Pampa Energia SA (PAM) 2020 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for waiting. I'm Margarita Chun from IR. We would like to welcome everyone to Pampa Energia Second Quarter 2020 Results Video Conference. We inform you that this event is being recorded. (Operator Instructions)

Before proceeding, please read the disclaimer that is located in the second page of our presentation.

Let me mention the forward-looking statements are based on the beliefs and assumptions of company here management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore, 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 Energia and could cause results to defer materially from those expressed in such forward-looking statements.

Now I will turn the video conference over to Lida Wang, our Investor Relations and Sustainability Officer of Pampa Energia. Lida, you may begin the video conference.

Thank you, Margarita. Hello, everyone, and thank you for joining our conference call. I hope you all and you and your loved ones (inaudible), are well. For interest of time, I will make a brief summary of the quarter's key figures and back of COVID-19 and the latest events since our last call. We will focus on the core businesses of Pampa, power and E&P, as TGS and Edenor already held their calls earlier this week. As you can see, our CEO; Gustavo Mariani; and CFO, Mr. Gabriel Cohen, are both here and joining us for Q&A.

Before we begin, let me remind you that Pampa's figures follow U.S. dollar as functional currency. In case of peso-linked subsidiaries such as our utilities, their figures are adjusted by inflation and shown in dollars at the end of each reporting period FX. As you can see in the slide, what businesses are included when we talk about of Pampa consolidated as well as Pampa restricted group, a definition we use for covenant purposes.

As you know, Argentina has been affected by pandemic and federal government setup mandatory lockdown from March 20. Restrictions have been softened across the country, but certain places, such as Buenos Aires metro area has been extended from time to time. So activity is still limited and therefore, affects the economy. Most of Pampa's businesses were deemed essential, and we are running our operations with all the necessary safety and health protocols, such as minimum personnel in place, new workflows to keep social distancing, minimizing exposures such as lengthened working shifts as well as of duty time and so on. Very important is that no wages has been adjusted nor personnel subject to furlough. Almost 40% of all personnel is working remotely right now. And as we said in the last call, we revisited our CapEx and OpEx budget, reducing primarily in E&P until improved environment. We also are proud to see Genelba second CCGT operating and an outstanding power generation performance through this tough quarter. E&P faced the lowest prices in the last 5 years as a result of the volume demand, which tested our insurance but also went through satisfactorily. The fact that we haven't given in March production during Q2, facilitated the ground for the winter seasons as demand rebounded and production rose to above 250 million cubic feet per day.

Finally, this were noting our productivity towards financial management, preventing us to be in a harder hurdle during macro instability. The agreement with the (inaudible) holders constitute a great step for Argentina. We remain prudent. We witnessed an improvement in collection rates across all the businesses, this is helping a lot, our working capital.

So let's start commenting the quarter's key takeaways. As shown in Slide 5, revenues fell year-on-year, 40% to $544 million, mainly because the collapse of gas prices, the lesser fuel cell procure as this year as this year is (inaudible) took over the grid fuel consumption, tariff rise for over a year impact in our related businesses, partially offset by new power generation price under PPAs.

In Q2 '20, around 40% of our sales were dollar-linked at roughly 75% in EBITDA there. This is including Edenor, GSR (inaudible) stake, (inaudible) our stake. But the dollar linking is mainly coming from our core businesses power, capacity and E&P.

Adjusted EBITDA decreased year-on-year by 56% to $120 million in the quarter, mainly explained by lower E&P price and volume, tariff (inaudible) and lesser legacy and plus margin at power generation, partially offset by new capacity, lower E&P, OpEx and royalties related to activity downturn. The positive effects from (inaudible) Liabilities Regularization Agreement, which in Q2 last year. And the dilution of peso-denominated costs because of FX depreciation.

Quarter-on-quarter, EBITDA decreased by 46% because of the lockdown impact or prices, combined with off-peak seasonality. Therefore, lower spot prices for power and gas. As we show on the right below, power generation takes 70% of the consolidated adjusted EBITDA, while E&P takes 5% purely led by gas and the rest driven by TGS and Transener at our equity stake and marginally by petrochemical.

