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Presentation

Margarita Chun: And we would like to welcome everyone to company Pampa Energía’s Fourth Quarter 2022 Results Video Conference. We inform you that this event is being recorded and all participants will be a in listen-only mode during the presentation. Before proceeding, please read the disclaimer that is located in the — on the second page of our presentation. Let me mention that forward-looking statements are based on Pampa Energía’s management beliefs and assumptions and information currently available to the company. They involve risks, uncertainties and assumptions because they are related to future events that may or may not occur. Investors should understand that general economic and industry conditions and other operating factors could also affect the future results of Pampa Energía and could cause results to differ materially from those expressed in forward-looking statements.

Now, I’ll turn your conference over to Lida Wang, Investor Relations and Sustainability Officer of Pampa Energía. Please go ahead.

Lida Wang: Thank you, Marrie. Hello, everyone and thank you for joining our conference call. I will try to make it short and skip some parts already explained in the earnings release. So we have plenty of time for Q&A with our CEO, Mr. Gustavo Mariani; and our CFO, Mr. Nicolás Mindlin here. This quarter marks the end of 2022 and it’s always helpful to look back and review what’s been going on with Pampa in the last 5 years since we have Petrobras Argentina. The challenges posed in this period did not prevent us from growing and delivering milestones. Our core businesses, Gas & Power grew significantly in the last 5 years. In 2022, we raised our peak gas production to more than 11 million per day and currently working to ramp it up to 60 million in 2023, thanks to the plan as last tender.

More than doubling our 2017 watermark and proudly becoming the company that grew the most its gas output since the pandemic. Power generation did not stay quite either. We became the largest independent power producer by investing in every tender or B2B whether efficient thermal or green energy, adding more than 1.3 gigawatts in full capacity to reach 5.1 gigawatts by 2022. In 2023, 323 megawatts more are coming online as we are inaugurating PEPE IV and we commissioned 2 weeks ago, with YPF more than 12 years after the CCGT project started. Our way of managing help us to gain efficiencies and be savvy over CapEx. So we invested in accretive assets that increase our EBITDA and made it resilient. We made good use of our robust cash flow by enhancing our power portfolio, strengthening our liquidity, substantially reducing our leverage and returning value to shareholders with share buybacks.

2022 was a great year in Pampa’s history. We look forward to delivering outstanding results to become a leading, efficient energy producer. So now let’s focus on the quarters figures in which gas made it to the headlines again as expected. The adjusted EBITDA amount to $183 million, 7% less year-on-year, mainly because of lower PPA income and some contracts mature in Loma in late 2021 and Varadan in April last year as well as Loma gas line number 5 outage, higher payroll in dollar terms and lack regulated tariffs affecting . However, the off gas exports to Chile, the higher export power and reforming outstanding results offset these decreases. 83% of our EBITDA was dollar linked. Quarter-on-quarter, the drop is explained by seasonality in gas and power demand and prices.

As you see in the right below, the gas prices helped oil and gas to lead the consolidated adjusted EBITDA which took 56% of our EBITDA. CapEx in Q4 was 13% higher year-on-year, just mainly because CMP drilling and completing activity searches in attic season to achieve planned gas commitments. However, this variation was partially offset by the advance progress in PEPE IV wind farm which implies lesser CapEx divestment. Moving on to power generation. As seen on Slide 5, we posted an adjusted EBITDA of $86 million in Q4, down 19% year-on-year and 4% quarter-on-quarter, mainly due to the end of some PPAs, the outages at Loma number 5 unit and higher pace expenses offset by better spot prices, higher dispatch and lower maintenance costs. Q4 dispatch rose 11% year-on-year, while the National Power Grid dropped 1%.

