Q2 2026 Transportadora de Gas del Sur SA Earnings Call

August 4, 2026

Speaker #1: You have joined the meeting as an attendee and will be muted throughout the meeting.

Carlos Almagro: Everyone, I'm Carlos Almagro, Head of Investor Relations. I would like to welcome everyone to TGS Q2 2026 earnings video conference. TGS issued its earnings release yesterday. If you didn't receive a copy of the release, please contact us at inversores@tgs.com.ar. Before we begin the call, I would like to inform you that this event is being recorded and all participants are in listen-only mode. Following the company remarks, we will host a Q&A session. All questions will need to be submitted in writing through the Q&A chat box. I would also like to remind you that forward-looking statements made during today's video conference do not account for future economic circumstances, industry conditions, or company performance and financial results. These statements are subject to a number of risks and uncertainties.

Speaker #3: Everyone. I'm Carlos Almagro, head of investor relations. I would like to welcome everyone to TCS Q2 2026 earnings video conference, TCS issued its earnings release yesterday.

Speaker #3: If you didn't receive a copy of the release, please contact us at investores@tcscom.ar. Before we begin the call, I would like to inform you that this event is being recorded and all participants are in listen only mode.

Speaker #3: Following the company remarks, we will host a Q&A session; all questions will need to be submitted in writing through the Q&A chat box. I would also like to remind you that forward-looking statements made during today's video conference do not account for future economic circumstances, industry conditions, or company performance.

Speaker #3: And financial results. This statements are subject to a number of risks and uncertainties. All figures, included herein, we are prepared in accordance with international accounting reporting standards.

Carlos Almagro: All figures included herein were prepared in accordance with International Accounting Reporting Standards, IFRS, and are stated in constant ARS as of 30 June 2026, unless otherwise noted. Joining us today from TGS in Buenos Aires is Alejandro Basso, Chief Financial Officer. I will now turn the video conference over to Mr. Basso. Alejandro, please begin.

Speaker #3: IFRS, and are stated in constant Argentine pesos as of June the 30th, 2026, unless otherwise noted. Joining us today from TCS in Buenos Aires is Alejandro Baso, Chief Financial Officer.

Speaker #3: I will now turn the video conference over to Mr. Baso. Alejandro, please begin.

Speaker #4: Thank you, Carlos. Good morning, everyone, and thank you for joining us today to discuss TCS's 2026 Q2 earnings and highlights. To begin the call today, I'd like to share some of the most recent corporate developments.

Alejandro Basso: Thank you, Carlos. Good morning, everyone, and thank you for joining us today to discuss TGS's Q2 2026 earnings and highlights. To begin the call today, I'd like to share some of the most recent corporate developments. First of all, the most relevant news is the FID for the NGL project, announced a few weeks ago, with key commercial agreements representing more than 90% of the project's total capacity already executed as of today. This is a $3 billion CapEx project, and the construction is expected to take about 45-month period, with the COD expected in March 2030. In addition, we have also requested that this project be approved under the regime. The project consists of a new gathering pipeline in Vaca Muerta, a processing plant to be built in Tratayén, and a 475-kilometer corridor, a fractionating plant in Cerri, and storage facilities in Puerto Galván.

Speaker #4: First of all, the most relevant news is the FID for the NGL project, announced a few weeks ago. With key commercial agreements representing more than 90% of the project's total capacity already executed as of today.

Speaker #4: This is a 3 billion dollar capex project, and the construction is expected to take about 45 month period, with the COD expected in March 2030.

Speaker #4: In addition, we have also requested that this project be approved under "Project Consists of a New Gathering Pipeline" to be built in Trata Gem, and a 475-kilometer polyglot, a fractioning plant in Surrey, and storage facilities in Porto Galván.

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

Speaker #4: In terms of the natural gas transportation expansion, which is currently under construction and following the open season launch last February, and after the allocation of 5 million cubic meters per day under a fully prepaid basis in a first round, last June we received bids for over 100 million cubic meters per day, capacity, in order to allocate the remainder capacity of 9 million cubic meters per day.

Speaker #4: We submitted our capacity allocation to our regulators some weeks ago, and are waiting for its approval. It is important to highlight the last May, the Perito Moreno pipeline expansion was approved by the Ministry of Economy to be included in the REI, which will result in tax benefits for the project.

Speaker #4: Finally, in June, S&P upgraded the long-term local and foreign currency debt ratings from B- to B, following the revision of Argentina's transfer and convertibility risk assessment.

