Pampa Energía S.A. (PAM) Q2 2025 Earnings Report, Transcript and Summary

Good morning, everyone, and thank you for waiting. I'm Raquel Cardasz from IR, and I would like to welcome everyone to Pampa Energia's Second Quarter of 2025 Results Video Conference. We would like to inform you that this event is being recorded. [Operator Instructions]. Before continuing, please read the disclaimer on the second page of our presentation. Let me mention that forward-looking statements are based on Pampa Energia's management beliefs and assumptions and information currently available to the company. They involve risks, uncertainties and assumptions because they are related to future events that may or may not occur. Investors should understand that general economic and 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 will turn to Lida. Please go ahead.

Thank you, Raquel. Hello, everyone, and thank you for joining our conference call. I will make a real quick summary of the Q2, so we can have more time for questions with the management. Today for the Q&A, we have our CEO, Mr. Gustavo Mariani; our Head of Oil and Gas, Mr. Horacio Turri; and our CFO, Mr. Adolfo Zuberbuhler. So going to the Slide 3, several key developments marked the second quarter of 2025. First and foremost is the successful production ramp-up in Rincón de Aranda, thanks to the tied in of new pads in coordination with the commissioning of supporting infrastructure such as the temporary processing facility, internal and trunk pipelines and so on. So also the contribution of the new 140 megawatts wind farm PEPE 6 and the higher spot prices boosted the quarter's figures. However, colder temperatures started in June, so delayed the spike of the winter, the winter spike in both power and gas demand. Petchem contributed positive EBITDA continue gradually recovering, returning to a positive EBITDA. Finally, in a proactive liability management transaction, we extended the 2029 notes to 2034 with a $140 million recap issued at the lowest spread over U.S. treasuries in Pampa's history. But let's move into the quarter's financial results. The adjusted EBITDA amounted to $239 million. This is a 17% decline year-on-year, driven by soft gas sales, falling petchem prices and higher operating expenses weighted on the performance. The headwinds were partially offset by contributions from the new PEPE 6 wind farm, increased gas exports to Chile and higher production at Rincón de Aranda. Quarter-on-quarter, EBITDA improved due to the seasonality and growing output at Rincón de Aranda. CapEx surged 134% year-on- year, reaching to $354 million. The majority, which is $249 million was invested in the development of Rincón de Aranda. Moving on to Slide 4. The oil and gas adjusted EBITDA was at $87 million, down 28% year-on-year, largely due to reduced domestic gas sales to retail and thermal power as the colder weather arrived later than usual. The expiration of winter peak contracts between May and September under the Plan Gas GSA also impacted the results, though in June, that performed very strongly as if the GSA remained in place. Higher lifting costs, especially from Rincón de Aranda also affected EBITDA performance. However, increased gas exports to Chile and a stronger crude oil production at Rincón de Aranda helped to balance this decline. The lease of temporary facilities at Rincón de Aranda and gas treatment fees pushed the lifting costs up to $7.6 per boe. In particular, gas lifting costs rose to $1.1 per milliBTU. This is influenced also by the lower output. Quarter-on-quarter, lifting cost per boe increased moderately, explained by the transition from trucking to in-house and lease facilities, offset by the seasonality. Total production averaged 84,000 barrels per day. This is down 7% year-on-year due to the output decreases at the El Mangrullo and nonoperating blocks, partially offset by Rincón de Aranda and Sierra Chata gas field. Quarter-on-quarter, the production is up 16%, again, explained by the seasonal effects and shale oil. The production mix continues to shift with oil rising to 9% of the total production output and contributing 18% of the oil and gas revenues, entirely due to Rincón de Aranda ramp-up. Also, we tied in 2 shale wells targeting Vaca Muerta at Río Neuquén block, the block's first shale development alongside new tie gas wells. Río Neuquén is not operated by Pampa. Crude oil prices averaged nearly $62 per barrel in Q2. This is 14% lower than last year, mainly explained by the Brent underperformance affecting exports mostly. However, our hedging strategy around Rincón de Aranda's rising production helped to mitigate the price drop. Total gas sales fell 11% year-on-year. This is to almost 13 million cubic meters per day, but rose 10% from Q1, last as I just explained recently again by seasonality. The Mangrullo block continued to leave the output, though its share declined to 58% of the total gas volume in Q2. Mean while Sierra Chata increased its share to 29% of the gas output in