9% and 33.7% of our
consolidated net sales in 2008, 2007 and 2006, respectively.
The Argentine government’s current policy is not to allow any exports of natural gas other than to the residential sector in
certain other countries. In addition, the Argentine government requires companies intending to export crude oil, diesel and LPG to
obtain prior authorization from the Argentine Secretariat of Energy by demonstrating that local demand for those products has been
satisfied. Since 2005, because domestic diesel production has generally not been sufficient to satisfy Argentine consumption needs,
exports of diesel have been substantially restricted.
International oil and gas prices and Argentine export taxes
Since the economic crisis in 2002, in order to prioritize domestic demand, the Argentine government has imposed export taxes
on certain hydrocarbon products. These taxes have increased substantially in the following years as international prices have surged.
For a description of these taxes, see “Item 4. Information on the Company—Regulatory Framework and Relationship with the
Argentine Government—Taxation.” These export taxes have significantly affected the profitability of hydrocarbon exportation. They
have also contributed to a shift away from exports and towards domestic sales, as described in “—Declining export volumes,” and
reduced the export parity prices.
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On November 16, 2007, the Ministry of Economy and Production published Resolution 394/2007, modifying the duties on
exports of crude oil and other crude oil derivative products. The new regime provides that when the WTI international price exceeds
the reference price, which is fixed at U.S.$60.9/barrel, the producer shall be allowed to collect at U.S.$42/barrel, with the remainder
being withheld by the Argentine government as an export tax. If the WTI international price is under the reference price but over
U.S.$45/barrel, a 45% withholding rate will apply. If such price is under U.S.$45/barrel, the applicable export tax is to be determined
by the Argentine government within a term of 90 business days. Notwithstanding that the WTI international price has recently traded
under U.S.$45/barrel from time to time, the Argentine government has not yet established a new withholding rate, and the 45%
withholding rate has continued to apply. The withholding rate determined as indicated above also currently applies to diesel, gasoline
and other crude derivative products. In addition, the calculation procedure described above also applies to other petroleum products
and lubricants based upon different withholding rates, reference prices and prices allowed to producers. See “Item 4. Information on
the Company—Regulatory Framework and Relationship with the Argentine Government—Market Regulation.”
Under current law, pursuant to Resolution 394/2007, the maximum export sales price per barrel of oil that companies in
Argentina could realize was U.S.$42, without considering quality price adjustments, while the average international market price per
barrel of WTI was U.S.$99.74 in 2008.
In the first quarter of 2008, Resolution No. 127/2008 of the Ministry of Economy and Production increased export duties
applicable to natural gas to 100%, mandating a valuation basis for the calculation of the duty as the highest price established in any
contract of any Argentine importer for the import of gas. Resolution No. 127/2008 provides with respect to LPG products (including
butane, propane and blends thereof) that if the international price of the relevant LPG product, as notified daily by the Argentine
Secretariat of Energy, is under the reference price established for such product in the Resolution (U.S.$338/m3 for propane,
U.S.$393/m3 for butane and U.S.$363/m3 for blends of the two), the applicable export duty for such product will be 45%. If the
international price exceeds the reference price, the producer shall be allowed to collect the maximum amount established by the
Resolution for the relevant product (U.S.$223/m3 for propane, U.S.$271/m3 for butane and U.S.$250/m3 for blends of the two), with
the remainder being withheld by the Argentine government as an export tax.
See “Item 4. Information on the Company—Regulatory Framework and Relationship with the Argentine Government—
Taxation.”
We expect these recent export tax increases to continue to adversely affect our export net sales and margins in future financial
periods, especially with respect to any exports of natural gas, diesel, gasoline and petrochemical products. We exported 580 mmcm of
natural gas, 140 mcm of diesel, 880 mcm of gasoline and 530 mtn of petrochemical products in 2008, and our exports accounted for
20.7% of our consolidated net sales in this period.
Differences between Argentine and international prices for hydrocarbon products
Prior to the recent decrease in the prices of crude oil and related products, domestic prices for our products had fallen
significantly below international prices as a result of regulatory policies that had resulted in limitations on our ability to increase
domestic prices sufficiently to keep pace with international market prices. The following table sets forth the average prices at which
we sold our principal products in the domestic market (net of taxes passed through to consumers, such as value added and fuel
transfer taxes) for the periods indicated:
For the Year Ended December 31,
Natural gas(2)(3)
Diesel(4)
Gasoline products(5)
2007
2008
Peso U.S.$(1) Peso U.S.$(1)
Peso U.S.$(1)
51
72
228
171
282
416 1,060
1,322
291
978
393
1,250
54 156
337 862
310 887
2006
(1) Amounts translated from Argentine pesos at the average exchange rate for the period.
(2) Per thousand cubic meters.
(3) Reflects the average of residential prices (which are generally lower than prices to other segments) and industrial prices.
(4) Per cubic meter. Does not include sales by Refinor, in which we have a 50% interest and which is proportionally consolidated in
our consolidated financial statements.
(5) Per cubic meter. Does not include sales by Refinor, in which we have a 50% interest, and which is proportionally consolidated
in our consolidated financial statements. The average price shown for each period is the volume-weighted average price of the
various grades of gasoline products sold by us in the domestic market during such period.
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The disparity between the prices at which hydrocarbon products have been sold in Argentina and the prevailing international
prices for such products has been mainly due to limitations on our ability to pass increases in international prices of crude oil and
hydrocarbon fuels and adverse exchange rate movements through to domestic prices or to increase local prices of natural gas (in
particular for residential customers), gasoline and diesel.
In addition, the price at which Bolivia exports natural gas to Argentina (which is purchased by ENARSA) was approximately
U.S.$10.35/mmBtu in December 2008 (approximately U.S.$7.84/mmBtu in March 2009), while the price at which we purchase
natural gas from ENARSA was approximately U.S.$2.32/mmBtu in March 2009 and our average sales price for natural gas in
Argentina during 2008 was approximately U.S.$2.00/mmBtu.
In addition, pursuant to Resolution 599/2007 of the Argentine Secretariat of Energy dated June 14, 2007 (see “Item 4.
Information on the Company—Regulatory Framework and Relationship with the Argentine Government—Market Regulation—
Natural gas”), the Argentine government and gas producers, including us, entered into an agreement for the supply of certain volumes
of gas to each segment of the domestic market during the period 2007 through 2011. Under this agreement, we have supplied a total
volume of 2,674 mmcm of gas from August through December 2007 (representing 34% of our total gas volume sales for the same
period) to domestic residential and small commercial consumers at a price of approximately Ps.0.50/mmBtu for that period.
Relative maturity of our oil and gas assets
Argentina’s oil and gas fields are mature and, as a result, our reserves and production are declining as reserves are depleted.
Because we mainly have concessions for mature oil and gas fields that are undergoing natural production declines, it is difficult to
replace our proved reserves from other categories of reserves. In 2008, our estimated proved oil reserves and oil production, without
considering NGL, declined by 4.1% and 4.6%, respectively, over the preceding year, while our estimated proved gas reserves and gas
production declined by 16.4% and 4.4%, respectively, over the same period. As a result, in an effort to maintain our high refinery
utilization rates and because of regulatory requirements to supply certain hydrocarbon products to the domestic market, we purchased
crude oil and natural gas from third parties. In 2008 and 2007, our crude production, substantially all of which was destined to our
refineries, represented approximately 78% and 83%, respectively, of the total crude oil processed by our refineries, and in 2008 and
2007, our natural gas production represented approximately 99% and 93%, respectively, of our total natural gas sales. We expect our
oil and gas proved reserves and production rates to continue their decline. See “Item 4. Information on the Company—Exploration
and Development—Reserves” for more information on our proved reserves.
We continue executing the PLADA initiative, which encompasses comprehensive reviews of our oil and gas fields to identify
opportunities in light of new technologies and to design novel strategies to rejuvenate old fields and optimize the development of new
fields in Argentine basins. Many of our fields have similar characteristics to mature fields in other regions of the world that have
achieved substantially higher recovery factors through the application of new technologies, similar to the ones we are currently
evaluating. Nevertheless, the financial viability of these investments and reserve recovery efforts will generally depend on the
prevailing economic and regulatory conditions in Argentina, as well as the market prices of hydrocarbon products.
We have budgeted approximately U.S.$1.6 billion in investments and capital expenditures for 2009, a significant portion of
which will be dedicated to our exploration and production activities. During the period 2009-2012, we expect to make capital
expenditures of around U.S.$7 billion, principally related to our exploration and production projects, including some to increase
recovery rates in our fields.
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Increasing cost of sales
Our cost of sales accounted for 68.9%, 65.3% and 61.7% of our consolidated net sales in 2008, 2007 and 2006, respectively. Our
cost of sales increased significantly between 2006 and 2008, mainly as a result of: increased purchases of crude oil from third parties,
driven by our efforts to maintain our high refinery utilization rates in light of our declining production; increased purchases of natural
gas and diesel from third parties to fulfill our domestic supply requirements and avoid penalties under certain delivery contracts;
higher labor costs; higher costs related to the renegotiation of certain service contracts; and inflation. Due to prevailing Argentine
price limitations, we were unable to pass many of these cost increases to our customers in the form of higher hydrocarbon product
prices.
Seasonality
Historically, our results have been subject to seasonal fluctuations during the year, particularly as a result of greater natural gas
sales during the winter. After the 2002 devaluation and as a consequence of the natural gas price freeze imposed by the Argentine
government, the use of this fuel has diversified, generating an increase in its long-term demand throughout the year. However, sales
of natural gas are still typically much higher in the winter to the residential sector of the Argentine domestic market, the prices for
which are significantly lower than other sectors of the Argentine market.
Critical Accounting Policies
Our accounting policies are described in Notes 1 and 2 to the Audited Consolidated Financial Statements. Argentine GAAP
requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and
disclosures of contingent assets and liabilities in our financial statements. Actual results could differ from those estimates. We
consider the following policies to be most critical in understanding the judgments that are involved in preparing our financial
statements and the uncertainties that could impact our results of operations, financial condition and cash flows.
Functional currency
We have determined the U.S. dollar as our functional currency in accordance with the Statement of Financial Accounting
Standards (“SFAS”) 52. For U.S. GAAP reconciliation purposes, financial statements are re-measured into U.S. dollars and the assets
and liabilities are translated into Argentine pesos (“reporting currency”) at the exchange rate prevailing at year end and revenues,
expenses, gains and losses are translated at the exchange rate existing at the time of each transaction, or, if appropriate, at a weighted
average of the exchange rates during the year.
In determining the functional currency, we make judgments based on the collective economic indicators affecting us. The
economic indicators we review include the currency in which cash flows are denominated, how sales prices are determined, the sales
markets in which we operate, how our operating costs are derived, how financing is obtained and the level of intra-group transactions
with Repsol YPF, our controlling shareholder. A significant change in the facts and circumstances over the long-term relating to the
collective economic indicators discussed above would result in our reassessing the functional currency.
The determination of the functional currency to be applied to a business for accounting purposes is a decision that impacts,
among other things, the reported results of operations, the exchange income or losses recorded and the translation differences arising
from the conversion of its financial statements from the functional currency to the company’s reporting currency.
Oil and gas reserves
The estimation of oil and gas reserves is an integral part of the decision-making process about oil and gas assets, such as
whether development should proceed or enhanced recovery methods should be implemented. As further explained below, oil and gas
reserve quantities are used for calculating depreciation of the related oil and gas assets using the unit-of-production rates and also for
evaluating the impairment of our investments in upstream assets.
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At YPF, all the assumptions made and the basis for the technical calculations used in the estimates regarding oil and gas proved
reserves are based on the guides and definitions established by Rule 4-10(a) of Regulation S-X promulgated by the SEC.
In December 2008, the SEC approved revisions to its oil and gas reporting requirements that are intended to provide investors
with a more meaningful and comprehensive understanding of oil and gas reserves. Key revisions include changes to (i) the pricing
used to estimate reserves, which will be valued based on a 12-month average price, calculated as the unweighted arithmetic average
of the first-day-of-the-month price for each month within the 12-month period prior to the end of the reporting period, rather than a
spot price at the end of the fiscal year; (ii) the ability to include nontraditional resources in reserves; (iii) the use of new technology
for determining reserves; and (iv) permitting disclosure of probable and possible reserves. The foregoing revisions to the SEC’s oil
and gas reporting requirements will be in effect as of January 1, 2010 and will apply to registration statements filed on or after such
date and to annual reports for fiscal years ending on or after December 31, 2009. With respect to item (i) above, according to the final
rule, the SEC would communicate with the FASB staff to align their accounting standards with the 12-month average price used in
the new rules. As indicated in the final rule, as the SEC discusses its revisions with the FASB, it may consider whether to delay the
effectiveness date. YPF is currently evaluating the impact that adopting these revisions will have on its financial statements.
See “Item 4. Information on the Company—Exploration and Development—Reserves” for a detailed discussion on reserves
estimates internal control and audits.
We follow the “successful efforts” method of accounting for our oil and gas exploration and production operations.
Accordingly, exploratory costs, excluding the costs of exploratory wells, have been charged to expense as incurred. Costs of drilling
exploratory wells, including stratigraphic test wells, have been capitalized pending determination as to whether the wells have found
proved reserves that justify commercial development. If such reserves were not found, the mentioned costs are charged to expenses.
Occasionally, however, an exploratory well may be determined to have found oil and gas reserves, but classification of those reserves
as proved cannot be made when drilling is completed. In those cases, the cost of drilling the exploratory well continues to be
capitalized if the well has found a sufficient quantity of reserves to justify its completion as a producing well and the enterprise is
making sufficient progress assessing the reserves and the economic and operating viability of the project. If any of the mentioned
conditions are not met, the cost of drilling exploratory wells is charged to expenses.
Intangible drilling costs applicable to productive wells and to developmental dry holes, as well as tangible equipment costs
related to the development of oil and gas reserves, have been capitalized.
The capitalized costs related to producing activities, including tangible and intangible costs, have been depreciated by field on
the unit-of-production basis by applying the ratio of produced oil and gas to estimated recoverable proved and developed oil and gas
reserves.
The capitalized costs related to acquisitions of properties with proved reserves have been depreciated by field on the unit-of-
production basis by applying the ratio of produced oil and gas to proved oil and gas reserves.
Revisions of crude oil and natural gas proved reserves are considered prospectively in calculating depreciation.
Foreign unproved properties have been valued at costs translated as detailed in Note 1 to the Audited Consolidated Financial
Statements. Capitalized costs related to unproved properties are reviewed periodically by management to ensure that their carrying
value does not exceed their estimated recoverable value.
Impairment of long-lived assets
We assess the recoverability of our held-for-use assets on a business segment basis for Argentine GAAP purposes. With respect
to operations that are held as pending sale or disposal, our policy is to record these assets at amounts that do not exceed net realizable
value.
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For Argentine GAAP, held-for-use properties, grouped by business segment, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amounts may not be recoverable. An asset would be impaired if the discounted
cash flows were less than its carrying value.
The impairment of oil and gas producing properties is calculated as the difference between the market value or, if appropriate,
the discounted estimated future cash flows from its proved reserves and unproved reserves, adjusted for risks related to such reserves,
in each field owned at the year end with the net book value of the assets relating thereto. Expected future cash flows from the sale or
production of reserves are calculated considering crude oil prices based on a combination of market forward quotes and standard
long-term projections. The discounted values of cash flows are determined using a reasonable and supportable discount rate based on
standard WACC-CAPM (weighted average cost of capital—capital asset pricing model) assumptions including, if appropriate, a risk
premium related to this type of asset. The estimated cash flows are based on future levels of production, the future commodity prices,
lifting and development costs, estimates of future expenditures necessary with respect to undeveloped oil and gas reserves, field
decline rates, market demand and supply, economic regulatory conditions and other factors.
The impairment of assets corresponding to our Refining and Marketing and Chemical business segments is calculated as the
difference between the discounted estimated future cash flows from the use of those assets and the net book value of the assets related
thereto. The discounted values of cash flows are determined using a discount rate we believe to be reasonable and supportable based
on standard WACC-CAPM (weighted average cost of capital—capital asset pricing model) assumptions including, if appropriate, a
risk premium related to the type of asset. The estimated cash flows are based on future levels of production, the future estimated
prices of our products and costs, other estimates of future expenditures, estimated useful life of the respective asset, market demand
and supply, economic regulatory conditions and other factors for each business segment.
Charges for impairment are recognized in our results from time to time as a result of, among other factors, adverse changes in
the recoverable reserves from oil and natural gas fields, and changes in economic regulatory conditions. If proved reserves estimates
were revised downward, net income could be negatively affected by higher impairment charges on the property’s book value.
Therefore, our management must make reasonable and supportable assumptions and estimates with respect to: (i) the market
value of reserves, (ii) oil fields’ production profiles and future production of refined and chemical products, (iii) future investments,
taxes and costs, (iv) risk factors for unproved reserves which are measured based on the profile and potential of each specific
exploration and production asset, (v) future capital expenditures and useful life for properties corresponding to our Refining and
Marketing and Chemical business segments, and (vi) future prices, among other factors. As such, any change in the variables used to
prepare such assumptions and estimates may have a significant effect on the impairment tests.
Impact of oil and gas reserves and prices on testing for impairment
Proved oil and gas properties held and used by us are reviewed for impairment whenever events or circumstances indicate that
the carrying amounts may not be recoverable. Impairments are measured by the amount by which the carrying value exceeds its fair
value.
We perform asset valuation analyses on an ongoing basis as a part of our asset management program. In general, we do not view
temporarily low oil prices as a triggering event for conducting the impairment tests. Accordingly, any impairment tests that we
perform make use of our long-term price assumptions for the crude oil and natural gas markets and petroleum products.
Depreciation of oil and gas producing properties
Volumes produced and asset costs are known, while proved reserves have a high probability of recoverability and are based on
estimates that are subject to some variability. The impact of changes in estimated proved reserves is treated prospectively by
depreciating the remaining book value of the assets over the future expected production, affecting the following year’s net income. In
2008, 2007 and 2006 we recorded depreciation of fixed assets associated with hydrocarbon reserves amounting to Ps.4,058 million,
Ps.3,564 million and Ps.3,223 million, respectively.
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Asset retirement obligations
Future costs related to hydrocarbon wells abandonment obligations are capitalized along with the related assets, and are
depreciated using the unit-of-production method. As compensation, a liability is recognized for this concept at the same estimated
value of the discounted payable amounts. Future estimated retirement obligations and removal costs are based on management’s best
estimate of the time that the event will occur and the assertion of costs to be incurred upon the retirement or removal of the asset.
Asset removal technologies and costs, as well as political, environmental, safety and other requirements and public expectations, are
frequently changing. Consequently, the timing and future cost of dismantling and abandonment are subject to significant
modification. As such, any change in variables used to prepare such assumptions and estimates can have, as a consequence, a
significant effect on the liability and the related capitalized asset and future charges related to the retirement obligations. Future
obligations are reviewed upon consideration of the current costs incurred in abandonment obligations on a field-by-field basis or other
external available information if abandonment obligations were not performed. Due to the number of the wells in operation and/or not
abandoned and the complexity with respect to different geographic areas where the wells are located, the current costs incurred in
plugging are extrapolated to the wells pending abandonment. Management believes that current plugging costs incurred are the best
source of information at the end of each fiscal year to estimate asset retirement obligations for wells.
Environmental liabilities, litigation and other contingencies
Environmental liabilities are recorded when environmental assessments and/or remediation are probable, material and can be
reasonably estimated. Such estimates are based on either detailed feasibility studies of remediation approach and cost for individual
sites, or on our estimate of costs to be incurred based on historical experience and available information for the stage of assessment
and/or remediation of each site. As additional information becomes available regarding each site or as environmental standards
change, we revise our estimate of costs to be incurred in environmental assessment and/or remediation.
Reserves are established to cover litigation and other contingencies, including counsel fees and judicial expenses, which are
probable and can be reasonably estimated. The final costs arising from litigation and other contingencies may vary from our estimates
due to changes in laws or differing interpretations of laws, the issuance of court decisions or other opinions and final assessments of
the amount of claims. Changes in the facts or circumstances related to these types of contingencies, as well as the future outcome of
these disputes, can have, as a consequence, a significant effect on the reserves for litigation and other contingencies recorded.
Reserves totaling Ps.2,445 million, Ps.2,319 million and Ps.1,952 million as of December 31, 2008, 2007 and 2006,
respectively, have been established in connection with contingencies which were probable and could be reasonably estimated as of
those dates.
U.S. GAAP reconciliation
The recurrent difference between our net income under Argentine GAAP and our net income under U.S. GAAP for the years
ended December 31, 2008, 2007 and 2006 is primarily due to the remeasurement into functional currency and translation into
reporting currency, the elimination of the inflation adjustment into Argentine constant pesos, the effects of the reorganization of
entities under common control, the impairment of long-lived assets, capitalization of financial expenses, accounting for assets
retirement obligations, proportional consolidation of investments in jointly controlled companies, and the consolidation of variable
interest entities.
Under Argentine GAAP, financial statements are presented in constant Argentine pesos (“reporting currency”). Foreign
currency transactions are recorded in Argentine pesos by applying to the foreign currency amount the exchange rate between the
reporting and the foreign currency at the date of the transaction. Exchange rate differences arising on monetary items in foreign
currency are recognized in the income statement of the period.
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Under U.S. GAAP, a definition of the functional currency is required which may differ from the reporting currency.
Management has determined, for us and certain of our subsidiaries and investees, the U.S. dollar to be the functional currency in
accordance with Statement of Financial Accounting Standards (“SFAS”) No. 52. Therefore, we have re-measured into U.S. dollars
the Audited Consolidated Financial Statements as of December 31, 2008, 2007 and 2006, in each case prepared in accordance with
Argentine GAAP by applying the procedures specified in SFAS No. 52. The objective of the re-measurement process is to produce
the same results that would have been reported if the accounting records had been kept in the functional currency. Accordingly,
monetary assets and liabilities are re-measured at the balance sheet date (current) exchange rate. Amounts carried at prices in past
transactions are re-measured at the exchange rates in effect when the transactions occurred. Revenues and expenses are re-measured
on a monthly basis at the average rates of exchange in effect during the period, except for consumption of non-monetary assets, which
are re-measured at the rates of exchange in effect when the respective assets were acquired. Translation gains and losses on monetary
assets and liabilities arising from the re-measurement are included in the determination of net income (loss) in the period such gains
and losses arise. For certain of our subsidiaries and investees, we have determined the Argentine peso as the functional currency.
Translation adjustments resulting from the process of translating the financial statements of the mentioned subsidiaries into U.S.
dollars are not included in determining net income and are reported in other comprehensive income (“OCI”), as a component of
shareholders’ equity.
The amounts obtained from the re-measurement process referred to above are translated into Argentine pesos under the
provisions of SFAS No. 52. Assets and liabilities are translated at the current selling exchange rate of Ps.3.45, Ps.3.15, and Ps.3.06 to
U.S.$1.00, as of December 31, 2008, 2007 and 2006, respectively. Revenues, expenses, gains and losses reported in the income
statement are translated at the exchange rate existing at the time of each transaction or, if appropriate, at the weighted average of the
exchange rates during the period. Translation effects of exchange rate changes are included as a cumulative translation adjustment in
shareholders’ equity. For the years ended December 31, 2008, 2007 and 2006, the re-measurement into functional currency and the
translation into reporting currency decreased net income determined according to Argentine GAAP by Ps.1,230 million, Ps.1,513
million and Ps.2,065 million, respectively.
Under Argentine GAAP, we have proportionally consolidated, net of intercompany transactions, assets, liabilities, net sales, cost
and expenses of investees in which joint control is held. Under U.S. GAAP, these investees are accounted for by the equity method.
The proportional consolidation mentioned above generated an increase of Ps.648 million, Ps.486 million and Ps.446 million and in
total assets and total liabilities as of December 31, 2008, 2007 and 2006, respectively, and an increase of Ps.1,770 million, Ps.1,350
million and Ps.1,451 million in net sales and Ps.681 million, Ps.690 million and Ps.774 million in operating income for the years
ended December 31, 2008, 2007 and 2006, respectively.
Under Argentine GAAP, in order to perform the recoverability test, long-lived assets are grouped with other assets at business
segment level, and they would be impaired if the discounted cash flows, considered at business segment level, were less than its
carrying value. With respect to assets that were held pending sale or disposal, our policy was to record these assets on an individual
basis at amounts that did not exceed net realizable value.
Under U.S. GAAP, for proved oil and gas properties, we perform the impairment test on an individual field basis. Other long-
lived assets are aggregated, so that the discrete cash flows produced by each group of assets may be separately analyzed. Each asset is
tested following the guidelines of SFAS No. 144, “Accounting for the Impairment of Long-Lived Assets,” by comparing the net book
value of such an asset with the expected undiscounted cash flow. Impairment losses are measured as the amount by which the
carrying amount of the assets exceeds the fair value of the assets. When market values are not available, we estimate them using the
expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the assets. The
accumulated adjustments under U.S. GAAP of the impairment provisions as of December 31, 2008, 2007 and 2006 were Ps.613
million, Ps.554 million and Ps.491 million, respectively, mainly corresponding to our Exploration and Production segment.
Additional impairment charges under U.S. GAAP amounted to Ps.124 million, Ps.180 million and Ps.11 million for the years ended
December 31, 2008, 2007 and 2006, respectively. The impairment recorded in 2008 was mainly the result of a decrease in oil and gas
reserves affecting certain long-lived assets. In 2007, the impairment recorded was mainly the result of a decrease in oil and gas
reserves affecting certain long-lived assets of
90
our Exploration and Production business segment. In 2006, the impairment recorded was mainly the result of the downward revision
in reserves made by us in December 2006, as well as to certain non-strategic Exploration and Production areas that were available for
sale at that time, and accordingly were valued at fair value less cost to sell. See “Item 4. Information on the Company—Exploration
and Production.” The adjusted basis after impairment resulted in lower depreciation under U.S. GAAP Ps.119 million, Ps.132 million
and Ps.137 million for the years ended December 31, 2008, 2007 and 2006, respectively.
Under U.S. GAAP, only interest expense on qualifying assets must be capitalized, regardless of the asset’s construction period.
Under Argentine GAAP, for those assets that necessarily take a substantial period of time to get ready for its intended use, borrowing
costs (including interest and exchange differences) should be capitalized. Accordingly, borrowing costs for those assets whose
construction period exceeds one year have been capitalized, provided that such capitalization does not exceed the amount of financial
expense recorded in that period or year.
Under U.S. GAAP, SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement cost. The standard applies to the legal obligation associated with the
retirement of long-lived assets that results from the acquisition, construction, development and normal use of the asset. SFAS No. 143
requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred, if a
reasonable estimate of fair value can be made. The asset retirement obligations liability is built up in cash flow layers, with each layer
being discounted using the discount rate as of the date that the layer was created. Remeasurement of the entire obligation using
current discount rates is not permitted. Each cash flow layer is added to the carrying amount of the associated asset. This additional
carrying amount is then depreciated over the life of the asset. The liability is increased due to the passage of time based on the time
value of money (“accretion expense”) until the obligation is settled. Argentine GAAP is similar to SFAS No. 143, except for a change
in the discount rate is treated as a change in estimates, so the entire liability must be recalculated using the current discount rate, being
the change added or reduced from the related asset.
Under U.S. GAAP, results on reorganization of entities under common control are eliminated and related accounts receivables
are considered as a capital (dividend) transaction. Under Argentine GAAP, results on reorganization of entities under common control
and accounts receivable are recognized in the statement of income and the balance sheet, respectively.
FIN No. 46R, Consolidation of Variable Interest Entities (“FIN 46R”), clarifies the application of Accounting Research Bulletin
No. 51 to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The
interpretations explain how to identify variable interest entities and how an enterprise assesses its interests in a variable interest entity
to decide whether to consolidate that entity. These interpretations require existing unconsolidated variable interest entities to be
consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. Under Argentine
GAAP, consolidation is based on having the votes necessary to control corporate decisions (Note 1 to the Audited Consolidated
Financial Statements).
Until May 2008, YPF had transactions with one variable interest entity (“VIE”), which has been created in order to structure
YPF’s future deliveries of oil (“FOS transaction”). For a further description refer to “—Transactions with unconsolidated variable
interest entities” below.
In May 2008, YPF delivered the last barrels committed under the FOS transaction; consequently the transaction and the swap
agreement have expired. As of December 31, 2008, no shareholder’s equity reconciliation adjustment is required.
The effects before taxes of such consolidation as of December 31, 2007 and 2006 were (i) an increase in loans by Ps.68 million
and Ps.186 million, respectively, (ii) an increase in current assets by Ps.24 million and Ps.19 million, respectively, (iii) the elimination
of net advances from crude oil purchasers from balance sheets by Ps.9 million and Ps.103 million respectively, and (iv) a decrease in
shareholders’ equity by Ps.35 million and Ps.65 million, respectively.
91
YPF Holdings has a non-contributory defined-benefit pension plan and postretirement and postemployment benefits. On
December 31, 2006, under U.S. GAAP the Company adopted SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension
and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132 (R).” Under provisions of SFAS
No. 158, the Company fully recognized the underfunded status of defined-benefit pension and postretirement plans as a liability in the
financial statements, reducing the Company’s shareholders’ equity through the accumulated OCI account. Unrecognized gains and
losses are recognized in the income statement during the expected average remaining working lives of the employees participating in
the plans and the life expectancy of retired employees. Under Argentine GAAP, the benefits related to the plans were valued at net
present value and accrued based on the years of active service of employees. The net liability for defined-benefits plans is the amount
resulting from the sum of: the present value of the obligations, net of the fair value of the plan assets and net of the unrecognized
actuarial losses generated since December 31, 2003. These unrecognized actuarial losses and gains are recognized in the statement of
income during the expected average remaining working lives of the employees participating in the plans and the life expectancy of
retired employees. Unrecognized actuarial losses are not considered in the amount of the net liability. For a more detailed discussion
of the most significant differences between Argentine GAAP and U.S. GAAP, please refer to Notes 13, 14 and 15 to the Audited
Consolidated Financial Statements.
Principal Income Statement Line Items
The following is a brief description of the principal line items of our income statement.
Net sales
Net sales include primarily our consolidated sales of unrefined and refined fuel and chemical products net of the payment of
applicable fuel transfer taxes, turnover taxes and custom duties on exports. Royalties with respect to our production are accounted for
as a cost of production and are not deducted in determining net sales.
Cost of sales
The following table presents, for each of the years indicated, a breakdown of our consolidated cost of sales by category:
Inventories at beginning of year
Purchases for the period
Production costs(1)
Holding gains on inventories
Inventories at end of period
Cost of sales
For the Year Ended December 31,
2008
2007
(in millions of pesos)
2006
2,573
8,547
1,697
6,637
15,866 12,788
451
(2,573)
1,315
4,351
11,458
394
(1,697)
24,013 19,000 15,821
476
(3,449)
(1) The table below presents, for each of the years indicated, a breakdown of our consolidated production costs by category:
Salaries and social security taxes
Fees and compensation for services
Other personnel expenses
Taxes, charges and contributions
Royalties and easements
Insurance
Rental of real estate and equipment
92
For the Year Ended December 31,
2008
2007
(in millions of pesos)
2006
1,072
212
352
284
2,396
131
397
824
174
283
226
1,989
106
331
649
114
215
191
2,095
102
258
Depreciation of fixed assets
Industrial inputs, consumable material and supplies
Operation services and other service contracts
Preservation, repair and maintenance
Contractual commitments
Transportation, products and charges
Fuel, gas, energy and miscellaneous
Total
Other expenses, net
For the Year Ended December 31,
2008
2007
(in millions of pesos)
2006
4,573
611
1,101
2,400
61
954
1,322
15,866
3,989
535
535
1,674
596
790
736
12,788
3,598
485
566
1,329
519
622
715
11,458
Other expenses principally include reserves for pending lawsuits and other claims, provisions for environmental remediation and
provisions for defined benefit pension plans and other post-retirement benefits.
Finance income/(expense), net and holding gains
Finance income/(expense), net and holding gains consist of the net of gains and losses on interest paid and interest earned,
currency exchange differences and the periodic revaluation of inventories.
Taxes
The statutory corporate income tax rate in Argentina was 35% during each of the periods presented in this annual report. Our
effective tax rates for the periods discussed in this annual report exceed the Argentine corporate income tax rate mainly due to the
non-deductibility of the amortization of the effect of inflation indexation on fixed assets, offset in part by income on non-consolidated
long-term investments (which is included in our consolidated financial statements net of corporate income tax as payable by
investees) and tax-free income from the sale of hydrocarbons produced in Tierra del Fuego. See Note 3(k) to the Audited
Consolidated Financial Statements.
Results of Operations
Consolidated results of operations for the years ended December 31, 2008, 2007 and 2006
The following table sets forth certain financial information as a percentage of net sales for the years indicated.
Net sales
Cost of sales
Gross profit
Administrative expenses
Selling expenses
Exploration expenses
Operating income
2008
2006
Year Ended December 31,
2007
(percentage of net sales)
100.0% 100.0% 100.0%
(65.3)
34.7
(2.8)
(7.3)
(1.8)
22.9
(61.7)
38.3
(2.6)
(7.0)
(1.8)
26.9
(68.9)
31.1
(3.0)
(7.1)
(2.0)
19.1
The tables below present, for the years indicated, volume and price data with respect to our consolidated sales of our principal
products in the domestic and export markets, respectively. The data presented below does not include sales by Compañía Mega S.A.
(Mega), Refinor or Profertil, jointly controlled companies in which we have 38%, 50% and 50% interests, respectively, and which are
proportionally consolidated in our consolidated financial statements. Mega contributed, after consolidation adjustments, 0.9%, 1.6%
and 1.6%, respectively, of our
93
consolidated net sales for 2008, 2007 and 2006. Refinor contributed, after consolidation adjustments, 1.4%, 1.5% and 2.0%,
respectively, of our consolidated net sales for 2008, 2007 and 2006. Profertil contributed, after consolidation adjustments, 2.8%, 1.5%
and 2.1%, respectively, of our consolidated net sales for 2008, 2007 and 2006.
Domestic Market
Product
Natural gas
Diesel(2)
Gasoline
Fuel oil(3)
Petrochemicals
2008
Year Ended December 31,
2007
2006
Units
sold
Units
sold
Average
price
per unit(1)
(in pesos)
Average
price
per unit(1)
(in pesos)
Average
price
per unit(1)
(in pesos)
15,864 mmcm 228/mcm 16,771 mmcm 171/mcm 16,686 mmcm 156/mcm
7,757 mcm 862/m3
2,246 mcm 887/m3
458 mtn 939/ton
606 mtn 1,390/ton
8,285 mcm 1,322/m3
3,054 mcm 1,250/m3
931 mtn 1,304/ton
676 mtn 2,143/ton
8,352 mcm 1,060/m3
2,691 mcm 978/m3
910 mtn 961/ton
754 mtn 1,510/ton
Units
sold
(1) Average prices shown are net of applicable domestic fuel transfer taxes payable by consumers.
(2)
(3)
Includes 59 mcm sold under the Energy Substitution Program in 2007.
Includes 298 mtn sold under the Energy Substitution Program in 2008 and 220 mtn in 2007.
Export Markets
Product
Natural gas
Diesel
Gasoline
Fuel oil
Petrochemicals(2)
2008
Year Ended December 31,
2007
2006
Units
sold
Units
sold
Average
price
per unit(1)
(in pesos)
Average
price
per unit(1)
(in pesos)
Average
price
per unit(1)
(in pesos)
580 mmcm 1,271/mcm 1,358 mmcm 354/mcm 3,090 mmcm 280/mcm
149 mcm 1,686/m3
1,695 mcm 1,481/m3
903 mtn 967/ton
700 mtn 2,010/ton
140 mcm 2,789/m3
880 mcm 2,392/m3
1,138 mtn 1,495/ton
530 mtn 2,563/ton
133 mcm 1,883/m3
1,273 mcm 1,746/m3
1,187 mtn 1,175/ton
689 mtn 2,249/ton
Units
sold
(1) Average prices shown are gross of applicable export withholding taxes payable by us, and, as a result, may not be indicative of
amounts recorded by us as net sales. See “—Factors Affecting Our Operations—International oil and gas prices and Argentine
export taxes” for more information on the export tax withholding rates applicable to our principal products.
Includes exports of refined paraffinic.
(2)
Net sales
Net sales in 2008 were Ps.34,875 million, representing a 19.8% increase compared to Ps.29,104 million in 2007. This increase
was primarily attributable to increases in the average domestic prices of diesel (24.7%) and gasoline (27.8%), as well as a 33%
increase in the average price of natural gas sold in the domestic market. The increase in volume of gasoline sold in the domestic
market (13.5%) also contributed to this increase. In addition, there were significant price increases in other products, such as jet fuel
and aviation gasoline, both in the domestic and export markets. As a result, our domestic sales increased 33.5% to Ps.27,647 million
in 2008 from Ps.20,704 million in 2007. These increases were partially offset by higher export taxes attributable to the application of
Resolution 394/2007, which resulted in an increase, year over year, of approximately Ps.2,470 million in export taxes applicable to
petrochemical and refined products. Export net sales declined by 13.9% to Ps.7,228 million in 2008 from Ps.8,400 million in 2007, as
a result of higher export taxes and declines in the exported volumes of natural gas, gasoline and crude oil (which decreased 57%, 31%
and 24%, respectively), partially offset by an increase in international gasoline and diesel prices. Our export sales in both periods
were made mainly to the United States, Brazil and Chile.
94
Net sales in 2007 were Ps.29,104 million, representing a 13.5% increase compared to Ps.25,635 million in 2006. This increase
was primarily attributable to greater sales volumes of diesel, gasoline, fuel oil and petrochemicals in the domestic market (which
increased 7.7%, 19.8%, 98.7% and 24.4%, respectively), as well as to significant increases in average domestic diesel, gasoline and
fuel oil prices (which increased 23.0%, 10.3% and 2.3%, respectively). As a result, our domestic sales increased 21.9% to Ps.20,704
million in 2007 from Ps.16,986 million in 2006. In addition, diesel and fuel oil sold under the Energy Substitution Program also
contributed to the increase in sales. Export sales declined by 2.9% to Ps.8,400 million in 2007 from Ps.8,649 million in 2006, driven
by declines in the exported volumes of natural gas, gasoline and crude oil (which decreased 56.1%, 24.9% and 51.4%, respectively),
partially offset by an increase in international gasoline prices.
For further information on our net sales for the periods discussed above, see “—Results of operations by business segment for
the years ended December 31, 2008, 2007 and 2006.”
Cost of sales
Cost of sales in 2008 was Ps.24,013 million, compared to Ps.19,000 million in 2007, representing a 26.4% increase, which was
mainly attributable to a 21% increase in the volume of crude oil purchased from third parties, driven by our efforts to maintain our
high refinery utilization rates notwithstanding our declining production. Increased volumes of crude oil purchases adversely affect our
margins because we lose the margin earned on our internal exploration and production activities. In addition, depreciation of fixed
assets increased 15.4%, mainly as a result of increased asset values attributable to (i) increased assets (principally related to our
Exploration and Production business segment) subject to depreciation in 2008, and (ii) higher capitalized well abandonment
obligations during the first semester of 2008, according to the new estimates performed as of that time based on new information
concerning future costs associated with those activities, which began to be depreciated in the second half of 2008 based on the unit of
production method. Salaries and social security taxes, maintenance costs, contract services and certain other production costs also
increased significantly, driven mainly by inflation and the renegotiation of certain labor and service contracts.
Cost of sales in 2007 was Ps.19,000 million, compared to Ps.15,821 million in 2006, representing a 20.0% increase, which was
mainly attributable to a 45% increase in the volume of crude oil purchased from third parties, driven by our efforts to maintain our
high refinery utilization rates notwithstanding our declining production, as well as to an increase in the volume of other products
purchased from third parties. In addition, depreciation of fixed assets increased 10.9%, mainly as a result of increased asset values
attributable to (i) higher capitalized well abandonment obligations at the end of 2006, according to the new estimates performed as of
that time based on new information concerning future costs associated with those activities, which began to be depreciated in 2007
based on the unit of production method and (ii) increased assets (principally related to our Exploration and Production business
segment) subject to depreciation in 2007. Salaries and social security taxes, maintenance costs, contract services and certain other
production costs also increased, driven mainly by inflation and the renegotiation of certain labor and service contracts. Our
contractual commitments contributed Ps.77 million to the increase in cost of sales, principally due to an increase in penalties recorded
for contractual liabilities (including in connection with certain export contracts) to Ps.596 million in 2007 from Ps.519 million in
2006.
Selling expenses
Our selling expenses were Ps.2,460 million in 2008, Ps.2,120 million in 2007 and Ps.1,797 million in 2006, representing an
increase of 16.0% from 2007 to 2008 and an increase of 18.0% from 2006 to 2007. These higher costs were due mainly to the
increase in the volume of gasoline sold in the domestic market, which was sold mainly through service stations and resulted in higher
logistics costs for us, the increase in our net sales, which determines the amount of transaction taxes we pay in connection with them
(a transaction tax of 0.6% or, in certain instances, a different rate is levied on debits and credits in bank accounts).
95
Operating income
Operating income in 2008 was Ps.6,665 million, compared to Ps.6,657 million in 2007, representing a slight increase of 0.1%.
Operating income in 2007 was Ps.6,657 million, compared to Ps.6,883 million in 2006, representing a decrease of 3.3%.
Operating income decreased primarily due to the increased purchases of crude oil and diesel from third parties described above, as
well as increased depreciation of fixed assets and other expenses.
Our operating margins (operating income divided by net sales) were 19.1%, 22.9% and 26.9% in 2008, 2007 and 2006,
respectively. Increased volumes of crude oil purchases in 2008, 2007 and 2006 adversely affected our margins because we lost the
margin earned on our internal exploration and production activities.
Other expenses, net
Other expenses, net decreased 14.4% to Ps.376 million in 2008 from Ps.439 million in 2007, mainly as a result of decreased
provisions for lawsuits, partially offset by increased environmental obligations, due mainly to new information which became
available during 2008. See Note 3(j) to our Audited Consolidated Financial Statements.
Other expenses, net increased 115.2% to Ps.439 million in 2007 from Ps.204 million in 2006, mainly as a result of increased
provisions for lawsuits, due mainly to new developments in our existing lawsuits and our reassessment of certain environmental
obligations. See Note 3(j) to our Audited Consolidated Financial Statements.
Financial income (expense), net and holding gains
In 2008, financial expense, net and holding gains was Ps.174 million, compared to financial income, net and holding gains of
Ps.518 million in 2007. These negative results were attributable mainly to lower interest earnings resulting from our decreased
financial investments, the increase of interest expense from loans attributable to our increased indebtedness in 2008 compared to
2007, and negative exchange rate differences due to the devaluation of the peso against the US dollar.
In 2007, financial income (expense), net and holding gains increased 14.1% to Ps.518 million from Ps.454 million in 2006. This
increase was attributable principally to higher positive exchange rate differences on our net non-peso denominated financial assets, as
well as to holding gains on inventories from stock revaluation for increasing production costs compared with the prior period. These
positive results were offset in part by higher financial expense attributable to increased accruals related to our well abandonment
obligations resulting from an increase in such obligations.
Taxes
Income tax expense in 2008 decreased 7.3% to Ps.2,558 million from Ps.2,758 million in 2007. The effective income tax rates
for 2008 and 2007 were 41.3% and 40.3%, respectively, compared to the statutory income tax rate of 35%. Our effective tax rates
exceed the Argentine corporate income tax rate due to the negative results from YPF Holdings Inc., which did not give rise to a tax
credit or deduction under Argentine law because YPF Holding is a foreign company. In addition, the deferred tax assets generated by
YPF Holdings’ losses have been fully provisioned because there is no expectation that YPF Holdings will be able to make use of any
such tax benefits in future periods. The non-deductibility of the amortization of the effect of inflation indexation on fixed assets,
which is not deductible from income tax under prevailing Argentine tax legislation, also contributed to our higher effective tax rates.
See Note 3(j) to the Audited Consolidated Financial Statements.
Income tax expense in 2007 decreased 1.5% to Ps.2,758 million from Ps.2,801 million in 2006. The effective income tax rates
for 2007 and 2006 were 40.3% and 38.6%, respectively, compared to the statutory income tax rate of 35%. Our effective tax rates
exceed the Argentine corporate income tax rate mainly due to the non-deductibility of the amortization of the effect of inflation
indexation on fixed assets, which is not deductible from income tax under prevailing Argentine tax legislation. See Note 3(k) to the
Audited Consolidated Financial Statements.
96
Net income
Net income for 2008 was Ps.3,640 million, compared to Ps.4,086 million in 2007, a decrease of 10.9%. This decrease is mainly
attributable to the decline in the financial income described above.
Net income for 2007 was Ps.4,086 million, compared to Ps.4,457 million in 2006, a decrease of 8.3%. This decrease is mainly
attributable to the 3.3% decline in operating income and the increase in other expenses, net described above.
Results of operations by business segment for the years ended December 31, 2008, 2007 and 2006
The following table sets forth net sales and operating income for each of our lines of business for the years ended December 31,
2008, 2007 and 2006:
Net sales(1)
Exploration and Production(2)
To unrelated parties
To related parties
Intersegment sales and fees(3)
Total Exploration and Production
Refining and Marketing(4)
To unrelated parties
To related parties
Intersegment sales and fees
Total Refining and Marketing
Chemical
To unrelated parties
Intersegment sales and fees
Total Chemical
Corporate and Other
To unrelated parties
Intersegment sales and fees
Total corporate and others
Less intersegment sales and fees
Total net sales(5)
Operating income (loss)
Exploration and Production
Refining and Marketing
Chemical
Corporate and Other
Consolidation adjustments
Total operating income
For the Year Ended December 31,
2008
2007
(in millions of pesos)
2006
3,288
724
4,016
939
3,076
774
12,663 14,056 14,033
17,883
17,618 18,068
25,364 20,375
2,045
1,858
17,651
1,624
1,526
28,017 24,278 20,801
1,508
1,145
2,829
1,094
3,923
2,563
892
3,455
2,401
647
3,048
219
461
680
109
440
549
109
282
391
(15,363) (17,246) (16,488)
34,875 29,104 25,635
3,315
3,089
1,178
(815)
(102)
6,665
5,679
1,234
500
(620)
(136)
6,657
6,564
258
572
(540)
29
6,883
97
(1) Net sales are net to us after payment of a fuel transfer tax, turnover tax and custom duties on exports. Royalties with respect to
our production are accounted for as a cost of production and are not deducted in determining net sales (see Note 2(g) to the
Audited Consolidated Financial Statements).
Includes exploration and production operations in Argentina and the United States.
Intersegment sales of crude oil to Refining and Marketing are recorded at transfer prices that reflect our estimates of Argentine
market prices.
Includes LPG activities.
(4)
(5) Total net sales include export sales of Ps.7,228 million, Ps.8,400 million and Ps.8,649 million for the years ended December 31,
(2)
(3)
2008, 2007 and 2006, respectively. The export sales were mainly to the United States, Brazil and Chile.
Exploration and Production
Exploration and Production net sales in 2008 were Ps.17,618 million, representing a 2.5% decrease from Ps.18,068 million in
2007. Intersegment sales to Refining and Marketing, substantially all of which were crude oil sales, decreased Ps.1,393 million in
2008. This variation was due to a 6.3% decrease in the volume of crude oil sales that resulted mainly from a decline in our production
attributable to the strikes that affected our operations in the Southern region of Argentina, and the increasing maturity of our fields, as
well as a 6% decrease in intersegment oil prices in 2008 compared to 2007. This decrease in intersegment oil prices was due to our
consideration of the effect of Resolution 394/2007, which among other things, established certain reference prices for crude oil. These
effects were partially offset by a 33.3% increase in the average price of natural gas sold in the domestic market, due mainly to
increases in the price of natural gas sold to industrial customers and thermal power plants, during 2008.
Exploration and Production operating income declined 41.6% to Ps.3,315 million in 2008 from Ps.5,679 million in 2007, due to
the above-mentioned decline in crude oil sales volumes and to higher operating expenses. Segment operating expenses increased
15.4% due to significant increases in contract works and services, driven mainly by cost increases in service contracts due to inflation
and the high oil prices that prevailed during a significant part of the year. Additionally, we recorded a Ps.495 million, or 13.7%,
increase in depreciation of fixed assets mainly due to the increase in assets subject to depreciation resulting mainly from higher
capital expenditures, as well as increased well abandonment obligations.
Average oil production during 2008 decreased 4.9% to 313 thousand barrels per day from 329 thousand barrels per day in 2007.
Natural gas production in 2008 decreased 4.7% to 1,658 mmcf/d from 1,740 mmcf/d in 2007. These declines were attributable to the
natural decline in the production curve resulting from the continuing overall maturity of our fields and the strikes that took place in
the Southern region of Argentina during the first half of 2008.
Exploration and Production net sales in 2007 were Ps.18,068 million, representing a 1.0% increase from Ps.17,883 million in
2006. Overall segment crude oil sales, substantially all of which were intersegment sales, increased Ps.23 million in 2007. This
increase was due to a 9% increase in average international crude oil prices that set the internal price of transfer between business
segments prior to the implementation of a new regime for withholding rates on exports in November 2007, which more than offset the
6% decrease in the volume of crude oil sales that resulted mainly from a 5% decrease in our production attributable to the increasing
maturity of our fields. Additionally, in 2007, the average price of natural gas sold in the domestic market increased 9.6% from 2006,
due mainly to increases in the price of natural gas sold to industrial customers and thermal power plants, which more than offset the
significant increase in the portion of gas sold to the residential segment of the market, the prices for which are significantly lower than
those for other segments of the market, and the decline in exports of natural gas attributable to lower export volumes (which
decreased 56.1% from 2006). Sales of gas by-products and other products remained stable.
Exploration and Production operating income declined 13.5% to Ps.5,679 million in 2007 from Ps.6,564 million in 2006, due to
the above-mentioned decline in crude oil sales volumes and to higher operating expenses. Segment operating expenses increased
9.5% due to significant increases in contract works and services, driven mainly by the renegotiation of certain service contracts in line
with industry-wide cost increases in such service contracts in
98
Argentina, as well as by higher labor costs resulting from renegotiations of labor contracts with petroleum workers’ unions based on
higher inflation and increasing oil prices. Additionally, we recorded a Ps.353 million, or 10.8%, increase in depreciation of fixed
assets mainly due to the decline in our reserves combined with the increase in assets related to well abandonment obligations.
Furthermore, new exploration initiatives, mainly in offshore areas, contributed a further Ps.117 million to the increase in segment
operating expenses in 2007.
Average oil production during 2007 decreased 4.6% to 329 thousand barrels per day from 345 thousand barrels per day in 2006.
Natural gas production in 2007 decreased 2.3% to 1,740 mmcf/d from 1,784 mmcf/d in 2006. These declines were attributable to the
natural decline in the production curve resulting from the continuing overall maturity of our fields and the cessation of production at
our Magallanes field in January 2007 due to pipeline problems.
Refining and Marketing
Refining and Marketing net sales in 2008 were Ps.28,017 million, 15.4% higher than the Ps.24,278 million in net sales recorded
in 2007. This increase was mainly attributable to increases in average prices of diesel and gasoline sold in the domestic market
(24.7% and 27.8%, respectively), the segment’s two principal products, as well as a 13.5% increase in the volume of gasoline sold in
the domestic market. Notwithstanding the aforementioned increases, average prices of domestic sales remained lower than
international prices. Diesel volumes sold in the domestic market decreased slightly (0.8%). Our increased domestic sales were
partially offset by lower volumes of exported gasoline (which decreased by 30.9%).
Refining and Marketing operating profit increased to Ps.3,089 million in 2008, from Ps.1,234 million in 2007. This increase was
due to the above-mentioned increase in the domestic price of diesel and increases in domestic prices and volumes of gasoline sales. A
6% decrease in the average price paid for crude oil to our Exploration and Production business segment was the result of considering
the effect of Resolution 394/2007, which established certain reference prices for crude oil, in calculating our intersegment oil prices.
Purchases of crude oil accounted for approximately 90% of the segment’s operating costs. In addition there was a 17% increase in
refining costs (excluding crude oil purchase and transport costs), mainly due to higher contract service costs as a result of the
renegotiation of certain service contracts and inflation adjustments, as well as the increase of crude oil purchases from third parties
driven by our efforts to maintain our high refinery utilization rates. The price of crude oil purchased from third parties was higher
than our intersegment price principally due to the generally higher quality of the crude oil purchased, compared to the crude oil basket
considered in setting our internal transfer price. Additionally, the segment’s operating profit was affected by the implementation in
November 2007 of a new regime for withholding rates on exports, which significantly decreased our margins on the export sales of
many hydrocarbon products. Refining cost per barrel, which we calculate as the segment’s cost of sales for the period less crude oil
purchase costs, divided by the number of barrels produced during the period, was Ps.12.7 in 2008, compared to Ps.10.7 in 2007.
Refinery output in 2008, including 50% of Refinor’s output (we own 50% of Refinor), reached 328 thousand barrels per day,
representing a slight 1.8% decrease over the 334 thousand barrels per day processed in 2007.
Refining and Marketing net sales in 2007 were Ps.24,278 million, 16.7% higher than the Ps.20,801 million net sales recorded in
2006. This increase was mainly attributable to increases in the volumes and average prices of diesel and gasoline sold in the domestic
market, the segment’s two principal products. Domestic diesel volumes and average prices increased by 7.7% and 23.0%,
respectively, while domestic gasoline volumes and average prices increased by 19.8% and 10.3%, respectively. Higher domestic sales
were offset by lower export sales of many of our products, especially gasoline, as the Argentine government’s requirement that we
fulfill domestic demand resulted in a 24.9% decrease in our exported volume of gasoline, the segment’s principal export product.
Gasoline prices were on average significantly higher in international markets than in Argentina during 2007.
Refining and Marketing operating profit increased 378.3% to Ps.1,234 million in 2007, from Ps.258 million in 2006. This
increase was due to the above-mentioned increases in volumes and prices of domestic sales of diesel and gasoline, partially offset by
an approximately 5% increase in the average price paid for crude oil to our Exploration and Production business segment and higher
crude oil volumes purchased from third parties to satisfy the increase in
99
daily production of our refineries. Purchases of crude oil accounted for over 90% of the segment’s operating costs in both years. The
increased domestic sales described above were also partially offset by a 15.1% increase in refining costs (excluding crude oil costs),
mainly due to higher contract service costs as a result of the renegotiation of certain service contracts and inflation adjustments, and
the implementation in November 2007 of a new regime for withholding rates on exports. Refining cost per barrel, which we calculate
as the segment’s cost of sales for the period less crude oil purchase costs, divided by the number of barrels produced during the
period, was Ps.10.7 in 2007, compared to Ps.9.3 in 2006.
Refinery output in 2007, including 50% of Refinor’s output, reached 334 thousand barrels per day, representing a 3.4% increase
over the 323 thousand barrels per day processed in 2006 and a utilization rate over 100% of the existing processing capacity of
332.5 thousand barrels per day.
Chemical
Net sales in 2008 increased by 13.5% to Ps.3,923 million from Ps.3,455 million in 2007. The increase in net sales was
attributable mainly to an increase in the domestic prices of petrochemicals, particularly fertilizers. Export sales decreased in 2008, as
higher average export prices for petrochemicals, which increased by 12%, were offset by a 23% decrease in exported volumes.
Additionally, increased export taxes resulting from the application of the new withholding tax regime for exports that came into effect
in November 2007 resulted in a Ps.270 million increase in export taxes, which are deducted from our gross sales, in 2008 compared to
2007. Operating income in 2008 increased 135.6% to Ps.1,178 million from Ps.500 million in 2007. The increase in operating income
was attributable to better margins obtained from our aromatics, as well as to the higher results of Profertil, due mainly to higher
production of urea and other fertilizers and to the higher prices of such products in the domestic and export markets.
Net sales in 2007 increased by 13.4% to Ps.3,455 million from Ps.3,048 million in 2006, while operating income in 2007
decreased 12.6% to Ps.500 million from Ps.572 million in 2006. The increase in net sales was attributable mainly to a 24.4% increase
in the domestic sales volumes of petrochemicals, driven mainly by higher demand for fertilizers (the prices for which also increased)
and certain other products, an 8.6% increase in the average domestic sales prices of petrochemicals, and an increase in the average
price of exported petrochemicals, partially offset by the 2% decrease in the volume of exported petrochemicals. The decrease in
operating income was attributable to the significantly lower results of Profertil (which contributed Ps.191 million to the segment’s
operating income in 2007 compared to Ps.310 million in 2006), which were attributable mainly to lower production of urea (a
fertilizer) resulting from reduced availability of natural gas during the winter months, an increase in maintenance and contract
services costs, and the effects of the new withholding tax regime for exports that came into effect in November 2007, which
collectively outpaced the increase in net sales described above.
Liquidity and Capital Resources
Financial condition
Total debt outstanding, net of cash, as of December 31, 2008 and 2007 was U.S.$1,185 million (Ps.4,088 million) and U.S.$231
million (Ps.798 million), respectively, consisting of short-term debt (including the current portion of long-term debt) of U.S.$820
million (Ps.2,828 million) and long-term debt of U.S.$365 million (Ps.1,260 million) as of December 31, 2008, and short-term debt of
U.S.$80 million (Ps.275 million) and long-term debt of U.S.$152 million (Ps.523 million) as of December 31, 2007. As of
December 31, 2008 and 2007, a major part of our debt was denominated in U.S. dollars.
Since September 2001, we have repurchased certain of our publicly-traded bonds in open market transactions on an arms-length
basis. As of December 31, 2008, we had repurchased approximately U.S.$159 million of our outstanding bonds. We may from time to
time make additional purchases of, or affect other transactions relating to, our publicly-traded bonds if in our own judgment the
market conditions are attractive.
100
The following tables set forth our consolidated cash flow information for the periods indicated.
Net cash flows provided by operating activities
Net cash flows used in investing activities
Net cash flows used in financing activities
Net increase/(decrease) in cash and equivalents
Cash and equivalents at the beginning of period
Cash and equivalents at the end of period
For the Year Ended December 31,
2006
2008
2007
(in millions of pesos)
13,558
(7,043)
(6,147)
368
847
1,215
8,756
(6,187)
(2,809)
(240)
1,087
847
8,019
(5,109)
(2,338)
572
515
1,087
Net cash flow provided by operating activities was Ps.13,558 million in 2008, compared to Ps.8,756 million in 2007, an increase
of 55% attributable mainly to net proceeds from our loans from related parties, improvements in the management of our working
capital, and higher operating income, excluding amortization of fixed assets, in 2008. Additionally, net cash flow provided by
operating activities was Ps.8,756 million in 2007, compared to Ps.8,019 million in 2006, representing an increase of 9.2% attributable
mainly to higher operating income, excluding amortization of fixed assets, in 2007, and lower tax payments.
The principal uses of cash in investing and financing activities in 2008 included Ps.7,035 million in fixed asset acquisitions
relating mainly to our Exploration and Production business unit, and Ps.9,287 million in dividend payments (which include dividends
declared in respect of 2007 and paid in 2008), while net proceeds from loans reached Ps.3,140 million. In 2007, the principal uses of
cash in investing and financing activities included Ps.6,163 million in fixed asset acquisitions relating mainly to drilling equipment
used by our Exploration and Production business unit, Ps.2,360 million in dividend payments and Ps.449 million in net repayments of
outstanding loans. The principal uses of cash in investing and financing activities in 2006 included Ps.5,002 million in fixed asset
acquisitions relating mainly to drilling equipment used by our Exploration and Production business unit and Ps.2,360 million in
dividend payments. Our current financing policy is to use cash flows provided by operating activities and debt to fund both our
investing and operating activities.
In response to market financial conditions prevailing in Argentina as of the date of this annual report, our financial policy seeks
to structure an important portion of our short-term debt in local currency. Pursuant to this policy, we have several domestic credit
lines available from financial institutions. We believe that our level of working capital will not affect our business operations, mainly
as a result of the expected net cash flow provided by operating activities in 2009. However, we are currently making efforts to convert
our short-term financial debt into long-term financial debt.
Repsol YPF and Petersen Energía have agreed in the shareholders’ agreement entered into by them in connection with the
Petersen Transaction to effect the adoption of a dividend policy under which we would distribute 90% of our net income as dividends,
starting with our net income for 2007. They have also agreed to vote in favor of requiring us to distribute an additional dividend of
U.S.$850 million, payable jointly with the ordinary dividends in 2008 and 2009. See “Item 8. Financial Information—Dividends
Policy” and “Item 7. Major Shareholders and Related Party Transactions—Shareholders’ Agreement.”
The shareholder’s meeting held on January 8, 2008 approved a notes program for an amount up to U.S.$1 billion. The proceeds
of any offerings under this program must be used exclusively to invest in fixed assets and working capital in Argentina.
101
The following table sets forth our commitments for the periods indicated below with regard to the principal amount of our debt,
as of December 31, 2008, plus accrued but unpaid interest through December 31, 2008:
Debt
Contractual obligations
Expected Maturity Date
Total
Less than
1 year
2 – 3
1 – 2
years
years
(in millions of pesos)
3 – 4
years 4 – 5 years
More
than 5
years
4,479
3,219 691 345 —
—
224
The following table sets forth information with regard to our commitments, expressed in U.S. dollars at the exchange rate of
Ps.3.45 to U.S.$1.00, under commercial contracts for the years indicated below, as of December 31, 2008:
Contractual Obligations
Debt(1)
Operating Lease Obligations
Purchase Obligations(2)
Purchases of services
Purchases of goods
LPG
Electricity
Gas
Oil
Steam
Others
Other Liabilities(3)
Total(3) (4)
Total
Less than
1 year
(in millions of U.S.$)
1 – 3
years
3 – 5
years
More
than 5
years
1,432
295
2,817
1,132
1,685
99
424
294
579
222
67
941 315 13 163
112 101 39
43
712 733 496 876
309 307 155 361
403 426 341 515
38 34
4
96 78 195
16
81 37
88 159 151 181
41 41 119
21
11 — —
56
3,436 2,382 353 229 472
7,980 4,147 1,502 777 1,554
23
55
160
(1) These projected amounts include interest due during all the periods presented. Interest on variable rate instruments is calculated
(2)
using the rate as of December 31, 2008 for all periods.
Includes purchase commitments under commercial agreements that do not provide for a total fixed amount, which have been
valued using our best estimates. Accordingly, our actual purchase obligations may differ from the estimated amounts shown in
the table.
(3) Reserves for contingent liabilities under commercial contracts, which amounted to U.S.$709 million as of December 31, 2008,
(4)
are not included in the table above since we cannot, based on available evidence, reasonably estimate the settlement dates of
such contingencies.
In addition to the contractual obligations detailed in the preceding table, see Note 10(c) to the Audited Consolidated Financial
Statements (“Agreements of extension of concessions”), which also describes our commitments related to the extension of
certain oil and gas concessions in which we participate.
Sale Commitments
Gas sales
LPG
Total
19,698
1,024
102
Less than 1
year
1 – 3
years
(in millions of U.S. dollars)
4,129
231
2,145
115
4,127
231
3 – 5 years
More than 5
years
9,297
447
Sale Commitments
Other petroleum and petrochemical product sales
Services
Total
Total
Less than 1
year
1 – 3
years 3 – 5 years
More than 5
years
4,387
531
25,640
(in millions of U.S. dollars)
812 1,430
211
214
3,286 6,001
1,340
38
5,736
805
68
10,617
We have additional commitments under guarantees. For a discussion of these additional commitments see “—Guarantees
provided” below.
Transactions with unconsolidated variable interest entities
Since 1996, we have entered into three forward oil sale agreements, which we refer to as the FOS transactions in this annual
report. These agreements were entered into in order to obtain cash to fund operations in advance of the actual sale and delivery of oil.
Under these transactions, we were advanced U.S.$381 million in 1996, U.S.$300 million in 1998 and U.S.$383 million in 2001,
against future deliveries of oil. Our obligations under the FOS transactions were recorded as liabilities in the consolidated balance
sheet and were taken to income as the physical deliveries were made over the term of the contracts. As of December 31, 2008, the
obligations under the respective contracts have been fully complied with and there remain no further obligations to deliver crude oil
under such agreements.
As described in “Item 8. Financial Information—Legal Proceedings” on March 8, 2004, the Argentine tax authorities formally
communicated to us their view that the FOS transactions should have been treated as financial transactions carried out in Argentina
and, as such, should have been subject to the relevant tax withholdings. We have presented our defense rejecting the claim and are
currently arguing our position.
Covenants in our indebtedness
Our financial debt generally contains customary covenants for contracts of this nature, including negative pledge, material
adverse change and cross-default clauses, as well as customary acceleration provisions.
With respect to financial debt totaling Ps.4,479 million (U.S.$1,298 million), including accrued interest (long- and short-term
debt) as of December 31, 2008, we have agreed, among other things and subject to certain exceptions, not to establish liens or charges
on our assets. In the event of a payment default, the creditors may declare due and immediately payable the principal and accrued
interest on amounts owed to them. Upon an event of default with respect to other matters, in the case of outstanding negotiable
obligations amounting to Ps.588 million (U.S.$170 million) (included in the figure above), the trustee may declare due and
immediately payable the principal and accrued interest on amounts owed if required by the holders of at least 25% of the total
principal of the outstanding obligations. On February 23, 2009, we paid the current portion of our outstanding negotiable obligations.
See Note 2 (g) to the Audited Consolidated Financial Statements.
Almost all of our total outstanding financial debt is subject to cross-default provisions. These provisions generally may be
triggered if an event of default occurs with respect to the payment of principal amount or interest on debts equal to or exceeding
U.S.$20 million. As a result of these cross-default provisions, a default on our part or the part of any of our consolidated subsidiaries
covered by such provisions could result in a substantial portion of our debt being declared in default or accelerated. None of our debt
or the debt of our consolidated subsidiaries is currently in default.
Credit rating
As of the date of this annual report, FITCH Argentina Calificadora de Riesgo S.A. (FITCH)’s International Rating for our
foreign currency denominated debt was BB-, and for our domestic currency denominated debt was BB. FITCH’s National Rating is
AAA for our Negotiable Obligation Programs. FITCH has a stable outlook on all of our ratings.
103
Moody’s Investors Service’s has rated Baa2 our domestic currency denominated debt and Ba2 our foreign currency
denominated debt. In both cases its outlook is negative.
A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time
by the assigning rating organization.
We do not have any ratings downgrade triggers that would accelerate the maturity dates of our debt or trigger any other
contractual obligation on our part. However, a downgrade in our credit rating could have a material adverse effect on the cost of
renewing existing credit facilities, or obtaining access to new ones in the future. In the past, our main sources of liquidity have been
our cash flows from operations, bank financings, issuances of debt securities and the proceeds from our divestment plan. Any future
downgrades will not preclude us from using any of our existing credit lines.
Guarantees provided
As of December 31, 2008, we had signed guarantees in relation to the financing activities of Pluspetrol Energy S.A., Central
Dock Sud S.A. and Inversora Dock Sud S.A. in amounts of approximately U.S.$17 million (U.S.$13.7 million as of June 22, 2009),
U.S.$21 million and Ps.5 million, respectively. The corresponding loans mature in 2011, 2013 and 2009, respectively.
Capital investments and expenditures
Capital investments in 2008 totaled approximately Ps.7,368 million. The table below sets forth our capital expenditures and
investments by activity for each of the years ended 2008, 2007 and 2006.
Capital Expenditures and Investments
Exploration and Production
Refining and Marketing
Chemical
Corporate and Other
Total
2008
(in millions of
pesos)
5,696
1,013
148
511
(%)
77
14
2
7
2007
(in millions of
pesos)
5,186
898
143
314
(%)
79
14
2
5
2006
(in millions of
pesos)
4,217
733
137
176
(%)
80
14
3
3
7,368 100%
6,541 100%
5,263 100%
Future capital expenditures and investments
We have budgeted approximately U.S.$1.6 billion in investments and capital expenditures for 2009, a significant portion of
which will be dedicated to our exploration and production activities. During the period 2009-2012, we expect to make capital
expenditures of around U.S.$7 billion, principally related to our exploration and production projects, including some to increase
recovery rates in our fields. We intend to finance planned capital expenditures through our internally-generated cash flows and, to the
extent necessary, borrowings. For a detailed description of our principal current investment projects, see “Item 4. Information on the
Company—Overview.”
Actual investments and capital expenditures may differ from the above estimates.
Off-Balance Sheet Arrangements
We have entered into certain off-balance sheet arrangements, as described in “—Liquidity and Capital Resources—Transactions
with unconsolidated variable interest entities,” “—Guarantees provided” and “—Contractual obligations” above.
104
ITEM 6.
Board of Directors
Directors, Senior Management and Employees
Our business and affairs are managed by the Board of Directors in accordance with our bylaws and the Argentine Corporations
Law No. 19,550 (the “Argentine Corporations Law”). Our bylaws provide for a Board of Directors of 11 to 21 members, and up to an
equal number of alternates. Alternates are those elected by the shareholders to replace directors who are absent from meetings or who
are unable to exercise their duties, when and for whatever period appointed to do so by the Board of Directors. Alternates have the
responsibilities, duties and powers of directors only if and to the extent they are called upon to attend board meetings and as long as
they perform the duties of a director.
Directors shall hold office from one to three years, as determined by the shareholders’ meetings. Since the shareholders’ general
ordinary meeting held on April 28, 2009, our Board of Directors is composed of 17 directors and 13 alternates.
In accordance with our bylaws, the Argentine government, sole holder of Class A shares, is entitled to elect one director and one
alternate. The current director representative of Class A shares was appointed to serve up to a one-year term.
Under the Argentine Corporations Law, a majority of our directors must be residents of Argentina. All directors must establish a
legal domicile in Argentina for service of notices in connection with their duties.
Our bylaws require the Board of Directors to meet at least once every quarter in person or by video conference, and a majority
of directors is required in order to constitute a quorum. If a quorum is not met one hour after the start time set for the meeting, the
President or his substitute may invite alternates of the same class as that of the absent directors to join the meeting, or call a meeting
for another day. Resolutions must be adopted by a majority of the directors present, and the President or his substitute is entitled to
cast the deciding vote in the event of a tie.