Alejandro Basso: Similarly, in July, Moody's upgraded the rating of our notes from B2 to B1 as a consequence of Argentina's sovereign rating upgrade. Moving to slide four, I will briefly highlight the key financial results for Q2 2026. Please keep in mind that all figures presented for this quarter and comparisons made with the previous quarter are expressed in constant Argentine pesos as of 30 June 2026, following the provisions established by IFRS for the financial reporting in hyperinflationary economies. As seen in the slide, we reported a total net income of ARS 133 billion during Q2 2026, compared to ARS 53.8 billion reported in the same quarter of 2025.

Speaker #4: Similarly, in July, Moody's upgraded the rating of our notes from B2 to B1 as a consequence of the Argentina's sovereign rating upgrade. Moving to slide 4, I will briefly highlight the key financial results for the Q2 of 2026.

Speaker #4: Please keep in mind that all figures presented for this quarter and comparisons made with the previous quarter are expressed in constant Argentine pesos as of June 30th, 2026, following the provisions established by the FRS for the financial reporting in hyperinflationary economies.

Speaker #4: As seen in the slide, we reported a total net income of 133 billion during the Q2 of 2026, compared to 53.8 billion reported in the same quarter of 2025.

Alejandro Basso: This relevant net income increase is mainly explained by the ARS +60.2 billion variation in our financial results, as well as the important liquids EBITDA growth of ARS 48.4 billion, and to a lesser extent, the ARS 12.3 billion increase related to the natural gas transportation EBITDA. Moving on to slide five, EBITDA for natural gas transportation business in Q2 2026 totaled ARS 132 billion, which is above the almost ARS 120 billion recorded in Q2 2025. It is worth noting that tariff increases generating higher revenues by ARS 50.2 billion, which was more than the ARS -48.6 billion effect of inflation. In addition, two negative events in Q2 2025 also explain partially the higher EBITDA in Q2 2026 of ARS 19.2 billion.

Speaker #4: This relevant net income increase is mainly explained by the 60.2 billion positive variation in our financial results, as well as the important liquid SEBITDA growth of 48.4 billion and to a lesser extent the 12.3 billion increase related to the natural gas transportation EBITDA.

Speaker #4: Moving on to slide 5, EBITDA for natural gas transportation business in Q2 of 2026. Total 132 billion, which is above the almost 120 billion recorded in the Q2 2025.

Speaker #4: It is worth noting that tariff increases generating higher revenues by 50.2 billion, which was more than the 48.6 billion negative effect of inflation. In addition to negative events in the Q2 of 2025, also explained partially the higher EBITDA in the Q2 of 2026 of 19.2 billion.

Speaker #4: The first event was related to a trade receivable write-off of $11.2 billion, and the second one was the climate event that occurred in March 2025, which damaged some natural gas transportation assets and generated a positive EBITDA valuation of $8 billion.

Alejandro Basso: The first event was related to a trade receivable write-off of ARS 11.2 billion, and the second one was the climate event occurred in March 2025, which damaged some natural gas transportation assets and generated a positive revaluation of ARS 8 billion. Finally, the revenues generated by firm transportation contracts decreased by ARS 9.3 billion following the natural gas transportation system reconfiguration, which became effective starting as of 26 May 2026, whose initial negative effect will be partially offset by future small monthly tariff adjustments. On slide six, you can see how EBITDA for the liquids segment increased to ARS 82.3 billion during Q2 2026, compared to the low ARS 33.9 billion reported in the same quarter of 2025.

Speaker #4: Finally, the revenues generated by field transportation contracts decreased by 9.3 billion, following the natural gas transportation system reconfiguration. Which became effective starting as of May 2026.

Speaker #4: Whose initial negative effect will be partially observed by future small monthly tariff adjustments. On slide 6, you can see how EBITDA for the liquid segment increased to $82.3 billion during Q2 2026, compared to the low $33.9 billion reported in the same quarter of 2025.

Alejandro Basso: The increase in EBITDA was mainly attributed to higher volume sales, which rose from 211,000 metric tons to 330,000 metric tons and was mainly explained by the low volume sales in the Q2 2025 due to the processing plant shutdown caused by the flooding suffered on 7 March 2025. The plant started to operate by mid-April with low level of production and increased its production to reach normal levels in the beginning of May. The higher volume sales generated a higher EBITDA of ARS 46.7 billion. Moreover, high international reference prices as a consequence of the geopolitical conflict in the Middle East raised EBITDA by ARS 23.2 billion. These positive effects were partially offset by the ISAIN take-or-pay annual compensation collected in the Q2 2025 of ARS 8.5 billion, together with the negative monetary effect of ARS 7.4 billion.

