BREAKING: YPF CEO Gonzalez Estimates Gas Freezes Will Reduce EBITDA by $100M-$120M Per Month, Company Will Cut Capex by 'Similar Amount'

On a call with investors to discuss the recent economic measures taken by the Argentine government following the primary elections, YPF CEO Daniel Gonzalez said that the freeze on the prices of diesel and gasoline - the downstream segment's two largest revenue items - will freeze the company's margins in Argentine peso terms, while diminishing those margins in U.S. dollar terms as the peso depreciates.

Gonzalez estimated that this freeze could have a negative impact of $100 million to $120 million on EBITDA per month. To that end, the CEO said YPF will cut its capital expenditures plans "in an amount similar to the EBITDA impact."

Gonzalez said that the decision to reduce capex could slow down production growth, but that it is too early to tell by how much. He added that he assumes these measures will have some negative impact on reserves, but the magnitude of the impact is still unclear at this point. Management has just begun to look at its 2020 drilling plan, and should have a better idea of potential implications once the plan is solidified. 

According to Gonzalez, YPF and other companies in the segment have communicated to the government the negative implication of these measures for the companies, and Gonzalez said that the company will work with the government to try to reduce these measures over the 90-day period. 

Last, Gonzalez said that as long as these measures are only short term they should not have an impact on the company's long-term production growth.