Form 6-K
Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of August, 2017

Commission File Number: 001-12102

 

 

YPF Sociedad Anónima

(Exact name of registrant as specified in its charter)

 

 

Macacha Güemes 515

C1106BKK Buenos Aires, Argentina

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ☐            No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ☐            No  ☒

 

 

 


Table of Contents

YPF Sociedád Anonima

TABLE OF CONTENTS

 

ITEM

1 Translation of Condensed Interim Consolidated Financial Statements as of June 30, 2017 and Comparative Information (Unaudited).


Table of Contents

LOGO

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS AS OF JUNE 30, 2017

AND COMPARATIVE INFORMATION (UNAUDITED)


Table of Contents

English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).

In case of discrepancy, the financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

CONTENT

 

Note

 

Description

   Page  
 

Glossary of terms

     1  
 

Legal Information

     2  
 

Condensed interim consolidated statements of financial position

     3  
 

Condensed interim consolidated statements of comprehensive income

     4  
 

Condensed interim consolidated statements of changes in shareholders’ equity

     5  
 

Condensed interim consolidated statements of cash flow

     7  
 

Notes to the condensed interim consolidated financial statements:

  
1  

General information, structure and organization of the business of the Group

     8  
2  

Basis of preparation of the condensed interim consolidated financial statements

     9  
3  

Seasonality of operations

     10  
4  

Acquisitions and dispositions

     10  
5  

Financial risk management

     11  
6  

Segment information

     11  
7  

Financial instruments by category

     14  
8  

Intangible assets

     15  
9  

Property, plant and equipment

     16  
10  

Investments in associates and joint ventures

     17  
11  

Inventories

     21  
12  

Other receivables

     21  
13  

Trade receivables

     21  
14  

Cash and cash equivalents

     21  
15  

Provisions

     22  
16  

Income Tax

     23  
17  

Loans

     24  
18  

Other liabilities

     26  
19  

Accounts payable

     26  
20  

Revenues

     26  
21  

Costs

     26  
22  

Expenses by nature

     27  
23  

Other operating results, net

     28  
24  

Financial results, net

     28  
25  

Investments in joint operations

     28  
26  

Shareholders’ equity

     29  
27  

Earnings per share

     29  
28  

Deconsolidation of Maxus Entities

     30  
29  

Contingent assets and liabilities

     31  
30  

Contractual commitments

     32  
31  

Main regulations and others

     34  
32  

Balances and transactions with related parties

     38  
33  

Employee benefit plans and similar obligations

     41  
34  

Assets and liabilities in currencies other than the Argentine peso

     42  
35  

Subsequent events

     43  

 


Table of Contents

English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).

In case of discrepancy, the financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

GLOSSARY OF TERMS

 

Term

  

Definition

AESA    Subsidiary A-Evangelista S.A.
Annual consolidated financial statements    Consolidated financial statements as of December 31, 2016
Associate    Company over which YPF has significant influence as provided for in IAS 28
BONAR    Argentine public bonds
CDS    Associate Central Dock Sud S.A.
CGU    Cash-Generating Units
CIMSA    Subsidiary Compañía de Inversiones Mineras S.A.
CNV    Argentine Securities Commission
Condensed interim consolidated financial statements    Condensed interim consolidated financial statements as of June 30, 2017
Eleran    Subsidiary Eleran Inversiones 2011 S.A.U.
ENARGAS    Argentine National Gas Regulatory Authority
FACPCE    Argentine Federation of Professional Councils in Economic Sciences
Group    YPF and its subsidiaries
IAS    International Accounting Standard
IASB    International Accounting Standards Board
IFRS    International Financial Reporting Standard
IDS    Associate Inversora Dock Sud S.A.
Joint venture    Company jointly owned by YPF as provided for in IFRS 11
JO    Joint operation
LGS    Argentine General Corporations Law No. 19,550 (T.O. 1984), as amended
MEGA    Joint venture Compañía Mega S.A.
Metroenergía    Subsidiary Metroenergía S.A.
Metrogas    Subsidiary Metrogas S.A.
MINEM    Ministry of Energy and Mining
MMBtu    Million British thermal units
Oldelval    Associate Oleoductos del Valle S.A.
OPESSA    Subsidiary Operadora de Estaciones de Servicios S.A.
OTA    Associate Oleoducto Trasandino (Argentina) S.A.
OTC    Associate Oleoducto Trasandino (Chile) S.A.
Profertil    Joint Venture Profertil S.A.
Refinor    Joint Venture Refinería del Norte S.A.
SEC    U.S. Securities and Exchange Commission
Subsidiary    Company controlled by YPF in accordance with the provisions of IFRS 10
Termap    Associate Terminales Marítimas Patagónicas S.A.
US$    U.S. dollar
US$/Bbl    U.S. dollar per barrel
Y-GEN I    Joint venture Y-GEN Eléctrica S.R.L.
Y-GEN II    Joint venture Y-GEN Eléctrica II S.R.L.
YPF Brasil    Subsidiary YPF Brasil Comércio Derivado de Petróleo Ltda.
YPF Chile    Subsidiary YPF Chile S.A.
YPF EE    Subsidiary YPF Energía Eléctrica S.A.
YPF Gas    Associate YPF Gas S.A.
YPF Holdings    Subsidiary YPF Holdings, Inc.
YPF International    Subsidiary YPF International S.A.
YPF or the Company    YPF Sociedad Anónima
YPF SP    Subsidiary YPF Servicios Petroleros S.A.
YTEC    Subsidiary YPF Tecnología S.A.

 

1


Table of Contents

English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).

In case of discrepancy, the financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

LEGAL INFORMATION

Legal address

Macacha Güemes 515 – Ciudad Autónoma de Buenos Aires, Argentina

Fiscal year number 41

Beginning on January 1, 2017

Principal business of the Company

The Company’s purpose shall be to perform, on its own, through third parties or in association with third parties, the exploration, development and production of oil, natural gas and other minerals and refining, marketing and distribution of oil and petroleum products and direct and indirect petroleum derivatives, including petrochemicals, chemicals, including those derived from hydrocarbons, and non-fossil fuels, biofuels and their components, as well as production of electric power from hydrocarbons, through which it may manufacture, use, purchase, sell, exchange, import or export them. It shall also be the Company’s purpose to render, on its own, through a subsidiary or in association with third parties, telecommunications services in all forms and 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. In order to fulfill these objectives, the Company 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 the Bylaws.

Filing with the Public Registry

Bylaws filed on February 5, 1991 under No. 404, Book 108, Volume “A”, Sociedades Anónimas, with the Public Registry of Buenos Aires City, in charge of the Argentine Registrar of Companies (Inspección General de Justicia); and Bylaws in substitution of previous Bylaws, filed on June 15, 1993, under No. 5109, Book 113, Volume “A”, Sociedades Anónimas, with the above mentioned Registry.

Duration of the Company

Through June 15, 2093.

Last amendment to the Bylaws

April 29, 2016 registered with the Argentine Registrar of Companies (Inspección General de Justicia) on December 21, 2016 under No. 25,244, Book 82 of Corporations.

Optional Statutory Regime related to Compulsory Tender Offer provided by Decree No. 677/2001 art. 24

Not incorporated (modified by Law No. 26,831).

Capital structure

393,312,793 shares of common stock, Argentine pesos 10 par value and 1 vote per share.

Subscribed, paid-in and authorized for stock exchange listing

3,933,127,930

 

   

MIGUEL ANGEL GUTIERREZ

President

 

2


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF JUNE 30, 2017 AND DECEMBER 31, 2016 (UNAUDITED)

(Amounts expressed in millions of Argentine Pesos)

   LOGO

 

     Notes      June 30,
2017
     December 31,
2016
 

ASSETS

        

Noncurrent Assets

        

Intangible assets

     8        8,707        8,114  

Property, plant and equipment

     9        320,643        308,014  

Investments in associates and joint ventures

     10        5,772        5,488  

Deferred income tax assets, net

     16        354        564  

Other receivables

     12        1,886        3,909  

Trade receivables

     13        94        87  

Investment in financial assets

     7        7,736        7,737  
     

 

 

    

 

 

 

Total noncurrent assets

        345,192        333,913  
     

 

 

    

 

 

 

Current Assets

        

Inventories

     11        24,031        21,820  

Other receivables

     12        10,712        13,456  

Trade receivables

     13        32,979        33,645  

Investment in financial assets

     7        7,966        7,548  

Cash and cash equivalents

     14        13,455        10,757  
     

 

 

    

 

 

 

Total current assets

        89,143        87,226  
     

 

 

    

 

 

 

TOTAL ASSETS

        434,335        421,139  
     

 

 

    

 

 

 

SHAREHOLDERS’ EQUITY

        

Shareholders’ contributions

        10,372        10,403  

Reserves, other comprehensive income and retained earnings

        113,823        108,352  
     

 

 

    

 

 

 

Shareholders’ equity attributable to shareholders of the parent company

        124,195        118,755  
     

 

 

    

 

 

 

Non-controlling interest

        133        (94
     

 

 

    

 

 

 

TOTAL SHAREHOLDERS’ EQUITY

        124,328        118,661  
     

 

 

    

 

 

 

LIABILITIES

        

Noncurrent Liabilities

        

Provisions

     15        54,181        47,358  

Deferred income tax liabilities, net

     16        43,422        42,465  

Taxes payable

        245        98  

Loans

     17        138,038        127,568  

Other liabilities

     18        355        336  

Accounts payable

     19        1,594        2,187  
     

 

 

    

 

 

 

Total noncurrent liabilities

        237,835        220,012  
     

 

 

    

 

 

 

Current Liabilities

        

Provisions

     15        1,838        1,994  

Income tax liability

        137        176  

Taxes payable

        5,709        4,440  

Salaries and social security

        2,677        3,094  

Loans

     17        22,520        26,777  

Other liabilities

     18        1,178        4,390  

Accounts payable

     19        38,113        41,595  
     

 

 

    

 

 

 

Total current liabilities

        72,172        82,466  
     

 

 

    

 

 

 

TOTAL LIABILITIES

        310,007        302,478  
     

 

 

    

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

        434,335        421,139  
     

 

 

    

 

 

 

Accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

   

MIGUEL ANGEL GUTIERREZ

President

 

3


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX-MONTH AND THREE-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016 (UNAUDITED)

(Amounts expressed in millions of Argentine Pesos, except per share information, expressed in Pesos)

   LOGO

 

            For the six-month
periods ended June 30,
    For the three-month
periods ended June 30,
 
     Notes      2017     2016     2017     2016  

Revenues

     20        117,165       99,693       60,162       52,759  

Cost

     21        (95,473     (82,950     (49,675     (42,819
     

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

        21,692       16,743       10,487       9,940  
     

 

 

   

 

 

   

 

 

   

 

 

 

Selling expenses

     22        (8,096     (6,744     (4,209     (3,699

Administrative expenses

     22        (3,791     (3,319     (2,001     (1,833

Exploration expenses

     22        (1,426     (1,192     (833     (738

Other operating results, net

     23        (402     1,448       22       1,648  
     

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

        7,977       6,936       3,466       5,318  
     

 

 

   

 

 

   

 

 

   

 

 

 

Income from equity interests in associates and joint ventures

     10        114       263       92       166  

Financial income

     24        4,613       11,109       3,001       1,988  

Financial loss

     24        (11,568     (12,170     (2,720     (6,690

Other financial results

     24        733       419       658       42  
     

 

 

   

 

 

   

 

 

   

 

 

 

Financial results, net

     24        (6,222     (642     939       (4,660
     

 

 

   

 

 

   

 

 

   

 

 

 

Net income before income tax

        1,869       6,557       4,497       824  
     

 

 

   

 

 

   

 

 

   

 

 

 

Income tax

     16        (1,405     (6,455     (4,225     (1,577
     

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) for the period

        464       102       272       (753
     

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) for the period attributable to:

           

- Shareholders of the parent company

        237       253       212       (743

- Non-controlling interest

        227       (151     60       (10

Earnings (losses) per share basic and diluted

     27        0.60       0.65       0.54       (1.89

Other comprehensive income

           

Translation differences from investments in subsidiaries, associates and joint ventures(1)

        (263     (616     (422     (81

Translation differences from YPF S.A. (2)

        6,213       20,332       10,015       4,390  
     

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income for the period (3)

        5,950       19,716       9,593       4,309  
     

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the period

        6,414       19,818       9,865       3,556  
     

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Will be reversed to net income at the moment of the sale of the investment or full or partial reimbursement of the capital.
(2) Will not be reversed to net income.
(3) Entirely assigned to the parent company’s shareholders.

Accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

   

MIGUEL ANGEL GUTIERREZ

President

 

4


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016 (UNAUDITED)

(Amounts expressed in millions of Argentine Pesos)

   LOGO

 

     For the six-month period ended June 30, 2017  
     Shareholders’ contributions  
     Subscribed
capital
    Adjustment to
contributions
    Treasury
shares
     Adjustment to
treasury
shares
     Share-based
benefit plans
    Acquisition cost
of treasury
shares
    Share trading
premium
    Issuance
premiums
     Total  

Balances at the beginning of the fiscal year

     3,923       6,085       10        16        61       (152     (180     640        10,403  

Accrual of share-based benefit plans(4)

     —         —         —          —          70       —         —         —          70  

Repurchase of treasury shares

     (3     (4     3        4        —         (100     —         —          (100

Settlement of share-based benefit plans (3)

     —         —         —          —          (3     2       —         —          (1

As decided by the Shareholders’ Meeting on April 28, 2017(2)

     —         —         —          —          —         —         —         —          —    

As decided by the Board of Directors on June 8, 2017(2)

     —         —         —          —          —         —         —         —          —    

Other comprehensive income

     —         —         —          —          —         —         —         —          —    

Net income

     —         —         —          —          —         —         —         —          —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Balances at the end of the period

     3,920       6,081       13        20        128       (250     (180     640        10,372  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

     For the six-month period ended June 30, 2017  
     Reserves                 Equity attributable to        
     Legal      Future
dividends
    Investments     Purchase of
treasury
shares
    Initial
IFRS
adjustment
    Other
comprehensive
income
    Retained
earnings
    Shareholders
of the parent
company
    Non-
controlling
interest
    Total
shareholders’
equity
 

Balances at the beginning of the fiscal year

     2,007        5       24,904       490       3,648       105,529       (28,231     118,755       (94     118,661  

Accrual of share-based benefit plans(4)

     —          —         —         —         —         —         —         70       —         70  

Repurchase of treasury shares

     —          —         —         —         —         —         —         (100     —         (100

Settlement of share-based benefit plans(3)

     —          —         —         —         —         —         —         (1     —         (1

As decided by the Shareholders’ Meeting on April 28, 2017(2)

     —          711       (24,904     (390     (3,648     —         28,231       —         —         —    

As decided by the Board of Directors on June 8, 2017(2)

     —          (716     —         —         —         —         —         (716     —         (716

Other comprehensive income

     —          —         —         —         —         5,950       —         5,950       —         5,950  

Net income

     —          —         —         —         —         —         237       237       227       464  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at the end of the period

     2,007        —         —         100       —         111,479 (1)      237       124,195       133       124,328  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Includes 115,547 corresponding to the effect of the translation of the financial statements of YPF and (4,068) corresponding to the effect of the translation of the financial statements of investments in subsidiaries, associates and joint ventures with functional currencies other than the U.S. dollar, as detailed in Note 2.b.1. to the annual consolidated financial statements.
(2) See Note 26.
(3) Net of employees’ income tax withholding related to the share-based benefit plans.
(4) See Note 33.
   