Speaker #4: The increase in EBITDA was mainly attributed to higher volume sales, which rose from 211,000 metric tons to 330,000 metric tons, and was mainly explained by the low volume sales in the 2025 quarter, due to the processing plant shutdown caused by the flooding suffered on March the 7th, 2025.

Speaker #4: The plant started to operate by mid-April, with a low level of production, and increased production to reach normal levels at the beginning of May. The higher volume sales generated a higher EBITDA of $46.7 billion.

Speaker #4: Moreover, higher international reference prices as a consequence of the geopolitical conflict in the Middle East raised EBITDA by 23.2 billion. This positive effects were partially observed by the e-same take or pay annual compensation collected in the Q2 of 2025 of 8.5 billion.

Speaker #4: Together with the negative monetary effect of 7.4 billion, the lower extent e-same price, which generated lower revenues of 5.8 billion and a higher average natural gas price, which increased to 3.4 dollars per million of BTU from 3.3, and generated higher costs by 2.5 billion.

Alejandro Basso: The lower ISAIN price, which generated lower revenues of ARS 5.8 billion and a higher average natural gas price, which increased to USD 3.4 per million BTU from USD 3.3 and generated higher costs by ARS 2.5 billion. Turning to slide seven, EBITDA from midstream and other services decreased slightly to ARS 64.1 billion compared to ARS 69.3 billion in the Q2 2025. Revenues generated by midstream services rendered in Vaca Muerta increased by ARS 13.2 billion. Transported natural gas billed volume rose from an average of 30 million cubic meters per day in the Q2 2025 to 35 million cubic meters per day during this quarter. The natural gas conditioning volume also increased from an average of 27 to 30 million cubic meters per day.

Speaker #4: Turning to slide 7, EBITDA from midstream and other services decreased slightly to 64.1 billion, compared to 69.3 billion in the Q2 of 2025. Revenues generated by midstream services rendered in Vaca Muerta increased by 13.2 billion.

Speaker #4: Transported natural gas billed volume rose from an average of 30 million cubic meters per day in Q2 2025 to 35 million cubic meters per day during this quarter.

Speaker #4: The natural from an average of 27 to 30 million cubic meters per day. However, this higher revenue was more than observed by the negative monetary effect of 10.5 billion, as inflation was higher than the foreign exchange rate increase, along with higher operating expenses of 5.6 billion.

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

Speaker #4: As seen on slide 8, we recorded a positive valuation in the financial results amounting to $60.2 billion. This was mainly due to a $130.1 billion increase in income from financial assets, given the higher yields recorded for the domestic financial investment and, to a lesser extent, to a higher level of financial investments.

Speaker #4: This positive effect was partially observed by a 46.7 billion higher foreign exchange loss, 15.2 billion in higher interest expenses was of which are mainly attributed to the 500 million dollars bond issued in November of 2025, as well as the 7.6 billion higher inflation exposure loss.

Alejandro Basso: Turning to the cash flow on slide nine, our cash position increased by ARS 274 billion in real terms during the Q2 2026 to ARS 2,206 billion, equivalent to approximately $1.5 billion at the official exchange rate. The EBITDA generation in the Q2 was ARS 278.4 billion, of which 53% was generated by non-regulated businesses, even after considering the full normalization of the natural gas transportation segment. These results highlight the increased relevance of the non-regulated activities within the company's overall business. CapEx amounted to ARS 165 billion, largely driven by investments in the pipeline expansion project. Working capital decreased by ARS 186 billion, primarily due to the collection of the first prepayment installment of approximately ARS 140 billion from customers that contracted 5 million cubic meters per day of incremental firm transportation capacity.

Speaker #4: Finally, turning to the cash flow on slide 9, our cash position increased by 274 billion in real terms during the Q2 of 2026, to 2,206 billion equivalent to approximately 1.5 billion dollars at the official exchange rate.

Speaker #4: EBITDA generation in the Q2 was 278.4 billion, of which 53% was generated by non-regulated businesses, even after considering the full normalization of the natural gas transportation segment.

Speaker #4: This result highlights the increased relevance of the non-regulated activities within the company's overall business. CAPEX amounted to 165 billion, lagging behind by investments in the pipeline expansion project.

