Pampa Energia Q4 2024 Earnings Report

Pampa Energia EPS Results

• Actual EPS: $1.90
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Pampa Energia Revenue Results

• Actual Revenue: $435.00 million
• Expected Revenue: $454.61 million
• Beat/Miss: Missed by -$19.61 million
• YoY Revenue Growth: N/A

Pampa Energia Announcement Details

• Quarter: Q4 2024
• Date: 3/5/2025
• Time: After Market Closes
• Conference Call Date: Thursday, March 6, 2025
• Conference Call Time: 10:00AM ET

Pampa Energía S.A. operates as an integrated power company in Argentina. The company operates through Electricity Generation, Oil and Gas, Petrochemicals, and Holding and Other Business segments. It generates electricity through thermal plants, hydroelectric plants, and wind farms with a 5,332 megawatt (MW) installed capacity. The company also explores for and produces oil and gas in the provinces of Neuquén and Río Negro. In addition, it produces petrochemicals, such as styrene, synthetic rubber, and polystyrene. Further, the company operates and maintains a 22,391 km high-voltage electricity transmission network in Argentina. Additionally, it holds a concession for the transportation of natural gas with 9,248 km of gas pipelines in the center, west, and south of Argentina; and processes and sells natural gas liquids in Bahía Blanca in the Province of Buenos Aires, as well as offers related advisory services. The company was formerly known as Pampa Holding S.A. and changed its name to Pampa Energía S.A. in September 2008. Pampa Energía S.A. was incorporated in 1945 and is based in Buenos Aires, Argentina.

Pampa Energia Q4 2024 Earnings Call Transcript

Presentation

[Raquel Cardasz, Analyst - IR at Pampa Energía]

Good morning, everyone, and thank you for waiting. I'm Raquel Cardas from IR, and we would like to welcome everyone to Pampa Energia's Fourth Quarter twenty twenty four 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 and A session.

[Raquel Cardasz, Analyst - IR at Pampa Energía]

Questions can only be submitted in writing through Zoom. Before proceeding, please read the disclaimer on the second page of our presentation. Let me mention that forward looking statements are based on Pampa Energia'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 Pampa Energia and could cause results to differ materially from those expressed in such forward looking statements.

[Raquel Cardasz, Analyst - IR at Pampa Energía]

Now I will turn the video conference over to Lida. Please go ahead.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Thank you, Raquel. Thanks. Hello, everyone, and thank you for joining our conference call. I will make a quick summary of the 2024 and Q4. You may find more details in our earnings release and financial statements.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

For today's Q and A, let me introduce here our CEO, Gustavo Mariani our EVP and Head of VMP, Mr. Horatio Turi and our new CFO, Alfosuabular Pito. First, we wanted to review 2024, a year that was challenging from the very beginning. Despite this, the macro outperformed expectations and we advanced with the development of Rincon Garenda, our flagship shale oil project. As one of the country's leading gas producers, we reached a new all time high this 2024, marking a 21% growth in year average output and an impressive 80% increase since 2017.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

This is driven by our top performing wells in Vaca Muerta. It is worth highlighting we hit 100,000 barrels of oil equivalent per day again during the winter. This is the most critical supply period of the year. While twenty twenty four's output was entirely gas, we will diversify into shale oil once Rincona Aranda comes online. In the power segment, we commissioned Pepe six wind farm.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

This is adding another 140 megawatts of green energy, having grown nearly 50% since 2017. With a strong focus on operational excellence, we achieved an impressive 95% availability rate in 2024, reaffirming our position as the country's leading IPP. EBITDA grew 19% year on year and 29% to compared to 2017, mostly coming from power and gas and contributing to another milestone. Net debt fell to $410,000,000 the lowest since 2016. Now turning to Q4 only, the quarter was marked by strong performance in gas upstream and power.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Gas production rose 11 year on year, with shale gas shrinking its share from 32% in 2023 now to nearly 50% in 2024. Power units recorded a 94% availability rate with a notable recovery in the PPA units. Also, as I mentioned before, the balance sheet keeps getting stronger with extended maturities and improved equality. We are preparing for the shallow ramp up in early starting area of Erbil, currently operating with four drilling rigs and one frac fleet while building the necessary facilities. The adjusted EBITDA for the quarter amounted to $182,000,000 This is up 60% from last year, driven by increased gas deliveries from thermal power generation.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

