PZE Petrobras Argentina S.A. Ads (delisted)

SELECTED FINANCIAL DATA

The financial information set forth below may not contain all of the financial information that you should consider when making an investment decision. This information should be read in conjunction with, and is qualified in its entirety by reference to, the “Risk Factors” included in this Annual Report. See “—Risk Factors.” You should also carefully read our audited consolidated financial statements and “Item 5. Operating and Financial Review and Prospects” included in this Annual Report for additional financial information about us.

Our audited consolidated financial statements included in this Annual Report (“Audited Consolidated Financial Statements”) are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Presentation of Financial Information in accordance with IFRS

Since January 1, 2012, in compliance with adopted accounting standards applicable to public companies in Argentina and regulations introduced by the Comisión Nacional de Valores (the Argentine Securities Commission, or “CNV”), PESA is required to prepare its statutory financial statements in accordance with IFRS as issued by the IASB.

Consistent with Item 18 of Form 20-F, we continue to provide the disclosure required under Accounting Standards Codification (“ASC”) 932 of the Financial Accounting Standards Board (the “FASB”) relating to extractive activities—Oil and Gas (formerly, FASB Statement of Financial Accounting Standards No. 69—Disclosures about Oil and Gas Producing Activities) (“ASC Topic 932”), as is required regardless of the basis of accounting on which we prepare our financial statements.

Consideration of the effects of inflation

According to inflation data published by the Instituto Nacional de Estadística y Censos (the “Argentine national statistics and census institute”, or the “INDEC”), from 2011 to 2014, the Argentine consumer price index (“CPI”) increased 9.5%, 10.8% , 10.9% and 24.0% in each of those years, respectively, and 11.9% in the ten-month period ended October 31, 2015. The wholesale price index (“WPI”) increased 12.7%, 13.1%, 14.8% and 28.3% in each of those years, respectively, and 10.6% in the ten-month period ended October 31, 2015. In November 2015, the INDEC suspended the publication of the CPI and the WPI. From 2007 through 2015, the INDEC experienced a process of institutional and methodological reforms that gave rise to controversy with respect to the reliability of the information that it produces, including inflation, gross domestic product (“GDP”) and unemployment data. Reports published by the International Monetary Fund (the “IMF”) stated that their staff used alternative measures of inflation for macroeconomic surveillance, including data produced by private sources, which have shown inflation rates considerably higher than those published by the INDEC since 2007. The IMF also censured Argentina in 2013 for failing to make sufficient progress in adopting remedial measures to address the quality of official data, including inflation and GDP data. On February 13, 2014, the INDEC released a new inflation index, known as the Natural Urban Consumer Price Index (the “IPCNu”) which measures prices on goods across the country and replaced the previous index that only measured inflation in the urban sprawl of the City of Buenos Aires. Even though the IPCNu brought inflation statistics closer to those estimated by private sources, differences between official inflation data and private estimates remained at the end of 2015. Since the first weeks after assuming office on December 10, 2015, the new administration has introduced economic and policy reforms. See “—Risk Factors—Factors Relating to Argentina—The impact of the recent congressional and presidential elections on the future economic and political environment of Argentina is uncertain”.

2

Table of Contents

In January 2016, the administration which assumed office on December 10, 2015 (the “new administration”), through Decree No. 55/2016, declared a state of administrative emergency of the national statistics system until December 31, 2016, and the new INDEC authorities announced the discontinuation of the methodology previously used to measure inflation and suspended the publication of all indices until the INDEC is in a position to calculate such indices based on adequate and reliable official data. The INDEC has suggested using CPI figures published by the Province of San Luis and the City of Buenos Aires for reference in the meantime. According to the Province of San Luis’ reports, the inflation rate was 2.9%, 6.5%, 4.2%, 2.7% and 3.0%, in November 2015, December 2015, January 2016, February 2016 and March 2016, respectively. According to the City of Buenos Aires’ reports, the inflation rate was 2.0%, 3.9%, 4.1%, 4.0% and 3.3%, in November 2015, December 2015, January 2016, February 2016 and March 2016, respectively. See “—Risk Factors—Factors Relating to Argentina—Economic and political instability in Argentina has affected and may continue to adversely affect our financial condition and results of operations.”

In accordance with IFRS, the financial information set forth in this Annual Report has not been adjusted to reflect inflation. Inflation could therefore affect the comparability among the different periods presented herein.

The following tables set forth selected consolidated financial data of the Company presented in Argentine pesos and prepared in accordance with IFRS as issued by the IASB, as of and for each of the years ended December 31, 2015, 2014, 2013, 2012 and 2011.

The selected consolidated financial data as of and for the years ended December 31, 2015, 2014 and 2013, has been derived from our Audited Consolidated Financial Statements, which were audited by Price Waterhouse & Co. S.R.L., an independent registered public accounting firm in Buenos Aires, Argentina, member firm of PricewaterhouseCoopers International Limited network (“PwC”), and are included elsewhere herein. The selected consolidated financial data as of and for the years ended December 31, 2012 and 2011 has been derived from our audited financial statements, which were audited by PwC and KPMG, respectively, and are not included herein.

The financial data as of and for the years ended December 31, 2012 and 2011 was modified at the time we issued our Audited Consolidated Financial Statements as of and for the year ended December 31, 2013 to retrospectively apply the change in accounting for employee benefit plans reflected in IAS 19 Employee Benefits as issued by the IASB.

3

Table of Contents

4

Table of Contents

5

Table of Contents

EXCHANGE RATES

From April 1, 1991 until the end of 2001, Law No. 23,928 and Decree No. 529/91 (together, the “Convertibility Law”) established a fixed exchange rate under which the Banco Central de la República Argentina (the “Central Bank of Argentina”, or the “Central Bank”) was obliged to sell U.S. dollars at a fixed rate of one peso per U.S. dollar. On January 6, 2002, the Argentine Congress enacted the Public Emergency and Foreign Exchange System Reform Law No. 25,561 (the “Public Emergency Law”), which suspended certain provisions of the Convertibility Law, including the fixed exchange rate of Ps.1.00 to U.S.$1.00, and granted the Argentine government the power to set the exchange rate between the peso and foreign currencies and to issue regulations related to the foreign exchange market. Following a brief period during which the Argentine government established a temporary dual exchange rate system, pursuant to the Public Emergency Law, the peso has been allowed to float freely against other currencies since February 2002, although the Central Bank has the power to intervene by buying and selling foreign currency for its own account, a practice in which it may engage on a regular basis.

After several years of moderate variations in the nominal exchange rate, the peso lost more than 30% of its value with respect to the U.S. dollar in each of 2013 and 2014, and in 2015, the peso lost approximately 52% of its value with respect to the U.S. dollar, including a depreciation of approximately 35% mainly experienced after December 17, 2015 following the announcement of the lifting by the Central Bank of most foreign exchange controls. See “—Risk Factors—Factors Relating to Argentina—Fluctuations in the value of the peso could adversely affect the Argentine economy, and consequently, our results of operations or financial condition.” The peso has been allowed to float with Central Bank interventions intended to ensure the orderly functioning of the foreign exchange market. There can be no assurance that the Argentine peso will not depreciate or appreciate significantly with respect to the U.S. dollar and other currencies in the future.

The following table sets forth the annual high, low, average and period-end exchange rates for the periods indicated, expressed in Argentine pesos per U.S. dollar and not adjusted for inflation, based on rates quoted by the Banco de la Nación Argentina (the “National Bank of Argentina”). The Federal Reserve Bank of New York does not report a buying rate for pesos.

6

Table of Contents

EXCHANGE CONTROLS

Prior to December 1989, the Argentine foreign exchange market was subject to exchange controls. From December 1989 until April 1991, Argentina had a freely floating exchange rate for all foreign currency transactions, and the transfer of dividend payments in foreign currency abroad and the repatriation of capital were permitted without prior approval of the Central Bank. From April 1, 1991, when the Convertibility Law became effective, until December 21, 2001, when the Central Bank decided to close the foreign exchange market, the Argentine currency was freely convertible into U.S. dollars.

On December 3, 2001, the Argentine government imposed a number of monetary and currency exchange control measures through Decree No. 1,570/01, which included restrictions on the free disposition of funds deposited with banks and tight restrictions on transferring funds abroad without the Central Bank’s prior authorization subject to specific exceptions for transfers related to foreign trade. Between 2002 and the first half of 2011, the Central Bank gradually eased these restrictions.

