Pampa Energia SA (PAM) 2024 Q4 法說會逐字稿

Recording in progress. There will be a Q&A session. Questions can only be submitted in writing through Zoom. Should any participant need help, please send us a chat message. Before proceeding, please read the disclaimer on the 2nd page of our presentation. Let me mention that forward-looking statements are based on Pampa Energia's management beliefs and assumptions and information currently available to the company. They involve risks, uncertainties, and assumptions because they are related to future events that may or may not occur.

Investors should understand that general economic and industry conditions and other operating factors could also affect the future results of Pampa Energia here and could cost results to differ materially from those expressed in such forward-looking statements. Now I will turn the video conference over to Lida. Please go ahead.

Thank you, Raquel. Thank you hello everyone and thank you for joining our conference call. I will make a quick summary of the 2024 and Q4. You may find more details in our earnings release and financial statements. For today's Q&A, let me introduce here our CEO, Gustavo Mariani, our EVP and Head of EMP, Mr. Horacio Turri, and our new CFO, Adolfo Zuberbuhler.

First, we wanted to review 2024, a year that was challenging from the very beginning. Despite this, the macro-outperformed expectations and we advanced with the development of Rincón de Aranda, our flagship Shale oil project. One of, as one of the country's leading gas producers, we reached a new all-time high.

This 2024 marking 21% growth in year average output and an impressive 80% increase since 2017. This is driven by our top performing wells in Vaca Muerta. It is worth highlighting we hit 100,000 barrels of oil equivalent per day again. During the winter, this is the most critical supply period of the year. While 2024's output was entirely gas, we will diversify into shale oil once Rincón de Aranda comes online.

In the power segment we commissioned PEPE six wind farm. This is adding another 140 megawatts of green energy, having grown nearly 50% since 2017 with a strong focus on operational excellence, we achieved an impressive 95% availability rate in 2024, reaffirming our position as the country's leading IPP. EBITDA grew 19% year on year and 29% to 20% compared to 2017, mostly coming from power and gas and contributing to another milestone. Net debt fell to $410 million the lowest since 2016.

Now turning to Q4 only, the quarter was marked by strong performance in gas upstream and power. Gas production rose 11% year on year, with shale gas shrinking its share from 32% in 2023 now to nearly 50% in 2024. Power units recorded a 94% availability rate with a notable recovery in the PPA units. Also, as I mentioned before, the balance sheet keeps getting stronger with extended maturities and improved equality.

We are preparing for the shallow ramp up in early starting early April. Currently operating with four drilling rigs and one fleet while building the necessary facilities. The adjusted EBITDA for the quarter amounted to $182 million. This is up 60% from last year. Driven by increased gas deliveries from thermal power generation.

The contribution the contribution of PEPE six improve. PPA performance in addition to the tariff hikes benefiting, PGS and Transcender. Higher operating costs and lower exports at the lending FX partially offset these gains. The quarter-on-quarter decrease was due to the seasonality, notably 68% of our quarters EBITDA was dollar link due to the successive peso increases in spot energy and in utilities rising to 88% at the parent company. CapEx in Q4 was 20% lower year on year, mainly because of the shale gas ramp up in 2023. Partially upset by final payments for PEPE six and the ongoing development in Rincon de Aranda.

Moving to EMP on slide five. Adjust VDA. Was $36 million in Q4, down 26% year on year, largely due to the lower sales to industries in Chile as well as higher operating costs. The impact exports settle at the differential effects which amounted to last year's Q4 $24 million nearly zero this Q4. These factors were upset by increased gas production for thermal power generation.

The beginning of Rincon de Aranda's development and program overhauls pushed the total lifting cost of 29% year on year. Lifting cost per BOE rose to $8.7 per BOE. Well, gas lifting costs increased by 10% to $1.2 per million BTU also influenced by the lower seasonal output. Total production averaged nearly 62,000 BOE per day, 9% higher than last year.

When we zoom in, crude oil represented 6% of the output and 25% of the EMP's revenue, while gas accounted for 94% of the production. And [Mangrullo] contributed 54% of the Q4 production while Sierra Chata increased to 30%, growing production 34% year on year in Sierra Chata without new wells connected, drilled, new wells drilled during the quarter.

During 2024, we connected three wells. So, Sierra Chata's annual production rose 40% versus 2023. In the year average Andrus output also increased 12% year on year without additional DNC. In the quarter, with a, with an annual production up 23% from three walls connected in 2024.

