Q3 2019 Earnings Call
Good morning, ladies and gentlemen, and thank you for waiting at this time, we would like to welcome everyone to the Papa Energy third quarter 2019 results conference call.
We would like to inform you that this event is being recorded in all participants will be in listen only mode. During both companies presentation.
After the company's remarks are completed there will be a question and answer section.
At that time further instructions will be given.
Any participant need assistance during this call. Please press Star then zero to reach an operator.
Proceeding let me mention that forward looking statements are based on beliefs and assumptions Papa energy management.
And on information currently available to both companies.
<unk> risks, uncertainties, and then and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future.
Mr should understand that general economic conditions industry conditions and other operating factors could also affect the future results Pepper Pampa energy.
And could cause results to differ materially this.
Expressed in such forward looking statements.
Now I'll turn the conference over to lead out Wong Investor Relations Officer Pampa energy.
Mislead you may begin your conference.
Good morning, everyone and thank you for joining the conference call I will make a brief summary of every six business segments, revealing to quarters key figures and the latest events until last call we know but.
Our CFO mr. they'll be up going is here for the Q any session before we could begin we want to remind you the pump adopted the U.S. dollar functional currency there for construction. So recorded in U.S. older since January of this year.
Well take a break in period 2018, according to <unk> for us.
Two years are reported in pesos adjusted for inflation I suppose the yearend 2018 and show in guess daughters opposing effects.
This compares some might be difficult to read therefore for a like to like like for like basis. We are consuming nominal figures reported a loss since you free no terms uncle Ben's converting $2 I'd never <unk>.
In this case appears to link some serious interest utilities. They continue to report on the pace of functional currency. So they're figures are just to blame Felicia and show in dollars.
Number 2019 close enough.
In order to one of nicer performance organically and to be mine. We are reporting the comparative figures in pesos adjustable Felicia until the end of 2018 and show in dollars at close enough.
So hobby mazes clarifications, we can start.
On slide five we can we wanted to make up we stopped by reviewing the quarter's financial highlights.
Revenues, Phil your and your by 21%, mainly because it's pretty 6% devaluation of the pay so.
You know were consulting businesses I get it nor trends and their teams. Yes, you know you shouldn't to lower gas prices and FX freeze Pete.
Hey oil M P.
Reduce legacy remuneration of power generation this negative effects world. That's why the commission is off new capacity since May 2018.
Are you more than 300 megawatts to the greed and higher gas production.
<unk> revenues also decreased by 24 person.
I mean, maybe explained by the hypothesis depreciation affecting our really do you feel at this lower exports and production Oh were petchem facilities.
Partially offset by winter season pricing for legacy and gas reference price I missed.
The new capacity Commission since last May and high either gas production.
It'd be a also fell year on year by 5% mainly explained by lower idle car once prices, we use legacy Roman ratio for our <unk>.
They will we shouldn't expect on now where price inflation adjusted utilities, partially offset by the commissioning a new power units that we see should then that's all Cincinnati <unk>.
Hi, good gas production and dilution of consulting expenses due to the Diva [noise].
Quarterly order EBITDA increased by 10%, mainly because of new power units explainable and full or are open to know what I am highly and how your legacy remuneration and higher gas production I'm prices because we'd their season.
So by peso depreciation and FX screen at oil prices.
As we show on the right below well then gosh your reprise sense, one for Bob Conciliate Debbie you eat into grew in pricing environment empty well electricity led by power generation takes you all their feet sports.
Oh, so it is worth highlighting that almost 70% Noah baumbach it'd be considered <unk> is still the link.
Meat from gas and power.
Moreover, a show me the chart that's below in the.
Quarter off this year, our captive epics decreased 3% compared to the same period last year.
He explained by lower pay in power generation expansion Capex.
Q2 week Commission pick it up its wind farms and new up do you.
You guys turbine.
Which is a key horrible CGT going project nobody's come to lower their north capex due to the devaluation.
If we compare to the last quarter.
Capex decreased by 29%, mainly being driven by the pixel de <unk> ignore mostly that's mostly have pay so topics.
Deceleration I saw a power expansion Capex you did last stage, it's Oh, no loss project and yen definitional pit the wind farms.
Upset by increased gas production, mainly in my usual, though.
Oh, so once you can see on slide 16 to FERC order of 29, <unk>, we reach an adjusted EBITDA of $270 million Hypersound, that's compared to the <unk> $283 million recorded in the seem to have 2018.
Mainly explained by decreases in the treaty distribution.
Oh, My gosh, we and others, partially offset by increases at our generation in petrochemicals.
