Pampa Energia S.A.

Good morning, ladies and gentlemen. Thank you for waiting. I'm Margarita Chun from Mayar, and we would like to welcome everyone to Pampa Energías' 4th 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 on 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. 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 video conference over to Lydia Wang, investor relations and sustainability officer of Pampa Energía. Please go ahead. Thank you, Mayi.

Hello, everybody.

Thank you, Marie. Hello, everyone, and thank you for joining our conference call. I will try to make it short and skip some parts already explained in the earnings release, so we have plenty of time for Q&A with our CEO, Mr. Gustavo Mariani, and our CFO, Mr. Nicolas Mimic, who are both here. This quarter marks the end of 2022, and it's always helpful to look back and review what's been going on with Pampa in the last five years since we acquired Petrobras Argentina. The challenges posed in this period did not prevent us from growing and delivering milestones. Our core businesses, gas and power, grew significantly in the last five years. In 2022, we raised our peak gas production to more than 11 million kilometers per day and currently working to ramp it up to 16 million in 2023, thanks to the planned gas last tender. More than doubling our 2017 watermark and proudly becoming the company that grew the most its gas output since the pandemic. Power generation did not stay quiet either. We became the largest independent power producer by investing in every tender of B2B, whether efficient thermal or green energy, adding more than 1.3 gigawatts install capacity to reach 5.1 gigawatts by 2022. In 2023, 323 megawatts more, are coming online as we are inaugurating PP4, and we commissioned two weeks ago Marragan with YPF more than 12 years after the CCGT project started. Our way of managing helped us to gain efficiencies and be savvy over CapEx. So we invested in equity assets that increase our VDA and made it resilient. We made good use of our robust cash flow by enhancing our power portfolio, strengthening our liquidity, substantially reducing our leverage, and returning value to shareholders with share buybacks. 2022 was a great year in Pampa's history. We look forward to delivering outstanding results to become a leading efficient energy producer. So now let's focus on the chorus figures, which Gus made it to the headlines again, as expected. The adjusted VBA amounted to $183 million, 7% less year-on-year, mainly because of lower PPA income as some contracts mature in Loma in late 2021 and Barragán in April last year, as well as Loma's gas to my number five outage, higher payroll in dollar terms, and lack regulated tariffs affecting Transener and TGC. However, the off-peak gas exports to Chile, the higher as spot power and reforming outstanding results offset these decreases. 83% of our EVDA was dollar-linked. Quarter-on-quarter, the drop is explained by seasonality in gas and power demand and prices. As you see in the right below, the gas prices helped oil and gas to lead the consolidated adjusted VTA, which took 56% of our VTA. CapEx in Q4 was 13% higher year-on-year, just mainly because EMP is reeling and completing activity surges in off-peak season to achieve planned gas commitments. However, this variation was partially upset by the advanced progress in PP4 wind farm, which implies lesser capex diversments. Moving on to power generation, as seen on slide five, we posted an adjusted VDA of $86 million in Q4, down 19% year-on-year and 4% quarter-on-quarter, mainly due to the end of some PPAs, the outages at LOMA number five unit and higher peso expenses upset by better spot prices, higher dispatch, and lower maintenance costs. Q4, dispatch rose 11% year on year, while the national power grid dropped 1%. This is mainly due to the last year's overhauls at Loma and Genelva. More gas for Central Piedra Buena. Outstanding water input. in Pichipicunufu and capacity factor at wind farms, partially offset by LOMAS number five unit outage and less liquids and Bolivian gas. Availability is essential to collect acre pay capacity payment, especially to our PPAs contributing most of the ABDA. In Q4, we reached an outstanding rate close to 97%, just above the 95.5% recorded last year. Again, this is way above the grid's recorded 69% ability rate. It would have been higher if it wasn't for LOMAS number 5 outage. Regarding our expansion at Cincinnati Barragán, the closing to combined cycle was commissioned just two weeks ago, substantially improving the power plant's efficiency and, therefore, its low factor. In addition, CAMESA granted clearance to the steam turbine up to 260 megawatts, priced with a 10-year PPA, with an off-day on CAMESA. With the existing gas, two gas turbines, the total installed capacity climbs to 827 megawatts, becoming one of the country's most efficient and biggest thermal plants. Moving on to wind farm expansions, we acquired at Arauco a 100 megawatt wind farm located in the province of La Rioja in mid-December, building a 20-year renovar PPA. The total price was $170 million and doesn't have leveraged the asset. The transition was an excellent opportunity to keep boosting our green portfolio and invest in resilient assets. Regarding PPF4, the project is now 86% advanced. We completed the cable installation, transforming station, and testings. All the wind turbine components are right now in the facilities, and we have commissioned already 36 megawatts. However, due to the climate condition and among other factors, we estimate to complete the COD by the end of Q2 this year. Also, last month, we announced a new project, PP6, which kick off already. We aim to add 300 megawatts investing more than $500 million. The first phase will add 95 million megawatts by the third quarter of 2024 with investment of almost $190 million. Keep in mind