Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to the Pampa Energia Third Quarter 2019 Results Conference Call. [Operator Instructions] After the Company's remarks are completed, there will be a question-and-answer session. [Operator Instructions] Before proceeding, let me mention that forward-looking statements are based on beliefs and assumptions of Pampa Energia's management and on information currently available to both companies. They involve risks, uncertainties and assumptions, because they relate to future events, and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Pampa Energia, and could cause results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the conference over to Lida Wang, Investor Relations Officer of Pampa Energia. Ms. Lida, you may begin your conference.

Good morning, everyone and thank you for joining our conference call. I will make a brief summary of various business segments reviewing the quarter's key figures and the latest events since our last call in August. Our CFO, Mr. Gabriel Cohen is here for the Q&A session. Before we get begin, we want to remind to you that Pampa adopted the US dollar functional currency. Therefore, transactions are recorded in US dollars, since January of this year for the comparative period of 2018. According to IFRS, figures are reported in pesos adjusted by inflation as of the year-end 2018 and show in US dollars at closing effects. This comparison might be difficult to read. Therefore for a like-to-like -- like-for-like basis, we are considering nominal figures reported last in Q3 in nominal terms and converting into dollars at an average FX. In this case, the peso-linked subsidiaries such as the utilities, they continue to report on the peso functional currency. So the figures are adjusted by inflation and shown in dollars at September 2019 closing effects. In order to analyze their performance organically and to be in line with the reporting, the comparative figures in pesos adjusted by inflation until the end of 2019 and show in dollars at closing FX. So having made this clarifications, we can start. On slide 5, we can -- we wanted to make a quick stop by reviewing the quarter's financial highlights. Revenues fell year-on-year by 21% mainly because of the 36% devaluation of the peso affecting our peso-linked businesses like Edenor, Transener, TGS, in addition to lower gas prices and FX freeze in E&P -- oil E&P and reduced legacy remuneration of power generation. These negative effects were offset by the commissioning of new capacities since May 2019, adding more than 300 megawatts…

The floor is now open for questions [Operator Instructions] Our first question comes from Petr Grishchenko with Barclays. Please go ahead.

Hi, good morning and thanks a lot for taking my questions. I guess first question. My understanding of project financing at subsidiary level was basically non-recourse. And now I'm seeing Pampa actually guarantee some payments under the trust -- under the financial trust and syndicated loan agreement. So I want to get more color on that. And I wanted to clarify this -- if $229 million, and I guess as it relates to, but again the EPC and turnkey agreements are also guaranteed or not?

Hi, Petr. Hi, how are you? So -- this is non-recourse as long as we comply with the closing to combined cycle to the project.

And just sort of fend this point a little more, if the combined cycle is not reached by -- basically in three years, then the Company would be obligated to make a repayment? Basically they won't be accelerated, is that right?

As long as Pampa -- Gabriel speaking, as long as Pampa and YPF will basically Pampa and YPF are required to warn our (inaudible).

Okay. I had a second question...

It's important to note that one thing is only at -- by that of scheduled project completion, okay.

Right okay, I guess the second question, can you maybe provide some more color on the decline in dispatch rates across various plants even for the new capacity? Just trying to understand, is this just demand driven or there were some outages during the period that led to lower dispatch?

Yes, well the -- it is demand driven actually. Q3 in the grid, it was the one of the lowest points of the demand and we bounded a little because it's winter season, but still we are at levels of 2014, 2015 in our levels. This is first thing. Second thing, for the units that are located in the north -- from the center to the north, that's they are -- variable costs have a gas price. It's kind of influenced by the imported gas from Bolivia. So in the variable cost, they kind of like are lagging behind in the dispatch priority, okay. This is first and second. Renewals also have a disruptive influence because in the north, we have solar. So it's -- there's some bottlenecks in the transportation and it doesn't come to the question, but renewals are getting disruptive in the dispatch, ranking in the dispatch and also in the south, where historically, our power plants have the lowest variable cost in the dispatch ranking, because the gas is the cheapest in the country. They even got outpaced by the wind generation, but demand-driven. Of course, we are experiencing around -- have been 34,000 gigawatt hour of demand in the quarter in the country where we usually used to be at almost 40,000. So it's quite -- this is -- since the last year, the demand in the country has been going down dramatically.

