Transportadora De Gas Sa Ord B Q2 2026 Earnings Report

Transportadora De Gas Sa Ord B EPS Results

• Actual EPS: N/A
• Consensus EPS: $0.62
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Transportadora De Gas Sa Ord B Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $317.88 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Transportadora De Gas Sa Ord B Announcement Details

• Quarter: Q2 2026
• Date: 8/12/2026
• Time: Before Market Opens
• Conference Call Date: N/A
• Conference Call Time: N/A

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 Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Net income more than doubled year over year to ARS 133 billion in Q2 2026, supported by stronger financial results and EBITDA growth in both liquids and natural gas transportation.
• Positive Sentiment: Liquids EBITDA increased to ARS 82.3 billion from ARS 33.9 billion, driven by higher sales volumes following the 2025 flood-related plant shutdown and stronger international reference prices.
• Neutral Sentiment: TGS reached final investment decision on its approximately $3 billion NGL project, with more than 90% of capacity commercially contracted and expected COD in March 2030; management expects to finance roughly $1.5 billion and leverage to peak below 3.0x net debt/EBITDA.
• Negative Sentiment: Transportation revenue was pressured by the system reconfiguration, lower southern contract volumes and reduced interruptible services, with only limited future tariff adjustments expected to offset the decline.
• Neutral Sentiment: Cash rose to ARS 2.2 trillion, helped by customer prepayments for expanded transportation capacity, but management noted that approximately $40 million of annual revenue will not be collected after project commissioning because it has already been prepaid.

Presentation

[Carlos Almagro, Head of Investor Relations at TGS]

Morning. Good morning, everyone. I'm Carlos Almagro, Head of Investor Relations. I would like to welcome everyone to TGS second quarter 2026 earnings video conference. TGS issued its earnings release yesterday. If you didn't receive a copy of the release, please contact us at inversores@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 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. These statements are subject to a number of risks and uncertainties.

[Carlos Almagro, Head of Investor Relations at TGS]

All figures included herein, we are prepared in accordance with International Accounting Reporting Standards, IFRS, and are stated in constant Argentine pesos as of June 30th, 2026, 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. Good morning, everyone, and thank you for joining us today to discuss TGS's 2026 second quarter earnings and highlights. To begin the call today, I'd like to share some of the most recent corporate developments. First of all, the most relevant news is the FID for the NGL project, announced a few weeks ago, with key commercial agreements representing more than 90% of the project's total capacity already executed as of today. This is a $3 billion CapEx project, and the construction is expected to take about 45 months period, with the COD expected in March 2030. In addition, we have also requested that this project be approved under the Regime. The project consists of a new gathering pipeline in Vaca Muerta, a processing plant to be built in Tratayén, and a 475-km polyduct, a fractionation plant in Cerri, and storage facilities in Puerto Galván.

[Alejandro Basso, CFO at TGS]

In terms of the Natural Gas Transportation expansion, which is currently under construction and following the open season launch last February, and after the allocation of 5 million units per day under a fully prepaid basis in the first round, last June, we received bids for over 100 million units per day capacity in order to allocate the remaining capacity of 9 million units per day. We submitted our capacity allocation to our regulators some weeks ago and are waiting for its approval. It is important to highlight that last May, the Perito Moreno pipeline expansion was approved by the Ministry of Economy to be included in the Regime, which will result in tax benefits for the project. Finally, in June, S&P upgraded the long-term local and foreign currency debt ratings from B- to B, following the revision for Argentina's transfer and convertibility risk assessment.

[Alejandro Basso, CFO at TGS]

Similarly, in July, Moody's upgraded the rating of our notes from B2 to B1 as a consequence of the Argentina sovereign rating upgrade. Moving to slide four, I will briefly highlight the key financial results for the second quarter of 2026. Please keep in mind that all figures presented for this quarter and comparisons made with the previous quarter are expressed in constant Argentine pesos as of June 30th, 2026, following the provisions established by the IFRS for the financial reporting in hyperinflationary economies. As seen in the slide, we reported a total net income of ARS 133 billion during the second quarter of 2026, compared to ARS 53.8 billion reported in the same quarter of 2025.

[Alejandro Basso, CFO at TGS]

This relevant net income increase is mainly explained by the ARS 60.2 billion positive variation in our financial results, as well as the important liquids EBITDA growth of ARS 48.4 billion, and to a lesser extent, the ARS 12.3 billion increase related to the natural gas transportation EBITDA. Moving on to slide five. EBITDA for natural gas and oil business in the second quarter of 2026 totaled ARS 132 billion, which is above the almost ARS 120 billion recorded in the second quarter of 2025. It is worth noting that tariff increases generating higher revenues by ARS 60.2 billion, which was more than the ARS 48.6 billion negative effect of inflation. In addition, two negative events in the second quarter of 2025 also explain partially the higher EBITDA in the second quarter of 2026 of ARS 19.2 billion.

