Pampa Energia(PAM) - 2025 Q2 - Quarterly Report

Executive Summary & Basis of Presentation This section provides an overview of Pampa Energía's Q2 2025 financial performance and outlines the basis for financial reporting Q2 25 Main Results Overview Pampa Energía reported a slight decline in Q2 2025 sales and a significant decrease in Adjusted EBITDA and Net Income attributable to shareholders, primarily due to lower gas deliveries, reduced petrochemical and crude oil prices, and higher operating expenses Q2 25 Key Financial Highlights | Metric | Q2 25 (US$ million) | Q2 24 (US$ million) | Year-on-year Change | | :----------------------- | :------------------ | :------------------ | :------------------ | | Sales | 486 | 500 | -3% | | Adjusted EBITDA | 239 | 288 | -17% | | Net Income (attributable)| 40 | 100 | -60% | | Net Debt | 712 | N/A | N/A | - Sales decline driven by lower Plan Gas GSA deliveries and reduced petrochemical/crude oil prices, partially offset by PEPE 6 contributions, higher spot energy prices, and increased export volumes[5] - Adjusted EBITDA decrease attributed to lower gas deliveries, weaker domestic demand, declining petrochemical prices, and higher operating expenses, partially offset by higher spot prices, PEPE 6, and increased oil output/gas exports[5] - Net income decrease mainly due to higher non-cash deferred tax charges and lower operating margin, partially offset by gains from financial instruments and absence of Q2 2024 impairments[6] - Net debt increased to US$712 million (1.1x net-debt to EBITDA ratio) due to higher working capital needs and continued investments in Rincón de Aranda[6] Basis of Presentation Pampa Energía reports financial information in US$, its functional currency, with Transener and TGS figures inflation-adjusted and converted to US$ - Financial information is reported in US$, the functional currency[4] - Transener and TGS figures are adjusted for inflation as of June 30, 2025, and converted to US$ using period-end FX[4] - Financial statements are prepared according to IFRS in force in Argentina[7] 1. Relevant events This section details Pampa Energía's key activities and regulatory changes in Q2 2025, including debt refinancing, oil and gas production milestones, and energy sector updates 1.1 Reopening of the 2034 Notes Pampa Energía reopened its 2034 international bond, issuing an additional US$340 million at an 8% yield, increasing the total outstanding to US$700 million, with proceeds used for early redemption of the 2029 Notes - Reopened 2034 international bond with a new issuance of US$340 million at an 8% yield, bringing total outstanding to US$700 million[9] - Proceeds used for early redemption of US$300 million principal of 2029 Notes (9.125% annual interest rate)[10] - Transaction extended debt maturity profile, reduced interest expenses, and positioned 2034 Notes as Pampa's benchmark bond with the lowest spread over US Treasuries in company history[10] 1.2 Oil and gas Pampa Energía achieved a new all-time high for gas production (17.4 mcmpd) driven by Vaca Muerta shale gas development, secured financing for the Vaca Muerta Oil Sur pipeline, and applied for RIGI for Rincón de Aranda's infrastructure development - Set a new all-time high for gas production on July 24, 2025, reaching 17.4 mcmpd, primarily from El Mangrullo (58%) and Sierra Chata (29%) in Vaca Muerta[11] - VMOS S.A. (a consortium including Pampa with a 10.2% stake) secured US$2 billion in financing for the US$3 billion Vaca Muerta Oil Sur pipeline project, which includes crude oil export infrastructure[12][13] - Pampa applied for the RIGI scheme for Rincón de Aranda's Central Processing Facility (CPF) and other infrastructure, with an estimated investment of US$426 million, targeting commissioning by year-end 2026[14] 1.3 Regulatory updates and emergency extension in the energy sector Argentina