Good morning ladies and gentlemen. Thank you for waiting. I'm Margarita Chun from IR. We would like to welcome everyone to Pampa Energia's Fourth Quarter 2020 Results Video Conference. 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 Q&A session, where questions can only be submitted through the Zoom platform available at the browser or through the app. Should any participant need assistance, please contact us through the chat or email. 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 Pampa Energía management beliefs and assumptions and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and 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 video conference over to Lida Wang, our Investor Relations and Sustainability Officer of Pampa Energía. Lida, you may begin the conference.

Thank you, Margarita. Hello everyone, and thank you for joining our conference call. I hope you all are safe and well. In the interest of time, I will summarize the latest events and financial figures, reviewing the year and the quarter, focusing on power and E&P. Our CEO, Gustavo Mariani, is here and our CFO, Mr. Cohen, is here to join us for Q&A. In the fifteen years of Pampa Energía, 2020 was a year to remember. Our resiliency helped us to navigate the complex waters, operating an essential business smoothly amid the pandemic. We kept growing our asset base, achieving another important milestone by commissioning Genelba's second CCGT, the most significant expansion project in Pampa's history. Genelba is highly demanded due to its efficiency and location and demonstrates exceptional availability since the beginning of operations. Our power generation goal has continually been growing on a sustainable basis, seeking maximum efficiency through renewable energy and highly productive thermal units. In the last five years, Pampa has more than doubled its installed capacity, leading the Argentine power market as the largest IPP. We expect to contribute 280 megawatts from the CCTG expansion at Barragán within a year. I'll comment more later. Also, we managed to keep producing relevant levels of gas without significantly curtailing our output, positioning ourselves as the first largest unconventional producer in Neuquina Basin, the most prospective basin and reservoir in Argentina. This is worth highlighting, especially when the gas market could not grant any visibility and billing the lowest prices in years until just a few months ago. The quality of our fields and the steadiness of our team contributed to this success. After many years of difficulties, petrochemical is thriving again and back to the production levels of four years ago. Despite the country's recession, we…

Thank you, Lida. [Operator Instructions] Our first question comes from Guilherme Levy from Morgan Stanley. The first question is about the E&P business. What should we think in terms of cost in the next quarters as natural gas production starts to pick up in context of the new Plan Gas? And following that, the second question is also related to the E&P business. What we should expect in terms of prices for the industrial segment going forward, since it was not among the segments contemplated in the Plan Gas?

Hi, Guilherme, how are you? Good morning. About costs, I think it's going to be stable at $0.70 lifting cost per million BTU. It's not going to change that much. All the efficiencies are gained. But as we are also gaining a lot of production – increasing production the per million BTU might be stabilize or decreasing a little bit to $0.70 per million BTU. The second question will be answered by my boss.

Hi Guilherme, Gustavo Mariani speaking here, regarding prices for the industrial segment, you know that they are coming from a very depressed level. So for the industrial segments, prices are going up in a significant way this year going forward. So that reality has to be digested by that segment, which is not something easy. So our commercial guys are having a tough time. But I think that going forward all the segments are going towards the average price of the Plan Gas, so adjusted by the fact that the industrial segment has a very good credit. It based on time. So we expect a slightly less price for the industrial segment than the average of the Plan Gas, so something around $3.30, $3.40 going forward. Maybe that's not going to be the number initially, but as time passes, I think that, that is where prices should be going.

Thank you, Gustavo. Our second question comes from Daniel Guardiola from BTG Pactual. He has two questions regarding E&P and two questions regarding power generation. The first question about the E&P is, can you share with us what is the expected EBITDA for 2021? And also break it down by unit. I'm especially interested in the upstream EBITDA for 2021, now that Plan Gas IV is in place, and gas production is expected to reactivate in 2021. And considering the under-investments seen in 2020 in the upstream segment, how challenging it will be to grow gas production in 2021 in order to own our Plan Gas IV? What is the expected upstream CapEx in 2021?