Speaker #4: Working capital decreased by 186 billion, primarily due to the collection of the first prepayment installment of approximately 140 billion from customers, that contracted 5 million cubic meters per day of incremental foreign transportation capacity.

Speaker #4: We also paid 31.3 billion in income taxes and 30.8 billion in interest. And we incurred a new debt amounting to 20.8 billion. This concludes our presentation.

Alejandro Basso: We also paid ARS 31.3 billion in income taxes and ARS 30.8 billion in interest. We incurred new debt amounting to ARS 20.8 billion. This concludes our presentation. I will now turn it over to Carlos, who will open the floor for questions. Thank you.

Speaker #4: I will now turn it over to Carlos, who will open the floor for questions. Thank you.

Carlos Almagro: Thank you, Ale. The floor is now open for questions. If you have questions, please send them through our Zoom chat. We will read and answer the questions in the order in which they are received. Please make sure to state your name and company so we can introduce you to the audience. Should any participant need assistance, please send us a message in the chat box. Please hold while we poll for questions. Thank you. Well, the first question is from Bruno Montanari from Morgan Stanley. Hello. How are you, Bruno? The first question is regarding the GPNK expansion. How much CapEx is still left to secure in the coming quarters?

Speaker #1: Thank you, Ali. The floor is now open for questions. If you have questions, please send them through our Zoom chat. We will read and answer the received.

Speaker #1: Please make sure to state your name and company so we can introduce you to the audience. Should any participant need assistance, please send us a message in the chat box.

Speaker #1: Please call while we poll for questions. Thank you. Well, the first question is from Bruno Montanari from Morgan Stanley. Hello, how are you, Bruno?

Speaker #1: The first question is regarding the GPN expansion. How much Capex is still left to execute in the coming quarters?

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

Speaker #4: Hi, Bruno. Well, as of June 30, 2026, we have already invested around $180 million, so we have $600 million left for the remainder of the quarters.

Speaker #4: Until May the 1st, so until May next year.

Carlos Almagro: The second question is regarding the new liquidity project. How should we think about the CapEx distributions over the years?

Speaker #1: The second question is regarding the new liquidity project. How should we think about the CAPEX distributions over the years?

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

Speaker #4: Well, we have for this year around 500 million dollars, 800 million dollars for 2027, 1 billion in 2028, and 600 million in 2029. Approximately.

Carlos Almagro: Yes. The remainder.

Speaker #1: Yes.

Speaker #4: And the remainder in the first quarter of 2023.

Alejandro Basso: The remainder in the first quarter of 20.

Carlos Almagro: 2030.

Alejandro Basso: Yeah.

Carlos Almagro: His third question is regarding the financing of the project. If you have already secured all the funding requirements?

Speaker #1: The third question is regarding the financing of the project. Has TGS already secured all the funding requirements?

Speaker #4: We have signed agreements with banks for the import financing, from around approximately 300 million dollars. For the first year, and we are working with a group of banks for the financing of the remainder of the MGS is the second BPU with the total investment of 2 billion dollars.

Alejandro Basso: We have signed agreements with banks for the import financing for approximately $300 million. For the first year, we are working with a group of banks for the financing of the remainder of the MGS finance. MGS is the second VPU, with a total investment of $2 billion. We are working with this group of banks to finance 60% of the total investment of this $2 billion. The tenure of the import facilities, finance facilities is three years. The cost is approximately 8.5% all in.

Speaker #4: And we are working with this group of banks to finance 60% of the total investment of these 2 billion dollars. The tenure of the import facilities finance facilities is 3 years.

Speaker #4: The scope is approximately an 8.5% holding.

Speaker #1: Now we have a question from Matthew Stoss. Hi, Matthew. His question is regarding the transportation segment revenues. For EBITDA, why was the EBITDA of this quarter weaker in dollar terms compared to Q1?

Carlos Almagro: Now we have a question from Matthew Stone. Hi, Matthew. His question is regarding the transportation segment, the revenues or EBITDA, how the EBITDA this Q2, why it was weaker in dollar terms compared to the Q1, even as we have a real gain in tariffs.

Speaker #1: Even we have a real gain in tariffs.

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

Speaker #4: Hi, Matthew. As you may know, we have a reconfiguration regulation, a new regulation of the capacity in the whole transportation system in Argentina. As the natural gas currently is coming from the West, from Vaca Muerta, from Neuquén, replacing the gas that used to come from the North, from the Bolivian basin, and from the Northern basin, and also from the South.