Moreover, as shown in the chart, left below, in the second quarter of this year, our CapEx decreased significantly compared to last year, mainly because Genelba Plus' expansion project was nearly finished. E&P halted drilling and completion due to the uncertain pricing environment lower CapEx at (inaudible) because of the deval and tariff (inaudible) plus EPS were completed last year.

In the Slide 6, I want to briefly show you the impact of the lockdown in the Argentine power grid during Q2. The average demand reached 13 gigawatts from 6% lower than last year. But if we compare it with the peak crisis year, that is 2018, the drop was 14%. Although smooth if we compare it to other sectors of the energy, industry or to the GDP, which estimated -- it is estimated that happens with -- by 21% year-on-year. This is according to the macros consensus. Industries are the most impacted by the quarantine (technical difficulty) those consider nonessential. While these costs are hit because of lapsing the SMEs consumption but partially offset by residential demand due to the state at home under -- order and (inaudible) often. As we go into the winter, demand recovers surpassing 2019.

Moving to the Power Generation segment as seen on Slide 7. During the second quarter of 2020, we posted an adjusted EBITDA of $95 million, similar to the Q2 2019, mainly given by the reduction and specification of spot prices as through February 2020, in addition to lower margin and volumes sold in Energia Plus, the latter and the legacy lack of inflation adjustment plus FX level or the negative effects of the COVID-19 in power generation.

As from July, this market, Energy Plus is improving, but still far away from the pre-pandemic levels. These effects were partially offset by our stake in Ingeniero (inaudible) power plant, PEPE II and PEPE III wind farms and private PPA -- with private PPAs and Genelba Plus capacity increase as well as lower costs related to the lower energy purchases and the legal impact on our pace denominated costs. Quarter-on-quarter off-peak pricing for spot energy and lower power dispatch in Q2 '20 contributed to the 16% decrease from quarter on EBITDA. While spot energy comprises 65% of our capacity in megawatts only represented 48% for our power generation EBITDA in the quarter. And we'll keep shrinking, thanks to the commissioning of the second CCGT at Genelba, we have seen in the P&L in Q3 and further once in Ensenada expansion is online.

In Q2, generation was 10% lower year-on-year, in line with the lower electricity demand at the national rig because of the lockdown. As the demand is lower, the marginal unit (inaudible) but also renewals are disrupting the ranking to (inaudible). Therefore, the combined cycles are the last units to fulfill the demand. Our 2 combined cycles at Boma and Genelba were fully dispatch as well as our nonconventional energy, but the remaining thermal units open cycles, were mostly not required. Quarter-on-quarter, power generation decreased 25%, mainly because of the lockdown (inaudible). Despite the demand and contraction witness in the country, the power generation business model relies on capacity payments. So lower dispatch does not much impact on the revenue-making as long as availability is outstanding, especially for PPA-based energy. The availability rate in the second quarter of 2020 reached 98.6% with installed capacity of 4.8 gigawatts operated by Pampa. On full-year basis higher than the same quarter of last year, mainly because last year, Piedra Buena and plus unit at EMS (inaudible). As I mentioned earlier, we are hold to have achieved one of the most important milestones at Pampa's 15-year history with the commissioning of the second CCGT at Genelba on July 2.

CAMMESA Grante clearance took the second in turbine for 199 megawatts completed expansions for a total of 400 megawatts, priced under a 15-year PPA (inaudible) with CAMMESA, despite the pandemic and the delays incurred until it was deem essential, Pampa executed COVID free produces with contractors, we thus achieving the COE on time and diversing roughly to $320 million. This is 9% lower the budget, mainly because of FX diluted peso capital.

Now Genelba is the largest and one of the most efficient (inaudible) plants in the country, as you can see on Slide 8 on the picture of the existing CCGT and the new one nearby. Our total installed capacity of 1.2 gigawatts located in the gate of (inaudible).