This is mainly due to the last year’s overhauls at Loma and , more gas for Central Piquirenda; outstanding water import in PCP Corfu and capacity factor at wind farms, partially offset by Lomas number 5 unit outage and West liquids and Bolivian gas. Availability is essential to collect take-or-pay capacity payment, especially total PPAs contributed most of the EBITDA. In Q4, we reached an outstanding rate close to 97%, just above the 95.5% recorded last year. Again, this is way above the grid’s recorded 69% ability rate. It will have been higher as on Loma number 5 outage. Regarding our expansion at the closing to combined cycle was commissioned just 2 weeks ago, essentially improving the power plant efficiency and therefore, it’s low factor.

In addition, CAMMESA granted clearance to this team to run up to 260 megawatts priced with a 10-year PPA with the update from CAMMESA. With the existing gas 2 gas turbines, the total installed capacity claims to 827 megawatts becoming one of the country’s most efficient and biggest thermal plants. Moving on to wind farm expansions. We acquired Arauco 100 megawatts we farm located in the province of in mid-December, building a 20-year PPA. The total price was $170 million and doesn’t have leveraged the asset. The transition was an excellent opportunity to keep boosting our wind portfolio and invest in resilient assets. Regarding PEPE IV, the project is now 86% advanced. We completed the cable installation, transformation and testing. All the wind turbine components are right now in the facilities and we have commissioned already 36 megawatts.

However, due to the climate condition and among other factors, we estimate to complete the COD by the end of Q2 this year. Also, last month, we announced a new project, PEPE VI which kicked off already. We aim to add 300 megawatts investing more than $500 million. The first phase will add 95 megawatts by the third quarter of 2024 with investment of almost $180 million. Keep in mind that debt expansions are sold all under B2B PPA. So on Slide 8, let me briefly comment on the MP figures. We posted an adjusted EBITDA of $72 million in the quarter. 57% higher year-on-year because of the plan gas deliveries, gas export prices and higher oil and gas — oil demand and prices, offset by lesser gas export volume and increased costs related to the growing activity and payroll.

However, quarter-on-quarter, EBITDA is down 39%. This is primarily due to the seasonality. Our lift and costs likely grew yearly but was down quarter-on-quarter due to seasonality. Efficiency-wise, the lifting cost per BOE performed in the opposite way. Recording $7 per BOE in the quarter, 3% down compared to last year. In Q4, our total production averaged almost 62,000 barrels per day — so mining, crude oil represented 9% of our output, still it reached 22% of the segment’s revenue, mostly because of export prices linked to Brent and export volumes which tripled compared to last year. Last summer, we successfully extended the Plan Gas contract until December 2028. Furthermore, regarding the tender tapping the first stage of the new gas pipeline to be online on July 23, Pampa got awarded 4.8 million out of the 11 million cubic meters per day at a similar price previous tenders until 2028.

It is an excellent news as it contributes significant organic growth and long-term visibility to our gas business. Therefore, by this winter, we will more than double the maximum record register in 2023 , then almost 16 million termites per day by investing 1.1 billion cumulative between 2020 and 2023. Besides the upcoming new capacity in the main pipeline, our shale gas campaign will support the significant ramp-up in production for the first time in our history. In Q4, we drilled 2 wells and completed 5 wells to at Cereceda confirming it’s great potential for shale development. Most of the $490 million CapEx in MB is testing to drill and complete 24 wells to and Sierra Chata Lokes. Still, currently, Taigas is our main primary production source.

So as we engage in shale gas campaign to increase our share, this year, we will connect 2 horizontal wells in keep drilling in Brionethat it’s not operated by us. Our gas production in Q4 was 6% up year-on-year but 11% down quarter-on-quarter due to seasonality, averaging 9.5 million cubic meters per day and outpacing the levels that only grew 2%. 72% of the quarter’s production came from Evangruco, where we commissioned the second gas treatment plan last November with a capacity of 4.8 million cubic meters per day replacing temporary facilities and covering subsequent winter ramp-up. Therefore, Ebangrusho can produce up to 4 million cubic meters per day. The average gas price of the quarter was $3.9 per mmBTU, 24% up year-on-year due to export prices but 20% down quarter-on-quarter because of seasonality.

