Pampa Energia S.A.

Good morning, ladies and gentlemen. Thank you for waiting. I'm Margarita Chun from IR, and we would like to welcome everyone to Pampa Energía's second quarter 2022 results video conference. We inform you that this event is being recorded. All participants will be in listen-only mode during the presentation. After the company's remarks, there will be a Q&A session. Questions can only be submitted in writing through Zoom. Should any participant need assistance, please send us a chat message. 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 Pampa Energía's management beliefs and assumptions and information currently available to the company. They involve risks, uncertainties, and assumptions because they are related to future events that may or may not occur in the future. Investors should understand that general economic and industry conditions and other operating factors could also affect the future results of Pampa Energía and could cause results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the videoconference over to Lida Wang, our Investor Relations and Sustainability Officer of Pampa Energía. Please go ahead.

Thank you, Manny.

Thank you Maggie and everyone.

Thank you Maggie and everyone. Thank you Maggie and everyone. All right.

Let's do it again. Thank you for joining our conference call. It's been a great quarter, but in interest of time, I will make it short and sweet. So we have plenty of time for Q&A with our CEO, Gustavo Mariani. Yeah, you're listening. Gustavo Mariano is here. Our CFO, Nicolás Migni, is here and they are waiting for you with the Q&A. So let's start with the quarters figures. Revenues increased 28% year-on-year to $587 million, driven by rising gas output, commodity prices, B2B energy at blue sales, and higher legacy energy and regulated prices. However, Lower income from Loma, Barragán, and Piquirenda upset these increases because its PPAs expired. As a result, around 85% of our sales were dollar-linked. The adjusted EBITDA amounted to $253 million, 6% up, year-on-year, and 13% up quarter-on-quarter, explained by the same reasons detailed before, and better pecan margins, offset by increased costs on maintenance and contractors from intense EMP activity and higher peso-linked expenses because inflation is outpacing devaluation. Quarter-on-quarter seasonality explains the boost in the EBITDA. As you can see on the right below, Poland Gas led the Consolidated Adjusted BDA for the first time in a long time, thanks to our gas business taking 59%. CAPEX in Q2 was 49% up year-on-year and 30% up quarter-on-quarter. This is mainly due to the growing plant gas commitment and power expansions at PP3 and Barragán. Moving on to power generation, as seen on slide four, we posted an NVDA of $99 million in Q2. This is 18% down year on year and quarter on quarter, mainly due to PPA maturities we mentioned before and higher local currency expenses. compensated by thermal, better thermal B2B margins and spot energy cells despite the basal depreciation. The outstanding operating performance also contributed to the EVDA Q2 generation was up 18% year-on-year, surpassing by far the national grid that only achieved 1% aggregated growth. Because of the peak season that began in May, our thermal units were highly demanded. We combined cycles dispatching at full capacity and dual units firing with liquid fuels. The power generation business relies on take-or-pay capacity pay. So availability is what matters the most. In Q2, we reached an outstanding rate of almost 98% with minor outages in Piedra Buena. In contrast, we recorded roughly 96% year-on-year last year due to WEBIS and Kenelva's partial outages. So again, PAMPA's availability rate was way above the system average of 77%. Regarding our expansion at Ensenada Barragán, the closing to CCGT's advancing now more than 80% done. We are preparing the facilities to perform the steam glow this month and running the pre-commissioning of the water treatment plant and the cooling tower. More than 450 people are working daily on this project to achieve the COE. This is forecasted by the end of 2022. Moving to PP3, wind farm expansion, the project is beyond halfway advanced. We continue with the civil works, working on the wind turbine bases. We have already received the anchor cages and the wind turbine components are arriving at the port of Bahia Blanca this month. The estimated COD is split in two stages. The first 50 megawatts by February 2023, and the remaining 31 megawatts by May 2023. Now, moving to EMB in slide seven, our gas production reached a new all-time high, record again, recording 11.2 million cubic meters per day in June. Actually, currently, this is the level that we are producing. The ramp-up is mainly explained by PlanGas' last tender, which added 2 million km per day of deliveries since May. In addition, the exports to Chile, even during the peak season, contributed to the production hike all May on a spot basis and higher sales to the industrial segment. Therefore, during Q2, our gas production outperformed by growing 38% year-on-year and 14% quarter-on-quarter, averaging 10.2 million kilometers per day in the quarter, and outpacing nationwide growth that only increased by 13%. We drill 12 gas wells and completed 17, all tight and mostly at El Mangrucho block where 