Moving to power generation segment during the first quarter, we posted an adjusted EBITDA of $431 million, 19% higher than 2018.
I mean, we give them by the recent we acquire it's an hour and power plant that we who own wipes, yes, and we Oh, where 50% equity stake.
<unk> eat also contribute to our newly commissioned wind farms, we keep <unk> and China up use new gas turbine as well at the devaluation impact on our peso denominated cost and better NFC up those margins.
This effects were partially offset mainly by the reduction on legacy for months remuneration.
Oh for resolution first one affected us from March 2018 by which capacity payment. During spring season also September was to reduce around 40%.
Oh, there's four women into a bunch of get away now.
As they are the lowest dispatch rates units in our portfolio.
So you back.
On our high gets no factor units.
Their legacy capacity, that's no I know my combined cycles.
It's a smoother, but during September would you see off peak season.
Got 20%.
Quarter on quarter winter season pricing for legacy.
If they wind farms with B to B P. P. H uneasy about I'm contributed to the 31 increasing <unk>.
Generation was 16% higher on your main <unk> year on year basis, mainly due to the gas turbines <unk> kinda give up some of our plan Dar apart. The closing two combined cycle project as well that's better little factor out the combined cycle legacy.
Hi, good actually no higher dispatch I know my laptop, because we managed to get the gas and therefore competitive buyable production cost.
Okay CDP.
So they get dispatch plus higher generation coming from the we Sparks, which ranked senior in the dispatch priority because it's variable cost the CPP, it's close to zero.
These effects were partially offset by lower new factor when it's not good enough from afar a blast.
Caused by their Tiger CBP from the partial recognition of imported gap.
Even higher during the winter season.
Therefore, placing them behind the dispatch priority in degree plus we got lower dispatch required.
You know why and Buda went up.
I'm up our appliance because their borrowing costs.
Well not competitive bid to be wind generation in the south.
One of them corridor.
Our generation increase mainly because of the higher electricity demand integration cost its during winter season.
In addition to new thermal and with units, partially offset by lower dispatched unless a lesser compared to the sort of more.
We believe it did you rates in the FERC order was outstanding.
95%.
We didn't full capacity of 4.8, you know what that include you abrasion of recently acquired or it's not a young from about one CE mark for the 94% of chief.
Let me get chief doing the same quarter last year and also similar quarter on quarter.
Regarding the expansions we have into pipeline. We are calling this final stages of the closing two combined cycle. All 380 female what that can elba as you can seem to be true life.
Last June we increase who are in gas turbine number free capacity by 19 megawatts and commission you got to when number four for creating email what's.
They are bill enough legacy until the closing to combined cycle begins operations.
However in mid October we steering heavy rain and a flood caused damage is the facility. This call since I'm delays, but we are optimizing the cycles commissioning procedures. So we expect a cheap she'll be expected in Q2 2020.
On the other here unless you can see on like nine by the end of last June we joined we acquire we'd wipe you have to thermal power plant into <unk>. We didn't go capacity deal for how much at 567 now what's running a P. Eight until 2022.
He has an expansion project to close the cycle.
Increasing 20, 280 mail, what's more with another P eight or 10 years, we can mesa.
By the end of September the joint venture company executing at EPG agreement, we set the and they cheap but why didn't you realty once the engineering optimization is does the works kickoff is subject to pump on why PFS decision.
Regarding to exceed that opens enough for approximately $229 billion at the end Oh goes the joint venture company agreed.
Improving repayment.
Schedule and lending condition subject to the finished suspension by the end of 20.1.
Okay commercial conditions prevail.
Moving on briefly to the distribution segment, which was reviewed by our CFO I didn't or mystery on the remote data yesterday in their earnings call.
As shown in display pen doing the first quarter 2019, David you remain similar to the scene beautifully 18 amounting to $59 million in the quarter, mainly because of the FX variation was higher than do you own distribution costs update aka tpd.
Which is over we did in the salary index that also lacks the steep <unk> under <unk>.
In addition to know where do you mind and higher energy losses.
This effects were partially offset by double we shouldn't impact on labor and Pencilling operating cost.
No were penalties due to the.
Never these real differentiation agreement executed last me I thought we saw another we sold the lower penalties off and energy investments to improve quality service.
And collection of retracting stillness, and social tariffs cap that did not happen.
Year on year doing Q3, 2018, we experienced lower demand also decreased by 5% due to my weather downturn, Yeah, I know me activity and pricing Manila specific.
Quarter on quarter to be money improved because of the winter season.
Energy losses reached 23% rate in the first quarter of 2018 265 basis higher than the 20%.