In Rio, which is a non-operating block, a production averaged 1.3 million kilometres per day, similar to the last year's quarter. The average a gas price for the quarter was $2.9 per meal BTU, down 10% due to lower exports to Chile and sales to industries, partially upset by better retail prices following the tariff increases. As you can see right below, most local gas deliveries were directed to CAMMESA for thermal power generation.

Okay, so let me briefly comment on our progress on Rincon de Aranda in Q4, '24, the production averaged almost 1,000 barrels per day, which is in line with the expected decline curves for this, wall types. Since September last year we have been drilling pads to prepare the UCs on the way to complete three paths so far.

The frac fleet arrived in early February and we began frac, we already fracked the first path and we are in preparation for the second, and in preparation for duplicate, which should be online early April. By May, we plan to have two paths connected, bringing output to 8,000 barrels per day.

To reach this year's plateau, we plan to complete five more paths, targeting 20,000 barrels per day by December of this year. We are building pipelines, preparing early production facilities, building the central processing facility, water treatment pools, etc.

So, before we are moving on from the MPE, I wanted to do a real quick update on the reserves. Total proven reserves rose 16% to 1,231 million barrels of oil equivalent.

This is driven by the increased activity in Sierra Chata and Manguso, our flagship shale gas blocks, as well as testing in Rincon de Aranda. Shale reserves grew 60% year on year to 132 million barrels, with shale oil now accounting for 9% of the total of the shale oil shale reserves, marking the first time it has been booked. The remaining 91% is shale gas. The reserve replacement ratio, the RRR was 2.2 times, maintaining an average life of 8.6 years.

Since 2019, proven reserves have increased by 71%. With a sharp growth in our proven shale reserves, particularly in shale oil since last year. So, moving on to power generation on slide nine, we posted an adjusted PDA of $86 million this quarter, up 7% year on year, mainly explained by the contributions of PEPE six and the PPAs and recovering legacy spot prices, partially offset by higher operating expenses. Q4 likely fell 4% year on year because of the life extension overhaul that we're doing in OldelVal, all CCGT and lower water levels in Pichi Picun Leufu hydro. The hydro dispatch from Loma de la Lata and the commissioning of PEPE six offset these effects.

Take or pay capacity payment, especially from the PPAs, were the main EBIDA driver reflecting the outstanding capacity availability, which improved to 94% from the 93% last year due to fueller thermal outages. In 2025, we plan to upgrade Barragan's gas turbines, adding another 11 megawatts and conduct a major overhaul in Loma de la Lata gas turbine in March.

Well, a quick brief on PEPE six expansion, which is no longer a project, the COD was completed last November 21, bringing the total install capacity to 140 megawatts. Now PAA operates 427 megawatts of wind energy, ranking us among the country's top five renewable IPPs.

Moving to slide 11, we show the restricted group figures that reflect the bomb perimeter. Cash, free cash flow in Q4 market, $82 million supported by the working capital inflows from the winter receivables, the highest revenue making period of the year.

Day sales outstanding stood at 45 days, meaning just a three-day delay alongside robust operating cash flow from power and gas. After last year's CapEx for the shale gas ramp up 2024, expanding was mainly just maintenance focused spiced up by Rincon de Aranda development. The total CapEx for the quarter was [$140 $154 million] but Rincon de Aranda was more than half of it.

In December, we issued a $360 million international bond maturing in 2034 to improve our debt profile, redeeming the remaining 2027 notes at par. This resulting resulted in a cash increasing to $1.7 billion though after the 2027 bond repurchased this year, cash stood at $1.3 billion more than 50% than last year's $834 million cash. The next slide shows our consolidated financial position, including our affiliates at ownership, but just let's keep focusing on the restricted group.

Gross debt stood at $2 billion up 44% year on year due to the 2031 and the 2034 bond assurances for $770 million total, which directly funded the repurchase of 2027 notes. It is no worry that besides further extending the average life to 4.2 years and securing the lowest spread to UST bills in the history, the Argentine corporates, the net debt dropped to $410 million. This is 33% down year on year and 0.6 times net leverage ratio. This is the lowest ratio and the lowest levels since 2016 when we acquired the former Petrodasanina. This was mainly because of the strong cash flow inflow from power generation and gas operations alongside improved collections from Camesa and NASA.

Well, in some, we successfully met. One of our key 2025 goals extending the large maturity wall for 2027 and [2041] and beyond with highly competitive rates shielding our financial position to support the development of Rincon de Aranda

Well, now concludes our presentation.