that PEP expansions are sold all under B2B PPAs. So on slide eight, let me briefly comment on the MP figures. We posted an adjusted VDA of $72 million in the quarter, 57% higher year-on-year because of the planned gas deliveries, gas export prices, and higher oil demand and prices, offset by lesser gas export volume and increased costs related to the growing activity and payroll. However, quarter-on-quarter, EBITDA is down 39%. This is primarily due to the seasonality. Our lifting costs likely grew yearly, but was down quarter on quarter due to seasonality. Efficiency-wise, the lifting costs per BOE performed in the opposite way, recording $7 per BOE in the quarter, 3% down compared to last year. In Q4, our total production averaged almost 62,000 barrels per day. So many crude oil represented 9% of our output. Still, it reached 22% of the segment's revenue, mostly because of export prices linked to brand and export volumes, which tripled compared to last year. Last December, we successfully extended the planned gas contracts until December 2028. Furthermore, regarding the tender tapping the first stage of the new gas pipeline to be online on July 23, Pampa got awarded $4.8 million out of the $11 million cubic meters per day at a similar price to previous tenders until 2028. This is excellent news as it contributes significantly organic growth, and long-term visibility to our gas business. Therefore, by this winter, we will more than double the maximum record register in 2020, producing almost 16 million kilometers per day by investing 1.1 billion cumulative between 2020 and 2023. Besides the upcoming new capacity in the main pipeline, our shale gas campaign will support the significant ramp-up in production for the first time in our history. In Q4, we drilled two wells and completed five wells to Baca Muerta at Cerra Chata, confirming its great potential for shale development. Most of the $490 million capex in EMB is destined to drill and complete 24 wells to Vaca Muerta in Mangrucho and Sierra Chata blocks. Still, currently, Thai gas is our main primary production source. So as we engage in Shell gas campaign to increase our share, this year, we will connect to horizontal wells in Mangrucho and keep drilling in Rio Neuquén, that it's not operated by us. Our gas production in Q4 was 6% up year-on-year, but 11% down quarter-on-quarter due to seasonality, averaging 9.5 million kilometers per day and outpacing nationwide levels that only grew 2%. 72% of the quarter's production came from El Mangrucho, where we commissioned the second gas treatment plan last November, with a capacity of 4.8 million kilometers per day, replacing temporary facilities and covering subsequent winter ramp-up. Therefore, El Mangrucho can produce up to 14 million km per day. The average gas price of the quarter was $3.9 per mm2, 24% up year-on-year due to export prices, but 20% down quarter-on-quarter because of seasonality. Regarding the sales breakdown, Q4 is fairly distributed. We retail in off-peak and lesser exports year on year, but still represents 13% of our output with higher prices. Exports will remain under record pay until winter, even winter, since we obtained permits that will last until June of this year. In 2022, thanks to the outstanding work of our technical team and the Shell gas productivity at Sierra Chata block, we recorded a 14% increase in our proven reserves, amounting to 179 million barrels of oil equivalent. Although we held the production record in 2022, the replacement ratio was two times and the Irish life was kept at eight years. The additions reflect the excellent results of shale gas pilots to Bacamorta formation that we did in Sierra Chata and El Mangrucho, tripling shale reserves certified last year. The petrochemical business, EVDA, grew by 68% year-on-year, posting $15 million in Q4 revenues. primarily contributed by domestic reforming and polystyrene sales, plus a lower cost of emerging NAFTA offset by reduced margin and demand of styrene and rubber. In Q4, 30% of the total sales volume was exported. As you can see left below, after we reorganized the production strategy in 2019, we could smoothly navigate the volatile commodity prices producing at maximum capacity close to historical rewards. In spite of intensive EMP capex, In Q4, we recorded a free cash flow of $101 million. This is driven by the outstanding operating performance of all the free businesses. Working capital reduced the seasonality that Kamesa paid at a higher frequency, upset by debt service and an income tax early paid of $15 million. The increased debt considers the dollar link that we raised in the local market. In addition, in Q4, we acquired the Arauco wind farm that we previously talked about it, and we had to make a first installment of $128 million. This is shortly married. So in summary, net of everything we generated $15 million of net cash flow this quarter, achieving $700 million cash by the end of the year. Moving on to slide 14, we show the consolidated figures of our financial position, including our affiliates at Ownership. Let's focus on the restricted group that reflects the bond perimeter. We posted a gross debt of $1.6 billion, similar to last quarter. 84% is dollar-denominated, bearing an average interest rate of 5.4%. Taking advantage of the domestic liquidity diversifying our leveraged resources, we issued a five-year zero-coupon dollar link for an additional $15 million. plus $100 million peso bond at Ballard plus 2%. The net leverage and net debt kept going down, recording $913 million and 1.2 times multiple. The average life also decreased to 3.6 years. Ban Ban does not face relevant debt maturities until 2027, so This is thanks to the successful bond exchange made in August of last year. So this concludes the presentation. Now I will turn the word to Margarita, who will poll for questions in the chat. Thank you so much.