Speaker #4: So some contracts were transferred from one system to the other, so TGS has an impact there, because of the important position that we have in the South on contracts, the transportation contracts coming from Tierra del Fuego.

Speaker #4: So you are going to see this loss of volumes or lower volumes in the future. Also, this reconfiguration has made more efficient the system, so lower IT services, interruptible services are rendered by TGS and TGN.

Alejandro Basso: At the same time, we have a compensation tariff. The compensation tariff is calculated in the future. You may see a small compensation for this weakness in the transportation revenues. It's not significant.

Speaker #4: At the same time, we have a compensation tariff, but the compensation tariff is calculated in the future, so you may see a small compensation for this weakness in the transportation revenues, but it's not significant.

Carlos Almagro: The second question is regarding the liquids business. Which are the drivers of higher costs versus Q1 that explain why margin and EBITDA were weaker despite good energy prices?

Speaker #1: The second question is regarding the liquid business. Which are the drivers of higher cost versus the first Q? Just explain why margin and EBITDA were weaker despite good energy prices.

Alejandro Basso: Well, that has to do with the cost of natural gas. In the winter season, that starts in May every year, you may see higher natural gas prices than obviously in the summer season, Q1. At the same time, cost of gas is higher than the previous year, especially in the spot market. That's compared with the same quarter of last year, 2025.

Speaker #4: Well, that has to do with the cost of natural gas. In the winter season, which starts in May every year, you may see higher natural gas prices than, obviously, in the summer season—the first Q.

Speaker #4: At the same time, the cost of gas is higher than the previous year in the especially in the spot market. That's compared with the same quarter of last year.

Speaker #4: 2025.

Speaker #1: Now we have a question from Shore Gas Stores from Latin Securities. A question that was answered in the first.

Carlos Almagro: Now we have a question from Charles Raftopol from Latin Securities, but a question that was answered in the first-

Alejandro Basso: In the previous one

Speaker #4: In the previous one.

Speaker #1: In the previous one? Regarding the transportation revenues compared with the first Q 2026. His second question is also, well, it was explained regarding the financing of the shared project.

Carlos Almagro: in the previous one regarding the transportation revenues compared with the Q1 2026. His second question is also one that was explained regarding the financing of the initial project, but Alejandro explained specifically. Well, now we have a question from Juan Ignacio Lopez. Hi, Juan. His first question is regarding the CapEx deployment for the H2 2026, regarding the GPM, the Perito Moreno pipeline, and the NGL project.

Speaker #1: Alejandro explains specifically. Then we have—well, now we have a question from Juan Ignacio Lopez. Hi, Juan. His first question is regarding the CAPEX deployment for the second half of 2026.

Speaker #1: Regarding the GPM, the perito marino pipeline, and the initial project.

Alejandro Basso: Okay. Regarding the Perito Moreno expansion, we are estimating for the remainder of this year, around $400 million. A similar amount, or a bit higher than that, for the NGL project for this year.

Speaker #4: Okay. Regarding the perito marino expansion, we are estimating for the remainder of this year around 400 million dollars. And a similar amount of higher than that, a bit higher than that for the initial project, for this year.

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

Speaker #1: His second question is regarding the strong cash flow print supported by a positive working capital. His question is about the reason for this strong cash flow.

Alejandro Basso: Okay. Juan Ignacio, as I said in the call, we $5 million out of 14 cubic meters per day or out of 12 cubic meters per day from the Perito Moreno expansion or for the transportation, that's for this year, transportation 15 expansion, were collected as prepaid. They were prepaid by the clients. It's an option that we have, and the clients also have in the open season. 40% of the total capacity may be offered and sold by TGS under prepaying scheme. They prepay the capacity for the 15-year contract, that's $100 million, almost, that we collected in the Q2, which is the important favorable impact in our working capital.

Speaker #4: Okay. Juan Ignacio, as I said in the call, we have 5 million out of 14 million cubic meters per day, or out of 12 million cubic meters per day, from the Perito Moreno expansion for the TGS transportation system expansion.

Speaker #4: They're collected as prepaid. They were prepaid by the clients. It's an option that we have, and the clients also have, in the open season.

Speaker #4: Forty percent of the total capacity may be offered and sold at the TGS under the prepaid scheme. So they prepay the capacity for the 15-year contracts, and so that's $100 million—almost—that we collected in the second quarter, which is the important federal impact in our working capital.