In June 2003, the Argentine government set restrictions on capital flows into Argentina, which mainly consisted of a prohibition against the transfer abroad of any funds until 180 days after their entry into the country. Furthermore, in June 2005, through Decree No. 616/05, the Argentine government established further restrictions on capital flows into Argentina, including increasing the period that certain incoming funds must remain in Argentina to 365 calendar days and requiring that 30% of such incoming funds be deposited with a bank in Argentina in a non-transferable, non-interest-bearing account for 365 calendar days. Export and import financing operations, as well as primary public offerings of corporate bonds listed on self-regulated markets, among others, are exempt from the foregoing provision.

On October 25, 2011, the Argentine government issued Decree No. 1,722/11, providing that all foreign currency revenues obtained from exports made by mining and oil and gas companies must be repatriated and sold within the local foreign exchange market, which is the general regime applicable to revenues generated by Argentine exports. Prior to the issuance of this decree, companies engaged in exploration and development of hydrocarbons benefited from a special regime that allowed them to retain overseas up to 70% of the proceeds of certain exports.

Between October 2011 and December 17, 2015, the Argentine government expanded the restrictions on access to the foreign exchange market and transfers of foreign currency abroad. Through a combination of foreign exchange and tax regulations, the Argentine authorities significantly curtailed access to foreign exchange by individuals and private sector entities. Foreign exchange regulations included, among others, the obligation to obtain prior approval by the Central Bank of certain foreign exchange transactions such as payments relating to royalties, services or fees payable to related parties of Argentine companies outside Argentina, the suspension of previously permitted purchases of foreign exchange in an amount of up to U.S.$2 million per month to create or increase portfolio investments outside of Argentina, and limits to the net position in foreign exchange holdings of financial institutions. See “—Risk Factors—Factors Relating to Argentina—Economic and political instability in Argentina has affected and may continue to adversely affect our financial condition and results of operations.”

On December 17, 2015, the Central Bank modified exchange control regulations to permit greater flexibility and easier access to the foreign exchange market for individuals and private sector entities, including: the reduction of the mandatory minimum period for foreign financial indebtedness from 365 calendar to 120 calendar days, with a reduction to zero percent of the mandatory deposit (“ encaje ”) and the elimination of the prior Central Bank approval requirement to access the exchange market for the payment of royalties, services and fees payable to foreign related entities. In addition, access to the exchange market was reestablished for the purchase of foreign assets in an aggregate amount of up to U.S.$ 2 million per calendar month, and the CNV eliminated the requirement of a minimum holding period of 72 business hours in connection with purchases and subsequent sales of securities listed or negotiated in any local and international stock exchange markets. See “—Risk Factors—Factors Relating to Argentina— The impact of the recent congressional and presidential elections on the future economic and political environment of Argentina is uncertain.”

7

Table of Contents

RISK FACTORS

Factors Relating to Argentina

Economic and political instability in Argentina has affected and may continue to adversely affect our financial condition and results of operations.

We are exposed to economic and political conditions in Argentina, considering that as of December 31, 2015, approximately 81% of our total assets, 99% of our sales, 92% of our combined crude oil and gas production and 90% of our proved oil and gas reserves were located in Argentina.

The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high and variable levels of inflation and currency devaluation. As a consequence, our business and operations have been, and may in the future be, affected from time to time to varying degrees by economic and political developments and other material events affecting the Argentine economy, such as: inflation; price controls; exchange controls; fluctuations in foreign currency exchange rates and interest rates; currency devaluation; governmental policies regarding spending and investment, and other initiatives increasing government involvement in economic activities; social unrest and local security concerns. You should make your own investigation into Argentina’s economy and its prevailing conditions before making an investment in us.

During 2001 and 2002, Argentina went through a period of severe political, economic and social crisis. Among other consequences, the crisis resulted in Argentina defaulting on its foreign debt obligations, introducing emergency measures and numerous changes in economic policies that affected utilities and many other sectors of the economy. Argentina also suffered a significant real devaluation of the peso, which in turn caused numerous Argentine private sector debtors with foreign currency exposure to default on their outstanding debt. Following that crisis, Argentina substantially increased its real GDP. During 2008 and 2009, however, the Argentine economy suffered a slowdown attributed to local and external factors, including an extended drought affecting agricultural activities, and the effects of the global economic crisis. Real GDP growth recovered in 2010 and 2011, with GDP increasing to 9.5% and 8.4%, respectively. However, GDP growth slowed to 0.8% in 2012, recovering again to 2.9% in 2013. According to the INDEC, economic activity grew 0.5% in 2014 and 2.1% in 2015 (based on preliminary GDP data), mainly as a result of the growth in the agricultural and construction segments. In 2014, private consumption and investment contracted by 0.5% and 5.5%, respectively. The economy’s contraction was primarily due to the weakening of the domestic demand, which resulted, in part, from the increase in domestic prices due to the Central Bank’s financing of the government’s fiscal imbalance. Private sector performance also weakened, mainly due to an increase in prices, a decrease in the peso’s purchasing power, limited access to credit markets and increased consumer saving in response to uncertain financial conditions.

Argentina has suffered inflationary pressures since 2007, evidenced by continued increases in fuel, energy and food prices, among other indicators. According to inflation data published by the INDEC, from 2011 to 2014, the Argentine CPI increased 9.5%, 10.8%, 10.9% and 24.0% in each of those years, respectively, and 11.9% in the ten-month period ended October 31, 2015. The WPI increased 12.7%, 13.1%, 14.8% and 28.3% in each of those years, respectively, and 10.6% in the ten-month period ended October 31, 2015. In November 2015, the INDEC suspended the publication of the CPI and the WPI.

From 2007 through 2015, the INDEC experienced a process of institutional and methodological reforms that gave rise to controversy with respect to the reliability of the information that it produces, including inflation, GDP and unemployment data. Reports published by the IMF stated that their staff used alternative measures of inflation for macroeconomic surveillance, including data produced by private sources, which have shown inflation rates considerably higher than those published by the INDEC since 2007. The IMF also censured Argentina in 2013 for failing to make sufficient progress in adopting remedial measures to address the quality of official data, including inflation and GDP data.

On February 13, 2014, the INDEC released the IPCNu which measures prices on goods across the country and replaced the previous index that only measured inflation in the urban sprawl of the City of Buenos Aires. Even though the IPCNu brought inflation statistics closer to those estimated by private sources, differences between official inflation data and private estimates remained at the end of 2015.

Since the first weeks after assuming office on December 10, 2015, the new administration has introduced economic and policy reforms. See “—The impact of the recent congressional and presidential elections on the future economic and political environment of Argentina is uncertain”. In addition, the Argentine government has restarted negotiations with holdout creditors from the last Argentine debt restructuring. See “—A lack of financing for Argentine companies, whether due to market forces, government regulation or the unresolved litigation with holdout bondholders, may negatively impact our financial condition or cash flows.”

8

Table of Contents

In January 2016, the new administration, through Decree No. 55/2016, declared a state of administrative emergency in the national statistics system, and the new INDEC authorities announced the discontinuation of the methodology previously used to measure inflation and suspended the publication of all indices until the INDEC is in a position to calculate such indices based on adequate and reliable official data. The INDEC has suggested using CPI figures published by the Province of San Luis and the City of Buenos Aires for reference in the meantime. According to the Province of San Luis’ reports, the inflation rate was 2.9%, 6.5%, 4.2%, 2.7% and 3.0%, in November 2015, December 2015, January 2016, February 2016 and March 2016, respectively. According to the City of Buenos Aires’ reports, the inflation rate was 2.0%, 3.9%, 4.1%, 4.0% and 3.3%, in November 2015, December 2015, January 2016, February 2016 and March 2016, respectively.

Since 2007 inflation in Argentina has contributed to a material increase in our costs of operation, in particular labor costs, and negatively impacted our results of operations and financial condition. There can be no assurance that inflation rates will not escalate further in the future, or of what effects the measures adopted or that may be adopted by the Argentine government to control inflation may have in the future. See “—Government intervention in the Argentine economy could adversely affect our results of operations or financial condition.”

We cannot provide any assurance that inflation, or other future economic, social and political developments in Argentina, over which we have no control, will not adversely affect our financial condition or results of operations, including our ability to pay our debts at maturity or dividends.

The impact of the recent congressional and presidential elections on the future economic and political environment of Argentina is uncertain.

Presidential and congressional elections took place in Argentina on October 25, 2015, and a runoff election (ballotage) between the two leading presidential candidates was held on November 22, 2015, which resulted in Mr. Mauricio Macri being elected president of Argentina for a four-year period. The new administration assumed office on December 10, 2015.