Regarding the sales breakdown, Q4 is fairly distributed with retail in off-peak and lesser exports year-on-year but still represents 14% of our output with higher prices. Exports will remain under — until winter, even winter since we obtain permits that will last until June of this year. In 2022, thanks to the outstanding work of our technical team and the shale gas productivity at Sierra Chata block. We recorded a 14% increase in annual proved reserves amounting to 179 million barrels of oil equivalent. Although we held the production record in 2022, the replacement ratio was 2x and the average life was kept at 8 years. The additions reflect the excellent results of shale gas pilots to Bacamurta formation that we are — we did in Sierra Chata and Evanrucho, tripling shale reserves last year.

The Petrochemical business EBITDA grew by 68% year-on-year, posting $15 million in Q4, primarily contributed by domestic reforming and polystyrene sales plus a lower cost offset by reduced margin and demand of styrene and rubber. In Q4, 3% of the total sales volume was exported. As you can see left below, after we reorganized the production strategy in 2019, we could smoothly navigate the volatile commodity prices producing at maximum capacity close to historical . Despite of intensive CapEx, in Q4, we recorded a free cash flow of $101 million. This is driven by the outstanding operating performance of all the 3 businesses. Working capital reduced seasonality that CAMMESA pay at a higher frequency offset by that service and an income tax early paid of $50 million .

The increased debt considers the dollar link that we raise in the local market. In addition, in Q4, we acquired the Arauco wind farm that we previously talked about it. And we have to make a first installment of $128 million . So in summary, net of everything, we generated $50 million of net cash flow this quarter, achieving $700 million cash by the end of the year. Moving on to Slide 14, we show the consolidated figures of our financial position, including our affiliates at ownership, that’s based on the restricted group that reflects the bond parameter. We posted a gross debt of $1.6 billion, similar to last quarter. 84% is dollar denominated, bearing an average interest rate of 8.4%, taking advantage of the domestic liquidity, diversifying our leverage resources.

We issue a 5-year 0 coupon dollar link for an additional $50 million plus CHF 100 million peso bond at plus 2% . Net leverage and net debt kept going down, recording $913 million and 1.2x multiple. The average life also decreased to 3.6 years, Pampa does not face relevant debt maturities until 2027. So this is thanks to the successful bond exchange made in August of last year. So this concludes the presentation. Now I will turn the word to Margarita, who will poll for questions in the chat. Thank you so much.

A – Margarita Chun: The first question comes from Frank McGann from Bank of America. He has six questions. The first one is, how do you see gas production quarter-by-quarter in 2023 with the startup of the new pipeline.

Gustavo Mariani: Frank, thank you for your question. This year, we’ve been producing during the summer, less than we expected, basically because lack of infrastructure to evacuate the gas from the Neuquina Basin. So although we were expecting to be producing above 10 million cubic meters of natural gas per day. We are currently being able to sell less than 9.5 million. We think this will continue first quarter and second quarter of year. So within this situation of lack of capacity from the Neuquina Basin, we will continue the remaining of the first quarter and the second quarter as well. Once the new pipeline is online by mid-winter, we expect to be able to jump our production to 16 million cubic meters of natural gas per day.

So that is our expected output during the third quarter. And in the fourth quarter during our spring and with the new pipeline working, we expect our production — our sales to be in the range of 12 million to 13 million cubic meters per day. So a significant increase from this current summer Okay.

Margarita Chun: Thank you, Gustavo. The second question from Frank McGann what is the latest you are hearing about the startup date for the..

Gustavo Mariani: It’s funny that we are talking about a pipeline of this size, such a huge infrastructure project. And then we are talking about days, not weeks, not months but days. But to answer the question, the latest that we are hearing is that everybody is working to be on time on the schedule. So to be — to have the pipeline ready by the end of June. That is so far I hope nothing unexpected that change that. But up to this moment, what we are hearing is that the pipeline might be on time. Something that I’d like to take the opportunity of this question to highlight some numbers that I’ve been looking at this weekend and they surprised me. As I said at the beginning, there is the capacity to produce gas from the Neuquina Basin is capped by infrastructure.