For the same period, 2018, and pre 90 basis, but last quarter you identify in residential end users, especially low income users that do not have classic access to the gas distribution. Please.
Partially offset by lower volume of energy demand.
We are targeting have users as stewards receives a de furnace by performing market disciplined actions installing customized recharge meters.
Therefore, we are increasing our customer base.
This is speed up say, but blogging awful SMS and large users due to the GDP recession.
Energy costs decreased by 21% in Dollarss year on year.
Due to the peso depreciation upset by the gradual substance removal.
This is still huh.
Subsidized oh, the food costs of the electricity costs of the attrition piece of possible for you or users.
Moving on to the news updating the SEC man in mid September 2018. It in order like we were at the federal government to keep building that parity schedules enforced.
Therefore, the 19% CPV up day.
A slower seasonal price for the Treaty D., we're both Easter.
However, I didn't know what's allowed to keep collecting the retracting settlements for de lever, we gave them the previous terrorists addressed many March 28.
[noise] as you can see on by 11, she free 2019 in the oil and gas segment, we posted the navy of $52 million, 42% nowhere to go into Q3 2018, mainly because it is still reflecting the downward trend in GAAP sell price since August 2018, lower oil price.
This mainly due to the FX free this question will measure by the government and high your gas treatment costs among crucial bardelli, partially upset by 14% high your production of gas driven by the <unk> vertical integration, we power generation and lower royalty.
And expenses that are pistol link.
On the other half quarter on quarter EBTDA with similar mainly explained by the higher gas production them better pricing I see something that seasonal demand starting on June .
Partially offset by lower oil prices because of FX freak.
Our overall production you free 2019 increased 11% year on year I'm free person corn on border, reaching to nearly 50000 barrels of oil was on per day, we each of which 9% its natural gas.
On the old site production level year on year decreased 10% of reaching to 4.8 thousand bars with <unk>.
We bought quarter on quarter remains similar mainly because the lower well completion activity I don't be show no contribution from cheated. The order. This is a blog that leasing process.
Or exploitation.
During Q3 2019, the cooler prices sell price.
Decrease year on year by 26% on quarter on quarter by 18%, reaching $49 per barrel, mainly because the government imposed side effects free.
Oil domestic prices as of August nine for 90 days and brand referenced 59 per barrel.
Selling.
20% no worse, then nishu had been.
51% of whole production uses Columbia heavy on.
That is the sweet and given the current clean fuels trend it narrows to admit I need to prices.
Please turn to slide 12.
Where we want is waning deeper detail to situation gosh, we guaranteeing the gas production to quarter reached an average of 270 million cubic feet per day.
14% increase year on year, and 3% increase quarter on quarter, mainly explained by did production decreased.
At the among Lucia Oclock in which Gaska Buck we should go up I see was expanded.
Since the last year.
And he's fuel braided bye bye.
By September 2018, the gas production level off among new short reach 155 million cubic feet per day, 60% higher.
And.
I'm there.
All of last year, and I'm contributing almost 60% AFFO overall gas production.
This positive effects were partially offset by lower production mean, other gossipy room blocks because of lack of vis a vis a vis with you sell prices.
Which was affected by excessive supply.
Driven by the disruption of shale gas development.
Partially it's the seems like we back out by the unconventional gas plant with solution for the sake and especially during the winter see some bottlenecks at the main transportation pipelines.
This FX negatively impacted arent going to an unusual block, we got loads really great a natural decline and the minority query.
We only again and I know what outweigh blocks.
The pace of steel I tried that he remained similar production due to the completion off two recent though will you free time Nike.
During third quarter.
Our our crew weighted average sell price was.
For gas was $3.3 million Premiumbeat, you, 26% lower year on year, I'm lightly higher than last quarter, mainly due to the reduction on the reference price for gas fired power plants and gas tenders or not directly basis conducted by Cammisa.
Same June gas prices rebounded a CE marked the beginning of the winter season.
We've got 46% increasing dollars a power plants reference price spike a miss out on higher spot price due to the seasonal demand.
But seeing September if we turn to the off the see some prices, reflecting excessive caspase expect some supply and transportation bottlenecks.
Also impacting negatively the commercialization industrial segment.
The field procurement for our power generation helped to recover the gas production levels. We are testing almost all our production there.
So it does not improve pricing, we cover our breakeven cost and he helps to have a certain enough. They.
Certain off big fish to speak specifically, the weak demand periods and to monetize some synergies between power and gas system.
As you can see on slide 12, you average gas prices that we recorded on the men have been plunging seems second half of 2018 falling to the lowest point.
Years, and hardly covering the country's marginal breakeven costs.
