Pampa Energia’s Positive Earnings Call Highlights Growth

Pampa Energia ((PAM)) has held its Q4 earnings call. Read on for the main highlights of the call.

Pampa Energia’s recent earnings call painted a largely positive picture, highlighting robust performances in gas production and power, significant EBITDA growth, and strategic financial management that led to reduced debt. However, the company also faced challenges such as higher operating costs and seasonal decreases in margins.

Record Gas Production

Pampa Energia achieved a new all-time high in gas production in 2024, with a 21% growth in average gas output and an impressive 80% increase since 2017. This growth was primarily driven by top-performing wells in the Vaca Muerta region, showcasing the company’s strong operational capabilities.

PEPE 6 Wind Farm Commissioned

The commissioning of the PEPE 6 Wind Farm marked a significant milestone for Pampa Energia, adding 140 megawatts of clean energy. This development represents nearly a 50% growth in capacity since 2017, with an impressive 95% availability rate in 2024, underscoring the company’s commitment to sustainable energy.

EBITDA Growth

Pampa Energia reported a 19% year-on-year growth in EBITDA, with a 29% increase compared to 2017. This growth was largely driven by the power and gas segments, contributing to a reduction in net debt to $410 million, the lowest level since 2016.

Strong Q4 Gas and Power Performance

In the fourth quarter, gas production rose by 11% year-on-year, while power units recorded a 94% availability rate. Improved performance in power purchase agreements (PPA) further bolstered the company’s quarterly results.

Successful Debt Management

Pampa Energia successfully issued a $360 million international bond maturing in 2034, which helped reduce net debt to $410 million. This strategic move resulted in a net leverage ratio of 0.6 times, reflecting prudent financial management.

Proven Reserves Increase

The company saw a 16% increase in total proven reserves, reaching 231 million barrels of oil equivalent. This growth was driven by increased activity in the Sierra Chata and El Mangrullo regions, highlighting Pampa Energia’s effective resource management.

Higher Operating Costs

Despite the positive developments, Pampa Energia faced higher operating costs and lower exports at the blended FX, which partially offset gains. Lifting costs per barrel of oil equivalent rose to $8.7, indicating a need for cost management strategies.

Decrease in Oil and Gas Margins

Margins in the oil and gas sector were lower in the last quarter of 2024 due to reduced production volumes and lower prices compared to previous quarters, posing a challenge for the company.

Seasonal EBITDA Decrease

The company experienced a notable quarter-on-quarter decrease in EBITDA due to seasonality, despite an increase in gas deliveries from thermal power generation, reflecting the cyclical nature of the energy sector.

Forward-Looking Guidance

Looking ahead, Pampa Energia expects continued growth in gas production, with a 21% year-over-year increase and an 80% surge from 2017, driven by Vaca Muerta wells. The power segment is set to expand further with the PEPE 6 Wind Farm, achieving a 95% availability rate. The company anticipates maintaining its strong EBITDA growth and reduced net debt levels, while focusing on managing operating costs and optimizing margins.

In summary, Pampa Energia’s earnings call highlighted a positive trajectory with strong performances in gas production and power, significant EBITDA growth, and successful debt management. Despite challenges like higher operating costs and seasonal margin decreases, the company remains optimistic about its future growth prospects.