The contribution of PP6 improved PPA performance in addition to the tariff hikes benefiting TGS and TransEnerg. Higher operating costs and lower exports at the blended FX partially offset these gains. The quarter on quarter decrease was due to the seasonality. Notably, 68% of our quarter's EBITDA was dollar linked due to the successive peso increases in spot energy and utilities, to 88% at the parent company. CapEx in Q4 was 20% lower year on year, mainly because of the shale gas ramp up in 2023, partially offset by final payments for PP6 and the ongoing development in Rincona Aranda.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Moving to E and P on Slide five. Adjusted EBITDA was $36,000,000 in Q4, down 26% year on year, largely due to the lower sales to industries in Chile as well as higher operating costs. The impact exports settled at the differential effects, which amounted to last year's Q4 '20 '4 million dollars nearly zero this Q4. These factors were offset by increased gas production for thermal power generation. The beginning of Rinconi Aranda's development and program overhauls pushed the total lifting cost up 29% year on year.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Lifting cost per BOE rose to $8.7 per BOE, while gas lifting cost increased by 10% to $1.2 per million BTU, also influenced by the lower seasonal output. Total production averaged nearly 62,000 BOE per day, nine percent higher than last year. When we zoom in, crude oil represented 6% of the output and 25% of the E and P's revenue, while gas accounted for 94% of the production. El Mangrullo contributed 54% of the Q4 production, while Sierracotta increased to 30%, growing production 34% year on year in Sierracotta without new wells connected drills new wells drilled during the quarter. During 2024, we connected three wells.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

So Sierra Chata's annual production rose 40% versus twenty twenty three in the year average. And Mangrullo output also increased 12% year on year without additional D and C in the quarter, with an annual production up 23% from three wells connected in 2024. In Rio Neuquen, which is a nonoperating block, production averaged 1,300,000 kilometers per day, similar to the last year's quarter. The average gas price for the quarter was $2.9 per million BTU, down 10% due to lower exports to Chile and sales to industries, partially offset by better retail prices following the tariff increases. As you can see right below, most local gas deliveries were directed to CAMMESA for thermal power generation.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Okay. So let me briefly comment on our progress on Rincon de Aranda. In Q4 twenty twenty four, the production averaged almost 1,000 barrels per day, which is in line with the expected decline curves for these well types. Since September, we have been drilling pads to prepare DUCs on the way to complete three pads so far. The frac fleet arrived in early February and we began we already fracked the first pad, and we are in preparation for the second and in preparation for duplicar, which should be online early April.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

By May, we plan to have two pads connected, bringing output to 8,000 barrels per day. To reach this year's plateau, we plan to complete five more pads targeting 20,000 barrels per day by December of this year. We are building pipelines, preparing early production facilities, building the central processing facility, water treatment pools, etcetera, etcetera. So before we moving on from E and P, I wanted to do a real quick update on the reserves. Total proven reserves rose 16% to twelve thirty one million barrels of oil equivalent.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

This is driven by the increased activity in Sierra Chata and El Mangrullo, our flagship shale gas blocks as well testings in Rincon De Aranda. Shale reserves grew 60% year on year to 132,000,000 barrels, with shale oil now accounting for 9% of the total of the shale oil reserves, marking the first time it has been booked, the remaining 91% is shale gas. The reserve replacement ratio, the RRR, was 2.2 times, maintaining an average life of eight point six years. Since 2019, proven reserves have increased by 71% with a sharp growth in our proven shale reserves, particularly in shale oil since last year. So moving on to power generation on Slide 9.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