MIGUEL ANGEL GUTIERREZ

President

 

5


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016 (UNAUDITED) (Cont.)

(Amounts expressed in millions of Argentine Pesos)

   LOGO

 

     For the six-month period ended June 30, 2016  
     Shareholders’ contributions  
     Subscribed
capital
    Adjustment to
contributions
    Treasury
shares
     Adjustment to
treasury
shares
    Share-based
benefit plans
    Acquisition cost
of treasury
shares
    Share trading
premium
    Issuance
premiums
     Total  

Balances at the beginning of the fiscal year

     3,922       6,083       11        18       67       (277     (115     640        10,349  

Accrual of share-based benefit plans(4)

     —         —         —          —         57       —         —         —          57  

Repurchase of treasury shares

     (2     (3     2        3       —         (55     —         —          (55

Settlement of share-based benefit plans(3)

     —         1       —          (1     (11     27       (15     —          1  

As decided by the Shareholders’ Meeting on April 29, 2016(2)

     —         —         —          —         —         —         —         —          —    

As decided by the Board of Directors on June 9, 2016(2)

     —         —         —          —         —         —         —         —          —    

Other comprehensive income

     —         —         —          —         —         —         —         —          —    

Net income

     —         —         —          —         —         —         —         —          —    
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Balances at the end of the period

     3,920       6,081       13        20       113       (305     (130     640        10,352  
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

     For the six-month period ended June 30, 2016  
     Reserves                  Equity attributable to        
     Legal      Future
dividends
    Investments      Purchase of
treasury
shares
     Initial
IFRS
adjustment
     Other
comprehensive
income
    Retained
earnings
    Shareholders
of the parent
company
    Non-
controlling
interest
    Total
shareholders’
equity
 

Balances at the beginning of the fiscal year

     2,007        5       21,264        440        3,648        78,115       4,585       120,413       48       120,461  

Accrual of share-based benefit plans(4)

     —          —         —          —          —          —         —         57       —         57  

Repurchase of treasury shares

     —          —         —          —          —          —         —         (55     —         (55

Settlement of share-based benefit plans(3)

     —          —         —          —          —          —         —         1       —         1  

As decided by the Shareholders’ Meeting on April 29, 2016(2)

     —          889       3,640        50        —          —         (4,579     —         —         —    

As decided by the Board of Directors on June 9, 2016(2)

     —          (889     —          —          —          —         —         (889     —         (889

Other comprehensive income

     —          —         —          —          —          19,716       —         19,716       —         19,716  

Net income

     —          —         —          —          —          —         253       253       (151     102  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at the end of the period

     2,007        5       24,904        490        3,648        97,831 (1)      259       139,496       (103     139,393  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Includes 101,314 corresponding to the effect of the translation of the financial statements of YPF and (3,483) corresponding to the effect of the translation of the financial statements of investments in subsidiaries, associates and joint ventures with functional currencies other than the U.S. dollar, as detailed in Note 2.b.1.to the annual consolidated financial statements.
(2) See Note 25 to the annual consolidated financial statements.
(3) Net of employee income tax withholdings related to share-based benefit plans.
(4) See Note 33.

Accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

   

MIGUEL ANGEL GUTIERREZ

President

 

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Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016 (UNAUDITED)

(Amounts expressed in millions of Argentine Pesos)

   LOGO

 

     For the six-month periods
ended June 30,
 
     2017     2016  

Operating activities

    

Net income

     464       102  

Adjustments to reconcile net income to cash flows provided by operating activities:

    

Income from equity interest in associates and joint ventures

     (114     (263

Depreciation of property, plant and equipment

     23,736       21,759  

Amortization of intangible assets

     383       323  

Retirement of property, plant and equipment and intangible assets and consumption of materials

     2,184       2,605  

Charge on income tax

     1,405       6,455  

Net increase in provisions

     2,181       2,503  

Exchange differences, interest and other (1)

     5,345       (700

Share-based benefit plan

     70       57  

Income from deconsolidation of subsidiaries

     —         (1,528

Changes in assets and liabilities:

    

Trade receivables

     1,125       (14,888

Other receivables

     2,897       4,635  

Inventories

     (1,297     (119

Accounts payable

     (11     (1,757

Taxes payables

     1,444       (449

Salaries and social security

     (413     (51

Other liabilities

     (932     137  

Decrease in provisions included in liabilities due to payment/use

     (666     (948

Dividends received

     311       520  

Proceeds from collection of lost profit insurance

     —         607  

Income tax payments

     (479     (1,561
  

 

 

   

 

 

 

Net cash flows provided by operating activities

     37,633       17,439  
  

 

 

   

 

 

 

Investing activities:(2)

    

Acquisition of property, plant and equipment and intangible assets

     (27,678     (32,602

Contributions and acquisitions of interests in associates and joint ventures

     (337     —    

Decrease in financial assets

     —         910  

Proceeds from collection of insurance for damaged property

     —         355  

Interests received from financial assets

     511       —    
  

 

 

   

 

 

 

Net cash flows used in investing activities

     (27,504     (31,337
  

 

 

   

 

 

 

Financing activities:(2)

    

Payments of loans

     (15,080     (33,954

Payments of interest

     (8,577     (6,893

Proceeds from loans

     16,060       54,466  

Repurchase of treasury shares

     (100     (55

Contributions of non-controlling interests

     —         50  
  

 

 

   

 

 

 

Net cash flows (used in) provided by financing activities

     (7,697     13,614  
  

 

 

   

 

 

 

Translation differences provided by cash and cash equivalents

     266       938  
  

 

 

   

 

 

 

Deconsolidation of subsidiaries

     —         (148
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     2,698       506  
  

 

 

   

 

 

 

Cash and cash equivalents at the beginning of year

     10,757       15,387  

Cash and cash equivalents at the end of period

     13,455       15,893  
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     2,698       506  
  

 

 

   

 

 

 

 

(1) Does not include exchange differences generated by cash and cash equivalents, which are disclosed separately in this statement.
(2) The main investing and financing transactions that have not affected cash and cash equivalents correspond to:

 

     For the six-month periods
ended June 30,
 
     2017      2016  

Acquisition of property, plant and equipment and concession extension easements not paid

     4,309        3,879  

Dividends payable

     716        889  

Dividends receivable

     17        —    

Capitalized receivables in joint ventures

     19        —    

Accompanying notes are an integral part of these condensed interim consolidated financial statements.

 

   

MIGUEL ANGEL GUTIERREZ

President

 

7


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

(Amounts expressed in millions of Argentine Pesos, except shares and per share amounts expressed in Argentine Pesos, and as otherwise indicated)

   LOGO

1. GENERAL INFORMATION, STRUCTURE AND ORGANIZATION OF THE BUSINESS OF THE GROUP

General information

YPF Sociedad Anónima is a sociedad anónima (stock corporation) incorporated under the laws in force in the Argentine Republic, with a registered office at Macacha Güemes 515, in the City of Buenos Aires.

YPF and its subsidiaries comprise the leading energy group in Argentina, which operates a fully integrated oil and gas chain with leading market positions across the domestic Upstream and Downstream segments.

Structure and organization of the economic group

The following chart shows the organizational structure, including the main companies of the Group, as of June 30, 2017:

 

LOGO

 

(1) Held directly and indirectly.

 

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Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

1. GENERAL INFORMATION, STRUCTURE AND ORGANIZATION OF THE BUSINESS OF THE GROUP (Cont.)

 

Organization of the business

As of June 30, 2017, the Group carries out its transactions and operations in accordance with the following structure:

 

    Upstream;

 

    Gas and Power;

 

    Downstream;

 

    Central administration and others, which covers the remaining activities not included in the previous categories.

Activities covered by each business segment are detailed in Note 6.

Almost all operations, properties and clients are located in Argentina. However, the Group holds equity interests in one exploratory area in Chile and Bolivia. The Group also sells lubricants and derivatives in Brazil and Chile.

2. BASIS OF PREPARATION OF THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

2.a) Basis of preparation

The condensed interim consolidated financial statements of YPF and its subsidiaries for the six-month period ended June 30, 2017, are presented in accordance with IAS 34 “Interim Financial Reporting”. The adoption of the IFRS as issued by the IASB was determined by the Technical Resolution No. 26 (ordered text) issued by FACPCE and CNV regulations.

Also, some additional information required by the LGS and/or regulations of the CNV was included. Such information is contained in the Notes to these condensed interim consolidated financial statements only to comply with regulatory requirements.

These condensed interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements of the Group as of December 31, 2016 prepared in accordance with IFRS.

These condensed interim consolidated financial statements were approved by the Board of Directors’ meeting and authorized to be issued on August 8, 2017.

These condensed interim consolidated financial statements corresponding to the six-month period ended on June 30, 2017 are unaudited. The Company´s Management believes they have included all necessary adjustments to reasonably present the results of each period on a basis consistent with the audited annual consolidated financial statements. Income for the six-month period ended on June 30, 2017 does not necessarily reflect the proportion of the Group’s full-year income.

2.b) Significant Accounting Policies

The accounting policies adopted in the preparation of these condensed interim consolidated financial statements are consistent with those used in the preparation of the annual consolidated financial statements, except for the valuation policy for Income Tax detailed in Note 16. The most significant accounting policies are described in Note 2.b) to the annual consolidated financial statements.

Adoption of new standards and interpretations effective January 1, 2017

The Group has adopted the new and revised standards and interpretations issued by the IASB that are relevant to its operations and that are to be applied effective as of June 30, 2017, as described in Note 2.b.24) to the annual consolidated financial statements. These new and revised standards and interpretations had no impact on these condensed interim consolidated financial statements.

 

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Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

2. BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

 

Functional and reporting currency

As mentioned in Note 2.b.1. to the annual consolidated financial statements, YPF has defined the U.S. dollar as its functional currency. In addition, according to CNV Resolution No. 562, YPF must present its financial statements in Argentine pesos.

2.c) Accounting Estimates and Judgments

The preparation of financial statements at a certain date requires Management to make estimates and assessments affecting the amount of assets and liabilities recorded, contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the period. Actual future results might differ from the estimates and assessments made as of the date of preparation of these condensed interim consolidated financial statements.

In preparing these condensed interim consolidated financial statements, significant estimates and judgments made by Management in applying the Group’s accounting policies and the main sources of uncertainty were consistent with those applied by the Group in the preparation of the annual consolidated financial statements, which are disclosed in Notes 2.b) and 2.c) to the annual consolidated financial statements.

2.d) Comparative information

Amounts and other information corresponding to the year ended on December 31, 2016 and to the six-month period ended on June 30, 2016 are an integral part of these condensed interim consolidated financial statements and are intended to be read only in relation to these financial statements.

3. SEASONALITY OF OPERATIONS

Historically, the Group’s results have been subject to seasonal fluctuations during the year, particularly as a result of the increase in natural gas sales during the winter. After the 2002 devaluation of the Argentine peso, and as a consequence of the natural gas price freeze imposed by the Argentine government, the use of natural gas has been diversified, generating an increase in demand throughout the entire year. However, sales of natural gas are still typically higher in the winter for the residential sector of the Argentine domestic market, which has lower prices than other sectors of the Argentine market. Notwithstanding the foregoing, under the “Additional Injection Stimulus Program” (see Note 30.h) to the annual consolidated financial statements), gas producing companies were invited to file with the MINEM before June 30, 2013 projects to increase natural gas injection, in order to receive an increased price of US$7.50/MMBTU for all additional natural gas injected. These projects shall comply with the minimum requirements established in the aforementioned Program, and will be subject to approval by the MINEM, including a maximum period of five years, renewable at the request of the beneficiary, upon the decision of the MINEM. If the beneficiary company does not reach the committed production increase in a given month, it will have to make up for such volumes not produced. The natural gas pricing program was incorporated into the Hydrocarbons Law, as modified by Law No. 27,007.

In view of the foregoing, seasonality of the Group operations is not significant.

4. ACQUISITIONS AND DISPOSITIONS

During the six-month period ended June 30, 2017, there have been no significant acquisitions or dispositions.

 

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Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

5. FINANCIAL RISK MANAGEMENT

The Group’s activities are exposed to a variety of financial risks: market risk (including foreign currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group maintains an organizational structure and systems that allow for the identification, measurement and control of the risks to which it is exposed.

The condensed interim consolidated financial statements do not include all the information and disclosures on financial risk management; therefore, they should be read in conjunction with the Group’s annual consolidated financial statements.

There have been no significant changes in the risk management or risk management policies applied by the Group since the last year end. See Note 4 to the annual consolidated financial statements.

6. SEGMENT INFORMATION

The different segments in which the Group is organized take into consideration the different activities from which the Group obtains income and incurs expenses. The aforementioned organizational structure is based on the way in which the highest authority in the decision-making process analyzes the main financial and operating magnitudes while making decisions about resource allocation and performance assessment also considering the Group’s business strategy.

Upstream

The Upstream segment carries out all activities related to the oil and natural gas exploration, development and production.

It obtains its revenues from (i) the sale of produced oil to the Downstream segment and, marginally, from its sale to third parties; and (ii) the sale of produced gas to the Gas and Power segment, which includes the receipt of incentives from the Natural Gas Additional Injection Stimulus Program.

Gas and Power

On March 15, 2016, the Gas and Power Executive Vice-presidency was created, and during the previous fiscal year, the complete scope of management of this new business unit was determined.

The Gas and Power segment obtains its income from the development of activities related to: (i) the natural gas commercialization to third parties and the Downstream segment, (ii) the commercial and technical operation of LNG regasification terminals in Bahía Blanca and Escobar, by hiring two regasification vessels, (iii) the natural gas distribution, and (iv) the generation of conventional and renewable electricity.

In addition to the proceeds derived from the sale of natural gas to third parties and the intersegment, which is then recognized as a “purchase” to the Upstream segment, Gas and Power accrues a fee in its favor with the Upstream segment to carry out such commercialization.

The Gas and Power Executive Vice-presidency assumed, as of 2017, all responsibility for the administration and management of collections related to the Natural Gas Additional Injection Stimulus Program, and therefore began to record revenues derived from sales in the segment, to later be transferred to the Upstream segment as an intersegment operation.

 

11


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

6. SEGMENT INFORMATION (Cont.)

 

Downstream

The Downstream segment develops activities related to: (i) oil refining and petrochemical production, (ii) commercialization of refined and petrochemical products obtained from such processes, (iii) logistics related to the transportation of oil and gas to refineries and the transportation and distribution of refined and petrochemical products to be marketed in the different sales channels.

It obtains its income from the marketing mentioned in item (ii) above, which is developed through the Retail, Industry, Agro, LPG, Chemicals and Lubricants and Specialties businesses.

It incurs in all expenses related to the aforementioned activities, including the oil purchase from the Upstream segment and third parties and the natural gas to be consumed in the refinery and petrochemical industrial complexes from the Gas and Power segment.

Central Administration and Others

It covers other activities, not falling into the aforementioned categories, mainly including corporate administrative expenses and assets and construction activities.

Sales between business segments were made at internal transfer prices established by the Group, which generally seek to approximate market prices.

Operating income and assets for each segment have been determined after consolidation adjustments.

As required by IFRS 8, comparative information has been given retroactive effect by the creation of the new segment.