amended national electricity laws, merging ENARGAS and ENRE, establishing a 24-month transition for market liberalization, introducing new frameworks for power transmission expansion, and extending the energy emergency until July 2026 - National Laws No. 15,336 and 24,065 governing the electricity sector were amended, merging ENARGAS and ENRE, and setting a 24-month transition for oil and gas market liberalization[15] - Amendments include terms for hydroelectric concessions (up to 60 years), re-bidding at expiration, and ensuring free contracting in the Wholesale Electricity Market (WEM)[16] - Two new frameworks for power transmission system expansion were introduced: one allowing SE-authorized projects financed by the National Power Energy Fund, and another for privately led expansions with priority access[17] - The National Government extended the energy emergency for power generation, transmission, and distribution, and natural gas transportation and distribution until July 9, 2026[18] 1.4 Power generation Power generation saw monthly price updates for the legacy/spot scheme, with increases ranging from 0.4% to 4%, hydroelectric concessions for HIDISA and HINISA were extended (HINISA's under dispute), and Pampa participated in a 50 MW Battery Energy Storage Systems (BESS) tender Legacy Energy/Spot Price Updates (January-August 2025) | Effective as of: | Increase | Resolution | | :--------------- | :------- | :--------------- | | January 2025 | 4% | SE No. 603/24 | | February 2025 | 4% | SE No. 27/25 | | March 2025 | 1.5% | SE No. 113/25 | | April 2025* | 1.5% | SE No. 143/25 | | May 2025* | 2% | SE No. 177/25 | | June 2025* | 1.5% | SE No. 227/25 | | July 2025 | 1% | SE No. 280/25 | | August 2025 | 0.4% | SE No. 331/25 | - HIDISA's hydroelectric concession transition period extended to October 19, 2025. HINISA's provincial concession extended by 14 months, but the national concession expired on June 1, 2025, with HINISA continuing operations to safeguard assets[20][21] - Pampa participated in a 50 MW project at CTPP in the national BESS tender for up to 500 MW, aimed at improving grid reliability, with awards scheduled for August 29, 2025[22] 1.5 Transener and TGS Transener and TGS received various tariff updates throughout Q2 2025, TGS's natural gas transportation license was extended for 20 years, its Cerri Complex fully recovered from floods, TGS is the sole bidder for the GPM expansion tender, and approved a significant cash dividend distribution Transener/Transba and TGS Tariff Updates (January-August 2025) | Effective as of: | Transener/Transba Increase | Transener/Transba Resolution | TGS Increase | TGS Resolution | | :--------------- | :------------------------- | :--------------------------- | :----------- | :------------------- | | January 2025 | 4% | ENRE No. 1,065 y 1,066/24 | 2.5% | ENARGAS No. 915/24 | | February 2025 | 4% | ENRE No. 85 y 87/25 | 1.5% | ENARGAS No. 51/25 | | March 2025 | 2% | ENRE No. 158 y 154/25 | 1.7% | ENARGAS No. 124/25 | | April 2025 | 4% | ENRE No. 227 y 231/25 | 0% | NO-2025-32668903-APN-MEC | | May 2025 | 8.6%/2.1% | ENRE No. 305 y 312/25 | 0.1% | ENARGAS No. 256/25 | | June 2025 | 7.3%/4.1% | ENRE No. 388 y 383/25 | 3.0% | ENARGAS No. 350/25 | | July 2025 | 4.6%/1.5% | ENRE No. 451 y 454/25 | 0.8% | ENARGAS No. 421/25 | | August 2025 | 6.0%/2.9% | ENRE No. 549 and 555/25 | 1.8% | ENARGAS No. 539/25 | - TGS's natural gas transportation license was extended for 20 years, starting from its December 2027 expiration[24] - TGS's Cerri Complex fully recovered in early May 2025 after being out of operation since March 7, 2025, due to floods[25] - TGS was the sole bidder in ENARSA's tender to expand the GPM by 14 mcmpd, with the award scheduled for October 13, 2025[26] - TGS Shareholders' Meeting approved a cash dividend distribution of US$202.7 million (US$0.95 per ADR)[27] 