That is why we are selling less than we expected, while CAMMESA has been burning liquid fuels and we are burning gas importing from Bolivia all through the summer. So this — we cannot check how much natural gas has been. How much liquid that means fuel oil, gas oil, coal and imported gas from body in total, CAMMESA I’m counting October, November, December and January. Those are real months. And this situation will continue February, March, April and then in May, we’ll start the winter. But — so these months, so far, CAMMESA has burned liquids in an equivalent to almost 11.6 million cubic meters of natural gas per day. At what price, liquids are much more expensive than local natural gas. So CAMMESA has been burning liquids at an average of $21.5 per million of BTU.

So the gas — the summer price for natural gas is $3 and CAMMESA, it’s burning fuels. I’m doing the average of gas from Bolivia, fuel oil, gas oil and coal. That is — that makes an average of $21.5 per million of BTU. So what does this mean? 11.5 million cubic meters of natural gas per day at $21 per million of BTU for 7 months, that is — that amount to $1.9 billion. So that is how much the country is spending to import all these fuels. One and why we are doing this because we lack infrastructure capacity to have our own production coming from the Neuquina Basin. Once the new pipeline is ready, the country will be able to replace all these consumption of liquids with local natural gas that — thanks to the plan gas, Argentina is going to be able to buy from producers at $3 per million cubic meters per day — sorry.

So this quantity of gas at this price for 7 months, it’s $250 million. So instead of $1.9 billion, $250 million, with one other important difference. The $1.9 billion is currency real dollars that the country is spending, while the 250 are Argentine dollars. So really, it’s paid in pesos at the official exchange rate. So that is how much — that is the huge gap and there is a huge saving that the new pipeline will bring. That means that the total cost of the pipeline was around — I think it was around $1.8 billion. So, what I’m trying to summarize is that in less than one summer, the cost of the infrastructure of the new pipeline gets repaid for the country. That’s how important this new pipeline means for the country not only for us as producers but also for the macro numbers of Argentina.

Margarita Chun: Thank you, Gustavo. The third question about Frank is about what is the upside to output in 2024 next year.

Gustavo Mariani: Well, so far for 2024, we don’t have anything new, so a new jump in production. Maybe there is — it’s the second phase of the pipeline gets auctioned and the construction is ongoing. So then there’s going to be a new round of Plan Gas in order to fulfill that second tranche. Let’s hope that happens this year. Obviously, if that happens, we will participate as we have always been participating in the past round, maybe we will be able to increase further our production. But even though if there is no — if the construction of the second tranche is not done by — is not undertaken by the winter of 2024, our output will grow in 2024 despite that just because the first tranche will be online. So not during the winter, because during the winter, we will be selling the near 60 million cubic meters of natural gas per day.

But during the rest of — during the summer months, during our spring summer and early fall, CAMMESA will be able to replace all its consumption liquids with local natural gas. And so we — and together with the rest of the industry, we will be able to replace those liquids. So if there is no infrastructure in winter time, our production will be similar to ’23 but in the summer, our sales will be higher than the first and second quarter of 2023.

Margarita Chun: Thank you, Gustavo. The fourth question, Frank, is about how are you seeing cost pressures with high inflation and a slow devaluation of the Argentine peso.

Gustavo Mariani: We have been seeing peso appreciation this year. So we do see dollar inflation in our cost. And there’s not much that we can do against these movements of the macro . So we are seeing it but there’s not much that we can do as — on operations to prevent that from happening.

Lida Wang: And mostly productivity-wise, productivity efficiencies. But unfortunately, — but in order to retain talent, this is — the payroll has to go. Let’s consider that since 2018 to 2021, 2020, there has been big decrease in dollars in terms of the salary. So it’s logical to have a ramp-up.