Speaker #1: Now we have a question from Andrés Sinigliaro from Balance. Well, the same question that was answered before, regarding deployment of the 3 billion dollars.

Carlos Almagro: We have a question from Andres Cimighero from Balanz. Well, the same question that was answered before regarding the deployment of the $3 billion, in which year. Another question is from George Castro, regarding the Pampa project, the urea project, which will require an additional 3.5 million cubic meters per day of transportation capacity out of Vaca Muerta. If we expect to exercise the Perito Moreno 6 million cubic meters per day additional expansion option to meet this demand.

Carlos Almagro: We have a question from Andrés Cirnigliaro from Balanz. Well, the same question that was answered before regarding the deployment of the $3 billion, in which year. Another question is from George Castro, regarding the Pampa project, the urea project, which will require an additional 3.5 million cubic meters per day of transportation capacity out of Vaca Muerta. If we expect to exercise the Perito Moreno 6 million cubic meters per day additional expansion option to meet this demand.

Speaker #1: In which years? Now, another question is from Shore Gas Store. Regarding the pump project, the Urea project, which will require an additional 3.5 million cubic meters per day of transportation capacity of Agua Muerta.

Speaker #1: If we expect to exercise the Perito Moreno 6 million cubic meters per day additional expansion option to meet this demand.

Alejandro Basso: Yes, George, we are analyzing that business opportunity to further expand the Perito Moreno up to 6 million cubic meters per day. It may be less than that, but it could happen.

Speaker #4: Yes, George. We are analyzing the business opportunity to further expand the Perito Moreno up to 6 million cubic meters per day. It may be less than that, but it could happen.

Speaker #1: Now we have a question from Melina Einar from PPI. The question is regarding the $3 billion CAPEX. At what level do we expect the net debt to EBITDA ratio to peak during the investment phase?

Carlos Almagro: We have a question from Melina Einar from PPI. The question is regarding the $3 billion CapEx. At what level do we expect the net debt to EBITDA ratio to peak during the investment phase? In which moment we think this will occur?

Speaker #1: In which moment we think this will occur? Well, overlooking.

Alejandro Basso: Well, overlooking. Obviously, Melina, we expect to increase our net debt to EBITDA ratio, maybe in the year 2029 or 2028.

Speaker #4: Okay. We obviously Melina, we expect to increase our net debt to EBITDA ratio maybe in the year 2029 or 2028. We could be around three times.

Carlos Almagro: Below 3x.

Alejandro Basso: We could be around 3x.

Carlos Almagro: Below 3x.

Alejandro Basso: Below 3x. Obviously, below the maximum ratio we have under our-.

Speaker #4: Or below three times. Obviously, much below the maximum ratio that we have under our bond contracts.

Alejandro Basso: Below 3x. Obviously, below the maximum ratio we have under our-.

Carlos Almagro: 3.5

Alejandro Basso: bond contracts. Okay.

Carlos Almagro: That is 3.5.

Speaker #1: That is 3.5.

Alejandro Basso: 3.5.

Speaker #4: 3.5.

Carlos Almagro: We have a question from Alvaro Leiva from BTG Pactual. Hi, Alvaro. Well, your question was answered regarding the financing of the NGL project.

Speaker #1: Now we have a question from Álvaro Leiva from BTC Actual. Hi Álvaro. Well, your question was answered regarding the financing of the initial project.

Carlos Almagro: We have a question from Alvaro Leiva from BTG Pactual. Hi, Alvaro. Well, your question was answered regarding the financing of the NGL project.

Alejandro Basso: The leverage also.

Speaker #4: And the leverage also.

Carlos Almagro: Yeah, also the leverage. Yes. A question from Santiago Herrera from Allaria regarding NGL project. What is the new maintenance CapEx once the project is finished? I think that is around, the total project, $10 million per year. In addition to what we currently have. That is $90 million, plus another $10 that was the added-

Speaker #1: And also the leverage, yes. A question from Santiago Herrera from Alaria. Regarding the initial project, what is the new maintenance CAPEX once the project is finished?

Speaker #1: I think that is around, for the total project, $10 million per year in addition to what we currently have. That is $90 million plus another $10 million that could be added.

Alejandro Basso: In the project?

Speaker #4: In this project.