 

12


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

6. SEGMENT INFORMATION (Cont.)

 

     Upstream     Gas and Power      Downstream      Central
Administration
and Others
    Consolidation
Adjustments(1)
    Total  

For the six-month period ended June 30, 2017

              

Revenues from sales

     233       27,563        89,384        1,197       (1,212     117,165  

Revenues from intersegment sales

     54,150       1,931        407        3,357       (59,845     —    
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Revenues

     54,383       29,494        89,791        4,554       (61,057     117,165  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Operating income (loss)

     15       1,583        7,457        (1,541     463       7,977  

Income from equity interests in associates and joint ventures

     —         109        5        —         —         114  

Depreciation of property, plant and equipment

     20,014 (2)      130        3,190        402       —         23,736  

Acquisition of property, plant and equipment

     19,353       1,935        3,214        477       —         24,979  

Assets

     225,272       37,926        133,136        38,676       (675     434,335  

For the six-month period ended June 30, 2016

              

Revenues from sales

     10,522       10,953        76,962        1,256       —         99,693  

Revenues from intersegment sales

     46,647       1,309        445        3,274       (51,675     —    
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Revenues

     57,169       12,262        77,407        4,530       (51,675     99,693  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Operating income (loss)

     6,157       397        2,241        79       (1,938     6,936  

Income from equity interests in associates and joint ventures

     —         160        103        —         —         263  

Depreciation of property, plant and equipment

     18,830 (2)      145        2,478        306       —         21,759  

Acquisition of property, plant and equipment

     23,649       837        4,030        708       —         29,224  

As of December 31, 2016

              

Assets

     236,173       25,866        125,536        34,739       (1,175     421,139  

 

(1) Corresponds to the elimination of income among segments of the YPF Group.
(2) Includes depreciation of charges for impairment of property, plant and equipment.

 

13


Table of Contents

English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

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7. FINANCIAL INSTRUMENTS BY CATEGORY

Fair value measurements

Fair value measurements are described in Note 6 to the annual consolidated financial statements

The tables below show the Group’s financial assets measured at fair value as of June 30, 2017 and December 31, 2016, and their allocation to their fair value hierarchies:

 

     As of June 30, 2017  

Financial assets

   Level 1     Level 2      Level 3      Total  

Investments in financial assets:

          

- Mutual funds

     56       —          —          56  

- Government securities

     15,646 (1)      —          —          15,646  
  

 

 

   

 

 

    

 

 

    

 

 

 
     15,702     —        —        15,702  
  

 

 

   

 

 

    

 

 

    

 

 

 

Cash and cash equivalents:

          

- Mutual funds

     7,996       —          —          7,996  
  

 

 

   

 

 

    

 

 

    

 

 

 
     7,996     —        —        7,996  
  

 

 

   

 

 

    

 

 

    

 

 

 
     23,698     —        —        23,698  
  

 

 

   

 

 

    

 

 

    

 

 

 
     As of December 31, 2016  

Financial assets

   Level 1     Level 2      Level 3      Total  

Investments in financial assets:

          

- Mutual funds

     53       —          —          53  

- Government securities

     15,232 (1)      —          —          15,232  
  

 

 

   

 

 

    

 

 

    

 

 

 
     15,285     —        —        15,285  
  

 

 

   

 

 

    

 

 

    

 

 

 

Cash and cash equivalents:

     2,808       —          —          2,808  
  

 

 

   

 

 

    

 

 

    

 

 

 

- Mutual funds

     2,808       —          —          2,808  
  

 

 

   

 

 

    

 

 

    

 

 

 
     18,093     —        —        18,093  
  

 

 

   

 

 

    

 

 

    

 

 

 

 

(1) As of June 30, 2017, 7,736 has been classified as noncurrent and 7,910 as current. As of December 31, 2016, 7,737 has been classified as noncurrent and 7,495 as current.

The Group has no financial liabilities at fair value through profit or loss.

Fair value estimates

From December 31, 2016 until June 30, 2017, there have been no significant changes in the commercial or economic circumstances affecting the fair value of the Group’s assets and financial liabilities, whether measured at fair value or amortized cost.

During the six-month period ended June 30, 2017, there were no transfers between the different hierarchies used to determine the fair value of the Group’s financial instruments.

Fair value of financial assets and financial liabilities measured at amortized cost

The estimated fair value of loans, considering unadjusted listed prices (Level 1) for Negotiable Obligations and interest rates offered to the Group (Level 3) in connection with the remaining financial loans, amounted to 168,544 and 157,133 as of June 30, 2017 and December 31, 2016, respectively.

The fair value of the following financial assets and financial liabilities do not differ significantly from their book value:

 

    Other receivable

 

    Trade receivables

 

    Cash and cash equivalents

 

    Accounts payable

 

    Other liabilities

 

14


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

8. INTANGIBLE ASSETS

Changes in the Group’s intangible assets for the six-month period ended June 30, 2017 and the year ended December 31, 2016 are as follows:

 

     Service
concession
     Exploration
rights
     Other
intangibles
     Total  

Cost

     9,527        2,990        4,260        16,777  

Accumulated amortization

     5,553        155        3,710        9,418  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balances as of December 31, 2015

     3,974        2,835        550        7,359  
  

 

 

    

 

 

    

 

 

    

 

 

 
Cost            

Increases

     642        75        171        888  

Translation effect

     2,127        612        936        3,675  

Decreases and reclassifications

     (547      (584      127        (1,004
Accumulated amortization            

Increases

     437        —          280        717  

Translation effect

     1,245        —          848        2,093  

Decreases and reclassifications

     —          (6      —          (6

Cost

     11,749        3,093        5,494        20,336  

Accumulated amortization

     7,235        149        4,838        12,222  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balances as of December 31, 2016

     4,514        2,944        656        8,114  
  

 

 

    

 

 

    

 

 

    

 

 

 
Cost            

Increases

     380        —          72        452  

Translation effect

     565        138        255        958  

Decreases and reclassifications

     (14      (149      187        24  
Accumulated amortization            

Increases

     278        —          105        383  

Translation effect

     353        —          237        590  

Decreases and reclassifications

     —          (149      17        (132

Cost

     12,680        3,082        6,008        21,770  

Accumulated amortization

     7,866        —          5,197        13,063  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balances as of June 30, 2017

     4,814        3,082        811        8,707  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

15


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

9. PROPERTY, PLANT AND EQUIPMENT

 

     June 30, 2017      December 31, 2016  

Net book value of property, plant and equipment

     355,574        345,679  

Provision for obsolescence of materials and equipment

     (1,517      (1,380

Provision for impairment of property, plant and equipment

     (33,414      (36,285
  

 

 

    

 

 

 
     320,643        308,014  
  

 

 

    

 

 

 

Changes in Group’s property, plant and equipment for the six-month period ended June 30, 2017 and the year ended December 31, 2016 are as follows:

 

    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
    Infrastructure
for natural
gas
distribution
    Electric
power
generation
facilities
    Other
property
    Total  

Cost

    13,949       458,066       69,429       3,650       13,478       76,803       3,647       5,603       10,778       2,931       1,573       8,291       668,198  

Accumulated depreciation

    5,920       324,922       41,138       2,392       —         —         —         4,699       6,921       1,181       1,283       5,620       394,076  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances as of December 31, 2015

    8,029       133,144       28,291       1,258       13,478       76,803       3,647       904       3,857       1,750       290       2,671       274,122  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost

                         

Increases

    140       3,831       1       3       6,968       52,610       1,392       25       —         —         2       76       65,048  

Translation effect

    2,975       104,086       16,601       802       2,494       14,602       626       1,260       2,430       —         —         1,658       147,534  

Decreases and reclassifications

    1,365       59,645       26,529       1,096       (8,701     (91,342     (3,687     1,201       1,138       260       187       (60     (12,369

Accumulated depreciation

                         

Increases

    360       40,729       4,312       414       —         —         —         668       642       75       111       318       47,629  

Translation effect

    1,257       73,288       9,288       516       —         —         —         1,052       1,558       —         —         1,142       88,101  

Decreases and reclassifications

    (40     (6,937     (3     (37     —         —         —         (18     (2     45       —         (82     (7,074

Cost

    18,429       625,628       112,560       5,551       14,239       52,673       1,978       8,089       14,346       3,191       1,762       9,965       868,411  

Accumulated depreciation

    7,497       432,002       54,735       3,285       —         —         —         6,401       9,119       1,301       1,394       6,998       522,732  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances as of December 31, 2016

    10,932       193,626 (1)      57,825       2,266       14,239       52,673       1,978       1,688       5,227       1,890       368       2,967       345,679  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost

                         

Increases

    41       299       —         59       3,125       20,300       1,030       9       —         —         —         116       24,979  

Translation effect

    813       29,985       5,231       259       569       2,478       82       374       728       —         —         437       40,956  

Decreases and reclassifications

    (156     13,595       (797     305       (2,978     (14,552     (907     24       872       105       3       154       (4,332

Accumulated depreciation

                         

Increases

    221       24,200       2,494       308       —         —         —         260       383       38       34       141       28,079  

Translation effect

    346       21,343       2,643       160       —         —         —         309       445       —         —         306       25,552  

Decreases and reclassifications

    (52     (942     (924     (16     —         —         —         33       —         —         —         (22     (1,923

Cost

    19,127       669,507       116,994       6,174       14,955       60,899       2,183       8,496       15,946       3,296       1,765       10,672       930,014  

Accumulated depreciation

    8,012       476,603       58,948       3,737       —         —         —         7,003       9,947       1,339       1,428       7,423       574,440  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances as of June 30, 2017

    11,115       192,904 (1)      58,046       2,437       14,955       60,899       2,183 (2)      1,493       5,999       1,957       337       3,249       355,574  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Includes 9,672 and 9,147 of mineral property as of June 30, 2017 and December 31, 2016, respectively.
(2) As of June 30, 2017, there are 37 exploratory wells in progress. During the six-month period ended on such date, 14 wells were drilled, and 14 wells were charged to exploratory expenses.

 

16


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

9. PROPERTY, PLANT AND EQUIPMENT (Cont.)

 

The Group capitalizes the financial cost as part of the cost of the assets. For the six-month periods ended June 30, 2017 and 2016, the rate of capitalization was 12.17% and 12.46%, respectively, and the amount capitalized amounted to 384 and 639, respectively, for the periods mentioned above.

Set forth below is the evolution of the provision for obsolescence of materials and equipment for the six-month periods ended June 30, 2017 and 2016:

 

     For the six-month periods
ended June 30,
 
     2017      2016  

Amount at beginning of year

     1,380        762  

Increase charged to expenses

     3        12  

Amounts incurred due to utilization

     (4      —    

Transfers and other movements

     65        —    

Translation differences

     73        116  
  

 

 

    

 

 

 

Amount at end of period

     1,517        890  
  

 

 

    

 

 

 

Set forth below is the evolution of the provision for impairment of property, plant and equipment for six-month periods ended on June 30, 2017 and 2016:

 

     For the six-month periods
ended June 30,
 
     2017      2016  

Amount at beginning of year

     36,285        2,455  

Depreciation(1)

     (4,343      (294

Translation differences

     1,472        368  

Deconsolidation of subsidiaries

     —          (105
  

 

 

    

 

 

 

Amount at end of period

     33,414        2,424  
  

 

 

    

 

 

 

 

(1) Included in “Depreciation of property, plant and equipment” in Note 22.

10. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

The Group does not participate in subsidiaries with a significant non-controlling interest. Furthermore, no investments in associates or joint ventures are deemed individually material.

The following table shows the value of the investments in associates and joint ventures at an aggregate level, considering that none of the individual companies is material, as of June 30, 2017 and December 31, 2016:

 

     June 30,
2017
     December 31,
2016
 

Amount of investments in associates

     1,457        1,478  

Amount of investments in joint ventures

     4,327        4,022  

Provision for impairment of investments in associates and joint ventures

     (12      (12
  

 

 

    

 

 

 
     5,772        5,488  
  

 

 

    

 

 

 

Disclosed in investments in associates and joint ventures

     5,772        5,488  

 

17


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

10. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (Cont.)

 

The main movements during the six-month periods ended June 30, 2017 and 2016, which affected the value of the aforementioned investments, correspond to:

 

     For the six-month periods
ended June 30,
 
     2017      2016  

Amount at the beginning of year

     5,488        4,371  

Acquisitions and contributions

     356        —    

Income on investments in associates and joint ventures

     114        263  

Translation differences

     142        742  

Distributed dividends

     (328      (520
  

 

 

    

 

 

 

Amount at the end of period

     5,772        4,856  
  

 

 

    

 

 

 

The following table shows the principal amounts of the results of the investments in associates and joint ventures of the Group, calculated according to the equity value therein, for the six-month periods ended June 30, 2017 and 2016. The Group has adjusted, if applicable, the values reported by these companies to adapt them to the accounting criteria used by the Group for the valuation equity method in the aforementioned dates:

 

     Associates      Joint ventures  
     For the six-month periods
ended June 30,
     For the six-month periods
ended June 30,
 
     2017      2016      2017      2016  

Net income

     96        142        18        121  

Other comprehensive income

     9        22        133        720  
  

 

 

    

 

 

    

 

 

    

 

 

 

Comprehensive income for the period

     105        164        151        841  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

18


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

10. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (Cont.)

 

The following table shows information of the subsidiaries:

 

    Information of the issuer  
    Description of the Securities             Last Financial Statements
Available
       

Name and Issuer

  Class     Face
Value
    Amount    

Main Business

 

Registered Address

  Date     Capital
stock
    Net profit
(loss)
    Equity     Holding in
Capital
Stock
 

Subsidiaries:(9)

                   

YPF International S.A.(7)

    Common     Bs. 100       66,897     Investment   La Plata Street 19, Santa Cruz de la Sierra, República de Bolivia     06-30-17       15       —   (8)      25       100.00

YPF Holdings Inc.(7)

    Common     US$     0.01       810,614     Investment and finance   10333 Richmond Avenue I, Suite 1050, TX, U.S.A.     06-30-17       13,438       (390     (3,304     100.00

Operadora de Estaciones de Servicios S.A.

    Common     $ 1       163,701,747     Commercial management of YPF’s gas stations   Macacha Güemes 515, Buenos Aires, Argentina     06-30-17       164       206       403       99.99

A-Evangelista S.A.

    Common     $ 1       307,095,088     Engineering and construction services   Macacha Güemes 515, Buenos Aires, Argentina     06-30-17       307       77       1,200       100.00

YPF Servicios Petroleros S.A.

    Common     $ 1       50,000     Wells perforation and/or reparation services   Macacha Güemes 515, Buenos Aires, Argentina     06-30-17       —   (8)      (121     (140     100.00

Metrogas S.A.

    Common     $ 1       398,419,700     Providing the public service of natural gas distribution   Gregorio Aráoz de Lamadrid 1360, Buenos Aires, Argentina.     06-30-17       569       639       (858     70.00

YPF Energía Eléctrica S.A.

    Common     $ 1       30,006,540     Exploration, development, industrialization and marketing of hydrocarbons, and generation, transportation and marketing of electric power   Macacha Güemes 515, Buenos Aires, Argentina     06-30-17       30       299       2,817       100.00

YPF Chile S.A.(7)

    Common       —         50,968,649     Lubricants and aviation fuels trading and hydrocarbons research and exploration   Villarica 322; Módulo B1, Qilicura, Santiago     06-30-17       757       (117     1,218       100.00

YPF Tecnología S.A.

    Common     $ 1       234,291,000     Investigation, development, production and marketing of technologies, knowledge, goods and services   Macacha Güemes 515, Buenos Aires, Argentina     06-30-17       459       28       680       51.00

YPF Europe B.V.(7)

    Common     US$ 0.01       15,660,437,309     Investment and finance   Prins Bernardplein 200, 1097 JB, Amsterdam, Holanda     12-31-16       —   (8)      132       12       100.00

YSUR Inversora S.A.U. (7) (10)

    —         —         —       Investment   Macacha Güemes 515, Buenos Aires, Argentina     12-31-16       2,657       (1     5,397       100.00

YSUR Inversiones Petroleras S.A.U. (7) (10)

    —         —         —       Investment   Macacha Güemes 515, Buenos Aires, Argentina     12-31-16       230       —   (8)      391       100.00

YSUR Petrolera Argentina S.A. (7) (10)

    —         —         —       Exploration, extraction, exploitation, storage, transportation, industrialization and marketing of hydrocarbons, as well as other operations related thereto   Macacha Güemes 515, Buenos Aires, Argentina     12-31-16       634       106       570       100.00

Compañía de Inversiones Mineras S.A.

