Transportadora De Gas Sa Ord B Q3 2025 Earnings Report

Transportadora De Gas Sa Ord B EPS Results

• Actual EPS: $0.56
• Consensus EPS: $0.06
• Beat/Miss: Beat by +$0.50
• One Year Ago EPS: N/A

Transportadora De Gas Sa Ord B Revenue Results

• Actual Revenue: $309.14 million
• Expected Revenue: $359.08 million
• Beat/Miss: Missed by -$49.94 million
• YoY Revenue Growth: N/A

Transportadora De Gas Sa Ord B Announcement Details

• Quarter: Q3 2025
• Date: 11/3/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, November 4, 2025
• Conference Call Time: 9:00AM ET

Transportadora de Gas del Sur S.A. (NYSE:TGS) is an Argentina‐based midstream energy company principally engaged in the transportation, storage and processing of natural gas. Established in 1992 following the privatization of the state‐owned gas utility, TGS operates one of the country’s largest pipeline networks, carrying gas from production basins in the Neuquén and Golfo San Jorge regions to major consumption markets in Buenos Aires and beyond. The company’s infrastructure supports both domestic supply and export volumes bound for neighboring countries.

In addition to its core pipeline business, TGS maintains a significant gas processing division that extracts natural gas liquids (NGL) and produces liquefied petroleum gas (LPG) and other by‐products. Its processing plants are strategically located near major gas fields, enabling efficient treatment and fractionation of raw gas streams. The company markets its LPG through a distribution arm serving residential, commercial and industrial customers, further diversifying its midstream portfolio.

Transportadora de Gas del Sur has cultivated long‐standing agreements with Argentina’s leading exploration and production firms, leveraging partner relationships to optimize throughput and asset utilization. Listed on the New York Stock Exchange since the late 1990s, TGS adheres to international corporate governance standards and is overseen by a board of directors with extensive expertise in energy infrastructure and finance. Headquartered in Buenos Aires, the company continues to pursue opportunities to expand its network and processing capacity in line with regional demand growth.

Transportadora De Gas Sa Ord B Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: TGS was awarded the Perito Moreno expansion and will invest a total of $780,000,000 (≈$560m for Perito Moreno compressors + $220m for regulated pipeline upgrades), must commission incremental capacity by April 2027, will operate the pipeline for 15 years and can commercialize capacity under a dollar‑denominated unregulated tariff.
• Positive Sentiment: Reported net income rose to ARS 112,000,000,000 in Q3 2025 (vs ARS 68,800,000,000 a year ago), driven mainly by a tripling of liquids EBITDA and continued midstream EBITDA growth, plus lower negative financial results.
• Negative Sentiment: Natural gas transportation (regulated) EBITDA declined by about ARS 10,500,000,000, mainly because the August‑to‑August tariff adjustment did not keep pace with inflation and operating expenses increased, weighing on the regulated business.
• Positive Sentiment: Liquids and midstream performance was strong — liquids EBITDA tripled to ARS 55,200,000,000 due to higher export and ethane volumes and deregulated butane prices, midstream volumes from Vaca Muerta rose, and the company expects an insurance recovery of >$50,000,000 for a March incident.

Presentation

[Carlos Almagro, Head of Investor Relations at TGS]

Good morning. Hello. Good morning, everyone. I'm Carlos Almagro, Head of Investor Relations. I would like to welcome everyone to TGS third quarter 2025 earnings video conference. TGS issued its earnings release yesterday. If you didn't receive a copy of the release, please contact us at investors@tgs.com.ar. Before we begin the call, I would like to inform you that this event is being recorded and all participants are in listen-only mode. Following the company's remarks, we will host a Q&A session. All questions will need to be submitted in writing through the Q&A chat box. I would also like to remind you that forward-looking statements made during today's video conference do not account for future economic circumstances, industry conditions, or company performance and financial results. This statement is subject to a number of risks and uncertainties.

[Carlos Almagro, Head of Investor Relations at TGS]

All figures included herein we are preparing according to the International Financial Reporting Standards (IFRS) and as stated in constant Argentine pesos as of September 30th, 2025. Unless otherwise noted. Joining us today from TGS in Buenos Aires is Alejandro Basso, Chief Financial Officer. I will now turn the video conference over to Mr. Basso. Alejandro, please begin.

[Alejandro Basso, CFO at TGS]

Thank you, Carlos.

