Hello everybody. Good morning, ladies and gentlemen and thank you for waiting. I'm Margarita Chun from IR. We would like to welcome everyone to Pampa Energía Second Quarter 2020 Results Videoconference. We inform you that this event is being recorded and all participants will be in listen-only mode during the presentation. After the company's remarks there will be a question-and-answer session only available on browser or through the app. [Operator Instructions]. Before proceeding, please read the disclaimer that is located in the second page of our presentation. Let me mention that forward-looking statements are based on the beliefs and assumptions of Pampa Energía Management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, 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 such forward-looking statements. Now, I'll turn the videoconference over to Lida Wang, our Investor Relations Officer of Pampa Energía. Lida you may begin the videoconference.

Hello everyone and thank you for joining our conference call. I hope you and your loved ones are safe and well. For the interest of time, I will make a brief summary of the quarter’s key figures, the impact of COVID-19 and the latest events since our last call. We will focus on the core businesses of Pampa, power and E&P, as TGS and Edenor already held their calls earlier this week. As you can see, our CEO Mr. Gustavo Mariani and CFO Mr. Gabriel Cohen are both here and joining us for Q&A. Before we begin, let me remind you that Pampa’s figures follow U.S. Dollar as functional currency. In the case of Peso-linked subsidiaries such as our utilities, their figures are adjusted by inflation and shown in dollars at the end of each reporting period FX. Also, you can see in this slide what businesses are included when we talk about of Pampa consolidated, as well as Pampa restricted group, a definition we use for covenant purposes. As you know, Argentina has been affected by COVID-19 pandemic and Federal Government set up a mandatory lockdown from March 20. Restrictions has been softening across the country but certain places such as Buenos Aires metro area has been extended from time to time, so activity still limited and therefore, affects the economy. Most of Pampa’s businesses were deemed essential, and we are running our operations with all the necessary safety and health protocols such as minimum personnel in place, new workflows to keep social distancing, minimize exposure such as lengthen working shifts as well as off-duty time, and so on. Very important is that no wages have been adjusted nor personnel subject to furlough; almost 40% of our personnel is working remotely now. As we said in the last call,…

Thank you. The floor is now open for questions. [Operator Instructions] We have questions from Ezequiel Fernández from Balanz.

He sent us when are you planning, what we are planning to go back to drilling new unconventional wells? Well, right now we have a stock of 11 wells, we could but we need more signals. How many unconventional wells are you targeting for the remainder of 2020 in which blocks Pampa will be focusing? As we said in the script it will be, well right now with the prices that we are seeing among us is the most competitive but we'll see for the remaining of the year what's going to happen with the pricing if it's worth it to keep drilling as we already have a stock.

Lida, hi. Gustavo here. I'm through the phone because of technical problems. So I apologize to the audience for not being able to be on the video call. I don't know whether it's myself getting old and not getting along with the technology or the Murphy Law in this case. Anyway, I wanted to join for the Q&A and I have [Lida and Gabby] with some of the questions. Regarding this one of how many unconventional wells. As you know, there is the plan -- the new plan, gas, what is called the plan gas four that is being discussed with the authorities, not yet formally announced. Last week, there was a formal meeting that the Minister of Production announced to the producers that we will be soon the invitation. The idea of the authorities is to do the auction in September and started with this program in October. So whether it will drill new unconventional wells or not will depend on how we do on the disruption, but mainly we are not foreseeing unconventional wells this year and most probably it's that we will fulfill the new Plus [indiscernible] production requirement through our tight gas reserves, not shale gas and that addition is for 2021, maybe for 2022, it's going to be a different case. Sorry Linda, you can continue with the rest of the question.

All right. There is another question from Ezequiel saying is the current remuneration for legacy thermal power units enough to sustain. plant availability at high levels or are we at the limit already? Gus?

Well, I wouldn't say that we are at the limit already. At least in our case, we're still making margin. But as you know, this legacy pricing was supposed to get inflation adjustment monthly right from the beginning and then, it was because of the COVID crisis. The Secretary of Energy issued a Resolution postponing the adjustment. We hope that as the COVID crisis eases, they will restart with the inflation adjustment of the pricing scheme. And as I said, I wouldn't say that we are really at the limit. That's our case, but maybe some of our colleagues, which have all the equipment are probably already in that position, so not our case. But I wouldn't -- but I don't think that the average of the sector is far from there.

Okay, another question from Ezequiel, he is asking any news on asset disposals or M&A, a lot of people asking this, so as Ezequiel.

No, not. Currently, we are not working on any asset disposal.

And M&A?

We are studying the things. So there are several things in the pipeline as always, having there study, but nothing concrete.