    Common     $ 1       17,043,060     Exploration, exploitation, processing, management, storage and transport of all types of minerals; assembly, construction and operation of facilities and structures and processing of products related to mining   Macacha Güemes 515, Buenos Aires, Argentina     06-30-17       17       (10     (27     100.00

 

19


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

10. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (Cont.)

 

The following table shows the investments in associates and joint ventures:

 

   

06-30-2017

    12-31-2016  
                     

Information of the issuer

       
   

Description of the Securities

                        Last Financial Statements
Available
             

Name and Issuer

 

Class

  Face
Value
    Amount     Book
value(3)
    Cost (2)    

Main Business

 

Registered Address

  Date     Capital
stock
    Net
profit
(loss)
    Equity     Holding
in
Capital
Stock
    Book
Value(3)
 

Joint ventures:

                         

Compañía Mega S.A.(7) (6)

  Common   $ 1       244,246,140       1,160       —       Separation, fractionation and transportation of natural gas liquids   San Martín 344, P. 10º, Buenos Aires, Argentina     03-31-17       643       262       2,111       38.00     1,208  

Profertil S.A.(7)

  Common   $ 1       391,291,320       1,983       —       Production and marketing of fertilizers   Alicia Moreau de Justo 740, P. 3, Buenos Aires, Argentina     03-31-17       783       95       1,147       50.00     1,897  

Refinería del Norte S.A.

  Common   $ 1       45,803,655       447       —       Refining   Maipú 1, P. 2º, Buenos Aires, Argentina     03-31-17       92       (72     919       50.00     468  
       

 

 

   

 

 

                 

 

 

 
          3,590       —                       3,573  
       

 

 

   

 

 

                 

 

 

 

Associates:

                         

Oleoductos del Valle S.A.

  Common   $ 10       4,072,749       186       —       Oil transportation by pipeline   Florida 1, P. 10º, Buenos Aires, Argentina     06-30-17       110       63       504       37.00     174 (1) 

Terminales Marítimas Patagónicas S.A.

  Common   $ 10       476,034       98       —       Oil storage and shipment   Av. Leandro N. Alem 1180, P. 11º, Buenos Aires, Argentina     03-31-17       14       3       286       33.15     94  

Oiltanking Ebytem S.A.

  Common   $ 10       351,167       156       —       Hydrocarbon transportation and storage   Terminal Marítima Puerto Rosales – Provincia de Buenos Aires, Argentina.     06-30-17       12       96       127       30.00     184  

Gasoducto del Pacífico (Argentina) S.A.

  Preferred   $ 1       15,579,578       37       —       Gas transportation by pipeline   San Martín 323, P.13°, Buenos Aires, Argentina     12-31-16       156       100       329       10.00     33  

Central Dock Sud S.A.

  Common   $ 0.01       11,869,095,145       186       126     Electric power generation and bulk marketing   Pasaje Ingeniero Butty 220, P.16°, Buenos Aires, Argentina     03-31-17       1,231       46       1,865       10.25 %(5)      175  

Inversora Dock Sud S.A.

  Common   $ 1       355,270,303       581       415     Investment and finance   Pasaje Ingeniero Butty 220, P.16°, Buenos Aires, Argentina     03-31-17       829       32       1,343       42.86     569  

Oleoducto Trasandino (Argentina) S.A.

  Preferred   $ 1       12,135,167       37       —       Oil transportation by pipeline   Macacha Güemes 515, P.3º, Buenos Aires, Argentina     03-31-17       34       3       107       36.00     37  

YPF Gas S.A

  Common   $ 1       175,997,158       154       —       Gas fractionation, bottling, distribution and transport for industrial and/or residential use   Macacha Güemes 515, P.3º, Buenos Aires, Argentina     03-31-17       176       (24     645       34.00     172  

Other companies:

                         

Other (4)

  —       —         —         759       131     —     —       —         —         —         —         —         489  
       

 

 

   

 

 

                 

 

 

 
          2,194       672                     1,927  
       

 

 

   

 

 

                 

 

 

 
          5,784       672                     5,500  
       

 

 

   

 

 

                 

 

 

 

 

(1) Holding shareholder’s equity, net of intercompany profits (losses).
(2) Cost net of cash dividends and stock redemption.
(3) Holding in shareholders’ equity plus adjustments to conform to YPF accounting principles.
(4) Includes Gasoducto del Pacífico (Cayman) Ltd., A&C Pipeline Holding Company, Poligás Luján S.A.C.I.,Oleoducto Transandino (Chile) S.A., Bizoy S.A., Civeny S.A., Bioceres S.A., Y-GEN Eléctrica S.R.L., Y-GEN Eléctrica II S.R.L., Y-GEN Eléctrica III S.R.L., Y-GEN Eléctrica IV S.R.L. and Petrofaro S.A.
(5) Additionally, the Group has a 29.99% indirect holding in capital stock through Inversora Dock Sud S.A.
(6) As stipulated by shareholders’ agreement, joint control is held in this company by shareholders.
(7) The U.S. dollar has been defined as the functional currency of this company.
(8) No value is disclosed as the carrying value is less than 1.
(9) In addition, Compañía Minera de Argentina S.A., YPF Services USA Corp., YPF Brasil Comércio Derivado de Petróleo Ltda., Wokler Investment S.A., YPF Colombia S.A.S., Miwen S.A., Eleran Inversiones 2011 S.A.U., Lestery S.A., Energía Andina S.A. and EOG Resources Netherlands B.V. are consolidated.
(10) Companies merged with YPF.

 

20


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

11. INVENTORIES

 

     June 30,
2017
    December 31,
2016
 

Refined products

     15,803       13,390  

Crude oil and natural gas

     6,222       6,551  

Products in process

     502       411  

Construction works in progress for third parties

     110       12  

Raw materials, packaging materials and others

     1,394       1,456  
  

 

 

   

 

 

 
     24,031 (1)      21,820  (1) 
  

 

 

   

 

 

 

 

(1) As of June 30, 2017 and December 31, 2016, the cost of inventories does not exceed their realization net value.

12. OTHER RECEIVABLES

 

     June 30, 2017      December 31, 2016  
     Noncurrent      Current      Noncurrent      Current  

Trade

     66        1,271        —          1,733  

Tax credit and export rebates

     294        2,081        291        4,648  

Loans to third parties and balances with related parties (1)

     721        1,148        2,495        1,703  

Collateral deposits

     1        250        17        214  

Prepaid expenses

     156        1,212        159        702  

Advances and loans to employees

     16        359        12        335  

Advances to suppliers and custom agents (2)

     —          2,574        —          1,691  

Receivables with partners in JO and consortia

     783        651        816        1,361  

Miscellaneous

     80        1,209        134        1,111  
  

 

 

    

 

 

    

 

 

    

 

 

 
     2,117        10,755        3,924        13,498  

Provision for other doubtful receivables

     (231      (43      (15      (42
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,886        10,712        3,909        13,456  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) See Note 32 for information about related parties.
(2) Includes among others, advances to customs agents for the payment of taxes and import rights related to the imports of fuels and goods.

13. TRADE RECEIVABLES

 

     June 30, 2017      December 31, 2016  
     Noncurrent      Current      Noncurrent      Current  

Accounts receivable and related parties (1)

     94        34,248        87        34,729  

Provision for doubtful trade receivables

     —          (1,269      —          (1,084
  

 

 

    

 

 

    

 

 

    

 

 

 
     94        32,979        87        33,645  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) See Note 32 for information about related parties.

Changes in the provision for doubtful trade receivables

 

     For the six-month periods
ended June 30,
 
     2017      2016  

Amount at beginning of year

     1,084        848  

Increases charged to expenses

     53        83  

Decreases charged to income

     (22      (15

Amounts incurred due to payment/utilization

     (4      —    

Other movements

     117        —    

Translation differences

     41        77  
  

 

 

    

 

 

 

Amount at end of period

     1,269        993  
  

 

 

    

 

 

 

14. CASH AND CASH EQUIVALENTS

 

     June 30,
2017
     December 31,
2016
 

Cash and banks

     5,438        7,922  

Short-term investments

     21        27  

Financial assets at fair value through profit or loss (1)

     7,996        2,808  
  

 

 

    

 

 

 
     13,455        10,757  
  

 

 

    

 

 

 

 

(1) See Note 7.

 

21


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

15. PROVISIONS

Changes in the Group’s provisions for the six-month period ended June 30, 2017 and for the fiscal year ended December 31, 2016 are as follows:

 

    Provision for pending
lawsuits and contingencies
    Provision for environmental
liabilities
    Provision for hydrocarbon
wells abandonment obligations
    Provision for pensions     Total  
    Noncurrent     Current     Noncurrent     Current     Noncurrent     Current     Noncurrent     Current     Noncurrent     Current  

Amount as of December 31, 2015

    10,375       149       1,620       1,400       27,380       429       248       31       39,623       2,009  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increases charged to expenses

    1,579       335       962       32       3,023       —         97       —         5,661       367  

Decreases charged to income

    (158     (258     —         —         (10     (77     (1     —         (169     (335

Amounts incurred due to payments/utilization

    9       (239     —         (869     (48     (584     —         (13     (39     (1,705

Exchange and translation differences, net

    1,221       7       159       52       6,245       94       26       3       7,651       156  

Deconsolidation of subsidiaries

    (2,213     (11     (1,351     (607     (515     —         (357     (34     (4,436     (652

Reclassifications and other movements

    (1,608     586       (860     860       1,548       695       (13     13       (933     2,154  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amount as of December 31, 2016

    9,205       569       530       868       37,623       557       —         —         47,358       1,994  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Increases charged to expenses

    1,018       31       284       —         1,395       —         —         —         2,697       31  

Decreases charged to income

    (411     (156     (6     —         (5     —         —         —         (422     (156

Amounts incurred due to payments/utilization

    (10     (51     —         (337     —         (268     —         —         (10     (656

Exchange and translation differences, net

    335       22       —         —         1,878       19       —         —         2,213       41  

Reclassifications and other movements

    2,851 (1)      78       (386     386       (120     120       —         —         2,345       584  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amount as of June 30, 2017

    12,988       493       422       917       40,771       428       —         —         54,181       1,838  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Includes 2,932 of reclassifications from Other liabilities. See Note 18.

Provisions for lawsuits, claims and environmental liabilities are described in Note 14 to the annual consolidated financial statements.

No significant new provisions have been identified for the six-month period ended on June 30, 2017, nor have there been amendments to the evaluations of the ongoing matters as of December 31, 2016, except for the provisions in Note 28.

 

22


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

16. INCOME TAX

According to IAS 34, income tax expense is recognized in each interim period based on the best estimate of the effective income tax rate expected as of year-end. Amounts calculated for income tax expense for the six-month period ended June 30, 2017 may need to be adjusted in subsequent periods if, based on new factors of judgment, the estimate of the effective expected income tax rate changes.

The calculation of the income tax expense accrued for the six-month periods ended June 30, 2017 and 2016 is as follows:

 

     For the six-month periods
ended June 30,
 
     2017      2016  

Current income tax

     (287      (425

Deferred income tax

     (1,118      (6,030
  

 

 

    

 

 

 
     (1,405      (6,455
  

 

 

    

 

 

 

The reconciliation between the charge to income for income tax for the six-month periods ended June 30, 2017 and 2016 and the one that would result from applying the prevailing tax rate on net income before income tax arising from the consolidated statements of comprehensive income for each year is as follows:

 

     For the six-month periods
ended June 30,
 
     2017     2016  

Net income before income tax

     1,869       6,557  

Statutory tax rate

     35     35
  

 

 

   

 

 

 

Statutory tax rate applied to net income before income tax

     (654     (2,295

Effect of the valuation of property, plant and equipment and intangible assets measured in their functional currency

     (3,720     (11,869

Exchange differences

     3,230       8,912  

Effect of the valuation of inventories measured in their functional currency

     (315     (1,254

Income on investments in associates and joint ventures

     40       92  

Miscellaneous

     14       (41
  

 

 

   

 

 

 

Income tax expense

     (1,405     (6,455
  

 

 

   

 

 

 

The following deferred tax assets have not been recorded, as they do not meet the criteria for recording under IFRS:

 

    As of June 30, 2017, 359 corresponding to tax credits from subsidiaries’ accumulated tax losses, which expire in 2020.

 

    As of December 31, 2016, 1,138 corresponding to tax credits from subsidiaries’ accumulated tax losses, of which 1,090 have expiration dates from 2017 and 48 have indeterminate expiration dates.

Breakdown of deferred tax as of June 30, 2017 and December 31, 2016 is as follows:

 

     June 30,
2017
     December 31,
2016
 

Deferred tax assets

     

Provisions and other non-deductible liabilities

     3,474        3,607  

Tax losses carryforward and other tax credits

     4,054        3,837  

Miscellaneous

     102        82  
  

 

 

    

 

 

 

Total deferred tax assets

     7,630        7,526  
  

 

 

    

 

 

 

Deferred tax liabilities

     

Property, plant and equipment

     (45,801      (45,579

Miscellaneous

     (4,897      (3,848
  

 

 

    

 

 

 

Total deferred tax liabilities

     (50,698      (49,427
  

 

 

    

 

 

 

Total deferred tax, net

     (43,068      (41,901
  

 

 

    

 

 

 

 

23


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

16. INCOME TAX (Cont.)

 

As of June 30, 2017 and December 31, 2016, the Group has classified as deferred tax assets for 354 and 564, respectively, and as deferred tax liability 43,422 and 42,465, respectively, all of which arise from the net deferred tax balances of each of the separate companies included in these condensed interim consolidated financial statements.

As of June 30, 2017 and December 31, 2016, the causes that generate allocations to Other comprehensive income, did not create temporary differences for income tax.

17. LOANS

 

                             June 30, 2017      December 31, 2016  
     Interest rate (1)     Maturity      Noncurrent      Current      Noncurrent      Current  
Argentine pesos:                      

Negotiable obligations

     16.50   -      27.23     2017-2024        33,337        4,107        29,194        4,400  

Loans(3)

     20.00   -      28.86     2017-2020        1,590        3,785        2,416        1,459  

Account overdraft

     —       -      —         —          —          —          —          4,037 (5) 
            

 

 

    

 

 

    

 

 

    

 

 

 
               34,927        7,892        31,610        9,896  
            

 

 

    

 

 

    

 

 

    

 

 

 

Currencies other than the Argentine peso:

                     

Negotiable obligations(2)(4) (6)

     3.50   -      10.00     2017-2028        90,226        2,812        86,116        4,360  

Export pre-financing

     0.95   -      8.07     2017-2019        2,008        5,446        1,908        6,491  

Imports financing

     1.60   -      5.50     2017-2018        —          2,857        —          2,439  

Loans(6)

     1.00   -      8.62     2017-2025        10,877        3,513        7,934        3,591  
            

 

 

    

 

 

    

 

 

    

 

 

 
               103,111        14,628        95,958        16,881  
            

 

 

    

 

 

    

 

 

    

 

 

 
               138,038        22,520        127,568        26,777  
            

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Annual interest rate in force as of June 30, 2017.
(2) Disclosed net of 703 and 672 corresponding to YPF’s own negotiable obligations repurchased through open market transactions, as of June 30, 2017 and December 31, 2016, respectively.
(3) Includes loans granted by Banco Nación Argentina. As of June 30, 2017, it includes 4,053, 53 of which accrues interest at a BADLAR variable rate plus a spread of 4 percentage points, 2,000 of which accrues interest at a BADLAR variable rate plus a spread of 3.5 percentage points and 2,000 of which accrues interest at a fixed rate of 20 percentage points. As of December 31, 2016, it includes 2,105, 105 of which accrues interest at a variable BADLAR rate plus a margin of 4 percentage points and 2,000 of which accrues interest at a variable BADLAR rate plus a spread of 3.5 percentage points. See Note 32.
(4) Includes 1,563 and 3,253 as of June 30, 2017 and December 31, 2016, respectively, of nominal value of negotiable obligations that will be canceled in pesos at the applicable exchange rate in accordance with the terms of the series issued.
(5) Includes 1,440 corresponding to overdrafts granted by Banco Nación Argentina as of December 31, 2016. See Note 32.
(6) Includes 4,600 and 4,960 corresponding to financial loans and negotiable obligations secured by cash flows as of June 30, 2017 and December 31, 2016.

