Pampa Energia S.A.

Please contact us whether through the platform or email. Before proceeding, please read the disclaimer that is located in the second page of our presentation. Let me mention that forward-looking statements are based on the beliefs and assumptions of companies that we see as management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events and they are far different from circumstances that may or may not occur in the future. Investors should understand that 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 such forward-looking statements. Now I'll turn the video conference over to Lida Wang, our Investor Relations and Sustainability Officer of Pampa Energia. Lida, you may begin the video conference.

Thank you, Margarita. Hello, everyone, and thank you for joining our conference call. I hope you all are safe and well. 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 on power and EMP, as TGS and ANR already held their calls earlier this week. Our CEO Gustavo Mariani and CFO Gabriel Cohen are both here and joining us for Q&A. Before we begin, let me remind you that compass figures follow U.S. dollar as functional currency. In the case of peso links of theory, such as our utilities, their figures are adjusted by inflation and shown in dollars at the end of each reporting period effects. You also can see in this slide which businesses are included when we talk about Pampa Consolidated and Pampa Restricted Group, a definition we use for covenant purposes. Compared to last quarter, Q3 has not been so active as the lockdown is easing up and the economy rebounded, readily improving but still not back to pre-COVID-19 levels. During Q3, the Argentine economy is estimated to have fallen by around 11% year-on-year, better than 19% recorded in Q2. We expect the normalization to keep coming along as the country is entering into a more flexible quarantine phase. CompaChief robust figures this quarter as a result of higher pricing due to winter peak season, solid operational performance across all our businesses, and the contribution from our new CDGT at Genelva, which is billing a 15-year PPA. Because of uncertain environment at Upstream, culmination of expansionary investment cycle at Power Generation, OPEC's discipline, and Higher Sales, our operating cash flow boosted during Q3 2020, helping to keep buybacks and offset the payment delays from CAMESA experiencing the quarter. And finally, a few weeks ago, the government announced a new gas incentive scheme to foster investments for domestic production, although the official regulation has not been released yet. Beforehand, we believe this should be equated to our upstream business. So let's start commending the quarter's key takeaways. As shown on slide five, revenues increased 5% year-on-year to $689 million, mainly contributed by Hemelba's new PPA and because of the strong real devaluation in Q3 last year, affecting our utility businesses. Partially upset by lower fuel sub-supply, as Camisa took over most of the grid's fuel consumption, lower prices and volumes of oil and gas sold at lesser spot prices and dispatch. In Q320, around 45% of our sales were dollar-linked, but roughly 70% in EVVA terms. mainly coming from our core businesses, PPA, power capacity, followed by EMP. Adjusted EVDA maintained stable by only reduces 3% year-on-year amounting to $234 million for the quarter, mainly explained by lower EMP price and volume, carry space of utilities and lesser legacy of power generation. Partially upset by Geneva PPA, lower EMP OPEX, and royalties related to activity downturn, and the dilution of the peso-denominated costs because of depreciation. Quarter on quarter, EVDA almost doubled thanks to Geneva's CCGT PPA, the peak season having higher spot prices for power and gas, and increased sales at EDENO. As we show on right below, electricity takes 71% of the consolidated adjusted VDA, mostly led by power generation, while oil and gas exposure takes 29% driven by gas and DGS. Moreover, as shown in the chart left below, in the first quarter of this year, our cap has decreased significantly compared to last year. mainly because of drilling and completion activities at Yampi are on standby due to the uncertain pricing environment compared to the shale activities in Q3 last year. And also because we finished Geneva Plus expansion project. Eden North CapEx increased year on year due to the steep yield evaluation in Q3 2019, partially upset by the lockdown restrictions, tariff freeze, and higher bad debts impacting Eden North CapEx. On slide seven, during Q3, the lockdown effect diluted over the Argentine power grid thanks to the winter season. The average demand reached 15 gigawatts, two to 