[Alejandro Basso, CFO at TGS]

Thank you, Carlos. Good morning, everyone, and thank you for joining us today to discuss TGS's 2025 third quarter earnings and highlights. To begin the call today, I will start by sharing some of the most recent news about the company. As you remember, back in June 2024, a private initiative was submitted to the government to expand the transportation capacity of the Perito Moreno pipeline by 14 million cubic meters per day. As a result, ENARSA launched a tender offer in May. By the closing of the tender on July 28, only TGS had presented a bid. The project was finally awarded to TGS on October 17th. The expected CapEx amount is $560 million, and it involves the construction of three compressor plants as well as the expansion of the Tratayén compressor plant, totaling an additional 90,000 horsepower.

[Alejandro Basso, CFO at TGS]

By April 2027, we must commission the incremental capacity while operating and maintaining the Perito Moreno pipeline for a 15-year period. We are also entitled to commercialize the incremental capacity and collect a dollar-denominated unregulated tariff during the period, after which the facilities will be reverted to ENARSA. Last week, we filed this project with the regulatory authorities in order to obtain the approval soon and get the tax benefits this regime provides. In addition to that project, TGS will invest another $220 million to expand the capacity by 12 million cubic meters per day for its regulated pipelines between Saliceto and Greater Buenos Aires, by adding 20 km of pipeline and increasing compression capacity by 15,000 horsepower in one of the compressor plants. Moving to slide four, I will briefly highlight the key financial results for the third quarter of 2025.

[Alejandro Basso, CFO at TGS]

Please keep in mind that all figures presented for this quarter and comparisons made with the previous quarters are expressed in constant Argentine pesos as of September 30th, 2025. Following the provisions established by the IFRS for financial reporting in hyperinflationary economies. As seen in the slide, we reported a total net income of 112 billion during the third quarter of 2025, compared to 68.8 billion reported in the same quarter of 2024. These higher earnings were mostly explained by the better performance of the liquids business, which contributed with a higher EBITDA of 37 billion, and the continuous EBITDA growth in the midstream business segment, which rose by 14.5 billion. In the quarter, we also recorded lower negative financial results amounting to 31 billion, which boosted our third quarter earnings, but were partially offset by the natural gas transportation EBITDA decline of 10.5 billion.

[Alejandro Basso, CFO at TGS]

Moving on to slide five, EBITDA for natural gas transportation business in the third quarter of 2025 totaled 102.4 billion, which is slightly below the almost 113 billion recorded in the third quarter of 2024. The ARS 10.5 billion EBITDA reduction in the regulated business segment was mainly due to that the tariff adjustments from August 2024-August 2025, which resulted in a ARS 29.2 billion revenues nominal increase, were insufficient to offset the inflation adjustment effect of ARS 42.2 billion. In addition, operating expenses rose by ARS 2.4 billion, while revenues also increased by ARS 4 billion, mainly due to incremental intrastate transportation services provided during the third quarter of 2025. On slide six, you can see how EBITDA for the liquid segment tripled, amounting to ARS 55.2 billion during the third quarter of 2025, compared to ARS 18.2 billion reported in the same quarter of 2024.

[Alejandro Basso, CFO at TGS]

Most of the EBITDA increase was explained by the higher volume exported of 61,000 metric tons, rising from 43,000-104,000 metric tons, which contributed to a higher EBITDA by ARS 18 billion. In addition, higher ethane volumes of 38,000 metric tons were sold, rising from 53,000-91,000 metric tons, and adding ARS 11.7 billion to the third quarter EBITDA of 2025. This higher volume is mainly related to a higher production, which increased from 173,000 tons-315,000 metric tons as a result of a higher richness of the natural gas process in this quarter and the three-week planned shutdown for maintenance works implemented during the third quarter of 2024.

[Alejandro Basso, CFO at TGS]

In addition, EBITDA increased by ARS 13.2 billion due to higher butane prices in the domestic market following the deregulation of the butane price under the program AUGAR starting January 2025, which allowed us to sell at export parity price. To a lesser extent, operating expenses decreased by ARS 5.4 billion, and monetary effects were positive by ARS 1.1 billion. The positive effects on EBITDA were partially offset by ARS 8.9 billion strong expenses incurred as a result of the March 7 flood, which we expect to recover from the insurance company in the coming months. Additionally, the natural gas price increased from $3.1-$3.4 per million BTU, which impacted negatively the EBITDA in ARS 4.3 billion. Turning to slide seven, EBITDA from midstream and other services rose to ARS 61.2 billion compared to ARS 46.7 billion in the third quarter of 2024.

[Alejandro Basso, CFO at TGS]

This increase was mainly driven by higher sales derived from the incremental billable volume of natural gas transported and conditioned in Vaca Muerta, totaling almost ARS 21 billion. Transported natural gas billable volume rose from an average of 29 million cubic meters per day in the third quarter of 2024 to 32 million cubic meters per day during this quarter. The natural gas conditioned volume also increased from an average of 16 million cubic meters per day to 29 million cubic meters per day. In addition, the monetary effect increased EBITDA by ARS 3.2 billion. These effects were partially offset by ARS 10.4 billion in higher operating expenses. As seen on slide eight, we recorded a positive variation in the financial results amounting to ARS 31.1 billion.