72% of our production in the quarter came from. Last May, we added 2.5 million kilometers per day of evacuation and treatment capacity at El Mangrucho. By the fourth quarter of this year, the total capacity of this block will be 14 million kilometers per day. more than double last year's capacity. Rio Neuquén and Sierra Chata also contributed to the growing output, but at a smaller pace. Thai gas is our main production source, but we expect to increase our shale gas share further soon since we began drilling two horizontal wells at Sierra Chata this month as a part of a new investment plan. This plan, we plan to complete 14 horizontal wells targeting Tubaca Muerta formation before June 2023. Briefly commenting on EMP business figures as seen on slide 8, we posted an adjusted VDA of $102 million in Q2, 39% up year-on-year, and almost double quarter-on-quarter, explained by the gas performance that we mentioned before, and higher realized oil prices, offset by increased costs related to growing activity and export expenses. Our total production averaged 65,000 BOE per day, of which 92% is gas. Our lifting costs grew by 62% year-on-year and 35% quarter-on-quarter. However, efficiency-wise, the lifting costs increased just 20% year-on-year and 5% quarter-on-quarter, recording $6.2 per DOE. Zooming in, crude oil represented 19% of the segment's revenue in the quarter, The revenue sold was similar year-on-year, but 11% down quarter-to-quarter, being 4.7 thousand barrels per day. During the quarter, local sales increased, but export reduced their pace to resume it in last month, July. Realized price was almost $73 per barrel, primarily due to the brand, and the grotto raised domestic price. Back to gas, our average sale price of the quarter was $4.4 million per million BTU. This is 14% up in a year and 25% up quarter on quarter, driven by export prices and local gas prices. This is due to the seasonal gas demand. As we are right now in the peak season, our Q sales breakdown is skewed to retail because they have priority in winter under the plant gas. We maintain or despite selling on their spot. We aim to keep up with this production level of 11 million kilometers per day, even after the winter ends. So we are working to place the excess output. A few days ago, we were cleared by the Energy Secretariat to export under take-or-pay basis 1.5 million kilometers per day to Chile during the off-season. Moving to petrochemicals, it delivered another outstanding adjusted VDA of $19 million in Q2, higher than last year's $16 million. This is primarily contributed by a broader margin for respect and volume of reforming products. Plus, the increasing demand for polystyrene, partially upset by higher raw material costs, Quarter-on-quarter, the EBDA has more than tripled. This is driven by better product margins. Sales volume was 19% up year-on-year, mainly due to the demand growth for octane bases, polystyrene, and naftas. In Q2, 41% of the total sales were exports. Regarding cash flow, as seen on slide 10, we recorded a free cash flow outflow of $62 million. This is mainly due to the working capital impacted by the seasonal billing, remember that we are in winter, and higher payment delays from Camisa. In addition, because of the gas commitment deliveries, we ramp up our EMP capex significantly. by 55% year-on-year, plus the pay-per-free renewal expansion investment. We recorded a lesser debt service due to lower stock compared to last year. In addition, we incur in a minor debt and collected Adenauer's sale final installment. In summary, we reduced $41 million of net cash in the quarter, achieving $566 million of cash by the end of the quarter. Moving on to the slide 11, this slide shows consolidated figures, including our affiliates at ownership, but let's focus on the restricted group that reflects the bond perimeter. We posted a gross debt of $1.5 billion, similar to the last quarter. This is 97% dollar denominated. bearing an interest rate average of 7.8%. The average life decreased slightly to 3.9 years. During the quarter, we added minor peso loans. Though net debt slightly increased to $902 million due to the cash outflow mentioned before, the net leverage ratio remained similar 1.3 times. Regarding our upcoming maturities, we tapped our 2020 free notes last June and carried out an exchange offer that successfully settled this week. Our goal was to strengthen our debt profile and preserve a solid cash position to move forward with an intense investment plan in our core businesses, especially in gas production. Thanks to our bone-holder support, we successfully exchanged $407 million out of the $500 million face value, with 48% choosing the cash and notes proposal and 52% picking the new notes compensation. Thus, we reduced debt by paying $122 million in cash and extended principal by issuing $293 million of new 2026 notes, amortizing annually from December 2024 to 2026 with a fixed interest rate of 9.5%. In addition, we issue a local loan for 28 billion pesos due in 18 months and also took 7 billion pesos, net pesos of bearing loans, bank loans. So as you can see in the new debt profile after the exchange until 2027, Tampa does not face relevant debt maturity. So, This concludes our presentation. I will turn now the word to Margarita, who will open the floor for questions.

