Pampa Energía S.A. (NYSE:PAM) Q1 2024 Earnings Call Transcript

Pampa Energía S.A. (NYSE:PAM) Q1 2024 Earnings Call Transcript May 9, 2024

Pampa Energía S.A. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Raquel Cardasz: Good morning, everyone, and thank you for waiting. I'm Raquel Cardasz from IR, and we would like to welcome everyone to Pampa Energia's First Quarter 2024 Results Video Conference. We would like to inform you that this event is being recorded. All participants will be in listen-only mode, during the presentation. After the company's remarks, there will be a Q&A session. Questions can only be submitted in writing through Zoom. [Operator Instructions] Before proceeding, 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'll turn the video conference over to Lida. Please go ahead.

Lida Wang: Thank you, Raquel. Hello everyone and thank you for joining our conference call. I'll make a quick summary of Q1, you may find more details in our earnings release and financial statements. Today, we are having a Q&A with our CEO, Mr. Gustavo Mariani; our CFO, Mr. Nicolas Mindlin, Mr. Horacio Turri, our Head of E&P and also Adolfo Zuberbuhler, our Finance Director. Let's start with the quarter figures. After a soft Q4, gas and power demand recovered. Pampa delivered 31% higher gas production year-on-year and 32% quarter-on-quarter, thanks to the new gas pipeline online in August of last year. Remember that Pampa was awarded 4.9 million cubic meters per day out of 11 of the pipeline's capacity. This is very important as this late summer bloom prevented the country from importing gas and firing alternative fuels.

Therefore, there is more local gas output, lesser FX outflow, a friendlier carbon footprint, and more power efficiency. Also, we kept boosting shale gas production, representing 40% of our total output of this quarter, a significant increase compared to last year's 14%. In contrast, we've been experiencing significant delays in collecting CAMMESA payments, burying higher working capital. We learned that the Secretariat of Energy instructed CAMMESA to pay December 2023 and January 2024's transactions in face value dollar bonds, so we booked a $34 million impairment loss on trade receivables. We are awaiting the final resolution and analyzing the course of action. The adjusted EBITDA for the quarter amounted to $189 million. This is a decrease of 8% compared to last year's amount because of the payment haircut on CAMMESA's January receivables and lower gas exports, in addition to the drop of petrochemicals and energy spot prices, this the latter affected by the sharp peso depreciation in December.

Higher domestic gas demand and lower net operating costs partially offset these effects. However, the EBITDA grew 70% quarter-on-quarter, mainly due to this recovery in gas and power demand. Notice that the Q4 '23 EBITDA is also affected by CAMMESA haircut because of December's transaction. CapEx in Q1 slowed down, being 36% lower year-on-year, mainly because of the strong shale gas activity and PEPE 4 was developed in 2023, plus in Q1 we carried out the last divestments of PEPE 6, our last wind farm, which is estimated to be fully commissioned by October of this year. This was partially offset by the beginning of the pilot plan for shale oil in Rincon de Aranda. Moving on to power generation, as seen on slide four, we posted an adjusted EBITDA of $85 million in Q1, 22% lower year-on-year, mainly explained by the $17 million impairment of CAMMESA's January 2024 invoice explained before.

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