Thank you. 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 to introduce you to the audience. Should any participant need assistance, send us a chat message or raise your hand. Please hold while we pull for questions. Thank you for waiting. The first question comes from Frank McGann from Bank of America. He has six questions. The first one is how they see gas production quarter by quarter in 2023 with the start off of the new pipeline.

Hi, Frank. Thank you for your question. this year we've been producing during the summer less than we expected, basically because of lack of infrastructure to evacuate the gas from the Neuquina Basin. So although we were expecting to be producing above 10 million cubic meters of natural gas per day. We are currently being able to sell less than nine and a half. We think this will continue first quarter and second quarter of this year. I hear myself. Can you mute? Okay. So we think this situation of lack of capacity from the Neuquina Basin will continue the remaining of the first quarter and the second quarter as well. Once the new pipeline is online by mid-winter, we expect to be able to jump our production to 16 million cubic meters of natural gas per day. So that is our expected output during the third quarter. And in the fourth quarter, during our spring, and with the new pipeline working, we expect our production, our sales to be in the range of 12 to 13 million cubic meters per day. So a significant increase from this current summer.

Thank you, Gustavo. The second question from Frank McCann is what is the latest you are hearing about the startup date for the Nestor Kirchner pipeline?

It's funny that we are talking about a pipeline of this size, such a huge infrastructure project. And then we are talking about days, not weeks, not months, but days. But to answer the question, the latest that we are hearing is that Everybody's working to be on time on the schedule. So to have the pipeline ready by the end of June. That is so far. I hope there is nothing unexpected that changed that. But up to this moment, what we're hearing is that the pipeline might be on time. Something that I would like to take the opportunity of this question to highlight some numbers that I've been looking at this weekend and they surprised me. As I said at the beginning, there is the capacity to produce gas from the Noquina Basin is capped by infrastructure. That is why we are selling less than we expected, while CAMESA has been burning liquid fuels and we are burning gas importing from Bolivia all through the summer. So this We can check how much natural gas has been, how much liquids, that means fuel oil, gas oil, carbon, coal, and imported gas from Bolivia. In total, CAMESA... I'm counting October, November, December, and January. Those are real months. And this situation will continue February, March, April, and then in May, we'll start the winter. But so this seven months, so far, Camisa has burned liquids in an equivalent to almost 11.6 million of... cubic meters of natural gas per day. At what price? Liquids are much more expensive than local natural gas. So CAMESA has been burning these liquids at an average of 21.5 million dollars per million of BTU. So The gas, the summer price for natural gas is $3 and Kamesa it's burning fuels. I'm doing the average of gas from Bolivia, fuel oil, gas, oil, and coal. That is, that makes an average of 21 and a half dollars per million of BTU. So what does this mean? In 11.5 million cubic meters of natural gas per day, at $21 per million of BTU for seven months, that amounts to $1.9 billion. So that is how much the country is spending to import all these fuels. And why we are doing this? Because we lack the infrastructure capacity to have our own production coming from the New Guinea Basin. Once the new pipeline is ready, the country will be able to replace all this consumption of liquids with local natural gas. Thanks all. that, yeah, thanks to the plant gas, Argentina is going to be able to buy it from producers at $3 per million of cubic meters per day. Sorry, man. So, this quantity of gas at this price for seven months it's 250 million dollars so instead of 1.9 billion 250 with one other important difference the 1.9 billion is currency real dollars that the country it's spending while the 250 are Argentine dollars. So really it's paid in pesos at the official exchange rate. So that is how much, that is the huge gap, and that is the huge saving that the new pipeline will bring. That means that the total cost of the pipeline was around, I think was around $1.8 billion. So what I'm trying to summarize is that in less than, one summer, the cost of the infrastructure of the new pipeline gets repaid for the country. That's how important this new pipeline means for the country, not only for us as producers, but also for the macro numbers of Argentina.

