Q3 2020 Pampa Energia SA Earnings Call
You too.
We expect the normal official keep coming along as the country is entering into a more flexible warranting face.
Okay, Keith robot figures this quarter as a result of higher pricing this winter pixelation solid operational performance across all our businesses and the contributions from our new CD GTX manual, which is building a 15-year PPS.
Recover from certain environment combination of expansionary investment cycle that power generation of discipline and higher wage our operating cash flow posted during his time helping to keep BuyBacks.
And we'll set the payment Delay from camisa experiencing the quarter and finally.
You we weeks ago the government announced a new government entity Foster investment for domestic production. Although the initial the official Revelation has not been relieved. Yes beforehand. We believe this should be a created for Austrian.
Well, that's our commanding the quarter keeping away as shown on five five revenues increased 5% year-on-year the six $89 million dollars bring it by Camila new PA and because of the strong real devaluation in Q3 last year. I think our utility businesses partially offset by lower fuel subsequent life over most of the queries fuel consumption lower prices and volumes of oil and gas soul and letters prices and dispatch. Give me 20 around 45% of our sales were dollar link, but roughly 50% in 70% in aviation. Mainly coming from our core businesses PTA power capacity followed by MP.
I just needed the a19 stable by only reduces 3% year-on-year amounting to $234 for the quarter mainly swing by long as you price on volume as utilities and lesser Legacy of power generation partially offset by Penelope be a lower wage and royalties related to activity down there and the illusion of the people are they cost because of the Precision foreign quarter every day almost double thanks to the Canelo.
Yeh the peak season having higher prices for Power and Gas and increase sales at home.
As we show on right below electricity takes 71% of the Consolidated adjusted mostly led by power generation while all after-school sure 29% driven by gas and PDF.
More alert as showing the next you know in the first quarter of this year our topic between significantly compared to last year mainly because of drilling and completion activities at the NPR on Sunday to the uncertain pricing environment compared to the Shell activities in Q3 last year.
And also because we finish Camilla plus expansion brought it in north campus in Queens Iran years due to the deal devaluation 2019 partial certified the law restriction have a freeze and tire but the impacting I don't know.
like 7 during Q3
The Loft. Affect you lose it over the argentines power green tends to the winter season the Irish demand reached 15 g o m 2 to 3% dollars and previous years, but better than other sectors will get going to the energy industry or GDP.
Industries are still the most impacted by quarantine, especially not in central while this goes were hit because of the collapse of the Sesame consumption part partially of cell phone not holding that this is a stay-at-home order and pull the water wetter. As we are entering green electricity demand is expected to given moving to a generation segment. I've seen on flight 7 during the first quarter of 2020 will post in the Navy a of a hundred thirty two million dollars, very similar. You just walk in last year maybe even buy in a lot higher when you all sales as well as lower costs related to lower energy to Chase's house and the impact on our limited senses.
That's where partially upset mainly by the reduction of pacification of prices as from February 2020 without any inflation adjustment.
Order water pink pricing for energy and Tyler dispatch to 3:20 contributed to the 49% increase in every day.
Well, what energy can price is 59% of our capacity of races only 18% of our power generation off the presented by stockmarket in the quarter and we'll keep shrinking once an hour around function is online and inflation keeps happening generation until 3:20 was 3% lower in or near in line with the lower electricity demand in the National Bridge. Our freaking dead woman can hear you know Factor, but the thermal unit that solely depend on gas such a bit awareness the Northwestern unit, but mostly not required in addition to lower generation of our hydraulic unit.
because of the
and ten reviews gas supply for power generation Our efficient fuel fuel units as an engineer or white We're highly requested what order how our generation raised by 16% mainly because of the seasonality
Action was looking the country the power generation business model relies on capacity payments. So low our dispatch does not much impact on the revenue making as long as a community is outstanding, especially for guys energy.
The ability to be right in Q3 2020 which 1998 in 6% with an installed capacity of 5G towards operated by Palm very few minutes to year-on-year and hold on the corner before.
