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01/11 03:07
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: strong production and strategic plans, but concerns about free cash flow and vague management responses. Positive factors include increased shale gas production, extended debt maturity, and potential market share growth. However, negative aspects like negative free cash flow, uncertainty in regulatory impacts, and unclear guidance balance these out. The lack of clear guidance on key metrics and the negative free cash flow outlook contribute to a neutral sentiment, while the strategic production plans prevent a negative outlook.
Adjusted EBITDA $322 million, a 16% year-on-year increase, mainly driven by Rincón de Aranda, steady shale oil growth, higher B2B sales, and the contribution of PP6 wind farm. Quarter-on-quarter, EBITDA also improved due to Rincón de Aranda and gas seasonality.
CapEx $332 million, a 183% year-on-year increase, with $174 million invested in the development of Rincón de Aranda.
Oil and Gas Adjusted EBITDA $171 million, a 40% year-on-year increase, largely due to Rincón de Aranda, increased exports, strong industrial demand, and sub procurement margin in Vaca Muerta. Partially offset by soft retail demand in September due to milder weather and the end of peak winter contracts under Plan Gas SA.
Lifting Cost per BOE $6.4 per BOE, increased due to higher gas treatment costs and lease of temporary facilities at Rincón de Aranda. However, quarter-on-quarter, lifting cost per BOE sharply decreased due to higher output and stable total cost.
Gas Lifting Costs $0.90 per million BTU, flat year-on-year but dropped 17% quarter-on-quarter.
Total Production Nearly 100,000 barrels of oil equivalent per day, a 14% year-on-year increase led by Rincón de Aranda and Sierra Chata, partially offset by decreases in El Mangrullo and nonoperated blocks. Quarter-on-quarter, production rose 18%.
Crude Oil Prices $61 per barrel, a 15% decrease year-on-year due to Brent underperformance. Hedge in Rincón de Aranda's production helped mitigate the price drop.
Gas Sales 14 million cubic meters per day, steady year-on-year and 8% higher than Q2 due to seasonality. Export remained steady at 1.2 million cubic meters per day, up 146% year-on-year due to low hydro in Chile.
Gas Prices $4.4 per million BTU, flat year-on-year. Fuel procurement for Loma de la Lata power plant and industry sales supported this price, offset by lower export prices.
Power Generation EBITDA $120 million, an 8% year-on-year increase, mainly explained by PEPE 6 wind farm, fuel procurement margin in Loma de la Lata, and higher seasonal capacity payments for open cycles. Partially offset by a 9% drop in generation due to weaker demand.
Free Cash Flow $6 million in Q3, driven by strong EBITDA generation and improved working capital.
Cash and Cash Equivalents $881 million at quarter end, in line with Q2.
Gross Debt Nearly $1.8 billion, a 16% decrease since December 2024, following the redemption of the 2027 and 2029 notes funded with proceeds from the 2034 notes.
Net Debt $874 million, reflecting CapEx outflows and collaterals on oil hedge. Post quarter, net debt reduced due to repayments and recovered guarantees.
Rincón de Aranda production ramp-up: Production ramp-up at Rincón de Aranda is translating into strong EBITDA, supported by 7 active pads. Oil now accounts for 34% of EBITDA in E&P and 18% of total E&P.
PP6 wind farm contribution: PP6 wind farm contributed to the EBITDA growth.
Gas exports and industrial demand: Gas exports and strong industrial demand increased, with exports up 146% year-on-year due to low hydro in Chile.
B2B sales improvement: Improved deliveries of B2B sales and exports.
Gas production and seasonality: Gas production reached an all-time high of 18 million cubic meters per day during winter, driven by Sierra Chata's peak production.
Cost management in oil and gas: Lifting cost per BOE decreased due to higher output and stable costs. Gas lifting costs remained flat year-on-year but dropped 17% quarter-on-quarter.
Share repurchase: Management repurchased 1.5% of the company's share capital at $59 per ADR, with the stock now trading at nearly $90.