Winter season pickup prices, but as evidenced in the past.
Domestic production was not enough to cover the domestic gotten man.
Needing to cover roughly 20% deficits Oh.
[noise] gas consuming winter season would gas imports from LNG, unbelievable, which much higher prices than those pay to domestic users.
Moving on the new sub being the SEC man on August .
Under Secretary Oh hydrocarbons on fuels approved the terms and conditions to export gas to Chile, when affirmed basis during the off peak season.
In this sense Palm bought was granted a permit to explore gosh for an hour production you cannot be seem to enact.
Chile for a maximum volume of 21 million cubic feet per day at that price of 3.1 dollars Permian be to you that is net of export duties and transportation costs I.
Additionally, exporting companies should compensate the higher costs incurred by the power degree due to the useful alternative fuels like LNG of fuel or power plants supported by the Golar.
Regarding the GAAP.
Build to the residential segment, there are free news affecting pump and CGM.
First regarding the Terry flattening floor Winterton Sasha consumption, we estimate that as of September receivables collectible bite on dgs would've onto roughly 48 and 1.3 billion pesos.
Respectively.
But no relation we'll see should establishing the payment.
Second the FX difference natural gas treated between April last year, a March this year.
That was set to be collected from the federal government installments asked for an October bump on the or to this procedure and an estimated receivables.
966 million got pesos.
The collection its pending as of today.
Finally, the gas rig leader decided that FX variation of natural gas prices and PGS cost variation update.
Schuele that should be granted in October 1st 2018.
Both to be fair to January 2020.
Before I move on from oil and gas I wanted to give you a quick update of our operations. During the fourth quarter of 2018, 26 wells were drilled and 23 wells were completed.
Our focus is the development of logs, we take us with the watts.
During Q3 2018, seven tight gas wells were drilled <unk>, among new show, which is very important for them and peanuts off the record production in the block.
We also completed to a recent though I guess well I feel I tried to us I mentioned before.
During August 2018 to show Goswell embark on one of the were completed in my usual block.
Well, we horizontal expansion of 8000 seat.
We two different landing points using cheaper Frac technology.
With 46 fracturing stages per well you seem for.
For 4500 socks off proppant per stage.
So in 200 tons of proppant per well.
The results of the completion of this wells, we charted feeling testing phase are very promising producing I'd expect it raised over 400002 meters per day since October 2019.
Another important milestone once the drilling of a shell oil wells at Green Columbia that on.
Targeting buck on what that during Q3.
18, an exploratory blocks operated by us with 55% equity stake and we partner there we talked on.
The well how should we some of those potential for almost 7000 feet.
Currently we are carrying out the final completion works Gus ready for testing phase at the end of the yet.
In petrochemicals.
We posted an adjusted video free million dollars during the first quarter of 2018 higher year over year and higher quarter on quarter, mainly because of higher upfront reforming price spreads.
Lower puzzling cost due to the debo, plus lower cost of gas given the market negative trends emerging messed up for cheap.
Domestically instead of importing these effects were partially offset by lower styrenics demand and lower spreads.
In operating terms to those cells baldino forward brick and segment in Q3, 2018 decreased 12% year on year, and 22% or don't order totaling 75000 times due to lower exports and closing off eight the lean and be a piece.
A plan.
So by higher SPR domestic cells.
Finally, our wholly another segment presented in an adjusted EBITDA of $25 million into first quarter 2018, 22% lower year on year per year per cent lower.
This is mainly due to the lower EBITDA adjusted by our own the sheets from our affiliates TGF trends in that.
Because of the peso devaluation and that outpaced the cost variation adjustments. In addition to lower income from fees collected a holding.
I'm going only briefly review PGS healthy just had their earnings call last Friday PGS is it maybe a adjusted by our direct nondairy stake of 25.7% contributed to pump by $18 million into quarter.
Running what's the total 71.
46% lower than Q free 18, mainly due to the FX variation higher than the lot granted PPI that covers cost variation for the regulated gas transportation business.
The drop in reference prices.
Denominated in dollars for NGL.
Lower natural gas process volumes because of the lowering things sales due to the Dow chemical technical outage.
Which was normalized October partially offset by lower cost of gas previewing be too.
In relation to the <unk> Midstream project.
Mark I'm worked up populates pipeline the nordson trench.
Pretty fine miles was finish connecting the wrinkle nothing Isa field with the Solden.
Trench of this pipeline.
So so far 85% this gathering pipeline is commission.
Regarding the other prevent the leader on mean gas pipeline tender the garmin postpone the opening of be until 2020 or 20 times.