Okay. And there is another question that from Ezequiel, the last one he says our price -- our gas price was $2 and quite low. Peers in the sector reported something around $2.5. Why we are lower than the peers?

Lida, You will answer this question better than me, but I would say that my first guess regarding our peers is that they're probably enjoying some of the -- some of them the benefits of Resolution 46, which we do not. So probably that makes the explanation of the difference. I don't know, you might have another...

We are audited, right? But basically, we -- our -- as we've shown in the presentation and you can see, I think in Slide 11, our sales are skewed to CAMMESA and our reserves also and that prices like it's been reduced significantly because of the tenders. So -- and we don't have any exposure to distribution, very little, less than 5% to retailers. Retailers right now are the most -- the highest price income. So right now, as I said, the spot market, it follows CAMMESA. So in CAMMESA, it is reducing. So that's reason why this is the price that we have. Going forward, June, it's -- already I was saying, June, it's like more about buying -- bounding to the reference price of $2.7 and July as well. August, it's -- well, August, the tender was a little bit lesser, but still above $2, so we are expecting an improvement hopefully. Okay. This is the questions from Ezequiel. Then, we have a question from Anne. When are the capacity and generation payments on Genelba's second steam turbine coming online now and how much incremental EBITDA do you estimate the plant will have?

Okay.

Yes. The capacity payments on Genelba is $20,000 per megawatt per month. This is in the earnings report. The EBITDA estimated to add, it's like roughly $8 million per month. That is $24 million, $25 million next quarter. So this quarter in Q2, we didn't book anything, will be booked next quarter. And that's it. Then nothing, the initial payment and that's it. Then the second question from Anne. She is asking there are reports of what [indiscernible] of Ensenada. Will Pampa be interested in this stake?

I would say it's that if YPF decides to move forward on that, we will certainly look at it, but so far, there is nothing concrete.

What are the options of Transener considering that for 2021, $100 million bond maturity, local markets, are there.. Actually, Anne, it's $90 million outstanding. So, it's lesser than $100 million, because we reported.

Yes, hello, Gabriel speaking. Well, clearly as all the other companies to do a [indiscernible] will be an option or to just fund through own cash generation and depending on the outlook on future cash flow generation. But on one side, it's not a significant amount. On the other side, depending on the outlook moving forward, there is something that will be required to take an action -- specific action.

Okay. Another question from Anne. What is the outlook, estimate for CapEx for the remainder of 2020 in each of Pampa's main divisions? The estimate for the remainder of 2020, actually for the year, we have E&P $65 million of forecast of CapEx like half maintenance, half non-recurring. This is very little because, at the beginning, we always said the budget of 2020 was $130 million, more than $130 million and this was like half. And then for power generation, this one is not much. Basically, it's $3 million from Genelba commission, which is already done, while another $40 million for the year, okay, in the maintenance. So far as of -- year-to-date as of June, we already completed half of it. So we are like in line.

Our next question comes from --

I just wanted to try. So very minor CapEx going forward because we just completed Genelba. So there are no CapEx other than maintenance CapEx, which are rather small this year, around $45 million. So in the remaining of the year, less than half of it. And on E&P, it will depend on the Plan Gas, but still a small amount.

Perfect. The next question comes from Matias Castagnino from BCP. What do we know about the new potential and gas prices, timing, etcetera. Is Pampa joining this potential program or no? What would be the break-even price to develop reserves? That is the first question he has.

Okay. I mentioned a few things. About the timing as I had said, again, nothing has been published yet, but we do expect that is what the minister explained to us last week. Then in the next few days, we will be receiving the invitation to participate in the auction with all the terms. And that auction should take place during September and the new plant gas start accruing in October. The goal of the plant gas is not a huge increase of production it's rather and basically because of the constraints of evacuation capacity from the Neuquina basin. So they are going to auction a flat production throughout the year and a three-month peak for the winter. It will have a cap of around $3.40 that will be increased 10% per year. So those has been what has been also published in the media. The main big issues of the plant gas. Regarding break-even price, it depends on your own portfolio of assets. So each company will have a -- the asset that you need to develop. So each company will have its own price and it's going to be a competitive auction in which, yes, we are looking to participate.

Thank you. The next question of Matias is what is the impact of the EBITDA due to the legacy remuneration specification?

Lida, I think you already covered this one. I don't know if you want to add something.

Yes. So basically given the trend and the FX, official FX, the inflation trend we are forecasting around $45 million, $50 million hit because of the lack of the adjustment and the FX promotion over the legacy contribution. And this is matching our contribution from -- for this year. So it's kind of like we are estimated that one effect will offset with the other.