Q2 with a 14% production gain year-on-year. In Sierra Chata, we drilled 4 wells and tied in 3 year-to-date. So 57% of the Q2 output is considered shale gas. In line with our commitments with the exploratory block in [ Parva Este ], we drilled a horizontal shale well, which is currently awaiting for completion and testing. Pampa extended [ Parva Negra Este ] license, exploratory license until 2027. In the gas prices, they averaged 4% -- $4 sorry, per milliBTU in the quarter, remaining steady year-on-year due to the Brent prices that affected export prices and offset by improved retail prices and improved marginally in the Industrial segment. Half of our gas was delivered to CAMMESA for power thermal generation under the Plan Gas GSA. If you see the nationwide gas, we contributed 17% of the gas consumed totally in the country for power generation. Since May, we have increased our flows to Chile through 2 pipelines, right? GasAndes and del Pacífico, Gasoducto del Pacífico capitalizing on the competitiveness of our gas relative to LNG. By June, the exports have reached 1.1 million cubic meters per day, same as today. Though Q2 gas sales were soft, June rebound sharply with the colder temperatures. On July 24, we hit a new all-time high daily production high at 17.4 million cubic meters per day, driven by the outstanding shale wells at Sierra Chata. The most recent tied in pad of 3 wells, we peaked at 2.7 million cubic meters per day in June, highlighting its solid productivity and competitiveness. So focusing now on Rincón de Aranda, we have 5 pads that have been drilled, 4 of which are online. During Q2, the block produced an average of 5,300 barrels per day, exiting June at 8,800 barrels per day. This growth was mainly driven by the pad #2 and #4. The latter began really producing in late June. So -- and it didn't by then completely clear out the water. So it was testing. And currently, Rincón de Aranda is delivering almost 16,000 barrels per day from 4 pads. The last 2 pads were tied in during July, and they're still on the well testing. For 2025, we budget $100 million in total CapEx, having already invested over $360 million year-to-date. We expect it to reach 20,000 barrels per day at Rincón de Aranda by Q4 and aim to reach a target of 45,000 barrels per day by 2027 when Vaca Muerta Sur -- Oil Sur pipeline is online. So again, to support this ramp-up, we secure trunk pipelines, transportation agreements in Vaca Muerta Sur, [ VMOS ] and Duplicar in June, we applied to the RIGI framework for the central processing facility, PPA, CPF and all related infrastructure needed to evacuate the target production level as shown in the video on the screen, the CPF flow lines, pipelines, water treatment pools and all required investment is approximately of $426 million, of which the CPF is estimated to begin by next year. Switching to power generation on Slide 9. We posted an adjusted EBITDA of $112 million in Q2. This is a 5% increase year-on-year, mainly explained by PEPE 6 performance and higher spot prices measured in dollars, partially offset by increased operating costs and scheduled outages. Generation volumes declined 7% year-on-year and availability stood at 92% due to the maintenance at Loma De La Lata, upgrade works in Barragán CCGT for efficiency and lower gas emissions and the hydros Nihuiles outages in 2 out of the 3 dams since January of this year. Still increased gas supply and PEPE 6 helped to offset the decreases, capacity payments, particularly under the take-or-pay PPAs continue to support 70% of the segment's EBITDA. So turning to the Slide 10 about the cash flow. We only show restricted group figures because they are aligned with the [ bond ] perimeter. In Q2, we posted a free cash flow outflow of $307 million. This is mainly driven by the CapEx that we are doing at Rincón de Aranda, which accounted 75% of the total investment, along with an uptick in seasonal working capital as gas sales peaked during the Q2 and Q3, right? And as a result, cash and cash equivalents stood at $879 million at the quarter end. Finally, in the balance sheet, gross debt was nearly $1.6 billion, down 23% since December 2024, thanks to the redemption of the '27 and the 29th (sic) '29 notes. Net debt rose to $712 million. This is 1.1x net leverage ratio, reflecting the cash outflow for CapEx and the working capital needs. Our successful liability management efforts extended the net debt -- the debt average life to 6.2 years from 4.2 years, significantly improving the maturity profile and the high drawdown in cash from Rincón de Aranda. So this concludes our presentation. Now the floor is open for questions. [Operator Instructions]. Thank you.

All right. Cool. Let's hit it off. No, no we have already received questions.

Already? Okay.

Because the third question goes to you.

And 99%...

And 99% target to Horacio Turri. Which is, could you give us more color from [ Jonatha's work from that wire ]? Could you give us more color on the CPF in Rincón de Aranda, please?