2. Analysis of the Q2 25 results This section provides a detailed financial and operational analysis of Pampa Energía's segments for Q2 2025, highlighting key drivers for changes in sales, EBITDA, and net income 2.1 Reconciliation of consolidated adjusted EBITDA Consolidated adjusted EBITDA for Q2 2025 was US$239 million, a 17% decrease year-on-year, primarily influenced by adjustments in the oil and gas, and holding & others segments Consolidated Adjusted EBITDA Reconciliation (US$ million) | Metric | Q2 25 | Q2 24 | | :-------------------------------------- | :---- | :---- | | Consolidated operating income | 113 | 119 | | Consolidated depreciations and amortizations | 97 | 84 | | Reporting EBITDA | 210 | 203 | | Adjustments from oil and gas segment | (1) | (0) | | Adjustments from generation segment | 14 | 71 | | Adjustments from petrochemicals segment | (0) | (0) | | Adjustments from holding & others segment | 17 | 14 | | Consolidated adjusted EBITDA | 239 | 288 | - Consolidated adjusted EBITDA decreased by 17% from US$288 million in Q2 2024 to US$239 million in Q2 2025[30] 2.2 Analysis of the oil and gas segment The oil and gas segment experienced a 6% sales decline and a 28% adjusted EBITDA decrease in Q2 2025, mainly due to reduced gas demand, expiration of Plan Gas commitments, and lower export prices, partially offset by increased crude oil production in Rincón de Aranda and higher export volumes Oil & Gas Segment Key Financials (US$ million) | Metric | Q2 25 | Q2 24 | ∆% | | :--------------- | :---- | :---- | :---- | | Sales revenue | 204 | 218 | -6% | | Gross profit | 52 | 83 | -37% | | Operating income | 22 | 58 | -62% | | Net income | 20 | 27 | -26% | | Adjusted EBITDA | 87 | 121 | -28% | - Sales revenue decreased by 6% YoY, primarily due to reduced gas demand from milder weather, expiration of Plan Gas winter peak commitments, and lower export prices to Chile[31] - Total production averaged 84.1 kboepd in Q2 2025 (-7% YoY), with gas production at 12.9 mcmpd (-11% YoY) and oil production at 8.0 kbpd (+47% YoY), driven by Rincón de Aranda's ramp-up[32][33][37] - Average oil price was US$61.6 per barrel (-14% YoY), reflecting lower Brent prices, while gas price was flat at US$4.0 per MBTU YoY[34][35][38] - Capital expenditures amounted to US$306 million (+181% YoY), with 81% allocated to Rincón de Aranda's development[44] 2.3 Analysis of the power generation segment The power generation segment's sales increased by 10% YoY in Q2 2025, driven by PEPE 6's contribution and higher spot energy prices, but net income turned to a loss, and adjusted EBITDA saw a modest 5% increase, impacted by lower dispatch levels due to maintenance and outages Power Generation Segment Key Financials (US$ million) | Metric | Q2 25 | Q2 24 | ∆% | | :--------------- | :---- | :---- | :---- | | Sales revenue | 185 | 168 | +10% | | Gross profit | 83 | 87 | -5% | | Operating income | 69 | 15 | NA | | Net income | (5) | 36 | NA | | Adjusted EBITDA | 112 | 106 | +5% | - Sales revenue increased by 10% YoY, mainly due to PEPE 6 (fully online since November 2024 with 140 MW) and increased spot energy prices in US$[46] - Operational performance dropped 7% YoY, primarily due to scheduled maintenance at CTLL's GT01 and ongoing outages at HINISA dams, partially offset by higher gas supply and PEPE 6's contribution[49] - Total availability of Pampa's operated units was 91.6% in Q2 2025, down from 98.1% in Q2 2024, affected by maintenance and forced outages[50] - Adjusted EBITDA increased by 5% YoY, supported by PEPE 6, resilient spot prices, and increased insurance recoveries, but partially offset by higher power purchases and operating costs[55] 2.4 Analysis of the petrochemicals segment The petrochemicals segment's adjusted EBITDA significantly decreased by 80% in Q2 2025, primarily due to lower prices across all products and reduced SBR