The current members of our Board of Directors, the year in which they were appointed and the year their current term expires
are as follows:
Position
Name
Chairman and Director
Antonio Brufau Niubo
Vice-Chairman and Director
Enrique Eskenazi
Executive Vice-Chairman, Chief Executive Officer and Director
Sebastián Eskenazi
Antonio Gomis Sáez
Chief Operating Officer and Director
Director
Aníbal Guillermo Belloni
Mario Blejer
Director
Director
Carlos Bruno
Director
Santiago Carnero*
Director
Carlos de la Vega
Matías Eskenazi Storey
Director
Raúl Fortunato Cardoso Maycotte Director
Director
Salvador Font Estrany
Director
Federico Mañero
Director
Fernando Ramírez Mazarredo
Director
Luis Suárez de Lezo Mantilla
Director
Javier Monzón
Director
Mario Vázquez
Alternate Director and General Counsel
Alejandro Quiroga López
105
Age
61
83
45
57
74
60
60
54
68
40
55
60
52
55
57
53
73
46
Director
Since
2004
2008
2008
2007
2008
2008
2008
2008
1993
2008
2008
2008
2005
2008
2008
2005
2008
2004
Term
Expires
2011
2011
2011
2011
2011
2011
2011
2010
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
Name
Alfredo Pochintesta
Rafael Lopez Revuelta
Tomás García Blanco
Fernando Dasso
Carlos Jiménez López
Carlos Alfonsi
Ángel Ramos Sánchez
Ezequiel Eskenazi Storey
Mauro Renato José Dacomo
Ignacio Cruz Moran
Eduardo Ángel Garrote
To be appointed *
Position
Alternate Director and Director of Marketing
Alternate Director and Director of Chemicals
Alternate Director and Director of Exploration and Production
Alternate Director and Director of Human Resources
Alternate Director and Director of Management Control
Alternate Director and Director of Refining and Logistics
Alternate Director and Director of Administration and Tax
Alternate Director
Alternate Director
Alternate Director and Chief Financial Officer
Alternate Director
Alternate Director
*
Representing our Class A shares.
Age
56
60
44
48
52
48
52
48
45
38
58
Director
Since
2008
2008
2008
2008
2008
2008
2009
2008
2008
2008
2008
Term
Expires
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
None of the members of the Board of Directors owns shares in YPF. Sebastián Eskenazi, Enrique Eskenazi, Matías Eskenazi
Storey and Ezequiel Eskenazi Storey as a group control Petersen Energía and PEISA, which own 15.46% of our capital stock, and
individually or collectively hold options to purchase up to an additional 10.0% of our capital stock. See “Item 7. Major Shareholders
and Related Party Transactions.”
Directors’ outside business interests and experience
Antonio Brufau Niubo
Mr. Brufau Niubo graduated with an economics degree from the University of Barcelona. From 1999 to 2004, he acted as
managing director for the La Caixa Group. He served as a member of the Repsol YPF Board of Directors from 1996 until becoming
chairman and CEO of Repsol YPF in October 2004, a position he currently occupies. He was appointed chairman of Gas Natural
group in July 1997 and is now vice chairman of the group. From July 2002 to July 2005, he served as chairman of Barcelona’s
Círculo de Economía. Mr. Brufau has served on the boards of several other companies, including Suez; Enagás; Abertis; Aguas de
Barcelona; Colonial and Caixa Holding; the CaixaBank France and CaixaBank Andorra. Until December 2005, he was the only
Spanish member of the Executive Committee of the International Chamber of Commerce.
Enrique Eskenazi
Mr. Eskenazi graduated with a chemical engineering degree from the Universidad Nacional del Litoral. Mr. Eskenazi has been
Vice Chairman and Director of YPF since 2008. He is also the Co-Chief Executive Officer of Marviol S.R.L. and the President of
Petersen Inversiones S.A., Napelgrind S.A., Banco de San Juan S.A., Banco de Santa Cruz S.A., Nuevo Banco de Santa Fe S.A.,
Nuevo Banco de Entre Ríos S.A., Petersen Energía S.A. (Argentina), Petersen Energía S.A. (Spain), Fundación Banco de Santa Cruz
S.A., Fundación Nuevo Banco de Santa Fe S.A. and Fundación Nuevo Banco de Entre Ríos S.A. He is also Vice President of
Mantenimientos y Servicios S.A. and Santa Sylvia S.A. and a member of the Board of Directors of Petersen, Thiele y Cruz S.A.,
Estacionamientos Buenos Aires S.A., Petersen Energía S.A. (Spain), Petersen Energía Pty. Ltd. and Agro Franca S.A. Mr. Eskenazi is
the father of Messrs. Sebastián, Matías and Ezequiel Eskenazi.
106
Sebastián Eskenazi
Mr. Eskenazi has been Executive Vice-Chairman, Chief Executive Officer and Director of YPF since March 2008. He is also
Co-Chief Executive Officer of Marviol S.R.L. and Petersen Energía and President of Arroyo Lindo S.A. and Red Link S.A.
Mr. Eskenazi is Vice President of Petersen Inversiones S.A, Petersen Energía S.A. (Argentina), Petersen, Thiele y Cruz S.A.,
Mantenimientos y Servicios S.A., Banco de Santa Cruz S.A., Nuevo Banco de Santa Fe S.A. and Nuevo Banco de Entre Ríos S.A., an
alternate member of the Board of Directors of Banco de San Juan S.A. and member of the Board of Directors of Petersen Energía
S.A. (Spain), Petersen Energía Pty. Ltd. and Petersen Inversiones S.A. Mr. Eskenazi is the son of Mr. Enrique Eskenazi and brother of
Messrs. Matías and Ezequiel Eskenazi.
Antonio Gomis Sáez
Mr. Gomis Sáez graduated with a chemical engineering degree from the Complutense University of Madrid and a master’s in
business administration from IESE Business School – University of Navarra in Spain. He began his career in 1974 at the Repsol YPF
Petróleo refinery in Puertollano, Ciudad Real and later went to work at the International Energy Agency in Paris founded by the
Organization for Economic Cooperation and Development (“OECD”). He served as advisor to the General Secretary of Energy and
Mineral Resources at the Spanish Ministry of Energy. In 1986 he joined the Instituto Nacional de Hidrocarburos, where he was
appointed managing director of international and institutional relations of Repsol YPF. From 1997 to 2000, he was general director of
energy at the Spanish Ministry of Industry and Energy. From September 2000 to November 2004, he was corporate director of
external relations, overseeing investor and media relations. In January 2005 he was appointed CEO of Repsol YPF Química and
managing director of Repsol YPF’s Chemicals Europe and Rest of the World. In July 2007 he was appointed director of our company
and in August 2007 he became our Chief Executive Officer and served in that capacity until March 2008. Since March 2008, he has
served as our Chief Operating Officer.
Aníbal Guillermo Belloni
Mr. Belloni holds a degree in Electrical Engineering from the Universidad de Buenos Aires, and has been a director of Petersen,
Thiele y Cruz S.A. since 1989. He has worked as an engineer and business development manager at Sade S.A., as a general manager
at Cosapi S.A., in Lima, Peru, as a Vice President of Kanter S.A., and as the Argentine representative of Foster Wheeler Corporation.
He has been an Executive Board member of the Argentine Chamber of Construction and was a founding member and Executive
Board member of the Argentine Union of Construction.
Mario Blejer
Mr. Blejer holds a bachelor’s and a master’s degree in Economics from the Hebrew University, and a master’s degree and a
Ph.D. in Economics from the University of Chicago. He has been a professor of Economics at the Hebrew University of Jerusalem,
Boston University, the Central European University, in Budapest, and the New York University Graduate School of Business, a
senior advisor to the World Bank, Europe and Central Asia region, and the International Monetary Fund, and was a senior researcher
at the Center for Latin American Monetary Studies. From 2001 to 2002, he was the Deputy Governor and then the Governor of the
Central Bank of Argentina, and from 2003 to 2008 he was the director of the Centre for Central Banking Studies, and advisor to the
Governor, of the Bank of England. He is currently an independent economic consultant, professor at the Universidad de San Andrés
in Buenos Aires, and is a director of Inversiones y Representaciones S.A. and Consultants Asset Management, both located in Buenos
Aires.
Carlos Bruno
Mr. Bruno graduated with a degree in architecture from the University of Buenos Aires. He is president and co-founder of the
Centro de Investigaciones para la Transformación. He has participated in the creation of the Center of International Economy while
being a member of the Ministry of Foreign Relations. He was the Undersecretary of Economic Integration and Secretary of
International Economy Relations from 1984 to 1989 and was appointed Ambassador V with the Senate’s approval. His areas of
expertise are international economic relations and international trade.
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Santiago Carnero
Mr. Carnero graduated as a certified public accountant from the University of La Plata in Argentina. He has been a professional
advisor in accounting, taxation and labor matters, and corporate organizational and constitutional matters. He has also served as an
external auditor for public and private organizations. Since 2004, Mr. Carnero has served as advisor to the Bicameral Commission of
Expense Control and Intelligence Activities of the National Congress of Argentina.
Carlos de la Vega
Mr. de la Vega was director of La Caja ART from 1996 to 2004 and director of Luncheon Tickets from 1991 to 1998. Since
April 2003 he has been president of the Argentine Chamber of Commerce, a position he also held from 1988 to 1993. He has been a
member of our Board of Directors for Class D shares since 1993, and until 1996 he was director of Institutional Relations of Ciba-
Geigy Argentina. He has been a member of our Audit Committee from 1993 to 1997 and from 2004 to the present.
Matías Eskenazi Storey
Mr. Eskenazi Storey is Chief Executive Officer of Administradora San Juan S.R.L. and Co-Chief Executive Officer of Petersen
Energía S.A. (Spain). He is President of Estacionamientos Buenos Aires S.A. and Vice President of Comercial Latino S.A. and Banco
de Santa Cruz S.A. Mr. Storey is alternate member of the Board of Directors of Mantenimientos y Servicios S.A., Banco de San Juan
S.A. and Red Link S.A. and member of the Board of Directors of Petersen Energía S.A. (Spain), Petersen Energía Pty. Ltd., Petersen
Inversiones S.A., Nuevo Banco de Santa Fe S.A., Nuevo Banco de Entre Ríos S.A. and Petersen Energía S.A. (Argentina).
Mr. Eskenazi is the son of Mr. Enrique Eskenazi and the brother of Messrs. Sebastián and Ezequiel Eskenazi.
Raúl Fortunato Cardoso Maycotte
Mr. Cardoso has a degree in Law from the Universidad Autónoma de México and a Masters Degree in International Relations
from the Institute of Social Studies at The Hague. Mr Cardoso began his professional career in the Mexican Ministry of Foreign
Affairs and later at the Mexican Ministry of Finance, holding a variety of positions within the International Affairs Department with a
focus on bilateral economic relations. In 1983, Mr. Cardoso commenced working for Pemex Internacional España, S.A. (Pemex) in its
International Trade area. During his extensive career, Mr. Cardoso has held a number of positions in the Crude Oil division and at
points in his career ran the P.M.I. (Pemex) Trading offices in both Madrid and London. From 2001 to 2003, Mr. Cardoso was
stationed in Ankara as the Ambassador of Mexico to Turkey, Pakistan, Azerbaijan, Kazakhstan, Uzbekistan, Turkmenistan and
Kirgizstan. After this assignment he returned to his position at Pemex. He is currently the Managing Director of Pemex Internacional
España, S.A., based in Madrid, and represents that company on Repsol YPF, S.A.’s Board of Directors. He represents Mexico in a
variety of international forums, including OPEC, the IEA, the OECD and the International Energy Forum. Mr. Cardoso is also a
member of the Mexican delegation on various presidential and cabinet assignments.
Salvador Font Estrany
Mr. Font Estrany is a civil engineer. He is currently Energy General Manager of Sacyr Vallehermoso, S.A. in Spain. He has
previously served as Commercial Director and Chairman of CAMPSA Red, Managing Director of CEPSA Red, Cepdisa and Dispesa,
Chairman of CEPSA Estaciones de Servicio, a member of the Executive Committee of CEPSA, and was a Director of CEPSA
Lubricantes, CEPSA Gas, Petro Cat, Cepsa Portuguesa and Turyocio. He also previously served as Commercial General Manager and
member of the Operating and Executive Committees of Iberdrola.
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Federico Mañero
Mr. Mañero graduated with a law degree from the San Sebastián Faculty of Law. He is president of Comunicación y Gestión de
Entornos, and has more than 25 years of experience in managerial and consulting positions for organizations and private, public and
political projects. He is an expert in strategic positioning and corporate communications, and has an international profile with
professional activities in more than 50 countries and strong relations in Latin America. He is the founder of various nonprofit projects
and organizations like Solidaridad Internacional, Programa de Cooperación Iberoamericana en Temas de Juventud (Organismo
Iberoamericano de Juventud) and Movimiento por la Paz, el Desarme y la Libertad and is a regular collaborator with the Fundación
Salvador Allende, Fundación Progreso Global and UNICEF. Mr. Mañero is a native speaker of Spanish and French.
Fernando Ramírez Mazarredo
Mr. Ramírez Mazarredo received his degree in Economic and Business Sciences from the University of Madrid and is a certified
public accountant. He was Chairman of the Spanish Financial Futures Market (Mercado Español de Futuros Financieros) from April
2004 to June 2005.
Luis Suárez de Lezo Mantilla
Mr. Suárez de Lezo Mantilla received his degree in Law from the Universidad Complutense of Madrid and is a State Attorney
(on leave) specializing in Commercial and Administrative Law. He was Director of Legal Affairs of CAMPSA, and has been in
private legal practice, particularly in the energy industry. Currently, he is Director of Compañía Logística de Hidrocarburos, S.A.
(CLH) and Repsol – Gas Natural LNG, S.L.
Javier Monzón
Mr. Monzón graduated with a degree in economics from the Complutense University of Madrid. He is chairman and CEO of
Indra. He has a finance and management background. He has acted as corporate banking director of Caja Madrid, CFO and president
of Telefónica International, executive vice president and member of the executive committee of Telefónica, worldwide partner of
Arthur Andersen, managing partner of Corporate Finance Consulting Services and president of Alpha Corporate in Arthur Andersen
Spain. He is a member of the boards of other companies, foundations and entrepreneurial organizations, such as our company, ACS
and the American Chamber of Commerce.
Mario E. Vázquez
Mr. Vázquez graduated as a certified public accountant from the University of Buenos Aires. He has been a professor of
auditing at the Economics School of the University of Buenos Aires. Mr. Vázquez has acted as CEO of Grupo Telefónica in
Argentina and was a member of the Board of Telefónica, S.A. from 2000 to 2006. Mr. Vázquez is currently a member of the Board of
Telefónica Internacional, S.A. (Spain) and of Telefónica Chile. He is also a member of the boards of directors or a statutory auditor of
several companies (including Telefónica de Argentina S.A., Telefónica Holding de Argentina S.A., YPF S.A., Santander Río Seguros,
Indra, Universia and Sheraton Hotels). He is a member of the board of F.I.E.L. (Latin American Foundation for Economic
Investigation), Fundación Leer, the Argentine Chamber of Commerce, IDEA, CARI (Consejo Argentino para las Relaciones
Internacionales) and Fundación Carolina. Mr. Vázquez was also partner and general director of Arthur Andersen (Pistrelli, Díaz y
Asociados y Andersen Consulting – Accenture) for more than 20 years until his retirement in 1993.
Alejandro Quiroga López
Mr. Quiroga López graduated with a law degree from the University of Buenos Aires School of Law. Since 2001, he has been
our general counsel and secretary of our Board of Directors. He was a partner at the law firm Nicholson & Cano from 1986 to 1997, a
foreign associate at Davis Polk & Wardwell in 2000, and Undersecretary of Banking and Insurance at the Ministry of Economy of
Argentina from 1997 to 1999. He was professor of banking and commercial law at the University of Cema. He was a member of the
Executive Board of the University of Buenos Aires School of Law. He is also a graduate of the Wharton Advanced Management
Program.
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Alfredo Pochintesta
Mr. Pochintesta has received degrees in public accounting and administration from the University of Buenos Aires.
Mr. Pochintesta worked as a planning and administration manager in Pluspetrol S.A., planning manager in Petrosur S.A. and senior
auditor at PriceWaterhouseCoopers. He worked for Astra for more than 18 years as CFO and since 1990 as head of the Gas and
Electricity Division. Mr. Pochintesta joined Repsol YPF in 1999 when Repsol YPF purchased Astra. He was in charge of the LPG
business for Latin America from 1999 to January 2005, when he was appointed marketing director. He also serves as director of a
number of other companies.
Rafael López Revuelta
Mr. López Revuelta graduated as a chemical engineer from the Complutense University of Madrid and earned a master’s degree
in business administration from IESE, Madrid. He has been a director in different areas of Repsol YPF since 1988.
Tomás García Blanco
Mr. García Blanco graduated with a degree in mining engineering from Oviedo University, a certificate in petroleum
engineering from Oil & Gas Consultants International in Tulsa, Oklahoma and an IMD Managing Corporate Resources degree from
Laussane University. He has developed his Exploration and Production career internationally in Spain, the United States, Egypt,
Libya, Venezuela and Argentina. Mr. García Blanco has held several positions in Repsol YPF, including field engineer, reservoir
engineer, production engineer, development manager, production manager, operations manager, business unit manager, director of
technical staff and, since August 2006, he has been Director of Exploration and Production.
Fernando Dasso
Mr. Dasso graduated with a labor relations degree from the University of Buenos Aires. In 1993, he joined our company and has
held several positions within our company ever since. In 2006, he was appointed Director of Human Resources in the Exploration and
Production business unit for Argentina, Bolivia and Brazil. Since June 2007, he has been our Director of Human Resources.
Carlos Jiménez López
Mr. Jiménez graduated with a degree in chemical engineering from the Complutense University of Madrid, Spain and received a
master’s degree in business administration and financial management from the Polytechnic University of Madrid. In addition, he
completed the Program of Management Development (Programa de Desarrollo Directivo) at the Institut Européen d’Administration
des Affaires (INSEAD). Mr. Jiménez began his professional career as a Process and Startup Engineer in 1980 with a leading
engineering and construction company, while also being employed as Professor at the Complutense University of Madrid. In 1986 he
joined Petronor, S.A., part of the Repsol YPF group, as head of the Department of Technical Studies in the area of commercial
planning and coordination. In 1999, he became Director of Refining in the area of strategic planning and development of Repsol YPF.
During the period 2002 to 2004, he was Director of the Refining and Marketing business unit in Brazil. From 2004 to 2007, he was
Technical Director of Refining and Logistics. In addition, Mr. Jiménez is a member of the boards of directors of Oiltanking-Ebytem
S.A., Oldelval S.A. and OTA and OTC S.A. He is also the President of the Refinery Committee of ARPEL. Currently, Mr. Jimenez is
our Director of Management Control.
Carlos Alfonsi
Mr. Carlos Alberto Alfonsi graduated with a chemistry degree from Universidad Tecnológica of Mendoza, Argentina, an IMD
Managing Corporate Resources degree from Lausanne University and studied at the Massachusetts Institute of Technology. In 1987,
he joined our company and has held several positions in our company and Repsol YPF, including operations manager, director of the
La Plata refinery, operational planning director, trading and transport director for Latin America, refinery and marketing director in
Peru, country manager for Peru, and R&M for Peru, Chile, Ecuador and Brazil. Since January 2008, he has been our company’s
Director of Refining and Logistic operations.
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Ángel Ramos Sánchez
Mr. Ramos Sanchez received a degree in Economics and Business Studies from the Universidad Autónoma de Madrid. He has
been a director in different areas of our financial department since 1992. Mr. Ramos Sanchez is currently our Director of
Administration and Tax.
Ezequiel Eskenazi Storey
Mr. Eskenazi Storey serves as vice president of Agro Franca S.A. He is also an alternate member of the board of directors of Los
Boulevares S.A. and Petersen Inversiones S.A., and a member of the board of directors of Petersen, Thiele y Cruz S.A., Santa Sylvia
S.A. and Agro Franca S.A. Mr. Eskenazi Storey is the son of Mr. Enrique Eskenazi and the brother of Mr. Sebastián and Mr. Matías
Eskenazi.
Mauro Renato José Dacomo
Mr. Dacomo graduated with a law degree from the University of Buenos Aires, and is Partner at ABD law firm. He is also
President of Inwell S.A. and Los Boulevares S.A. Mr. Dacomo serves as General counsel to Fundación Banco de Santa Cruz S.A.,
Fundación Nuevo Banco de Santa Fe S.A. and Fundación Nuevo Banco de Entre Ríos S.A. He is an alternate member of the Board of
Directors of Petersen Energía S.A. (Argentina), Arroyo Lindo S.A. and Nuevo Banco de Santa Fe S.A., and member of the Board of
Directors of Inwell S.A. and Nuevo Banco de Entre Ríos S.A. Mr. Dacomo is also Director and Secretary of Petersen Energia S.A.
(Spain).
Ignacio Cruz Moran
Mr. Moran has received degrees in public accounting from the University of Buenos Aires. He is an alternate member of the
Board of Directors of Banco de Santa Cruz S.A., Nuevo Banco de Santa Fe S.A. and Red Link S.A. and member of the Board of
Directors of Banco de San Juan S.A., Nuevo Banco de Entre Ríos S.A., ACH S.A. and Petersen Energía S.A. (Spain). Mr. Moran is
currently our Chief Financial Officer.
Eduardo Angel Garrote
Mr. Garrote graduated with a degree in architecture from the University of Buenos Aires. He is a member of the Board of
Directors of Nuevo Banco de Santa Fe S.A., and alternate member of the Board of Directors of Nuevo Banco de Entre Ríos S.A.
Mr. Garrote also serves as General Manager of Petersen, Thiele y Cruz S.A.
Board practices
In accordance with the Argentine Corporations Law, directors have an obligation to perform their duties with loyalty and with
the diligence of a prudent business person. Directors are jointly and severally liable to us, our shareholders and to third parties for the
improper performance of their duties, for violating the law or our bylaws or regulations, and for any damage caused by fraud, abuse
of authority or gross negligence. Specific duties may be assigned to a director by the bylaws, applicable regulations, or by resolution
of the shareholders’ meeting. In such cases, a director’s liability will be determined by reference to the performance of such duties as
long as the director’s appointment and the determination of duties approved by a shareholders’ meeting is registered with the
Superintendency of Corporations.
Only shareholders, through a shareholders’ meeting may authorize directors to engage in activities in competition with us.
Transactions or contracts between directors and us in connection with our activities are permitted to the extent they are performed
under fair market conditions. Transactions that do not comply with the Argentine Corporations Law require prior approval of the
Board of Directors or, in the case of an absence of a quorum in a Board of Directors meeting, the Supervisory Committee. In addition,
these transactions must be subsequently approved by the shareholders at a general meeting. If our shareholders do not approve the
relevant transaction, the directors and members of the Supervisory Committee who approved such transactions are jointly and
severally liable for any damages caused to us.
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Any director whose personal interests are adverse to ours shall notify the Board of Directors and the Supervisory Committee and
abstain from voting on such matters. Otherwise, such director may be held liable to us.
A director will not be liable if, notwithstanding his presence at the meeting at which a resolution was adopted or his knowledge
of such resolution, a written record exists of his opposition to such resolution and he reports his opposition to the Supervisory
Committee before any complaint against him is brought before the Board of Directors, the Supervisory Committee, the shareholders’
meeting, the appropriate governmental agency or the courts. Any liability of a director to us terminates upon approval of the director’s
actions by the shareholders at a general meeting, provided that shareholders representing at least 5% of our capital stock do not object
and provided further that such liability does not result from a violation of the law, our bylaws or other regulations.
The Audit Committee
The Transparency Decree and Resolutions No. 400/02 and No. 402/02 of the CNV, require that Argentine public companies
appoint an audit committee (comité de auditoría) composed of at least three members of the Board of Directors. The bylaws must set
forth the composition and regulations for the operation of the Audit Committee. A majority of the members of the Audit Committee
must be independent directors. See “—Independence of the Members of our Board of Directors and Audit Committee” below.
Our Audit Committee was created on May 6, 2004. The members of the Audit Committee currently are: president Mario
Vázquez, members Mario Blejer, Carlos de la Vega, Federico Mañero and Carlos Bruno, and alternate member Javier Monzón.
Mario Vázquez was determined by our Board of Directors to be an “Audit Committee Financial Expert” pursuant to the rules
and regulations of the SEC.
Executive directors may not sit on the Audit Committee.
Our Audit Committee, among other things:
•
periodically inspects the preparation of our financial and economic information;
•
•
•
•
•
•
reviews and opines with respect to the Board of Directors’ proposals regarding the designation of the external auditors and
the renewal, termination and conditions of their appointment;
evaluates internal and external audit work, monitors our relationship with the external auditors, and assures their
independence;
provides appropriate disclosure regarding operations in which there exists a conflict of interest with members of the
corporate committees or controlling shareholders;
opines on the reasonability of the proposals by the Board of Directors for fees and stock option plans of the directors and
administrators;
verifies compliance with applicable national or international regulations in matters related to behavior in the stock markets;
and
ensures that the internal Code of Ethics complies with normative demands and is adequate.
Activities of the audit committee
The Audit Committee, which pursuant to its regulations meets as many times as needed and at least once every quarter, held 10
meetings between April 2008 and March 2009.
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Performing its basic function of supporting the Board of Directors in its oversight duties, the Audit Committee periodically
reviews economic and financial information relating to us, supervises the internal financial control systems and oversees the
independence of the external auditors.
Economic and financial information
With the help of the Director of Administration and Tax and considering the work performed by our external and internal
auditors, the Audit Committee analyzes the consolidated annual and quarterly financial statements before they are submitted to the
Board of Directors.
In addition, because our shares are traded on the NYSE, pursuant to U.S. law we must include our annual financial information
in an annual report on Form 20-F, which must be filed with the SEC. The Audit Committee reviews such annual report before it is
submitted to the SEC.
Oversight of the internal control system
To supervise the internal financial control systems and ensure that they are sufficient, appropriate and efficient, the Audit
Committee oversees the progress of the annual internal audit, which is aimed at identifying our critical risks.
Throughout each year, the Audit Committee is informed by our internal audit department of the most relevant facts and
recommendations arising out of its work, and the status of the recommendations issued in prior years.
We have aligned the internal control system for financial reporting with the requirements established by Section 404 of the
Sarbanes-Oxley Act, a process supervised by the Audit Committee. These regulations require that, along with the annual audit, a
report must be presented from our management relating to the design, maintenance and periodic evaluation of the internal control
system for financial reporting, accompanied by a report from our external auditor. Several of our departments are involved in this
activity, including the internal audit department. Our external auditor reported on our internal control system for financial reporting as
of December 31, 2008.
Relations with the external auditors
The Audit Committee maintains a close relationship with the external auditors, allowing it to make a detailed analysis of the
relevant aspects of the audit of financial statements and to obtain detailed information on the planning and progress of the work.
The Audit Committee also evaluates the services provided by our external auditors, determines whether the condition of
independence of the external auditors, as required by applicable law, is met and monitors the performance of external auditors to
ensure that it is satisfactory.
The shareholders at a meeting held on April 28, 2009 approved the designation of Deloitte & Co. S.R.L. as external auditors of
the financial statements for the year ended December 31, 2009. As of December 31, 2008, and as a consequence of the evaluation
process described in the paragraph above, the Audit Committee had no objections to the designation of Deloitte & Co. S.R.L. as our
external auditors of the financial statements for the year ending December 31, 2009.
Independence of the Members of our Board of Directors and Audit Committee
Pursuant to CNV regulations, a director is not considered independent when such director (i) owns at least a 35% equity interest
in a company, or a lesser interest if the director has the right to appoint one or more directors of the company, which we refer to as a
“Significant Participation,” or has a Significant Participation in another company that in turn has a Significant Participation in the
company or a significant influence on the company (“significant influence” is defined by Argentine GAAP); (ii) is a member of the
Board of Directors of, or depends on, shareholders, or is otherwise related to shareholders, who have a Significant Participation in the
company or another company in which these shareholders have a direct or indirect Significant Participation or significant influence;
(iii) is or has been in the previous three years an employee of the company; (iv) has a professional
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relationship with, or is a member of a company that maintains professional relationships with, or receives remuneration (other than
that received in consideration of his performance as a director) from the company or any of its shareholders who has a direct or
indirect Significant Participation in or significant influence on the company, or with a third-party company that has a direct or indirect
Significant Participation or a significant influence; (v) directly or indirectly sells or provides goods or services to the company or to
any of its shareholders who has a direct or indirect Significant Participation in or significant influence on the company for an amount
exceeding his remuneration as a member of the Board of Directors or audit committee; or (vi) is the spouse or parent (up to second
grade of affinity or up to fourth grade of consanguinity) of persons who, if they were members of the Board of Directors or Audit
Committee, would not be independent, according to the above-listed rules.
As of the date of this annual report, Messrs. Santiago Carnero, Carlos Bruno, Carlos de la Vega, Federico Mañero, Mario
Vázquez and Mario Blejer qualified as independent members of our Board of Directors under the above-described criteria.
Disclosure Committee
In February 2003, we created a Disclosure Committee to:
•
monitor the overall compliance with regulations and principles of conduct of voluntary application, especially in relation to
listed companies and their corporate governance;
direct, establish and maintain procedures for the preparation of accounting and financial information to be approved and
filed by us or which is generally released to the markets;
direct, establish and maintain internal control systems that are adequate and efficient to ensure that our financial statements
included in annual and quarterly reports, as well as any accounting and financial information to be approved and filed by
us, are accurate, reliable and clear;
identify significant risks to our businesses and activities that may affect the accounting and financial information to be
approved and filed;
assume the activities that, according to U.S. laws and SEC regulations, are applicable to us and may be assumed by
disclosure committees or other internal committees of a similar nature, especially those activities relating to the SEC
regulations dated August 29, 2002 (“Certification of Disclosure in Companies’ Quarterly and Prospectus” —SEC Release
number 33-8124), in relation to the support for the certifications by our Chief Executive Officer and Chief Financial
Officer as to the existence and maintenance by us of adequate procedures and controls for the generation of the information
to be included in its annual reports on Form 20-F, and other information of a financial nature;
take on activities similar to those stipulated in SEC regulations for a disclosure committee with respect to the existence and
maintenance by us of adequate procedures and controls for the preparation and content of the information to be included in
the annual financial statements, and any accounting or financial information to be filed with the CNV and other regulators
of the stock markets on which our stock is traded; and
formulate proposals for an internal code of conduct on the stock markets that follow applicable rules and regulations or any
other standards deemed appropriate.
•
•
•
•
•
•
In addition, the Disclosure Committee reviews and supervises our procedures for the preparation and filing of:
•
•
official notices to the SEC, the Argentine stock market authorities and other regulators of the stock markets on
which our stock is traded;
interim financial reports;
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•
•
•
press releases containing financial data on results, earnings, large acquisitions, divestitures or any other information
relevant to the shareholders;
general communications to the shareholders; and
presentations to analysts, investors, rating agencies and lending institutions.
The Disclosure Committee is composed of certain of our executive officers, some of whom are also members of our Board of
Directors.
The Disclosure Committee is currently composed of the following people:
Name
Sebastián Eskenazi
Antonio Gomis Sáez
Carlos Alfonsi
Fernando Dasso
Juan Carlos Miranda
Sergio Resumil
Ignacio Cruz Moran
Tomás García Blanco
Carlos Jimenez López
Ángel Ramos Sánchez
Rafael López Revuelta
Alfredo Pochintesta
Matías Eskenazi Storey
Alejandro Quiroga López
Aquiles Rattia
Rubén Marasca
Executive Officers
Position
Chief Executive Officer
Chief Operating Officer
Director of Refining and Logistics
Director of Human Resources
Media Director
Director of Communication
Chief Financial Officer
Director of Exploration and Production
Director of Management Control
Director of Administration and Tax
Director of Chemicals
Director of Marketing
Director of Industrial Subsidiaries
General Counsel
Director of Reserves Control
Director of Internal Audit
The President of the Board of Directors, who, according to our bylaws, must be a Class D director, is elected by the Board of
Directors to serve for a two-year term, but not to exceed his term as director. All other officers serve at the discretion of the Board of
Directors and may be terminated at any time without notice.
All of our current senior executive officers are either members or alternate members of the Board of Directors.
Share Ownership of Executive Officers
None of our executive officers owns any of our shares.
Compliance with NYSE Listing Standards on Corporate Governance
On November 4, 2003, the SEC approved rules proposed by the NYSE intended to strengthen corporate governance standards
for listed companies.
In accordance with the NYSE corporate governance rules, as of July 31, 2005, all members of the Audit Committee were
required to be independent. Independence is determined in accordance with highly detailed rules promulgated by the NYSE and SEC.
Each of the members of our Audit Committee was determined to be independent in accordance with the applicable NYSE and SEC
rules.
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Significant differences between our corporate governance practices and those required by NYSE listing standards
Non-U.S., NYSE-listed companies may, in general, follow their home country corporate governance practices in lieu of most of
the NYSE corporate governance requirements. The NYSE rules, however, require that non-U.S. companies disclose any significant
ways in which their specific corporate governance practices differ from U.S. companies under the NYSE listing standards.
The following is a summary of the significant differences between our corporate governance practices and those applicable to
U.S. companies under the NYSE listing standards. Because more than 50% of our voting stock is held by another company, Repsol
YPF, we would not be required to comply with the following NYSE corporate governance requirements even if we were a U.S.
company: (i) having a majority of independent directors, (ii) corporate governance committee requirements, and (iii) compensation
committee requirements.
Independence of the directors on the Board of Directors
In accordance with the NYSE corporate governance rules, a majority of the Board of Directors of U.S. companies listed on the
NYSE must be composed of independent directors, whose independence is determined in accordance with highly detailed rules
promulgated by the NYSE. The relevant Argentine rules for determining director independence are described under “—Independence
of the Members of our Board of Directors and Audit Committee” above.
Compensation and nomination committees
In accordance with the NYSE corporate governance rules, all U.S. companies listed on the NYSE must have a compensation
committee and a nominations committee and all members of such committees must be independent in accordance with highly detailed
rules promulgated by the NYSE. Under Argentine law, these committees are not required.
Separate meetings for non-management directors
In accordance with NYSE corporate governance rules, independent directors must meet periodically outside of the presence of
the executive directors. Under Argentine law, this practice is not required and as such, the independent directors on our Board of
Directors do not meet outside of the presence of the other directors.
Code of Ethics
We have adopted a code of ethics applicable to the Board of Directors and all employees. Since its effective date on August 15,
2003, we have not waived compliance with or amended the code of ethics.
Compensation of Directors and Officers
Argentine law provides that the aggregate annual compensation paid to the members of the Board of Directors (including those
directors acting in an executive capacity) with respect to a fiscal year may not exceed 5% of net income for such year if YPF is not
paying dividends in respect of such net income, which percentage is increased up to 25% of net income based on the amount of
dividends, if any, are paid. The compensation of the president and other directors acting in an executive capacity, together with the
compensation of all other directors, requires the ratification of an ordinary general shareholders’ meeting as provided by Argentine
law. The compensation of the members of the Supervisory Committee is determined by the shareholders at the ordinary shareholders’
meeting.
For the period ended December 31, 2008 the aggregate compensation accrued or paid to the members of the Board of Directors
and YPF’s executive officers for services in all capacities was Ps 43.2 million.
During 2008, YPF’s performance-based compensation programs included a bonus plan for approximately 5.000 employees.
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The bonus plan provides for cash to be paid to the participants based on a measurable and specific set of objectives under Repsol
YPF’s Management by Objectives program and the results of the review of individual performance. All of the participants are YPF
employees included at a specific salary level. The participation of each eligible employee in the bonus plan ranges from 15% to 55%
of such employee’s annual base salary. Bonus percentages are fixed by the president of Repsol YPF with the approval of Repsol
YPF’s Compensation Committee at the beginning of each calendar year. The total amount of bonuses awarded under the bonus plan
cannot exceed 90% of the individual maximum participation and will be linked to the company’s net cash flow.
YPF’s directors do not have any service contracts with YPF.
Supervisory Committee
The Supervisory Committee is responsible for overseeing compliance by the management and the Board of Directors with the
Argentine Corporations Law, the bylaws and regulations (if any), and shareholders’ resolutions. The functions of the Supervisory
Committee include, among others, attending all meetings of the Board of Directors, preparing a report of the financial statements for
our shareholders, attending shareholders’ meetings and providing information upon request to holders of at least 2% of our capital
stock.
The bylaws provide for a Supervisory Committee consisting of three to five members and three to five alternate members,
elected to one-year terms. The Class A shares are entitled to elect one member and one alternate member of the Committee so long as
one share of such class remains outstanding. The holders of Class D shares elect up to four members and up to four alternates. Under
the bylaws, meetings of the Supervisory Committee may be called by any member. The meeting requires the presence of all members,
and a majority vote of the members in order to make a decision. The members and alternate members of the Supervisory Committee
are not members of our Board of Directors. The role of our Supervisory Committee is distinct from that of the Audit Committee. See
“—The Audit Committee.” For the year 2008, the aggregate compensation paid to the members of the Supervisory Committee was
Ps.1,460,375.
The current members of the Supervisory Committee, the year in which they were appointed and the year their current term
expires are as follows:
Name
Silvana Rosa Lagrosa
Juan A. Gelly y Obes
Israel Lipsich
Santiago C. Lazzati
Carlos María Tombeur
Guillermo Stok
Arturo F. Alonso Peña
Oscar Oroná
Edgardo A. Sanguineti
Rubén Laizerowitch
Class of Shares
Represented
A
D
D
D
D
A
D
D
D
D
Member
Since
2007
2005
2008
2005
2008
2009
2007
2008
2008
2008
Age
50
53
84
71
54
53
58
61
58
55
Term
Expires
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
Silvana Rosa Lagrosa
Mrs. Lagrosa graduated as a certified public accountant from the University of Buenos Aires. She has been a member of the
National General Audit Office (Sindicatura General de la Nación (SIGEN)) since 2000, for which she acts as statutory auditor of our
company, Lotería Nacional S.E., Ferrocarril General Belgrano S.A., Encotesa e.l. and LAFSA.
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Juan A. Gelly y Obes
Mr. Gelly y Obes graduated as a certified public accountant from the Belgrano University of Buenos Aires. He is a partner of the
consulting firm Otero Cano & Asociados-Accountants, and he is a consulting accountant in legal matters to the board of directors of
the Argentine Republic Central Bank. Previously, Mr. Gelly y Obes was a member of the statutory audit committees of Aerolineas
Argentinas S.A. and Agritech Inversora S.A.
Israel Lipsich
Mr. Lipsich graduated as a certified public accountant from the University of Buenos Aires. He is currently a member of the
Supervisory Committee of Banco de San Juan S.A., Banco de Santa Cruz S.A., Nuevo Banco de Santa Fe S.A., Nuevo Banco de
Entre Ríos S.A., Petersen, Thiele y Cruz S.A., Santa Sylvia S.A., Turfmax S.A. y Serra Lima S.A.
Santiago C. Lazzati
Mr. Lazzati graduated as a certified public accountant from the University of Buenos Aires. He was a partner of Arthur
Andersen from 1974 until he retired in 1993 and was the head of the Audit and Business Advisory Division from 1975 to 1987 and
Practice Director from 1987 until his retirement. He is currently working in Argentina and other Latin American countries in
consulting, especially in human capital services. He is a business consultant, specializing in topics related to management and human
behavior. He is the author of fifteen books and many articles on accounting, auditing and business administration. Additionally,
Mr. Lazzatti is assessor of the International Criminal Court in the Hague of all matters concerning the organization of the Office of
the Prosecutor in charge, Dr. Luis Moreno Ocampo. Mr. Lazzati is the statutory auditor of Sheraton Hotels and Telefónica de
Argentina and a full-time business administration professor of the Universidad Católica Argentina.
Carlos María Tombeur
Mr. Tombeur graduated from the University of Buenos Aires, School of Law and Social Sciences, with a law degree in 1976.
Previously, he was Professor of Economic Law in the School of Economic Sciences and of Commercial Law in the School of Law,
both at the University of Buenos Aires. Mr. Tombeur was also Professor of Economic Law in the Master’s Degree program in Public
Policy at the University Di Tella. From 1999 to 2005 he served as member of the Board of Directors of YPF S.A. Mr. Tombeur was
appointed controller at Seguro de Depósitos S.A. (SEDESA) (Insurance Deposit Company) by the Central Bank for the period 1997-
2001. He also served as legal undersecretary of the Ministry of Economy and Public Works and Services from 1992 until 1996 and
was member of the Board of Directors of the Central Bank of the Argentine Republic, 1991-1992. Mr. Tombeur was Partner of the
firm Caride Fitte & Tombeur from 1977 until 1991. Mr. Tombeur is currently Partner with the firm Severgnini Robiola Grinberg &
Larrechea. He is also a member of the Bar Association of the City of Buenos Aires and the International Bar Association.
Mr. Tombeur is currently the President of the Board of Directors at EMC Computer Systems Argentina S.A. and Williams Lea
Argentina S.A.
Guillermo Stok
Mr. Stok has a degree in public accounting from the Universidad Católica Argentina, where he has served as an Associate
Professor of Accounting since 1980. He has served in the former General Audit Office of Public Enterprises (Sindicatura General de
Entidades Públicos (SIGEP)) and as a member of the Supervisory Committees of YPF, Gas del Estado, Hidronor, Petroquímica
General Mosconi, Bahia Blanca Petrochemical, among other entities. He is currently a member of the National General Audit Office
(Sindicatura General de la Nación (SIGEN)) and a member of the Supervisory Committees of CAMMESA, EBISA and Consultatio.
He is also an Associate Director with the Company Supervision Section of SIGEN.
Arturo F. Alonso Peña
Mr. Peña received his law degree from the University of Buenos Aires School of Law in 1973. He was statutory auditor of
Banco Hipotecario Nacional from 1995 to 2001. He was partner of M&M Bomchil law firm from 1980 to
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1985, Chief of the trademark department of the National Intellectual Property Registry in 1979, and secretary of the Court of First
Instance in commercial matters of the City of Buenos Aires from 1974 to 1978. He is currently an attorney with Severgnini, Robiola,
Grinberg & Larrechea.
Oscar Alberto Oroná
Mr. Oroná graduated from the Belgrano University of Buenos Aires in 1975. He is a Consultant Lawyer of Cassagne Abogados
Law Firm. In 1991 Mr. Oroná completed the Petroleum Management Certificate Program in Boston, Massachusetts. He previously
served as a member of the Board of Directors of Astra Compañía Argentina de Petróleo S.A., Terminal Marítima Patagónica S.A.,
Pluspetrol Energy S.A., Central Dock Sud S.A., Inversora Dock Sud S.A., Empresa Petrolera Andina S.A. (Bolivia), Apex Petroleum
Inc., Gas Argentino S.A., Metrogas S.A., Petroken Petroquimica Ensenada S.A. and Empresa de Distribución Eléctrica de Entre Ríos
S.A. Mr. Oroná was also the Second Vice President of the Cámara de Sociedades Anónimas and President of the Legal Comité of the
Camara de la Industria del Petróleo and of San Isidro Golf Club S.A. He is a member of the Comisión Fiscalizadora of Oleoductos del
Valle S.A. and Metrogas S.A., as well as the Colegio de Abogados de Buenos Aires, the American Bar Association, the Asociación
de Derecho de la Energía, the Instituto Argentino del Petróleo y Gas (IAPG) and the Association of International Petroleum
Negociators (AIPN).
Edgardo A. Sanguineti
Mr. Sanguineti graduated from the University of Buenos Aires with a degree in Business Administration and holds a doctorate
in Economic Sciences from the same university, where he was a professor in the Economic Sciences doctoral program. He is a
Certified Public Accountant and Partner of Lazzati y Sanguineti – Management Consulting Firm. Mr. Sanguineti is a member of the
Statutory Audit Committee of Telefónica de Argentina, Telefónica Holding de Argentina S.A., Televisión Federal S.A.-Telefé,
Atlántida Comunicaciones S.A. and Telefónica Media Argentina S.A., among other companies.
Rubén Laizerowitch
Rubén Laizerowitch received his law degree at the University of Buenos Aires. He is an alternate member of Board of Directors
of Petersen, Thiele y Cruz S.A., Estacionamientos Buenos Aires S.A. and INWELL S.A., and is a member of Supervisory Commitee
of Nuevo Banco de Santa Fe S.A. and Nuevo Banco de Entre Ríos S.A. He is also an alternate member of the Supervisory Committee
of Banco Santa Cruz S.A.
Employee Matters
As of December 31, 2008, we had 11,319 employees, including 5,881 employees of the Refining and Marketing business
segment, 2,062 employees of the Exploration and Production business segment, and 564 employees of the Chemical business
segment.
Approximately 42% of our employees are represented by the labor union “Federación Sindicatos Unidos Petroleros e
Hidrocarburíferos” that negotiates labor agreements with us. At the end of 2006, we began new negotiations with other relevant labor
unions, that resulted in our extending our agreements with such unions until year 2010. The negotiations involved the economic and
social conditions for employees of ours and of third parties that are addressed in the labor agreement. We consider our current
relations with our workforce to be generally good.
In Argentina there are currently three collective agreements that regulate labor conditions in refineries, oil fields, gas stations
and LPG.
During 2008, several salary agreements have been reached with the labor unions. We have also been involved in the negotiation
of labor collective agreements concerning employees from contractor companies, working in oil fields.
On November 26, 2008, YPF and other petrochemical companies agreed to suspend negotiations of collective and salary
agreements with the principal oil-related labor unions for a period of six months. YPF has undertaken to maintain the then-current
levels of employment for the same period.
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As part of its privatization, YPF restructured its internal organization and significantly reduced the number of its employees.
YPF reduced its work force from over 51,000 employees (including approximately 15,000 personnel under contract) at December 31,
1990 to approximately 7,500 at December 31, 1993. YPF paid to the employees affected by these reductions the termination
payments required under Argentine labor laws which amounted to Ps.686 million. A substantial majority of lawsuits which were
originated as a consequence of said restructuring process have been brought by former employees who allege that they received
insufficient severance payments in connection with their dismissal, the unsettled YPF stocks, according to the “Regime of
Participated Property” (this regulation was denominated to the sale of employees’ YPF stocks), and various job-related illnesses,
injuries, typically seek unspecified relief.
As of December 31, 2008, YPF was a party in approximately 1,902 labour lawsuits which relate to events or acts that took place
after December 31, 1990. The outcome of said lawsuits depends on factual issues that vary from case to case, and it is not always
feasible to predict the outcome of particular cases.
Based on the number and character of the lawsuits already commenced, however, the estimated likelihood of additional claims
in view of the number of dismissed employees, applicable statutes of limitations, the legal principles involved in the suits and the
financial statement reserves previously established. Management does not expect the outcome of these lawsuits to have a material
adverse effect on our financial condition or future results of operations.
Maxus (a YPF subsidiary) has a number of trustee noncontributory pension plans covering substantially all full-time employees.
The benefits provided by these plans are based on the number of years of employment and the compensation earned during those
years. This company has other noncontributory pension plans for executive officers, selected key employees and former employees of
the Maxus Group. The Maxus Energy Corporation career average pension plan was frozen effective March 1, 2007. The Maxus
Energy Corporation savings plan was amended effective March 1, 2007 to include the non-elective component, through which the
plan’s sponsor contributes 7.5% of the employees’ annual base salary. Maxus also grants benefits for health care, life insurance and
other social benefits to some of its employees who retire early. The amounts payable accrue over the employee’s years of service.
During March 2008, YPF Holdings purchased a group annuity contract from an insurance company to settle the liability associated
with the benefits under certain of Maxus’ defined benefits plans, with a one-time premium payment of U.S.$115 million. The
assumption by the insurance company of liability under the plans was effective on March 20, 2008, the date the premium was paid by
YPF Holdings.
We also had 35,427 third-party employees under contract as of December 31, 2008, mostly under contract with large
international service providers. Although we have policies regarding compliance with labor and social security obligations by its
contractors, we are not in a position to ensure that contractors’ employees will not initiate legal actions to seek indemnification from
us based upon a number of Argentine judicial labor court precedents recognizing joint and several liability between the contractor and
the entity to which it is supplying services under certain circumstances.
The following table provides a breakdown of our employees by business units as of December 31, 2008.
Employees by Business Units
Exploration & Production
Refining and Marketing
Chemical
Corporate and Other(1)
Total YPF
(1)
Includes 2,016 employees of A-Evangelista S.A.
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2,062
5,881
564
2,812
11,319
The following table provides a breakdown of our employees by geographic locations.
Employees by geographic location
Argentina(1)
USA
Total YPF
(1)
Includes 2,016 employees of A-Evangelista S.A.
121
11,298
21
11,319
ITEM 7. Major Shareholders and Related Party Transactions
The following table sets forth information relating to the beneficial ownership of our shares as of the date of this annual report.
Repsol YPF(1)
Petersen Energía and PEISA
Public
Argentine federal and provincial governments(2)
Employee fund(3)
Number of shares
330,551,981
60,813,798
1,869,677
11,388
65,949
(%)
84.04%
15.46%
0.47%
<0.01%
0.03%
(1) Share ownership amounts and percentages do not reflect the remaining option granted to certain members of the Eskenazi
family, who are affiliates of Petersen Energía, by Repsol YPF to purchase up to an additional 10% of our capital stock pursuant
to the Petersen Options described in further detail below.
(2) Reflects the ownership of 3,764 Class A shares and 7,624 Class B shares by the Argentine federal government and provincial
governments, respectively.
(3) Reflects the ownership of 65,949 Class C shares.
On February 21, 2008, Petersen Energía S.A. (“Petersen Energía”) purchased 58,603,606 of our ADSs, representing 14.9% of
our capital stock, from Repsol YPF for U.S.$2,235 million (the “Petersen Transaction”). In addition, Repsol YPF also granted options
to Enrique Eskenazi, Sebastián Eskenazi, Ezequiel Eskenazi Storey and Matías Eskenazi Storey, shareholders of Petersen Energía, or
to companies that are, directly or indirectly, wholly-controlled by any of them (the “Option Beneficiaries”) to purchase up to an
additional 10.1% of our outstanding capital stock within four years (the “Petersen Options”). On May 20, 2008, Petersen Energía
Inversora S.A. (“PEISA”) exercised an option to purchase shares representing 0.1% of our capital stock. Additionally, PEISA
launched a tender offer to purchase all of the shares of YPF that were not already owned by them at a price of U.S.$49.45 per share or
ADS. Repsol, pursuant to its first option agreement with Petersen Energía, had stated that it would not tender YPF shares to PEISA.
The offer period commenced on September 11, 2008 and expired on October 20, 2008. A total of 1,816,879 shares (including Class D
shares and ADSs), representing approximately 0.462% of our total shares outstanding, have been tendered.
The following are summaries of certain material terms of the agreements entered into by Repsol YPF, Petersen Energía and
certain of their respective affiliates in connection with the Petersen Transaction and the Petersen Options, as described in Repsol
YPF’s public filings.
Share Purchase Agreement and Related Financing Agreements
Pursuant to the share purchase agreement, Petersen Energía purchased 58,603,606 ADSs, representing 14.9% of our outstanding
capital stock, from Repsol YPF for a total purchase price of U.S.$2,235 million, or U.S.$38.13758 per ADS. Petersen Energía’s
purchase of our securities was financed by the drawdown of U.S.$1,026 million under a senior secured term loan facility provided by
certain financial institutions, borrowing of U.S.$1,015 million under a seller credit agreement entered into with Repsol YPF and
equity provided by Petersen Energía’s shareholders. The seller credit agreement matures on February 21, 2018. Principal payments
are required to be made at certain periodic intervals commencing in 2013 until the maturity date. The loan under the seller credit
agreement bears interest at 8.12% per year until May 15, 2013, and thereafter at 7.0% per year, and contains other customary terms
and provisions.
Securities purchased by Petersen Energía are pledged as collateral under the senior secured term loan facility and the seller
credit agreement. The seller credit agreement is subordinated to the senior secured term loan facility.
Option Agreements
Repsol YPF granted certain members of the Eskenazi family, who are affiliates of Petersen Energía, an option to purchase the
number of Class D shares or ADSs amounting to 0.1% of our capital stock, pursuant to the first
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option agreement (which was exercised in May 2008), and an option to purchase an additional number of Class D shares or ADSs
amounting to 10.0% of our capital stock (collectively, the “Option Shares”), pursuant to the second option agreement, subject to
certain terms and conditions. The Petersen Options expire on February 21, 2012. The exercise price per Option Share shall be
determined in accordance with the following formula: (i) U.S.$15 billion multiplied by the consumer price index published monthly
by the United States Bureau of Labor Statistics for the period from the date of the option agreements through the exercise date,
(ii) plus or minus our accumulated results from the date of the option agreements through the exercise date (with certain adjustments
for taxes paid), determined based on our financial statements for the fiscal years ending after the date of the option agreements,
(iii) minus dividends paid from the date of the option agreements through the exercise date, (iv) plus or minus any changes in our
share capital, (v) divided by the number of shares outstanding on the exercise date.
The beneficiaries of the Petersen Options may exercise their purchase rights under the second option agreement on one or more
occasions during the exercise period of such second option agreement.
Subject to certain terms and conditions contained in the Petersen Options, Repsol YPF has agreed to provide financing of up to
48% of the exercise price required to be paid for the Option Shares purchased by certain members of the Eskenazi family pursuant to
the Petersen Options. Repsol YPF has also agreed to finance or guarantee the financing of up to 100% of the price that the members
of the Eskenazi family would be required to pay to purchase shares from other shareholders through a mandatory tender offer as a
result of Petersen Energía and its affiliates, including certain members of the Eskenazi family, acquiring an interest in our capital
stock of greater than 15%. This commitment is limited to a maximum amount equivalent to the price necessary to purchase Class D
shares or ADSs equal to 0.9% of our capital stock, which corresponds to the percentage of shares that were not owned by Repsol YPF
prior to the Petersen Transaction.
The beneficiaries of the Petersen Options agreed that, if they exercise their option under the second option agreement, they will
not transfer for a period of five years the 10% of our outstanding capital stock that is subject to that agreement, but have not made
such an agreement as to the 0.1% of our capital stock that was acquired pursuant to the first option agreement.
Shareholders’ Agreement
Petersen Energía, Repsol YPF and certain affiliates of Repsol YPF entered into a shareholders’ agreement on February 21, 2008
in connection with the Petersen Transaction establishing certain rights and obligations in connection with our governance and certain
procedures for and limitations on transfers of our shares, among other matters. The following is a summary of certain material terms
of the shareholders’ agreement based on Repsol YPF’s public filings.
Voting at Shareholders’ Meetings
Repsol YPF and Petersen Energía have agreed to discuss and reach agreement on their voting with respect to proposals
presented at shareholders’ meetings involving certain matters, including certain increases or any reductions in our capital (except
reductions that are legally required), the merger, divestiture or dissolution of our company or certain of our subsidiaries, the
divestiture of material assets of our company or certain of our subsidiaries, the modification of our bylaws, and the designation or
removal of our external auditors, among other matters. In the event that Repsol YPF and Petersen Energía cannot reach an agreement
on any of these matters, they have agreed to vote against such matters.
Composition of our Board of Directors
Repsol YPF and Petersen Energía have agreed that the composition of our Board of Directors shall reflect a proportional
representation of Repsol YPF’s and Petersen Energía’s interests in our capital stock, with (i) Repsol YPF retaining the right to appoint
the majority of the members of our Board of Directors for so long as it holds the majority of our capital stock, and (ii) Petersen
Energía having the right to appoint at least five members to our Board (or three members in the case that its interest in our outstanding
capital stock falls below 10%).
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Appointment of Directors and Officers and Certain Board Decisions
Repsol YPF and Petersen Energía have agreed that the Chairman of our Board of Directors and our Chief Operating Officer
shall be designated by Repsol YPF while our Chief Executive Officer will be designated by Petersen Energía. They have agreed that
initially Mr. Antonio Brufau will remain the Chairman of our Board of Directors, Mr. Sebastián Eskenazi will serve as our Chief
Executive Officer, Mr. Antonio Gomis will serve as our Chief Operating Officer and Mr. Enrique Eskenazi will serve as a director
and Non-Executive Vice President of the Board. When Mr. Enrique Eskenazi ceases to be a director, such non-executive vice
presidency will remain vacant.
Certain decisions of our Board of Directors shall require the affirmative vote of the directors representing Repsol YPF and
Petersen Energía, including any action that results in any of the specific matters discussed under “—Voting at Shareholders’
Meetings” above, the reduction of our direct or indirect interest in certain of our subsidiaries, the contracting of debts, guarantees or
investments that contractually limit the payment of dividends or cause our consolidated debt to EBITDA ratio to reach or exceed 3:1,
undertake non-budgeted investments or acquisitions that individually exceed U.S.$250 million, and the requesting of the declaration
of insolvency or bankruptcy, among other matters. In the event that Repsol YPF and Petersen Energía cannot reach an agreement on
any of these specific matters, they have agreed to instruct their directors to vote against such matters.
Lock-Ups and Transfer Restrictions
Petersen Energía has agreed not to sell any shares of our capital stock for a period of five years, subject to certain exceptions,
including the condition that Repsol YPF continues to hold at least 35% of our outstanding capital stock. In addition, if our dividend
payments are insufficient for Petersen Energía to meet its obligations under the senior secured term loan facility, or if Petersen
Energía repays the senior secured term loan facility in full, Petersen Energía may sell shares of our capital stock, so long as Petersen
Energía maintains a minimum interest in our capital stock of between 10% and 15% (depending on whether the beneficiaries of the
Petersen Options have fully exercised the Petersen Options and excluding certain dilution events in respect of capital increases).
Repsol YPF has agreed to hold at least 50.01% of our capital stock for a period of at least five years, unless Petersen Energía
repays the senior secured term loan facility in full. Once the senior secured term loan facility has been repaid in full, Repsol YPF has
agreed to hold at least 35% of our capital stock, so long as Petersen Energía maintains a minimum interest in our capital stock of
between 10% and 15% (depending on whether its affiliates that are beneficiaries of the Petersen Options have fully exercised the
Petersen Options and excluding certain dilution events in respect of capital increases), provided that Repsol YPF may sell shares to a
purchaser that is a “first-tier” company in the oil and gas industry and agrees to be bound by the terms of the shareholders’ agreement.
After five years: (i) Petersen Energía may transfer its shares without limitation; and (ii) so long as Petersen Energía maintains a
minimum interest in our capital stock of between 10% and 15% (depending on whether its affiliates that are beneficiaries of the
Petersen Options have fully exercised the Petersen Options and excluding certain dilution events in respect of capital increases),
Repsol YPF must maintain an interest that, combined with Petersen Energía’s holdings, amounts to 40% of our outstanding capital
stock, subject to certain conditions, provided that Repsol YPF may sell shares to a purchaser that is a “first-tier” company in the oil
and gas industry and agrees to be bound by the terms of the shareholders’ agreement.
Tag-Along Rights, Right to Participate in Public Offering and Right of First Refusal
If Petersen Energía has repaid the senior secured term loan facility in full, when Repsol YPF sells more than 5% of our
outstanding capital stock, Petersen Energía shall have a pro rata tag-along right with respect to such sale by Repsol YPF. Petersen
Energía also has rights to participate, on a pro rata basis, in any public offering of our outstanding capital stock conducted by Repsol
YPF.
Additionally, when Repsol YPF or Petersen Energía sells a block of our shares representing greater than 10% of our capital
stock, the other party shall have a right of first refusal to purchase such shares, subject to certain terms and conditions.
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Acquisition of Certain of Repsol YPF’s Latin American Assets
Repsol YPF and Petersen Energía have agreed to allow us to evaluate the possible acquisition, at market price, of certain
specified Latin American assets of Repsol YPF in order to expand and diversify our business.
Dividends
Repsol YPF and Petersen Energía have agreed to effect the adoption of a dividend policy under which we would distribute 90%
of our net income as dividends, starting with our net income for 2007. They have also agreed to vote in favor of requiring us to
distribute an additional dividend of U.S.$850 million, to be paid jointly with the ordinary dividends in 2008 and 2009.
Tender Offer by Petersen Energía
Repsol YPF had agreed not to participate in the tender offer for our shares that Petersen Energía or its affiliates were required to
make when they acquired 15% or more of our outstanding capital stock (as a result of its exercise of one of the Petersen Options, or
otherwise).
Duration and Termination
The shareholders’ agreement shall remain in effect during our existence, but is subject to immediate termination if Repsol YPF’s
holdings of our capital stock fall below 12.5% or Petersen Energía’s holdings of our capital stock fall below 10%. The shareholders’
agreement is also subject to termination if there are certain defaults under the shareholders’ agreement, or if, within thirty days of the
bankruptcy of either party, the bankrupt party cannot provide a sufficient guaranty to the other party.
Registration Rights and Related Agreements
Under the terms of the registration rights agreement between us, Repsol YPF and the financial institutions providing the senior
secured term loan facility, we have agreed to file a resale shelf registration statement under the Securities Act with respect to the
ADSs sold in the Petersen Transaction, have it declared effective by the SEC, and keep it continuously effective until certain specified
conditions have been met. On February 20, 2008, we filed such shelf registration statement on Form F-3 with the SEC. Upon any
acceleration of the senior secured term loan facility following the occurrence and continuation of an event of default under such
facility, Credit Suisse, London Branch, the administrative agent acting on behalf of the lenders under the senior secured term loan
facility as holders of such pledged securities, may sell such securities under the shelf registration statement after giving us notice,
provided that we may suspend the use of the registration statement upon the occurrence of certain specified events. Such securities
and the associated registration rights may be transferred by any holder.
In the event that we fail to keep a continuously effective resale shelf registration statement and an acceleration of the senior
secured term loan facility following an occurrence and continuation of an event of default under such facility occurs, we are required
to pay certain specified damages to the holders of the securities required to be registered. The registration rights agreement provides
that the selling shareholders and we will indemnify each other and our and their respective directors, officers, agents, employees and
controlling persons against specific liabilities in connection with the offer and sale of the ADSs, including liabilities under the
Securities Act, or will be entitled to contribution in connection with those liabilities. In addition, Repsol YPF and Petersen Energía
PTY Ltd., the parent holding company of Petersen Energía, S.A., have agreed in a separate agreement to indemnify us against certain
specific losses resulting from our agreement to indemnify the selling shareholders and their directors, officers and controlling persons
pursuant to the registration rights agreement (excluding losses resulting from a final judgment determining the existence of a material
misstatement or omission of fact contained in our resale shelf registration statement or a prospectus included therein, or a settlement
based on such claims). Repsol YPF or Petersen Energía S.A. will pay all of our expenses incidental to the registration, offering and
sale of the ADSs to the public (subject to the caps and limitations set forth in the registration rights agreement), and each selling
shareholder will be responsible for payment of commissions, concessions, fees and discounts of underwriters, broker-dealers and
agents.
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We have also entered into a separate registration rights agreement with respect to the Option Shares, with terms and conditions
that are substantially similar to those contained in the registration rights agreement entered into with respect to the ADSs sold in the
Petersen Transaction.
Related Party Transactions
All material transactions and balances with related parties are set forth in Note 7 to the Audited Consolidated Financial
Statements. The principal such transactions were the collection of short-term intercompany loans granted by us at market rates of
interest (which amounted to Ps.2,423 million in 2008), intercompany loans obtained by us from a subsidiary of Repsol YPF, S.A. at
market rates of interest (which amounted to Ps. 1,117 million in 2008) our sales of refined and other products to certain affiliates
(which amounted to Ps.2,447 million in 2008), and our purchase of petroleum and other products that we do not produce ourselves
from certain affiliates (which amounted to Ps.1,488 million in 2008). The prices of the transactions with related parties approximate
the amounts charged by and/or to us by unrelated third parties.
In addition, Repsol YPF and Petersen Energía PTY Ltd., the parent holding company of Petersen Energía, have agreed to
indemnify us against certain specific losses resulting from our agreement to indemnify the selling shareholders and their directors,
officers and controlling persons pursuant to the registration rights agreements we have entered into in connection with the Petersen
Transaction (excluding losses resulting from a final judgment determining the existence of a material misstatement or omission of fact
contained in our resale shelf registration statement or a prospectus included therein, or a settlement based on such claims). Repsol
YPF or Petersen Energía will pay all of our expenses incidental to the registration, offering and sale of the securities registered hereby
to the public. See “Item 7. Major Shareholders and Related Party Transactions—Registration Rights and Related Agreements.”
For an organizational chart demonstrating our organizational structure, including our interests in our principal affiliates, see
“Item 4. Information on the Company—Overview.”
Argentine Law Concerning Related Party Transactions
Section 73 of the Transparency Decree provides that before a company whose shares are listed in Argentina may enter into an
act or contract involving a “significant amount” with a related party or parties, such company must obtain approval from its board of
directors, and obtain an opinion, prior to such board approval, from its audit committee or from two independent valuation firms that
states that the terms of the transaction are consistent with those that could be obtained on an arm’s-length basis.
For the purpose of Section 73 of the Transparency Decree, as amended by Decree No. 1020/03, “significant amount” means an
amount that exceeds 1% of the issuer’s net worth as reflected in the latest approved financial statements, provided this amount
exceeds Ps.300,000. For purposes of the Transparency Decree, “related party” means (i) directors, members of the supervisory
committee, managers; (ii) the persons or entities that control or hold a significant participation in the company or in its controlling
shareholder (at least 35% of its capital stock, or a lesser amount when they have the right to appoint one or more directors, or have
other shareholder agreements related to the management of the company or its controlling shareholder); (iii) any other company under
common control; (iv) direct relatives of the persons mentioned in (i) and (ii); or (v) companies in which the persons referred to in
(i) to (iv) hold directly or indirectly significant participations.
The acts or contracts referred to above, immediately after being approved by the board of directors, shall be disclosed to the
CNV, making express indication of the audit committee’s or independent valuation firm’s opinion, as the case may be. Also,
beginning on the business day following the day the transaction was approved by the board of directors, the audit committee’s or
independent valuation firm’s reports shall be made available to the shareholders at the company’s principal executive offices.
If the audit committee or the two independent valuation firms do not find that the contract is on arm’s-length terms, prior
approval must be obtained at the company’s shareholders’ meeting.
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ITEM 8.
Financial Statements
Financial Information
See Item 18 for our Consolidated Financial Statements.
Legal Proceedings
Argentina
The Privatization Law provides that the Argentine State shall be responsible, and shall hold us harmless, for any liabilities,
obligations or other commitments existing as of December 31, 1990 that were not acknowledged as such in the financial statements of
Yacimientos Petrolíferos Fiscales Sociedad del Estado as of that date arising out of any transactions or events that had occurred as of
that date, provided that any such liability, obligation or other commitment is established or verified by a final decision of a competent
judicial authority. In certain lawsuits related to events or acts that took place before December 31, 1990, we have been required to
advance the payment of amounts established in certain judicial decisions, and have subsequently been reimbursed or are currently in
the process of requesting reimbursement from the Argentine government of all material amounts in such cases. We are required to
keep the Argentine government apprised of any claim against us arising from the obligations assumed by the Argentine government.
We believe we have the right to be reimbursed for all such payments by the Argentine government pursuant to the above-mentioned
indemnity, which payments in any event have to date not been material. This indemnity also covers fees and expenses of lawyers and
technical consultants subject, in the case of our lawyers and consultants, to the requirement that such fees and expenses not be
contingent upon the amounts in dispute.
Reserved, probable contingencies
In the ordinary course of our business, we are a party to various actions, including approximately 1,902 labor lawsuits as of
December 31, 2008, for which provisions of Ps.50 million have been made.
Reserves totaling Ps.1,821 million, Ps.1,898 million, and Ps.1,571 million as of December 31, 2008, 2007 and 2006,
respectively, have been established to provide for contingencies which are probable and can be reasonably estimated. In the opinion
of our management, in consultation with our external counsel, the amount reserved reflects the best estimation, based on the
information available as of the date of this annual report, of the probable outcome of the mentioned contingencies. The most
significant legal proceedings and claims reserved are described in the following paragraphs.
CNDC anti-competitive activity disputes. On March 22, 1999, we were notified of Resolution No. 189/99 from the former
Department of Industry, Commerce and Mining of Argentina, which imposed a fine on us of Ps.109 million, stated Argentine pesos as
of that date, based on the interpretation that we had purportedly abused our dominant position in the bulk LPG market due to the
existence of different prices between the exports of LPG and the sales to the domestic market from 1993 through 1997. In July 2002,
the Argentine Supreme Court confirmed the fine, and we made the claimed payment. Additionally, Resolution No. 189/99 provided
for the commencement of an investigation in order to prove whether the penalized behavior continued from October 1997 to March
1999. On December 19, 2003, the CNDC completed its investigation and charged us with abuse of dominant market position during
this period. On January 20, 2004, we answered the notification by (i) claiming the application of the statutes of limitations and
alleging the existence of defects in the imputation procedure (absence of majority in the resolution that decided the imputation and
prejudgment by its signers); (ii) arguing the absence of abuse of dominant position; and (iii) offering the corresponding evidence.
Given that the Argentine Supreme Court has previously established under Law No. 22,262 that the statute of limitations for
administrative infractions is two years, we believe that our defense based on the statute of limitations is solid. Since the imputed
conduct occurred before September 29, 1999, which is the effective date of the new law, we believe that the law applicable to the
proceeding is Law No. 22,262 instead of the new Antitrust Protection Law (No. 25,156). We filed appeals with the National
Economic Criminal Court: (i) on July 29, 2003, in view of the
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rejection by the CNDC of the motion to overturn the resolution that ordered the opening of the preliminary investigations without
deciding in advance on the statute of limitations defense claimed by us; and (ii) on February 4, 2004, in view of the rejection by the
CNDC of the motion to overturn the resolution that ordered the charge because of a lack of majority and prejudgment. On April 13,
2004, the National Court of Appeals in Criminal Economic Matters sustained the appeal filed by us on the grounds of lack of majority
of the CNDC in passing the objected resolution. On August 31, 2004, we appealed the resolution passed by the CNDC that rejected
our statute of limitations defense. The CNDC accepted the appeal and referred the proceedings to Chamber II of the National Court of
Appeals in Federal Civil and Commercial Matters, which subsequently referred the proceeding to Chamber B of the National Court of
Appeals in Criminal Economic Matters. On March 3, 2006, the CNDC decided on the evidence that we shall produce during this
proceeding. During August and September 2007, hearings involving the testimony of witnesses proposed by us took place. Despite
the arguments expressed by us, the above-mentioned circumstances make evident that, preliminarily, the CNDC rejects the defenses
filed by us and that the CNDC is reluctant to modify the doctrine provided by Resolution No. 189/99. On August 12, 2008, Chamber
B of the National Court of Appeals in Criminal Economic Matters rejected our statute of limitations argument. We have appealed this
decision. Upon Chamber B’s confirmation of the CNDC’s resolution, YPF filed a cassation and an extraordinary appeal on the basis
that the CNDC bases its arguments on Law No. 22,262, while Chamber B relies on the application of Law No. 25,156. Chamber B of
the National Court of Appeals in Criminal Economic Matters rejected both appeals. YPF has consequently presented two complaint
appeals: one against the rejection of the cassation appeal (rejected on December 18, 2008) and another against the rejection of the
extraordinary appeal (rejected on February 17, 2009). Both appeals are under evaluation. Despite the solid arguments expressed by
YPF, the mentioned circumstances make evident that, preliminarily, the CNDC denies the defenses filed by the Company and that it
is reluctant to modify the doctrine provided by the Resolution No. 189/1999 and, furthermore, the National Court of Appeals in
Criminal Economic Matters’ decisions tend to confirm the decisions made by the CNDC.
