Pampa Energia(PAM) - 2025 Q1 - Quarterly Report

Q1 25 Main Results Pampa Energía reported a 3% increase in Q1 25 sales and a 17% rise in Adjusted EBITDA, while net profit decreased by 43% due to tax and operating costs Q1 25 Key Financial Highlights (YoY) | Metric | Q1 25 (US$ million) | Q1 24 (US$ million) | Variation | | :--- | :--- | :--- | :--- | | Sales | 414 | 401 | +3% | | Adjusted EBITDA | 220 | 187 | +17% | | Net Profit | 153 | 267 | -43% | | Net Debt | 577 | N/A | N/A | - Sales growth was driven by higher spot energy prices, the newly commissioned PEPE 6, and greater deliveries under Plan Gas, partially offset by lower petrochemical reformer volumes and softer gas sales to industries and Chile[2] - Adjusted EBITDA increase was mainly due to spot energy and PEPE 6 in power generation, along with higher Plan Gas volumes and tariff increases in TGS and Transener, partially offset by higher operating costs and reduced petrochemical production[3] - Net profit decreased primarily due to a smaller recovery from non-cash deferred income tax and increasing operating costs, despite higher sales and positive net financial results[4] 1. Relevant Events This section details significant corporate developments, including a major FLNG project, power generation updates, tariff adjustments for TGS and Transener, and changes in the Board of Directors 1.1 Participation in the FLNG Project for LNG Exports Pampa Energía, through its 20% stake in SESA, is moving forward with a significant FLNG Project, executing final investment decisions for two floating liquefaction vessels (Hilli and MKII) with a combined capacity of up to 6 MTPA of LNG. This US$7 billion investment aims to monetize Pampa's Vaca Muerta reserves and position Argentina in the global LNG market, with Pampa contributing up to 6 mcmpd of natural gas - Shareholders of SESA (Pampa 20% stake) agreed to proceed with the FLNG Project, executing FID for a 20-year charter of the Hilli (2.45 MTPA) and MKII (3.5 MTPA) floating liquefaction vessels[7][8][9] - The project aims to export up to 6 MTPA of LNG, with Hilli expected to begin operations in late 2027/early 2028 and MKII by the end of 2028[8] - Pampa will contribute up to 6 mcmpd of natural gas, representing an almost 50% increase from current average production, to supply the vessels[10] - The estimated investment is US$7 billion over 20 years, approved under the RIGI, with a 30-year unrestricted LNG export permit granted[11] 1.2 Power generation The power generation segment saw multiple spot remuneration updates from January to May 2025, with increases ranging from 1.5% to 4%. Additionally, the National Government and Mendoza province agreed to jointly tender the HIDISA and HINISA concessions as a single business unit Spot Remuneration Updates (Effective as of) | Effective as of: | Increase | | :--- | :--- | | January 2025 | 4% | | February 2025 | 4% | | March 2025 | 1.5% | | April 2025* | 1.5% | | May 2025* | 2% | - The National Government and Mendoza province agreed to jointly tender the HIDISA and HINISA concessions as a single business unit, transferring 51% of the concessionaire's shares[13] 1.3 Transener and TGS TGS experienced a US$13 million loss in Q1 25 due to severe flooding at its Cerri Complex, which halted NGL production and gas transportation, though gas transportation was restored. Both Transener and TGS received multiple tariff adjustments and concluded their five-year tariff reviews (RQT), establishing new capital bases, mandatory investments, real rates of return, and monthly adjustment mechanisms for cost variations - Severe flooding at TGS's Cerri Complex on