Pampa Energia S.A.

Good morning, ladies and gentlemen, and thank you for waiting. I'm Margarita Chun from IAR, and we would like to inform you that this event is being recorded, and all participants will be in listen-only mode during this presentation. Only available at browser or through the app. At the time, further instructions will be given. Should any participant need assistance during this video conference, send us a prayer. Read the disclaimer. It's located in the second page of our presentation. Let me mention that forward-looking information currently available to the company. They involve risks, uncertainties, and assumptions because they are related to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand the general economic conditions, industry conditions, and other operating factors could also affect the future results of Pampa Energia and could cause results to differ materially from those expressed in statements. Now I'll turn the video conference over to Lida Wang, Investor Relations Officer of Pampa Energia. Lida, you may begin the conference.

Thank you, Margarita. Good morning, everyone, and thank you for joining our conference call. This is a special call, so for the interest of time, I will make a brief summary of the quarter's key figures, the impact of COVID-19, and the latest events since our last call. We will focus more on the previous and Yandy, as TGS and NNR already held their call earlier this week. As you can see, our CEO, Mr. Gustavo Mariani, and our CFO, Mr. Gabriel Coelho, asked for the Q&A. Before we begin, let me remind you that Pampas Q1 2019 and 2020 figures are all recorded under U.S. dollar as functional currency. In the case of the piezo-linked sub-theories, such as our utilities, their figures are adjusted by inflation and shown in dollars at the end of the reporting period of effects. Also, you can see in this slide, when we talk about compound consolidated, as well as compound restricted group, a definition we commonly use for common employment purposes. It is publicly known that COVID-19 has spread all over the world in Argentina. And Argentina is no exception. The federal government declared mandatory lockdown effective as from March 20 and has been following its evolution by extending it from time to time. Therefore, all plant-based businesses were deemed essential for SBR production in the petrochemical segment. What does it mean? Thank you very much. Two-thirds are employed at our operating assets or perform operating jobs, and 70% of them are going to work. The other one-third of our personnel are support areas for our businesses and corporate, and only 10% of them are going to work. The rest, that is almost 50% of our workforce, is staying at home working remotely. Q1-20 was not much affected... that negatively impact somehow in the next quarter. On the white hat, some direct government measures have been enacted that impact such as the hold to services connections for certain users that fail to pay or delay payments. Whereas the freeze in domestic LPG prices affecting PDF and others. On the other hand, we are witnessing lower demand for oil and gas, lesser power dispatch, collapse in the demand of petrochemical products, and higher delinquency, mainly from end users at Adenor, gas distribution companies at TGS, and from Camensa, our largest client at Power and Gas. Therefore, to reduce the impact of the difficult conditions ahead, We have revisited our budget by reducing operating... ...safety and reliability of our assets. So, let's start commending the quarter's key takeaways. As shown in slide five, revenues in Q120 fell 12% year-on-year to $721 million, mainly because Chemex had to over... ...purposes. In addition to the hopes to tariff increases, lower prices of oil and gas, and new pricing scheme in Texas from February for spot power capacity. These were partially upset by higher sales for new power units, as well as improved electricity demand at Adenos. Therefore, in Q120, around 40% of our sales were dollar-linked, but more than 50% in EVA terms coming from our core businesses, new power capacity, and EMP. Adjusted EVA increased year-on-year by 5% to $221 million for the quarter, mainly explained by more power capacity, lower EMP, and Eleanor Fines due to the better quality of service and dilution of the PESA-nominated cost because of the effects. A terrible decrease at utilities and lower prices at legacy power engines. Quarter-on-quarter, EVDA increased by 30%, mainly because Q1 comprises most of the power of the summer peak season for electricity. Therefore, higher electricity costs Lower Fines at Adenor, but also lower prices at EMP. As we show on the right below, our generation takes more than 50% of the consolidated ETA, while EMP takes 13%, mostly led by gas production, and only 3% for oil. And the rest is composed by our utilities, Adenor and TGS and TransEner at our equity stakes. Moreover, as shown in the chart below, in the first quarter of this year, our capex decreased significantly compared to the last year and last quarter, mainly because of Camila Cruz's pension project and Senea Varadarán's just kill. EMP is heavily lowering the drilling and completion phase due to the uncertain pricing environment, in addition to the lower capex at Edenor because of the devaluation and parity. In this slide six that we're seeing, we want to show you the impact of the lockdown in the Argentine power grid. The crisis began in the second half of 2018, economic crisis. So first half is unaffected. 2019 was mostly hit by the crisis, recurring towards the last quarter. 2020 began with that push, but as the lockdown took place in... April is north 20% on average lower than March, being reduced around 3,000 megawatts of net demand. If we compare it with April 2019, the net demand is around 12% down on average, but if we compare it to the year before 2018, net demand is around 20% down. So it is important to highlight that in April it's chiller, was chiller, than previous years, as it was before. Thank you for joining us today. are the last units to fulfill the demand. However, the presentation business model is highly dependent on capacity payments, so lower dispatch does not much impact on the revenue making as long as records outstanding availability, especially for PPA-based energy. Our two combined cycles of Loma de la Elata and Ginerba are fuel dispatch, but the remaining thermal units were not so required. If we take the average of the gross power demand versus the post-lockdown of 48 days as of May 6th, the Argentine demand overall fell by 26% or 4,500 megawatts, mostly driven by industries close that have not been essential, such as car makers, steel industry, construction, textile, and so on. This cost also got affected, but mainly because most of the SMEs and large users were closed down by the lockdown. Comparing the lockdown period with this decrease is 8%, still mostly due to the industry. Moving to the power generation segment as seen on slide eight, during the first quarter of 2020, we posted an adjusted VDA of $140 million, 18%. as well as the devaluation impact on our PISA-nominated costs. These effects were partially offset mainly by the reduction and specification in the remuneration scheme for the spot energy as from February 2020 worsened by the FX depreciation. Four and a quarter summer pricing for spot energy and higher power dispatch in Q1 contributed to the 6% increase in the EVTA. Keep in mind that spot energy comprises 36% of our power generation in EVTA, diminishing its share when ongoing expansions with PPA become operational. In Q1, generation was 18% higher year on year, mainly due to the commissioning of Caneva Plus Thermal Plan Gas Turbine, and Higher Dispatch at Tierra Buena Loma, the operator shift at Encenao Arralan, as well as the Higher Dispatch generation coming from the wind farm, which ranks senior in the dispatch priority because their cost is close to zero. Plus, the mandatory dispatch for safety of the transmission grid at Tiquiren and Güemes and higher water imports also contributed to the CRE-1 2020 APDA. These effects were partially upset by lower water flows at Mendoza Hydros, lower dispatches at Ingeniero White and Pilar were available at Econergia due to the schedule maintenance at TGS CERI. Quarter on quarter, Power generation increased 21%, mainly because of the scheduled maintenances in Q4. The availability rate in the first quarter of 2020 was 96.6% with a full capacity of 4.8 gigawatts. That includes, in general, our power plant. 100 basis points higher than the same quarter of last year, but 100 basis lower than the quarter Thank you for joining us today. The currency for spot energy remuneration was converted to peso with mongling fashion adjustment.