We posted an adjusted EBITDA of $86,000,000 this quarter, up 7% year on year, mainly explained by the contributions of PP6, PP6 in the PPAs and recovering legacy spot prices, partially offset by higher operating expenses. Q4 slightly fell 4% year on year because of the life extension overhaul that we are doing in Genelba, all CCGT, and lower water levels in Pichipecun del Fou hydro. The hydro dispatch from Loma De Lata and the commissioning of Pepe six offset these effects. Take or pay capacity payment, especially from the PPAs, were the main EBITDA driver, reflecting the outstanding capacity availability, which improved to 94% from the 93% last year due to fewer thermal outages. In 2025, we plan to upgrade Barragan's gas turbines, adding another 11 megawatts and conduct a major overhaul in Loma La Lata gas turbine in March.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Well, a quick brief on Peppe 6 expansion, which is no longer a project. The COD was complete last November 21, bringing the total installed capacity to 140 megawatts. Now Pampa operates four twenty seven megawatts of wind energy, ranking us among the country's top five renewable IPPs. Moving to Slide 11, we show the restricted group figures that reflect the bond parameter. Cash flow free cash flow in Q4 market, 82,000,000, supported by the working capital inflows from the winter receivables, the highest revenue making period of the year.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Day sales outstanding stood at forty five days, meaning just a free day delay, alongside robust operating cash flow from power and gas. After last year's CapEx for the shale gas ramp up, 2024 spending was mainly just maintenance focus, spiced up by Rincon de Aranda development. The total CapEx for the quarter was $140.154000000, but Rincon de Aranda was more than half of it. In December, we issued a $360,000,000 international bond maturing in 02/1934 to improve our debt profile, redeeming the remaining twenty twenty seven notes at par. This resulted in a cash increasing to $1,700,000,000 Though after the 2027 bond repurchase this year, cash stood at $1,300,000,000 more than 50% than last year's $834,000,000 cash.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

The next slide shows our consolidated financial position, including our affiliates at ownership, but just let's keep focusing on the restricted group. Gross debt stood at $2,000,000,000 up 44% year on year due to the 02/1931 and the 02/1934 bond issuances for $770,000,000 total, which directly funded the repurchase of 2027 notes. It is no worry that besides further extending the average life to four point two years and securing the lowest spread to U. S. VLTP bills in the history, the Argentine corporates, the net debt dropped to $410,000,000 This is 33% down year on year and 0.6x net leverage ratio.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

This is the lowest ratio and the lowest level since 2016 when we acquired the former Petrobras Campina. This was mainly because of the strong cash flow inflow from power generation and gas operations alongside improved collections from CAMMESA and ENARSA. Well, in sum, we successfully met one of our key 2025 goals, extending the large maturity wall for 2027 and to 02/1931 and beyond with highly competitive rates, shielding our financial position to support the development of Rinconi Aranda. Well, now concludes our presentation. The floor is open for questions.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

If you have a question, please send us through Zoom chat. I will read it and answer them in the order received. First in, first out. So please make sure you put your name, your company, so we can introduce you to the audience should any participant that needed assistance just write in the Zoom chat. Please hold just we poll for the questions.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Well, the first question, all right? Martina Merten, sorry, from Latin Securities, she asked, how do you expect regulatory changes introduced by the Secretary of Energy to impact Pampa, particularly regarding the ability for generators to self procure the fuel? What impact do you anticipate for both E and P and generation Power Generation segments?

[Gustavo Mariani, EVP & CEO at Pampa Energía]

Hello. Good morning, everybody. Thank you all for participating. Thank you, Marina, for your question. First thing that I have to say is that it is too early to tell.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

What the regulatory authority has issued are basically guidelines that the regulator put over the table for all the participants to comment on those guidelines. And the idea that is written in this guideline is that throughout this year, they will prepare the definitive regulatory changes that should be implemented beginning after the winter, basically, beginning in by November of twenty twenty five. From now until November, we do not expect many changes. The capacity of self procure our own fuel will not have we don't expect it to have a significant impact in the during this month, probably some impact before the winter start, no impact at all during the winter. And then in November, we'll expect the new changes.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

What we expect basically for ourselves that we are integrated is that we will be able during this summertime to be able to increase our sales of natural gas because we will be using our gas in our own thermal plants. But we don't have yet clarity about what will happen with prices in the market. So it's too early to tell, but we do not expect in the next quarter any significant impact.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

All right. The second question. In recent quarters, strong cash flow generation has significantly reduced net debt. However, with growth plans that include investments in Rincona Aranda, Vaca Muerta Sur, the LNG project and potentially a Ria plant, how do you expect leverage to evolve?