Thank you, Gustavo. The third question of Frank is, about what is the upside to output in 2024, next year?

Well, so far for 2024, we don't have anything new, so a new jump in production. Maybe there is the second phase of the gasoducto Nestor-Kirchner of the Nestor Kitscher pipeline gets auctioned and the construction is ongoing. So then there's going to be a new round of plant gas in order to fulfill that second round. that second tranche. Let's hope that happens this year. Obviously, if that happens, we will participate as we have always been participating in the past rounds, and maybe we will be able to increase further our production. But even though if there is no, if the construction of the second tranche is not done by It's not undertaken by the winter of 2024. Our output will grow in 2024 despite that, just because the first tranche will be online. So not during the winter, because during the winter we will be selling the near 16 million cubic meters of natural gas per day. But during the rest of the, during the summer months, during our spring, summer, and early fall, CAMESA will be able to replace all its consumption of liquids with local natural gas. And so we, together with the rest of the industry, will be able to replace those liquids. So, If there is no infrastructure, in wintertime, our production will be similar to 2023. But in the summer, our sales will be higher than the first and second quarter of 2023.

Thank you, Gustavo. The fourth question, Frank, is about how are you seeing cost pressures with high inflation and a slow devaluation of the Argentine peso?

We have been seeing a peso appreciation this year. So we do see dollar inflation in our costs. And there's not much that we can do against this movement of the macro value. So we are seeing it, but there's not much that we can do as a, or operations to prevent that from happening?

Mostly productivity-wise. Productivity efficiency. But unfortunately... But in order to retain talent, the payroll has to go. Let's consider that since 2018 to 2021, 2020, there has been a big decrease in dollars. in terms of the salary. So it's logical to have a ramp up.

Thank you, Gus and Lia. The fifth question, Frank, is about TGS LNG project. If the TGS LNG project goes forward, what would be the upside for volumes, both over the medium and long term? What would this mean in terms of CAPEX, both for upstream developments and possible participation with an equity stake in a project?

Frank, TGS is still working on the engineering of this project and Basically, it's too early to tell. It's too soon to speculate about CAPEX plan, both for TGS and for Pampa regarding this project. Hopefully, by mid of this year, we will have more clarity. I hope at some point of this year, we will be in a position to decide whether to move forward or not. Once we do so, I'd be happy to share these figures with you, but currently it's too early to tell. It would be too speculative.

Thank you, Gus. The last question of Frank is about with significant opportunities in coming years, will you be able to finance this with your existing cash flow? Is equity financing an option?

Okay. Thank you for the question, Frank. I'll go back. I think this was Lida's first slide in the presentation. I want to go back here because I think this shows this tremendous free cash flow generation of our portfolio, capacity of our portfolio of assets. As you can see here in the first two charts, in the past five years, we have increased our capacity to produce natural gas by 120%. That obviously meant a huge amount of capex. Also in power generation, we grew our capacity by 44% from 3.2%. 7 gigas to 5.4. Again, a huge amount of capex in order to do so. And then I go to the bottom of the slide. While we did so, while we grew our production capacity by so much, We were also being able to do so while reducing our net indebtedness, as you can see in the middle of the board, we have reduced our net indebtedness by 25%. We also, we have repurchased our own bonds. We have repurchased like 330 million dollars of nominal bonds. At the bottom right, In the past five years, we have reduced the number of ADRs outstanding from 83 million to 55 million. So we have reduced our stock outstanding by 34%. We have spent in share repurchases more than $600 million. So between share repurchases and dev repurchases, we have spent around $1 billion. So I think this slide shows the cash flow generation capabilities of our portfolio. We have been increasing our production capacity tremendously, and we have also been able to repurchase our own stock and debt. So going forward, going back to your question, I think Yes, there are a lot of opportunities that we can take advantage of, and our portfolio generates the needed cash flow to do so. But if we may decide to finance ourselves increasing indebtedness, as we will probably be doing this year, taking advantage of the cheap financing available in the local market, in the peso market, we might do so. Regarding equity financing, if it is an option, yes, it's always an option. But today's share price of our stock we are more tended to repurchase our own stock to issue new stock. So it's always a possibility, certainly not at these prices.

