FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For the month of November, 2008

Commission File Number: 001-12102

YPF Sociedad Anónima
(Exact name of registrant as specified in its charter)

Av. Pte. R.S. Peña 777 – 8th Floor
1354 Buenos Aires, Argentina
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F:
Form 20-F
X
Form 40-F
 

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes
 
No
X

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes
 
No
X

Indicate by check mark whether by furnishing the information
contained in this Form, the Registrant is also thereby furnishing the information to the Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes
 
No
X

If “Yes” is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): N/A



This Form 6-K is incorporated by reference into the registration statement on Form F-3/A of YPF Sociedad Anónima filed with the Securities and Exchange Commission on March 10, 2008 (File No. 333-149313).



YPF Sociedad Anónima


TABLE OF CONTENTS


Item
   
     
1
 
Financial statements as of September 30, 2008 and Comparative Information, Limited Review Report on Interim Period Financial Statements and Statutory Audit Committee’s Report



 
Item 1
 
 
SOCIEDAD ANONIMA
 
Financial Statements as of September 30, 2008
and Comparative Information
Limited Review Report on Interim Period
Financial Statements
Statutory Audit Committee's Report
 
 
 
 

 
 
English translation of the report originally issued in Spanish, except for the omission of certain disclosures related to formal legal requirements for reporting in Argentina and the addition of the last paragraph – See Note 13 to the primary financial statements
 
 
Limited Review Report on Interim
Period Financial Statements
 
To the Board of Directors of
YPF SOCIEDAD ANONIMA
Av. Pte. Roque Sáenz Peña 777
Buenos Aires City

1.
Identification of financial statements subject to limited review

We have reviewed the balance sheet of YPF SOCIEDAD ANONIMA (an Argentine Corporation) as of September 30, 2008 and the related statements of income, changes in shareholders' equity and cash flows for the nine-month period then ended. We have also reviewed the consolidated balance sheet of YPF SOCIEDAD ANONIMA and its controlled and jointly controlled companies as September 30, 2008, and the related consolidated statements of income and cash flows for the nine-month period then ended, which are presented as supplemental information in Schedule I. These financial statements are the responsibility of the Company's Management.


2.
Scope of our work

We conducted our review in accordance with generally accepted auditing standards in Argentina for a review of interim period financial statements. A review consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for accounting and financial matters. A review is substantially less in scope than an audit of financial statements, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.


3.
Limited review report

Based on our review, we are not aware of any material modifications that should be made to the financial statements of YPF SOCIEDAD ANONIMA referred to in the first paragraph for them to be in conformity with generally accepted accounting principles in Argentina.

In relation to the financial statements as of December 31, 2007 and September 30, 2007, which are presented for comparative purposes, we issued our unqualified auditors' report dated March 7, 2008, and our unqualified limited review report on interim period financial statements dated November 6, 2007, respectively.
 

 
Certain accounting practices of YPF SOCIEDAD ANONIMA used in preparing the accompanying financial statements conform to generally accepted accounting principles in Argentina, but do not conform to generally accepted accounting principles in the United States of America (see Note 13 to the accompanying financial statements).


Buenos Aires City, Argentina
November 6, 2008


Deloitte & Co. S.R.L.



Ricardo C. Ruiz
Partner

2

 
YPF SOCIEDAD ANONIMA
 
FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2008 AND COMPARATIVE INFORMATION
 
INDEX
 
 
 
Page
   
Cover
1
Consolidated balance sheets
2
Consolidated statements of income
3
Consolidated statements of cash flows
4
Notes to consolidated financial statements
5
Exhibits to consolidated financial statements
16
Balance sheets
18
Statements of income
19
Statements of changes in shareholders' equity
20
Statements of cash flows
21
Notes to financial statements
22
-  Exhibits to financial statements
49
Ratification of lithographed signatures
55


 
English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”),
except for the inclusion of Note 13 to the primary financial statements in the English translation.
In case of discrepancy, the financial statements filed with the CNV prevail over this translation.


YPF SOCIEDAD ANONIMA
 
Avenida Presidente Roque Sáenz Peña 777 – Ciudad Autómona de Buenos Aires, Argentina
 
FISCAL YEARS NUMBER 32 AND 31
BEGINNING ON JANUARY 1, 2008 AND 2007
FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2008 AND COMPARATIVE INFORMATION
(The financial statements as of September 30, 2008 and September 30, 2007 are unaudited)
 
 
Principal business of the Company: exploration, development and production of oil and natural gas and other minerals and refining, transportation, marketing and distribution of oil and petroleum products and petroleum derivatives, including petrochemicals, chemicals and non-fossil fuels, biofuels, and their components, generation of electric power from hydrocarbons, rendering telecommunications services, as well as the production, industrialization, processing, marketing, preparation services, transportation and storage of grains and its derivatives.
 
Date of registration with the Public Commerce Register: June 2, 1977.
 
Duration of the Company: through June 15, 2093.
 
Last amendment to the bylaws: April 24, 2008.
 
Optional Statutory Regime related to Compulsory Tender Offer provided by Decree No. 677/2001 art. 24: not incorporated.
 
 
Capital structure as of September 30, 2008
(expressed in Argentine pesos)
 
 
 
 
Subscribed, paid-in and authorized for stock exchange listing
(Note 4 to primary
financial statements)
 
 
 
 
 
 
-  
Shares of Common Stock, Argentine pesos 10 par value,
1 vote per share
    3,933,127,930  

1

 
Schedule I
1 of 3
 
English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”),
except for the inclusion of Note 13 to the primary financial statements in the English translation.
In case of discrepancy, the financial statements filed with the CNV prevail over this translation.

YPF SOCIEDAD ANONIMA AND CONTROLLED AND JOINTLY CONTROLLED COMPANIES

CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2008 AND DECEMBER 31, 2007
(amounts expressed in millions of Argentine pesos – Note 1 to the primary financial statements)
(The financial statements as of September 30, 2008 are unaudited)
 
   
2008
   
2007
 
             
Current Assets
           
Cash
    146       196  
Investments (Note 2.a)
    818       655  
Trade receivables (Note 2.b)
    3,808       3,235  
Other receivables (Note 2.c)
    2,550       4,361  
Inventories (Note 2.d)
    3,385       2,573  
Total current assets
    10,707       11,020  
                 
Noncurrent assets
               
Trade receivables (Note 2.b)
    25       32  
Other receivables (Note 2.c)
    879       809  
Investments (Note 2.a)
    830       799  
Fixed assets (Note 2.e)
    26,505       25,434  
Intangible assets
    7       8  
Total noncurrent assets
    28,246       27,082  
Total assets
    38,953       38,102  
                 
Current Liabilities
               
Accounts payable (Note 2.f)
    5,005       4,339  
Loans (Note 2.g)
    2,966       471  
Salaries and social security
    233       213  
Taxes payable
    1,598       1,441  
Net advances from crude oil purchasers
    -       9  
Reserves
    551       466  
Total current liabilities
    10,353       6,939  
                 
Noncurrent Liabilities
               
Accounts payable (Note 2.f)
    3,186       2,542  
Loans (Note 2.g)
    674       523  
Salaries and social security
    137       164  
Taxes payable
    21       21  
Reserves
    1,937       1,853  
Total noncurrent liabilities
    5,955       5,103  
Total liabilities
    16,308       12,042  
                 
Shareholder’s Equity
               
Total liabilities and shareholder’s equity
    22,645       26,060  
      38,953       38,102  

Notes 1 to 4 and the accompanying exhibits A and H to Schedule I and the primary financial statements of YPF, are an integral part of and should be read in conjunction with these statements.
 