Great, Okay.

In line with the GDP, right. The GDP recession, right?

Right, yes. We were aware of that. And I guess, switching gears a little bit, can you maybe discuss a little bit what do you see in terms of payment delays from CAMMESA or any kind of extensions, if you could please maybe quantify them a little bit? I don't know if you mentioned during the presentation, I probably missed that.

Regarding the -- the other question I -- this is very important. Regulating our units were 90%. So as long as you are available, you collect the capacity take or pay, okay. So this especially was low, yes, lower than expected, but because of demand and CVP, same but our availability was outperforming. Now regarding CAMMESA, we are quite in the same pace and lately we've been -- we are around 50 -- less than 50 days of delays. So this is -- CAMMESA is doing the payments accordingly.

Repeat -- I what number did you give?

50 days, less than 50 days. The rule is 42. The highest point was a long time ago. So -- but we are around that level.

Okay, that's helpful. Thank you. And the last question if I may, can you maybe give some more color on how you are seeing debt amortizations next year, and generally speaking what refinancing options do you think are available for the Company? Anything on that kind of -- frankly, would be very helpful, thank you.

Yes, hello. Well, in terms of our debt amortization, the most important thing to be said as of today is that it's our cash position. So in that respect, what I would say is that we have the biggest thing to be amortized. It's the 2023 bonds. But it's -- that's the relevant amortization that we have amid on that. On the other side, whatever it's due for Pampa, here it's bank transactions that are that moment in time with them either repay with our own cash position, or we should expect to be able to refinance. In that respect, we have, as you may have seen already, two transactions that have been refinanced to pesos and we have other dollar amortization. So at this stage, I would say so would be clearly very easy to refinance, it will be better. It's actually at that moment in time and whatever is dollars we'll see when they can do, what -- we are going to cancel that, or refinance maybe the local market. So far bank lines are still available essentially a matter of costs rather than of liquidity.

Got it. Thanks for details. Best of luck to you guys.

Thank you.

Thank you.

Our next question comes from Guilherme Levy with Morgan Stanley. Please go ahead.

Hi, thank you for taking the question. I wanted to understand better, what are the capital allocation priorities should the macro situation in Argentina remain challenging for longer? In this case, for how long should we expect a continuation of share repurchase programs and how should we think about CapEx going forward? And second question, if I may, related to the first one actually, specifically for upstream, what are the next steps now? Is directly investing LNG an option or could we maybe see the Company deploying more cash rather than gas? What we -- what should we expect in the coming quarters? Thank you.

Yes, hello. In terms of the macro situation in Argentina, clearly, we should expect new information with the ones that administration is in place. So I think we cannot tell anything in terms of our future plans until we have -- basically the eventual new rules on outdoor, it change or not. So it's not possible to say what will happen and how long it will -- it would be there. What we are doing as of today is that basically are focusing on maintaining the current expansion in terms of generation. And in terms of E&P, we have the commitments and some exploratory wells in -- some exploratory wells. So once we have a new administration and we will see the policy that it's implemented, we will speak again and tell you what our plan is. Then in terms of share buybacks, well, as you see, the new share buyback program it's limited to be bound and it's being reviewed periodically in terms of how we see prospect going forward, and always having in mind to keep a strong cash position and what we consider conservative leverage. Another question?

No, no that was one question.

Hi. And the second question was specifically to upstream, are there any options to help monetize the gas reserves? I mean, would the Company consider directly invest in LNG for example?

Well about that we have our TGS, our affiliates for that. So, that's their investment, their project. So for Pampa, our focus is in gas production E&P. As Gaby said, we -- in our 2020 budget, we only have our committed CapEx for the blocks, some proactively wells to shale formations to minimum to maintain at least our production that today what we are doing is just testing that to our power generation. In power generation, the expansion is basically as you right, is almost nearing to finish and we don't have any other projects in the pipeline.

Pretty clear. Thank you.

Our next question comes from Ezequiel Fernandez with Creditcorp. Please go ahead.

