Lifting cost, production on the line
YPF, Argentina's state-controlled oil and gas company, is 51% state-owned, and Fitch's final B- rating is capped at the sovereign level. The standalone credit profile (SCP), the agency's read of the company on its own fundamentals stripped of sovereign support, is where the operating story shows through. It improved in a single year on three quantitative levers: falling unit costs, rising output, and lighter leverage.
What Fitch confirmed and what it projects are distinct. The 44% cost decline and the 2025 reserve base are reported figures; the production trajectory, capex, and leverage path that underpin the upgrade are the agency's rating-case assumptions, and they depend on execution YPF has only begun to deliver.
The Cost Curve Behind the Upgrade
YPF's lifting cost, the per-barrel cost of getting oil and gas out of the ground, fell to $11.6 per barrel of oil equivalent (boe) in 2025, 44% below 2024. The shale segment that anchors the Plan 4x4, chief executive Horacio Marín's strategy to drive YPF's unconventional growth and cost reductions, already operates at $4.5/boe. Fitch put the half-cycle cost, which captures drilling and completion but not amortization of prior capital, at roughly $18/boe.
The agency expects the full-cycle cost, a broader metric that does include amortization, to fall from $35/boe in 2026 to $30/boe by 2028. Against proved reserves that closed 2025 at 1,284 million boe (MMboe), the shale figure of $4.5/boe defines the unit economics the "b+" profile rewards. Fitch's regional grid now describes the unconventional cost base in Vaca Muerta, Argentina's flagship shale play in the Neuquén Basin, as a competitive advantage.
The Production Case Fitch Is Betting On
The second lever is operational. Fitch's rating case assumes average production of 641,000 boe/d between 2026 and 2029, up from a prior assumption of 550,000 boe/d. YPF closed 2025 at 527,000 boe/d, so the assumption implies a sustained jump of about 21% held for four consecutive years.
To support it, Fitch models capex averaging $6.2 billion a year between 2026 and 2028 — close to the $6 billion Marín set out for 2026 on YPF's February 27 investor call. The assumption leans on three transactions YPF closed in the past six weeks: the May 7 closing of assets acquired from Equinor, the Norwegian energy major, which added an indirect 25.1% in the Bandurria Sur block and 35% in Bajo del Toro; the April 30 close of the Hub Sur swap with Pluspetrol, an Argentine independent oil and gas producer; and progress on the Vaca Muerta Oil Sur pipeline (VMOS) toward the Punta Colorada terminal in Río Negro province, with first exports scheduled for late 2026.
The Balance Sheet That Opens the Window
The third lever is financial. Under the rating case, YPF's leverage eases: total debt to EBITDA, which stood at 2.5 times in pesos and 2.1 times in dollars in 2025, should fall to 1.7 times in 2026 and average 2.1 times across the rating horizon.
Cash stood at roughly $1.2 billion at the end of 2025. Maturities to refinance total $1 billion in 2026 (of which $300 million is international) and $1.9 billion in 2027. The upgrade opens a market window for that refinancing directly; Fitch works with an 8% rollover assumption on short-term rates, assumes no dividends across the rating horizon, and prices Brent at $87 a barrel for 2026 and $60 thereafter.
Where YPF Sits Among Its Peers
Fitch places YPF between Petrobras, Brazil's state energy company, and Ecopetrol, Colombia's state oil company, on capital structure. Its reserve life is the shortest in the group at 6.7 years, against 7.0 years for Ecopetrol, 8.7 for Petróleos Mexicanos (Pemex) and 11.5 for Petrobras.
On debt per proved reserves, YPF sits in the middle at $8.7/boe, between Petrobras at $2.5 and Ecopetrol at $15.4. Its 56% share of Argentina's refined-products market is the feature the agency singles out as an edge over state oil companies that only refine, such as Chile's ENAP.
The Sovereign Ceiling
The fourth factor is regulatory, and it is the one that trims the SCP gain. YPF's final rating settled at B-, not "b+," because Fitch's Government-Related Entities Criteria require equalizing the corporate rating with the sovereign when the issuer's standalone profile exceeds it and no legal ring-fencing insulates the company's cash flows from government interference. YPF, which is 51% state-owned with provincial directors on its board, has no such insulation.
The sovereign decision came first. On May 5, Fitch raised Argentina's rating to B- from CCC+; analysts Christopher Dychala, Richard Francis and Shelly Shetty attributed that move to structural improvement in the country's fiscal and external accounts, progress on economic reforms, and better prospects for rebuilding foreign-currency reserves. The sensitivity rule the May 26 YPF commentary sets out is direct: the company's rating rises again only if the sovereign rises, and falls only if the sovereign falls. The "b+" profile waits.