So, Hi Daniel, how are you? We don't give guidance, though, but Plan Gas numbers are all public. The budget that the board approved for upstream E&P EBITDA it’s $200 million of EBITDA. This contains the fact that 70% of our production will be testing under this GSA. Basically is that, the production is already reactivated. It's already – we are around 7 million cubic meters per day of production right now, and it's expected to pick up in May. In May, we are – we have to deliver – we start delivering the additional winter season and peaking at June. This is one question. The second on CapEx, the second question you said underestimating in 2020? Yes. Yes, it was. But now in 2021, that's another chapter. And the Board approved $150 million, 1-5-0, for E&P only, but might go higher than that, basically because we might be doing another side project that's related to gas E&P, but everything inside the discipline of the cash flow. Gus?

No. Just I think the $150 million was what we approved, what the Board approved at the end of last year. Probably the figure this year is going to be higher in the area of $180 million, taking into account the Round 2 of the Plan Gas, which – where we were aggressive, and we committed more volume of gas for this winter and for the next four winters. So that's why CapEx are going up. But keep in mind, when you see Pampa going forward, that most of the investment – or all the investment infrastructure in order to comply with the increased volume that we have committed for the planned gas will be done this year. So this is the year of the highest CapEx because of what we are spending in infrastructure and following the following years in order to maintain this level of production. There will be almost nothing in infrastructure and just wells in order to maintain production and to compensate the decline in production of the wells. So this is going to be the highest year of CapEx in order to comply with commitments in the Plan Gas project.

Thank you, Gustavo. We have one follow-up question from Daniel Guardiola, it's regarding the power generation business. So the question is about the – what portion of the total power generation segment revenue came from PPA? And regarding the potential specification of the PPA, how it could affect Pampa in comparisons with the legacy spot that was already specified?

So what portion of the total power generation segment revenues came from PPA? It's basically more than 70%, 70%, it's from PPAs, and the rest decreasing, it's the legacy. And the second question, I don't have it. [Foreign Language].

Okay. Regarding the – I don't see the question, but I think it was regarding the potential specification of the PPAs. So answering what would be the impact for Pampa that is impossible because that's something that has not happened. And if it wouldn't happen, going forward, it will depend on the – on how this peso contracts will be adjusted going forward and so the pace of the adjustment vis-à-vis the devaluation of the local currency. So it's very hard to give you an answer on how that would impact. But regarding this point, I would make – I would like to – sorry, if I repeat myself because I've been saying this for correcting two years already. And we don't believe that within a situation – a macro situation under control. This is something that is going to happen. It didn't happen in 2020, which was the first year of this new administration that was the year of the pandemic. And even in that situation, the government took the decision to respect the contract. And that is because not respecting those contracts has terrible consequences in the medium term, tremendous negative consequences this could – would happen. As you know, since 2003, the only way that Argentina attracted a huge infrastructure investment as power generation sector required for energy in general is through long-term dollar contracts. And this government is doing that same thing right now. For example, with the Plan Gas, so again, unless there is a huge disruption of the macro variables, meaning basically a huge devaluation, which is something that we are not envisioning at all this year. Actually, we were much more concerned during 2020 of the macro variables, and we think that going forward, this year, because of several reasons that we –…

Thank you, Gustavo. Our next question comes from Ezequiel Fernández from Balanz. He has three questions. I will read it one by other. The first one is any update on how the conversation with government is going regarding an increase in the remuneration for legacy power units?

Hi. Well, legacy capacity will also – we – as we said very few times our power generation people gather – as a larger IPP with other IPPs with authorities, we presented the case. We showed them that there's many legacy capacity that is very important for – critical for their functioning in Argentina in some regions they need urgently some kind of adjustment. And we already exposed. They already know. They too know this, but so far nothing formal yet, but they understand they know it. The second question was could the closing of Central Barragán require any additional equity contribution. Gabi?

Yes. Hello. No, we are not expecting any capital contribution for Barragán. Barragán is advancing to some extent on the schedule. It will be completed by first semester of 2022 and we'll remind that it's a low leverage company. And once performing well, so there should be any programs even for additional leverage capacity, but no equity commitment is expected to be funded additional or already done.