Good morning, thanks for the Q&A, the earnings materials, [Technical Issues] the useful comparisons on adjusted and unadjusted monetary variables. I connected a little bit late to the call, so sorry if I go into any topic that you referred already. I have two questions.

Sorry, it's very difficult to understand what you're saying.

I will go one by one if you don't mind. The first one is related to oil and gas, if you can give us a ballpark. Sorry, can you hear me any better?

A little bit rough.

All right, I'll take it off the call -- I'll give you a color.

Okay.

Okay. I will repeat my question. If it's fine, then you tell me. Can you give us a ballpark for your 2019 full-year CapEx on the Oil and Gas segment and it's mix between exploration and infrastructure development? And what can be considered the run rate for you current output, and if you have anything to add about 2020, great?

In respect of guidance, we don't have guidelines; in respect of information for 2019, give us -- for this year, will be in line of $200 million.

Okay, great. $200 million for this year. I don't know if you could split that between exploration and recurrent?

One second.

Exploration CapEx, out of this $200 million forecast for this year's $70 million is for what we call expansionary CapEx. Basically this shale wells, exploratory wells plus another facilities that we do at El Mangrullo, a little bit in Rincon de Aranda and Sierra Chata.

Okay, great. All right. My second question is regarding the power distribution side. If you could comment a bit on the hike that were granted already and implemented and what is old or is still pending?

Are we talking about power distribution or that?

Power distribution, Edenor.

Okay, Edenor. Edenor, we got -- so here's the thing. We got schedule freeze, okay. And that schedules include some attractive instalments that was from the delays of the tariff -- prior previous tariff adjustment granted in March. So [Technical Issues] 19% in October, but with this retracting instalments that should have been stopped in August, that we keep collecting roughly half of the tariff increases cover. The other half, the area from the agreement with the government is to get paid in seven instalments as from January 2020.

Okay, great. My third question is related to your direct link between the capital units and power generation. You think you care about being able to self-deal gas to your plants about at the same time? Supposedly, it's not that relevant in terms of margins, what kind of advantage you see there that is important for you?

What's the advantage, it's because we have to understand what the -- the advance that we have by in terms of our gas, with our power generation, that's the question?

Yes. What advantage do you see in selling gas to your own power generation units, considering that the margin is not that big?

Let me tell you why. In the past quarter, a number of -- a significant number of wells in the country has been curtailed in gas and we didn't. Let me tell you why, because we have a certain offtaker. The offtake is our two best-performing power generation units, they are combined cycles, they are very competitive in the dispatch ranking, Loma De La Lata and Genelba. So we -- because they are always dispatched no matter what, because their variable cost is very cheap, and that's why we park our gas to them. That's around 70% of our production, 65% of our production with target to Loma De La Lata and Genelba. Loma De La Lata -- and this is at an advantage. Loma De La Lata is very close to our production block. So there is no transportation needed, right. The second well, for Genelba, we need to transportation and we have a granted for one year. So here is -- this is the very first thing -- certain offtake we have. The vertical integration is very volatile, though the pricing is very -- not very attractive. But it's certain we collect dollar-link and we collect it through our power generation collection. So power generation is in charge of selling this amount of gas on behalf of E&P. E&P and power generation are in the same company. This is not an interco. So there is -- we are away from internal taxes, we avoid are financial transaction taxes, and then the most important thing is that if we didn't have this integral -- vertical integration, how -- in the spot, which is -- it will -- could kill you in the offpeak season or sell it to CAMMESA directly and CAMMESA will send it to our power plant. So this triangle, it's avoided, but before we were subject to a high level of working capital that now we have been reduced dramatically because power generation sales gas on behalf of E&P. I don't know if it's -- if I made myself clear. It's more qualitative improvement then quantitative improvement.

That's very clear, and it has actually taken care of my fourth question. So, I'm done and sorry for the bad connection. Thank you very much.

No problem. Thank you.

Our next question comes from Florencia Mayorga with TPCG. Please go ahead.