Carlos Almagro: Yes. Now we have a question from Ramiro Guerrero. Hi, Ramiro from Bull Market. His question regarding the late entry project, what portion of the $3 billion investment do we expect to finance through project finance at the PV level, and what portion will require contribution from TGS?

Speaker #1: Yes. Now we have a question from Ramiro Guerrero. Hi, Ramiro. From Bull Market. His question regarding the integrated initial project. What portion of the 3 billion dollar investment do we expect to finance through project finance at the SPV level?

Speaker #1: And what portion will require contribution from TGS?

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

Speaker #4: Hi, Ramiro. I would say that half of the total investment, because we are going to finance with 60% of leverage the second BPU, which is a 2 billion dollar investment.

Speaker #4: And at least 300 million dollars of finance of import finance in the first BPU, which is a 1 billion dollar. So a total of 1.5 out of 3 billion.

Speaker #4: That's our expectation. We are working on that.

Carlos Almagro: We have another question from Ignacio Valdez. Another one regarding the entry project, if we consider adding a partner to participate in the project.

Speaker #1: We have another question from Ignacio Gálvez. Regarding another one regarding the initial project, if we consider adding a partner to participate in the project.

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

Speaker #4: Hi, Ignacio. Well, we may consider adding a partner. It will depend on new opportunities, business opportunities, and the context of this.

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

Speaker #1: Now we have a question from Agustín Pacheco from Grupo Mariva. Hi, Agustín. Well, his first question was answered regarding the first year of how much we expect to invest.

Speaker #1: And his second question is re-approval of pre-requisites for starting construction and committing the main expenditures or could some early-stage investment begin before approval?

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

Speaker #4: Hi, Agustín. In fact, we have already started investing in the project. So the re-approval is not a pre-requisite. Nevertheless, we are quite confident that the re is going to be approved soon.

Speaker #4: We already filed the re in June the 5th. So we are expecting to have the approval in a few months, I would say. That's all.

Carlos Almagro: Another question from Federico Favelli that were answered previously. Another question from Alan Feldman from Criteria. Alan, your question was answered regarding the working capital big variation. As Alejandro explained, that we would expect for the following quarter to receive another ARS 300 million, ARS 200 in 2026 and ARS 100 more in Q4 2027 or before in April 2026. Another question from Alan Feldman regarding the working capital. What underlying free cash flow would use as a run rate, and how should the market think about the sustainable conversion of EBITDA into cash considering this dependent?

Speaker #1: Another question from Federico Favelli that we have answered previously. Another question from Alan Feldman from Criteria—hi, Alan. Your question was answered regarding the working capital devaluation.

Speaker #1: Alejandro explained that we expect to receive another $300 million in the following quarter. $200 million will remain in 2026, and $100 million more is expected in the first quarter of 2027.

Speaker #1: Or before in April. Or 2027. Another question from Alan Feldman is regarding the working capital. What underlying free cash flow would use as a run rate and how should the market think about the sustainable conversion of EBITDA into cash?

Speaker #1: Considering this dependent.

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

Speaker #4: Okay. Hi, Alan. As we already or as we are being prepared 40% of the new volumes of the expansion volumes of the GPM expansion and the transportation TGS transportation system expansion, so we are not going to have those revenues after those 40% of the revenues collected after the project COD.

Speaker #4: Next May. So approximately I would say 40 million dollars of EBITDA of the revenues per year are not going to be collected because we have already for that time we will have already collected them.

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

Speaker #1: We have another question regarding financing the project. So, it was answered. Another question from Jorge Mauro. Hi, Jorge. Your question was answered regarding the peak leverage in the next three years.

Speaker #1: George Castro had a question regarding the Pampa project, which was answered. Well, we think that's all. That's all. Well, this concludes the questions and answers section.

Speaker #1: Now, we will turn to Alejandro for final remarks.

Speaker #4: Thank you all for participating in this year's second quarter 2026 conference call. We look forward to speaking with you again when we release our 2026 third quarter results.

Alejandro Basso: Thank you all for participating in TGS's Q2 2026 conference call. We look forward to speaking with you again when we release our 2026 Q3 results. If you have any questions in the meantime, please do not hesitate to contact our investor relations department. Have a good day.

Speaker #4: If you have any questions in the meantime, please do not hesitate to contact our investor relations department. Have a good day.

Operator 2: Goodbye

Browse all earnings call transcripts

Q2 2026 Transportadora de Gas del Sur SA Earnings Call

Request TrialDemo

TGS AR

Earnings