Argentine President's No Mention of Takeover Calms Worries

BUENOS AIRES -- Shares of Argentina's largest oil and gas producer, YPF SA, rose as much as 16.5 percent Thursday as investors piled back into the stock after President Cristina Kirchner made no mention of nationalizing the company in a speech to Congress.

YPF's shares plunged 14 percent Wednesday amid intense speculation Kirchner would announce a partial or full-blown takeover of the company, whose controlling shareholder is Spain's Repsol YPF SA.

YPF's ADRs were recently 14.9 percent higher at $30.03, after hitting an midday high of $30.57. The company's shares in Buenos Aires were up 17.6 percent at $33.76 (ARS 147) on heavy volume.

The benchmark Merval equity index was 3.9 percent higher led by gains in YPF and bank stocks. Financial issues got a boost after Kirchner poured cold water on several bills that would have significantly expanded the government's control and regulation of the banking industry.

"I think it's going to ride for a while," Brian Joseph, a senior trader at local brokerage Puente, said in reference to Thursday's market rally.

"The market doesn't have a whole lot of volume. We are going to see some profit-taking eventually," he cautioned.

YPF has lost billions of dollars in market capitalization after newspaper Pagina 12, which has close ties to the administration, reported in late January that Kirchner was considering the nationalization of the company.

Government officials have refused to comment on the report.

Kirchner has put increasing pressure on the oil industry in recent months as rising fuel and natural-gas imports erode the country's trade surplus.

The administration accuses oil and gas companies of failing to invest enough in exploration, production and refining. Administration critics, including eight former energy secretaries, say price caps and government regulations are to blame for limited investment and declining output.

Earlier this month, the governors of Argentina's top oil- and gas-producing provinces, most of whom are Kirchner allies, gave energy companies two years to boost output by 15 percent or face losing their concessions.

But YPF has come under especially intense scrutiny by the authorities. In February, YPF became embroiled in a boardroom dispute with the government and saw its ability to import badly needed fuel and equipment curtailed by red tape.

YPF had a net profit of $1.21 billion (5.30 billion pesos) on sales of $11.78 billion (ARS 51.3 billion) last year, according to preliminary results published by the company Wednesday.

YPF said it invested $3.17 billion (ARS 13.79 billion) in its operations last year, up nearly 61 percent from 2010. The company also said it paid $6.61 billion (ARS 28.76 billion) in taxes and royalties to the federal and provincial governments.

Copyright (c) 2012 Dow Jones & Company, Inc.


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