Thank you. Thank you, Lida. The floor is now open for questions. If you have a question, please send us through Zoom chat. We will read and answer them in the order received. Also, please make sure your name and company are correctly displayed so that we can introduce you to the audience. Please lower your hand once your question is answered. Should any participant need assistance, send us a chat message or raise your hand. Please hold while we look for questions. So here we have Gustavo Mariani, our CEO, and Lina Wang in the same camera. So our first question comes from Frank McGann of Bank of America. He has three questions. We will start with the first one. The first one is, what are the expectations now for oil and gas output for Pampa Upside over the next two, three years with the new transportation capacity?

Sorry, we had a technical problem with my iPad, so I had to move to Lida's position. Hi, good morning, and thank you, Frank, for the question. Is it working now? OK. Regarding oil, Currently, we don't have any plan to significantly increase production in any way. Although we are analyzing all the alternatives that we have, we are discussing with our partners. With the partner in Conde Aranda, that's our vaca muerta play in oil that we operate in order to start drilling in that area. But still nothing confirmed on that front yet. In terms of natural gas, our aim is to continue growing. We are currently at full capacity of all our gas treatment plants. we currently reach, as Lida mentioned, the record of 11.2 cubic meters of natural gas per day of production, which we hope to maintain throughout the summer, thanks to export to Chile in the summertime. And in order to increase that, to increase the production, we are a few months away of finishing a new gas plant treatment in El Mangrucho for another 5 million cubic meters of natural gas. So we hope by next winter of 2023, be able to use all that capacity that will depend on the outcome of, that will depend on basically on the market, on the outcome of any of what we are expecting. There is a new option in the... Sorry. So I haven't been here for how long?

No, no, no, no.

Okay. So, as you know, the contract had been signed in order to start building the new pipeline to increase evacuation capacity from the Neuquina Basin. And if everything goes fine, and as we expect it will go, by mid of next winter, there will be an increase of 11 million cubic meters of natural gas of evacuation capacity out of the Neuquena basin. So we are expecting that the Secretary of Energy will soon announce a new plant gas in order to fulfill this new pipeline with gas. And depending on how successful we are on that auction, will be the plants for next year.

Okay, so I think we covered that.

Thank you, Gustavo. The second question is about power generation. What plan maintenance is scheduled over the next several quarters in your power plants?

So the next quarter, Q3, we usually do at the end of the quarter between September and October. Maintenance is in our combined cycles. This is in Loma de la Lata. And in Genelva, the number two, the number two combined cycle, the original one. And we have some containers in the steam turbines of Piedra Buena and in Güemes. The steam turbines of Piedra Buena and Güemes.

Thank you. Thank you, Lidia. And the last question of Frank is also about power generation. What additional PPA changes are expected in terms of ending and starting of contracts through the rest of 2022 and in 2023 and 2024. Give me a second.