Moreover in October Tgps is.
Jeremy shareholders meeting a crew the distribution of our dividend consistent in 29.4 million common shares in treasury.
On a cash dividend to offset taxes if applicable.
As for.
Trends in there.
EBITDA adjusted by our direct show holding of 26.3% contributed $10 million and a few quarter.
Turning blizzard totaled $47 million. This is 4% higher than the same view of 2018.
Mainly because of trends in there a cost of correspondent tariff increase of 19% in almost 2018, but almost 20 team. There is scheduled type increase was delayed to November the Q4.
Regarding share buybacks. So far we acquired 7.5 million 80 hours of which you know October .
Well this year 61, 1 million Mdrs were approved to be cancelled by the shareholders meeting.
Because of the market bullet beauty and the difference between the body of the company.
Assets and the quota price on buying stocks changes, we can see very we can see repurchasing our own shares one of the best investment I creepy actions towards shareholders. So we are undertaking.
Therefore pump as for approved the fifth share buyback program for $50 million with a price cap of $14.5 million graveyards.
There is something that is going to attribute the to the owners of the company pump a reported a closely to gain.
60, a how many $60 million into first quarter 2019, whereas the same period 2018, a loss of 20 120 million.
Dollars was recorded mainly explained by lower accrual of losses from FX differences that we sold off change in the functional currency.
When at the beginning of this call.
Finally, moving to the thought slight 16, we must highlight the mill and well spread leverage of the company.
Well, that's that's still the cat cash position held compared to other peers in the industry and in Argentina.
We have always seemed very proactive towards the cash on the ability management.
Especially after witnessing volatility high heels and narrow window didn't a national financing markets.
We couldn't we continue redeeming the short term the facilities highlighting that so far this year.
Redeem and maturity and Pete can still.
This year, roughly a total of $310 million.
The consolidated gross debt, including affiliate ownership decreased to $2.4 billion, Herman 50 million lower than June 2019, mainly because of the repurchase of own corporate bonds.
So far I pump out we bought back $84 million face value.
Was that prepayments.
On a and to a lesser extent that evenly spread on the persevering bonds consolidated gross debt is 93% denominated in dollars. This is lower than the previous June 2019, 99%.
Very not the Irish interest rate of 7.8% and 75% its place the parent company.
Consolidated cash amounted to $699 million, which snowbird under 860.
$3 million in June 2018.
Close in Q3, 2018, we were holding 93% AFFO cashing dollars.
We also show here.
No loan he debt fuse for our bond holders.
Even after canceling roughly $310 million that principle maturities belonging to campus stand alone that are left.
In 18, and combine until 2022 amongst to $246 million.
Which is by far exceeded by the $550 million cash position at the parent.
Right.
Net debt bite me increased to $1.7 billion. However, at the restricted group the net debt fell to $1.2 billion.
And the net debt to total mom moms it'd be a.
Remained low at 1.9 times, a conciliate the level on two times the restricted.
So this concludes our presentation.
Now I will turn the word to the operator, who will open the floor for questions. Thanks.
So the floor is now open for questions. If you have a question. Please press Star then one on your Touchtone phone at this at anytime.
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My first question comes from Peter Gryshchenko with Barclays. Please go ahead.
Hi, Good morning America, Thanks for taking my questions.
I guess first question you know my understanding project financing and superior level was basically nonrecourse.
And in announcing pump, but actually guaranteed from payments on the trust on the financial Troughed and.
Syndicated loan agreement, so I want to give more color on that and they want to clarify this summer and it's the 1.9 million.
And I guess as it relates to Oregon. The between turnkey agreements are also guaranteed or not.
Oh.
Hi, I'm, Peter how are you so.
And this is no recourse among us we comply we go according to come one cycle.
Due to the project.
And just within the point a little more if the combined cycle not reached by within three years to them.
The comp would be obligated to.
Make a repayment basically we won't be a coordinated is the right.
As long as obvious the longest bye bye.
Yes.
I'm wondering bank basically bump on white yet.
Required to one ours.
One other that.
Okay.
It's important to note that.
[noise] that wouldn't be each only.
Well you that all scheduled project completion.
Right. Okay. I guess second question can you maybe im probably some more color on the decline in this bad trades across various plan.
You know, even though we do with new capacity is trying to understand is this is demand driven or there were some outages during the period the led to lower dispatch.
Yes, well deal if demand driven actually Q3 into agreed it was the one of the lowest point.
The Mandel rebounded alluded because this winter season, but still we are.
At levels of 2014 15 demand levels. This is first lien second thing for the Unistar located in the norm for from December to the north that speed and when me I'm Lucky blog. They are the Bible cost Oh.
