Transportadora de Gas del Sur SA Q4 FY2020 earnings call

• COVID-19 situation in Argentina improved with summer season, cases lowered, restrictions lifted, and economy partially recovered; 2021 rebound expected with successful vaccination.
• Argentine government issued decree 1020 for integral tariff revision (2-year deadline), suspension of 2017 integrating revision agreement, and gas transitional tariff adjustment. Public hearings on March 15 and 16 for subsidy, gas plant, and tariff increases.
• Impairment of natural gas transportation assets due to unadjusted tariffs and high inflation uncertainty.
• Liquids business: Selling spot contracts for key exports, natural gasoline has 2-month contract; expected EBITDA for Liquids around similar to last year with higher prices and volumes ahead.

In the fourth quarter, TGS recognized an impairment of ARS 3.1 billion in the accounting value of natural gas transportation assets. Regarding the Liquids business, expectations are for EBITDA and profitability to be influenced by natural gas price increases in Argentina, with higher prices and volumes potentially contributing, though international prices for propane, butane, natural gasoline are sold mostly under spot and short-term contracts.

• Expect EBITDA for Liquids business to be around similar to last year, with higher prices and volumes potentially remaining.
• Tariff revision process with public hearings on March 15 and 16, but timeline and outcome uncertain with potential delays due to government internal discussions.

• Uncertainty in future tariff increases coupled with high inflation.
• Delays in tariff adjustment process due to government internal discussions on subsidies and energy components.
• Impact of COVID-19 on economic recovery and potential disruptions to business operations.

Q: Can you provide more color on the impairment charge in regulated fees and assumptions for tariff adjustments going forward?

A: Conversations with gas parties in January-February, no agreement yet; gas parties proposed tariff changes with incorrect figures not accounting for certain expenses.

Q: What should we expect in terms of EBITDA and profitability for the Liquids business this year with natural gas price increases?

A: Higher natural gas prices and volumes may contribute to EBITDA, expecting Liquids EBITDA to be around similar to last year.

Q: Are you selling propane, butane, natural gasoline under spot or long-term contracts?

A: Currently selling spot contracts for key exports, natural gasoline has a 2-month contract.

Q: Any other dates or road map for transitional tariffs on regulated gas pipes business?

A: Tariffs should come to new levels by April 1 but not obligated, with pass-through of natural gas price issues causing delays.

Q: Thoughts on gas prices in industrial segment after Plan Gas 4?

A: Gas prices in January were low compared to December/November, not catching up much to Plan Gas 4.

Q: Will Bahía Blanca natural gas regasification plant bring substantial revenues? Any impact on TGS from reversion of GasoductoNoreste?

A: No substantial revenues from Bahía Blanca plant as it replaces existing gas; reversion of northern pipeline not expected to impact TGS business.

Q: Color on offshore cash amount, composition, and coupon payments?

A: Total cash around $240 million mostly offshore; plan to pay coupons at due date, may use official FX from BCRA with Central Bank authorization.

Q: Expectations on tariffs after public hearings and midstream business growth?

A: Tariff revision uncertain, but expecting positive adjustment; midstream services expected to grow in total values, nonregulated business strategy is growth.