Alleged defaults under natural gas supply contracts – Innergy, et al. Since 2004, the Argentine Secretariat of Energy and the
Undersecretariat of Fuels, through Rule No. 27/04, Resolutions No. 265/04, 659/04, 752/05, 1329/06 and 599/07, have on various
occasions instructed us to supply certain quantities of natural gas to the Argentine domestic market, in each case notwithstanding the
lack of a contractual commitment on our part to do so. In addition, the Argentine government has, at various times since 2004,
imposed direct volume limitations on natural gas exports in different ways. As a result of these measures, from 2004 to the present,
we have been forced in many instances to partially or fully suspend natural gas export deliveries that are contemplated by our
contracts with export customers.
We appealed these measures, but, pending favorable final resolution of such appeals, we have been obliged to comply in order
to avoid greater losses to us and our export customers that could be occasioned by the revocation of our export permits or other
penalties. We informed our natural gas export customers of our position that these governmental measures constitute an event of force
majeure that releases us from any contractual or extra-contractual liability deriving from the failure to deliver the agreed upon
volumes of gas. Some of our customers have rejected our position and three of them have sought damages and/or penalties for breach
of supply commitments under a contractual “deliver or pay” clause, which claims have been rejected by us.
Innergy Soluciones Energéticas S.A. (“Innergy”) has filed an arbitral claim against us based on its “deliver or pay” clause,
seeking U.S.$87.7 million in damages as of August 2007, plus interest (as calculated by Innergy on September 17, 2007). This
amount increases as Innergy invoices “deliver or pay” amounts to us on a monthly basis, beginning in September 2007, for partially
missed deliveries. In addition to our claim of force majeure, we have counterclaimed against Innergy for contract termination based
upon the “statutory hardship” exemption set forth in Article 1198 of the Argentine Civil Code, in light of recent substantial increases
in Argentine export duties on natural gas that make our cost of delivering natural gas to Innergy significantly higher than the price to
be paid to us by Innergy for such deliveries. After Innergy filed its Reply and Counterclaim Response on December 5, 2008, the
parties agreed on a settlement to their dispute which was finally executed on June 18, 2009.
We are also currently in pre-arbitral settlement discussions with the other two clients that have sought damages from us under
the “deliver-or-pay” clause, Electroandina S.A. and Empresa Eléctrica del Norte Grande S.A. These
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companies have claimed damages through November 2006 in a total amount of approximately U.S.$41 million and, from December
2006 through September 2007, for an additional total amount of U.S.$52 million. We have opposed such claims. Furthermore, the
above-mentioned companies have notified the formal start-up period of negotiations previous to any arbitration demand. Although
such period is overdue, the Company has not been notified of the initiation of the arbitration demands.
Additionally, on June 25, 2008, AES Uruguaiana Emprendimientos S.A. (AESU) claimed damages in a total amount of
U.S.$28.1 million for missed deliveries of natural gas volumes during the period September 16, 2007 through June 25, 2008. On
July 16, 2008, AESU also claimed damages in a total amount of U.S.$2.7 million for missed deliveries of natural gas volumes during
the period January 18, 2006 through December 1, 2006. We have contested both of these claims. Both parties have suspended the
fulfillment of their obligations under the contract. On September 15, 2008, AESU notified YPF the interruption of the fulfillment of
its commitments alleging delay and breach of YPF’s obligations. The Company has rejected this notification. On December 4, 2008,
YPF notified that having ceased the force majeure conditions, pursuant to the contract in force, it would suspend its delivery
commitments, due to the repeated breaches of AESU’s obligations. This notification was also rejected. On December 30, 2008,
AESU rejected YPF’s right to suspend its natural gas deliveries. On March 20, 2009, AESU notified YPF that it was terminating the
contract. See “—Arbitration with AES Uruguaiana Emprendimentos S.A. (AESU), Companhia de Gás do Estado do Río Grande do
Sul (Sulgás) and Transportadora de Gas del Mercosur S.A. (TGM).”
In addition, YPF is subject to certain claims from natural gas transportation suppliers in relation to payments on contracts
associated with natural gas exports. One of the parties initiated mediation proceedings with us in order to determine the merits of its
claim. As of the date of this annual report, the mediation proceedings, which have concluded, have not resulted in an agreement. No
lawsuit related to these claims has been filed against YPF as of the date of this annual report.
Alleged defaults under natural gas supply contracts – Central Puerto. Central Puerto S.A. (“Central Puerto”) has made claims
against us for cutbacks in natural gas supply pursuant to the contract with Central Nuevo Puerto, Central Puerto Nuevo, and the
combined cycle in the city of Buenos Aires. We have formally denied such breach, based on the fact that, pending the restructuring of
such contracts, we are not obligated to confirm nominations of natural gas during certain periods of the year. On June 6, 2007, Central
Puerto notified us of its decision to submit the controversy to arbitration under the rules of the International Chamber of Commerce.
On June 21, 2007, we appointed our arbitrator and notified Central Puerto of our decision to submit to arbitration the controversy
regarding the amounts due by Central Puerto. On July 23, 2007, Central Puerto filed an arbitral claim against us. On September 24,
2007, we answered Central Puerto’s claim and filed counterclaims asking the arbitral tribunal for: (i) a declaration of the termination
of the contract; or (ii) as a subsidiary claim in case the arbitral tribunal rejects the request for termination of the contract, the
restructuring of the contract under the Civil Law principles of “Teoría de la Imprevisión” (hardship provision under Article 1198 of
the Argentine Civil Code) and “Sacrificio Compartido” (both-parties-effort) and (iii) payment by Central Puerto of “take or pay”
amounts owed by Central Puerto for certain amounts produced but not taken between 2002 and 2004. On December 3, 2007, Central
Puerto submitted a presentation requesting that the arbitral tribunal reject all of our claims. On February 11, 2008, a hearing took
place among the members of the arbitral tribunal and the parties at which a document setting forth procedures for the arbitration was
agreed upon and signed by the parties. In that document, Central Puerto indicated that it could not quantify its damages until its
experts had completed their work. On April 29, 2008, the arbitral tribunal issued an order setting a schedule for the next phase of the
arbitration. On October 1, 2008, the parties produced their evidence before the arbitral tribunal. On October 16, 2008, the parties
suspended proceedings for 30 days. On December 5, 2008, the arbitral tribunal issued Procedural Order N° 19, which ordered the
initiation of the evidence production period. On February 27, 2009, the parties presented briefs of claim and counterclaim,
respectively, together with the corresponding evidence, as well as the amounts claimed. On April 27, 2009, the parties presented their
respective replies to the briefs previously presented, as ordered by the Court, and Central Puerto claimed a new amount. On May 19,
2009, YPF rejected Central Puerto’s new claim arguing that such claim should have been made on February 27. On May 26, 2009
Central Puerto rejected YPF’s argument. On June 26, 2009 the parties entered into a settlement agreement by which the contract with
Central Nuevo Puerto, Central Puerto Nuevo, and the combined cycle in the city of Buenos Aires was terminated, resigning the
parties to any actions, rights or claims under the contract or this arbitration.
La Plata refinery environmental disputes. On June 29, 1999, a group of three neighbors of the La Plata Refinery filed claims for
the remediation of alleged environmental damages in the peripheral water channels of the refinery,
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investments related to contamination and compensation for alleged health and property damages as a consequence of environmental
pollution caused by YPF prior to and after privatization. We notified the executive branch of the Argentine government that there is a
chance that the tribunal may find us responsible for the damages. In such event, due to the indemnity provided by Law No. 24,145
and in accordance with that law, we shall be allowed to request reimbursement of the expenses for liabilities existing on or prior to
January 1, 1991 (before privatization) from the Argentine government.
On December 27, 2002, a group of 264 claimants who resided near the La Plata Refinery requested compensation for alleged
quality of life deterioration and environmental damages purportedly caused by the operation of the La Plata Refinery. The amount
claimed is approximately Ps.60.1 million. We filed a writ answering the complaint. There are three similar additional claims raised by
three groups of 120, 343, and 126 neighbors, respectively. The first group has made a claim for compensation of Ps.17 million, the
second group has made a claim for compensation of Ps.45.2 million and the third one has made a claim of Ps.18.5 million, in addition
to a request for environmental cleanup.
On December 17, 1999, a group of 37 claimants who resided near La Plata Refinery, demanded the specific performance by us
of different works, installation of equipment, technology and execution of work necessary to stop any environmental damage, as well
as compensation for health damages alleged to be the consequence of gaseous emissions produced by the refinery, currently under
monitoring.
We have been informally notified that the Secretariat of Environmental Policy of the Province of Buenos Aires has brought
criminal proceedings against us on the grounds of the purported worsening of the water quality problems in the Western Channel
adjacent to La Plata Refinery, potential health damages (on account of the existence of volatile particles and/or hydrocarbon
suspension), non-fulfillment of a remediation schedule of canals, and the existence of allegedly clandestine disposal sites. On
September 25, 2008, the Federal Court in Criminal matters decided not to make any formal accusations and dismissed the
proceedings.
AFIP tax claims. On January 31, 2003, we received a claim from the Federal Administration of Public Revenue (Administración
Federal de Ingresos Públicos, or “AFIP”), stating that the forward oil sale agreements entered into by us (see “Item 5. Operating and
Financial Review and Prospects —Liquidity and Capital Resources—Transactions with unconsolidated variable interest entities”)
should have been subject to an income tax withholding. On March 8, 2004, the AFIP formally communicated to us the claim for
approximately Ps.45 million plus interest and fines. Additionally, on June 24, 2004, we received a new formal claim from the AFIP,
asserting that the services related to these contracts should have been taxed with the Value Added Tax. Management believes, based
upon the opinion of its external counsel, that the claim is without merit since those advances were received under crude oil export
commitments. Consequently, during 2004, we presented our defense to the AFIP, rejecting the claims and arguing our position.
However, on December 28, 2004, we received formal communication of a resolution from the AFIP confirming its original position
in both claims for the period 1997 to 2001. We have appealed such resolution in the National Fiscal Court. However, in order to
reduce interest charges YPF would suffer if final resolution was unfavorable, subsequent to March 31, 2009, YPF has enrolled in the
regime provided in the Law No. 26,476 with respect to disputed taxes. This regime waives fines, significantly reduces interest, and
allows the payment of taxes under dispute in 120 low-interest installments. Additionally, in 2006, we conditionally paid the amounts
corresponding to periods that followed those included in the claim by the AFIP (2002 and subsequent periods) and filed
reimbursement summary proceedings so as to avoid facing interest payments or a fine. On March 14, 2008 the AFIP notified us of the
rejection of the reimbursement previously mentioned. That decision has been appealed to the National Fiscal Court.
In addition, we have received several other claims from the AFIP and from the provincial and municipal fiscal authorities, which
are not individually significant.
Sale of Electricidad Argentina S.A. and Empresa Distribuidora y Comercializadora Norte S.A. to EDF. In July 2002, EDF
Internacional S.A. (“EDF”), initiated an international arbitration proceeding under the Arbitration Regulations of the International
Chamber of Commerce against us, among others, seeking payment from us of U.S.$69 million which was afterward increased to
U.S.$103.2 million plus interests. EDF claims that under a Stock Purchase Agreement dated March 30, 2001 among Endesa
Internacional S.A. and Astra Compañía Argentina de
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Petróleo S.A. (which was subsequently merged into YPF), as sellers, and EDF, as purchaser, with respect to shares of Electricidad
Argentina S.A. and Empresa Distribuidora y Comercializadora Norte S.A. (“Edenor”), EDF is entitled to an adjustment in the
purchase price it paid due to changes in the exchange rate of the Argentine peso that EDF asserts to have occurred prior to
December 31, 2001. Our position is that the change in the exchange rate did not occur prior to January 2002, and, therefore, EDF is
not entitled to the purchase price adjustment. We have filed a counterclaim against EDF in the amount of U.S.$13.85 million as a
purchase price adjustment. We believe that EDF’s claim is without merit. The arbitral award dated October 22, 2007 accepted the
claim against us awarding damages against us in the amount of U.S.$40 million and also accepted our counterclaim against EDF in
the amount of U.S.$11.1 million. Consequently, the amount payable by us should the award become final is U.S.$28.9 million plus
costs and interest. We have challenged the award by filing an extraordinary appeal before the Argentine Supreme Court and an appeal
before the Federal Court of Appeals on Commercial Matters. In April 2008 the Federal Court of Appeals on Commercial Matters
suspended the effects of the arbitral award pending its appeal.
Furthermore, EDF sought the enforcement of the arbitral award before a court in Delaware, in the United States. We
successfully sought the dismissal of this complaint on the grounds that the arbitral award has been suspended by an Argentine court
and, consequently, the Delaware complaint is not permitted under Article 5 of the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards. EDF is also seeking the enforcement of the arbitral award before a court in Paris, France.
Quilmes claims. Citizens claiming to be residents living near Quilmes, in the province of Buenos Aires, have filed a lawsuit in
which they have requested the remediation of environmental damages and the payment of Ps.47 million plus interest as compensation
for alleged personal damages. The plaintiffs base their claim mainly on a fuel leak that occurred in 1988 in a poliduct running from La
Plata to Dock Sud that was operated by Yacimientos Petrolíferos Fiscales Sociedad del Estado. The leaked fuel became perceptible in
November 2002, resulting in remediation that is now being performed by us in the affected area, supervised by the environmental
authority of the province of Buenos Aires. We have requested an extension of the time to answer the complaint to allow us time to
evaluate certain documents submitted to the court by the plaintiffs. We have also notified the Argentine government that we will
implead it at the time we answer the complaint in order to request that it indemnify us against any liability and hold us harmless in
connection with this lawsuit, as provided by Law No. 24,145. The Argentine government, through an administrative decision, has
denied any responsibility to indemnify us for this matter, and we have sued the Argentine government to obtain a judicial award
declaring this administrative decision null and void. Such award is still pending. There are 29 other judicial claims that have been
brought against us based on similar allegations, amounting to approximately Ps.4.6 million. In these cases, we believe that the
Argentine government will contest its obligation to indemnify and hold us harmless by claiming that the alleged damages were not
caused by the 1988 leak. Additionally, we are aware of the existence of other actions brought against us that have not yet been served
and which are based on similar allegations.
Non-reserved, possible contingencies
In addition to the probable contingencies described in the preceding paragraphs, we have received several labor, civil,
commercial and environmental claims which had not been reserved since management, based on the evidence available to date and
upon the opinion of our external counsel, have considered them to be possible contingencies. The most significant of such
contingencies are described below.
Capital control-related proceedings. On December 9, 2002, we filed a declaratory judgment action (Acción Declarativa de
Certeza) before an Argentine federal court requesting clarification as to the uncertainty generated by opinions and statements of
several organizations providing official advice that the right of the hydrocarbon industry to freely dispose of up to 70% of foreign
currency proceeds from exports of hydrocarbons products and byproducts, as provided by Executive Decree No. 1,589/89, had been
implicitly abolished by the new exchange regime established by Executive Decree No. 1,606/01. On December 9, 2002, a federal
judge issued an injunction ordering the Argentine government, the Central Bank and the Ministry of the Economy to refrain from
interfering with our access to and use of 70% of the foreign exchange proceeds from our hydrocarbon exports. Following the
enactment of Decree No. 2,703/02 in December 2002, we expanded the scope of the declaratory judgment action before the federal
court to clear any doubts and uncertainty arising after the enactment of this decree. See “Item 4. Information
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on the Company—Regulatory Framework and Relationship with the Argentine Government—Repatriation of Foreign Currency.” On
December 1, 2003, the National Administrative Court of Appeals decided that the issuance of Decree No. 2,703/02, which allows
companies in the oil and gas sector to keep abroad up to 70% of the export proceeds, rendered the injunction unnecessary.
Nevertheless, the Court of Appeals’ decision was silent with respect to the availability of the exemption to convert proceeds from
export operations carried out by oil and gas companies into domestic currency prior to the issuance of Decree No. 2,703/02. On
December 15, 2003, we filed a motion for clarification asking the court to clarify whether the exemption was available to oil and gas
companies during the period between the issuance of Decree No. 1,606/01 and the issuance of Decree No. 2,703/02. On February 6,
2004, the Court of Appeals dismissed our motion for clarification, indicating that the regulations included in Decree No. 2,703/02
were sufficiently clear, and confirmed the lifting of the injunction that prohibited the Central Bank and the Ministry of Economy from
interfering with our access to foreign exchange proceeds, as described above. On February 19, 2004, we filed an extraordinary appeal
before the Argentine Supreme Court against the dismissal of the motion for clarification by the Court of Appeals and requested the
restatement of the injunction against the Central Bank and the Ministry of Economy. The Federal Court of Appeals dismissed the
extraordinary appeal. Taking into account the fact that there is a new special system in place allowing for the free disposal of up to
70% of the foreign currency proceeds from the exports of crude oil and its derivatives, it was deemed advisable to abandon the suit as
a procedural strategy. If the Central Bank were to reassert and prevail before the courts in the argument that the exemption allowing
oil and gas companies to keep up to 70% of export proceeds abroad during the period between the issuance of Decree No. 1,606/01
and the issuance of Decree No. 2,703/02 was not available, we could be subject to material penalties.
On October 12, 2007, we were notified of the initiation of an administrative summary proceeding for alleged late repatriation of
foreign currency proceeds, and the failure to repatriate the remaining 70%, in connection with some hydrocarbon export transactions
made in 2002 (during the period between the issuance of Decree No. 1,606/01 and the issuance of Decree No. 2,703/02). In this
administrative summary proceeding, charges were brought against us in the amount of U.S.$1.6 million, and it has been advised that
the conduct of a bank that handled other of our export transactions made in 2002 be investigated, which could give rise to the
initiation of further proceedings. Administrative summary proceedings have already been brought against the bank. Nevertheless, a
final and unchallenged judicial judgment recently issued by a First Instance Court in Criminal Economic Matters in a similar
administrative summary proceeding against a different company for alleged violation of the criminal exchange law (lack of
repatriation of 70% of foreign currency proceeds) regarding export transactions made in 2002 resolved the matter in favor of that
company based on well-founded arguments that were not challenged by the prosecutor. In addition, the Office of the General
Prosecutor of Argentina recently issued an opinion in similar administrative summary proceedings involving another oil company
stating that no criminal law violations existed in that case due to the lack of willful misconduct and the existence of differing
regulations that created uncertainty as to the scope of certain obligations, and stating that the proceeding should be dismissed. On
April 30, 2009, in similar administrative proceedings involving another oil company, the National Administrative Court of Appeals
resolved the matter in favor of that company, on the basis that the free disposal regime of up to 70% of export proceeds was in force
during 2002, upon the publication of Decree No. 1638/01 on December 12, 2001. YPF’s management is not aware of whether the
National Government has filed an appeal before the Argentine Supreme Court against such decision.
CNDC investigation. On November 17, 2003, the CNDC requested explanations, within the framework of an official
investigation pursuant to Art. 29 of the Antitrust Protection Law, from a group of almost 30 natural gas production companies,
including us, with respect to the following items: (i) the inclusion of clauses purportedly restraining trade in natural gas purchase/sale
contracts and (ii) gas imports from Bolivia, in particular (a) expired contracts signed by YPF, when it was state-owned, and YPFB
(the Bolivian state-owned oil company), under which YPF allegedly sold Bolivian gas in Argentina at prices below the purchase
price; and (b) the unsuccessful attempts in 2001 by Duke and Distribuidora de Gas del Centro to import gas into Argentina from
Bolivia. On January 12, 2004, we submitted explanations in accordance with Art. 29 of the Antitrust Protection Law, contending that
no antitrust violations had been committed and that there had been no price discrimination between natural gas sales in the Argentine
market and the export market. On January 20, 2006, we received a notification of resolution dated December 2, 2005, whereby the
CNDC (i) rejected the “non bis in idem” petition filed by us, on the grounds that ENARGAS was not empowered to resolve the issue
when ENARGAS Resolution No. 1,289 was enacted; and (ii) ordered that the preliminary opening of the proceedings be undertaken
pursuant to the provisions of Section 30 of
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Law 25,156. On January 15, 2007, the CNDC charged us and eight other producers with violations of Law 25,156. We have contested
the complaint on the basis that no violation of the Law took place and that the charges are barred by the applicable statute of
limitations, and have presented evidence in support of our position. On June 22, 2007, without acknowledging any conduct in
violation of the Antitrust Protection Law, we filed with the CNDC a commitment according to Article 36 of the Antitrust Protection
Law requesting that the CNDC approve the commitment, suspend the investigation and dismiss the proceedings. We are still awaiting
a formal response. On December 14, 2007, the CNDC elevated the investigation to the Court of Appeals.
The CNDC has commenced proceedings to investigate us for using a clause in bulk LPG supply contracts that it believes
prevents buyers from reselling the product to third parties and therefore restricts competition in a manner detrimental to the general
economic interest. We have asserted that the contracts do not contain a prohibition against resale to third parties and have offered
evidence in support of our position. On April 12, 2007, we presented to the CNDC, without acknowledging any conduct in violation
of the Antitrust Protection Law, a commitment consistent with Article 36 of the Antitrust Protection Law not to include such clauses
in future bulk LPG supply contracts, among other things, and requested that the CNDC terminate the proceedings. We are still
awaiting a formal response. On November 5, 2008, the Argentine Secretariat of Domestic Commerce approved the commitment
formulated by YPF, ordered us to communicate and publish the commitment for one day in the Official Gazette and in a newspaper
and suspended the proceedings for three years. We have already complied with the aforementioned notification and publication
requirements.
Noroeste basin reserves review. The effectiveness after certain specific dates of natural gas export authorizations (related to
production in the Noroeste basin) granted to us pursuant to Resolution S.E. Nos. 165/99, 576/99, 629/99 and 168/00, issued by the
Argentine Secretariat of Energy, is subject to an analysis by the Argentine Secretariat of Energy to determine whether sufficient
additional natural gas reserves have been discovered or developed by us in the Noroeste basin. The result of this ongoing review is
uncertain and may have an adverse impact upon the execution of the export gas sales agreements related to such export
authorizations, and may imply significant costs and liabilities for us. We have submitted to the Argentine Secretariat of Energy
documentation in order to allow for the continuation of the authorized exports in accordance with Resolutions SE No. 629/1999,
565/1999, and 576/1999 (the “Export Permits”) from the Noroeste basin. These Export Permits relate to the long-term natural gas
export contracts with Gas Atacama Generación S.A., Empresa Eléctrica del Norte Grande S.A and Electroandina S.A. (collectively,
the “Clients”), involving volumes of 900,000 m3/day, 600,000 m3/day and 1,750,000 m3/day, respectively. We have not yet received
a response from the Argentine Secretariat of Energy. However, on March 29, 2007, an internal memorandum of the technical sector
of the Argentine Secretariat of Energy addressed this file and concluded, without resolving the question that we have not included the
necessary reserves to continue with the Export Permits. The file is currently awaiting decision from the Argentine Secretariat of
Energy. If the Argentine Secretariat of Energy were to determine that the reserves are not sufficient to continue to comply with our
export commitments and other commitments, it could declare the expiration or suspension of one or more of the Export Permits,
which would have a direct impact on the export contracts, to the injury of the Clients. In the case in which it were determined that we
did not act as a prudent and diligent operator and/or did not have sufficient reserves, we could be responsible for the damages that this
situation causes to the Clients.
Alleged defaults under natural gas contracts – Mega. Mega has claimed compensation from us for failure to deliver natural gas
under the contract between us and Mega. We invoked that natural gas deliveries to Mega pursuant to the contract were affected by the
Argentine government’s interference. Likewise, we believe that we would not be liable for such natural gas delivery deficiencies
pursuant to the doctrines of “force majeure” and “contract impracticability.”
New Jersey claims. On December 13, 2005, the New Jersey Department of Environmental Protection (the “DEP”) and the New
Jersey Spill Compensation Fund filed a claim with a New Jersey court against Occidental Chemical Corporation, Tierra, Maxus,
Repsol YPF, YPF, YPF Holdings and CLH Holdings. The plaintiffs are claiming for the remediation of environmental damages,
punitive damages and other damages including the costs and fees associated with this proceeding, based on alleged violations of the
Spill Compensation and Control Act, the Water Pollution Control Act and common law claims relating to a facility allegedly operated
by the defendants and located in Newark, New Jersey that allegedly impacted the Passaic River and Newark Bay. DEP filed its
Second
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Amended Complaint in April 2008; YPF’s motion to dismiss for lack of personal jurisdiction was denied in September 2008. The
decision was affirmed by the Court of Appeals following an appeal from YPF. Notwithstanding, the Court denied the plaintiffs’
motion to bar third party practice and allowed defendants to file third-party claims. Third-party claims against approximately 300
companies and governmental entities (including certain municipalities) which could have responsibility in connection with the claim
were filed in February 2009. See “—YPF Holdings.”
Patagonian Association of Land-Owners claims. On August 21, 2003, the Patagonian Association of Land-Owners
(“ASSUPA”) sued the companies operating production concessions and exploration permits in the Neuquina basin, including us,
claiming for the remediation of the general environmental damage purportedly caused in the execution of such activities or the
establishment of an environmental restoration fund, and the implementation of measures to prevent environmental damages in the
future. The total amount claimed against all companies is more than U.S.$547.6 million. The plaintiff requested that the Argentine
government (Secretariat of Energy), the Federal Environmental Council (Consejo Federal de Medio Ambiente), the provinces of
Buenos Aires, La Pampa, Neuquén, Río Negro and Mendoza and the National Ombudsman be summoned. It requested, as a
preliminary injunction, that the defendants refrain from carrying out activities affecting the environment. Both the Ombudsman’s
summons as well as the requested preliminary injunction were rejected by the Argentine Supreme Court. Once the complaint was
notified, we and the other defendants filed a motion to dismiss for failure of the plaintiff to state a claim upon which relief may be
granted. The court granted the motion, and the plaintiff had to file a supplementary complaint. We requested that the claim be rejected
because the defects of the complaint indicated by the Argentine Supreme Court have not been corrected, but such request was denied.
However, we have also requested its rejection for other reasons, and impleaded the Argentine government, due to its obligation to
indemnify us against any liability and hold us harmless for events and claims arising prior to January 1, 1991, according to Law
No. 24,145 and Decree 546/1993. Our request is currently pending.
Dock Sud claim. We have been sued in the following environmental lawsuits that have been filed by residents living near Dock
Sud, province of Buenos Aires: (i) “Mendoza, Beatriz against National State et al.,” a lawsuit before the Argentine Supreme Court, in
which the Argentine government, the province of Buenos Aires, the City of Buenos Aires, 14 municipalities and 44 companies
(including us) were sued. The plaintiffs have requested unspecified compensation for collective environmental damage to the
Matanza and Riachuelo river basins and for physical and property damage, which they claim to have suffered. The Argentine
Supreme Court declared itself legally competent to settle only the conflict related to the collective environmental damages, including
prevention of future pollution, remediation of environmental damages already caused and monetary compensation for irreparable
environmental damages, and has requested that the defendants submit specific reports. In particular, it has requested that the
Argentine government, the province of Buenos Aires, the City of Buenos Aires and Cofema submit a plan with environmental
objectives. We answered the complaint and requested the impleading of the Argentine government, based on its obligation to
indemnify us against any liability and hold us harmless for events and claims previous to January 1, 1991, according to Law
No. 24,145 and Decree No. 546/1993. In July 2008, the Argentine Supreme Court decided that the Basin Authority (Law 26,168) will
be in charge of performing a remediation plan as well as of taking preventive measures in the area. The National State as well as the
Province and City of Buenos Aires will be responsible for the performance of these measures. It also declared the exclusive
competence of the First Instance Federal Court in Quilmes to hear any claims or disputes arising out of the remediation plan or the
preventive measures and determined that any future action seeking the environmental remediation of the basin will be dismissed (litis
pendentia). Additionally, the Argentine Supreme Court declared that it will determine whether and how much liability is to be borne
by the parties involved; (ii) “Cicero, María Cristina against Antivari S.A.C.I. et al. for damages” in which the plaintiffs, who are
residents of Villa Inflamable, Dock Sud, also demand the environmental remediation of Dock Sud and Ps.33 million in compensation
for physical and property damages against many companies that have operations there, including us. We answered the complaint by
requesting its rejection and asked the citation of the Argentine government, due to its obligation to indemnify us against any liability
and hold us harmless for events and claims previous to January 1, 1991, according to Law No. 24,145 and Decree No. 546/1993.
La Plata Refinery environmental claims. On June 6, 2007, we were served with a new complaint in which nine residents of the
vicinity of the La Plata Refinery request (i) the cessation of contamination and other harms they
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claim are attributable to the refinery and (ii) the cleanup of the adjacent canals, Río Santiago and Río de la Plata (water, soils and
aquifers, including within the refinery), or, if cleanup is impossible, compensation for environmental and personal damages. The
plaintiffs have also requested physical and property damages of approximately Ps.51.5 million, or an amount to be determined from
evidence produced in discovery. We believe that most damages that are alleged by the plaintiffs, if proven, may be attributable to
events that occurred prior to YPF’ s privatization and would therefore be the responsibility of the Argentine government in
accordance with the Privatization Law of YPF. Notwithstanding the aforesaid, there is the possibility a judgment could order us to
meet the expenses of remedying these liabilities, in which case we could ask the Argentine government to reimburse the remediation
expenses for liabilities existing prior to January 1, 1991 pursuant to Law 24,145. In addition, we believe that this claim partially
overlaps with the request made by a group of neighbors of the La Plata Refinery on June 29, 1999, mentioned in preceding
paragraphs. Accordingly, we consider that the cases will need to be partially consolidated to the extent that the claims overlap. We
answered the complaint by requesting its rejection and asked for the citation of the Argentine government, due to its obligation to
indemnify us against any liability and hold us harmless for events and claims previous to January 1, 1991, according to Law
No. 24,145 and Decree No. 546/1993. We believe that any contamination that may exist could be attributable to numerous sources,
including dumping of refuse over many years by other industrial facilities and by ships.
Additionally, we are aware of an action in which we have not yet been served, in which the plaintiff requests the cessation of
contamination and the cleanup of the canals adjacent to the La Plata Refinery, in Río Santiago, and other sectors near the coast
(removal of mud, drainage of wetlands, restoration of biodiversity, among other things), and, if such sanitation is not practicable,
compensation of Ps.500 million or an amount to be determined from evidence produced in discovery. We believe that this claim
partially overlaps with the requests made by a group of neighbors of the La Plata Refinery on June 29, 1999 and with the complaint
served on June 6, 2007, mentioned in preceding paragraphs. Accordingly, we consider that if we are served in this proceeding or any
other proceeding related to the same subject matters, the cases will need to be consolidated to the extent that the claims overlap. With
respect to claims that would not be included in the previous proceedings, for the time being we are unable to estimate the prospects of
such claims. Additionally, we believe that most damages that would be alleged by the plaintiff, if proven, may be attributable to
events that occurred prior to YPF’s privatization and could therefore be the responsibility of the Argentine government in accordance
with the Privatization Law concerning YPF.
Concessions on Hydrocarbon bearing zones – Provincial claims. We have been notified of Resolution 433/08 issued by the
Ministry of Production, Hydrocarbon Department of the Río Negro Province concerning compliance with certain obligations by
exploitation concessionaires in the hydrocarbon bearing zones of Barranca de los Loros, Bajo del Piche, El Medanito and Los
Caldenes, all located in Río Negro Province. This resolution asserts that we, among others, in our capacity as a concessionaire, are
liable for failing to meet certain concession and environmental obligations. If found liable, we could be at risk of termination of these
concession contracts. In light of the above, and consistent with provisions of the Hydrocarbons Law, we were requested to submit a
response.
The Hydrocarbons Law grants the concessionaire and/or licensee the right, prior to termination based upon contractual
provisions, to cure a contractual breach within a certain period of time after receiving notice thereof. Accordingly, on May 29, 2008,
we filed a request for nullification of Resolution 433/08, since this resolution failed to grant us this right. Additionally, on June 13,
2008, we submitted a response denying the charges against us and on November 12, 2008, the Ministry of Production ordered the
initiation of the evidence production period. On November 28, 2008, we filed a writ requesting the production of certain evidence and
the appointment of our technical expert. As of the date of this annual report, we have argued certain aspects related to the production
of evidence. On March 13, 2009, the Hydrocarbon Department postponed and suspended, for sixty and twenty labor days,
respectively, the production of evidence.
Arbitration with Transportadora de Gas del Mercosur S.A. (TGM). YPF was notified by the International Chamber of
Commerce (ICC) of an arbitration brought by TGM against YPF claiming unpaid and outstanding payments in an approximate
amount of U.S.$10 million, in connection with the transportation fee established in the natural gas transportation contract entered into
in September 1998 between YPF and TGM, associated with the natural gas export contract entered into by YPF, AESU and
Companhia de Gás do Estado do Río Grande do Sul (Sulgás), referred below. See “—Arbitration with AES Uruguaiana
Empreendimentos S.A. (AESU), Companhia de
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Gás do Estado do Río Grande do Sul (Sulgás) and Transportadora de Gas del Mercosur S.A. (TGM).” On April 8, 2009, YPF
requested that this claim be rejected and counterclaimed for the termination of the natural gas transportation contract, based on its
termination rights upon the termination by AESU and Sulgás of the natural gas export contract discussed below. Furthermore, on
April 6, 2009, YPF registered a request for arbitration at the ICC against TGM, among other parties, seeking an award declaring the
termination of the gas transportation contract with TGM as a result of the termination of the natural gas export contract by AESU and
Sulgás. YPF requested that the two proceedings be combined.
On the same date, YPF was notified by the ICC of an arbitration brought against it by AESU and Sulgás. See “—Arbitration
with AES Uruguaiana Empreendimentos S.A. (AESU), Companhia de Gás do Estado do Río Grande do Sul (Sulgás) and
Transportadora de Gas del Mercosur S.A. (TGM),” below.
Litigation with Transportadora de Gas del Norte S.A. (TGN). On April 8, 2009, YPF filed a complaint against TGN with
ENARGAS, seeking the termination of the natural gas transportation contract with TGN for the transport of natural gas in connection
with the natural gas export contract entered with AESU and other parties. The complaint is based on the termination of the referenced
natural gas export contract and the legal impossibility of assigning the transportation contract to other shippers because of certain
changes in law in effect since 2002; as a second order matter, the legal impossibility for TGN to render the transportation service on a
firm basis because of certain changes in law in effect since 2004; and as a third order matter, the Teoría de la Imprevisión (hardship
provision under Article 1198 of the Argentine Civil Code) available under Argentine law when extraordinary events render a party’s
obligations excessively burdensome.
Pluspetrol Energy S.A. contractual obligations. Pluspetrol and Gas Atacama Generación S.A. (“Gas Atacama”), had reached an
agreement through which, in case that Pluspetrol could not fulfill its natural gas delivery obligations, it would indemnify Gas
Atacama. This agreement would come into effect once ratified by the Secretariat of Energy. However, on March 10, 2008, the
Ministry of Economy and Production issued Resolution No. 127/2008, by which the natural gas export tax withholding rate was
increased, significantly changing the commercial terms of the aforementioned agreement. Consequently, Pluspetrol informed Gas
Atacama and the Secretariat of Energy of its intention to terminate the aforementioned agreement. As a result, the parties have
initiated discussions in order to reach a new agreement considering the new regulatory framework. If the parties were not able to
reach an agreement, they could potentially resort to arbitration.
Non-reserved, remote contingencies
Our management, in consultation with our external counsel, believes that the following contingencies, while individually
significant, are remote:
Congressional request for investigation to CNDC. On November 7, 2003, certain former members of the Argentine Congress,
Arturo Lafalla, Ricardo Falu and others, filed with the CNDC a complaint against us for abuse of a dominant position in the bulk LPG
market during 2002 and part of 2003. The alleged conduct consisted of selling bulk LPG in the domestic market at prices higher than
the export price, thereby restricting the availability of bulk LPG in the domestic market. On December 15, 2003, the CNDC decided
to forward the complaint to us, and requested explanations under Art. 29 of the Antitrust Protection Law. On January 21, 2004, we
submitted explanations in accordance with Art. 29 of the Antitrust Protection Law, contending that no antitrust violations had been
committed. At this point, the CNDC may accept our explanations or begin a criminal investigation. We contend that we did not
restrict LPG supply in the domestic market during the relevant period, that during this period all domestic demand for LPG could
have been supplied by our competitors and that therefore our market share could not be deemed a dominant position. On September 2,
2008, the CNDC issued Note No. 1131/08 requesting information in relation to the prices in the internal and external markets
corresponding to the years 2000-2008. On October 7, 2008, YPF presented the information. On December, 10, 2008, the CNDC
requested YPF to file the LPG export contracts signed during the years 2001-2004 as well as to explain the evolution of the prices in
the internal and external markets of propane and butane during the March to December period in the years 2001-2004. On
December 16, 2008, YPF presented the requested information.
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Pursuant to the provisions of Resolution No. 189/99, referred to above, certain third parties have claimed compensation for
alleged damages suffered by them as a consequence of our sanctioned conduct. We have denied these claims and presented our
defenses.
Neuquén royalty disputes. On February 20, 2006, the province of Neuquén published in the Official Gazette Decrees No. 225/06
and 226/06 (the “Decrees”). The Decrees provide that royalties for domestic sales of hydrocarbons produced within the province of
Neuquén must be calculated using international market prices as a reference, thus increasing the amounts of the royalties to be paid by
us. The calculation of hydrocarbon royalties, in accordance with Section 75 (12) of the Argentine Constitution, is ruled by federal
legislation, and the Decrees, in our opinion, contradict the preemption principle of the Argentine Constitution. We filed a declaratory
judgment action (Acción Declarativa de Certeza) with the Argentine Supreme Court with the aim of obtaining the nullification of the
Decrees and the issuance of an interim measure banning the province of Neuquén from filing any royalty claim on the ground of the
provisions contained within the Decrees. On October 31, 2006, the Argentine Supreme Court issued an injunction ordering the
province of Neuquén to refrain from applying the Decrees to us. On November 29, 2007, the province of Neuquén issued Decree
No. 2200/07, revoking the Decrees, and subsequently petitioned the Argentine Supreme Court to withdraw its injunction against the
Decrees as moot. We have filed a written request for the continuation of the injunction as well as the official revocation of the
Decrees. Neuquén has not expressly withdrawn its request and the matter is currently pending before the Argentine Supreme Court.
On August 31, 2004, the province of Neuquén filed with the Federal Court of the province of Neuquén (the “Federal Court”) a
claim against Atalaya Energy and 19 oil and gas companies, including us, claiming compliance with Section 6 of Law No. 25,561 for
the calculation of royalties regarding hydrocarbons produced within the province of Neuquén. Section 6 of Law No. 25,561 provides
that in no event will export withholdings reduce the wellhead prices for the calculation and payment of hydrocarbon royalties.
According to the province of Neuquén’s reading of Section 6 of Law No. 25,561, the oil and gas companies producing hydrocarbons
in the province of Neuquén should not make any deduction based on export withholdings for the calculation of royalties
corresponding to hydrocarbons sold in the domestic market. The Federal Court issued an interim measure ordering the oil and gas
companies to calculate and pay royalties on the basis of international prices. We filed an appeal against such interim measure. On
October 5, 2005, the Federal Court granted our appeal. Additionally, the Federal Court clarified that Section 6 of Law No. 25,561
shall be applied only to the calculation of royalties regarding exported hydrocarbons. The province of Neuquén appealed this decision
to the National Court of Appeals, which declared that it lacked jurisdiction and referred the case to the Argentine Supreme Court. In
2006, the Argentine Supreme Court also declared that it lacked jurisdiction, and returned the case file to the Federal Court. We also
requested the Argentine Supreme Court to order the Federal Court to restrain from continuing proceedings. The Argentine Supreme
Court denied such request and we filed a writ requesting the reversal of such decision. On May 14, 2007, the judge issued an opinion
declaring that the Federal Court lacked jurisdiction to hear our royalties dispute case and the case was transferred to the administrative
courts of the province of Neuquén. On May 17, 2007, we presented our appeal on the basis that the judge failed to consider recent
jurisprudential records of the Federal Court (the case of the Neuquén Decrees) that acknowledged that royalties disputes posed a valid
federal question. On June 29, 2007, the judge rejected our motion in limine but subsequently accepted our motion of appeal. We have
filed a request with the Federal Court requesting jurisdiction over the royalties litigation, in light of the above-mentioned recent
jurisprudence.
On September 17, 2008, the province of Neuquén and YPF executed an agreement on crude oil and natural gas prices applicable
to the calculation of royalties. The agreement provides for the calculation of royalties to be made using domestic sales prices as
provided in the Hydrocarbons Law and that the province of Neuquén shall withdraw the legal proceeding filed against YPF for
royalties calculated prior to July 1, 2008.
Other export tax disputes. During 2006 and 2007, the Customs General Administrations in Neuquén, Comodoro Rivadavia and
Puerto Deseado informed us that certain summary proceedings had been brought against us based on alleged formal misstatements on
forward oil deliveries (future commitments of crude oil deliveries) in the loading permits submitted before these agencies. In
December 2008, the Customs General Administration of Neuquén rejected our arguments and issued a resolution against us. We will
appeal before the National Fiscal Court. Although our management, based on the opinion of legal counsel, believes the claim has no
legal basis, the potential fines imposed could be substantial.
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Mendoza royalties dispute. Following demands by the province of Mendoza that the international market price be applied to
internal market transactions based on an interpretation of Section 6 of Law No. 25,561 (similar to the above-mentioned claim made
by Neuquén), we commenced an administrative proceeding. Our request is currently pending. Additionally, YPF filed a declaratory
action with the Argentine Supreme Court, with application for an injunction to declare unconstitutional the interpretation that the
province of Mendoza applies to Section 6 of Law No. 25,561. On April 7, 2009, we were notified that the Argentine Supreme Court
declared itself competent to hear the case brought by YPF, and issued a preliminary injunction to restrain the province of Mendoza
from applying the international market price in calculating the royalties payable by YPF. The final resolution of this case is still
pending.
Neuquén concession investment dispute. On November 22, 2007, we received Note No. 172/07 of the Argentine Secretariat of
Energy and Mining of the province of Neuquén (SEEyM), alleging material shortfalls in our investments pursuant to the Extension
Agreement for the Loma de la Lata – Sierra Barrosa Concession, executed on December 5, 2000 (the “Extension Agreement”). The
Note provided that: (i) “YPF shall immediately explain the reasons for the detected underinvestment, subject to immediate forfeiture
of the concession extension”; (ii) “this serious incident makes it necessary to delay any negotiations with this company for the
purpose of any concession extensions”; (iii) the proceedings will be remitted to the Provincial Legislature so that the legislators may
weigh this “incident” at the time of reviewing any extension to the contracts; and (iv) legal rights were reserved for the institution of
legal actions “to comprehensively redress the damage caused.”
The Extension Agreement sets out three phases for investment by us: (i) a first phase from July 1, 2000 to December 31, 2005,
during which the committed investment amounted to U.S.$3,500 million; (ii) a second period, from January 1, 2006 to December 31,
2011, contemplating a committed investment of U.S.$2,500 million; and (iii) a final period from January 1, 2012 to December 31,
2017, during which we agreed to invest the amount of U.S.$2,000 million. The aggregate amount of the committed investment is
U.S.$8,000 million, and under the Extension Agreement any non-substantial difference in a phase can be performed and made up for
in the next phase.
In addition to the SEEyM’s failure to observe Section 80 of the Hydrocarbons Law, which requires a controlling authority to
warn permission holders and concession operators and to allow them to cure violations, we believe that:
(i) we have made the investments agreed to under the Extension Agreement for the first of the three periods (ended on
December 31, 2005), which is the subject of Note No 172/07, whether calculated in U.S. dollars or in pesos (though we believe
they should be calculated in pesos);
(ii) during almost two years since the end of the first period, we have made investments in the province of Neuquén of
approximately U.S.$1,830 million (for a cumulative amount of U.S.$5,350 million since 2000), which greatly exceeds the
difference alleged by the province in Note No. 172/07 and demonstrates the completion of our performance of the requisite
investments for the first period (U.S.$2,500 million related to the years 2006-2011); and
(iii) the investment obligations are convertible into pesos at a one-to-one ratio by effect of the emergency regulations
enacted in 2002 (including Section 1 of Decree 214/04) and in light of economic reality, as the size and scope of the investments
that could be made at the time the Extension Agreement was entered into differs drastically from the amount possible after
devaluation in 2002. Our arguments in this regard are considered without prejudice to asserting the “unforeseen conditions”
doctrine under Argentine law due to the significant change in circumstances, as the right to assert the doctrine was not waived in
the Extension Agreement.
We have challenged Note No. 172/07 through administrative and judicial proceedings. By means of Resolution No. 178/08 the
province of Neuquén’s Natural Resources State Secretariat rejected our filing against Note No. 172/07 only as regards the jurisdiction
of the province of Neuquén to review the Extension Agreement. However, it recognized that the investments informed for years
2006-2007 amended the differences of the first period (which were declared as no material) and certified that YPF S.A. complied with
its duties for the first period 2000-2005.
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Arbitration with AES Uruguaiana Empreendimentos S.A. (AESU), Companhia de Gás do Estado do Río Grande do Sul (Sulgás)
and Transportadora de Gas del Mercosur S.A. (TGM). On April 6, 2009, YPF was notified by the ICC of an arbitration brought
against it by AESU and Sulgás claiming damages in an amount of approximately U.S.$1,052 million, which includes damages for the
matter described above with respect to AESU, in connection with YPF’s alleged liability resulting from the termination by AESU and
Sulgás of the natural gas export contract entered into in September 1998. See “—Alleged defaults under natural gas supply contracts
– Innergy, et al,” above. YPF denies all liability arising from such termination. Moreover, YPF believes that AESU’s damages
assessment is far beyond any reasonable assessment, since it exceeds six-fold the maximum aggregate deliver-or-pay penalties that
would have accrued in the event that YPF would breached its delivery obligations for the maximum daily quantity through the
expiration of the term of the natural gas export contract. In addition, more than 90% of AESU’s damages assessment relates to alleged
loss of profits that may be strongly challenged on the basis that prior to the termination of the natural gas export contract, AESU
voluntarily terminated all of its long term power purchase contracts.
Furthermore, on April 6, 2009, YPF registered a request for arbitration against AESU, Sulgás and TGM at the ICC seeking a
declaration from the arbitral tribunal that, among other things, AESU and Sulgás have repudiated and unilaterally and illegally
terminated the natural gas export contract entered into in September 1998 and declaring AESU and Sulgás liable for any damages
suffered by the parties because of such termination, including but not limited to the damages resulting from the termination of the
natural gas transportation contracts associated with the natural gas export contract. See “—Arbitration with Transportadora de Gas del
Mercosur S.A. (TGM).”
Additional information
On January 21, 2005, we were notified of a request made by Empresa Nacional de Electricidad S.A. (“ENDESA”) for
arbitration to resolve a dispute relating to an alleged breach of a contractual clause in an export contract signed in June 2000. The
clause relates to increased natural gas deliveries and ENDESA has requested payment of a contractual penalty resulting from our
alleged failure to deliver the required amounts. The contract term is 15 years. ENDESA’s claim amounted to U.S.$353.8 million,
while asserting that there had been willful misconduct on our part. Thereafter, the parties entered into (i) an agreement for the
amendment of the gas supply agreement in order to adapt it to the export restrictions imposed by the Argentine government (the
“Amendment”) and (ii) an agreement for the termination of the arbitration (the “Termination Agreement”), both subject to the
Argentine Secretariat of Energy’s approval. On August 31, 2007, we were notified of the Argentine Secretariat of Energy’s approval.
Thereafter, the parties informed the tribunal of the termination of the arbitration by mutual agreement. We have paid ENDESA
U.S.$8 million pursuant to the Termination Agreement and ENDESA has foregone all claims based on past conduct. Finally, the
Amendment adjusted the maximum semi-annual compensation that we would have to pay in connection with deficiencies in natural
gas deliveries.
On August 11, 2006, we received Note SE No. 1009 (the “Note”) from the Argentine Secretariat of Energy, which reviewed the
progress of reserves in the Ramos Area in the Noroeste basin, in relation to the export authorization granted by Resolution S.E.
No. 169/97 (the “Export Authorization”). The Export Authorization concerns the long-term natural gas export contract between us
and Gas Atacama, for a maximum daily volume of 530,000 m3/day. The Note stated that as a result of the decrease in natural gas
reserves supporting the Export Authorization, the domestic market supply was at risk. The Note preventively provided that the
maximum natural gas daily volumes authorized to be exported under the Export Authorization were to be reduced by 20%, affecting
the export contract. We filed an answer to the Note on September 15, 2006 stating our allegations and defenses.
YPF Holdings
The following is a brief description of certain environmental and other liabilities related to YPF Holdings Inc., a Delaware
corporation.
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In connection with the sale of Maxus’ former chemical subsidiary, Chemicals, to Occidental in 1986, Maxus agreed to
indemnify Chemicals and Occidental from and against certain liabilities relating to the business or activities of Chemicals prior to the
Closing Date, including certain environmental liabilities relating to certain chemical plants and waste disposal sites used by
Chemicals prior to the Closing Date. See “—YPF Holdings—Operations in the United States.”
As of December 31, 2008, YPF Holdings’ reserves for environmental and other contingencies totaled approximately U.S.$183
million. YPF Holdings management believes it has adequately reserved for all environmental and other contingencies that are
probable and can be reasonably estimated based on information available as of such time; however, many such contingencies are
subject to significant uncertainties, including the completion of ongoing studies, the discovery of new facts, and the issuance of orders
by regulatory authorities, which could result in material additions to such reserves in the future. It is possible that additional claims
will be made, and additional information about new or existing claims (such as results of ongoing investigations, the issuance of court
decisions or the signing of settlement agreements) is likely to develop over time. YPF Holdings’ reserves for the environmental and
other contingencies described below are based solely on currently available information and as a result, YPF Holdings, Maxus and
Tierra may have to incur costs that may be material, in addition to the reserves already taken.
In the following discussion concerning plant sites and third party sites, references to YPF Holdings include, as appropriate and
solely for ease of reference, references to Maxus and Tierra. As indicated above, Tierra is also a subsidiary of YPF Holdings and has
assumed certain of Maxus’ obligations.
Newark, New Jersey. A consent decree, previously agreed upon by the U.S. Environmental Protection Agency (the “EPA”), the
New Jersey Department of Environmental Protection (the “DEP”) and Occidental, as successor to Chemicals, was entered in 1990 by
the United States District Court of New Jersey for Chemicals’ former Newark, New Jersey agricultural chemicals plant. The approved
interim remedy has been completed and paid for by Tierra pursuant to the above described indemnification agreement with
Occidental. Operations and maintenance of the constructed remedy are ongoing, and as of December 31, 2008, YPF Holdings has
reserved approximately U.S.$15 million in connection with such activities.
Passaic River/Newark Bay, New Jersey. Maxus, acting on behalf of Occidental, negotiated an agreement with the EPA under
which Tierra has conducted further testing and studies to characterize contaminated sediment and biota in a six-mile portion of the
Passaic River near the Newark, New Jersey plant site described above. While some work remains, these studies were substantially
completed in 2005. In addition, the EPA and other agencies are addressing the lower 17-mile portion of the Passaic River (including
the six-mile portion already studied) in a joint federal, state, local and private sector cooperative effort designated as the Lower
Passaic River Restoration Project (“PRRP”). Tierra, along with certain other entities, has agreed to participate in and fund a remedial
investigation and feasibility study (“RIFS”) in connection with the PRRP. The parties are discussing the possibility of further work
with the EPA. The entities that have agreed to fund the RIFS have negotiated allocations of RIFS costs among themselves based on a
number of considerations.
Tierra, acting on behalf of Occidental, is also performing and funding a separate RIFS to characterize sediment contamination
and evaluate remedial alternatives in Newark Bay and portions of the Hackensack River, the Arthur Kill, and the Kill van Kull
pursuant to a 2004 administrative order on consent with EPA. The EPA has issued General Notice Letters to a series of additional
parties concerning the contamination of Newark Bay. Tierra has reached agreement with five of these parties to contribute annually
toward Newark Bay study costs, and is continuing to negotiate with other parties.
In December 2005, the DEP issued a directive to Tierra, Maxus and Occidental directing said parties to pay the State of New
Jersey’s costs of developing a Source Control Dredge Plan focused on allegedly dioxin-contaminated sediment in the lower six-mile
portion of the Passaic River described above. The development of this Plan was estimated by the DEP to cost approximately U.S.$2.3
million. The DEP has advised the recipients that they are not required to respond to the directive until otherwise notified. Also in
December 2005, the DEP and the New Jersey Spill Compensation Fund sued YPF Holdings, Tierra, Maxus and other affiliates, as
well as Occidental, in
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connection with dioxin contamination allegedly emanating from Chemicals’ former Newark plant and contaminating the lower 17-
mile portion of the Passaic River, Newark Bay, other nearby waterways and surrounding areas. The defendants have made responsive
pleadings and/or filings. In March 2008, the court denied motions to dismiss for failure to state a claim by Occidental Chemical
Corporation, and by Tierra and Maxus. DEP filed its Second Amended Complaint in April 2008; YPF’s motion to dismiss for lack of
personal jurisdiction was denied in September 2008. The decision was affirmed by the Court of Appeals following an appeal by YPF.
Notwithstanding, the Court denied the plaintiffs’ motion to bar third party practice and allowed defendants to file third-party claims.
Third-party claims against approximately 300 companies and governmental entities (including certain municipalities) which could
have responsibility in connection with the claim were filed in February 2009. See “Legal Proceedings—Argentina—New Jersey
Claims.”
In June 2007, EPA released a draft Focused Feasibility Study (“FFS”) that outlines several alternatives for remedial action in the
lower eight miles of the Passaic River. These range from no action (which would result in comparatively little cost) to extensive
dredging and capping (which according to the draft FFS, EPA estimated could cost from U.S.$0.9 billion to U.S.$2.3 billion), and are
all described by EPA as involving proven technologies that could be carried out in the near term, without extensive research. Tierra,
in conjunction with the other parties of the PRRP group, submitted comments on the draft FFS to EPA, as did a number of other
interested parties. EPA has recently stated that a revised remedy proposal will be issued sometime in 2009. Tierra plans to respond to
any further EPA proposal as may be appropriate at that time.
In August 2007, the National Oceanic Atmospheric Administration (“NOAA”), as one of the Federal Natural Resources
Trustees (“Trustees”), sent a letter to the parties of the PRRP group, including Tierra and Occidental, requesting that the group enter
into an agreement to conduct a cooperative assessment of natural resources damages in the Passaic River and Newark Bay. The PRRP
group has declined the NOAA’s request, citing concerns with matters such as the FFS. In January 2008, the NOAA sent a letter to us,
YPF Holdings, CLH Holdings Inc. and other entities designating each as a potentially responsible party (“PRP”), all of which have
denied being a PRP. In November 2008, Occidental and Tierra entered into an agreement with the Trustees to fund a portion of the
Trustees’ past costs and conduct certain assessment activities during 2009. A group of approximately 20 other parties has also entered
into a similar agreement with the Trustees.
In June 2008, the EPA, Occidental, and Tierra entered into an Administrative Order on Consent (“AOC”), pursuant to which
Tierra (on behalf of Occidental) will undertake the removal of sediment from a portion of the Passaic River in the vicinity of
Chemicals’ former Newark, New Jersey facility described above. This action will result in the removal of approximately 200,000
cubic yards of sediment, which will be carried out in two phases. The field work on the first phase, which will encompass the removal
of 40,000 cubic yards, is scheduled to begin in 2010 and is expected to be completed approximately nine months later. The first phase
of clean up is estimated to cost approximately U.S.$44.7 million. The second phase, which will encompass the removal of
approximately 160,000 cubic yards of sediment, will be completed on a different schedule. Pursuant to the AOC, the EPA has
required the provision of financial assurance in the amount of U.S.$80 million for the performance of the removal work through a
trust fund. As of the date of this annual report, U.S.$12 million have been contributed to the fund; an additional U.S.$10 million must
be contributed every six months until a total of U.S.$80 million has been deposited into the fund. The total amount of required
financial assurance may be decreased or increased over time if the anticipated cost of completing the removal work contemplated by
the AOC changes. During the removal work, certain contaminants not produced by the former Chemicals plant, such as PCBs and
mercury, will be removed along with dioxin. YPF Holdings may seek cost recovery from the parties responsible for such
contamination; however, at this time it is not possible to make any predictions regarding the likelihood of success or the funds
potentially recoverable in a cost-recovery action. The removal work required pursuant to the AOC will be conducted concurrently
with and in addition to the other investigations and remedial actions described above, including those undertaken in connection with
the FFS concerning the lower eight miles of the Passaic River, the RIFS addressing the lower 17-mile portion of the Passaic River,
and the RIFS relating to contamination in Newark Bay, portions of the Hackensack River, the Arthur Kill and the Kill van Kull.
As of December 31, 2008, YPF Holdings has reserved approximately U.S.$87 million in connection with the foregoing matters
related to the Passaic River, the Newark Bay and the surrounding area comprising the estimated
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costs for studies, estimated costs in connection with the AOC, and certain other matters related to the Passaic River and Newark Bay.
However, it is possible that other works, including interim remedial measures, may be ordered. How these matters are resolved,
including the development of new information, the imposition of natural resource damages or the selection of remedial actions
differing from the scenarios we have proposed could result in Maxus and Tierra incurring material costs in addition to the amount
currently reserved.
Hudson and Essex Counties, New Jersey. Until the 1970s, Chemicals operated a chromite ore processing plant at Kearny, New
Jersey (the “Kearny Plant”). Tierra, on behalf of Occidental, is providing financial assurance in the amount of U.S.$20 million for
performance of the work associated with the issues described below.
In May 2005, the DEP took two actions in connection with the chrome sites in Hudson and Essex Counties. First, the DEP
issued a directive to Maxus, Occidental and two other chromium manufacturers (the “Respondents”) directing them to arrange for the
cleanup of chromite ore residue at three sites in Jersey City and for the conduct of a study by paying the DEP a total of U.S.$19.5
million. Second, the DEP filed a lawsuit against Occidental and two other entities in state court in Hudson County seeking, among
other things, cleanup of various sites where chromite ore residue is allegedly located, recovery of past costs incurred by the state at
such sites (including in excess of U.S.$2.3 million dollars allegedly spent for investigations and studies) and, with respect to certain
costs at 18 sites, treble damages. The DEP claims that the defendants are jointly and severally liable, without regard to fault, for much
of the damages alleged. The parties have come to an agreement regarding this matter, pursuant to which Tierra will pay U.S.$5
million, and will remediate 3 sites, at an estimated cost of U.S.$2.1 million. In addition, in 2008 the DEP approved the construction of
certain interim remedial measures relating to the Kearny Plant; work on those remedial measures has begun.
Pursuant to a request of the DEP, in the second half of 2006, Tierra and certain other parties tested the sediments in a portion of
the Hackensack River near the former Kearny Plant. A report of those test results has been submitted to the DEP for its comments.
What, if any, additional work will be required is expected to be determined once the results of this testing have been analyzed by the
DEP.
In November 2005, several environmental groups sent a notice of intent to sue the owner of the property adjacent to the former
Kearny Plant and five other parties, including Tierra, under the Resource Conservation and Recovery Act. The parties have entered
into an agreement that addresses the concerns of the environmental groups, and these groups have agreed, at least for now, not to file
suit.
As of December 31, 2008, YPF Holdings has reserved a total of approximately U.S.$30 million in connection with the foregoing
chrome-related matters. Soil action levels for chromium in New Jersey have not been finalized, and the DEP continues to review the
proposed action levels. The cost of addressing these chrome-related matters could increase significantly depending upon the final soil
action levels, the DEP’s response to Tierra’s reports and other developments.
Painesville, Ohio. From about 1912 through 1976, Chemicals operated manufacturing facilities in Painesville, Ohio (the
“Painesville Works”). The operations there over the years involved several discrete but contiguous plant sites over an area of about
1,300 acres. The primary area of concern historically has been Chemicals’ former chromite ore processing plant (the “Chrome
Plant”). The Ohio Environmental Protection Agency (“OEPA”) has approved certain work, including the remediation of specific sites
within the former Painesville Works area and work associated with development plans (the “Remediation Work”). The Remediation
Work has begun. As the OEPA approves additional projects for the site of the former Painesville Works, additional amounts may
need to be reserved. YPF Holdings has reserved a total of approximately U.S.$4 million as of December 31, 2008 for its estimated
share of the cost to perform the remedial investigation and feasibility study, the Remediation Work and other operation and
maintenance activities at this site.
Third Party Sites. Pursuant to settlement agreements with the Port of Houston Authority (the “Port”) and other parties, Tierra
and Maxus are participating (on behalf of Occidental) in the remediation of property adjoining Chemicals’ former Greens Bayou
facility where dichloro-diphenyl-trichloroethane (“DDT”) and certain other chemicals were manufactured. Additionally, in 2007 the
parties entered into a settlement with federal and state natural resources trustees in connection with claims for natural resources
damages. As of December 31, 2008, YPF Holdings has reserved approximately U.S.$13 million for its estimated share of the
remediation and the natural resources damages settlement associated with the Greens Bayou facility.
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In June 2005, the EPA designated Maxus as a PRP at the Milwaukee Solvay Coke & Gas Site in Milwaukee, Wisconsin. The
basis for this designation is Maxus’ alleged status as the successor to Pickands Mather & Co. and Milwaukee Solvay Coke Co.,
companies that the EPA has asserted are former owners or operators of such site. Preliminary work in connection with the RIFS in
respect of this site commenced in the second half of 2006. YPF Holdings has reserved approximately U.S.$0.3 million as of
December 31, 2008 for its estimated share of the costs of the RIFS. Maxus lacks sufficient information to determine additional
exposure or costs, if any, it might have in respect of this site.
Maxus is responsible for certain liabilities attributable to Occidental, as successor to Chemicals, in respect of the Malone Service
Company Superfund Site in Galveston County, Texas. This site is a former waste disposal site where Chemicals is alleged to have
sent waste products prior to September 1986.
Chemicals has also been designated as a PRP by the EPA under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (“CERCLA”) with respect to a number of third party sites where hazardous substances from
Chemicals’ plant operations allegedly were disposed or have come to be located. Numerous PRPs have been named at substantially
all of these sites. At several of these, Chemicals has no known exposure. At December 31, 2008, YPF Holdings had reserved
approximately U.S.$3 million in connection with its estimated share of costs related to the Milwaukee Solvay Coke & Gas Site, the
Malone Service Company Superfund Site, and the other sites mentioned in this paragraph.
“Agent Orange” and VCM Litigation. In 2002, Occidental sued Maxus and Tierra in state court in Dallas, Texas seeking a
declaration that Maxus and Tierra have the obligation under the agreement pursuant to which Maxus sold Chemicals to Occidental to
defend and indemnify Occidental from and against certain historical obligations of Chemicals, including claims related to “Agent
Orange” and vinyl chloride monomer (VCM), notwithstanding the fact that said agreement contains a 12-year cut-off for defense and
indemnity obligations with respect to most litigation. Tierra was dismissed as a party, and the matter was tried in May 2006. The trial
court decided that the 12-year cut-off period did not apply and entered judgment against Maxus. This decision was affirmed by the
Court of Appeals in February 2008. Maxus’ petition to the Texas Supreme Court for review was denied. This decision will require
Maxus to accept responsibility for various matters for which it has refused to indemnify Occidental since 1998, which could result in
the incurrence of costs in addition to YPF Holdings’ current reserves for this matter. This decision will also require Maxus to
reimburse Occidental for past costs on these matters As of December 31, 2008, YPF Holdings had reserved approximately U.S.$17
million in respect of this matter. In March 2009, Maxus paid $14.9 million to Occidental, and remains in discussions with Occidental
regarding other amounts due.
Turtle Bayou Litigation. In March 2005, Maxus agreed to defend Occidental, as successor to Chemicals, in respect of an action
seeking the contribution of costs for the remediation of the Turtle Bayou waste disposal site in Liberty County, Texas. Judgment was
entered in this action, and Maxus filed a motion for reconsideration which was partially successful. As a result, the court’s decision
requires Maxus to pay, on behalf of Occidental, approximately 16% of those costs incurred by one of the plaintiffs. Maxus has
appealed. As of December 31, 2008, YPF Holdings has reserved approximately U.S.$4 million in respect of this matter.
YPF Holdings, including its subsidiaries, is a party to various other lawsuits, the outcomes of which are not expected to have a
material adverse affect on the Company’s financial condition. YPF Holdings has established reserves for legal contingencies in
situations where a loss is probable and can be reasonably estimated.
Dividends Policy
See “Item 10. Additional Information—Dividends.”
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ITEM 9.
Shares and ADSs
The Offer and Listing
New York Stock Exchange
The ADSs, each representing one Class D Share, are listed on the NYSE under the trading symbol “YPF.” The ADSs began
trading on the NYSE on June 28, 1993, and were issued by The Bank of New York as depositary (the “Depositary”).
The following table sets forth, for the five most recent full financial years and for the current financial year, the high and low
closing prices in U.S. dollars of our ADSs on the NYSE:
2004
2005
2006
2007
2008
2009(1)
(1) Through June 26, 2009.
High Low
44.00 35.95
69.20 43.20
57.38 37.00
50.10 34.37
49.00 41.11
47.00 16.81
The following table sets forth, for each quarter of the most recent two financial years and the high and low closing prices in U.S.
dollars of our ADSs on the NYSE.
2007:
2008:
2009:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
First Quarter
Second Quarter(1)
High Low
50.10 41.14
46.41 41.42
45.91 34.37
44.97 37.02
43.90 37.75
48.31 42.75
48.61 45.40
49.00 41.11
47.00 16.81
35.90 23.09
(1) Through June 26, 2009.
The following table sets forth, for each of the most recent six months and for the current month, the high and low closing prices
in U.S. dollars of our ADSs on the NYSE.
2008:
2009:
December
January
February
March
April
High Low
49.00 45.70
47.00 42.75
43.15 29.00
27.60 16.81
28.60 23.09
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May
June(1)
(1) Through June 26, 2009.
High Low
34.30 28.86
35.90 28.25
As of December 31, 2008 there were approximately 225.4 million ADSs outstanding and approximately 87 holders of record of
ADSs. Such ADSs represented approximately 57.3% of the total number of issued and outstanding Class D shares as of December
2008. Repsol YPF (including its other subsidiaries) was the holder of 163.8 million of our ADSs at that date, while Petersen Energía
and PEISA collectively held 61.6 million of our ADSs.
Buenos Aires Stock Market
The Buenos Aires Stock Market is the principal Argentine market for trading the ordinary shares.
The Buenos Aires Stock Market (Mercado de Valores de Buenos Aires, or “MERVAL”) is the largest stock market in Argentina
and is affiliated with the BASE. MERVAL is a corporation consisting of 133 shareholders who are the sole individuals or entities
authorized to trade, either as principals or agents, in the securities listed on the BASE. Trading on the BASE is conducted either
through the traditional auction system from 11 a.m. to 6 p.m. on trading days, or through the Computer-Assisted Integrated
Negotiation System (Sistema Integrado de Negociación Asistida por Computación, or “SINAC”). SINAC is a computer trading
system that permits trading in both debt and equity securities and is accessed by brokers directly from workstations located in their
offices. Currently, all transactions relating to listed negotiable obligations and listed government securities can be effectuated through
SINAC. In order to control price volatility, MERVAL imposes a 15-minute suspension on trading when the price of a security
registers a variation in price between 10% and 15% and between 15% and 20%. Any additional 5% variation in the price of a security
will result in an additional 10-minute successive suspension period.
Investors in the Argentine securities market are mostly individuals and companies. Institutional investors, which are responsible
for a growing percentage of trading activity, consist mainly of institutional pension funds created under the amendments to the social
security laws enacted in late 1993.
Certain information regarding the Argentine stock market is set forth in the table below.
Market capitalization (in billions of pesos)(1)
As percent of GDP(1)
Volume (in millions of pesos)
Average daily trading volume (in millions of pesos)
(1) End-of-period figures for trading on the BASE.
Source: CNV and Instituto Argentino de Mercado de Capitales.
2008
1,234
121.6%
2007
1,773
227.2%
2006
1,229
183.4%
2005
771
163%
237,790
962.71
209,905
849.82
131,984
532.19
145,535
577.52
The following table sets forth, for the five most recent full financial years and for the current financial year, the high and low
prices in Argentine pesos of our Class D shares on the Buenos Aires Stock Market:
2004
2005
2006
2007
2008
2009(1)
(1) Through June 26, 2009.
145
High Low
130.00 103.00
205.00 128.00
177.50 115.00
153.00 110.90
183.00 118.00
162.00 64.00
The following table sets forth, for each quarter of the most recent two financial years, the high and low prices in Argentine pesos
of our Class D shares on the Buenos Aires Stock Market.
2007:
2008:
2009:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
First Quarter
Second Quarter(1)
High Low
153.00 126.00
143.50 127.00
143.50 107.80
142.00 118.00
142.00 118.00
155.50 136.00
153.00 144.50
183.00 137.00
162.00 64.00
136.00 90.00
(1) Through June 26, 2009.
The following table sets forth, for each of the most recent six months and for the current month, the high and low prices in
Argentine pesos of our Class D shares on the Buenos Aires Stock Market.
2008:
2009:
December
January
February
March
April
May
June(1)
High Low
164.00 159.00
162.00 151.50
154.00 109.00
106.50 64.00
108.00 90.00
132.00 108.00
136.00 113.00
(1) Through June 26, 2009.
As of December 31, 2008, there were approximately 7,160 holders of Class D shares.
Stock Exchange Automated Quotations System International
The ADSs are also quoted on the Stock Exchange Automated Quotations System International.
Argentine Securities Market
The securities market in Argentina is composed of 10 stock exchanges, which are located in the City of Buenos Aires, Bahía
Blanca, Corrientes, Córdoba, La Plata, La Rioja, Mendoza, Rosario, Santa Fe, and Tucumán. Five of these exchanges (the BASE,
Rosario, Córdoba, Mendoza, and Santa Fe) have affiliated stock markets and, accordingly, are authorized to quote publicly offered
securities. Securities listed on these exchanges include corporate equity and bonds and government securities.
The BASE is the principal and longest-established exchange in Argentina and is currently the fourth largest exchange in Latin
America in terms of market capitalization. The BASE began operating in 1854 and accounts for approximately 95% of all equity
trading in Argentina. Bonds listed on the BASE may simultaneously be listed on the Argentine over-the-counter market (Mercado
Abierto Electrónico, or “MAE”), pursuant to an agreement
146
between BASE and MAE that stipulates that equity securities are to be traded exclusively on the BASE, while debt securities (both
public and private) may be traded on both the MAE and the BASE. In addition, through separate agreements with the BASE, all of
the securities listed on the BASE may be listed and subsequently traded on the Córdoba, Rosario, Mendoza, La Plata and Santa Fe
exchanges, by virtue of which many transactions originating on these exchanges relate to BASE-listed companies and are
subsequently settled in Buenos Aires. Although companies may list all of their capital stock on the BASE, controlling shareholders in
Argentina typically retain the majority of a company’s capital stock, resulting in a relatively small percentage of active trading of the
companies’ stock by the public on the BASE.
