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Argentina's YPF Q2 profits slump nearly 90% due to lower fuel prices

YPF, Argentina's energy company controlled by the state, reported a 90% drop in its second-quarter profit to $58 millions on Thursday. Fuel prices were cited as the main reason for this decline.

Sales fell 6% to $4.64 Billion from the previous year, due to lower prices for refined products as well as seasonal declines in demand for naphtha.

YPF’s performance is a crucial indicator for Argentina’s economy. The country is relying heavily on the Vaca Muerta Formation in its drive to become a Net Energy Exporter.

Earnings before interest, taxes, depreciation, and amortization, or EBITDA, a key measure for profitability, were $1.12 billion in the period April-June, down 7% compared to a year ago.

Analysts surveyed by LSEG expected, on average, an EBITDA adjusted of $1.17billion from revenues of $4.49billion. Benchmark Brent crude averaged $67 a barrel in the second half of the year, down from $75 a barrel the previous quarter and $85 one year ago.

Upstream sales were down by 10% due to the lower Brent prices and reduced conventional production after YPF had sold mature fields.

The lower fuel prices also affected downstream sales. However, the strong demand for diesel and agriculture helped partially offset this drop.

The results are coming as Argentina is facing a major court battle following a U.S. Judge's order that the government hand over its majority stake in YPF. This was to satisfy a $16.1 Billion judgment related to an expropriation from Spain Repsol of a stake back in 2012. (Reporting and editing by Sarah Morland, Jamie Freed and Natalia Siniawski)

(source: Reuters)