Pampa Energia S.A.

Good morning, everyone, and thank you for waiting. I'm Raquel Cabras from IAR, and we would like to welcome everyone to Pampa Energía's Single Quarter of 2025 results video conference. 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 descend in writing through Zoom. Should any participant need assistance, please send us a chat message. Before continuing, please read the disclaimer on the second page of our presentation. Let me mention that four looking statements are based on PumpEnergia'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 pampanergia and could cause results to differ materially from those expressed in such forward-looking statements. Now I will turn to Lida. Please go ahead.

Thank you, Raquel. Hello, everyone, and thank you for joining our conference call. I will make a real quick summary of the Q2 so we can have more time for questions with the management. Today, for the Q&A, we have our CEO, Mr. Gustavo Mariani, our head of Over and Gas, Mr. Horacio Turri, and our CFO, Mr. Adolfo Zuberliura. So, going to the slide three, several key developments marked the second quarter of 2025. First and foremost is the successful production ramp-up in Rincón de Aranda, thanks to the tidying of new paths in coordination with the commissioning of supporting infrastructure, such as the temporary processing facility, internal and front pipelines, and so on. So, also, the contribution of the new 140 MW wind farm PP6 and the higher spot prices boosted the quarter's figures. However, colder temperatures started in June, so delayed the spike of the winter. The winter spike involved power and gas demand. TETCAM contributed positive EVDA continue, gradually recovering, returning to a positive EVDA. Finally, in a proactive LM and ability management transaction, we extended the 2029 notes to 2034 with a $140 million RETAP issued at the lowest spread over U.S. treasuries in PAMPA's history. Well, let's move into the quarter's financial results. The adjusted BDA amounted to $249 million. This is a 17% decline year-on-year, driven by soft gas sales, falling PEPCAM prices, and higher operating expenses weighted on the performance. The headwinds were partially offset by contributions from the new PP6 wind farm. Increased gas exports to Chile and higher production at Rincon Yeranda. Quarter-on-quarter EBDA improves due to the seasonality and growing output at Rincon Yeranda. CapEx surged 134% year-on-year, reaching to $354 million. The majority, which is $249 million, was invested in the development of Rincon Yeranda. Moving on to slide four, the oil and gas adjusted EBITDA was up $87 million, down 28% year-on-year, largely due to reduced domestic gas sales to retail and thermal power as the colder weather arrived later than usual. Expiration of winter peak contracts between May and September under the planned gas EGSA also impacted the results. Though in June, that performed very strongly, as if the GSA remained in place. Higher lifting costs, especially from Rincón de Arana, also affected EBITDA performance. However, increased gas exports to Chile and stronger crude oil production at Rincón de Arana helped to balance this decline. The lease of temporary facilities and gas treatment fees push the lifting costs up to $7.6 per BOE. In particular, gas lifting costs rose to $1.1. This is influenced also by the lower output. Quarter-on-quarter lifting costs per BOE increased moderately, explained by the transition from fracking to in-house and lease facilities, offset by the seasonality. Total production averaged 84,000 barrels per day. This is down 7% year-on-year due to the output decreases at Hemangruxo and non-operating blocks. Partially offset by Rinconiaranda and Sierra Chata gas fields. Water-on-water, the production is up 16%. Again, explained by the seasonal effects and shale oil. The production mix continues to shift. with oil rising to 9% of the total production output and contributing 18% of the oil and gas revenues, entirely due to Rincón de Aranda and Mampapa. Also, we're tidying two shale wells, targeting Vaca Muerta at Río Neuquén block, the block's first shale development, alongside new tide gas wells. Río Neuquén is not operated by Pampa. Crude oil prices average nearly $62 per barrel in Q2. This is 14% lower than last year, mainly explained by the Brent's underperformance, affecting exports mostly. However, our hedging strategy around Rincón de Aranda's rising production helped to mitigate the price drop. Total gas sales fell 11% year-on-year. This is to almost 13 million cleaners per day, but rose 10% from Q1. Last, as I just explained recently again, by seasonality. The Manusho block continued to leave the output, though its share declined to 58% of the total gas volume in Q2. Meanwhile, Sierra Chata increased its share to 29% of the gas output in Q2, with a 14% production gain year-on-year. In Sierra Chata, we drilled four wells and tied in three here today, so 57% of the Q2 output is considered shale gas. And now, in line with our commitments with the exploratory