PAM — Pampa Energía S.A.

Pampa Energía Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Q4 Adjusted EBITDA: $230 million, a 26% year-on-year increase, primarily driven by power generation and the Rincón de Aranda project.
• Annual EBITDA: Surpassed $1 billion, reflecting an 8% year-on-year growth.
• Oil and Gas Segment EBITDA: $77 million in Q4, more than double from the previous year.
• CapEx: $371 million in Q4, an 81% increase year-on-year, with $249 million allocated to Rincón de Aranda.
• Net Debt: $801 million, with a net debt-to-EBITDA ratio of 1.1x.
• Production: Average production of 81,000 barrels of oil equivalent per day, up 32% year-on-year, but down 18% quarter-on-quarter due to seasonality.

2. Strategic Updates and Business Highlights

• Rincón de Aranda Development: Achieved a production ramp-up to 20,000 barrels per day, contributing $126 million to EBITDA in 2025. Plans to reach 28,000 barrels per day by mid-2026 and a target of 45,000 barrels by 2027.
• Power Generation: Maintained a 15% share of Argentina's electricity output with a 94% thermal availability rate. EBITDA for the power segment was $111 million in Q4, up 28% year-on-year.
• Vertical Integration: Initiated self-procurement of gas for power generation, expected to improve margins and operational efficiencies.
• New Market Guidelines: The deregulated electricity market has improved price signals, enhancing operational efficiencies.

3. Forward Guidance and Outlook

• 2026 CapEx Guidance: Expected to reach approximately $1.1 billion, with $770 million for Rincón de Aranda and $400 million for maintenance across operations.
• Production Targets: Anticipated oil production to reach 25,000 barrels per day by Q1 2026, with a peak of 28,000 barrels per day by mid-2026.
• EBITDA Growth: Projected 10-15% increase in EBITDA for the power generation segment in 2026, alongside a similar increase in natural gas production.

4. Bad News, Challenges, or Points of Concern

• Seasonality Impact: Q4 EBITDA declined quarter-on-quarter due to gas seasonality, which is expected to continue influencing results in the near term.
• Gas Prices and Demand: Gas prices remained flat year-on-year, with lower export prices impacting revenues. The industrial gas demand is stable but not a primary focus for the company.
• Hedging Strategy: Currently experiencing a loss of $4-5 per barrel from the hedging strategy, which may impact profitability if oil prices fluctuate unfavorably.

5. Notable Q&A Insights

• Production Evolution: Management confirmed a target of 27,000-28,000 barrels per day for oil production by mid-2026, with a focus on Rincón de Aranda.
• Self-Procurement Impact: The shift to self-procurement of gas is expected to enhance profitability, although specific savings figures were not disclosed.
• M&A Opportunities: No immediate M&A opportunities are being pursued in either the upstream or power generation segments.
• Dividend Policy: No plans for dividend distribution in the near future due to negative free cash flow expectations.
• RIGI Approval: The approval process for RIGI is ongoing, which could significantly impact the economics of the Rincón de Aranda project.

This summary encapsulates the key financial metrics, strategic initiatives, forward guidance, and notable insights from the Q&A session, providing a balanced view of Pampa Energía's performance and outlook.