Hi, Lida. Thanks for taking my question. And just two questions. The first one regarding E&P. In how many days distribution -- gas distribution companies and industrials are making their payments regarding gas? And the second one is the outlook regarding production after the growth already seen in the third quarter.

Hi, good morning Florencia. So distribution -- distributors, it's very tiny of our production, so it's like 5% or less. And in our production they are paying at 55 base. This is a sale that we practically do in pesos, right and we recorded as such in our financial statements. But it's very tiny from our sale. The major part is coming from CAMMESA being 50 days -- almost 50 days. As I said in an earlier question, industrials -- industrials, if we can agree, but they have a premium, it's around 30, 45 days and we are also exporting since September of this year. We are collecting at 60 days. Yes. Basically the major bulk of our sales are collecting at less than 50 days of collections.

Perfect and regarding production, do you expect that at the same level exceeded this quarter? Would it be seen in the fourth quarter after the growth from El Mangrullo or do you expect a small decline or remain flat?

Hi. So Q4 it's a very difficult quarter for the country, for the gas production, because again seasonality comes along. It's off-peak season but we managed to get our gas production kind of flattish. Again, we are exploring 600 -- I mean 700,000 cubic meters per day, that's roughly 10% of our production. And in Mangrullo it's flat. A main contributor of our production, El Mangrullo is flat.

Perfect and the last question, I believe that you mentioned that you had some deadlines available. Can you disclose how much higher level credit lines that Pampa has as of today?

First of all credit lines are not committed. So it's -- we are not disclosing that and that basically credit lines of the major banks give us most of their most of their cutback lending capacity that's available to us.

Thank you.

Our next question comes from Daniel Guardiola with BTG Pactual. Please go ahead.

Hi, good morning. I have a couple of questions. So my first question is related to the Oil and Gas segment. Considering that and on an overall basis, the average prices of gas have dramatically declined. I wanted to know your thoughts on the likelihood that Pampa may have to pass a negative revision to gathered reserves related to lower oil price. So that's my first question. And my second question is related to the much-awaited hikes in the tariffs of the utility companies. And considering the increase in social unrest on this content that we have seen in the (inaudible), I wanted to know if you could share with us how likely you think it is that the new administration is going to honor, the expected hikes that are related to the RTI? Thanks a lot.

So. Hi, Daniel. Good morning. Our reserves as of December 2018 was 140 million BOE. They are mostly tied to unconventional gas, there is no shale book there. So in that sense, we don't have shale gas book. And that's -- and the breakeven cost for a shale it's really higher than the prices that we are realizing today. That's why this impairment, it's kind of not likely on Pampa, though of course this affects our assessment of the share of our results for the December 2019, though we are, as we said in the call, we are already producing and already drilled, completed wells have shale gas formation and we expect to book some of them to our research. So we will see what kind of -- it's yet too early to tell, but yet, we will have to see what kind of contribution will make it. Then for -- I'm sorry I lost your question. That's the only one I could retain.

Frankly, the second question is regarding the tariffs, the adjustment that we are starting the tariffs of the utility companies in January 2020. And I wanted to know how likely it is that the new administration is going to own all these hikes considering the increase in social unrest and social discontent that we have seen across Latin America?

Yes, hello. Again, it's not possible to answer the likelihood in that respect. So it's -- basically we don't we -- we cannot answer that. What yes -- we can say is that whatever the -- whatever they don't pay it's going to become again a fiscal deficit and it's rather -- it's what we're seeing in the beginning of the call. We need to see what's going to be the plan of the government in terms of an integral plan -- so considering they have to consider different aspects and in balances of macroeconomic front.

Okay. Just -- let me rephrase the question. When you're a considering -- when you're forecasting your budget for 2020, are you considering the hikes?

Clearly, we consider the hikes. On the other side, you need to -- you need to manage liquidity considering that maybe you have delays as it has happened in the past.

Okay, understood. Thanks.

This concludes the question-and-answer session. At this time, I would like to turn the floor back to Ms. Wang for closing remarks.

Thank you so much for joining our call today. Our team is fully available for you, if you have any further questions. Have a good day.

The conference is now concluded. Thank you for attending today’s presentation. You may disconnect your line at this time and have a nice day.