• Adjusted EBITDA: $279 million, up 14% year on year.
• Power Generation EBITDA: $112 million, a 23% increase year on year.
• EMP EBITDA: $122 million, down 8% year on year.
• CapEx: 59% lower year on year.
• Free Cash Flow: $80 million in Q3.
• Net Debt: $539 million, down 20% year on year.
• Cash Position: $1.2 billion by the end of September, a 23% increase compared to last year.
• Gas Production: Increased 8% year on year.
• Average Gas Price: $4.4 per MBTU, down 6% year on year.
• Total Production: Averaged nearly 88,000 BOE per day, 8% higher than last year.
• Net Debt to EBITDA Ratio: 0.8 times, the lowest in the last eight years.

• Warning! GuruFocus has detected 5 Warning Signs with PAM.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Pampa Energia SA (NYSE:PAM) reported a solid performance in gas upstream and power generation, overcoming the winter peak with an 8% increase in gas production year-on-year.
• The company's balance sheet remains strong with extended maturities and improved liquidity, bringing net debt to its lowest level since 2016.
• Adjusted EBITDA increased by 14% from last year, driven by increased gas deliveries through the new pipeline and higher spot prices.
• The power generation segment posted a 23% increase in EBITDA year-on-year, supported by higher legacy prices and greater gas and power availability.
• Pampa Energia SA (NYSE:PAM) successfully completed civil works for the P/E six expansion, with 98% of the project advanced and 114 megawatts operational.

Negative Points

• Quarter-on-quarter decrease in performance due to warmer September temperatures, gas pipeline curtailments, and higher operating costs.
• CapEx in Q3 was 59% lower year-on-year, mainly due to the ramp-up of shale gas and construction projects in 2023.
• Petrochemicals segment posted an 88% drop in EBITDA year-on-year due to higher costs and peak demand downturn.
• The EMP business saw an 8% decrease in EBITDA year-on-year, largely due to higher operating costs and reduced exports to Chile.
• The company faces bottlenecks due to delays in the commissioning of compressor plants and soft demand from industries in Chile.

Q & A Highlights

Q: Can you talk about the initial performance of Rincon de Aranda and the drilling plans through the end of 2025? A: Horacio Turri, Executive Director of Exploration and Production, stated that they have two high-spec rigs working and plan to drill 28 wells from November 2024 to December 2025. They expect production to reach 12,000 barrels by April-May 2025 and 18,000 barrels by September 2025.

Q: What is Pampa's and Argentina's gas evacuation capacity, and how will it evolve into 2025 and beyond? A: Gustavo Mariani, CEO, explained that producers do not own evacuation capacity for natural gas. The capacity increased from 11 million to 16 million cubic meters per day with a new compression plant, and it will reach 21 million cubic meters per day by next winter. The north pipeline has been reversed to allow gas supply to the north and potential exports to Chile and Brazil.

Q: How have discussions about LNG projects evolved, and is Pampa still interested in being involved? A: Gustavo Mariani confirmed Pampa's interest in LNG projects to monetize dry gas reserves. They prefer floating units over land facilities due to capital restrictions. However, their current focus is on the Vaca Muerta Sur oil evacuation project.

Q: What is the status of the Sierra Chata block and potential changes in partners? A: Nicolas Mindlin, Executive Director of Finance, stated that they have no information on changes in partners. Pampa is the operator and will continue to operate the area as planned, regardless of any changes in partnership.

Q: What is the expected impact of the Secretariat of Energy's plans on Pampa's EBITDA, and will it involve additional CapEx commitments? A: Nicolas Mindlin estimated an EBITDA impact of around $10 million per year. The plan requires additional CapEx, and they are still working on the specifics. They have not yet responded to the Secretary of Energy's request.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.