Pampa Energia ((PAM)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call from Pampa Energia painted a mixed picture for investors and stakeholders. While the company reported strong growth in production and financial performance, particularly from the Rincón de Aranda field and robust gas production figures, these positives were offset by challenges such as declining crude prices, high capital expenditures, and issues in the power generation segment.
Rincón de Aranda Production Ramp-Up
Production at the Rincón de Aranda field has seen significant growth, with oil production reaching 14,400 barrels per day in the third quarter, nearly tripling from the second quarter levels. The company has set ambitious targets, aiming to exit 2025 with a production rate of 20,000 barrels per day and reaching 45,000 barrels by 2027.
Record Gas Production
Pampa Energia achieved a milestone in gas production, hitting an all-time high of 17.6 million cubic meters per day in July. This achievement was largely driven by the peak performance of the Sierra Chata field, showcasing the company’s strength in gas production.
Strong Financial Performance
The company reported an adjusted EBITDA of $322 million, marking a 16% increase year-on-year. This financial growth is primarily attributed to the ramp-up at Rincón de Aranda and increased B2B sales, highlighting the company’s robust financial health.
Share Repurchase and Stock Performance
Management has been proactive in enhancing shareholder value by repurchasing 1.5% of the company’s share capital at $59 per ADR. The stock has since appreciated, trading close to $90, reflecting investor confidence in the company’s prospects.
Decline in Crude Oil Prices
The company faced challenges with crude oil prices, which averaged $61 per barrel in the third quarter, representing a 15% decrease from the previous year. This decline is attributed to the underperformance of Brent crude, impacting the company’s revenue from oil sales.
High CapEx Levels
Capital expenditures surged 183% year-on-year, reaching $332 million. This significant increase indicates the company’s commitment to ongoing investment, particularly in the development of the Rincón de Aranda field.
Challenges in Power Generation
The power generation segment saw an 8% year-on-year increase in EBITDA, but faced challenges with a 9% drop in generation due to weaker demand and maintenance outages. These factors have reduced availability and impacted overall performance.
High Lifting Costs
Lifting costs remain a concern, standing at $6.4 per BOE, although there has been a decrease from previous quarters. This indicates ongoing efforts to manage operational costs effectively.
Forward-Looking Guidance
Looking ahead, Pampa Energia provided guidance on several key metrics. The company expects to stabilize its net leverage ratio around 1.1x and anticipates a 10-15% improvement in the power segment’s EBITDA next year due to regulatory changes. With infrastructure expansions, the company plans to exit 2025 with oil production at 20,000 barrels per day and aims to reach 45,000 barrels per day by 2027.
In summary, Pampa Energia’s earnings call highlighted a mixed sentiment with strong production and financial performance juxtaposed against challenges in crude prices and power generation. The company’s forward-looking guidance reflects optimism with ambitious production targets and expected improvements in the power segment, signaling a strategic focus on growth and stability.