demand, despite a 12% increase in total volume sold boosted by exports of reformer products and domestic sales of solvents, octane bases, and styrene Petrochemicals Segment Key Financials (US$ million) | Metric | Q2 25 | Q2 24 | ∆% | | :--------------- | :---- | :---- | :---- | | Sales revenue | 122 | 134 | -9% | | Gross profit | 6 | 16 | -63% | | Operating income | 1 | 14 | -93% | | Net income | (13) | 15 | NA | | Adjusted EBITDA | 3 | 15 | -80% | - Adjusted EBITDA decreased by 80% YoY, mainly due to lower prices across all products and reduced SBR demand, partially offset by higher sales volumes of reformer products and styrene[58] - Total volume sold reached 125 thousand tons (+12% YoY), driven by increased exports of isomerized naphtha and domestic sales of solvents, octane bases, and styrene[59] Petrochemicals Volume Sold (thousand tons) and Average Price (US$/ton) - Q2 | Product | Volume Sold Q2 25 | Volume Sold Q2 24 | Volume ∆% | Avg. Price Q2 25 | Avg. Price Q2 24 | Price ∆% | | :------------------ | :---------------- | :---------------- | :-------- | :--------------- | :--------------- | :------- | | Styrene & polystyrene | 22 | 19 | +17% | 1,510 | 1,891 | -20% | | SBR | 9 | 12 | -26% | 1,715 | 1,933 | -11% | | Reforming & others | 93 | 80 | +17% | 781 | 924 | -15% | | Total | 125 | 111 | +12% | 978 | 1,199 | -18% | 2.5 Analysis of the holding and others segment The holding and others segment's adjusted EBITDA decreased by 17% in Q2 2025, mainly due to lower contribution from TGS, which was impacted by reduced NGL volumes and tariff increases not keeping pace with inflation, while Transener showed increased EBITDA due to tariff hikes Holding and Others Segment Key Financials (US$ million) | Metric | Q2 25 | Q2 24 | ∆% | | :--------------- | :---- | :---- | :---- | | Sales revenue | 5 | 7 | -29% | | Operating income | 21 | 32 | -34% | | Net income | 38 | 22 | +73% | | Adjusted EBITDA | 38 | 46 | -17% | - Adjusted EBITDA decreased by 17% YoY, primarily due to lower contribution from TGS[64] - TGS's adjusted EBITDA (at Pampa's stake) was US$37 million (-20% YoY), impacted by reduced NGL volumes due to the Cerri flood and tariffs not keeping pace with inflation[65] - Transener's adjusted EBITDA (at Pampa's stake) was US$14 million (+40% YoY), driven by tariff hikes exceeding inflation and devaluation[66] 3. Cash and financial borrowings This section details Pampa Energía's debt transactions, including early redemptions and new issuances, provides a summary of debt securities, and outlines recent credit rating upgrades 3.1 Debt transactions Pampa Energía's financial debt under IFRS decreased by 23% to US$1,591 million as of June 30, 2025, due to early redemptions of 2027 and 2029 Notes, though net debt increased to US$712 million, reflecting higher working capital and capital expenditures, with the company proactively extending its average debt life to 6.2 years - Financial debt under IFRS amounted to US$1,591 million as of June 30, 2025, a 23% decrease compared to year-end 2024[69] - Decrease mainly due to early redemption of 2027 Notes (US$353 million) and 2029 Notes (US$300 million), funded by new 2034 Notes issuance[69] - Net debt increased to US$712 million, reflecting higher seasonal working capital and increased capital expenditures, mostly for Rincón de Aranda[69] - Average debt life extended to 6.2 years through proactive liability management[70] Gross Debt Principal Breakdown by Currency and Type | Currency | Type of issuance | Amount in million US$ | Legislation | % over total gross debt | Average coupon | | :------- | :--------------- | :-------------------- | :---------- | :---------------------- | :------------- | | US$ | US$ | 1,230 | Foreign | 77% | 8.1% | | US$ | US$ | 136 | Argentine | 9% | 5.2% | | US$ | US$ MEP | 140 | Argentine | 9% | 5.4% | | AR$ | US$-link | 88 | Argentine | 6% | 0% | 3.2 Summary