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Argentina's YPF Shares Dive On Takeover Worries

02/29/2012 | 02:18pm US/Eastern

-YPF shares tumble as much as 17.5% on fears of government take over.

-President set to address Congress on Thursday, with many expecting energy policy changes

-Government has cranked up pressure on oil companies to increase output

(Adds that YPF and Argentine Government spokesmen declined to comment and trader comments.)

By Shane Romig

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Shares of Argentina's largest oil and gas company, YPF SA (YPFD.BA, YPF), fell as much as 17.5% on Wednesday as speculation the government might nationalize the firm pushed the stock to a fresh 52-week low.

President Cristina Kirchner is set to address Congress on Thursday and investors are worried that she may announce sweeping policy changes in the energy industry, including a partial or full-blown takeover of YPF, whose controlling shareholder is Spain's Repsol YPF SA (>> Repsol YPF SA).

"There's something coming, but we don't know what," said Augusto Farina, a trader at Amirante Galitis brokerage.

A YPF spokesman said the company didn't have a comment on movements in its share price. Presidential spokesman Alfredo Scoccimarro didn't return emails seeking comment.

YPF's shares traded in New York were recently down 10.4% at $27.42, after hitting an intraday low of $25.25 early in the session.

Its shares in Buenos Aires were down 9.7% at ARS132.70 on heavy volume.

The stock has lost about a third of its value since late January, when the newspaper Pagina 12, which has close ties to the administration, said the government was mulling a nationalization of YPF.

Government officials have fueled the takeover speculation by refusing to comment about the Pagina 12 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. Critics, including eight former energy secretaries, say price caps and heavy 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% or face losing their concessions.

But YPF has come under especially intense scrutiny.

YPF is one of five companies under investigation on accusations of abusing their dominant positions in the fuel market to overcharge buyers.

YPF denies the fuel price manipulation accusations.

Last week, the government accused the company of preventing its representative on the YPF board and three high ranking government officials from participating in a board meeting.

YPF said it didn't turn the government's board representative away. Rather, its statutes allow only accredited representatives to participate in board meetings.

That incident came just a week after the authorities briefly banned YPF from conducting foreign trade operations due to a tax dispute.

YPF declined to comment on the tax dispute. But the following day the company did say it was experiencing significant problems accessing the foreign exchange market and importing goods, which jeopardized its investment program and ability to import diesel fuel.

-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@dowjones.com

Stocks mentioned in the article : Repsol YPF SA, YPF SA
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