Margarita Chun: Thank you, Gus and Lida. The fifth question of Frank is about TGS LNG project. If the TGS LNG project goes forward, what would be the upside for volumes, both over the medium and long term. What would this mean in terms of CapEx both for upstream developments and possible participation with an equity stake in a project.

Gustavo Mariani: Frank, TGS is still working on the engineering of this project. And — and basically, it’s too early to tell it’s too soon to speculate about CapEx plan in terms — both for TGS and for Pampa regarding this project. Hopefully, by mid of this year, we will have more clarity as I hope that at some point of this year, we will be in a position to decide whether to move forward or not. Once we do so, I’d be happy to share these figures with you. But currently, it’s too early to tell, would be too speculative.

Margarita Chun: Thank you, Gus. The last question of Frank is about with significant opportunities in coming years, will you be able to finance this with your existing cash flow? Is equity financing and option?

Gustavo Mariani: Okay. Thank you for the question, Frank. I’ll go back. I think this would lead us to first slide in the presentation. And I want to go back here because I think this shows the tremendous free cash flow generation of our portfolio capacity — of our portfolio of assets. As you can see here, in the first 2 charts. In the past 5 years, we have increased our capacity to produce natural gas by 120%. That obviously meant a huge amount of CapEx. Also in power generation, we grew our capacity by 44% from 3.7 GS gas to 5.4. Again, a huge amount of CapEx in order to do so. But — and then I go to the bottom of the slide. While we did so, we grew our production capacity by so much, we were also being able to do so while reducing our net indebtedness, as you can see in the middle of the bond, we have reduced our net indebtedness by 25%.

We also — we have repurchased our own bonds. We have repurchased like $330 million of nominal bonds. At the bottom right, in the past 5 years, we have reduced the number of ADRs outstanding from $83 million to $55 million. So we have reduced our stock outstanding by 34%. We have spent earning in share repurchases more than $600 million. So between share repurchases and debt repurchases, we have spent around $1 billion. So, I think this slide shows the cash flow generation capabilities of our portfolio. We have been increasing our production capacity tremendously and we have also been able to repurchase our own stock and debt. So going forward, going back to your question, I think, yes, there are a lot of opportunities that we can take advantage of and our portfolio generates the needed cash flow to do so.

And — but if we may decide to finance ourself increasing indebtedness, we will probably be doing this year, taking advantage of the cheap financing available in the local market, in the peso market, we might do so. Regarding equity financing, it is an option, yes, it’s always an option but to place share price of our stock, we are more tended to repurchase our own stock to reach to new stock. So it’s always a possibility, certainly, not at these prices.

Margarita Chun: Thank you, Gus. Our next question comes from Bruno Montanari from Morgan Stanley. He has 3 questions. The first one is the balance of risk and opportunities in Argentina seems to be migrating more towards the oil side of the industry recently. Would Pampa be interested in being more active on the oil investments to increase production, now that the gas upside seems to be well mapped out. If yes which is — in which blocks could you — could the company intensify developments.

Gustavo Mariani: Bruno, thank you for your question. We are studying several alternatives. We do want to increase to balance a little bit more our production towards oil. As you know, today, we are probably 90% natural gas and 10% oil. So we want to have a more balanced portfolio. And in order to do so, we are starting several alternatives and discussing with our partners, one possibility is increasing exploration and production in which is 1 block that we own but we need to reach an agreement with our partner. And there is a couple of other alternatives that we are selling but nothing concrete as I can tell you at this moment.

Margarita Chun: Thank you, Gus. The second question of Bruno is although an increase in lifting cost was expected, the company seems to have been able to offset some of the inflation incurred on E&P cost. What are the trends for lifting costs going forward?

Gustavo Mariani: Well, as you well mentioned, yes, the inflation in dollar terms put pressure here as well. But basically, what I think what explains is the fact that we have been building new infrastructure and we do still have spare capacity in that infrastructure that we have been building over the past few months. So we are not still having a high utilization rate of this new infrastructure. I hope that as our production continues to grow, lifting costs will continue going down.