[Gustavo Mariani, EVP & CEO at Pampa Energía]

The one clarification I will make is that we are, as you know, moving forward full speed with the development of commitment to participate in the Vaca Muerta Sur, the oil pipeline. The other two, the LNG floating LNG project and the urea plant that we are studying, those are, as I said, projects that are being studied. The floating LNG, the final investment decision has not been taken yet. We are very eager and committed to this project, but there are a few hurdles that we need to resolve before taking the final decision. Nevertheless, the floating LNG project, one of its beauties is that the initial CapEx for this project is rather low, although it implicates significant commitments going forward once you assume the commitment to charter the vote for twenty years.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

For the urea plant, if that is a decision, as we have explained before, that we will be taking probably by the end of this year. And our expectation is to be to do the project in a subsidiary so it will not affect the ratios of Pampa. We expect to finance the urea project as a project finance, obviously, with the equity contribution coming from Pampa but on a separate vehicle. So and I let the Fito complete. We expect this year, as we have said before, because of the significant CapEx that we will be deploying in Rincon De Aranda, for the first time, we will have a year with negative free cash flow, so investing more than our EBITDA generation.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

So our net indebtedness will go up. Lida said, it's currently in a very comfortable situation of 0.6. We expect it to grow about 1.2 times net debt. So a very marginal increase in year '20 '20 '6, probably in year '20 '20 '7. In year '20 '20 '7, it will be more or less equalized.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

And so in 2026 and in 2027, we will go back to significant free cash flow generation.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Well, the next one, Quiro Vizosero, Pronalaria. What is the plan if Rinconeranda for Rinconeranda if Brent prices goes to $60.65 dollars per barrel?

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

Okay. Good morning, everybody. First thing to say is that when we are looking at prices, we don't look at the spot price, but rather we take a look at the future curve, and that is much more stable than the spot prices. Having said so, we also decided to hedge approximately 65% of the production of 2025. So we feel pretty comfortable with that and the prices that we achieved with that hedging.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

So we don't see any major changes in our investment plan for 2025, which is basically the ramp up of Rincon de Randla going up to a level of 20,000 barrels per day by the end of the year.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Next question from Bruno Montanari from Morgan Stanley. Can you talk about the appetite sensitivity to sustaining, accelerating or decelerating CapEx for income there, no?

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

Okay. Well, it's more or less same thing as we mentioned before. We are already committed for 2025, and we will not be accelerating or decelerating the rhythm of investment and or drilling or completion during the next year or even 2026, which probably will be a matter of rolling over our hedge position for the year after 2025. So we will keep on doing so in order to have a stable or at least a much more certain cash flow.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

What is the question? What's the hedge price?

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

Well, the hedge price is around $72 per barrel.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Yes. What happens if the Brent goes below the below $60? It's the same.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

It's it's it's the same. We're we are hedged. We're gonna be hedged. I don't know if that went out or we have to repeat. It's okay?

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

It says, What which one? The hedge price or hedge price?

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

The hedge price, $72 per month.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Dollars and the re if the drilling pace will go down below $60, it's the same what

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

you It's the same same thing.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Yeah. Same thing. Right? And in the opposite, which levels of prices will make you feel to accelerate the pace of Rinconia Agama's development?

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

Yes. First thing, it's important to clarify that this is not like opening a valve and closing a valve whenever you want. It takes time to commit the necessary equipment for drilling and particularly for completion. There is a lead time that it makes it very difficult to make decisions on the very short term in terms of accelerating the drilling and completion of the wells. So there is not much room there, at least in a period of approximately one year, to accelerate significantly or decrease the rhythm of drilling and completion.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

Of course, it is easier to decide eventually to stop fracking and decide to demove the frac fleet. But obviously, that has costs associated, which I don't think we would like to burden on our shoulders.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Great. So another question for you, Horatio. Come on. About the recent revolution for Shell Gas and Oil, thinking about the derisking of

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

When could we expect to see more meaningful reserve addition in that specific area?