Good morning, everybody. Thanks for joining the meeting. The CPF stands for central processing facility. And basically, it has 3 different, I would say, purposes. One, obviously, is the oil and water separation and the disposal of that flowback water, the possibility of having the oil ready to be dispatched to the YPF facility in order to get it in a spec for injection in the main pipeline and also the separation of natural gas, which is currently being sent through a gas pipeline to the Vista facility in [ Bateria Tres ], which has already been connected. This processing -- central processing facility has a total output of 7,000 cubic meters per day. And we expect it to be finished by the end of 2026.

Which is 45,000 barrels per day?

Which is -- yes, a little bit less than 45,000 barrels per day, 42,000 something.

Which is our plateau.

This is our expected plateau, that is right.

Awesome. Well, the next question, yes, is for Gustavo. Have you already started self-producing with our own-fuel, meaning self- producing power, right? Your own fuel? If not, when do you expect to begin? And which is the spread between CAMMESA's reference price and your own procurement price?

Good morning, everybody. Yes, we have begun to self-procure our own gas to our facilities. But on a marginal basis because, as you know, the deregulation has not occurred yet, but there are some opportunities for us to self-procure our fuel on some of our facilities, those that do not require firm gas transportation or whether those days we find firm transportation capacity. So the answer is yes, we have begun to do it on a marginal basis. And you asked about this...

Price.

The Price...

What's the spread against the Plan Gas price, I guess?

Yes. Currently, correct me, it's $9 is what...

$9 and $8, no?

Currently, it's $8. Yes, CAMMESA has been changing this regulation or this pricing has been -- initially has allowed generators to buy natural gas up to $11 per million of BTU, then to $9 per million of BTU. And this current 2 weeks because it's a system that changes every 2 weeks, it's $8 per million of BTU. So the spread to winter gas price is about $3.5 or something like that. Winter gas price for CAMMESA is around $4.50, I would say.

It's Loma De La Lata, right? Specifically?

That's the facility that we are able to take advantage of this opportunity because it doesn't require gas transportation.

Awesome. Next question comes from [ Guido Visocero from Alaria ]. And he asked again, Horacio regarding Rincón de Aranda, could you give us any color on the expected evolution of the lifting cost throughout the second half of the year and 2026, considering the ramp-up expected in production and until the processing plant is constructed?

Second quarter of '25, we were a little bit below $16 per barrel, basically due to the fixed cost of the TPF or the temporary production facility, which has a lease has to be paid annually and it's fixed. And the production rate in the second quarter of '25 was 5,000 barrels per day. So that explains the high lifting cost. Moving to the first half of 2025 due to the increase in production, as Lida mentioned before, we are close to 15,000 barrels per day. We are reaching around $8.5 per barrel in terms of lifting cost. We also reduced significantly the figure from the first quarter due to the connection of our oil pipeline. We were evacuating oil through trucks at the very beginning. By 2026, with the increase in production to 20,000 barrels per day, we should be hitting around $7 per barrel. And the final stage will be the installation and construction of the CPF and that will move down the lifting cost to $5 per barrel with a plateau of 45,000 barrels per day.

Awesome. You mentioned the oil average price will have been $58.5 per barrel without the hedging strategy in Q2 '25. Was that me -- I mentioned that. Despite the $67.5 Brent average in the period. Are you planning to hedge production during 2026?

$58.5 is NATO. [Foreign Language].

I think that the main difference is that the Brent has 2 discounts in order to be transform it in the well...

Price.

Well price.

Well price, the wellhead price. One is the export tax, which is 8%. And also there's a premium for Medanito quality, which ranges, but it's around $2 to $1.5 per barrel.

And discount -- premium...

A negative premium. So this is basically the explanation. And regarding the hedging for 2026, we already started hedging. Now we are already hedged until what -- September but July is the exercise content.

Yes. Basically, we have 1 year forward, we are hedged currently around 70%, 75% of our expected production at a price of $69.

Do you expect that our prices, Horacio, Gus? I mean less discount versus Brent? And when you reach the 20,000 barrels production targets by year-end, a little bit for [indiscernible]?

It's impossible to predict at all. We don't feel that we can predict. So we look at the future prices of Brent as the best indication of where prices are going to be so we cannot say anything better than that than what the future market curves predict.

Then [ Vigo ] asks about the [ CSA ], which is the sovereign energy, LNG, [indiscernible] LNG project. Do you expect any participation in the construction and maintenance of the required gas new gas pipeline for TGS?

We are still in discussions and trying to put together the best solution for that. But eventually TGS could be part of the consortium to build and operate that gas pipeline.

