Pampa Energia SA (PAM) 2021 Q1 法說會逐字稿

We apologize for interruption. Good morning, ladies and gentlemen. Thank you for waiting. I'm Margarita Chun from IR, and we would like to welcome everyone to Pampa Energía's First Quarter 2021 Results Video Conference. We inform you that this event is being recorded. (Operator Instructions)

Before proceeding, please read the disclaimer that is located on the second page of our presentation. Let me mention that forward-looking statements are based on Pampa Energía's 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 video conference.

Thank you, Margarita. Hello, everyone. Thank you for joining our conference call. I hope you are all safe and well. In the interest of time, I will summarize the latest events and financial figures. For more details, you can check the earnings release or contact us. Our CEO, Gustavo Mariani; and our CFO, Mr. Cohen, are both here and joining us for Q&A.

Despite the challenging context, the first quarter showed solid figures from sales to net cash flow, a great proof of the company's resiliency. As of 2021, figures are shown with (inaudible) Edenor as we announced the divestment last year and clearance should be any time. Therefore, Pampa is getting simpler and leaner. The revenues from continuing businesses increased 4% year-on-year to $420 million, mainly due to Genelba Plus new PPA, growing gas self-supply by our E&P.

We also recorded higher petrochemical and E&P prices due to the rise in international prices and (inaudible) TSA. All of them were partially offset by the drop in legacy prices and hydrocarbon volumes as well as the tariff freeze and devaluation effect over our utility businesses.

In Q1 '21, 83% of our sales were dollar-linked and almost 88% in EBITDA terms, mainly coming from our core businesses, PPA power capacity followed by E&P. The adjusted EBITDA from continued businesses amounted to $204 million for the quarter, 16% higher year-on-year, mainly explained by the same reasons detailed before plus production efficiencies and decreasing peso-linked expenses due to the devaluation effect. Quarter-on-quarter, EBITDA increased by 11%, mainly due to the Plan Gas, petrochemicals price improvement and the high seasonality on power and liquid businesses, offset by Barragán outages and devaluation effect on regulated income. Therefore, oil and gas is regaining exposure by taking 41% as we show in the right below while excluding Edenor, electricity takes 59% of the consolidated adjusted EBITDA.

Moreover, during Q1, the CapEx from the continuing businesses fell 11% year-on-year and 10% quarter-on-quarter, explained by the commissioning of Genelba last year first half, offset by the recovery in E&P activity due to the Plan Gas and Barragán expansion project.

Moving to the power generation segment as seen on Slide 4. During the first quarter of 2021, we posted an adjusted EBITDA of $115 million, similar to the Q1 '20 mainly because of Genelba CCGT, higher B2B sales and the valuation impact on our peso-denominated expenses. These effects were offset primarily by the dilution of dollar legacy prices in dollar terms, which are frozen since February last year. Remember that they are in pesos.

Quarter-on-quarter, EBITDA decreased by 5%, mainly due to Barragán's outages and devaluation impact, offset by the summer season that rose the spot energy prices in Q1 '21. Spot energy comprises 59% of our capacity but only represented 22% of our power generation EBITDA in the quarter. And it will keep shrinking until the regulator grants inflation adjustment, which is imperative to continue with the proper maintenance of these plants underpay consider the contribution to the availability.

Generation in Q1 '21 was 4% down year-on-year, impacted by increasing renewables in the grid combined by weaker demand, lesser Bolivian gas in the north of the country in addition to Barragán's outage. All of them were partially offset by Genelba's new CCGT and CAMMESA's exports using our and drill fuel units at Parque Pilar and Ingeniero White. Quarter-on-quarter, generation was quite similar, with thermal outpacing hydro and wind generation.

Keep in mind that the power generation business model relies on capacity payments, so lower dispatch does not impact the revenue making as long as the availability is outstanding, especially for PPA-based energy. The availability rate in Q1 '21 reached almost 95% with installed capacity of 5 gigawatts operated all by Pampa, slightly lower year-on-year, mainly due to Barragán's unavailability. We expect exports by CAMMESA to remain but slowed down as it forecasted in the country, meaning that there's more reliance on thermal generation regardless of the fuel. All in all, our 2021 generation is expected to increase year-on-year.

