Q1 2022 Pampa Energia SA Earnings Call

And increase local demand.

The power generation business relies on capacity payment like a H corpate.

So availability is what matters most. In Q1 we reach anof understand availability of 98%.

Without significant outage, better than the 95% achieved in 2021.

Again.

Again compass availability was way o the system.

The system availility of 34%.

Regarding our thermal expansion, the closing to CGD in cananalwa ion, So almost 80% of adbands, most of the power grid is ready and we continue getting ready boilers, high voltage facilities and transformers. More than 1000 people are working daily on this project. Nevertheless, the successful commissioning require additional time to review works carry out years ago, postponing the CD to the fourth quarter of twentyandpoint.

But the free in farm expansion is roughly 25% of eventsch. We made substantial progress in the seal works and continue working on the control system and different permits with a regulator.

We also started to install keo piping in the foundations.

The estimated TV is a split in two stages. The first 1, 50 mailwatts by February two thousand andtwent, y-three, and the remain, fer ty war mailwts by may 2020 -three.

Now no on to the ymp business, even though it was off big seasons. We posted an adjusted vda of $56 million in Q1, 20% up near year and 22% up quarterum quarter, mainly boosted by export volumes and prices, higher industrial gas demand, offset by increased costs related to the growing activity and export expenses.

Our total lifting cost increased by 32% year-on-year but it's 27% down quon quarter, explained by the increased activity to keep a high production level. To explore more and prepare for the 2022 cash winter commitment.

Efficiency wags Li and costs reach less than $6 per view, similar year-on-year and 25% down quarter-on quarter.

Our total production averageed almost five thousand borrels of oil equivalent per day. Of that, 91% is gas.

On the oil slideside, which represented 24% of the segment' revenue in the quarter. The volume sawld was 62% up year-on-year and twel percent up quarter-on quarter, being five point two thousand models perly.

The increase was mainly driven by both local and forerainy mand recovery.

Oil price was almost $70 per barrel.

Primarily due to the experts and well, a local rise.

reing regarding us are shown on Slide eight our volume salment 19 at nine point zero zero zero zero zero three million meters per day since the total thousand and 21 winter, placing the opic surplus on exports and local industries.

Our production will perform the industry average which grew.

five three 13%.

And this production of performance was led again by magusciha. That represented 69% of the quarter's production.

This block is wholly on and operated I us, with the outstanding productivity boosted by its active drilling and completion of wells and the growing of equation capacity, to be ready for this window. It was also followed by reono gains grow, which almost doubled year-on-year, in addition to sharra catalock.

Our average gas price of the quarter was $4 per million bt U. this is 27% up year-on-year and 14% up quarter-on-quarter. This is thanks to the exppera prices.

Also spot prices converge to the planting gas level.

The year-to-today sales breakdown now is fairly distributed: takeer paid contracts, experort contracts with chlet that ended that last April , step in cesa and the retail due to seasonality.

It is worth highlighting that bamba led the export market through the gas and this pipeline that connects to Chile.

Also compared to last year, Q1. We are growing our B two B industry. iare.

Regarding our operations. This quarter we drilled 12 gas wells and completed N asash wells, all of them tight and mostly at munduscial growth.

We expect drilling activities to accelerate even more during the winter to achieve more than 11 million Readers per day of production. As mentioned in previous calls, in preparation for the output surge we are expanding the gas treatment plant at benmagusution.

This month we are adding two point five million meters per day of capacity and by the four quarter of this year the tooltal capacity will reach above 13.5 million three meters per day, more than a double of last year's capacity.

Okay moving on the peum business, we posted an a bitda of $6 million.

67% lower year-on-year because of higher raw material cost. Special mergion nafa. This is offset by a significant rise in commodity prices.

Quarter quarter. The vda is down 30 free percent.

Driven by a lower volume of reforming products.

Sales volume were 10% down year-on-year, mainly due to lower reforming products dispatch. As for sunong, instead of the end products.

In Q1, 37% of the sales were exports.

Regarding cash flow.

The free cash flow was almost breakeven because of the increased CapEx and lomas expir APA. This quarter, our restricted grouw CapEx grew to $74 million compared to 31 last year.

Although we are raising our expansion CapEx in the core business, they are self financed by their outstanding operating performance.