2

 
Schedule I
2 of 3
 
English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”),
except for the inclusion of Note 13 to the primary financial statements in the English translation.
In case of discrepancy, the financial statements filed with the CNV prevail over this translation.

YPF SOCIEDAD ANONIMA AND CONTROLLED AND JOINTLY CONTROLLED COMPANIES

CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007
(amounts expressed in millions of Argentine pesos, except for per share amounts in Argentine pesos – Note 1 to the primary financial statements)
(The financial statements as of September 30, 2008 and September 30, 2007 are unaudited)

   
2008
   
2007
 
             
Net sales
    26,204       20,869  
Cost of sales
    (17,695 )     (13,917 )
Gross profit
    8,509       6,952  
                 
Administrative expenses (Exhibit H)
    (707 )     (561 )
Selling expenses (Exhibit H)
    (1,724 )     (1,541 )
Exploration expenses (Exhibit H)
    (435 )     (356 )
Operating income
    5,643       4,494  
                 
Income on long-term investments
    82       38  
Other expense, net (Note 2.h)
    (313 )     (171 )
Financial income (expense), net and holding gains:
               
Gains on assets
               
Interests
    104       259  
Exchange differences
    78       100  
Holding gains on inventories
    390       313  
(Losses) gains on liabilities
               
Interests
    (328 )     (216 )
Exchange differences
    19       (57 )
Reversal of impairment of other current assets
    -       69  
Net income before income tax
    5,675       4,829  
Income tax
    (2,287 )     (1,849 )
Net income
    3,388       2,980  
Earnings per share
    8.61       7.58  

Notes 1 to 4 and the accompanying exhibits A and H to Schedule I and the primary financial statements of YPF, are an integral part of and should be read in conjunction with these statements.
 
3

 
Schedule I
3 of 3
 
English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”),
except for the inclusion of Note 13 to the primary financial statements in the English translation.
In case of discrepancy, the financial statements filed with the CNV prevail over this translation.

YPF SOCIEDAD ANONIMA AND CONTROLLED AND JOINTLY CONTROLLED COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007
(amounts expressed in millions of Argentine pesos – Note 1 to the primary financial statements)
(The financial statements as of September 30, 2008 and September 30, 2007 are unaudited)

   
2008
   
2007
 
             
Cash Flows from Operating Activities
           
Net income
    3,388       2,980  
Adjustment to reconcile net income to net cash flows provided by operating activities:
               
Income on long-term investments
    (82 )     (38 )
Dividends from long-term investments
    51       52  
Reversal of impairment of other current assets
    -       (69 )
Depreciation of fixed assets
    3,297       3,105  
Consumption of materials and fixed assets retired, net of allowances
    608       158  
Increased in allowances for fixed assets
    2       99  
Income tax
    2,287       1,849  
Income tax payments
    (1,795 )     (1,654 )
Increase in reserves
    662       570  
Changes in assets and liabilities:
               
Trade receivables
    (566 )     (644 )
Other receivables
    1,743       904  
Inventories
    (812 )     (797 )
Accounts payable
    816       200  
Salaries and social security
    12       (42 )
Taxes payable
    (315 )     (101 )
Net advances from crude oil purchases
    (10 )     (69 )
Decrease in reserves
    (493 )     (396 )
Interests, exchange differences and others
    86       35  
Net cash flows provided by operating activities
    8,879 (1)     6,142 (1)
                 
Cash Flows used in Investing Activities
               
Acquisitions of fixed assets
    (4,631 )     (4,076 )
Investments (non cash and equivalents)
    9       (13 )
Net cash flows used in investing activities
    (4,622 )     (4,089 )
                 
Cash flows used in Financing Activities
               
Payments of loans
    (3,100 )     (1,413 )
Proceeds from loans
    5,748       1,026  
Dividends paid
    (6,789 )     (2,360 )
Net cash flows used in financing activities
    (4,141 )     (2,747 )
Increase (decrease) in Cash and Equivalents
    116       (694 )
                 
Cash and equivalents at the beginning of year
    847       1,087  
Cash and equivalents at the end of period
    963       393  
Increase (decrease) in Cash and Equivalents
    116       (694 )

For supplemental information on cash and equivalents, see Note 2.a.
 
(1)
Includes (85) and (98) corresponding to interest payments for the nine-month periods ended September 30, 2008 and 2007, respectively.
 
Notes 1 to 4 and the accompanying exhibits A and H to Schedule I and the primary financial statements of YPF, are an integral part of and should be read in conjunction with these statements.
 
4

 
Schedule I

English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”),
except for the inclusion of Note 13 to the primary financial statements in the English translation.
In case of discrepancy, the financial statements filed with the CNV prevail over this translation.

YPF SOCIEDAD ANONIMA AND CONTROLLED AND JOINTLY CONTROLLED COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2008 AND COMPARATIVE INFORMATION
(amounts expressed in millions of Argentine pesos – Note 1 to the primary financial statements, except where otherwise indicated)
(The financial statements as of September 30, 2008 and September 30, 2007 are unaudited)


1.
CONSOLIDATED FINANCIAL STATEMENTS

 
Under General Resolution No. 368 from the Argentine Securities Commission (“CNV”), YPF Sociedad Anónima (the “Company” or “YPF”) discloses its consolidated financial statements, included in Schedule I, preceding its primary financial statements. Consolidated financial statements are supplemental information and should be read in conjunction with the primary financial statements.
 
a)
Consolidation policies
 
Following the methodology established by Technical Resolution No. 21 of the Argentine Federation of Professional Councils in Economic Sciences (“F.A.C.P.C.E.”), the Company has consolidated its balance sheets and the related statements of income and cash flows as follows:
 
-
Investments and income (loss) related to controlled companies in which YPF has the number of votes necessary to control corporate decisions are substituted for such companies’ assets, liabilities, net revenues, cost and expenses, which are aggregated to the Company’s proportionate share in their assets, liabilities, net revenues, cost and expenses, considering intercompany profits, transactions, balances and other consolidation  adjustments.
 
-
Investments and income (loss) related to companies in which YPF holds joint control are consolidated line by line on the basis of the Company’s proportionate share in their assets, liabilities, net revenues, cost and expenses, considering intercompany profits, transactions, balances and other consolidations adjustments.
 
Investments in companies under control and joint control are detailed in Exhibit C to the primary financial statements.
 
b)
Financial statements used for consolidation:
 
The consolidated financial statements are based upon the latest available financial statements of those companies in which YPF holds control or joint control, taking into consideration, if applicable, significant subsequent events and transactions, available management information and transactions between YPF and the related companies which could have produced changes to their shareholder’s equity.
 
5

 
c)
Valuation criteria:
 
In addition to the valuation criteria disclosed in the notes to YPF primary financial statements, the following additional valuation criteria have been applied in the preparation of the consolidated financial statements:
 
Fixed assets
 
Properties on foreign unproved reserves have been valued at cost and translated into pesos as detailed in Note 2.d to the primary financial statements. Capitalized costs related to unproved properties are reviewed periodically by Management to ensure the carrying value does not exceed their estimated recoverable value.
 
Salaries and Social Security – Pension Plans and other Postretirement and Postemployment benefits
 
As of December 31, 2007, YPF Holdings Inc., which has operations in the United States of America, had three trustee defined- benefit pension plans and other postretirement and postemployment benefits.
 