Regarding our expansions, our crucial project is closing to CCGT at Ensenada Barragán thermal power plant, as seen on Slide 5. The project is considered critical infrastructure for Argentina's grid, which will add 280 megawatts in the south of greater Buenos Aires. The project is 40% advanced. Siemens carried out the stim turbine inspection without any anomalies. We are beginning to install the water system and review the facilities connection to the grid. Around 900 people are, right now at the site, working with the strictest protocols to minimize the circulation of COVID. We also implemented a night shift to recover the delays caused by the second wave of the pandemic to achieve the COD by second quarter of 2022.

Keep in mind that CAMMESA like Pampa operates in Ensenada Barragán, and it is the fourth CCGT project for us. Once closed, the installed capacity will amount to 847 megawatts, contributing to the grid one of the most efficient thermal units.

So moving on to the E&P results seen on Slide 6. We posted an adjusted EBITDA of $33 million in Q1 '21, 13% higher on year-on-year, mainly driven by Plan Gas rebounding gas prices as of the beginning of this year. Crude oil prices also grew to pre-pandemic levels due to the international prices. However, the lower oil demand and gas exports and more royalties because of higher prices compensated the EBITDA's increase. Quarter-on-quarter, the EBITDA increase is remarkable, consider that they are both quarters -- off-peak quarters, driven basically by Plan Gas and also a little bit higher production -- gas production.

Efficiency-wise, we recorded $23 million of lifting costs, 24% improvement than Q1 '20, driven by higher productivity at competitive gas blocks such as El Mangrullo, lesser volume and devaluation. By BOE produced, we reached less than $6 of lifting cost, 19% lower year-on-year and 2% lower quarter-on-quarter. Despite the harsh environment, the industry depletion and it is worth highlighting that the -- our oil and gas production only decreased 5% year-on-year, mainly because of lower oil output and remains similar quarter-on-quarter.

We reached almost 44,000 barrels of oil equivalent per day, of which 90% is gas. On the oil side, we represented 21% of the segment's revenue in the quarter. Volumes sold decreased by 39% year-on-year to 3,200 barrels per day, explained by lower domestic demand as refined products haven't recovered to pre-pandemic levels. Although we resumed exports in April, as per crude oil prices, they increased by 11% year-on-year and 34% quarter-on-quarter, reaching more than $55 per barrel, driven by the Brent and bouncing back from the sharp fall at the beginning of the lockdown.

Regarding gas, we can see on Slide 7, Q1 '21 reached an average of 241 million cubic feet per day of volumes sold, 7% lower year-on-year but similar quarter-on-quarter, explained by still weak but recovering domestic demand and lower exports to Chile. The fact that drilling and completion activity reactivated in Q1 after a dreadful year also impacted the production, although the growth efforts are placed for the winter season when price surged and the shortage of gas happens.

Production was lower at our less efficient gas-bearing blocks but was partially offset by steady growth at El Mangrullo, a block with outstanding productivity wholly owned and operated by us. In Q1 '21, El Mangrullo reached 165 million cubic feet per day of gas production, 9% higher than Q1 '20 and contributing close to 70% of our overall gas, ranked the 4 largest gas producing block in Neuquina Basin.

During the first quarter of '21, our average gas price was $2.8 per million BTU, 21% higher than last year and 32% higher than Q4, mainly explained by the Plan Gas where over 70% of our output is sold at $3 per million BTU. Though this GSA does not cover the spot market or the CAMMESA additional gas tenders, prices improved but haven't reached the Plan Gas levels. As we approach to the winter season, prices are expected to converge to Plan Gas levels.