Note that working capital is negative this quarter, mainly driven by comensed delay in payment.

In addition, we incurred debt for $33 million, mostly from the green bond.

In summary, we generated $34 million of net cash in the quarter, achieving $607 million of cash decisition by the end of March.

Additionally, we continue to invest in noncore businesses. We are transferring our spake in venezuela. Blocks ensuring a clein exit for pump pum will collect 50% of any potential compensation to this blocks.

Moving on to the Slide 11, we sl shows to consolidated figures, including our affiliates ownership, but let's focus on the restricted group that reflects the pump perimeter.

We posted a gross deset of $1.5 billion, 97% dollars denominated, bearing an average interest rate of 8%.

The average life decreased slightly to four point one years. During the quarter, we issued our first rebound in pesos, equivalent to $28 million, due in 18 months to finance our free expansion.

Our net debt very important decrease to AG. For the final dollars, the net leverage ratio remains similar at one point to times.

In the next two ammonths. The company just faces less than $2 million of maturities.

Therefore we expect to keep strengthening our balance sheet and focusing the investment on our core businesses.

So this is the end of our presentation. Now I will turn the word to mararita. We opened the floor for questions. Thank you.

Thanks you l that the floor is now open for questions. If you have a question, Please send us through a lo chat. We will read and answer them. Any you will order receipt. Also, please make sure your name and the company are correctly deplayed So that we can introduce you to the audience. Please lower your hand once your question is answer. Should any participant in assistant send us a trap message or break your hand, Please hold where we pull for questions.

The first question is regarding the new grass pipeline loationer. The question comes from annewly and fran macan of Bank of America and Bruno monani of morer family.

There are three questions. First, 1: is the expected pipeline of the new pipeline? Second, 1: is pama' perspected, given the new pipeline? And the third, 1: if there is no transportation limitation, what will be the expected production for 2020 M three and 2020 -four?

ok I prefer the question one at is time it.

And you my this regarding the timeline for the next doorker bipe.

The news is that the pipes for the construction has already been awarded and, as far as I understand, the supply of those who pipes.

Are in.

In a way that makes the.

The visability of having the pipe, of having the new pipeline ready for next winter, a possibility what has not been.

Yet publish is the biding document for the construction of the pipe.

We are expecting those documents Al Although the bbuilding process we to start any time in the next few weeks.

So assuming that that happens and assuming that, once they published the bidd documents, biders will have about 30 days to prepare their offers.

And a few more weeks to for the government reside to which construction company award the project.

If all that process happens in the next month and a half, So that by mid July the construction companies are awarded with the possibility.

Of coming the new pipeline ready by next winter.

It's a very tight schedle, for everything has to happen.

Very soon and without any major complications, but it's still possible to.

Which do we do?

Have the new pipeline ready, that we'll add.

11 million meter more of.

Production eacuation capacity of the new generacio.

For next weeinter it's only 11 because it's without any compression.

It is already known that you won't be able.

yeah.

That the compression plants won't be ready for next winter. The o plants will be ready a few months after. So for winter of 2024 this pipeline with compression will be providing.

20 to two menillion cubic meters.

Of natural gas per day additional to the creasing capacity.

Thank you, rusta of other two the second question is about the perspective of Pampa participation in this new pipeline.

Well I assume that the.

Good.

afterher.

After a while in the construction of the copy iedes of the government will.

Be MA a new round of blanas.

Meaning in process, in order to feel the.

Is this new pipeline?

So we will participate in that.

In that process and we are eager to.

To gain a portion of those 11 cubic meters of additional production from the imptinealation.

And the last question was about if there is no transportation boteneck.

What will be the potential of yampi in the case of pamper?

A.

We have a.

Huge potential to continue growing and.

Short term, meaning for next. We Inter up for the winter.

Of 2024 I would say that.

We have the possibility to.

Double our current.

Production we are currently at 11, So we.

Beginning two weeks ago we finished some.

earily production facilities that grew the.

Available capability in elmanangroio.

Thanks to that now we are producing close to 11 million tub meters of natural gas produ ase.

Could we double that production level in two years? Yes, that's.

It took the feasible for pumpa maybe.

Maybe a growth of 40- 50% for next winter and another.

In the following year but whether.

We go to those levels, So not will depend on how successful we are.

A.

In the bidding process of the next round of the planlangas and how much volume we are aaled there.