During March 2008, YPF Holdings Inc. entered into certain contracts with Prudential Insurance Company (“Prudential”) to settle the liability associated with two defined-benefit pension plans, paying a premium amount of US$ 115 million. Prudential assumed the liabilities under these pension plans as of March 20, 2008.
 
The funding policy related to the remaining pension plan is to contribute amounts to the plan sufficient to meet the minimum funding requirements under governmental regulations, plus such additional amounts as Management may determine to be appropriate.
 
YPF Holdings Inc. provides certain health care and life insurance benefits for eligible retired employees, and also certain insurance, and other postemployment benefits for eligible individuals in case employment is terminated by YPF Holdings Inc. before their normal retirement. YPF Holdings Inc. accrues the estimated cost of retiree benefit payments during employees’ active service periods. Employees become eligible for these benefits if they meet minimum age and years of service requirements. YPF Holdings Inc. accounts for benefits provided when the minimum service period is met, payment of the benefit is probable and the amount of the benefit can be reasonably estimated.
 
The benefits related to the mentioned plans were valued at net present value and accrued based on the years of active service of employees. The net liability for defined benefits and postretirement plans is disclosed as non current liabilities in the “Salaries and social security” account and is the amount resulting from the sum of: the present value of the obligation, net of the fair value of the plan assets (if funded) and net of the unrecognized actuarial losses generated since December 31, 2003. The unrecognized actuarial losses and gains are recognized as expense during the expected average remaining work of the employees participating in the plans and the life expectancy of the retired employees. The Company updates the actuarial assumptions at the end of each year.
 
YPF Holdings Inc. also has a noncontributory supplemental retirement plan for executive officers and other selected key employees. Other postretirement and postemployment benefits are recorded as claims are incurred.
 
As of September 30, 2008, the unrecognized actuarial losses amount to 20 and are associated with one pension plan and other postretirement and postemployment benefits effective as of that date.
 
6

 
Recognition of revenues and costs of construction activities
 
Revenues and costs related to construction activities are accounted by the percentage of completion method. When adjustment in contract values or estimated costs are determined, any change from prior estimates is reflected in earnings in the current period. Anticipated losses on contracts in progress are expensed as soon as they become evident.
 
2.
ANALYSIS OF THE MAIN ACCOUNTS OF THE CONSOLIDATED FINANCIAL STATEMENTS
 
Details regarding the significant accounts included in the accompanying consolidated financial statements are as follows:
 
Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007
 
a)    Investments:
 
2008
 
2007
 
   
Current
   
Noncurrent
   
Current
   
Noncurrent
 
Short-term investments and government securities
    818 (1)     162 (3)     655 (1)     168 (3)
Long-term investments
    -       891 (2)     -       837 (2)
Allowance for reduction in value of holdings in long-term investments
    -       (223 )(2)     -       (206 ) (2)
      818       830       655       799  
 
 
(1)
Includes 817 and 651 as of September 30, 2008 and December 31, 2007, respectively, with an original maturity of less than three months.
 
 
(2)
In addition to the amounts detailed in Exhibit C to the primary financial statements, includes interest in Gas Argentino S.A. (“GASA”). As of September 30, 2008, GASA must restart a new debt restructuring process as certain creditors terminated the refinancing agreement celebrated on December 7, 2005, executing the option contemplated in the mentioned agreement.
 
 
(3)
Corresponds to restricted cash as of September 30, 2008, and December 31, 2007, which represents bank deposits used to pay labor claims and deposits used as guarantees given to government agencies.
 
b)    Trade receivables:
 
2008
   
2007
 
   
Current
   
Noncurrent
   
Current
   
Noncurrent
 
                         
Accounts receivable
    3,739       25       3,142       32  
Related parties
    487       -       533       -  
      4,226       25       3,675       32  
Allowance for doubtful trade receivables
    (418 )     -       (440 )     -  
      3,808       25       3,235       32  
 
7

 
c)    Other receivables:
 
2008
   
2007
 
   
Current
   
Noncurrent
   
Current
   
Noncurrent
 
Deferred income tax
    -       498       -       517  
Tax credits and export rebates
    779       18       931       15  
Trade
    60       -       97       -  
Prepaid expenses
    131       76       111       60  
Concessions charges
    17       53       17       79  
Related parties
    970 (1)     99 (1)     2,681 (1)     -  
Loans to clients
    22       88       14       90  
Advances to suppliers
    135       -       132       -  
From joint ventures and other agreements
    134       -       62       -  
Miscellaneous
    434       98       438       98  
      2,682       930       4,483       859  
Allowance for other doubtful accounts
    (132 )     -       (122 )     -  
Allowance for valuation of other receivables to their estimated realizable value
    -       (51 )     -       (50 )
      2,550       879       4,361       809  
 
(1)
In addition to the amounts detailed in Note 3.c to the primary financial statements, mainly includes 179 with Central Dock Sud S.A., which accrues interest at 6.63% as of September 30, 2008 and 51 with Repsol Netherlands Finance B.V. as of December 31, 2007.
 
d)    Inventories:
 
2008
   
2007
 
             
Refined products
    2,096       1,612  
Crude oil and natural gas
    924       646  
Products in process
    44       46  
Raw materials, packaging materials and others
    321       269  
      3,385       2,573  
 
e)    Fixed assets:
 
2008
   
2007
 
             
Net book value of fixed assets (Exhibit A)
    26,552       25,481  
Allowance for unproductive exploratory drilling
    (3 )     (3 )
Allowance for obsolescence of material and equipment
    (44 )     (44 )
      26,505       25,434  
 
f)    Accounts payable:
 
2008
   
2007
 
   
Current
   
Noncurrent
   
Current
   
Noncurrent
 
Trade
    3,707       17       3,131       21  
Hydrocarbon wells abandonment obligations
    446       2,778       395       2,316  
Related parties
    228       -       140       -  
From joint ventures and other agreements
    356       -       373       -  
Environmental liabilities
    109       351       137       166  
Miscellaneous
    159       40       163       39  
      5,005       3,186       4,339       2,542  
 
8

 
g)    Loans:
             
2008
   
2007
 
   
Interest
rates(1)
   
Principal maturity
   
Current
   
Noncurrent
   
Current
   
Noncurrent
 
                                     
Negotiable Obligations – YPF
    9.13 - 10.00 %     2009-2028       328       204       14       523  
Related parties
    4.77 - 13.50 %     2009-2010       84       470       -       -  
Other bank loans and other creditors
    3.37 - 19.00 %     2008-2009       2,554       -       457       -  
                      2,966       674       471       523  
 
 
(1)
Annual fixed interest rate as of September 30, 2008.
 
Consolidated Statements of Income as of September 30, 2008 and 2007
 
   
Income (Expense)
 
h)    Other expense, net:
 
2008
   
2007
 
Reserve for pending lawsuits and other claims
    (76 )     (140 )
Environmental remediation
    (282 )     (113 )
Miscellaneous
    45       82  
      (313 )     (171 )
 
 
3.
COMMITMENTS AND CONTINGENCIES IN CONTROLLED COMPANIES
 
Laws and regulations relating to health and environmental quality in the United States of America affect nearly all the operations of YPF Holdings Inc. These laws and regulations set various standards regulating certain aspects of health and environmental quality, provide for penalties and other liabilities for the violation of such standards and establish in certain circumstances remedial obligations.