Argentina’s equity markets have historically been composed of individual investors, though in recent years there has been an
increase in the level of investment by banks and insurance companies in these markets. The participation of Argentine pension funds
represents an increasing percentage of the BASE market; however, Argentine mutual funds (fondos comunes de inversión) continue to
have very low participation.
Regulation of the Argentine securities market
The Argentine securities market is regulated and overseen by the CNV, pursuant to Law No. 17,811, as amended, which, in
addition to having created the CNV, governs the regulation of security exchanges, as well as stockbroker transactions, market
operations, the public offering of securities, corporate governance matters relating to public companies and the trading of futures and
options. Argentine pension funds and insurance companies are regulated by separate government agencies, whereas financial
institutions are regulated primarily by the Central Bank.
In Argentina, debt and equity securities traded on an exchange or the over-the-counter market must, unless otherwise instructed
by their shareholders, be deposited with Stock Exchange Incorporated (Caja de Valores S.A.), a corporation owned by the BASE,
MERVAL and certain provincial exchanges. Stock Exchange Incorporated is the central securities depositary of Argentina and
provides central depositary facilities, as well as acting as a clearinghouse for securities trading and as a transfer and paying agent for
securities transactions. Additionally, it handles the settlement of securities transactions carried out by the BASE and operates SINAC.
Despite a change in the legal framework of Argentine securities trading in the early 1990s, which permitted the issuance and
trading of new financial products in the Argentine capital markets, including commercial paper, new types of corporate bonds and
futures and options, there is still a relatively low level of regulation of the market for Argentine securities and investors’ activities in
such markets and enforcement of them has been extremely limited. Because of the limited exposure and regulation in these markets,
there may be less publicly available information about Argentine companies than is regularly published by or about companies in the
United States and certain other countries. However, the CNV has taken significant steps to strengthen disclosure and regulatory
standards for the Argentine securities market, including the issuance of regulations prohibiting insider trading and requiring insiders
to report on their ownership of securities, with associated penalties for noncompliance.
In order to improve Argentine securities market regulation, the Argentine government issued Decree No. 677/01 on June 1, 2001
(the “Transparency Decree”), which provided certain guidelines and provisions relating to capital markets transparency and best
practices. The Transparency Decree applies to individuals and entities that participate in the public offering of securities, as well as to
stock exchanges. Among its key provisions, the decree broadens the definition of a “security,” governs the treatment of negotiable
securities, obligates publicly listed companies to form audit committees composed of three or more members of the Board of
Directors (the majority of whom must be independent under CNV regulations), authorizes market stabilization transactions under
certain circumstances, governs insider trading, market manipulation and securities fraud and regulates going-private transactions and
acquisitions of voting shares, including controlling stakes in public companies.
Before offering securities to the public in Argentina, an issuer must meet certain requirements established by the CNV with
regard to the issuer’s assets, operating history and management. Only securities approved for a public offering by the CNV may be
listed on a stock exchange. However, CNV approval does not imply any kind of certification as to the quality of the securities or the
solvency of the issuer, even though issuers of listed securities are required to file unaudited quarterly financial statements and audited
annual financial statements and various
147
other periodic reports with the CNV and the stock exchange on which their securities are listed, as well as to report to the CNV and
the relevant stock exchange any event related to the issuer and its shareholders that may affect materially the value of the securities
traded.
Money laundering regulations
Recent modifications to Argentine money laundering regulations have resulted in their application to increasing numbers and
types of securities transactions.
Argentine Law No. 25,246 (as amended by Law No. 26,087 and Law 26,119) categorizes money laundering as a crime under
the Argentine Criminal Code and created the Unidad de Información Financiera (“UIF”), an agency of the Ministry of Justice and
Human Rights of Argentina responsible for investigating questionable transactions. The Argentine Criminal Code defines money
laundering as the exchange, transfer, management, sale or any other use of money or other assets obtained through a crime, by a
person who did not take part in such crime, with the possible result that such original assets (or new asset resulting from such original
asset) have the appearance of having been obtained through legitimate sources, provided that the aggregate value of the assets
exceeded Ps.50,000, whether such amount results from one or more connected transactions.
The money laundering legal framework assigns control and information reporting duties to certain private sector entities,
including banks, broker-dealers, trading companies and insurance companies, in many cases according to highly general criteria.
According to the rules of the Guide to Unusual or Questionable Financial and Foreign Exchange Transactions (Guía de
Transacciones Inusuales o Sospechosas en la Órbita del Sistema Financiero y Cambiario) approved by Resolution No. 2/2002 of the
UIF (as amended), such entities have an obligation to notify the UIF of transactions falling into the following general categories:
(a) investments in securities in amounts significantly exceeding the amounts normally invested by a particular investor, taking the
business of the investor into account; (b) deposits or back-to-back loans in jurisdictions known as tax havens; (c) requests for asset
management services where the origin of funds is not certain, is unclear or does not relate to the business of the investor; (d) unusual
transfers of large amounts of securities or interests; (e) unusual and frequent use of special investment accounts; and (f) frequent
purchases and sales of securities during the same day for the same amount and volume, when such transactions seem unusual and
inadequate considering the business of the investor.
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ITEM 10. Additional Information
Capital Stock
Our capital stock consists of Ps.3,933,127,930, divided into 3,764 Class A shares, 7,624 Class B shares, 65,949 Class C shares
and 393,235,456 Class D shares, each fully subscribed and paid, with a par value of ten pesos each and the right to one vote per share.
Our total capital stock has not changed since December 31, 2004.
In November 1992, the Privatization Law became effective. Pursuant to the Privatization Law, in July 1993, we completed a
worldwide offering of 160 million Class D shares, representing approximately 45% of our outstanding capital stock, which had been
owned by the Argentine government. Concurrently with the completion of such offering, the Argentine government transferred
approximately 40 million Class B shares to the Argentine provinces, which represented approximately 11% of our outstanding capital
stock, and made an offer to holders of pension bonds and certain other claims to exchange such bonds and other claims for
approximately 46.1 million Class B shares, representing approximately 13% of our outstanding capital stock. As a result of these
transactions, the Argentine government’s ownership percentage of our capital stock was reduced from 100% to approximately 30%,
including shares that had been set aside to be offered to our employees upon establishment of the terms and conditions by the
Argentine government in accordance with Argentine law. The shares set aside to be offered to employees represented 10% of our
outstanding capital stock.
In July 1997, the Class C shares set aside for the benefit of our employees in conjunction with the privatization, excluding
approximately 1.5 million Class C shares set aside as a reserve against potential claims, were sold through a global public offering,
increasing the percentage of our outstanding shares of capital stock held by the public to 75%. Proceeds from the transactions were
used to cancel debt related to the employee plan, with the remainder distributed to participants in the plan. Additionally, Resolution
1,023/06 of the Ministry of Economy and Production, dated December 21, 2006, effected the transfer to the employees covered by the
employee share ownership plan, or PPP, of 1,117,717 Class C shares, corresponding to the Class C shares set aside as a reserve
against potential claims, and reserving 357,987 Class C shares until a decision was reached in a pending lawsuit. Subsequently, with a
final decision having been reached in the lawsuit, and consistent with the mechanism of conversion of Class C shares into Class D
shares established by Decree 628/1997 and its accompanying rules, as of December 28, 2007, 1,409,755 Class C shares had been
converted into Class D shares. See “Item 4. Information on the Company—History of YPF.”
The Class A shares held by the Argentine government became eligible for sale in April 1995 upon the effectiveness of
legislation which permitted the Argentine government to sell such shares. In January 1999, Repsol YPF acquired 52,914,700 Class A
shares in block (14.99% of our shares) which were converted to Class D shares. Additionally, on April 30, 1999, Repsol YPF
announced a tender offer to purchase all outstanding Class A, B, C and D shares at a price of U.S.$44.78 per share (the “Offer”).
Pursuant to the Offer, in June, 1999, Repsol YPF acquired an additional 82.47% of our outstanding capital stock. On November 4,
1999, Repsol YPF acquired an additional 0.35%. On June 7, 2000, Repsol YPF announced a tender offer to exchange newly issued
Repsol YPF’s shares for 2.16% of our Class B, C and D shares held by minority shareholders. Pursuant to the tender offer, and after
the merger with Astra, as of December 31, 2008, Repsol YPF owned 330,551,981 Class D shares and therefore controlled us through
a 84.04% ownership interest. On February 21, 2008, Petersen Energía S.A. (“Petersen Energía”) purchased 58,603,606 of our ADSs,
representing 14.9% of our capital stock, from Repsol YPF for U.S.$2,235 million (the “Petersen Transaction”). In addition, Repsol
YPF also granted options to Enrique Eskenazi, Sebastián Eskenazi, Ezequiel Eskenazi Storey and Matías Eskenazi Storey,
shareholders of Petersen Energía, or to companies that are, directly or indirectly, wholly-controlled by any of them (the “Option
Beneficiaries”) to purchase up to an additional 10.1% of our outstanding capital stock within four years (the “Petersen Options”). On
May 20, 2008, Petersen Energía Inversora S.A. (“PEISA”) exercised an option to purchase shares representing 0.1% of our capital
stock. Additionally, PEISA launched a tender offer to purchase all of the shares of YPF that were not already owned by them at a
price of U.S.$49.45 per share or ADS. Repsol, pursuant to its first option agreement with Petersen Energía, had stated that it would
not tender YPF shares to PEISA. The offer period commenced on September 11, 2008 and expired on October 20, 2008. A total of
1,816,879 shares (including Class D shares and ADSs), representing approximately 0.462% of our total shares outstanding, have been
tendered.
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Memorandum and Articles of Association
YPF’s by-laws were approved by National Executive Decree No. 1,106, dated May 31, 1993, and notarized by public deed
No. 175, dated June 15, 1993 at the National Notary Public Office, sheet 801 of the National Registry, and registered at the Inspection
Board of Legal Entities of the Argentine Republic on the same date, June 15, 1993 under number 5,109 of the book of Corporations
number 113, volume “A.”
For a detailed description of YPF’s object and purpose, see “Item 4. Information on the Company.” YPF’s object is set forth in
Section 4 of its by-laws. Copies of the by-laws, which have been filed as described in “Exhibit Index” in this annual report, are also
available at the offices of YPF.
Pursuant to Argentine Corporations Law No. 19,550 (the “Corporations Law”), the Board of Directors or the Statutory Audit
Committee (as defined below) shall call either annual general or extraordinary shareholders’ meetings in the cases provided by laws
and whenever they consider appropriate. Shareholders representing not less than five percent of YPF’s capital stock may also request
that a shareholders’ meeting be called.
A shareholders’ meeting shall be called at least twenty days prior to the meeting date by notice published in the legal
publications journal for a period of five days. The notice shall include the nature, date, time and place of the meeting, the agenda to be
discussed and the specific requirements shareholders must meet to attend the meeting.
In order to attend the meeting, shareholders must obtain a deposit certificate from a broker or from the depository trust company.
This certificate will allow each shareholder to be registered in the attendance book which closes three business days before the date
on which the meeting will be held. YPF will issue to each shareholder a deposit certificate required for admission into the meeting.
Shares certified and registered in the attendance book shall not be disposed of before the meeting is held unless the corresponding
deposit is cancelled.
Directors, members of the Statutory Audit Committee and senior managers are both entitled and required to attend all
shareholders’ meetings. These persons may only exercise voting power to the extent they have been previously registered as
shareholders, in accordance with the provisions described in the above paragraph. Nevertheless, these persons are not allowed to vote
on any proposal regarding to the approval of their management duties or their removal for cause.
Shareholders’ Meetings
Pursuant to the Argentine Corporations Law, the Board of Directors or the Supervisory Committee shall call either annual
ordinary or extraordinary shareholders’ meetings in the cases provided by laws and whenever they consider appropriate. Shareholders
representing not less than 5% of our capital stock may also request that a shareholders’ meeting be called.
Shareholders’ meetings may be ordinary meetings or extraordinary meetings. We are required to convene and hold an ordinary
meeting of shareholders within four months of the close of each fiscal year to consider the matters specified in the first two
paragraphs of Section 234 of the Argentine Corporations Law, such as the approval of our financial statements, allocation of net
income for such fiscal year, approval of the reports of the Board of Directors and the Audit Committee and election, performance and
remuneration of directors and members of the Supervisory Committee. In addition, pursuant to the Transparency Decree, at ordinary
shareholders’ meetings, shareholders must consider (i) the disposition of, or creation of any lien over, assets as long as such decision
has not been performed in the ordinary course of business and (ii) the execution of administration or management agreements and
whether to approve any agreement by virtue of which the assets or services provided to us are paid partial or totally with a percentage
of our income, results or earnings, if the payment is material when measured against the volume of the ordinary course of business
and our shareholders’ equity. Other matters which may be considered at an ordinary shareholders’ meeting convened and held at any
time include the responsibility of directors and members of the Supervisory Committee, capital increases and the issuance of certain
notes. Extraordinary shareholders’ meetings may be called at any time to consider matters beyond the authority of an ordinary
meeting including, without limitation, the amendment of our bylaws, issuance of debentures, early dissolution, merger, spin-off,
reduction of capital stock and redemption of shares, transformation from one type of entity to another and limitation or suspension of
shareholders’ preemptive rights.
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Shareholders’ meetings may be called by the Board of Directors or the members of the Supervisory Committee whenever
required by law or whenever they deem it necessary. Also, the Board of Directors or the members of the Supervisory Committee are
required to call shareholders’ meetings upon the request of shareholders representing an aggregate of at least five percent of our
outstanding share capital, in which case the meeting must take place within 40 days of such shareholders’ request. If the board or the
Supervisory Committee fails to call a meeting following such a request, a meeting may be ordered by the CNV or by the courts.
Notices of meetings
Notice of shareholders’ meetings must be published for five days in the Official Gazette, in an Argentina newspaper of wide
circulation and in the bulletin of the Buenos Aires Stock Exchange, at least 20 but not more than 45 days prior to the date on which
the meeting is to be held. Such notice must include information regarding the type of meeting to be held, the date, time and place of
such meeting and the agenda. If a quorum is not available at such meeting, a notice for a meeting on second call, which must be held
within 30 days of the date on which the first meeting was called, must be published for three days at least eight days before the date of
the meeting on second call. The above-described notices of shareholders’ meetings may be effected simultaneously for the meeting on
second call to be held on the same day as the first meeting, only in the case of ordinary meetings. Shareholders’ meetings may be
validly held without notice if all the shares of our outstanding share capital are present and resolutions are adopted by unanimous vote
of shares entitled to vote.
Quorum and voting requirements
Except as described below, the quorum for ordinary meetings of shareholders on first call is a majority of the shares entitled to
vote, and action may be taken by the affirmative vote of an absolute majority of the shares present that are entitled to vote on such
action. If a quorum is not available at the first meeting, a meeting on second call may be held at which action may be taken by the
holders of an absolute majority of the shares present, regardless of the number of such shares. The quorum for an extraordinary
shareholders’ meeting on first call is 60% of the shares entitled to vote, and if such quorum is not available, a meeting or second call
may be held, at which action may be taken by the holders of an absolute majority of the shares present, regardless of the number of
such shares.
Our bylaws establish that in order to approve (i) the transfer of our domicile outside Argentina, (ii) a fundamental change of the
corporate purpose set forth in our bylaws, (iii) delisting of our shares in the BASE or NYSE, and (iv) a spin-off by us, when as a
result of such spin-off more than 25% of our assets are transferred to the resulting corporations, a majority of the shares representing
75% or more of our voting shares is required, both in first and second call. Our bylaws also establish that in order to approve
(i) certain amendments to our bylaws concerning tender offers of shares (as described below), (ii) the granting of certain guarantees in
favor of our shareholders, (iii) full stop of refining, commercialization and distribution activities and (iv) rules regarding appointment,
election and number of members of our Board of Directors, a majority of the shares representing 66% or more of our voting shares is
required, both in first and second call, as is the affirmative vote of the Class A Shares, granted in a special meeting of the holders of
such shares.
In order to attend the meeting, shareholders must deposit their shares, or a certificate representing book-entry shares issued by a
bank, clearing house or depository trust company, with us. This certificate will allow each shareholder to be registered in the
attendance book which closes three business days before the date on which the meeting will be held. We will issue to each
shareholder a deposit certificate required for admission into the meeting. Shares certified and registered in the attendance book may
not be disposed of before the meeting is held unless the corresponding deposit is cancelled.
Under the Corporations Law, foreign companies that own shares in an Argentine corporation are required to register with the
Superintendent of Corporations (Inspección General de Justicia, or IGJ) in order to exercise certain shareholder rights, including
voting rights. Such registration requires the filing of certain corporate and accounting documents. Accordingly, if a shareholder owns
Class D shares directly (rather than in the form of ADSs) and is a non-Argentine company, and such shareholder fails to register with
the IGJ, the ability to exercise its rights as a holder of Class D shares may be limited.
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Directors, members of the Supervisory Committee and senior managers are both entitled and required to attend all shareholders’
meetings. These persons may only exercise voting power to the extent they have been previously registered as shareholders, in
accordance with the provisions described in the above paragraph. Nevertheless, these persons are not allowed to vote on any proposal
regarding the approval of their management duties or their removal for cause.
Shareholders who have a conflict of interest with us and who do not abstain from voting may be liable for damages to us, but
only if the transaction would not have been approved without such shareholders’ votes. Furthermore, shareholders who willfully or
negligently vote in favor of a resolution that is subsequently declared void by a court as contrary to the law or our bylaws may be held
jointly and severally liable for damages to us or to other third parties, including shareholders.
Directors
Election of Directors
Our business and affairs are managed by the Board of Directors in accordance with our bylaws and the Argentine Corporations
Law No. 19,550 (the “Argentine Corporations Law”). Our bylaws provide for a Board of Directors of 11 to 21 members, and up to an
equal number of alternates. Alternates are those elected by the shareholders to replace directors who are absent from meetings or who
are unable to exercise their duties, when and for whatever period appointed to do so by the Board of Directors. Alternates have the
responsibilities, duties and powers of directors only if and to the extent they are called upon to attend board meetings or for such
longer period as they may act as replacements.
Directors shall hold office from one to three years, as determined by the shareholders’ meetings. Since the shareholders’ general
ordinary and extraordinary meeting held on March 7, 2008, our Board of Directors is composed of 17 directors and 14 alternates.
In accordance with our bylaws, the Argentine government, sole holder of Class A shares, is entitled to elect one director and one
alternate. The current director representative of Class A shares was appointed to serve up to a one-year term.
Under the Argentine Corporations Law, a majority of our directors must be residents of Argentina. All directors must establish a
legal domicile in Argentina for service of notices in connection with their duties.
Our bylaws require the Board of Directors to meet at least once every quarter in person or by video conference, and a majority
of directors is required in order to constitute a quorum. If a quorum is not met one hour after the start time set for the meeting, the
President or his substitute may invite alternates of the same class as that of the absent directors to join the meeting, or call a meeting
for another day. Resolutions must be adopted by a majority of the directors present, and the President or his substitute is entitled to
cast the deciding vote in the event of a tie.
The composition of certain of our Board committees, as well as the roles of certain members thereof, will change upon the
implementation of the requirements of the shareholders’ agreement between Repsol YPF and Petersen Energía. See “Item 7. Major
Shareholders and Related Party Transactions—Shareholders’ Agreement.”
Duties and liabilities of Directors
In accordance with the Argentine Corporations Law, directors have an obligation to perform their duties with loyalty and with
the diligence of a prudent business person. Directors are jointly and severally liable to us, our shareholders and to third parties for the
improper performance of their duties, for violating the law or our bylaws or regulations, and for any damage caused by fraud, abuse
of authority or gross negligence. Specific duties may be assigned to a director by the bylaws, company regulations, or by resolution of
the shareholders’ meeting. In such cases, a director’s liability will be determined by reference to the performance of such duties.
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Only shareholders, through a shareholders’ meeting may authorize directors to engage in activities in competition with us.
Transactions or contracts between directors and us in connection with our activities are permitted to the extent they are performed
under fair market conditions. Transactions that do not comply with the Argentine Corporations Law require prior approval of the
Board of Directors or the Supervisory Committee. In addition, these transactions must be subsequently approved by the shareholders
at a general meeting. If our shareholders do not approve the relevant transaction, the directors and members of the Supervisory
Committee who approved such transactions are jointly and severally liable for any damages caused to us.
Any director whose personal interests are adverse to ours shall notify the Board of Directors and the Supervisory Committee and
abstain from voting on such matters. Otherwise, such director may be held liable to us.
A director will not be liable if, notwithstanding his presence at the meeting at which a resolution was adopted or his knowledge
of such resolution, a written record exists of his opposition to such resolution and he reports his opposition to the Supervisory
Committee before any complaint against him is brought before the Board of Directors, the Supervisory Committee, the shareholders’
meeting, the appropriate governmental agency or the courts. Any liability of a director to us terminates upon approval of the director’s
actions by the shareholders at a general meeting, provided that shareholders representing at least 5% of our capital stock do not object
and provided further that such liability does not result from a violation of the law, our bylaws or other regulations.
Foreign Investment Legislation
Under the Argentine Foreign Investment Law, as amended, and its implementing regulations (together, referred to as the
“Foreign Investment Legislation”), the purchase of shares of an Argentine corporation by an individual or legal entity domiciled
abroad or by an Argentine company of “foreign capital” (as defined in the Foreign Investment Legislation) constitutes foreign
investment. Currently, foreign investment in industries other than broadcasting is not restricted, and no prior approval is required to
make foreign investments. No prior approval is required in order to purchase Class D Shares or ADSs or to exercise financial or
corporate rights thereunder.
Dividends
Under our bylaws, all Class A, Class B, Class C and Class D shares rank equally with respect to the payment of dividends. All
shares outstanding as of a particular record date share equally in the dividend being paid, except that shares issued during the period
to which a dividend relates may be entitled only to a partial dividend with respect to such period if the shareholders’ meeting that
approved the issuance so resolved. No provision of our bylaws or of the Argentine Corporations Law gives rise to future special
dividends only to certain shareholders.
The amount and payment of dividends are determined by majority vote of our shareholders voting as a single class, generally,
but not necessarily, on the recommendation of the Board of Directors. In addition, under the Argentine Corporations Law, our Board
of Directors has the right to declare dividends subject to further approval of shareholders at the next shareholders’ meeting.
We have distributed over 85% of our net income attributable to the years 2001 through 2006 in dividends to our shareholders.
We have not adopted a formal dividend policy. Any dividend policy adopted will be subject to a number of factors, including our debt
service requirements, capital expenditure and investment plans, other cash requirements and such other factors as may be deemed
relevant at the time. In addition, Repsol YPF and Petersen Energía have agreed in the shareholders’ agreement entered into by them in
connection with the Petersen Transaction to effect the adoption of a dividend policy under which we would distribute 90% of our net
income as dividends, starting with our net income for 2007. They have also agreed to vote in favor of corporate resolutions requiring
us to distribute a special dividend of U.S.$850 million, payable jointly with the ordinary dividends in 2008 and 2009. See “Item 7.
Major Shareholders and Related Party Transactions—Shareholders’ Agreement.”
The following table sets forth for the periods and dates indicated, the quarterly dividend payments made by us, expressed in
pesos.
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Year Ended December 31,
2002
2003
2004
2005
2006
2007
2008
2009
Pesos Per Share/ADS
1Q 2Q 3Q 4Q Total
— — — 4.00 4.00
— 5.00 2.60 — 7.60
— 9.00 — 4.50 13.50
— 8.00 — 4.40 12.40
— 6.00 — — 6.00
6.00 — — — 6.00
10.76 6.50 — 6.35 23.61
— 6.30 — — 6.30
On February 6, 2008, our Board of Directors approved a dividend of Ps.10.76 per share or per ADS, to be paid out of the reserve
for future dividends approved by our shareholders’ meeting held on April 13, 2007. The dividend was paid on February 29, 2008.
On April 24, 2008, our shareholder’s meeting approved a dividend of Ps.6.50 per share or per ADS, which was paid in May
2008. In addition, a reserve for future dividends of Ps.4,003 million was approved.
On November 6, 2008, our Board of Directors approved a dividend of Ps.6.35 per share or per ADS, to be paid out of the
reserve for future dividends approved by our shareholder’s meeting held on April 24, 2008. Such dividend was paid on November 13,
2008.
On April 28, 2009, our shareholder’s meeting approved the creation of a statutory reserve for future dividends in the amount of
Ps.5,901 million, and empowered the Board of Directors to decide all matters with respect to its distribution. Our Board of Directors
approved a dividend of Ps.6.30 per share or per ADS, which was paid out of the reserve for future dividends on May 12, 2009.
Amount Available for Distribution
Under Argentine law, dividends may be lawfully paid only out of our retained earnings reflected in the annual audited financial
statements prepared in accordance with Argentine GAAP and CNV regulations and approved by a shareholders’ meeting. The Board
of Directors of a listed Argentine company may declare interim dividends, in which case each member of the Board and of the
Supervisory Committee is jointly and severally liable for the repayment of such dividend if retained earnings at the close of the fiscal
year in which the interim dividend was paid would not have been sufficient to permit the payment of such dividend.
According to the Argentine Corporations Law and our by-laws, we are required to maintain a legal reserve of 20% of our then-
outstanding capital stock. The legal reserve is not available for distribution to shareholders.
Under our bylaws, our net income is applied as follows:
•
first, an amount equivalent to at least 5% of net income, plus (less) prior year adjustments, is segregated to build the legal
reserve until such reserve is equal to 20% of our subscribed capital;
•
•
•
second, an amount is segregated to pay the accrued fees of the members of the Board of Directors and of the Supervisory
Committee (see “Item 6. Directors, Senior Management and Employees—Compensation of Directors and Officers”);
third, an amount is segregated to pay dividends on preferred stock, if any; and
fourth, the remainder of net income may be distributed as dividends to common shareholders or allocated for voluntary or
contingent reserves as determined by the shareholders’ meeting.
Our Board of Directors submits our financial statements for the preceding fiscal year, together with reports thereon by the
Supervisory Committee and the auditors, at the annual ordinary shareholders’ meeting for approval. Within four months of the end of
each fiscal year, an ordinary shareholders’ meeting must be held to approve our yearly financial statements and determine the
allocation of our net income for such year.
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Under applicable CNV regulations, cash dividends must be paid to shareholders within 30 days of the shareholders’ meeting
approving such dividends or, in the case in which the shareholders’ meeting delegates the authority to distribute dividends to the
Board of Directors, within 30 days of the Board of Directors’ meeting approving such dividends. In the case of stock dividends,
shares are required to be delivered within three months of our receipt of notice of the authorization of the CNV for the public offering
of the shares arising from such dividends. In accordance with the Argentine Commercial Code, the statute of limitations to the right of
any shareholder to receive dividends declared by the shareholders’ meeting is three years from the date on which it has been made
available to the shareholder.
Owners of ADSs are entitled to receive any dividends payable with respect to the underlying Class D shares. Cash dividends are
paid to the Depositary in pesos, directly or through The Bank of New York S.A., although we may choose to pay cash dividends
outside Argentina in a currency other than pesos, including U.S. dollars. The Deposit Agreement provides that the Depositary shall
convert cash dividends received by the Depositary in pesos to dollars, to the extent that, in the judgment of the Depositary, such
conversion may be made on a reasonable basis, and, after deduction or upon payment of the fees and expenses of the Depositary, shall
make payment to the holders of ADSs in dollars.
Preemptive and Accretion Rights
Except as described below, in the event of a capital increase, a holder of existing shares of a given class has a preferential right
to subscribe a number of shares of the same class sufficient to maintain the holder’s existing proportionate holdings of shares of that
class. Preemptive rights also apply to issuances of convertible securities, but do not apply upon conversion of such securities.
Pursuant to the Argentine Corporations Law, in exceptional cases and on a case-by-case basis when required for our best interest, the
shareholders at an extraordinary meeting with a special majority may decide to limit or suspend shareholders’ preemptive rights,
provided that such limitation or suspension of the shareholders’ preemptive rights is included in the agenda of the meeting and the
shares to be issued are paid in kind or are issued to cancel preexisting obligations.
Under our bylaws, we may only issue securities convertible into Class D shares, and the issuance of any such convertible
securities must be approved by a special meeting of the holders of Class D shares.
Holders of ADSs may be restricted in their ability to exercise preemptive rights if a registration statement under the Securities
Act relating thereto has not been filed or is not effective. Preemptive rights are exercisable during the 30 days following the last
publication of notice informing shareholders of their right to exercise such preemptive rights in the Official Gazette and in an
Argentine newspaper of wide circulation. Pursuant to the Argentine Corporations Law, if authorized by an extraordinary
shareholders’ meeting, companies authorized to make public offering of their securities, such as us, may shorten the period during
which preemptive rights may be exercised from 30 to ten days following the publication of notice of the offering to the shareholders
to exercise preemptive rights in the Official Gazette and a newspaper of wide circulation in Argentina. Pursuant to our bylaws, the
terms and conditions on which preemptive rights may be exercised with respect to Class C shares may be more favorable than those
applicable to Class A, Class B and Class D shares.
Shareholders who have exercised their preemptive rights have the right to exercise accretion rights, in proportion to their
respective ownership, with respect to any unpreempted shares, in accordance with the following procedure.
•
•
Any unpreempted Class A shares will be converted into Class D shares and offered to holders of Class D shares that
exercised preemptive rights and indicated their intention to exercise additional preemptive rights with respect to any such
Class A shares.
Any unpreempted Class B shares will be assigned to those provinces that exercised preemptive rights and indicated their
intention to exercise accretion rights with respect to such shares; any excess will be converted into Class D shares and
offered to holders of Class D shares that exercised preemptive rights and indicated their intention to exercise accretion
rights with respect to any such Class D shares.
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•
Any unpreempted Class C shares will be assigned to any PPP participants who exercised preemptive rights and indicated
their intention to exercise accretion rights with respect to such shares; any excess will be converted into Class D shares and
offered to holders of Class D shares that exercised preemptive rights and indicated their intention to exercise accretion
rights with respect to any such Class C shares.
Any unpreempted rights will be assigned to holders of Class D shares that exercised their preemptive rights and indicated
their intention to exercise accretion rights; any remaining Class D shares will be assigned pro rata to any holder of shares
of another class that indicated his or her intention to exercise accretion rights.
•
The term for exercise of additional preemptive rights is the same as that fixed for exercising preemptive rights.
Voting of the Underlying Class D Shares
Under the by-laws, each Class A, Class B, Class C and Class D share entitles the holder thereof to one vote at any meeting of the
shareholders of YPF, except that a specified number of Directors is elected by majority vote of each class (except as provided below).
See “—Directors—Election of Directors” above for information regarding the number of directors that holders of each class of shares
are entitled to elect and certain other provisions governing nomination and election of directors. The Depositary has agreed that, as
soon as practicable after receipt of a notice of any meeting of shareholders of YPF, it will mail a notice to the holders of ADRs,
evidencing ADSs, registered on the books of the Depositary which will contain the following:
•
•
•
a summary in English of the information contained in the notice of such meeting;
a statement that the holders of ADRs at the close of business on a specified record date will be entitled, subject to any
applicable provisions of Argentine law, the by-laws of YPF and the Class D Shares, to instruct the Depositary to exercise
the voting rights, if any, pertaining to the Class D Shares evidenced by their respective ADSs; and
a statement as to the manner in which such instructions may be given to the Depositary.
The Depositary shall endeavor, to the extent practicable, to vote or cause to be voted the amount of Class D Shares represented
by the ADSs in accordance with the written instructions of the holders thereof. The Depositary will vote Class D Shares, as to which
no instructions are received, in accordance with the recommendations of the Board of Directors of YPF. The Depositary will not vote
Class D Shares, as to which no instructions have been received, in accordance with the recommendations of the Board of Directors,
however, unless YPF has provided to the Depositary an opinion of Argentine counsel stating that the action recommended by the
Board of Directors is not illegal under Argentine law or contrary to the by-laws or Board regulations of YPF. In addition, the
Depositary will, if requested by the Board of Directors and unless prohibited by any applicable provision of Argentine law, deposit all
Class D Shares represented by ADSs for purposes of establishing a quorum at meetings of shareholders, whether or not voting
instructions with respect to such shares have been received.
Voting
Under our bylaws, each Class A, Class B, Class C and Class D share entitles the holder thereof to one vote at any meeting of our
shareholders, except that the Class A shares (i) vote separately with respect to the election of our Board of Directors and are entitled
to appoint one director and one alternate director and (ii) have certain veto rights, as described below.
Class A Veto Rights
Under the bylaws, so long as any Class A shares remain outstanding, the affirmative vote of such shares is required in order to:
(i) decide upon the merger of the Company; (ii) approve any acquisition of shares by a third party representing more than 50% of the
Company’s capital; (iii) transfer to third parties all the exploitation rights
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granted to the Company pursuant to the Hydrocarbons Law, applicable regulations thereunder or the Privatization Law, if such
transfer would result in the total suspension of the Company’s exploration and production activities; (iv) voluntarily dissolve the
Company and (v) transfer our legal or fiscal domicile outside Argentina. The actions described in clauses (iii) and (iv) above also
require prior approval of the Argentine Congress through enactment of a law.
Reporting Requirements
Pursuant to our bylaws, any person who, directly or indirectly, through or together with its affiliates and persons acting in
concert with it, acquires Class D shares or securities convertible into Class D shares, so that such person controls more than 3% of the
Class D shares, is required to notify us of such acquisition within five days of such acquisition, in addition to complying with any
requirements imposed by any other authority in Argentina or elsewhere where our Class D shares are traded. Such notice must
include the name or names of the person and persons, if any, acting in concert with it, the date of the acquisition, the number of shares
acquired, the price at which the acquisition was made, and a statement as to whether it is the purpose of the person or persons to
acquire a greater shareholding in, or control of, us. Each subsequent acquisition by such person or persons requires a similar notice.
Certain Provisions Relating to Acquisitions of Shares
Pursuant to our bylaws:
•
each acquisition of shares or convertible securities, as a result of which the acquirer, directly or indirectly through or
together with its affiliates and persons acting in concert with it (collectively, an “Offeror”), would own or control shares
that, combined with such Offeror’s prior holdings, if any, of shares of such class, would represent:
•
15% or more of the outstanding capital stock, or
•
20% or more of the outstanding Class D shares; and
•
each subsequent acquisition by an Offeror (other than subsequent acquisitions by an Offeror owning or controlling more
than 50% of our capital prior to such acquisition) (collectively, “Control Acquisitions”), must be carried out in accordance
with the procedure described under “Restrictions on Control Acquisitions” below.
In addition, any merger, consolidation or other combination with substantially the same effect involving an Offeror that has
previously carried out a Control Acquisition, or by any other person or persons, if such transaction would have for such person or
persons substantially the same effect as a Control Acquisition (“Related Party Share Acquisition”), must be carried out in accordance
with the provisions described under “—Restrictions on Related Party Share Acquisitions.” The voting, dividend and other distribution
rights of any shares acquired in a Control Acquisition or a Related Party Share Acquisition carried out other than in accordance with
such provisions will be suspended, and such shares will not be counted for purposes of determining the existence of a quorum at
shareholders’ meetings.
Restrictions on Control Acquisitions
Prior to consummating any Control Acquisition, an Offeror must obtain the approval of the Class A shares, if any are
outstanding, and make a public tender offer for all of our outstanding shares and convertible securities. The Offeror will be required
to provide us with notice of, and certain specified information with respect to, any such tender offer at least fifteen business days prior
to the commencement of the offer, as well as the terms and conditions of any agreement with any shareholder proposed for the
Control Acquisition (a “Prior Agreement”). We will send each shareholder and holder of convertible securities a copy of such notice
at the Offeror’s expense. The Offeror is also required to publish a notice containing substantially the same information in a newspaper
of general circulation in Argentina, New York and each other city in which our securities are traded on an exchange or other
securities market, at least once per week, beginning on the date notice is provided to us, until the offer expires.
157
Our Board of Directors shall call a special meeting of the Class A shares to be held ten business days following the receipt of
such notice for the purpose of considering the tender offer. If the special meeting is not held, or if the shareholders do not approve the
tender offer at such meeting, neither the tender offer nor the proposed Control Acquisition may be completed.
The tender offer must be carried out in accordance with a procedure specified in our bylaws and in accordance with any
additional or stricter requirements of jurisdictions, exchanges or markets in which the offer is made or in which our securities are
traded. Under the bylaws, the tender offer must provide for the same price for all shares tendered, which price may not be less than
the highest of the following (the “Minimum Price”):
(i) the highest price paid by, or on behalf of, the Offeror for Class D shares or convertible securities during the two years
prior to the notice provided to us, subject to certain antidilution adjustments with respect to Class D shares;
(ii) the highest closing price for the Class D shares on the BASE during the thirty-day period immediately preceding the
notice provided to us, subject to certain antidilution adjustments;
(iii) the price resulting from clause (ii) above multiplied by a fraction, the numerator of which shall be the highest price
paid by or on behalf of the Offeror for Class D shares during the two years immediately preceding the date of the notice
provided to us and the denominator of which shall be the closing price for the Class D shares on the BASE on the date
immediately preceding the first day in such two-year period on which the Offeror acquired any interest in or right to any Class D
shares, in each case subject to certain antidilution adjustments; and
(iv) the net earnings per Class D share during the four most recent full fiscal quarters immediately preceding the date of the
notice provided to us, multiplied by the higher of (A) the price/earnings ratio during such period for Class D shares (if any) and
(B) the highest price/earnings ratio for us in the two-year period immediately preceding the date of the notice provided to us, in
each case determined in accordance with standard practices in the financial community.
Any such offer must remain open for a minimum of 20 days and a maximum of 30 days following the provision of notice to the
shareholders or publication of the offer, plus an additional period of a minimum of five days and a maximum of ten days required by
CNV regulations, and shareholders must have the right to withdraw tendered shares at any time up until the close of the offer.
Following the close of such tender offer, the Offeror will be obligated to acquire all tendered shares or convertible securities, unless
the number of shares tendered is less than the minimum, if any, upon which such tender offer was conditioned, in which case the
Offeror may withdraw the tender offer. Following the close of the tender offer, the Offeror may consummate any Prior Agreement
within thirty days following the close of the tender offer; provided, however, that if such tender offer was conditioned on the
acquisition of a minimum number of shares, the Prior Agreement may be consummated only if such minimum was reached. If no
Prior Agreement existed, the Offeror may acquire the number of shares indicated in the notice provided to us on the terms indicated in
such notice, to the extent such number of shares were not acquired in the tender offer, provided that any condition relating to a
minimum number of shares tendered has been met.
Restrictions on Related Party Share Acquisitions
The price per share to be received by each shareholder in any Related Party Share Acquisition must be the same as, and must not
be less, than the highest of the following:
(i) the highest price paid by or on behalf of the party seeking to carry out the Related Party Share Acquisition (an
“Interested Shareholder”) for (A) shares of the class to be transferred in the Related Party Share Acquisition (the “Class”) within
the two-year period immediately preceding the first public announcement of the Related Party Share Acquisition or (B) shares of
the Class acquired in any Control Acquisition, in each case as adjusted for any stock split, reverse stock split, stock dividend or
other reclassification affecting the Class;
158
(ii) the highest closing sale price of shares of the Class on the BASE during the thirty days immediately preceding the
announcement of the Related Party Share Acquisition or the date of any Control Acquisition by the Interested Shareholder,
adjusted as described above;
(iii) the price resulting from clause (ii) multiplied by a fraction, the numerator of which shall be the highest price paid by or
on behalf of the Interested Shareholder for any share of the Class during the two years immediately preceding the announcement
of the Related Party Transaction and the denominator of which shall be the closing sale price for shares of the Class on the date
immediately preceding the first day in the two-year period referred to above on which the Interested Shareholder acquired any
interest or right in shares of the Class, in each case as adjusted as described above; and
(iv) the net earnings per share of the shares of the Class during the four most recent full fiscal quarters preceding the
announcement of the Related Party Transaction multiplied by the higher of the (A) the price/earnings ratio during such period
for the shares of the Class and (B) the highest price/earnings ratio for us in the two-year period preceding the announcement of
the Related Party Transaction, in each case determined in accordance with standard practices in the financial community.
In addition, any transaction that would result in the acquisition by any Offeror of ownership or control of more than 50% of our
capital stock, or that constitutes a merger or consolidation of us, must be approved in advance by the Class A shares while any such
shares remain outstanding.
Taxation
Argentine Tax Considerations
The following discussion is a summary of the material Argentine tax considerations relating to the purchase, ownership and
disposition of our Class D shares or ADSs.
Dividends tax
Dividends paid on our Class D shares or ADSs, whether in cash, property or other equity securities, are not subject to income
tax withholding, except for dividends paid in excess of our taxable accumulated income for the previous fiscal period, which are
subject to withholding at the rate of 35% in respect of such excess. This is a final tax and it is not applicable if dividends are paid in
shares (acciones liberadas) rather than in cash.
Capital gains tax
Capital gains recognized by non-resident individuals or entities from the sale, exchange or other disposition of our ADSs or
Class D Shares are not subject to Argentine income tax.
Personal assets tax
Argentine entities, including (i) individuals and undivided estates; (ii) foreign individuals and undivided estates; and (iii) foreign
entities, are responsible for the personal assets tax of 0.5% of the value of shares or ADSs held by such entities as of December 31 of
each year. The tax is levied on Argentine issuers of such shares or ADSs, such as us, and is based on the equity value (valor
patrimonial proporcional), or the book value, of the shares derived from the latest financial statements at December 31 of each year.
Pursuant to the Personal Assets Tax Law, we are entitled to seek reimbursement of such paid tax from the applicable shareholders,
including by withholding, foreclosing on the shares, or by withholding dividends.
159
Tax on debits and credits in bank accounts
Tax on debits and credits in bank accounts is levied, with certain exceptions, for debits and credits on checking accounts
maintained at financial institutions located in Argentina and other transactions that are used as a substitute for the use of checking
accounts. The general tax rate is 0.6% for each debit and credit, although in certain cases an increased rate of 1.2% or a decreased rate
may apply. The account holder may use up to 34% of the tax paid when the 0.6% rate is applicable, and up to 17% of the tax when
the 1.2% rate is applicable, as a credit against other federal taxes.
Value added tax
The sale, exchange or other disposition of our Class D shares or ADSs and the distribution of dividends are exempt from the
value added tax.
Transfer taxes
The sale, exchange or other disposition of our Class D shares or ADSs is not subject to transfer taxes.
Stamp taxes
Stamp taxes may apply in certain Argentine provinces in case transfer of our Class D shares or ADSs is performed or executed
in such jurisdictions by means of written agreements. Transfer of our Class D shares or ADSs is exempt from stamp tax in the City of
Buenos Aires.
Other taxes
There are no Argentine inheritance or succession taxes applicable to the ownership, transfer or disposition of our Class D shares
or ADSs. In addition, neither the minimum presumed income tax nor any local gross turnover tax is applicable to the ownership,
transfer or disposition of our Class D shares or ADSs.
In the case of litigation regarding the Class D shares or ADSs before a court of the City of Buenos Aires, a 3% court fee would
be charged, calculated on the basis of the claim. A 3% surcharge calculated on the amount of the court tax would also be imposed by
the City of Buenos Aires Attorneys Social Security Association.
Tax treaties
Argentina has tax treaties for the avoidance of double taxation currently in force with Australia, Austria, Belgium, Bolivia,
Brazil, Canada, Chile, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland and the
United Kingdom. There is currently no tax treaty or convention in effect between Argentina and the United States. It is not clear
when, if ever, a treaty will be ratified or entered into effect. As a result, the Argentine tax consequences described in this section will
apply, without modification, to a holder of our Class D shares or ADSs that is a U.S. resident. Foreign shareholders located in certain
jurisdictions with a tax treaty in force with Argentina may be (i) exempted from the payment of the personal assets tax and
(ii) entitled to apply for reduced withholding tax rates on payments to be made by Argentine parties.
United States Federal Income Tax Considerations
The following are the material U.S. federal income tax consequences of owning and disposing of our Class D shares or ADSs.
This discussion does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a particular
person’s decision to hold such securities.
This discussion applies only if you are a U.S. Holder (as defined below) and you hold our Class D shares or ADSs as capital
assets for tax purposes and it does not describe all of the tax consequences that may be relevant to holders subject to special rules,
such as:
•
certain financial institutions;
160
•
•
•
•
•
•
•
•
•
•
insurance companies;
dealers and traders in securities or foreign currencies;
persons holding Class D shares or ADSs as part of a hedge, “straddle,” wash sale, conversion transaction, integrated
transaction or similar transaction or persons entering into a constructive sale with respect to the class D shares or ADSs;
persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;
entities classified as partnerships for U.S. federal income tax purposes;
persons liable for the alternative minimum tax;
persons who acquired our Class D shares or ADSs pursuant to the exercise of an employee stock option or otherwise as
compensation;
persons holding Class D shares or ADSs in connection with a trade or business conducted outside of the United States;
tax-exempt organizations; or
persons holding Class D shares or ADSs that own or are deemed to own ten percent or more of our voting stock.
If an entity that is classified as a partnership for U.S. federal income tax purposes holds Class D shares or ADSs, the U.S. federal
income tax treatment of a partner will generally depend on the status of the partner and upon the activities of the partnership.
Partnerships holding Class D shares or ADSs and partners in such partnerships should consult their tax advisers as to the particular
U.S. federal income tax consequences of holding and disposing of the Class D shares or ADSs.
This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), administrative pronouncements,
judicial decisions and final, temporary and proposed Treasury regulations, all as of the date hereof. These laws are subject to change,
possibly on a retroactive basis. It is also based in part on representations by the Depositary and assumes that each obligation under the
Deposit Agreement and any related agreement will be performed in accordance with its terms.
You are a “U.S. Holder” if you are a beneficial owner of Class D shares or ADSs and are, for U.S. federal income tax purposes:
•
•
•
a citizen or individual resident of the United States;
a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any
political subdivision thereof; or
an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.
In general, if you own ADSs, you will be treated as the owner of the underlying shares represented by those ADSs for U.S.
federal income tax purposes. Accordingly, no gain or loss will be recognized if you exchange ADSs for the underlying shares
represented by those ADSs.
The U.S. Treasury has expressed concerns that parties to whom American depositary shares are released before shares are
delivered to the depositary (“pre-release”), or intermediaries in the chain of ownership between U.S. Holders and the issuer of the
security underlying the American depositary shares, may be taking actions that are inconsistent with the claiming of foreign tax
credits by U.S. Holders of American depositary shares. Such actions would also be inconsistent with the claiming of the reduced rate
of tax, described below, applicable to dividends
161
received by certain non-corporate holders. Accordingly, the analysis of the creditability of Argentine taxes, and the availability of the
reduced tax rate for dividends received by certain non-corporate holders, each described below, could be affected by actions taken by
such parties or intermediaries.
Please consult your own tax advisers concerning the U.S. federal, state, local and foreign tax consequences of purchasing,
owning and disposing of Class D shares or ADSs in your particular circumstances.
This discussion assumes that the Company is not, and will not become, a passive foreign investment company, as described
below.
Taxation of distributions
Distributions paid on Class D shares or ADSs, other than certain pro rata distributions of ordinary shares, will be treated as a
dividend to the extent paid out of current or accumulated earnings and profits (as determined under U.S. federal income tax
principles). Because the Company does not maintain calculations of earnings and profits under U.S. federal income tax principles, it
is expected that distributions will generally be reported to U.S. Holders as dividends. Subject to applicable limitations (including a
minimum holding period requirement) and the discussion above regarding concerns expressed by the U.S. Treasury, certain dividends
paid by qualified foreign corporations to certain non-corporate U.S. Holders in taxable years beginning before January 1, 2011 are
taxable at a maximum rate of 15%. A foreign corporation is treated as a qualified foreign corporation with respect to dividends paid
on stock that is readily tradable on an established securities market in the United States. You should consult your own tax advisers to
determine whether the favorable rate may apply to dividends you receive and whether you are subject to any special rules that limit
your ability to be taxed at this favorable rate. The amount of a dividend will include any amounts withheld by us in respect of
Argentine taxes. The amount of the dividend will be treated as foreign-source dividend income to you and will not be eligible for the
dividends-received deduction generally allowed to U.S. corporations under the Code.
Dividends paid in Argentine pesos will be included in your income in a U.S. dollar amount calculated by reference to the
exchange rate in effect on the date of your or in the case of ADSs, the Depositary’s receipt of the dividend, regardless of whether the
payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, you generally
should not be required to recognize foreign currency gain or loss in respect of the dividend income. You may have foreign currency
gain or loss if the dividend is converted into U.S. dollars after the date of its receipt.
Subject to applicable limitations (including a minimum holding period requirement) that may vary depending upon your
circumstances and subject to the discussion above regarding concerns expressed by the U.S. Treasury, Argentine income taxes
withheld from dividends on Class D shares or ADSs will be creditable against your U.S. federal income tax liability. The rules
governing the foreign tax credit are complex. You are urged to consult your tax advisers regarding the availability of the foreign tax
credit under your particular circumstances.
Sale or other disposition of Class D shares or ADSs
For U.S. federal income tax purposes, gain or loss you realize on the sale or other disposition of Class D shares or ADSs will be
capital gain or loss, and will be long-term capital gain or loss if you held the Class D shares or ADSs for more than one year. The
amount of your gain or loss will equal the difference between the amount realized on the disposition and your tax basis in the Class D
shares or ADSs disposed of. Such gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes. The
deductibility of capital losses is subject to limitations.
Passive foreign investment company rules
The Company believes that it was not a “passive foreign investment company” (“PFIC”) for U.S. federal income tax purposes
for the taxable year of 2008, and does not expect to be considered one in the foreseeable future. However, since PFIC status depends
upon the composition of a company’s income and assets and the market value of its assets (including, among other things, less than
25 percent owned equity investments) from time to time, there can be no assurance that the Company will not be considered a PFIC
for any taxable year. If the Company were treated as a PFIC for any taxable year during which you held a Class D share or ADS,
certain adverse consequences could apply to you.
162
If the Company is treated as a PFIC for any taxable year during which you held a Class D share or ADS, any gain you recognize
on a sale or other disposition of the Class D share or ADS would be allocated ratably over your holding period for the Class D share
or ADS. The amounts allocated to the taxable year of the disposition and to any year before the Company became a PFIC would be
taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for
individuals or corporations, as appropriate, and an interest charge would be imposed on the amount allocated to such taxable year.
Further, any distribution in respect of ADSs or ordinary shares in excess of 125 percent of the average of the annual distributions on
ADSs or ordinary shares received by you during the preceding three years or your holding period, whichever is shorter, would be
subject to taxation in the manner just described for gains.
In addition, if the Company were to be treated as a PFIC in a taxable year in which it pays dividends or the prior taxable year,
the 15% dividend rate discussed above with respect to dividends paid to certain non-corporate holders would not apply.
Information reporting and backup withholding
Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial
intermediaries generally are subject to information reporting and may be subject to backup withholding unless (i) you are a
corporation or other exempt recipient or (ii) in the case of backup withholding, you provide a correct taxpayer identification number
and certify that you are not subject to backup withholding.
The amount of any backup withholding from a payment to you will be allowed as a credit against your U.S. federal income tax
liability and may entitle you to a refund, provided that the required information is timely furnished to the Internal Revenue Service.
Available Information
YPF is subject to the information requirements of the Exchange Act, except that as a foreign issuer, YPF is not subject to the
proxy rules or the short-swing profit disclosure rules of the Exchange Act. In accordance with these statutory requirements, YPF files
or furnishes reports and other information with the SEC. Reports and other information filed or furnished by YPF with the SEC may
be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N. E., Washington, D.C. 20549, and
at the SEC’s Regional Offices at Northwestern Atrium Center, 500 West Madison Street, Suit 1400, Chicago, Illinois 60611-2511.
Copies of such material may be obtained by mail from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C.
20549, at prescribed rates. You may obtain information on the operation of the Public Reference Section by calling the SEC at 1-800-
732-0330. The SEC maintains a World Wide Web site on the Internet at http://www.sec.gov that contains reports and information
statements and other information regarding us. Such reports and other information may also be inspected at the offices of the New
York Stock Exchange, 11 Wall Street, New York, New York 10005, on which YPF’s American Depositary Shares are listed.
163
ITEM 11. Quantitative and Qualitative Disclosures about Market Risk
The following quantitative and qualitative information is provided about financial instruments to which we are a party as of
December 31, 2008, and from which we may incur future gains or losses from changes in market, interest rates, foreign exchange
rates or commodity prices. We do not enter into derivative or other financial instruments for trading purposes.
This discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results could vary
materially as a result of a number of factors including those set forth in “Item 3. Key Information—Risk Factors.”
Foreign currency exposure
We generally follow a policy of not hedging our debt obligations in U.S. dollars due to the fact that, in 1991, the Argentine
government instituted a set of economic reforms known as the “Convertibility Plan,” the centerpiece of which was a fixed one-to-one
rate of exchange between the Argentine peso and the U.S. dollar. Although in view of the Argentine economic crisis the Argentine
authorities implemented a number of monetary and exchange control measures, including the abolishment of the Convertibility Law,
we have still not hedged our U.S. dollar debt obligations to date. In addition, our costs and receipts denominated in currencies other
than the Argentine peso, including the U.S. dollar, often do not match. As a result, we are currently exposed to risks associated with
changes in foreign currency exchange rates. See “Item 3. Key Information—Risk Factors—Risks Relating to Argentina—We may be
exposed to fluctuations in foreign exchange rates.”
The table below provides information about our assets and liabilities denominated in currencies other than pesos (principally
U.S. dollars) that may be sensitive to changes in foreign exchange rates, as of December 31, 2008.
Assets
Accounts payable
Debt
Other Liabilities
Expected Maturity Date
Less than 1
year
1-3 years
3-5 years
More than 5
years and
undetermined
1,037
1,347
639
121
(in millions of U.S. dollars)
38
216
100
7
—
282
200
7
52
421
65
351(1)
Total
1,127
2,266
1,058
486
(1)
Includes U.S.$331 million corresponding to reserves with undetermined maturity.
Interest rate exposure
Our objective in borrowing under fixed rate debt is to satisfy capital requirements that minimize our exposure to interest rate
fluctuations. To realize our objectives, we have borrowed under fixed rate debt instruments, based on the availability of capital and
prevailing market conditions.
The table below provides information about our assets and liabilities as of December 31, 2008 that may be sensitive to changes
in interest rates.
Expected Maturity Date
Assets
Fixed rate
Other Receivables (Related parties)
Less than 1
year
1 – 2
years
2 – 3
years
3 – 4
years
4 – 5
years
(in millions of pesos)
More
than 5
years Total
Fair
Value
92 108 — — — — 200
182
164
Interest rate
Liabilities
Variable rate
Related parties
Interest rate
Fixed rate
YPF’s Negotiable Obligations
Interest rate
Other Short-term debt
Interest rate
Less than 1
year
1 – 2
years
6.54%
6.54%
Expected Maturity Date
2 – 3
3 – 4
years
years
(in millions of pesos)
4 – 5
years
More
than 5
years
Total
Fair
Value
—
693
343
— — —
1,036 1,036
Libor +2% Libor +2%
349
9.13%-10.0%
2.811
3.37%-27.5%
—
—
—
— —
224
10.0%
573
494
—
— — —
2,811 2,811
ITEM 12. Description of Securities Other than Equity Securities
Not applicable.
165
ITEM 13. Defaults, Dividend Arrearages and Delinquencies
None.
PART II
ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
None.
ITEM 15. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
As of December 31, 2008, YPF, under the supervision and with the participation of YPF’s management, including our Chief
Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rule 13a-15(f) under the Securities Exchange Act). There are, as described below,
inherent limitations to the effectiveness of any control system, including disclosure controls and procedures. Accordingly, even
effective disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives.
Based on such evaluation, YPF’s Chief Executive Officer and Chief Financial Officer concluded that YPF’s disclosure controls
and procedures were effective at the reasonable assurance level in ensuring that information relating to YPF, required to be disclosed
in reports it files under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the
SEC’s rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Management of YPF is responsible for establishing and maintaining adequate internal control over financial reporting (as
defined in Rule 13a-15(f) under the Securities Exchange Act). YPF’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles in Argentina including the reconciliation to U.S. GAAP and
includes those policies and procedures that:
•
•
•
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of YPF;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are
being made only in accordance with authorizations of YPF’s management and directors; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, any system of internal control over financial reporting, no matter how well designed, may not
prevent or detect misstatements, due to the possibility that a control can be circumvented or overridden or that misstatements due to
error or fraud may occur that are not detected. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Under the supervision and with the participation of YPF’s management, including the Chief Executive Officer and Chief
Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria
established in Internal Control-Integrated Framework issued by the Committee of
166
Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, our management concluded that, as of
December 31, 2008, our internal control over financial reporting was effective based on those criteria.
Our internal control over financial reporting as of December 31, 2008 has been audited by Deloitte & Co. S.R.L., an
independent registered public accounting firm, as stated in their report included in the F-pages.
Changes in Internal Control Over Financial Reporting
There has been no change in YPF’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities
Exchange Act) that occurred during the period covered by this Annual Report on Form 20-F that has materially affected, or is
reasonably likely to materially affect, internal control over financial reporting.
ITEM 16.
ITEM 16A. Audit Committee Financial Expert
The Board of Directors has designated Mario Vázquez as YPF’s Audit Committee Financial Expert at the meeting held on
April 28, 2009.
YPF believes that Mr. Vázquez, a member of YPF’s Audit Committee, possesses the attributes of an Audit Committee Financial
Expert set forth in the instructions to Item 16A of Form 20-F. Mr. Vázquez is an independent director.
ITEM 16B. Code of Ethics
YPF has adopted a Code of Ethics applicable to all employees of YPF and the Board of Directors. Since its effective date on
August 15, 2003, we have not waived compliance with, nor made any amendment to, the Code of Ethics. A copy of our Code of
Ethics is filed as an Exhibit to this Annual Report. YPF undertakes to provide to any person without charge, upon request, a copy of
such Code of Ethics. A copy of the Code of Ethics can be requested in writing by telephone or facsimile from us at the following
address:
YPF S.A.
Office of Shareholders Relations
Macacha Güemes 515
C1106BKK Buenos Aires, Argentina
Tel. (011-54-11) 5071-5531
Fax (011-54-11) 5071-2113
ITEM 16C. Principal Accountant Fees and Services
The following table provides information on the aggregate fees billed by our principal accountants, Deloitte & Co. S.R.L. by
type of service rendered for the periods indicated.
167
Services Rendered
Audit Fees
Audit-Related Fees(1)
Tax Fees
All Other Fees
2008
Fees
7,663
2,537
—
—
10,200
Expenses
Fees
(in thousands of pesos)
6,281
284
—
—
6,565
85
—
—
—
85
2007
Expenses
106
—
—
—
106
(1)
Includes the fees for the issuance of agreed upon procedures reports and fees related to employee benefit plan audits.
The annual shareholders’ meeting of YPF appoints the external auditor of YPF, along with the Audit Committee’s non-binding
opinion, which is submitted for consideration to the annual shareholders’ meeting.
The Audit and Control Committee has a pre-approval policy regarding the contracting of Repsol YPF’s external auditor, or any
affiliate of the external auditor, for professional services. The professional services covered by such policy include audit and non-
audit services provided to Repsol YPF or any of its subsidiaries reflected in agreements dated on or after May 6, 2003.
The pre-approval policy is as follows:
1. The Audit and Control Committee must pre-approve all audit and non-audit services to be provided to Repsol YPF or any of
its subsidiaries by the external auditor (or any of its affiliates) of Repsol YPF.
2. The Chairman of the Audit and Control Committee has been delegated the authority to approve the hiring of Repsol YPF’s
external auditor (or any of its affiliates) without first obtaining the approval of the Audit and Control Committee for any of the
services which require pre-approval as described in (1) above.
Services approved by the Chairman of the Audit and Control Committee as set forth above must be ratified at the next plenary
meeting of the Audit and Control Committee.
All of the services described in the table above were approved by the Audit and Control Committee.
Additionally, all services to be provided to YPF by its external auditors must be approved by the Board of Directors of YPF.
ITEM 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
In 2008, neither YPF nor any of its affiliates purchased any of YPF’s equity securities.
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PART III
ITEM 17.
Financial Statements
The registrant has responded to Item 18 in lieu of responding to this Item.
ITEM 18.
Financial Statements
The following financial statements are filed as part of this Annual Report:
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Income of YPF S.A. for the Years Ended December 31, 2008, 2007 and 2006
Consolidated Balance Sheets of YPF S.A. as of December 31, 2008, 2007 and 2006
Consolidated Statements of Cash Flows of YPF S.A. for the Years Ended December 31, 2008, 2007 and 2006
Consolidated Statements of Change in Shareholders’ equity of YPF S.A. for the Years Ended December 31, 2008, 2007 and
2006
Notes to the Consolidated Financial Statements of YPF S.A. for the Years Ended December 31, 2008, 2007 and 2006
F-2
F-4
F-5
F-6
F-7
F-8
ITEM 19. Exhibits
1.1 By-laws (Estatutos) of YPF S.A. as amended (Spanish Version)
1.2 By-laws (Estatutos) of YPF S.A. as amended (English Version)
11.1 Code of Ethics*
12.1 Section 302 Certification by the Chief Executive Officer
12.2 Section 302 Certification by the Chief Financial Officer and the Director of Administration and Tax
13.1 Section 906 Certification
23.1 Consent of Independent Registered Public Accounting Firm
23.2 Consent of Independent Registered Public Accounting Firm
*
Incorporated by reference to YPF’s 2004 Annual Report on Form 20-F filed on June 30, 2005.
169
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and
authorized the undersigned to sign this annual report on its behalf.
SIGNATURES
YPF SOCIEDAD ANÓNIMA
/s/ Ignacio Cruz Moran
By:
Name: Ignacio Cruz Moran
Title: Chief Financial Officer
YPF SOCIEDAD ANÓNIMA
/s/ Ángel Ramos Sánchez
By:
Name: Ángel Ramos Sánchez
Title: Director of Administration and Tax
Dated: June 30, 2009
170
YPF SOCIEDAD ANONIMA AND CONTROLLED AND JOINTLY CONTROLLED COMPANIES
INDEX
Reports of independent registered public accounting firm
Consolidated statements of income for the years ended December 31, 2008, 2007 and 2006
Consolidated balance sheets as of December 31, 2008, 2007 and 2006
Consolidated statements of cash flows for the years ended December 31, 2008, 2007 and 2006
Consolidated statements of changes in shareholders’ equity for the years ended December 31, 2008, 2007 and 2006
Notes to consolidated financial statements for the years ended December 31, 2008, 2007 and 2006
Supplemental information on oil and gas producing activities (unaudited)
F - 1
Page
F-2
F-4
F-5
F-6
F-7
F-8
F-58
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of YPF SOCIEDAD ANONIMA:
We have audited the accompanying consolidated balance sheets of YPF SOCIEDAD ANONIMA (an Argentine Corporation) and its
controlled and jointly controlled companies (the “Company”) as of December 31, 2008, 2007 and 2006, and the related consolidated
statements of income, cash flows and changes in shareholders’ equity for each of the three years in the period ended December 31,
2008. These consolidated financial statements are the responsibility of the Company’s Management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of
America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made
by Management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
YPF SOCIEDAD ANONIMA and its controlled and jointly controlled companies as of December 31, 2008, 2007, and 2006, and the
results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with
generally accepted accounting principles applicable to consolidated financial statements in Argentina.
Accounting principles generally accepted in Argentina vary in certain significant respects from accounting principles generally
accepted in the United States of America (“U.S. GAAP”). Information relating to the nature and effect of such differences is
presented in Notes 13, 14 and 15 to the consolidated financial statements.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States of
America), the Company’s internal control over financial reporting as of December 31, 2008, based on the criteria established in
Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and
our report dated June 29, 2009 expressed an unqualified opinion on the Company’s internal control over financial reporting.
Buenos Aires City, Argentina
June 29, 2009
Deloitte & Co. S.R.L.
/s/ Ricardo C. Ruiz
Ricardo C. Ruiz
Partner
F - 2
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of YPF SOCIEDAD ANONIMA:
We have audited the internal control over financial reporting of YPF SOCIEDAD ANONIMA (an Argentine Corporation) and its
controlled and jointly controlled companies (the “Company”) as of December 31, 2008, based on the criteria established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The
Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control
over Financial Reporting (Item 15). Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of
America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal
executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors,
management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely
basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are
subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2008, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States of
America), the consolidated financial statements of YPF SOCIEDAD ANONIMA and its controlled and jointly controlled companies
as of and for the year ended December 31, 2008 and our report dated June 29, 2009 expressed an unqualified opinion on those
consolidated financial statements and included an explanatory paragraph stating that the accounting principles generally accepted in
Argentina vary in certain significant respects from accounting principles generally accepted in the United States of America (“U.S.
GAAP”) and that the information related to the nature and effect of such differences is presented in Notes 13, 14, and 15 to the
consolidated financial statements of the Company.
Buenos Aires City, Argentina
June 29, 2009
Deloitte & Co. S.R.L.
/s/ Ricardo C. Ruiz
Ricardo C. Ruiz
Partner
F - 3
YPF SOCIEDAD ANONIMA AND CONTROLLED AND JOINTLY CONTROLLED COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(Amounts expressed in millions of Argentine pesos, except for per share amounts in Argentine pesos – Note 1)
Net sales (Note 3.k)
Cost of sales (Note 16.d)
Gross profit
Administrative expenses (Note 16.f)
Selling expenses (Note 16.f)
Exploration expenses (Note 16.f)
Operating income
Income on long-term investments
Other expenses, net (Note 3.i)
Financial income (expense), net and holding gains:
Gains on assets
Interests
Exchange differences
Holding gains on inventories
Losses on liabilities
Interests
Exchange differences
Income from sale of long-term investments
Reversal (impairment) of other current assets (Note 2.c)
Income tax (Note 3.j)
Net income before income tax
Net income
Earnings per share (Note 1)
The accompanying notes are an integral part of these statements.
F - 4
2008
2006
2007
34,875 29,104 25,635
(24,013) (19,000) (15,821)
9,814
10,862 10,104
(1,053)
(2,460)
(684)
6,665
(805)
(2,120)
(522)
6,657
(674)
(1,797)
(460)
6,883
83
(376)
34
(439)
183
(204)
134
416
476
278
142
451
338
5
394
(492)
(708)
—
—
6,198
(2,558)
3,640
9.25
(292)
(61)
5
69
6,844
(2,758)
4,086
10.39
(213)
(70)
11
(69)
7,258
(2,801)
4,457
11.33
YPF SOCIEDAD ANONIMA AND CONTROLLED AND JOINTLY CONTROLLED COMPANIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2008, 2007 AND 2006
(Amounts expressed in millions of Argentine pesos – Note 1)
Current Assets
Cash
Investments (Note 3.a)
Trade receivables (Note 3.b)
Other receivables (Note 3.c)
Inventories (Note 3.d)
Other assets (Note 2.c)
Total current assets
Noncurrent Assets
Trade receivables (Note 3.b)
Other receivables (Note 3.c)
Investments (Note 3.a)
Fixed assets (Note 3.e)
Intangible assets
Total noncurrent assets
Total assets
Current Liabilities
Accounts payable (Note 3.f)
Loans (Note 3.g)
Salaries and social security
Taxes payable
Net advances from crude oil purchasers
Reserves (Note 10)
Total current liabilities
Noncurrent Liabilities
Accounts payable (Note 3.f)
Loans (Note 3.g)
Salaries and social security (Note 3.h)
Taxes payable
Net advances from crude oil purchasers
Reserves (Note 10)
Total noncurrent liabilities
Total liabilities
Shareholders’ Equity (per corresponding statements)
Total liabilities and shareholders’ equity
The accompanying notes are an integral part of these statements.
F - 5
2008
2007
2006
391
825
196
655
118
971
2,702 3,235 2,242
1,861 4,361 5,033
3,449 2,573 1,697
— — 1,128
9,228 11,020 11,189
24
945
848
32
809
799
44
852
788
28,028 25,434 22,513
8
29,851 27,082 24,205
39,079 38,102 35,394
6
8
471
213
6,763 4,339 3,495
915
3,219
207
284
1,132 1,441 1,298
96
—
273
588
11,986 6,939 6,284
9
466
3,473 2,542 2,448
510
1,260
523
202
116
164
20
31
21
7
— —
1,857 1,853 1,578
6,737 5,103 4,765
18,723 12,042 11,049
20,356 26,060 24,345
39,079 38,102 35,394
YPF SOCIEDAD ANONIMA AND CONTROLLED AND JOINTLY CONTROLLED COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(Amounts expressed in millions of Argentine pesos – Note 1)
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash flows provided by operating activities:
2008
2007
2006
3,640
4,086
4,457
Income on long-term investments
Dividends from long-term investments
Income from sale of long-term investments
(Reversal) impairment of other current assets
Depreciation of fixed assets
Consumption of materials and fixed assets retired, net of allowances
Increase in allowances for fixed assets
Income tax
Income tax payments
Increase in reserves
Changes in assets and liabilities:
Trade receivables
Other receivables
Inventories
Accounts payable
Salaries and social security
Taxes payable
Net advances from crude oil purchasers
Decrease in reserves
Interests, exchange differences and others
Net cash flows provided by operating activities
Cash Flows from Investing Activities
Acquisitions of fixed assets
Acquisition of long-term investments
Proceeds from sale of long-term investments
Investments (non cash and equivalents)
Net cash flows used in investing activities
Cash Flows from Financing Activities
Payment of loans
Proceeds from loans
Dividends paid
Net cash flows used in financing activities
Increase (decrease) in Cash and Equivalents
Cash and equivalents at the beginning of year
Cash and equivalents at the end of year
Increase (decrease) in Cash and Equivalents
(83)
51
—
—
4,775
647
2
2,558
(2,387)
862
704
2,401
(876)
1,486
(21)
(507)
(10)
(736)
1,052
13,558
(1)
(7,035)
—
—
(8)
(7,043)
(34)
54
(5)
(69)
4,139
247
116
2,758
(2,281)
1,005
(183)
43
(11)
69
3,718
272
192
2,801
(2,855)
882
(981)
849
(876)
670
(25)
(340)
(93)
(537)
73
(1)
8,756
(21)
(255)
(382)
(99)
189
(425)
(90)
(268)
(15)
(1)
8,019
(6,163)
(5,002)
(16) —
32
(139)
(5,109)
6
(14)
(6,187)
(5,400)
8,540
(9,287)
(6,147)
368
(1,860)
1,411
(2,360)
(2,809)
(240)
(666)
688
(2,360)
(2,338)
572
847
1,215
368
1,087
847
(240)
515
1,087
572
For supplemental information on cash and equivalents, see Note 3.a.
(1)
Includes (155), (114) and (103) corresponding to interest cash payments for the years ended December 31, 2008, 2007 and 2006,
respectively.