The remaining expansion in the pipeline is in Nagarajan, formal power plant, as you can see on Slide 9, this is a 280-megawatt CCGT project at the South of Greater Win Osiris, which is critical infrastructure for Argentina group. During May and June, we placed a purchase order for the cooling tower and kept digging to set the foundation base. However, works were halted for almost -- most of the July. And until July 20, we got an essential waiver so we resume operations focusing on the construction of critical path to achieve COD by Q1 2022. Therefore, to start building a PPA for 10 years with CAMMESA. The lockdown negatively impacted the domestic cash. But a way lesser than crude oil and lesser than the GDP, dropping year-on-year to 8% in Q2, mainly driven by the lower industrial consumption because of the nonessential shutdown and the economic downturn, lesser gas-fired by CAMMESA because of lower power demand plus less gas for cars and less gas (inaudible). This was partially offset by the higher retail consumption because of the [COVID]. Moreover, the second quarter of the lockdown, we see -- gas off-peak season, which bottoms at the fall and spring in Argentina, dropping even sharper to gas demand and therefore, bringing down traded price. Gas consumption is rising right now as we are winter season, but we are still below previous year's (inaudible). However, CAMMESA demand is unfulfilled right now and discovering it with imported gas and liquid fuels.

Moving on the results on E&P, as you can see on Slide 11, during Q2 2020, this segment posted an adjusted EBITDA of $6 million, 88% lower than Q2 2019, mainly because of COVID-19 impact to lower prices, partially offset by lesser costs related to the activity downturn, lesser royalties and Aviva dilution confession. Despite the tough environment, our overall production in Q2 2020 decreased 10% year-on-year, but only 5% quarter-on-quarter, reaching around 44,000 barrels of oil equivalents sold [per day], of which 91% is composed by natural gasoline.

On the oil side, which represents only 14% of the segment's revenue in the quarter volumes sold decreased 17% year-on-year and 23% quarter-on-quarter, reaching 4,100 barrels. Many due to the collapsing demand and prices affected by the lockdown and the lack of storage capacity, resulting in drilling activities on standby.

During Q2 2020, the crude oil sales price decreased year-on-year, 60% -- 65% and quarter-on-quarter, 58%, reaching $21 per barrel. Although in mid-May, the government set (inaudible) at $45 per barrel in the domestic market, but the demand collapse. So consequently, we exported at the discounted price of Brent of a total of 2.3 barrels per day of Escalante, and for the first time, we explore Medanito. 59% of our production is Escalante, which is (inaudible) given the current clean fuels trend is pricing premium (inaudible) oil.

Regarding gas production on Slide 12, we can see Q2 reached an average of [453] million cubic feet per day per volumes sold, 10% lower year-on-year, but stable quarter-on-quarter despite the price collapse due to the lockdown and the lap of long-term (inaudible). Lower prices impacts on the breakeven equation, therefore, producers who's followed a (inaudible) a less drilling rate and natural decline explains. And because of that, production was lower in Rincón de Maruho and Brio Nuken and a minor decrease at Sierra Chata and (inaudible) BOPs, which were partially offset by the increases at EMA Luton, and this is a block in which evacuation infrastructure was expanded given the outstanding productivity and upside potential. And also keep in mind that it is fully owned by us, pulling operation -- operatorship as well. In Q2 '20, Marusia reached 153 million cubic feet per day gas production. This is 5% higher than Q2 2019 and contributed close to 65% of our overall gas running the 4 highest gas producing block and Encinas. It is also remarkable that 7% of the Q2 production corresponded to shale gas from the completion of 2 resona wells at Mangrullo last year.

During the second quarter of 2020, our average of -- for gas was $2 per million BTU, 37% lower year-on-year and 15% lower quarter-on-quarter, mainly driven by the sharp price reduction on CAMMESA tenders in April and May. The lockdown led to a drop in demand, especially for large users, and lesser thermal power; supply overhang forced producers to adjust prices to prevent curtailments and keep billing. CAMMESA outcome also affected industrial segment and spot prices, but since June, increased close to the reference price of $2.7 per MBTU, reflecting the demand recovery due to the winter season at lockdown easing. But prices are still in the lowest point in years and barely covering the replacement costs, impacting the investment horizon. Also as you can see right below our production year-to-date is skewed towards CAMMESA and our own Energia Plus units leaving 15% to other segments. Since the commissioning of Genelba Plus CCGT, we've been procuring our own gas, rising the intersegment exposure from 14% to almost 25%. The lower domestic prices were partially offset by exports to Chile, which GSA ended on mid-May. Since then, we are fully selling domestically, but we are waiting for the Secretary of Energy's clearance to continue exporting to Chile.

