BUENOS AIRES—Argentina’s government on Thursday asked YPF SA, the country’s biggest oil-and-gas company, to reinvest its earnings from the last two years in exploration and production instead of paying dividends to shareholders.
The request, made at a YPF board meeting by the state’s representative on the board, Roberto Baratta, comes during a government campaign to convince the company to boost production.
Argentine President Cristina Kirchner and government officials have criticized YPF repeatedly in recent months for failing to raise output at a time when Argentina faces a growing and increasingly expensive energy deficit.
At the meeting, YPF’s board approved the company’s 2011 financial results, with Mr. Baratta casting a dissenting vote.
In a filing with the Buenos Aires Stock Exchange on Thursday, YPF reported net profit of 5.30 billion pesos ($1.22 billion) and a reserve for future dividend payments of 1.06 billion pesos.
YPF, which is majority-owned by Spain’s Repsol-YPF SA, said the board decided to postpone discussion of what to do with last year’s earnings pending further study.
A YPF spokesman said the board meeting didn’t address the subject of dividends.
Argentina’s Planning Ministry said in a statement that YPF’s oil and gas production fell 10.3% and 6.8%, respectively, last year. Meanwhile, YPF’s diesel output fell 27% in 2011.
YPF sells more than 60% of the fuel sold in Argentina.
President Kirchner blames YPF for forcing the government to import $9.4 billion in fuel and natural gas last year, more than double what it spent the previous year.
President Kirchner has said the energy industry’s top priority should be providing inexpensive gas, electricity and fuel to the rest of the economy, reducing input costs for Argentine companies.
But that goal, implemented through a decade-old freeze on utility rates and fuel prices, has often clashed with the desire of energy industry executives to maximize profitability.
YPF invested about $3 billion in its operations last year.
Government critics, including eight former energy ministers, say price caps and heavy government regulations are to blame for the country’s declining oil and gas production and reserves.
The dispute with the Kirchner administration coupled with speculation that YPF might be partially or fully nationalized has wiped billions of dollars off the company’s market capitalization this year.
YPF’s shares listed in New York closed up 3.6% at $28.53, valuing the company at about $12 billion. While the stock has bounced off a 52-week low of $25.00 on Feb. 29, it is down from the $35.46 closing price at the end of 2011.
Source: online.wsj.com