of debt securities Pampa Energía and its affiliates hold various corporate bonds under foreign and Argentine law, with maturities ranging from 2025 to 2034 and fixed interest rates, and the company remains in full compliance with all debt covenants Summary of Debt Securities (US$ million) | Company | Type of Bond | Maturity | Amount issued | Amount net of repurchases | Coupon | | :------ | :------------------------------- | :------- | :------------ | :------------------------ | :------- | | Pampa | CB Series 9 at par & fixed rate | 2026 | 293 | 120 | 9.5% | | Pampa | CB Series 21 at discount & fixed rate | 2031 | 410 | 410 | 7.95% | | Pampa | CB Series 23 at discount & fixed rate | 2034 | 700 | 700 | 7.875% | | TGS | CB at discount at fixed rate | 2031 | 490 | 490 | 8.5% | | Pampa | CB Series 20 | 2026 | 108 | 51 | N/A | | Pampa | CB Series 13 | 2027 | 88 | 88 | 0% | | CTEB | CB Series 9 | 2026 | 50 | 49 | 0% | | Pampa | CB Series 16 | 2025 | 56 | 56 | 4.99% | | Pampa | CB Series 22 | 2028 | 84 | 84 | 5.75% | - Pampa remains in full compliance with all debt covenants as of June 30, 2025[73] 3.3 Credit ratings Pampa Energía's credit ratings were upgraded by Moody's (from 'Caa1' to 'B2') and S&P (stand-alone from 'b+' to 'bb-') in July 2025, reflecting its strong market position, robust liquidity, and solid debt structure - Moody's upgraded Pampa's rating from 'Caa1' to 'B2' in July 2025, aligning with Argentina's sovereign rating upgrade[76] - S&P raised Pampa's stand-alone credit rating from 'b+' to 'bb-'[76] - The upgrades highlight Pampa's strong market position, robust liquidity, and solid debt structure[76] Credit Ratings Summary | Company | Agency | Global Rating | Local Rating | | :-------- | :---------- | :----------------- | :----------------- | | Pampa | S&P | B-, bb- (stand-alone) | na | | Pampa | Moody's | B2 | na | | Pampa | FitchRatings | B- | AAA (long-term), A1+ (short-term) | | TGS | S&P | B-, b+ (stand-alone) | na | | TGS | FitchRatings | B- | na | | Transener | FitchRatings | na | A+ (long-term) | | CTEB | FitchRatings | na | AA+ | 4. Appendix This appendix provides detailed financial statements, operational KPIs, and production data for Pampa Energía's subsidiaries and segments for the first half and second quarter of 2025 4.1 Analysis of the first half, by subsidiary and segment This section provides a detailed breakdown of adjusted EBITDA, net debt, and net income for Pampa Energía's subsidiaries and segments for the first half of 2025 compared to 2024, both consolidated and at Pampa's share ownership - Total consolidated adjusted EBITDA for the first half of 2025 was US$459 million, down from US$475 million in H1 2024[78] - Total consolidated net debt was US$712 million in H1 2025, an increase from US$691 million in H1 2024[78] - Total consolidated net income for the first half of 2025 was US$193 million, a significant decrease from US$367 million in H1 2024[78] 4.2 Analysis of the quarter, by subsidiary and segment This section presents a detailed quarterly analysis of adjusted EBITDA, net debt, and net income for Pampa Energía's subsidiaries and segments for Q2 2025 compared to Q2 2024, both consolidated and at Pampa's share ownership - Total consolidated adjusted EBITDA for Q2 2025 was US$239 million, down from US$288 million in Q2 2024[79] - Total consolidated net income for Q2 2025 was US$40 million, a decrease from US$100 million in Q2 2024[79] 4.3 Consolidated balance sheet This section provides a consolidated balance sheet for Pampa Energía as of June 30, 2025, compared to December 31, 2024, detailing assets, equity, and liabilities in both Argentine Pesos (AR$) and US Dollars (US$) - Total assets decreased to US$6,122 million as of June 30, 2025, from US$6,345 million as of December 31, 2024[81] - Total equity attributable to owners of the company increased to US$3,485 million as of