The breakdown of the Group’s loans as of the six-month periods ended on June 30, 2017 and 2016 is as follows:

 

     For the six-month periods
ended June 30,
 
     2017      2016  

Amount at beginning of the year

     154,345        105,751  

Proceeds from loans

     16,060        54,466  

Payments of loans

     (15,080      (33,954

Payments of interest

     (8,577      (6,893

Accrued interest(1)

     8,394        7,744  

Exchange differences and translation, net

     5,489        11,970  

Reclassifications and other movements

     (73      —    
  

 

 

    

 

 

 

Amount at the end of the period

     160,558        139,084  
  

 

 

    

 

 

 

 

(1) Includes capitalized financial costs. See Note 9.

On April 28, 2017, the General and Extraordinary Shareholders’ Meeting approved the extension of the effective term of the Global Medium Term Notes Program of the Company for a term of 5 years.

 

24


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

17. LOANS (Cont.)

 

Details regarding the Negotiable Obligations of the Group are as follows:

 

                                  Principal     June 30, 2017     December 31, 2016  

Month

  Year     Principal value    

Ref.

 

Class

 

Interest rate(3)

    Maturity     Noncurrent     Current     Noncurrent     Current  
YPF                                                            

-

    1998     US$ 15     (1) (6)   -     Fixed     10.00     2028       246       4       63       4  

November and December

    2012     $ 2,110     (2) (4) (6) (7)   Class XI   -       —         —         —         —         —         260  

December and March

    2012/3     $ 2,828     (2) (4) (6) (7)   Class XIII   BADLAR plus 4.75%     24.21     2018       1,414       1,435       1,414       1,439  

April

    2013     $ 2,250     (2) (4) (6) (7)   Class XVII   BADLAR plus 2.25%     21.86     2020       2,250       84       2,250       101  

April

    2013     US$ 89     (2) (5) (6)   Class XIX   -       —         —         —         —         —         1,413  

June

    2013     $ 1,265     (2) (4) (6)   Class XX   BADLAR plus 2.25%     21.70     2020       1,265       10       1,265       12  

July

    2013     US$ 92     (2) (5) (6)   Class XXII   Fixed     3.50     2020       603       205       576       197  

October

    2013     US$ 150     (2) (6)   Class XXIV   Libor plus 7.50%     8.54     2018       146       593       419       570  

December, February and December

    2013/5     US$ 862     (2)   Class XXVI   Fixed     8.88     2018       13,865       35       13,410       40  

April, February and October

    2014/5/6     US$ 1,522     (2) (4) (6)   Class XXVIII   Fixed     8.75     2024       25,237       534       24,111       509  

March

    2014     $ 500     (2) (6) (7)   Class XXIX   BADLAR     19.49     2020       350       156       500       8  

June

    2014     US$ 66     (2) (5) (6)   Class XXXIII   -       —         —         —         —         —         350  

September

    2014     $ 1,000     (2) (6) (7)   Class XXXIV   BADLAR plus 0.1%     20.86     2024       1,000       57       1,000       76  

September

    2014     $ 750     (2) (4) (6)   Class XXXV   BADLAR plus 3.5%     24.26     2019       750       49       750       64  

February

    2015     $ 950     (2) (6) (7)   Class XXXVI   BADLAR plus 4.74%     26.61     2020       950       98       950       126  

February

    2015     $ 250     (2) (6) (7)   Class XXXVII   -       —         —         —         —         —         260  

April

    2015     $ 935     (2) (4) (6)   Class XXXVIII   BADLAR plus 4.75%     25.23     2020       626       362       935       69  

April

    2015     US$ 1,500     (2) (6)   Class XXXIX   Fixed     8.50     2025       24,721       893       23,617       853  

July

    2015     $ 500     (2) (6)   Class XL   BADLAR plus 3.49%     23.22     2017       —         524       —         529  

September

    2015     $ 1,900     (2) (6) (7)   Class XLI   BADLAR     20.76     2020       1,900       107       1,900       145  

September and December

    2015     $ 1,697     (2) (4)   Class XLII   BADLAR plus 4%     24.76     2020       1,697       114       1,697       148  

October

    2015     $ 2,000     (2) (6) (7)   Class XLIII   BADLAR     20.27     2023       2,000       79       2,000       106  

December

    2015     $ 1,400     (2) (6)   Class XLIV   BADLAR plus 4.75%     24.23     2018       1,400       20       1,400       23  

March

    2016     $ 150     (2) (6)   Class XLV   BADLAR plus 4%     23.50     2017       —         153       —         153  

March

    2016     $ 1,350     (2) (4) (6)   Class XLVI   BADLAR plus 6%     27.23     2021       1,350       120       1,350       152  

March

    2016     US$ 1,000     (2)   Class XLVII   Fixed     8.50     2021       16,580       384       15,840       367  

April

    2016     US$ 46     (2) (5) (6)   Class XLVIII   Fixed     8.25     2020       760       13       726       12  

April

    2016     $ 535     (2) (6)   Class XLlX   BADLAR plus 6%     25.72     2020       535       24       535       33  

July

    2016     $ 11,248     (2) (8)   Class L   BADLAR plus 4%     23.08     2020       11,248       605       11,248       696  

September

    2016     CHF 300     (2)   Class Ll   Fixed     3.75     2019       5,185       148       4,673       45  

May

    2017     $ 4,602     (2) (8)   Clase LII   Fixed     16.50     2022       4,602       110       —         —    

Metrogas

                     

January

    2013     US$ 177       Series A-L   Fixed     8.88     2018       2,655       3       2,461       —    

January

    2013     US$ 18       Series A-U   Fixed     8.88     2018       228       —         220       —    
               

 

 

   

 

 

   

 

 

   

 

 

 
                  123,563       6,919       115,310       8,760  
               

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Corresponds to the 1997 M.T.N. Program for US$ 1,000 million.
(2) Corresponds to the 2008 M.T.N. Program for US$ 10,000 million.
(3) Interest rate as of June 30, 2017.
(4) The ANSES and/or the “Fondo Argentino de Hidrocarburos” have participated in the primary subscription of these negotiable obligations, which may at the discretion of the respective holders, be subsequently traded on the securities market where these negotiable obligations are authorized to be traded.
(5) The payment currency of these Negotiable Obligations is the Argentine Peso at the Exchange rate applicable under the terms of the series issued.
(6) As of the date of issuance of these financial statements, the Group has fully complied with the use of proceeds disclosed in the pricing supplements.
(7) Negotiable obligations classified as productive investments computable as such for the purposes of section 35.8.1, paragraph K of the General Regulations applicable to Insurance Activities issued by the Argentine Insurance Supervisory Bureau.
(8) The payment currency of this issue is the U.S. dollar at the exchange rate applicable in accordance with the conditions of the relevant issued series.

 

25


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

18. OTHER LIABILITIES

 

     June 30, 2017     December 31, 2016  
     Noncurrent      Current     Noncurrent      Current  

Extension of concessions

     345        454       336        508  

Maxus Entities’ agreements(1)

     —          —         —          2,932  

Liabilities for contractual claims(2)

     —          —         —          950  

Miscellaneous

     10        724 (3)      —          —    
  

 

 

    

 

 

   

 

 

    

 

 

 
     355        1,178       336        4,390  
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) See Note 15.
(2) See Note 14 to the annual consolidated financial statements.
(3) Includes dividends payable. See Note 26.

19. ACCOUNTS PAYABLE

 

     June 30, 2017      December 31, 2016  
     Noncurrent      Current      Noncurrent      Current  

Trade and related parties (1)

     59        37,054        2,145        40,667  

Guarantee deposits

     13        478        13        482  

Advances from clients

     1,508        132        —          —    

Miscellaneous

     14        449        29        446  
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,594        38,113        2,187        41,595  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) See Note 32 for information about related parties.

20. REVENUES

 

     For the six-month
periods ended June 30,
 
     2017      2016  

Sales (1)

     120,475        102,975  

Revenues from construction contracts

     826        335  

Turnover tax

     (4,136      (3,617
  

 

 

    

 

 

 
     117,165        99,693  
  

 

 

    

 

 

 

 

(1) Includes 5,325 and 9,568 for the six-month periods ended June 30, 2017 and 2016, respectively, associated with revenues related to the natural gas additional injection stimulus program created by Resolution No. 1/2013 of the Planning and Strategic Coordination Commission of the National Plan of Hydrocarbons Investment. See Note 32.

21. COSTS

 

     For the six-month periods
ended June 30,
 
     2017      2016  

Inventories at beginning of year

     21,820        19,258  

Purchases

     29,397        22,731  

Production costs(1)

     67,373        60,338  

Translation effect

     987        2,848  

Reclassifications and other movements

     (73      —    

Inventories at end of the period

     (24,031      (22,225
  

 

 

    

 

 

 
     95,473        82,950  
  

 

 

    

 

 

 

 

(1) See Note 22.

 

26


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

22. EXPENSES BY NATURE

The Group presents the statement of comprehensive income by classifying expenses according to their function as part of the “Costs”, “Administrative expenses”, “Selling expenses” and “Exploration expenses” lines. The following additional information is disclosed as required, on the nature of the expenses and their relation to the function within the Group for the six-month periods ended June 30, 2017 and 2016:

 

     For the six-month period ended June 30, 2017  
     Production
costs(3)
     Administrative
expenses
    Selling
expenses
     Exploration
expenses
     Total  

Salaries and social security taxes

     5,782        1,581       924        183        8,470  

Fees and compensation for services

     486        969 (2)      254        6        1,715  

Other personnel expenses

     1,598        165       98        29        1,890  

Taxes, charges and contributions(1)

     1,088        136       1,868        —          3,092  

Royalties, easements and canons

     8,181        —         14        15        8,210  

Insurance

     401        26       38        —          465  

Rental of real estate and equipment

     2,725        8       235        —          2,968  

Survey expenses

     —          —         —          142        142  

Depreciation of property, plant and equipment

     22,925        292       519        —          23,736  

Amortization of intangible assets

     313        57       13        —          383  

Industrial inputs, consumable materials and supplies

     2,574        10       50        7        2,641  

Operation services and other service contracts

     6,088        123       370        85        6,666  

Preservation, repair and maintenance

     8,769        161       223        40        9,193  

Unproductive exploratory drillings

     —          —         —          907        907  

Transportation, products and charges

     3,970        5       2,783        —          6,758  

Provision for doubtful trade receivables

     —          —         31        —          31  

Publicity and advertising expenses

     10        150       181        —          341  

Fuel, gas, energy and miscellaneous

     2,463        108       495        12        3,078  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
     67,373        3,791       8,096        1,426        80,686  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

(1) Includes approximately 708 corresponding to export withholdings.
(2) Includes 25 corresponding to fees and remunerations of the Directors and Statutory Auditors of YPF’s Board of Directors. On April 28, 2017, the General and Extraordinary Shareholders’ Meeting of YPF resolved to ratify the fees corresponding to fiscal year 2016 of 127 and to approve as fees on account for such fees and remunerations for the fiscal year 2017, the approximate sum of 48.
(3) The expense recognized in the condensed interim consolidated statement of comprehensive income corresponding to research and development activities amounted to 192.

 

     For the six-month period ended June 30, 2016  
     Production
costs(3)
     Administrative
expenses
    Selling
expenses
     Exploration
expenses
     Total  

Salaries and social security taxes

     4,780        1,274       725        123        6,902  

Fees and compensation for services

     414        736 (2)      194        12        1,356  

Other personnel expenses

     1,334        210       57        20        1,621  

Taxes, charges and contributions(1)

     907        160       1,651        —          2,718  

Royalties, easements and canons

     8,297        —         11        18        8,326  

Insurance

     471        22       38        —          531  

Rental of real estate and equipment

     2,440        12       230        1        2,683  

Survey expenses

     —          —         —          269        269  

Depreciation of property, plant and equipment

     21,015        289       455        —          21,759  

Amortization of intangible assets

     208        97       18        —          323  

Industrial inputs, consumable materials and supplies

     2,686        19       39        5        2,749  

Operation services and other service contracts

     4,581        178       431        68        5,258  

Preservation, repair and maintenance

     7,747        152       150        13        8,062  

Unproductive exploratory drillings

     —          —         —          656        656  

Transportation, products and charges

     3,215        6       2,212        —          5,433  

Provision for doubtful trade receivables

     —          —         68        —          68  

Publicity and advertising expenses

     —          74       105        —          179  

Fuel, gas, energy and miscellaneous

     2,243        90       360        7        2,700  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
     60,338        3,319       6,744        1,192        71,593  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

(1) Includes approximately 666 corresponding to export withholdings.
(2) Includes 102 corresponding to fees and remunerations of the Directors and Statutory Auditors of YPF’s Board of Directors. On April 29, 2016, the General and Extraordinary Shareholders’ Meetings of YPF resolved to ratify the fees corresponding to fiscal year 2015 for 140 and to approve as fees on account for such fees and remunerations for the fiscal year 2016 the approximate sum of 127.
(3) The expense recognized in the condensed interim consolidated statement of comprehensive income corresponding to research and development activities amounted to 151.

 

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Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

23. OTHER OPERATING RESULTS, NET

 

     For the six-month periods
ended June 30,
 
     2017      2016  

Lawsuits

     (526      (457

Construction incentive(1)

     150        228  

Income on deconsolidation of subsidiaries

     —          1,528  

Miscellaneous

     (26      149  
  

 

 

    

 

 

 
     (402      1,448  
  

 

 

    

 

 

 

 

(1) Corresponds to the incentive for Argentine manufacturers of capital goods received by A-Evangelista S.A. under the provisions of Executive Order No. 379/2001 of the Argentine Ministry of Economy.