YPF Holdings Inc. believes that its policies and procedures in the area of pollution control, product safety and occupational health are adequate to prevent unreasonable risk of environmental and other damage, and of resulting financial liability, in connection with its business. Some risk of environmental and other damage is, however, inherent in particular operations of YPF Holdings Inc. and, as discussed below, Maxus Energy Corporation (“Maxus”) and Tierra Solutions Inc. (“Tierra”) (both controlled by YPF Holdings Inc.) could have certain potential liabilities associated with operations of Maxus’ former chemical subsidiary. YPF Holdings Inc. cannot predict what environmental legislation or regulations will be enacted in the future or how existing or future laws or regulations will be administered or enforced. Compliance with more stringent law regulations, as well as more vigorous enforcement policies of the regulatory agencies, could in the future require material expenditures by YPF Holdings Inc. for the installation and operation of systems and equipment for remedial measures, possible dredging requirements and in certain other respects. Also, certain laws allow for recovery of natural resource damages from responsible parties and ordering the implementation of interim remedies to abate an imminent and substantial endangerment to the environment. Potential expenditures for any such actions cannot be reasonably estimated.

In the following discussion, references to YPF Holdings Inc. include, as appropriate and solely for the purpose of this information, references to Maxus and Tierra.

In connection with the sale of Maxus’ former chemical subsidiary, Diamond Shamrock Chemicals Company (“Chemicals”) to Occidental Petroleum Corporation (“Occidental”) in 1986, Maxus agreed to indemnify Chemicals and Occidental from and against certain liabilities relating to the business or activities of Chemicals prior to the selling date, September 4, 1986 (“the selling date”), including environmental liabilities relating to chemical plants and waste disposal sites used by Chemicals prior to the selling date.
 
9

 
As of September 30, 2008, reserves for the environmental contingencies and other claims totaled approximately 581. YPF Holdings Inc.’s Management believes it has adequately reserved for all environmental contingencies, which are probable and can be reasonably estimated as such time; however, changes in circumstances, including new information or new  requirements of governmental entities, could result in changes, including additions, to such reserves in the future. The most significant contingencies are described in the following paragraphs:

Newark, New Jersey. A consent decree, previously agreed upon by the U.S. Environmental Protection Agency (“EPA”), the New Jersey Department of Environmental Protection and Energy (“DEP”) and Occidental, as successor to Chemicals, was entered in 1990 by the United States District Court of New Jersey and requires implementation of a remedial action plan at Chemical’s former Newark, New Jersey agricultural chemicals plant. The approved remedy has been completed and paid for by Tierra. This project is in the operation and maintenance phase. YPF Holdings Inc. has reserved approximately 47 as of September 30, 2008, in connection with such activities.

Passaic River, New Jersey. Studies have indicated that sediments of the Newark Bay watershed, including the Passaic River adjacent to the former Newark plant, are contaminated with hazardous chemicals from many sources. These studies suggest that older and more contaminated sediments located adjacent to the former Newark plant generally are buried under more recent sediments deposits. Maxus, forced to act on behalf of Occidental, negotiated an agreement with the EPA under which Tierra has conducted further testing and studies near the plant site. While some work remains in a pending state, these studies were substantially completed in 2005.

In addition:

-
YPF Holdings Inc. has been conducting similar studies under their own auspices for several years.

-
The EPA and other agencies are addressing the lower Passaic River in a joint federal, state, local and private sector cooperative effort designated as the Lower Passaic River Restoration Project (“PRRP”). Tierra, along with other entities, participated in an initial remedial investigation and feasibility study (“RIFS”) in connection with the PRRP. The parties are discussing the possibility of further work with the EPA. The entities have agreed the allocations of costs associated with the RIFS, based on a number of considerations.

-
In 2003, the DEP issued Directive No. 1 to Occidental and Maxus and certain of their respective related entities as well as other third parties. Directive No. 1 seeks to address natural resource damages allegedly resulting from almost 200 years of historic industrial and commercial development of the lower 17 miles of the Passaic River and a part of its watershed. Directive No. 1 asserts that the named entities are jointly and severally liable for the alleged natural resource damages without regard to fault. The DEP has asserted jurisdiction in this matter even though all or part of the lower Passaic River has been designated as a Superfund site and is a subject of the PRRP. Directive No. 1 calls for the following actions: interim compensatory restoration, injury identification, injury quantification and value determination. Maxus and Tierra responded to Directive No. 1 setting forth good faith defenses. Settlement discussions between the DEP and the named entities have been hold, however, no agreement has been reached or is assured.

-
In 2004, the EPA and Occidental entered into an administrative order on consent (the “AOC”) pursuant to which Tierra (on behalf of Occidental) has agreed to conduct testing and studies to characterize contaminated sediment and biota in the Newark bay. The initial field work on this study, which includes testing in the Newark Bay, has been substantially completed. Discussions with the EPA regarding additional work that might be required are underway. EPA has notified other companies in relation to the contamination of the Newark Bay. Additionally, Tierra, acting on behalf of Occidental, is performing a separate RIFS to characterize sediment contamination and evaluate remediations, if necessary, in certain portions of the Hackensack River, the Arthur Kill River, and the Kill van Kull River. Tierra has reached an agreement with five of these parties to share and contribute toward Newark Bay study costs, and is continuing to negotiate with other involved parties.
 
10

 
-
In December 2005, the DEP issued a directive to Tierra, Maxus and Occidental directing said parties to pay the State of New Jersey’s cost of developing a Source Control Dredge Plan focused on allegedly dioxin – contaminated sediment in the lower six–mile portion of the Passaic River. The development of this plan is estimated by the DEP to cost approximately US$ 2 million. This directive was issued even though this portion of the lower Passaic River is a subject of the PRRP. The DEP has advised the recipients that (a) it is engaged in discussions with the EPA regarding the subject matter of the directive, and (b) they are not required to respond to the directive until otherwise notified. Additionally, in December 2005, the DEP sued YPF Holdings Inc., Tierra, Maxus and other several companies, besides to Occidental, in connection with the dioxin contamination allegedly emanating from Chemicals’ former Newark plant and contaminating the lower portion of the Passaic River, Newark Bay, other nearby waterways and surrounding areas. The DEP seeks remediation of natural resources damaged and punitive damages and other matters. The defendants have made responsive pleadings and filings. The Court has recently denied motions to dismiss by Occidental Chemical Corporation, Tierra and Maxus. The DEP filed its Second Amended Complaint in April 2008. YPF filed a motion to dismiss for lack of personal jurisdiction. The motion mentioned above was denied in September, 2008, and the denial was confirmed by the Court of Appeal. Notwithstanding, the Court denied to plaintiffs' motion to bar third party practice and allowed defendants to file third-party complaints. Therefore, all of those companies which have contributed in polluting the area could receive a citation.

-
In June 2007, EPA released a draft Focused Feasibility Study (the “FFS”) that outlines several alternatives for remedial action in the lower eight miles of the Passaic River. These alternatives range from no action, which would result in comparatively little cost, to extensive dredging and capping, which according to the draft FFS, EPA estimated could cost from US$ 0.9 billion to US$ 2.3 billion and are all described by EPA as involving proven technologies that could be carried out in the near term, without extensive research. Tierra, in conjunction with the other parties of the PRRP group, submitted comments on the legal and technical defects of the draft FFS to EPA, as did other interested parties. In light of these comments, EPA decided to initiate his review and informed that a revised remedy proposal will not be forthcoming any earlier than mid-2009.

