Pampa Energia S.A.

everyone, and thank you for waiting. I'm Raquel Cardaz from Mayar, and we would like to welcome everyone to Pampa Energías' third 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 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 for the company. They involve risk, uncertainties, and assumptions because they are related to future events that may or may not occur. Investors should understand that in general they are related to future events that may 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 Lida Wang, Investor Relations and Sustainability Officer of Pampa Energía. Please go ahead.

Thank you, Raquel. Hello, everyone. And thank you for joining our conference call. I will make a quick summary of Q3. You may find more details in our early release. Today, we are having a Q&A with our CFO, Nicolás Midling, and Horacio Turri, our head of BNP, and Tito Súber-Bühler, our head of corporate finance. Let's start with the quarter's figures highlighted by the ramp-up in gas production and set a new all-time high milestone, growing shale per contribution, the incremental share of efficient and green PPAs, and we keep enhancing our balance sheet by increasing our liquidity. The adjusted VDA amounted to $244 million in Q3, similar year-on-year, thanks to the additional output coming from the plant gas and contribution from new PPAs such as wind farms and Barragán CCGT, partially upset by a drop in commodity prices affecting crude oil brand and pet chem, and peso depreciation impacting spot energy. However, the EVDA grew 10% quarter-on-quarter, mainly explained by the higher gas production. It is worth noting that more than 85% of the quarter's EVDA was dollar-linked, and the share now is led by EMP, mainly due to natural gas. CapEx in Q3 was 40% higher year-on-year, mainly because of the ramp-up activity in Yampi, which is concentrated in shale gas drilling and completion of wells, plus the construction of PP6 wind farm, upset by the commissioning of PP4 last quarter. Moving on to power generation, as seen on slide four, we posted an adjusted VDA of $91 million in Q3. This is 2% higher year-on-year, mainly explained by the new PPAs at our wind farms and barragans and lower maintenance and material costs, upset by a decline in spot and energy plus prices, the divestment of various wind farms and a partial outage in July. Loma La Lata, plus higher labor costs. Compared to last quarter, power was 7% below. This is explained by the divestment of Mario Cebrero and higher labor costs. Obsessed by the increased spot prices, because we've been granted 23% increase in pesos. Another 28% update was clear from November onwards, accumulating a 150% increase year-to-date. The dispatch in Q3 rose 32% year-on-year, led by Barragan, UCCGT, and more hydro at Pichipicumlefu and new wind farms that we built and acquired, offset by less thermal dispatch due to the lower power demand, the outage at Loma La Lata mentioned before, and the exit of Mario Cebreiro. The corporate capacity payment, especially from PPAs, is playing most of our EVDA. It is driven by availability, and in Q3, we reached almost 94%. Below last year's 96%, this is because of LOMA, TG number five, and the overhaul that we did in Genelva, program overhaul. However, this is way above the grid's 73% availability rate. Moving on to PP6 expansion, the project's progress is 94%. We are working on the facilities and civil works for the high voltage station and testing the main transformer bank. Also, the main components for the 31 windmills arrive in Bahia Blanca and the construction of the towers is underway in Argentina. The estimated COD for the first phase of 95 MW is for the next year Q3, and the second phase of 45 MW will be by next year's Q4. It is worth highlighting that PP4 energy will be sold under B2B BB8s. Now moving to the EMP business, we posted at just a VDA of $132 million in Q3. This is way above last quarter's figures and 12% higher year-on-year. The increase was driven by higher gas delivery committed under the new plant gas realm, linked to the new pipelines. This was upset by a drop in brand prices and in oil production plus a mild winter and pipeline delay impacting gas output. In Q3, our total production averaged above 80,000 bars of oil equivalent per day. This is 17% higher than last year and 19% up quarter-on-quarter. In August, we reached a new all-time high production record of 16.4 million cubic meters per day. This is a remarkable growth of 44% from our 2022 record. Our lifting costs grew by 9% year-on-year and 5% quarter-on-quarter. This is explained by the activity ramp-up. However, if you put it on a productivity perspective that comes from the new walls, this possibly impacted the lifting cost per barrel equivalent, which decreased 7% year-on-year and 13% quarter-on-quarter, recording $5.6 per barrel equivalent. Cruel sales stood at 4.6 thousand barrels per day, representing 80% of the production, but 19% of the segment's revenue, getting a realized price of $63 per barrel. 