The accompanying notes are an integral part of these statements.
F - 6
YPF SOCIEDAD ANONIMA AND CONTROLLED AND JOINTLY CONTROLLED COMPANIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(Amounts expressed in millions of Argentine pesos – Note 1, except for per share amount in pesos)
Shareholder’s contributions
Subscribed
capital
Adjustment to
contributions
Issuance
premiums
Total
Legal reserve
Deferred
earnings
Reserve for
future
dividends
Unappropriated
retained
earnings
Total
shareholders’
equity
3,933
7,281
640 11,854
1,530
(123)
—
8,988
22,249
—
—
—
— —
— —
—
— —
267 —
—
—
(2,360)
(2,360)
(267)
—
—
—
— —
— —
2,710
(2,710)
—
—
—
—
—
— —
— —
—
(1)
— —
—
—
—
4,457
(1)
4,457
3,933
7,281
640 11,854
1,797
(124)
2,710
8,108
24,345
—
—
— —
— —
(2,360)
—
(2,360)
—
—
— —
223 —
—
(223)
—
—
—
— —
— —
4,234
(4,234)
—
—
—
—
—
— —
— —
—
(11)
— —
—
—
—
4,086
(11)
4,086
3,933
7,281
640 11,854
2,020
(135)
4,584
7,737
26,060
Balance as of
December 31,
2005
As decided by the
Ordinary
Shareholders’
meeting of
April 28, 2006:
- Cash dividends
(Ps. 6 per share)
- Appropriation to
Legal reserve
- Appropriation to
Reserve for
future dividends
Net decrease in
deferred earnings
(Note 2.j)
Net income
Balance as of
December 31,
2006
As decided by the
Board of
Directors’
meeting of
March 6, 2007:
- Cash dividends
(Ps. 6 per share)
As decided by the
Ordinary
Shareholders’
meeting of
April 13, 2007:
- Appropriation to
Legal reserve
- Appropriation to
Reserve for
future dividends
Net decrease in
deferred earnings
(Note 2.j)
Net income
Balance as of
December 31,
2007
As decided by the
Board of
Directors’
meeting of
February 6, 2008:
- Cash dividends
(Ps.10.76 per share)
As decided by the
Ordinary and
Extraordinary
Shareholders’
meeting of
April 24, 2008:
- Cash dividends
(Ps.6.5 per share)
- Appropriation to
Legal reserve
- Reversal of
Reserve for
future dividends
- Appropriation to
Reserve for
future dividends
As decided by the
Board of
Directors’
meeting of
November 6,
2008:
- Cash dividends
(Ps.6.35 per
share)
Net decrease in
deferred earnings
(Note 2.j)
Net income
Balance as of
December 31,
2008
—
—
— —
— —
(4,232)
—
(4,232)
—
—
—
— —
— —
—
— —
204 —
—
—
(2,557)
(2,557)
(204)
—
—
—
— —
— —
(352)
352
—
—
—
— —
— —
4,003
(4,003)
—
—
—
— —
— —
(2,498)
—
(2,498)
—
—
—
—
— —
— —
—
(57)
— —
—
—
—
3,640
(57)
3,640
3,933
7,281
640 11,854
2,224
(192)
1,505
4,965
20,356
The accompanying notes are an integral part of these statements.
F - 7
YPF SOCIEDAD ANONIMA AND CONTROLLED AND JOINTLY CONTROLLED COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(Amounts expressed in millions of Argentine pesos, except where otherwise indicated – Note 1)
1. SIGNIFICANT ACCOUNTING POLICIES
The financial statements of YPF Sociedad Anónima (“YPF”) and its controlled and jointly controlled companies (the “Company”)
have been prepared in accordance with generally accepted accounting principles applicable to consolidated financial statements in
Argentina (“Argentine GAAP”), and taking into consideration the regulations of the National Securities Commission (“CNV”).
In accordance with generally accepted accounting principles and current Argentine legislation, the presentation of individual financial
statements is mandatory. Consolidated financial statements are to be included as supplementary information to the individual
financial statements. For the purpose of this filing, individual financial statements have been omitted since they are not required for
the United States Securities and Exchange Comission (“SEC”) reporting purposes.
Certain disclosures related to formal legal requirements for reporting in Argentina have been omitted for purposes of these
consolidated financial statements, since they are not required for SEC reporting purposes.
On March 20, 2009, the Argentine Federation of Professional Councils in Economic Sciences (“FACPCE”) approved the Technical
Resolution No. 26 “Adoption of the International Financial Reporting Standards (“IFRS”) of the International Accounting Standards
Board (“IASB”)”. This resolution mandates that Argentine publicly-traded entities under the regulation of the CNV are required to
adopt IFRS for fiscal periods beginning on or after January 1, 2011. As of the issuance date of these financial statements, this
resolution has not been endorsed by the CNV and the Company is assessing the impact of the adoption of IFRS.
Presentation of financial statements in constant Argentine pesos
The financial statements reflect the effect of changes in the purchasing power of money by the application of the method for inflation
adjustment into constant Argentine pesos set forth in Technical Resolution No. 6 of the FACPCE and taking into consideration
General Resolution No. 441 of the CNV, which established the discontinuation of the inflation adjustment of financial statements into
constant Argentine pesos as from March 1, 2003.
Basis of consolidation
Following the methodology established by Technical Resolution No. 21 of the FACPCE, the Company has consolidated its balance
sheets and the related statements of income and cash flows as follows:
•
Investments and income (loss) related to controlled companies in which YPF has the number of votes necessary to control
corporate decisions are substituted for such companies’ assets, liabilities, net revenues, cost and expenses, which are
aggregated to the Company’s assets, liabilities, net revenues, cost and expenses, considering intercompany profits,
transactions, balances and other consolidation adjustments and minority interest if applicable.
Investments and income (loss) related to companies in which YPF holds joint control are consolidated line by line on the
•
basis of the Company’s proportionate share in their assets, liabilities, net revenues, cost and expenses, considering
intercompany profits, transactions, balances and other consolidations adjustments. The effect of this proportional
consolidation for the year ended December 31, 2008 and comparative information, is disclosed in Note 13.b.
F - 8
Foreign subsidiaries are defined as integrated companies when they carry out their operations as an extension of the parent company’s
operations or as non-integrated companies when they collect cash and other monetary items, incur expenses, generate income and are
financed principally through their own resources. Assets and liabilities of non-integrated foreign subsidiaries are translated into
Argentine pesos at the exchange rate prevailing as of the end of each year. Income statements are translated using the relevant
exchange rate at the date of each transaction. Exchange differences arising from the translation process are included as a component
of shareholder’s equity in the account “Deferred Earnings”, which are maintained until the sale or complete or partial reimbursement
of capital of the related investment occurs. Assets, liabilities and income statements of integrated foreign subsidiaries are translated at
the relevant exchange rate at the date of each transaction. Exchange differences arising from the translation process are credited
(charged) to the income statement in the account “Gains on assets—Exchange differences”.
The consolidated financial statements are based upon the lastest available financial statements of those companies in which YPF
holds control or joint control, taking into consideration, if applicable, significant subsequent events and transactions, available
management information and transactions between YPF and the related company, which could have produced changes on the latter’s
shareholders’ equity.
The valuation methods employed by the controlled and jointly controlled companies are consistent with those followed by YPF. If
necessary, adjustments have been made to conform the accounting principles used by these companies to those of YPF. The principal
adjustments are related to the application of general accepted accounting principles in Argentina to foreign related companies’
financial statements.
Cash and equivalents
In the statements of cash flows, the Company considers cash and all highly liquid investments with an original maturity of less than
three months to be cash and equivalents.
Revenue recognition criteria
Revenue is recognized on sales of crude oil, refined products and natural gas, in each case, when title and risks are transferred to the
customer.
Revenues and costs related to construction activities, performed by a domestic subsidiary of YPF, are accounted by the percentage of
completion method. When adjustments in contract values or estimated costs are determined, any change from prior estimates is
reflected in earnings in the current year. Anticipated losses on contracts in progress are expensed as soon as they become evident.
Joint ventures and other agreements
The Company’s interests in oil and gas related joint ventures and other agreements involved in oil and gas exploration and
production, have been consolidated line by line on the basis of the Company’s proportional share in their assets, liabilities, revenues,
costs and expenses (Note 6).
Production concession and exploration permits
According to Argentine Law No. 24,145 issued in November 1992, YPF’s areas were converted into production concession and
exploration permits under Law No. 17,319, which has been amended by Law No. 26,197. Pursuant to these laws, the hydrocarbon
reservoirs located in Argentine onshore territories and offshore continental shelf, belong to provincial or national governments,
respectively, depending on the location. Exploration permits may have a term of up to 17 years and production concessions have a
term of 25 years, which may be extended for an additional ten–year term (Note 10.c).
Fair value of financial instruments and concentration of credit risk
The carrying value of cash, current investments and trade receivables approximates its fair value due to the short maturity of these
instruments. Furthermore, the fair value of loans receivable, which has been estimated based on current interest rates offered to the
Company at the end of each year, for investments with the same remaining maturity, approximates its carrying value. As of
December 31, 2008, 2007 and 2006 the fair value of loans payable estimated based on market prices or current interest rates at the
end of each year amounted to 4,399, 1,049 and 1,494, respectively.
F - 9
Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash, current
investments, accounts receivable and other receivables. The Company invests cash excess primarily in high liquid investments in
financial institutions both in Argentina and abroad with strong credit rating. In the normal course of business, the Company provides
credit based on ongoing credit evaluations to its customers and certain related parties. Additionally, the Company accounts for credit
losses based on specific information of its clients. Credit risk on trade receivables is limited, as a result of the Company’s large
customer base.
As of December 31, 2008, YPF does not hold derivative financial instruments.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires Management to make
estimates and assumptions that affect reported assets, liabilities, revenues and expenses and disclosure of contingencies. Future results
could differ from the estimates made by Management.
Earnings per share
Earnings per share have been calculated based on the 393,312,793 shares outstanding during the years ended as of December 31,
2008, 2007 and 2006.
2. VALUATION CRITERIA
The principal valuation criteria used in the preparation of the financial statements are as follows:
a) Cash, current investments, trade and other receivables and payables:
•
•
Amounts in Argentine pesos have been stated at face value, which includes accrued interest through the end of each year, if
applicable. Mutual funds have been valued at fair value as of the end of each year. When generally accepted accounting
principles require the valuation of receivables or payables at their discounted value, that value does not differ significantly
from their face value.
Amounts in foreign currencies have been valued at the relevant exchange rates as of the end of each year, including
accrued interest, if applicable. Mutual funds have been valued at fair value at the relevant exchange rate in effect as of the
end of each year. Investments in government securities have been valued at their fair value as of the end of each year.
Exchange differences have been credited (charged) to current income. Additional information on assets and liabilities
denominated in foreign currency is disclosed in Note 16.e.
If applicable, allowances have been made to reduce receivables to their estimated realizable value.
b)
Inventories:
•
•
Refined products, products in process, crude oil and natural gas have been valued at last production or replacement cost, as
applicable, as of the end of each year.
Raw materials and packaging materials have been valued at cost, which does not differ significantly from its replacement
cost as of the end of each year.
Valuation of inventories does not exceed their estimated realizable value.
c) Other assets:
Includes oil and gas exploration and producing fields held for sale as of December 31, 2006, which had been valued at the lower
of their carrying amount and fair value less cost to sell. In April 2007, the Company decided to suspend the selling process of
those assets and transferred their book value as fixed assets held for use and reversed the impairment charged during the year
ended December 31, 2006.
F - 10
d) Noncurrent investments:
These include the Company’s investments in companies under significant influence and holdings in other companies. These
investments are detailed in Note 16.b and have been valued using the equity method, except for holdings in other companies,
which have been valued at its acquisition cost remeasured as detailed in Note 1.
Investments in Gasoducto del Pacífico (Argentina) S.A., Gasoducto del Pacífico (Cayman) Ltd. and Oleoducto Trasandino
(Chile) S.A., where less than 20% direct or indirect interest is held, are accounted by the equity method since the Company
exercises significant influence over these companies in making operation and financial decisions based on its representation on
the Boards of Directors and/or the significant transactions between YPF and such companies.
If applicable, allowances have been made to reduce investments to their estimated recoverable value. The main factors for the
impairment recognized were the devaluation of the Argentine peso, certain events of debt default and the de-dollarization and
freezing of certain utility rates.
Holdings in preferred shares have been valued as defined in the respective bylaws.
If necessary, adjustments have been made to conform the accounting principles used by companies under significant influence to
those of the Company.
The investments in companies under significant influence, have been valued based upon the latest available financial statements
of these companies as of the end of each year, taking into consideration, if applicable, significant subsequent events and
transactions, available management information and transactions between the Company and the related companies which have
produced changes on the latters’ shareholders’ equity.
As from the effective date of Law No. 25,063, dividends, either in cash or in kind, that YPF receives from investments in other
companies and which are in excess of the accumulated taxable income that these companies carry upon distribution shall be
subject to a 35% income tax withholding as a sole and final payment. YPF has not recorded any charge for this tax since it has
estimated that dividends from earnings of investees accounted under equity method will be remitted in a tax free liquidation.
e)
Fixed assets:
Fixed assets have been valued at acquisition cost remeasured as detailed in Note 1, less related accumulated depreciation.
Depreciation rates, representative of the useful life assigned, applicable to each class of asset, are disclosed in Note 16.a. For
those assets whose construction requires an extended period of time, financial costs corresponding to third parties’ financing
have been capitalized during the assets’ construction period.
Oil and gas producing activities
•
The Company follows the “successful effort” method of accounting for its oil and gas exploration and production
operations. Accordingly, exploratory costs, excluding the costs of exploratory wells, have been charged to expense as
incurred. Costs of drilling exploratory wells, including stratigraphic test wells, have been capitalized pending determination
as to whether the wells have found proved reserves that justify commercial development. If such reserves were not found,
the mentioned costs are charged to expense. Occasionally, an exploratory well may be determined to have found oil and
gas reserves, but classification of those reserves as proved cannot be made when drilling is completed. In those cases, the
cost of drilling the exploratory well shall continue to be capitalized if the well has found a sufficient quantity of reserves to
justify its completion as a producing well and the enterprise is making sufficient progress assessing the reserves and the
economic and operating viability of the project. If any of the mentioned conditions are not met, cost of drilling exploratory
wells is charged to expense. As of December 31, 2007, the Company had only one exploratory well under assessment with
a capitalization period greater than one year after the completion of the drilling. As of the date of the issuance of those
financial statements, the Company was carrying out certain studies to assess the
F - 11
•
•
•
•
•
•
feasibility of the project and the economic viability of the well. During 2008, the Company determined that the project was
not viable, and charged to expense the capitalized amount (approximately 43). As of the issuance date of these financial
statements, the Company does not maintain any exploratory well in evaluation for a period exceeding one year.
Intangible drilling costs applicable to productive wells and to developmental dry holes, as well as tangible equipment costs
related to the development of oil and gas reserves, have been capitalized.
The capitalized costs related to producing activities have been depreciated by field on the unit-of-production basis by
applying the ratio of produced oil and gas to estimate recoverable proved and developed oil and gas reserves.
The capitalized costs related to acquisitions of proved reserves and extension of concessions have been depreciated by field
on the unit-of-production basis by applying the ratio of produced oil and gas to proved oil and gas reserves.
Capitalized costs related to unproved properties are reviewed periodically by Management to ensure the carrying value
does not exceed their estimated recoverable value.
Revisions of crude oil and natural gas proved reserves are considered prospectively in the calculation of depreciation.
Revisions in estimates of reserves are performed at least once a year. Additionally, estimates of reserves are audited by
independent petroleum engineers on a three-year rotation plan.
Costs related to hydrocarbon wells abandonment obligations are capitalized along with the related assets, and are
depreciated using the unit-of-production method. As compensation, a liability is recognized for this concept at the
estimated value of the discounted payable amounts. Revisions of the payable amounts are performed upon consideration of
the current costs incurred in abandonment obligations on a field-by-field basis or other external available information if
abandonment obligations were not performed. Due to the number of wells in operation or not abandoned and likewise the
complexities with respect to different geographic areas where the wells are located, the current costs incurred in plugging
are used for estimating the plugging costs of the wells pending abandonment. Current costs incurred are the best source of
information in order to make the best estimate of asset retirement obligations.
Other fixed assets
•
The Company’s other fixed assets are depreciated using the straight-line method, with depreciation rates based on the
estimated useful life of each class of property.
Fixed assets’ maintenance and repairs have been charged to expense as incurred.
Major inspections of refineries necessary to continue to operate the related assets are capitalized and depreciated using the
straight-line method over the period of operation to the next major inspection.
Renewals and betterments that materially extend the useful life and/or increase the productive capacity of properties are
capitalized. As fixed assets are retired, the related cost and accumulated depreciation are eliminated from the balance sheet.
The Company capitalizes the costs incurred in limiting, neutralizing or preventing environmental pollution only in those cases in
which at least one of the following conditions is met: (a) the expenditure improves the safety or efficiency of an operating plant
(or other productive asset); (b) the expenditure prevents or limits environmental pollution at operating facilities; or (c) the
expenditures are incurred to prepare assets for sale and do not raise the assets’ carrying value above their estimated recoverable
value.
F - 12
The carrying value of the fixed asset of each business segment, as defined in Note 8, does not exceed their estimated recoverable
value.
f)
Salaries and Social Security – Pension Plans and other Postretirement and Postemployment benefits:
As of December 31, 2007, YPF Holdings Inc., which has operations in the United States of America, had three trustee defined-
benefit pension plans and other postretirement and postemployment benefits.
In March 2008, YPF Holdings Inc. entered into certain contracts with Prudential Insurance Company (“Prudential”) to settle the
liability associated with two defined-benefit pension plans, paying a premium amount of US$ 115 million. Prudential assumed
the liabilities under these pension plans as of March 20, 2008.
The funding policy related to the remaining pension plan is to contribute amounts to the plan sufficient to meet the minimum
funding requirements under governmental regulations, plus such additional amounts as Management may determine to be
appropriate.
YPF Holdings Inc. provides certain health care and life insurance benefits for eligible retired employees, and also certain
insurance, and other postemployment benefits for eligible individuals in case employment is terminated by YPF Holdings Inc.
before their normal retirement. YPF Holdings Inc. accrues the estimated cost of retiree benefit payments during employees’
active service periods. Employees become eligible for these benefits if they meet minimum age and years of service
requirements. YPF Holdings Inc. accounts for benefits provided when the minimum service period is met, payment of the
benefit is probable and the amount of the benefit can be reasonably estimated.
During 2008, YPF Holdings Inc. curtailed the postretirement health care benefits to certain retirees. The effect of this
curtailment on net income was not material (Note 3.h).
The benefits related to the mentioned plans are valued at net present value and accrued on the years of active service of
employees. The net liability for defined benefits and postretirement plans is disclosed as non current liabilities in the “Salaries
and social security” account and is the amount resulting from the sum of: the present value of the obligation, net of the fair value
of the plan assets (if funded) and net of the unrecognized actuarial losses generated since December 31, 2003. The unrecognized
actuarial losses and gains are recognized as expense during the expected average remaining service period of the employees
participating in the plans and the life expectancy of the retired employees. YPF Holdings Inc. updates the actuarial assumptions
at the end of each year.
Other postretirement and postemployment benefits are recorded as claims are incurred.
g)
Taxes, withholdings and royalties:
Income tax and tax on minimum presumed income
The Company recognizes the income tax applying the liability method, which considers the effect of the temporary differences
between the financial and tax basis of assets and liabilities and the tax loss carryforwards and other tax credits, which may be
used to offset future taxable income, at the current statutory rate of 35%.
In deferred income tax computations, the difference between the book value of fixed assets remeasured into constant Argentine
pesos and their corresponding historical cost used for tax purposes is a temporary difference to be considered in deferred income
tax computations. However, generally accepted accounting principles in Argentina allow the option to disclose the mentioned
effect in a note to the financial statements. The Company adopted this latter criterion (Note 3.j).
Additionally, the Company calculates tax on minimum presumed income applying the current 1% tax rate to taxable assets as of
the end of each year. This tax complements income tax. The Company’s tax liability will coincide with the higher between the
determination of tax on minimum presumed income and the Company’s tax liability related to income tax, calculated applying
the current 35% income tax rate to taxable income for the year.
F - 13
However, if the tax on minimum presumed income exceeds income tax during one tax year, such excess may be computed as
prepayment of any income tax excess over the tax on minimum presumed income that may be generated in the next ten years.
For the years ended December 31, 2008, 2007 and 2006, amounts determined as current income tax were higher than tax on
minimum presumed income and they were included in the “Income tax” account of the statement of income of each year.
Royalties and withholding systems for hydrocarbon exports
A 12% royalty is payable on the estimated value at the wellhead of crude oil production and the commercialized natural gas
volumes (see additionally Note 10.c). The estimated value is calculated based upon the approximate sale price of the crude oil
and gas produced, less the costs of transportation and storage. Notwithstanding, in January 2008, and in absence of agreements
between companies about market prices for crude oil buying and selling operations as the result of the issuance of a new crude
oil export withholding system, the Secretariat of Energy issued the Directive No.1, providing certain guidelines to calculate the
royalties of crude oil.
As of the issuance date of these financial statements, the Company has considered agreed prices in the market for some qualities
of crude oil and has used these agreed prices to estimate royalty expense, in accordance to Law No.17,319 and its amendments.
Royalty expense is accounted for as a production cost.
Law No. 25,561 on Public Emergency and Exchange System Reform, issued in January 2002, established duties for
hydrocarbon exports for a five-year period. In January 2007, Law No. 26,217 extended this export withholding system for an
additional five-year period and also established specifically that this regime is also applicable to exports from “Tierra del Fuego”
province, which were previously exempted. Up to March 2008, Resolution No. 534/2006 of the Ministry of Economy and
Production (“MEP”) was in force, which, as from July 25, 2006, had raised the natural gas withholding rate from 20% to 45%
and had established the natural gas import price from Bolivia as the basis for its determination. Resolution No. 532/2004 (in
force until November, 2007) had settled the withholding rate for crude oil between 25% and 45% in function of the West Texas
Intermediate (“WTI”) price, and between 5% and 25% for other refined products. On November 16, 2007, the MEP published
Resolution No. 394/2007, modifying the withholding regime on exports of crude oil and other refined products. The new regime
provides reference prices and floor prices which in conjunction with the WTI determine the export rate for each product. For
crude oil, when the WTI exceeds the reference price of US$ 60.9 per barrel, the producer is allowed to collect a floor price of
US$ 42 per barrel, depending on the quality of the crude oil sold, with the remainder being withheld by the Argentine
Government. When the WTI is under the reference price but over US$ 45 per barrel, a 45% withholding rate should be applied.
If such price is under US$ 45 per barrel, the Government will have to determine the export rate within a term of 90 business
days. As of the date of the issuance of these financial statements, this latter situation has not happened. Furthermore, in March
2008, Resolution N° 127/2008 of the MEP increased the gas export withholding rate to 100% of the highest price from any
natural gas import contract. This resolution has also established a variable withholding system applicable to liquefied petroleum
gas, similar to the one established by the Resolution N° 394/2007. As of December 31, 2008, the crude oil withholding rate
determined according to Resolutions N° 394/2007 and N° 127/2008 of MEP, also currently applies to diesel, gasoline products
and other refined products. In addition, the procedure above mentioned also applies to fuel oil, petrochemical gasoline,
lubricants and liquefied petroleum gas (including propane, butane and blends) and other refined products, considering different
reference and floor prices disclosed in the mentioned resolutions.
Natural gas export clients are currently absorbing the payment of export duties established by the Resolutions N° 534/06 and
127/08. Some of them have paid reserving their rights to future claims.
Hydrocarbon export duties are charged to the “Net sales” account of the statement of income.
F - 14
h) Allowances and reserves:
•
•
Allowances: amounts have been provided in order to reduce the valuation of trade receivables, other receivables,
noncurrent investments and fixed assets based on the analysis of doubtful accounts and on the estimated recoverable value
of these assets.
Reserves for losses: amounts have been provided for various contingencies which are probable and can be reasonably
estimated, based on Management’s expectations and in consultation with legal counsels. Reserves for losses are required to
be accounted for at the discounted value as of the end of each year, however, as their face value does not differ
significantly from discounted values, they are recorded at face value.
The activity in the allowances and reserves accounts is set forth in Note 16.c.
i)
Environmental liabilities:
Environmental liabilities are recorded when environmental assessments and/or remediation are probable and can be reasonably
estimated. Such estimates are based on either detailed feasibility studies of remediation approach and cost for individual sites or
on the Company’s estimate of costs to be incurred based on historical experience and available information based on the stage of
assessment and/or remediation of each site. As additional information becomes available regarding each site or as costs and
environmental standards change, the Company revises its estimate of liabilities to be incurred in environmental assessment
and/or remediation matters.
j)
Shareholder’s equity accounts:
These accounts have been remeasured in Argentine pesos as detailed in Note 1, except for “Subscribed Capital” account, which
is stated at its historical value. The adjustment required to state this account in constant Argentine pesos is disclosed in the
“Adjustment to Contributions” account.
The account “Deferred Earnings” includes the exchange differences generated by the translation into pesos of the investments in
foreign companies defined as non-integrated subsidiaries.
k)
Statement of income accounts:
The amounts included in the income statement accounts have been recorded by applying the following criteria:
•
Accounts which accumulate monetary transactions at their face value.
Cost of sales has been calculated by computing units sold in each month at the replacement cost of that month.
Depreciation and amortization of non-monetary assets, valued at acquisition cost, has been recorded based on the
remeasured cost of such assets as detailed in Note 1.
Holding gains (losses) on inventories valued at replacement cost have been included in the “Holding gains on inventories”
account.
Income (loss) on long-term investments in which significant influence is held, has been calculated on the basis of the
income (loss) of those companies and was included in the “Income on long-term investments” account.
The “Reversal (impairment) of other current assets” account for the year ended December 31, 2006, includes the
impairment charge of oil and gas exploration and producing fields held for sale, which had been valued at the lower of
their carrying amount and fair value less cost to sell. For the year ended December 31, 2007, includes the reversal of the
impairment mentioned, as a consequence of the decision of the Company to suspend the selling process of those assets on
April, 2007. Consequently, the book value of the mentioned assets was transferred to fixed assets held for use.
F - 15
•
•
•
•
•
3. ANALYSIS OF THE MAIN ACCOUNTS OF THE CONSOLIDATED FINANCIAL STATEMENTS
Details regarding the significant accounts included in the accompanying consolidated financial statements are as follows:
a)
Investments:
Short-term investments and government
securities
Long-term investments (Note 16.b)
Allowance for reduction in value of
Current
2008
Noncurrent
Current
2007
Noncurrent
Current
2006
Noncurrent
825
(1)
—
179
(2)
890
655
(1)
—
168
(2)
837
971
(1)
—
156
(2)
843
holdings in long-term investments (Note
16.c)
—
825
(221)
848
—
655
(206)
799
—
971
(211)
788
(1)
Includes 824, 651 and 969 as of December 31, 2008, 2007 and 2006, respectively, with an original maturity of less than
three months.
(2) Corresponds to restricted cash as of December 31, 2008, 2007 and 2006, which represents bank deposits used to pay labor
claims and deposits used as guarantees given to government agencies.
b) Trade receivables:
Accounts receivable
Related parties (Note 7)
Allowance for doubtful trade receivables
(Note 16.c)
c) Other receivables:
2008
2007
2006
Current
Noncurrent Current
Noncurrent Current
2,813
306
3,119
(417)
2,702
24
—
24
—
24
3,142
533
3,675
(440)
3,235
32
—
32
—
32
2,280
391
2,671
(429)
2,242
Noncurrent
44
—
44
—
44
Deferred income tax (Note 3.j)
Tax credits and export rebates
Trade
Prepaid expenses
Concessions charges
Related parties (Note 7)
Loans to clients
Advances to suppliers
Collateral deposits
Advances and loans to employees
From joint ventures and other agreements
Miscellaneous
Allowance for other doubtful accounts
(Note 16.c)
Allowance for valuation of other receivables
to their estimated realizable value (Note
16.c)
2008
2007
2006
Current
Noncurrent
Current
Noncurrent
Current
—
749
217
154
17
178
29
160
91
69
101
230
1,995
554
19
—
80
50
109
79
—
18
—
—
84
993
—
931
97
111
17
2,681
14
132
80
46
62
312
4,483
517
15
—
60
79
—
90
—
19
—
—
79
859
—
692
71
130
17
3,883
12
65
56
15
46
183
5,170
Noncurrent
510
18
—
73
88
—
69
—
19
—
—
127
904
(134)
—
(122)
—
(137)
—
—
1,861
(48)
945
—
4,361
(50)
809
—
5,033
(52)
852
F - 16
d)
Inventories:
Refined products
Crude oil and natural gas
Products in process
Raw materials, packaging materials and others
e)
Fixed assets:
Net book value of fixed assets (Note 16.a)
Allowance for unproductive exploratory drilling (Note 16.c)
Allowance for obsolescence of materials and equipment (Note 16.c)
f)
Accounts payable:
2007
2008
2006
1,941 1,612 1,047
441
1,110
47
69
162
329
3,449 2,573 1,697
646
46
269
2008
2007
2006
28,073 25,481 22,562
(3)
(46)
28,028 25,434 22,513
(3)
(44)
(3)
(42)
Trade
Hydrocarbon wells abandonment obligations
Related parties (Note 7)
Extension of Concessions - Province of Neuquen
(Note 10.c)
From joint ventures and other agreements
Environmental liabilities
Miscellaneous
2008
2007
2006
Current Noncurrent Current Noncurrent Current Noncurrent
27
2,210
—
4,841
547
166
45
3,130
—
2,617
233
238
3,131
395
140
21
2,316
—
483
334
172
220
6,763
—
—
257
41
3,473
—
373
137
163
4,339
—
—
166
39
2,542
—
256
93
58
3,495
—
—
164
47
2,448
g)
Loans:
Interest
(1)
rates
Principal
maturity
2008
2007
2006
Current Noncurrent Current Noncurrent Current Noncurrent
Negotiable Obligations -
YPF
Related parties (Note 7)
Other financial debts
9.13–10.00% 2009 - 2028
5.00–25.00% 2009 - 2011
3.37–27.50%
2009
364
94
2,761
3,219
224
14
1,036 —
457
471
—
1,260
523
559
— —
356
—
915
523
509
—
1
510
(1) Annual fixed interest rates as of December 31, 2008.
The maturities of the Company’s noncurrent loans, as of December 31, 2008, are as follows:
Noncurrent loans
From 1 to 2
years
From 2 to 3
years
691
345
Over
5 years
224
Total
1,260
F - 17
Details regarding the Negotiable Obligations of YPF are as follows:
M.T.N.
Program
Issuance
Fixed Interest
Rates
Principal
Maturity
(in millions)
Principal
Value
Year
US$ 1,000 1997 US$ 300
US$ 1,000 1998 US$ 100
US$ 1,000 1999 US$ 225
—
10.00%
9.13%
2008
Book Value
2007
2006
—
2028
2009
Current Noncurrent Current Noncurrent Current Noncurrent
—
199
310
509
—
4
360
364
546
3
10
559
—
4
10
14
—
205
318
523
—
224
—
224
In connection with the issuance of the Negotiable Obligations, YPF has agreed for itself and its controlled companies to certain
covenants, including among others, to pay all liabilities at their maturity and not to create other encumbrances that exceed 15% of
total consolidated assets. If the Company does not comply with any covenant, the trustee or the holders of not less than 25% in
aggregate principal amount of each outstanding Negotiable Obligations may declare the principal and accrued interest immediately
due and payable.
Financial debt contains customary covenants for contracts of this nature, including negative pledge, material adverse change and
cross–default clauses. Certain YPF’s outstanding debt is subject to cross–default provisions, which may be triggered if an event of
default occurs with respect to the payment of principal or interest on indebtedness equal to or exceeding US$ 20 million.
The Shareholders’ meeting held on January 8, 2008, approved a Notes Program for an amount up to US$ 1,000 million. The proceeds
of this offering shall be used exclusively to invest in fixed assets and working capital in Argentina. As of the issuance date of these
financial statements, the Company has not issued Notes related with the mentioned program.
h) Noncurrent salaries and social security:
Defined – benefit obligations and other benefits
Net present value of obligations
Fair value of assets
Deferred actuarial losses
Recognized net liabilities
Changes in the fair value of the defined-benefit obligations
Liabilities at the beginning of the year
Settlement of obligations - Prudential (Note 2.f)
Translation differences
Service cost
Interest cost
Actuarial losses
Benefits paid, settlements and curtailments
Liabilities at the end of the year
F - 18
2008
2007
2006
117
—
(1)
116
472
(247)
(61)
164
480
(226)
(52)
202
2008
2007
2006
472
501
480
(319) — —
5
3
28
6
(63)
480
16
1
10
16
(79)
117
15
1
28
25
(77)
472
Changes in the fair value of the plan assets
Fair value of assets at the beginning of the year
Settlement of obligations - Prudential (Note 2.f)
Translation differences
Expected return on assets
Actuarials (losses) gains
Employer and employees contributions
Benefits paid, settlements and curtailments
Fair value of assets at the end of the year
Amounts recognized in the Income Statements
Service cost
Interest cost
Expected return on assets
Actuarial losses recognized in the year
Gains (losses) on settlements and curtailments
Total recognized as other expenses, net (Note 3.i)
Actuarial assumptions used to determine benefit cost
Discount rate
Expected return on assets
Expected increase on salaries
2008
2007
2006
247
(242)
—
—
—
19
(24)
—
226
—
7
17
(1)
60
(62)
247
199
—
2
15
8
50
(48)
226
Income (Expense)
2007
2008
2006
(1)
(10)
—
—
29
18
(1)
(28)
17
(1)
(8)
(21)
(3)
(28)
15
(2)
(4)
(22)
2008
2007
2006
6.2%
6.5%
7%
N/A
N/A N/A
(1)
(1)
6%
7%
5.5%
(1) Increase on salaries is not expected as there are no more active employees.
Expected employer’s contributions and estimated future benefit payments for the remaining plans are:
Expected employer’s contributions for next year
Estimated future benefit payments are as follows:
2009
2010
2011
2012
2013-2018
F - 19
Other Benefits
Pension
Benefits
1
Gross Benefits
Payments
—
1
2
2
2
8
9
9
9
9
54
Implied
Medicare
Subsidy
—
1
1
1
1
6
i)
Other expenses, net:
Reserve for pending lawsuits and other claims
Environmental remediation - YPF Holdings Inc.
Defined benefit pension plans and other postretirement benefits (Nota 3.h)
Miscellaneous
j)
Income tax:
Current income tax
Deferred income tax
Income (Expense)
2007
(194)
(206)
(21)
(18)
(439)
2008
(104)
(303)
18
13
(376)
2006
(173)
(136)
(22)
127
(204)
2008
(2,595)
37
(2,558)
(1)
2007
(2,765)
7
(2,758)
(1)
2006
(2,859)
58
(2,801)
(1)
(1) Corresponds to income tax incurred in Argentina as of December 31, 2008, 2007 and 2006, respectively.
The reconciliation of pre-tax income at the statutory tax rate, to the income tax as disclosed in the income statements for the years
ended December 31, 2008, 2007, and 2006, is as follows:
Net income before income tax
Statutory tax rate
Statutory tax rate applied to net income before income tax
Permanent differences:
Effect of the inflation adjustment into constant Argentine pesos
Income on long-term investments
(2)
Non taxable foreign source income
Tax free income – Law N° 19,640 (Tierra del Fuego)
Miscellaneous
Increase of valuation allowance for temporary differences and tax loss and credit
carryforwards
(1)
2008
6,198
2007
6,844
2006
7,258
35%
35%
35%
(2,169)
(2,395)
(2,540)
(246)
29
1
22
(3)
(276)
12
39
19
(45)
(399)
64
25
81
68
(192)
(2,558)
(112)
(2,758)
(100)
(2,801)
(1) Relates to changes in circumstances and prospects that affect the future use of the temporary differences, tax loss
and credit carryforwards.
(2) The Company does not provide for income taxes on the unremitted earnings of equity method investees as they
will be remitted in a tax free liquidation.
The breakdown of the net deferred tax asset as of December 31, 2008, 2007 and 2006, is as follows:
Deferred tax assets
Tax loss and credit carryforwards
Non deductible allowances and reserves and other liabilities
Miscellaneous
Total deferred tax assets
Deferred tax liabilities
Fixed assets
Miscellaneous
Total deferred tax liabilities
Valuation allowances
Net deferred tax asset
2008
2007
2006
1,050
(1)
970
116
2,136
812
930
290
2,032
645
917
159
1,721
(219)
(85)
(304)
(1,278)
554
(449)
(76)
(525)
(990)
517
(286)
(72)
(358)
(853)
510
(1) Tax loss and credit carryforwards will expire as follows: 956 after five years and 94 that carry forward
indefinitely.
F - 20
As explained in Note 2.g, the difference between the book value of fixed assets in Argentina remeasured into constant Argentine
pesos and their corresponding cost used for the tax basis, is a deferred tax liability of 1,279, 1,525 and 1,801 as of December 31,
2008, 2007 and 2006, respectively. The mentioned difference will continue to be reduced as the corresponding fixed assets are
depreciated or retired.
k) Net sales:
Sales
Turnover tax
Hydrocarbon export withholdings
2007
2008
2006
39,314 30,535 26,996
(460)
(901)
34,875 29,104 25,635
(795)
(3,644)
(567)
(864)
4. CAPITAL STOCK
YPF subscribed capital as of December 31, 2008, 2007 and 2006 was 3,933 and was represented by 393,312,793 shares of common
stock and divided into four classes of shares (A, B, C and D), with a par value of Argentine pesos 10 and one vote per share. These
shares are fully subscribed, paid-in and authorized for stock exchange listing.
As of December 31, 2008, Repsol YPF S.A. (“Repsol YPF”) controlled the Company, directly and indirectly, through a 84.04%
shareholding while Petersen Energía S.A. (“PESA”) and its affiliates exercised significant influence through a 15.46% shareholding.
Additionally, Repsol YPF granted certain affiliates of PESA an option to purchase from Repsol YPF up to an additional 10% of
YPF’s outstanding capital stock.
Additionally, Repsol YPF and PESA have signed a shareholders’ agreement, in connection with the Transaction, establishing among
other things, the adoption of a dividend policy under which YPF will distribute 90% of the annual net income as dividends.
Additionally, on February 29, 2008, Repsol YPF started an offering process for the sale of shares representing 20% of the capital
stock of YPF (the “Offering”). The effective date of the Offering will be subject, among other conditions, to the authorization of the
regulatory agencies of the Argentine and United States markets in which YPF’s shares quote and to the financial markets conditions.
Repsol YPF’s legal address is Paseo de la Castellana 278, 28046 Madrid, Spain. Repsol YPF’s principal business is the exploration,
development and production of crude oil and natural gas, transportation of petroleum products, liquefied petroleum gas and natural
gas, petroleum refining, production of a wide range of petrochemicals and marketing of petroleum products, petroleum derivatives,
petrochemicals, liquefied petroleum gas and natural gas.
As of December 31, 2008, there are 3,764 Class A outstanding shares. So long as any Class A share remains outstanding, the
affirmative vote of Argentine Government is required for: 1) mergers, 2) acquisitions of more than 50% of YPF shares in an agreed or
hostile bid, 3) transfers of all the YPF’s production and exploration rights, 4) the voluntary dissolution of YPF or 5) change of
corporate and/or tax address outside the Argentine Republic. Items 3) and 4) will also require prior approval by the Argentine
Congress.
F - 21
5. RESTRICTED ASSETS AND GUARANTEES GIVEN
As of December 31, 2008, YPF has signed guarantees in relation to the financing activities of the following related companies:
Pluspetrol Energy S.A., Central Dock Sud S.A. and Inversora Dock Sud S.A. in an amount of approximately US$ 17 million, US$
21 million and 5, respectively. The corresponding loans have final maturity in 2011, 2013 and 2009, respectively.
Additionally, YPF has committed to contribute capital (the “Contribution Agreement”) up to a maximum amount that will enable to
satisfy certain environmental liabilities assumed by Maxus Energy Corporation (“Maxus) and Tierra Solutions Inc. (“Tierra”),
together “the Parties”, subsidiaries of YPF Holdings Inc. and to meet its operating expenses (see Note 10.a). On October 8, 2007,
YPF and the Parties had signed an agreement which, after making the corresponding contributions and under the fulfillment of certain
conditions, established, among other things, the end of YPF’s obligations under the Contribution Agreement. The conditions
established in the agreement were fulfilled on March 31, 2008.
6. PARTICIPATION IN JOINT VENTURES AND OTHER AGREEMENTS
As of December 31, 2008, the main exploration and production joint ventures and other agreements in which YPF participates are the
following:
Name and Location
Acambuco
Salta
Aguada Pichana
Neuquén
Aguaragüe
Salta
CAM-2/A SUR
Tierra del Fuego
Campamento Central
/ Cañadón Perdido
Chubut
Consorcio CNQ7/A
La Pampa and Mendoza
El Tordillo
Chubut
La Tapera y Puesto Quiroga
Chubut
Llancanelo
Mendoza
Magallanes
Santa Cruz, Tierra del Fuego and National
Continental Shelf
Palmar Largo
Formosa and Salta
Puesto Hernández
Neuquén and Mendoza
Ramos
Salta
San Roque
Neuquén
Tierra del Fuego
Tierra del Fuego
Yacimiento La Ventana – Río Tunuyán
Mendoza
Zampal Oeste
Mendoza
Ownership Interest
22.50%
Operator
Pan American Energy LLC
27.27%
Total Austral S.A.
30.00%
Tecpetrol S.A.
50.00%
Enap Sipetrol Argentina S.A.
50.00%
YPF S.A.
50.00%
Petro Andina Resources Ltd. Sucursal Argentina
12.20%
Tecpetrol S.A.
12.20%
Tecpetrol S.A.
51.00%
YPF S.A.
50.00%
Enap Sipetrol Argentina S.A.
30.00%
Pluspetrol S.A.
61.55%
Petrobras Energía S.A.
15.00%
(1)
Pluspetrol Energy S.A.
34.11%
Total Austral S.A.
30.00%
Petrolera L.F. Company S.R.L.
60.00%
YPF S.A.
70.00%
YPF S.A.
(1) Additionally, YPF has a 27% indirect ownership interest through Pluspetrol Energy S.A.
F - 22
Additionally, certain YPF’s subsidiaries participate in exploration and production agreements in the Gulf of Mexico.
The assets and liabilities as of December 31, 2008, 2007 and 2006 and production costs of the joint ventures and other agreements for
the years then ended are as follows:
Current assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Production costs
187
256
2008 2007 2006
538
4,206 3,606 2,463
4,462 3,793 3,001
405
501
343
541
1,042
748
1,685 1,423 1,098
474
373
847
Participation in joint ventures and other agreements have been calculated based upon the lastest available financial statements as of
the end of each year, taking into account significant subsequent events and transactions as well as available management information.
YPF Holdings Inc. has entered into various operating agreements and capital commitments associated with the exploration and
development of its oil and gas properties which are not material except those for the “Neptune Project”. Total commitments related to
the development of the Neptune Project amounts to US$ 31 million.
7. BALANCES AND TRANSACTIONS WITH RELATED PARTIES
The principal outstanding balances as of December 31, 2008, 2007 and 2006 from transactions with jointly controlled companies,
companies under significant influence, the parent company and other related parties under common control are as follows:
Trade
receivables
Other receivables
Accounts
payable
Loans
2008
Trade
receivables
2007
Other
receivables
Accounts
payable
Trade
receivables
2006
Other
receivables
Accounts
payable
Current Current
Jointly
Current
Current
Noncurrent
Current Current Noncurrent Current Current
Current Current
controlled
companies:
Profertil S.A.
Compañía Mega
S.A. (“Mega”)
Refinería del
Norte S.A.
(“Refinor”)
Companies
under
significant
influence:
Main
shareholders
and other
related parties
under their
control
Repsol YPF
Repsol YPF
4
2
—
2 —
124 —
—
— —
70 —
2
198
—
—
4 —
6 —
—
—
—
—
—
167
39
206
— —
— —
—
—
19
19
—
105
50
155
— —
1 —
—
1
6
6
16
99
(1)
109
(1)
36 —
—
25
27
33
36
8
143
—
7
—
68 —
—
—
6
43
—
979
22
Transporte y
Trading S.A.
Repsol YPF Gas
S.A.
Repsol YPF
Brasil S.A.
Repsol
International
4 —
22
13
2
2
—
—
5 —
—
199
—
110
—
1 —
30
5
—
—
—
— —
10
1,102 —
1,305 —
3
1
34
12
34
2
5
Finance B.V.
Repsol
Netherlands
Finance B.V.
Nuevo Banco de
Entre Ríos
S.A.
Nuevos Banco de
Santa Fe S.A.
Others
—
1
—
— —
—
—
1,427 —
—
1,520 —
— —
—
—
13
1,036
—
51 —
—
47 —
— —
—
—
— —
65
77
178
53
92
306
—
—
—
109
—
50
124
166
23
45
13
94
94
—
—
—
1,036
1,036
—
—
63
302
533
— —
— —
41
88
140
63
2,654
2,681
—
—
44
200
391
— —
— —
31
18
89
3,874
238
3,883
(1)
Includes mainly 200 with Central Dock Sud S.A.
F - 23
The Company maintains purchase, sale and financing transactions with related parties. The principal purchase, sale and financing
transactions with these companies for the years ended December 31, 2008, 2007 and 2006, include the following:
Purchases
and
services
2008
Loans
(granted)
collected
Loans
obtained
(paid)
Interest
gains
(losses)
Purchases
and
services
Loans
(granted)
collected
Interest
gains
(losses) Sales
Purchases
and
services
Loans
(granted)
collected
Interest
gains
(losses)
Sales
2007
2006
83 — — —
11 — — —
62 — — —
156 — — —
32
86 — —
53 — —
669 — — — 629 — — —
79 — —
199
132 — —
900
66 — — 200
152 — — 858
29
Sales
20
900
140
1,060
82
168
(173) —
11
90
151
25 — 152
231 — —
Jointly controlled
companies:
Profertil S.A.
Mega
Refinor
Companies under
significant
influence:
Main shareholders
and other related
parties under
their control
Repsol YPF
Repsol YPF
Transporte y
Trading S.A.
Repsol YPF Brasil
S.A.
Repsol YPF Gas
S.A.
Repsol International
Finance B.V.
Repsol YPF E&P
Bolivia S.A.
Repsol Netherlands
Finance B.V.
Nuevo Banco de
Entre Ríos S.A.
Nuevo Banco de
Santa Fe S.A.
Others
—
26 — — — —
18
926
15 —
7
350
67
737
1,123 — — — 1,276
827 — — 923
654 — —
158 — 1,103 —
3
116 —
225
88
97 — (1,011)
69
198
4 — — —
227
6 — — 210
5 — —
— — 1,437 —
28 — —
143
91 — —
63
65
— — — — — — — — —
1
446 — —
— —
56 1,036
(20) — —
(2)
7 — —
68
8
— — —
23 — — — — — — — — —
— — —
11 —
212
1,305
2,447
1,164 2,596 1,117
1,488 2,423 1,117
45
13 —
(3) — — — — — — — —
11 — —
209
(530)
209
(530)
10 — — 157
201 1,388
201 2,398
160
8 1,779
19 2,769
861 1,292
1,164 1,317
1,123
1,486
8. CONSOLIDATED BUSINESS SEGMENT INFORMATION
The Company organizes its business into four segments which comprise: the exploration and production, including purchases of
natural gas and crude oil purchases arising from service contracts and concession obligations, as well as crude oil intersegment sales,
natural gas and its derivatives sales and electric power generation (“Exploration and Production”); the refining, transport, purchase
and marketing of crude oil and refined products (“Refining and Marketing”); the petrochemical operations (“Chemical”); and other
activities, not falling into these categories, are classified under “Corporate and Other”, which principally includes corporate
administrative costs and assets, and construction activities.
Operating income (loss) and assets for each segment have been determined after intersegment adjustments.
Year ended December 31, 2008
Net sales to unrelated parties
Net sales to related parties
Net intersegment sales
Net sales
Operating income (loss)
Exploration and
Production
Refining and
Marketing Chemical
Corporate
and Other
Consolidation
Adjustments
Total
4,016
939
12,663
17,618
3,315
25,364
1,508
1,145
28,017
3,089
2,829
—
1,094
3,923
1,178
219
—
461
680
(815)
— 32,428
2,447
—
(15,363)
—
(15,363) 34,875
6,665
(102)
Income on long-term investments
Depreciation
Acquisitions of fixed assets
Assets
67
4,111
6,290
21,755
16
467
1,013
10,286
—
119
148
2,295
—
78
511
5,224
—
83
—
4,775
7,962
—
(481) 39,079
F - 24
Year ended December 31, 2007
Net sales to unrelated parties
Net sales to related parties
Net intersegment sales
Net sales
Operating income (loss)
Income on long-term investments
Depreciation
Acquisitions of fixed assets
Assets
Year ended December 31, 2006
Net sales to unrelated parties
Net sales to related parties
Net intersegment sales
Net sales
Operating income (loss)
Income on long-term investments
Depreciation
Acquisitions of fixed assets
Assets
3,288 20,375 2,563 109
724 2,045 — —
— 26,335
— 2,769
14,056 1,858 892 440 (17,246) —
18,068 24,278 3,455 549 (17,246) 29,104
(136) 6,657
5,679 1,234 500 (620)
34
—
16 — —
18
—
377
4,139
54
92
3,616
— 6,216
4,861
898 143 314
(631) 38,102
19,893 11,199 2,220 5,421
3,076 17,651 2,401 109
774 1,624 — —
— 23,237
— 2,398
14,033 1,526 647 282 (16,488) —
17,883 20,801 3,048 391 (16,488) 25,635
258 572 (540)
29 6,883
6,564
16 — —
—
167
183
— 3,718
329
41
85
3,263
— 5,932
4,886
733 137 176
(867) 35,394
18,987 9,349 1,876 6,049
Export sales, net of witholdings taxes, for the years ended December 31, 2008, 2007 and 2006 were 7,228, 8,400 and 8,649,
respectively. Export sales were mainly to the United States of America, Brazil and Chile.
9. SOCIAL AND OTHER EMPLOYEE BENEFITS
a)
Performance Bonus Programs:
These programs cover certain YPF and its controlled companies’ personnel. These bonuses are based on compliance with
business unit objectives and performance. They are calculated considering the annual compensation of each employee, certain
key factors related to the fulfillment of these objectives and the performance of each employee and will be paid in cash.
The amount charged to expense related to the mentioned Performance Bonus Programs was 72, 61 and 44 for the years ended
December 31, 2008, 2007, and 2006, respectively.
b) Retirement Plan:
Effective March 1, 1995, YPF established a defined contribution retirement plan that provides benefits for each employee who
elects to join the plan. Each plan member will pay an amount between 2% and 9% of his monthly compensation and YPF will
pay an amount equal to that contributed by each member.
The plan members will receive the YPF’s contributed funds before retirement only in the case of voluntary termination under
certain circumstances or dismissal without cause and, additionally, in case of death or incapacity. YPF has the right to
discontinue this plan at any time, without incurring termination costs.
The total charges recognized under the Retirement Plan amounted approximately 13, 11 and 9 for the years ended December 31,
2008, 2007 and 2006, respectively.
F - 25
10. COMMITMENTS AND CONTINGENCIES
a)
Pending lawsuits and contingencies:
As of December 31, 2008, the Company has reserved 2,445 in connection with the pending lawsuits, claims and contingencies
which are probable and can be reasonably estimated. The most significant pending lawsuits and contingencies reserved are
described in the following paragraphs.
•
•
Pending lawsuits: In the normal course of its business, the Company has been sued in numerous labor, civil and
commercial actions and lawsuits. Management, in consultation with the external counsels, has reserved an
allowance considering its best estimation, based on the information available as of the date of the issuance of these
financial statements, including counsel fees and judicial expenses.
Liquefied petroleum gas market: On March 22, 1999, YPF was notified of Resolution No. 189/1999 from the former
Secretariat of Industry, Commerce and Mining of Argentina, which imposed a fine on YPF of 109, stated in
Argentine pesos as of that date, based on the interpretation that YPF had purportedly abused of its dominant position
in the bulk liquefied petroleum gas (“LPG”) market due to the existence of different prices between the exports of
LPG and the sales to the domestic market from 1993 through 1997. In July 2002, the Argentine Supreme Court
confirmed the fine and YPF carried out the claimed payment.
Additionally, Resolution No. 189/1999 provided the beginning of an investigation in order to prove whether the
penalized behavior continued from October 1997 to March 1999. On December 19, 2003, the National Antitrust
Protection Board (the “Antitrust Board”) imputed the behavior of abuse of dominant position during the previously
mentioned period to YPF. On January 20, 2004, YPF answered the notification: (i) opposing the preliminary defense
claiming the application of the statutes of limitation and alleging the existence of defects in the imputation
procedure (absence of majority in the resolution that decided the imputation and pre-judgment by its signers);
(ii) arguing the absence of abuse of dominant position; and (iii) offering the corresponding evidence.
The request of invalidity by defects in the imputation procedure mentioned above was rejected by the Antitrust
Board. This resolution of the Antitrust Board was confirmed by the Economic Penal Appellate Court, and it was
confirmed, on September 27, 2005, pursuant to the Argentine Supreme Court’s (“CSJN”) rejection of the complaint
made by YPF due to the extraordinary appeal denial.
Additionally, on August 31, 2004, YPF filed an appeal with the Antitrust Board in relation to the resolution that
denied the claim of statutes of limitation. The Antitrust Board conceded the appeal and remitted proceedings for its
resolution by the Appeal Court. However, in March 2006, YPF was notified that the proceedings were opened for
the production of evidence. During August and September 2007, testimonial hearings were held for YPF’s
witnesses. On August 12, 2008, the Appeal Court in Criminal Economic Matters rejected the statute of limitation
argument opposed by YPF. Such decision was appealed by YPF. Upon the confirmation of the Antitrust Board’s
decision given by the Chamber B, YPF has appealed that judgment by cassation and extraordinary appeals, because
the Antitrust Board applied Law No. 22,262 and Chamber B applied Law No. 25,156. The latter rejected both
appeals (cassation and extraordinary), consequently YPF presented complaints appeals against the cassation appeal,
denied on December 18, 2008, and against the Extraordinary Appeal, denied on February 17, 2009. Both of them are
under evaluation. Despite the solid arguments expressed by YPF, the mentioned circumstances make evident that,
preliminarily, the Antitrust Board denies the defenses filed by YPF and that it is reluctant to modify the doctrine
provided by the Resolution No. 189/1999 and, furthermore, the Court of Appeals decisions tend to confirm the
decisions made by the Antitrust Board.
F - 26
•
Tax claims: On January 31, 2003, YPF received a claim from the Federal Administration of Public Revenue
•
•
(“AFIP”), stating that the sales corresponding to forward oil sale agreements entered into by YPF, should have been
subject to an income tax withholding. On March 8, 2004, the AFIP formally notified YPF the claim for
approximately 45 plus interests and fines. Additionally, on June 24, 2004, YPF received a new formal claim from
the AFIP, considering that the services related to these contracts should have been taxed with the value added tax.
Consequently, during 2004, YPF presented its defense to the AFIP rejecting the claims and arguing its position.
However, on December 28, 2004, YPF was formally notified of a resolution from the AFIP confirming its original
position in both claims for the period 1997 to 2001. YPF has appealed such resolution in the National Tax Court.
However, in order to reduce interest YPF would suffer if final resolution were unfavorable, in March 2009 YPF
enrolled in the regime provided in Law No. 26,476. This regime waives fines, significantly reduces interests and
allows the payment of taxes under dispute in 120 low-interest installments. In addition, YPF has conditionally paid
the amounts corresponding to subsequent periods not included in the claim from AFIP (2002 and subsequent
periods) to avoid interest or fine charges and filed reimbursement summary proceedings. On March 14, 2008, the
AFIP notified YPF of the rejection of the reimbursement previously mentioned. YPF appealed that decision before
the National Tax Court.
In addition, the Company has received several claims from the AFIP and from provincial and municipal fiscal
authorities, which are not individually significant.
Liabilities and contingencies assumed by the Argentine Government: The YPF Privatization Law provided for the
assumption by the Argentine Government of certain liabilities of the predecessor as of December 31, 1990. In
certain lawsuits related to events or acts that took place before December 31, 1990, YPF has been required to
advance the payment established in certain judicial decisions. YPF has the right to be reimbursed for these payments
by the Argentine Government pursuant to the above-mentioned indemnity.
Natural gas market:
Export sales: Pursuant to Resolution No. 265/2004 of the Secretariat of Energy, the Argentine Government created a
program of “useful” curtailment of natural gas exports and their associated transportation service. Such Program was
initially implemented by means of Regulation No. 27/2004 of the Under-Secretariat of Fuels, which was
subsequently substituted by the Program of Rationalization of Gas Exports and Use of Transportation Capacity (the
“Program”) approved by Resolution No. 659/2004 of the Secretariat of Energy. Additionally, Resolution
No. 752/2005 of the Secretariat of Energy provided that industrial users and thermal generators (which according to
this resolution will have to request volumes of gas directly from the producers) could also acquire the natural gas
from the cutbacks on natural gas export through the Permanent Additional Injections mechanism created by this
resolution. By means of the Program and/or the Permanent Additional Injection, the Argentine Government requires
natural gas exporting producers to deliver additional volumes to the domestic market in order to satisfy natural gas
demand of certain consumers of the Argentine market (“Additional Injection Requirements”). Such additional
volumes are not contractually committed by YPF, who is thus forced to affect natural gas exports, which execution
has been conditioned. The mechanisms established by the Resolutions No. 659/2004 and 752/2005 have been
adapted by the Secretariat of Energy Resolution No. 599/2007, modifying the conditions for the imposition of the
requirements, depending on whether the producers have signed or not the Proposed Agreement, ratified by such
resolution, between the Secretariat of Energy and the Producers. Additionally, the Argentine Government, through
instructions made using different procedures, has ordered limitations over natural gas exports (in conjunction with
the Program and the Permanent Additional Injection, named the “Restrictions”).
As a result of the Restrictions, in several occasions since 2004, YPF has been forced to suspend, either totally or
partially, its natural gas deliveries to some of its export clients, with whom YPF has undertaken long-term firm
commitments to deliver natural gas.
The Company has challenged the Program, the Permanent Additional Injection and the Additional Injection
Requirements as arbitrary and illegitimate, and has invoked vis-à-vis the relevant clients that such measures of the
Argentine Government constitute a force majeure event (act of authority) that releases the Company from any
liability and/or penalty for the failure to deliver the contractual volumes. These clients have rejected the force
majeure argument invoked by the Company, demanding the payment of indemnifications and/or penalties for the
failure to comply with firm supply commitments, and/or reserving their rights to future claims in such respect (the
“Claims”).
F - 27
Electroandina S.A. and Empresa Eléctrica del Norte Grande S.A. (“Edelnor”) have rejected the force majeure
argument invoked by the Company and have invoiced the penalty stipulated under the “deliver or pay” clause of the
contract for cutbacks accumulated as of September, 2007, for a total amount of US$ 93 million. These invoices have
been rejected by the Company, assuming no responsibility. Furthermore, the above-mentioned companies have
notified the formal start-up period of negotiations previous to any arbitration demand. Although such period is
overdue, the Company has not been notified of the initiation of the arbitration demands.
Additionally, on June 25, 2008, AES Uruguaiana Emprendimientos S.A. (“AESU”) claimed damages in a total
amount of US$ 28.1 million for natural gas “deliver or pay” penalties for cutbacks accumulated from September 16,
2007 through June 25, 2008. On July 16, 2008, AESU also claimed an additional amount of US$ 2.7 million for
natural gas “deliver or pay” penalties for cutbacks accumulated from January 18, 2006 until December 1, 2006. YPF
has rejected both claims. On September 15, 2008, AESU notified YPF the interruption of the fulfillment of its
commitments alleging delay and breach of YPF obligations. The Company has rejected this notification. On
December 4, 2008, YPF notified that having ceased the force majeure conditions, pursuant to the contract in force, it
would suspend its delivery commitments, due to the repeated breaches of AESU obligations. This notification was
also rejected. On December 30, 2008, AESU rejected YPF’s right to suspend its natural gas deliveries and on
March 20, 2009, AESU notified YPF the termination of the contract. Subsequently, AESU initiated an arbitration
process in which it claims, among other matters that YPF considers inappropriate, the payment of the deliver or pay
penalties above mentioned. YPF has also started an arbitration process against AESU claiming, among other
matters, the declaration that the termination of the contract by AESU was unilateral and illegal under its
responsibility.
In addition, YPF has been notified of an arbitration demand from Innergy Soluciones Energéticas (“Innergy”). The
Company has answered the arbitration complaint, and has filed a counterclaim based on the hardship provisions
(“teoría de la imprevisión”) of the Argentine Civil Code. The parties have exchanged documentation requirements
and have presented their appellate brief with the documental evidence and experts and witnesses’ declarations.
Damages claimed by Innergy amount to US$ 88 million plus interests, according to the invoice presented in the
Innergy’s appellate brief, on September 17, 2007. Such amount might be increased if Innergy incorporates to the
demand invoices for penalties received for periods subsequent to August 2007. The parties have agreed on a
settlement to their dispute, including those that arose during the arbitration process, which was finally executed on
June 18, 2009.
Additionally, there are certain claims from natural gas transportation suppliers, in relation with contracts associated
with exports of such hydrocarbon. In that order, one of the parties commenced mediation proceedings in order to
determine the merits of such claims. Having completed the mentioned mediation proceeding without reaching an
agreement, as of the date of the issuance of these financial statements, YPF has not been notified of any proceeding
related to these claims.
Domestic sales: Central Puerto S.A. has claimed YPF for cutbacks in natural gas supply to its combined-cycle plant
located in Buenos Aires City. YPF has formally denied such breach based on the view that, pending the
restructuring of such contracts, it is not obliged to confirm nominations of natural gas to this client during certain
periods of the year. On June 6, 2007, Central Puerto S.A. notified its decision to submit the controversy to
arbitration under the rules of the International Chamber of Commerce (“ICC”). Central Puerto S.A. nominated its
arbiter and notified YPF the initiation of an arbitration proceeding in that Chamber. On June 21, 2007, YPF
nominated its arbiter and notified its decision to submit the controversy related to certain amounts claimed to
Central Puerto S.A., also related to the natural gas supply to its combined-cycle located in Buenos Aires City to an
arbitration proceeding. On July 23, 2007, YPF received the arbitration demand which was answered on
September 24, 2007, requesting for the rejection of the claims of Central Puerto S.A. Besides, YPF has filed a
counterclaim requesting, among other things, the termination of the
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contract or, in absence of this, the revision based on the hardship provision and the “both-parties-effort”. On
December 3, 2007, Central Puerto S.A. submitted a presentation requesting (i) the rejection of all subsidiary claims
presented by YPF, including the request that the Chamber ratifies the effectiveness of the contract and the rejection
of the fair reconvention of the contract; (ii) the rejection that the settlement and payment claim related to amounts
due by Central Puerto S.A. pursuant to the “take or pay” clause; (iii) the rejection of the settlement and payment
claim related to the adjustment by the application of the “Coeficiente de Estabilización de Referencia” (“CER”), and
in subsidy opposing the prescription exception; and (iv) the inappropriateness of the claim in relation with the price
differential payment.
On February 11, 2008, an audience was held with the arbitral trial members and an Act (“Acta de Misión”) was
subscribed. In that document, Central Puerto S.A. argued that, in relation with the quantification of the pretensions,
it could not determine the claimed amount until the performance of the corresponding work of experts. However, in
order to determine the provision (article No.18 (1)(c) of the ICC Reglament), it acceded to fix the payment provision
on its charge based on the maximum value determined by ICC Reglament (Apendix III). On September 4, 2008, the
Court issued the Order No.15 setting a schedule for the arbitration. After that, the parties have presented their
evidence, as well as their specific comments in relation with the information presented by the other party.
Additionally, on February 27 2009, the parties presented the briefs of claim and counterclaim, respectively, with the
corresponding evidence, having also submitted the reply to the briefs previously presented, as ordered by the Court.
On April 27, 2009, the parties presented their respective replies to the briefs previously presented, as ordered by the
Court, and Central Puerto claimed a new amount. On May 19, 2009, YPF rejected Central Puerto’s new claim
arguing that such claim should have been made on February 27. On May 26, 2009 Central Puerto rejected YPF’s
argument. On June 26, 2009 the parties entered into a settlement agreement by which the contract with Central
Nuevo Puerto, Central Puerto Nuevo, and the combined cycle in the city of Buenos Aires was terminated, resigning
the parties to any actions, rights or claims under the contract or this arbitration.
In addition, there are other claims in which YPF is party, which are not individually significant.
As of December 31, 2008, the Company has reserved costs for penalties associated with the failure to deliver the
contractual volumes of natural gas in the export and domestic markets which are probable and can be reasonably
estimated.
La Plata and Quilmes environmental claims:
La Plata: In relation with the operation of the refinery that YPF has in La Plata, there are certain claims for
compensation of individual damages purportedly caused by the operation of the La Plata Refinery and the
environmental remediation of the channels adjacent to the mentioned refinery. During 2006, YPF submitted a
presentation before the Environmental Ministry of the Province of Buenos Aires which put forward for
consideration the performance of a study for the characterization of environmental associated risks. As previously
mentioned, YPF has the right of indemnity for events and claims prior to January 1, 1991, according to Law
No. 24,145 and Decree No. 546/1993. Besides, there are certain claims that could result in the requirement to make
additional investments connected with the operations of La Plata Refinery.
Quilmes: Citizens which allege to be residents of Quilmes, province of Buenos Aires, have filed a lawsuit in which
they have requested remediation of environmental damages and also the payment of 47 plus interests as a
compensation for supposedly personal damages. They base their claim mainly on a fuel leak in the poliduct running
from La Plata to Dock Sud, currently operated by YPF, which occurred in 1988 as a result of an illicit detected at
that time, being at that moment YPF a state-owned company. Fuel would have emerged and became perceptible on
November 2002, which resulted in remediation works that are being performed by YPF in the affected area,
supervised by the environmental authority of the province of Buenos Aires. YPF has also notified the Argentine
Government that it will receive a citation, due to its obligation to indemnify YPF against any liability according to
Law No. 24,145, prior to requesting its citation before the Court upon YPF’s response to the complaint. The
Argentine Government has denied any responsibility to indemnify YPF for this matter, and YPF has sued the
Argentine Government to obtain a declaration of invalidity of such decision. The award is still pending. In addition,
other 29 judicial claims related to similar matters have been brought against YPF amounting to approximately 5.
Additionally, YPF is aware of the existence of other out of court claims which are based on similar allegations.
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•
•
Environmental contingencies and other claims of YPF Holdings Inc.- a wholly owned subsidiary of YPF.
Laws and regulations relating to health and environmental quality in the United States of America affect nearly all
the operations of YPF Holdings Inc. These laws and regulations set various standards regulating certain aspects of
health and environmental quality, provide for penalties and other liabilities for the violation of such standards and
establish in certain circumstances remedial obligations.
YPF Holdings Inc. believes that its policies and procedures in the area of pollution control, product safety and
occupational health are adequate to prevent unreasonable risk of environmental and other damage, and of resulting
financial liability, in connection with its business. Some risk of environmental and other damage is, however,
inherent in particular operations of YPF Holdings Inc. and, as discussed below, Maxus Energy Corporation
(“Maxus”) and Tierra Solutions Inc. (“Tierra”), both controlled by YPF Holdings Inc., could have certain potential
liabilities associated with operations of Maxus’ former chemical subsidiary.
YPF Holdings Inc. cannot predict what environmental legislation or regulations will be enacted in the future or how
existing or future laws or regulations will be administered or enforced. Compliance with more stringent law
regulations, as well as more vigorous enforcement policies of the regulatory agencies, could in the future require
material expenditures by YPF Holdings Inc. for the installation and operation of systems and equipment for
remedial measures, possible dredging requirements, among other things. Also, certain laws allow for recovery of
natural resource damages from responsible parties and ordering the implementation of interim remedies to abate an
imminent and substantial endangerment to the environment. Potential expenditures for any such actions cannot be
reasonably estimated.
In the following discussion, references to YPF Holdings Inc. include, as appropriate and solely for the purpose of
this information, references to Maxus and Tierra.
In connection with the sale of Maxus’ former chemical subsidiary, Diamond Shamrock Chemicals Company
(“Chemicals”) to Occidental Petroleum Corporation (“Occidental”) in 1986, Maxus agreed to indemnify Chemicals
and Occidental from and against certain liabilities relating to the business or activities of Chemicals prior to the
selling date, September 4, 1986 (the “selling date”), including environmental liabilities relating to chemical plants
and waste disposal sites used by Chemicals prior to the selling date.
As of December 31, 2008, reserves for the environmental contingencies and other claims totaled approximately 624.
YPF Holdings Inc.’s Management believes it has adequately reserved for all environmental contingencies, which are
probable and can be reasonably estimated; however, changes in circumstances, including new information or new
requirements of governmental entities, could result in changes, including additions, to such reserves in the future.
The most significant contingencies are described in the following paragraphs:
Newark, New Jersey. A consent decree, previously agreed upon by the U.S. Environmental Protection Agency
(“EPA”), the New Jersey Department of Environmental Protection and Energy (“DEP”) and Occidental, as
successor to Chemicals, was entered in 1990 by the United States District Court of New Jersey and requires
implementation of a remedial action plan at Chemical’s former Newark, New Jersey agricultural chemicals plant.
The approved remedy has been completed and paid for by Tierra. This project is in the operation and maintenance
phase. YPF Holdings Inc. has reserved approximately 51 as of December 31, 2008, in connection with such
activities.
Passaic River, New Jersey. Studies have indicated that sediments of the Newark Bay watershed, including the
Passaic River adjacent to the former Newark plant, are contaminated with hazardous chemicals from many sources.
These studies suggest that older and more contaminated sediments located adjacent to the former Newark plant
generally are buried under more recent sediments deposits. Maxus, forced to act on behalf of Occidental, negotiated
an agreement with the EPA under which Tierra has conducted further testing and studies near the plant site. While
some work remains in a pending state, these studies were substantially completed in 2005.
In addition:
•
YPF Holdings Inc. has been conducting similar studies under their own auspices for several years.
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•
•
•
•
•
The EPA and other agencies are addressing the lower Passaic River in a joint federal, state, local and private
sector cooperative effort designated as the Lower Passaic River Restoration Project (“PRRP”). Tierra, along
with other entities, participated in an initial remedial investigation and feasibility study (“RIFS”) in connection
with the PRRP. The parties are discussing the possibility of further work with the EPA. The entities have
agreed the allocations of costs associated with the RIFS, based on a number of considerations.