How much gas may Pampa add in sales for these 2 ships in '27 and '28, how much CapEx do you need to achieve it?

Okay. The total amount of gas at the end of the 2 vessels being operational in Argentina is around 6 million cubic meters per day. That is by the end of 2028. The CapEx associated for the ramp-up and the construction of a new facility in Sierra Chata, we are talking about $400 million, out of which 50% facility, 50% is perforation -- drilling and completion. And then we will have around $60 million to $80 million per year on a plateau basis to keep up with the 6 million.

Great. The 6 million is breakdown between 2.5 for the first shift.

Yes, that's the total amount at the end of the 2 vessels being operational. This approximately 40% with the first vessel than 60% with the segments.

Awesome. And he asked the last question is about the TGS private initiative. So how much EBITDA -- annual EBITDA contribution for TGS do you expect for this project?

No, I don't have that figure in my mind. Should ask that to.

[ 4 million ]. That's what it is.

You should ask that to TGS once...

Once it's done.

When it's awarded.

Yes. Because the award is in October. But it's the sole bidder, so I don't know if they are going to wait until October. And how much gas will Pampa add in the production considering the 14 million cubic meters per day new capacity for the [indiscernible] pipeline?

Eventually, Pampa has reserves to supply all that gas. But how much, what market share of that new market will Pampa again? It's a question that we still don't have an answer. We expect that is -- these are increasing the capacity of the pipeline. So this 14 million cubic meters of natural gas per day. They are going to be used for a short period of time, something like around 100 days per year during -- mostly during wintertime. So it will replace imports of LNG and diesel oil that the country does at much higher prices. So pricing for this gas should be close to that import parity, but we will see once that market develops.

Sorry. This is a new [indiscernible]. He says, well, something that we always ask in every quarter is what prices of natural gas are we forecasting for this project?

That is very [indiscernible].

Okay. Then Alan Mecelis from Jefferies, he's asking something about the lifting costs and drilling costs that we already answered, right? Drilling cost, we didn't answer though.

Yes, we have.

Drilling cost, we didn't answer. He's asking how the drilling costs are evolving?

Okay. Drilling costs are going down, specifically talking about drilling. We moved from drilling efficiency of around 500 to 600 meters per day to around 900 meters per day. So we are improving significantly in our drilling efficiency. On top of that, we also made some improvements in our stage fracking per day, moving from 6 or 7 to around 8 -- 10 to 11. So in all, with the improvements in completion and drilling, we should be able to reduce our total cost per well from $15.5 million to something around $13 million. But this is going to take some more time, probably 1 more year.

Okay. And what level of shale oil production do you expect from Rincón de Aranda? This is what we...

Already mentioned.

Already mentioned. Quarterly, I guess, by no, next quarter.

Next quarter. Next quarter is okay, no problem. We are currently in -- I mean, in the range of 15,000 barrels per day and we should be increasing our production in order to reach 18,000 barrels per day by the end of the year by the last quarter. So that's more or less what we have in our minds for the ramp-up.

We could say that. Before, we were expecting to reach that by year-end and now we are the average of the fourth quarter is going to be around that like the good results of Rincón de Aranda have anticipated.

Yes. There is a mixture there, but all in all, we're going to be reaching the 18,000 or 19,000, 20,000 barrels per day by year-end. There might be a gap in the next quarter. By the end of the year, we should be definitely reaching the 15,000 to 20,000 barrels per day.

[indiscernible] is all asking the evolution of Rincón de Aranda iron Ore.

In terms of shale oil?

Shale oil. Yes.

The Rio Engenio project is very, very -- I mean it's at a very early stage, is exploratory. There have been -- the 2 wells have been drilled already and still a long way to go. I mean it's not a project. It's just a pilot.

It's in the border of Vaca Muerta, right?

It's a border of Vaca Muerta. The results have not been that bad. I mean, it's okay, but still a long way to go to decide well to move steadier.

Well, [indiscernible] Securities also ask about the listing trends. So we will answer that. Bruno [indiscernible] Morgan Stanley, is asking, can you comment on expectations for cash generation in second half of 2025. In particular, how should you -- should we see any the same CapEx intensity in Rincón de Aranda. What about the working capital should be any reversal of the pressure observed in the second half of 2025?