March 7, 2025, halted NGL production and natural gas transportation; gas transportation was restored on March 24, but NGL production is still partially normalized[15] - TGS recorded a US$13 million loss in Q1 25 related to climate event expenses and impairment of materials and PPE due to the flood[16] Tariff Adjustments due to Cost Variations | Effective as of: | Transener Increase | TGS Increase | | :--- | :--- | :--- | | January 2025 | 4% | 2.5% | | February 2025 | 4% | 1.5% | | March 2025 | 2% | 1.7% | | April 2025 | 4% | 0% | - TGS's five-year tariff review (RQT) concluded, effective May 2025-2030, including an initial 3.67% tariff increase and monthly adjustments based on a 50% PPI and 50% CPI formula[18][19] - Transener and Transba's five-year tariff review (RQT) concluded, effective May 2025-2030, with Transener receiving a 42.89% increase and Transba a 10.30% increase, phased in monthly, and a monthly adjustment mechanism combining 33% CPI and 67% PPI[20][21] 1.4 Approval of VMOS's under RIGI The Ministry of Economy (MECON) approved VMOS's application to the Incentive Regime for Large Investments (RIGI) for the construction and operation of a 437 km oil pipeline with a capacity of up to 700 kbpd. Pampa holds an 11% stake in VMOS and has a contract to transport 50 kbpd - MECON approved VMOS's application to the RIGI for building and operating a 437 km oil pipeline between Allen and Punta Colorada, with a capacity of up to 700 kbpd[23] - Pampa holds an 11% stake in VMOS and has a contract to transport 50 kbpd, including storage and loading services[23] 1.5 End of the Export Growth Program ('PIE') Executive Order No. 269/25 mandated that 100% of export proceeds must be settled through the official exchange market (MULC), effectively terminating the Export Growth Program (PIE) - Executive Order No. 269/25 ended the Export Growth Program ('PIE') by mandating that 100% of export proceeds must be settled through the official exchange market MULC[24] 1.6 Changes in the Board of Directors Pampa's Shareholders Meeting approved the appointments of three new Board members and renewed the tenures of several existing members and alternate members. New appointments were also made to the Audit Committee - Gabriel Szpiegel, Daniela Rivarola Meilan, and Nicolás Mindlin were appointed as new Board members[25] - Carolina Zang and Julia Pomares had their tenures renewed as Board members, while Clarisa Lifsic, Lorena Rappaport, and Diego Martín Salaverri were renewed as alternate members, and Flavia Bevilacqua and María Carolina Sigwald were appointed as alternate members[26] - Gabriel Szpiegel and Carolina Zang were designated members of the Audit Committee, with Clarisa Lifsic as an alternate member[26] 2. Financial highlights This section provides an overview of Pampa Energía's consolidated balance sheet, income statement, cash flow, and debt profile for Q1 25 2.1 Consolidated balance sheet As of March 31, 2025, Pampa Energía reported a slight decrease in total assets and liabilities compared to December 31, 2024, while total equity attributable to owners of the company increased Consolidated Balance Sheet (US$ million) | Metric | As of 03.31.2025 | As of 12.31.2024 | | :--- | :--- | :--- | | Total Assets | 6,199 | 6,345 | | Total Equity | 3,482 | 3,295 | | Total Liabilities | 2,717 | 3,050 | | Property, plant and equipment | 2,685 | 2,607 | | Investments in associates and joint ventures | 1,103 | 993 | | Cash and cash equivalents | 361 | 738 | 2.2 Consolidated income statement Pampa Energía's Q1 25 consolidated income statement shows a 3% increase in sales revenue year-on-year, but a 43% decrease