Margarita Chun: Thank you, Gus. Last question of is can you comment on Pampa’s strategy to deal with a potential material devaluation of the Argentine peso happening in a very short time frame. What will be the impact in terms of margin of E&P on power generation? And how would the company protect its cash balance and cash flows?

Nicolas Mindlin: So firstly, most of our incomes are dollar linked. I think the biggest impact on our cash flow will be — and will depend on the ones that we are owed by CAMMESA and also regarding plant gas but it should not be a big impact. And regarding our cash and our cash balance, we are mostly invested in dollar-linked assets or in U.S. dollars. So I think we are already protected from that scenario.

Margarita Chun: Thank you. Nico. The next question is from Matias Castagnino from BCP Securities. His question is regarding the remaining amount of the 2023 bond.

Nicolas Mindlin: So this maturity is like a different new maturity than last year’s. So the current regulation applies. That means that we have access to the official effects for 40% and we have to refinance the other 60%. We can do this as early as 45 days before the maturity and this is not a big maturity. So it’s very manageable for us and we are analyzing different alternatives that will depend among other things on market conditions at that time.

Margarita Chun: Thank you, Nico. Our next question comes from Rafal Nagano from Credit Suisse. Is there any additional value being discussed on the ? If so, could you share with us how much? And do you see any risk of reverting pay of the $37 million provision due to the injunction from given you only receive part of this amount so far.

Nicolas Mindlin: So no, the full amount of this award, including interest is the $37 million. We already collected almost $21 million and there are still $15 million spending. The protection action presented by has been rejected. So I see very little chance of that being revertive. And now we are following the necessary steps to collect the other $50 million spending.

Margarita Chun: Thank you, Nico. Our next question comes from Alejandra Aranda from Bank of Itau. Your first question is kind of already answered. It’s about the plans of volumes in the upstream business in the first and second half of this year. What to expect in terms of cost for this segment, the E&P segment?

Gustavo Mariani: Sorry, Alejandra. I think similar to the first question. In terms of volume, we are expecting first and second quarter, while there is no new infrastructure capacity to extract the gas from the Neuquina Basin to our volumes to remain below 10 million cubic meters of natural gas per day. Once the new pipeline is ready during the winter, our production should jump to around 16 million cubic meters of natural gas per day. And by the end of the year, during our spring going back probably to 13, hopefully 14 — between 12 million and 14 million cubic meters of natural gas per day. That’s what we are expecting in terms of sales this year.

Margarita Chun: Thank you, Gus. The second question of Alejandra is regarding nonconventional renewable energy. How should we think about nonconventional renewable energy investments or acquisitions going forward? Do you have a target in terms of this generation source that would — that you would like to reach in the next few years?

Gustavo Mariani: No, we don’t have a target but we do — but we would like to grow as much as possible with profitable process. We have shown that by last year, we acquired from our partner of their stake that was 50% of 100-megawatt wind farm. That was — we also are about to complete. We have been — last year, we have been investing in our — in PEPE IV showing here and 1 megawatt expansion already 36-megawatt are online. So that adds to the 50. So we increased last year, 130 megawatts our capacity. And we also bought Parcadauco at the end of the year over 100 megawatts. So we increased our renewable capacity by 230 megawatts last year. And we have launched a project that is comprised of a total of 300 megawatts. The first phase we are doing 100 that is already underway and we hope to that this new park will be ready by second quarter of 2024 but again, we don’t have a goal but we would like to complete this 300-megawatt expansion within the next couple of years.

Margarita Chun: Thank you, Gus. The last question of Alejandra is regarding the LNG project. Could you comment on where TGS is regarding project study? And what do you need in terms of legislation and incentives to move forward with this project.