The cash generation in the second half of 2025 is going to be negative. As we have been saying for a few quarters 2025 and 2026 are going to be years where basically because of the money that we will be deploying in Rincón de Aranda that I remind you, it's going to be $1.5 billion between 2025 and 2026. We will be having negative free cash flow in Pampa. So we're investing in excess of our free cash flow generation. So the intensity will continue in the second half of this year. And in the first half of next year, you should be expecting a negative free cash flow. Anything else?

Working capital. What do you think about working capital? Usually, it gets better in the second half of the year, right?

I don't know if you could...

Would you like to comment?

Capital, we don't present to have more working capital, should we recover all the production from the third and the fourth quarter should improve.

Yes and because -- and as sales will increase, so there will be a little bit more working capital involved in the coming quarters, but that's something natural because of the increase in sales.

Yes. I remind you all that Pampa, it's a golf curve, right? This is our big moment. Q2 and Q3. Also, if you comment on the company's learning care in operating shale oil, Horacio?

Yes. Well, we are definitely learning a lot. And as I mentioned before, we were able to take advantage of this productivity increase, both in drilling and completion, and we are now trying to understand a little bit better whether the long-range sand versus a short- range sand and the spacing between stages have to remain constant or something that we can keep on trying to understand better and eventually improve some more dollars in our total well per cost and cost per well.

Yes, asked also what positive surprises have you been seeing or any main challenges since the beginning of the operation at Rincón de Aranda?

Okay. I would say that the most interesting surprise we had in Rincón de Aranda is that originally, we had 2 landing zones, [indiscernible] Orgánico Inferior. We had some expectations on the Orgánico Superior, but with a lot of uncertainty we drilled in pad #6, we drilled well to the Orgánico Superior target and with a very, very good performance, and that opens up the possibility of developing as well the third layer that was not before taking into account.

Right. So basically, the company is confident with the growth profile to reach the peak production as well?

Yes.

All right. Next question comes from Lin Yang from HSBC. And She asked, well, for Horacio. Could you give us more color on the free LNG -- the [indiscernible] LNG projects going on in Argentina, specifically on the timing and your interest in participating?

Can comment on the thing was participating in the other 2 projects, our YPF projects and rather ask them what they're going to do all of that.

Yes, she asks, if we are interested in participating.

We have -- as we always say, we always say very competitive gas reserves. So we are always interested in projects that will -- that could allow us to develop this extraordinary gas reserves that we have. Today, we are 100% focused on the CSA project, the one that it's already underway. And we are discussing with YPF and the other partners, any other possibility, but there's not much to say there.

She asked, where do you see high upside potential power, TGS or E&P? Very straightforward.

I think there is upside potential in all the 3 segments. Obviously, in the next -- in the near term, E&P is where the growth on the EBITDA of Pampa is going to come from in a very significant way in terms because of the development of Rincón de Aranda. In the case of power, we are waiting for the new regulation. There are no news there, but we are waiting for that. It's not something, as we said, that's going to be a game changer for Pampa, but we expect an improvement in the power business because of the new regulation. And in the short term, we should be also expecting the need of additional an increase in the capacity of the country on big projects that take a long time to develop like 3 years. So there's going to be an opportunity for Pampa to continue growing in power generation after the deregulation. And TGS also has a lot of infrastructure projects on the pipeline to continue growth. So we see upside potential in all the 3 segments.

Great. Well, and then obviously, the more synergies between power and E&P gas.

That's quite small now.

Yes. referring to the...

Other energy storage.

Yes, [indiscernible] storage auction that we participated with a project of 50 megawatts. We are waiting to see whether we will be awarded or not. It's a very competitive project. It will 3x more offers than what CAMMESA was requesting. In the specific case of our project, it's even more competitive because we are competing with like 6 or 7 projects. So it's very, very competitive. We don't know whether we're going to be awarded or not.

Great. [indiscernible] from [indiscernible] is asking a lot of hedging strategy. We already talked about that, so we're going to skip it. The second question is regarding increasing our denominated costs within the fuel and gas segment, particularly lifting costs as well as selling SG&A. Is this trend primarily driven by the FX dynamics and inflationary pressures? Or it's another factor I might be overlooking?

But we discussed the lifting cost of Rincón de Aranda.

Yes. But it's -- he's asking the peso share if have dollar inflation, right? Yes, we had inflation, right?

Yes.

We do have in on. It's smaller than other companies in the sense that we are -- no, in the sense that we are not a peso company, peso cost company. That will be worse. My third question is about the renewal of the hydroelectric concessions. What is the current status of the process? Have you been there any developments regarding the terms of the timing? Hydroelectric concessions. I guess the big ones, the ones that want to be tender, not in [indiscernible].