Thank you, Gus. Our next question comes from Bruno Montanari from Morgan Stanley. He has three questions. The first one is, The balance of risk and opportunities in Argentina seems to be migrating more towards the oil side of the industry recently. Would Pampa be interested in being more active on the oil investments to increase production now that the gas upside seems to be well mapped out? If yes, in which blocks could the company intensify developments?

Hi, Bruno, and thank you for your question. We are studying several alternatives. We do want to increase and to balance a little bit more our production towards oil. As you know, today we are probably 90% natural gas and 10% oil, so we want to have a more balanced portfolio. And in order to do so, we are studying several alternatives. And discussing with our partners, one possibility is increasing exploration and production in Rincon de Aranda, which is one block that we own, but we need to reach and agree with our partner. And there are a couple of other alternatives that we are studying, but nothing concrete that I can tell you at this moment.

Thank you, Gus. The second question of Bruno is, although an increase in lifting costs was expected, the company seems to have been able to offset some of the inflation impact on EMP costs. What are the trends for lifting costs going forward?

As you well mentioned, yeah. Inflation in dollar terms put pressure here as well. But basically what I think what explains is the fact that we have been building new infrastructure and we do still have spare capacity in that infrastructure that we have been building over the past few months. So we are not still... Having a high utilization rate of this new infrastructure, I hope that as our production continues to grow, lifting costs will continue going down.

Thank you, Gus. The last question of Bruno is, can you comment on Pampa's strategy to deal with a potential material devaluation of the Argentine peso happening in a very short time frame? What will be the impact in terms of margin of EMP and power generation? And how would the company protect its cash balance and cash flows?

So, firstly, most of our incomes are dollar linked. I think the biggest impact on our cash flow will be and will depend on the amounts that we are owed by CAMESA and also regarding plant gas. But it should not be a big impact. And regarding our cash, our cash balance, we are mostly invested in dollar link assets or is in US dollars. So I think we are already protected from that scenario.

Thank you. Thank you, Nico. The next question is from Matias Castagnino from BCP Securities. His question is regarding the remaining amount of the 2023 bond.

So this maturity is like a different... new maturity than last year's. So the current regulation applies. That means that we have access to the official effects for 40% and we have to refinance the other 60%. We can do this as early as 45 days before the maturity and This is not a big maturity, so it's very manageable for us. And we are analyzing different alternatives that will depend among other things on market conditions at that time.

Thank you, Nico. Our next question comes from Rafael Nagano from Credit Suisse. Is there any additional value being discussed on the Petro-Ecuador case? If so, could you share with us how much? And do you see any risk of reverting pay of the $37 million provision due to the injunction from Pedro Ecuador, given you only received part of this amount so far?

So no, the full amount of this award, including interest, is the $37 million. We already collected almost $21 million. and there are still $15 million spending. The protection action presented by Petrocuador has been rejected. So I see very little chance of that being reverted. And now we are following the necessary steps to collect the other $15 million spending.

Thank you, Nico. Our next question comes from Alejandra Aranda from Itaú, Banco Itaú. Your first question is kind of already answered. It's about the plans of volumes in the upstream business in the first and second half of this year and what to expect in terms of costs for this segment, the EMP segment.

Sorry. I think it's similar to the first question. In terms of volume, we are expecting first and second quarter while there is no new infrastructure capacity to extract the gas from the Neuquina Basin to our volume to remain below 10 million kilometers of natural gas per day. Once a new pipeline is ready during the winter, our production should jump to around 16 million kilometers of natural gas per day. And by the end of the year, during our spring, going back probably to 13, hopefully 14, Between 12 and 14 million cubic meters of natural gas per day. That's what we are expecting in terms of sales this year.

Thank you, Gus. The second question of Alejandra is regarding non-conventional renewable energy. How should we think about non-conventional renewable energy investments or acquisitions going forward? Do you have a target in terms of this generation source that you would like to reach in the next few years?