As you can see right below, the quarter sales are more diversified than a year ago but still mainly destined to CAMMESA, whether through Plan Gas or spot sales. are also part of Plan Gas and will soar during the winter, increasing its share to 1/3 of the last -- of this year's production. Also, we put in place a campaign to appeal to gas B2B sales with positive results increasing our market share. The only segment shrinking was gas exports, which decreased by half year-on-year.

Let me briefly comment again on the importance of Plan Gas, which sets a turnaround for our E&P business. Plan Gas grants a 4-year GSA intended to revert the declining trend on local gas production. Pampa was the first major ORD and the only producing -- producer tendering the largest winter production growth in the Neuquina Basin. Winter is seasonally critical because on top of the industrial product consumption, retail and thermal power increased the demand dramatically, resulting in a gas shortage and massive imports, which are paid with hard currency and does not help to the Argentine macro.

Under the GSA, we are committed to increase our annual production by 15% and by 28% during the winter season, charging $3 per million BTU off-peak and $4.5 per million BTU on peak season. That makes a year weighted average of $3.6 under this GSA. Therefore, in Q1 '21, we reactivated our investment activity by drilling 6 dry gas wells at Río Neuqué and Sierra Chata and completing 2 dry gas wells at El Mangrullo, our main production field. In that block, we are preparing for the output search by building the second gas treatment plant which will more than double evacuation capacity to reach almost 300 million cubic feet per day.

Drilling activities in the mentioned blocks will increase during the following months to fulfill our commitment, especially for the winter. It is worth mentioning petrochemicals' outstanding performance despite the economic downturn context. The EBITDA increase was mainly explained by the significant rise of international reference prices and local spreads, thanks to the growing demand linked to the industry recovery. Exports, which are 40% of our sales, are growing for SBR and reforming products. Continuing with the pricing trend, we expect to achieve similar performance during Q2, but beyond, we are not sure how commodity markets will behave and as they are highly volatile.

Finally, moving on to Slide 10. Our solid performance allows us to keep deleveraging our balance sheet, therefore, improve our leverage ratios, granting us some degrees of freedom compared to other industry peers amid this challenging environment. This slide shows consolidated figures, including our affiliates at ownership, but let's only focus on the Restricted Group for (inaudible) purposes. Restricted group is the parent company plus the hydros.

Since Edenor was deconsolidated, Pampa under IFRS is the same as the Restricted Group. As of the year-end, the Restricted Group gross debt recorded $1.6 billion, similar to last December, 91% denominated in U.S. dollars, up from 88% in Q4 because we've been paying down short-term peso debt. The dollar debt bears an average interest rate of 7.4% while the peso debt averages a 39% interest. Average life decreased from 4.8 years to 4.6 years. The cash amounted to $409 million, 12% lower than last quarter's stock, mainly but due to higher working capital by Plan Gas, coupon and peso debt payments and share buyback, partially offset by positive operating cash flow.

The Restricted Group's net debt is similar to the last quarter, amounting to $1.2 billion. The net leverage ratio improved from 2.4 to 2.3x, driven by the higher LTM EBITDA. In the next 12 months, the company only faces $165 million of maturities, of which 84% in local currency. After Q1, we paid, at maturity, $16 million of peso debt and made some share buyback. We will keep reducing short-term peso debt unless we find another opportunities to capitalize on, either through M&A or further security buybacks.

Regarding our affiliates, Barragán amended its BRT's amortization schedule, using the maturity profile for the next 2 years. Finally, the last April's annual shareholders' meeting approved to cancel another 2.3 million treasury ADRs As of today, our standing capital amounts to 55.7 million ADRs. Also, keep in mind that our Board also approved a new program for up to $30 million last March with a price cap of $60 per -- $16 per ADR. So this concludes our presentation. Now I will turn the word to Margarita. She will poll for questions. Thank you very much.

Thank you, Lida. The floor is now open for questions. (Operator Instructions)

Our first question comes from Frank McGann from Bank of America. He has 3 questions. The first one is, what are your expectations for the hydrocarbon law in terms of timing and major provisions you will have? How could it affect Pampa's opportunity?