Regarding our remaining expansions in the pipeline or d project now is the closing to CCD Antonella Ram, as you can see on 5/18 this this 280 TGT project at the seventh grader window Cyrus, which is critical infrastructure for interaction since we've we've already placed the order for the cooling tower So currently we are working on cementing its foundation based. We are also finishing the turbines building installing the pig tale and I'm prepared to pay all remaining equipment 250 people are right now at this time working at the strictest possible in place to minimize wage, and I'm quoting
National gas consumption redundant as expected because of the winter but domestic production is severly depleting Beauty. We invest in landscape that began about a year-and-a-half ago.
The grass we see in the slide shows the evolution of production and the dependency on gas Imports and L&T and Bolivian Casper speaking.
maximum capacity
so this situation Prevail depletion will come along and the country will need to restore the LNG facility that was dismissed in 2018 black increases and well, let's extend connection volume set by NASA
Royal in terms of operating efficiencies, we recorded $29 of lifting cost 44% Improvement compared to Q3 last year mainly driven by the evaluation efficiency and lower activity at less competitive loss given the current market prices measure by unit will reach a lesson cost of $5,000 to be introduced. Please review the scanning productivity of look so we become more active as we did the scorer missing cost me go Tiger but most of the savings our efficiency gain gain technical
Despite the top environment our oil and gas production decreased only 60% year-on-year but increased 10% quarter-on-quarter offer. You free twenty twenty forty seven thousand barrels of oil equivalent per day of which ninety 1% is composed by natural gas the quote unquote cash value is this way by season Ali on the other side which represented almost 20% of our segment Revenue the quarter volume Soul decrease 11% year-on-year to four point two thousand miles a day mainly due to the decline in demand and prices because of the lockdown resolving inactivity stand by Faith Hill set by conventional production.
Which last one was transferred to Palm Pilot of 25-year exploitation in session of language.
Excuse me, twenty twenty four prices decreased by 18% year-on-year 15 to $40 per barrel balancing back for the full twelve by COVID-19.
Domestic demand collapse due to the lockdown Tampa was able to score almost 75% of its production at a discounted price on rent.
Fifty-three percent of our oil production is a calendar which is sweet and given the current Queen fuel strength is pricing premium. However off last September local market started to recover and we'll assume sales.
Regarding 11 to 3:20 which an average of 264 million feet per day of volume sold 15% No words here on the Year may need you to lower trading and to a lesser extent 5% International on production compared with last quarter volume phone recover 4% as a production rates to attended in demand by challenging type.
Lower pricing impact negatively on the receive an equation that producers respond with a lesser drilling rate and off or depletion takes place.
Because of that production was lower and our God-fearing walks.
But we're parking upset by increasing at immigration law with outstanding productivity. Julian of operated by us. Since you're free 2874 million the day of that production 14% higher than Q 319 and contributed close to seventy percent of our overall rank the four largest acquisition block.
We're over 6% of our production was that she'll gasp from the completion of two correspondent wolf as in my last year as we are not connecting more will I will keep you need.
If you twenty $20 average price of gas was $205 Community to 25% less than Q3 2019 swing by the chef options with the reference price for gas fired power plants. Also affecting the industrial and spot price.
So, the price is doing to 3:20. We're around 2 and 1/2 reflecting the high demand is used the winter season since October with spring season choices are roughly $2 less back again to the lowest in years and barely covering the replacement cost infecting the investment right? Also, if you can see right below our production year today is still towards America for placing an increase of four vertical integration as we've been procuring them or can you help you write things from the last call's 14% sale share to 22% sale ship
Yes, first two children and this on mid May and we were we are waiting Secretary of Energy clearance to resume YouTube primarily off in gas prices. We we assess our activities with no Drilling and completion register in Q3 2000 interceptor.
Moving on the bottom line of the pan out. I'm sorry. Consolidated gain of seventy eight million dollars in the first quarter of 2020. Whereas in the same. Twenty Nineteen Hundred sixty million or supposed to be ported mainly explained by a $10 and power Legacy quicker Mobility realization a payment and lower operating in oil and gas or already. Imagine orange partially offset by Tiger profit in our equity.