Yes. The first -- they should go the tenders of the new -- of the hydro concessions should go first with the [indiscernible], the ones that are basically [indiscernible] in Alcura, [indiscernible]. Those are the ones that are going to be auction first because they were the first that matured after is going to come the auction for [indiscernible], which will impact us. But we don't have any clarity on the timing of this process.

Four question goes to Bemos. The syndicated loan has been granted. When are the diversements expected to begin? And what is the project time line for the projected time line including the state of construction and operations?

The financing was already deployed around $400 million. So we already started the use of cash of the financing. The advancement of the project is scheduled the first at different stages. The first stage has an advance of 23%. The second stages are around -- I don't remember exactly the -- and the like, but the project is -- everything is going as planned.

Well, he's asking the recent operations regarding the acquisition of 10% of fullback, the purchase of the dev in their cement that was released out there, what strategic objectives are driving these transactions.

I think we talked about this in the previous quarter. There's no strategic objective on neither of these investments. They are financial. Yes, financial investments. So part of our portfolio management that we do on our cash position. So there's not much to share that financial transactions or strategic ones.

And there's really, really tiny out percentage on our close to $1 billion cash, right?

Yes. Absolutely.

Well, this question always come out and it's coming from Francisco [indiscernible] from [indiscernible]. He's asking, are you looking to change the CapEx or production forecast due to the weaker oil prices. Again.

No, we are not, then we -- no, definitely not. And that's. Additionally, that's why we are hedging our production so we have some more -- less uncertainty regarding the future of the project.

If I can add. I would say that we are not surprised by current prices because a year ago, when you were looking at what future curve of rent was forecasting was lower prices than last year. So this is not a surprise. Rincón de Aranda is a profitable project at these levels. And we are -- we will -- as Horacio say, we will reach the plateau of 20 -- close to 20,000 barrels a note. We will reach a production of 20,000 barrels of oil per day by year-end. Once we have the central processing facility by the end of 2026, we will double -- more than double that production. And even at these prices, we are evaluating whether to reach another step in production intermedius before -- we haven't taken a final decision on that, but we are evaluating whether having an intermediate step next year before the as temporary with an initial temporary facility before the definitive facilities are online by year-end 2026.

All right. [indiscernible] from Bank of America. He's asking local news mentioned that you presented a bit for total assets in Argentina. Do you plan to bid for new brownfield projects, oil projects? Or the follows on all should rely solely on Rincón de Aranda? What were the synergies with total assets?

As you know, in all the M&A transactions, we always sign NDAs that restricted us about maybe much information. So I don't want to breach what we have signed. So what I can say is that we are interested in increasing our acreage of our reserves where we would like to continue increasing production beyond where Rincón de Aranda is going to leave us. on an opportunistic basis. And so we will continue -- we will look to participate in any opportunity that may arise in the future. But yes. And regarding synergies, I would say there are any synergies between total between [indiscernible] and Rincón de Aranda. It's another field to develop without any synergy, but...

They're pretty far away, actually.

Yes, for 70 kilometers away.

70 kilometers. All right. Well, completely another nature of question is about the power sector rebilization. This is a very -- could you give us any update on the timetable? Yes, every quarter...

Nice question for the sector energy. I don't have an under [indiscernible]...

Real one.

Well, last year, when the issue, I do recall the number of the resolution, but it was before November of this year was supposed to be published all the new roles. So we are optimistic that in the next few months, we will have news about the upcoming regulation.

Yes, what's the marginal cost of operation in dollar terms in dollar per megawatt hour for Pampa assets? And what do you estimate as an potential for this rose potential in shoe for this tier? I guess...

That's a question for you, if you have understood.

No. I guess, well, we have -- the deregulation is for the thermal, right, for the thermal units, if not the market marginal system for the thermal units. Obviously, the picking of the peakers known as the peakers, the open cycles, or weight of the lease in a normal day, right? Normal Argentina's normal day is around what sometimes -- the average car is $70 last year. But I guess, with more gas supply, less imports and so on, it should be going down, let's say, in the long term for a period of time is $60. But in a normal day, we know extreme weather, it should be around $40, $50 marginal cost, marginal costs. Yes, more or less. Right now, it's like 200. I think we are 10 degrees Celsius, right, this is winter season. And that's the opportunity line for the CCGTs, our CCGTs it's $35 per megawatt hour of marginal -- average cost -- variable cost. And then the other ones, the one that is very close and then a little bit out of the league, but this is still competitive in alarm. But truly out of the leg in a normal day should be the beakers. I can say more A lot of information. A lot of information to digest, yes. Well, Maria Catarosi from [indiscernible]. He's asking now the FID has approval the MK2, the floating LNG project. What are the key milestones, the next key milestones for the [indiscernible] project? Can you share more details on Pampa's expected equity and EBITDA contribution? An upstream and the project itself. And from the LNG project once it's operational. I guess, firstly, what kind of next movement is in the [indiscernible] project, I guess.