Since assuming office, the new administration has announced and implemented certain economic and policy reforms, including:

Electricity system state of emergency and reforms. The Argentine government, through Decree No. 134/2015, has declared a state of emergency with respect to the national electricity system that will remain in effect until December 31, 2017. The state of emergency allows the Argentine government to take actions designed to guarantee the supply of electricity in Argentina such as instructing the Ministerio de Energía y Minería de la Nación (the “Ministry of Energy and Mining”) to elaborate and implement, with the cooperation of all federal public entities, a coordinated program to guarantee the quality and security of the electricity system and rationalize public entities’ consumption of energy. In addition, through Resolution No. 6/2016 of the Ministry of Energy and Mining and Resolution No. 1/2016 of the Ente Nacional Regulador de la Electricidad (the “ENRE”), the new administration announced the elimination of certain energy subsidies and a substantial increase in electricity rates.

INDEC reforms. The new administration, through Decree No. 55/2016, declared a state of administrative emergency in the national statistics system and the new INDEC authorities suspended the publication of all indices until the INDEC is in a position to calculate such indices based on adequate and reliable official data, and is working to implement certain methodological reforms and adjust certain macroeconomic statistics on the basis of such reforms.

Foreign exchange reforms . The new administration has implemented certain changes to the foreign exchange market that provide greater flexibility and easier access to the foreign exchange market for individuals and private sector entities. The principal measures adopted as of the date of this Annual Report include (i) the elimination of the requirement to mandatory transfer and settle the proceeds from new foreign financial indebtedness incurred by the foreign financial sector, the non-financial private sector and local governments through the single and free floating foreign exchange market (the “MULC”) (except that the evidence of the mandatory transfer and settlement of funds through the MULC will still be required for subsequent access to the MULC in order to repay principal and interest of such indebtedness); (ii) the reduction of the mandatory minimum period in which the proceeds of any new financial indebtedness and renewal of existing indebtedness incurred by residents, held by foreign creditors and transferred through the MULC must be kept in Argentina, from 365 calendar days to 120 calendar days from the date of the transfer of the relevant amount; (iii) in the case of partial or total prepayment of principal corresponding to new foreign financial indebtedness, access to the MULC is permitted subject to the mandatory minimum period mentioned above; (iv) the reestablishment of Argentine residents’ rights to purchase foreign currency in an amount up to U.S.$ 2.0 million per month to acquire offshore assets; (v) the reduction from 30% to 0% of a mandatory, non-transferable and non-interest bearing deposit of the amount of certain transactions involving foreign currency inflows for a 365 calendar day period; and (vi) the elimination of the requirement of a minimum holding period (72 business hours) for purchases and subsequent sales of securities. See “—Exchange Controls”

9

Table of Contents

Deficit reduction . The new administration has announced its intention to reduce its primary budget deficit from approximately 5.8% of GDP in 2015, to 4.8% of GDP in 2016 and 3.3% of GDP in 2017, in part by eliminating public services’ subsidies in effect and decreasing public spending.

Foreign trade reforms. The new administration has eliminated export duties on wheat, corn, beef and regional products, and reduced the duty on soybeans by 5% to 30%. Furthermore, the 5% export duty on most industrial exports and export duties on mining exports were eliminated. With respect to payments for imports and services to be performed abroad, the new administration announced the gradual elimination of limitations on transaction amounts for any transactions through the MULC. The limitations for such transactions have been eliminated as from June 2016.

As of the date of this Annual Report, the impact that these measures or other measures announced will have on the Argentine economy and the timing of such implementation cannot be predicted.

Fluctuations in the value of the peso could adversely affect the Argentine economy and, consequently, our results of operations or financial condition.

Fluctuations in the value of the peso may also adversely affect the Argentine economy, our financial condition and results of operations. Since January 2002, the peso has fluctuated significantly in value. If the peso devalues significantly, all of the negative effects on the Argentine economy related to such devaluation could also have adverse consequences for our business. A substantial increase in the value of the peso against the U.S. dollar also represents risks for the Argentine economy since it may lead to a deterioration of the country’s current account balance and the balance of payments.

After several years of moderate variations in the nominal exchange rate, the peso lost more than 30% of its value with respect to the U.S. dollar in each of 2013 and 2014, and in 2015, the peso lost approximately 52% of its value against the U.S. dollar, including a depreciation of approximately 35% mainly experienced after December 17, 2015 following the announcement of the lifting of a most foreign exchange controls. Since the devaluation in December 2015, the Central Bank has allowed the peso to float and limited interventions to those needed to ensure the orderly functioning of the foreign exchange market. As of April 15, 2016, the exchange rate was Ps.14.05 to U.S.$.1.00.

A continued devaluation of the peso could have adverse consequences for our business. An increase in the devaluation of the peso could negatively affect our results of operations if the government enacts measures that do not permit us to pass those costs along to customers. See “—Factors Relating to Our Business—Limitations on local pricing in Argentina may adversely affect our results of operations.” We are unable to predict the future value of the peso against the U.S. dollar and how any fluctuations may affect the demand for our products and services or the costs that we incur in conducting our operations or our results.

Notwithstanding the measures recently adopted by the new administration, any future exchange control regulations may prevent or limit us from offsetting the risk derived from our exposure to the U.S. dollar and consequently, adversely affect our financial condition and results of operations.

Government intervention in the Argentine economy could adversely affect our results of operations or financial condition.

In addition to the political and economic factors described above, our business and operations have been, and could in the future be, affected by actions taken by the Argentine government through the implementation of new, or the amendment of existing, laws and regulations, such as: nationalizations, expropriations or forced divestiture of assets; restrictions on production, imports and exports; exchange or transfer restrictions; direct and indirect price controls; obligations to supply primarily to the domestic market (even if it entails importing products with negative margins); tax increases, changes in the interpretation or application of tax laws and other retroactive tax claims or challenges; cancellation of contract rights; and delays or denials of governmental approvals.

Between 2007 and 2015, the Argentine government increased its direct intervention in the economy, including through the implementation of expropriation and nationalization measures, price controls and exchange controls.

In 2008, the Argentine government absorbed and replaced the former private pension system for a public “pay as you go” pension system. As a result, all resources administered by the private pension funds, including significant equity interests in a wide range of listed companies, were transferred to a separate fund ( Fondo de Garantía de Sustentabilidad , or the “FGS”) to be administered by the National Social Security Administration ( Administración Nacional de la Seguridad Social , or the “ANSES”). The dissolution of the private pension funds and the transfer of their financial assets to the FGS have had important repercussions on the financing of private sector companies. Debt and equity instruments which previously could be placed with pension fund administrators are now entirely subject to the discretion of the ANSES. Since acquiring equity interests in privately owned companies through the process of replacing the pension system, the ANSES is entitled to designate government representatives to the boards of directors of those entities. Pursuant to Decree No. 1,278/12, issued by the Argentine government on July 25, 2012, the ANSES’s representatives must report directly to the Ministry of Economy and are subject to a mandatory information-sharing regime, under which, among other obligations, they must immediately inform the Ministry of Economy of the agenda for each board of directors meeting and provide related documentation.

10

Table of Contents

In April 2012, the Argentine government decreed the removal of directors and senior officers of YPF S.A. (“YPF”), the country’s largest oil and gas company, which was controlled by the Spanish group Repsol, and submitted a bill to the Argentine Congress to expropriate shares held by Repsol representing 51% of the shares of YPF. The Argentine Congress approved the bill in May 2012 through the passage of Law No. 26,741, which declared the production, industrialization, transportation and marketing of hydrocarbons to be activities of public interest and fundamental policies of Argentina, and empowered the Argentine government to adopt any measures necessary to achieve self-sufficiency in hydrocarbon supply. In February 2014, the Argentine government and Repsol announced that they had reached an agreement on the terms of the compensation payable to Repsol for the expropriation of the YPF shares. Such compensation totaled U.S.$5 billion payable by delivery of Argentine sovereign bonds with various maturities. The agreement, which was ratified by Law No. 26,932, settled the claim filed by Repsol with the International Centre for Settlement of Investment Disputes (the “ICSID”). See “—Factors Relating to Our Business—The Argentine government and provincial governments have intervened in the oil and gas industry in the past, and are likely to continue to intervene.”

Our business and operations in Argentina may also be adversely affected by measures adopted by the Argentine government to address inflation. For example, increases in the costs of services and labor could negatively affect our results of operations if the government enacts measures that do not permit us to pass those costs along to customers. See “—Factors Relating to Our Business—Limitations on local pricing in Argentina may adversely affect our results of operations.”

In addition, on October 26, 2011, the Argentine government issued Decree No. 1,722/11, providing that all foreign currency revenues obtained from exports made by mining and oil and gas companies must be repatriated and sold within the local foreign exchange market, which is the general regime applicable to revenues generated by Argentine exports. Prior to the issuance of this decree, we were allowed to retain overseas up to 70% of the proceeds of certain exports. See “Item 3. Key Information—Exchange Controls” and “Item 5. Operating and Financial Review and Prospects—Description of Indebtedness.”