Are you seeing me now? Okay. Regarding PPAs, as you know, we are working together with YPF And as Lida showed the picture, in finishing the closing of the cycle of Ensenada de Barragán, that would add a new steam turbine of 280 megawatts of capacity with a 10-year PPA. As Lida mentioned, we expect this to finish by the end of works on the COD to be at the end of the fourth quarter, by the end of the year. And so we are expecting the impact of that PPA fully in 2023. Also, regarding the expansion of PP3, where we will be adding 80 megawatts of windmills a minute before this conference starts to the picture of the unloading of the windmills for that expansion. So everything is on track there. In a few weeks, we'll begin putting the windmills on the site. So by February of next year, the first 50 megas should be online and two months later, the other 30 megas. So in 2023, you have the 50% of the addition of Ensenada Barragán, that is 140 megawatts of the PPA, plus the 80 megawatts of the new wind farm. And regarding PPAs that will come to an end, From now until the end of 2026, we don't have any maturities. So 2026 and 2027 will be the next maturities in PPAs.

Thank you, Gustavo. Our next question comes from Matias Castagnino from BCP Securities. He also has three questions. The first one is regarding the new pipeline. Pampa is... recording record high of production of gas, how much does your production growth depend on the new gas pipeline?

it fully depends on the new pipeline because all our production in natural gas is concentrated in the Neuquina Basin or almost all of it is concentrated in the Neuquina Basin and the Neuquina Basin has reached its evacuation capacity towards the internal market and also towards Chile during the summer we are exporting as much as we can. Until this new pipeline is online, which we expect to happen by midwinter of next year, there's no way to increase production other than gaining a little bit of market share within the basin, which is unlikely to happen.

Thank you, Gustavo. The second question of Matias is regarding the petrochemicals business. Petrochemicals recorded another exceptional EBITDA in the quarter. In the global market, we see that in July and August, there are margins decreasing. So what is your expectation regarding your business for the remaining period of the year?

You're totally right that the petrochemical business is having a terrific year. Probably it will be a record year again. As you know, our petrochemical business has basically four segments. And as you correctly say, some of those segments are slowing down, but others remain with very good health. So as we have visibility, the third quarter, we are optimistic that will be a very good quarter. We have less visibility and less capacity to to hedge prices for longer term. So fourth quarter, it's more uncertain, but everything looks fine. So I think we are on track on having a very good year because besides some slowdown in some of the segments.

Thank you, Gustavo. And the last question about Matias is regarding the net debt. You increased slightly the net debt by $50 million compared to March, and we would like to know what are the main reasons.

So, hi, Matthias. So this increase in net debt is something circumstantial and it can be explained by many different reasons. The first one is working capital. We have been experiencing, as Lida said before, higher delays in payments from CAMESA during the last few months, mostly because of seasonal billing. And secondly, because during June and July, we had some stationary high capex expenditures and some extraordinary expenses regarding the expansion of PP3 wind farms. And lastly, because on June we faced some losses on some financial investments, partially offset in July. But we don't expect this increase in net debt to sustain over time, but obviously this will depend on what happens with working capital and CAMESA payment delays in the future.

Thank you, Nico. And our next question comes from Alejandra Andrade of JP Morgan. She has four questions. We will start with the first one. Could you comment on the buildup of account receivable and the day of sales outstanding, day of collection from Kamesa?

So, as I just said, in the last few months, due to seasonal building, the payment delay of CAMESA has been fluctuating and deteriorating, especially during the last weeks, reaching almost 90 days of delay, approximately, when last year we were on an average of 70 days. But we hope the situation reverts in the upcoming months.

Thank you, Nico. Alejandra's second question is regarding what is the outlook about your production and capex level?

Well, right now, as I said before, the idea is to keep up with the production that we are in the Altenheim, 11 million kilometers per day. This is beyond the off-peak season. If we can place the cells that we are very confident on, We will. CapEx for this year in EMP, because we ramp up heavily, it's estimated at around $350 million total of the year. But next year, we expect to go down to maintenance CapEx only. It's around $250 million. Then we have power generation. Power generation, we are close to 19 terawatts of energy this year generated from all our units that we operate. This is quite an increase compared to last year, and this is placing us stronger in the grid. And capex for this year, it's $140 million. This is what we expect to diverse. Mainly This is 50 from maintenance and the rest, 90, it's coming from PP3, the expansion that we're doing next year. The diversions left, it's very little.

Thank you, Leah. Alejandra's third question is regarding the 2023 notes that is remaining. It is about $93 million roughly and maturing in July 2023. What's going to happen with that?

