Transportadora de Gas del Sur SA Q4 FY2021 earnings call

• Natural gas transportation: ENARGAS plant gas had a 60% transitional tariff increase effective March 1. Approximately 80% of transportation segment revenues from long-term contracts. - Midstream business: Completed 2021 CapEx of ARS 16 million, investing another ARS 22 million for new capacity, with plans to invest ARS 82 million for new conditioner capacity by winter 2023. New agreements with gas producers negotiated. - Pipeline projects: ENARGAS issued resolution 67 for a new pipeline, and DCS pipeline extensions planned. Decree 76 granted a 35-year concession for a traditional pipeline.

Natural gas transportation: Net income was ARS 6.8 billion in Q4 2021 vs a loss of ARS 5.4 million in Q4 2020. EBITDA decreased by ARS 3.2 billion due to lack of tariff adjustment. Approximately 80% of revenues come from long-term contracts with average life >10 years. Operating margins have been deteriorating. Liquids business: EBITDA increased from ARS 5 billion to ARS 8.4 billion in Q4 2021, driven by higher international prices, which doubled from Q4 2020. Revenues rose by ARS 5.2 billion due to higher prices. Other services: EBITDA increased by 36% mainly due to higher midstream services revenues, with ARS 636 million from Vaca Muerta services.

• CapEx: Expect to finance ARS 150 million CapEx in 2022 mostly from cash generation. - Tariff impact: Anticipate relief from the 60% transitional tariff increase. - Growth: Expect to grow at a 25% VDA rate related to capital building, with plans to expand the plant with models of around 6 million cubic meters per day depending on demand.

• Price volatility: International gas prices are uncertain and can impact margins. - Government contract delays: Potential issues with government contracts and subsidies, such as delays in energy contracting for winter. - Inflation impact: Higher inflation can affect costs and revenues, as seen in previous monetary effects on liquids business.

Q: Regarding the sustainability of higher margins and trend of international gas prices and cost for 2022 A: Cannot speculate on prices, but expect prices to remain high at least for 2022. Natural gas prices in Argentina are trending up.

Q: What options is the company evaluating to use cash?

A: Expected to use cash for ARS 150 million CapEx in 2022 and for future projects like expanding the plant and evacuating gas from Vaca Muerta, and to pay debt in 2025.

Q: Level of liquid production in 2022, spot vs contracted gas A: Expect lower production in 2022 vs 2021. Most gas is contracted in long-term agreements, with ~20% in spot. Argentina may face gas shortage in winter.

Q: Use of equity reserve and share repurchase A: No plans for further share repurchases currently. Equity reserve to be used in planned projects like plant expansion.

Q: New gas pipeline start operation and CapEx A: Fastest capacity online for winter 2022 is tough, estimated first stage CapEx ~ARS 1.5 billion, second stage ~ARS 1 billion.

Q: Positive impact of 60% tariff increase A: In constant pesos, impact on revenues; in nominal pesos, ~ARS 12 billion annual impact from 60% of ARS 20 billion transportation revenues.

Q: Tariff adjustment end of year A: ENARGAS started tariff review process, with expected adjustment at start of next year, semestral adjustments by inflation or ENARGAS choice.

Q: Growth from investment in conditioning plant and future expansions A: Expect 25% VDA growth related to capital building. Plan to expand plant with 6 million cubic meters per day models depending on demand