Pampa Energia S.A.

Thank you for waiting. I'm Margarita Chun from IAR, and we would like to welcome everyone to Pampa Energía's first quarter 2023 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 the 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 Lira Wang, Investor Relations and Sustainability Officer of Pampa Energía. Please go ahead.

Thank you, Maggie. 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 CFO, Mr. Nicolas Minglin, and our special guest here, Mr. Horacio Turri, our head of Upstream. Let's start with the quarter's figures and go straight to the adjusted EBITDA, which amounted to $206 million in the Q1, 8% less year-on-year, mainly because of Barragán's old PPA, TGSs lack tariffs and higher payroll in dollar terms, upset by the addition of PPAs and a solid power dispatch, better gas and spot prices, plus Transcendence tariff increase. However, the BDA increased 12% quarter-on-quarter because of the PPA additions, Transcendence tariff, and higher liquid margins in TGS, upset by soft gas cells and lower reforming cells. It is worth to note that 76% of the EVTA was dollar linked. As you can see in the right below, the share between electricity and oil and gas is almost even, though power is leading the pipe thanks to our PPAs. CapEx in Q1, more than double year on year, mainly because we kick off So a new wind farm in PP6, plus the ambitious drilling and completion activity in preparation for the winter peak season. Moving on to power generation, as seen on slide four, we posted an EVDA of $108 million in Q1, down 11% year-on-year, but up 26% quarter-on-quarter. mainly explained by Barragán's old PPA that expired in April last year, and higher labour expenses, offset by the addition of wind farms plus the kick-off of Barragán's new PPA in late February of this year, and better spot prices thanks to a special remuneration for legacy CCGTs. Q1 dispatch rose 11% year-on-year, above the national power grid 8% growth, in response to a hot wave that drove new records of power demand. Barragan's new CCGT contributed most of the increased load factor, upset by less Bolivian fuel and forced and scheduled outages at some thermal units restored within the core. Availability is essential to collect take-or-pay capacity payment, especially from PPAs contributing most of the EVDA. In Q1, we reached 93%. This is below last year's almost 98% availability rate due to the thermal outages mentioned before, but still outstanding compared to the grid's 69% availability. Moving on to wind farm expansions, regarding PP4, the project is highly advanced. In April, we commissioned um 18 more so we have 54 mail was online out of the 81 that is the total install capacity in addition almost all the remaining wind turbines are assembled and we estimate to complete the cod by the end of this month Regarding PP6, we also kick off the second phase this month, adding 45 megawatts more. So the total capacity will be 140 megawatts by investing $265 million approximately. For the first phase of 95 megawatts, we just started with the civil works for the pads, platforms, and the foundations. And for the second phase of 45 MW, we are procuring 10 additional Vestas wind turbines. We estimate to achieve COD next year, the first phase by Q3 and the second phase by Q4. Keep in mind that PEP expansions are sold under B2B PPAs. Also, to finance this PP6, we issue in May our second green bond in pesos in the local market, raising... and equivalent to $22 million due in one year. In slide six, our EMP business posted a total adjusted EBITDA of $62 million in Q1, 10% up year-on-year because of the gas export prices and local oil demand, upset by lower gas export volumes and soft retail demand that drove production curtailments. plus the higher costs for payroll and growing activity. However, quarter on quarter, EBDA is down 14%, driven by sale curtailments and labor expenses. Our total lifting costs almost doubled yearly, explained by payroll and increased activity. However, it decreased quarter on quarter due to lower facility costs from a block. Efficiency-wise, the lifting cost per BOE was up 23% year-on-year, but very similar, stays similar quarter-on-quarter, recorded $7 per BOE. In Q1, our total production average was 58,000 BOE per day, zooming in. Crude oil represented 9% of that. Still, it reached 24% of the segment's revenues. mostly because of increased local demand, upset by the drop in the brand pricing, getting a realized price of almost $68 per barrel. Our gas production in Q1 was similar yearly, but slightly down quarterly, averaging almost 9 million Q meters per day, mainly explained, again, by the weaker retail demand vis-a-vis the seasonal contracted volumes under planned gas. in addition to lesser exports to Chile as permits were limited. Furthermore, though the country experienced a record high power demand and thermal installed capacity fire as much as possible, CAMESA was not able to procure additional gas because of pipeline bottlenecks. Hence, El Mangrucho output was curtailed during the quarter to 5.7 million kilometers per day, However, Sierra Chata, with six drilled and connected shale gas wells, have been outstanding, dramatically increasing the production. As you can see below, the production, the results of Sierra Chata have performed the benchmark. El Mangrucho also performs very well within the average among peers. We rely on both blocks to run by production, each reaching an all-time high, supported by excellent results from our shale gas wells. The average gas price of the quarter was $4 per million BTU. This is 11% year-on-year increase, mainly due to export prices. In Q1, sales were skewed to Chemesa as they were buying gas to up from the high power demand. Exports were lower but remained under take-or-pay contracts until June of this year. The petrochemical business posted $7 million in Q1, primarily contributed by styrene and polystyrene cells, plus a lower cost of propane, upset by a fall in SBR volume and higher labor costs. However, quarter-on-quarter is shrunk by more than half, driven by a reduced supply of raw gas line and export margins. Sales volume was up 13% year-on-year, mainly because last year some reforming products were dispatched as façons, so not billed as volume sold. In Q1, 39% of the total sales were exported. So moving to the cash flow in Q1, we recorded a free cash flow outflow of $29 million. This is mainly due to the expansionary capits that we are doing in power and gas. higher debt service driven by peso debt through principal gets diluted by devaluation, plus worsening of payment collections from CAMESA that it went from 70 days to 100 days full cycle collection. That represents roughly $80 million of working capital buried. In addition, we raised $97 million net from the local market In summary, we generated $68 million of net cash flow in the quarter, achieving $768 million cash in the end of the period. So moving to the slide 11, we show our consolidated financial position, including our ownerships, the affiliates at ownership. But just let's focus on the restricted group that reflects the bond perimeter. We posted a gross debt of $1.7 billion. This is similar to the last quarter. Net debt and leverage ratio decreased thanks to our solid cash flow position. recording a little bit above $900 million and 1.2 times leverage. The Irish life also reduced to 3.4 years. Taking advantage of the domestic liquidity, we kept diversifying the currency and source. As a result, 81% of the dollar denominated offshore bearing an interest rate of 8.5%. Peso debt bears an interest rate below trailing CPI, so onshore debt in dollars is zero coupon. Also, as mentioned before, we recently raised a second green bond for 5 billion pesos, that's $22 million roughly, and issued $56 million of hard dollar bonds in the local market. This is non-MEP bonds. maturing in 2025 at 5%. A few days ago, we announced the redemption of the remaining 2023 bonds for around $93 million. So until 2027, Pampa does not face any relevant debt maturities. So this concludes our presentation. Now I will turn to Margarita. So she will poll for questions. Thank you very much.

Thank you, Leah. Now the floor is open for questions. If you have questions, 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 call for questions. Our first question is from Maria Mochano from the company Adcap. She would like to know regarding the company situation to access to the official effects for principal of debt payment and import of equipment. What are the company tools to have access to the official effects of the central bank?