Regarding our activities, due to COVID-19, the mandatory lockdown and uncertainties in gas prices, we have been reassessing our activities as from March of this year, but continuing with the operation of our oil and gas fields with the minimum, but essential requirements. Therefore, no drilling and completion was registered in Q2 2020 in line with the sector. Currently, we have 11 wells drilled, but pending of completion, of which 8 are located at El Mangrullo, awaiting for better pricing horizon.

Moving on the bottom line in the P&L, in terms of net income attributable to the owners of the company, Pampa reported a consolidated profit of $4 million in the second quarter of this year, whereas, in the same period of last year, $400 million was reported, mainly due to one-off, non-cash profit in Edenor of last year of 308 million dollars, in addition to lower operating margins in oil and gas and regulated businesses, lesser inflation exposure gain because of passive net monetary position allocated to the electricity distribution and income tax charge.

Finally, moving on to the Slide 14, our proactivity towards the cash and liability management paid-off. In this slide, we show all the layers of the company, from restricted group to consolidated figures. But for covenant purposes, lets focus on the restricted group, that is primarily Pampa parent company. We continued optimizing every aspect of our indebtedness, highlighting that during Q2 2020, Pampa paid at maturity $23 million, in addition to $45 million buyback at face value, partially offset by new short-term peso bonds for a total of $26 million, as well as net borrowing in pesos of $20 million. Therefore, the restricted group gross debt in Q2 20 recorded $1.6 billion, which is very similar to March 2020.

The gross debt is 89% denominated in US dollar, which was 92% in quarter-on-quarter, bearing an average interest rate of 7.7%. Average life remained around 5.3 years. The cash amounted to $393 million, which is slightly higher than the $373 million in March 2020, mainly due to positive working capital as a result of lower billing and faster collection. And we have a DSO improvement and collection of Plan Gas 2017 as well. So the restricted group net debt remained similar to last quarter below $1.2 billion and net debt to LTM EBITDA stayed at 2.6x. After Q2, we issued peso bonds for $87 million, plus domestic net borrowing of $10 million. Pampa also repurchased bonds for $27 million face value and redeemed peso bond Series 4 for $17 million. Therefore, we are fully shifting -- we have already shifted all our banking debt to local currency. It is worth highlighting that the cumulative maturities from now until 2022 amount to $186 million, of which 90% is nominated in local currency. In terms of consolidated including affiliates at ownership, Pampa recorded a net debt of $1.5 billion. This is 2x EBITDA and $105 million less than last quarter of March, due to reduced net leverage at Edenor and affiliates.

Finally, we have a share buyback program with a price cap of $13 dollars per ADR and outstanding of $38 million. As of the date, we hold 2.2 million ADRs, in treasury. So Pampa's outstanding capital amounts to 61.7 million. So this concludes our presentation. I hope this is well-balanced here.

Now I will turn to Margarita, who will open the floor for questions. We were gathering them in the platform. Please write there, and we will read it up loud for everyone.

(Operator Instructions) We have questions from Ezequiel Fernandez from Balanz. He sent us when we are -- when are you planning, when we are planning, to go back to drilling the nonconventional wells?

Well, right now, we have a stock of 11 wells, and we could, but we need more signals.

How many unconventional wells are you targeting for the remainder of 2020, in which blocks Pampa will be focusing?

As we said in the script, it will be -- well, our -- right now with the prices that we are seeing are most competitive. But we'll see for the remaining of the year, what's going to happen with the pricing if we were to keep drilling as we already have in the past.

Gustavo here. I'm through the phone because of technical problems. So I apologize for -- to the audience for not being able to be on the video call. I don't know whether it's myself getting old, I'm not getting along with the technology or I might getting old in this case. Anyway, I wanted to join for the Q&A, and I have Lida and Gabby with some of the questions.