rock in Barabaneira Este, we drilled a horizontal shell well, which is currently awaiting for completion and testing. Pampa extended Barabaneira Este's exploratory ice license until 2027. In the gas prices, they averaged $4 per millimeter in the quarter, remaining steady year-on-year, due to the Brent prices that affected export prices, and offset by improved retail prices and improved marginally in the industrial segment. Half of our gas was delivered to CAMESA for power thermal generation under the Plan Gas GSA. If you see the nationwide gas, we contributed 17% of the gas consumed totally in the country for power generation. Since May, we have increased our flows to Chile through two pipelines, right, Gas Andes and Gas Pacífico, Capitalizing the competitive demand of our gas relative to LNG. By June, the exports had reached 1.1 million kilometers per day, same as today. Though Q2 gas sales were soft, June rebounded sharply with the colder temperatures. On July 24, we hit a new all-time high, daily production high at 17.4 million cubic meters per day, driven by the outstanding shell wells at Sierra Chata. The most recent tidying pad of free wells, we peak at 2.7 million kilometers per day in June, highlighting its solid productivity and competitiveness. So focusing now on Rincón de Arana, we have five paths. have been grilled, four of which are online. During Q2, the block produced an average of 5.3 thousand barrels per day, exiting June at 8.8 thousand barrels per day. This growth was mainly driven by the path number two and number four. The latter began really producing in late June, and it didn't, by then, completely clear out the water. So it wasn't tested. Currently, Rincon de Aran lies delivering almost 16,000 barrels per day from four paths. The last two paths were tidy during July and they're still on the wall testings. For 2025, we budget $800 million in total cafes, having already invested over $360 million year to date. We expect it to reach 20,000 barrels per day at Rincón de Aranda by Q4, and aim to reach a target of 45,000 barrels per day by 2027, when Vaca Muerta Sur pipeline is online. So again, to support this ramp-up, we secure trunk pipelines, transportation agreements in Vaca Muerta Sur, In June, we applied to the RIGI framework for the central processing facility a.k.a. CPF, and all related infrastructure needed to evacuate the target production level, as shown in the video on the screen. The CPF flowlines, pipelines, water treatment pools, and all required investment is approximately of $426 million, of which the CPF is estimated to begin by next year. Switching to power generation on slide 9, we posted an adjusted PDA of $112 million in the Q2, just a 5% increase year-on-year, mainly explained by BP6 performance and higher spot prices measured in dollars, partially upset by increased operating costs and scheduled outages. Generation volumes declined 7% year-on-year. Inavailability stood at 92% due to the maintenance at Loma La Lata. Upgrade works in Barragán CCGT for efficiency and lower gas emissions. And the hydros in Huiles outages in two out of the three dams since January of this year. Still, increased gas supply and PPCs helped to offset the The decreases, capacity payments, particularly under the take-or-pay PPAs, continue to support 70% of the segment's KPDA. So turning to the slide 10 about the cash flow, we only show restricted group figures because they are aligned with the bond parameter. In Q2, we posted a free cash flow outflow. of $307 million. This is mainly driven by the capex that we're doing at Ringgit Aranda, which accounted 75% of the total investment, along with an uptick in seasonal working capital, as gas sales peaked during the Q2 and Q3, right? As a result, cash and cash equivalents stood at $879 million at the quarter end. Finally, in the balance sheet, gross debt was nearly $1.6 billion, down 23% since December 2024, thanks to the redemption of the 27 and the 29 NOBs. Debt rose to $712 million. This is 1.1 times net leverage ratio, reflecting the cash flow for CapEx and the working capital needs. Our successful liability management efforts extended the debt average life. to 6.2 years from 4.2 years, significantly improving the maturity profile and the high drawdown in cash from Rincon Gerand. So this concludes our presentation. Now the floor is open for questions. If you have a question, please send it to the Zoom chat. We'll read it and answer them in order received. Make sure your name and the company is correctly displayed to introduce you to the audience. Should any participant need assistance, just write it through the Zoom chat. We are totally for questions, so please wait a little bit.

Thank you. All right. Cool. Let's cut it off.

No, no, we have already received questions. Already, okay. And Horacio is open?

No, not yet.

Because the third question goes to you.

99% target to Horacio Turri, which is, could you give us more color from Jonathan's work from Dead Wire? Could you give us more color of the CPF in Rincón de Aranda, please?