June 30, 2025, from US$3,286 million as of December 31, 2024[81] - Total liabilities decreased to US$2,628 million as of June 30, 2025, from US$3,050 million as of December 31, 2024[81] 4.4 Consolidated income statement This section presents the consolidated income statement for Pampa Energía for the first half and second quarter of 2025, compared to the same periods in 2024, detailing sales revenue, costs, operating income, financial results, and net income - Sales revenue for Q2 2025 was US$486 million, a decrease from US$500 million in Q2 2024[82] - Net income attributable to owners of the company for Q2 2025 was US$40 million, down from US$100 million in Q2 2024[82] - Net income per ADR to shareholders for Q2 2025 was US$0.7, a decrease from US$1.8 in Q2 2024[82] 4.5 Consolidated cash flow statement This section provides the consolidated cash flow statement for Pampa Energía for the first half of 2025 compared to 2024, detailing cash flows from operating, investing, and financing activities - Net cash generated by operating activities for H1 2025 was US$147 million, an increase from US$64 million in H1 2024[84] - Net cash used in investing activities for H1 2025 was US$168 million, compared to US$151 million used in H1 2024[84] - Net cash used in financing activities for H1 2025 was US$556 million, a significant change from US$77 million generated in H1 2024, primarily due to higher repurchase and redemption of corporate bonds[84] - Cash and cash equivalents at the end of H1 2025 were US$161 million, consistent with US$161 million at the end of H1 2024[84] 4.6 Power generation's main operational KPIs by plant This section details key operational performance indicators for Pampa Energía's power generation plants, categorized by wind, hydroelectric, and thermal, for the first half and second quarter of 2025 and 2024, including installed capacity, net generation, sales, average price, and gross margin - Total installed capacity increased by 2% YoY to 5,472 MW in Q2 2025, driven by a 28% increase in wind capacity[52] - Total net generation decreased by 7% YoY to 4,704 GWh in Q2 2025, with wind generation increasing by 57% but hydro and thermal decreasing by 30% and 9% respectively[52] - Average price for total power generation increased by 14% YoY to US$43/MWh in Q2 2025[52] 4.7 Production in the main oil and gas blocks This section provides a breakdown of oil and gas production in key blocks at Pampa Energía's ownership for Q2 2025 compared to Q2 2024, highlighting changes in production volumes Oil and Gas Production in Main Blocks (kboe/day at ownership) - Q2 | Block | 2025 | 2024 | Variation | | :------------------ | :---- | :---- | :-------- | | Gas | | | | | El Mangrullo | 44.1 | 54.2 | -19% | | Sierra Chata | 22.2 | 19.6 | +14% | | Río Neuquén | 7.9 | 9.7 | -19% | | Rincón del Mangrullo | 1.0 | 1.2 | -17% | | Others | 0.9 | 0.7 | +30% | | Total gas | 76.1 | 85.4 | -11% | | Oil | | | | | Rincón de Aranda | 5.3 | 1.2 | na | | El Tordillo | 1.6 | 1.6 | -5% | | Associated oil | 1.1 | 1.3 | -17% | | Los Blancos | 0.1 | 0.2 | -72% | | Gobernador Ayala | - | 1.1 | -100% | | Total oil | 8.0 | 5.4 | +47% | | Total | 84.1 | 90.8 | -7% | - Total gas production decreased by 11% YoY, while total oil production increased by 47% YoY in Q2 2025[86] - Rincón de Aranda showed significant oil production growth, while Gobernador Ayala's contribution ceased due to stake transfer[86] 5. Glossary of terms This section provides definitions for various acronyms and technical terms used throughout the financial report, covering financial, operational, and regulatory terminology relevant to Pampa Energía's business Glossary of Terms This section provides definitions for various acronyms and technical terms used throughout the financial report, covering financial, operational, and regulatory terminology relevant to Pampa Energía's business