in net income, primarily due to lower recovery from non-cash deferred income tax and increased operating costs Consolidated Income Statement (US$ million, Q1 25 vs Q1 24) | Metric | Q1 25 | Q1 24 | Variation | | :--- | :--- | :--- | :--- | | Sales revenue | 414 | 401 | +3% | | Cost of sales | (285) | (258) | +10% | | Gross profit | 129 | 143 | -10% | | Operating income | 121 | 119 | +2% | | Financial results, net | 29 | 1 | NA | | Profit before tax | 150 | 120 | +25% | | Net income for the period | 154 | 268 | -43% | | Net income per ADR to shareholders | 2.8 | 4.9 | -43% | 2.3 Consolidated cash flow statement In Q1 25, Pampa Energía significantly improved cash generated from operating activities, moving from a net outflow in Q1 24 to a net inflow. However, there was a substantial increase in cash used in financing activities, primarily due to debt repurchases and redemptions, leading to an overall decrease in cash and cash equivalents Consolidated Cash Flow Statement (US$ million, Q1 25 vs Q1 24) | Activity | Q1 25 | Q1 24 | | :--- | :--- | :--- | | Net cash generated by (used in) operating activities | 90 | (20) | | Net cash generated by (used in) investing activities | (43) | (28) | | Net cash (used in) generated by financing activities | (424) | 77 | | (Decrease) Increase in cash and cash equivalents | (377) | 29 | | Cash and cash equivalents at the end of the period | 361 | 200 | - Repurchase and redemption of corporate bonds amounted to US$360 million in Q1 25, a significant financing outflow compared to none in Q1 24[31] 2.4 Cash and financial borrowings Pampa Energía's consolidated financial debt decreased by 19% to US$1,691 million in Q1 25 due to the redemption of 2027 Notes, but net debt increased to US$577 million due to higher working capital and investments. The company successfully improved its debt maturity profile, extending the average life to 5.0 years, and continues to comply with all debt covenants Cash and Financial Debt (US$ million, as of March 31, 2025) | Metric | Consolidated (in FS) | | :--- | :--- | | Cash | 1,114 | | Financial debt | 1,691 | | Net debt | 577 | - Pampa's financial debt under IFRS amounted to US$1,691 million, a 19% decrease from the end of 2024, mainly due to the full redemption of 2027 Notes funded by the issuance of 2034 Notes[34] - Net debt increased to US$577 million due to higher seasonal working capital needs and increased capital expenditures for Rincón de Aranda's development[34] - The issuances of the 2031 and 2034 Notes significantly improved Pampa's debt maturity profile, extending the average life to 5.0 years[35] Pampa's Debt Securities (in million US$) | Security | Maturity | Amount net of repurchases | Coupon | | :--- | :--- | :--- | :--- | | CB Series 9 (Foreign Law) | 2026 | 120 | 9.5% | | CB Series 3 (Foreign Law) | 2029 | 293 | 9.125% | | CB Series 21 (Foreign Law) | 2031 | 410 | 7.95% | | CB Series 23 (Foreign Law) | 2034 | 360 | 7.875% | Credit Ratings (Global) | Company | Agency | Rating | | :--- | :--- | :--- | | Pampa | S&P | B- | | Pampa | Moody's | Caa1 | | Pampa | FitchRatings | B- | 3. Analysis of the Q1 25 results This section offers a detailed segment-by-segment analysis of Pampa Energía's Q1 25 financial performance, including adjusted EBITDA, and key operational drivers 3.1 Reconciliation of consolidated adjusted EBITDA Pampa Energía's consolidated adjusted EBITDA increased by 17% year-on-year to US$220 million in Q1 25, driven by strong performance in power generation and holding & others segments, despite adjustments in other segments Consolidated Adjusted EBITDA Reconciliation (US$ million) | Metric | Q1 