Regarding this one of how many unconventional wells, as you know, there is the Plan -- the new Plan Gas, what is called the Plan Gas IV, that is being discussed with the authorities. Not yet formally announced. Last week, there was a formal meeting that the Minister of Production announced to the producers that we will be soon in the invitation. The idea of the authorities is to do the auction in September and start with this program in October. So whether we drill new unconventional wells or not will depend on how we do on this auction. But mainly, we don't -- we are not foreseeing unconventional wells this year. And most probably is that we will fulfill the new Plus plan production requirements through our tight gas reserves, not sharing that at least in -- for 2021, maybe for 2022, it's going to be a different case.

Sorry, Lida, you can continue with the rest of the questions.

There's another question from Ezequiel saying, is the core remuneration from legacy thermal power units enough to sustain planned availability at high levels or are we at the limit already? Gus?

Well, I wouldn't say that, that we are at the limit already. At least, in our case, we're still making margin. But as you know, this legacy pricing was supposed to get inflation adjustment monthly right from the beginning. And then it was -- because of the COVID crisis, the Secretary of Energy issued resolution postponing the adjustment. We hope that as the COVID crisis eases, they will restart with the inflation adjustment of the pricing scheme. And as I said, I wouldn't say that we are already at the limit, that's our case. But maybe some of our colleagues, which have older equipment are probably already in that position. So not our case, but I wouldn't -- but I don't think that the average of the sector is far from there.

Okay. Another question from Ezequiel, who is asking, any news on asset disposals or M&A, a lot of people asking this.

No. Not currently. We are not working on any asset disposals.

And M&A?

We are studying things. So there are several things in the pipeline, as always. And we are studying, but nothing concrete.

Okay. And there's another question from Ezequiel. The last one, he says. Our price -- gas price was $2 and quite low. Peers in the sector reported something around $2.5. Why we are lower than the peers.

Sorry, Lida, you will answer this question better than me. But I would say that my first guess regarding our peers is that they are probably enjoying some of the -- some of them, the benefits of Resolution 46, which we do not. So probably, that makes the explanation of the difference. I don't know -- you may have another...

Well, we are audited, right? But basically, we -- our -- as we've shown in the presentation, and you can see, I think, in Slide 11, our stock are skewed to CAMMESA and our Plus. So -- and that price is like it's been reduced significantly because of the tenders. So -- and we don't have any exposure to distribute, very little, less than 5% through retailers. Retailers right now are the most -- the highest priced in the town. So right now, as I said, the spot market, it follows CAMMESA. And CAMMESA is reducing. So that's the reason why this is (inaudible). Going forward, June, it's already our same June, it's like more bounding to the reference price of $2.7. And in July as well, August, it's -- well, August is dependent with -- a little bit lesser, but still above $2, and we're expecting an improvement in the Q3.

Okay. These were the questions from Ezequiel. Then we have a question on the discount. Why are the capacity and generation payments on Genelba's second steam turbine coming online now? And how much incremental EBITDA do you estimate the plant will have?

Lida, you know the answer better than anyone.

The capacity payments on Genelba is $20,000 per megawatt-month. This is in the earnings report. The EBITDA estimated to that, it's like roughly $8 million per month. That is $24 million, $25 million next quarter. So this quarter, in Q2, we didn't book anything, will be booked next quarter. And that's it. Nothing should be amended.

Then the second question from Ann. She's asking the reports of (inaudible) of Ensenada, will the company be interested in this stake?

I would say if YPF decides to move forward on that, we will certainly look at it. But so far, there's nothing concrete.

What are the options of Transener considering that for 2021, $100 million bond maturity, local markets. Are there...

Actually, Ann, it's $90 million outstanding. It's less than $100, because we reported it.

Yes, hello, Gabriel speaking. Well, clearly, as all the other companies, to do (inaudible) will be an option or to just fund through -- on cash generation and depending on the outlook on future cash flow generation. But on one side, it's not a significant amount. On the other side, depending on the outlook, moving forward, there is something that will be required to take a specific action.