So if the current regulation remains the same, next year we understand that we will have access. As participation in the exchange was of more than 80%, the amount of holdouts for 2023 is just $93 million, that we think is a very reasonable number considering Pampa's cash flow generation capacity. So in the upcoming month, we will analyze the alternatives, taking into account the company CapEx plans and also the regulation in place at that time.

Thank you, Nico. And Alejandra's last question is about the inflow of asset sales that we can see in the balance sheet.

Thank you. So this is mainly because during the last week of June and the first week of July, we collected the last $40 million of the sale of the 51% of Edenor. And with this payment, we complete the $100 million and we do not have anything else to collect from the buyers.

Thank you, Nico. And our next question comes from Florencia Majorga from the company Medlife. Your question is regarding the technical problem we had in one of the gas turbines of Loma y la Lata. What is your expectation regarding the insurance company, how much they should cover regarding these technical problems?

Hi, Florencia. The insurance company should cover basically what we have is in terms of business interruption beyond 60 days, which we hope it will not take that long and the machine will be ready before. And they should cover We have a deductible. Between the deductible and the self-insurance retention that we have, it's about $9 million. So they should cover anything that goes beyond that number. But the reality is that we are discussing with the supplier because we understand that they should... they should cover the damage that we suffer. And we are optimistic on the outcome of that negotiation. We had these kind of issues in the past and they have responded according to their responsibility. So we hope not to need to claim anything to the insurance company and to solve the issue with the supplier. That's our expectation at this moment.

Thank you, Gustavo. Florencia added one more question, and it is about the new official appointment in the Energy Secretary. What is Pampa's view on this change?

Well, regarding the change in the Secretary of Energy, some of the new appointments are officials that have been working with the government in other positions, which we know them very well and we have an excellent dialogue and relationship. With the new appointed Secretary of Energy, although we know her, and we know her because we have assets in the province where she's coming from, we have less knowledge, but we We are very optimistic about her capabilities for the position. So far, the announcement has been excellent towards the sector, both the reduction in subsidies. It's a significant step forward, very, very important. And all the other announcements regarding the, that were made yesterday by the Minister of Economy, regarding Vaca Muerta, and the incentives to increase production are excellent news for the sector. So although Argentina, as you well know, is going through tough times in terms of the macro situation, what is related to our sector, we are very optimistic because they're moving in the right directions of solving issues so that the energy sector becomes an important help to the macroeconomic situation.

Thank you, Gus. Our next question comes from Paula La Greca from TPCG. How much incremental revenue will represent exports to Chile in Q3 and Q4 of this year?

We are about to be granted a 1.5 million firm export permit to Chile. Export permits are almost all the... The paperwork in the Secretary of Energy is almost done, so in the next couple of weeks it should be published, and we are expecting to be granted 1.5 million cubic meters per day of thermal exports. Those exports will be done at an average close to $8 per million of BTU, so it's an excellent price. And assuming the difference between the local price during the summertime and the export price being something about $4 or $5. So the incremental revenues should be around $20, $25 million because of the export contract.

Thank you, Gus. Our next question comes from Lucas Calvi from Portfolio Personal. He has two questions. The first one is related to the gas export as well, but during off-peak season. How much gas do you think you'll be able to export during the off-peak season in the coming months? As Gustavo mentioned, we are having the 1.5 million litres per day. We apologize. We are having some inconvenience with the internet quality. Please give us a few minutes until we settle the situation, please. So the first question of Lucas Caldi was related to the gas export, but during off-peak season, as Gustavo mentioned, we are having the paperwork ready to have the export permit of 1.5 million kilometres per day since October until May next year on a take-or-pay basis. Can you give what would be the expected pricing of those exports?

Okay, I think I just answered that. But what we are expecting to export during the summer, beginning October 1st until the end of April, is in firm 1.5 million. Hopefully... not on a firm basis, but we expect to export around half a million cubic meters of natural gas per day more, so a total of 2 million. And the price for the firm gas will be close to $8 per million of BTU. For the other half million, we are still negotiating with our counterparty in Chile.