-
In August 2007, the National Oceanic Atmospheric Administration (“NOAA”) sent a letter to the parties of the PRRP group, including Tierra and Occidental, requesting that the group enters into an agreement to conduct a cooperative assessment of natural resources damages in the Passaic River and Newark Bay. The PRRP group has declined to do so at this time, citing concerns with matters such as the FFS being revised by EPA as described above. Tierra together with several other members, has entered into discussions concerning possible studies to be undertaken. In January 2008, the NOAA sent a letter to YPF S.A., YPF Holdings Inc., CLH Holdings Inc. and other entities, designating them as potentially responsible party (“PRP”). Such letters have been responded appropriately, rejecting the designation as PRP.

-
In June 2008, the EPA, Occidental, and Tierra entered into an AOC, pursuant to which Tierra (on behalf of Occidental) will undertake a removal action of sediment from the Passaic River in the vicinity of the former Diamond Alkali facility. This action will result in the removal of approximately 200,000 cubic yards of sediment, which will be carried out in two different phases. The first phase, which will encompass the removal of 40,000 cubic yards, is scheduled for completion within 30 months, from the effective date of the AOC (June 2008). The second phase involves the removal of approximately 160,000 cubic yards of sediment. This second phase will start once the first one is completed. As of September 30, 2008, the due date of this phase is not estimated. During the removal action, contaminants not produced by the former Diamond plant, such as PCBs and mercury, will necessarily be removed along with dioxin. Although having recognized the estimated costs related to all works mentioned above, YPF Holdings and its subsidiaries may seek cost recovery from the parties responsible for such contamination, provided contaminants’ origins were not from the Diamond Alkali plant. However, as of September 30, 2008, it is not possible to make any predictions regarding the likelihood of success or the funds potentially recoverable in a cost-recovery action.
 
11

 
As of September 30, 2008, there are approximately 270 reserved in connection with the foregoing matters related to the Passaic River and surrounding area, comprising the estimated costs for studies, the YPF Holdings Inc.’s best estimate of the cash flows it could incur in connection with remediation activities considering the studies performed by Tierra, the estimated costs related to the agreement, and in addition certain other matters related to Passaic River and the Newark Bay. However, it is possible that other works, including interim remedial measures, may be ordered. In addition, the development of new information on the imposition of natural resource damages, or remedial actions differing from the scenarios that YPF Holdings Inc. has evaluated could result in additional costs to the amount currently reserved.

Hudson County, New Jersey. Until 1972, Chemicals operated a chromite ore processing plant at Kearny, New Jersey (“Kearny Plant”). According to the DEP, wastes from these ore processing operations were used as fill material at a number of sites in and near Hudson County. The DEP and Occidental, as successor to Chemicals, signed an administrative consent order with the DEP in 1990 for investigation and remediation work at certain chromite ore residue sites in Kearny and Secaucus, New Jersey.

Tierra, on behalf of Occidental, is presently performing the work and funding Occidental’s share of the cost of investigation and remediation of these sites and is providing financial assurance in the amount of US$ 20 million for performance of the work. The ultimate cost of remediation is uncertain. Tierra submitted its remedial investigation reports to the DEP in 2001, and the DEP continues to review the report.

Additionally, in May 2005, the DEP took two actions in connection with the chrome sites in Hudson and Essex Counties. First, the DEP issued a directive to Maxus, Occidental and two other chromium manufacturers directing them to arrange for the cleanup of chromite ore residue at three sites in New Jersey City and the conduct of a study by paying the DEP a total of US$ 20 million. While YPF Holdings Inc. believes that Maxus is improperly named and there is little or no evidence that Chemicals’ chromite ore residue was sent to any of these sites, the DEP claims these companies are jointly and severally liable without regard to fault. Second, the State of New Jersey filed a lawsuit against Occidental and two other entities in state court in Hudson County seeking, among other things, cleanup of various sites where chromite ore residue is allegedly located, recovery of past costs incurred by the state at such sites (including in excess of US$ 2 million allegedly spent for investigations and studies) and, with respect to certain costs at 18 sites, treble damages. The DEP claims that the defendants are jointly and severally liable, without regard to fault, for much of the damages alleged. In February 2008, the parties reached a conceptual agreement on a possible settlement that remains subject to further agreement on terms and conditions. As a result YPF Holdings Inc. has reserved 22 (which are included in the amount of 97 disclosed in the following paragraphs).

In November 2005, several environmental groups sent a notice of intent to sue the owners of the properties adjacent to the former Kearny Plant (the “Adjacent Property”), including among others Tierra, under the Resource Conservation and Recovery Act. The stated purpose of the lawsuit, if filed, would be to require the noticed parties to carry out measures to abate alleged endangerments to health and the environment emanating from the Adjacent Property. The parties have entered into an agreement that addresses the concerns of the environmental groups, and these groups have agreed, at least for now, not to file suit.

Pursuant to a request of the DEP, in the second half of 2006, Tierra and other parties tested the sediments in a portion of the Hackensack River near the former Kearny Plant. Whether additional work will be required, is expected to be determined once the results of this testing have been analyzed.

In March 2008, the DEP approved an interim response action workplan for work to be performed at the Kearny Plant by Tierra and the Adjacent Property by Tierra in conjunction with other parties. As a result YPF Holdings Inc. has reserved 24 (which are included in the amount of 97 disclosed in the following paragraphs).

As of September 30, 2008, there are approximately 97 reserved in connection with the foregoing chrome-related matters. The study of the levels of chromium in New Jersey has not been finalized, and the DEP is still reviewing the proposed action levels. The cost of addressing these chrome-related matters could increase depending upon the final soil action levels, the DEP’s response to Tierra’s reports and other developments.
 
12

 
Painesville, Ohio. In connection with the operation until 1976 of one chromite ore processing plant (“Chrome Plant”), from Chemicals, the Ohio Environmental Protection Agency (“OEPA”) ordered to conduct a RIFS at the former Painesville’s Plant area. Tierra has agreed to participate in the RIFS as required by the OEPA. Tierra submitted the remedial investigation report to the OEPA, which report was finalized in 2003. Tierra is submitting required feasibility reports separately. In addition, the OEPA has approved certain work, including the remediation of specific sites within the former Painesville Works area and work associated with the development plans discussed below (the “Remediation Work”). The Remediation Work has begun. As the OEPA approves additional projects for the site of the former Painesville Works, additional amounts may need to be reserved.

Over ten years ago, the former Painesville Works site was proposed for listing on the national Priority List under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”); however, the EPA has stated that the site will not be listed so long as it is satisfactorily addressed pursuant to the Director’s Order and OEPA’s programs. As of the date of issuance of these financial statements, the site has not been listed. YPF Holdings Inc. has reserved a total of 16 as of September 30, 2008 for its estimated share of the cost to perform the RIFS, the remediation work and other operation and maintenance activities at this site. The scope and nature of any further investigation or remediation that may be required cannot be determined at this time; however, as the RIFS progresses, YPF Holdings Inc. will continuously assess the condition of the Painesville’s plants works site and make any required changes, including additions, to its reserve as may be necessary.

Third Party Sites. Pursuant to settlement agreements with the Port of Houston Authority and other parties, Tierra and Maxus are participating (on behalf of Chemicals) in the remediation of property required Chemicals’ former Greens Bayou facility where DDT and certain other chemicals were manufactured. As of September 30, 2008, YPF Holdings Inc. has reserved 53 for its estimated share of future remediation activities associated with the Greens Bayou facility. Additionally, negotiations have been initiated in connection with claims for natural resources damages. The amount of natural resources damages and the party’s obligations in respect thereof are unknown at the present time.