[Alejandro Basso, CFO at TGS]

The first event was related to a trade receivable write-off of ARS 11.2 billion, and the second one was the climate event occurred in March 2025, which damaged some natural gas transportation assets and generated a positive EBITDA variation of ARS 8 billion. Finally, the revenues generated by transportation contracts decreased by ARS 9.3 billion following the natural gas transportation system reconfiguration, which became effective starting as of May 2026. Whose initial negative effect will be partially offset by future small monthly tariff adjustments. On slide six, you can see how EBITDA for the liquids segment increased to ARS 82.3 billion during the second quarter of 2026, compared to a low ARS 33.9 billion reported in the same quarter of 2025.

[Alejandro Basso, CFO at TGS]

The increase in EBITDA was mainly attributed to higher volume sales, which rose from 211,000 metric tons to 330,000 metric tons, and was mainly explained by the low volume sales in the 2025 quarter due to the processing plant shutdown caused by the flooding suffered on March 7th, 2025. The plant started to operate by mid-April with low level of production and increased its production to reach normal levels in the beginning of May. The higher volume sales generated a higher EBITDA of ARS 46.7 billion. Moreover, high international reference prices as a consequence of the geopolitical conflict in the Middle East raised EBITDA by ARS 23.2 billion. These positive effects were partially offset by the same take-or-pay annual compensation collected in the second quarter of 2025 of ARS 8.5 billion, together with the negative monetary effect of ARS 7.4 billion.

[Alejandro Basso, CFO at TGS]

The lower retained price, which generated lower revenues of ARS 5.8 billion and a higher average natural gas price, which increased to ARS 3.4 per million BTU from ARS 3.3 and generated higher costs by ARS 2.5 billion. Turning to slide seven, EBITDA from midstream and other services decreased slightly to ARS 64.1 billion, compared to ARS 69.3 billion in the second quarter of 2025. Revenues generated by midstream services rendered in Vaca Muerta increased by ARS 13.2 billion. Transported natural gas billed volume rose from an average of 30 million cu m per day in the second quarter of 2025 to 35 million cu m per day during this quarter. The natural gas conditioning volume also increased from an average of 27 million cu m-30 million cu m per day.

[Alejandro Basso, CFO at TGS]

This higher revenue was more than offset by the negative monetary effect of ARS 10.5 billion as inflation was higher than the foreign exchange rate increase, along with higher operating expenses of ARS 5.6 billion. As seen on slide eight, we recorded a positive variation in the financial results amounting to ARS 60.2 billion. This was mainly due to ARS 130.1 billion increase in income from financial assets, given the higher yields recorded for the domestic financial investment and to a lesser extent, to a higher level of financial investments. This positive effect was partially offset by a ARS 46.7 billion higher foreign exchange loss, ARS 15.2 billion in higher interest expenses, most of which are mainly attributed to the $500 million bond issued in November of 2025, as well as the ARS 7.6 billion higher inflation exposure loss.

[Alejandro Basso, CFO at TGS]

Turning to the cash flow on slide nine, our cash position increased by ARS 274 billion in real terms during the second quarter of 2026 to ARS 2,206 billion, equivalent to approximately $1.5 billion at the official exchange rates. EBITDA generation in the second quarter was ARS 278.4 billion, of which 53% was generated by non-regulated businesses, even after considering the full normalization of the Natural Gas Transportation segment. These results highlight the increased relevance of the non-regulated activities within the company's overall results. CapEx amounted to ARS 165 billion, largely driven by investments in the pipeline expansion project. Working capital decreased by ARS 186 billion, primarily due to the collection of the first prepayment installment of approximately ARS 140 billion from customers that contracted 5 million cu m per day of incremental firm transportation capacity.

[Alejandro Basso, CFO at TGS]

We also paid ARS 31.3 billion in income taxes and ARS 30.8 billion in interest. We incurred new debts amounting to ARS 20.8 billion. 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 questions. Thank you. Well, the first question's from Bruno Montanari from Morgan Stanley. Hello. How are you, Bruno? The first question is regarding the GPM expansion. How much CapEx is still left to execute in the coming quarters?

[Alejandro Basso, CFO at TGS]

Hi, Bruno. Well, as of June 30th, 2026, we have already invested around $180 million. We have $600 million left for the remainder of quarters until May the 1st. Until May next year.

[Carlos Almagro, Head of Investor Relations at TGS]

The second question is regarding the new equity project. How should we think about the CapEx distributions over the years?

[Alejandro Basso, CFO at TGS]

Well, we have for this year around $500 million, $800 million for 2027, $1 billion in 2028, and $600 million in 2029, approximately.

