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YPF quarterly profit more than doubles after Repsol’s departure

PABLO GONZALEZ

BUENOS AIRES, Argentina (Bloomberg) -- YPF said first-quarter profit gained 129% on higher oil and gas production.

Net income increased to 2.88 bn pesos ($360 million), or 7.34 pesos a share, in the quarter from 1.26 bn pesos, or 3.2 pesos, a year earlier, Buenos Aires-based YPF said in a statement to Argentina’s regulator May 8.

President Cristina Fernandez de Kirchner’s government gave Repsol bonds with a market value of $4.67 bn for the YPF nationalization. Since the expropriation, YPF secured a venture with Chevron to jointly develop part of Vaca Muerta, a Connecticut-sized formation in southern Argentina considered the world’s second largest shale gas deposit and fourth largest shale oil field which helped the company to boost crude and gas production.

Quarterly crude output increased 6.8% from a year earlier, YPF said. Natural gas production rose 19% to 37.2 million cubic meters a day. Total output gained 11%. Argentina seized the 51% YPF stake in April 2012 after claiming that Repsol failed to replace reserves and output was declining.

In exchange for the bonds, Repsol is dropping all legal action against Argentina. The Spanish producer had threatened to sue any companies that partnered with YPF in Argentina while it sought compensation for the nationalization.

The compensation, paid with bonds totaling $5.32 bn in nominal value maturing as late as 2033, is less than half the $10.5 bn the company sought initially. Repsol, which won’t be able to get more than $5 bn if it sells the bonds before maturity, on May 6 sold a 12% stake in YPF through Morgan Stanley for $1.3 bn.

YPF rallied as much 10% the following day as investors celebrated the departure of the hostile shareholder, said Carlos Aszpis, an equity strategist at Schweber & Cia. Sociedad de Bolsa.

“Repsol’s departure is very good news for YPF as it is much better to have several funds holding 12% than one single holder of such a stake,” he said in a telephone interview from Buenos Aires. “The company won’t have board members against management, which is what any minority shareholder wants.”

Repsol will keep a stake of less than 0.5% after the disposal.

YPF said it set aside $58 mn for a dividend payment to be determined later this year.

05/09/2014

 

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