25 | Q1 24 | | :--- | :--- | :--- | | Consolidated operating income | 121 | 119 | | Consolidated depreciations and amortizations | 84 | 68 | | Reporting EBITDA | 205 | 187 | | Consolidated adjusted EBITDA | 220 | 187 | Adjusted EBITDA by Segment (US$ million, Q1 25 vs Q1 24) | Segment | Q1 25 | Q1 24 | Variation | | :--- | :--- | :--- | :--- | | Oil and Gas | 41 | 67 | -39% | | Power generation | 130 | 86 | +51% | | Petrochemicals | (4) | 11 | NA | | Holding and Others | 53 | 23 | +133% | | Total | 220 | 187 | +17% | 3.2 Analysis of the oil and gas segment The oil and gas segment experienced a 3% decline in sales revenue and a 39% drop in adjusted EBITDA in Q1 25, primarily due to lower gas sales to Chile and industries, and reduced crude oil volumes. Despite flat overall production year-on-year, gas production saw a slight increase, while oil production decreased significantly due to divestments and lower volumes in conventional blocks, partially offset by rising shale oil production at Rincón de Aranda, which also drove a 67% increase in capital expenditures Oil & Gas Segment Financials (US$ million, Q1 25 vs Q1 24) | Metric | Q1 25 | Q1 24 | ∆% | | :--- | :--- | :--- | :--- | | Sales revenue | 146 | 150 | -3% | | Gross profit | 28 | 51 | -45% | | Net loss for the period | (49) | 48 | NA | | Adjusted EBITDA | 41 | 67 | -39% | | Increases in PPE and right-of-use assets | 147 | 87 | +69% | - Sales decline was mainly due to lower gas sales to Chile and industries, and a drop in crude oil volumes, partially offset by higher deliveries under Plan Gas[44] Oil & Gas Production (kboe/day, Q1 25 vs Q1 24) | Product | Q1 25 | Q1 24 | Variation | | :--- | :--- | :--- | :--- | | Total Production | 72.7 | 73.1 | -0% | | Gas Production | 69.5 | 68.8 | +1% | | Oil Production | 3.2 | 4.3 | -25% | Oil & Gas Average Prices (Q1 25 vs Q1 24) | Product | Q1 25 | Q1 24 | Variation | | :--- | :--- | :--- | :--- | | Average gas price (US$/MBTU) | 3.0 | 3.2 | -6% | | Average oil price (US$/bbl) | 68.4 | 68.6 | -0% | - Oil production decreased due to the sale of Gobernador Ayala block in October 2024 and lower volumes at conventional crude oil blocks, partially offset by rising shale oil production at Rincón de Aranda[51] - Lifting cost per boe rose 20% to US$6.9 in Q1 25 (vs. US$5.8 in Q1 24), mainly due to higher gas treatment expenses and well testing at Rincón de Aranda[53] - Capital expenditures amounted to US$147 million in Q1 25 (+67% YoY), with 78% allocated to the development of Rincón de Aranda[60] 3.3 Analysis of the power generation segment The power generation segment saw a 27% increase in sales revenue and a 51% rise in adjusted EBITDA in Q1 25, primarily driven by higher spot prices, the full commissioning of PEPE 6, and operational improvements. Despite a slight decrease in net income, the segment's operational performance outperformed the national grid, with increased generation from new capacity and improved availability Power Generation Segment Financials (US$ million, Q1 25 vs Q1 24) | Metric | Q1 25 | Q1 24 | ∆% | | :--- | :--- | :--- | :--- | | Sales revenue | 195 | 154 | +27% | | Gross profit | 92 | 77 | +19% | | Net income for the period | 125 | 198 | -37% | | Adjusted EBITDA | 130 | 86 | +51% | | Increases in PPE | 9 | 24 | -63% | - Sales growth was mainly driven by higher spot prices in US$ terms (AR$ prices rose 136% YoY), the full commissioning of PEPE 6 (adding 140 MW), and increased recognition of fuel, gas, and power transportation tariffs[62] Power Generation Key Performance Indicators (Q1 25 vs Q1 24) | Metric | Q1 25 | Q1 24 | Variation | | :--- | :--- | :--- | :--- | | Installed