Pampa Energia NYSE: PAM reported a sharp increase in first-quarter adjusted EBITDA, supported by record oil and gas production, the continued ramp-up of its Rincón de Aranda shale oil project and improved margins in power generation under Argentina’s new electricity market framework.
Lida Wang, Pampa’s investor relations and sustainability officer, said adjusted EBITDA reached $325 million in Q1 2026, up 48% from a year earlier and 41% sequentially. She said Rincón de Aranda, gas operations and power generation were the main contributors. Rincón de Aranda alone accounted for 17% of total quarterly EBITDA, increasing eightfold from the same period last year.
Total production exceeded 100,000 barrels of oil equivalent per day, marking a new quarterly record for the company. Wang said the increase was driven by the “sustained ramp up” at Rincón de Aranda and higher gas output tied to the new power generation framework.
Rincón de Aranda Drives Oil and Gas Growth
The oil and gas segment generated adjusted EBITDA of $104 million in the quarter, 2.5 times the level reported a year earlier. Wang attributed the growth to Rincón de Aranda, higher gas production for self-supply to the company’s thermal power plants, exports and industrial demand. Those gains were partly offset by lower realized crude oil prices and higher royalties, transportation and treatment costs associated with higher production.
Rincón de Aranda contributed 54% of the segment’s EBITDA, compared with 15% in the prior-year period. Average production at the field reached 18,200 barrels per day in Q1 across 43 producing wells, up 7% from the previous quarter. The quarter’s exit rate was more than 21,000 barrels per day after seven wells came online in March.
Wang said Pampa expects to tie in an additional 20 wells during the remainder of the year and reach a 20,000-barrel-per-day milestone by mid-2026. The company is targeting a production plateau of 45,000 barrels per day once the central processing facility and the Vaca Muerta Oil Sur pipeline are online.
Management also highlighted efficiency gains at Rincón de Aranda. Wang said drilling performance improved from 200 meters per day on the first pad last year to nearly 330 meters per day on the most recent pad, while completion activity increased from nearly seven stages per day to nine stages per day.
Pampa submitted a RIGI incentive program application for Rincón de Aranda on March 9. Chief Executive Gustavo Mariani said the full-field development plan totals about $4.5 billion, including drilling, completions and midstream infrastructure. He said development of the northern area could help sustain the production plateau for approximately six to eight additional years. Approval remains pending, and Mariani said it could take “a few more months.”
Gas Output Rises as Power Plants Self-Supply
Gas production grew 17% year over year and 28% from the fourth quarter to nearly 14 million cubic meters per day. Wang said the increase was driven by gas supplied to Pampa’s combined-cycle gas turbines, higher exports to Chile and stronger industrial demand.
Exported volumes increased 65% year over year to 1.5 million cubic meters per day, a level management expects to continue through the rest of the year. Horacio Turri, Pampa’s EVP and executive director of exploration and production, said the company’s gas exports are “basically to Chile,” through the GasAndes and Gasoducto del Pacífico pipelines.
Average gas prices were $2.90 per million BTU, flat year over year. Wang said lower export prices were offset by higher retail prices. She also noted a major shift in sales mix: 47% of gas was sold under Plan Gas agreements through commercial retailers, down from 82% a year earlier, as some agreements were transferred to Pampa’s combined-cycle gas turbines. Intersegment consumption rose to 32% of total sales, compared with 2% last year.
Power Generation Benefits From New Market Rules
Pampa’s power generation segment posted adjusted EBITDA of $144 million, up 11% from a year earlier and 30% from the prior quarter. Wang said the increase was mainly due to stronger spot margins at the company’s combined-cycle gas turbines under new wholesale electricity market guidelines that favor efficient units.
Total availability declined to 90%, reflecting ongoing outages at Güemes, an outage at gas turbine No. 4 at Loma de la Lata that is expected to return to service in June, and scheduled maintenance at Paraná. Wang said Pampa’s thermal availability still outperformed peers in Argentina’s national grid.
Mariani said the new regulations separated the power market into energy and capacity. For legacy capacity, generators can sell up to 20% of expected energy production through business-to-business contracts, and Pampa has already completed that allocation. He said the company has sold around 30% of its total capacity and expects that portion to take more time to contract.
Pipeline Capacity and Capital Spending Remain Key Focus Areas
Pampa secured 3.2 million cubic meters per day of capacity in the first tranche of the Perito Moreno gas pipeline expansion, representing 27% of the total 12 million cubic meters per day expansion and two-thirds of the first tranche tender. Wang said the 35-year ship-or-pay transportation contract requires prepayment of the first 15 years of tariffs, amounting to approximately $330 million including VAT, payable in four installments through April 2027. The expansion is expected to begin operations during winter 2027.
Mariani said the incremental pipeline capacity could contribute roughly $100 million to power generation EBITDA, depending on winter fuel prices and system marginal costs. Turri said additional gas dispatched into the market could add approximately $50 million to $60 million of EBITDA for the exploration and production business, characterizing the estimate as conservative.
Capital expenditures rose 36% year over year to $242 million in Q1, including $163 million invested in Rincón de Aranda. Wang said free cash flow was negative $404 million for the quarter, reflecting collateral requirements tied to oil hedges, heavy CapEx at Rincón de Aranda, payments related to last year’s CapEx and slightly higher days sales outstanding. Cash and equivalents stood at $677 million at quarter-end, down $414 million from Q4.
Gross debt was nearly $1.9 billion at the end of March, while net debt rose to $1.2 billion, equal to 1.5 times last-12-month adjusted EBITDA. Management said Pampa may increase gross debt to finance high CapEx and the TGS expansion, but expects leverage to remain around 1.5 times this year and decline over time as Rincón de Aranda ramps up.
Management Addresses Hedging, Urea Project and Dividends
Mariani said Pampa hedged oil production to provide stability during the early ramp-up of Rincón de Aranda. The average Brent hedge price through April 2027 is $65 per barrel. He said the company had hedged 100% of production during the ramp-up, but expects to reduce the hedged percentage to around 50% as production grows.
On the proposed urea project, Mariani said Pampa continues working on engineering, EPC negotiations, environmental permitting and project financing. He said no final investment decision has been made, but the company hopes to decide by the end of Q3 or sometime in Q4. The envisioned plant would produce 2 million tons of urea per year. At normal historical prices, Mariani said sales would be around $1 billion annually, while current prices would imply almost twice that amount.
Mariani said Argentina imports urea despite being a gas-producing country, and described the project as a way to monetize Pampa’s competitive natural gas reserves. He said the company would provide more details through an investor relations event if it decides to proceed.
Asked whether Pampa plans to pay dividends, Mariani responded, “No.”
About Pampa Energia NYSE: PAM
Pampa Energía SA is Argentina's largest independent energy company, with integrated operations spanning electricity generation, transmission, distribution and oil and gas activities. The company holds a diversified portfolio of thermal and hydroelectric power plants, along with growing investments in renewable energy projects, serving both domestic and regional markets.
In its electricity business, Pampa Energía develops and operates plants that supply energy to Argentina's power grid.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Pampa Energia, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Pampa Energia wasn't on the list.
While Pampa Energia currently has a Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Click the link to see MarketBeat's list of seven best retirement stocks and why they should be in your portfolio.
Get This Free Report
