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

Financial Data and Key Metrics Changes - The total net income for Q3 2025 was ARS 112 billion, up from ARS 68.8 billion in Q3 2024, primarily driven by improved performance in the liquids business and midstream segment [6][8] - EBITDA for natural gas transportation decreased to ARS 102.4 billion from nearly ARS 113 billion in Q3 2024, with a decline of ARS 10.5 billion attributed to insufficient tariff adjustments to offset inflation [7][8] - EBITDA for the liquids segment tripled to ARS 55.2 billion in Q3 2025 from ARS 18.2 billion in Q3 2024, driven by increased export volumes and higher prices [9][10] - The cash position increased by 22% to ARS 875 billion, approximately $638 million at the official exchange rate [12][13] Business Line Data and Key Metrics Changes - The liquids segment saw a significant increase in EBITDA, primarily due to higher export volumes rising from 43,000 to 104,000 metric tons [9] - The midstream and other services segment's EBITDA rose to ARS 61.2 billion from ARS 46.7 billion in Q3 2024, driven by increased billable volumes of natural gas transported [11] Market Data and Key Metrics Changes - The average transported natural gas billable volume increased from 29 million cubic meters per day in Q3 2024 to 32 million cubic meters per day in Q3 2025 [11] - The natural gas price increased from $3.1 to $3.4 per million BTU, negatively impacting EBITDA by ARS 4.3 billion [10] Company Strategy and Development Direction - TGS plans to invest $560 million to expand the Perito Moreno pipeline's capacity and an additional $220 million for regulated pipelines between Saliceto and Greater Buenos Aires [4][5] - The company is evaluating participation in a new gas pipeline project to supply LNG facilities planned for completion by 2027-2028 [26] Management's Comments on Operating Environment and Future Outlook - Management noted that the current high levels of production and margins in the liquids segment may not be sustainable into Q4 2025, with expectations of lower gas production [20][21] - The company anticipates that international liquid prices may decrease in 2026 compared to the current year [21] Other Important Information - The company is expecting to recover over $50 million from insurance claims related to the Complejo Cerri event, with partial payments expected this year [18] - CapEx for the expansion project is expected to be higher, with $150 million planned for this year, primarily in Q4 [23] Q&A Session Summary Question: Breakdown of the $780 million CapEx for the expansion project - Management indicated that $150 million is expected to be spent this year, $450 million in 2026, and the remaining $27 million in early 2027 [16] Question: Status of insurance claims for the Complejo Cerri event - The estimated recovery amount is over $50 million, with $10 million expected this year and the remainder in the following year [18] Question: Sustainability of current production and margins in the liquids segment - Management stated that while current production levels are extraordinary, they may not be sustainable into Q4 due to seasonal variations [20][21] Question: Acceleration of cash CapEx deployment until year-end - Management confirmed that cash CapEx is expected to be higher than previous levels due to the ongoing expansion project [23] Question: Expected income tax payments in the next quarter - Management indicated that income tax payments in Q4 are expected to be similar to those in Q3 [27] Question: FID for the fractionation facility regarding liquids - Management is working hard on the project, with FID expected in Q1 of the following year [28] Question: Participation in the NGL project and potential partnerships - Management is considering partnerships for the liquids project, particularly in transportation and fractionation [30] Question: Synergies in the midstream segment by 2027 - Management confirmed that the midstream business will benefit from increased transport capacity and volumes [31]