3% lower than previous years, but better than other sectors of the energy industry or GDP. Industries are still the most impacted by quarantine, especially now in Seychelles. While these goals were hit because of the collapse of the SMEs' consumption, but partially upset by residential demand due to the stay-at-home order and colder weather. As we are entering spring, electricity demand is expected to give in. Moving to power generation segment, as seen on slide 7, during the third quarter of 2020, we posted an EVPA of 132 million dollars. Very similar to the adjusted VGA of Q3 last year, mainly given by Canela Plus CCGT contribution, higher B2B renewal sales, as well as lower costs related to lower energy purchases, and the devolved impact on our peso-nominated expenses. These effects were partially offset mainly by the reduction and pacification of spot prices as from February 2020 without any inflation adjustment. Quarter-on-quarter peak pricing for spot energy and higher dispatch in Q320 contributed to the 39% increase in ABDA. While spot energy comprises 59% of our capacity operated, only 18% of our power generation ABDA represented by spot market in the quarter and will keep shrinking Once Ensenada Barragán expansion is online and inflation keeps not happening. Generation in 2020 was 3% lower year-on-year in line with the lower electricity demand in the national grid. Our free combined cycles at Loma and Genelva, as well as our wind farms, achieved high levels of low factor, but the thermal units that solely depend on gas, such as Tierra Buena, the northwestern units, were mostly not required. in addition to lower generation of our hydro units. Because of the winter and hence reduced gas supply for power generation, our efficient dual fuel units of Parque Pilar and Ingeniero White were highly requested. Quarter on quarter, power generation raised by 16% mainly because of the seasonality. Despite the demand contraction with this in the country, The power generation business model relies on capacity payment, so lower dispatch does not much impact on the revenue making, as long as the availability is outstanding, especially for PPA-based energy. The availability rate in G3 2020 reached 98.6% with an installed capacity of 5 gigawatts operated by Pampa, very similar to year-on-year and quarter-on-quarter performance. Regarding our remaining expansions in the pipeline, our key project now is the closing to CCGT at Ensenada Barragán thermal power plant, as you can see on slide eight. This is a 280 megawatt CCGT project at the south of Greater Buenos Aires, which is critical infrastructure for Argentina's grid. We've already placed the purchase order for the cooling tower, so currently we are working on cementing We are also finishing the turbines building, installing the main pipelines and preparing all remaining equipment. 250 people are right now at the site working at the strictest protocols in place to minimize circulation of COVID. National gas consumption rebounded as expected because of the winter. but domestic production is severely depleting due to weak investment landscape that began about a year and a half ago. The graph we see in the slide shows the evolution of production and the dependency on gas imports and liquids to fulfill the demand, which are more inefficient, paid with hard currency, way more expensive than local gas, et cetera. As domestic production increased, Import reliance shrank until 2020. In Q3, the production fell 10% year-on-year, covering demand deficits with liquid fuels, as LNG and Bolivian gas were taken at maximum capacity. Should this situation prevail, depletion will come along, and the country will need to restore the LNG facility that was dismissed in 2018, plus increased liquid consumption. all in detriment of reserves, subsidies, and GDP. However, the implementation of Plan Gas 4 should be soon and reverse this trend. So moving on to the results of EMP, as you can see on the slide 10, in Q3 2020, we posted an adjusted VBA of $36 million, 31% lower than the Q3 2019, mainly because of lower prices and to a less extent production volume, Partially upset by lesser cost and royalty. In terms of operating efficiency, we recorded $23 million of lifting costs, 44% improvement compared to Q3 last year, mainly driven by devaluation, efficiency, and lower activity at less competitive loss, given the current market's prices. Measured by units, we reached a lifting cost of $5.50 per BOE produced. Contributed by their outstanding productivity at the Marluxo block. Should we become more active as we did this quarter? Lifting costs may go higher, but most of the savings are efficiencies gained to this segment.

Despite the tough environment,