"Argentina’s biggest energy company, proposes using 91 percent of 2011 profit to issue new shares instead of dividends as the government seeks to increase control of the company. YPF American depositary receipts surged on the announcement."
When they write "instead of dividends" above, I'm thinking they mean YPF keeps the cash to invest and give us shareholders stock in lieu of cash as a dividend. While this is a little dilutive it's a great idea. This plan to appeases all involved, helps use profits to expand and still very good for shareholders!
We, at this point, don't know the intentions of the company.
When companies issue more stock, it usually signals something significant is about to happen. In many cases, the company will make clear what it intends to do with the extra cash so existing investors know that the dilution of their stake will buy increased value for the company.
Other companies are more circumspect about what they plan to do with the extra cash and only hint the vaguest terms about their plans.
Again, we can speculate the reasons, but in reality we probably won't know until the shareholders are issued the voting ballots.