Well, good morning, everybody. Thanks for joining the meeting. The CPF stands for Central Processing Facility, and basically it has three different, I would say, purposes. One, obviously, is the oil and water separation and the disposal of that flow back water. possibility of having the oil ready to be dispatched to the YPF facility in order to get a spec for injection in the main pipeline, and also the separation of natural gas, which is currently being sent through a gas pipeline to the Vista facility in Bateria 3, which has already been connected. This central processing facility has a total output of 7,000 cubic meters per day, and we expect it to be finished by the end of 2026.

Which is 45,000 barrels per day.

Which is a little bit less than 45,000 barrels per day, 42 or something.

which is our plateau.

This is our expected plateau.

Awesome. Well, the next question, yes, is for Gustavo. Have you already started self-producing with our own fault, meaning self-producing power, right? With your own fuel? If not, when do you expect to begin? And which is the spread between Chemesis reference price and your own procurement price?

Good morning, everybody. Yes, we have begun to self-procure our own gas to our facilities, but on a marginal basis because, as you know, the deregulation has not occurred yet, but there are some opportunities for us to self-procure our fuel on some of our facilities, those that do not require firm gas transportation, or whether those days we find a firm transportation capacity. So the answer is yes, we have begun to do it on a marginal basis. And just about this. The price. The price.

What's the spread against the plant gas price, I guess?

Yes. Currently, correct me, $9 is what? $9.08, no? Currently, it's $8. Yeah, the world, Camisa has been changing this price. regulation or this pricing has been initially has allowed generators to buy natural gas up to $11 per million of BTU, then to $9 per million of BTU, and this current two weeks, because it's a system that changes every two weeks, it's $8 per million of BTU. So the spread to winter gas price is about $3.50 or something like that. Winter gas price for Camisa is around $4.50, I would say.

It's in Domalalá, right, specifically?

That's the facility that we are able to take advantage of this opportunity because it doesn't require gas transportation.

Awesome. Next question comes from Guido Visocero from Alaria, and he asks again, Horacio, regarding Rincón de Aranda, could you give us any color on the expected evolution of the lifting costs throughout the second half of the year and 2026, considering the ramp-up expected in production and until the processing plant is constructed?

Second quarter of 25, we were a little bit below $16 per barrel, basically due to the fixed cost of the TPF, of the temporary production facility, which has a lease that has to be paid annually, and it's fixed. And the production rate at the second quarter of 25 was $5,000 per day. So that explains the high lifting cost. Moving to the To the first half of 2025, due to the increase in production, as Lida mentioned before, we are close to 15,000 barrels per day. We are reaching around $8.5 per barrel in terms of lifting cost. We also reduced significantly the figure from the first quarter due to the connection of our oil pipeline. We were evacuating oil through trucks at the very beginning. By 2026, with the increase in production to 20,000 barrels per day, we should be hitting around $7 per barrel, and the final stage would be the installation on construction of the CPF, and that will move down the lifting cost to $5 per barrel, with a plateau of 45,000 barrels per day.

Awesome. Thank you. You mentioned the old average price will have been $58.5 per barrel without the hedging strategy in Q2 2025. I mean, I mentioned that. Despite the 67.5 Brent average in the period, are you planning to hedge production during 2026?

58 is net. Net. Organized.

I think that the main difference is that the brand has two discounts in order to be transformed in the way. Well-priced. Well-priced. The well-paid price. One is the extra tax, which is 8%, and also there's a premium for Medanito quality, which ranges, but it goes around, it's around $2 to $1.5 per barrel. A discount, not a premium. A discount. A negative premium. A negative premium, yes. so um this is basically the uh the explanation and uh regarding the uh the hedging for 2026 we already started hedging now we are already hedged until uh what september by july is the uh the exercise month yeah basically we have a one year forward we we are hedged at a

Currently around 70%, 75% of our expected production at a price of $69.

Do you expect better prices, Horacio? I mean, less discount versus rent. And when you reach the 20,000 barrels production target by year-end, a little bit for durology, but...

It's impossible to predict at all. We don't feel that we can predict. So we look at the future prices of rent as the best indication of where prices are going to be. So we cannot say anything better than that, than what the future market curves predict.

Then Guido asks about the CISA project, which is the sovereign energy LNG, floating LNG project. Do you expect any participation in the construction and maintenance of the required gas, new gas pipeline for TGS?

We are still in discussions and trying to put together the best solution for that. But eventually TGS could be part of the consortium to build and operate that gas pipeline.

How much gas may Pampa add in sales for these two ships in 27 and 28? How much capex do you need to achieve it?