No, we don't have a target, but we would like to grow as much as possible with a profitable project. We have shown that by last year, we acquired from our partner 50% of their stake in the Their sake, there was 50% of a 100 milliwatt wind farm. That was a . We also are about to complete, we have been, last year we have been investing in our, in PPF4. Maggie is showing here, an 81 megawatt expansion, already 36 megawatt are online. So that adds... to the 50. So we increased last year, 130 megawatts, our capacity. And we also bought Parque Arauco at the end of the year, 100 megawatts. So we increased our renewal capacity by 230 megawatts last year. And we have launched a project that is comprised of a total of 300 megawatts. The first phase, we are doing 100. That is already underway. And we hope that this new park will be ready by the second quarter of 2024. But again, we don't have a goal, but we would like to complete this 300 megawatt expansion within the next couple of years.

Thank you, Gus. The last question of Alejandra is regarding the LNG project. Could you comment on where TGS is regarding project study and what do you need in terms of legislation and incentives to move forward with this project?

That's a very good question, Alejandra. TGS is working on the engineering of this project, which is quite complex and takes time. longer than we had originally expected. But we are working with several international companies to help us on the engineering of the project. Regarding the law, yes, this has been mentioned in the media. This is a project where Argentina is going to compete in a market that is quite competitive. Obviously, the spot market of LNG is not the same as long-term contracts. at a much cheaper price that would have been seen on the spot LNG market. We need to be able to build a project that is very competitive internationally-wise. The project that we are envisioning is... rather small project vis-a-vis the huge projects that you see in other parts of the world. So there is a problem of scales that makes it less competitive. So it's important, both the fiscal incentives that we hope this new law will provide as well as the certainty regarding the export permits that given our history it's important going forward I think it's not going to be that relevant because thanks to Vaca Muerta Argentina knows that we have enough reserves for several centuries going forward. So it makes no sense as it has happened in the past to restrict export of natural gas. So what is more important than I think about the law is the need of fiscal incentives to make it competitive with other international LNG projects.

Thank you, Gus. Our next question comes from Christian Feria and Ezequiel Fernandez from Balance. They have three questions. The first one is, can you explain a bit How are the process and new rules for gas exports into Chile? What type of authorizations you need to get? How much in advance you have to apply for these? And how is determined to who has priority of gas exports among all Argentine EMPs?

Thank you for the question, Christian and Ezequiel. Gas exports are quantified. There are quotas based on a formula that relates to the volume that each producer has been able to win in the several rounds of the plant gas. So your success in the plant gas is what determines the export quotas. There is also a floor price at which you cannot export gas to Chile below that price. I'm not sure, but I think it's around, currently it's around $7.50 or $8 per million BTU. And what else? And the policy of Argentina is that first, local gas is to consume in Argentina and so if there is what has been happening what has been happening this summer and will also happen during the winter during the beginning of the winter until the new pipeline is ready and probably even after the new pipeline is ready is that the production capacity of the Neuquina Basin exceeds the evacuation capacity of the Neuquina Basin towards Argentina. That's why we will have capacity to pass to Chile, not only as we are doing now during the summer and during the winter while the new Nestor-Kichner pipeline is ready, but also It may happen that even with the new pipeline that will bring an increase in evacuation capacity from the Neuquina Basin of 11 cubic meters of natural gas per day, it could be the case that the increase in production in the Neuquina Basin is even higher than that. So we might be able as a country to continue exporting gas to Chile throughout the winter. I think that answers the question.

Thank you. The second question of balance was regarding the LNG project that was already answered. The third and last question is about the cash flow generation. What are you thinking about the cash uses?

well, cash usage for this year. I think Lida has already talked about it, but we have this year one of our probably most aggressive CAPEX plan in the past few years. We have a CAPEX plan for power generation of around $250 million that is comprised of maintenance CAPEX and the build-up of our sixth wind farm, PP6. We think we will be spending around $150 million on around that figure this year. That is how the $250 million for power generation is comprised. And for EMP, we will be certainly doing the most aggressive CapEx plan over the past few years in order to be able to increase our production from 11 cubic meters of natural gas per day to 16 million cubic meters of natural gas per day. That is something we are already working on and we need to achieve. I think we will be able to achieve that figure once the new pipeline is online by early this winter. how we are going to finance that through our own cash flow generation. And as mentioned before, taking advantage of our financing capabilities in the local peso market.