In June 2005, the EPA designated Maxus as a PRP at the Milwaukee Solvay Coke & Gas site in Milwaukee, Wisconsin. The basis for this designation is Maxus alleged status as the successor to Pickands Mather & Co. and Milwaukee Solvay Coke Co., companies that the EPA has asserted are former owners or operators of such site. Preliminarily works in connection with the RIFS of this site commenced in the second half of 2006. YPF Holdings Inc. has reserved 1 as of September 30, 2008 for its estimated share of the costs of the RIFS. YPF Holdings Inc. lacks sufficient information to determine additional exposure or costs, if any; it might have in respect of this site.

Maxus has agreed to defend Occidental, as successor to Chemicals, in respect of the Malone Services Company Superfund site in Galveston County, Texas. This site is a former waste disposal site where Chemicals is alleged to have sent waste products prior to September 1986. It is the subject of enforcement activities by the EPA. Although Occidental is one of many PRPs that have been identified and have agreed to an AOC, Tierra (which is handling this matter on behalf of Maxus) presently believes the degree of Occidental’s alleged involvement as successor to Chemicals is relatively small.

Chemicals has also been designated as a PRP with respect to a number of third party sites where hazardous substances from Chemicals’ plant operations allegedly were disposed or have come to be located. At several of these, Chemicals has no known exposure. Although PRPs are typically jointly and severally liable for the cost of investigations, cleanups and other response costs, each has the right of contribution from other PRPs and, as a practical matter, cost sharing by PRPs is usually effected by agreement among them. As of September 30, 2008, YPF Holdings Inc. has reserved 7 in connection with its estimated share of costs related to certain sites and the ultimate cost of other sites cannot be estimated at this time.
 
13

 
Black Lung Benefits Act Liabilities. The Black Lung Benefits Act provides monetary and medical benefits to miners disabled with a lung disease, and also provides benefits to the dependents of deceased miners if black lung disease caused or contributed to the miner’s death. As a result of the operations of its coal-mining subsidiaries, YPF Holdings Inc. is required to provide insurance of this benefit to former employees and their dependents. As of September 30, 2008, YPF Holdings Inc. has reserved 30 in connection with its estimate of these obligations.

Legal Proceedings. In 2001, the Texas State Controller assessed Maxus approximately US$ 1 million in Texas state sales taxes for the period of September 1, 1995 through December 31, 1998, plus penalty and interest. In August 2004, the administrative law judge issued a decision affirming approximately US$ 1 million of such assessment, plus penalty and interest. YPF Holdings Inc. believes the decision is erroneous, but has paid the revised tax assessment, penalty and interest (a total of approximately US$ 2 million under protest). Maxus filed a suit in Texas state court in December 2004 challenging the administrative decision. The matter will be reviewed by a trial de novo in the court action.

In 2002, Occidental sued Maxus and Tierra in state court in Dallas, Texas seeking a declaration that Maxus and Tierra have the obligation under the agreement pursuant to which Maxus sold Chemicals to Occidental to defend and indemnify Occidental from and against certain historical obligations of Chemicals, including claims related to “Agent Orange” and vinyl chloride monomer, notwithstanding the fact that said agreement contains a 12-year cut-off for defense and indemnity obligations with respect to most litigation. Tierra was dismissed as a party, and the matter was tried in May 2006. The trial court decided that the 12-year cut-off period did not apply and entered judgment against Maxus. This decision was affirmed by the Court of Appeals in February 2008. Maxus has petitioned the Supreme Court of Texas for review. This lawsuit was denied. This decision will require Maxus to accept responsibility of various matters which it has refused indemnification since 1998 which could result in the incurrence of costs in addition to YPF Holdings Inc.’s current reserves for this matter. Maxus believes that its current reserves according to the available information to the date of the financial statements are adequate for these costs. As of September 30, 2008 YPF Holdings Inc. has reserved 46 in respect to this matter.

In March 2005, Maxus agreed to defend Occidental, as successor to Chemicals, in respect of an action seeking the contribution of costs incurred in connection with the remediation of the Turtle Bayou waste disposal site in Liberty County, Texas. The plaintiffs alleged that certain wastes attributable to Chemicals found their way to the Turtle Bayou site. Trial for this matter was bifurcated, and in the liability phase Occidental and other parties were found severally, and not jointly, liable for waste products disposed of at this site. Trial in the allocation phase of this matter was completed in the second quarter of 2007, and the court has entered a decision setting Occidental’s liability at 15.96% of those costs incurred by one of the plaintiffs. Occidental’s motion has been filed with the court. That decision was appealed, and the parties are awaiting the court’s decision. As of September 30, 2008, YPF Holdings Inc. has reserved 11 in respect of this matter.

YPF Holdings Inc., including its subsidiaries, is a party to various other lawsuits, the outcomes of which are not expected to have a material adverse effect on YPF’s financial condition. YPF Holdings Inc. reserves legal contingences that are probable and can be reasonably estimated.

YPF Holdings Inc. has entered into various operating agreements and capital commitments associated with the exploration and development of its oil and gas properties which are not material except those for the “Neptune Prospect”. On March 16, 2008, the Company was notified that a structural anomaly was identified in at least one of the pontoons of the Neptune Platform. As of the date of the issuance of these financial statements, remediation activities are completed, and production has started gradually since July 2008. Total commitments related to the development of the Neptune Prospect amounted to US$ 34 million.
 
14

 
4.
CONSOLIDATED BUSINESS SEGMENT INFORMATION

The Company organizes its business into four segments which comprise: the exploration and production, including contractual purchases of natural gas and crude oil purchases arising from service contracts and concession obligations, as well as crude oil intersegment sales, natural gas and its derivatives sales and electric power generation (“Exploration and Production”); the refining, transport, purchase and marketing of crude oil to unrelated parties and refined products (“Refining and Marketing”); the petrochemical operations (“Chemical”); and other activities, not falling into these categories, are classified under “Corporate and Other”; which principally includes corporate administration costs and assets, construction activities and environmental remediation activities related to YPF Holdings Inc. discontinued operations (Note 3).

Operating income (loss) and assets for each segment have been determined after intersegment adjustments.

   
Exploration and Production
   
Refining and Marketing
   
Chemical
   
Corporate
and Other
   
Consolidation Adjustments
   
Total
 
                                     
Nine–month period ended
September 30, 2008
                                   
Net sales to unrelated parties
    3,131       18,830       2,049       123       -       24,133  
Net sales to related parties
    737       1,334       -       -       -       2,071  
Net intersegment sales
    9,024       920       858       392       (11,194 )     -  
Net sales
    12,892       21,084       2,907       515       (11,194 )     26,204  
Operating income (loss)
    2,493       2,886       927       (538 )     (125 )     5,643  
Income on long–term investments
    70       12       -       -       -       82  
Depreciation
    2,831       327       82       57       -       3,297  
Acquisitions of fixed assets
    3,972       603       94       313       -       4,982  
Assets
    21,360       10,617       2,488       5,049       (561 )     38,953  
Nine–month period ended
September 30, 2007
                                               
Net sales to unrelated parties
    2,310       14,599       1,855       99       -       18,863  
Net sales to related parties
    495       1,511       -       -       -       2,006  
Net intersegment sales
    9,770       1,405       599       262       (12,036 )     -  
Net sales
    12,575       17,515       2,454       361       (12,036 )     20,869  
Operating income (loss)
    3,550       1,008       379       (480 )     37       4,494  
Income on long–term investments
    25       13       -       -       -       38  
Depreciation
    2,714       281       67       43       -       3,105  
Acquisitions of fixed assets
    3,299       528       79       170       -       4,076  
Year ended December 31, 2007
                                               
Assets
    19,893       11,199       2,220       5,421       (631 )     38,102  

Export sales, net of withholdings taxes, for the nine–month periods ended September 30, 2008 and 2007 were 5,711 and 6,176 respectively. Export sales were mainly to the United States of America, Brazil and Chile.
 