Okay. Another question from Ann, what is the outlook estimate for CapEx for the remainder of 2020 in each of Pampa's main divisions?

The estimate with the remainder of 2020, actually, for the year, we have in E&P $65 million forecast of CapEx like half maintenance have nonrecurring. This is very low because at the beginning, we always said the budget of 2020 was $130 million -- more than $130 million and this was like half. And then for our generation, this one hasn't increased that much. Basically, it's $30 million from Genelba finishing, which is already done, plus another $40 million for the year, okay, in the maintenance. So far, as of year-to-date, June, we already completed half of it. So we are like in line with that.

I just wanted to add. So very minor CapEx going forward because we just completed the Genelba. So there are no the CapEx other than maintenance CapEx, which are rather small this year, around $45 million. So in the remaining of the year, less than half of it. And on E&P, it will depend on the Plan Gas, but still a small amount.

Perfect. The next question comes from Matias Castagnino from BCP. What do we know about the new potentials on gas prices, timing, et cetera? Is Pampa joining this potential program or not? And what will be the breakeven (inaudible) to develop reserves? That is the first question he has.

Okay. I mentioned a few things about the timing, as I said, again, nothing has been published yet, but we do expect that is what the Minister explained to us last week that in the next few days, we will be receiving the invitation to participate in the auction with all the terms. And that auction should take place during September. And the new Plan Gas starts accruing in October. The goal of the Plan Gas is not a huge increase of production. It's rather -- and basically because of the constraints of evacuation capacity from the Neuquina Basin, so they are going to auction a flat production throughout the year and a 3-month peak for the winter. It will have a cap on around $3.40 that will be increased 10% per year. So those are the -- has been the -- what has been also published in the media, the main -- the issues of the Plan Gas. Regarding breakeven price, it depends on your own portfolio of assets. So it's a company. We have the assets that we need to develop. So each company will have its own price and it's going to be a competitive auction, in which, yes, we are looking to participate.

The next question of Matias is what is the impact of the EBITDA due to the legacy remuneration inflation?

Lida, I think you already covered this, but I don't know if you want to add something.

So basically, given the trend on the FX, official FX inflation trend, we are forecasting around $45 million, $50 million hit because of the lack of adjustment and the FX solution over the legacy contribution. And this is matching our contribution from Geneva for this year. So it's kind of like we are estimating that one FX will offset the other.

Another question from Matias regarding Edenor. What would happen if Edenor meets financial rates, is Pampa going to transfer cash to Edenor?

Yes. Yes. No, we are not expecting any support from the current Edenor. It was -- since we got Edenor, there were never any intercompany flows and not even any dividend collection from Edenor department.

Our next question comes from Bruno Montanari from Morgan Stanley. He is interested about the cost control. How we are dealing within each businesses regarding the cost? What will be expected for the cost and CapEx in the near future?

Sorry, Maggie, can you repeat it, please, like once for me?

Yes. Yes, of course. The question comes from Bruno Montanari from Morgan Stanley. He wants to know about the cost control regarding each businesses -- each business and how we are going to deal with the cost and CapEx for the near future?

Bruno, as I said, what we can -- obviously, we are always revising and, especially in this situation, going over and over to our OpEx to see which one of them -- there's no key line, I don't know...

Sorry, somebody has the microphone on.

Can you mute the mic or not?

Wait. Yes, I'm going to find the person.

Okay. So as I was saying, we don't -- there is not much that we can do to reduce costs. Obviously, we are revising all of them, but it's very marginal and on second decimal in terms of the numbers of Pampa, where it's relevant for Pampa, its CapEx. And in this situation, I think for the planning, we are in a very low CapEx environment. Thanks because we have already completed the Genelba expansion, and we are awaiting the new terms of the Plan Gas before deciding new investments there.

Our next question comes from Alejandro Demichelis. Sorry, before I continue, if there is somebody with a microphone on, please turn it off so that we can listen to the answers clearly. Our next questions comes from Alejandro Demichelis from Nau Securities. He has 2 questions. The first one is how do we see the evolution of electricity tariffs and power prices and the payment from CAMMESA?