It was widely reported by private economists that expropriations, price controls, exchange controls and other direct involvement by the Argentine government in the economy have had an adverse impact on the level of investment in Argentina, the access of Argentine companies to the international capital markets and Argentina’s commercial and diplomatic relations with other countries. Recent measures taken by the new administration include: the reduction or elimination of certain restrictions to operate in the foreign exchange market, the increase in interest rates for loans in pesos, the removal or reduction of taxes on exports for certain products and the increase of electricity and gas tariffs to reduce energy subsidies and the fiscal deficit. In February 2016, the Argentine government entered into an agreement in principle to settle with certain holders of defaulted debt and put forward a proposal to other holders of defaulted debt. On April 22, Argentina issued U.S.$16.5 billion of new debt securities in the international capital markets, and applied U.S.$9.3 billion to satisfy settlement payments on agreements with holders of approximately U.S.$8.2 billion principal amount of defaulted bonds. See “—A lack of financing for Argentine companies, whether due to market forces, government regulation or the unresolved litigation with holdout bondholders, may negatively impact our financial condition or cash flows. Notwithstanding the measures recently adopted by the new administration, the level of government intervention in the economy may continue or increase, which may adversely affect Argentina’s economy and, in turn, our business, results of operations and financial condition.

The Argentine economy can be adversely affected by economic developments in other markets and by more general “contagion” effects, which could have a material adverse effect on Argentina’s economic growth.

Argentina’s economy is vulnerable to external shocks that could be caused by adverse developments affecting its principal trading partners (including Brazil, the European Union, China and the United States). A significant decline in the economic growth of any of Argentina’s major trading partners, such as the current slowdown of the Brazilian economy and substantial depreciation of its currency, could have a material adverse impact on Argentina’s balance of trade and adversely affect Argentina’s economic growth. Declining demand for Argentine exports, or a decline in the international market prices for those products, could have a material adverse effect on Argentina’s economic growth.

A decline in the international prices for Argentina’s main commodity exports would have a negative impact on the levels of government revenues and the government’s ability to service its sovereign debt, and could either generate recessionary or inflationary pressures, depending on the government’s reaction. Either of these results would adversely impact Argentina’s economy and, in turn, our business, results of operations and financial condition. See “—Substantial or extended declines and volatility in the prices of crude oil, oil products and natural gas may have an adverse effect on our results of operations and financial condition”.

In addition, financial and securities markets in Argentina have been influenced by economic and market conditions in other markets worldwide. Although economic conditions vary from country to country, investors’ perceptions of events occurring in other countries have in the past substantially affected, and may continue to substantially affect, capital flows into, and investments in securities from issuers in, other countries, including Argentina. International investors’ reactions to events occurring in one market sometimes demonstrate a “contagion” effect in which an entire region or class of investment is disfavored by international investors, Argentina could be adversely affected by negative economic or financial developments in other countries, which in turn may have an adverse effect on our financial condition and results of operations.

11

Table of Contents

There can be no assurance that the Argentine economy, its financial system and securities markets will not be adversely affected by events in developed countries’ economies or events in other emerging markets. A slowdown in economic activity in Argentina would adversely affect our business, financial condition and results of operations.

A lack of financing for Argentine companies, whether due to market forces, government regulation or the unresolved litigation with holdout bondholders, may negatively impact our financial condition or cash flows.

The prospects for Argentine companies of accessing financial markets might be limited in terms of the amount of financing available, and the conditions and cost of such financing.

Economic policy measures adopted by the Argentine government, may continue to prevent Argentine companies such as us from accessing the international capital markets or make the terms of any such transactions less favorable than those provided to companies in other countries in the region, and may therefore negatively impact our financial condition or cash flows.

In 2005 and 2010, Argentina conducted exchange offers to restructure part of its sovereign debt that had been in default since the end of 2001. As a result of these exchange offers, Argentina restructured over 92% of its eligible defaulted debt.

Commencing in 2002, holdout creditors filed numerous lawsuits against Argentina in several jurisdictions, including the United States, Italy, Germany, and Japan. These lawsuits generally assert that Argentina failed to make timely payments of interest and/or principal on their bonds, and seek judgments for the face value of and/or accrued interest on those bonds. Judgments have been issued in numerous proceedings in the United States and Germany, but to date judgment creditors have not succeeded, with a few minor exceptions, in executing on those judgments.

In February 2012, plaintiffs in 13 actions in New York, involving claims for U.S.$ 428 million in principal, plus interest, obtained a U.S. district court order enjoining Argentina from making interest payments in full on the bonds issued pursuant to the 2005 and 2010 exchange offers (“Exchange Bonds”) unless Argentina paid the plaintiffs in full, under the theory that the former payments violated the pari passu clause in the 1994 Fiscal Agency Agreement (the “FAA”) governing those non-performing bonds. The U.S. district court order was stayed pending appeals. The Second Circuit Court of Appeals affirmed the so-called pari passu injunctions, and on June 16, 2014 the U.S. Supreme Court denied Argentina’s petition for a writ of certiorari and the stay of the pari passu injunctions was vacated on June 18. Additionally, in 2015, plaintiffs that had obtained pari passu injunctions amended their complaints to include claims that Argentina’s servicing of more recently issued BONAR 2024 bonds, as well as all external indebtedness in general, would violate the pari passu clause. The U.S. district court has not ruled on these new claims and discovery among the parties remains ongoing. On October 30, 2015, the U.S. district court issued new pari passu injunctions, substantially identical to the ones already in effect, in 49 additional proceedings, involving claims for over U.S.$ 2.1 billion under the 1994 FAA, plus billions more in pre- and post-judgment interest. Argentina appealed the decision on November 10, 2015.

In 2014, the Argentine Government took a number of steps intended to continue servicing the bonds issued in the 2005 and 2010 exchange offers, which had limited success. Holdout creditors continued to litigate expanding the scope of issues to include payment by the Argentine Government on debt other than the Exchange Bonds and the separateness of the Central Bank.

The new administration engaged in negotiations with holders of defaulted bonds in December 2015 with a view to bringing closure to fifteen years of litigation. In February 2016, the Argentine government entered into an agreement in principle to settle with certain holders of defaulted debt and put forward a proposal to other holders of defaulted debt, including those with pending claims in U.S. courts, subject to two conditions: obtaining approval by the Argentine Congress and the lifting of the pari passu injunctions. On March 2, 2016, the U.S. district court agreed to vacate the pari passu injunctions, subject to two conditions: first, the repealing of all legislative obstacles to settlement with holders of defaulted debt securities issued under the FAA, and second, full payment to holders of pari passu injunctions with whom the Argentine government had entered into an agreement in principle on or before February 29, 2016, in accordance with the specific terms of such agreements. The U.S. district court’s order was appealed and on April 13, 2016 was affirmed by the Second Circuit Court of Appeals. On March 31, 2016, the Argentine Congress repealed the legislative obstacles to the settlement and approved the settlement proposal. On April 22, Argentina issued U.S.$ 16.5 billion of new debt securities in the international capital markets, and applied U.S.$ 9.3 billion to satisfy settlement payments on agreements with holders of approximately U.S.$ 8.2 billion principal amount of defaulted bonds. The U.S. district court ordered the vacatur of all pari passu injunctions upon confirmation of such payments.

As of the date of this Annual Report, litigation initiated by bondholders that have not accepted Argentina’s settlement offer continues in several jurisdictions, although the size of the claims involved has decreased significantly. The lifting of the injunctions issued by the United States courts preventing bondholders from receiving their interest payments on the bonds issued pursuant to the 2005 and 2010 exchange offers and the related subsequent events paved the way for the Argentine government to regain access to the international capital markets.

12

Table of Contents

Application of certain laws and regulations is uncertain and could adversely affect our results of operations and financial condition.

Law No. 26,854, which regulates injunctions in cases to which the Argentine government is a party or has intervened, took effect on April 30, 2013 as part of a judicial reform bill approved by the Argentine Congress. Among the principal changes implemented pursuant to the judicial reform bill are a time limitation on injunctions imposed in proceedings brought against the Argentine government and the creation of three new chambers of Casación which hear appeals prior to the intervention of the Supreme Court of Justice. In addition, Law No. 26,855, which became effective on May 27, 2013, modified the structure and functions of the Argentine Consejo de la Magistratura (judicial council), which is empowered to appoint judges, present charges against them, and suspend or remove them. However, certain aspects of the legislation have been struck down by the Supreme Court as unconstitutional.