capacity (MW) | 5,472 | 5,332 | +3% | | Net generation (GWh) | 5,951 | 5,928 | +0% | | Average price (US$/MWh) | 37 | 31 | +22% | | Average gross margin (US$/MWh) | 25 | 20 | +22% | | Total availability | 93.4% | 96.5% | -307 bps | - Adjusted EBITDA was boosted by higher spot prices, the addition of PEPE 6, and operational improvements, especially in PPAs units, partially offset by higher operating expenses[72] - Capital expenditures (excluding CTEB) totaled US$9 million in Q1 25, down from US$24 million in Q1 24, due to the completion of PEPE 6 in Q4 24[73] 3.4 Analysis of the petrochemicals segment The petrochemicals segment reported a US$4 million adjusted EBITDA loss in Q1 25, a significant decline from a US$11 million gain in Q1 24, primarily due to a reformer plant overhaul that reduced production by 30%, lower styrene and polystyrene prices/volumes, and higher operating expenses. Despite this, net income increased significantly due to contingency recoveries Petrochemicals Segment Financials (US$ million, Q1 25 vs Q1 24) | Metric | Q1 25 | Q1 24 | ∆% | | :--- | :--- | :--- | :--- | | Sales revenue | 92 | 120 | -23% | | Gross profit | 2 | 12 | -83% | | Net income for the period | 42 | 11 | +282% | | Adjusted EBITDA | (4) | 11 | NA | - The adjusted EBITDA loss was mainly due to a 30% reduction in production from an overhaul at the Reformer plant in February 2025, lower styrene and polystyrene prices and volumes, and higher operating expenses[76] Petrochemicals Key Performance Indicators (Q1 25 vs Q1 24) | Metric | Q1 25 | Q1 24 | Variation | | :--- | :--- | :--- | :--- | | Total volume sold (k ton) | 84 | 110 | -24% | | Average price (US$/ton) | 1,095 | 1,098 | -0% | | Styrene & polystyrene volume sold (k ton) | 19 | 23 | -15% | | SBR volume sold (k ton) | 11 | 10 | +8% | | Reforming & others volume sold (k ton) | 54 | 77 | -30% | - Financial results recorded a profit of US$26 million in Q1 25, compared to a US$1 million loss in Q1 24, mainly explained by contingency recoveries[77] 3.5 Analysis of the holding and others segment The holding and others segment significantly improved its adjusted EBITDA to US$53 million in Q1 25, a 133% increase year-on-year, driven by higher contributions from TGS and Transener due to tariff hikes, and improved corporate segment losses. Net income also saw a substantial increase, supported by gains from slower AR$ devaluation and reduced financial expenses Holding and Others Segment Financials (US$ million, Q1 25 vs Q1 24) | Metric | Q1 25 | Q1 24 | ∆% | | :--- | :--- | :--- | :--- | | Sales revenue | 7 | 3 | +133% | | Operating income | 20 | 16 | +25% | | Net income for the period | 36 | 11 | +227% | | Adjusted EBITDA | 53 | 23 | +133% | - The significant increase in adjusted EBITDA was due to higher contributions from TGS (US$46 million vs US$27 million) and Transener (US$13 million vs US$6 million), both driven by tariff increases, and improved losses from the corporate segment[84][85][86] - Financial results showed a net profit of US$7 million in Q1 25 (vs. US$5 million loss in Q1 24), mainly explained by gains from slower AR$ devaluation on tax credits and lesser financial expenses from reduced AR$ debt[81] 3.6 Analysis of the quarter, by subsidiary and segment This section provides a detailed breakdown of Adjusted EBITDA, Net Debt, and Net Income for Q1 25 and Q1 24, categorized by subsidiary and segment, both on a consolidated basis and adjusted by Pampa's ownership stake, offering granular insight into each business unit's contribution Adjusted EBITDA by Subsidiary and Segment (US$ million, Q1 25 vs Q1 24) | Segment/Subsidiary | % Pampa | Q1 25 Adjusted EBITDA | Q1 24 Adjusted EBITDA | | :--- | :--- | :--- | :--- | | Oil & gas segment (Pampa Energía) | 100.0% | 41 | 67 | | Power generation segment (Subtotal) | N/A | 130 | 86 | | Petrochemicals segment (Pampa Energía) | 100.0% | (4) | 11 | | Holding & others segment (Subtotal) | N/A | 53 | 23 | | Total consolidated | N/A | 220 | 187 | Net Income by Subsidiary and Segment (US$ million, Q1 25 vs Q1 24) | Segment/Subsidiary | % Pampa | Q1 25 Net Income | Q1 24 Net Income | | :--- | :--- | :--- | :--- | | Oil & gas segment (Pampa Energía) | 100.0% | (49) | 48 | | Power generation segment (Subtotal) | N/A | 124 | 197 | | Petrochemicals segment (Pampa Energía) | 100.0% | 42 | 11 | | Holding & others segment (Subtotal) | N/A | 36 | 11 | | Total consolidated | N/A | 153 | 267 | Net Debt by Subsidiary and Segment (US$ million, Q1 25 vs Q1 24) | Segment/Subsidiary | % Pampa | Q1 25 Net Debt | Q1 24 Net Debt | | :--- | :--- | :--- | :--- | | Oil & gas segment (Pampa Energía) | 100.0% | 1,167 | 956 | | Power generation segment (Subtotal) | N/A | (502) | (129) | | Petrochemicals segment (Pampa Energía) | 100.0% | - | - | | Holding & others segment (Subtotal) | N/A | (118) | 3 | | Total consolidated | N/A | 577 | 718 | 4. Appendix This section provides supplementary operational data, including detailed KPIs for power generation plants and oil and gas production by main blocks 4.1 Power generation's main operational KPIs by plant This section provides a detailed breakdown of key operational performance indicators for Pampa Energía's individual power generation plants, including installed capacity, net generation, sales volume, average price, and average gross margin, categorized by wind, hydroelectric, and thermal sources for Q1 25 and Q1 24 Power Generation Operational KPIs by Plant (Q1 25) | Plant Type | Installed Capacity (MW) | Net Generation (GWh) | Sales (GWh) | Avg. Price (US$/MWh) | Avg. Gross Margin (US$/MWh) | | :--- | :--- | :--- | :--- | :--- | :--- | | Wind | 427 | 418 | 420 | 70 | 51 | | Hydro | 938 | 485 | 485 | 19 | 10 | | Thermal | 4,107 | 5,048 | 5,246 | 36 | 24 | | Total | 5,472 | 5,951 | 6,150 | 37 | 25 | - Wind generation saw a 72% increase in net generation (418 GWh in Q1 25 vs 244 GWh in Q1 24), while hydro generation decreased by 29% (485 GWh vs 683 GWh)[90] 4.2 Production in the main oil and gas blocks This section details Pampa Energía's oil and gas production in kboe/day by main blocks for Q1 25 and Q1 24, highlighting variations in gas and oil output across different fields Oil and Gas Production in Main Blocks (kboe/day at ownership) | Block | Q1 25 | Q1 24 | Variation | | :--- | :--- | :--- | :--- | | Gas | | | | | El Mangrullo | 38.1 | 43.7 | -13% | | Río Neuquén | 8.4 | 8.9 | -5% | | Sierra Chata | 20.9 | 13.8 | +51% | | Rincón del Mangrullo | 1.0 | 1.5 | -29% | | Oil | | | | | El Tordillo | 1.3 | 1.6 | -15% | | Gobernador Ayala | - | 1.1 | -100% | | Rincón de Aranda | 0.9 | 0.2 | NA | | Total | 72.7 | 73.1 | -0% | - Sierra Chata gas production increased by 51% YoY, while El Mangrullo and Rincón del Mangrullo gas production decreased by 13% and 29% respectively[91] - Gobernador Ayala oil production ceased due to the transfer of Pampa's stake in October 2024, while Rincón de Aranda shale oil production significantly increased[91] 5. Glossary of terms This section defines key financial, operational, and regulatory terms used throughout the report - The glossary provides definitions for key terms and acronyms used throughout the earnings release, covering financial, operational, and regulatory terminology specific to the Argentine energy sector[93][94]