Next question from Matias is regarding Edenor. What would happen if Edenor needs financial aid? Is Pampa going to transfer cash to Edenor?

[Indiscernible] Yes. Hello, no we are not expecting any support from the plant to Edenor. There was since we got it there were never any the company flows, and not even any dividend collection from Edenor to Pampa.

Our next question comes from Bruno Montanari from Morgan Stanley. He is interested about the cost controls, how we are dealing with in each businesses regarding the cost? What will be expected for the cost and CapEx in the near future?

Sorry Maggie, can you repeat it pleas again for me?

Yes. Of course. The question comes from Bruno Montanari from Morgan Stanley. He wants to know about the cost control regarding each businesses, each business and how we are going to deal with the cost CapEx for the near future?

Bruno as I said, what we can, we are always revising and especially in this situation going over and over to our OpEx to see which one of them, there is [Indiscernible] Edenor. I don't know [Indiscernible] somebody.

Sorry somebody has the microphone on.

Can you find out the person?

Yes. I am going to find the person.

Okay. So as I was saying we don't, there is not much that we can do to reduce costs obviously we are revising all of them, but it's very marginal and on second decimal in terms of the numbers of Pampa. When it's relevant for Pampa, it's CapEx and in this situation and thanks for the planning. We are in a very low CapEx environment thanks because we have already completed the Genelba expansion and we are awaiting the new terms of the plant gas before deciding new investments there. Maggie, continue?

Yes. Our next question comes from [Indiscernible]. Sorry before I continue if there is somebody with a microphone on, please turn it off so that we can listen to the answers clearly. Our next question comes from [Indiscernible] Securities. He has two questions. First one is, how do we see the evolution of electricity tariffs and power prices and the payment from CAMMESA.

Gus, do you want to answer that?

I think he is muted also.

He is muted. So how do you see the revolution of electricity tariffs. We honestly, this is in the midst of the pandemic. I don't think electricity tariffs will be raised right now and actually the government then place an extension of the tariff rates. I don't know if you remember there was an emergency act passed last year, and that up to 180 days, no tariff increases, cell phones, mobile anything will revise, risen, that ended on June and they extended for another 180 days. So should be the fees for tariffs will be done by December. Our prices, honestly the legacy is, it is what it is it. We will be keep [Indiscernible]. We don’t give any inflation adjustment, and honestly this is in the same line as of the previous answer. I don't see this happening in the midst of the pandemic, though it is true and we’re addressing in the call, working capital is performing better. I think everybody, all the peers are talk about this. We are seeing better collections from the retailers Edenor collecting more, gas distribution companies which is conducting more so, they're passing through this kind of behavior to CAMMESA or to gas producers as well, and CAMMESA has been factor as well. So in this quarter we had real positive working capital with CAMMESA versus last quarter when we had this call sales outstanding was watermark was 86 days more or less. And we are 10 days earlier. So this 10 days one third of the average is like $20 million better if we do this for the whole year, right for 12 months effect. Maggie, the other question from Alexander [ph]?

The other question, the second one from Alexander is and it's very similar to the question of Ricardo [Indiscernible] from JPMorgan. And it's about our investment in the upstream of gas volume evolving in the near future. If we are joining the new potential plant gas, especially second half of the 2020 second half of this year and for next year. Gustavo is on mute.

Well again as Gustavo was addressing this, if we have it, it will be a great signaling, and a great push through the sector that really needs it. One of the questions that [Indiscernible] was asking what prices do we need, what prices are the break-even, this is the prices that makes it break even. We almost have a break even EBITDA. I would say that this is the bottom and this is very low. Anything that may help, anything that contributes it will make this sector more prospective. So of course we don't have nothing in paper, but it's in dialogue and that we are working on it. So already addressed by Gustavo.

Thank you. Now we are polling for more questions. Please wait for a few minutes. I got a question and answer session. Danielle, is also asking what is the minimum CapEx you can deploy before significantly damaging the operation?

Well this is the minimum CapEx, absolutely. And not really in anything, well the first quarter of the year we drilled almost nothing, because first quarter was -- we were thinking about the second quarter to be preparing for winter season, which is our hot season, but then lockdown COVID-19. So nothing, we did nothing so and basically well this year we have the drive of last year's activity. Last year was a surprised good year for E&P, active in the drilling and improvisation. Last year we were doing shale drilling, even we were doing shallow drilling. And because of the CapEx that we are diversion this year so far I was saying $65 million this is forecast for the year $60, $65. Next year we are estimated, that if nothing happens that will mean the decline in production. So if this is already very low. There is another question [Indiscernible].

This is about the regulating utilities, if we are seeing non-tariff adjustment in the second half of this year, what do we think about the tariff adjustment for next year?