[Carlos Almagro, Head of Investor Relations at TGS]

Yes.

[Alejandro Basso, CFO at TGS]

The remainder in the first quarter of 2030.

[Carlos Almagro, Head of Investor Relations at TGS]

2030.

[Alejandro Basso, CFO at TGS]

Yeah.

[Carlos Almagro, Head of Investor Relations at TGS]

His third question is regarding the financing of the project, if he has already secured all the funding requirements?

[Alejandro Basso, CFO at TGS]

We have signed agreements with banks for the import financing for around approximately $300 million for the first year. We are working with a group of banks for the financing of the remainder of the NGLs finance. NGLs is the second BPU with a total investment of $2 billion. We are working with this group of banks to finance 60% of the total investment of this $2 billion. The tenure of the imports facilities, finance facilities is three years. The scope is approximately 8.5% volume.

[Carlos Almagro, Head of Investor Relations at TGS]

We have a question from Matheus Dos. Hi, Matheus. His question is regarding the transportation segment, the revenues, or gigas, how the gigas this second quarter, why it was weaker in dollar terms compared to the first Q, even as we have a real gain in tariffs.

[Alejandro Basso, CFO at TGS]

Hi, Matheus. As you may know, we have a reconfiguration, a new regulation of the capacity in the whole transportation systems in Argentina, as the natural gas currently is coming from the west, from Vaca Muerta, from Neuquén, replacing the gas that used to come from the north, from the Bolivian basin and from the northern basin and also, from the south. Some contracts were transferred from one system to the other. TGS has an impact there because of the important position that we have in the southern contracts, the transportation contracts coming from Tierra del Fuego. You are going to see this loss of volumes or lower volumes in the future. Also, this reconfiguration has made more efficient the system, so lower IT services, interruptible services, are rendered by TGS up here.

[Alejandro Basso, CFO at TGS]

At the same time, we have a compensation in tariffs, the compensation tariff is calculated in the future. You may see a small compensation for this weakness in the transportation revenues, but it's not significant. Okay.

[Carlos Almagro, Head of Investor Relations at TGS]

The second question is regarding the liquids business, which are the drivers of higher costs versus the first Q that explain why margin and EBITDA were weaker despite good energy prices.

[Alejandro Basso, CFO at TGS]

Well, that has to do with the cost of natural gas. In the winter season that starts on May every year, you may see higher natural gas prices than obviously in the summer season, the first Q. At the same time, the cost of gas is higher than the previous year, especially in the spot market. That compared with the same quarter of last year, 2025.

[Carlos Almagro, Head of Investor Relations at TGS]

We have a question from George Glasgow from [inaudible] Securities, the question that it was answered in the first.

[Alejandro Basso, CFO at TGS]

In the previous one.

[Carlos Almagro, Head of Investor Relations at TGS]

In the previous one, regarding the transportation revenues compared with the first Q 2026. His second question is also one, it was explained regarding the financing of initial project that Alejandro explained specifically. Well, we have a question from Juan Ignacio Lopez. Hi, Juan. His first question is regarding the capacity deployment for the second half of 2026, regarding the GPM, the Perito Moreno pipeline, and the initial project.

[Alejandro Basso, CFO at TGS]

Okay, regarding the Perito Moreno expansion, we are estimating for the remainder of this year $400 million and a similar amount, or a bit higher than that for the initial project for this year.

[Carlos Almagro, Head of Investor Relations at TGS]

His second question is regarding the strong cash flow, pretty supported by a positive working capital. Well, his question is regarding what is the reason of this strong cash flow?

[Alejandro Basso, CFO at TGS]

Okay. Juan Ignacio, as I said in the call, 5 million out of 14 cu m per day or out of 12 cu m per day from the Perito Moreno expansion and for the TGS Transportation System expansion, were collected as prepaid. They were prepaid by the clients. It's an option that we have, and the clients also have in the open season. 40% of the total capacity may be offered and sold by the TGS under a prepay scheme. They prepay the capacity for the 15-year contract. That's $100 million, almost that will be collected in the second quarter, which is the important impact, favorable impact in our working capital.

[Carlos Almagro, Head of Investor Relations at TGS]

We have a question from Andres Cirnigliaro from Balanz. Well, the same question that was answered before regarding the deployment of the $3 billion in which years. Another question is from George Glasgow, regarding the Pampa project, the urea project, which will require an additional 3.5 million cu m per day of transportation capacity out of Vaca Muerta. If we exercise the Perito Moreno 6 million cu m per day additional expansion option to meet this demand.

[Alejandro Basso, CFO at TGS]

Yes, George, we are analyzing that business opportunity to further expand Perito Moreno up to 6 million of cubic storage. It may be less than that, but it could happen.