Thank you, Gabi. We have one more question from Ezequiel. How much was your total CapEx in Q4 without considering Edenor?

Hi, Ezequiel. This is in the presentation. So without Edenor – with Edenor it's $100 million in the Q4, now without Edenor, that's in the Page 6, okay, without Edenor it's only $60 million, all right. This is without Edenor, but also including the affiliates at our ownership.

Thank you, Lida. Our next question comes from Alejandro Demichelis from NAU Securities. Could you please indicate how you are seeing the payment cycle from CAMMESA and also for gas sales under Plan Gas?

Hi, Alejandro. How are you? So the payment cycle right now from CAMMESA is around 80 days. That's the collection days. That's the average that we are witnessing right now. That's being for three months already. The peak was, three months ago, it was like we peaked to 90 days and now it's 80. That means the rule is 42, so anything exceeding from that that's delays. Now, remember that we – the record of the history of CAMMESA DSO, we reach 110. So 80, is quite ugh. Plan Gas, well, Plan Gas, the regulation about the GSA stipulates to get paid, right – in the few – next few days, the final invoice should be approved for January transaction. Once that happens, we should be collecting anytime soon, but it's not due yet. Very important thing that I didn't mention and this is very important because it highlights the commitment, I will say, something that I haven't seen. Plan Gas stipulated that if there's any fall situation or there is a delayed payment from the government, the money that you invoice can be used for as a tax credit. And that was totally implemented in the Argentine RS a few days ago. And it can be used for paying any tax obligations such as income tax, VAT, and you can use – and it's already online in the platform.

Thank you, Lida. Please hold while we pull for more questions. Okay. Our next question comes from Konstantinos Papalias [ph]. What destination could we expect of excess volumes above Plan Gas 4? Yes, that is the first question.

Okay. I think he refers to the fact that we are producing more in the winter and where are we thinking about placing that excess gas that we will produce in the winter? Is it correct Lida, that you are more used to these questions, what is he referring to?

No Plan Gas. So basically, he says, what happens with the gas it's not under the GSA that you have to produce. So we will select under the spot market. That's the nature of the excess volumes.

[Indiscernible] Plan Gas. We have committed roughly five million – sorry, about that I wasn't muted. The explanation of the Plan Gas IV for Pampa, we have committed roughly flat production of five million cubic meters of natural gas per day, that will be sold to CAMMESA and distribution companies throughout the year. In excess of that, we will – we have committed because that was part of the Plan Gas. You were obliged to commit for an additional 30%. So, in our case it’s, around 2.1 million cubic meters of natural gas per day. That we will be selling based to the industry at around the prices that I really refer. During the summertime, not winter season, we are also – will have also presented an export contract that is awaiting for government approval, but we are optimistic that we will soon obtain government approval for that contract in order to place an important portion of the gas that we will produce in excess during the winter. So, this is almost two million cubic meters per day, that will take our total production to nine million cubic meters starting in July or August of this year. So that answers the question.

Okay. Thank you, Gustavo. There is a follow-up question on EMP business. Do you see industrial user gas prices converting to Plan Gas prices in 2021?

I think I've already talked about it. I see conversion, it probably will take some time. And also keep in mind that because the industry pace would sooner than CAMMESA and the distribution company’s exposure is less. So the industry will have a discount vis-à-vis the prices of the Plan Gas, because of sooner collection. And it's also good to automize your collection risk. So, I think there's going to be a small discount that is going to narrow in the next few years. That is my expectation.

Thank you, Gustavo. Our next question follow-up of Konstantinos. Do you see in the power generation, any organic growth?

No, we don't have plans right now to continue expanding. We are analyzing some small projects, but conditions are not there yet for us to commit with a new investment.

Thank you, Gustavo. Our next question comes from Alejandra Andrade of JP Morgan. Can you also discuss – somebody is not muted, wait a second – can you also discuss any updates on a potential exchange for 2023?

Yes hello, well, in that respect, the only thing that we can say is that our expectation is to address that transaction before 2023. That's the only thing that we can say. And if you look at our past transactions of the group, as a policy we try to be ready all the time on the market and look at market conditions, trying to go whenever we feel comfortable about successful execution.