On September 18, 2014, the Argentine Congress enacted Law No. 26,991 amending Law No. 20,680 (the “Supply Law”), which became effective on September 28, 2014, to increase control over the supply of goods and provision of services. Such initiative includes the ability of the Argentine government to regulate consumer rights under Article 42 of the Constitution and permits the creation of an Observer of Prices of Goods and Services. The Supply Law, as amended: (i) requires the continued production of goods to meet basic requirements; (ii) creates an obligation to publish prices of goods and services produced and borrowed; (iii) allows financial information to be requested and seized; (iv) intensifies fines for judicial and fiscal persons. The reforms and creation of the Observer of Prices of Goods and Services could adversely affect our operations. An initiative to regulate questions of consumer rights was also approved, creating the Conciliación Previa en las Relaciones de Consumo (COPREC), where users and consumers may present claims free of charge and have them resolved within 30 days.

The Supply Law applies to all economic processes linked to goods, facilities and services which, either directly or indirectly, satisfy basic needs of the population (“Basic Needs Goods”) and grants a broad delegation of powers to its enforcing agency involved in such processes. It also empowers the enforcing agency to order the sale, production, distribution or delivery of Basic Needs Goods throughout the country in case of a shortage of supply.

On October 1, 2014, the Argentine Congress approved the reform, update and unification of the National Civil and Commercial codes. A single new National Civil and Commercial Code became effective on August 1, 2015. The consequences of the reform and its subsequent judicial application cannot be predicted.

The long-term impact of recently adopted legislation on Argentina’s legal system and future administrative or judicial proceedings, including potential future claims by us against the Argentine government, cannot be predicted.

Factors Relating to Our Business

Substantial or extended declines and volatility in the prices of crude oil, oil products and natural gas may have an adverse effect on our results of operations and financial condition.

A significant amount of our revenue is derived from sales of crude oil, oil products and natural gas. Factors affecting international prices for crude oil and related oil products include: political developments in crude oil producing regions, particularly the Middle East; the ability of the Organization of Petroleum Exporting Countries (“OPEC”) and other crude oil producing nations to set and maintain crude oil production levels and prices; global and regional supply and demand for crude oil, gas and related products; competition from other energy sources; domestic and foreign government regulations; weather conditions; and global and local conflicts or acts of terrorism. We have no control over these factors. Changes in crude oil prices generally result in changes in prices for related products. International oil prices have fluctuated widely in recent years, declining significantly since the second half of 2014.

Substantial or extended declines in international prices of crude oil and related oil products may have a material adverse effect on our business, results of operations and financial condition and the value of our proved reserves. In addition, significant decreases in the prices of crude oil and related oil products may require us to incur impairment charges in the future or cause us to reduce or alter the timing of our capital expenditures, and this could adversely affect our production forecasts in the medium term and our reserves estimates in the future.

Argentine oil and gas production concessions and exploration permits are subject to certain conditions and may not be renewed or could be revoked.

Law No. 17,319 (the “Hydrocarbons Law”), as amended by Law No. 27,007, provides that conventional (oil and gas) concessions remain in effect for 25 years, non-conventional concessions for 35 years and offshore concessions for 30 years, from the date of their award, and further provides for the extension of concession periods for up to additional ten years, subject to terms and conditions approved by the grantor at the time of the extension. The authority to extend the terms of current and new permits, concessions and contracts is vested with the government of the Argentine province in which the relevant area is located (or the

13

Table of Contents

Argentine government in respect of offshore areas beyond 12 nautical miles). In order to be eligible for an extension, under the amended Hydrocarbons Law, concessionaires must (i) have complied with their obligations under the law and their concession, (ii) be producing hydrocarbons in the concession under consideration, and (iii) submit an investment plan for the development of such areas as requested by the competent authorities at least one year prior to the termination of the concession term. Further, concessionaires applying for extensions under Law No. 27,007 must make additional royalty payments ranging from 3% up to a maximum of 18%. Non-compliance with the obligations and standards set out in the Hydrocarbons Law may also result in the imposition of fines and, in the case of material breaches following the expiration of applicable cure periods, revocation of the concession or permit. We cannot provide assurances that concessions will be extended as a result of the review by the relevant authorities of the investment plans we submit for such purposes in the future, or that other requirements will not be imposed on us in order to obtain extensions. See “Item 4. Information on the Company—Business Overview—Oil and Gas Exploration and Production—Our Oil and Gas Exploration and Production Interests.”

Our crude oil and natural gas reserves estimates involve some degree of uncertainty that could adversely affect our ability to generate income.

Our proved oil and gas reserves are estimated using geological and engineering data to determine with reasonable certainty whether the crude oil or natural gas in known reservoirs is recoverable under existing economic and operational conditions. The accuracy of proved reserves estimates depends on a number of factors, assumptions and variables, some of which are beyond our control. Factors susceptible to our control include drilling, testing and production after the date the estimates are made, which may result in substantial revisions to reserves estimates; the quality of available geological, technical and economic data used by us and our interpretation thereof; the production performance of our reservoirs and our recovery rates, both of which depend in significant part on available technologies as well as our ability to implement such technologies and the relevant know-how; the selection of third parties with which we enter into business; and the accuracy of our estimates of initial hydrocarbons in place, which may prove to be incorrect or require substantial revisions. Factors mainly beyond our control include changes in prevailing oil and natural gas prices, which could have an effect on the quantities of our proved reserves (since the estimates of reserves are calculated under economic conditions existing when such estimates are made); changes in the prevailing tax rules, other government regulations and contractual conditions after the date estimates are made (which could make reserves no longer economically viable to exploit); and certain actions of third parties, including the operators of fields in which we have an interest. See “Item 4. Information on the Company—Oil and Gas Exploration and Production—Reserves.”

As a result of the foregoing, reserves estimates are subject to revision. Any downward revision in our estimated quantities of proved reserves could adversely impact our financial results by leading to increased depreciation, depletion and amortization or impairment charges, which would reduce earnings and shareholders’ equity.

Oil and gas activities are subject to significant economic, environmental and operational risks.

Oil and gas exploration and production activities are subject to particular economic and industry-specific operational risks, some of which are beyond our control, such as production, equipment and transportation risks, as well as natural hazards and other uncertainties, including those relating to the physical characteristics of onshore and offshore oil or natural gas fields. Our operations may be curtailed, delayed or cancelled due to bad weather conditions, mechanical difficulties, shortages or delays in the delivery of equipment, compliance with governmental requirements, fire, explosions, blow-outs, pipe failure, abnormally pressured formations, and environmental hazards, such as oil spills, gas leaks, ruptures or discharges of toxic gases. If these risks materialize, we may suffer substantial operational losses or disruptions in our operations. Drilling may be unprofitable, not only with respect to dry wells, but also with respect to wells that are productive but do not produce sufficient net revenues to return a profit after drilling, operating and other costs are taken into account.

We may not be able to replace our oil and gas reserves and this may have an adverse impact on our future results of operations and financial condition.

In recent years, we have experienced a decline in reserves and production (see “Item 4. Information on the Company—Business Overview—Reserves—Internal Control over Proved Reserves”). The possibility of replacing our crude oil and gas reserves in the future is dependent on our ability to access new reserves, both through successful exploration and reserve acquisitions. We consider exploration, which carries inherent risks and uncertainties, to be our main vehicle for future growth and reserves replacement.

Without successful exploration activities or reserves acquisitions, our proved reserves would decline as our oil and gas production would be forced to rely on our current portfolio of assets.

We cannot guarantee that our exploration, development and acquisition activities will allow us to offset the decline of our reserves. If we are not able to successfully find, develop or acquire sufficient additional reserves, our reserves and therefore our production may continue to decline and, consequently, this may adversely affect our future results of operations and financial condition.

14

Table of Contents

The Argentine government and provincial governments have intervened in the oil and gas industry in the past, and are likely to continue to intervene.

The Argentine government has historically exercised significant influence over the economy, including the energy sector, and companies such as us which operate in that sector have done so in a heavily regulated environment, aimed primarily at ensuring the satisfaction of domestic demand.

To address the Argentine crisis of 2001 and 2002, the Argentine Congress enacted the Public Emergency Law and other emergency regulations, some of which remain in effect to date. Some of these regulations introduced a number of material changes to the regulatory framework applicable to the oil and gas industry in Argentina.

As of the date of this Annual Report, the Public Emergency Law is still in effect. In addition, the Argentine government continues to introduce material changes to the regulatory regime applicable to the oil and gas industry, such as the suspension of the Petróleo Plus (“Oil Plus”) and Refinación Plus (“Refining Plus”) programs, and the obligation to repatriate and sell in the local market 100% of the foreign currency revenues obtained from oil and gas exports.