15

 
Schedule I
Exhibit A

English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”),
except for the inclusion of Note 13 to the primary financial statements in the English translation.
In case of discrepancy, the financial statements filed with the CNV prevail over this translation.

YPF SOCIEDAD ANONIMA AND CONTROLLED AND JOINTLY CONTROLLED COMPANIES

CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2008 AND COMPARATIVE INFORMATION
FIXED ASSETS EVOLUTION
(amounts expressed in millions of Argentine pesos – Note 1 to the primary financial statements)
(The financial statements as of September 30, 2008 and September 30, 2007 are unaudited)
 
   
2008
 
   
Cost
 
Main account
 
Amounts at beginning
of year
   
Translation
net effect (5)
   
Increases
   
Net decreases,
 transfers and reclassifications
   
Amounts at
end of period
 
                               
Land and buildings
    2,391       -       -       73       2,464  
Mineral property, wells and related equipments
    51,595       (3 )     351       3,029       54,972  
Refinery equipment and petrochemical plants
    9,227       -       7       305       9,539  
Transportation equipment
    1,887       -       -       63       1,950  
Materials and equipments in warehouse
    791       -       543       (482 )     852  
Drilling and work in progress
    4,617       (1 )     3,707       (3,520 )     4,803  
Exploratory drilling in progress
    147       -       263       (282 )     128  
Furniture, fixtures and installations
    622       -       4       118       744  
Selling equipment
    1,406       -       1       44       1,451  
Other property
    377       -       106       (16 )     467  
Total 2008
    73,060       (4 )     4,982 (2)     (668 )(1)     77,370  
Total 2007
    61,939       11       4,076       5,011 (1)(6)     71,037  

 
   
2008
   
2007
 
Main account
 
Accumulated
at beginning
of year
   
Net decreases,
transfers and
reclassifications
   
Depreciation
rate
   
Increases
   
Accumulated
at the end of
period
   
Net book
value as of
09-30-08
   
Net book
value as of
09-30-07
   
Net book
value as of
12-31-07
 
                                                 
Land and buildings
    1,108       (1 )     2 %     41       1,148       1,316       1,293       1,283  
Mineral property, wells and related equipments
    37,131       (43 )       (4)     2,791       39,879       15,093 (3)     14,088 (3)     14,464 (3)
Refinery equipment and petrochemical plants
    6,139       (3 )     4 - 10 %     317       6,453       3,086       2,983       3,088  
Transportation equipment
    1,324       (2 )     4 - 5 %     47       1,369       581       553       563  
Materials and equipment in warehouse
    -       -       -       -       -       852       746       791  
Drilling and work in progress
    -       -       -       -       -       4,803       4,140       4,617  
Exploratory drilling in progress
    -       -       -       -       -       128       133       147  
Furniture, fixtures and installations
    523       (1 )     10 %     47       569       175       106       99  
Selling equipment
    1,056       -       10 %     44       1,100       351       363       350  
Other property
    298       (8 )     10 %     10       300       167       79       79  
Total 2008
    47,579       (58 ) (1)             3,297       50,818       26,552                  
Total 2007
    39,377       4,071 (1)(6)             3,105       46,553               24,484       25,481  

(1) 
Includes  2 and 99 of net book value charged to fixed assets allowances for the nine-month periods ended September 30, 2008 and 2007, respectively.
(2) 
Includes 351 corresponding to the future cost of hydrocarbon wells abandonment obligations for the nine-month period ended September 30, 2008.
(3) 
Includes 724 , 901 and 851 of mineral property as of September 30, 2008 and 2007 and December 31, 2007, respectively.
(4) 
Depreciation has been calculated according to the unit of production method.
(5) 
Includes the net effect of the exchange differences arising from the translation of fixed assets net book values at beginning of the year in foreign companies.
(6) 
Includes 5,291 of cost and 4,094 of accumulated depreciation corresponding to oil and gas exploration and producing areas, which were disclosed as held for sale as of December 31, 2006.

16

 
Schedule I
Exhibit H
English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”),
except for the inclusion of Note 13 to the primary financial statements in the English translation.
In case of discrepancy, the financial statements filed with the CNV prevail over this translation.

YPF SOCIEDAD ANONIMA AND CONTROLLED AND JOINTLY CONTROLLED COMPANIES

CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007
EXPENSES INCURRED
(amounts expressed in millions of Argentine pesos – Note 1 to the primary financial statements)
(The financial statements as of September 30, 2008 and September 30, 2007 are unaudited)
 
   
2008
   
2007
 
   
Production
costs
   
Administrative
expenses
   
Selling
expenses
   
Exploration
expenses
   
Total
   
Total
 
                                     
Salaries and social security taxes
    757       151       150       41       1,099       917  
Fees and compensation for services
    155       254       36       1       446       347  
Other personnel expenses
    245       79       20       14       358       287  
Taxes, charges and contribution
    208       19       287       -       514       394  
Royalties and easements
    1,730       -       5       11       1,746       1,474  
Insurance
    86       3       10       -       99       93  
Rental of real estate and equipment
    294       3       42       -       339       290  
Survey expenses
    -       -       -       75       75       136  
Depreciation of fixed assets
    3,162       50       84       1       3,297       3,105  
Industrial inputs, consumable materials and supplies
    432       6       45       4       487       448  
Operation services and other service contracts
    814       14       68       8       904       534  
Preservation, repair and maintenance
    1,689       15       38       2       1,744       1,258  
Contractual commitments
    160       -       -       -       160       478  
Unproductive exploratory drilling
    -       -       -       270       270       100  
Transportation, products and charges
    693       -       853       -       1,546       1,327  
(Recovery) allowance for doubtful trade receivables
    -       -       (21 )     -       (21 )     42  
Publicity and advertising expenses
    -       59       66       -       125       96  
Fuel, gas, energy and miscellaneous
    986       54       41       8       1,089       631  
Total 2008
    11,411       707       1,724       435       14,277          
Total 2007
    9,499       561       1,541       356               11,957  
 
17

 
English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”),
except for the inclusion of Note 13 to the primary financial statements in the English translation.
In case of discrepancy, the financial statements filed with the CNV prevail over this translation.