15% of the output was destined to exports. Focusing on gas, our sales in Q3 grew by 20% yearly. This is averaging almost 13 million QE just per day in the quarter. Mainly explained, again, by the higher volume sold in the local market through plant gas. Regarding the campaign, the new Shell Wells performance is in line with our expectations. In Sierra Chata, the output grew more than five times year-on-year. Thanks to the 11th Shell Wells Tyvee this year. Another three are scheduled to start completion this month. In El Mangrucho, Path 6 has been completed and tested and results have exceeded our expectations. Like we talked about it in the last quarter, we also drilled Path number 5. which completion is nearly finished and began drilling path 7, scheduled to be completed by next year Q1. Each path has three wells. The average gas price for the quarter stood at $4.7 per mu BTU, similar year-on-year and quarter-on-quarter. As you can see below, the retail share downsized because of the incremental deliveries under planned gas destined to power plants. Other clients remain very similar to last year. So as you can see here, gas deliveries were above take-or-pay during the winter season. despite the pipeline delay, the warmer winter. However, going into Q4, the gas demand is relenting as the warmest spring in years, and high-gas hydro in the last 15 years is happening. So this weather phenomenon impacts in the domestic cells, impacts in the plant gas, impacts in the exports to Chile, because also Chile is happening the same thing, and thermal power generation, indirectly reducing the grid's electricity costs. We expect the gas demand to normalize by December. It is not worthy to mention the importance of take-or-pay. This is a kind of assurance for our investments. So we move on to petrochemical business that posted $16 million of ABDA in Q3. This is 16% lower year on year because of the drop in international prices that last year was all-time highs and lower reforming sales in the local market. However, ABDA... was 60% up quarter-on-quarter due to the higher domestic sales of styrene and exports of polystyrene and rubber, plus higher reforming prices. In Q3, 42% of the total sales volume was exported, up from the last year's 38%. Well, we move on to the financial side. In Q3, we recorded a free cash outflow of $90 million. This is mainly explained by the expansionary capex that we are undergoing gas and higher debt service because of the peso debt. Though we benefit from the peso devaluation because it dilutes our principal amount. Working capital deteriorated due to increased collection days and rates from Camisa since last quarter. Additionally, we raised $68 million net from the local market, mostly in domestic dollars. In summary, we generated $92 million in the quarter. This is achieving $964 million cash position by the end of the period. Moving on to the slide 11, we show our consolidated financial position, including our affiliates at the ownership. But just let's focus on the restricted group, the parent company that reflects the bond perimeter. We posted a cross debt of $1.6 billion, similar to the last quarter. However, thanks to our strong liquidity position mentioned before, the cash flow generation from the businesses, the net debt and leverage ratio decreased significantly, recording $677 million in one-time leverage. The average life was also reduced to 3.1 years until 2027. As you see in the debt profile, we don't face any relevant debt maturities. So this concludes our presentation. Now I will turn to Raquel, so she will pose for questions. Thank you so much.

Thank you. The floor is now open for questions. If you have a question, please send us through some chat. We will read and answer them in order to receive. Also, please make sure your name and company are correctly displayed to introduce you to the audience. Should any participants need assistance, send us a chat message or raise your hand. Please hold while we pour for questions. So the first question comes from Alejandro Demichelis from Jefferies. The first one is, how do you see the evolution of production of El Mangrusha going forward? And how do you see this impacting lifting costs?