In 2003, the DEP issued Directive No. 1 to Occidental and Maxus and certain of their respective related
entities as well as other third parties. Directive No. 1 seeks to address natural resource damages allegedly
resulting from almost 200 years of historic industrial and commercial development along a portion of the
Passaic River and a part of its watershed. Directive No. 1 asserts that the named entities are jointly and
severally liable for the alleged natural resource damages without regard to fault. The DEP has asserted
jurisdiction in this matter even though all or part of the lower Passaic River has been designated as a Superfund
site and is a subject of the PRRP. Directive No. 1 calls for the following actions: interim compensatory
restoration, injury identification, injury quantification and value determination. Maxus and Tierra responded to
Directive No. 1 setting forth good faith defenses. Settlement discussions between the DEP and the named
entities have been hold, however, no agreement has been reached or is assured.
In 2004, the EPA and Occidental entered into an administrative order on consent (the “AOC”) pursuant to
which Tierra (on behalf of Occidental) has agreed to conduct testing and studies to characterize contaminated
sediment and biota in the Newark bay. The initial field work on this study, which includes testing in the
Newark Bay, has been substantially completed. Discussions with the EPA regarding additional work that might
be required are underway. EPA has notified other companies in relation to the contamination of the Newark
Bay. Additionally, Tierra, acting on behalf of Occidental, is performing a separate RIFS to characterize
sediment contamination and evaluate remediation, if necessary, in certain portions of the Hackensack River,
the Arthur Kill River and the Kill van Kull River. Tierra has reached an agreement with five of these parties to
share and contribute toward Newark Bay study costs, and is continuing to negotiate with other involved
parties.
In December 2005, the DEP issued a directive to Tierra, Maxus and Occidental directing said parties to pay the
State of New Jersey’s cost of developing a Source Control Dredge Plan focused on allegedly dioxin –
contaminated sediment in the lower six–mile portion of the Passaic River. The development of this plan is
estimated by the DEP to cost approximately US$ 2 million. This directive was issued even though this portion
of the lower Passaic River is a subject of the PRRP. The DEP has advised the recipients that (a) it is engaged in
discussions with the EPA regarding the subject matter of the directive, and (b) they are not required to respond
to the directive until otherwise notified. Additionally, in December 2005, the DEP sued YPF Holdings Inc.,
Tierra, Maxus and other several companies, besides to Occidental, in connection with the dioxin contamination
allegedly emanating from Chemicals’ former Newark plant and contaminating the lower portion of the Passaic
River, Newark Bay, other nearby waterways and surrounding areas. The DEP seeks remediation of natural
resources damaged and punitive damages and other matters. The defendants have made responsive pleadings
and filings. The Court denied motions to dismiss by Occidental Chemical Corporation, Tierra and Maxus. The
DEP filed its Second Amended Complaint in April 2008. YPF filed a motion to dismiss for lack of personal
jurisdiction. The motion mentioned previously was denied in September, 2008, and the denial was confirmed
by the Court of Appeal. Notwithstanding, the Court denied to plaintiffs’ motion to bar third party practice and
allowed defendants to file third-party complaints. Third-party claims against approximately 300 companies and
governmental entities (including certain municipalities) which could have responsibility in connection with the
demand were filed in February, 2009.
In June 2007, EPA released a draft Focused Feasibility Study (the “FFS”) that outlines several alternatives for
remedial action in the lower eight miles of the Passaic River. These alternatives range from no action, which
would result in comparatively little cost, to extensive dredging and capping, which according to the draft FFS,
EPA estimated could cost from US$ 0.9 billion to US$ 2.3 billion and are all described by EPA as involving
proven technologies that could be carried out in the near term, without extensive research. Tierra, in
conjunction with the other parties of the PRRP group, submitted comments on the legal and technical defects
of the draft FFS to EPA, as did other interested parties. In light of these comments, EPA decided to initiate his
review and informed that a revised remedy proposal will be forthcoming during 2009.
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•
•
In August 2007, the National Oceanic Atmospheric Administration (“NOAA”) sent a letter to the parties of the
PRRP group, including Tierra and Occidental, requesting that the group enters into an agreement to conduct a
cooperative assessment of natural resources damages in the Passaic River and Newark Bay. The PRRP group
has declined to do so at this time, citing concerns with matters such as the FFS being revised by EPA as
described above. Tierra, together with several other members, has entered into discussions concerning possible
studies to be undertaken. In January 2008, the NOAA sent a letter to YPF S.A., YPF Holdings Inc., CLH
Holdings Inc. and other entities, designating them as potentially responsible parties (“PRP”). Such letters have
been responded, rejecting the designation as PRP. In November 2008, Tierra and Occidental entered into an
agreement with the NOAA to fund a portion of the costs it has incurred and to conduct certain assessment
activities during 2009. Approximately 20 other PRRP members have also entered into similar agreements.
In June 2008, the EPA, Occidental, and Tierra entered into an AOC, pursuant to which Tierra (on behalf of
Occidental) will undertake a removal action of sediment from the Passaic River in the vicinity of the former
Diamond Alkali facility. This action will result in the removal of approximately 200,000 cubic yards of
sediment, which will be carried out in two different phases. The first phase, which is scheduled to begin in
2010, encompasses the removal of 40,000 cubic yards of sediments and is expected to be completed in nine
months. The first phase estimated cost is approximately US$ 45 million. The second phase involves the
removal of approximately 160,000 cubic yards of sediment. This second phase will start once the first phase is
completed. Pursuant to the AOC, the EPA has required the constitution of a trust fund of US$ 80 million for
the performance of the removal work. As of December 31, 2008, an initial deposit of US$ 2 million has been
deposited and an additional US$ 10 million must be contributed every six months, until the completion of the
US$ 80 million. During the removal action, contaminants not produced by the former Diamond Alkali plant,
such as PCBs and mercury, will necessarily be removed along with dioxin. Although having recognized the
estimated costs related to all works mentioned above, YPF Holdings and its subsidiaries may seek cost
recovery from the parties responsible for such contamination, provided contaminants’ origins were not from
the Diamond Alkali plant. However, as of December 31, 2008, it is not possible to make any predictions
regarding the likelihood of success or the funds potentially recoverable in a cost-recovery action.
As of December 31, 2008, there are approximately 296 reserved in connection with the foregoing matters related to
the Passaic River and surrounding area, comprising the estimated costs for studies, the YPF Holdings Inc.’s best
estimate of the cash flows it could incur in connection with remediation activities considering the studies performed
by Tierra, the estimated costs related to the agreement, and in addition certain other matters related to Passaic River
and the Newark Bay. However, it is possible that other works, including interim remedial measures, may be ordered.
In addition, the development of new information on the imposition of natural resource damages, or remedial actions
differing from the scenarios that YPF Holdings Inc. has evaluated could result in additional costs to the amount
currently reserved.
Hudson County, New Jersey. Until 1972, Chemicals operated a chromite ore processing plant at Kearny, New Jersey
(“Kearny Plant”). According to the DEP, wastes from these ore processing operations were used as fill material at a
number of sites in and near Hudson County. The DEP and Occidental, as successor to Chemicals, signed an
administrative consent order with the DEP in 1990 for investigation and remediation work at certain chromite ore
residue sites in Kearny and Secaucus, New Jersey.
Tierra, on behalf of Occidental, is presently performing the work and funding Occidental’s share of the cost of
investigation and remediation of these sites and is providing financial assurance in the amount of US$ 20 million for
performance of the work. The ultimate cost of remediation is uncertain. Tierra submitted its remedial investigation
reports to the DEP in 2001, and the DEP continues to review the report.
Additionally, in May 2005, the DEP took two actions in connection with the chrome sites in Hudson and Essex
Counties. First, the DEP issued a directive to Maxus, Occidental and two other chromium manufacturers directing
them to arrange for the cleanup of chromite ore residue at three sites in New Jersey City and the conduct of a study
by paying the DEP a total of US$ 20 million. While YPF Holdings Inc. believes that Maxus is improperly named
and there is little or no evidence that Chemicals’ chromite ore
F - 32
residue was sent to any of these sites, the DEP claims these companies are jointly and severally liable without regard
to fault. Second, the State of New Jersey filed a lawsuit against Occidental and two other entities in state court in
Hudson County seeking, among other things, cleanup of various sites where chromite ore residue is allegedly
located, recovery of past costs incurred by the state at such sites (including in excess of US$ 2 million allegedly
spent for investigations and studies) and, with respect to certain costs at 18 sites, treble damages. The DEP claims
that the defendants are jointly and severally liable, without regard to fault, for much of the damages alleged. In
February 2008, the parties reached an agreement for which Tierra will pay US$ 5 million and will perform
remediation works in three sites, with a total cost of approximately US$ 2 million. As a result YPF Holdings Inc.
has reserved 24 (which are included in the amount of 103 disclosed in the following paragraphs).
In November 2005, several environmental groups sent a notice of intent to sue the owners of the properties adjacent
to the former Kearny Plant (the “Adjacent Property”), including among others Tierra, under the Resource
Conservation and Recovery Act. The stated purpose of the lawsuit, if filed, would be to require the noticed parties to
carry out measures to abate alleged endangerments to health and the environment emanating from the Adjacent
Property. The parties have entered into an agreement that addresses the concerns of the environmental groups, and
these groups have agreed, at least for now, not to file suit.
Pursuant to a request of the DEP, in the second half of 2006, Tierra and other parties tested the sediments in a
portion of the Hackensack River near the former Kearny Plant. Whether additional work will be required, is
expected to be determined once the results of this testing have been analyzed.
In March 2008, the DEP approved an interim response action workplan for work to be performed at the Kearny
Plant by Tierra and the Adjacent Property by Tierra in conjunction with other parties. As a result YPF Holdings Inc.
has reserved 27 (which are included in the amount of 103 disclosed in the following paragraphs).
As of December 31, 2008, there are approximately 103 reserved in connection with the foregoing chrome-related
matters. The study of the levels of chromium in New Jersey has not been finalized, and the DEP is still reviewing
the proposed actions. The cost of addressing these chrome-related matters could increase depending upon the final
soil actions, the DEP’s response to Tierra’s reports and other developments.
Painesville, Ohio. In connection with the operation until 1976 of one chromite ore processing plant (“Chrome
Plant”), from Chemicals, the Ohio Environmental Protection Agency (“OEPA”) ordered to conduct a RIFS at the
former Painesville’s Plant area. Tierra has agreed to participate in the RIFS as required by the OEPA. Tierra
submitted the remedial investigation report to the OEPA, which report was finalized in 2003. Tierra will submit
required feasibility reports separately. In addition, the OEPA has approved certain work, including the remediation
of specific sites within the former Painesville Works area and work associated with the development plans discussed
below (the “Remediation Work”). The Remediation Work has begun. As the OEPA approves additional projects for
the site of the former Painesville Works, additional amounts will need to be reserved.
Over ten years ago, the former Painesville Works site was proposed for listing on the national Priority List under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”);
however, the EPA has stated that the site will not be listed so long as it is satisfactorily addressed pursuant to the
Director’s Order and OEPA’s programs. As of the date of issuance of these financial statements, the site has not
been listed. YPF Holdings Inc. has reserved a total of 15 as of December 31, 2008 for its estimated share of the cost
to perform the RIFS, the remediation work and other operation and maintenance activities at this site. The scope and
nature of any further investigation or remediation that may be required cannot be determined at this time; however,
as the RIFS progresses, YPF Holdings Inc. will continuously assess the condition of the Painesville’s plants works
site and make any required changes, including additions, to its reserve as may be necessary.
Third Party Sites. Pursuant to settlement agreements with the Port of Houston Authority and other parties, Tierra
and Maxus are participating (on behalf of Chemicals) in the remediation of property required Chemicals’ former
Greens Bayou facility where DDT and certain other chemicals were manufactured. Additionally, the parties have
reached an agreement with the Federal and State Natural Resources Trustees concerning natural resources damages,
which could require future additional contributions. As of December 31, 2008, YPF Holdings Inc. has reserved 43
for its estimated share of future remediation activities associated with the Greens Bayou facility.
F - 33
In June 2005, the EPA designated Maxus as a PRP at the Milwaukee Solvay Coke & Gas site in Milwaukee,
Wisconsin. The basis for this designation is Maxus alleged status as the successor to Pickands Mather & Co. and
Milwaukee Solvay Coke Co., companies that the EPA has asserted are former owners or operators of such site.
Preliminarily works in connection with the RIFS of this site commenced in the second half of 2006. YPF Holdings
Inc. has reserved 1 as of December 31, 2008 for its estimated share of the costs of the RIFS. YPF Holdings Inc.
lacks sufficient information to determine additional costs, if any it might have in respect of this site.
Maxus has agreed to defend Occidental, as successor to Chemicals, in respect of the Malone Services Company
Superfund site in Galveston County, Texas. This site is a former waste disposal site where Chemicals is alleged to
have sent waste products prior to September 1986. It is the subject of enforcement activities by the EPA. Although
Occidental is one of many PRPs that have been identified and have agreed to an AOC, Tierra (which is handling this
matter on behalf of Maxus) presently believes the degree of Occidental’s alleged involvement as successor to
Chemicals is relatively small. Chemicals has also been designated as a PRP with respect to a number of third party
sites where hazardous substances from Chemicals’ plant operations allegedly were disposed or have come to be
located. At several of these, Chemicals has no known vinculation. Although PRPs are typically jointly and severally
liable for the cost of investigations, cleanups and other response costs, each has the right of contribution from other
PRPs and, as a practical matter, cost sharing by PRPs is usually effected by agreement among them. As of
December 31, 2008, YPF Holdings Inc. has reserved 10 in connection with its estimated share of costs related to
certain sites and the ultimate cost of other sites cannot be estimated at the present time.
Black Lung Benefits Act Liabilities. The Black Lung Benefits Act provides monetary and medical benefits to miners
disabled with a lung disease, and also provides benefits to the dependents of deceased miners if black lung disease
caused or contributed to the miner’s death. As a result of the operations of its coal-mining subsidiaries, YPF
Holdings Inc. is required to provide insurance of this benefit to former employees and their dependents. As of
December 31, 2008, YPF Holdings Inc. has reserved 33 in connection with its estimate of these obligations.
Legal Proceedings. In 2001, the Texas State Controller assessed Maxus approximately US$ 1 million in Texas state
sales taxes for the period of September 1, 1995 through December 31, 1998, plus penalty and interest. In August
2004, the administrative law judge issued a decision affirming approximately US$ 1 million of such assessment,
plus penalty and interest. YPF Holdings Inc. believes the decision is erroneous, but has paid the revised tax
assessment, penalty and interest (a total of approximately US$ 2 million under protest). Maxus filed a suit in Texas
state court in December 2004 challenging the administrative decision. The matter will be reviewed by a trial de novo
in the court action.
In 2002, Occidental sued Maxus and Tierra in state court in Dallas, Texas seeking a declaration that Maxus and
Tierra have the obligation under the agreement pursuant to which Maxus sold Chemicals to Occidental to defend
and indemnify Occidental from and against certain historical obligations of Chemicals, including claims related to
“Agent Orange” and Vinyl Chloride Monomer (“VCM”), notwithstanding the fact that said agreement contains a
12-year cut-off for defense and indemnity obligations with respect to most litigation. Tierra was dismissed as a
party, and the matter was tried in May 2006. The trial court decided that the 12-year cut-off period did not apply and
entered judgment against Maxus. This decision was affirmed by the Court of Appeals in February 2008. Maxus has
petitioned the Supreme Court of Texas for review. This lawsuit was denied. This decision will require Maxus to
accept responsibility of various matters which it has refused indemnification since 1998 which could result in the
incurrence of costs in addition to YPF Holdings Inc.’s current reserves for this matter. As of December 31, 2008
YPF Holdings Inc. has reserved approximately 57 in respect to this matter. In March 2009, Maxus paid US$
15 million to Occidental, and remains in discussions with Occidental regarding additional costs.
In March 2005, Maxus agreed to defend Occidental, as successor to Chemicals, in respect of an action seeking the
contribution of costs incurred in connection with the remediation of the Turtle Bayou waste disposal site in Liberty
County, Texas. The plaintiffs alleged that certain wastes attributable to Chemicals found their way to the Turtle
Bayou site. Trial for this matter was bifurcated, and in the liability phase
F - 34
Occidental and other parties were found severally, and not jointly, liable for waste products disposed of at this site.
Trial in the allocation phase of this matter was completed in the second quarter of 2007, and the court has entered a
decision setting Occidental’s liability at 15.96% of those costs incurred by one of the plaintiffs. Occidental’s motion
has been filed with the court. That decision was appealed, and the parties are awaiting the court’s decision. As of
December 31, 2008, YPF Holdings Inc. has reserved 13 in respect of this matter.
YPF Holdings Inc., including its subsidiaries, is a party to various other lawsuits, the outcomes of which are not
expected to have a material adverse effect on YPF’s financial condition. YPF Holdings Inc. reserves legal
contingences that are probable and can be reasonably estimated.
•
EDF International S.A. (“EDF”) claim: EDF had initiated an international arbitration proceeding under the
Arbitration Regulations of the International Chamber of Commerce against Endesa Internacional S.A. and YPF.
EDF claimed from YPF the payment of US$ 69 million, which were subsequently increased to US$ 103 million plus
interests, without existing real arguments, in connection with the sale of Electricidad Argentina S.A., parent
company of Edenor S.A. EDF claimed an adjustment in the purchase price it paid arguing that under the stock
purchase agreement, the price it paid would be reviewed if changes in the exchange rate of Argentine peso occurred
prior to December 31, 2001. EDF considered that this had happened. On October 22, 2007, the Arbitral Court issued
an arbitral final award in which EDF’s claim and the defendants’ counterclaim were partially accepted.
Consequently, the arbitral final award imposed on YPF the payment of US$ 28.9 million plus interests and judicial
expenses. YPF and EDF are both currently challenging the arbitral decision. On April 22, 2008, the Federal
Appellate Court on Commercial Matters declared that the resource presented by YPF has suspension effects over the
arbitral decision. Nevertheless, EDF has seeked the enforcement of the arbitral decision before the court of the
district of Delaware, United States, which was rejected by YPF. Additionally, YPF has been notified that EDF is
also seeking the enforcement of the arbitral award before a court in Paris, France.
Additionally, YPF’s Management, believes that the following contingencies and claims, individually significant, have
possible outcome:
•
Availability of foreign currency deriving from exports: Decree No. 1,589/1989 of the Federal Executive provides
that producers enjoying free availability of crude oil, natural gas and/or liquefied gas under Law No. 17,319 and its
supplemental Decrees and producers that may agree so in the future will have free availability of the percentage of
foreign currency coming from the exports of crude oil, petroleum derivatives, natural gas and/or liquefied gas of free
availability established in biddings and/or renegotiations, or agreed-upon in the respective contracts. In no cases will
the maximum freely available percentage be allowed to exceed 70% of each transaction.
During year 2002, several government organizations considered that free availability of foreign currency provided
by Decree No. 1,589/1989 was implicitly abolished by Decree No. 1,606/2001.
On December 31, 2002, Decree No. 2,703/2002 was enforced, ratifying such date the 70% limit as the maximum
freely available percentage of foreign currency deriving from the exports of crude oil and petroleum derivatives,
without providing a conclusion in regards to the exports performed during the year 2002, after the issuance of
Decree No. 1,606/2001. The Central Bank has indicted YPF on charges allegedly related to certain exports
performed during 2002, once the executive order 1,606/2001 was no longer in force and before the executive order
2,703/2002 came into effect. Therefore, YPF will file an answer to the charges and will offer evidence in this regard.
In case YPF is indicted on charges involving other exports during the said period, YPF has the right to challenge the
decision as well as to request the issuance of precautionary measures.
There is a recently confirmed sentence, connected with a proceeding to another hydrocarbon exporter, where the
claim was the same and that company and its directors were acquitted of all charges because it was considered that
such company was exempt from the liquidation and negotiation of the 70% of the foreign currency deriving from the
hydrocarbon exports. Additionally, the Office of the General Prosecutor of Argentina has recently issued an opinion,
in a similar claim, analyzing the behavior of another oil and gas company. According to that opinion, no violations
had been committed as the uncertainty associated with the scope of the liability was generated by the existence of
different rules. Due to the absence of intention in the
F - 35
•
•
behavior, the Office of the General Prosecutor of Argentina has pronounced in favor of filing the claims.
Additionally, the National Administrative Court of Appeals decided, by judgment dated April 30, 2009, in judicial
proceedings initiated by another oil and gas company, that this free disposal regime of up to 70% of the foreign
currency proceeds from the exports of crude oil and its derivatives was in force during 2002, based on the fact that
the special regime was in effect from the day following the publication of Decree No. 1638/2001 (December 12,
2001). It is unknown whether the National State has filed an appeal against said decision which should be decided
by the Argentine Supreme Court.
Asociación Superficiarios de la Patagonia (“ASSUPA”): In August 2003, ASSUPA sued 18 companies operating
exploitation concessions and exploration permits in the Neuquén Basin, YPF being one of them, claiming the
remediation of the general environmental damage purportedly caused in the execution of such activities, and
subsidiary constitution of an environmental restoration fund and the implementation of measures to prevent
environmental damages in the future. The plaintiff requested that the National Government, the Federal
Environmental Council (“Consejo Federal de Medio Ambiente”), the provinces of Buenos Aires, La Pampa,
Neuquén, Río Negro and Mendoza and the Ombudsman of the Nation be summoned. It requested, as a preliminary
injunction, that the defendants refrain from carrying out activities affecting the environment. Both the Ombudsman’s
summon as well as the requested preliminary injunction were rejected by the CSJN. YPF has answered the demand
requesting its rejection, opposing failure of the plaintiff and requiring the summon of the National Government, due
to its obligation to indemnify YPF for events and claims previous to January 1, 1991, according to Law No. 24,145
and Decree No. 546/1993. The CSJN gave the plaintiffs a term to correct the defects of the complaint. On
August 26, 2008 the CSJN decided that such defects had already been corrected, and still has to decide on pending
matters such as the summons of the National Government, the provinces, and making available to the plaintiffs the
defendants motion.
Dock Sud environmental claims:
A group of neighbors of Dock Sud, Province of Buenos Aires, have sued 44 companies, among which YPF is
included, the National Government, the Province of Buenos Aires, the City of Buenos Aires and 14 municipalities,
before the CSJN, seeking the remediation and the indemnification of the environmental collective damage produced
in the basin of the Matanza and Riachuelo rivers. Additionally, another group of neighbors of the Dock Sud area,
have filed two other environmental lawsuits, one of them desisted in relation to YPF, claiming several companies
located in that area, among which YPF is included, the Province of Buenos Aires and several municipalities, for the
remediation and the indemnification of the environmental collective damage of the Dock Sud area and for the
individual damage they claim to have suffered. At the moment, it is not possible to reasonably estimate the outcome
of these claims, as long as, if applicable, estimate the corresponding legal fees and expenses that might result. YPF
has the right of indemnity by the Argentine Government for events and claims previous to January 1, 1991,
according to Law No. 24,145 and Decree No. 546/1993.
By means of sentence dated July 8, 2008, the CSJN:
(i) Determined that the Basin Authority (Law No. 26,168) should be in charge of the execution of the program of
environmental remediation of the basin, being the National Government, the Province of Buenos Aires and the
City of Buenos Aires responsible of its development; delegated in the Federal Court of First Instance of
Quilmes the knowledge of all the matters concerning the execution of the remediation and reparation; declared
that all the litigations related to the execution of the remediation plan will accumulate and will proceed before
this court and established that this process produces that other collective actions that have for object the
environmental remediation of the basin be dismissed (“littispendentia”);
(ii) Decided that the proceedings related to the determination of the responsibilities derived from past behaviors for
the reparation of the environmental damage will continue before the CSJN.
F - 36
•
National Antitrust Protection Board: On November 17, 2003, Antitrust Board requested explanations, within the
framework of an official investigation pursuant to Art. 29 of the Antitrust Law, from a group of almost thirty natural
gas production companies, among them YPF, with respect to the following items: (i) the inclusion of clauses
purportedly restraining trade in natural gas purchase/sale contracts; and (ii) observations on gas imports from
Bolivia, in particular (a) old expired contract signed by YPF, when it was state-owned, and YPFB (the Bolivian
state-owned oil company), under which YPF allegedly sold Bolivian gas in Argentina at prices below the purchase
price; and (b) the unsuccessful attempts in 2001 by Duke and Distribuidora de Gas del Centro to import gas into
Argentina from Bolivia. On January 12, 2004, YPF submitted explanations in accordance with Art. 29 of the
Antitrust Law, contending that no antitrust violations had been committed and that there had been no price
discrimination between natural gas sales in the Argentine market and the export market. On January 20, 2006, YPF
received a notification of resolution dated December 2, 2005, whereby the Antitrust Board (i) rejected the “non bis
in idem” petition filed by YPF, on the grounds that ENARGAS was not empowered to resolve the issue when
ENARGAS Resolution No. 1,289 was enacted; and (ii) ordered that the opening of the proceedings be undertaken
pursuant to the provisions of Section 30 of Law No. 25,156. On January 15, 2007, Antitrust Board charged YPF and
eight other producers with violations of Law No. 25,156. YPF has contested the complaint on the basis that no
violation of the Law took place and that the charges are barred by the applicable statute of limitations, and has
presented evidence in support of its position. On June 22, 2007, YPF presented to the Antitrust Board, without
acknowledging any conduct in violation of the Antitrust Law, a commitment consistent with Article 36 of the
Antitrust Law, requiring to the Antitrust Board to approve the commitment, to suspend the investigation and to file
the proceedings. On December 14, 2007, the Antitrust Board decided to transfer the motion to the Appeal Court as a
consequence of the appeal presented by YPF against the rejection of the application of the statute of limitation.
The Antitrust Board has started proceedings to investigate YPF for including a clause in bulk LPG (Liquid
Petroleum Gas) supply contracts that it believes prevents the buyer from reselling the product to a third party and
therefore restricts competition in a manner detrimental to the general economic interest. YPF has asserted that the
contracts do not contain a prohibition against resale to third parties and has offered evidence in support of its
position. On April 12, 2007, YPF presented to the Antitrust Board, without acknowledging any conduct in violation
of the Antitrust Law, a commitment consistent with Article 36 of the Antitrust Law, in which it commits, among
other things, to refrain from including a clause with the destiny of the product in future bulk LPG supply contracts.
On November 5, 2008, the Secretary of Domestic Commerce notified YPF the approval of the commitment
formulated by YPF, requiring YPF to communicate and publish the commitment for one day in the Official Gazette
and in other newspaper and suspended the proceedings for three years. YPF has complied with the aforementioned
notification and publication requirements.
Other environmental claims in La Plata: On June 6, 2007, YPF was served with a new complaint in which 9
residents of the vicinity of La Plata Refinery request: i) the cease of contamination and other harms they claim are
attributable to the refinery; and ii) the clean-up of the adjacent channels, Río Santiago and Río de la Plata (soil,
water and acquiferous, including those of the refinery) or, if clean-up is impossible, indemnification for
environmental and personal damages. The plaintiff has quantified damages in 51 or an amount to be determined
from evidence produced during the proceeding. YPF believes that most damages that are alleged by the plaintiff,
might be attributable to events that occurred prior to YPF’s privatization and would, therefore, be covered to that
extent by the indemnity granted by the Argentine Government in accordance with the Privatization Law of YPF.
The Court has accepted the summon of the Argentine Government in this matter. Notwithstanding the foresaid, the
possibility of YPF being asked to afford these liabilities is not discarded, in which case the Argentine Government
must be asked to reimburse the remediation expenses for liabilities existing prior to January 1, 1991. In addition, the
claim partially overlaps with the request made by a group of neighbors of La Plata Refinery on June 29, 1999,
described in the first paragraph of “La Plata and Quilmes environmental claims”. Accordingly, YPF considers that
the cases should be partially consolidated to the extent that the claims overlap. Regarding claims not consolidated,
information and documents in order to answer the claim are being collected, and for the time being, it is not possible
to reasonably estimate the outcome, as long as, if applicable, estimate the corresponding legal fees and expenses that
might result. The contamination that may exist could derive from countless sources, including from disposal of
waste over many years by other industrial facilities and ships.
•
F - 37
Additionally, YPF is aware of an action that has not been served yet, in which the plaintiff requests the clean-up of
the channels adjacent to the La Plata Refinery, in Río Santiago, and other sectors near the coast line, and, if such
remediation is not possible, an indemnification of 500 (approximately US$ 145 million) or an amount to be
determined from evidence produced in discovery. The claim partially overlaps with the requests made by a group of
neighbors of La Plata Refinery on June 29, 1999, described in the first paragraph of “La Plata and Quilmes
environmental claims”, and with the complaint served on June 6, 2007, mentioned in the previous paragraph.
Accordingly, YPF considers that if it is served in this proceeding or any other proceeding related to the same subject
matters, the cases should be consolidated to the extent that the claims overlap. With respect to claims not
consolidated, for the time being, it is not possible to reasonably estimate the monetary outcome, as long as, if
applicable, estimate the corresponding legal fees and expenses that might result. Additionally, YPF believes that
most damages alleged by the plaintiff, if proved, might be attributable to events that occurred prior to YPF’s
privatization and would therefore be the responsibility of the Argentine Government in accordance with the
Privatization Law concerning YPF.
Other claims related to the natural gas domestic market: Compañía Mega has claimed YPF for cutbacks in natural
gas supply pursuant to their respective sales contract. YPF affirmed that the deliveries of natural gas to Compañía
Mega were affected by the interference of the Argentine Government. Besides, YPF would not have any
responsibility based on the events of force majeure, fortuitous case and frustration of the contractual purpose.
Despite YPF has material arguments of defense, taking into account the characteristics of the claims, they have been
considered as possible contingencies.
Hydrocarbon’s concessions - Provincial claims: YPF has been notified of the Resolution No. 433/2008 issued by
the Direction of Hydrocarbons, Ministry of Production of the Province of Río Negro, concerning compliance with
certain obligations assumed as production concessionaire of the areas Barranca de los Loros, Bajo del Piche, El
Medanito and Los Caldenes, all of them located in the Province of Río Negro. The resolution provides that YPF,
among others, has not complied with certain obligations as production concessionaire and claims for damages to the
environment.
Considering the previous paragraph and the dispositions of the Law No. 17,319 (Law of Hydrocarbons), YPF was
requested to submit its discharge at risk of termination of the mentioned concessions. However, the mentioned Law
grants the concessionaire and/or licensee the right, prior to termination of the concession, to cure a contractual
breach within a certain period of time after receiving notice thereof. In this order, on May 29, 2008, YPF filed a
request for nullification of the Resolution No. 433/2008, since this resolution fail to grant YPF the mentioned right.
Additionally, on June 13, 2008, YPF submitted a response, denying the mentioned charges. On November 12, 2008,
the Ministry of Production ordered the initiation of the evidence production period. On November 28, 2008, YPF
requested the production of certain evidence and the appointment of a technical expert. As of the issuance date of
these financial statements, YPF has argued certain aspects related with the production of evidence.
Arbitration process initiated by Transportadora de Gas del Mercosur S.A. (“TGM”): YPF was notified of an
arbitration process brought by TGM against YPF before the ICC, claiming unpaid and outstanding invoices in an
approximate amount of US$ 10 million plus interest, in connection with the transportation fee established in the
natural gas transportation contract entered into in September 1998 between YPF and TGM, associated with the
natural gas export contract entered into by YPF and AESU previously mentioned. On April 8, 2009, YPF requested
the rejection of this claim and counterclaimed asking for the termination of the natural gas transportation contract,
based on the termination promoted by AESU and Companhía de Gás do Estado do Río Grande do Sul (“Sulgás”) of
the natural gas export contract.
Administrative presentation against Transportadora de Gas del Norte S.A. (“TGN”): On April 8, 2009, YPF filed a
complaint against TGN before the ENARGAS, seeking the termination of the natural gas transportation contract
with TGN to transport natural gas associated with the natural gas export contract entered with AESU and other
parties. The termination of the contract with TGN is based on: (a) the impossibility of YPF to use and of TGN to
render the natural gas transportation service due to the
•
•
•
•
F - 38
conjunction of (i) the termination of the natural gas contract with Sulgas/AESU and (ii) the legal impossibility of
assigning the transportation contract to other parties under current regulatory framework, (b) the legal impossibility
of TGN to render the transportation service on a firm basis as a consequence of certain changes in the regulatory
framework since 2004, and (c) the Hardship Provision (teoría de la imprevisión) as defined under Argentine law,
upon the existence of extraordinary events which caused an excessive burden.
•
Pluspetrol Energy S.A. contractual obligations: Pluspetrol Energy S.A. (“Pluspetrol”), a domestic YPF’s investee as
detailed in Note 16.b), and Gas Atacama Generación S.A. (“Gas Atacama”), had reached an agreement through
which, in case that Pluspetrol could not fulfill its natural gas delivery obligations, it would indemnify Gas Atacama.
This agreement would come into effect once ratified by the Secretariat of Energy. However, in March 10, 2008, the
Ministry of Economy and Production issued Resolution No. 127/2008, by which natural gas export withholding rate
was increased, significantly changing the commercial terms of the aforementioned agreement. Consequently,
Pluspetrol informed Gas Atacama and the Secretariat of Energy its intention to terminate the aforementioned
agreement. As a result, the parties have initiated conversations in order to reach a new agreement considering the
new regulatory framework.
Additionally, the Company has received other labor, civil and commercial claims and several claims from the AFIP and
from provincial and municipal fiscal authorities, not individually significant, which have not been reserved since
Management, based on the evidence available to date has considered them to be possible contingencies.
b) Environmental liabilities:
YPF is subject to various provincial and national laws and regulations relating to the protection of the environment. These laws
and regulations may, among other things, impose liability on companies for the cost of pollution clean-up and environmental
damages resulting from operations. Management believes that the Company’s operations are in substantial compliance with
Argentine laws and regulations currently in force relating to the protection of the environment, as such laws have historically
been interpreted and enforced.
However, the Company is periodically conducting new studies to increase its knowledge concerning the environmental situation
in certain geographic areas where the Company operates in order to establish their status, causes and necessary remediations
and, based on the aging of the environmental issue, to analyze the possible responsibility of Argentine Government, in
accordance with the contingencies assumed by the Argentine Government for liabilities existing prior to December 31, 1990.
Until these studies are completed and evaluated, the Company cannot estimate what additional costs, if any, will be required.
However, it is possible that other works, including provisional remedial measures, may be required.
In addition to the hydrocarbon wells abandonment legal obligations for 3,677 as of December 31, 2008, the Company has
reserved 429 corresponding to environmental remediations in Argentina, which evaluations and/or remediation works are
probable, significant and can also be reasonably estimated, based on the Company’s existing remediation program. Future
legislative changes on individual costs and technologies may cause a re-evaluation of the estimates. The Company cannot
predict what environmental legislation or regulation will be enacted in the future or how future laws or regulations will be
administered. In the long-term, this potential changes and ongoing studies could materially affect future results of operations.
c) Contractual commitments and regulatory requirements:
•
Contractual commitments: In June 1998, YPF received an advanced payment for a crude oil future delivery commitment for
approximately US$ 315 million. The pending amount of this advance for sales of crude oil was classified as “Net advances from
crude oil purchasers” on the balance sheet as of December 31, 2007 and 2006. As of December 31, 2008, there are no pending
obligations corresponding to the mentioned commitment.
F - 39
Additionally, the Company has signed other contracts by means of which it has committed to buy certain products and services,
and to sell natural gas, liquefied petroleum gas and other products. Some of the mentioned contracts include penalty clauses that
stipulate compensations for a breach of the obligation to receive deliver or transport the product object of the contract. In
particular, YPF has renegotiated certain natural gas export contracts, and has agreed certain limited compensations in case of
any delivery interruption or suspension, for any reason, except for physical force majeure event.
Natural gas regulatory requirements: In addition to the regulations that affect the natural gas market mentioned in “Natural gas
•
market” (Note 10.a), on June 14, 2007, Resolution No. 599/2007 of the Secretariat of Energy was published in the Official
Gazette (the “Resolution”). This Resolution approved an agreement with natural gas producers regarding the natural gas supply
to the domestic market during the period 2007 through 2011 (the “Agreement 2007-2011). The purpose of this Agreement 2007-
2011 is to guarantee the normal supply of the natural gas domestic market during the period 2007 through 2011, considering the
domestic market demand registered during 2006 plus the growth of residential and small commercial customer’s consumption
(the “Priority Demand”). According to the Resolution, the producers that have signed the Agreement 2007-2011 commit to
supply a part of the Priority Demand according to certain percentage determined for each producer based upon its share of
production for the 36 months period prior to April 2004. In case of shortage to supply the Priority Demand, natural gas exports
of producers that did not sign the Agreement 2007-2011 will be the first to be called upon in order to satisfy such mentioned
shortage. The Agreement 2007-2011 also establishes terms of effectiveness and pricing provisions for the Priority Demand
consumption. Considering that the Resolution anticipates the continuity of the regulatory mechanisms that affect the exports,
YPF has appealed the Resolution and has expressly stated that the execution of the Agreement 2007-2011 does not mean any
recognition by YPF of the validity of that Resolution. On June 22, 2007, the National Direction of Hydrocarbons notified that
the Agreement 2007-2011 reached the sufficient level of subscription.
•
Liquid hydrocarbons regulatory requirements: Resolution No. 1,679/04 of the Secretariat of Energy reinstalled the registry of
diesel and crude oil export transactions created by Executive Decree No. 645/2002, and mandated that producers, sellers,
refining companies and any other market agent that wishes to export diesel or crude oil to register such transaction and to
demonstrate that domestic demand has been satisfied and that they have offered the product to be exported to the domestic
market. In addition, Resolution No. 1,338/06 of the Secretariat of Energy added other petroleum products to the registration
regime created by Executive Decree No. 645/2002, including gasoline, fuel oil and its derivatives, aviation fuel, coke coal,
asphalts, certain petrochemicals and certain lubricants. Resolution No. 715/2007 of the Secretariat of Energy empowered the
National Refining and Marketing Director to determine the amounts of diesel to be imported by each company, in specific
periods of the year, to compensate exports of products included under the regime of Resolution No. 1,679/04; the fulfillment of
this obligation to import diesel is necessary to obtain authorization to export the products included under Decree No. 645/2002
(crude, fuel oil, diesel, coke coal and gasoline, among others). In addition, Resolution No. 25/06 of the Secretariat of Domestic
Commerce, issued within the framework of Law No. 20,680, imposes on each Argentine refining company the obligation to
supply all reasonable diesel fuel demand, by supplying certain minimum volumes (which at least should be volumes supplied
the year before plus the positive correlation between diesel demand and GDP accumulated from the month reference). The
mentioned commercialization should be done without altering or affecting the normal operation of the diesel market.
Additionally, Rule 168/04 requires companies intending to export LPG to first obtain an authorization from the Secretariat of
Energy, by demonstrating that local demand was satisfied or that an offer to sell LPG to local demand has been made and
rejected.
In January 2008, the Secretariat of Domestic Commerce issued Resolution No.14/2008, whereby the refining companies were
instructed to optimize their production in order to obtain maximum volumes according to their capacity.
F - 40
•
Other regulatory requirements: In connection with certain natural gas export contracts from the Noroeste basin in Argentina,
YPF presented to the Secretariat of Energy the accreditation of the existence of natural gas reserves of that basin in adherence to
export permits. In case the Secretariat of Energy considers that the natural gas reserves are insufficient, it could resolve the
expiration or partial or total suspension of one or several export permits. The Secretariat of Energy limited preventively the
exportable volumes of natural gas in a 20% by Note No. 1,009/2006. All of this is connected with the export authorization given
by Resolution No. 167/1997 of the Secretariat of Energy (80% of the maximum exportable quantities still remain).
During 2005, the Secretariat of Energy by means of Resolution No. 785/2005 modified by Resolution No. 266/2008 of the
Ministry of Federal Planning, Public Investment and Services, created the National Program of Hydrocarbons and its derivatives
Warehousing Aerial Tank Loss Control, measure aimed at reducing and correcting environmental pollution caused by
hydrocarbons and its derivatives warehousing-aerial tanks. The Company has begun to develop and implement a technical and
environmental audit plan as required by the resolution.
•
Agreements of extension of concessions:
(i) Agreement with the Federal Government and the Province of Neuquén of the year 2000: On December 28, 2000, through
Decree No. 1,252/2000, the Argentine Federal Executive Branch (the “Federal Executive”) extended for an additional term
of 10 years, until November 2027, the concession for the exploitation of Loma La Lata—Sierra Barrosa area granted to
YPF. The extension was granted under the terms and conditions of the Extension Agreement executed between the Federal
Government, the Province of Neuquén and YPF on December 5, 2000. Under this agreement, YPF paid US$ 300 million to
the Federal Government for the extension of the concession mentioned above, which were recorded in “Fixed Assets” on
the balance sheet and committed, among other things, to define a disbursement and investment program of US$
8,000 million in the Province of Neuquén from 2000 to 2017 and to pay to the Province of Neuquén 5% of the net cash
flows arising out of the concession during each year of the extension term. The previously mentioned commitments have
been affected by the changes in economic rules established by Public Emergency and Exchange System Reform Law
No. 25,561.
(ii) Agreement with the Province of Neuquén of the year 2008: In September, 2008, pursuant to the notice provided to
companies holding production concessions by the Province of Neuquén, through Provincial Decree No. 822/2008, YPF
entered into a Memorandum of Agreement provided under such Regulation and an Addendum to such agreement
(hereinafter, the “Memorandum of Agreement”) to extend the term of eight production concessions identified below. On
October 9, 2008, Provincial Act No. 2,615 approved the Memorandum of Agreement, which was enacted by provincial
executive decree No. 1,830/2008, and was published in Official Gazette No. 3109 of the Province of Neuquén.
The Memorandum of Agreement between YPF and the Province of Neuquén establishes the following provisions, among
others:
•
Concessions involved: Cerro Bandera, Señal Cerro Bayo, Chihuido de la Sierra Negra, El Portón, Filo Morado,
Octógono, Señal Picada – Punta Barda and Puesto Hernández.
•
•
Extension of concession terms within the Province of Neuquén: production concession terms, which were originally
set to expire on November 14, 2017, are extended for a 10-year term, up to November 14, 2027.
Under Provincial Decree No. 822/2008, YPF undertook the following commitments upon the execution of the
Memorandum of Agreement: i) to make, on the date specified in the Memorandum of Agreement, initial payments
of US$ 109 million, US$ 26 million, and US$ 40 million; ii) to pay in cash to the Province an “Extraordinary
Production Royalty” of 3% of the production of the areas involved in the Memorandum of Agreement. In addition,
the parties agreed to make additional adjustments of up to an additional 3% in the event of an extraordinary income
arising from lower export duties or from higher realized price from the sale of crude oil and/or natural gas according
to a mechanism and reference values established in the Memorandum of Agreement; iii) to carry out exploration
activities in the
F - 41
remaining exploration areas and make certain investments and expenditures in a total amount of US$ 3,200 million
and iv) to make “Corporate Social Responsibility” contributions to the Province of Neuquén in an amount of US$
20 million, which will be made effective in the years 2008, 2009 and 2010. The purpose of such contributions will
be to assist the Province in the development of education, environment, health, culture, science and research and
community development areas.
(iii) Agreements with the Province of Neuquén of the year 2009:
•
•
Aguada Pichana and San Roque: Pursuant to the notice provided to companies holding production concessions by
the Province of Neuquén, through Provincial Decree No. 822/2008, YPF, together with Total Austral S.A., Pan
American Energy LLC Sucursal Argentina (“PAE”)and Wintershall Energía S.A. entered into a Memorandum of
Agreement with the province of Neuquén, to extend until the year 2027 the term of Aguada Pichana and San Roque
Concessions (the “Memorandum of Agreement AP and SR”).
The aforementioned companies undertook the following commitments: i) to make a total initial payment of US$
88 million, paying each company on a pro rata basis based on its working interest in the area (US$ 26 million for
YPF); ii) to pay in cash to the Province an “Extraordinary Production Royalty” of 3% of the production of the areas
involved in the Memorandum of Agreement AP and SR. In addition, the parties agreed to make adjustments of up to
an additional 3% in the event of an extraordinary income arising from higher realized price from the sale of crude oil
and/or natural gas according to a mechanism established in the Memorandum of Agreement AP and SR; iii) to carry
out exploration activities in the remaining exploration areas and make certain investments and expenditures in a total
amount of US$ 883 million, including US$ 133 million corresponding to investment commitments over the
remaining exploration area, except in case of total or partial reversal of the area; and iv) to make “Corporate Social
Responsibility” contributions to the Province of Neuquén in an amount of US$ 10 million (US$ 3 million based on
YPF’s interest). Payments will be made effective in monthly installments, according to the Memorandum
Agreement AP and SR.
Lindero Atravesado: In May, 2009, YPF, jointly with PAE entered into a memorandum of agreement with the
province of Neuquén, to extend until the year 2026 the term of Lindero Atravesado Concession. In June 2009, the
memorandum was approved by all parties. The parties also agreed to the following: (i) to make a total initial
payment of US$ 8 million, paying each company on a pro rata basis based on its working interest in the area
(approximately US$ 3 million for YPF); ii) to pay in cash to the province an “Extraordinary Production Royalty” of
3% of the production of the areas involved. In addition, the parties agreed to make adjustments of up to an additional
3% in the event of an extraordinary income arising from higher realized price from the sale of crude oil and/or
natural gas according to a mechanism established in the Memorandum of Agreement; iii) to carry out exploration
activities in the remaining exploration areas and make certain investments and expenditures in a total amount of
US$ 132 million through 2026; and iv) to make “Corporate Social Responsibility” contributions to the province of
Neuquén in an amount of US$ 1 million (US$ 0.3 million based on YPF’s interest). Notwithstanding the approval of
the memorandum by the province of Neuquén, it will become effective with the publication of a Decree of the
province. As of the issuance date of these financial statements, such publication is still pending.
d) Operating leases:
As of December 31, 2008, the main lease contracts correspond to the rental of oil and gas production equipment, ships, natural
gas compression equipment and real estate for service stations. Charges recognized under these contracts for the years ended
December 31, 2008, 2007 and 2006, amounted to 466, 396 and 323, respectively.
As of December 31, 2008, estimated future payments related to these contracts are as follows:
Estimated future payments
386
215
135
87
43
147
Within 1
year
From 1 to 2
years
From 2 to 3
years
From 3 to 4
years
From 4 to 5
years
More than 5
years
F - 42
11. RESTRICTIONS ON UNAPPROPRIATED RETAINED EARNINGS
In accordance with the provisions of Law No. 19,550, 5% of net income for each fiscal year has to be appropriated to the legal reserve
until such reserve reaches 20% of the Company’s capital (subscribed capital plus adjustment to contributions). Consequently,
unappropriated retained earnings are restricted by 19 as of December 31, 2008.
Under Law No. 25,063, dividends distributed, either in cash or in kind, in excess of accumulated taxable income as of the end of the
year immediately preceding the dividend payment or distribution date, shall be subject to a 35% income tax withholding as a sole and
final payment, except for those distributed to shareholders resident in countries benefited from conventions for the avoidance of
double taxation, which will be subject to a minor tax rate.
12. MAIN CHANGES IN COMPANIES COMPRISING THE YPF GROUP
During the year ended December 31, 2007:
•
•
YPF acquired an additional 18% interest in Oleoducto Trasandino (Argentina) S.A., a 18% interest in Oleoducto
Trasandino (Chile) S.A. and a 18% interest in A&C Pipeline Holding Company, for an amount of US$ 5.3 million.
YPF sold its interest in Petróleos Trasandinos S.A., for an amount of US$ 2 million, recording a gain of 5.
During the year ended December 31, 2006:
•
YPF International S.A., controlled by YPF, sold for an amount of U$S 10.6 million, its interest in Greenstone Assurance
Ltd., recording a gain of 11.
13. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE
COMPANY AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The consolidated financial statements have been prepared in accordance with Argentine GAAP, which differs in certain respects from
generally accepted accounting principles in the United States of America (“U.S. GAAP”).
The differences between Argentine GAAP and U.S. GAAP are reflected in the amounts provided in Notes 14 and 15 and principally
relate to the items discussed in the following paragraphs:
a.
Functional and reporting currency
Under Argentine GAAP, financial statements are presented in constant Argentine pesos (“reporting currency”), as mentioned in Note
1. Foreign currency transactions are recorded in Argentine pesos by applying to the foreign currency amount the exchange rate
between the reporting and the foreign currency at the date of the transaction. Exchange rate differences arising on monetary items in
foreign currency are recognized in the income statement of each year.
Under U.S. GAAP, a definition of the functional currency is required, which may differ from the reporting currency. Management has
determined for YPF and certain of its subsidiaries and investees the U.S. dollar as its functional currency in accordance with the
Statement of Financial Accounting Standards (“SFAS”) No. 52, “Foreign Currency translation” (“SFAS No. 52”). Therefore, the
Company has remeasured into U.S. dollars its financial statements and the financial statements of the mentioned subsidiaries and
investees as of December 31, 2008, 2007 and 2006, prepared in accordance with Argentine GAAP by applying the procedures
specified in SFAS No. 52. The objective of the remeasurement process is to produce the same results that would have been reported if
the accounting records had been kept in the functional currency. Accordingly, monetary assets and liabilities are remeasured at the
balance sheet date (current) exchange rate. Amounts carried at prices in past transactions are remeasured at the exchange rates in
effect when the transactions occurred. Revenues and expenses are remeasured on a monthly basis at the average rates of exchange in
effect during the period, except for consumption of nonmonetary assets, which are remeasured at the rates of exchange in effect when
the respective assets were acquired. Translation gains and losses on monetary assets and liabilities arising from the remeasurement are
included in the determination of net income (loss) in the period such gains and losses arise. For certain YPF’s subsidiary and
investees, Management has determined the Argentine peso as its functional currency. Translation adjustments resulting from the
process of translating the financial statements of the mentioned subsidiary and investees into U.S. dollars are not included in
determining net income and are reported in other comprehensive income (“OCI”) as a component of shareholders’ equity.
F - 43
The amounts obtained from the process referred to above are translated into Argentine pesos following the provisions of SFAS
No. 52. Assets and liabilities were translated at the current selling exchange rate of Argentine pesos 3.45, 3.15 and 3.06 to US$ 1, as
of December 31, 2008, 2007 and 2006, respectively. Revenues, expenses, gains and losses reported in the income statement are
translated at the exchange rate existing at the time of each transaction or, if appropriate, at the weighted average of the exchange rates
during the period. Translation effects of exchange rate changes are included in OCI as a component of shareholders’ equity.
b.
Proportional consolidation
As discussed in Note 1, YPF has proportionally consolidated, net of intercompany transactions, assets, liabilities, net sales, costs and
expenses of investees in which joint control is held. Under U.S. GAAP these investees are accounted for by the equity method. The
mentioned proportional consolidation generated under Argentine GAAP an increase of 648, 486 and 446 in total assets and total
liabilities as of December 31, 2008, 2007 and 2006, respectively, and an increase of 1,770, 1,350 and 1,451 in net sales and 681, 690
and 774 in operating income for the years ended December 31, 2008, 2007 and 2006, respectively.
c.
Valuation of inventories
As described in Note 2.b, the Company values its inventories of refined products for sale, products in process of refining and
separation, crude oil and natural gas at replacement cost provided that does not exceed net realizable value. Under U.S. GAAP, these
inventories should be valued at the lower of cost or market, which is defined as replacement cost, provided that it does not exceed net
realizable value or is not less than net realizable value reduced by a normal profit margin. As the turnover ratio of inventories is high,
there have been no significant differences between inventories valued at replacement cost and at historical cost using first in first out
(“FIFO”) method for the years presented.
d.
Impairment of long-lived assets
Under Argentine GAAP, in order to perform the recoverability test, long-lived assets are grouped with other assets at business
segment level (see Note 8). With respect to long-lived assets that are held as pending for sale or disposal, the Company’s policy is to
record these assets at amounts that did not exceed net realizable value.
Under U.S. GAAP, for proved oil and gas properties, the Company performs the impairment test on an individual field basis. Other
long-lived assets are aggregated so that the discrete cash flows produced by each group of assets may be separately analyzed. Each
asset is tested following the guidelines of SFAS No. 144, “Accounting for the Impairment of Long-Lived Assets”, by comparing the
net book value of such an asset with the expected undiscounted cash flows. Impairment losses are measured as the amount by which
the carrying amount of the assets exceeds the fair value of the assets. When market values are not available, the Company estimates
them using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the assets.
Additional impairment charges under U.S. GAAP amounted to 124, 180 and 11 for the years ended December 31, 2008, 2007 and
2006, respectively, and were included as operating income from continuing operations. The impairment recorded in years ended
December 31, 2008, 2007 and 2006 was mainly the result of a decrease in oil and gas reserves affecting certain long-lived assets of
the YPF’s Exploration and Production Business Segment.
The adjusted basis of fixed assets book values after impairment charges results in lower depreciation under U.S. GAAP of 119, 132
and 137 for the years ended December 31, 2008, 2007 and 2006, respectively.
e.
Start-up and organization costs
Under Argentine GAAP, start-up and organization costs can be capitalized subject to recoverability through future revenues. These
costs were fully amortized during 2006 based on a five-year estimated useful life.
Under U.S. GAAP, start-up costs were expensed as incurred.
f.
Reorganization of entities under common control
Under Argentine GAAP, results on sales of noncurrent assets and the corresponding accounts receivable are recognized in the
statement of income and the balance sheet, respectively. Under U.S. GAAP, results related with reorganization of entities under
common control are eliminated and the corresponding accounts receivable are considered as a capital (dividend) transaction.
F - 44
During the year ended December 31, 2007, the Company collected the account receivables related with the reorganization of entities
under common control. Accordingly, no shareholders’ equity adjustment is required as of December 31, 2008 and 2007. Net income
reconciliation for the years ended December 31, 2007 and 2006, include the elimination of interests accrued under Argentine GAAP
in relation with the mentioned account receivables, which should not be recognized under U.S. GAAP.
g.
Pension Plans
As displayed in Note 2.f, YPF Holdings Inc. has non-contributory defined-benefit pension plans and postretirement and
postemployment benefits.
Under Argentine GAAP, the net liability for defined-benefits plans is the amount resulting from the sum of the present value of the
obligations, net of the fair value of the plan assets and net of the unrecognized actuarial losses generated since December 31, 2003.
These unrecognized actuarial losses are recorded in the statement of income during the expected average remaining working lives of
the employees participating in the plans and the life expectancy of retired employees.
Under U.S. GAAP the Company adopted SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension and Other
Postretirement Plans-an amendment of FASB Statements No. 87, 88, 106, and 132 (R)” (“SFAS No. 158”). Under provisions of
SFAS No. 158 the Company fully recognized the underfunded status of defined-benefit pension and postretirement plans as a liability
in the financial statements reducing the Company’s shareholders’ equity through Accumulated OCI account. Unrecognized actuarial
losses and gains are recognized in the statement of income during the expected average remaining working lives of the employees
participating in the plans and the life expectancy of retired employees.
h. Accounting for asset retirement obligations
SFAS No. 143, “Accounting for Asset Retirement Obligations” (“SFAS No. 143”), addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the associated asset retirement cost. The standard applies
to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and
normal use of the asset. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the
period in which it is incurred, if a reasonable estimate of fair value can be made. The asset retirement obligations liability is built up
in cash flow layers, with each layer being discounted using the discount rate as of the date that the layer was created. Measurement of
the entire obligation using current discount rates is not permitted. Each cash flow layer is added to the carrying amount of the
associated asset. This additional carrying amount is then depreciated over the life of the asset. The liability is increased due to the
passage of time based on the time value of money (“accretion expense”) until the obligation is settled. The activity with respect to
retirement obligations under US GAAP is detailed in Note 15.c.
Argentine GAAP is similar to SFAS No. 143, except for a change in the discount rate which is treated as a change in estimates, so the
entire liability must be recalculated using the current discount rate, being the change added or reduced from the related asset.
i.
Consolidation of variable interest entities—Interpretation of ARB No. 51
Under Argentine GAAP consolidation is based on having the votes necessary to control corporate decisions (Note 1). FIN No. 46R,
“Consolidation of Variable Interest Entities”, (“FIN 46R”), clarifies the application of Accounting Research Bulletin No. 51,
Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling
financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial
support from other parties. The interpretations explain how to identify variable interest entities and how an enterprise assesses its
interests in a variable interest entity to decide whether to consolidate that entity. They require existing unconsolidated variable interest
entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved.
Until May, 2008, YPF had operations with one variable interest entity (“VIE”) which had been created in order to structure YPF’s
future deliveries of oil (“FOS transaction”).
F - 45
YPF entered into a forward oil sale agreement that called for the future delivery of oil for the life of the contract. YPF was paid in
advance for the future delivery of oil. The price of the oil to be delivered was calculated using various factors, including the expected
future price and quality of the crude oil being delivered. The counterparty or assignee to the oil supply agreement was a VIE
incorporated in the Cayman Islands, which financed itself through the issuance of notes. The oil to be delivered under the supply
agreement was subsequently sold in the open market.
YPF was exposed to any change in the price of the crude oil it will deliver in the future under the outstanding FOS transaction. YPF’s
exposure derives from crude oil swap agreement under which YPF pays a fixed price with respect to the nominal amount of the crude
oil sold, and receives the variable market price of such crude oil.
In May 2008, YPF delivered the last barrels commited under the FOS transaction; consecuently the transaction and the swap
agreement expired. As of December 31, 2008, no shareholder’s equity reconciliation adjustment is required.
The effect before taxes of such consolidation was an increase in the “Loans” account of 68 and 186, an increase of current assets of
24 and 19, the elimination of “Net advances from crude oil purchasers” of 9 and 103 and a decrease in shareholders’ equity of 35 and
65 as of December 31, 2007 and 2006, respectively.
j.
Capitalization of financial expenses
Under Argentine GAAP, for those assets that necessarily take a substantial period of time to get ready for its intended use, borrowing
costs (including interest and exchange differences) should be capitalized. Accordingly, borrowing costs for those assets whose
construction period exceeds one year have been capitalized, provided that such capitalization does not exceed the amount of financial
expense recorded in that year.
Under US GAAP, only interest expense on qualifying assets must be capitalized, regardless of the asset’s construction period.
The effect on net income and shareholders’ equity as of December 31, 2008, 2007 and 2006 is included in “Capitalization of financial
expenses” in the reconciliation in Note 14.
k.
SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including
an amendment of FASB Statement No. 115” (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial
instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected
will be recognized in earnings at each subsequent reporting date. SFAS No. 159 was effective for the Company on January 1, 2008.
The Company did not use the fair value option granted by SFAS No. 159.
l.
SFAS No.141(R), “Business Combinations” and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements — an amendment of ARB No. 51”
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations” (“SFAS No. 141(R)”) which requires
the recognition of assets acquired, liabilities assumed, and any noncontrolling interest in an acquiree at the acquisition date fair value
with limited exceptions. SFAS No. 141(R) will change the accounting treatment for certain specific items and includes a substantial
number of new disclosure requirements. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an
Amendment of ARB No. 51” (“SFAS No. 160”), which establishes new accounting and reporting standards for noncontrolling interest
(minority interest) and for the deconsolidation of a subsidiary. SFAS No. 160 also includes expanded disclosure requirements
regarding the interests of the parent and its noncontrolling interest. SFAS No. 160 is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2008. The Company does not anticipate that the adoption of this new
statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows.
m.
SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities
In March 2008 the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities”. The new
standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash
flows. The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial
statements; how derivative instruments and related hedged items are accounted for under SFAS 133; and how derivative instruments
and related hedged items affect its financial position, financial
F - 46
performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning
after November 15, 2008, with early application encouraged. The Company does not anticipate that the adoption of this new
statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows.
n.
SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. This Statement
identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial
statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the
United States (the GAAP hierarchy). This Statement applies to financial statements of nongovernmental entities that are presented in
conformity with GAAP.
o. Modernization of Oil and Gas Reporting (Release Nos. 33-8995; 34-59192; FR-78)
On December 31, 2008, the SEC published the final rules and interpretations updating its oil and gas reporting requirements. Many of
the revisions are updates to definitions in the existing oil and gas rules to make them consistent with the petroleum resource
management system, which is a widely accepted standard for the management of petroleun resources that was developed by several
industry organizations. Key revisions include changes to the pricing used to estimate reserves, the ability to include nontraditional
resources in reserves, the use of new technology for determinating reserves, and permitting disclosure of probable and possible
reserves. The SEC will require companies to comply with the amended disclosure requirements for registration statements filed after
January 1, 2010, and for annual reports for fiscal years ending on or after December 31, 2009. Early adoption is not permitted. The
Company is currently assessing the impact that the adoption will have on the Company’s disclosures, operating results, financial
position and cash flows.
F - 47
14. RECONCILIATION OF NET INCOME AND SHAREHOLDERS’ EQUITY TO UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES
The following is a summary of the significant adjustments to net income for each of the years ended December 31, 2008, 2007 and
2006, and to shareholders’ equity as of December 31, 2008, 2007 and 2006, which would have been required if U.S. GAAP had been
applied instead of Argentine GAAP in the consolidated financial statements. Amounts are expressed in millions of Argentine pesos.
Net income according to Argentine GAAP
Increase (decrease) due to:
Elimination of the inflation adjustment into Argentine constant pesos (Note 1 and 13.a)
Remeasurement into functional currency (Note 13.a)
Impairment of long-lived assets (Note 13.d)
Start-up and organization costs amortization (Note 13.e)
Reorganization of entities under common control - Interest from accounts receivable (Note 13.f)
Pension Plans (Note 13.g)
Asset Retirement Obligations (Note 13.h)
Consolidation of VIEs (Note 13.i)
Capitalization of financial expenses (Note 13.j)
Deferred income tax
(1)
Net income in accordance with U.S. GAAP
Shareholders’ equity according to Argentine GAAP
Increase (decrease) due to:
Elimination of the inflation adjustment into Argentine constant pesos (Note 1 and 13.a)
Remeasurement into functional currency and translation into reporting currency (Note 13.a)
Impairment of long-lived assets (Note 13.d)
Reorganization of entities under common control - Accounts receivable (Note 13.f)
Pension plans (Note 13.g)
Asset Retirement Obligations (Note 13.h)
Consolidation of VIEs (Note 13.i)
Capitalization of financial expenses (Note 13.j)
Deferred income tax
(1)
Shareholders’ equity in accordance with U.S. GAAP
(1) Corresponds to the effect of Deferred Income Tax, if applicable, to U.S. GAAP adjustments.
F - 48
2008
2007
3,640 4,086 4,457
2006
(5)
725
805 1,144
(1,230) (1,513) (2,065)
126
(48)
13
— —
(65)
(15)
—
(21)
(79)
(19)
19 —
(55)
24
35
19
104
3
(41)
(47)
(15)
24
3,014 3,325 3,667
20,356 26,060 24,345
(613)
(3,478) (4,203) (5,008)
9,150 7,723 8,333
(491)
(954)
(56)
(35)
(65)
211
(39)
25,492 29,067 26,241
(554)
— —
(65)
(17)
(35)
220
(62)
(1)
(79)
—
197
(40)
The summarized consolidated balance sheets as of December 31, 2008, 2007 and 2006, and consolidated statements of income and
cash flows for the years then ended, remeasured into U.S. dollar and translated into Argentine pesos under U.S. GAAP, after giving
effect to the adjustments detailed above and the elimination of the proportional consolidation performed under Argentine GAAP, are
presented only for the convenience of the readers and would be as follows:
Summarized consolidated balance sheets
Current assets
Fixed assets
Other noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Shareholders’ equity
Total liabilities and shareholders’ equity
Summarized consolidated statements of income
(1)
Net sales
Operating income (Note 15.a)
Net income
Earnings per share, basic and diluted
(1) Sales are disclosed net of fuel transfer tax, turnover tax and hydrocarbon export withholdings.
Summarized consolidated statements of cash flows
Net cash flow provided by operating activities
Net cash flow used in investing activities
Net cash flow used in financing activities
Increase (decrease) in cash and equivalents
Cash and equivalents at the beginning of years
Exchange differences from cash and equivalents
Cash and equivalents at the end of years
Cash and equivalents at the end of years are comprised as follows:
Cash
Cash equivalents
(1)
Cash and equivalents at the end of years
(2)
2008
2007
2006
9,653 10,695 10,325
31,954 27,372 24,193
2,644 2,679 2,528
44,251 40,746 37,046
10,900 5,719 5,962
7,859 5,960 4,843
25,492 29,067 26,241
44,251 40,746 37,046
2008
2007
2006
33,103 27,746 24,204
5,230 5,176 5,626
3,014 3,325 3,667
9.32
7.66
8.45
2006
2008
2007
13,497 7,926 7,466
(6,958) (6,112) (5,063)
(6,215) (2,035) (1,955)
448
371
2
821
(221)
821
10
610
324
610
43
977
2008
384
593
977
2007
193
417
610
2006
111
710
821
Included in short-term investments in the consolidated balance sheets.
(1)
(2) Cash and equivalents from jointly controlled companies which are proportionally consolidated for Argentine GAAP purposes
are not included.
The principal transactions not affecting cash and equivalents consisted in increases in assets related to revisions in hydrocarbon well
abandonment costs for the years ended December 31, 2008, 2007 and 2006 and the adquisition during the year ended December 31,
2008, of mineral property in connection with the extension of certain production concessions in the Province of Neuquén (Note 10.c),
which is payable in installments through 2010.
F - 49
15. ADDITIONAL U.S. GAAP DISCLOSURES
a) Consolidated operating income
Under U.S. GAAP, costs charged to income for YPF Holdings environmental remediation, holding gains on inventories, impairment
of long-lived assets, the elimination of operating results of jointly controlled companies proportionally consolidated, pending lawsuits
and other claims costs and other items which are not individually significant, would have been deducted from or added to operating
income.
b) Comprehensive income
Net income under U.S. GAAP as determined in Note 14 is approximately the same as comprehensive income as defined by SFAS
No. 130, “Reporting Comprehensive Income” (“SFAS 130”) for all periods presented, except for the effect in the years 2008, 2007
and 2006 of the following items, that should be included in comprehensive income for U.S. GAAP purposes but are excluded from
net income for U.S. GAAP purposes:
Effect arising from the translation into reporting currency
Pension plans
(2)
(1)
Comprehensive income at the end of years
(1) Has no tax effect.
(2) Valuation allowance has been recorded to offset the recognized income tax effect.
c) Assets retirement obligation
2008
2006
2007
18,046 15,485 14,582
(217)
17,974 15,277 14,365
(208)
(72)
Under Argentine regulations, the Company has the obligation to incur costs related to the abandonment of hydrocarbon wells. The
Company does not have assets legally restricted for purposes of settling the obligation.
The reconciliation of the beginning and ending aggregate carrying amount of assets retirement obligation, translated into Argentine
pesos at the outstanding selling exchange rate at the end of each year and under US GAAP, is as follows:
Aggregate assets retirement obligation, beginning of year
Translation effect
Revision in estimated cash flows
Obligations incurred
Accretion expense
Obligations settled
Aggregate assets retirement obligation, end of year
d)
Fair Value Measurements
2006
2007
2008
3,036 2,441 1,457
381
12
840
652
55
138
117
264
(40)
(89)
4,382 3,036 2,441
83
314
67
197
(66)
In September 2006, FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”), which became effective for the Company
on January 1, 2008. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosure
requirements about fair value measurements. SFAS 157 does not mandate any new fair-value measurements and is applicable to
assets and liabilities that are required to be recorded at fair value under other accounting pronouncements. Implementation of this
standard did not have a material effect on the Company’s results of operations or consolidated financial position.
SFAS 157 establishes three levels of the fair-value hierarchy based on the sources of the inputs used in the measurement of the fair
value, which are described below:
Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly.
Level 3: Unobservable inputs.
F - 50
The initial application of SFAS 157 on January 1, 2008, had no effect on the Company’s existing fair-value measurement practices
and is limited to the Company’s investments in mutual funds. The fair value measurements for these assets are based on observable
market inputs (Level 1) consisting in quotations provided by the mutual funds’ bank sponsor. The fair value of these assets is 187 as
of December 31, 2008, and the related gains or losses from periodic measurement at fair value is immaterial to the Company’s
financial statements.
In February 2008, the FASB issued FASB Staff Position (“FSP”) SFAS No. 157-1, Application of FASB Statement No. 157 to FASB
Statement No. 13 and Its Related Interpretive Accounting Pronouncements That Address Leasing Transactions (“FSP 157-1”), which
became effective for the Company on January 1, 2008. This FSP excludes SFAS No. 13, Accounting for Leases, and its related
interpretive accounting pronouncements from the provisions of SFAS 157.
Also in February 2008, the FASB issued FSP SFAS 157-2, Effective Date of FASB Statement No. 157, which delayed the Company’s
application of SFAS 157 for nonrecurring non financial assets and liabilities until January 1, 2009. In this regard, the major categories
of assets and liabilities for which the Company will not apply the provisions of SFAS 157 until January 1, 2009, are long-lived assets
that are measured at fair value upon impairment. The Company does not expect the adoption to have a material impact on the
Company’s financial statements.
e)
SFAS Interpretation No. 48, “Accounting for uncertainty in income taxes – an interpretation of FASB Statement
No. 109” (“FIN 48”)
FIN 48 defines the criteria an individual tax position must meet for any part of the benefit of such position to be recognized in the
financial statements. FIN 48 establishes “a more-likely-than-not” recognition threshold that must be met before a tax benefit can be
recognized in the financial statements. FIN 48 also provides guidance, among other things, on the measurement of the income tax
benefit associated with uncertain tax positions, de-recognition, classification, interest and penalties and financial statement
disclosures.
The Company implemented FIN 48 in January, 2007. As it is defined in this interpretation, the Company has reassessed whether the
“more-likely-than-not” recognition threshold has been met before a tax benefit can be recognized and how much of a tax benefits to
recognize in the financial statements. The adoption of FIN 48 did not have an impact on YPF’s financial position. There were no
unrecognized tax benefits as of the date of adoption and as of December 31, 2008 and 2007.
Under Argentine tax regime, as of December 31, 2008, fiscal years 2002 through 2007 remain subject to examination by the Federal
Administration of Public Revenues (“AFIP”).
16. OTHER CONSOLIDATED FINANCIAL STATEMENT INFORMATION
The following tables present additional consolidated financial statement disclosures required under Argentine GAAP. Certain
information disclosed in these tables is not required as part of the basic financial statements under U.S. GAAP.
a)
Fixed assets evolution.
b)
Investments in shares and holdings in companies under significant influence and other companies.
c) Allowances and reserves.
d)
e)
f)
Cost of sales.
Foreign currency assets and liabilities.
Expenses incurred.