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

We will see a significant change in our reserve portfolio in Rincon De Randa by the end of twenty twenty five. By that time, hopefully, we will have already drilled and completed 28 wells, which will obviously boost significantly our total reserves, particularly shale oil reserves in the Pampa portfolio.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Power generation for Agus. Could you comment on what are the management expectation regarding further resolutions allowing generators to sign new PPAs? Is PEM penalized in potential investments in greenfield power generation assets?

[Gustavo Mariani, EVP & CEO at Pampa Energía]

No. We are not currently analyzing any new investment in power generation. What we are analyzing that it's related is there a recent invitation to install a battery package within the city of Buenos Aires. That is an investment that we are studying, but we haven't taken any decision yet. And regarding the further PPAs, we do have the B2B market to sign PPAs with what we have installed our wind farms for the Materne.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

But we have already sold all that capacity. So there's no need to we need to renew some contracts that are maturing, but we don't need to sell new capacity.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Next question from Imbertira Bolsa, Ignacio Sinichovsky. I hope I pronounced well. My first question is about the cost of sales, which increased, thus lowering the gross margin. I understand that this is mainly explained by higher lift in costs. But could you provide a little bit more color on this? I guess all the segments have this thing, right?

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

No. Understand he's asking about the increase in lifting costs during the last quarter of twenty twenty four. Okay. That has to do particularly is basically based on natural gas lifting costs, and it has to do with the reduction in our production. So less production, the same fixed costs.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

So you have an an an impact in your in your lifting. It's not that we are less competitive now.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

And then a little bit there

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

there also is a component, which happens not only in the gas industry, but all over Argentina. It has to do with new prices or inflation in dollars.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Yeah. No. It happens the same in in power generation and specifically in Petchem, where most of the costs are in pesos and and the the that the peso real price is really appreciated.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

That's right.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Your margins tight. The second question from Ignacio concerns about power generation. Now Pepe Silver, excluding potential case that the hydros are not renewed. Well, it's about the increased capacity. We we don't have any greenfields projects in the in the pipeline.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Last if you wanted to give more color on that.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

Sorry. One thing that we like about Pampa and its diversified portfolio of business segment, it's the capacity to allocate capital wherever we see it makes more sense. So as we've been explaining, we are very enthusiastic with the opportunity after acquiring Rincona Aranda in 2023 to develop the oil segment, and we are putting all the focus and the effort of the company in the development of Rinconeranda, especially from a CapEx perspective. Regarding renewable projects, I think in the past, it has been an excellent use of our capital, taking advantage of our peso generation and being able to access the official exchange rate when there was a huge gap between the official exchange rate and the blue chip swap. So we did we built those renewable those wind farms, when measured in dollars, half the cost of the of what it costs anywhere else in the world.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

So that gave the project now that the gap between the official and the Bluetooth swap has narrowed, gives the project nice dollar IRR. Now that the blue chip swap has the spread has collapsed, The yields in these projects are, for us, not attractive enough, and we prefer to deploy capital on other segments than something like what we are doing in Rinco, Nevada. So that's more color to the question.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Great.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

I think we talked about it, but what do you think in general, the deregulation that happened that started the guidelines out there? Do you think it's positive in general or negative?