Thank you, Gus. And Lucas, next question. This is a final question of Lucas. It's regarding the next winter. Are you expecting to further increase natural gas production next winter in case the new pipeline is not ready by that time? Could you export to Chile that additional production as you did this winter?

as I said before on Franz McCann's question, by next winter, we will have the possibility to increase production to 16, 17 million cubic meters of natural gas per day, thanks to our investment in infrastructure that will be ready by that time. Whether we reach that level of production or not, it will depend on the visibility we have, on our capacity to say well, our production through the new pipeline that we expect it will be ready by mid of next winter and to export gas to Chile, during the winter because of transportation restrictions. During the summer, we can export to Chile around 9 million cubic meters of natural gas per day from the Neuquina Basin. i'm referring during the winter we can only export less than five to chile because of transportation restriction so again we will have the the capacity to grow grow production but we don't have yet visibility on a our market share both in the export market or in the local market with the expansion of the new pipeline. So once we have more clarity on that, we will be able to fine tune our increasing in production.

Thank you, August. Our next question comes from Costas Papalias from Puente. He has two questions. The first question is what percentage of your revenues has the state as a counterpart? On the same line, what are the average collection days and what will be the net effect of a steep overnight devaluation on Pampa's finance, given the amount of unpaid invoices?

Sean?

So, as I said before, Camisa payment delay has been deteriorating, reaching approximately 90 days. And obviously, any discrete increase in FX will affect our receivables in pesos, right? And the impact on this is difficult to estimate exactly because it will depend on many factors at the time of that supposed devaluation. as the amount of receivables at that time and the days of delay. But just to give you an idea, until the day 42 of delay, the receivable is adjusted by FX. And after the day 42 is adjusted by an interest rate in pesos, that today is near to 70%.

Thank you, Nico. The second question of Costas is regarding the EMP business. Are there any logistic or macro restrictions affecting your CapEx execution?

My iPad keeps...

The question is about any problems with the capes. No, we are not having... We are not foreseeing any problems. And even yesterday, the Ministry of Economy has announced like a green channel for customs for Vata Muerta. So the government... understands perfectly that energy will be part of the solutions to the macroeconomic problems. And so they're trying to smooth all the bottlenecks and the problems the industry suffers in order to move farther to increase production. So We haven't suffered any problems yet. There are some bottlenecks like, for example, fracking equipment, lack of fracking equipment in the market. That is a bottleneck. So we need to import new sets. talking as an industry, and that the government understands that we need to remove any problems, so we are optimistic we will not have any problem with implementing our plans.

Thank you, Hugo. Our next question comes from Guilherme Levy from Morgan Stanley. He has two questions, one for EMP and another one regarding working capital. The first one is, in EMP, what is the planning capex for the coming quarters? What is the company doing to ensure that investment to be executed in this high inflation environment, both in Argentina and in the global industry? And if there is any impact regarding import restriction in Argentina for the short-term investment?

Yeah, so basically we can say again the outlook for the year and capex for EMP is around $350 million. And then we have

And unfortunately, from power generation, this is the outlook for this year. It's not probably going to happen again next year because this year is loaded with one-offs, expansionary capex. In the case of EMP, it's around $200 million of expansionary capex. And in the case of power generations, it's 90 out of the 140. Restrictions in imports, I think, Gustavo just covered recently. And working capital, we just covered it by our CFO, Nico.

Thank you, Leah. So we covered the second question of Guillerme also regarding working capital. We'll move on with the question of Rafael Nagano of Credit Suisse. He has three questions. The first one is, what are the commercialization plans for the Loma de la Lata steam turbine and Piquirenda given the expiration of their PPA?

So, Jairafa, the thing is that when the PPAs, they mature, they migrate to the spot market. That's how it works. This is for the CAMESA PPAs. Now, for the Mater, Energia Plus, they constantly roll.