Gas price, it's kind of influenced by the important gas unbelievable. So in the Bible cost they kind of like are lagging behind the dispatch priority.
Business first and third second renewals also have a.
Disruptive.
Influence because in the in the North we have solar though it's there's a bottlenecks in the transportation that doesn't come to the question, but renewals are getting disruptive into dispatch ranking in the dispatch and also into self where.
Historically, our power plants have the lowest variable cost.
But shrinking because the gas is the cheapest into country.
They even got outpaced by the we.
Generation, but demand driven scores we are experiencing around.
I think 30 334000 to go what our if the money to order in the country, where we usually used to be up almost 40. So it's quite business seems the last year the demand in the country has been going down dramatically.
Great Okay.
The GDP ride the GDP recession right.
Right, Yeah, we will that.
And I guess switching gears would have it can you maybe discuss a little bit.
You know what do you see in principle payment delays.
From come AFS or any kind of extensions or you know if you could we maybe quantify them a bit I don't imagine during the presentation I remember when Uh huh.
Oh I remain relating to the other question I. This is very important the literally been our units were 95%. So as long as you are available you collect the capacity take or pay okay. So, especially if you will slow, yes, lower than expected, but because of the man.
VP thing, but Oh, we're availability was outperforming.
Now regarding commenced Ah we are quite the same day then.
Lately, we've been we are around 50 less than 50 days of delays.
Yes.
Cammisa, it's doing the payments accordingly.
Okay, I, probably missed the would number do you.
50 days.
Some 50 days the rule is 42.
Hi, Good point was.
A long time ago so.
But the done around that bills.
Okay. That's helpful. Thank you and last question if I may.
Can you maybe give some more color on how are you seeing that amortization next year and you know generally speaking wasn't financing options.
Do you think are available for the company you know anything on that kind of a front we very helpful. Thank you.
Yes.
Ladies dozens of our that amortization.
The most important thing to be set as of today.
Our cash position so.
With respect to what I would say that we have.
That's the biggest seem to be a mark I used the 2023 bond Buddy.
But that's the relevant.
Position, but other needs.
Wildfires noise.
The other side whatever rates due for or bump I hear sites.
Transactions that Monty dot gov, either rebate or cash position.
We should expect to be able to.
Do we fight.
That respect we have as you may have seen already.
Two transactions that have been.
That being.
Refinanced and basal and we have other dollar on what they say so at this stage I won't say.
What every space what would be really very easy to refinance it will be but.
Especially by.
Cost of the only thing buying and whatever U.S dollars.
Yes, when they got to do what.
We were going to cancel that door, we fast maybe the local market.
So far by bank lives are still available.
She doesn't matter off.
Of cost rather that we.
Got it thanks for a detailed best of luck for you guys.
Thank you. Thank you.
Our next question comes from gear on that Levy with Morgan Stanley . Please go ahead.
Hi, Thanks for taking the question I wanted to understand better what are the kept all the kitchen priorities should be back the situation edging Sheena remain challenging for a longer and in this case for how long should we expect a continuation of share repurchase programs and Oh, how should we see.
About capex going forward and second question, if I may relate that should the first one actually.
Specifically for me for upstream or what are the next steps now directly investing LNG an option our could we maybe the company deploying more cashing all your read their desks.
What we what should we expect you to coming quarters Ah. Thank you.
Yes Hello.
In terms of.
The Microstation, Argentina, clearly we should expect.
Annual information, we the once it get me situation using base so.
I think we've got enough bell anything in terms of our future plans.
We have.
Basically the.
Industrial euros, or not or a change or not so.
I.
The possible to say what will happen and how long it.
Would be there what we're doing as of today is that basically up accusing long.
I mean thing.
The current expansions. He does result generation and in terms of the B we have.
The commitments Sonic slightly was easy.
That's what it was sold.
Once we haven't had administration and.
We'll see the poly studies he landslips, we will speak again and tell you what our plans.
Then in terms of a share buybacks.
Lets you see.
The new share buyback program me, it's limited to tell you about.
Viewed.
So you obviously in terms of how we see prostate going forward and always having in mind to keep a strong cash position and.
One close either.
Leverage.
I don't know question.
No no no.
Yeah.
Hi.
Gotcha and <unk>. The second question was specifically choose to upstream.
Yes are there any auctions a tool to help monetized or the gas reserves I mean, I would the company consider directed directory investing LNG for example.
Well.
I love that that's we have our PGS our affiliates for that so that's.
There their investment there project.
From pump a powerful position gas production Vicki.