On April 17, 2012, the Argentine government submitted a bill to the Argentine Congress calling for the expropriation of 51% of the shares of YPF owned by Repsol YPF S.A. (Spain). Effective May 7, 2012, the Argentine Congress enacted Law No. 26,741, sanctioning the expropriation of 51% of YPF’s Class D shares, out of the shares then held by Repsol YPF S.A. (Spain), and 51% of Repsol YPF GAS S.A., represented by 60% of its Class A shares then held by Repsol Butano S.A. (Spain).

Law No. 26,741 also defines the hydrocarbon activities (including the exploitation, industrialization, transportation and commercialization thereof) in the territory of Argentina as of “national public interest.” On July 27, 2012, Decree No. 1,277/12 regulated various aspects of Law No. 26,741, specifically it (a) abrogated the sections of Decree Nos. 1,055/89, 1,212/89 and 1,589/89 (the “Deregulation Decrees”) that established the right to freely market hydrocarbon products in the domestic and external markets, and the exemption from export withholdings; (b) created the Comisión de Planificación y Coordinación Estratégica del Plan Nacional de Inversiones Hidrocarburíferas (Commission of Planning and Strategic Coordination of the National Hydrocarbon Investments Plan, or the “Commission”), in charge of executing a “National Hydrocarbon Investments Plan”; (c) established the obligation for hydrocarbon companies to submit their technical, production and economic data to the Commission, as well as their investment plans; and (d) granted broad powers to the Commission with the aim of monitoring the investment plans and ensuring reasonable commercial prices in the domestic market. See “Item 4. Information on the Company—Regulation of Our Business.” Similarly, in 2012, the governors of ten hydrocarbon-producing Argentine provinces signed the Acuerdo Federal de Hidrocarburos (Federal Hydrocarbons Accord), including among its principal objectives to establish self-sufficiency in oil and gas supplies as a national policy.

In December 2015, the new administration, pursuant to Decree No. 272/2015, which amended Decree No. 1,277/12, dissolved the Commission and transferred certain of the Commission’s functions and duties to the Ministry of Energy and Mining. Through Decree No. 272/2015, the Ministry of Energy and Mining is in charge of completing a comprehensive review of the rules relating to the registration and disclosure requirements applicable to companies operating in the oil and gas sector. However, until any changes in laws or regulations are enacted, we are uncertain as to how any such changes may affect our business and results of operations. Changes made in connection with the Ministry of Energy and Mining’s review, or any further changes in the regulatory framework, may have an adverse effect on the business, revenues and operations of companies operating in the Argentine oil and gas sector, including us.

We cannot assure that these or other measures that may be adopted by the Argentine government or provincial governments with respect to the oil and gas industry will not have a material adverse effect on our business, financial condition or results of operations.

Limits on exports of hydrocarbons and related oil products have affected and may continue to affect our results of operations.

In recent periods, the Argentine government has introduced a series of measures limiting exports of hydrocarbons and related oil products, which have prevented us from profiting from higher prices on these commodities in the international markets, and materially affected our competitiveness and results of operations.

In April 2004, to facilitate the recovery of natural gas prices, the Secretariat of Energy (“SE”) entered into an agreement with natural gas producers, requiring them to sell a specified amount of gas in the local regulated market. During 2006, the SE required producers to redirect gas earmarked for export to supply local thermal power plants and gas distribution companies. In January 2007, the SE confirmed that the ability to export hydrocarbons would be subject to the satisfaction of domestic demand and that exports would have to be authorized on a case-by-case basis by the SE. These measures prevented us from benefiting from higher margins in the international markets. In 2007, upon the expiration of the aforementioned agreement, the Argentine government and producers signed a new agreement effective until 2011 aimed at securing the domestic supply of gas. On January 5, 2012, the SE decided to extend the temporary allocation rules and other criteria established by Resolution No. 599/2007 to set obligations for the timely supply of natural gas, as established under the agreement with natural gas producers in effect from 2007 through 2011 until new legislation is passed.

15

Table of Contents

Under these agreements, temporary limits on certain natural gas exports have been imposed to avoid a crisis in the local supply of natural gas, depriving us of higher prices in the international markets.

Pursuant to SE Resolution No. 1,679/04, since December 2004, producers must obtain the approval of the Argentine government prior to exporting crude oil or diesel. To obtain such approval, exporters must demonstrate that they have either satisfied local demand requirements or have granted the domestic market the opportunity to acquire oil or diesel under terms similar to current domestic market prices and, in the case of diesel, they must also demonstrate, if applicable, that commercial terms offered to the domestic market are at least equal to those offered to their own gas station network. Furthermore, in December 2006, through Resolution No. 1,338/06, the SE extended these regulations to the export of gasoline, fuel oil and fuel oil mixtures, aero kerosene, jet fuel, lubricants, asphalts, coke and by-products for use in the petrochemical industry. In January 2008, the Argentine government temporarily prohibited exports of gasoline and diesel until the domestic market was fully supplied at the prices in force on October 31, 2007.

These restrictions may significantly and adversely affect the profitability of our operations, preventing us from capturing the upside of export prices, and negatively impacting the total volume of refined products sold in the domestic market, due to our need to manage crude oil volumes processed in accordance with our storage capacity.

Notwithstanding the measures recently adopted by the new administration, we cannot assure that the Argentine government will not increase export restrictions on hydrocarbons and related oil products, adversely affecting our financial condition and results of operations.

Export taxes and import regulations on our products have negatively affected, and may continue to negatively affect, the profitability of our operations.

On March 1, 2002, the Argentine government imposed a withholding tax on exports of hydrocarbons, initially lasting five years. The export tax was extended in 2006 by Law No. 26,217 and in 2011 by Law No. 26,732 and is in effect through 2015. This tax framework has prevented us from benefiting from significant increases in international prices for oil, oil related products and natural gas, hindered us from offsetting sustained increases in costs related to the energy industry, and materially affected our competitiveness and results of operations. Effective November 2007, the Ministry of Economy adopted a more onerous method for calculating withholding taxes on exports of crude oil and certain oil by-products. On January 3, 2013, withholding taxes on exports of crude oil were reduced, enabling a reduction of the gap between local and export net prices. In October 2014, the withholding tax on hydrocarbon exports was modified, linking the rate (ranging from 10% to 13%) to a specific price schedule. Additionally, Resolution No. 1077/14 of the Ministry of Economy and Public Finance became effective on January 1, 2015 providing that for so long as the international price of crude oil is less than U.S.$71 per barrel, the applicable withholding tax rate will be 1% and incremental tax rates will apply for so long as the international price of crude oil is equal to or higher than U.S.$71 per barrel. See “Item 5. Operating and Financial Review and Prospects—Factors Affecting Our Consolidated Results of Operations—Regulations of the Energy Industry in Argentina—Withholding Taxes on Exports.”

In addition, in 2012, the Argentine government adopted an import procedure pursuant to which local authorities must pre-approve any import of products and services to Argentina as a precondition to allow importers access to the foreign exchange market for the payment of such imported products and services. During 2012, the European Union, the United States of America and Japan filed claims with the World Trade Organization (WTO) against certain import-related requirements maintained by Argentina. The WTO has found that those measures were not consistent with Argentina’s obligations under the WTO and requested their removal. On December 22, 2015, through Resolution No. 3,823, the Federal Public Revenue Agency ( Agencia Federal de Ingresos Públicos , or “AFIP”) removed the import license procedure in place since 2012, namely the Advance Import Affidavit (“DJAI”) system, and replaced it with the new Comprehensive Import Monitoring System (“SIMI”) intended to ease imports. Among other changes, local authorities must now reply to any request for approval within ten days from the date on which the request is filed.

We cannot assure that the Argentine government will not modify or maintain current export tax rates and import regulations. We cannot predict the impact that any changes may have on our results of operations and financial condition.

Limitations on local pricing in Argentina may adversely affect our results of operations.

In recent years, due to regulatory, economic and government policy factors, our domestic crude oil, gasoline, diesel and other fuel prices have differed substantially from the prices for such products prevailing on the international and regional markets, and our ability to increase or maintain prices to adjust to international price or domestic cost variations has been limited. International crude oil and related oil product prices have declined significantly since the second half of 2014. On December 31, 2015, the BRENT crude oil price fell below U.S.$38 per barrel, representing approximately a 28% decrease compared to the 2015 average price of U.S.$ 52.30 per barrel.

16

Table of Contents

Domestic crude oil prices decreased by U.S.$7 per barrel in the first quarter of 2015 compared to the price in effect as of December 31, 2014, and by an additional 10% in 2016, compared to the price in effect as of December 31, 2015, resulting in a price of U.S.$67.50 and U.S.$54.90 per barrel for Medanito and Escalante crude oil, respectively. However, as of the date of this Annual Report, prices for domestic crude oil and refined products generally exceed the international prices for such products.

