Pampa Energía S.A. Q2 FY2025 earnings call

• Successful production ramp-up in Rincón de Aranda with new pads and supporting infrastructure. - Contribution from PEPE 6 wind farm and higher gas exports to Chile. - Petchem EBITDA recovering positively. - Proactive liability management: extended 2029 notes to 2034. - CapEx surged 134% year-on-year to $354 million, with $249 million invested in Rincón de Aranda development.

Oil and Gas

• Adjusted EBITDA was $87 million, down 28% year-on-year. Largely due to reduced domestic gas sales, expiration of winter peak contracts, and higher lifting costs. However, increased gas exports to Chile and stronger crude oil production at Rincón de Aranda helped balance the decline. Production averaged 84,000 barrels per day, down 7% year-on-year but up 16% quarter-on-quarter. Gas sales fell 11% year-on-year but rose 10% from Q1. Rincón de Aranda produced an average of 5,300 barrels per day in Q2, with plans to reach 20,000 barrels per day by Q4 2025 and 45,000 barrels per day by 2027.

Power Generation

• Posted an adjusted EBITDA of $112 million in Q2, a 5% increase year-on-year. Driven by PEPE 6 performance and higher spot prices, partially offset by increased operating costs and scheduled outages. Generation volumes declined 7% year-on-year, but gas supply and PEPE 6 helped offset decreases.

• Expect Rincón de Aranda to reach 20,000 barrels per day by Q4 2025 and 45,000 barrels per day by 2027. - Free cash flow expected to be negative in 2025 and 2026 due to significant CapEx in Rincón de Aranda. - Aim to begin central processing facility (CPF) next year with estimated investment of $426 million.

• Colder temperatures delayed winter demand spike for power and gas. - Dependence on spot prices and market conditions affecting EBITDA. - Uncertainties in gas pipeline projects and regulatory changes impacting gas sales and exports.

Q: Could you give us more color on the CPF in Rincón de Aranda, please?

A: The CPF stands for central processing facility. It has a total output of 7,000 cubic meters per day. We expect it to be finished by the end of 2026.

Q: Have you already started self-producing with our own-fuel, meaning self-producing power, right? Your own fuel? If not, when do you expect to begin? And which is the spread between CAMMESA's reference price and your own procurement price?

A: Yes, we have begun to self-procure our own gas to our facilities on a marginal basis. Currently, the spread to winter gas price is about $3.5 or something like that. Winter gas price for CAMMESA is around $4.50.

Q: Could you give us any color on the expected evolution of the lifting cost throughout the second half of the year and 2026, considering the ramp-up expected in production and until the processing plant is constructed?

A: Second quarter of '25 lifting cost was below $16 per barrel. By 2026, with production increase to 20,000 bpd, lifting cost should hit around $7 per barrel. Final stage with CPF will move it to $5 per barrel.

Q: Do you expect that our prices, Horacio, Gus? I mean less discount versus Brent? And when you reach the 20,000 barrels production targets by year-end, a little bit for [indiscernible]?

A: It's impossible to predict. We look at future Brent prices as the best indication. We are hedged currently around 70-75% of expected production at a price of $69.

Q: Do you expect any participation in the construction and maintenance of the required gas new gas pipeline for TGS?

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

Q: How much gas may Pampa add in sales for these 2 ships in '27 and '28, how much CapEx do you need to achieve it?

A: Total gas at end of 2 vessels operational is around 6 million cubic meters per day by end of 2028. CapEx associated for ramp-up and construction in Sierra Chata is around $400 million.

Q: Can you comment on expectations for cash generation in second half of 2025. In particular, how should you -- should we see any the same CapEx intensity in Rincón de Aranda. What about the working capital should be any reversal of the pressure observed in the second half of 2025?

A: Cash generation in second half of 2025 will be negative. CapEx intensity will continue. Working capital may have some increase as sales increase.

Q: What positive surprises have you been seeing or any main challenges since the beginning of the operation at Rincón de Aranda?

A: We were able to take advantage of productivity increase in drilling and completion. We are learning about sand usage and stage spacing to improve well costs.

Q: Can you comment on the company's learning in operating shale oil, Horacio?

A: We are learning a lot. We improved drilling efficiency from 500-600 meters per day to 900 meters per day and stage fracking, aiming to reduce well cost from $15.5 million to $13 million.

Q: Are you looking to change the CapEx or production forecast due to the weaker oil prices?

A: No, we are not. We are hedged and continue with our plans.