24. FINANCIAL RESULTS, NET

 

     For the six-month periods
ended June 30,
 
     2017      2016  

Financial income

     

Interest income

     592        514  

Exchange differences

     4,021        10,595  
  

 

 

    

 

 

 

Total financial income

     4,613        11,109  
  

 

 

    

 

 

 

Financial loss

     

Interest loss

     (8,304      (8,225

Financial accretion

     (1,509      (1,504

Exchange differences

     (1,755      (2,441
  

 

 

    

 

 

 

Total financial costs

     (11,568      (12,170
  

 

 

    

 

 

 

Other financial results

     

Fair value gains on financial assets at fair value through profit or loss

     733        205  

Gains on derivative financial instruments

     —          214  
  

 

 

    

 

 

 

Total other financial results

     733        419  
  

 

 

    

 

 

 

Total financial results, net

     (6,222      (642
  

 

 

    

 

 

 

25. INVESTMENTS IN JOINT OPERATIONS

The assets and liabilities as of June 30, 2017 and December 31, 2016, and expenses for the six-month periods ended on June 30, 2017 and 2016 of JO and other agreements are as follows:

 

     June 30,
2017
     December 31,
2016
 

Noncurrent assets(1)

     61,005        63,145  

Current assets

     1,380        2,602  
  

 

 

    

 

 

 

Total assets

     62,385        65,747  
  

 

 

    

 

 

 

Noncurrent liabilities

     5,507        5,946  

Current liabilities

     4,714        6,293  
  

 

 

    

 

 

 

Total liabilities

     10,221        12,239  
  

 

 

    

 

 

 
     For the six-month periods ended June 30,  
     2017      2016  

Production Cost

     9,585        9,782  

Exploration expenses

     699        360  

 

(1) Does not include impairment of property, plant and equipment since such impairment is recorded by the participating partners of the JO.

 

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Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

26. SHAREHOLDERS’ EQUITY

The Company’s subscribed capital as of June 30, 2017, is 3,920 and is 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 June 30, 2017, there are 3,764 Class A outstanding shares. As 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 exploitation 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.

On April 28, 2017, the General and Extraordinary Shareholders’ Meeting was held, which approved YPF’s financial statements corresponding to the fiscal year ended December 31, 2016 and approved the following in relation to the distribution of profits: a) the complete elimination of the special reserve for initial adjustment for the implementation of IFRS pursuant to the provisions of Article 10, Chapter III, Title IV of the CNV Rules (T.O. 2013), the reserve for future dividends, the reserve for purchase of Company shares and the reserve for investments; b) to fully absorb the losses accumulated in Retained earnings of up to 28,231 against amounts corresponding to discontinued reserves for up to that amount; and c) to allocate the remaining amount of the discontinued reserves as follows: (i) the amount of 100 to establish a reserve to purchase Company shares, in order to make it possible for the Board of Directors to acquire Company shares when they consider it opportune, and to fulfill commitments under the bonus and incentive plans, both currently existing and those that may arise in the future, and (ii) the amount of 716 to a reserve for payment of dividends, authorizing the Board of Directors to determine when to distribute such dividends prior to the end of the fiscal year.

On June 8, 2017, the Company’s Board of Directors resolved to pay a dividend of 1.82 per share for an amount of 716, which was left without effect by the Company’s Board of Directors at its meeting held on July 9, 2017, in order to ensure strict compliance with certain contractual obligations assumed by the Company, all in accordance with applicable regulation and in safeguarding the general interests of the Company and its shareholders. Therefore, following the closing of this period, the Company has reinstated the Reserve for future dividends in the amount of 716, leaving without effect the liabilities for such dividend payment.

27. EARNINGS PER SHARE

The following table shows the net income and the number of shares that have been used for the calculation of the basic and diluted earnings per share:

 

     For the six-month periods
ended on June 30,
 
     2017      2016  

Net income

     237        253  

Average number of shares outstanding

     392,957,660        391,943,076  

Basic and diluted earnings per share

     0.60        0.65  

Basic and diluted earnings per share are calculated as shown in Note 2.b.13 to the annual consolidated financial statements.

 

29


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

28. DECONSOLIDATION OF MAXUS ENTITIES

•    Reorganization process under Chapter 11 of the US Bankruptcy Law of Maxus Entities

On March 28, 2017, in connection with the reorganization proceedings under Chapter 11 of the United States Bankruptcy Code filed by Maxus Energy Corporation, Tierra Solutions Inc., Maxus International Energy Company, Maxus (US) Exploration Company and Gateway Coal Company (collectively, the “Maxus Entities”), the Creditors’ Committee and the Maxus Entities submitted an alternative restructuring plan (the “Alternative Plan”) that does not incorporate the agreement (the “Agreement”) with YPF, jointly with its subsidiaries YPF Holdings Inc., CLH Holdings Inc., YPF International S.A. and YPF Services USA Corp (jointly, the “YPF Entities”), to settle any and all claims held by the Maxus Entities against the YPF Entities, including any alter ego claims, all of which claims the YPF Entities believe are without merit.

Under the Alternative Plan, a liquidating trust (the “Liquidating Trust”) may file alter ego claims or any other estate claims against the YPF Entities. The Liquidating Trust will be funded by Occidental Chemical Corporation, in its capacity as a creditor of the Maxus Entities.

As YPF does not approve of such Alternative Plan and the Alternative Plan does not contemplate the implementation of the Agreement originally submitted, this situation creates an event of default (Event of Default) under the loan granted within the framework of the Agreement with YPF and the YPF Entities (the “DIP Loan”), based on which, on April 10, 2017, YPF Holdings, Inc. sent a note to communicate this situation. Additionally, on April 17, 2017, YPF Holdings, Inc. communicated that the total amounts due under the DIP Loan terms amounted to approximately US$ 12.2 million.

On April 21, 2017, the Judge issued an order to authorize the repayment of amounts due under the terms of the DIP Loan through the approval of the financing offered by Occidental (“Post-petition DIP Facility”) within the framework of the Alternative Plan, which were subsequently received.

On May 22, 2017, the Bankruptcy Court for the District of Delaware issued an order confirming the Alternative Plan submitted by the Creditors’ Committee and Maxus Entities. The effective date of the Alternative Plan was July 14, 2017, provided that the conditions set forth in Section XII.B of the Alternative Plan were met. Finally, deadlines of August 14, 2017 for the filing of administrative claims and claims for damages and September 12, 2017 for the filing of professional claims were set. The above does not significantly affect the statement of comprehensive income for the six-month period ended June 30, 2017.

Considering the aforementioned events and that the agreements originally filed have not been approved by the Judge, the Company’s Management, in consultation with its legal advisors, has reassessed the amounts reported considering the existing uncertainties and classified them as provisions in accordance with the accounting policies explained in Note 2.b.7) to the annual consolidated financial statements.

 

30


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).

In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

29. CONTINGENT ASSETS AND LIABILITIES

Contingent liabilities and contingent assets are described in Note 28 to the annual consolidated financial statements.

29.a) Contingent assets

No new significant contingent assets have been identified for the six-month period ended June 30, 2017, nor have there been amendments to the assessments of contingencies pending as of December 31, 2016.

29.b) Contingent liabilities

Development for the six-month period ended on June 30, 2017 are described below:

29.b.1) Environmental claims

•    Asociación Superficiarios de la Patagonia (“ASSUPA”)

In connection with the judicial claims filed by ASSUPA against the companies operating concessions in the Noroeste Basin, on April 19, 2017, YPF was notified of the Court’s ruling to resume the proceedings. YPF has timely filed a legal defect exception. The court has not ruled thereon, but ordered the suspension of the terms to respond to the complaint. The deadlines will continue to be suspended until such time as a final resolution is issued regarding the legal defect exception filed by YPF.

29.b.2) Contentious claims

•    Petersen Energía Inversora, S.A.U. and Petersen Energía, S.A.U.

On June 15, 2017 a hearing was held for the parties to orally present their arguments. The decision of the Court of Appeals is currently pending.

As of the date of these condensed interim consolidated financial statements, there are no elements available to allow the Company to quantify the possible impact this claim might have on the Company.

•    Eton Park Capital Management, L.P., Eton Park Master Fund, LTD. and Eton Park Fund, L.P. (jointly, “Eton Park”)

On June 2, 2017, Eton Park, a former shareholder of YPF, filed a complaint against the Argentine Republic and YPF in the USA District Court for the Southern District of New York claiming alleged damages it suffered during the expropriation process of shares conducted by the Argentine Republic over Repsol’s majority interest in YPF in 2012. The complaint, which seeks unspecified damages, alleges that obligations in the bylaws and the initial public offering of YPF shares were violated, which imposed obligations relating to a tender offer for the shareholders.

As of the date of these condensed interim consolidated financial statements, there are no elements available to allow the Company to quantify the possible impact this claim might have on the Company.

The Company categorically rejects the claims made in the complaint, which it considers wholly without merit, and will exercise all necessary legal remedies and take all defensive measures in accordance with applicable legal procedure in order to defend its rights.

 

31


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

29. CONTINGENT ASSETS AND LIABILITIES (Cont.)

 

29.b.3) Claims under the scope of the National Antitrust Commission (“CNDC”)

•    Claims for the sale of diesel to public transportation companies

On March 14, 2017, YPF was notified of SC Resolution No. 137 which, based on the prior opinion given by the CNDC, ordered the case closed for failure to establish collusive behavior by the companies sued and abuse of dominant market position by YPF.

29.b.4) Tax claims

•    Dispute over the cost deduction for abandoning wells

On June 28, 2017, the Company was notified of a request for information from the Administración Federal de Ingresos Públicos (Federal Administration of Public Revenue) to initiate a verification process with respect to the deduction of well plugging costs from 2011 to 2016, inclusive.

•    Dispute over customs duties

On March 31, 2017, the Company resolved to pay the differences in export duties which had been objected to by several Customs authorities arising from future commitments to deliver crude oil, in accordance with the moratorium provided for by Law No. 27,260. This action made it possible to reduce interest and release the fines applied which were related to the substantial obligation. In that regard, the summaries and processes in which the application of a fine is in disputed when there were no export duties remain ongoing, in which case the fine provided for in Article 954 subsection c) would be applied, which figure amounts to 450 as of the date of these condensed interim consolidated financial statements.

30. CONTRACTUAL COMMITMENTS

Contractual commitments are described in Note 29 to the annual consolidated financial statements. Updates for the six-month period ended June 30, 2017 are described below:

30.a) Concession extension agreements

•    Salta

On April 3, 2017, YPF entered into with the Province of Salta an Amendment Agreement to the one signed on October 23, 2012. The signatories are the same in both Agreements. The Amendment Agreement sets forth that the obligations described in items (i), (ii) and (iv) mentioned in the annual consolidated financial statements have been complied with, and in respect of the obligations referenced in item (v), it sets forth that the same will be replaced by the drilling of 2 development wells for a minimum amount of US$ 26 million. In case the development wells yield satisfactory productive results for YPF and associated companies, and contingent on such results, the parties agreed to drill an additional development well. The parties have begun to fulfill this commitment and will finalize it within 365 calendar days of the effective date of such agreement. Likewise, YPF and signatory associated companies shall drill an exploration well for an amount of US$ 4 million within 365 calendar days of the effective date of the Amendment Agreement.

 

32


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

30. CONTRACTUAL COMMITMENTS (Cont.)

 

30.b) Investment project agreements

•    Agreement for the development of Loma La Lata Norte and Loma Campana areas

In relation to the Investment Agreement entered into between the Company and subsidiaries of Chevron Corporation for the joint exploitation of non-conventional hydrocarbons in the province of Neuquén, in the Loma Campana area, for the six-month period ended June 30, 2017, the Company and Compañía de Hidrocarburo No Convencional S.R.L. (“CHNC”) have carried out transactions which include the purchase of gas and crude oil by YPF for 2,415. These transactions were executed based on the market’s general and regulatory framework. The net balance to be paid to CHNC as of June 30, 2017 amounts to 451.

•    Agreement for interest assignment in Aguada de la Arena area

On February 23, 2017, YPF and Petrouruguay S.A. signed a definitive agreement for the transfer of a 20% participating interest in the Aguada de la Arena area located in the province of Neuquén, for a total of US$ 18 million. As a result, YPF increased its participating interest in the Aguada de la Arena area to 100%.

•    Agreement for the development of Bajada de Añelo area

On February 23, 2017, YPF and O&G Developments Ltd. S.A. (hereinafter “O&G”), an affiliate of Shell Compañía Argentina de Petróleo S.A., executed an agreement through which YPF and O&G agreed on the principal terms and conditions for the joint development of a shale oil and shale gas pilot in two phases, for a joint investment amount of US$ 305.8 million in the Bajada de Añelo area in the province of Neuquén, of which O&G will contribute 97.6% and YPF will contribute 2.4%. O&G will be the operator of the area. The agreement provides for a period of exclusivity for the negotiation and execution of definitive agreements. Once definitive agreements have been signed and certain conditions precedent have been fulfilled, the execution of the project will begin, through which O&G will acquire a 50% interest in the exploitation concession that covers an area of 204 km2.

On May 12, 2017, YPF and O&G executed an Assignment Agreement for 50% of the concession. The Assignment Agreement provides for the joint development of a two-stage work program (the “Work Program”) in connection with the aforementioned joint investment. During the first phase of the Work Program, which will have a maximum duration of 30 months, O&G will contribute a total of US$ 222.6 million, and YPF will contribute US$ 7.4 million. The remaining US$ 75.8 million will be contributed by O&G during the second phase of the Work Program. O&G’s interest will be assigned as a guarantee in favor of YPF until O&G has fully complied with all of its obligations under the Assignment Agreement.

Once the conditions precedent for the effectiveness of the Assignment Agreement have been fulfilled, which must occur prior to August 16, 2017, the Work Program will commence and certain ancillary agreements will be executed. The conditions precedent relate principally to the authorization by the Executive Power of the Province of Neuquén of the proposed interest assignments pursuant to the Assignment Agreement.

Once the first phase of the Work Program has been completed, O&G will have the option to leave such Work Program by returning its concession interest and paying for liabilities accrued up until its exit date.

Once the commitments undertaken by the Parties have been completely fulfilled, each Party will contribute 50% of the budget for the development of the area as provided in the Joint Operation Agreement (which will be executed when the conditions precedent are fulfilled).

•    Bandurria Sur Area Development Agreement

On April 12, 2017, YPF executed an agreement (hereinafter the “Agreement”) with Schlumberger Oilfield Eastern Ltd. (hereinafter “SPM”), an affiliate of Schlumberger Argentina S.A., through which YPF and SPM agreed on the main terms and conditions for the joint development of a shale oil pilot project in two phases, with a total investment of US$ 390 million in the Bandurria Sur area (hereinafter the “Area”), located in the Province of Neuquén, 100% of which will be contributed by SPM. YPF will continue as the Area operator. Once definitive agreements have been signed and conditions precedent have been fulfilled, SPM will acquire a 49% interest in the non-conventional exploitation concession of the Area, and YPF will keep the remaining 51%.

 

33


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

30. CONTRACTUAL COMMITMENTS (Cont.)

 

•    Agreement for the assignment of interest in the Llancanelo block

On April 18, 2017, YPF executed an agreement (hereinafter the “Agreement”) with Patagonia Oil Corp. (“Patagonia”), an affiliate of PentaNova Energy Corp., through which Patagonia will acquire YPF’s 11% interest in the block known as the Llancanelo block, located in the Province of Mendoza, for a total price of US$ 40 million (hereinafter the “Price”), and YPF will keep a 50% stake in such block. Additionally, both companies agreed on the main terms and conditions for the development of a pilot project of heavy crude oil in the same block with a total investment of US$ 54 million over the next 36 months (hereinafter the “Project”), where YPF will be the operator and Patagonia will contribute its expertise in heavy crude oil. The project investment corresponding to YPF’s interest will be paid by Patagonia by way of partial payment of the Price. The agreement provides for an exclusivity period, which was extended to October 18, 2017, to negotiate and execute definitive agreements. Once definitive agreements have been signed and certain conditions precedent have been fulfilled, including the relevant approval from the Province of Mendoza, the execution of the Project will begin.

