Pampa Energy Inc. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Gas upstream and power generation helped overcome winter peak. Gas production up 8% y-o-y, CCGTs had high load factors. Balance sheet solid with net debt at lowest since 2016. Adjusted EBITDA $279 million, up 14% y-o-y.
• Balance sheet: Net debt at lowest since 2016, net cash $1.2 billion by end of September, net debt $539 million, 0.8x last 12 months EBITDA.
• PEPE 6: Civil works complete, all wells installed, 98% advanced, 130 MW operational, full COD expected soon.
• Rincon de Aranda: Production at 1,000 bbls/day, development plan targets 45,000 bbls/day by 2027, planning to drill 7 pads annually, $700 million to be invested in 2025.

Segment Performance

• Power Generation: Posted EBITDA of $112 million in Q3, a 23% year-on-year increase. Driven by operating outperformance and higher legacy prices, but offset by lower industrial demand, increased operating expenses, and divestment of Mario Cebreiro. CCGTs achieved high load factors. PEPE 6 expansion is nearly complete with 130 MW operational and full COD expected soon.
• E&P: EBITDA was $122 million in Q3, down 8% year-on-year. Gas production increased 8% year-on-year with Shell contributing. Mangrullo and Sierra Chata were key producers. Oil only 6% of output.
• Petrochemicals: EBITDA $2 million in Q3, down 88% year-on-year due to higher costs and economic downturn, partially offset by higher volumes and prices of reforming products.

Guidance

• Gas Production: Forecast to end 2024 with average ~13 million cubic meters/day, peaking ~16 million. 2025 average ~13.1-13.2 million cubic meters/day, peaking ~14.3-14.5 million including exports to Chile.
• Refinancing: Comfortable with debt profile, no immediate need to access markets, but may extend maturity of remaining '27 notes if market conditions are favorable.

Risks

• Gas evacuation capacity issues: Delays in compressor plant commissioning, warmer weather, and soft demand in Chile impacting volumes.
• Regulatory uncertainties: Uncertainties around LNG project discussions and energy tariff scheme processes.

Question and Answer

Q: Talk about initial performance of Rincón de Aranda and drilling path through end of 2025 A: 2 rigs working, forecast to drill 28 wells by end of 2025, expecting 12,000 bbls by April-May 2025 and 18,000 bbls by September 2025.

Q: Argentina's LNG project discussions A: Interested in monetizing dry gas reserves via LNG, prefers floating units over land facilities, priority on Vaca Muerta Sur project first.

Q: Sierra Chata block and Exxon process A: No info on Exxon's process, Pampa is operator and plans unchanged.

Q: Energia Base scheme and power generation EBITDA impact A: Estimated ~$10M/year EBITDA impact, CapEx needed, thermal generation expansion possible but regulated environment limits current growth.

Q: Gas transportation and transmission tariff schemes A: TJ requested extension, Transener and TGS processes ongoing, focusing on license extensions.

Q: CAMMESA receivables A: Paid on time, last six months paid within 3-4 days of billing.

Q: Hydro concessions in Mendoza A: Government yet to decide, Pampa interested if concessions are auctioned again.

Q: Gas production guidance for 2025 A: Average ~13.1-13.2 million cubic meters/day, peaking ~14.3-14.5 million including exports to Chile.

Q: Next steps after refinancing A: Comfortable with debt profile, no immediate need to access markets, may extend '27 notes if favorable market window.

Q: Positioning in free contracting term market A: Pampa has competitive advantage due to integrated business, efficient CCGTs, and experienced commercial team.