F - 51
a)
Fixed assets evolution
Main account
Land and buildings
Mineral property, wells and related equipment
Refinery equipment and petrochemical plants
Transportation equipment
Materials and equipment in warehouse
Drilling and work in progress
Exploratory drilling in progress
Furniture, fixtures and installations
Selling equipment
Other property
Total 2008
Total 2007
Total 2006
Amounts at
beginning of
year
2,391
51,595
9,227
1,887
791
4,617
147
622
1,406
377
73,060
61,939
61,812
Translation
net
effect
(5)
—
56
—
—
—
—
—
—
—
—
56
10
2
2008
Cost
Increases
1
1,038
42
3
828
5,492
322
4
1
231
(2)(7)
7,962
6,216
(2)
5,932
(2)
Net decreases,
transfers and
reclassifications
116
4,899
974
66
(792)
(5,770)
(353)
123
49
(26)
(714)
(1)
4,895
(5,807)
(1)(6)
(1)(6)
Amounts at
end of year
2,508
57,588
10,243
1,956
827
4,339
116
749
1,456
582
80,364
73,060
61,939
Main account
Land and buildings
Mineral property, wells
and related equipment
Refinery equipment and
petrochemical plants
Transportation equipment
Materials and equipment
in warehouse
Drilling and work in
progress
Exploratory drilling in
progress
Furniture, fixtures and
installations
Selling equipment
Other property
Total 2008
Total 2007
Total 2006
Accumulated
at beginning of
year
1,108
37,131
6,139
1,324
—
—
—
523
1,056
298
47,579
39,377
39,803
2008
Depreciation
Depreciation
rate
2%
(4
)
4 - 10%
4 - 5%
—
—
—
10%
10%
10%
Net decreases,
transfers and
reclassifications
(2)
(43)
(6)
(3)
—
—
—
(1)
—
(8)
(63)
(1)
4,063
(4,144)
(1)(6)
(1)(6)
2007
2006
Increases
57
Accumulated
at end of year
1,163
Net book
value
1,345
Net book
value
1,283
Net book
value
1,273
4,058
459
62
—
—
—
66
59
14
4,775
4,139
3,718
41,146 16,442 14,464 13,038
(3)
(3)
(3)
6,592
1,383
3,651
573
3,088
563
2,857
577
—
827
791
611
—
4,339
4,617
3,569
—
116
588
1,115
304
161
341
278
52,291 28,073
47,579
39,377
147
99
350
79
135
77
340
85
25,481
22,562
(1)
(2)
(6)
(7)
Includes 4, 118 and 194 of net book value charged to fixed assets allowances for the years ended December 31, 2008, 2007 and
2006, respectively.
Includes 444, 53 and 930 corresponding to the cost of hydrocarbon wells abandonment obligations for the years ended
December 31, 2008, 2007 and 2006, respectively.
Includes 1,260, 851 and 1,052 of mineral property as of December 31, 2008, 2007 and 2006, respectively.
(3)
(4) Depreciation has been calculated according to the unit of production method.
(5)
Includes the net effect of the exchange differences arising from the translation of net book values at beginning of the year of
fixed assets in foreign companies.
Includes 5,291 of acquisition cost and 4,094 of accumulated depreciation corresponding to oil and gas exploration and
producing areas, which were disclosed as held for sale as of December 31, 2006 (Note 2.c).
Includes 594 corresponding to the extension of certain production concessions in the Province of Neuquén (Note 10.c), of which
483 are payable as of December 31, 2008.
F - 52
b)
Investments in shares and holdings in companies under significant influence and other companies
Description of the Securities
2008
Information of the Issuer
Last Financial Statements Issued
2007
2006
Face
Value
Amount
Book Value
Cost
(5)
Main Business Registered Address Date
Capital
Stock
Income
(Loss)
Equity
Holding in
Capital
Stock
Book Value
Book Value
Name and Issuer Class
Companies
under
significant
influence:
Oleoductos
del
Valle S.A.
Common
$
10
4,072,749
96
(1)
—
Common
$
10
476,034
46
—
Common
$
10
351,167
41
(2)
—
Preferred
$
1
15,579,578
21
—
Common
$
0.01
3,719,290,957
14
(2)
46
Common
$
1
307,412,578
196
338
Common
$
1
103,497,738
136
(2)
193
Terminales
Marítimas
Patagónicas
S.A.
Oiltanking
Ebytem S.A.
Gasoducto
del Pacífico
(Argentina)
S.A.
Central Dock
Sud S.A.
Gas
Argentino
S.A.
(6)
Inversora
Dock Sud
S.A.
Pluspetrol
Energy S.A.
Oil
transportation
by pipeline
Oil storage
and shipment
Hydrocarbon
transportation
and storage
Gas
transportation
by pipeline
Electric
power
generation
and bulk
marketing
Investment in
Metrogas
S.A.
Investment
and finance
09/30/08
110
3
307
37.00%
95
(1)
101
(1)
09/30/08
14
21
139
33.15%
44
44
09/30/08
12
13
93
30.00%
44
(2)
43
(2)
12/31/08
156
48
211
10.00%
19
19
09/30/08
468
11
252
9.98%
(4)
7
(2)
11
(2)
12/31/08
309
(80)
280
45.33%
181
186
09/30/08
241
8
232
42.86%
114
(2)
129
(2)
09/30/08
67
49 655
45.00%
290
281
Florida 1, P.
10°, Buenos
Aires,
Argentina
Av. Leandro
N. Alem 1180,
P.11°, Buenos
Aires,
Argentina
Terminal
Marítima
Puerto Rosales
– Provincia de
Buenos Aires,
Argentina
Av. Leandro
N. Alem 928,
P. 7º, Buenos
Aires,
Argentina
Reconquista
360, P. 6°,
Buenos Aires,
Argentina
Gregorio
Araoz de
Lamadrid
1360, Buenos
Aires,
Argentina
Reconquista
360, P. 6°,
Buenos Aires,
Argentina
Lima 339,
Buenos Aires,
Argentina
Common $
1
30,006,540
295
14 Exploration
and
exploitation
Oleoducto
Trasandino
(Argentina)
S.A.
Other
companies:
Others
(3)
—
Preferred
$
1
27,018,720
14
—
of
hydrocarbons
and electric
power
generation,
production
and
marketing
Oil
transportation
by pipeline
Esmeralda 255,
P. 5°, Buenos
Aires,
Argentina
09/30/08
75
(3)
40
36.00%
16
14
— —
—
31
890
27 —
618
—
—
— — — —
27
837
15
843
(1)
(2)
(3)
(4)
(5)
(6)
Holding in shareholder’s equity, net of intercompany profits.
Holding in shareholder’s equity plus adjustments to conform to YPF S.A. accounting methods.
Includes A-Evangelists Constrçoes e Serviçios Ltda., Gasoducto del Pacífico (Cayman) Ltd. A&C Pipeline Holding Company. Poligás Luján S.A.C.I., Oleoducto
Transandinos (Chile) S.A., Gasoducto Oriental S.A. and Mercobank S.A.
Additionally, the Company has a 29,93% indirect holding in capital stock through Inversora Dock Sud S.A.
Cost net of cash dividends and capital distributions from long-term investments inflation adjusted in accordance with Note 1.
On May 19, 2009, Gas Argentino S.A. (“GASA”) filed a voluntary reorganization petition (“concurso preventivo”) before a commercial tribunal in Buenos
Aires.
F - 53
c) Allowances and reserves
Account
Deducted from current assets:
For doubtful trade receivables
For other doubtful accounts
Deducted from noncurrent assets:
For valuation of other receivables to their estimated
realizable value
For reduction in value of holdings in long-term
investments
For unproductive exploratory drilling
For obsolescence of materials and equipment
Total deducted from assets, 2008
Total deducted from assets, 2007
Total deducted from assets, 2006
Reserves for losses - current:
For various specific contingencies
Reserves for losses - noncurrent:
For pending lawsuits, environmental contingencies and
various specific contingencies
Total included in liabilities, 2008
Total included in liabilities, 2007
Total included in liabilities, 2006
Amount at
Beginning
2008
of Year Increases Decreases Transfers
Amount at
End of
Year
2007
Amount at
End of
Year
2006
Amount at
End of
Year
440
122
562
50
206
3
44
303
865
878
917
466
466
95
17
112
4
24
—
2
30
142
221
396
72
72
798
798
870
1,005
882
1,853
1,853
2,319
1,851
1,237
F - 54
118
5
123
—
—
—
6
—
9
—
4
19
142
234
435
56
56
688
688
744
537
268
—
—
—
—
—
—
—
106
106
(106)
(106)
—
—
—
417
134
551
48
221
3
42
314
865
588
588
440
122
562
50
206
3
44
303
865
466
466
429
137
566
52
211
3
46
312
878
273
273
1,857
1,857
2,445
1,853
1,853
1,578
1,578
2,319
1,851
d)
Cost of sales
Inventories at beginning of year
Purchases for the year
Production costs (Note 16.f)
Holding gains on inventories
Inventories at end of year
Cost of sales
F - 55
2008
2006
2007
2,573 1,697 1,315
8,547 6,637
4,351
15,866 12,788 11,458
394
(3,449) (2,573) (1,697)
24,013 19,000 15,821
476
451
e)
Foreign currency assets and liabilities
Account
Current Assets
Cash
Investments
Trade receivables
Other receivables
Total current assets
Noncurrent Assets
Investments
Other receivables
Total noncurrent assets
Total assets
Current Liabilities
Accounts payable
Loans
Salaries and social security
Net advances from crude oil purchasers
Reserves
Total current liabilities
Noncurrent Liabilities
Accounts payable
Loans
Salaries and social security
Net advances from crude oil purchasers
Reserves
Total noncurrent liabilities
Total liabilities
(1) Buying exchange rate.
(2) Selling exchange rate.
Foreign currency and amount
2006
2007
2008
Exchange rate
in pesos as of
12-31-08
Book value
as of 12-31-08
2 US$
139 US$
567 US$
15 €
44
US$
165
US$
556
US$
€
1
264
US$
$CH 34,743 — — — —
€
5
17 US$
117 US$
588 US$
10 €
1,262 US$ 1,092 US$
4 €
5 €
3.41
(1)
3.41
(1)
3.41
(1)
4.73
(1)
3.41
(1)
—
4.73
(1)
US$
US$
51 US$
7 US$
54 US$
6 US$
52
38
3.41
(1)
3.41
(1)
523 US$
12 €
287 US$
7 US$
31 US$
21 US$
708 US$ 1,314
15 €
24
693
140 US$
5 US$
13
3 — —
108
79 US$
736 US$
166 US$
66 US$
742 US$
166 US$
52 US$
919
365
34
2 — — — —
331
300 US$
374 US$
3.45
(2)
4.79
(2)
3.45
(2)
3.45
(2)
—
3.45
(2)
3.45
(2)
3.45
(2)
3.45
(2)
—
3.45
(2)
US$
€
US$
US$
US$
US$
US$
US$
US$
US$
US$
F - 56
150
563
1,896
5
900
—
24
3,538
177
130
307
3,845
4,533
115
2,391
45
—
372
7,456
3,171
1,260
116
—
1,142
5,689
13,145
f)
Expenses incurred
Salaries and social security taxes
Fees and compensation for services
Other personnel expenses
Taxes, charges and contributions
Royalties and easements
Insurance
Rental of real estate and equipment
Survey expenses
Depreciation of fixed assets
Industrial inputs, consumable materials and supplies
Operation services and other service contracts
Preservation, repair and maintenance
Contractual commitments
Unproductive exploratory drillings
Transportation, products and charges
(Recovery) allowance for doubtful trade receivables
Publicity and advertising expenses
Fuel, gas, energy and miscellaneous
Total 2008
Total 2007
Total 2006
Production
costs
1,072
212
352
284
2,396
131
397
—
4,573
611
1,101
2,400
61
—
954
—
—
1,322
15,866
12,788
11,458
Administrative
expenses
2008
Selling
expenses
74
10
22
24
244
363
119
28
—
9
4
217
58
28
400
7
14
65
— —
127
51
107
44
— —
— —
1,190
—
(12)
—
93
86
71
70
2,460
1,053
2,120
805
1,797
674
F - 57
Exploration
expenses
59
5
21
—
15
5
—
186
1
4
14
3
—
351
—
—
—
20
Total
1,592
638
520
712
2,418
159
466
186
4,775
676
1,244
2,471
61
351
2,144
(12)
179
1,483
684 20,063
522
460
2007
2006
Total
1,225
517
415
551
2,006
126
396
218
4,139
593
677
1,757
596
144
1,813
45
142
875
Total
971
399
334
446
2,101
122
323
124
3,718
532
664
1,400
519
199
1,488
76
140
833
16,235
14,389
SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
The following information is presented in accordance with SFAS No. 69, “Disclosures about Oil and Gas Producing
Activities” (amounts expressed in millions of Argentine Pesos, except where otherwise indicated and prepared under Argentine
GAAP).
Capitalized costs
The following tables set forth capitalized costs, along with the related accumulated depreciation and allowances as of December 31,
2008, 2007 and 2006:
Proved oil and gas properties
2008
Other
foreign
Argentina
Worldwide
Argentina
2007
Other
foreign
Worldwide
Argentina
2006
Other
foreign
Worldwide
Mineral property, wells and
related equipment
Support equipment and
facilities
Drilling and work in progress
Unproved oil and gas properties
Total capitalized costs
56,452
716
57,168
50,871
545
51,416
47,398
36
47,434
1,505 —
2,341 —
53
769
384
60,682
1,505
2,341
437
61,451
1,358 —
2,656 —
50
595
147
55,032
1,358
2,656
197
55,627
1,183
2,049
109
50,739
—
293
31
360
1,183
2,342
140
51,099
Accumulated depreciation and
valuation allowances
Net capitalized costs
Company’s share in equity
method investees’ net
capitalized costs
(41,620)
19,062
(115)
654
(41,735)
19,716
(37,613)
17,419
(18)
577
(37,631) (34,111)
16,628
17,996
(1)
(22)
338
(34,133)
16,966
77 —
77
73 —
73
78
—
78
(1)
Includes 1,127 of net capitalized cost related to other assets to be disposed by sale.
Costs incurred
The following tables set forth the costs incurred for oil and gas producing activities during the years ended December 31, 2008, 2007
and 2006:
Exploration costs
Development costs
Total costs incurred
Company’s share in equity method
investees’ total costs incurred
2008
Other
foreign Worldwide Argentina
545
4,225
4,770
702
5,959
6,661
71
111
182
2007
Other
foreign Worldwide Argentina
427
4,243
4,670
576
4,490
5,066
31
265
296
2006
Other
foreign Worldwide
502
4,417
4,919
75
174
249
Argentina
631
5,848
6,479
36 —
36
18 —
18
9 —
9
Results of operations from oil and gas producing activities
The following tables include only the revenues and expenses directly associated with oil and gas producing activities. It does not
include any allocation of the interest costs or corporate overhead and, therefore, is not necessarily indicative of the contribution to net
earnings of the oil and gas operations.
Differences between these tables and the amounts shown in Note 8, “Consolidated Business Segment Information”, for the
exploration and production business unit, relate to additional operations that do not arise from those properties held by the Company.
F - 58
Net sales to unaffiliated parties
Net intersegment sales
Total net revenues
Production costs
Exploration expenses
Depreciation and expense for
valuation allowances
Other
Pre-tax income (loss) from
producing activities
Income tax expense
Results of oil and gas
producing activities
Company’s share in equity
method investees’results of
operations
2008
Other
foreign
Argentina
3,363
190
12,576 —
190
15,939
(21)
(8,373)
(70)
(614)
Argentina
2,737
2007
Other
foreign
12
13,989 —
12
16,726
(7)
(6,989)
(57)
(465)
Worldwide
3,553
12,576
16,129
(8,394)
(684)
2006
Other
foreign
Argentina
Worldwide
2,749
2,539
13
13,989 13,960 —
13
16,738 16,499
(6,168)
(6,996)
(7)
(68)
(392)
(522)
Worldwide
2,552
13,960
16,512
(6,175)
(460)
(3,985)
(95)
(275) —
(4,080)
(275)
(3,572)
(4)
(190) —
(3,576)
(190)
(3,226)
(4)
(117) —
(3,230)
(117)
2,692
4
(1,030) —
2,696
(1,030)
5,510
(56)
(2,314) —
5,454
(2,314)
6,596
(66)
(2,589) —
6,530
(2,589)
1,662
4
1,666
3,196
(56)
3,140
4,007
(66)
3,941
32 —
32
45 —
45
51 —
51
Oil and gas reserves
Proved oil and gas reserves are the estimated quantities of crude oil, natural gas, and natural gas liquids which geological and
engineering available data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under
existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Prices include consideration of
changes in existing prices provided by contractual arrangements, but not on increases based upon future conditions. Proved developed
oil and gas reserves are reserves that can reasonably be expected to be recovered through existing wells with existing equipment and
operating methods.
Estimates of reserves were prepared using standard geological and engineering methods generally accepted by the petroleum industry
and in accordance with the rules and regulations of the SEC. The choice of method or combination of methods employed in the
analysis of each reservoir was determined by experience in the area, stage of development, quality and completeness of basic data,
and production history. There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future
rates of production and timing of development expenditures, including many factors beyond the control of the producer. Reserve
engineering is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be measured in
an exact manner and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and
geological interpretation and judgment. In addition, results of drilling, testing and production subsequent to the date of an estimate
may justify revision of such estimate. Accordingly, reserve estimates are often different from the quantities of crude oil and natural
gas that are ultimately recovered. The meaningfulness of such estimates is highly dependent upon the accuracy of the assumption
upon which they were based. The reserve estimates were subjected to economic tests to determine economic limits. In determining
reserves, the Company excludes from its reported reserves royalties due to others, whether payable in cash or in kind, where the
royalty owner has a direct interest in the underlying production and the option and ability to make lifting and sale arrangements
independently. The reserves in Argentina are stated prior to the payment of any royalties to the provinces in which the reserves are
located. Consequently, royalties are given effect in such economic tests as operating costs in Argentina. The estimates may change as
a result of numerous factors including, but not limited to, additional development activity, evolving production history, and continued
reassessment of the viability of production under varying economic conditions.
F - 59
The following tables reflect the estimated reserves of crude oil, condensate, natural gas liquids and natural gas as of December 31,
2008, 2007 and 2006 and the changes therein.
Argentina
2008
Other
foreign
Crude oil, condensate and natural gas liquids (Millions of barrels)
2007
Other
foreign Worldwide
Argentina
Argentina
Worldwide
2006
Other
foreign Worldwide
Proved developed and
undeveloped reserves
Beginning of year
Revisions of previous
estimates
Extensions, discoveries
and improved
recovery
Production for the year
End of year
(4)
(3)
Proved developed reserves
Beginning of year
End of year
Company’s share in equity
method investees’proved
developed and undeveloped
reserves
617
35
6
(4)
41
(114)
579
(1)
—
(1)
1
460
450
(2)
—
1
623
674
6
680
771
6
777
31
46
—
46
9
—
9
41
(115)
580
460
451
17
(120)
617
(1)
—
—
6
521
460
(2)
—
—
17
(120)
623
521
460
20
—
(126) —
6
674
(1)
604
—
521 —
(2)
20
(126)
680
604
521
1
—
1
2
—
2
3
—
3
Includes natural gas liquids of 98, 114 and 123 as of December 31, 2008, 2007 and 2006, respectively.
Includes natural gas liquids of 71, 76 and 83 as of December 31, 2008, 2007 and 2006, respectively.
(1)
(2)
(3) Crude oil, condensate and natural gas liquids production for the years 2008, 2007 and 2006 includes approximately 14, 14 and
15, respectively, of crude oil, condensate and natural gas liquids equivalent to royalties, whether payable in cash or in kind,
where the royalty owner has not a direct interest in the underlying production and the option and ability to make lifting and sale
arragment independently.
(4) Proved reserves of crude oil, condensate and natural gas liquids as of December 31, 2008, 2007 and 2006, include
approximately 70, 74 and 81, respectively, of crude oil, condensate and natural gas liquids equivalent to royalties, whether
payable in cash or in kind, where the royalty owner has not a direct interest in the underlying production and the option and
ability to make lifting and sale arrangement independently.
Argentina
2008
Other
foreign
Natural gas (Billions of standard cubic feet) (2)
2007
Other
foreign
Worldwide
Argentina
Argentina
Worldwide
2006
Other
foreign
Worldwide
Proved developed and undeveloped
reserves
Beginning of year
Revisions of previous
estimates
Extensions and discoveries
Production for the year
(1)(2)
End of year
(3)
Proved developed reserves
Beginning of year
End of year
Company’s share in equity method
investees’proved developed and
undeveloped reserves
3.702
6
3.708
4,008
7
4,015
4,675
8
4,683
(2)
(132)
132 —
(1)
(606)
3
3.096
(134)
132
(607)
3.099
319 —
9 —
(1)
6
(634)
3,702
319
9
(635)
3,708
(63) —
46 —
(1)
7
(650)
4,008
(63)
46
(651)
4,015
2.438
2.216
3
3
2.441
2.219
2,568
2,438
3
3
2,571
2,441
3,197
2,568
4
3
3,201
2,571
49 —
49
51 —
51
73 —
73
(1) Excludes quantities which have been flared or vented.
(2) Natural gas production for the years 2008, 2007 and 2006 includes approximately 69, 72 and 75, respectively, of gas equivalent
to the royalties, whether payable in cash or in kind, where the royalty owner has not a direct interest in the underlying
production and the option and ability to make lifting and sale arragment independently.
(3) Proved reserves of natural gas as of December 31, 2008, 2007 and 2006, include approximately 377, 423 and 459, respectively,
of natural gas equivalent to royalties, whether payable in cash or in kind, where the royalty owner has not a direct interest in the
underlying production and the option and ability to make lifting and sale arragment independently.
F - 60
Standardized measure of discounted future net cash flows
The standardized measure is calculated as the excess of future cash inflows from proved reserves less future costs of producing and
developing the reserves, future income taxes and a discount factor. Future cash inflows represent the revenues that would be received
from production of year-end proved reserve quantities assuming the future production would be sold at year-end prices. Additionally,
year-end prices were adjusted in those instances where future sales are covered by contracts at specified prices.
Future production costs include the estimated expenditures related to production of the proved reserves plus any production taxes
without consideration of future inflation. Future development costs include the estimated costs of drilling development wells and
installation of production facilities, plus the net costs associated with dismantling and abandonment of wells, assuming year-end costs
continue without consideration of future inflation. Future income taxes were determined by applying statutory rates to future cash
inflows less future production costs and less tax depreciation of the properties involved. The present value was determined by
applying a discount rate of 10% per year to the annual future net cash flows.
The future cash inflows and outflows in foreign currency have been remeasured at the selling exchange rate of Argentine pesos 3.45,
3.15 and 3.06 to US$ 1, as of December 31, 2008, 2007 and 2006, respectively.
The standardized measure does not purport to be an estimate of the fair market value of the Company’s proved reserves. An estimate
of fair value would also take into account, among other things, the expected recovery of reserves in excess of proved reserves,
anticipated changes in future prices and costs and a discount factor representative of the time value of money and the risks inherent in
producing oil and gas.
The following information has been determined on a basis which presumes the year-end economic and operating conditions will
continue over the years during which proved reserves would be produced. Neither the effects of future pricing nor expected future
changes in technology and operating practices have been considered.
(1)
Future cash inflows
Future production costs
Future development costs
Future income tax expenses
10% annual discount for estimated
timing of cash flows
Argentina
88,852
(39,449)
(11,753)
(7,759)
2008
Other
foreign
Worldwide
Argentina
2007
Other
foreign Worldwide
Argentina
2006
Other
foreign
Worldwide
289
(144)
(4)
(49)
89,141 120,976 1,871 122,847 102,269
(498)
(39,593)
(29,590)
(145)
(11,757)
(430)
(7,808)
52 102,321
(29,596)
(6)
(9,878)
(9,878) —
(17,398)
(16)
(35,327)
(9,309)
(22,820)
(34,829)
(9,164)
(22,390)
(17,382)
(7,899)
(25)
(7,924)
(18,546)
(218)
(18,764)
(15,486)
(13)
(15,499)
Standardized measure of discounted
future net cash flows
21,992
67
22,059
36,047
580
36,627
29,933
17
29,950
Company’s share in equity method
investees’standardized measure
of discounted future net cash
flows
266 —
266
184 —
184
194 —
194
(1) Future cash inflows are stated net of the impact of withholdings on exports until 2011, according to the provisions of Law
No. 26,217.
F - 61
Changes in the standardized measure of discounted future net cash flows
The following table reflects the changes in standardized measure of discounted future net cash flows for the years ended
December 31, 2008, 2007 and 2006:
Beginning of year
Sales and transfers, net of production costs
Net change in sales and transfer prices, net of future production costs
Changes in reserves and production rates (timing)
Net changes for extensions, discoveries and improved recovery
Changes in estimated future development and abandonment costs
Development costs incurred during the year that reduced future development costs
Accretion of discount
Net change in income taxes
Others
End of year
F - 62
2008
2006
2007
36,627 29,950 39,405
(11,353) (8,304) (11,187)
(25,502) 7,056 (13,716)
2,107
471
(1,545)
1,933
3,388
8,705
389
22,059 36,627 29,950
1,282 5,391
2,250
793
(2,495)
(949)
2,554 1,762
3,428 2,198
11,732 (2,123)
853
3,536
ESTATUTO
DE
YPF SOCIEDAD ANONIMA
TITULO I
DENOMINACIÓN, DOMICILIO Y DURACIÓN
Exhibit 1.1
Artículo 1°—Denominación
La Sociedad se denomina YPF SOCIEDAD ANÓNIMA. En el cumplimiento de las actividades propias de su objeto social y en todos
los actos jurídicos que formalice, podrá usar, indistintamente, su nombre completo o el abreviado YPF S.A.
Artículo 2°—Domicilio
El domicilio legal de la Sociedad se fija en la Ciudad de Buenos Aires, República Argentina, sin perjuicio de lo cual podrá establecer
administraciones regionales, delegaciones, sucursales, agencias o cualquier especie de representación dentro o fuera del país.
Artículo 3°—Duración
El término de duración de la Sociedad se establece en cien (100) años contados desde la inscripción de este Estatuto en el Registro
Público de Comercio.
TITULO II
OBJETO
Artículo 4°—Objeto
La Sociedad tendrá por objeto llevar a cabo por sí, por intermedio de terceros o asociada a terceros, el estudio, la exploración y la
explotación de los yacimientos de hidrocarburos líquidos y/o gaseosos y demás minerales, como asimismo, la industrialización,
transporte y comercialización de estos productos y sus derivados directos e indirectos, incluyendo también productos petroquímicos,
químicos derivados o no de hidrocarburos y combustibles de origen no fósil, biocombustibles y sus componentes, así como la
generación de energía eléctrica a partir de hidrocarburos, a cuyo efecto podrá elaborarlos, utilizarlos, comprarlos, venderlos,
permutarlos, importarlos o exportarlos, así como también tendrá por objeto prestar, por sí, a través de
1
una sociedad controlada, o asociada a terceros, servicios de telecomunicaciones en todas las formas y modalidades autorizadas por la
legislación vigente y previa solicitud de las licencias respectivas en los casos que así lo disponga el marco regulatorio aplicable, así
como también la producción, industrialización, procesamiento, comercialización, servicios de acondicionamiento, transporte y acopio
de granos y sus derivados, así como también realizar cualquier otra actuación complementaria de su actividad industrial y comercial o
que resulte necesaria para facilitar la consecución de su objeto. Para el mejor cumplimiento de estos objetivos podrá fundar, asociarse
con o participar en personas jurídicas de carácter público o privado domiciliadas en el país o en el exterior, dentro de los límites
establecidos en este Estatuto.
Artículo 5°—Medios para el cumplimiento del objeto social
a)
Para cumplir su objeto la sociedad podrá realizar toda clase de actos jurídicos y operaciones cualesquiera sea su carácter legal,
incluso financieros, excluida la intermediación, que hagan al objeto de la Sociedad, o estén relacionados con el mismo, dado
que, a los fines del cumplimiento de su objeto, la Sociedad tiene plena capacidad jurídica para adquirir derechos, contraer
obligaciones y ejercer todos los actos que no sean prohibidos por las leyes o por este Estatuto.
b)
En particular, la Sociedad podrá:
(i)
(ii)
(iii)
Adquirir por compra o cualquier título, bienes inmuebles, muebles, semovientes, instalaciones y toda clase de
derechos, títulos, acciones o valores, venderlos, permutarlos, cederlos y disponer de ellos bajo cualquier título,
darlos en garantía y gravarlos, incluso con prendas, hipotecas o cualquier otro derecho real y constituir sobre ellos
servidumbres, asociarse con personas de existencia visible o jurídica, concertar contratos de unión transitoria de
empresas y de agrupación de colaboración empresaria.
Celebrar toda clase de contratos y contraer obligaciones, incluso préstamos y otras obligaciones, con bancos
oficiales o particulares, nacionales o extranjeros, organismos internacionales de crédito y/o de cualquier otra
naturaleza, aceptar consignaciones, comisiones y/o mandatos y otorgarlos, conceder créditos comerciales vinculados
con su giro.
Emitir, en el país o en el extranjero, debentures, obligaciones negociables y otros títulos de deudas en cualquier
moneda con o sin garantía real, especial o flotante, convertibles o no.
2
TITULO III
CAPITAL. ACCIONES
Artículo 6°—Capital
a)
Monto del capital social: El capital social se fija en la suma de pesos TRES MIL NOVECIENTOS TREINTA Y TRES
MILLONES CIENTO VEINTISIETE MIL NOVECIENTOS TREINTA ($ 3.933.127.930) totalmente suscripto e integrado,
representado por TRESCIENTOS NOVENTA Y TRES MILLONES TRESCIENTOS DOCE MIL SETECIENTOS
NOVENTA Y TRES (393.312.793) de acciones ordinarias escriturales, de DIEZ PESOS ($10,00) valor nominal cada una y
un voto por acción.
b)
Clases de acciones ordinarias: El capital social se divide en cuatro clases de acciones ordinarias de acuerdo al siguiente
detalle:
(i)
(ii)
(iii)
(iv)
•
•
Acciones clase A, sólo el Estado Nacional podrá ser titular de acciones clase A.
Acciones clase B, destinadas originariamente a ser adquiridas por tenedores de Bonos de Consolidación de Regalías
de Gas y Petróleo o titulares de acreencias contra la Nación por regalías de gas y petróleo. La acción clase B
adquirida por un tenedor de los citados Bonos que no fuera una Provincia o el Estado Nacional se convertirá en
acción clase D.
Acciones clase C, destinadas originariamente por el Estado Nacional a los empleados de la Sociedad bajo el régimen
del Programa de Propiedad Participada de la Ley 23.696. Las acciones clase C no adquiridas por los empleados de la
Sociedad bajo el Programa de Propiedad Participada se convertirán en acciones clase A; y
Acciones clase D, convertidas en tales por transferencia a cualquier persona de acciones clase A, B o C de acuerdo a
las siguientes reglas:
Las acciones clase A que el Estado Nacional transfiera a cualquier persona se convertirán en acciones clase D, salvo
transferencias a Provincias si una ley previamente lo autoriza en cuyo caso no cambiarán de clase.
Las acciones clase B que las Provincias transfieran a cualquier persona que no sea una Provincia se convertirán en
acciones clase D.
3
•
•
Las acciones clase C que se transfieran a terceros fuera del Programa de Propiedad Participada se convertirán en
acciones clase D.
Las acciones clase D no cambiarán de clase por ser eventualmente suscriptas o adquiridas por el Estado Nacional,
las Provincias, otra persona jurídica de carácter público o por personal que participa en el Programa de Propiedad
Participada.
c)
Derechos especiales de la clase A: Se requerirá el voto favorable de las acciones clase A, cualquiera sea el porcentaje del
capital social que dichas acciones clase A representen para que la Sociedad válidamente resuelva:
(i)
(ii)
(iii)
(iv)
(v)
Decidir la fusión con otra u otras sociedades;
Aceptar que la Sociedad, a través de la adquisición por terceros de sus acciones, sufra una situación de copamiento
accionario consentido u hostil que represente la posesión de más del cincuenta por ciento (50 %) del capital social
de la Sociedad;
Transferir a terceros, la totalidad de los derechos de explotación concedidos en el marco de la Ley 17.319, sus
normas complementarias y reglamentarias, y la Ley 24.145, de modo tal que ello determine el cese total de la
actividad exploratoria y de explotación de la Sociedad;
La disolución voluntaria de la Sociedad.
El cambio de domicilio social y/o fiscal de la Compañía fuera de la República Argentina.
Se requerirá, además, previa aprobación de una ley nacional para resolver favorablemente sobre los subincisos (iii) y (iv) anteriores.
Acciones preferidas: La Sociedad puede emitir acciones preferidas con o sin derecho de voto divididas también en clases A,
d)
B, C y D. Se aplicarán a cada clase de acciones preferidas las mismas reglas sobre titularidad y conversión que las previstas
para la misma clase de acciones ordinarias en el inciso b) precedente. Cuando las acciones preferidas ejerzan el derecho de
voto (ya sea transitoria o permanentemente) lo harán, en su caso, como integrantes, a ese efecto, de la clase a la cual
pertenezcan.
e)
Aumentos de Capital: El capital puede ser aumentado hasta su quíntuplo por decisión de la asamblea ordinaria, conforme lo
dispuesto por el artículo 188 de la
4
Ley 19.550, no rigiendo tal límite si la Sociedad es autorizada a hacer oferta pública de sus acciones. Corresponde a la
Asamblea establecer las características de las acciones a emitir en razón del aumento, dentro de las condiciones dispuestas en
el presente Estatuto, pudiendo delegar en el directorio la facultad de fijar la época de las emisiones, como también la
determinación de la forma y condiciones de pago de las acciones, pudiendo efectuar, asimismo, toda otra delegación admitida
por la ley. Toda emisión de acciones ordinarias o preferidas se hará por clases respetando la proporción existente entre las
distintas clases a la fecha de esa emisión, sin perjuicio de las modificaciones que ulteriormente resulten del ejercicio del
derecho de preferencia y del derecho de acrecer según se prevé en el artículo 8° de este Estatuto.
Artículo 7°—Transferencia de acciones
a)
Acciones escriturales: Las acciones no se representarán en títulos sino que serán escriturales y se inscribirán en cuentas
llevadas a nombre de sus titulares en la Sociedad, bancos comerciales, de inversión o cajas de valores autorizados, según lo
disponga el directorio. Las acciones son indivisibles. Si existiese copropiedad, la representación para el ejercicio de los
derechos o el cumplimiento de las obligaciones deberá unificarse.
b)
c)
Transferencia de acciones clase A o C: Toda transferencia de acciones clase A efectuada en violación de lo dispuesto por el
último párrafo de artículo 8° de la Ley 24.145, o de acciones clase C efectuada en violación de las normas del Programa de
Propiedad Participada o del respectivo Acuerdo General de Transferencia comunicado fehacientemente a la Sociedad, será
nula, carecerá de todo efecto y no será reconocida por la Sociedad.
Deber de información: Toda persona que, directa o indirectamente, adquiera por cualquier medio o título, acciones clase D, o
que al transferirse se conviertan en clase D, o títulos de la Sociedad de cualquier tipo que sean convertibles en acciones clase
D (incluyendo, dentro del significado del término “título”, pero sin limitarse, a los debentures, obligaciones negociables y
cupones de acciones) que otorguen control sobre más del tres por ciento (3%) de las acciones de la clase D, deberá dentro de
los cinco (5) días de efectuada la adquisición que causó la superación de dicho límite, informar esa circunstancia a la
Sociedad, sin perjuicio de cumplir con los recaudos adicionales que las normas aplicables en los mercados de capitales
impongan para tal evento. La información referida deberá detallar, además, la fecha de la operación, el precio, el número de
acciones adquiridas y si es propósito del adquirente de esa participación adquirir una participación mayor o alcanzar el control
de la voluntad social de la Sociedad. Si el adquirente está conformado por un grupo de personas, deberá identificar los
miembros del grupo. La información aquí prevista deberá proporcionarse con relación a adquisiciones posteriores a la
informada originariamente brindada, cuando se vuelva a exceder, según lo aquí previsto, los montos de acciones clase D
indicados en la última información.
5
d)
e)
Toma de control: Sin cumplirse con lo indicado en los incisos e) y f) de este artículo no podrán adquirirse, directa o
indirectamente, por cualquier medio o título, acciones de la Sociedad o títulos de la Sociedad (incluyendo dentro del
significado del término “título”, pero sin limitarse, a los debentures, obligaciones negociables y cupones de acciones)
convertibles en acciones cuando, como consecuencia de dicha adquisición, el adquirente resulte titular de, o ejerza el control
sobre acciones Clase D de la Sociedad que, sumadas a sus tenencias anteriores de dicha clase (si las hubiere) representen, en
total, el QUINCE POR CIENTO (15%) o más del capital social, o el VEINTE POR CIENTO (20%) o más de las acciones
clase D en circulación, si las acciones representativas de dicho VEINTE POR CIENTO (20%) constituyeran, al mismo
tiempo, menos del QUINCE POR CIENTO (15%) del capital social.
No obstante lo indicado: (i) estarán excluidas de las previsiones de los incisos e) y f) de este artículo, las adquisiciones que
realice quien ya sea titular o ejerza el control de acciones que representen más del CINCUENTA POR CIENTO (50%) del
capital social; y (ii) estarán excluidas de las previsiones del inciso e) punto (ii) y del inciso f) de este artículo, las
adquisiciones posteriores que realice quien ya sea titular o ejerza el control de acciones que representen el QUINCE POR
CIENTO (15%) o más del capital social, o el VEINTE POR CIENTO (20%) o más de las acciones clase D en circulación, si
las acciones representativas de dicho VEINTE POR CIENTO (20%) constituyeran, al mismo tiempo, menos del QUINCE
POR CIENTO (15%) del capital social, siempre que las acciones de las que fuera y/o pase a ser titular el adquirente
(incluyendo las acciones de las que fuera titular al momento de la adquisición y de las que pase a ser titular en virtud de la
misma) no superen el CINCUENTA POR CIENTO (50%) del capital social.
Las adquisiciones a las que se refiere este inciso d) se denominan “Adquisiciones de control”.
Requisitos: La persona que desee llevar a cabo una Adquisición de Control (en adelante, en este inciso “el oferente”) deberá:
(i)
(ii)
Obtener el consentimiento previo de la asamblea especial de los accionistas de la clase A y
Realizar una oferta pública de adquisición de todas las acciones de todas las clases de la Sociedad y de todos los
títulos convertibles en acciones.
6
f)
Toda decisión que la asamblea especial de la clase A adopte en relación con las materias previstas en este inciso e) será
definitiva y no generará derecho a indemnización alguna para ninguna parte.
Oferta Pública de Adquisición: Cada oferta pública de adquisición será realizada de acuerdo con el procedimiento indicado en
este inciso y, en la medida que las normas aplicables en las jurisdicciones en que la oferta pública de adquisición sea hecha y
las disposiciones de las bolsas y mercados de valores en donde coticen las acciones y títulos de la Sociedad impongan
requisitos adicionales o más estrictos a los aquí indicados, se cumplirá con dichos requisitos adicionales o más estrictos en las
bolsas y mercados en que ellos sean exigibles.
(i)
El Oferente deberá notificar por escrito a la Sociedad de la oferta pública de adquisición con por lo menos quince
días hábiles de anticipación a la fecha de inicio de la misma. En la notificación se informará a la Sociedad todos los
términos y condiciones de cualquier acuerdo o preacuerdo que el oferente hubiera realizado o proyectara realizar
con un tenedor de acciones de la Sociedad en virtud del cual, si dicho acuerdo o preacuerdo se consumara, el
Oferente se encontraría en la situación descripta por el primer párrafo del inciso d) de este Artículo (en adelante, el
Acuerdo Previo), y, además, toda la siguiente información mínima adicional:
(A)
(B)
(C)
(D)
(E)
La identidad, nacionalidad, domicilio y número de teléfono del Oferente;
Si el oferente está conformado por un grupo de personas, la identidad y domicilio de cada Oferente en el
grupo y de la persona directiva de cada persona o entidad que conforme el grupo;
La contraprestación ofrecida por las acciones y/o títulos. Si la oferta está condicionada a que un número
determinado de acciones resulte adquirido, se deberá indicar dicho mínimo;
La fecha programada de vencimiento del plazo de validez de la oferta pública de adquisición, si la misma
puede ser prorrogada, y en su caso el procedimiento para su prórroga;
Una declaración por parte del Oferente sobre las fechas exactas con anterioridad y posterioridad a las cuales
los accionistas y tenedores de títulos que los sujetaron para su venta al régimen de la oferta pública de
adquisición tendrán el derecho de retirarlos, la forma en la cual las acciones y títulos así sujetos a la venta
serán aceptados y sujeta a la cual se realizará el retiro de las acciones y títulos de su sujeción al régimen de
la oferta pública de adquisición;
7
(ii)
(iii)
(iv)
(F)
(G)
Una declaración indicando que la oferta pública de adquisición estará abierta a todos los tenedores de
acciones y de títulos convertibles en acciones;
La información adicional, incluyendo los estados contables del Oferente, que la Sociedad pueda
razonablemente requerir o que pueda ser necesaria para que la notificación arriba indicada no conduzca a
conclusiones erróneas o cuando la información suministrada sea incompleta o deficiente.
El Directorio de la Sociedad convocará por cualquier medio fehaciente a una Asamblea especial de la clase A a
celebrarse a los diez días hábiles contados a partir de la recepción por la Sociedad del aviso indicado en el subinciso
(i), a fin de considerar la aprobación de la oferta pública de adquisición y someterá a dicha Asamblea su
recomendación al respecto. Si tal asamblea no se celebra pese a la convocatoria, o si se celebrara y en ella se
rechazara la oferta pública de adquisición, ésta no podrá cumplirse y tampoco se llevará a cabo el Acuerdo Previo, si
existiera.
La Sociedad enviará por correo, a cada accionista o tenedor de títulos convertibles en acciones, a costa del Oferente,
con la diligencia razonable, copia de la notificación entregada a la Sociedad de acuerdo con lo indicado en el
subinciso (i). El Oferente deberá adelantar a la Sociedad los fondos requeridos para este fin.
El Oferente enviará por correo o de otra forma suministrará, con una diligencia razonable, a cada accionista o
tenedor de títulos convertibles en acciones que se lo requiera, copia de la notificación suministrada a la Sociedad y
publicará un aviso conteniendo sustancialmente la información indicada en el subinciso (i), al menos una vez por
semana, comenzando en la fecha en que dicha notificación es entregada a la Sociedad de acuerdo con el subinciso
(i) y terminando al expirar la fecha para la oferta pública de adquisición. Sujeto a las disposiciones legales
aplicables, esta publicación se hará en la sección de negocios de diarios de circulación general en la República
Argentina, en la ciudad de Nueva York, EE.UU. y en cualquier otra ciudad en cuya bolsa o mercado coticen las
acciones.
(v)
La contraprestación por cada acción o título convertible en acción pagadera a cada accionista o tenedor del título
será la misma, en dinero, y no será inferior al precio por acción clase D o en su caso título convertible en acción
clase D, más alto de los precios siguientes:
(A)
el mayor precio por acción o título pagado por el Oferente, o por cuenta del Oferente, en relación con
cualquier adquisición de acciones clase D o títulos convertibles en acciones clase D dentro del período de
dos años inmediatamente anterior al aviso de la adquisición de Control, ajustado a raíz de cualquier división
accionaria, dividendo en acciones, subdivisión o reclasificación que afecte o se relacione a la clase D de
acciones; o
8
(B)
(C)
(D)
El precio más alto cierre vendedor durante el período de treinta días inmediatamente precedente a dicho
aviso, de una acción clase D según su cotización en la Bolsa de Comercio de Buenos Aires, en cada caso
ajustado a raíz de cualquier división accionaria, dividendo en acciones, subdivisión o reclasificación que
afecte o se relacione a la clase D de acciones; o
Un precio por acción igual al precio de mercado por acción de la clase D determinado según lo indicado en
el subinciso (B) de esta cláusula multiplicado por la relación entre: (a) el precio por acción más alto pagado
por el Oferente o por cuenta del mismo, por cualquier acción de la clase D, en cualquier adquisición de
acciones de la clase dentro de los dos años inmediatamente precedentes a la fecha del aviso indicado en el
subinciso (i), y (b) dicho precio de mercado por acción de la clase D en el día inmediatamente precedente al
primer día del período de dos años en el cual el Oferente adquirió cualquier tipo de interés o derecho en una
acción de la clase D. En cada caso el precio será ajustado teniendo en cuenta cualquier subsiguiente división
accionaria, dividendo en acciones, subdivisión o reclasificación que afecte o esté relacionada a la clase D; o
El ingreso neto de la Sociedad por acción de la clase D durante los cuatro últimos trimestres fiscales
completos inmediatamente precedentes a la fecha del aviso indicado en el subinciso (i), multiplicado por la
más alta de las siguientes relaciones: la relación precio/ingreso para ese período para las acciones de la clase
D (si lo hubiere) o la relación precio/ingreso más alta para la Sociedad en el período de dos años
inmediatamente precedente a la fecha del aviso indicado en el subinciso (i). Dichos múltiplos serán
determinados en la forma común en la cual se los computa e informa en la comunidad financiera.
(vi)
Los accionistas o tenedores de títulos que los hayan sujetado a la oferta pública de adquisición podrán retirarlos de
la misma antes de la fecha fijada para el vencimiento de dicha oferta.
9
(vii)
(viii)
(ix)
La oferta pública de adquisición no podrá ser inferior a VEINTE (20) días, ni exceder de TREINTA (30) días
contados desde la fecha de autorización de la solicitud de oferta pública por la Comisión Nacional de Valores de
Argentina.
El Oferente adquirirá todas las acciones y/o títulos convertibles en acciones que antes de la fecha de la expiración de
la oferta, sean puestos a venta de acuerdo al régimen de la oferta pública de adquisición. Si el número de dichas
acciones o títulos es menor al mínimo al cual condicionó el Oferente la oferta pública de adquisición, el Oferente
podrá retirarla.
Si el Oferente no ha fijado un mínimo al cual condiciona su oferta pública de adquisición según lo indicado en el
subinciso (i) (C) de este inciso, finalizado dicho procedimiento podrá concretar el Acuerdo Previo, si lo hubiera,
cualquiera sea el número de acciones y/o títulos que haya adquirido bajo el régimen de la oferta pública de
adquisición. Si hubiere fijado tal mínimo, podrá concretar el Acuerdo Previo sólo si bajo el régimen de la oferta
pública de adquisición ha superado dicho mínimo. El acuerdo previo deberá concretarse dentro de los treinta días de
finalizada la oferta pública de adquisición, caso contrario, para poder concretarlo será necesario repetir el
procedimiento previsto en este Artículo.
Si no hubiese Acuerdo Previo, el Oferente, en los supuestos y oportunidades indicados previamente en que se podría
concretar un Acuerdo Previo, podrá adquirir libremente el número de acciones y/o títulos que informó a la Sociedad
en la comunicación indicada en el subinciso (i) de este inciso, en tanto no haya adquirido dicho número de acciones
y/o títulos bajo el régimen de la oferta pública de adquisición.
g)
Transacciones relacionadas: Toda fusión, consolidación u otra forma de combinación que tenga substancialmente los mismos
efectos (en adelante, en este artículo “la Transacción Relacionada”) que comprenda a la Sociedad y cualquier otra persona (en
adelante en este artículo “el Accionista Interesado”), que haya realizado previamente una Adquisición de control o que tenga
para el Accionista Interesado los efectos, en cuanto a la tenencia de acciones clase D, de una Adquisición de control, sólo será
realizada si la contraprestación que recibirá cada accionista de la Sociedad en dicha Transacción Relacionada fuera igual para
todos los accionistas y no menor a:
(i)
El precio por acción más alto pagado por o por cuenta de dicho Accionista Interesado con relación a la adquisición
de:
(A)
Acciones de la clase del tipo a ser transferidas por los accionistas en dicha Transacción Relacionada (en
adelante, “La clase”), dentro del período de dos años inmediatamente anterior al primer anuncio público de
la Transacción Relacionada (en adelante, “la Fecha del Anuncio”), o
10
(ii)
(iii)
(iv)
(B)
Acciones de la Clase adquiridas por dicho Accionista Interesado en cualquier Adquisición de control.
En ambos casos según dicho precio sea ajustado con motivo de cualquier división accionaria, dividendo en acciones,
subdivisión o reclasificación que afecte o esté relacionada a la clase.
El precio, cierre vendedor, más alto durante el período de treinta días inmediatamente precedente a la fecha del
anuncio o la fecha en que el Accionista Interesado adquiera acciones de la Clase en cualquier Adquisición de
control, de una acción de la clase según su cotización en la Bolsa de Comercio de Buenos Aires, ajustado por
cualquier división accionaria, dividendo en acciones, subdivisión o reclasificación que afecte o esté relacionada a la
Clase.
Un precio por acción igual al precio de mercado por acción de la Clase determinado según lo indicado en el inciso
(ii) de esta cláusula multiplicado por la relación entre: (a) el precio por acción más alto pagado por el Accionista
Interesado o por cuenta del mismo, por cualquier acción de la Clase, en cualquier adquisición de acciones de la
Clase dentro de los dos años inmediatamente precedentes a la Fecha del Anuncio, y (b) dicho precio de mercado por
acción de la Clase en el día inmediatamente precedente al primer día del período de dos años en el cual el Accionista
Interesado adquirió cualquier tipo de interés o derecho en una acción de la Clase. En cada caso el precio será
ajustado teniendo en cuenta cualquier subsiguiente división accionaria, dividendo en acciones, subdivisión o
reclasificación que afecte o esté relacionada a la Clase.
El ingreso neto de la Sociedad por acción de la Clase durante los cuatro últimos trimestres fiscales completos
inmediatamente precedentes a la Fecha del Anuncio, multiplicado por la más alta de las siguientes relaciones: la
relación precio/ ingreso para ese período para las acciones de la Clase (si lo hubiere) o la relación precio/ingreso
más alta para la Sociedad en el período de dos años inmediatamente precedente a la Fecha del Anuncio. Dichos
múltiplos serán determinados en la forma común en la cual se los computa e informa en la comunidad financiera.
11
h)
i)
Violación de requisitos: Las acciones y títulos adquiridos en violación a lo establecido en los incisos 7 c) a 7 g), ambos
inclusive, de este artículo, no darán derecho a voto o a cobrar dividendos u otras distribuciones que realice la Sociedad y no
serán computadas a los fines de determinar el quórum en cualquiera de las asambleas de accionistas de la Sociedad, hasta
tanto las acciones no sean enajenadas, en el caso de que el adquirente haya obtenido el control directo sobre YPF, o hasta
tanto el adquirente pierda el control sobre la sociedad controlante de YPF, si la toma de control ha sido indirecta.
Interpretación: A los efectos de este artículo 7, el término “indirectamente” incluirá a las sociedades controlantes del
adquirente, las sociedades por él controladas o que resultarían controladas como consecuencia de la Adquisición de control,
Oferta Pública de Adquisición, Acuerdo Previo, o Transacción Relacionada, según sea el caso, que otorgarían a su vez el
control de la Sociedad, las sociedades sometidas a control común con el adquirente y a las demás personas que actúen
concertadamente con el adquirente; asimismo quedarán incluidas las tenencias accionarias que una persona posea a través de
fideicomisos, certificados de depósito de acciones (“ADR”) u otros mecanismos análogos.
La Sociedad no se encuentra adherida al Régimen Estatutario Optativo de Oferta Pública de Adquisición Obligatoria previsto
por el artículo 24 del Decreto 677/01.
Artículo 8°—Derecho de preferencia
a)
Reglas generales: Los tenedores de acciones ordinarias o preferidas de cada clase gozarán del derecho de preferencia en la
suscripción de las acciones de la misma clase que se emitan, en proporción a las que posean. Este derecho deberá ejercerse en
las condiciones y dentro del plazo fijados por la Ley y reglamentaciones aplicables. Las condiciones de emisión, suscripción e
integración de las acciones clase C podrán ser más ventajosas para sus adquirentes que las previstas para el resto de las
acciones pero en ningún caso podrán ser más gravosas. Todo titular de un derecho de preferencia, cualquiera sea la clase de
acción que lo origina, podrá cederlo a cualquier tercero, en cuyo caso la acción objeto de dicho derecho de preferencia se
convertirá o consistirá en una acción clase D.
b)
Derecho de acrecer: El derecho de acrecer se ejercerá dentro del mismo plazo fijado para el derecho de preferencia, y respecto
de todas las clases de acciones que no hayan sido inicialmente suscriptas. A estos efectos:
(i)
Las acciones clase A que no hayan sido suscriptas en ejercicio del derecho de preferencia por el Estado Nacional se
convertirán en acciones clase D y serán ofrecidas a los accionistas de dicha Clase que hubieran manifestado la
intención de acrecer con relación a las acciones clase A no suscriptas;
12
(ii)
(iii)
(iv)
(v)
Las acciones clase B que no hayan sido suscriptas por Provincias en ejercicio de sus derechos de preferencia
originales, por omisión de ejercicio o por cesión del mismo, se asignarán seguidamente a las Provincias que hayan
suscripto acciones clase B y manifestado la intención de acrecer, y el excedente se convertirá en acciones clase D
para ser ofrecidas a los accionistas de dicha clase D que hubieran manifestado la intención de acrecer con relación a
las acciones clase B no suscriptas;
Las acciones clase C que no hayan sido suscriptas por personas comprendidas en el Programa de Propiedad
Participada en ejercicio de sus derechos de preferencia originales, por omisión de ejercicio o por cesión del mismo,
se asignarán a aquellas de las personas comprendidas en dicho régimen que hayan suscripto acciones clase C y
manifestado la intención de acrecer, y el excedente se convertirá en acciones clase D para ser ofrecidas a los
accionistas de dicha clase que hubieran manifestado la intención de acrecer con relación a las acciones clase C no
suscriptas;
Las acciones clase D que no hubieren sido suscriptas en ejercicio de derechos de preferencia emanados de acciones
de esa clase serán asignadas a aquellos de los suscriptores de esa clase que hayan manifestado la intención de
acrecer;
Las acciones clase D remanentes se asignarán a los accionistas de las demás clases que hubieren manifestado
intención de acrecer, en paridad de rango.
c)
Límites: Los derechos de preferencia y de acrecer previstos en los párrafos precedentes existirán sólo en la medida en que
sean exigidos por la legislación societaria vigente en cada momento o sean necesarios para cumplir las disposiciones
aplicables de las Leyes 23.696 y 24.145.
Artículo 9°—Oferta pública y privada. Derogado
13
TITULO IV
OBLIGACIONES NEGOCIABLES, BONOS DE
PARTICIPACION Y OTROS TITULOS
Artículo 10°—Títulos emitibles
a)
Obligaciones negociables: La Sociedad podrá emitir obligaciones negociables, convertibles o no. Cuando fuere legalmente
necesario que la emisión de obligaciones negociables sea decidida por la asamblea, ésta podrá delegar en el Directorio todas o
algunas de las condiciones de emisión.
b)
c)
Otros títulos: La Sociedad podrá emitir bonos de preferencia y otros títulos admitidos por la legislación aplicable. Los bonos
de preferencia otorgarán a sus titulares el derecho de suscripción preferente en los aumentos de capital que se decidan en el
futuro y hasta el monto que dichos bonos prevean. En la suscripción de dichos bonos y otros títulos convertibles, los
accionistas tendrán derecho de preferencia en los términos y en los casos previstos en el artículo 8º de este Estatuto.
Conversión a clase D: Todo título convertible emitido por la Sociedad dará derecho a conversión sólo en acciones clase D. Su
emisión deberá ser autorizada por asamblea especial de la clase D.
TITULO V
DIRECCION Y ADMINISTRACION
Artículo 11°—Directorio
a)
Integración: La dirección y administración de la Sociedad estará a cargo de un directorio integrado por un número de once
(11) a veintiún (21) directores titulares, según lo determine la Asamblea, los que serán designados con mandato entre 1 y 3
ejercicios según lo determine la Asamblea en cada caso, pudiendo ser reelegidos indefinidamente, sin perjuicio de lo
establecido por el inciso e) de este artículo.
b)
Directores suplentes: Cada clase de acciones designará un número de directores suplentes igual o menor al de titulares que le
corresponda designar. Los directores suplentes llenarán las vacantes que se produzcan dentro de su respectiva clase en el
orden de su designación cuando tal vacante se produzca, sea por ausencia, renuncia, licencia, incapacidad, inhabilidad o
fallecimiento, previa aceptación por el directorio de la causal de sustitución cuando ésta sea temporaria.
14
c)
Designación: Los directores serán designados por voto mayoritario dentro de cada una de las clases de acciones ordinarias, de
la siguiente manera:
(i)
(ii)
(iii)
la clase A elegirá un director titular y un suplente mientras exista al menos una acción clase A;
la designación del resto de los directores titulares y suplentes (que en ningún caso será menor de seis titulares y un
número igual o menor de suplentes) corresponderá a la clase D. Las clases B y C votarán conjuntamente con las
acciones clase D en la asamblea especial de ésta última convocada para la elección de Directores;
en las asambleas especiales de clase D convocadas para la elección de directores se podrá votar por voto
acumulativo con arreglo a las previsiones del artículo 263 de la Ley 19.550, incluso cuando a ella concurran
accionistas tenedores de acciones A, B ó C conforme a lo previsto anteriormente.
Ausencia de una clase: Si no hubiere ninguna acción de una determinada clase con derecho a elegir directores de clase,
presente en una asamblea celebrada en segunda convocatoria y convocada para elegir directores, los directores de dicha clase
serán elegidos por los accionistas de las restantes clases votando conjuntamente como si constituyeran una sola clase salvo en
caso en que la ausencia de accionistas ocurriera en las asambleas de las clases A, B o C en cuyo caso el síndico designado por
las acciones clase A o por las acciones clase A, B y C en conjunto, según corresponda con arreglo a lo previsto en el Artículo
21 inciso b) procederá a efectuar la designación de directores titulares y suplentes de aquella de dichas clases que hubieren
estado ausentes.
Elección escalonada: La elección será por el plazo que establezca la Asamblea según lo previsto en el art. 11 inc. a), salvo
cuando se elijan directores para completar el mandato de los reemplazados.
Nominación de candidatos: En cada asamblea que deba elegir directores para la clase D, todo accionista, o grupo de
accionistas de la clase D que posea más del tres por ciento (3%) del capital representado por acciones clase D, podrá requerir
que se envíe a todos los accionistas de esa clase la lista de candidatos que ese accionista o grupo de accionistas propondrá a la
asamblea de dicha clase para su elección. En el caso de bancos depositarios que tengan acciones registradas a su nombre, esta
regla se aplicará con respecto a los beneficiarios. Igualmente, el directorio podrá proponer candidatos a directores a ser
electos por las asambleas de las clases respectivas, cuyos nombres se comunicarán a todos los accionistas junto con las listas
propuestas por los accionistas mencionados en primer término. Las reglas anteriores no
d)
e)
f)
15
impedirán a ningún accionista presente en la asamblea proponer candidatos no incluidos en las propuestas circularizadas por
el directorio. No podrá efectuarse ninguna propuesta de elección de directores para ninguna de las clases, antes del acto de la
asamblea o en el curso de la misma, sin presentar a la Sociedad prueba escrita de la aceptación del cargo por los candidatos
propuestos.
Forma de la elección: Sin perjuicio de lo establecido sobre voto acumulativo por el subinciso (vi) del inciso (c) de este
Artículo la elección de directores de la clase D se efectuará por lista siempre que ningún accionista lo objete; en caso
contrario, se efectuará individualmente. Se declarará electa a la lista o persona, según el caso, que obtenga la mayoría
absoluta de las acciones clase D presentes en la asamblea; si ninguna lista obtuviera tal mayoría, se realizará una nueva
votación en la que participarán las dos listas o personas más votadas, considerándose electa la lista o persona que en tal
votación obtenga la mayor cantidad de votos.
Remoción: Sujeto a los requisitos de quórum aplicables, cada clase, por mayoría de las acciones de la clase presente en la
asamblea, podrá remover a los directores por ella elegidos siempre que la remoción haya sido incluida en el orden del día.
g)
h)
Artículo 12°—Garantía
Los directores titulares deben constituir, cada uno de ellos, una garantía de diez mil pesos ($ 10.000) o su equivalente, como mínimo,
la que podrá consistir en bonos, títulos públicos o sumas de moneda nacional o extranjera depositados en entidades financieras o cajas
de valores, a la orden de la sociedad, o en fianzas o avales bancarios o seguros de caución o de responsabilidad civil a favor de la
sociedad, cuyo costo deberá ser soportado por cada director; en ningún caso procederá constituir garantía mediante el ingreso directo
de fondos a la caja social. Cuando la garantía consista en depósito de bonos, títulos públicos o sumas de moneda nacional o
extranjera, las condiciones de su constitución deberán asegurar su indisponibilidad mientras esté pendiente el plazo de prescripción de
eventuales acciones de responsabilidad. Los directores suplentes solamente deberán constituir la garantía aludida en caso de asumir
como titulares en reemplazo de un director titular saliente para completar el período o períodos que correspondan.
Artículo 13°—Vacantes
Los síndicos podrán designar directores, en caso de vacancia, cuyo mandato se extenderá hasta la elección de nuevos directores por la
asamblea. Corresponderá al síndico designado por las acciones clase A nombrar a un director por la clase A, después de consultar con
el accionista clase A, y a los síndicos designados por las acciones clase D nombrar a los directores por esa clase.
16
Artículo 14°—Remuneración
a)
Miembros no ejecutivos: Las funciones de los miembros no ejecutivos del directorio serán remuneradas según lo resuelva
anualmente la asamblea ordinaria en forma global y se repartirá entre ellos en forma igualitaria, y entre sus suplentes en
proporción al tiempo que reemplazaron a esos titulares. La asamblea autorizará los montos que podrán pagarse a cuenta de
dichos honorarios durante el ejercicio en curso, sujeto a ratificación por la asamblea que considerara dicho ejercicio.
b)
c)
Miembros ejecutivos: Los directores de la Sociedad que cumplan funciones ejecutivas, técnico-administrativas o comisiones
especiales recibirán una remuneración por dichas funciones o comisiones de nivel acorde con el vigente en el mercado, que
será fijada por el Directorio, con la abstención de los nombrados. Estas remuneraciones, juntamente con las de la totalidad del
Directorio, estarán sujetas a ratificación por la asamblea según el régimen del artículo 261 de la Ley 19.550.
Regla general: Las remuneraciones de los directores establecidas por los incisos a) y b) anteriores deberán respetar los límites
fijados por el Artículo 261 de la Ley 19.550, salvo el caso previsto en el último párrafo de dicho artículo.
Artículo 15º—Reuniones
El Directorio se reunirá, como mínimo, una vez por trimestre, sin perjuicio de que el Presidente del Directorio, o quien lo reemplace,
lo convoque cuando lo considere conveniente. Asimismo, el Presidente del Directorio o quien lo reemplace, debe citar al Directorio
cuando lo solicite cualquiera de los directores. La convocatoria se hará, en este último caso, por el Presidente del Directorio, para
llevar a cabo la reunión dentro del quinto día de recibido el pedido; en su defecto, la convocatoria podrá ser efectuada por cualquiera
de los directores. Las reuniones de Directorio deberán ser convocadas por escrito con indicación del orden del día, pero podrán
tratarse temas no incluidos en el orden del día, si se hubieran originado con posterioridad y tuvieran carácter urgente.
Artículo 16°—Quórum y mayorías
El Directorio podrá funcionar con los miembros presentes, o comunicados entre sí por otros medios de transmisión simultánea de
sonido, imágenes o palabras. El Directorio funcionará con la presidencia del Presidente del Directorio o quien lo reemplace, pudiendo
delegarse la firma del acta por parte de aquellos que se encuentren a distancia a los miembros presentes. El quórum se constituirá con
la mayoría absoluta de los miembros que lo integren, computándose la asistencia de los miembros participantes,
17
presentes o comunicados entre sí a distancia. Se dejará constancia en el Acta de la asistencia y la participación de los miembros
presentes y de los miembros a distancia. En caso de que en una reunión convocada regularmente, una hora después de la fijada en la
convocatoria no se hubiese alcanzado quórum, el Presidente del Directorio o quien lo reemplace podrá invitar al o los suplentes de las
clases correspondientes a los ausentes a incorporarse a la reunión hasta alcanzar el quórum mínimo o convocar la reunión para otra
fecha. No obstante, en caso de que las ausencias no afecten el quórum, el Directorio podrá invitar a los suplentes de las clases
correspondientes a incorporarse a la reunión. El Directorio adoptará sus resoluciones por el voto de la mayoría de los miembros
presentes y a distancia. La Comisión Fiscalizadora dejará constancia en el Acta del Directorio de la regularidad de las decisiones
adoptadas. El Presidente del Directorio, o quien lo reemplace tendrá, en todos los casos, derecho a voto y doble voto en caso de
empate. Los directores ausentes podrán autorizar a otro director a votar en su nombre, siempre que existiera quórum, en cuyo caso no
se incorporarán suplentes en reemplazo de quienes así hubieren autorizado. Las actas serán confeccionadas y firmadas dentro de los
CINCO (5) días hábiles de celebrada la reunión por los miembros presentes del Directorio y por el representante de la Comisión
Fiscalizadora.
Artículo 17°—Facultades del Directorio
El directorio tendrá amplias facultades para organizar, dirigir y administrar la Sociedad, incluso los que requieren poderes especiales a
tenor del Artículo 1881 del Código Civil y del Artículo 9 del Decreto Ley 5965/63. Podrá especialmente operar con toda clase de
bancos, compañías financieras o entidades crediticias oficiales y privadas; dar y revocar poderes especiales y generales, judiciales, de
administración u otros, con o sin facultad de sustituir; iniciar, proseguir, contestar o desistir denuncias o querellas penales y realizar
todo otro hecho o acto jurídico que haga adquirir derechos o contraer obligaciones a la Sociedad, sin otras limitaciones que las que
resulten de las leyes que le fueren aplicables, del presente Estatuto y de los acuerdos de asambleas, correspondiéndole:
(i)
Otorgar poderes generales y especiales -inclusive aquellos cuyo objeto sea lo previsto en el artículo 1881 del Código Civil-
así como aquellos que faculten para querellar criminalmente, y revocarlos. A los efectos de absolver posiciones, reconocer
documentos en juicios, prestar indagatoria o declarar en procedimientos administrativos, el directorio podrá otorgar poderes
para que la Sociedad sea representada por cualquier director, gerente o apoderado, debidamente instituido.
(ii)
Comprar, vender, ceder, donar, permutar y dar o tomar en comodato toda clase de bienes muebles e inmuebles,
establecimientos comerciales e industriales,
18
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
buques, artefactos navales y aeronaves, derechos, inclusive marcas, patentes de invención y derechos de propiedad industrial
e intelectual; constituir servidumbres, como sujeto activo o pasivo, hipotecas, hipotecas navales, prendas o cualquier otro
derecho real y, en general, realizar todos los demás actos y celebrar, dentro o fuera del país, los contratos que sean atinentes al
objeto de la Sociedad, inclusive arrendamientos por el plazo máximo que establezca la ley.
Asociarse con otras personas de existencia visible o jurídica, conforme a la legislación vigente y a estos Estatutos y celebrar
con ellas contratos de unión transitoria de empresas, o de agrupaciones de colaboración empresaria.
Tramitar ante las autoridades nacionales o extranjeras todo cuanto sea necesario para el cumplimiento del objeto de la
Sociedad.
Aprobar la dotación del personal, efectuar nombramientos de los gerentes generales o especiales, fijar sus niveles de
retribuciones, condiciones de trabajo y cualquier otra medida de política de personal y disponer promociones, pases, traslados
y remociones y aplicar las sanciones que pudieren corresponder.
Emitir, dentro o fuera del país, en moneda nacional o extranjera, debentures, obligaciones negociables y otros títulos de deuda
con garantía real, especial o flotante o sin garantía, convertibles o no, conforme las disposiciones legales que fueren
aplicables y previa resolución de la asamblea competente cuando ello fuere legalmente requerido.
Transar judicial o extrajudicialmente toda clase de cuestiones, comprometer en árbitros o amigables componedores, promover
y contestar toda clase de acciones judiciales y administrativas y asumir el papel de querellante en jurisdicción penal o
correccional competente, otorgar toda clase de fianzas y prorrogar jurisdicciones dentro o fuera del país, renunciar al derecho
de apelar o a prescripciones adquiridas, absolver o poner posiciones en juicio, hacer novaciones, otorgar quitas o esperas y, en
general, efectuar todos los actos que según la ley requieren poder especial.
Efectuar toda clase de operaciones con bancos y entidades financieras inclusive el Banco de la Nación Argentina, de la
Provincia de Buenos Aires, y demás instituciones bancarias y financieras oficiales, privadas o mixtas del país o del exterior.
Celebrar operaciones y contratar préstamos, empréstitos y otras obligaciones con bancos oficiales o particulares, incluidos los
enumerados en la frase anterior, instituciones y organismos internacionales de crédito o de cualquier otra naturaleza, personas
de existencia visible o jurídica, del país o del extranjero.
19
(ix)
(x)
(xi)
(xii)
Crear, mantener, suprimir, reestructurar o trasladar las dependencias y sectores de la Sociedad y crear nuevas
administraciones regionales, agencias o sucursales dentro o fuera del país; constituir y aceptar representaciones.
Aprobar y someter a la consideración de la asamblea la Memoria, Inventario, Balance General y Estado de Resultados de la
Sociedad proponiendo, anualmente, el destino de las utilidades del Ejercicio.
Aprobar el régimen de contrataciones de la Sociedad, el que asegurará la concurrencia de oferentes, transparencia y
publicidad de procedimientos.
Disponer, si lo considera conveniente y necesario, la creación e integración del Comité Ejecutivo y de otros comités de
Directorio, fijar las funciones y límites de su actuación dentro de las facultades que le otorga este Estatuto y dictar su
reglamento interno.
(xiii) Aprobar, en su caso, la designación del Gerente General y del Subgerente General, de acuerdo con lo dispuesto en el artículo
18 (c).
(xiv) Resolver cualquier duda o cuestión que pudiera suscitarse en la aplicación del presente Estatuto, a cuyo efecto el Directorio
queda investido de amplios poderes sin perjuicio de dar cuenta, oportunamente, a la asamblea.
Dictar su propio reglamento interno.
Solicitar y mantener la cotización, en bolsas y mercados de valores nacionales e internacionales, de sus acciones, y demás
títulos cuando fuere pertinente.
(xv)
(xvi)
(xvii) Aprobar el presupuesto anual, las estimaciones de gastos e inversiones, los niveles de endeudamiento necesario y los planes
anuales de acción de la Sociedad.
(xviii) Ejercer las demás facultades que le confiere este Estatuto.
La enumeración que antecede es enunciativa y no taxativa y, en consecuencia, el directorio tiene todas las facultades para administrar
y disponer de los bienes de la Sociedad y celebrar todos los actos que hagan al objeto social, salvo las excepciones previstas en el
presente Estatuto, incluso por apoderados especialmente designados al efecto, a los fines y con la amplitud de facultades que, en cada
caso particular, se determine.