[Alejandro Basso, CFO at TGS]

This was mainly due to a ARS 43.4 billion increase in income from financial assets, given the much higher yields achieved in the domestic financial investments. Additionally, inflation exposure loss decreased by ARS 10.7 billion. These positive effects were partially offset by a higher foreign exchange loss amounting to ARS 21.8 billion during the third quarter of 2025, following the central bank's decision to make the U.S. dollar exchange rate float starting early April and the consequent depreciation of 15% compared to the 16% rate in the same quarter of 2024 and under the previous regime of 2% monthly crawling peg. Finally, turning to the cash flow on slide nine, our cash position in real terms increased by 22%, or ARS 160 billion during the third quarter of 2025 to ARS 875 billion, equivalent to approximately $638 million at the official exchange rate.

[Alejandro Basso, CFO at TGS]

EBITDA generation during the third quarter amounted to almost ARS 219 billion, of which 47% was generated by the regulated transportation business, and 53% by the non-regulated businesses. CapEx for the period amounting to ARS 87 billion. Working capital decreased by ARS 36.4 billion, and we paid interest amounting to ARS 29 billion, and income tax payment totaled ARS 61 billion. In addition, we obtained short-term loans by ARS 28.6 billion. We finally recorded higher yields from our financial investment by ARS 53 billion in real terms, resulting mainly due to the higher increase of the foreign exchange rate over inflation of this quarter. This concludes our presentation. I will now turn it over to Carlos, who will open the floor for questions. Thank you.

[Carlos Almagro, Head of Investor Relations at TGS]

Thank you, Ale. The floor is now open for questions. If you have questions, please send them through our Zoom chat. We will read and answer the questions in the order in which they are received. Please make sure to state your name and company so we can introduce you to the audience. Should any participant need assistance, please send us a message in the chat box. Please hold while we poll for the questions. Thank you.

[Carlos Almagro, Head of Investor Relations at TGS]

Well, the first question is from Santiago from Alaria. Hello, Santiago.

[Carlos Almagro, Head of Investor Relations at TGS]

Is regarding the capex to be made in the expansion of the transportation system and the Perito Moreno and our final tranches. How is the breakdown of the deployment of the new $780 million? So this is the first question.

[Alejandro Basso, CFO at TGS]

Hi, Santiago. How are you doing? Well, regarding the deployment of the $780 million from the expansion project. For this year, we have some advances to suppliers amounting and some part of the works amounting up to $150 million. Then for the following year, 2026, we are expecting to spend $450 million and the remaining $27 million the first five months of 2027. The financing of the project, we already have almost $70 million bank loans to fund the imports, which is a regulatory requirement under BG, and we are currently considering other sources of financing for the remainder. Okay.

[Carlos Almagro, Head of Investor Relations at TGS]

His second question is regarding the insurance claim status for the Complejo Cerri event. If we can share what is the total expected recovery amount from the insurance and the timeline for collecting the payment.

[Alejandro Basso, CFO at TGS]

Regarding the recovery amount, we are estimating that. This amount could be more than $50 million, and the expectation for the collection may be $10 million this year and the remainder the following year, I don't know, maybe in the second quarter.

[Carlos Almagro, Head of Investor Relations at TGS]

Okay. We have a question from Matías Casparrucci. Hi, Matías from Adcap. His question regarding the strong recovery of the liquids in this quarter, if we can comment on whether the current levels of production and margins are sustainable into the fourth quarter of this year and how do we see prices in 2026.

[Alejandro Basso, CFO at TGS]

Okay. Well, regarding the level of production at Cerri this year, it's an extraordinary level which was driven by the very richness of the gas stream coming from Vaca Muerta. You know that as non-conventional gas is replacing the conventional. And also the increase in oil production with associated rich gas, the level of the richness of the gas is higher. And I could say that this level of richness could be substantial for the next years. Okay. Regarding the fourth quarter especially, well, it's a different time of the year. So the gas production is lower in the fourth quarter as compared with the third quarter. So the richness could be there, but the gas production should be lower. In spite of that fact, the gas stream coming in our plant is higher than the total capacity of the plant.

[Alejandro Basso, CFO at TGS]

So it's going to be a sort of arbitration between these two variables. Regarding prices for 2026, well, the current level of international prices are lower than we used to have a couple of months ago. So maybe liquid prices could be lower than the average of this year, but you know it's very hard to anticipate that. Okay.