CapEx investment: CapEx surged 183% year-on-year to $332 million, with $174 million invested in Rincón de Aranda development.
Market Volatility: The company experienced market volatility in September, which could impact investor confidence and stock performance.
Soft Retail Demand: Retail demand was soft in September due to milder weather, which could affect revenue from gas sales.
Higher Gas Treatment Costs: Increased gas treatment costs and the lease of temporary facilities at Rincón de Aranda raised operational expenses.
Crude Oil Price Decline: Crude oil prices averaged $61 per barrel in Q3, a 15% decrease from last year, which could impact revenue.
Scheduled Maintenance and Outages: Scheduled maintenance and ongoing outages in power plants like Gela and Loma de la Lata reduced availability to 94%, affecting power generation.
Debt Levels: Gross debt stood at nearly $1.8 billion, with a net leverage ratio of 1.3x, reflecting high CapEx outflows and oil hedge collaterals.
Export Price Decline: Lower export prices for gas, affected by Brent underperformance, could reduce profitability.
Regulatory and Seasonal Risks: Seasonal demand fluctuations and reliance on regulatory frameworks like Plan Gas SA could introduce uncertainties in revenue stability.
Oil Production Growth: The company expects to exit 2025 producing 20,000 barrels of oil equivalent per day. Production is projected to increase to an average of 28,000 barrels per day by the second half of 2026, and reach 45,000 barrels per day by 2027 once the Vaca Muerta oil Sur pipeline and the central processing facility (CPF) are operational.
Cost Reduction in Oil Production: The company aims to stabilize lifting costs at $5 per barrel, leveraging the CPF to achieve this milestone.
Gas Production and Sales: Gas production is expected to remain strong, with Sierra Chata leading growth. A new 4-well pad is undergoing fracking, and gas sales are supported by seasonal demand and industrial sales.
Power Generation Outlook: The company anticipates continued support from new energy under take-or-pay PPAs, which contribute significantly to the segment's EBITDA.
Financial Position and Debt Management: The company maintains a strong cash position of approximately $920 million and a net leverage ratio of 1.1x. Liability management efforts have extended the average debt life to 5.6 years, reducing near-term maturities.
Share Repurchase: Following the September market volatility, management demonstrated confidence in the company's fundamentals by repurchasing 1.5% of the company's share capital at $59 per ADR. Today, the stock is trading nearly $90.
The earnings call presents a mixed picture: strong production and strategic plans, but concerns about free cash flow and vague management responses. Positive factors include increased shale gas production, extended debt maturity, and potential market share growth. However, negative aspects like negative free cash flow, uncertainty in regulatory impacts, and unclear guidance balance these out. The lack of clear guidance on key metrics and the negative free cash flow outlook contribute to a neutral sentiment, while the strategic production plans prevent a negative outlook.
The earnings call reveals mixed results: a 5% increase in Power Generation Adjusted EBITDA and a reduction in gross debt are positive indicators. However, the free cash flow outflow and negative cash generation outlook due to high CapEx are concerning. The Q&A highlights ongoing projects and potential growth, but management's unclear responses on certain financial specifics add uncertainty. Overall, the sentiment is neutral as positive and negative factors balance out, with no clear catalyst to drive significant stock price movement in either direction.
The earnings call presents mixed signals: strong EBITDA growth and improved cash position are positive, but increased debt and lifting costs are concerns. The Q&A reveals uncertainty around regulatory impacts and future projects, with management providing unclear responses. These factors, combined with a lack of significant new guidance or partnerships, suggest a neutral outlook for the stock price over the next two weeks.
The earnings call highlights strong financial performance with increased EBITDA and free cash flow, alongside a significant rise in cash position. The strategic shift towards shale gas and the completion of major projects like PEPE 6 are promising. Despite some uncertainties in the Q&A, management's optimism about LNG projects and competitive positioning boosts sentiment. The positive financials and strategic developments suggest a stock price increase in the short term.
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