Pampa Energia(US:PAM)2023-05-12 06:55Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 amounted to $206 million, an 8% decrease year-on-year primarily due to Barragán's old PPA, PGS' lag tariffs, and higher payroll costs, but increased 12% quarter-on-quarter due to PPA additions and higher liquids margins [1][10] - Gross debt stood at $1.73 billion, similar to the last quarter, with net debt and leverage ratio decreasing to 1.2x due to solid cash flow generation [5][14] - Total cash flow generated in the quarter was $68 million, with cash at the end of the period reaching $768 million [14] Business Line Data and Key Metrics Changes - Power generation EBITDA was $108 million in Q1, down 11% year-on-year but up 26% quarter-on-quarter, influenced by the expiration of Barragán's PPA and higher labor expenses [25] - E&P business posted adjusted EBITDA of $62 million in Q1, a 10% increase year-on-year but down 14% quarter-on-quarter due to higher costs and legal expenses [10] - Petrochemical business recorded $7 million EBITDA in Q1, primarily from styrene and polystyrene sales, but shrank significantly quarter-over-quarter due to reduced supply of raw gas and export margins [30] Market Data and Key Metrics Changes - Q1 dispatch rose 11% year-on-year, with the National Power Grid growing by 8% due to record high power demand [8] - Gas production averaged almost 58,000 BOE per day, with crude oil representing 9% of that, contributing 24% to segment revenues [11] - Average gas price for the quarter was $4/MBTU, an 11% year-on-year increase, mainly due to export prices [12] Company Strategy and Development Direction - The company is focusing on aggressive investment in gas production and renewable capacity, with plans to add 45 megawatts to the PEPE VI project [4][41] - The Néstor Kirchner pipeline is expected to be commissioned by the end of June, which will significantly impact EBITDA generation for Q2 and Q3 [54][87] - The company is preparing for potential currency devaluation by issuing debt in pesos and maintaining a significant portion of income linked to U.S. dollars [65][83] Management's Comments on Operating Environment and Future Outlook - Management noted that inflation is impacting drilling and completion costs, with a 10% to 15% increase observed [40] - The company anticipates gas demand to increase in the coming weeks, projecting production to reach around 12 million cubic meters per day [42] - Management expressed confidence in the performance of shale wells, with successful productivity noted in both Mangrullo and Sierra Chata [53] Other Important Information - The company raised a second green bond for 5 billion pesos (approximately $22 million) and issued $56 million in dollar bonds in the local market [15][27] - The lifting costs per BOE increased by 23% year-on-year but remained stable quarter-over-quarter at $7 per BOE [28] Q&A Session Summary Question: Impact of inflation on drilling and completion costs - Management indicated a 10% to 15% increase in costs related to dollar link [40] Question: Gas demand outlook for Q2 - Management expects demand to rise, projecting production to reach around 12 million cubic meters per day [42] Question: Company's strategy regarding potential tender for thermal power plants - The company will evaluate participation based on competitive pricing, focusing on gas production and renewable capacity [41] Question: Progress on the Néstor Kirchner pipeline - The pipeline is on schedule for commissioning by the end of June, expected to significantly impact EBITDA [54][87] Question: Sensitivity analysis of inflation impact on lifting costs - Management noted a trade-off between CapEx and OpEx, with shale wells being more expensive to develop but cheaper in terms of lifting costs [60] Question: Future of hydro concessions - Management stated that there are no immediate issues with hydro concessions, with the next expiration not until 2026 [76] Question: Average initial production rates for shale gas wells - Initial production rates vary by field, with Mangrullo around 500,000 cubic meters and Sierra Chata up to 800,000 cubic meters per day [80]