Hi Frank. Regarding the hydrocarbon law, there's been many, many versions of -- or many proposals circulating informally through the market. We've seen one that is very encouraging. But so far, none has been formally presented in Congress so we still don't have any clarity about that. My personal opinion is that any improvement in the law that will encourage investments and growth in exports is more than welcome not only for the impact it will have on the industry but especially because the growth in exports will help to stabilize the Argentine economy. And I think that, that is the most important help for the sector and a stable economy.

So no law will be a solution for the industry. If we -- it will have an unstable macroeconomic environment. The first thing that the industry needs is a stable macroeconomic environment. And then -- and encourage to investments and exports, as I said, will be more than welcome. But so far, that is as much as I can say.

Thank you, Gustavo. The second question is about, what are the potential projects that you could do with Gazprom? Would Pampa be the operator in these projects?

Okay. It's too early to give you -- to give any kind of -- to answer the details that you are asking because we are at an early stage. The excellent news regarding -- that I can tell you so far is that a leading international company like Gazprom is willing to devote time to analyze and understand investment opportunities in Argentina. And so far, that's what we are working with them. We are sharing information. We are helping them understand the opportunities that we see in the natural gas market in Argentina, and -- but we are at a very early stage of the conversations. So far only an NDA has been signed. So that is what I can tell you so far.

Thank you, Gustavo. The last question from Frank was about, do you see the potential -- any potential new projects to add new capacity? I think he means the power generation business. When do you think the system will need new capacity?

Okay. It will vary. The timing will very much depend on the growth prospect of the industry, of the economy of Argentina. I don't have a time frame in my mind because it's not easy to predict the outlook for the economy. But as you know, power generation projects take a long time from the moment that you start thinking about it to the time that it's in commercial operations. So like a combined cycle is at least 3 years.

So if the economy starts to perform more okay, I don't think it's crazy that next year -- at some point of next year, we will start to think about new projects in power generation. Today, we are -- the system is running with a good safety cushion. But we -- that is because we are counting with old and inefficient equipment that it will be very good for the system to be replaced by more efficient renewables or combined cycles, so to replace all the steam turbines that are still running in the system. That would be very good news. Obviously, the investment environment has to be there. So with the current yields of sovereign and corporate debt, it's a good moment to be planning this kind of projects.

Thank you, Gus. And our next question comes from Bruno Montanari. He has 2 questions. The first one is, can you talk about how the new Plan Gas payment are taking place? Is the government paying on time? And how much does the company has in receivables related to the subsidies?

The -- what has happened is that you know that -- sorry (inaudible) And basically, for ourselves, the main -- the revenues are coming basically from CAMMESA. That's our most important buyer. So for the Plan Gas, CAMMESA has equaled the payment delay with those for the power generation segment. So we are collecting our gas sales in the same way that we are collecting our power generation sales. So although that is a little bit of delay compared to what was committed under the Plan Gas rules, that is something that we were expecting to happen. We never thought that CAMMESA would have a special treatment for Plan Gas vis-à-vis power generation. The amount of receivables of subsidies, I think it's something like probably ARS 100 million, no? Okay.

No, we already accrued, in the balance sheet, ARS 220 million is like $3 million. But remember that this is the off-peak. During the peak, it will go up. We -- it's worth to know that we already got the first -- the January's order of payment, so we either can use it for paying taxes or collect the money.

Yes. So in short, they are a little bit delayed but I think that in terms of -- for the subsidies, but I think that, that can be mostly attributed. That is the first implementation of the process. But now that they have issued the first orders of payments, we think they will normalize the situation pretty soon.

Thank you, Gus. Regarding the second question, the second question of Bruno Montanari from Morgan Stanley, it was partially answered because it was about Gazprom, but he added, have you seen an increase in the appetite of foreign investors to invest in the oil and gas sector in Argentina?

No, not really, but Gazprom is the first international company that has approached us so I cannot say that there is growth of foreign investors' appetite. Definitely, there is interest from Gazprom but I cannot say that it's a general situation among international investors.

