Pampa Energia S.A.

Good morning, everyone, and thank you for waiting. I'm Raquel Cardaz from IAR, and we would like to welcome everyone to Pampa Energías Third Quarter 2024. We would like to 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 participants 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 Pampanergia'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 Lida. Please go ahead.

Hello. Thank you, Raquel. Hello, everyone, and thank you for joining our conference call. I will make a quick summary of Q3. You might find more details in our earnings release and financial statements. Today, we are having our Q&A with our CEO, Gustavo Mariani, our CFO, Mr. Nicolás Lindin, and Horacio Turri, our head of EMP. Let's start with the quarter of three years marked by the solid performance from gas upstream and power generation, which helped to overcome the winter peak. This is the year's most critical period. Gas production increased 8% year on year with a growing contribution from Shell. Our CCGTs achieve high-low factors supported by strong gas and capacity availability. Our balance sheet remains solid with extended maturities and improved liquidity, bringing net debt to its lowest level since 2016 when we acquired Petrobras Argentina. The adjusted VDA amounted to $279 million, up 14% from last year, driven by increased gas deliveries through the new pipeline, under planned gas, higher spot prices, and excellent dispatch and availability performance in our power generation segment. Tariff increases also boosted contributions from PGS and Transener, lower gas exports, Power and gas B2B sales and pet can margins partially offset these gains. The quarter-on-quarter decrease is explained by warmer September temperatures, gas pipeline curtailment, and higher operating costs. It is worth noting that 75% of the quarter's EVDA was dollar-linked. and EMP leading the share. Excluding most regulated types of businesses, the dollar share goes up to 85%. CapEx in Q3 is 59% lower year on year, mainly because of the shale gas ramp up and PP4 construction in 2023, partially upset by final payments for PP6 ongoing development in Rincon de Aranda. Moving on to power generation on slide four. We posted an EVDA of $112 million in Q3. This is a 23% increase year-on-year, mainly explained by the operating performance and higher legacy prices, partially upset by lower industrial demand, increased operating expenses, and the divestment of Mario Cebreiro. Q3 dispatch rose 19% year-on-year, driven by our CCGTs at Genelva, Barragán, and Loma, supported by greater gas and power availability. Lower water levels at Pichipicún del Fú, Hydro, and the divestment of Mario Cebrero partially upset the decrease. Take or pay capacity payment, especially from PPAs, contributes most of the EVDA. It is driven by capacity availability. And in Q3, we reached 96% up from 94% last year, helped by fewer thermal outages. A quick review on PP6 expansion. The civil works were completed. All windmills are installed. since October, and the project now is 98% advanced. Between September and October, 50 MW were commissioned additional work commissioned by Camisa, reaching 130 MW operational out of the total planned 140 MW. We are now conducting the final tests and full COD is expected just next week or before the end of the month. The sixth energy will be sold under B2B PPAs in Matar. Moving on, slide seven, our EMP business posted an EBITDA of $122 million in Q3. This is 8% down year-on-year, largely due to higher operating costs related to Rincón de Aranda, reduced exports to Chile, and lower industrial sales due to the economic downturn. These factors were upset by increased gas production from the latest round of gas. The beginning of Rincón de Aranda pilot plan and increased gas treatment costs raised the total lifting costs by 16% year-on-year. However, lifting costs per VOE slightly rose to $6 per VOE. Higher output lowered the gas lifting costs by 2% to $0.80 per milliview. Total production averaged nearly 88,000 VOE per day, and 8% higher than last year, when we assumed mean crude oil represented only 6% of the output and 16% of the EMP revenue, while gas accounted for 90% of our production. Gas production in Q3 rose 3% year-on-year. As you can see here, the deliveries have been increasing throughout the year, thanks to the new gas pipeline and peak during the winter. However, bottlenecks due to the delays in the commissioning of compressor plants, warmer September and more significantly sub-demand from industries in Chile impact the volumes. Still, deliveries stay above take-or-pay levels during the winter. In Q4, demand is expected to ease with warmer weather. El Mangrucho contributed 57% of the quarter's production, and Sierra Chata provided a growing share of 29%. Sierra Chata's production grew 18% year-on-year and reached a new all-time high record of 5 million kilos per day in July without connecting or drilling any wells this quarter. Mangrucho experienced the same thing, no new wells tidying, and a 7% increase year-on-year. The Irish gas price for the quarter was $4.4 per million BTU, 6% down due to the lower exports to Chile and sales to industries partially upset by better retail prices due to tariff increases. As you can see right below, increased local gas deliveries were directed to retail and thermal power generation. On slide 10, Before we move on from EMP, let me briefly summarize what we presented during the investor day about Rincón de Aranda. Production is currently at 1,000 barrels per day. This is primarily crude, low water, low gas company. The development plan targets a production plateau of 45,000 barrels per day by 2027. This is aligned with the ongoing pipeline expansions. We are building facilities, securing evacuation capacity in Bacamorta Sur, and planning to drill seven paths annually for the next two years. This is why we procure four drilling rigs right now. We estimate to invest over $700 million in 2025, with a total of $1.5 billion in capex between 2025 and 2027. Quick note on petrochemicals. We posted $2 million on EBDA in the Q3. This is an 88% drop year-on-year due to higher costs and peak demand due to the economic downturn, partially upset by higher volumes and prices of reforming products. Though the spread to official effects shrink, the export dollar helped that tend to stay afloat this quarter. Okay, so moving to the slide 12, we show restricted group figures that reflect the bond parameter. In Q3, free cash flow reached $80 million, supported by improved working capital with days of sales outstanding at 48 days, just six days delayed, besides the robust operating cash flow. Last year's CapEx was shale gas ramp-up. This year's spending, capital spending, was mainly maintenance at $74 million. In September, we issued a $410 million international bond, maturing in 2031, and to improve the debt profile, partially redeeming at par the 2027 notes. Overall, this resulted in a net cash increase of $272 million, raising our cash position to $1.2 billion by the end of September. This is a 23% increase compared to last year, September, and $150 million more compared to June of this year. This slide shows our consolidated financial position, including our affiliates and the ownership, but let's keep it on restricted group figures. On top of the 1.2 billion cash that we described before, we posted a gross debt of $1.7 billion, up 5% year-on-year and 93% in dollars. However, the net debt recorded $539 million, down 20% year-on-year, and 0.8 times to the last 12 months of BDA, the lowest ratio and amount in the last eight years. So this concludes our presentation. Now I will turn the word to Raquel. She will pose for questions. Thank you so much.

Thank you so much, Leal. 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 order received. Also, please make sure your name and company are correctly displayed to introduce you to the audience. Should any participants need assistance, please send us a chat message or raise your hand. So to begin, first question comes from Bruno Montanari for Morgan Stanley. First question he asked is, can you talk about the initial performance of Rincón de Aranda and how should we think about the path of drilling in the coming quarters through the end of 2025? Good morning.