Okay. The total amount of gas at the end of the two vessels being operational in Argentina is around 6 million cubic meters per day. That is by the end of 2028. The capex associated is... For the ramp-up and the construction of a new facility in Sierra Chata, we're talking about $400 million, out of which 50% is facility, 50% is drilling and completion. And then we will have around $60 to $80 million per year on a plateau basis to keep up with the $6 million.

The six million, it's breakdown between 20.5% for the first shift.

Yeah, that's the total amount at the end of the two vessels being operational. It's approximately 40% with the first vessel and 60% with the second vessel.

Awesome. And she asked, the last question is about the TGS private initiative. So how much NLBDA contribution for TGS do you expect for this project?

No, I don't have that figure in my mind.

Should I ask that to... That's what they say.

I should ask that to DGS once... Once it's done. Once it's awarded.

Yeah, because the award is in October. But it's the sole bidder, so I don't know if they are going to wait until October. And how much gas... will Pampa add in the production considering the 14 million kilometers per day new capacity for the Perito Moreno pipeline?

Eventually, Pampa has reserves to supply all that gas, but what market share of that new market will Pampa gain? It's a question that we still don't have an answer. We expect that this increase in the capacity of the pipeline, so these 14 million cubic meters of natural gas per day, they're going to be used for a short period of time, something like around 100 days per year, mostly during wintertime. So it will replace imports of LNG and diesel oil that the country does at much higher prices. So pricing for this gas should be close to that import parity. But we will see once that market develops.

Sorry, this is a newsroom. And he says, well, something that we always ask in every quarter is, what prices of natural gas are forecasting for this project? That is very... Then, from Jefferies, he's asking, something about the lifting costs and drilling costs that we already answered, right? Drilling costs we didn't answer though. Drilling costs we didn't answer though. He's asking how the drilling costs are evolving.

Drilling costs are going down, specifically talking about drilling. We moved from drilling efficiency of around 500 to 600 meters per day to around 900 meters per day. So we are improving significantly in our drilling efficiency. On top of that, we also made some improvements in our stage fracking per day, moving from 6 or 7 to around 10 to 11. So in all, with the improvements in completion and drilling, we should be able to reduce our total cost per well from 15.5 to something around $13 million. But this is going to take some more time, probably one more year.

Okay. And what level of shale oil production do you expect from Rincón de Arana? This is what we already mentioned. Quarterly, I guess, but no. Next quarter, it says.

Next quarter?

Next quarter.

Next quarter. Okay, no problem. We are currently in the range of 15,000 bars per day, and we should be increasing our production in order to reach 18,000 bars per day by the end of the year, by the last quarter. So that's more or less what we have in our minds for the ramp up.

We could say that before we were expecting to reach that by year-end, and now we are, the average of the fourth quarters is going to be around that, no? It's like the good results of Rinconderanda have anticipated, no?

Yeah, there is a mixture there, but all in all, we're going to be reaching the 18,000 or 19,000, 20,000 bars per day by year end. There might be a gap in the next quarter, but by the end of the year, we should be definitely reaching the 18,000 to 20,000 bars per day.

It's only asking the devolution of Rio Neuquén, I don't know. Rio Neuquén, in terms of shale oils?

The Rio Neuquén shale oil project is very, very, I mean, it's at the very early stage, it's exploratory, there have been two drills, the two wells have been drilled already, and still a long way to go. I mean, it's not a project, it's just a pilot. It's in the border of Vaca Muerta, right? It's in the border of Vaca Muerta. The results have not been that bad. I mean, it's okay. But there's still a long way to go in order to decide whether to move steadily ahead.

Well, Julián Casas from Latin Securities also asked about the lifting trends, so we already answered that. Okay. Bruno Montarari from Morgan Stanley, though, he is asking, can you comment on the expectations for cash generation in the second half of 2025? In particular, should we see any, the same CapEx intensity as Rincón de Aranda? What about the working capital? Should be any reversal for the pressure observed in the second half of 2025?

The cash generation in the second half of 2025 is going to be negative. As we have been saying for a few quarters, 2025 and 2026 are going to be years where basically because of the money that we will be deploying in Rincón de Aranda that I remind you is going to be $1.5 billion between uh 2025 and 2026 we will be having negative free cash flow in pampa so investing in excess of our free cash flow generation so the intensity will continue in the second half of of this year and in the first half of of next year you should be expecting a negative free cash flow Anything else?

Working capital. What do you think about working capital? Usually it gets better in the second half of the year, right?