20
Artículo 18º—Presidente y Vicepresidentes del Directorio—Gerente General y Subgerente General.
a)
Designación: El Directorio designará de entre los miembros elegidos por las acciones Clase D a un Presidente del Directorio
y podrá designar, en su caso, Vicepresidentes del Directorio. En caso de empate se resolverá por votación de los directores
elegidos por la clase D. El Presidente y los Vicepresidentes del Directorio durarán en sus cargos dos (2) ejercicios, pero no
más allá de su permanencia en el Directorio, pudiendo ser reelegidos indefinidamente en esas condiciones si fueran electos o
reelectos como directores por la clase D. El Presidente del Directorio ejercerá además el cargo de Gerente General, quien será
el principal ejecutivo de la Sociedad y tendrá a su cargo la conducción de las funciones ejecutivas de la administración. Si el
Presidente del Directorio manifestara al ser electo, o posteriormente, que no desea ejercer el cargo de Gerente General,
propondrá a la persona (que podrá o no ser director, pero en el primer caso deberá haber sido electo por la clase D) que
ejercerá dicho cargo, sujeto a la aprobación del Directorio. El Presidente del Directorio podrá retomar en cualquier momento
el cargo de Gerente General. El Presidente o Gerente General podrá proponer al Directorio la persona (que podrá o no ser
director, pero en el primer caso deberá haber sido electo por la clase D) que, sujeto a la aprobación del Directorio, ejercerá el
cargo de Subgerente General. El Subgerente General reportará directamente al Gerente General y lo asistirá en el
gerenciamiento de las operaciones de la Sociedad y en las demás funciones ejecutivas que le atribuya o delegue el Gerente
General, a quien reemplazará en caso de ausencia u otro impedimento transitorio.
b)
c)
Vicepresidentes del Directorio: El Vicepresidente Ejecutivo del Directorio reemplazará al Presidente del Directorio en caso
de renuncia, fallecimiento, incapacidad, inhabilidad, remoción o ausencia temporaria o definitiva de este último. En todos
estos casos, salvo en el de ausencia temporaria, el Directorio deberá elegir nuevo Presidente del Directorio dentro de los
sesenta días de producida la vacancia y según lo previsto en el inciso a) de este artículo. En caso de que exista más de un
Vicepresidente el reemplazo del Presidente corresponderá al que viniese ejercitando funciones de Vicepresidente Ejecutivo, y
en segundo lugar al Vicepresidente del Directorio de mayor edad.
Cuando uno de los Vicepresidentes del Directorio sea nombrado Gerente General o Subgerente General, será denominado
“Vicepresidente Ejecutivo”. Cuando el Presidente del Directorio ejerza el cargo de Gerente General, si el Vicepresidente del
Directorio no reviste el carácter de Vicepresidente Ejecutivo lo reemplazará solamente en el cargo de Presidente del
Directorio.
21
d)
e)
En caso de empate en la aprobación de la designación del Gerente General o del Subgerente General, se resolverá por
votación de los directores elegidos por la clase D.
A los efectos de su actuación en el extranjero y ante los mercados internacionales de capitales, el Gerente General será
designado como “Chief Executive Officer” y el Subgerente General, será designado como “Chief Operating Officer”. El
Gerente General y el Subgerente General, estarán facultados para firmar todos los contratos, papeles de comercio, escrituras
públicas y demás actos públicos o privados que obliguen y/u otorguen derechos a la Sociedad dentro de los límites de los
poderes que les otorgue el Directorio, sin perjuicio de la representación legal que le corresponde al Presidente del Directorio y
en su caso al Vicepresidente Ejecutivo del Directorio, y de los demás poderes y delegaciones de firma que el Directorio
disponga.
Artículo 19º—Facultades del Presidente del Directorio
Son facultades y deberes del Presidente del Directorio o, a falta de éste, del Vicepresidente Ejecutivo del Directorio, además de las
que pudieren corresponderles según se prevé en el artículo 18º de este Estatuto:
(i)
Ejercer la representación legal de la Sociedad conforme a lo dispuesto en el artículo 268 de la Ley 19.550 y cumplir y hacer
cumplir las leyes, los decretos, el presente Estatuto y las resoluciones que tomen la asamblea, el Directorio y el Comité
Ejecutivo.
(ii)
(iii)
(iv)
(v)
Convocar y presidir las reuniones del Directorio con voto en todos los casos y doble voto en caso de empate.
Ejercer, en su caso, el cargo de Gerente General.
Firmar actos públicos y privados en representación de la Sociedad, sin perjuicio de las delegaciones de firmas o de poderes
que el Directorio haya conferido y de las facultades que, en su caso, competen al Gerente General y al Subgerente General.
Ejecutar o hacer ejecutar las resoluciones del Directorio, sin perjuicio de las facultades que competen, en su caso, al Gerente
General y al Subgerente General o de que el Directorio resuelva asumir por sí la ejecución de una resolución o de un tipo de
funciones o atribuciones determinadas.
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(vi)
Presidir las asambleas de la Sociedad.
TITULO VI
FISCALIZACION
Artículo 20°—Comisión Fiscalizadora
a)
Integración: La fiscalización de la Sociedad será ejercida por una comisión fiscalizadora compuesta por un número de tres
(3) a cinco (5) síndicos titulares y tres (3) a cinco (5) suplentes, según lo determine la Asamblea.
b)
c)
Designación: Un síndico y un suplente serán designados por las acciones clase A mientras exista al menos una acción clase
(14)
A, y los restantes titulares y suplentes serán designados por las acciones clase D. Los síndicos serán elegidos por el período de
un (1) ejercicio y tendrán las facultades establecidas en la Ley 19.550 y en las disposiciones legales vigentes. La Comisión
Fiscalizadora podrá ser convocada por cualquiera de los síndicos, sesionará con la totalidad de sus miembros y adoptará las
resoluciones por mayoría. El síndico disidente tendrá los derechos, atribuciones y deberes establecidos en la Ley 19.550.
Retribución: Las retribuciones de los síndicos serán fijadas por la asamblea ordinaria dentro de los límites establecidos por la
ley vigente.
TITULO VII
ASAMBLEAS GENERALES
Artículo 21°—Convocatoria
Se convocará a asamblea ordinaria o extraordinaria, en su caso, para considerar los asuntos establecidos en los artículos 234 y 235 de
la Ley 19.550. Las convocatorias se harán de acuerdo con las disposiciones legales vigentes.
Artículo 22°—Publicación
a)
Edictos: Las convocatorias para las asambleas de accionistas, tanto ordinarias como extraordinarias se efectuarán por medio
de avisos publicados en el Boletín Oficial, en uno de los diarios de mayor circulación general en la República y en los
boletines
23
de las bolsas y mercados de valores del país en los que coticen las acciones de la Sociedad, por el término y con la
anticipación establecidos en las disposiciones legales vigentes. El directorio ordenará las publicaciones a efectuar en el
exterior para cumplir con las normas y prácticas vigentes de las jurisdicciones correspondientes a los mercados y Bolsas
donde se coticen esas acciones.
b)
Otros medios de difusión: El directorio podrá emplear los servicios de empresas especializadas en la comunicación con
accionistas, y recurrir a otros medios de difusión a fin de hacerles llegar sus puntos de vista sobre los temas a someterse a las
asambleas que se convoquen. El costo de tales servicios y difusión estará a cargo de la Sociedad.
Artículo 23º—Representación
Los accionistas pueden hacerse representar en el acto de la asamblea de la que se trate, mediante el otorgamiento de un mandato en
instrumento privado con su firma certificada en forma judicial, notarial o bancaria. Presidirá las asambleas de accionistas el
Presidente del Directorio o, en su defecto, la persona que designe la asamblea.
Artículo 24°—Celebración
a)
Quórum y mayorías: Rigen el quórum y mayoría determinados por los artículos 243 y 244 de la Ley 19.550 según la clase de
asamblea, convocatoria y materias de que se trate, excepto:
(i)
(ii)
(iii)
(iv)
en cuanto al quórum de la asamblea extraordinaria en segunda convocatoria la que se considerará constituida
cualquiera sea el número de acciones presentes con derecho a voto;
para resolver sobre las cuestiones enumeradas en el inciso (c) del Artículo 6 en que se requerirá el voto afirmativo
de las acciones clase A otorgado en Asamblea Especial;
para resolver sobre las cuestiones enumeradas en el inciso (b) siguiente en los que se requerirá tanto en primera
como en segunda convocatoria, una mayoría equivalente al 75% (setenta y cinco por ciento) de las acciones con
derecho a voto;
para resolver sobre las cuestiones enumeradas en el inciso (c) siguiente en los que se requerirá tanto en primera
como en segunda convocatoria, una mayoría equivalente al 66% (sesenta y seis por ciento) de las acciones con
derecho a voto.
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(v)
(vi)
para afectar los derechos de una clase de acciones en que se requerirá la conformidad de dicha clase otorgada en
asamblea especial;
para modificar cualquier regla de este Estatuto que exija una mayoría especial, en que se requerirá también a ese
efecto la mayoría especial; y
(vii)
en los demás casos de que el presente requiera la votación por clase o la conformidad de cada una de las clases.
Las decisiones que requerirán la mayoría especial prevista en el subinciso (iii) del inciso precedente, sin perjuicio de la
conformidad de la Asamblea Especial de la clase cuyos derechos afecten son: (i) la transferencia al extranjero del domicilio
social; (ii) el cambio fundamental del objeto social de modo que la actividad definida por el artículo 4° de este Estatuto deje
de ser la actividad principal o prioritaria de la sociedad, (iii) el retiro de la cotización de las acciones de la Sociedad de las
Bolsas de Buenos Aires o Nueva York y (iv) la escisión de la Sociedad en varias sociedades, cuando como resultado de la
escisión se transfieran a las sociedades resultantes el 25% o más de los activos de la sociedad incluso cuando ese resultado se
alcanzara por sucesivas escisiones operadas en el plazo de un año.
Las decisiones que requerirán la mayoría especial prevista en el subinciso (iv) del inciso precedente, sin perjuicio de la
conformidad de la Asamblea Especial de la clase cuyos derechos afecten, son: (i) la modificación del Estatuto en cuanto
signifique (A) modificar los porcentajes establecidos en los subincisos 7 (c) o 7 (d) o (B) eliminar los requisitos previstos en
los subincisos 7(e) (ii) 7 (f) (i) (F) y 7 (f) (v) del artículo 7° en el sentido de que la oferta pública de adquisición alcance el
100% de las acciones y títulos convertibles, sea pagadera en dinero efectivo y no sea inferior al precio resultante de los
mecanismos allí previstos; (ii) el otorgamiento de garantías a favor de accionistas de la Sociedad salvo cuando la garantía y la
obligación garantizada se hubieran asumido en consecución del objeto social; (iii) la cesación total de las actividades de
refinación, comercialización y distribución; y (iv) las normas sobre número, nominación, elección y composición del
Directorio.
Asambleas especiales: Para las asambleas especiales de clases se seguirán las normas sobre quórum de la asamblea ordinaria
aplicadas al total de acciones de esa clase en circulación. Existiendo quórum general de todas las clases presentes, cualquier
número de acciones de las clases A, B y C constituirán quórum en primera y ulteriores convocatorias para las asambleas
especiales de dichas clases. Mientras el titular de las acciones de la clase A sea únicamente el Estado Nacional, la asamblea
especial de esa clase podrá reemplazarse con una comunicación firmada por el funcionario público competente para votar
dichas acciones.
b)
c)
d)
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TITULO VIII
BALANCES Y CUENTAS
Artículo 25° - Ejercicio Social
a)
Fecha: El ejercicio social comenzará el 1 de enero de cada año y concluirá el 31 de diciembre del mismo año, a cuya fecha
debe confeccionarse el Inventario, el Balance General y la Cuenta de Ganancias y Pérdidas conforme las disposiciones legales
en vigencia y normas técnicas en la materia.
b)
c)
d)
Modificación: La asamblea puede modificar la fecha de cierre del ejercicio, inscribiendo la resolución pertinente en el
Registro Público de Comercio y comunicándola a las autoridades del control.
Destino de las utilidades: Las utilidades líquidas y realizadas se distribuirán conforme al siguiente detalle:
(i)
(ii)
(iii)
(iv)
Cinco por ciento (5%) hasta alcanzar el veinte por ciento del capital social, para el Fondo de Reserva Lega1;
Remuneración al directorio y síndicos, en su caso;
Dividendos fijos de las acciones preferidas, si las hubiere con esa preferencia, y en su caso, los acumulativos
impagos;
El saldo, en todo o en parte, como dividendo en efectivo a los accionistas ordinarios o a Fondos de Reserva
facultativos o de previsión o a cuenta nueva o al destino que determine la asamblea.
Pago de dividendos: Los dividendos deben ser pagados en proporción a las respectivas integraciones, dentro de los noventa
(90) días de su sanción y el derecho a su percepción prescribe en favor de la Sociedad a los tres (3) años contados desde que
fueran puestos a disposición de los accionistas. La asamblea o en su caso el directorio, podrá autorizar el pago de dividendos
trimestrales, en la medida que no se infrinjan disposiciones aplicables.
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TITULO IX
LIQUIDACION
Artículo 26° - Reglas que la rigen
La liquidación de la Sociedad, originada en cualquier causa que fuere se regirá por lo dispuesto en el capítulo I, sección XIII de la Ley
19.550.
TITULO X
OTRAS DISPOSICIONES
Artículo 27°
Todas las menciones efectuadas en el presente a “la fecha de este Estatuto” deben entenderse referidas a la fecha en que se inscriba en
el Registro Público de Comercio, la modificación estatutaria aprobada por el Decreto Nº 1106/93.
Artículo 28° - Normas especiales para adquisiciones del Estado Nacional
(A)
(B)
(C)
Las previsiones de los incisos e) y f) del Artículo 7 (con la única excepción de lo establecido en el apartado (B) de este
Artículo) se aplicarán a las adquisiciones que directa o indirectamente efectúe el Estado Nacional, por cualquier medio o
título, de acciones o títulos de la Sociedad, 1) cuando como consecuencia de dicha adquisición el Estado Nacional resulte
titular de, o ejerza el control sobre, acciones de la Sociedad que, sumadas a sus tenencias anteriores de cualquier clase,
representen, en total, el 49% o más del capital social; o 2) cuando el Estado Nacional adquiera un 8 % o más de las acciones
clase D en circulación, mientras retenga acciones de la clase A que alcancen o superen el 5% del capital social establecido en
el inciso (a) del artículo 6 de estos Estatutos al tiempo del registro de los mismos en el Registro Público de Comercio. En caso
que las acciones clase A en poder del Estado Nacional representen un porcentaje inferior al anteriormente mencionado, no
regirá lo previsto en el punto 2) de este Artículo, aplicándose en tal caso los criterios generales previstos en el inciso d) del
Artículo 7.
La oferta de compra prevista para los supuestos contemplados en los puntos (1) y (2) del apartado (A) anterior, se limitará a la
totalidad de las acciones de la clase D.
Las sanciones previstas en el inciso (h) del Artículo 7 se limitarán, en el caso del Estado Nacional, a la pérdida del derecho de
voto, cuando la adquisición violatoria de lo previsto en el Artículo 7 y en el presente artículo se haya producido a título
27
(D)
gratuito o por efecto de una situación de hecho o de derecho en la que el Estado Nacional no haya actuado con el fin y la
voluntad de adquirir acciones por encima del límite establecido, salvo que como consecuencia de dicha adquisición, el Estado
Nacional resulte titular de, o ejerza el control sobre, 49% o más del capital social, o 50% o más de las acciones clase D. En
todos los demás casos se aplicarán las sanciones contempladas en el inciso h) del Artículo 7 sin limitación.
A los efectos previstos en este artículo y en los incisos e) y f) del artículo 7º, el término “sociedades” contemplado en el
inciso (i) del artículo 7º, en lo que resulte pertinente, incluye cualquier tipo de ente u organismo respecto del cual el Estado
Nacional tenga una vinculación de las características descriptas en el mencionado inciso. El término “títulos” empleado en
este artículo tendrá el alcance previsto en el inciso d) del artículo 7º. El término “adquisición de control” empleado por el
artículo 7º se aplica a las adquisiciones previstas por el apartado (A) de este artículo con las salvedades, excepciones y
régimen establecido en este artículo 28º.
Artículo 29° - Derogado
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Exhibit 1.2
BY-LAWS OF Y.P.F. SOCIEDAD ANÓNIMA
ARTICLE I
NAME, OFFICES AND DURATION
Section 1 – Name
The Corporation name is YPF SOCIEDAD ANÓNIMA. In the performance of the activities incidental to its corporate purpose and in
all legal acts carried out thereby, it shall indistinctly use either its full name or the short form YPF S.A.
Section 2 – Office
The legal domicile of the Corporation shall be located at the City of Buenos Aires, Argentine Republic, notwithstanding which, it
may establish regional administrations, delegations, branches, agencies or any other kind of representation within the country or
abroad.
Section 3 – Duration
The term of duration of the Corporation shall be of one hundred (100) years as from the registration of these By-laws with the Public
Registry of Commerce (Registro Público de Comercio).
ARTICLE II
PURPOSE
Section 4 – Purpose
The Corporation’s purpose shall be to perform, on its own, through third parties or in association with third parties, the survey,
exploration and exploitation of liquid and/or gaseous hydrocarbon fields and other minerals, as well as the industrialization,
transportation and commercialization of these products and their direct or indirect by-products, including petrochemical products,
chemical products, whether derived from hydrocarbons or not, and non-fossil fuels, biofuels and their components, as well as the
generation of electrical energy through the use of hydrocarbons, to which effect it may manufacture, use, purchase, sell, exchange,
import or export them. It shall also be the Corporation’s purpose the rendering, on its own, through a controlled company or in
association with third parties, of telecommunications services in all forms and
1
modalities authorized by the legislation in force after applying for the relevant licenses as required by the regulatory framework, as
well as the production, industrialization, processing, commercialization, conditioning, transportation and stockpiling of grains and
products derived from grains, as well as any other activity complementary to its industrial and commercial business or any activity
which may be necessary to attain its object. To better achieve these purposes, it may set up, become associated with or have an
interest in any public or private entity domiciled in the country or abroad, within the limits set forth in these By-laws.
Section 5 – Actions for the achievement of the corporate purpose
a)
To accomplish its purpose, the Corporation may carry out any kind of legal act or transaction, including those of a
financial nature but excluding intermediation, which are incidental to its corporate purpose, or related thereto, since
for the purpose of fulfilling its purpose, the Corporation has full legal capacity to acquire rights, undertake
obligations, and exercise any act not prohibited by the laws or these By-laws.
b)
In particular, the Corporation may:
(i)
(ii)
Purchase or otherwise acquire real estate, personal property, livestock, facilities and any other class of
rights, titles, shares or securities, sell, exchange, assign or dispose of them under any instrument, give them
as security and encumber them, including pledges, mortgages or any other real-property interests and
constitute ease of ways thereon, become associated with individuals or legal persons, enter into joint
ventures and business collaboration agreements.
Enter into any kind of agreement and undertake obligations, even loans or other liabilities, with official or
private banks, whether national or foreign, international credit institutions and/or organizations of any other
nature, accept and grant consignments, commissions and/or agency agreements and grant commercial
credits related to its business activities.
2
(iii)
Issue, in the country or abroad, debentures, corporate bonds, and other debt securities in any currency with
or without a security interest, whether special or floating, convertible or not.
ARTICLE III
CAPITAL. SHARES OF STOCK
Section 6 - Principal
a)
Amount of capital stock: The capital stock is fixed in the amount of THREE THOUSAND NINE HUNDRED THIRTY-
THREE MILLION ONE HUNDRED AND TWENTY-SEVEN THOUSAND NINE HUNDRED AND THIRTY ($
3,933,127,930) fully subscribed and paid in, represented by THREE HUNDRED NINTY-THREE MILLION THREE
HUNDRED AND TWELVE THOUSAND SEVEN HUNDRED NINETY-THREE (393,312,793) book-entry shares of
common stock, of TEN PESOS ($10.00) nominal value each, entitled to one vote per share.
b)
Classes of shares of common stock: The capital stock is divided into four classes of shares of common stock as per the
following detail:
(i)
Class A shares of stock, only the National Government shall be the holder of class A shares of stock.
(ii)
(iii)
(iv)
•
Class B shares of stock, originally destined to be acquired by holders of Consolidation Bonds of Gas and Oil
Royalties or creditors of the Nation on account of gas and oil royalties. Class B shares of stock acquired by a holder
of such Bonds other than a Province or the National Government shall become Class D shares of stock.
Class C shares of stock, originally destined by the National Government to the Corporation’s employees under the
Shared Ownership Program set forth in Act 23,696. Class C shares of stock not purchased by the Corporation’s
employees under the Shared Ownership Program shall become class A shares of stock; and
Class D shares of stock, thus converted due to the transfer of class A, B or C shares of stock to any person in
accordance with the following rules:
Class A shares of stock transferred by the National Government to any person shall become class D shares of stock,
except for transfers to the Provinces, if previously authorized by law, in which case they shall not change their class.
3
•
•
•
Class B shares of stock that the Provinces transfer to any person other than a Province shall become class D shares
of stock.
Class C shares of stock that are transferred to third parties beyond the Shared Ownership Program shall become
class D shares of stock.
Class D shares of stock shall not change to other classes by virtue of the subscription or acquisition thereof by the
National Government, the Provinces, other public legal entity or by the personnel participating in the Shared
Ownership Program.
c)
Class A special rights: The affirmative vote of class A shares of stock, whatever the percentage of capital stock that such class
of shares represents, shall be required so that the Corporation validly resolves to:
(i)
(ii)
(iii)
(iv)
(v)
Determine the merger with another or other companies;
Accept that the Corporation, through the acquisition of its shares by third parties, shall become subject to a takeover,
whether consented or hostile, representing the holding of more than fifty percent (50 %) of the capital stock of the
Corporation;
Transfer to third parties all of the exploitation rights granted within the framework of Act 17,319, its supplementary
and regulatory rules, and Act 24,145, for it to determine the full suspension of the exploration and exploitation
activities of the Corporation;
Determine the voluntary dissolution of the Corporation.
Transfer the corporate or fiscal domicile of the Corporation outside the Argentine Republic.
Besides, the prior enactment of a national law will be required to resolve favorably on paragraphs (iii) and (iv) above.
d)
Preferred shares of stock: The Corporation may issue preferred shares with or without voting right, which shall be divided
into classes A, B, C, and D. The same rules on ownership and conversion set forth in subsection b) above for the same class
of shares of common stock shall be applied to each class of preferred stock. When preferred shares of stock exercise their
voting right (whether temporarily or permanently), they shall do so as members, to such effect, of the class they belong to.
4
e)
Capital Increases: The capital may be increased up to five times its original amount by resolution passed at the regular
shareholders’ meeting, in accordance with the provisions of section 188 of Act 19,550, such limit being ruled out if the
Corporation is authorized to make a public offering of its shares of stock. The regular shareholders’ meeting shall establish
the nature of the shares to be issued on account of the capital increase, pursuant to the conditions set forth in these By-laws, it
being able to delegate to the Board of Directors the power to set the time of issuance, as well as the determination of the
payment terms and conditions of the shares, being also empowered to carry out any other delegation authorized by law. The
issuance of shares of preferred or common stock shall be carried out per classes, respecting the proportion existing among the
different classes as of the date of issuance, without prejudice to the modifications that may subsequently be derived from the
exercise of the preemptive and accretion rights, as provided for in section 8 hereof.
Section 7 - Transfer of stock
a)
b)
Book-entry stocks: Shares shall not be represented by certificates. Instead, they shall be book-entry shares and shall be
recorded in accounts kept under their holder’s names in the Corporation, commercial banks, investment banks or securities
clearing houses as authorized by the Board of Directors. Shares of stock shall be indivisible. Should there be co-ownership,
the representation to exercise the rights or the fulfillment of obligations shall be unified.
Transfer of class A or C shares: Any transfer of class A shares carried out in breach of the provisions of the last paragraph of
section 8 of Act 24,145, or of class C shares carried out in breach of the rules of the Shared Ownership Program or the
relevant General Transfer Agreement notified by effective means to the Corporation, shall be null and void and shall not be
acknowledged by the Corporation.
5
c)
d)
Information duty: Any person who shall, directly or indirectly, acquire by any means or instrument, class D shares, or which
upon transfer shall be converted into class D, or securities of the Corporation of any type that may be convertible into class D
shares (including, within the meaning of the term “securities”, but without limitation, debentures, corporate bonds, and stock
coupons), which shall grant control over more than three per cent (3%) of the class D shares, shall notify the Corporation
within five (5) days as from the acquisition that caused such excess, and report such circumstance to the Corporation,
notwithstanding the compliance of the additional measures imposed by the applicable regulations on capital markets for this
kind of event. The information referred to above shall also include the transaction date, the price, the number of shares
purchased and the intent of the purchaser to acquire a larger stake or to take over control of the corporate will. If the purchaser
is made up of a group of individuals, it shall be bound to identify the members composing the group. The information herein
provided for shall be furnished in relation to acquisitions carried out after the one informed first, when the limit on the
amounts of class D shares indicated in the latest information shall be exceeded again in accordance with the provisions
hereunder.
Takeover: If the terms of subsections e) and f) of this section are not complied with, it shall be forbidden to acquire shares or
securities of the Corporation, whether directly or indirectly, by any means or instrument (including within the meaning of the
term “securities”, without limitation, debentures, corporate bonds and stock coupons) convertible into shares if, as a result of
such acquisition, the purchaser becomes the holder of, or exercises the control of, class D shares of stock of the Corporation
which, in addition to its prior holdings of such class (if any), represent, in the aggregate, FIFTEEN PERCENT (15%) or more
of the capital stock, or TWENTY PERCENT (20%) or more of the outstanding class D shares of stock, if the shares
representing such TWENTY PERCENT (20%) constitute, at the same time, less than FIFTEEN PERCENT (15%) of the
capital stock.
Notwithstanding the foregoing: (i) acquisitions by the person already holding, or the person already exercising control of,
shares representing more than FIFTY PERCENT (50%) of the capital stock shall be excluded from the provisions of
6
subsections e) and f) of this section; and (ii) any subsequent acquisitions by any person already holding, or any person already
exercising the control of, shares representing FIFTEEN PERCENT (15%) or more of the capital stock, or TWENTY
PERCENT (20%) or more of outstanding Class D shares, if the shares representing such TWENTY PERCENT
(20%) constitute, at the same time, less than FIFTEEN PERCENT (15%) of the capital stock, provided the shares the
purchaser already holds or becomes a holder of (including the shares it held prior to the acquisition and those it acquired by
virtue thereof) do not exceed FIFTY PERCENT (50%) of the capital stock, shall be excluded from the provisions of
subsection e) paragraph (ii) and subsection f) of this section.
Acquisitions referred to in this subsection d) are called “Takeovers”.
e)
Requirements: The person wishing to a Takeover (hereinafter called “the Bidder”) shall:
(i)
(ii)
Obtain the prior consent of the special shareholders’ meeting of class A shareholders; and
Arrange a takeover bid for the acquisition of all the shares of all classes of the Corporation and all securities
convertible into shares.
f)
Any decision passed at special shareholders’ meeting of Class A shares regarding the matters provided for in this subsection
e) shall be final and shall not entitle any of the parties to claim any kind of compensation.
Takeover Bid: Each takeover bid shall be conducted in accordance with the procedure herein stipulated and, to the extent that
applicable regulations in the jurisdictions where the takeover bid takes place and the provisions of the stock exchanges where
the Corporation’s shares and securities are listed impose additional or stricter requirements than the ones provided hereunder,
such additional or stricter requirements shall be complied with in the stock exchanges or markets where they are applicable.
(i)
The Bidder shall notify the Corporation in writing about the takeover bid at least fifteen business days in advance to
the starting date thereof. The Corporation shall be notified about all terms and conditions of any agreement or
7
memorandum of understanding that the Bidder might have entered into or might intend to enter into with a holder of
shares of the Corporation whereby, if such agreement or memorandum of understanding were executed, the Bidder
would be in the situation described in the first paragraph of subsection d) of this Section (hereinafter called “Prior
Agreement”). Such notice shall include the following minimum information:
(A)
(B)
(C)
(D)
(E)
(F)
(G)
The Bidder’s identification, nationality, domicile, and telephone number;
If the Bidder is made up by a group of persons, the identification and domicile of each Bidder of the group
and of the managing officer of each person or entity making up the group;
The consideration offered for the shares of stock and/or securities. If the takeover bid is subject to the
condition that a certain number of shares be acquired, such minimum number shall be indicated;
The scheduled expiration date of the takeover bid period, whether it can be extended, and if so, the
procedure therefor;
A statement by the Bidder indicating the exact dates before and after which the shareholders and security
holders, who subjected them for sale subject to the takeover bid regime, shall be entitled to withdraw them,
how the shares and securities thus subjected to sale shall be accepted, and in accordance to which the
withdrawal of the shares and securities from sale under the takeover bid regime shall be carried out;
A statement indicating that the takeover bid shall be open to all shareholders and holders of securities
convertible into shares of stock;
Any additional information, including the Bidder’s accounting statements, as the Corporation may
reasonably request or which may be necessary so as to avoid the above-mentioned notice from leading to
wrong conclusions or when the information submitted is incomplete or insufficient.
(ii)
The Board of Directors shall call special meeting of class A shares of stock, by any effective means, to be held ten
business days following the receipt by the Corporation of the notice indicated under paragraph (i), for the purpose of
8
(iii)
(iv)
considering the approval of the takeover bid, and it shall submit to such meeting its recommendation in that regard.
If the meeting is not held despite the call, or if it is held but the takeover bid is rejected, the latter shall not be carried
out, nor shall the Prior Agreement, if any, be executed.
The Corporation shall send by mail to each shareholder or holder of securities convertible into stock, at the Bidder’s
cost and expense, and with reasonable due diligence, a copy of the notice delivered to the Corporation in accordance
with the provisions of paragraph (i). The Bidder shall make an advance payment to Corporation of the funds
required for such purpose.
The Bidder shall send by mail or otherwise deliver, with reasonable due diligence, to each shareholder or holder of
securities convertible into stock who shall so request, a copy of the notice delivered to the Corporation and shall
publish a notice containing substantially the information stated in paragraph (i), at least once a week, starting on the
date such notice is served on the Corporation pursuant to paragraph (i) and ending upon the expiration date of the
takeover bid. Subject to the applicable legal provisions, this information shall be published in the business section of
the major newspapers of the Argentine Republic, in the City of New York, U.S.A. and any other city where the
shares shall be listed.
(v)
The consideration for each share of stock or security convertible into stock payable to each shareholder or security
holder shall be the same, in cash, and shall not be lower than the highest of the following prices of each class D
share of stock or security convertible into a class D share:
(A)
(B)
the highest price per share or security paid by the Bidder, or on behalf thereof, in relation to any acquisition
of class D shares of stock or securities convertible into class D shares of stock within the two-year period
immediately preceding the notice of Takeover, adjusted as a consequence of any division of shares, stock
dividend, subdivision or reclassification affecting or related to class D shares of stock; or
The highest closing price, at the seller’s rate, during the thirty-day period immediately preceding such
notice, of a class D share of stock as quoted by
9
(C)
(D)
the Buenos Aires Stock Exchange, in each case as adjusted as a consequence of any division of shares, stock
dividend, subdivision or reclassification affecting or related to class D shares of stock; or
A price per share equal to the market price per class D share of stock determined as stated in paragraph
(B) herein multiplied by the ratio between: (a) the highest price per share paid by the Bidder, or on his
behalf, for any class D share of stock, in any share acquisition of this class within the two-year term
immediately preceding the notice date indicated in paragraph (i), and (b) the market price for class D share
of stock on the day immediately preceding the first day of the two-year period in which the Bidder acquired
any type of interest or right in a class D share of stock. In each case the price shall be adjusted taking into
account the subsequent division of shares, stock dividend, subdivision or reclassification affecting or related
to class D; or
The Corporation’s net income per class D share during the last four complete fiscal quarters immediately
preceding the notice date indicated in paragraph (i), multiplied by the higher of the following ratios: the
price/income ratio for that period for class D shares of stock (if any) or the highest price/income ratio for the
Corporation during the two-year period immediately preceding the notice date indicated in paragraph (i).
Such multiples shall be determined by applying the regular method used by the financial community for
computing and reporting purposes.
(vi)
(vii)
(vii)
The shareholders or security holders that have subjected them to the takeover bid may withdraw them from the bid
before the date established for the expiration of such bid.
The takeover bid shall be open for a minimum term of TWENTY (20) days and a maximum term of THIRTY
(30) days as from the date the bid was authorized by Comisión Nacional de Valores de Argentina (Argentine
Securities Exchange Commission).
The Bidder shall acquire all shares and/or securities convertible into stock that before the expiration date of the
takeover bid are set on sale in
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(ix)
accordance with the regime ruling takeover bids. If the number of such shares or securities is lower than the
minimum number to which the Bidder conditioned the takeover bid, the Bidder may withdraw it.
If the Bidder has not set a minimum number as a condition to the takeover bid as stated in paragraph (i) (C) of this
subsection, once this procedure has finished, the Bidder may execute the Prior Agreement, if any, whatever the
number of shares of stock and/or securities purchased thereby under the regime regulating takeover bids. If he has
set that minimum number, the Bidder shall execute the Prior Agreement only if the minimum number required under
the regime ruling takeover bids has been exceeded. The prior agreement shall be executed within thirty days as from
the closing of the takeover bid, otherwise, it shall be necessary to repeat the procedure provided for in this section to
execute it.
g)
If there existed no Prior Agreement, the Bidder, in the afore-mentioned cases and opportunities where such Prior
Agreement could be executed, may purchase freely the number of shares of stock and/or securities that he reported
to the Corporation through the communication set forth in paragraph (i) of this subsection, provided the Bidder has
not purchased such number of shares of stock and/or securities under the takeover bid regime.
Related transactions: Any merger, consolidation or any other combination leading to substantially the same effects
(hereinafter called “the Related Transaction”) comprising the Corporation or any other person (hereinafter “the Interested
Shareholder”) that has previously carried out a Takeover, or having for the Interested Shareholder the effects, regarding the
holding of class D shares of stock, of a Takeover, shall only be performed if the consideration to be received by each
shareholder from the Corporation in such Related Transaction is equal for all shareholders and not lower than:
(i)
The highest price per share of stock paid by or on account of such Interested Shareholder in relation to the
acquisition of:
(A)
Shares of the class to be transferred by the shareholders in such Related Transaction (hereinafter called “the
Class”), within the two-year period immediately preceding the first public announcement of the Related
Transaction (hereinafter called “the Announcement Date”), or
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(ii)
(iii)
(iv)
(B)
Shares of the Class purchased by said Interested Shareholder in any Takeover.
In both cases as adjusted by virtue of any stock division, share dividend, subdivision or reclassification affecting or
related to the class.
The highest closing price, at the seller’s rate, during the thirty-day period immediately preceding the announcement
date or the date of purchase of the shares of the Class by the Interested Shareholder in any Takeover, of a share of
the Class as quoted at the Buenos Aires Stock Exchange, adjusted by any division of shares, stock dividend,
subdivision or reclassification affecting or related to the Class.
A price per share equal to the market price of a share of the Class determined as established in subsection (ii) of this
section multiplied by the ratio between: (a) the highest price per share paid by the Interested Shareholder or on his
behalf, for any share of the Class, in any acquisition of shares of the Class within the two-year period immediately
preceding the Announcement Date, and (b) the market price per share of the Class on the day immediately preceding
the first day of the two-year period in which the Interested Shareholder acquired any type of interest or right in a
share of the Class. In each case the price shall be adjusted taking into account the subsequent division of shares,
stock dividend, subdivision or reclassification affecting or related to the Class.
The net income of the Corporation per each share of the Class during the last four complete fiscal quarters
immediately preceding the Announcement Date, multiplied by the higher of the following ratios: the price / income
ratio for that period for the shares of stock of the Class (if any) or the highest price / income for the Corporation in
the two-year period immediately preceding the Announcement Date. Such multiples shall be determined using the
regular method used by the financial community for their computation and reporting.
h)
Breach of Requirements: Shares of stock and securities acquired in breach of the provisions of subsections 7 c)
through 7 g), both included, of this section,
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i)
shall not grant any right to vote or collect dividends or other distributions that the Corporation may carry out, nor
shall they be computed to determine the presence of the quorum at any of the shareholders’ meetings of the
Corporation, until such shares of stock are sold, in the case the purchaser has obtained the direct control of YPF, or
until the purchaser loses the control of the YPF’s parent company, if the takeover has been indirect.
Construction: For the purposes of section 7, the term “indirectly” shall include the purchaser’s parent companies, the
companies controlled by it or that would end up under the control thereof as a consequence of the Takeover,
Takeover Bid, Prior Agreement, or Related Transaction, as the case may be, that would grant at the same time the
control of the Corporation, the companies submitted to the common control of the purchaser and other persons
acting jointly with the purchaser; likewise, the holdings a person has through trusts, American Depositary Receipts
(“ADR”) or other similar mechanisms shall be included.
The Corporation is not adhered to the Optional Statutory Regime for the Mandatory Acquisition of Shares in a
Takeover Bid (Régimen Estatutario Optativo de Oferta Pública de Adquisición Obligatoria) under the regulations of
section 24 of Decree 677/01.
Section 8 – Preemptive right
a)
General rules: The holders of each class of common or preferred stock shall be entitled to a preemptive right in the
subscription of the shares of stock of the same class to be issued, pro rata their holdings. This right shall be exercised under
the conditions and terms established in the applicable Law and regulations. The conditions of issuance, subscription and
payment of class C shares of stock may be more advantageous for their purchasers than the ones provided for the rest of the
shares; however, under no circumstances shall they be more onerous. Any preemptive right holder, whatever the class of
stock originating it, may assign it to any third party, in which case the share of stock entitled to such preemptive right shall
become or consist of a class D share of stock.
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b)
Accretion Right: The accretion right shall be exercised within the same period fixed for the preemptive right, and with respect
to all classes of shares that have not been initially subscribed. To such purposes:
(i)
(ii)
(iii)
(iv)
(v)
Class A shares that have not been subscribed in exercise of the preemptive right of by the National Government
shall be converted into class D shares and shall be offered to the shareholders of such Class that have expressed their
intention to exercise their accretion right with respect to non-subscribed class A shares;
Class B shares that have not been subscribed by the Provinces in exercise of their original preemptive rights, for
failure to exercise such right or due to the assignment thereof, shall be allocated to the Provinces having subscribed
class B shares and having expressed their intention to exercise their accretion right, and the balance shall be
converted into class D shares to be offered to class D shareholders who have expressed their intention to exercise
their accretion right with respect to non-subscribed class B shares;
Class C shares that have been subscribed by the persons comprised in the Shared Ownership Program in exercise of
their original preemptive rights, due to failure to do so or to assignment thereof, shall be assigned to those persons
comprised in such regime that have subscribed class C shares and have stated their intention to exercise their
accretion right, and the balance shall be converted into class D shares to be offered to shareholders of that class who
have stated their intention to exercise their accretion right with respect to non-subscribed class C shares;
Class D shares not subscribed in exercise of the preemptive rights incidental to that class of shares shall be assigned
to the subscribers of that class who have stated their intention to exercise their accretion right;
The remaining class D shares shall be assigned to shareholders of other classes who have stated their intention to
exercise their accretion right.
c)
Limits: The preemptive and accretion rights set forth in the preceding paragraphs shall only exist provided they are required
by the corporate legislation in force at the time or that they are necessary to comply with the applicable provisions of Acts
23,696 and 24,145.
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Section 9 – Public and private offering. Revoked
ARTICLE IV
CORPORATE BONDS, PROFIT SHARING STOCK (“BONOS DE PARTICIPACIÓN”) AND OTHER SECURITIES
Section 10 – Securities the Corporation may Issue
a)
Corporate bonds: The Corporation may issue corporate bonds, whether convertible or not. When it is required by law that the
issuance of corporate bonds be decided by the shareholders’ meeting, said meeting may delegate all or some of the issuance
conditions to the Board of Directors.
b)
c)
Other securities: The Corporation may issue preferential right securities (“bonos de preferencia”) and other securities
authorized by the applicable law. The preferential right securities shall grant their holders the preemptive subscription right in
the event of capital increases decided in the future and up to the amount that such securities shall allow. In the subscription of
such securities and other convertible securities, the shareholders shall have the preemptive right under the terms and in the
cases established in section 8 of these By-laws.
Conversion into class D: Any convertible security issued by the Corporation shall grant the conversion right only into class D
shares of stock. Its issuance shall be authorized at a special meeting of class D shareholders.
ARTICLE V
ADMINISTRATION AND MANAGEMENT
Section 11 – Board of Directors
a)
Number: The administration and management of the Corporation shall be in the hands of a Board of Directors composed of at
least eleven (11) and not more than twenty-one (21) regular Directors, as may be decided at the Shareholders’ Meeting, who
shall be appointed to serve for a term of 1 to 3 fiscal years, as may be decided at the Shareholders Meeting in each case, and
may be reelected indefinitely, notwithstanding the provisions of subsection e) of this section.
15
b)
c)
d)
e)
Alternate directors: Each class of shares shall appoint an equal or lower number of alternate directors than the number of
regular directors it is authorized to appoint. Alternate directors shall fill the vacancies within their respective class in the order
of their appointment upon the occurrence of such vacancy, whether by absence, resignation, license, incapacity, disability or
death, prior acceptance by the Board of the grounds for substitution, should it be temporary.
Appointment: Directors shall be appointed by the majority vote within each of the classes of ordinary shares of stock, as
indicated below:
(i)
(ii)
(iii)
class A shall appoint a regular and an alternate director provided there exists at least one class A share;
The appointment of the other regular and alternate directors (which shall in no case be lower than six regular
directors and an equal or lower number of alternate directors) shall correspond to class D. Classes B and C shall cast
their votes together with class D shares at the special meeting of shareholders of such class called for the
appointment of Directors;
at Class D special meetings of shareholders called for the appointment of directors, directors may be elected by
cumulative voting in compliance with provisions of section 263 of Act 19,550, even when such meeting is attended
by holders of shares A, B or C as afore-mentioned.
Absence of a class: If no shares of a given class entitled to vote in the election of directors of a class of shares are present at a
meeting held on second call for the appointment of directors, then the directors of such class shall be elected by the
shareholders of the remaining classes voting jointly as if they belonged to a single class, except when the absence of
shareholders shall occur at meetings of Class A, B or C shareholders, in which case the statutory auditor elected by class A
shares or jointly by classes A, B and C, as appropriate pursuant to the provisions of section 21, subsection b), shall appoint
the regular and alternate directors of those classes that are absent.
Staggered Appointment: Directors shall be appointed for the term decided at the meeting as provided for in section11,
subsection a), except when directors are appointed to complete the term of office of the directors being replaced.
16
f)
g)
h)
Candidate nomination: Each meeting at which directors for class D shares are to be elected, any class D shareholder or group
of shareholders holding more than three per cent (3%) of the capital represented by class D shares, may request that all
shareholders of such class be sent a list of the candidates to be proposed by such shareholder or group of shareholders at the
meeting of such class for the election thereof. In the case of depositary banks having shares registered in their name, these
provisions shall apply with respect to the beneficiaries. Likewise, the board of directors may propose candidates for the office
of directors to be elected at the shareholders’ meetings of the respective classes, whose names shall be notified to all
shareholders together with the lists proposed by the shareholders first above-mentioned. The preceding provisions shall not
prevent any shareholder present at the meeting from proposing candidates not included in the nominations notified by the
Board. No proposal for the election of directors for any of the classes may be made, prior to the meeting or during the course
thereof, unless the written acceptance of the offices by the nominated candidates is presented to the Corporation.
Manner of election: Notwithstanding the provisions related to cumulative voting set forth in paragraph (vi), subsection c) of
this Section, class D Directors shall be elected by voting a whole list provided no shareholder shall object thereto; otherwise,
it shall be carried out individually. The list or person, as the case may be, shall be considered elected when it has obtained the
absolute majority vote of class D shares of stock present at the meeting. Should no list obtain a majority vote, a new voting
shall take place in which the two lists or persons receiving the higher number of votes shall participate, and the list or person
obtaining the higher number of votes shall be deemed elected.
Removal: Subject to the requirements of applicable quorums, each class, by a majority vote of the shares of the class present
at the meeting, may remove the directors elected thereby, provided the removal has been included in the agenda.
Section 12 – Performance Bond
Each Regular Director shall furnish a bond for the amount of at least ten thousand
17
Pesos ($ 10,000) or its equivalent, which may consist of securities, sovereign bonds or amounts of money in domestic or foreign
currencies deposited with financial institutions or securities clearing houses, to the order of the Corporation, or sureties or bank
guaranties, or surety bonds or third party insurance to the name of the Corporation, which cost shall be borne by each Director; no
bond shall be furnished by depositing funds in the corporate safe deposit box. When the bond is furnished by depositing securities,
sovereign bonds or sums of money in domestic or foreign currencies, the conditions under which such deposits are made shall ensure
their unavailability during the course of any liability claims against him. Alternate Directors shall only furnish the mentioned bond in
the event of taking office in replacement of a regular Director to complete the relevant term or terms of office.
Section 13 – Vacancies
Statutory auditors may appoint directors in the event vacancies, who shall hold office until the election of new Directors at the
shareholders meeting. The statutory auditor appointed by Class A shares shall appoint one Director for Class A shareholder, following
consultation with Class A shareholder, and the statutory auditors appointed by Class D shares shall appoint Directors for such class.
Section 14 – Remuneration
a)
Non-executive members: The duties of non-executive Board members shall be compensated pursuant to the resolution passed
annually at the regular meeting in global terms and shall be distributed in equal parts among them, whereas among alternate
directors, such distribution shall be made pro rata the term during which they replaced such regular members. The meeting
shall authorize the amounts that may be paid on account of such fees during the current fiscal year, subject to the approval at
the meeting at which such fiscal year shall be considered.
b)
Executive members: The Corporation directors performing executive, technical and administrative functions or special
assignments shall receive a remuneration for such duties or assignments which shall be in line with those prevailing in the
market, and which shall be fixed by the Board, with abstention of the above-mentioned. Such remunerations, together with
those of the whole Board, shall be subject to the approval of the shareholders’ meeting, pursuant to the system provided for
by section 261 of Act. 19,550.
18
c)
General rule: Directors’ remunerations set forth in the foregoing subsections a) and b) shall comply with the limits provided
for by section 261 of Act 19,550, except for the case provided for in the last paragraph of such section.
Section 15 – Meetings
The Board shall meet at least once a quarter, and may be called by the Chairman of the Board of Directors, or his replacement,
whenever he shall deem it convenient. Likewise, the Chairman of the Board, or his replacement, shall call a meeting of the Board at
any of the director’s request. In this case, the meeting shall be called by Chairman of the Board, and the meeting shall be held within a
term of five days as from the request receipt; otherwise, the meeting may be called by any of the directors. The Meetings of the Board
of Directors shall be called by written notice and shall include the agenda. However, items not included in the agenda may be
considered in the event of urgent matters occurring after the call.
Section 16 – Quorum and majorities
At the meetings, the Board may transact business with the members present thereat, or communicated with one another by other
means of simultaneous transmission of sound, images or words. The Board shall be presided over by the Chairman of the Board of
Directors, or his replacement, and the signing of the minutes may be delegated by those who attend the meeting from another place to
the members present at the meeting. The absolute majority of the board members shall constitute a quorum for the transaction of
business, considering the attendance of participating and present members as well as those communicated with one another from
another place. The attendance and participation of the members present and of the members attending the meeting from another place
shall be entered in the minutes. If at a regularly called meeting, after one hour of the time fixed in the meeting notice the quorum shall
not be present, the Chairman of the Board, or his replacement, may invite the alternate directors of the classes corresponding to those
absent at the meeting to join the meeting until the minimum quorum shall be present or may call the meeting to another date.
Notwithstanding the above, in the event the absences shall
19
not affect the quorum, the board may invite the alternate directors of the corresponding classes to join the meeting. The Board shall
adopt resolutions by the majority vote of the members present at the meeting and of those participating thereat from another place.
The Statutory Committee shall register in the Board Minutes the adoption of resolutions according to the appropriate procedure. The
Chairman of the Board, or his replacement, shall, in all cases, be entitled to vote and double vote should the ballots result in a tie.
Absent directors may authorize another director to vote on their behalf, provided the quorum shall be present, in which case no
alternate directors shall join the meeting in replacement of the directors granting such authorization. Minutes shall be prepared and
signed within FIVE (5) business days from the date on which the meeting was held by the present members of the Board and by the
representative of the Statutory Committee.
Section 17 – Powers of the Board of Directors
The Board of Directors shall have wide powers to organize, conduct and manage the affairs of the Corporation, including those
powers which require the granting of special powers of attorney as provided for in Section 1881 of the Civil Code and Section 9 of
Decree Law 5965/63. It may specifically operate with all kind of banks, financial companies or public and private credit institutions;
grant or revoke special, general, judicial, administrative or other kind of powers of attorney, with or without power of substitution;
bring in, prosecute, answer or waive claims or criminal actions, and carry out any other proceedings or legal acts by which the
Corporation shall acquire rights or assume obligations, with no further restriction than those arising from the applicable laws, these
By-laws or the decisions adopted at the meetings, being empowered to:
(i)
Grant general and special powers of attorney – including those having the purpose set forth in section 1881 of the Civil Code
– as well as those authorizing to lodge criminal actions, and to revoke them. For the purposes of filing and answering
interrogatories, acknowledge documents in court proceedings, make statements answering charges at the preliminary
investigation proceedings or declare at administrative proceedings, the Board shall be allowed to grant powers so that the
Corporation be represented by a duly appointed director, manager, or attorney-in-fact.
20
(ii)
(iii)
(iv)
(v)
(vi)
Purchase, sell, assign, grant, exchange and give and accept in gratuitous bailment all kinds of real and personal property,
business and industrial facilities, vessels, shipping equipment and aircraft, rights, including trade-marks and letters patent and
industrial and intellectual property rights; enter into easement agreements, either as grantor or grantee, mortgages, ship
mortgages, pledges or any other security interest and, in general, carry out any and all acts and enter into all the contracts
deemed convenient with respect to the Corporate purpose, whether within the country or abroad, including leases for the
maximum term established by law.
Become associated with individuals or legal persons, in compliance with the legislation in force and these By-laws and enter
into joint ventures or business collaboration agreements.
Take all the necessary steps before national or foreign authorities for the fulfillment of the Corporation’s purpose.
Approve staff appointments, appoint general or special managers, fix the compensation levels and working conditions thereof,
and any other action related to staff policy, decide promotions, transfers and removals, and apply the penalties that might be
applicable.
Issue, within the country or abroad, in national or foreign currency, debentures, corporate bonds or bonds guaranteed by a
security interest, or by a special or floating guarantee or unsecured, whether convertible or not, pursuant to the legal
applicable provisions and with the prior consent of the pertinent shareholders meeting when legally required.
(vii) Make court or out-of-court settlements in all kind of matters, submit to arbitration proceedings, file and answer all kinds of
legal and administrative complaints and assume the capacity as accuser in the competent criminal or correctional jurisdiction,
grant all kinds of bonds and extend jurisdictions within the country or abroad, waive the right to appeal and any applicable
statutes of limitation, file or answer interrogatories in court, make novations, grant debt reductions or grace periods and, in
general, perform all acts for which the law requires a special power of attorney.
21
(viii) Carry out all kinds of transactions with banks and financial institutions, including Banco de la Nación Argentina, Banco de la
Provincia de Buenos Aires, and other official banking and financial institutions, whether private, semi-private existing within
the country or abroad. Perform transactions and take out loans and other liabilities with official or private banks, including
those mentioned in the preceding phrase, international credit institutions or agencies or of any other nature, individuals or
legal persons domiciled in the country or abroad.
(ix)
(x)
(xi)
(xii)
Create, maintain, close, restructure or transfer the offices and divisions of the Corporation and create new regional
administrations, agencies or branches within the country or abroad; set up and accept representations.
Approve and submit the Annual Report, Inventory, General Balance Sheet and Statement of Income of the Corporation at the
shareholders’ meeting for the consideration thereof, proposing, on an annual basis, the allocation of the Fiscal Year profits.
Approve the contracting system of the Corporation, which shall ensure the participation of bidders as well as the transparency
and publicity of the bidding process.
Decide, if he shall deem it convenient and necessary, the creation of an executive committee and other committees of the
Board, determine the functions and performance restrictions thereof within the powers granted by these By-laws and issue the
internal rules of procedure thereof.
(xiii) Approve, if applicable, the appointment of the General Manager and Assistant General Manager, as provided for in section 18
(c).
(xiv) Resolve all doubts or issues derived from the application of these By-laws, for which purpose the Board of Directors shall be
vested with ample powers, all of which shall be reported in due time at the shareholders’ meeting.
Issue its own internal rules of procedure.
(xv)
22
(xvi) Request and maintain the quotation, on the domestic and foreign stock and security markets, of its shares of stock and other
securities when deemed necessary.
(xvii) Approve the annual budget, expenditure and investment estimates, the necessary borrowing levels and the annual action plan
of the Corporation.
(xviii) Exercise the other powers granted by these By-laws.
The above list of powers is merely illustrative and not restrictive, and therefore, the Board is vested with all the powers to manage and
dispose of the assets of the Corporation and to perform all the acts for the best fulfillment of the corporate purpose, save as otherwise
provided for in these By-laws. Such powers may be exercised by attorneys-in-fact specifically appointed to such end, for the purposes
and to the extent determined in each particular case.
Section 18 – Chairman and Vice Chairman of the Board of Directors – General Manager – Assistant General Manager
a)
Appointment: The Board shall appoint a Chairman from among the members elected by Class D shares, and it may appoint,
as applicable, Vice Chairmen of the Board. In the event of a tie, it shall be decided by the votes cast by the Directors elected
by Class D. The Chairman and Vice Chairmen of the Board shall hold office for two (2) fiscal years, provided such term shall
not exceed their respective terms of office, and may be indefinitely reelected under such conditions should they be elected or
reelected as Directors by Class D. The Chairman of the Board shall also serve as General Manager. He shall be the
Corporations’ chief executive officer and shall be responsible for the executive management functions. Should the Chairman
of the Board state upon his election, or subsequently thereto, that he does not wish to serve as General Manager, he shall
propose the person (who may be a Director or not, but in the first case he shall have been elected by Class D shareholders)
who shall hold such office, subject to the Board’s consent. The Chairman of the Board may resume at any time the position as
General Manager. The Chairman or the General Manager may propose another person to the Board (who may be a Director
or not, but in the first case he shall have been elected by Class D) who, subject to the Board’s approval, shall serve as
Assistant General
23
b)
c)
d)
e)
Manager. The Assistant General Manager shall report directly to the General Manager and shall assist him in the management
of the corporate affairs as well as in other executive functions assigned or delegated thereto by the General Manager, whom
he shall replace in case of absence or other interim impediment.
Vice Chairmen of the Board: The Executive Vice Chairman of the Board shall replace the Chairman of the Board in case of
resignation, death, incapacity, disability, removal or temporary or definite absence of the latter. In all these cases, save in the
case of temporary absence, the Board shall appoint a new Chairman of the Board within sixty days as from the date in which
the vacancy occurred and in compliance with the provisions of subsection a) of this section. Should there be more than one
Vice Chairman, the Chairman’s vacancy shall be filled by the Vice Chairman who has been discharging the functions of the
Executive Vice President, and in second place by the eldest Vice Chairman.
When one of the Vice Chairmen is appointed as General Manager or as Assistant General Manager, he shall be called
“Executive Vice Chairman”. When the Chairman of the Board serves as General Manager, if the Vice Chairman of the Board
does not serve as Executive Vice Chairman, the latter shall only replace the former in the position as Chairman of the Board.
In case of a tie vote in the approval of the General Manager’s or the Assistant General Manager’s designation, it shall be
decided by the votes cast by the Directors elected by Class D.
For the purposes of his activities abroad and with respect to the international capital markets, the General Manager shall be
appointed as “Chief Executive Officer” and the Assistant General Manager shall be designated as “Chief Operating Officer”.
The General Manager and the Assistant General Manager shall be authorized to sign all contracts, commercial papers, public
deeds and other public and private documents binding and/or granting rights to the Corporation within the scope of the
powers granted by the Board, without detriment to the legal representation corresponding to the Chairman of the Board and
the Executive Vice Chairman of the Board, as the case may be, and notwithstanding the other powers and delegations of
executing authority as the Board shall decide.
24
Section 19 – Powers of the Chairman of the Board
The Chairman of the Board, or the Executive Vice Chairman of the Board, in absence of the former, shall have the following rights
and duties, in addition to those established in section 18 of these Bylaws:
(i)
To exercise the legal representation of the Corporation in compliance with the provisions of section 268 of Act 19,550 and to
comply with and verify the compliance of the laws, decrees, these By-laws and the resolutions adopted by the shareholders’
meeting, the Board and the Executive Committee.
(ii)
(iii)
(iv)
(v)
To call and preside over all meetings of the Board of Directors, being entitled to vote in all cases and to cast two votes in case
of a tie.
To serve, if appropriate, as General Manager.
To execute public and private documents in the name and on behalf of the Corporation, without detriment to the delegation of
executing authority or powers granted by the Board thereto and to the powers which, as the case may be, are vested in the
General Manager and Assistant General Manager.
To perform or order the performance of Board resolutions, without detriment to the powers vested, as the case may be, on the
General Manager and Assistant General Manager, and notwithstanding the fact that the Board may decide to undertake on its
own behalf the performance of a resolution or functions or powers of a particular nature.
(vi)
To preside over the shareholders’ meetings of the Corporation.
ARTICLE VI
SUPERVISION
Section 20 – Statutory Audit Committee
a)
Number of members: The supervision of the Corporation shall be in the hands of a statutory audit committee composed of
three (3) to five (five) regular statutory auditors and three (3) to five (5) alternate statutory auditors, as shall be decided by the
shareholders meeting.
25
b)
c)
Appointment: Class A shares shall appoint one regular and one alternate statutory auditors, provided at last one share of such
class shall exist; the remaining regular and alternate statutory auditors shall be appointed by Class D shares. Statutory auditors
shall serve for one (1) fiscal year and shall have the powers established in Act No. 19,550 and in the legal regulations in force.
Meetings of the Statutory Audit Committee may be called by any of the statutory auditors. The presence of all its members
shall be necessary at such meetings and resolutions shall be adopted by a majority vote. The dissident statutory auditor shall
have the rights, powers and duties established in Act No. 19,550.
Compensation: Statutory auditors’ compensation shall be fixed at shareholders’ regular meeting within the limits provided for
by the legislation in force.
ARTICLE VII
REGULAR MEETINGS OF SHAREHOLDERS
Section 21 – Notice
Shareholders’ regular or special meetings, as the case may be, shall be called for the purpose of considering the matters established in
sections 234 and 235 of Act 19,550. Notices of meetings shall be given pursuant to the legal provisions in force.
Section 22 – Publicity
a)
Public notice: Notice of shareholders’ meetings, whether regular or special, shall be published in the Official Gazette
(“Boletín Oficial”), in one of the major newspapers in the Argentine Republic and in the reports of the stock and securities
exchange markets of the country where the shares of the company shall be listed. Such notice shall be published during the
term with the anticipation provided for by legal provisions in force. The Board shall order the publications to be made abroad
in order to comply with the rules and practices in force in the jurisdictions corresponding to the stock and exchange markets
where the said shares shall be listed.
b)
Other media: The Board may hire the services of companies specialized in the communication with shareholders, and may
resort to other media in order to inform them about their points of view regarding the items of the agenda to be submitted for
consideration at the shareholders’ meetings being called. The cost of such services and publicity shall be borne by the
Corporation.
26
Section 23 – Proxies
Shareholders may be represented at any meeting by a written proxy granted by private instrument with the shareholder’s signature
certified either in court, by a notary public or a bank. The Chairman of the Board of Directors, shall preside over the shareholders’
meetings, or in his absence, they shall be presided over by the person appointed at the meeting.
Section 24 – Decision-making
a)
Quorum and majorities: The applicable quorum and majorities are those provided for in sections 243 and 244 of Act 19,550
according to the nature of the meeting, notice and matters to be considered, except for:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
quorum at special meeting at second call, which shall be deemed validly held whatever the number of shares entitled
to vote present thereat;
decisions regarding the matters listed in subsection (c) of Section 6, which shall require the affirmative vote of class
A shares of stock cast at a Special Meeting;
decisions related to the issues listed in subsection (b) below, which shall require, both at meetings on first and
second call, a majority equivalent to 75% (seventy-five percent) of the shares entitled to vote.
decisions regarding the issues listed in subsection (c) below, which shall require both at first and second call a
majority equivalent to 66% (sixty-six percent) of the shares entitled to vote.
decisions modifying the rights of a class of shares, which shall require the consent of such class given at special
meeting;
decisions related to the amendment of any provision of these By-laws requiring a special majority, which shall
require to such end a special majority; and
(vii)
other cases in which these By-laws require the voting per class or the consent of each of the classes.
27
b)
c)
d)
The decisions requiring the special majority provided for in paragraph (iii) of the preceding subsection, notwithstanding the
consent given by at the Special Meeting of the class which rights are being modified, are the following: (i) the transfer of the
corporate office to a foreign country; (ii) a substantial change of the corporate purpose whereby the activity defined in section
4 of these By-laws shall cease to be the main or principal activity of the corporation, (iii) the approval to cancel the listing of
shares in the Buenos Aires and New York Stock Exchanges (iv) the Corporation splitting-up into various companies, if as a
result thereof at least 25% of the assets of the Corporation are transferred to the resulting companies, even when such
percentage shall be reached by successive splitting-ups operated in a one-year term.
The decisions that shall require the special majority provided for in paragraph (iv) of the preceding subsection,
notwithstanding the consent given at the Special Meeting of Shareholders by the class of shares the rights of which are being
affected, are the following: (i) the amendment of these By-laws when it shall imply (A) modifying the percentages set forth in
paragraphs 7 (c) or 7 (d) or (B) or eliminating the requirements set forth in paragraphs 7(e) (ii) 7 (f) (i) (F) and 7 (f) (v) of
section 7 in the sense that the public offering shall reach 100% of the shares of stock and convertible securities, shall be
payable in cash and shall not be lower than the price resulting form the mechanisms provided therein; (ii) the granting of
guarantees in favor of the shareholders of the Corporation, except when the guarantee and the guaranteed obligation shall
have been assumed in furtherance of the corporate purpose; (iii) the complete suspension of all refining, commercialization
and distribution activities; and (iv) the amendment of the provisions related to the number, nomination, election and structure
of the Board of Directors.
Special shareholders’ meetings: Special meetings of classes of shares shall follow the quorum rules provided for regular
shareholders’ meetings applied to the total number of outstanding shares of such class. Should the general quorum of all
classes of shares be present, any number of shares of the classes A, B and C shall constitute quorum at first and subsequent
calls for special meetings of the said
28
classes. Should the holder of all class A shares be the National Government, the special meeting of such class may be
replaced by a notice signed by the public officer authorized to vote such shares.
ARTICLE VIII
BALANCE SHEETS AND ACCOUNTS
Section 25 – Fiscal year of the Corporation
a)
Date: the fiscal year of the Corporation shall commence on January 1 of each year and shall close on December 31 of like
year. The Inventory, General Balance Sheet and Statement of Income shall be drawn up as of that date according to the
pertinent legal regulations and technical accounting standards.
b)
c)
d)
Modification: The fiscal year closing date may be modified by decision passed at the shareholders’ meeting, which shall be
registered with the Public Registry of Commerce and notified to the supervisory authorities.
Allocation of profits: The liquid and realized profits shall be allocated as follows:
(i)
(ii)
(iii)
(iv)
Five percent (5%) up to the twenty percent of the capital stock, to the Legal Reserve Fund;
To fees payable to the Board of Directors and statutory auditors, as the case may be;
To payment of fixed dividends on preferred shares of stock, if any with such preference, and otherwise the unpaid
cumulative dividends;
The balance, in whole or in part, to dividends in cash to holders of shares of common stock or to contingency
Reserve Funds or carried forward to the next fiscal year or to the purpose that the shareholder’s meeting shall
determine.
Dividend payment: Dividends shall be paid pro rata the respective holdings, within ninety (90) days as from the approval
thereof and the collection right shall revert to the Company upon the expiration of a three (3) year term as from the date they
were made available to the shareholders. The shareholders’ meeting, or the Board of Directors, as the case may be, may
authorize the payment of dividends on a quarterly basis, provided the applicable provisions are not be infringed.
29
ARTICLE IX
LIQUIDATION
Section 26 – Applicable rules
Upon the dissolution, liquidation or winding up of the affairs of the Corporation for any cause whatsoever, the pertinent procedures
shall be carried out in accordance with the provisions of Chapter I, Article XIII of Act Number 19,550.
ARTICLE X
OTHER PROVISIONS
Section 27
All references made in these By-laws to the “date of these By-laws” shall mean the date on which the By-laws amendment passed by
Decree Number 1106/93 is registered with the Public Registry of Commerce.
Section 28 – Provisions applicable to acquisitions by the National Government
(A)
The provisions of subsections e) and f) of Section 7 (with the sole exception of the provisions of paragraph B of the said
Section) shall apply to all acquisitions made by the National Government, whether directly or indirectly, by any means or
instrument, of shares or securities of the Corporation, 1) if, as a consequence of such acquisition, the National Government
becomes the owner, or exercises the control of, the shares of the Corporation, which, in addition to the prior holdings thereof
of any class of shares, represent, in the aggregate, at least 49% of the capital stock; or 2) if the National Government acquires
at least 8% of class D outstanding shares of stock, while withholding class A shares of stock amounting at least to 5% of the
capital stock provided for in subsection (a) of section 6 of these By-laws upon registration thereof with the Public Registry of
Commerce. Should class A shares represent a lower percentage than the one previously mentioned, the provisions set forth in
point 2) of this Section shall not be applicable. Instead, the general criteria set forth in subsection d) of Section 7 shall apply.
(B)
The purchase offer provided for in the cases contemplated in the preceding points (1) and (2) in A) above shall be limited to
the aggregate amount of class D shares of stock.
30
(C)
(D)
The penalties provided for in subsection (h) of Section 7 shall be limited, in the case of the National Government, to the loss
of the right to vote, provided the acquisition in breach of the provisions of Section 7 and this section has occurred gratuitously
or due to a question of fact or a question of law in which the National Government has acted with the intention and purpose of
acquiring shares exceeding the established limits, except if, as a consequence of such acquisition, the National Government
becomes the owner of, or exercises the control over at least 49% of the capital stock, or over at least 50% of class D shares of
stock. In all other cases, the penalties provided for in subsection h) of Section 7 shall be applied with no kind of limitation
whatsoever.
For the purposes provided for in this section and in subsections e) and f) of section 7, the term “companies” contemplated in
paragraph (i) of section 7, in its relevant parts, comprises any kind of entity or organization having a relationship with the
National Government of the nature described in the mentioned subsection. The term “securities” as used in this section shall
have the scope provided for in subsection d) of section 7. The term “Takeover” used in section 7 is applied to the acquisitions
provided for in paragraph (A) of this section 28.
Section 29 – Revoked
31
Exhibit 12.1
I, Sebastián Eskenazi, certify that:
1. I have reviewed this annual report on Form 20-F of YPF Sociedad Anónima (the “Company”);
CERTIFICATION
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in
this report;
4. The company’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period
covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control
over financial reporting; and
5. The company’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing
the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information;
and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
Company’s internal control over financial reporting.
Date: June 30, 2009
/s/ Sebastián Eskenazi
By:
Name: Sebastián Eskenazi
Title: Chief Executive Officer
Exhibit 12.2
We, Ignacio Moran and Ángel Ramos Sánchez, certify that:
1. We have reviewed this annual report on Form 20-F of YPF Sociedad Anónima (the “Company”);
CERTIFICATION
2. Based on our knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on our knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in
this report;
4. We and the Company’s other certifying officer are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period
covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control
over financial reporting; and
5. We and the Company’s other certifying officer have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing
the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information;
and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
Company’s internal control over financial reporting.
Date: June 30, 2009
/s/ Ignacio Cruz Moran
By:
Name: Ignacio Cruz Moran
Title: Chief Financial Officer
/s/ Ángel Ramos Sánchez
By:
Name: Ángel Ramos Sánchez
Title: Director of Administration and Tax
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 13.1
The certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the year ended
December 31, 2008 (the “Annual Report”) for the purposes of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities
Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
Sebastián Eskenazi, the Chief Executive Officer, Ignacio Moran, the Chief Financial Officer of YPF Sociedad Anónima and
Ángel Ramos Sánchez, the Director of Administration and Tax, each certifies that, to the best of his knowledge:
1.
2.
the Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results
of operations of YPF Sociedad Anónima.
Date: June 30, 2009
/s/ Sebastián Eskenazi
By:
Name: Sebastián Eskenazi
Title: Chief Executive Officer
/s/ Ignacio Cruz Moran
By:
Name: Ignacio Cruz Moran
Title: Chief Financial Officer
/s/ Ángel Ramos Sánchez
By:
Name: Ángel Ramos Sánchez
Title: Director of Administration and Tax
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement No. 333-149486 on Form F-3 of our report dated June 29,
2009, relating to the consolidated financial statements of YPF SOCIEDAD ANONIMA (“YPF”), which report expresses an
unqualified opinion and includes an explanatory paragraph stating that the accounting principles generally accepted in Argentina vary
in certain significant respects from accounting principles generally accepted in the United States of America, that the information
relating to the nature and effect of such differences is presented in Notes 13, 14, and 15 to the consolidated financial statements of
YPF, and of our report dated June 29, 2009, relating to the effectiveness of internal control over financial reporting, appearing in the
Annual Report on Form 20-F of YPF for the year ended December 31, 2008.
Exhibit 23.1
Buenos Aires, Argentina
June 29, 2009
Deloitte & Co. S.R.L.
/s/ Ricardo C. Ruiz
Ricardo C. Ruiz
Partner
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement No. 333-149313 on Form F-3 of our report dated June 29,
2009, relating to the consolidated financial statements of YPF SOCIEDAD ANONIMA (“YPF”), which report expresses an
unqualified opinion and includes an explanatory paragraph stating that the accounting principles generally accepted in Argentina vary
in certain significant respects from accounting principles generally accepted in the United States of America, that the information
relating to the nature and effect of such differences is presented in Notes 13, 14, and 15 to the consolidated financial statements of
YPF, and of our report dated June 29, 2009, relating to the effectiveness of internal control over financial reporting, appearing in the
Annual Report on Form 20-F of YPF for the year ended December 31, 2008.
Exhibit 23.2
Buenos Aires, Argentina
June 29, 2009
Deloitte & Co. S.R.L.
/s/ Ricardo C. Ruiz
Ricardo C. Ruiz
Partner