Oh God. He said, we know were 2020 budget, we only have all are committed.
Capex for blocks or that the some Chinese gradually wells to shale formations.
To.
Meaning to maintain that lease our production that today, what we're doing is just destined to all the power generation in power generation. The expansion speaking, we you know like almost nearing to finish and we don't have any other projects in the pipeline.
T pretty clear thank you.
Oh the.
Eastern comes from Easyfuel Fernandez with credit core. Please go ahead.
[noise] good morning, Thanks for the Q and aid.
Cereals.
[laughter] comparisons on adjusted on an adjusted.
Monetary variable I couldn't get a little bit late to the cold. So sorry, if I go into any topic do you refer to those would be.
Hi.
[noise] question.
Sorry, it's very difficult to understand what you're laying go one by one of my.
First one is related to Orlando you off the ballpark.
[noise] sorry can you hear me any barno [noise].
I live in rough all right I'll take it off I'll kick it off the call I'll.
The call it.
Okay, Okay I'll repeat my question.
Hi, there can you tell me.
Can you give up the ballpark for your 2019 full year topic on the oil and gas.
Segment, and it made between exploration and infrastructure development and what can be can see either.
The run rate for your occurring output and if you have anything to out about 2020 great.
Yeah, we set the guidelines we don't have guidelines in respect of information for 2019 give us the.
[noise] 200 million this year for these that for these you will be in line of $200 million.
<unk>.
Okay, great at $200 million for years I don't know if you could split up between exploration and recurrent [noise].
One second.
[noise] desperation capex out of this 204 cats with this years 74, Oh, what we call expansionary Capex basically this shale shale wells exploratory wells plus another facilities that we do.
Language, among new show, a little bit because it on a and.
Gotcha.
Okay, Great right. My second question is regarding.
The power distribution side, you've you could comment a bit on I got worse granted already and implemented and what do you Oh or it's still pending.
Are we talking all power generation aren't on utilities.
Our distribution and then Oh, Okay, and I know you know what are we got so here's the thing we got schedule freeze.
Okay and that is schedules includes some attractive installments.
That was on the delays to the carry prior to his previous tariff adjustment lenses.
So.
Right.
We [laughter] rented 19% in October but with this retract installments that should have been stop in August we keep collecting roughly half of the tariff increases copper.
The other half the 80 I'm from the agreement with the Garmin needs to get paid instead installments us from January 2020.
[noise] category My third question related to.
Your direct link between the GAAP unit and power generation you seem to go about being able to sell deal GAAP here.
That's right at the same time.
Subs Barclay not that a run they want in terms of margins what kind of advantage.
He there that it's important for you.
[noise] [noise] [noise], what's the it's been thinking is because it's hard to understand what.
Yes, that's how do we have bye.
You don't know followed that we don't want generation that's a question.
Yes, what advantage do you see in selling got through your own power generation unit, considering that the margin is not that big.
Let me, let me tell you why.
In the past quarter a number.
We pick a number of wells in the country has been who tail.
Gotcha, and we didn't let me tell you why because we have a surgeon off taker the offtake each hour to best performing.
Our generation units. They are combined cycles. They are very competitive in the dispatch ranking no. My luck on can you asked so we because they are always dispatch no matter whats because they're they're Bible costs is very cheap and.
That's why we Clark our gas to them.
That's around.
70% of Holler production 70, 65% about production, we plugged it too low meant a lot on she knows.
No what I like that this is about an advantage no one I'm not that it's very close to what were production blocks. So there's no transportation needed right.
The second well spoken a lot we need to transportation and we haven't planted for one year.
So here's a visit the very first thing.
Certain offtake, we have it beat that you're going integration needs vary by the will do the pricing very not very attractive, but it's certain we collect golar link and we collected from our power generation.
Collection, So power generation is in charge of sell in this amount of gas on behalf of the young.
Yes, PMD power generation are in the same company business not any chemicals. So there's a we we are weak from internal taxes, we we avoid a financial transaction taxes.
And and then the most important thing is that if we didn't have doesn't take real but then he going to grecian, how a young p. shoots sell this guy. He didn't this part which is they will kill you in the off peak season or or sell it to cammisa directly.
Yes, I will send it to solar power plants. So this this triangle into boy that thought.
Before we were subject to a higher level of working capital that now we have been reduced dramatically because power generation.
A self gas on behalf of PMP I don't know he fits if I may myself, we're it's more qualitative.
Improvement than quantity is [noise].
[noise], that's very clear I'm, not actually taking care of my Port question. So I'm done I'm sorry for the back.
<unk> okay.
Well I'm. Thank you.