Finally, we on the slides for teens. Our son balance sheet grant us some degrees of freedom during this challenging environment in Black by will show the layers of the company from restricted multiple consolidator figures, but for Covenant purposes, let's focus on the restrictive you that is primarily pump up parent company month. We continue optimizing every asset of our indebtedness highlighting that during Q3 2020 Tampa engaged in boldface incremental borrowing off of $64 including tax. We also repurchased funds for $34 value there for the restrictive roasted recorded 1.6 billion dollars in September similar to Russian. The gross debt in is 87% The nominating is u.s. Dollar. Which birth
89%
In June 2020 barring any average interest rate of 7.7% I wish light decrease from 5.3 years to 4.9 years the cash amounted to 352 million dollars, which is 11% lower than the 393 million in the next 20 20 may leave you to five bucks and the situation of the working capital. Yes. So which 292 day combined with higher buildings?
Cathay by positive operating cash flow and net has tomorrow.
Restricted groups necessarily mean similar to last quarter below one point three billion dollars and net leverage ratio States at two point eight months after we we paid at maturity twenty-three million dollars of cigarettes, you know, he's into a million dollars at face value Bombardier back and some sure that it is worth highlighting than you would be maturities from now until twenty-two included amount to $249 million dollars of which 92% is denominated in Mexico.
Phones are consolidating. We just recorded and not death of one point five billion dollars two times the registration similar to mushroom down there to free a 10 or pay the last number cancellation of forty million dollars by Dragon reading a hundred thirty million of Securities and a Mendez is auto correcting schedule, which once approved will least. It's maturity profile for the next two years.
Regarding share my wife's next month. We are holding a shareholders meeting to ask to cancel freshly shares up to six point four million. As of today. We hold five hundred six million last hour of standing Capital amounts to 58.5 million. Eighty are also the board approved a new program for up to Thirty million dollars which with a price tag of $12 per month. So this concludes my presentation. We are going back to Margarita.
Yeah, so we can have full hour to your name. Please cast it to the platform the game that we have from whom you can do it. Thank you. Thank you for waiting. The floor is now open for questions. If you have a question, you can send it to the platform. If you have any issues that need assistance or have any problems then that the message or raise your hand and we will continue. Please hold while we pull for questions.
Okay.
All right. We are the first question is coming from the send it from JP Morgan. How do we got a little box next and that continues on the current water? I should we think about Capital allocations off the order.
Hi Ricardo. Hi Ricardo going forward them to continue with share repurchases as long as surprised drops below about the limit that we said in the last repurchase program. That was $12. So that that's the basic part of the answer and then Thursday.
Yeah free car show it has been doing and we plan to continue doing and we don't see other opportunities to to deploy a page on that level in order and conservative on how we feel comfortable about that. We plan to continue with the server purchases and eventually with the with both BuyBacks always depending on the market price on the situation monitoring the month. So generation of the company.
As we see the in the in the near future.
Oh, yeah anything tomorrow?
Our next question comes from the first question is about the plan gas. Could you give us more color on send that on the role of Tampa Palms that we wait maybe the timing prices and details?
I think it's a three explain the details have not been officially published. So we are waiting for home details. There's been several conversations with the industry with the government officials that give us a an idea of of what we will be published.
So what is in the in the media is more or less the same thing that that we know price price around $3 fifty for the foundation. In order to participate you need to at least commit to produce as much gas as you were producing in the first semester of the first quarter of this year.
We expect it to come to come out anytime now. I think now it's a matter of weeks before it is published. As you know, the president announced the program about the the month ago. So we within now they have also mentioned that it should be we will start to collect the new price in December. So that in the the auction will be dining in the following weeks before December. So that's that's why we we expect you expect to be imminent the
The publishing of the of the new gas and what it means for for Pampa basically going back to last year production levels around seven point five million cubic meters of natural gas per day in average and the plan will also contemplates and an incentive for a winter gas that we are evaluating but we don't know whether we will be used that opportunity or not. So what we are thinking now is basically to go back to the production of last year. He said he's slightly tired and what the plan will require from from us and basically developing in kangaroo show blog.