Gus, you want to answer that?

I think it's muted also, the mic.

It's muted. So how do you see the evolution of electricity tariffs? We, honestly, this is in the midst of the pandemic. I don't think electricity tariffs will be raised right now. And actually, the government is going to place an extension of the tariff rates. I don't know if you remember, there was an emergency ad past last year that up to 180 days, no tariff increases, cellphones, mobile, anything (inaudible). That ended on June, and they extended for another 180 days. So should be -- the phase of tariff will be by December. Our prices, honestly, the legacy, it is what it is. It will be keep diluting if we don't get any inflation adjustment. And honestly, this is the same line as with the previous answer. I don't see this happen in the midst of a dynamic. So it is true, and we addressed it in the call, working capital is performing better, I think, everybody, all appears to have a talk about this. We are seeing better collections from the retailers. Edenor, it's collecting more gas distribution companies, collecting more. So they're passing through this kind of behavior to CAMMESA or to gas producers as well. And CAMMESA has been faster as well. So in this quarter, we had a more positive working capital than this last quarter, when we had this call, days of sales outstanding was -- the watermark was 86 days, more or less. And now we are 10 days earlier. So this 10 days are 1/3 of the average billing, it's like $20 million better. If we business for the whole year, right, it's a 12 months effect.

Maggie, the other question from Alejandro, what it was?

The other question. The second one from Alejandro is very similar to the question of Ricardo Rezende from JPMorgan. And it's about the -- our investment in the upstream of gas volume evolving in the near future if we are joining the new potential plan gas. Especially second half of the 2020 -- second half of this year and for next year.

Well, Gustavo is self-mute. Well, again, as Gustavo was addressing this, if we have it, it's -- it will be a great signaling and great push for the sector that really needs it. One of the questions that from Daniel Arreola, he was asking what prices do we need -- what prices are the breakeven? This is the prices that makes it breakeven. We almost have a breakeven EBITDA. I will say that this is the bottom, and this is very low. Anything that may help, anything that contributes, it will make this the sector more perspective. So of course, we don't have nothing in paper, but it's in dialogue and -- but we are working on it to, already addressed by Gustavo.

Thank you. Now we are pulling for more questions, please wait for a few minutes.

In the questions-and-answer session, Daniel was also asking, what is the minimum CapEx you can deploy before significantly damaging the operation?

Well, this is the minimum CapEx, absolutely. And not drilling anything. Well, the first part of the year, we drilled almost nothing. And because the first quarter was -- we were thinking about the second quarter to be preparing for winter season, which is our hot season. But then lockdown, COVID-19. So nothing, we did nothing. So -- and basically, well, this year, we will have the drive of last year's activity. Last year was supplied for E&P, active in the drilling and completion. We were -- last year, we were doing shale drillings. Even when we're doing shallow drilling and because of the CapEx that we are diversing this year so far, I was saying, $65 million is the forecast for the year, $60 million, $65 million, next year, we are estimated that if nothing happens, that will mean a decline in the production. So this is already very low.

Okay. There is another question.

This is about the regulatory authority. If we are seeing no tariff adjustment in the second half of this year, what do we think about the tariff adjustment for this year?

No. So we have already said this is -- we are in the midst of the pandemic. And there's a decree presenting on that. So we don't expect any tariff increases in our regulated businesses. Though we are -- there are dialogues to think about what's going to happen after the pandemic.

We are pulling for questions, please wait for a few minutes. There's another question from (inaudible). He's asking about the current payment delay rates from CAMMESA.

I was saying, right now, we are around 75 days. This is 10 days better than the last call. That was the high watermark. Tariff, this is tariff CAMMESA (inaudible) gas production with everybody, all those plants, gas transportation, electricity transportation, everybody is getting paid from CAMMESA around these days, 3 to 5 days. (inaudible). So it's a 10-day improvement.

There's another question from Lanier.

Actually, it's from [Andre Carone] from Citi. He asking, are you considering to have that market? Some of your peers seems to be getting very low interest rates of local markets, both in local currency and dollar-linked instruments. If that is the case, what will be the use of proceeds.