Okay. Thank you, Gustavo. Our next question comes from Carolina Carneiro from Crédit Suisse. She has 2 questions. The first one is on the gas plan. Are there any expectation of additional procurement acquisition from government? Maybe she refers to the third round of Plan Gas.

Sorry. There is still no official news about a third round for winter supply of natural gas. But we think that -- and we have been discussing about this with the government that it's a must that they should do. Argentina for this winter is importing LNG at an average of, I think, something like $9 per million of BTU.

Full price.

Yes, full price, including regasification. And also, we will be importing liquid fuels like diesel that is even more expensive. So as we always said, it makes a lot of sense to pay the local industry something close to the import parity of these fuels in order to save fiscal money and also to save international reserves because the local industry will collect. Although it's a price refined in dollars, we are paid in pesos.

So it makes all the sense to do a third round, a third auction of -- for winter gas. And to do it as soon as possible. Obviously, it will be for starting the winter of 2022. But the sooner they do it, the more time the industry has to plan to see their capacity to increase production and to have a successful auction. So we are encouraging the government to do a third round but we have no -- there is no official response so far.

Thank you, Gustavo. Our next question comes from Alejandra Andrade from JPMorgan. Could you comment on the pace of CapEx going forward?

Basically, as we explained on the call on the first quarter, CapEx will be mostly -- will be, this year, mostly concentrated on the E&P business in order to be able to deliver our huge increase in production that we committed under the first 2 rounds of the Plan Gas auctions.

So in total for the year, we had something like $180 million of CapEx in the E&P business, and that will be mostly deployed during the second and third quarter. As Lida commented, we are investing in expanding our production capacity at the Mangrullo. We are about to more than double our production capacity -- processing capacity in El Mangrullo with a new plant. And the bulk of those CapEx will be spent during the second and third quarter of the year.

In power generation, we have the expansion of Barragán, but as you know, that's a subsidiary that is -- it's an investment that's already financed so we are not expecting to need any deployment of cash from Pampa going to Barragán. So on the power generation segment for Pampa, it's only maintenance CapEx of around $40 million, $50 million this year.

Thank you, Gustavo. I forgot a question from Carolina, the second question of Carolina Carneiro, and it is also related to the question of Santiago Barro from PPCG about legacy power plan. Any update on discussion for potential change in adjustment clauses for legacy generation? There are others talking about an incoming 29% update.

There's been -- we are expecting an increase any time, so coming in the next, I don't like to say a few days but in the next few weeks. It has been mentioned by government's official that they are working on this. And we've seen an exchange of information between the Secretary of Energy and CAMMESA this week. That is a sign that the resolution is moving forward. So we expect to have a recognition of the less than the past inflation of last year for legacy capacities around this 29%.

And contrary to what the resolution issue last year that said that this remuneration we're going to have a monthly update, we are not expecting that to happen. So we expect to be recognized partially for last year inflation and not until the end of the year to have a new recognition for current inflation.

Thank you, Gustavo. Our next question comes from Constantino Papadias, combining it with a question of Ezequiel from balance. The first question is about the E&P business. How secure do you expect DAS export under the new export regime in force? What are your estimates on export volumes for 2021?

Is it public? What we are awaiting approval for an export contract. That's an important export contract in terms of quantity, starting in -- that goes from October until April of next year so during the summer season. We are very much advanced on the paperwork. And we think before the end of the month, we should get approval for that contract.

We are very optimistic that given the fact that we are increasing so aggressively our production during the winter, that we will be granted this export contract. And I think there will be no problem for the country in its capacity to export after the winter because there will be excess of production vis-à-vis the local consumption. So we are optimistic that it will be respected. I think the question was related to that -- that was the question? Okay.

Okay. Thank you, Gustavo. The second question of Constantino is combined with Ezequiel from balance question. It's about the drilling and completion activity in the E&P business. Regarding drilling and completion activity expected in the following months in view of the Plan Gas commitment, could you give an estimate of the number of wells and Ezequiel added the unconventional wells as well?

