PAM — Pampa Energía S.A.

Summary of Pampa Energia's Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Production: Exceeded 100,000 barrels of oil equivalent per day, a record high, driven by Rincon de Aranda and increased gas output.
• Adjusted EBITDA: $325 million, up 48% year-on-year and 41% quarter-on-quarter, with Rincon de Aranda contributing significantly.
• Oil and Gas Segment EBITDA: $104 million, a 2.5x increase from last year, primarily due to higher gas production and exports.
• CapEx: Increased by 36% year-on-year to $242 million, with $163 million allocated to Rincon de Aranda.
• Net Debt: Rose to $1.2 billion, with a net leverage ratio of 1.5x EBITDA.
• Free Cash Flow: Negative $404 million, attributed to collateral requirements for oil hedges and high CapEx.

2. Strategic Updates and Business Highlights:

• Rincon de Aranda: Production ramp-up continues, with plans to reach 28,000 barrels per day by mid-2026 and a target plateau of 45,000 barrels per day.
• Gas Production: Increased by 17% year-on-year, driven by higher demand from CCGTs and exports to Chile.
• Power Generation: Adjusted EBITDA rose to $144 million, benefiting from stronger spot margins despite a decline in total availability.
• Perito Moreno Gas Pipeline: Awarded 3.2 million cubic meters per day of transportation capacity, expected to enhance profitability in power generation.
• Urea Project: Ongoing discussions for project financing, with potential annual sales of $1 billion once operational.

3. Forward Guidance and Outlook:

• Production Growth: Expected to maintain growth trajectory, with additional wells planned and ongoing improvements in drilling efficiency.
• EBITDA Forecast: Anticipated around $1 billion for the parent company in 2026, with $600 million from E&P and $400 million from power generation.
• Cash Flow Management: Expected negative free cash flow of approximately $400 million due to ongoing investments and prepayments.

4. Bad News, Challenges, or Points of Concern:

• Hedging Strategy: Realized oil prices were lower due to hedging, resulting in a significant revenue impact.
• Working Capital Increase: Trade receivables rose by $500 million, primarily due to collateral for oil hedges and delayed payments.
• Power Generation Margins: Declined due to new tariff schemes and procurement costs, raising concerns about profitability in the segment.
• Regulatory Risks: Delays in RIGI approvals could impact future production and profitability.

5. Notable Q&A Insights:

• Gas Export Outlook: Exports to Chile are stable, with no current plans for sales to Brazil.
• Future CapEx and Financing: The company may need to raise additional debt to finance ongoing projects, but expects to maintain leverage around 1.5x.
• Urea Project Viability: Management emphasized the competitive advantage of developing urea production in Argentina, highlighting the potential for significant sales.
• Market Signals: Management noted that gas prices are expected to rise in 2026, reflecting improved market conditions and pricing signals.

Overall, Pampa Energia reported strong operational performance and strategic advancements in Q1 2026, despite facing challenges related to hedging impacts and regulatory uncertainties. The outlook remains positive with continued production growth and strategic investments planned.