Miguel Galuccio took over as CEO of Argentine state-owned oil firm YPF in May of 2012, and the company has grown dramatically under his leadership, with $16 billion in revenues last year. In an interview with McKinsey and Co earlier this month, Galuccio reflects on his career, his approach to management and where YPF has been and is going.
100-day plan for YPF
The first thing Galuccio did when he took over back in the summer of 2012 was to create a 100-day plan. “I put down in black and white what the DNA of the company would be and discussed it with the government just to make sure we were aligned.” The plan had three elements. First, the company was going to be run professionally and with integrity. That meant developing a meritocracy to make sure people understood that they were going to be “valued for the results that they delivered, above all else.”
The following is our rough coverage of the 2021 Sohn Investment Conference, which is being held virtually and features Brad Gerstner, Bill Gurley, Octahedron's Ram Parameswaran, Glenernie's Andrew Nunneley, and Lux's Josh Wolfe. Q1 2021 hedge fund letters, conferences and more Keep checking back as we will be updating this post as the conference goes Read More
The second element of his plan was that the company was going to have a national identity. Galuccio pointed out that YPF collects almost 100% of its revenue in Argentina, and that YPF can be a big part of the country’s economic future. He notes: “That doesn’t mean that we raise the flag every time that we come to the office. It means that we are going to help the country become self-sufficient in the future and to get onto the right path in terms of energy.”
The third leg of Galuccio’s plan is that every activity is designed to create value for shareholders keeping in mind it is a for-profit enterprise. “If we ran the company with these three elements in mind, I thought we were basically going to hit the right targets and also create the right connection between the private sector and the government sector.”
On motivating YPF employees
Galuccio said he had to get YPF emplloyees to buy into his plan to become the leader in every business segment that we were working in. This involved changing the mind-set of people to strive for a new, very aggressive targets. He points out: “…when we proved that we could be very resourceful and got those funds converted into physical activity in the field, I think that brought a lot of motivation to the team.”
He also created a organizational culture that empowered people. Galluccio noted that just a couple of years ago, “managers couldn’t buy a pen in the field without asking for permission. Today, we have an asset-management organization with regional managers who are completely empowered to bring the goods at the end of the year.”
Vaca Muerta shale gas deposit
Argentina sits on world’s second-largest shale-gas deposit, the Vaca Muerte, and YPF issued a $1 billion bond—the biggest issuance in the Argentina’s history—in 2012.
Galuccio highlights that YPF has increased gas production by 33% year over year and is establishing a solid track record and industry trust.
He goes on to say that YPF drilled 1 gas well in 2011, but would end up drilling 150 by the end of this year. Galuccio also points out that a few years ago, the company was making around $3.20 per million Btu. Today, on average, it’s closer to $5.50, or $7.50 for new gas.
Galuccio concludes the interview by describing his vision for the future: “Now, if we can continue to escalate what we are doing, not just as YPF but as an industry, and bring in more players, then the world’s next shale boom is going to happen in this country. And Argentina has the potential to be energy independent and become a net exporter.”
See the full video below