[Gustavo Mariani, EVP & CEO at Pampa Energía]

They are definitely very positive for the sector as a whole and especially for Pampa for several reasons. The first one is that we are an integrated company. So and the rationale behind that decision early at the very beginning of Pampa is being able to procure our own fuel so that our gas production goes into our power plant, something that we haven't been able to take advantage of in the past decade. And we hope we will be able to take advantage of that situation beginning in at the end of this year. The second thing is that is very good news for Pampa is because of the competitiveness of the portfolio of our power generation assets.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

We have CCTGs with very high thermal efficiency. We have CCTGs located at the wellhead. So that means that we don't have to incur in gas transportation costs, which is another adds to the competitiveness of our assets. So we it's definitely excellent news. It is not easy, as we have always said, to eliminate all this regulation and going from a highly regulated environment to premarket situation.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

It takes time to implement it. It will need time to go all the way to that situation, but it's definitely a move in the right direction and excellent news for Pampa.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Great. Gustavo Faria from Bank of America, he asked what's the next steps regarding this regulation and procedures and what's the implementation process of this tower sector de realization.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

Next steps are the sector, different market participants, like power generators, distributors, big industries, everybody that is involved in the sector will give its comments to the Secretary of Energy. And this guideline will go from guidelines into definitive regulatory framework. Yes, a new regulatory framework that we expect will be published during the winter so that the sector will have time to adapt and take any decisions necessary to be implemented beginning in November.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Gustavo, you're is also asking a little bit, like, what's gonna how how the prices will work in the double click comparing, for example, greenfield projects, new energy with this spot spot market or this new potential B2B market that is going to be created? How different how the prices dynamics will work in each segment?

[Gustavo Mariani, EVP & CEO at Pampa Energía]

Again, it's too early to tell. One thing that I would say is that you have to keep in mind that the regulator will always keep in mind the total cost of the system. And knowing that if the total cost of the systems goes up, that means that the final user will have to pay higher prices or that the national government will have to increase subsidies. The regulator will be very focused on avoiding any significant increase in the overall cost of the system. So I imagine more than an increase in the cost of the system that would increase the margins for power generator.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

I imagine more stable prices, but a redistribution. So but you have to focus on the portfolio that each power generator owns and how this new regulation affects its portfolio, I, as a base case, would assume maintaining current prices. Something that is in the guideline is that the regulator is thinking about for the spot price going into a marginal system, but they not to a full marginal system until we end the transition. And I think that what the regulators thinks about the transition until there is new gas transportation infrastructure in place so that the system can fully eliminate the use of liquids. The regulator will not allow margins to go up significantly, and they will cap the margins of the power generator, again, with the goal of avoiding hikes significant prices price increases in the sector.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Great. Well, yes, about EBITDA, again, it's too early to tell, so how it's going to impact. So we'll turn again to Horatio. Gustavo asked, what's the outlook of gas exports to Chile and Brazil in 2025 regarding capacity and pricing? Looking, wait, looking on the gas prices.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

And then looking long term, most of the upside from gas exports will be coming from new pipelines or new LNG?

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

So let's go first to Chile. We've seen in during the last quarter of twenty twenty four, a reduction in the Chilean gas demand, just a mirror of what happened in Argentina, a combination of hydro and low temperatures for the summer. Now we're looking at ramping up of the Chilean demand. We are currently exporting around 1,400,000 cubic meters per day at a price which is around $5 per million BTU at the way ahead. That will probably be reduced in the coming fifteen days or the next two weeks when we foresee a reduction in temperatures and a very mild climate as the autumn sets in.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

And we will go back to our previous exports levels that are in the range of 600,000 meters per day. Having said so, it is also true that by May of twenty twenty five, we expect these first exports through the Igasoducto Del Pacifico to the region of the Vio Vio in Chile. That will be around 350,000 cubic meters per day. So we will be back to our 1,000,000 cubic meters per day exports to Chile again. And regarding prices, we don't foresee major differences from what happened or what's happening right now.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

In terms of the future and Brazil, the question is whether we are going to be exporting through pipelines or through LNG, I would say that we will be doing probably both. Argentina will be probably doing both, exporting through the existing capacity infrastructure, obviously, to Chile, which is already happening with through Gasandes and starting with Gaso Ucto del Pacifico. And we will have to see how it works with Brazil, whether the possibility of moving gas from Vaca Muerta to the region of Sao Paulo is going to happen in which volumes and prices. The potential demand is around 20,000,000 cubic meters per day, but still a question mark on what the transportation cost is going to be and whether that gas is going to be competitive or not in Brazil vis a vis the LNG imports of the Brazilian industry. LNG, well, we can mention our LNG project very, very, very briefly.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