So we have a capability to continue growing the same pace and have been growing recently.

The.

aybut, I said we. Whether we go there or not, it will depend on.

You are successful in the auxgen.

Thank you. Thank you. Our next question comes from than ni, from moreren sally and marine Americans, from partners they are. They would like to know about the expectations for gas exports in the come quarters and if there is additional gas export permits in place right now.

Firm gas exports ended at the end of April . So we had seen exports from October of last year until the end of April starting.

May may first, there are no longer any firm exports awarded to anybody in in the industry.

From October two.

To April : us a leader.

Has just explained. We have been very.

And very important, participating in the export market. We have been exploed about three million cubic meters of natural deper day, So are roughly 30% of our total production.

We hope and we would like to continue with same level of export, starting again in October of this year.

And so during the, the summer months, that goes from octoria until next April . But whether we are successful on that or not, we don't know.

During the winter a.

Theoretically there should be no export or.

soorry, let me refreezeen that the winter.

There are no free firm exports but.

A.

But they are a.

But there are spot exports. That will depend on two things.

At his company.

This first two weeks of may we have very mild weather, So Argentina is currently exporting gas to Chile.

At a price, that is, it has to be because of the regulations- north of $7 thirty, $7 thirty-five.

And we are currently exporting close to one million cub meters of that uralgas per day.

A.

As the weather gets colder.

There will be more consumption in Argentina soldals.

expos spor exforce to Chile.

Should be a student.

But.

We believe that this.

This winter.

The production capacity. The production of the kina Basin will be slightly above the evacquation capacity out of the nkina Basin, So there will be small quantities of gas that will not be able to.

The consumed in Argentina So if that happens and for those producers that have.

And.

Capability to produce in excess of their commitments with the plananggas and with the local sales to the industry.

So there could be marginal spot exports to Chile during the winter.

So that's the situation regarding the export, the export market.

Thank you, MA. Our next question is the same from brunno monani. He would like to know also about the oil export potentials for Pampa.

Regarding all don't expect any major change in terms of quantities produced about the same that you have seen in this first quarter. There has been a significant increase from previous year but we are not expecting any significant growth going forward and the share of our exports that came roughly about 30 cent. venty 5% and.

And.

There could be a slight increase in that percentage of oil exports, but no, we wouldn't spepect an inma change to what you have seen in the first quarter.

Thank you with. Our next question comes from frren agan from bankk of America and Marin Americans from IRA partners. They would like to know if we have further PPAs potentials of comas in the renewable market besides teraphistry expansion.

And.

We are all the time monitoring the market because we would like, we would like to continue.

Growing our share of renewal energy.

That we produce.

So after the aby meas.

And.

We don't have anything on the pipeline So.

But you know we are building this 80 Mayor att expansion in peappe three that will be that will come online. The first 50 mayor- what's in earen next year, probably February of next year, and the other 30 Mayor may what- by may.

About early second quarter of next year.

We don't have anything on the pipeline but we are all the time monitoring this market which is.

Extremely competitive we have very aggressive colleagues in this market and we are.

prorie a little bit more picky on.

The IRR of the projects that we want to.

And.

We want to go after.

So.

Monitoring all the time that that segment, but we don't have anything confirmed besides the adairwhat that we are currently working on.

Thank you. So our nextth question comes from several people. They are Marin Americans from IRA partners, larenceum M asred from medline and a hundred the muturies from non Securities, palicandan vallees around depy, Morgan and vtor P saya from stx, and the questionions is about the 2023 bon.

What phone phone.

Okay So, as you I know, there is a regulation in place and bill December 2000 andventy two that allows combinies to pay 40% of capabbitital maturities and we refin out the other 60%.

So since our 2023 bond is not reached by the current regulation, we will need an agreement with the central bton in order to execute that ill.

We are actively analyzing alternatives regarding our 2023 maturity and it should makequ a reasonable to expect a liability management sooner than later, but that will depend on as getting the approval of the centalg. So the main objective of this will need to have an even more stronger the profile, an acan path to continue investing in our core business and in the gas segment during the next few months.

I'm near.

With can ele. Our next question comes from from marapine and an marartina and F.