Gabby?

Yes.

Now we can listen to you.

Yes. Yes, I was on mute. Well, in this battle of transactions on our peers that have access to local market, the international market, we clearly have seen that our 47 transactions for the corporate, but we understand that they have access essentially to do liability management because they were required to do so. As you know, our debt profile, our first maturity is on 2023, by July 2023. So we have -- we don't have any requirement to access the local markets now. And even if we want to do something in 2023, it would not as much -- would concentrate a lot on the 2027. So essentially, we feel very comfortable with our debt profile and our cash flow generation. So we don't think these are requirements so far with the current business -- business strategy that we have.

On the other side, we have strengthened our liquidity onshore by accessing the local capital markets in shorter term, as we have -- that was in the press. We have about $90 million in the local market for 13 months. So that's what we did.

There's another question from Daniel. Daniel Arreola, again, he is also the same, what portion of the EBITDA generation of the power generation unit comes from units with PPA and how much from legacy?

So just to give you -- our figures chart is that 65% of our megawatt legacy, but only 40% -- less than 40%, actually 38%, was legacy EBITDA. And the opposite. 35% of our megawatts is operated PPA. Mario Cebreiro, Genelba, everything that you know, but they constitute 62% of our EBITDA. And this will -- this is a disclosure. Net quality will grow even wider as we have Genelba right now coming online in Q3, and one is now around.

Daniel also asked, do you foresee any material risk, the government may modify PPAs with CAMMESA?

I think we addressed it very -- before. It's nothing that (inaudible), but right now, we haven't talked or seen anything actually, we've been paid. Actually, there's improvement on payment days.

And besides, I think, what we would like also to stress something on what we said is that those contracts already have been affected, considering that the owner at the official exchange rate, so in terms of your equity that you have deployed to the capital, you don't have access to -- you don't have free access to exchange rate to recover your original cost of capital, okay?

Well, Lily Yang, also asking for Plan Gas. We've already addressed. Thank you Lily for your questions.

People asking for new bonds issuance. I think Gabby already answered. Thank you for your question also in that sense.

Someone from the audience asking how -- regarding hydrocarbons production. How we expect demand will change during Q2 -- the second half of the year -- sorry, is it growing?

Yes. Right now, it's growing because we are in midst of Q4. And Q4 is the hot peak season. And historically, as you can see, the charts, it always go down. But it's a seasonality that's not unknown. But the Q3 is the hot peak season of Argentina. And as you can see, the year-on-year decrease, it's not that much compared, I don't know, GDP or other sector point (inaudible).

I think this is -- can you please comment on TGS results and new projects in Bahia, by Lily Yang from HSBC?

It's a small project. Actually, it's really good because it makes more yields of the gas pipeline that we built with (inaudible) transported by TGS. This is a huge pressure. I don't know if you remember, TGS are (inaudible) million in about 2 years. It was finished last year. We started to operate and actually started to build, and it's contributed a part, but not -- huge, but important part to Q2 EBITDA at TGS. And basically, it's part of the ecosystem of (inaudible) that TGS is trying to build, right? And this is a treatment plan that it will be in the north part, in the north range of the Garin pipeline. The 3-year contract TGS will still operate and treat this gas that the people from Shell and YPF lift from (inaudible). I think that's it. No, Maggie?

I think there is one more questions from Chris Dechiario. Have there been any further discussion with the authorities about changes to the U.S.-denominated PPA in light of the current blue-chip (inaudible) continued monetary policy?

I mean, would you -- I think, Gabby, I have already addressed this.

I think so.

So I think that's it, right? No more? There's a (inaudible) after this presentation. Thank you so much for joining us. Margarita and I, we appreciate you are here. Any questions you may have, you can reach us both through every contact line that we have. Please stay safe and well. See you next quarter.

Thank you to everyone. And we are available for any further questions through Lida, Maggie and the team.

Thank you, Gabby, and thanks for your participation. This concludes today's presentation. Thank you for joining. You may disconnect at this time. Goodbye.