They are all unconventional wells and we will be drilling something like 8 wells in these 2 months...

The next 2 months.

In the next 2 months. Complete well -- was that -- some of them have already been drilled. Some are being drilled currently but they will all be completed in this month and next month in order to grow our production to comply with our commitment in the Plan Gas. In the auctions of the Plan Gas, we were as aggressive as we could have been. So 3 weeks of lockdown that happened in Neuquina during April, that affected our plans. And we are currently a little bit behind our committed production. We are around 10% below what we committed for this month in the Plan Gas auction, totally explained by the 3-week incapacity to work that we had during April. We hope that in the next 2 weeks, we will be able to -- we have the -- if the well performs as we expect, we think that we will be able to comply with our commitment under Plan Gas.

Just to add, right now, we have DUCs 13 wells, gas wells, okay? And for the year, we expected to drill like 30 but complete, out of this 30, 25 so 25 wells will be completed this year. Only Gus, talking about.

Thank you, Gustavo and Lida. Ezequiel added a third question is about any updates on the evaluation regarding Edenor deal?

We don't have much to add on that process. We have submitted -- we and the purchasers of Edenor had submitted to all the information that they have requested. The last information submitted was several weeks ago so we are awaiting whether they have more questions or they're working on the resolution but we don't have any clarity on that.

Okay. Thank you, Gustavo. And Ezequiel final question is about, do you foresee any difficulties in reaching committed volume in Plan Gas 4 during the winter?

No. As I said, obviously, we are counting on the wells to perform as expected. And in this business, you never know until you put the well in production. But if everything goes -- if the wells perform as expected, we think that within the next 2, 3 weeks, we will catch up with our delay, and we will be producing what we committed for this winter.

Thank you, Gustavo. We will continue with Constantino's second question is about, what do you expect for the facilities with maturing U.S. PPAs in 2021? Are they passing to legacy regime?

Yes. Well, we have a -- we have 2 facilities maturing this year. The first 1 is Piquirenda, which is a 30-megawatt, small -- very small plant, 30-megawatt, which is an internal combustion engines that -- and the Resolution 31 are not able to operate because they have a variable cost that is well above what the Resolution 31 placed to that technology.

But those equipments are needed because of its location. So it's needed -- the distribution company around -- it's needed for the system for several reasons that I don't want to get too technical. So we are in conversations with the interest parties in order to accommodate the remuneration so that we can keep these 30 megawatts running once the PPA ends in July of this year.

The other facility that is maturing is the steam turbine of Loma de la Lata in November of this year that will fall under Resolution 31. But that is a combined cycle that because of its efficiency, because of the way that it's remunerated and the Resolution 31, obviously, it will not have the kind of margins that we had under the PPA but it will continue working on the Resolution 31.

Well, Constantino from -- he has another question. I think I understood it, is that we have seen some turbine (inaudible) in the past months on the Argentine What is your position to secure thermal asset availability, mostly in the U.S.-linked PPAs? Thank you. Because in this quarter, the market availability was very low. It was 81%. Our availability was 95%. I guess that's the question.

We tried to -- nothing different from what we always do. We are proud of the -- of our -- the outstanding availability that we have in our -- in all our facilities. And we have that because of the excellent quality of our people. The fact that we do everything that is required to the equipment and we spend as much as is necessary and required, and we are, all the time, doing our best to keep that availability as high as possible.

So nothing different and our concern, as we explained in the previous conference call, is that without an adjustment in Resolution 31, there are some technologies that are not being remunerated well enough. And so if there is no adjustment in Resolution 31, we will not be able to continue with this kind of state-of-the-art maintenance of our equipment. And in the medium term, it will be felt.

But I think that if as expected, this increase in Resolution 31 that we already talked about happens in the next few weeks, that is a fear that will not materialize.

Thank you, Gustavo. Our next question comes from Raul It's very related to the we have answered. Are Energia asset plan EBITDA positive? Do you plan to shut down the plants if no inflation adjustment is provided?