[Carlos Almagro, Head of Investor Relations at TGS]

We have a question from Marina Eyna from PPI. The question is regarding the $3 billion CapEx. At what level do we expect the net debt to EBITDA ratio to peak during the investment phase, and in which moment we think this will occur?

[Alejandro Basso, CFO at TGS]

Obviously, Marina, we expect to increase our net debt to EBITDA ratio maybe in the year 2029 or 2028.

[Carlos Almagro, Head of Investor Relations at TGS]

Below 3x.

[Alejandro Basso, CFO at TGS]

We could be around 3x.

[Carlos Almagro, Head of Investor Relations at TGS]

Below 3x.

[Alejandro Basso, CFO at TGS]

Below 3x. Obviously, much below the maximum ratio governed under our bond contracts.

[Carlos Almagro, Head of Investor Relations at TGS]

That is 3.5x.

[Alejandro Basso, CFO at TGS]

3.5x.

[Carlos Almagro, Head of Investor Relations at TGS]

We have a question from Alvaro Garcia from BTG Pactual. Hi, Alvaro. Your question was answered regarding the financing of the NGLs project.

[Alejandro Basso, CFO at TGS]

The leverage also.

[Carlos Almagro, Head of Investor Relations at TGS]

Also the leverage. Yes. A question from Santiago Herrera from Allaria regarding NGLs project. What is the new maintenance CapEx once the project is finished? I think that is around, it's a project, $10 million per year.

[Alejandro Basso, CFO at TGS]

In addition to what we currently have.

[Carlos Almagro, Head of Investor Relations at TGS]

That is $90 million, plus another $10 million that would be added.

[Alejandro Basso, CFO at TGS]

In the project.

[Carlos Almagro, Head of Investor Relations at TGS]

Yes. Now we have a question from Ramiro Guerrero. Hi, Ramiro, from Bull Market. His question regarding the NGL project. What portion of the $3 billion investment do we expect to finance through project finance at the SPV level? And what portion will require contribution from TGS?

[Alejandro Basso, CFO at TGS]

Hi, Ramiro. I would say around half of the total investment because we are going to finance with a 60% of leverage the second PPU, which is a $2 billion investment, and at least $300 million of import finance in the first PPU, which is $1 billion. A total of $1.5 billion out of $3 billion. That's our expectation. We are working on that.

[Carlos Almagro, Head of Investor Relations at TGS]

We have another question from Ignacio Valdez. Another one regarding the NGLs project. If we consider adding a partner to participate in the project.

[Alejandro Basso, CFO at TGS]

Hi, Ignacio. Well, we may consider adding a partner. It will depend on new business opportunities and the context, obviously.

[Carlos Almagro, Head of Investor Relations at TGS]

Now, we have a question from Agustin Pacheco, from Banco Mariva. Hi, Agustin. Well, his first question was answered regarding in the first year of how much we expect to invest. His second question, is RIGI approval a prerequisite for starting construction and committing the main expenditure, or could some early-stage investment begin before approval?

[Alejandro Basso, CFO at TGS]

Hi, Agustin. In fact, we have already started investing in the project. The RIGI approval is not a prerequisite. Nevertheless, we are quite confident that the RIGI is going to be approved soon. We already filed the RIGI in June the 5th, we are expecting to have the approval in a few months, I would say. That's all.

[Carlos Almagro, Head of Investor Relations at TGS]

Another question from Federico Favelli that were answered previously. Another question from Alan Feldman from Criteria. Alan, your question was answered regarding the working capital big variation. As Alejandro explained, that we would expect for the following quarter to receive another $300 million, $200 remain in 2026, and $100 more in the first quarter of 2027, or before next week, which will be 2026. Another question from Alan Feldman regarding the working capital, what underlying free cash flow would use as a run rate, and how should the market think about the sustainable conversion of EBITDA into cash considering this payment?

[Alejandro Basso, CFO at TGS]

Okay. Hi, Alan. As we are being paid 40% of the new volumes of the expansion volumes of the GPM expansion and the TGS transportation system expansion. We are not going to have those revenues after those 40% of the revenues collected after the project COD next May. Approximately, I would say $40 million of EBITDA of the revenues per year are not going to be collected because at that time, we will have already collected them.

[Carlos Almagro, Head of Investor Relations at TGS]

We have another question regarding financing the project. It was answered. Another question from Jorge Mauro. Hi, Jorge. Your question was answered regarding the fixed leverage in the next three years. Jorge asked a question regarding the Pampa project. It was answered. Well, we think that's all. Well, this concludes the questions-and-answers sections. Now we will turn to Alejandro for final remarks.

[Alejandro Basso, CFO at TGS]

Thank you all for participating in TGS second quarter 2026 conference call. We look forward to speaking with you again when we release our 2026 third 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

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