Save you guys had the block which is our most efficient.
Most efficient the Basin area that we have in the Innovation and probably somewhere else as well in Sierra Club, which are the two those two are operated by by Pampa and an increase of production also in pre-owned local which is operated by y p f and where we have a 1/3 in our partner, but most of our increasing in production will come from the Inland crucial and Sharon Chat.
Yes.
Okay.
our next question comes from
hello, Gwen speaking.
As we mentioned before and it's a recurrent question in previous calls. We are buying both bonds and equity and Thursdays in Boulder at some extent. It's kind of judgmental and basically what you're highlighting is that we are still generating positive cash flows. And and that's what we keep doing those things.
You're welcome. Thank you. Thinking about it off. The first question is is it is incorrect, but I think in terms of service local including zero in Australia took a long slow tax environment is sustainable without you know.
I'm not an expert in reservoirs and it's not here maybe didn't have more light. I don't think this can be maintained for Thursday for a long time despite the Integrity of the reservoir. We don't require much capital in order to to take good care of Integrity of the of the reservoir cap ex has been extremely low because we have not been drilling or completing any wealth, which we hope we will receive very soon. ER actually if plan gas is published will resume with that as soon as as probably Thursday December that will also include maintenance or the reservoir. I don't know anything else ma'am.
Yeah, so basically we we are just young we only maintenance the majority of the rest of us are preserved but it's just being like Drilling and completing this year's and Latino Catholics around three million Thirty to forty five million should we have no signal in at all, which is not what I expected with the plan God you should be the same for next year but if one gas happens off rebounds significantly we in order to maintain the production that we achieve this year we expect to instead of diverse like nineteen thirty-five million dollars next year
to a hundred million dollars
The second question yes from from East about the option, which has declined substantially should wage increase back to more normal levels increase each level. What is the board normalized listing Comfort level for the company?
It's a very question. I don't think it's going to go lower than what we saw what we the lowest was dead. And she she was quite paralyzed but we still deliver and co-produced. We didn't give me much into free of course because of the winter time. We we recover but I don't see much more energy efficiencies to be gained especially because this year has been a very strange here salaries wages only increased by inflation or a little less than that. And the valuation was this year or next year. We we we could expect inflation in dollar for example
Thank you for calling from Daniel from DTG. The first question is about the the cash what version of your total cash is denomination in settles and in dollars.
Gabby would like to yes, hello in respect of our rectum. It's essentially $3 or the boulevard liquid and 1/4 each directing distance.
Thank you from Danielle is about the plan that that was mostly explained by leader.
But the additional question is asking is will this plan cover a hundred percent of the production or only 70% as initially mentioned?
the the government is going to auction 70 million Local 70 million cubic meters of natural gas per day, which will be
Both by camisa and distribution companies but the producer has its obliged to produce another the industry wage code of those who and who participate in the auction and supply and the contract of the 70 million block off tomorrow Blige to produce another thirty million in order to set in order to supply basically the industry, which is the month free market portion of the market.
so
Those who participate in the auction will be producing in total one hundred million cubic meters of natural gas per day 70% of that will be under contract with camisa and the distribution companies thirty percent. We will have to sell it to to the industry.
Thank you or next final question from Daniel is related to the to the ETA. What is the current situation? And what colors can you share with me from your conversations with the coverage?
figarden PJs
There are no conversations with the government regarding the pts. So I think that is that is the short answer to your question again, we as we have always been saying I think that the government understands how important it is to maintain the rules keep those contract with without any renegotiation wage, which is something that we share as well doing that. We have significant impact in the medium and long-term the government government understands that and try to avoid any any even any discussion with industry birth.
AP Pas obviously that is as long as the macroeconomic situation remains under control situation. If we fix micro macro conditions deteriorate significantly, so we will be in another ball game. But as long as obviously for Urgent like standards things are under control. We don't do not expect any change on the on the TV.
Thank you. Those are our next question is the question of that here. It's about are you considering today for exposure of some you know, no, not at all. We have not studying any divestiture in home.