I don't know.

Fito, would you like to comment?

Capital?

We don't project to have more working capital. Should we recover all the production from the third coup and the fourth coup and should improve?

Yeah, and because as sales will increase, so there will be a little bit more working capital involved in the coming quarters, but that's something natural because of the increase in sales.

Yeah, I remind you all that Pampa, it's a Gauss curve, right? This is our peak moment, Q2 and Q3. Also, can you comment on the company's learning curve in operating show oil, Horacio?

Yeah, well, we are definitely learning a lot. And as I mentioned before, we were able to take advantage of this productivity increase both in drilling and completion, and we are now trying to understand a little bit better whether the long-range sand versus the short-range sand and the spacing between stages are to remain constant or something that we can keep on trying to understand better and eventually improve some more dollars in our total cost per well.

Yes, also what positive surprises have you been seeing or any main challenges since the beginning of the operation at Rincón de Aranda?

Okay. I would say that the most interesting surprise we had in Rincón de Aranda is that originally we had two landing zones, the Cocina and the Orgánico Inferior. We had some expectations on the Orgánico Superior, but with a lot of uncertainty, we drilled. In the path number six, we drilled it well to the organico superior target and with a very, very good performance. And that opens up the possibility of developing as well a third layer that was not before taken into account.

Right. So, basically, the company is confident with the growth profile to reach the peak production plan.

Yeah. Yeah.

All right. Next question comes from Lillian from HSBC, and she asks, well, for Horacio, could you give us more color of the free LNG, the free, all right, LNG projects going on in Argentina, specifically on the timing and your interest in participating?

I can't comment on the one who's participating. The other two projects are YPF projects, and I'd rather ask them what they're going to do about that.

Yeah. She asks if we are interested in participating.

We have, as we always say, very competitive gas reserves, so we are always interested in projects that could allow us to develop these extraordinary gas reserves that we have. Today, we are 100% focused on the CESA project, the one that it's already underway, and we are discussing with YPF and the other partners the other possibility, but there's not much to say there.

She asks, where do you see higher upside potential, power, TGS, or EMP? Very straightforward.

I think there is upside potential in all the three segments. Obviously, in the next, in the near term, E&P is where the growth on the EBDA of Pampa is going to come from in a very significant way in terms, because of the development of Rincón de Aranda. In the case of power, we are waiting for the deregulation. There are no news there, but we are waiting for that. It's not something, as we said, that's going to be a game changer for PAMPA, but we expect an improvement in the power business because of the deregulation. And in the short term, we should be also expecting the need of additional and increasing the capacity of the country on big projects that takes a long time to develop, like three years. So there's going to be an opportunity for Pampa to continue growing in power generation projects. after the deregulation. And TGS also has a lot of infrastructure projects on the pipeline to continue growth. So, we see upside potential in all the three segments.

Great. Well, and then, obviously, the more synergies between power and EMP gas.

That's quite small, no? Yeah, we were preparing to the DES.

Battery energy storage.

Yeah, battery storage auction that we participated with a project of 50 megawatts. We are waiting to see whether we will be awarded or not. It's a very competitive project. Three times more offers than what Kamesa was requesting. In the specific case of our project, it's even more competitive because, you know, We are competing with like six or seven projects. So it's very, very competitive. We don't know whether we're going to be awarded or not.

Great. Nacho Sinikowski from Imbartia Bolsa, he's asking about the hedging strategy. We already talked about that, so we're going to skip it. The second question is regarding increasing dollar-denominated costs within the oil and gas segment, particularly lifting costs as well as selling or SG&E. Is this trend primarily driven by the FX dynamics and inflationary pressures, or it's another factor I might be overlooking?

Well, we discussed the lifting cost of Rincón Garanda.

Yeah, but he's asking if inflation, right?

Yeah, we had a lot of inflation, yeah.

We do have inflation, but it's smaller than other companies in the sense that we are. No, in the sense that we are not a peso company, peso cost company. That would be worse. My first question is about the renewal of the hydroelectric concessions. What is the current status of the process? Are there any developments regarding the terms of the timing? The hydroelectric concessions. I guess the big ones, the ones that want to be tender, not in ISA.

Yeah, the first... They should go, the tenders of the hydro concession should go first with the Comahue concessions, the ones that are uh basically and those are the ones that are going to be option first because they were the first that that matured after is going to come the auction for nibbles which will impact us but we don't have any clarity on the timing of the of this process

Our question goes to Vemos. The syndicated loan has been granted. When are the diversements expected to begin? And what is the project timeline for the projected timeline, including the start of construction and operations?