Well, we are in the process of building the pipeline into the...

Benefit of the pipe.

Yes. But first, the interconnection with the [indiscernible] pipeline. Yes. So we are now in the construction of the interconnection with the [indiscernible] project than the installation of the compression plant for the first stage, that should be ready by 2027 in order to be able to feed the first trials of the of the [indiscernible] is moving from Cameron to shipyard in Singapore by mid next year and will be -- coming to Argentina by September [ 27 ]. We start build in already been built in the shipyard. It's doing -- I mean the project is advancing as was expected and should be online by again, third quarter of '28. At the same time, we should make a final decision regarding the construction of the dedicated pipeline from Neogen to the Golfo San Matias, which is currently under under consideration.

Great. And EBITDA and equity is 20%, 20% and EBITDA well until this is now obviously.

The EBITDA will depend very much on LNG prices. So it's very variable and impossible to see at this moment.

Well, he's asking any chance of shareholder distribution we're assuming in 2027. I guess he's talking about the buybacks because in 2027 once CapEx levels are normalized, and free cash flow turns positive.

We are far away from 2027, but I'm sure there's going to be a lot of new things going on by 2027. So too early to answer that.

We have to keep it up because we have cool questions. Safra from -- Carneiro from Safra. She is asking, we saw high level possible new projects and developments the, combo participate like the application to the rig for the CPS, the best battery standard, the TPM. Can you comment on the next possible infrastructure projects that can materialize in Pampa?

Eventually, if we move ahead with -- well, we are moving ahead with the LNG project, we will have to supply those 6 million cubic meters per day to the vessels. So we will have to increase our treatment facilities in Sierra Chata to reach those 6 million per day. And that will definitely be a possibility for filing for the really -- for that investment project as we did for Rincón de Aranda, as a midstream project.

And the second question of [indiscernible] allowed cost we already talked about. [indiscernible] from Alaria. She's asking what level on debt and leverage ratios are projected for 2026 and 2027, considering the projects already approved another wave.

For this year, we are actually 1.1x net leverage EBITDA. We are expecting to maintain around this level of leverage this year. And hopefully, by next year or by the end of next year, which would decrease a little bit this level of leverage as we're going to and -- continue to generate new EBITDA to the company. So I think we will reach the peak of net leverage, what are the things being equal during the next quarter by year-end.

Well, the other question is about the scheduled maintenance works at the power plants that will take place in '25 and '26. So we are going from a big one right now. The our works in Senarra. Okay. [indiscernible] keeps asking. But usually, we do maintenance overflows in the in October area when there is...

Usually either during the fall or the squeezing.

That's right. And antialiasing another question, what do you see the opportunity for improvement in the discount versus Brent -- on Brent? See, the discount is $1, I guess?

$1.5.

$1.5. Do you see shrinking?

It's very difficult to say. It is a market -- it's not...

Or at least when we reach to the year-end target again.

This is not related to our production. It's a market discount that [indiscernible].

For [indiscernible], I don't know. Maybe it depends on the [indiscernible] around the world.

It improved though, -- it was...

It was 3 to 1.5. Now we may go again back to 2.2, we don't know.

It ranges between 3 and 0.

Yes, not 0, but 3 and 1, let's say.

Last year was 5, I think.

Well, maybe it got to 5 for a small period.

Yes. Well, [indiscernible] from Fundamenta. He is an investor, and he is asking my questions regarding other operating income in Oil and Gas segment. This was $12 million versus $28 million last year. Can you comment -- can you explain why? Well, this is because of the plan gas income. The higher the prices to retail that we charge in the sales to lower the compensation to the plan gas price that we agree. Last year was the what because the tariff increases were in midway. I think it was $2 per million BTU, while in the winter was 4.5, well, the subsidy covers that gap between 4.5 and 2. Now that there's constant and frequent tariff increases to the retail, that gap shrinks.

That's right.