And he will lighten out. What are your plans- drilling plan for a remainder of 2022- in terms of new wells, what are you thinking about acceleration or new areas? Are you going to need more facilities in the near future or are you already okay with existing infrastructure? And the thirteen point by mant: two mters per day of treatment upgrade.

We regarding facilities, we are currently, would have been working for the past year and half, I think, already on a big expansion in unruscial: a new gas treatment plan for almost five million meters of natural gas per day.

That plant will be ready by the end of this.

By the end of this winter.

So that will elevate the production capacity out of elmanrusa from current.

eight point five million to about 13.5 that's just in anggouscia and I will hold the rest of the.

The area where we.

Operate produce. We have roughly about.

16 17 million of production capacity without building new facilities or not without building new gas plplan. Obviously, with you, we will have to build.

And.

So have to be somea.

surfac infrastructure, but not big.

Gas etreatment plant.

And in.

And regarding dreaming.

We have just finished the campaign.

So we are finishing the campaign that elevated our production capacity from.

The level of nine point zero zero zero zero zero two million meters per day that.

Been what we have been producing throughout all the summer, in the third quarter of last year, in the first quarter of this year and now we are producing 11, two meters of neturalwork. afterterperday and we will stay.

At those levels until early next year.

But we will begin a new campaign in order to be ready for.

In order to, as you know, keep production at these levels that in miss industry you need to.

Drill all the time in order to maintain your production.

And we will be ready to grow production. We want to be ready to grow production in case we are award in the next.

In an next options.

So we will need doing a drilling campaign in siarra othera.

yeah.

That area where that we share with.

With exo noil.

That we operate and we also be drilling. We will have a drilling dambank.

In an unus in order to have Duke's available for next window.

So one of the questions roughly saying what is left for the lab for the reinmain of the year is 25 wells to we drill and completed.

Thank you both leads. The next question comes from Marin American, from IRA partners: by how much power generation bita drop, following in sva and mppp maturity, and how much be offset by the commissioning of the 280 mewatt.

But so full year before the tp expire was a hundred hundred and 60. mail is hundred hundred and 60 million dollars per year. Now that.

The PP. The old PP expire and the new ppph rumping up.

By D.

Third quarter- four quarter of this year.

Per forma a year. ful it's around $13 million. So you medviate the both at the combined cycle.

Thank you, lid. Please wait a wait. Why will we call for more questions?

Our next question comes from lilliana ANG of hc high. What prices would you need to see in coming plant tas auctions? So, after support production volume growth, could you remind us of clical prices you think you can get going forward?

donmatics for prices and that.

poential prity of pling or not.

In.

For this 11 million of the government has yet to decide how many of those 11 millions.

They will like them on a flood basis, So throughout the year or just for the winter period. So a portion of those 11 million will be.

The government will want them on a flood basis and a portion will want them.

Just for the winter. So for the, for the flat portion, I expect.

Something similar to planungas, to the first planungas.

I I suspect.

yeah.

That the government will put a sealingin price.

Similar.

To to the previous, when the previous one was $3 seventey.

For this.

The fact is that despite the fact that this.

Even if for that portion that is, auption on a flat basis throughout the year, the fact is that the industry needs to take into account yourammtization of all the new facilities.

That are needed to be built in order to supply the gas.

plodic plasicalans, treatment pipelines, etceterally and Etcetera. So probably.

The.

The pricing will be north of.

And obviously there are 70. that was.

Issue for the first round of the bloodgasregarding: the winter- winter price.

it'sdifficult to say, but it's going to be high obviously high, higher. The lad.

yeah.

And it's difficult to say, but because it will depend whether it is matched with firm exports to the neighbor countries, that will reduce.

The price of make it more similar to the the.

To the flat portion of the.

A clesefl portion.

What else and?

okaynow, regardregarding us exports to Chile during this winter, as I said, there is a resolution from the Secretary of ownenership that the floor price for those four six $7 35, but again, export of gas to Chile during the winter is going to be very, very marginal for us and for the industry as a whole.

And starting in October we expect a similar price as the term exports that we had this year around north of $5.

For the summer.

Thank you rules. Thank you for the questions. This conclude the qa section, So we will turn to llead a for final remarks.

I know whoose would you like to say something more that nobody asked Nickel now. Well, this ends our presentation. For Q1 thing that you have any question, that it comes to your mind after the call just which I LT, we are always available for you. Thank you for joining us and have a good day.