Gustavo Mariani: That’s a very good question, Alejandra. TGS is working on the engineering of this project which is quite complex and takes longer than we had originally expected. But we are working with several international companies to help us on the engineering of the project. Regarding the law, yes, this has been mentioned over the — in the media, this is a project where Argentina is going to compete against — in a market that is quite competitive. Obviously, the spot market of LNG is not the same as long-term contracts. Long-term contracts are at much cheaper price than we have been seeing on the spot LNG market. So — and this is — we need to be able to build a project that is very competitive internationally wise.

The project that we are envisioning is a rather small project vis-a-vis the huge projects that you see in other parts of the world. So there is a problem of scale that makes it less competitive. So it’s important both the fiscal incentives that we hope this new law will provide as well as the certainty regarding the export permits that given our history, it’s important. Going forward, I think it’s not going to be that relevant because thanks to Vaca Muerta, Argentina knows that we have enough reserves for several centers going forward. So it makes no sense as it has happened in the past to restrict export of natural gas. So what is more important and I think about the law is the need of fiscal incentives to make it competitive with other international LNG projects.

Margarita Chun: Thank you, Gus. Our next question comes from Christian and Ezequiel Fernández from Balanz. They have 3 questions. The first one is, can you explain a bit how are the process and new rules for gas exports into Chile? What type of authorizations you need to get? How much in advance you have to apply for this? How we determine to who has priority of gas exports among all large time E&Ps.

Gustavo Mariani: Thank you for the question, Christian and Ezequiel. Gas exports are quantified — are qualified –. Yes, there are quotas based on a formula that relates to the volume that its producer has been able to win in the several rounds of the plant gas. So that is — so your success in the plant gas is what determines the quotas of the export quotas. There is also a floor price at which you cannot export gas to Chile below that price. I’m not sure but I think it’s around currently, it’s around $7.50 or $8 per million of BTU. And — what else? And the policy of Argentina is that first, local gas is to consume in Argentina. And so if there is — what has been happening in this summer and it will also happen during the winter — during the beginning of the winter until the new pipeline is ready.

And probably even after the new pipeline is ready, is that the production capacity of the Neuquina Basin exceeds the equation capacity of the Neuquina Basin towards Argentina. That’s why we will have capacity to gas to Chile, not only as we are doing now during the summer and during the winter, while the new Netrisner Kishner pipeline is ready. But also, it may happen that even with the new pipeline that will bring an increase in evacuation capacity from the Neuquina Basin of 11 cubic meters of natural gas per day. It could be the case that the increase in production in Neuquina Basin is even higher than that. So we might be able as a country to continue exporting gas to Chile throughout the winter. I think that answers the question.

Margarita Chun: Thank you, Gus. The second question of balance was regarding the LNG project that was already answered. The third and last question is about the cash flow generation. What are you thinking about the cash uses?

Gustavo Mariani: Well, cash usage for this year, I think Lida has already talked about it but we have this year one of our probably most aggressive CapEx plan in the past few years. We have a CapEx plan for power generation of around $250 million. That is comprised of maintenance CapEx and the buildup of our 6 wind farm, PEPE VI. We think we will be spending around $150 million, around that figure this year. That is how the $250 million for power generation is comprised. And for E&P, we will be certainly doing the most aggressive CapEx plan over the past few years in order to be able to increase our production from 11 cubic meters of natural gas per day to 16 million cubic meters of natural gas per day. And that is something we are already working on and we need to achieve.

I think we will be able to achieve that figure by — once the new pipeline is online by early this winter. And how we are going to finance that through our own cash flow generation. And as I mentioned before, taking advantage of our financing capabilities in the local peso market.

Margarita Chun: Thank you, Gus. Our next question comes from Alejandra Aranda from JPMorgan. The first question regarding the 2023 bond was already answered. The second question is CapEx expectation given the increase in production is already sort of answered. So thank you, Alejandra, for the question. The next one is from . How much dollars will add — and PEPE III PPA in terms of EBITDA on a full year basis.

Lida Wang: It’s annually will $100 million more or less. And PEPE IV, it’s 81 megawatts of store capacity will add around $22 million of EBITDA per year.