•    Exploration agreement with Yacimientos Petrolíferos Fiscales Bolivianos (“YPFB”)

On July 26, 2017, the agreement with YPFB which was originally executed on January 2017 was notarized in order to begin exploration in Charagua, Bolivia, in a block with estimated potential natural gas resources of 2.7 TCF (trillion cubic feet). In addition, a plan for exploration and exploitation activities in Bolivian territory was filed for the purpose of recording 3D seismic data in the Charagua block in September 2017.

If the expected commercial discovery is achieved, YPFB and YPF E&P (an indirect subsidiary of YPF) would create a sociedad de economía mixta (partially government-owned company), with YPFB holding a 51% interest and YPF E&P holding a 49% interest.

31. MAIN REGULATIONS AND OTHERS

Main regulations and others are described in Note 30 to the annual consolidated financial statements. Updates for the six-month period ended June 30, 2017 are described below:

31.a) Incentive programs for the production of natural gas

•    Incentive program for investment in development of natural gas production from non-conventional reservoirs

On March 6, 2017, MINEM Resolution No. 46-E/2017 was published in the Official Gazette, which created the “Investment in Natural Gas Production from Non-Conventional Reservoirs Stimulus Program” (hereinafter the “Program”), established in order to stimulate investments in natural gas from non-conventional reservoirs in the Neuquina Basin, and in effect as of its publication until December 31, 2021.

The Resolution establishes compensation for the volume of non-conventional gas production from concessions located in the Neuquina Basin included in the Program, for which such concessions must first have a specific investment plan approved by the province’s application authority and the Secretariat of Hydrocarbon Resources.

The compensation will be determined by deducting from the effective sales price obtained from sales to the internal market, including conventional and non-conventional natural gas, the minimum sales prices established by the Resolution each year, multiplied by the volumes of production of non-conventional natural gas. The minimum prices established by the Resolution are US$ 7.50/MMBtu for 2018, US$ 7.00/MMBtu for 2019, US$ 6.50/MMBtu for 2020 and US$ 6.00/MMBtu for 2021.

The compensation from the Program will be distributed, for each concession included in the Program, as follows: 88% to the companies and 12% to the province corresponding to each concession included in the Program.

 

34


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

31. MAIN REGULATIONS AND OTHERS (Cont.)

 

31.b) Regulatory requirements applicable to the natural gas industry

•     Tariff renegotiation

 

i. Transitional Agreement 2017

On March 30, 2017, the MINEM instructed the ENARGAS, by Resolution No. 74 – E/2017, to make effective the tariff schemes resulting from the Comprehensive Tariff Review (“CTR”) pursuant to Article 1 of MINEM Resolution No. 31 dated March 29, 2016 and carried out as per the provisions in the Memorandum of Agreement for the Comprehensive Contractual Renegotiation entered into with the Licensees within the provisions of Law No. 25,561, as amended and supplemented.

In this respect, for the purpose of the gradual and progressive implementation of such measure, it established that the ENARGAS had to apply the tariff increases resulting from the Comprehensive Tariff Review in stages according to the following progression: thirty percent (30%) of the increase, as from April 1, 2017; forty percent (40%) of the increase, as from December 1, 2017; and the remaining thirty percent (30%), as from April 1, 2018.

Moreover, and for cases in which the corresponding Memorandum of Agreement for the Comprehensive Contractual Renegotiation had not become effective, it instructed the ENARGAS to apply to the Licensees (among them, Metrogas) a transitional tariff adjustment on account of the CTR.

On March 30, 2017, Metrogas signed a Transitional Agreement (“Transitional Agreement 2017”) with MINEM and the Ministry of Economy which provides for the temporary adjustment of prices and tariffs for the Natural Gas Distribution Public Service, the specific allocation of the amounts as set forth therein until the Memorandum of Agreement for the Comprehensive Contractual Renegotiation is executed and the application of the final tariff schemes which result from the CTR becomes effective.

The Transitional Agreement 2017, which is not subject to ratification by the National Executive Power, sets forth a temporary tariff scheme as of April 1, 2017 consisting of the readjustment of tariffs pursuant to the guidelines required to maintain the continuity of service in order to allow the Licensee to manage its operation, maintenance, management and commercialization expenses, the disbursements corresponding to the execution of the mandatory investment plan determined by ENARGAS and to comply with the respective payment obligations, keeping its payment procedure for the purpose of ensuring the continued normal provision of the public service it is responsible for until the effective date of the tariff scheme that derives from the Memorandum of Agreement for the Comprehensive Contractual Renegotiation.

Additionally, the Transitional Agreement 2017 provides for the transfer of the impact of changes in tax regulations awaiting resolution, except for income tax, and incorporates a Mandatory Investment Plan to which Metrogas is committed.

Finally, Metrogas may not distribute dividends unless it has previously provided evidence to the ENARGAS of its full compliance with the Mandatory Investment Plan.

Under the terms of the Transitional Agreement 2017, on March 31, 2017, ENARGAS Resolution No. 4,356/2017 was published in the Official Gazette, approving the tariff schemes resulting from the CTR of Metrogas and temporary tariff schemes applicable to Metrogas users effective April 1, 2017.

In addition, ENARGAS Resolution No. 4,356/2017 approved (i) the technical and economic studies of the Company’s CTR, (ii) the non-automatic Semi-Annual Adjustment Methodology and (iii) the Investment Plan of Metrogas for the next five years.

ii. Memorandum of Agreement for the Natural Gas Distribution License Contract (also known as “Memorandum of Agreement for the Comprehensive Contractual Renegotiation”)

On March 30, 2017, Metrogas signed a Memorandum of Agreement for the Natural Gas Distribution License Contract (the “Memorandum of Agreement”) with the MINEM and the Ministry of Economy, which sets forth the terms for the comprehensive renegotiation and the adjustment conditions of the License Contract. The Memorandum of Agreement is within the framework of the renegotiation process of public service contracts established by the Emergency Law, their extensions and Decrees No. 367/2016 and 2/2017, and based on the Transitional Agreement 2008, Transitional Agreement 2014, Transitional Agreement 2016 and Transitional Agreement 2017.

 

35


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

31. MAIN REGULATIONS AND OTHER (Cont.)

 

The provisions contained in the Memorandum of Agreement, which shall become effective following its ratification by the National Executive Power, will cover the contractual period starting on January 6, 2002 until the termination of the License Contract.

The terms provided therein set forth certain guidelines that should be contemplated in the CTR process.

Metrogas’ Tariff Scheme resulting from the CTR in accordance with such guidelines will be applicable upon compliance with all the procedures set forth for the effectiveness of the Memorandum of Agreement. The effective date of the Comprehensive Tariff Review will be no later than December 31, 2017. In the event that the ENARGAS orders the gradual and phased application of the tariff increase resulting from the Comprehensive Tariff Review, the last phase will be applied no later than April 1, 2018.

As a condition precedent to ratification, the Memorandum of Agreement provides for the suspension and withdrawal of all claims, appeals and lawsuits filed, pending or in the process of execution, whether in administrative, arbitration and judicial venues, in the Argentine Republic or abroad, which are based on or related to the facts or measures taken, regarding the License Contract, as from the Emergency Law and/or the annulment of the PPI (Producer Price Index of the United States of America). In addition, the Memorandum of Agreement must be ratified by Metrogas Shareholders’ Meeting, in order for the National Executive Power to issue a Decree ratifying the terms of the Memorandum of Agreement. On April 27, 2017, the Metrogas Shareholders’ Meeting ratified the Memorandum of Agreement for the Natural Gas Distribution Contract License.

Finally, the Memorandum of Agreement provides that the Company is obliged to make, during the extension term of the License, plus its eventual ten-year extension and within its license area, additional sustainable investments equivalent to the amount of the award issued in the “BG Group Plc. vs. The Argentine Republic (UNC 54 KGA)” arbitration, with the proportional reduction in the said amount as may be specified in the payment agreement and excluding the amounts corresponding to interest for any delay in the payment of the award. The amount and the plan for additional investments will be determined by the ENARGAS at the Company’s proposal and will not be incorporated into the tariff base.

As of the date of these condensed interim consolidated financial statements, the Memorandum of Agreement is subject to the controls established under the Emergency Law for the National Executive Power to issue the ratifying Decree.

iii. Supplementary Agreement with Natural Gas Producers

By means of Resolution No. 74 – E/2017, MINEM determined the new prices at the Entry Point to the Transportation System for natural gas which shall be applicable as of April 1, 2017 to the user categories therein indicated. Likewise, it determined the new discounted prices at the Entry Point to the Transportation System for residential users of natural gas that show savings in consumption equal to or higher than fifteen percent (15%) as compared to the same period of year 2015. These new prices at the Entry Point to the Transportation System have been contemplated in ENARGAS Resolution No. 4,356/2017.

•    Note from ENARGAS referred to the interest of YPF in Metrogas

On March 30, 2017, YPF filed a motion for reconsideration and requested to render the ENARGAS note null and void and the issuance of a new decision that sets a reasonable and consistent term for compliance with the provisions of Article 34 of Law No. 24,076 consistent with the current reality of the gas market.

In June 2017, YPF submitted to the ENARGAS a tentative timeline for the divestment of its interest in Metrogas, but as of the date of these condensed interim consolidated financial statements, such timeline has not been confirmed. This submission does not imply a waiver of the aforementioned motion for reconsideration.

 

36


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

31. MAIN REGULATIONS AND OTHER (Cont.)

 

•    Natural gas demand allotment mechanisms

On June 1, 2016, the MINEM published Resolution No. 89, which:

 

a) Requires ENARGAS to develop a procedure to amend and supplement ENARGAS Resolutions No. 716/1998 and 1410/2010 and establish daily operating conditions of the Transportation and Distribution Systems.

 

b) Establishes the volumes that distributors may request in order to satisfy priority demand and, if there has been a contract with a producer to fulfill such request, reduces the contracted volume requirement in accordance with the framework provided by Resolution No. 1,410/2010.

Pursuant to this resolution, on June 5, 2016 ENARGAS Resolution No. I/3833 was issued, which establishes the “Supplementary Procedure for Gas Requests, Confirmations and Control” (Procedimiento Complementario para Solicitudes, Confirmaciones y Control de Gas).

•    ENARGAS Resolution No. 4502/17

On June 6, 2017, ENARGAS Resolution No. 4502/17 was issued. The resolution approved the procedure for the administration of the office in the Emergency Executive Committee (“CEE”), which modifies the procedure for requesting deliveries and confirmations of gas that was approved by ENARGAS Resolution No. 3833/16 and provides measures and criteria to be adopted in the event of a supply crisis of the Natural Gas Priority Demand declared by carriers, distributors or ENARGAS.

Among these measures, it is stipulated that the CEE or (if the CEE fails to reach an agreement) the ENARGAS will define how the Priority Demand will be supplied, taking into account the quantities of natural gas available in each basin for each producer and deducting the quantities that are contracted to supply the Priority Demand.

•    Resolution SH 56-E/2017

On April 5, 2017, the Secretariat of Hydrocarbon Resources published Resolution No. 56-E/2017 in the Official Gazette, establishing new maximum benchmark prices for the different segments of the butane commercialization chain to be bottled in 10, 12 and 15 kg bottles under the Household Program (Decree No. 470/2015 and former Energy Secretariat Resolution No. 49/2015), and modifying the benchmark prices established in former Energy Secretariat Resolution No. 70/2015. The new maximum benchmark prices for the Company are Ps. 2,568 per TN for butane and Ps. 2,410 per TN for propane. For fractionators such as YPF GAS S.A., the prices established by Resolution No. 56-E/2017 are Ps. 63.89 for 10 kg bottles, Ps. 76.67 for 12 kg bottles and Ps. 95.84 for 15 kg bottles.

•    Resolution SH 75-E/2017

On June 7, 2017, the Secretariat of Hydrocarbon Resources published Resolution No. 75/2017 in the Official Gazette, which modifies the regulations applicable to the Household Program (former Energy Secretariat Resolution No. 49/2015) and provides that the adjustment of benchmark prices applicable to the different segments of the butane commercialization chain to be bottled in 10 and 12 kg bottles will not be implemented automatically in quarterly periods. Instead, those adjustments will be made at the discretion of the Secretariat of Hydrocarbon Resources in its capacity as enforcement authority of the Household Program. In addition, the resolution establishes that the adjustment of benchmark prices for LPG producers and fractionators on account of the Comprehensive Tariff Review established by the Household Program in its regulations will take place only after the prior analysis of cost variations and their incidence, and taking into account regional, distribution and logistical factors.

 

37


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

31. MAIN REGULATIONS AND OTHER (Cont.)

 

•     CNV Regulatory Framework

a) CNV General Resolution No. 622

 

  I. Pursuant to section 1, Chapter III, Title IV of such Resolution, a description of the notes to the condensed interim consolidated financial statements containing information required under the Resolution in the form of exhibits follows.

 

Exhibit A – Fixed Assets    Note 9 Property, plant and equipment
Exhibit B – Intangible assets    Note 8 Intangible assets
Exhibit C – Investments in companies    Note 10 Investments in associates and joint ventures
Exhibit D – Other investments    Note 7 Financial instruments by category
Exhibit E – Provisions   

Note 13 Trade receivables

 

Note 12 Other receivables

 

Note 10 Investments in associates and joint ventures

 

Note 9 Property, plant and equipment

 

Note 15 Provisions

Exhibit F – Cost of goods sold and services rendered    Note 21 Costs
Exhibit G – Assets and liabilities in foreign currency    Note 34 Assets and liabilities in currencies other than the Argentine peso

 

  II. On March 18, 2015, the Company was registered with the CNV under the category “Settlement and Clearing Agent and Trading Agent – Own account”, record No. 549. Considering the Company’s business, and the CNV Rules and its Interpretative Criterion No. 55, the Company shall not, under any circumstance, offer brokerage services to third parties for transactions in markets under the jurisdiction of the CNV, and it shall also not open operating accounts to third parties to issue orders and trade in markets under the jurisdiction of the CNV.

Besides, in accordance with the provisions of Section VI, Chapter II, Title VII of the CNV Rules and its Interpretative Criterion No. 55, the Company’s equity exceeds the minimum required equity under such rules, which is 15, while the minimum required counterparty capital, which is 3, is comprised of 8,522,815 Class B Units of Compass Ahorro Mutual Fund with 24-hour settlement upon redemption, the total value of the Company’s Units as of June 30, 2017, amounts to 20.

b) CNV General Resolution No. 629

Due to General Resolution No. 629 of the CNV, the Company informs that supporting documentation of YPF’s operations, which is not in YPF’s headquarters, is stored in the following companies:

 

    Adea S.A. located in Barn 3 – Route 36, Km. 31.5 – Florencio Varela – Province of Buenos Aires.

 

    File S.R.L., located in Panamericana and R.S. Peña – Blanco Encalada – Luján de Cuyo – Province of Mendoza.

Additionally, it is placed on record that the detail of the documentation given in custody is available at the registered office, as well as the documents mentioned in section 5, subsection a.3), Section I, Chapter V, Title II of the CNV Rules.

32. BALANCES AND TRANSACTIONS WITH RELATED PARTIES

The information detailed in the tables below shows the balances with associates and joint ventures as of June 30, 2017 and December 31, 2016 and transactions with the mentioned parties for the six-month periods ended June 30, 2017 and 2016.

 

38


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

32. BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)

 

     June 30, 2017      December 31, 2016  
     Other
receivables
     Trade
receivables
     Accounts
payable
     Other
receivables
     Trade
receivables
     Accounts
payable
 
     Current      Current      Current      Current      Current      Current  

Joint ventures:

                 

Profertil

     100        153        91        97        162        99  

MEGA

     —          792        67        —          797        80  

Refinor

     —          242        62        —          296        39  

Bizoy S.A.