As Gustavo mentioned before, we are in the process of deciding whether we will move forward with an FID or not in the coming future. The project consists of two vessels, the first one of 2,500,000 tPA tons per year and the second one, three point five million, so a total of 6,000,000 tons per year, both, which represents approximately 25,000,000 to 26,000,000 cubic meters per day. We have a 20% participation in the project. And we will still have to understand the final economics. We need transportation capacity to be built from Neuquen to the spot where the vessels are going to be moored.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

And this is something that we will be analyzing in the coming months.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Great. Another question for you, and this is coming from Claudia Rivera from Santander. She asked what's what happened with the margins in oil and gas. This quarter is lower than the previous quarter. It's something that it's going to see recurrently during the year. I think she doesn't know that it's seasonal.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

Yes.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

It's highly seasonal.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

Yes. She's comparing with the previous quarter, and there's basically two things happened there. They require lower prices because of seasonality and lower volumes. So that's basically why.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Yeah. The best the best quarters in Pampa and for power and gas is

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

Yes. Third and third quarter, particularly. Sorry. What was second and third?

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Second and third when the winter is. And the q four is the weakest because it's the

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

It's always the transition. Yeah. Transition from winter to spring and summer.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

And q two, q '3, q '1, let's say q one is the first one.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

One for 2025. January, there was not I mean, was not outstanding, but I would say that probably February and March are going to be so. The demand has been pretty, really strong, not only in Argentina, but also, as I mentioned, in Chile. So I think we're going to be looking at least from the gas standpoint to a good first quarter in twenty twenty five. REPRESENTATIVE:] Cool.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Next question. Well, Florencia Torres from MetLife, she's asking for the potential deregulation. Well, I think we covered it all. Yeah. This is another caller.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

She's asking for CapEx budget per business in 2025. I let me give give you a reminder. We don't give guidance, but we do can share with you our budget initially right now. Again, read the disclaimer that we set. You wanna say something about the budget or CapEx or I can tell? No? It's close to $1,000,000,000. Right? More than $1,000,000,000

[Gustavo Mariani, EVP & CEO at Pampa Energía]

Total CapEx, 1,100,000,000.0. Yes. Total CapEx for this year around one north of $1,100,000,000 being Rincon de Randa, the about $750,000,000 of that $1,100,000,000 will be deployed in Rincon De Aranda for the development of our shade oil reserves.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Yeah. Basically, power and gas is just maintenance. Right?

[Gustavo Mariani, EVP & CEO at Pampa Energía]

Yes. Net natural gas is just a few wells to be drilled this year, around four wells.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

Oh, we're gonna be drilling yeah. Four.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

Drilling and completing?

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

Four wells. We will be drilling one part of in Chirachata for 2025. And eventually, we'll start the drilling and completion particularly the drilling of an additional two pass for 2026.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Great. And our question, how much do you expect Rincon de Aranda to contribute for the total EBITDA in 2025?

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

Our estimated EBITDA for Rigo de Aranda is around $180,000,000 for 2025.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

And this is for Gus. I know that it's only less than 1% of the EBITDA. What can you give me any update on the damages in New Willis?

[Gustavo Mariani, EVP & CEO at Pampa Energía]

The damage on it was New Willis. There are three dams along the river. Two of them has been damaged, and the damage had been catastrophic. So this is 130 megawatts between both of them of capacity. The damages has, as I said, has been catastrophic.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

It's still very hard to get to the site because the road has been destroyed. So we're not we still, despite this problem happened several weeks ago, we still cannot access to the site with heavy equipment to do the remediation of all the damage. But we still have to do the assessment the proper assessment of the damage of the equipment. That will take several months. And so probably three or four months from now, we will be in a condition to say how much it will cost and how long it will take to get those two central to those stations to being able to dispatch again.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

We have full coverage of the from the insurance company, both from a material perspective and also loss of income. We will nevertheless, this is way below 1% of our EBITDA generation. So it's a very marginal issue for Pampa.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Great. Andres Cernigliano from Balance. I think we already covered, but not with this detail. It says What's the FID? This is FID on urea plant.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

What's the timeline? What's the estimates and production that we are thinking about?

