Pampa Energy Inc. Q3 FY2026 earnings call

• All seven RIHI projects are approved, representing ~$30 billion in investments, with Pampa directly involved in Fertil Pampa and Rincón de Aranda.
• Secured 9.6 million cubic meters per day of new gas transportation capacity via the Perito Moreno pipeline, bringing total contracted capacity to 15.6 million cubic meters per day.
• CapEx rose 85% YoY to $585 million, driven by ramp-up at Fertil Pampa following Final Investment Decision (FID).
• Oil production averaged 99.7 thousand BOE/day; Rincón de Aranda reached a record 28.7 thousand barrels/day in September.
• Power generation benefited from new deregulation framework allowing marginal pricing for spot electricity and increased B2B PPA quotas (up to 60% starting April 2025).
• Free Cash Flow was negative $388 million due to high CapEx and hedging collateral requirements.
• Net debt leverage increased to 1.7x from 1.4x last quarter.

Oil and Gas: Adjusted EBITDA was $170 million (55% of total EBITDA). Gas segment adjusted EBITDA was $119 million; Crude Oil segment adjusted EBITDA was $51 million. Power Generation: Adjusted EBITDA was $160 million. Contracted capacity represented 37% of total capacity but contributed 59% of the segment's EBITDA.

• Maintained long-term growth roadmap supporting Argentina's export expansion.
• Expected peak gas demand to reach 15.5 million cubic meters per day by 2030.
• Fertil Pampa (URIa) CapEx concentrated in 2028 (~$1 billion), with financing expected to close by year-end.
• Rincón de Aranda plateau target revised: 40,000 barrels/day by end of 2027, reaching 45,000 barrels/day by Q1 2028.
• Lifting costs at Rincón de Aranda expected to drop to ~$6 per BOE once CPF is running and plateau is reached.
• Hedging strategy will not exceed 50% of expected production going forward.
• Free Cash Flow expected to turn positive by 2028.

• Temporary well shut-ins at Rincón de Aranda due to frac hits from nearby activities cause production volatility.
• El Niño weather patterns negatively impacted thermal dispatch and reduced electricity demand.
• Increased lifting costs and royalties partially offset revenue gains in Oil & Gas.
• Market tightness is seasonal (<10% of hours); no risk of blackouts from generation shortage, though distribution issues remain a potential risk.
• Capital competition is intense due to limited basket of capital and multiple RIHI projects requiring funding.

Q: How will natural gas prices evolve after Plan Gas ends?

A: Management stated that associated gas will be insufficient to meet demand, so dry shale gas will set the marginal price. This dry gas is expected to be priced above $3/MMBtu, particularly in winter, establishing the market clearing price.

Q: What is the impact of TGS pipeline expansion on power margins?

A: The expansion allows Genelva CCGT to capture 100% of the margin (FRA=1) instead of 25%, significantly boosting EBITDA. Additionally, 5.5 million cubic meters/day of additional gas will be delivered to power plants during winter, generating an estimated $30 million in incremental gas EBITDA.

Q: How does the new regulation affect B2B PPA sales?

A: Legacy thermal units can now sell up to 60% of their energy to the B2B market (up from 20%), effective April 2025. This transition aims toward full liberalization by 2029. Management plans to contract as much as possible, except for Genelva which will favor the spot market due to higher margins enabled by new gas infrastructure.

Q: What is the outlook for free cash flow and leverage?

A: Free cash flow remains negative through 2027 due to CapEx at Rincón de Aranda, affiliate contributions, and gas prepayments. It is expected to turn positive in 2028. Leverage may temporarily approach 2.0x due to aggressive investment planning ahead of election-year market turbulence.

Q: Will temporary shut-ins continue to affect Rincón de Aranda production?

A: Yes, management confirmed that drilling and completion activities necessitate shutting in other wells to prevent frac hits. This paradoxical effect means more drilling leads to short-term production swings, but it is necessary to reach the final plateau capacity.