The financing was already deployed around $410 million, which already started the use of cash of the financing. The advancement of the project is a schedule. There are different stages. The first stage has an advancement of 25%. The second and third stages are around, I don't remember exactly, 10 and the like. But the project is, everything is going as planned.

um well he's asking the recent operations uh regarding the acquisition of ten percent of your bark the purchase of uh the death in india salmon that was uh released out there what strategic objectives are driving these transactions

I think we talked about this in the previous quarter. There's no strategic objective on neither of these investments. They are financial investments. So it's part of our portfolio management that we do on our cash position. So there's not much to say there about the financial transactions. There are strategic ones.

There's really, really tiny percentage on our, all close to $1 billion cash, right?

Yes, absolutely.

Well, this question always come out, and it's coming from Francisco Cacaro from DonCap. He asking, are you looking to change the CapEx world production forecast due to the weaker oil prices? Again.

No, we are not. And we, yeah. No, definitely not. And that's, additionally, that's why we are hedging our production so we have some more, less uncertainty regarding the future of the project.

If I can add, I would say that we are not surprised by current prices because A year ago, when you were looking at what future curve of rent was forecasting, it was lower prices than last year, so this is not a surprise. Rincón Miranda is a profitable project at these levels. we will as you say we will reach the plateau of 20 close to 20 000 barrels another we will reach a production of 20 000 barrels of oil per day by year end once we have the central processing facility by the end of 2026 we will double more than double that production and Even at these prices, we are evaluating whether to reach another step in production. Intermediate. Intermediate step before. uh we haven't taken a final decision on that but we are evaluating whether having a an intermediate step next year before the as a temporary with with an initial temporary facility before the definitive facilities are online by year end 2026.

All right. Gustavo Faria from Bank of America. He's asking, local news mentioned that you presented a bid for total assets in Argentina. Do you plan to bid for new ground-filled projects, oil projects, or should rely solely on Rincón de Aranda? What were the synergies with total assets?

As you know, in all the M&A transactions, we always sign NDAs that restricted us about giving much information. So I don't want to breach what we have signed. So what I can say is that we are interested in increasing our acreage of oil reserves. where we would like to continue increasing production beyond where Rincón de Aranda is going to leave us on an opportunistic basis. So we will continue, we will look and participate in any opportunity that may arise in the future. And, yeah, and regarding synergies, I would say there are any synergies between TOTOS, between Escalonada and Rincón de Arana. It's another field to develop without any synergy.

They're pretty far away, actually.

They're 17 kilometers away.

17 kilometers. All right. Well. Completely another nature of question is about the power sector liberalization. This is a very – could you give us any update in the timetable? Yes, every quarter.

Question for the Secretary of Energy. No, I don't have any idea on the timetable. The real one. Well, last year when the issue – I don't recall the number of the – The resolution, but it was before November of this year, was supposed to be published all the new provisions. So we are optimistic that in the next few months we will have news about the upcoming new regulations.

Yes. What's the marginal cost of operation in dollar terms, in dollar per mail, whatever, for Pampa assets? What do you estimate as an uptick potential for this trigger, upside potential, it should be, for this trigger?

That's a question for you if you understood it.

Yeah, I guess, well, we have the deregulation is for the thermal, right, for the thermal units. It's not the market marginal system. It's for the thermal units. Obviously, the peaking of the peakers, the open cycles are way off the lead in a normal day, right? In a normal, Argentina's normal day, it's around, what, 40, sometimes. The average cost is $70 last year. But I guess with more gas supply, less imports and so on, it should be going down, let's say, in the long term for a period of time, $60. But in a normal day, with no extreme weather, it should be around $40, $50 marginal cost. Yeah, more or less. Right now, it's like 200. We are 10 degrees Celsius, right? This is winter season. And that's the opportunity line for the CCGTs. Our CCGTs, the one that's in Doma La Lata, it's $35 per milliwatt hour of marginal cost, the average cost, variable cost. And then the other one, the one that's very close is Generva. And then a little bit out of the league, but this is still competitive. It's in Al-Aragan. But totally out of the league. In a normal day, it should be the peakers. That's it. I can't say more.

A lot of information.

