Release Date: May 13, 2025

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 power generation and utility businesses, with higher gas deliveries for thermal generation. The company has initiated the FLNG project, holding a 20% stake, which is expected to export 6 million tons of LNG per year, enhancing Argentina's position in the global LNG market. Adjusted EBITDA for the quarter was $220 million, a 17% increase from the previous year, driven by stronger spot prices in power and higher gas deliveries. Pampa Energia SA (NYSE:PAM) is on track to double its 2025 export campaign volume compared to the previous year, with new exports to Brazil and increased flows to Chile. The company is making significant progress in infrastructure development, with plans to reach 20,000 barrels per day of production at Rincon deranda by Q4 2025.

Negative Points

Higher operating costs and softer B2B gas sales partially offset the gains in adjusted EBITDA. The EMP business saw a 39% year-on-year decline in adjusted EBITDA due to increased operating expenses and lower sales to industries. Gas prices averaged $3 per million BTU, a 6% decrease year-on-year due to B2B oversupply and weaker Brent prices affecting exports. The petrochemical business segment is expected to face a tough year with lower sales and more competition from imports, impacting margins. Pampa Energia SA (NYSE:PAM) is not planning to raise new debt for CapEx, which may limit its ability to fund future projects without market opportunities.

Q & A Highlights

Warning! GuruFocus has detected 8 Warning Signs with PAM.

Q: How is the situation today in Ecuador regarding the concession? A: The concession ended last year, and we returned it to the Ecuadorian government. We are currently trying to recover two guarantees of $50 million each, one environmental and one operational. Despite the pipeline operating perfectly and no environmental issues, we haven't been able to release the guarantees. We have initiated arbitration to recover these guarantees and are optimistic about the outcome. - Unidentified_3

Q: Can you update on the development of Rincon deranda and the expected production exit rate for this year? A: We have drilled 5 pads and fracked 3, with 1 tied in. Current production is around 6,500 barrels per day. We plan to tie in the next two pads soon and aim to reach 20,000 barrels per day by the end of 2025. - Unidentified_4

Q: With investments in upstream and LNG, what are the CapEx requirements for the next couple of years? A: For LNG, we have a commitment of $700 million until 2028, with Pampa's share being a little over $100 million. For upstream, we plan to invest around $400 million from 2026 to 2028 to supply our share of the LNG vessels. - Unidentified_4

Story Continues

Q: Are there any plans to raise more debt in the short to medium term? A: We plan to fund all our CapEx with cash flow from power and gas businesses and our strong cash position. We are not planning to issue more debt unless there are very good market opportunities. - Unidentified_5

Q: What is the expected EBITDA contribution from the new FLNG project by 2028? A: Once both vessels are online and delivering nearly 6 million cubic meters per day, we estimate an EBITDA contribution of approximately $150 million, assuming an FOB price of $7.2 per million BTU. - Unidentified_4

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

This article first appeared on GuruFocus.

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