The last question from the near East about the existing Transportation capacity. How you got on the match defective little.
Sorry, can you repeat the question? Yes.
So the question is about the the current quotations from the website it Transportation option that name under the capacity from when I was almost at full capacity on the previous winter the winter of 2019 the same equation capacity of the nuclear basic was at pool league explained during his Her speech this year because she has not been reading or connecting New Wealth production has fallen significantly and from the network innovation has fallen close to fifty million dead.
Need this is natural gas per day in the winter of 2020 vis-a-vis the winter of 2019. So that is
that is spray capacity in the pipeline from Logan to 210 side, which the government had a meeting to fulfill with this new plan gas.
I'm not that optimistic that it will be fully fulfilled in 2021, but probably the following Years. Hopefully the capacity will be fulfilled regarding the
the pipeline from
the new pipeline from the little oil pipeline the new pipeline from The Innovation to to win a Cyrus, unfortunately.
In The Current financial conditions. That is the project is a two billion project that it's Unthinkable off this moment. So first I need to focus in tackling the economic situation normalize and and put the bulb yields on The Sovereign Bonds on on reasonable levels before a project of that magnitude Is it feasible the country? So I think unfortunately we will have to wait until that happens with that already. It was already explained by Lita. Could you please indicate for drilling and production in the oil and gas for next year? What are dead?
the first question
Yeah, so it's again next year is nothing happens. It's basically what we've been doing this year.
Nothing happens is what we've been doing. This year is basically 35 million dollars of its maintenance of infrastructure facilities infrastructure off.
If not one got happens and we respect to do if we fixed so it's instead of 35 around a hundred million dollars just to maintain the production and took a little bit higher than this year.
Thank you Lita. And the second question from Alejandro? Let me check the electricity time. What are the expectations for electricity tariff would be for next year and payments from, sorry.
We expect that, you know that for the case of the dollar based. I mean the case of energy how you how long is it the spot energy? It's under what we call resolution 31 that when when it was published in February of this year. It was five lease with a month inflation adjustment which unfortunately or fortunately it didn't last not even one month. So before the the first month the month it was concurrent with the with the explosion of the credit crisis in Argentina and the lock down and
Tremendous moment for the world economy and for Argentina because even even more so it was not put in place and Home Secretary of Energy instructed dementia to to suspend the application of the monthly increase until until noon in the past. You know, we believe in the high inflation environment. Probably we will be this year in the neighborhood of $35 percent inflation. So
The industry is beginning to suffer that that adjustment in in our cost the industry off as soon begin to the industry needs to the inflation adjustment to to be put in place very soon.
So otherwise the availability of the system deteriorates and at the end that is most costly for the system then doing the proper maintenance. So we expect that next year. They will resume with inflation adjustment in some way. I cannot give you Assurance no thoughts on the magnitude or or in the dining, but I think that that is needed the industry. It's it's needing that already dead and if you should come hopefully soon.
Thank you got there. Another question from u.s. Dollar already dead body was another question from Maria about the the phone by bad and Chevy or ready answer another question from under Cardona regarding the the Terrace Club, which was also answer. There was another question about from Matthias voicemail from fire departments home more color of the EMT business, which was also under and from Alexandra there from JPMorgan about the cabinet from GM TV box and the cash disclosure in u.s. Dollar but already answered. So let's move to the question of material the the restrictive liquidity include the referral Club.
some problems
Hi Mario, the restricted group does the restricted group liquidity does not include the repurchase. Tampa bonds. Tampa bones are upset for the death. Okay. Well if you see all on financial statements and all that profile, for example, the 23 bomb are already used by the by the sheer volume that we already bought back.
Angelita our next question was from Andres Corona from Silva. And when do you expect find a resolution for Vanguard? We are you know, we're also waiting for you have something change things Mister Fernandez VP announcement and then some weeks ago.