A lot of information to digest, yes. Well, Mattia Cataruzzi from ADCAV, he's asking, now the FID is approved for the MK2 in the floating LNG project, what are the key milestones, the next key milestones for the CESAP project? Can you share more details on PAMFAS-respected equity and EBDA contribution? for upstream and the project itself and from the LNG project once it's operational. I guess, first thing, what kind of next movements is in the CESA project, I guess.

Well, we are in the process of building the pipeline into Yeah, but first the interconnection with the San Martin pipeline. So we are now in the construction of the interconnection with the San Martin project and the installation of the compression plant for the first stage. That should be ready by 2027 in order to be able to feed the first trials of the Healy, the Pisello. The Healy is moving from Cameroon to Shipyard in Singapore by mid-next year and will be coming to Argentina by September 27.

We've got a build in...

already been built in the shipyard. It's doing, I mean, the project is advancing as was expected and should be online by, again, third quarter of 28. At the same time, we should make a final decision regarding the construction of the dedicated pipeline from Neuquén to the Gulf of San Matias, which is currently under consideration.

And EBDA and equity, it's 20%. 20%. Yeah, 20%. And EBDA, well, until this is so much, right? Yeah. Obviously.

EBDA will depend very much on LNG prices. So it's going to be very variable and impossible to see at this moment.

Well, he's asking any chance of shareholder distribution resuming in 2027. I guess he's talking about the buybacks because, you know, in 2027, once CapEx levels are normalized and the free cash flow turns positive.

We are far away from 2027, but I'm sure there's going to be a lot of new things going on by 2027, so... Too early to answer that.

We have to keep it up because we have a lot of questions. Safra, Carol from, Carneiro from Safra, she's asking, we saw highlights of possible new projects and developments that Pampa could participate, like the application to the RIGI for the CPF, the BESS, the battery standard, the GPM. Can you comment on the next possible infrastructure projects that can materialize in Bamba?

Eventually, if we move ahead with, well, we are moving ahead with the LNG project, we will have to supply those 6 million cubic meters per day uh to the vessels so uh we will have to increase our treatment facilities in sierra chata uh to reach those six million per day and that would definitely be a possibility for uh filing for the re uh for that uh investment project as we did for rincon as a midstream project

And the second question of Carol is about it because we already talked about it. Santiago Herrera from Alaria, he's asking what level of debt and leverage ratios are projected for 2026 and 2027, considering the projects already approved and underweight?

For this year, we are actually at 1.1 times net leverage at the ETA. We are expecting to maintain around this level of leverage this year. And hopefully by next year or by the end of next year, we should decrease a little bit this level of leverage as Rincon Aranda continues to generate new EBITDA to the company. So I think we will reach the peak of net leverage or other things being equal during the next quarter of the end of the year and

Well, the other question is about the schedule maintenance works at the power plants that will take place in 25 and 26. Oh, we are going through a big one right now, the upgrade works in Senada Barragán. But usually we do maintenance overhauls in the October area.

Usually either in the fall or the spring. That's right.

And Santiago Herrera is asking another question. What do you see the opportunity for improvement in the discount versus spread on brands? I see the discount is $1, I guess. $1.5. $1.5. Do you see shrinking?

It's very difficult to say. It's just a market.

Or at least when we reach to the year-end target, again.

It's not related to our production. It's a market discount that sometimes...

for the Medanito quality. I don't know. Maybe it depends on the Medanito demand around the world. It improved, though. It was from 3 to 1.5. Now, it may go again back to 2.2. I don't know. We don't know. It ranges between 3 and 0. 3 and 0. Yeah. Not 0, but 3 and 1, let's say.

Last year was fine, I think.

Well, maybe it got to 5, 7 for a small period of time. Yeah.

Jorge Mauro from Fundamenta. He's an investor and he's asking my questions regarding other operating income in the oil and gas segment. This was $12 million versus $28 million last year. Can you comment? Can you explain why? Well, this is because of the planned gas income. You know, the higher the prices to retail that we charge in the sales, the lower the compensation to the planned gas price that we agree. Last year, because the tariff increases were in midway, I think it was $2 per million BTU, while in the winter it was $4.5. Well, the subsidy covers that gap between $4.5 and $2. Now that there's constant and frequent tariff increases to the retail, that gap shrinks. That's right. That's right. Calm down. How much should we expect going forward? Well, it should be shrinking. It should be zero, right?

With this government's target of no fiscal... Changing zone abruptly because of the tariff increases.