Thank you, Gabby. There is a follow-up question of Alejandra. Can you give us an update of the CapEx guidance for 2021?

We don’t give guidance, but we do have a budget approved again for power generation. This year is just maintenance. The restricted group, it’s $40 million of CapEx. We don’t have any projects – expansion projects in the restricted group. We have that’s outside, funded, and that’s a JV with YPF, 50-50. What else? E&P, the budget approved, it’s $150 million for this year, but the 4-year program is $250 million, though it looks like it’s going to be over now because we have site projects that link with the gas that we might execute. And then petchem and holding is just $10 million. So the restricted group, 2021, it’s around $200 million.

Thank you, Lida. Our next question comes from Andres Cardona from Citibank. When looking at your existing portfolio, is there any assets that you consider noncore? And are you actively looking at M&A opportunities, any sector in particular in which you are seeing opportunities?

No. Andres, at this moment, there’s no asset within our portfolio that we consider noncore that we are actively looking to the vest. Regarding M&A opportunities, it’s part of our history. So we are all the time monitor in the market and very active studying opportunities. We’ve been looking at opportunities on the power generation segment. That would be, I would say, the only one that was with high probability of occurrence. But it was at one point, it’s not anymore. So at this point, there are no – nothing significant or relevant in terms of M&A transaction that we are looking for.

Thank you. Our next question comes from Rahul Bhatt. He has two questions. By when do you expect Edenor sale to complete? And do you have any funding needs for 2020?

No, this year, basically, based on our base case, we are free cash flow positive. Unless there is any new transaction or any new development, we expect to some extent, to reduce some debt this year. As a base case, you should have a guideline that we have approximately $200 million of free cash flow per year after CapEx and interest payment.

Yes. You asked on Edenor sale. It’s – it can be any minute because we just need not limit to, but limited to. But we just need the regulator’s approval. The shareholders of Pampa already approved in February of this year. So that’s it.

Thank you, Lida. [Operator Instructions] Thank you. So this concludes the question-and-answer section. We will turn to Lida for final remarks.

A couple of comments that I would like to make. One is regarding Plan Gas to complete what has been answered Plan Gas, from my perspective, it’s the best incentive program that has been designed so far. I don’t know why it was called Plan Gas IV originally, but it’s the third one since 2012. But from my perspective, it has it has several benefits like that the price of that resulted from a competitive bidding process and not from the decision of a government official. It’s a program that won’t generate the distortions that the resolution for six generated in terms of market imbalances of supply and demand. In terms of secure discuss this has been greatly improved because of the fiscal certificates. So as Lida explained, in case there is a delay in the payment, that allow us to use this fiscal certificate and use it to cancel taxes. So in a way, it’s like we have a certainty of collection for the part of the incentive that comes from the Secretary of Energy. The only thing that I criticize that is unfortunate, but I think it’s quite reasonable given the special year that we had in 2020 because of the pandemic, is that the program was announced or that the bidding process came too late in the year. So unfortunately, most of our colleagues were not very aggressive in terms of being able to provide gas, especially for the winter period. That’s when most when Argentina is in the special needs of natural gas, and Argentina is important at much more expensive prices and using international reserves, which is good to keep them to keep them at home. So the only critique that I have for the Plan Gas is that it wouldn’t be better if we…

Just to highlight what Gustavo is saying, if we consider a normalized free cash flow of about $200 million, our net debt to free cash flow is around slightly above 5x, and we’ll consider that very healthy for us.

That is what I wanted to highlight, these two issues that I think were not cover enough during the Q&A. Any more questions or no more questions?

I think that the time is up. No more questions. If you have any questions, just reach us. We are always available for you. Thank you for taking your time and joining us today. We really appreciate it. Please take care and contact us. And before you leave, please, there is going to be a small poll. Give us your feedback and any suggestion you have. Have a good day.

Thank you, bye-bye.

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Thank you. This concludes today’s presentation. Thank you for joining. You may disconnect at this time. Goodbye.