Hi Andre, so I there has been some changes since last week. So last week they say it was three years plus one and now we got her to know that it's going to be finally four years GSA gas supply agreement compared to the last draft. They also add some kind of like commitments am happy commitment and that will be reviews from time to time by a committee composed by the different stakeholders wage and the price is 3.7. They didn't resent 3.74 Milton abasing but pretty much is it's basic and then they said about something about home access to official effects, but that's we need more clear clarification from the TV right regarding the physical credits birth.
What is that in case that?
We are not paying we can use them. We also need more clarification and and final clearance from the Argentine IRS. So basically in summary instead of three years for 24 months off shore, which is not our case, but offshore instead of 3 + 5 is 4 plus 4 price has been ratified 3.7 nominal and there's no need to do a capex commitment.
Thank you Lita or next question comes from good morning. Could you come in on how you will address short-term debt either replaced or refine a local market and follow up on this is the first yes, hello and wireless, you know, most of our faith that it's basically dominated the local market is quite liquid. So we feel pretty confident that we can either refinance even with banks. So with the local Capital markets or uh, we can also manage our liquidity depending on how we see rates and
And we may also cancel and we go so we feel quite confident about our basically our all our cash position but our short-term debt, so when our bondage wiping the medium and long-term, so that's first part of the question and I think there's something else right on the policy for a month. Even if it's just personal.
I would expect that as long as macroeconomic variables start to recover and and get a so I would expect at some point, too.
To be to be a relief in those restrictions, although I don't see in the short-term any.
Read about listing of all those restrictions. I think it would be still.
Leaving and and run our business with those with those restrictions. Maybe we would expect at some point that they will be more relieved but I think it will depend clearly on on on how the economy develops and uh,
Are you may I ask who I'm basically it's the whole environment. Yes, really curious clearly the the research but that that's what I was thinking about in micro macro stability really we need to recover reserves and we basically need is that the country needs to to start going again at some point. I think that's the the basic signal that we need in order to expect everything those those restrictions.
Thank you. Very question comes from Alejandro Aranda. Could you give us more caller on the on the evolution of the office with the government regarding the Terrace?
So that was needed they are I don't know. I cannot say that the negotiation what has been regarding electricity tariffs off consumers pay the government has been in the last few weeks through several speakers some of them from the mediator on the ministry of economy some of them or somebody like the Secretary of Energy himself mentioned that the precinct wage is about to end at the end of of the year. I think that is completely in line with the physical needs of the country the perfect life.
Understand that maintaining the the terrorist means higher fiscal deficit through to subsidize the industry or two to the consumer and that is something that especially in order to agree with with the IMF. They need to tackle. So they are not discussion with discussions with the industry, but they are aware that they need to move forward in order to talk about democracy issues of of Argentina regarding the prices of
For power generation already under the ppaca are no dogs discussion or anything about the the PPA and regarding the sport package.
It's the the verge of in some cases an old equipment of being below the break-even point so that in the medium-term means that the the equipment is not properly maintained will be not properly maintained no began to suffer in terms of availability and that is very bad for for the system. So I think that the official the Secretary of Energy and camisa are aware of that. I hope that together with the decreasing of Palm Terrace. We will have some relief power generators.
Thank you. And thank you Ruth. Please hold while we put question.
Or next Monday. What is your name?
Okay, I think that the spot prices spot prices meaning of what we what the interest.
What the producer sells to the industry? I I think they will converge today. They are much lower in line. What else is paying for for gas? But I think that the that everything will come every price of gas in Argentina will in a way convert towards the price of the option of the Black Angus that is so I think it will be in the
$3 fifty per million. Btu area. That is our expectation.
Our next question comes off. I would like to know if you are going to distribute.
Hi, honey, how are you? Not we do not have a policy of distribution of money. So we do but so far for many years. We haven't received any years, but we are fine back our share.
the president
thank you. Our next question comes from Andreas Engler company plan to take that from The Other Side Market. Yes. Hello. Yes as we pointed out before yesterday, you know where plans and wage is quite liquid both on bankside and on the local market local Capital Market site. So clearly it's our first finding alternative.
Thank you, please. Please hold while we pull from a question.
No question and answer section. I will turn to beat up or something.
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