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YPF Quarterly Profit Slides on Losses From Refinery, Lawsuit

Aug. 12 (Bloomberg) -- YPF SA, Argentina’s largest oil company, said second-quarter profit fell 36 percent after losses from a fire at the country’s largest refinery and a charge from a legal case.

Net income dropped to 535 million pesos ($97 million), or 1.36 pesos a share, from 833 million pesos, or 2.12 pesos, a year earlier, Buenos Aires-based YPF said in a regulatory filing today.

YPF booked a 1.1 billion-peso charge for fuel-import costs after output was reduced by a flood and fire April 2 at its La Plata refinery. The refinery cut daily output of 180,000 barrels by 16 percent because of the incident, the company said. YPF said it took a one-time charge of 855 million pesos in the quarter to cover potential losses from a legal case being heard by an international court in Paris.

“Activities in the second quarter were affected by unprecedented storms impacting the La Plata refinery,” YPF said in the filing. “This event not only caused physical damage to certain assets of the company but also impacted on operating margins.”

President Cristina Fernandez de Kirchner’s government seized a 51 percent YPF stake from Spain’s Repsol SA in April 2012 to stem fuel imports that doubled to $9.4 billion in 2011 and cost the country $10 billion in 2012. Chevron Corp. signed a $1.24 billion accord July 16 to help YPF develop the Vaca Muerta shale formation and is seeking more partners for a $37 billion 5-year expansion plan at the world’s second-largest shale gas deposit and fourth-largest shale oil reservoir.

Fuel Imports

Crude output rose 0.4 percent in the quarter to 228,200 barrels of oil a day from a year earlier as natural gas production slid 3.3 percent. The company sees a 1 percent increase in natural gas and 4 percent in crude production for 2013, YPF Chief Financial Officer Daniel Gonzalez said today on a conference call with investors.

Selling expenses increased 46 percent in the period, primarily on higher fuel imports after the refinery fire, the company said in the filing.

“Without the La Plata incident, we could have posted a $150 million higher operating income,” Gonzalez said. “Unfortunately, we don’t have any clarity on when and how much but we definitely expect full compensation” from the refinery’s insurer.

Metrogas Acquisition

YPF said it plans to appeal the case related to canceled gas export contracts with Brazil it lost in May. The company posted a gain of 136 million of pesos for the acquisition of natural gas distributor Metrogas SA in May.

The company said in a separate filing that will pay a dividend of 83 centavos on Aug. 28.

YPF’s American depositary receipts gained 0.1 percent to $16.50 at p.m. in New York. The ADRs have increased 14 percent this year.

YPF said its joint venture with Chevron signed on July 16 is currently producing 10,000 barrels a day with 15 drilling rigs operating in the Vaca Muerta shale formation located in Neuquen province. Literally Dead Cow, Vaca Muerta is a Connecticut-sized area in southern Argentina that contains at least 23 billion barrels of oil, according to a report by independent auditor Ryder Scott.

CNOOC, Dow

YPF has also signed preliminary Vaca Muerta development accords with Dow Chemical Co., Corp. America run by Argentine billionaire Eduardo Eurnekian and Bridas Corp., a joint venture of the billionaire Bulgheroni brothers and China’s CNOOC Ltd.

Argentina said July 15 it will offer energy companies incentives if they invest $1 billion or more over a five-year period.

During the first six months of the year, YPF raised 4.6 billion pesos selling bonds in the local market for a total of 16.5 billion since the nationalization, YPF said in the filing.

“We were efficient in getting funds from the local market, we still have some room there, but I think in 2014, hopefully, we will have access to the international bond market to raise the same amount of money we have raised in the local bond market,” Gonzalez said on the call.

To contact the reporter on this story: Pablo Gonzalez in Buenos Aires at pgonzalez49@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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