I think I've already covered that. No, we are not planning to shut down any plant, except for Piquirenda, which because of its technology and the way it is remunerated under Resolution 31, we will not be able to continue operations in July -- or August -- in July. If this facility doesn't -- if we are not able to get a special treatment to this facility. But again, it's only 30 megawatts out of the 5G gas or the 5,000 megawatts that we operate so it's a very smaller marginal unit for our portfolio of power generation.

Thank you, Gustavo. Our next question comes from Lilyanna Yang from HSBC. The first one was about hydrocarbon law, which was answered. The second one is about what kind of incentives would you like to see so that you can export more gas? Are they more related to fostering gas infrastructure investments or making sure you're allowed to export even when the domestic consumer has not enough gas or if it's about increasing domestic gas prices?

It's not a question that it's easy to answer in a sentence. But I think that in order to export gas to Chile, a little bit to Brazil, the conditions are there. It's only a matter of -- I think what is more important is that we gain or we regain the confidence of those markets, meaning that we will be signing contracts and we should be able to perform on those contracts.

In the past, Argentina was not able to do so and that was a painful and costly situation for our neighbors. So the most important thing is to regain the confidence of this market so that there will be, with time, be able to eliminate or to reduce the imports of LNG and replace that with supply from Argentina. And in the process of decarbonization that Chile is planning to include Argentine gas as part of the solution, which is something that they are not foreseen at this moment.

So in the short term, I think that the most important thing is that is to this credibility from our potential market. In the long term, it will be huge infrastructure projects in order to be able to export LNG. We need a new pipe from the Neuquina Basin to Buenos Aires or being able to transport more gas from Neuquina Basin or to north of Argentina and also to build an export -- an LNG export facility, which there are huge investments. And as I said before, they require financing costs significantly lower than what Argentina has seen in these days. So that is a question that we can spend more time answering in the future.

Thank you, Gustavo. The next question comes from Bruno Montanari from Morgan Stanley. He added one more question. You mentioned M&A as a potential use of cash. Which M&A opportunities does the company see in Argentina?

We -- again, we -- there's nothing that is -- we are starting a few potential M&As but at the very early stages, all related to, obviously, to the energy sector, mostly on power generation and petrochemical-related investments. But there's nothing concrete so far, so not much to tell you on that front.

We are close to 1 hour. The following questions are all repeated. So we will try to reach out to answer again. Or you can see -- you can watch the video conference again. I don't know, Gus or Gabby, would you like to give some remarks that we didn't address today that you think we should tell everybody? No? Gus?

No. The only -- I was expecting a question about the petrochemical segment of Pampa that it's so good this quarter so we are very happy of that. We'd expect this current second quarter to be as strong as the first one. Obviously, we have -- but we don't know whether that will be -- whether the segment will be able to continue with that excellent performance in the second half of the year. But we are very happy to what has happened so far.

Just to give you some next structural change that is happening in the segment is related to the development of -- in a way to the development of Vaca Muerta. Vaca Muerta oil is quite light. And as the share of light oil coming from Vaca Muerta continues to grow, that results in more naphtha. There is naphtha coming out of the refineries, and that is an important input to our segment that we used to import and now we are able to source it locally. So that has helped the margins of this business.

So there is a structural positive change in the segment helped by high international prices, and we price according to -- we price our products according to import parity. So it's a segment that has been doing very well in the past. In this first half of the year, we will -- we hope -- we expect it to decline slightly in the second half. And any other comments? I think that covers.

Yes. So we are 1 hour of the -- we are top of the hour so thank you so much for joining us. It's a pleasure. We are going to have a survey after this. If you have any questions, please reach us. We are always available for you. We are also reaching out all our investor community with ESG materiality survey. We would like you to complete it. If you want, we can send you the link. And I think that's all. Thank you so much again. Maggie?

Yes. This concludes today's presentation. Thank you for joining. You may disconnect at this time. Bye.

Bye-bye.