Gustavo Mariani: Just the $100 million that Barragan will add, that’s full 100% of full company, we own 50% of that.

Lida Wang: Correct.

Margarita Chun: Thank you, Lida and Gus. The next question comes from Juan Jose Munoz from BTG Pactual. Do you foresee any changes in plan gas once the new administration is selected?

Gustavo Mariani: Juan Jose. No, certainly not. I think every time there’s been a change in administration and the market and there’s has always been fears of change in contracts. Fortunately, what we have been seeing in the last couple of changes in administration is that contract had been respected both on electricity PPAs and on the plant gas. So — and I think we are seeing the benefits of that. I think in plant gas, the country has seen the benefit of that of how competitive the auction has been, how aggressive producers were in terms of pricing. So I think the government officials and politicians are understanding that there’s a reward once there is a trust that contracts will be respected. I think it’s important to highlight that at the beginning of this administration and the fear by the end of past administration, what was going to happen when Argentina files for default on the sovereign bonds, what is going to happen with the PPAs. Unfortunately, what happened was that despite the fact that Argentina defaulted on its sovereign debt, they have respected all this contract.

And I think that is a very good — how do you say please .

Margarita Chun: thank you, Gus. Our next question comes from Solera Candelaria from Banco e-securities. I wanted to know if the administration of will be changed the operation, maybe means to YPF from June 2023.

Gustavo Mariani: That is the agreement that every 4 years, we swap the administration of the plant. We have been talking about it. It’s really — it’s not a big issue. We both know how to do so. We have an excellent relationship. And we are analyzing how to do the administration, basically because it’s not cost effective to move all the systems from one company to the other. So we have to figure out what is the best way to do it. We will certainly reach the best solution available; so that is my answer. The answer is yes. Administration goes to YPF in the next 4 years. It has — in the same way that it has been in the past 4 years, despite who had the administration is a share and teamwork. So we are convinced it’s going to be the same way the next four years.

Margarita Chun: Thank you, Gus. Our next question comes from Daniel Guardiola from BTG. Would like to know your thoughts on the possibility of distributing dividends.

Gustavo Mariani: Frankly, honestly, that’s not something that we have been discussing lately, not this year because of 2 reason: one, the capital controls that make it expensive. We could have, because of the 277 which allow us an excess — access to the official exchange rate, thanks to our increase in production. So we could have access to dollars at the official exchange rate in order to pay dividend this year. But I think we are going to use that extra access in order to do the liability management of the 2023. Also this year, we have, as I mentioned earlier, a huge CapEx plan. So for the first time in the past few years, we are going to be free cash flow negative and we are going to finance that in the local peso market.

So, I don’t — especially this year because of all these reasons, it’s not a good moment to think about dividends. And as we always say, we have a huge or very profitable investment opportunities. We have not been asked by our shareholders to pay dividends. So we are comfortable with continuing with this policy.

Margarita Chun: Thank you, Gus. Our last question comes from which is the impact of recent adjustment to legacy remuneration in power generation.

Gustavo Mariani: The recent adjustment, I think you are referring to the one that dollarized portion of the remuneration, so going forward, it’s not going to be 100% peso-denominated but I think something like 34% dollar-denominated. It’s a small percentage. I don’t recall whether it’s around 25%. Yes; so a portion of the current remuneration is going to be defined in dollars. Taking into account what we are — our projections of inflation and devaluation of the official exchange rate for the rest of the year, the impact is of around $15 million from what we have projected in our budget at the end of last year. it’s positive, it’s not huge. It’s rather marginal.

Margarita Chun: Thank you, Gus. This concludes the question-and-answer section. So we’ll turn to Lida for final remarks.

Lida Wang: Thank you so much for joining our conference call. Gus, would you like to add something, Nico, would you like to add something that we didn’t address. So basically, I think we — it was a great call. If you have any questions or anything that’s it’s not covered here, please contact us and we will be happy to assist you. Have a nice day.