Thank you, Lia. The second question of Rafael is, is there any expectation for new gas supply auctions? If so, when should it come and how big it should be?

the first, this new pipeline that will be, we hope and we are optimistic will be online by mid of next winter. We add on the first stage, 11 million of cubic meters of natural gas of capacity. That is without compression. Then on the second stage, the compression plants will be ready and that capacity will double. So it will go from 11 to 22 million, you know, more evacuation capacity from the Pina Basin. But because of delay in the supply of the compression plants, that is not going to be ready for winter of 2023. Winter 2023, just a pipeline without compression, that's 11 million. 11 million cubic meters per day. By summer of 2023, 2024, another 11 million once the compression capacity is added to the pipeline. So the first option will be of 11 million, and that option should be announced any time because the industry needs to I think the sooner that is being announced the better for the industry and for the government in terms of the price that is going to be offered. The government has to decide whether those what percentage of those 11 million are on the year round so contracted year-round and how much it will be just for winter. We think something like 70% of the million will be year-round demand and there will be a small peak 2023, probably 2024. Then all those that are medium ones, Bolivia continues to provide less gas during the summer. Those that are medium will be taken from the family or the apartment.

Thank you. Our last question is Our last question from Rafael from Credit Suisse is about should we expect any additional adjustment to legacy capacity remuneration?

We are discussing with the authorities. We have been given since February of last year legacy capacity basically two adjustments, one of 30% that impacted in February of this year, and another 10% in June of this year. And that is since February of 2021. Inflation has been way above those figures. We are aware of it. So we are currently discussing with the authorities. We don't have anything confirmed yet. We are optimistic that in the coming months, we will have an adjustment to compensate the cost inflation.

Thank you, Bruce. We will move on with the next questions. He's from Rodrigo Nistor from AR Partners. He has seven questions, but most of them were already answered. So we will reply two questions. The first question is, do you expect a reduction in payment days from CAMESA as consumers pay larger portion of energy costs?

it's tough to answer my first question is yes definitely it's a good news that the system will require less subsidy from the treasury that is very good news so and also what is important about Cabeza is that Most of the stress that Gamesa suffers is during the winter because they need to pay for imports of fuel to supply the power plants. Basically, imports of diesel oil and energy, which are very heavy during the winter. And we are almost over that season. So we expect the collection from Kamesa because of this seasonality and because of what you have mentioned in terms of increasing collections of Kamesa to the distribution company because of the current increase. I think those are two factors. that impact positively on canesas, so we should expect that. Let's be optimistic that that will be the case.

Thank you, August. And the second question of Rodrigo is how much can you grow production if additional misting capacity becomes available?

I think I answered that already, but I'll go again.

We currently have a capacity to produce 11 kilometers of gas a day, and that is what we're currently producing. We are about to finish a new gas treatment plant in Van Brugge, We take the Mangluccio from 8.5 million, that is our current production in Mangluccio, to 13.5 million. So we are having a total of 5 million new production capacity. We need to drill and complete the wells in order to... So by September or October, that capacity... New capacity will be ready, but we will not have new wells in production to fill that up. We will have the wells ready starting second quarter of next year. But whether we fully fill that Those five years or not, as said before, it will depend on the demand that we see both from the domestic market and from the export, from cheaper.

Thank you, Luz. We have been covering most of the questions. There were some few questions that couldn't be answered because we are running out of the time. We try to respect the one hour video conference. Anyway, we will contact directly to the person who answered the question. So this concludes the question and answer section. I'll turn to Lita for final remarks.

I would say it was a great quarter. If there's any topic or any questions that we didn't answer, please contact us. We will reach out for the unanswered questions. This is not seriously, we have a lot of questions. That keeps us very happy because we feel like there's a lot of activity. Any questions you may have, you can reach us out. Margarita and I will always feel available for you. Do you like to close, Nico?

Thank you very much for participating. We are very optimistic going forward on the prospect of the company. As Nico and Lida said, these past weeks have been very important for our company. being able to refinance our 2023 maturity, leave us with the capacity to focus exclusively on growing and on growing production. So it's been very important to move forward, to reduce our indebtedness and move forward so that there's maturity. And also the news about the new pipeline finally moving forward and all the measures that have been announced by the new Minister of Energy and Economy are excellent news for the companies. So we are very optimistic and we will be working very hard to fulfill our expectations. Thank you very much for joining.

Thank you, Woos. This concludes today's presentation. Thank you for joining. You may disconnect at this time. Goodbye.