01/29/2013| 09:42pm US/Eastern
By Taos Turner
BUENOS AIRES--Shares of Argentina's state-run oil company YPF SA (YPF, YPFD.BA) surged Tuesday, posting sharp gains both here and in New York, on a day in which the South American country's energy stocks rallied.
YPF's New York-traded shares rose almost 11% to close at $17.45 while they rose 9.3% in Buenos Aires to end the day at ARS130.66.
YPF declined to comment on the gains. But the surge was surely music to the ears of Chief Executive Miguel Galuccio, who after taking over last year made boosting the stock price one of his goals.
YPF is up almost 90% from its 52-week low of $9.21 in mid-November, but it is still down sharply from its 52-week high of $39.50, set last January.
Argentina's government expropriated YPF from its majority shareholder, Spain's Repsol SA ( Repsol SA) last May.
The company's market capitalization is around $6.8 billion, down from $17.5 billion about a year before the government started to take over the company.
YPF's gains came a day after the company said it was in talks with Uruguay's state-run energy company, Ancap, to explore for oil and gas together. Ancap said it was very interested in learning from YPF's experience developing unconventional shale resources in the energy-rich province of Neuquen in southern Argentina.
Traders couldn't say for sure what had pushed YPF's stock up but noted its share price, as well as those of other local energy companies, was still relatively low and therefore a potentially attractive investment.
Traders have also been saying investors are increasingly looking to invest in stocks, particularly those that are also traded abroad, as a way to hedge against currency depreciation in Argentina. One top Argentine official said recently that the peso could depreciate by around 20% this year.
Meanwhile, the market has been rife with speculation that the government will continue to raise energy prices, which could benefit both YPF and utility companies such as the power distributor Edenor.
Edenor's stock rose 8.6% to ARS1.14 in Buenos Aires, putting it up roughly 70% so far this year.
Though the government has yet to let companies like Edenor raise rates, last year it more than tripled the price it pays YPF for newly discovered natural gas. It has also let the company repeatedly raise gasoline prices.
Mr. Galuccio, who took over as YPF's CEO when the company was expropriated, has been pushing hard to attract international investment and get other companies to partner with YPF to produce unconventional shale oil and gas.
Last year, he announced an ambitious investment plan aimed at boosting output and reducing Argentina's dependence on expensive energy imports.
Last month, YPF announced that it had inked a deal with the local Bulgheroni family to invest $1.5 billion over the next two years to develop shale-gas and oil resources.
That deal came about two weeks after YPF announced a similar arrangement with Chevron Corp. ( Chevron Corporation) in which Chevron will spend about $1 billion to drill wells in Neuquen Province's shale-rich Vaca Muerta area. The results of that pilot program will help the companies finalize plans to drill an estimated 2,000 wells for about $15 billion.
In recent months, the former Schlumberger Ltd. ( Schlumberger Limited.) executive has met with Statoil ASA ( Statoil ASA), Cnooc Ltd. (CEO, 0883.HK) and other foreign oil companies to discuss potential investment partnerships.
Mr. Galuccio recently said YPF is currently in talks with other companies and that another partnership could be announced in the first half of 2013.
Analysts note that Argentina has remarkably attractive oil and gas potential but that government intervention in the sector, including burdensome regulations and prices controls, as well as a ban on sending dividends abroad, could impede investment.
Write to Taos Turner at taos.turner@dowjones.com
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