Thank you, Gus. Our next question comes from Alejandra Andrade. From JP Morgan, the first question regarding the 2023 bond was already answered. The second question is CapEx expectation given the increasing production. It's already sort of answered. So thank you, Alejandra, for the question. The next one is from Ludovic Casroche from Autonomy. How much dollars will add Barragan and PP4's PPA in terms of EBITDA on a full year basis?

Hi, Ludovic. Ensenada Barragán's PPA, it's annually will add $100 million, more or less. And the PP4, it's 81 million watts of store capacity, will add around $22 million of PPA per year.

Just the $100 million that Barragán will add, that's... full company. We own 50% of that. Correct.

Thank you, Liz and Gus. The next question comes from Juan Jose Munoz from BTG Pactual. Do you foresee any changes in plant gas once the new administration is elected?

Juan Hi, Juan Jose. No, certainly not. I think every time there's been a change in administration, the market always has been fierce of changing contracts. fortunately what we have been seeing in the last couple of changes in administration is that contracts have been respected both on electricity PPAs and on the plant gas so and I think we are seeing We are seeing the benefits of that. I think in plant gas, the country has seen the benefit of that, of how competitive the auction has been, how aggressive producers were in terms of pricing. So I think the government officials and politicians are understanding that there is a reward once once there is a trust that contracts will be respected i think it's it's important to to highlight that at the beginning of this administration and the fear by the end of past administration what what was going to happen when argentina files for default on the sovereign bonds, what is going to happen with the PPAs. Unfortunately, what happened was that despite the fact that Argentina defaulted on its sovereign debt, they have respected all this contract. And I think that is a very good antecedente. How do you say antecedente? Present. Present, yeah.

Thank you, Gus. Our next question comes from Soledad Candelaria from Banco de Crédito y Securities. I wanted to know if the administration of Barragán will be changed the operation, maybe she means to YPF from June 2023.

That is an agreement that every four years we swap the administration of the plant. We have been talking about it. It's really not a big issue. We both know how to do so. We have an excellent relationship and we are analyzing how to do the engine administration, basically because it's not cost-effective to move all the systems from one company to the other. So we have to... figure out what is the best way to do it, we will certainly reach the best solution available. So that is my answer. The answer is yes, administration goes to YPF the next four years. And it has to be in the same way that it has been the past four years, despite who has the administration, it's a share and teamwork. So we are convinced it's going to be the same way the next four years.

Thank you, Gus. Our next question comes from Daniel Guardiola from BTG. We would like to know your thoughts on the possibility of distributing dividends.

Hi. Frankly, honestly, that's not something that we have been discussing lately, not this year, because of the recent one, the capital controls that make it expensive. We could have, because of the the decreto 277 which allow us an excess access to the official exchange rate thanks to our increasing in production and so we could have access to the to the fish dollars at the official exchange rate in order to pay dv this year, but I think we are going to use that extra access in order to do the liability management of the 2023s. Also this year, we have, as I mentioned earlier, a huge increase capex plan so for the first time in the past few years we are going to be free cash flow negative and we are going to finance that in the local market so I don't especially this year because of all these reasons it's not a good moment to think about dividends and as we always say we have a huge or very very profitable investment opportunities. We have not been asked by our shareholders to pay dividends. So we are comfortable with continuing with this policy.

Thank you, Gus. Our last question comes from Florencia Majorga, which is the impact of recent adjustment to legacy remuneration? in power generation?

The recent adjustment, I think you're referring to the one that dollarized a portion of the remuneration. So going forward, it's not going to be 100% peso denominated, but I think something like 30% dollar denominated. It's a small percentage. I don't recall whether it's 30, 25%. It's around 25%. Yeah. So a portion of the current remuneration is going to be defined in dollars. taking into account what we are, our projections of inflation and devaluation of the official exchange rate for the rest of the year, the impact is of around $15 million from what we have projected in our budget at the end of last year. So it's a It's positive, it's not huge. It's rather marginal.

Thank you, Gus. This concludes the question and answer section, so we'll turn to Lida for final remarks.

Thank you so much for joining our conference call. Would you like to add something, Nico? Would you like to add something that we didn't address? So basically, I think it was a great call. If you have any questions or anything that's left that's not been covered here, please contact us and we will be happy to assist you. Have a nice day.