YPF SOCIEDAD ANONIMA

BALANCE SHEETS AS OF SEPTEMBER 30, 2008 AND DECEMBER 31, 2007
(amounts expressed in millions of Argentine pesos  - Note 1)
(The financial statements as of September 30, 2008 are unaudited)

   
2008
   
2007
 
             
Current Assets
           
Cash
    45       120  
Investments (Note 3.a)
    486       242  
Trade receivables (Note 3.b)
    3,731       3,148  
Other receivables (Note 3.c)
    2,325       4,937  
Inventories (Note 3.d)
    2,955       2,284  
Total current assets
    9,542       10,731  
                 
Noncurrent Assets
               
Trade receivables (Note 3.b)
    25       31  
Other receivables (Note 3.c)
    1,248       788  
Investments (Note 3.a)
    2,474       2,718  
Fixed assets (Note 3.e)
    24,595       23,585  
Total noncurrent assets
    28,342       27,122  
Total assets
    37,884       37,853  
                 
Current Liabilities
               
Accounts payable (Note 3.f)
    5,242       5,115  
Loans (Note 3.g)
    2,637       288  
Salaries and social security
    178       167  
Taxes payable
    1,460       1,293  
Net advance from crude oil purchases
    -       9  
Reserves (Exhibit E)
    356       323  
Total current liabilities
    9,873       7,195  
                 
Noncurrent Liabilities
               
Accounts payable (Note 3.f)
    3,163       2,519  
Loans (Note 3.g)
    674       523  
Taxes payable
    6       8  
Reserves (Exhibit E)
    1,523       1,548  
Total noncurrent liabilities
    5,366       4,598  
Total liabilities
    15,239       11,793  
                 
Shareholders' Equity (per corresponding statements)
    22,645       26,060  
Total liabilities and shareholders' equity
    37,884       37,853  
 
Notes 1 to 13 and the accompanying exhibits A, C, E, F, G, and H and Schedule I
are an integral part of these statements.
 
18

 
English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”),
except for the inclusion of Note 13 to the primary financial statements in the English translation.
In case of discrepancy, the financial statements filed with the CNV prevail over this translation.
 
YPF SOCIEDAD ANONIMA
 
STATEMENTS OF INCOME
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007
 
(amounts expressed in millions of Argentine pesos –except for per share amounts in Argentine pesos - Note 1)
(The financial statements as of September 30, 2008 and September 30, 2007 are unaudited)
 
   
2008
   
2007
 
             
Net sales (Note 3.h)
    24,325       19,448  
Cost of sales (Exhibit F)
    (16,757 )     (13,215 )
Gross profit
    7,568       6,233  
                 
Administrative expenses (Exhibit H)
    (604 )     (487 )
Selling expenses (Exhibit H)
    (1,632 )     (1,458 )
Exploration expenses (Exhibit H)
    (419 )     (332 )
Operating income
    4,913       3,956  
                 
Income on long–term investments
               
Other expense net (Note 3.i)
    272       273  
Financial income, net and holding gains:
    (27 )     (76 )
Gains on assets
               
Interests
    94       257  
Exchange differences
    76       90  
Holding gains on inventories
    355       302  
(Losses) gains on liabilities
               
Interests
    (313 )     (205 )
Exchange differences
    16       (56 )
Reversal of impairment of other current assets (Note 2.j)
    -       69  
Net income before income tax
    5,386       4,610  
Income tax (Note 3.j)
    (1,998 )     (1,630 )
Net income
    3,388       2,980  
Earnings per share (Note 1)
    8.61       7.58  
 
Notes 1 to 13 and the accompanying exhibits A, C, E, F, G, and H and Schedule I
are an integral part of these statements.
 
19

 
English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”),
except for the inclusion of Note 13 to the primary financial statements in the English translation.
In case of discrepancy, the financial statements filed with the CNV prevail over this translation.
 
YPF SOCIEDAD ANONIMA
 
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007
(amounts expressed in millions of Argentine pesos except for per share amounts in Argentine pesos – Note 1)
(The financial statements as of September 30, 2008 and September 30, 2007 are unaudited)
 
 
   
2008
 
   
Shareholders’ Contributions
 
   
Subscribed
capital
   
Adjustment to
Contributions
   
Issuance
Premiums
   
Total
 
                         
Balances at the beginning of year
    3,933       7,281       640       11,854  
As decided by the Board of Directors’ meeting of March 6, 2007:
                               
- Cash dividends (6 per share)
    -       -       -       -  
As decided by the Board of Directors’ meeting of February 6, 2008:
    -       -       -       -  
- Cash dividend (10.76 per share)
    -       -       -       -  
As decided by the Ordinary and Extraordinary Shareholders’ meeting of April 24, 2008:
                               
- Cash dividends (6.5 per share)
    -       -       -       -  
- Appropriation to Legal Reserve
    -       -       -       -  
- Reversal of Reserve for Future Dividends
    -       -       -       -  
- Appropriation to Reserve for Future Dividends
    -       -       -       -  
Net decrease in deferred earnings (Note 2.i)
    -       -       -       -  
Net income
    -       -       -       -  
Balances at the end of period
    3,933       7,281       640       11,854  
 
 
   
2008
   
2007
 
   
Legal
Reserve
   
Deferred
Earnings (losses)
   
Reserve for
Future
Dividends
   
Unappropriated
Retained
Earnings
   
Total
Shareholders’
Equity
   
Total
Shareholders’
Equity
 
                                     
Balances at the beginning of year
    2,020       (135 )     4,584       7,737       26,060       24,345  
As decided by the Board of Directors’ meeting of March 6, 2007:
                                               
- Cash dividends (6 per share)
    -       -       -       -       -       (2,360 )
As decided by the Board of Directors’ meeting of February 6, 2008:
                                               
- Cash dividends (10.76 per share)
    -       -       (4,232 )     -       (4,232 )     -  
As decided by the Ordinary and Extraordinary Shareholders’ meeting of April 24, 2008:
                                               
- Cash dividends (6.5 per share)
    -       -       -       (2,557 )     (2,557 )        
- Appropriation to Legal Reserve
    204       -       -       (204 )     -       -  
- Reversal of Reserve for Future Dividends
    -       -       (352 )     352       -       -  
- Appropriation to Reserve for Future Dividends
    -       -       4,003       (4,003 )     -       -  
Net decrease in deferred earnings (Note 2.i)
    -       (14 )     -       -       (14 )     (10 )
Net income
    -       -       -       3,388       3,388       2,980  
Balances at the end of period
    2,224       (149 )     4,003       4,713       22,645       24,955  
 
Notes 1 to 13 and the accompanying exhibits A, C, E, F, G, and H and Schedule I
are an integral part of these statements.
 
20

 
English translation of the financial statements originally filed in Spanish with the Argentine Securities Commission (“CNV”),
except for the inclusion of Note 13 to the primary financial statements in the English translation.
In case of discrepancy, the financial statements filed with the CNV prevail over this translation.
 
YPF SOCIEDAD ANONIMA
 
STATEMENTS OF CASH FLOWS
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007
(amounts expressed in millions of Argentine pesos– Note 1)
(The financial statements as of September 30, 2008 and September 30, 2007 are unaudited)
 
   
2008
   
2007
 
             
Cash Flows from Operating Activities
           
Net income
    3,388       2,980  
Adjustment to reconcile net income to net cash flows provided by operating activities:
               
Income on long-term investments
    (272 )     (273 )
Dividends from long-term investments
    514       424  
Reversal of impairment of other current assets
    -       (69 )
Depreciation of fixed assets
    3,193       3,024  
Consumption of materials and fixed assets retired, net of allowances
    481       146  
Increase in allowances for fixed assets
    2       99  
Income tax
    1,998       1,630  
Income tax payments
    (1,579 )     (1,435 )
Increase in reserves
    379       567  
Changes in assets and liabilities:
Trade receivables
    (577 )     (592 )
Other receivables
    1,148       566  
Inventories
    (671 )     (750 )
Accounts payable
    927       270  
Salaries and social security
    11       (17 )
Taxes payable
    (231 )     (96 )
Net advances from crude oil purchases