You know, there's monthly increases in the tariffs in the regulated side and also in the... Well, in the cost of gas, it's not... so frequent but it's it's pretty pretty uh often we're down okay lower gas production for in manguso this quarter is around 19 should we expect peak gas production until cesar comes online in 2028 do we expect what again He says, well, there's a lower production in El Mangrucho this quarter. Should we expect to repeat when CESA comes online in 2028? I think, I guess he's asking that.

Well, El Mangrucho will increase its production when CESA is online.

Yeah.

Well, this is something that we still need to understand because, obviously, we're going to be feeding CESA with the most efficient gas we have.

All right.

works for, but he, can you ask, can you tell us what is the actual strategy of the company? Where do you see more value? I think the same.

We already talked about the three segments of the company.

Oil and gas, what are the plans? Do you want more exposure to oil and gas? We already talked about. I also ask about the energy matrix.

Dave.

Juan Ignacio Lopez de Puente, from Puente, sends congratulations on Rincón de Aranda. And then he asked about the CAPEX and the free cash flow guidance. We already talked about that. He asked about the cruel emplacement after this ramp-up specifically. How much are you placing locally and how much are you exporting?

Okay. Well, I think... I mean, by the time we reach the big product or the plateau production, we will be exporting almost 100% of the production. Until that, we are in a mixture between local market and export market because we don't have enough transportation capacity of our own, so we are buying transportation capacity to third parties, and those third parties don't sell transportation capacity but the possibility of selling goods. crude oil at the export parity price. So we are selling at the export parity price. Now, we don't know whether that oil is being exported or is being redirected to the local market. But economically speaking, it's as if we were exporting.

That is, I think, the main point to clarify. There is no difference today between the local price of crude vis-a-vis the export parity price.

Yeah, actually, this quarter we export the most.

Yeah, that's right.

Another question is from Murilo Riccini from Radefco. He asks, recently we've seen news mentioning a potential slowdown in oil production growth in Argentina due to the financial equipment constraints.

Financial?

And equipment constraints.

We all have financial constraints.

How does Pampa view this trend?

Oh, we are not slowing at all. No, it is not our case, but we do agree and we do see that... There might be a reduction in the second half of 2025 of drilling and completion activity. There might be some reduction.

Actually, you forecast that before. You said it.

It's not going to be... You said that the duplicate project was not going to be filled completely, and this is happening.

That forecast was...

Accurate. It was accurate. That is why we went forward with Rincón de Aranda, even without having secure transportation capacity. But we felt that there was going to be spare capacity after the DupliCar project came online.

Well, what he's asking, beyond the oil prices, what do you think it could be the potential factors of this slowdown in Bacamorta? Not us, of course, but Bacamorta as a whole. Why is it happening?

There are some, and this is just a personal view, but there are some companies that go through a process of acquiring new blocks, and those new blocks need to be developed. And it takes time to plan and to deploy that. So maybe that's what's – Lack. Yeah. I would say making a little bit low – not so fast or slowing the increase in drilling and completion. They're still trying to digest what they already acquired. All right.

And probably the lower Brent price means that the speed of the growth is going to be slower. Argentina will continue growing its production of oil probably at a slower, at a lower speed because of the lower price.

Edward Palma from I Don't Know Where, he asks, power generation, do you see any increase in the spot prices? Any change in your energy matrix? I guess what he's asking, the spot prices, is the increases so far in this scheme going to be higher than the inflation and devaluation? So far?

So far has been, for the last 12 months or a year and a half, has been there have been dollar increases because of the pace of prices have been increased above the... devaluation of the exchange rate. Particularly this month, it happened the opposite. I don't expect any significant change going forward.

Then another question from Pedro, which I don't remember what he works for. But are you interested in the stake that the government wants to sell in Francener? Is there any priority or shareholder's agreement for given that you are a co-controlling partner?

It's not an issue of... The shareholders agreement is an issue of the law, the electricity law in Argentina that restrict us from controlling the transmission. If you are either a power generator or a distributor, you cannot fully control the transmission. You can have co-control, that is what we currently have, but we cannot go beyond that.

All right. Walter from Santander, he asked straight forward, any chance that Pampa writes Noma Negra?

No.

That's it. I reached all the questions, all of them. Gus, Horacio, Fito, would you like to comment something else that we didn't cover in this very world Q&A session?

Nothing. Nothing more.

Nothing more. Well, expect us to, our next call is in November, so I hope we have a better, doing something. Any questions you may have, please let us know. Raquel and I are fully available for you. Have a good time. Bye. Thank you.