In addition, prices at which we sell natural gas in Argentina are subject to government regulations, including compensation schemes resulting in increases in the revenues of companies such as us admitted to natural gas injection stimulus programs such as the Gas Program II (as defined below). See “Item 4—Information on the Company—Regulation of Our Business—Argentine Regulatory Framework—Adjustment of Natural Gas Price at Wellhead.”

Furthermore, the Argentine government sets the tariffs for compensation of generation companies (affecting the Genelba Combined Cycle and Pichi Picún Leufú Hidroelectric Complex operations) in the spot market in Argentine pesos See “Item 4—Information on the Company—Regulation of Our Business—Argentine Regulatory Framework—Electricity.”

For additional information on domestic pricing for our products, see “Item 5. Operating and Financial Review and Prospects—Factors Affecting our Consolidated Results of Operations—Regulation of the Energy Industry in Argentina” and “Item 4. Information on the Company—Regulation of Our Business—Argentine Regulatory Framework.”

We cannot assure that we will be able to maintain or increase the domestic prices of our products, and limitations on our ability to do so would adversely affect our financial condition and results of operations. Similarly, we cannot assure that hydrocarbon prices in Argentina will track increases or decreases in hydrocarbon prices in the international or regional markets. Discrepancies between domestic and international prices may adversely affect our financial condition and results of operations.

Oil and gas prices could affect our level of capital expenditures.

The prices that we are able to obtain for our hydrocarbon products affect the viability of investments in new exploration, development and refining activities, and as a result, the timing and amount of our projected capital expenditures for such purposes. We budget capital expenditures by taking into account, among other things, market prices for our hydrocarbon products. In the event that current domestic prices decrease, our ability to improve our hydrocarbon recovery rates, identify new reserves and carry out certain of our other capital expenditure plans is likely to be affected, which, in turn, could have an adverse effect on our results of operations.

The Argentine government and our associated utility company are in the process of renegotiating utility contracts, and the recoverability of our investments in such associate depends on the successful completion of these negotiations.

The macroeconomic situation of the country after the enactment of the Public Emergency Law in 2002 impacted the economic and financial condition of utility companies in Argentina. The combined effect of (i) the devaluation of the peso in 2002, (ii) the government decision to freeze rates in pesos without reflecting the impact of the devaluation, and (iii) financial debts primarily denominated in foreign currency, adversely affected the utility companies’ financial condition, results of operations and their ability to satisfy financial obligations and pay dividends. Although some of these utility companies have been successful in restructuring their indebtedness, their return to financial stability and profitability on a long-term basis depends on a successful negotiation of tariff increases with the Argentine government. Transportadora de Gas del Sur S.A. (“TGS”) has engaged in negotiations with the Utilities Contract Renegotiation and Analysis Committee ( Unidad de Renegociación y Análisis de Contratos de Servicios Públicos , or the “UNIREN”) and obtained transitional adjustments of prices and tariffs that were necessary to ensure the continuity of the normal provision of its services. On February 16, 2016, the new administration, through Decree No. 367/16, dissolved the UNIREN and transferred the responsibility of renegotiating public service agreements to the ministries with jurisdiction over the relevant activity (in the case of TGS, the Ministry of Energy and Mining) acting jointly with the Ministry of Economy and Public Finance. Pursuant to Resolution No. 31/16 of the Ministry of Energy and Mining, TGS and the ENARGAS are expected to conclude the renegotiation process within twelve months following the issuance of Resolution No. 3,724/16, on March 31, 2016. As of the date of this Annual Report, these discussions have not resulted in tariff increases sufficient for our associated utility company’s regulated segment to return to financial stability and profitability. See “Item 4. Information on the Company—Gas and Energy—Gas Transportation—TGS—Tariff Renegotiation Process,” and “Item 4—Regulation of Our Business—Argentine Regulatory Framework—Natural Gas” and “—Electricity.”

Developments affecting our controlling shareholder may have an adverse effect on our operations.

Beginning in 2014, and over the course of 2015, the Brazilian Federal Prosecutor’s Office investigated irregularities involving Petrobras contractors and suppliers and uncovered a broad payment scheme that involved a wide range of participants, including former Petrobras personnel. Based on the information available to Petrobras, the payment scheme involved a group of companies that, between 2004 and April 2012, colluded to obtain contracts with Petrobras, overcharging Petrobras under those contracts and using the overpayment received under the contracts to fund improper payments to political parties, elected officials or other public officials, individual contractor personnel, former Petrobras personnel and other individuals involved in the payment scheme. In addition to the payment scheme, the investigations identified several specific instances of other contractors and suppliers that allegedly overcharged Petrobras and used the overpayment received from their contracts with Petrobras to fund improper payments, unrelated to the payment scheme, to certain former Petrobras personnel.

17

Table of Contents

Although Brazilian authorities have publicly described Petrobras as a victim of the alleged illegal conduct identified during the above-mentioned investigations, we cannot predict the overall effects of the ongoing investigation, which could have an adverse effect on our business, financial condition or results of operations.

Ongoing internal investigation could affect our business and/or our results of operations.

In response to certain testimony from a former senior Petrobras officer in connection with Brazilian criminal investigations, our board of directors (the “Board of Directors”) has initiated an independent internal investigation process through external specialized law firms. Additionally, a Monitoring Committee was created to oversee the investigation.

As of the date of this Annual Report, the investigation is ongoing but it has not revealed any findings that would result in adjustments and/or additional disclosures to our Audited Consolidated Financial Statements. However, we cannot predict the effects of the ongoing investigation, which could affect our business and/or our results of operations.

Our activities may be adversely affected by events in other countries in which we do business, particularly in Venezuela.

Our operations are concentrated in Latin America, a region that has experienced significant economic, social, political and regulatory volatility. In recent periods, many governments in Latin America have taken steps to assert greater control or increase their share of revenues from the energy sector, spurred by soaring oil and gas prices and nationalist policies. See “Item 4. Information on the Company—Regulation of Our Businesses—Venezuelan Regulatory Framework” and “—Bolivian Regulatory Framework.”

These risks are evidenced by changes in business conditions that we have experienced in Venezuela, Bolivia and Ecuador. See “Item 5. Operating and Financial Review and Prospects—Factors Affecting our Consolidated Results of Operations” and “Item 4. Information on the Company—Oil and Gas Exploration and Production—Production—Production Outside Argentina.”

Regarding our investments in mixed companies in Venezuela, the monetary and fiscal policies implemented by the Venezuelan government together with the significant drop in international oil prices since 2014 have eroded the ability of the mixed companies to efficiently operate the producing fields, creating greater uncertainty as to the risks of our investments in Venezuela.

The level of government intervention in the economy of Latin American countries has adversely affected our business and results of operations, including, by changing the terms and conditions of operating service agreements in Venezuela and by increasing tax rates. We cannot assure that such intervention will not continue or increase, further adversely affecting our business, results of operations and financial condition.

We could be subject to organized labor action.

Many of our operations are highly labor-intensive and require a significant number of workers. The sectors in which we operate are largely unionized. We have experienced organized work disruptions and stoppages in the past, frequently due to strikes by employees of contractors we employ. We cannot assure that we will not experience such disruptions or work stoppages in the future, and any such action could adversely affect our business and revenues.

During 2010, to a lesser extent, 2011 and 2012, gas production in the Austral Basin was affected by labor strikes. Between March and June 2013, we experienced trade union conflicts at the Zárate Plant. During 2014 and 2015, trade union conflicts did not significantly affect our operations and were mostly related to industry-wide actions.

We do not maintain insurance coverage for business interruptions, including business interruptions caused by labor actions. Strikes or other types of conflict with the unionized personnel may adversely affect our results of operations and financial condition.

Our operations could cause environmental damage, and any changes in environmental laws or regulations may increase our operational costs.

Some of our operations are exposed to environmental risks that may arise unexpectedly and result in material adverse effects on our results of operations and financial condition. In addition, the occurrence of any of these risks could result in personal injuries, loss of life, environmental damage, clean-up and repair expenses, equipment damage and liability in civil and administrative proceedings. We cannot assure that we will not incur additional costs related to the environment in the future, which could negatively impact our results of operations and financial condition. In addition, we cannot assure that the insurance coverage that we maintain is adequate to cover the losses that may potentially arise from these environmental risks.

18

Table of Contents

Furthermore, we are subject to extensive environmental laws and regulations both in Argentina and in the other countries in which we operate. Local, provincial and national authorities in Argentina and other countries where we operate may implement new environmental laws and regulations, and are moving towards more stringent enforcement of existing environmental laws and regulations, both of which may require us to incur higher compliance costs. For example, various initiatives in regions outside of Argentina have been made or proposed to regulate hydraulic fracturing processes (which involve injecting water, sand and small volumes of chemicals into a wellbore to fracture hydrocarbon-bearing rock thousands of feet below the surface to facilitate higher flow of hydrocarbons into the wellbore), and drilling activities for non-conventional oil and gas reserves. The imposition of stringent regulatory and permitting requirements related to these practices in Argentina could significantly increase our cost of doing business.