Our next question comes from a Lorenzo Ya Majorca with TPG C.G. Please go ahead.
Hi, Thanks for taking my question and I have two questions. The first one regarding E M b in how many days.
And distinguish on I think you wish on companies I mean that yes, I'm, making the payments regarding that.
The second one east bad there I'll note regarding production after that the growth already seen him that that's what though.
[noise] [noise] hi, good morning put into yeah. So distribution distributors, it's very tiny of our production. So it's like 5% or less and I know where production they are paying up quite a base.
This is a sale that we I think we doing pesos right and we recorded a such you know were financial statements, but it's very tiny.
The major part its cammisa, how many sites being 40 50 day, almost 50 days as I said in a earlier.
Question.
Industrials, Walt Industrials E. We can agree but they are about premium that's around 30 40 45 days.
And we are also exporting since September of this year, we're collecting at 60 days.
Yep.
But basically a major bulk of our cells are collecting not less than 50 days Oh collection.
[noise] perfect I'm talking Bill that shandy, if they had bad and nobody.
He did these costs there and when you.
What do you need spinning that hope all the time.
After that well among show all the big Guy small decline or remained flat.
Hi.
Hi, So I'm Q4, it's a very difficult quarter for the country for the gas production because it may again seasonality comes along it's off peak season, but we managed to get our gas production kind of flattish.
Again, we are exploring six comments I mean 700000 cubic meters per day, that's roughly 10% of our production.
And and among who she was flat the main contribute to real color production and my whose is flat.
[noise] perfect and then lastly, <unk>, yeah, I need that you mentioned that you have CAD nine how they know if I need to know how much.
I think every credit lines that somebody <unk> as of today.
That's a whole upgrade lines are not committed sole piece.
[noise], they're not.
Okay got it.
I.
Basically grade lines of the major Abbas.
Give us most stop there.
Most of their.
Let me into classic pizza available to us.
[noise] thinking you're walking.
Our next question comes from Daniel Guardiola with BTC Pactual. Please go ahead.
Hi, Good morning, I have a couple of questions. So my first question is related to the oil and gas segment.
Considering the fundamental bases the average prices the gas how dramatic decline I want to know your thoughts on the likelihood that bump I may have to Boston make up the previously on Threed Scouting reserves related to lower oil price. So that's my first question.
And my second question related to the much or where it is a hike in detar. If so do you teach company.
Considering the increasing social non res somebody's content that we have teamed up your America.
Wanted to know equal share with us.
Like you think it if the new demonstration is going out and or the expected heights that are related to the our T.I. Thanks.
So high and good morning, Oh, We started last last December 20 team was 140 million Bowie.
And they are mostly tied to unconventional gas there's no shell book there so.
In that sense, we don't have a shell gas book and that's the breakeven cost for Shelly slightly higher than the prices a wheel icing today, that's why this.
Impairment, it's kind of not likely an uncle, though of course. This affects how were you assessment of the shipment of our research for the December 2018, though we are as we said in the call. We are already producing and already drilled completed wells have shale gas for me.
Brian and we expect to book some of them to total or who serves so we'll see what kind of Ah, yes, too early to tell but yet we will have to see what kind of contribution will make it.
Then I.
I'm sorry, I lost you question, that's the only when they could retain.
Thanks, Pete I know the political question is regarding into you'd be targets. The adjustment that we are starting to targets will do you take the companies in January 2020.
And they wanted to know how likely do you look and you have any situation is going up on or are these hikes, considering the increase in social outlets sounds social these content that we have seen across Latin America.
Yes, Hello, again, it's not possible board was for the likelihood that be specs. So.
Basically we don't we were going after that what yes, we can say he is that.
Uh huh.
Whatever they.
Whatever they don't base go do it.
Again, if fiscal deficits that.
It's rather it's a little where seem to be you know because you know we need to see what's going to be the plants. If the government in terms of any deal in take one plan so considering they have to.
To close either a different aspects.
In balance has all of a quick on many fronts.
Okay. That's just let me rephrase the question.
Where are your coffee there aren't where you're forecasting your budget for 2020 are you considering these hikes.
[noise].
Clearly, we gonna see are they hikes on the other side you need to close you need to do to manage your liquidity considering that it may be you have today that has happened.
Understood. Thanks.
[noise].
This concludes the question and answer section.
This time I would like to turn the floor back to Mr. Huang for closing remarks.
Thank you so much for joining our call today, Oh routinely shuli available for you. If you have any for questions have a good day.
The conference has now concluded.
Thank you for attending today's presentation.
Disconnect your lines at this time and have a nice day.
[noise].