Transportadora de Gas del Sur S.A.(TGS) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a total net income of EUR 112 billion in Q3 2025, compared to EUR 68.8 billion in the same quarter of 2024, primarily driven by better performance in the liquids business and midstream segment [8][9] - EBITDA for the natural gas transportation business totaled EUR 102.4 billion, slightly below the EUR 113 billion recorded in 2024, with a decline of EUR 10.5 billion attributed to tariff adjustments and inflation effects [8][9] - Liquids segment EBITDA tripled to EUR 55.2 billion in Q3 2025 from EUR 18.2 billion in Q3 2024, driven by increased export volumes and higher domestic prices [9][10] - Cash position increased by 22% to EUR 875 billion, equivalent to approximately USD 638 million at the official exchange rate [13] Business Line Data and Key Metrics Changes - The liquids segment saw a significant increase in exported volumes from 43,000 metric tons to 104,000 metric tons, contributing EUR 18 billion to EBITDA [9] - Natural gas transportation EBITDA declined due to a tariff adjustment that resulted in EUR 29.2 billion, insufficient to offset inflation adjustments of EUR 42.2 billion [8][9] - Midstream and other services EBITDA rose to EUR 1.2 billion, driven by higher sales from increased natural gas transportation volumes [10][11] Market Data and Key Metrics Changes - The average transported natural gas volume increased from 29 million cubic meters per day in 2024 to 32 million cubic meters per day in Q3 2025 [11] - The natural gas price increased from USD 3.1 to USD 3.4 per million BTU, negatively impacting EBITDA by EUR 4.3 billion [10] Company Strategy and Development Direction - The company plans to invest USD 560 million to expand the Perito Moreno pipeline's capacity and an additional USD 220 million for regulated pipelines between Sal De Quello and Greater Buenos Aires [6][7] - The company is evaluating participation in a new gas pipeline project to supply gas to LNG facilities planned for 2027-2028 [28] Management Comments on Operating Environment and Future Outlook - Management noted that the current production levels are extraordinary due to the richness of the gas stream from Vaca Muerta, which is expected to remain substantial in the coming years [22] - However, gas production is anticipated to be lower in Q4 compared to Q3, affecting overall production levels [22] - Management expressed uncertainty regarding future liquid prices, indicating they may be lower than the average of the current year [24] Other Important Information - The company expects to recover over USD 50 million from an insurance claim related to a previous event, with partial recovery anticipated this year [20][21] - The company recorded a positive variation in financial results due to increased income from financial assets and a decrease in inflation exposure loss [12] Q&A Session Summary Question: Breakdown of CapEx for the expansion project - The company plans to spend USD 150 million this year, USD 450 million in 2026, and the remainder in early 2027, with financing already secured for part of the project [18] Question: Status of insurance claim recovery - The expected recovery amount is over USD 50 million, with USD 10 million anticipated this year and the remainder in the following year [21] Question: Sustainability of liquids production and margins - Current production levels are extraordinary, but Q4 production is expected to be lower, with potential price decreases in 2026 [22][24] Question: Acceleration of cash CapEx deployment - Cash CapEx is expected to be higher than previous levels, particularly in the last quarter of the year [26] Question: Participation in new gas pipeline project - The company is currently evaluating participation in the new gas pipeline project [28] Question: Income tax payments in the next quarter - Income tax payments in Q4 are expected to be similar to those in Q3 [30] Question: FID for the Tertation facility - The company is working hard on the project, with FID expected in Q1 of next year [32] Question: Midstream segment synergy by 2027 - The company anticipates benefits from increased transport capacity in the midstream business [38]