     5        —          —          9        —          —    

Y-GEN I

     22        —          —          —          2        —    

Y-GEN II

     8        —          —          —          —          —    

Petrofaro S.A.

     —          29        67        —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     135        1,216        287        106        1,257        218  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Associates:

                 

CDS

     —          98        —          —          108        —    

YPF Gas

     495        218        37        35        375        35  

Oldelval

     —          —          112        —          —          81  

Termap

     —          —          45        —          —          44  

OTA

     —          —          4        —          —          5  

OTC

     20        —          —          2        —          —    

Gasoducto del Pacífico (Argentina) S.A.

     4        —          16        4        —          31  

Oiltanking Ebytem S.A.

     —          —          56        —          —          50  

Emp. Perforaciones de Argentina S.A.

     2        —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     521        316        270        41        483        246  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     656        1,532        557        147        1,740        464  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     For the six-month periods ended June 30,  
     2017      2016  
     Revenues      Purchases and
services
     Net interest
gain (loss)
     Revenues      Purchases and
services
     Net interest
gain (loss)
 

Joint ventures:

                 

Profertil

     438        212        —          480        199        —    

MEGA

     1,984        160        —          1,096        182        —    

Refinor

     394        166        10        566        71        —    

Petrofaro S.A.

     29        28        —          —          —          —    

Y-GEN I

     17        —          —          —          —          —    

Y-GEN II

     18        —          —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     2,880        566        10        2,142        452        —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Associates:

                 

CDS

     40        —          —          413        —          —    

YPF Gas

     398        23        18        332        19        —    

Oldelval

     —          241        —          —          187        —    

Termap

     —          172        —          —          157        —    

OTA

     —          11        —          —          10        —    

Gasoducto del Pacífico (Argentina) S.A.

     —          94        —          —          79        —    

Oiltanking Ebytem S.A.

     —          181        —          —          181        —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     438        722        18        745        633        —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     3,318        1,288        28        2,887        1,085        —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

39


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

32. BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)

 

Additionally, in the normal course of business, and taking into consideration that YPF is the main oil and gas company in Argentina, the Group’s client/suppliers portfolio encompasses both private sector entities as well as national public sector entities. As required by IAS 24 “Related party disclosures”, among the major transactions above mentioned the most important are:

 

           Balances     Transactions  
           Credits / (Liabilities)     Income / (Costs)  
                 For the six-month periods
ended June 30,
 

Customers / Suppliers

   Ref.     June 30,
2017
    December 31,
2016
    2017     2016  

CAMMESA

     (1     3,023       3,782       9,549       10,570  

CAMMESA

     (2     (244     (170     (909     (979

ENARSA

     (3     616       727       1,485       1,188  

ENARSA

     (4     (1,349     (1,357     (88     (871

Aerolíneas Argentinas S.A. and Austral Líneas Aéreas Cielos del Sur S.A.

     (5     540       364       1,878       1,273  

Aerolíneas Argentinas S.A. and Austral Líneas Aéreas Cielos del Sur S.A.

     (6     —         (2     (16     —    

MINEM

     (7     9,100       10,881       5,325       9,568  

MINEM

     (8     208       129       74       35  

MINEM

     (9     153       142       59       62  

MINEM

     (10     —         759       —         —    

Ministry of Transport

     (11     598       1,152       2,443       2,568  

Secretariat of Industry

     (12     19       378       150       228  

 

(1) The provision of fuel oil and natural gas, and electric power generation.
(2) Purchases of energy.
(3) Rendering of regasification service in the regasification projects of liquefied natural gas in Escobar and Bahía Blanca.
(4) The purchase of natural gas and crude oil.
(5) The provision of jet fuel.
(6) The purchase of miles for the YPF Serviclub program.
(7) The benefits of the incentive scheme for the Additional Injection of natural gas.
(8) Benefits for the propane gas supply agreement for undiluted propane gas distribution networks.
(9) Benefits for the bottle-to-bottle program.
(10) Temporary economic assistance for Metrogas
(11) The compensation for providing gas oil to public transport of passengers at a differential price.
(12) Incentive for domestic manufacturing of capital goods, for the benefit of AESA.

Additionally, the Group has entered into certain financing and insurance transactions with entities related to the national public sector. Such transactions consist of certain financial transactions that are described in Note 17, and transactions with Nación Seguros S.A. related to certain insurance policies contracts, and in connection therewith, to the reimbursement from the insurance coverage for the incident mentioned in Note 28.a) to the annual consolidated financial statements.

In addition, the Group holds BONAR 2020 (see Note 30.h) to the annual consolidated financial statements) and 2021 (see Note 4 to the annual consolidated financial statements), classified as “Investments in financial assets”.

Furthermore, in relation to the investment agreement signed between YPF and Chevron subsidiaries, YPF has an indirect non-controlling interest in CHNC with which YPF carries out transactions in connection with the above mentioned investment agreement. See Note 30.b).

 

40


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

32. BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)

 

The table below discloses the compensation for the Company’s key management personnel, including members of the Board of Directors and vice presidents (managers with executive functions appointed by the Board of Directors), for the six-month periods ended June 30, 2017 and 2016:

 

     For the six-month periods
ended June 30,
 
     2017(1)      2016(1)  

Short-term employee benefits (2)

     108        83  

Share-based benefits

     21        9  

Post-retirement benefits

     5        4  

Termination benefits

     12        61  
  

 

 

    

 

 

 
     146        157  
  

 

 

    

 

 

 

 

(1) Includes the compensation for YPF’s key management personnel which developed their functions during the mentioned periods.
(2) Does not include Social Security contributions of 20 and 21 for the six-month periods ended June 30, 2017 and 2016.

33. EMPLOYEE BENEFIT PLANS AND SIMILAR OBLIGATIONS

Note 2.b.10 to the annual consolidated financial statements describes the main characteristics and accounting treatment for benefit plans implemented by the Group.

 

i. Retirement plan

The total charges recognized under the Retirement Plan amounted to approximately 41 and 42 for the six-month periods ended June 30, 2017 and 2016, respectively.

 

ii. Performance Bonus Programs and Performance evaluation

The amount charged to expense related to the Performance Bonus Programs was 865 and 604 for the six-month periods ended June 30, 2017 and 2016, respectively.

 

iii. Share-based benefit plan

The amount charged to expense in relation with the share-based plans, which are disclosed according to their nature, amounted to 70 and 57 for the six-month periods ended June 30, 2017 and 2016, respectively.

 

41


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).

In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

34. ASSETS AND LIABILITIES IN CURRENCIES OTHER THAN THE ARGENTINE PESO

 

     June 30, 2017      December 31, 2016  
     Amount in
currencies other
than the
Argentine peso
    Exchange
rate in
force(1)
     Total      Amount in
currencies other
than the
Argentine peso
    Exchange rate
in force(1)
     Total  

Noncurrent assets

               

Other receivables

               

U.S. Dollar

     52       16.53        860        169       15.79        2,669  

Real

     —         —          —          10       4.84        48  

Trade receivables

               

U.S. Dollar

     5       16.53        83        —         —          —    

Investments in financial assets

U.S. Dollar

     468       16.53        7,736        490       15.79        7,737  
       

 

 

         

 

 

 

Total noncurrent assets

          8,679             10,454  
       

 

 

         

 

 

 

Current assets

               

Trade receivables

               

U.S. Dollar

     306       16.53        5,058        397       15.79        6,269  

Chilean peso

     8,636       0.03        259        10,542       0.02        211  

Real

     —         —          —          23       4.84        111  

Other receivables

               

U.S. Dollar

     181       16.53        2,992        349       15.79        5,511  

Euro

     9       18.85        170        15       16.63        249  

Real

     —         —          —          4       4.84        19  

Chilean peso

     1,993       0.03        60        —         —          —    

Swiss franc

     1       17.22        17        —         —          —    

Investments in financial assets

U.S. Dollar

     482       16.53        7,966        478       15.79        7,548  

Cash and cash equivalents

               

U.S. Dollar

     323       16.53        5,339        414       15.79        6,537  

Chilean peso

     347       0.03        10        240       0.02        5  

Real

     —         —          —          2       4.84        10  

Swiss franc

     —         —          —          —   (2)      15.52        6  
       

 

 

         

 

 

 

Total current assets

          21,871             26,476  
       

 

 

         

 

 

 

Total assets

          30,550             36,930  
       

 

 

         

 

 

 

Noncurrent liabilities

               

Provisions

               

U.S. Dollar

     3,004       16.63        49,957        2,675       15.89        42,506  

Loans

               

U.S. Dollar

     5,889       16.63        97,926        5,741       15.89        91,222  

Real

     —         —          —          13       4.88        63  

Swiss franc

     300       17.28        5,185        300       15.57        4,673  

Other liabilities

               

U.S. Dollar

     21       16.63        345        21       15.89        334  

Accounts payable

               

U.S. Dollar

     3       16.63        50        133       15.89        2,113  
       

 

 

         

 

 

 

Total noncurrent liabilities

          153,463             140,911  
       

 

 

         

 

 

 

Current liabilities

               

Provisions

               

U.S. Dollar

     48       16.63        798        45       15.89        715  

Taxes payable

               

Real

     —         —          —          5       4.88        24  

Chilean peso

     1,094       0.03        33        1,055       0.02        21  

Loans

               

U.S. Dollar

     870       16.63        14,480        1,054       15.89        16,754  

Real

     —         —          —          17       4.88        82  

Swiss franc

     9       17.28        148        3       15.57        45  

Salaries and social security

               

U.S. Dollar

     7       16.63        116        6       15.89        96  

Real

     —         —          —          2       4.88        10  

Chilean peso

     279       0.03        8        501       0.02        10  

Other liabilities

               

U.S. Dollar

     27       16.63        449        275       15.89        4,371  

Accounts payable

               

U.S. Dollar

     872       16.63        14,501        1,197       15.89        19,020  

Euro

     18       19.00        342        15       16.77        252  

Chilean peso

     3,756       0.03        113        4,915       0.02        98  

Real

     —         —          —          9       4.88        44  

Swiss franc

     —   (2)      17.28        1        —   (2)      15.57        3  

Yen

     23       0.15        3        —         —          —    
       

 

 

         

 

 

 

Total current liabilities

          30,992             41,545  
       

 

 

         

 

 

 

Total liabilities

          184,455             182,456  
       

 

 

         

 

 

 

 

(1) Exchange rate in force at June 30, 2017 and December 31, 2016 according to Banco Nación Argentina.
(2) Registered value less than 1.

 

42


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”).

In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

35. SUBSEQUENT EVENTS

 

  Hydrocarbon Investment Agreement among YPF, Pan American Energy LLC (Argentina branch) (“PAE”), Total Austral S.A. (Argentina branch) (“TOTAL”), Wintershall Energía S.A. (“WIAR”) and the Province of Neuquén, and Definitive Reorganization and Investment Agreement among YPF, PAE, TOTAL and WIAR

On July 17, 2017, through Decree No. 1178/17 issued by the Provincial Executive Power, the Agreements executed on July 13, 2017 among YPF, PAE, TOTAL, WIAR and the Province of Neuquén came into effect, which provided for the following:

 

(i) The division of the Aguada Pichana area into two new areas, namely “Aguada Pichana Este” (“APE”) and “Aguada Pichana Oeste” (“APO”); with areas of 761 km2 (629 km2 net perforations) and 605 km2 (443 km2 net perforations), respectively, and the granting of two Non-Conventional Hydrocarbon Exploitation Concessions for the areas, committing the Parties to implement a pilot program of 20 wells for an amount of approximately US$ 300 million in APE and 11 wells for an amount of approximately US$ 150 million in APO; and

 

(ii) The granting of a Non-Conventional Hydrocarbon Exploitation Concession in the Aguada de Castro (“ACA”) area, which has an area of 163 km2; committing the Parties to implement a pilot program of 3 wells for an amount of approximately US$ 50 million.

Based on the technical-economic results of the pilot programs and the granting of the benefits of the Stimulus Program provided in MINEM Resolution No. 46-E/2017, the total estimated amount of the investments to be made under the Agreements, including the investment commitments in the pilot programs discussed above, would reach US$ 1,150 million during the next 5 years, with a total of 48 wells in APE, 18 wells in APO and 6 wells in ACA.

APE will be operated by TOTAL, and APO and ACA will be operated by PAE. YPF’s current interest is 27.27% in the Aguada Pichana area and 50% in the Aguada de Castro area.

Under the Agreements, YPF’s current interests will be modified as follows:

 

(i) In the APE area, YPF will hold a 22.50% interest, which implies relative to its current participation the sale of a 4.77% stake.

 

(ii) In the APO area, YPF will hold a 30% interest, which implies relative to its current participation the purchase of a 2.73% stake.

 

(iii) In the ACA area, YPF will hold a 30% interest, which implies relative to its current participation the sale of a 20% stake in ACA.

Notwithstanding the changes in the aforementioned interests, all existing assets, including the production of existing wells and any future development that is not associated with the Vaca Muerta formation, will not be modified in terms of the Parties’ interests.

The execution of the Agreements involves an exchange of interests in the areas, whereby YPF is expected to receive US$ 52.3 million through investment contributions.

The effectiveness of the Agreements is subject to the granting of the aforementioned Concessions through the respective Decree by the Provincial Executive Power.

 

43


Table of Contents

English translation of the condensed interim consolidated financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”). In case of discrepancy, the condensed interim consolidated financial statements filed with the CNV prevail over this translation

 

YPF SOCIEDAD ANONIMA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2017 AND COMPARATIVE INFORMATION (UNAUDITED)

   LOGO

 

35. SUBSEQUENT EVENTS (Cont.)

 

•    Non-conventional Exploitation Concession in the Rincón del Mangrullo block

On August 1, 2017, YPF and the Province of Neuquén signed an Agreement (the “Agreement”) establishing the terms for obtaining a Non-Conventional Exploitation Concession in the Rincón del Mangrullo block (the “Block”), which will result in an increase in the Block’s current activity and an extension of the current term, which expires in 2022. Upon the granting of the new concession, YPF will be able to exploit the Block until 2052, with the possibility of further extending the term.

Under this Agreement, YPF is committed to invest US$ 150 million in order to carry out a pilot program that consists of drilling 13 horizontal wells to continue the development of the Mulichinco formation and investigate other formations, such as Vaca Muerta and Lajas.

The effectiveness of the Agreement is subject to the granting of such concession through the corresponding Decree by the Provincial Executive Power.

YPF currently has an Investment Agreement with Petrolera Pampa S.A. (“Pampa”), through which the Company operates the area and Pampa participates in the production from certain Block formations, with YPF holding 100% of the rights to Vaca Muerta and Quintuco. In this framework, YPF will be the owner of 100% of the new Non-Conventional Exploitation Concession and of the current concession of the Block, continuing with the Investment Agreement with Pampa.

•    Issuance of Negotiable Obligations

In July 2017, the Company issued Class LIII Negotiable Obligations for an amount of US$ 750 million. Class LIII Negotiable Obligations will accrue interest at an annual fixed nominal rate of 6.95% payable semi-annually, with the principal amount maturing in 2027.

As of the date of issuance of these condensed interim consolidated financial statements, there have been no other significant subsequent events that require adjustments or disclosure in the financial statements or operations of the Group as of June 30, 2017, which were not already considered in such condensed interim consolidated financial statements in accordance with IFRS.

 

 

MIGUEL ANGEL GUTIERREZ

President

 

44


Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    YPF Sociedad Anónima
Date: August 16, 2017     By:  

/s/ Diego Celaá

    Name:   Diego Celaá
    Title:   Market Relations Officer