[Carlos Almagro, Head of Investor Relations at TGS]

The next question is from Luisa Belen. Hi, Luisa. Her first question is regarding what you just explained regarding the liquid business in the future. And her second question is if we expect an acceleration in cash CapEx deployment until year-end.

[Alejandro Basso, CFO at TGS]

Hi, Luisa. Well, yes, regarding our CapEx, our cash CapEx is going to be higher than previous levels as we have already started out with the private initiative project, okay, with the Perito Moreno expansion. As I previously mentioned, we are expecting to spend $150 million this year, mostly in the last quarter.

[Carlos Almagro, Head of Investor Relations at TGS]

Next question is from Daniel Guardiola. Daniel, how are you? One of his first questions regarding the Perito Moreno pipeline that we provide all the explanation that we can share. His second question if we are interested in participating in the project to build a brand new gas pipeline towards the south to provide gas to LNG facilities that CIESA Southern Energy is planning to end by 2027, 2028.

[Alejandro Basso, CFO at TGS]

Regarding the new gas pipeline, currently we are evaluating our participation in this project. I cannot anticipate any news on that by now.

[Carlos Almagro, Head of Investor Relations at TGS]

Next question is from George Casto from Latin Securities. Good morning, George. If we are expecting to pay significant cash income taxes again next quarter?

[Alejandro Basso, CFO at TGS]

Hi, George. Well, regarding income tax payments, the payments could be quite similar in the fourth quarter as compared with the third one. Okay. The bulk of the income tax payment was paid in May this year. And then you have advances that are quite similar from June to April next year, March next year. So as compared fourth quarter with third quarter, the payments should be in pesos quite similar.

[Carlos Almagro, Head of Investor Relations at TGS]

Next question from Daniel Guardiola. When do we expect to reach FID for the fractionation facility regarding liquids?

[Alejandro Basso, CFO at TGS]

We are working very, very hard on the project. FID could be at the first quarter of next year, hopefully.

[Carlos Almagro, Head of Investor Relations at TGS]

Next question is from Andrés Semiglero. From Balance. Hi, Andrés. Well, his question was answered because it's regarding the NGL project that was answered. Another question from Agustín Pacheco. Hi, Agustín. From Banco Mariva. Well, his question regarding the NGL project. It was answered. Well, both questions are regarding the NGL project. So it was answered. Another question. Hi, Matheus Doste from City. Well, his question regarding the NGL project, it was explained, it was answered. Perhaps an additional question from him is joining with partners or perhaps tapping. How many companies engage with both of these from a balanced perspective of the participation in the project and joining with partners or perhaps tapping equity markets?

[Alejandro Basso, CFO at TGS]

Hi, Matheus. Well, we are working on that. The idea is to have partners, especially in the part of the liquids project that comprises the transportation and fractionation and dispatching facilities. Our idea is to go with partners in that part of the project, and we are working on that. Tapping equity markets, I think that's not. We are not analyzing that at this moment. That's okay.

[Carlos Almagro, Head of Investor Relations at TGS]

Another question from Ezequiel Harari from Adcap regarding the financing of the GPM project that Alejandro explained. Another one. Matías Casparrucci from Adcap is asking the same question regarding the financing of the Perito Moreno pipeline project. It was explained. Another question from Matías. If we see further midstream segment synergy by 2027 with the increased transport capacity of the GPM?

[Alejandro Basso, CFO at TGS]

The answer is yes. Yeah. With the additional volumes transported in the expansion of the GPM. Our midstream business is going to benefit from that with higher volumes also, okay, to the limit of the capacity of our pipeline, of our gas treatment facilities. Okay. In the pipeline, we have plenty of space in the gathering pipeline.

[Carlos Almagro, Head of Investor Relations at TGS]

Then we have a question from Facón Pastor. He's asking about the challenge assessment accumulated in the first nine months of 2025. The accumulation is 14.8%. Up to the assessment we received at the beginning of September that impacted on the nine-month period. Well, another question from Guido from Alaria. Regarding the Perito Moreno Iniciativa Private Project. We provide all the information that we can share. Thank you, Guido. We have another question from Valentino Caramutti from Criteria. Thank you for your question. Same question regarding the financing of the Perito Moreno that we explained. Another question from Guido. Well, the FID-related project was answered. Well, for the time being, we have no other question. Well. This concludes the question and answer section. Now we will turn to Alejandro for final remarks.

[Alejandro Basso, CFO at TGS]

Well, thank you all for participating in this year's third quarter 2025 conference call. We look forward to speaking with you again when we release our 2025 fourth quarter results. If you have any questions in the meantime, please do not hesitate to contact our investor relations department. Have a good day.

Participants

Analysts

• Alejandro Basso, CFO at TGS
• Carlos Almagro, Head of Investor Relations at TGS