[Gustavo Mariani, EVP & CEO at Pampa Energía]

We are thinking about a plan of 2,000,000 tons production per year that will consume about 3,000,000 cubic meters of natural gas per day. That's roughly the size of the plant that we are estimating. That and that's what we need to one of the most important data that we are looking for is what will be the total cost of this of building this plan that we estimate it will be in the range of $2,000,000,002,500,000,000 Time line, we are expecting the proposals from the EPC contractors by the third or fourth quarter of this year. So it will be a decision that Pampa will be taking by most probably by year end.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Very good. Pedro L'Etelier, he's asking me if there is any progress with the conversion of the North pipeline gas pipeline in terms of increasing gas exports? I think you addressed a little bit, yeah, in the previous question about Bolivia and Brazil. Florencia, again, she's peeping up asking regarding fuel procurement. While you're an integrated company, how easy is for you guys self supply your plants under current infrastructure?

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Do you need further infra development to be % self supplied? Weird question.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

I think your question relates to gas transportation availability. We have, for example, Loma De Lata that is located at Wellhead that doesn't need any transportation because of its location, so that can be easily supplied. In the case of Genelba, we do have some firm cash flow rotation capacity that we own. So we are able to service half of one of the CCTGs of Genelba. Other than that, we depend on new gas transportation capacity and having to acquire firm gas transportation capacity from future infrastructure being built.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

And initiative. Initiative that TGS has proposed and that we expect that will be that the process will soon move forward with the Secretary of Energy or with the NARSA putting in the street the bidding documents for that private initiative. That could be an alternative for Pampa to acquire gas transportation capacity for some of the remaining assets. We don't need to secure gas firm gas transportation capacity for all our assets. So only for those that we hope that they will be dispatched on firm basis throughout the year, those are the ones that make sense to acquire firm transportation capacity.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Yeah. Well, this is very important for the this transition period time. CAMMESA will still procure in the PPAs at least. So it's only it's never gonna be so far for this time period. Time being, it's not gonna be a % of procure. Right? It's only for the spot.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

Mhmm.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

And and as you said very well, for the peakers, it doesn't make any sense. Okay, Let's get to another questions quickly.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Tom Devine from Bickman Place Advisors. Cost of capital in general terms Rank major segments of your business by expected return of capital. You know what question? What's the

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

Rank them.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Rank them. But cost of capital, you know, the WACC. Cost of capital. For the for the impairment. For the impairment, we we publish in our financial statements the footnotes and how how we calculate the cost of capital by segment.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

I if I remember correctly, I think for power generation, it's, like, 12%. For E and P, it's, like, 13%, no, and so on. Next question, the last one. No, the previous one. This is for you, Horatio.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Regarding hedge contracts for oil, what's the length of the contract?

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

As we mentioned before, we hedged May, December '20 '5.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

There's one last question from from Bruno Montanari. When we talk about LNG project, you're talking about only from Golar. Right?

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

That is right. We're talking about the water project.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Even in my cell phone, there's no more questions. And just in time, in 1PM, just one hour, till we we reached the top of the hour. Thank you so much, the three of you, for being here. Thank you for attending our conference call. If you have any questions, just e mail us.

[Lida Wang, IR & Sustainability Officer at Pampa Energía]

Raghuil and I will be more than happy to help you. I hope you have a good day. We see each other next May for the q one results. Have a good day.

[Gustavo Mariani, EVP & CEO at Pampa Energía]

Thank you.

[Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía]

Thank you.

Participants

Analysts

• Raquel Cardasz, Analyst - IR at Pampa Energía
• Lida Wang, IR & Sustainability Officer at Pampa Energía
• Gustavo Mariani, EVP & CEO at Pampa Energía
• Horacio Turri, EVP & Executive Director - Exploration and Production at Pampa Energía