We cannot predict the overall effects of the implementation of new environmental laws and regulations and/or the more stringent enforcement of existing environmental laws and regulations on our financial condition and results of operations.

Oil and gas activity has become increasingly dependent on digital technologies to conduct operations, including certain exploration, development and production activities.

Our technologies, systems, networks, and those of our business partners may become the target of cyber-attacks or information security breaches that could result in the unauthorized release, misuse or loss of confidential information, or other disruption of our business operations. In addition, certain cyber incidents, such as surveillance, may remain undetected for an extended period. We depend on digital technology, including information systems to process financial and operating data, analyze seismic and drilling information and oil and gas reserves estimates. Although we have not experienced any material loss related to cyberattacks, there can be no assurance that we will not be the target of cyberattacks in the future that could adversely affect our operations or financial condition. As cyber threats continue to evolve, we may be required to incur additional expenses to enhance our protective measures or to remediate any information security vulnerability.

If a change of control occurs, we may not have the ability to raise the funds necessary to finance the offer to repurchase as required by our Series S Notes or to replace or collateralize guarantees.

As of the date of this Annual Report, approximately U.S.$300 million of our financial debt is represented by our Series S Notes. Under the supplemental indenture for the Series S Notes, if a change of control occurs, we must offer to repurchase any and all such notes that are outstanding at a purchase price equal to 101% of the aggregate principal amount of such notes, plus any accrued and unpaid interest thereon and additional amounts, if any, through the purchase date. We may not have sufficient funds available to make the required repurchases of the Series S Notes upon a change of control.

If we fail to repurchase (or cause to repurchase) our Series S Notes in circumstances that may constitute an event of default under the supplemental indenture, which may in turn trigger cross-default provisions in other of our debt instruments then outstanding, our results of operations could be adversely affected and the market value of our shares and ADSs could decline.

In connection with other instruments to which we are a party, certain banking institutions have issued guarantees at our request in favor of third parties and we could be required to replace or to collateralize them with a cash deposit in case of a change of control, which could adversely affect our business. Additionally, if we fail to replace or collateralize such guarantees, which may in turn trigger cross-default provisions in other of our debt instruments then outstanding, certain amounts may become immediately due and our business could be adversely affected. See “Item 4. Information on the Company—History and Development—Negotiations for the disposition of controlling interest by our controlling shareholder.”

Risks Relating to Our Shares, ADSs and Series S Notes

Our principal shareholders can exercise control over the Company.

As of the date of this Annual Report, Petrobras holds 67.2% of our capital stock and voting rights and the ANSES holds approximately 11.8% of our shares and voting rights. Petrobras is able to determine or exercise significant influence on substantially all matters requiring approval by a majority of our shareholders, including the election of a majority of our directors. Petrobras also directs our operations and may be able to cause or prevent a change in our control. See “Item 4. Information on the Company—History and Development—Negotiations for the disposition of controlling interest by our controlling shareholder.”

We cannot assure that the interests of our principal shareholders will not diverge from interests of our other investors. See “Item 7. Major Shareholders and Related Party Transactions”

19

Table of Contents

Restrictions on capital outflows imposed by Argentina may impair your ability to receive dividends and distributions on, and the proceeds of any sale of, the shares underlying the ADSs.

In the past, and as recently as 2015, the Argentine government imposed restrictions on capital movements in circumstances where a serious imbalance develops in Argentina’s balance of payments or where there are reasons to foresee such an imbalance. We cannot assure that the Argentine government will not impose restrictions on capital outflows and/or foreign exchange which could impair or prevent the conversion of dividends, distributions, or the proceeds from any sale of shares, as the case may be, from pesos into U.S. dollars and the remittance of the U.S. dollars abroad.

Under the terms of our Deposit Agreement with the depositary for the ADSs, the depositary will convert any cash dividend or other cash distribution we pay on the shares underlying the ADSs into U.S. dollars if, in the judgment of the depositary, that conversion can be made on a practicable basis, and shall distribute such U.S. dollars in accordance with the Deposit Agreement, subject, in each case, to any restrictions under Argentine laws or regulations or applicable permits issued by an Argentine governmental body. If the exchange rate fluctuates significantly during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the dividend distribution.

Under Argentine law, shareholder rights may be different from those in other jurisdictions.

Our corporate affairs are governed by our bylaws and Law No. 19,550 (the “Argentine Companies Law”), which differ from the legal principles that would apply if we were incorporated in a jurisdiction in the United States or in other jurisdictions outside Argentina. In addition, rules governing the Argentine securities markets are different and may be subject to different enforcement in Argentina than in other jurisdictions.

Sales of a substantial number of shares could decrease the market prices of our shares and the ADSs.

Petrobras owns shares representing a significant majority of our capital stock. Sales of a substantial number of shares or ADSs by Petrobras, the ANSES, or any other future significant shareholder, or the anticipation of such sales, could decrease the trading price of our shares and ADSs.

You may be unable to exercise preemptive, accretion or other rights with respect to the shares underlying your ADSs.

You may not be able to exercise the preemptive or accretion rights relating to the shares underlying your ADSs (see “Item 10. Additional Information—Preemptive Rights”) unless a registration statement under the U.S. Securities Act of 1933 (the “Securities Act”) is made effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement with respect to the shares relating to these preemptive rights, and we cannot assure that we will file any such registration statement. Unless we file a registration statement or an exemption from registration is available, you may receive only the net proceeds from the sale of your preemptive rights by the depositary or, if the preemptive rights cannot be sold, they will be allowed to lapse. As a result, U.S. holders of our shares or ADSs may suffer dilution of their interest in the Company upon future capital increases.

In addition, under the Argentine Companies Law, foreign companies that own shares in an Argentine corporation are required to register with the Inspección General de Justicia (Superintendency of Legal Entities, or the “IGJ”) in order to exercise certain shareholder rights, including voting rights. If you own our shares directly (rather than in the form of ADSs), are a non-Argentine company and fail to register with the IGJ, your ability to exercise your rights as a holder of our shares may be limited.

You may be unable to exercise voting rights with respect to the shares underlying your ADSs at our shareholders’ meetings.

The depositary will be treated by us for all purposes as the shareholder with respect to the shares underlying your ADSs. As a holder of American Depositary Receipts (“ADRs”) representing the ADSs being held by the depositary in your name, you will not have direct shareholder rights and may exercise voting rights with respect to the shares represented by the ADSs only in accordance with the Deposit Agreement relating to the ADSs. There are no provisions under Argentine law or under our bylaws that limit the exercise by ADS holders of their voting rights through the depositary with respect to the underlying shares. However, there are practical limitations on the ability of ADS holders to exercise their voting rights due to the additional procedural steps involved in communicating with these holders. ADS holders may be unable to exercise voting rights with respect to the shares underlying the ADSs as a result of these practical limitations.

Shareholders outside Argentina may face additional investment risk from currency exchange rate fluctuations in connection with their holding of our shares or ADSs.

We are an Argentine company and any future payments of dividends on our shares will be denominated in pesos. The peso has historically fluctuated significantly against many major world currencies, including the U.S. dollar. A depreciation of the peso would likely adversely affect the U.S. dollar or other currency equivalent of any dividends paid on our shares and could result in a decline in the value of our shares and ADSs as measured in U.S. dollars.

20

Table of Contents

Developments related to our controlling shareholder may have an effect on the rating of our Series S Notes.

Our Series S Notes are subject to a standby purchase agreement with our controlling shareholder, Petrobras, whereby Petrobras would be obligated to purchase noteholders’ rights to receive payments if we were to default on the payment of any amounts owed under those Notes. Moody’s Investors Service downgraded Petrobras’s global foreign currency debt rating and, consequently, Moody’s Latin America Agente de Calificación de Riesgo (Moody’s Agent for Risk Ratings in Latin America) downgraded the global scale rating on our Series S Notes from Ba2 to Baa3. The ratings for Petrobras’s global debt, and our Series S Notes have been further downgraded. Standard & Poor’s downgraded Petrobras’s global foreign currency debt rating and, consequently, downgraded the global scale rating on our Series S Notes from BB to B+.

A decrease in access to financing sources or access to the capital markets may have an adverse impact on our financial condition. There can be no assurance that Petrobras’s or our ratings will not be downgraded any further. Future downgrades or changes in outlook could adversely affect Petrobras’s and our shares’ value. See “—Developments affecting our controlling shareholder may have an adverse effect on our operations.”