Yes. Well so we already said this. We are in the midst of the pandemic and there is a decree preventing on that. So we don't expect any tariff increases in our regulated businesses. Though we had dialogue, there is dialogue to think about what's going to happen after the pandemic.

Hello. We are polling for questions. Please wait for a few minutes.

There is another question from [Indiscernible]. He’s asking about the current payment delays from CAMMESA. I was saying right now we are around 75 days. This is 10 days better than the last call that was the high watermark. Tariff, this is tariff CAMMESSA tariff with gas production with everybody, all the clients. Gas transportation, electricity transportation everybody is getting paid from CAMMESA around this 75 days sales outstanding, so it's a 10-day improvement. There is another question from Daniel.

Actually it's from Andre [Indiscernible] from Citi. He is asking, are you considering to have a better market. Some of your peers seems to be getting very low interest rate, local markets, both in local currency and dollar link instruments. If that is the case, what would be the use of proceeds?

Mari…

Yes. Hello. Yes, I was on mute. Well in respect of transactions on our peers that have accessed the local market, the international market, we clearly have seen that there are friendly transactions for the corporates, but we understand that they have access essentially to do liability management because they were required to do so. As you know our debt profile, our first maturity is on 2023, by July 2023. So we don't have any requirements to access the local markets now and even if we would want to do something on 2023 it would not act much, would concentrate a lot on the 2027. So essentially we feel very comfortable with debt profile and our cash flow generation. So we don't think there is a requirement so far with the current business strategy that we have. On the other side, we have strengthened our liquidity onshore by accessing the local capital markets in shorter term as you have, there was in the press we had about $90 million in the local market for 13 months. So that's what we did.

There is another question [Indiscernible] asking the same. What portion of the EBITDA generation of the power generation units comes from units with PPAs and how much from legacy?

So just to give our famous chart is that 65% of our megawatt is from legacy, but only 40% less than 40% actually 38 its legacy EBITDA. And the opposite 35% of our megawatts it’s operated EPAs. [Indiscernible] everything that you know but they constitute 62% of our EBITDA and this distortion, this inequality will grow even wider as we have Genelba right now coming online in Q3, and one. He asks, Daniel also as well do you foresee any material risk that government may modify EPAs with CAMMESA? I think we addressed it twice before. It's something that it's always a risk but right now we haven't talked or seen anything actually we've been paid actually there is improvement on payments today.

And besides and yes, besides I think we would like also to stress something of what we said is that those contracts already have been affected considering that the owner of the official exchange rate. So in terms of your equity that you have deployed to the capital, you don't have access to, you don't have really access to exchange rate to recover your original cost of capital, okay.

Okay. [Indiscernible] also asking on plant gas. We already addressed it. Thank you Lily for the questions. People asking for new bonds issues. I think Gabriel already answered it. Thank you for your question also in that sense. Someone from the audience asking how regarding hydrocarbons production, how we expect demand will change during Q2 -- the second half of the year sorry? Is it growing? Yes right now it's growing because we are in winter but Q4 because it's off-peak season, and historically as you can see the charts it's always goes down, but it's a seasonality that's not unknown. So but the Q3 it's the hot season for Argentina and as you can see the year-on-year decrease it's not that much compared I don't know GDP or other sectors like [Indiscernible]. I think this is, can you please comment on TGS results, a new project in Vaca Muerta by Lily Young from HSBC. It's a small project actually. It's really good because it makes more use of the cabin pipeline that we built with [Indiscernible] and just transport by TGS. This is a huge project I don't know if you remember. TGS like $300 million about two years it was finished last year. We started operating and actually started to build and it contributed a lot more but not so huge but important part to the Q2 EBITDA at TGS and basically it's part of the ecosystem at Vaca Muerta that TGS is trying to build, right. And this is a treatment plan that it will be in the north part in the north trench of this gathering pipeline. It's a two-year contract TGS will operate and treat this gas that the people from Shale and YPS [ph] lives on [Indiscernible] what else? I think that's it.

I think there is one more question from Chris [Indiscernible]. Have there been any further discussion with the authorities about changes to the U.S. denominated PPAs in light of current blue chip right a continuous monetary policy?

I think Gabriel already addressed it. I think so. I think that's it right. There is no more. There is a poll after this presentation. Thank you so much for joining us. Margarita and I we appreciate you are here. Any question you may have you can reach us both to every contact line that we have, and please stay safe. I will see you next quarter.

Thank you to everyone.

Thank you.

We will be available for any further questions through Lida, Maggie and the team.

Thank you Gabi, and thanks for your participation. This concludes today's presentation. Thank you for joining. You may disconnect at this time. Goodbye.