Why one -- how much do we -- how much should we expect going forward? Well, it should be -- frankly, you should be there, right, with this government's target of no fiscal changes on abruptly because of the tariff increases. There's monthly increases in the tariffs in the regulated side and also in the -- well, in the cost of gas, it's not so frequent, but it's pretty often. Were down to lower gas production for El Mangrullo this quarter is around 19%. Should we expect peak gas production until CESA comes online in 2028?

Do you want to expect what again? Well, this is something that we still need to understand because, obviously, you're going to be feeding CESA with the most efficient as We already talked about that. He asked about the cooler placement after this ramp-up, this is specifically, how much are you placing Okay. Well, -- I mean, by the time we reach the peak product or the plateau production, we will be exporting 100% of the production. Until that, we are in a mixture between local market and export market because we are -- we don't have enough transportation capacity possibility of selling crude oil and the extra parity price. So we are selling an export parity price. Now we don't know whether that oil

think -- I guess he's asking that.

Where El Mangrullo will increase its production when CESA is online?

Yes.

we have.

Works for, but can you ask -- can you tell us what is the actual strategy of the company? Where do you see more value?

You're seeing we have already in total of the 3 segments of the company.

Oil and gas, what are the plans? We want more exposure to oil and gas. We already talked about on the main. [indiscernible] from and [indiscernible]. Says congratulations, Rincón de Aranda. And then he asks about the CapEx and the free cash flow guidance. locally and how much are exploring?

of our own. So we are buying transportation capacity to third parties and those third parties to sell transportation capacity, but the is being exported or is being redirected into the local market. But economically speaking, if we were exporting.

That is, I think, the main point to clarify, there is no difference today between the local price of crude vis-a-vis the export parity.

Yes. Actually, this quarter, we exported most.

Yes.

Another question is from [indiscernible] from Radico. We asks, recently, we've seen news were mentioning a potential slowdown in oil production growth in Argentina due to the financial equipment constraints.

Financial...

And free equipment...

We'll have financial equipment number.

How does [indiscernible] view this trend?

No, we are not slowing it up.

No, it is not our case. But we do agree, and we do see that.

There might be a reduction in the second half of 2025 of drilling and completion activity. There might be some reduction.

Actually, you forecast that before. You said it. It's not going to be...

We said that the lubricant project was not going to be filled completely, and this is happening.

That forecast was accurate.

He was agreed in terms of -- that is why we went forward with Rincón de Aranda, even without having secure transportation capacity, but we felt that was going to be spare capacity after the [indiscernible] came online.

Well, [indiscernible] is asking beyond the oil prices, what do you think it could be the potential factors of this slowdown in Vaca Muerta? No as hope, of course, but Vaca Muerta, why is it happening?

There are some -- and this is just a personal view, but there are some companies that have go through a process of acquiring new blocks and those new blocks need to be developed, and it takes time to plan and to deploy that -- so maybe that's what's area, I would say, making a little bit low -- not so fast the slowing, the -- the increase in drilling and completion. They're still trying to ingest when they already acquired.

All right.

And probably a lower Brent price is the speed of the growth is going to be slower. Argentina will continue growing extraction of oil probably at a lower -- at a lower state because of the lower price.

Edward [indiscernible] from Iowa, if you ask. Power generation, do you see an increase in the spot prices? Any change in your energy matrix? I guess what he's asking the spot prices is the increases so far in this scheme could it be higher than the inflation and devaluation. So far...

So far as the -- for the last 12 months or 1.5 years has been there have been dollar increases because of the peso prices have been increased above the devaluation of the exchange rate. Particularly this month, it happened the opposite. I don't expect any significant change going forward.

Then another question from Verra [indiscernible] which I don't remember working works for. But are you interested in the stake that the government wants to sell in Transener? Is there any priority or shareholders' agreement that for given that your controlling partner -- co-controlling partner?

It's not an issue of shareholders' agreement. It's an issue of the low electricity lower in Argentina that restricted us from controlling the transmission. If you are either a power generator or a distributor, you cannot fully control the transmission. You can have co-control that is what we currently have, but we cannot go beyond that.

All right. Well, [indiscernible] from Santander. He has straight forward, any chance that Pampa negative?

No.

That's it. reached all the questions. Gus, Horacio, Fito, would you like to comment something else that we didn't cover in this very broad Q&A session.

I don't think.

Nothing more.

Nothing more. Well, I expect us to -- our next call is in November. So I hope we have a better putting some [indiscernible] -- any questions you may have, please let us know, Raquel and I are fully there for you. have a good time. Bye. Thank you.