Dear all, we apologize for the inconvenience. Please wait for a few minutes and we'll be back. Continuing on the news section, since February this year, the currency for spot energy remuneration was converted to peso. with monthly inflation adjustment and the capacity payment was decreased. However, after the lockdown began, on April 8th, the Secretariat of Energy instructed Canessa to postpone that inflation adjustment on legacy energy that should have been applied after March, until further decision. However, as of today, we did not receive any administrative notice had it been updated, waging 60% CPI and 40% TPI, March transaction would have adjusted by 2.4%. Regarding our fully-owned wind farms, Pepe 2 and 3, after their commissioning in May last year, we found out certain defects in the blades of the wind generators, resulting in the outages. Vestas, our supplier, have started a repair and replacement task. One of the wind farms is almost resumed and full recovery is estimated by August of this year. We highlight that despite the lower generation due to business interruption, the impact is minor as it was covered by the guarantee of Vestas and the insurance policy. Regarding the expansions in the pipeline, We are in the final stages of the closing to CCGT of 383 MW at Cienega Plus. You can see on slide 9 the picture of the existing CCGT and the new one under work. Because of the lockdown, expansion works were interrupted for almost three weeks resuming in mid-April as all private energy infrastructure works, including Genova Plus and Barragan expansions, were deemed essential. Consequently, we expect COD to be postponed for about 45 days, estimating by the beginning of August. Also, as you can see on slide 10, due to the aforementioned lockdown impact, We are resuming expansion works at Ensenada La Rana thermal power plant, a 280 megawatt CCGT project at the southern outskirts of Buenos Aires City. Currently, we are focused on regaining the time lost to achieve the COD by Q1 2020. Therefore, building a PPA for 10 years with CAMESA. Like in the power, the lockdown negatively impacted the domestic gas demand, but to a lesser extent than crude oil, dropping month to month 0.5 BCS per day, or 11% in April, driven by lesser power demand, therefore reducing thermal generation dispatch and lesser gas needed to fire by Canessa, and to a lesser extent, lower industrial consumption because of the shutdown to non-essentials. This was partially offset by retail consumption because weather is cooling. If we take the average gas demand pre-quarantine versus post-lockdown as of April 30, demand overall fell by 17% or $850 million to exceed per day, mostly driven by thermal power generation. Non-essential industries closed and gas for cars, offset by gas for discos, but just because weather is becoming colder. Comparing the lockdown period with the same time in 2019, the decrease is 9%, still mostly due to the power generation and industry. This lockdown coincided with the gas off-peak season, which bottoms at fall and Spring in Argentina. However, as we are approaching winter, we expect this consumption trend to reverse at a faster pace, like today, as CARMESA is requesting more and more gas again, and industries are gradually resuming operations. Now I'll turn to Lida so that she can continue with the EMP analysis. We apologize once more. Please wait for a few minutes. We'll be back.