The floor is open for questions. If you have a question, please send us through Zoom chat. I will read it and answer them in the order received first in first out. So, please make sure you put your name, your company, so we can introduce you to the audience should any participant that needed assistance just write in the Zoom chat.

Please hold just we call for the questions. Well, the first question, all right? Martina Marin, sorry, from Latin Securities, she asked how do you expect regulatory changes introduced by the Secretary of Energy to impact particularly regarding the ability for generators to self-procure the fuel? What impact do you anticipate for both EMP and generation power generation segments?

Hello, good morning, everybody. Thank you all for participating. Thank you, Marina for your question. First thing that I have to say is that it is too early to tell, what the regulatory authority has issued are basically guidelines, that the regulator put over the table for all the participants to comment on those guidelines and the idea and that is written in the in this guideline is that throughout this year.

They will prepare the definitive regulatory changes that should be implemented beginning after the winter, basically, beginning in by November of 2025. From now until November, we do not expect many changes. The capacity of a self-procure our own fuel, will not have, we don't expect it to have a significant impact in the, during this month. Probably, some impact before the winter start, no impact at all during the winter.

And then in November, we'll expect the new changes. What we expect basically for ourselves that we are integrated is that we will be able during this, during the. During this summertime to be able to increase our sales of natural gas because we will be using our gas in our own thermal plants.

But We don't have yet clarity about what will happen with prices in the market. So it's Too early to tell, but we do not expect. In the next quarter any significant impact.

All right. The second question in recent quarters, strong cash flow generation has significantly reduced net debt. However, with growth plans that include investments in Rincon de Aranda, [Bacamortasur], the LNG project, and potentially a rea plant, how do you expect leverage to evolve?

The one clarification I will make is that we are as moving forward full speed with the development of commitment to participate in the Bacamortaur, the old pipeline. The other two, the LNG, floating LNG project and the UEA plan that we are studying, those are, as I said, projects that are being studied. The floating LNG, the final investment decision has not been taken yet. We are very eager and committed to this project, but there are a few hard hurdles that we need to resolve before taking the final decision. Nevertheless, the floating energy project.

One of its beauties is that the initial CapEx for this project is rather low, although it implicates significant commitments going forward once you assume the commitment to charter the boat for 20 years, for the UEA plant, if that is a decision as we have explained before that we will be taking probably by the end of this year and our expectation to do the project in a subsidiary, so it will not affect.

The ratios of Pampa, we expect to finance the project as a project finance obviously with equity. A contribution coming from Pampa but on a separate vehicle. So, and I let the Vito complete. The we expect this year as we have said before because of the significant CapEx, that we will be deploying in in Rincon de Aranda for the first time we will have a year with negative free cash flow, so investing more than our EBIDA generation so our net in-debtness will go up.

Lia said is currently in a very comfortable situation of 0.6%. We expect it to grow about 1.2 times net debt, so a very marginal increase. In the year 2026, probably in the year 2027. In year 2027, it will be they more or less, equalize and sorry, in 2026 and in 2027, we will go back to Significant free innovation.

Well, the next one, [Guido viocero proellaria].

What is the plan if Rincón de Aranda, if brand prices go to $60 to $65 per barrel?

Okay, good morning, everybody. First thing to say is that, when we are looking at prices, we don't look at the spot price, but rather we take a look at the future curve, and that is much more stable than the spot prices. Having said so, we also decided to hedge approximately 65% of the production of 2025, so we feel pretty comfortable with that and the prices that we achieved, with that hedging.

So, we don't see any major changes in our investment plan for 2025, which is basically the ramp up of Rincón de Aranda, going up to a level of 20,000 barrels per day by the end of the year.

Great. Awesome. Next question from Bruno Montanari from Morgan Stanley. And you talk about the appetite sensitivity to sustaining accelerating or decelerating CapEx for, which is (inaudible).

Okay. Well, it's more or less same thing as we mentioned before. We are already committed for 2025 and, we will not be accelerating or decelerating the rhythm of investment and our drilling or completion. During the next year or even 2026, which probably will be a matter of rolling over our hedge position for the year after 2025. So, we will keep on doing so in order to have a stable or at least a much more certain cash flow.

What is the question, what's the hedge price?

Well, the hedge price is around $72 per barrel.

He asks, what happens if the brand goes below, will be low $60.

It's the same, we are hedged, we're going to be hedged.

Right.

I don't know if that went out or we have to repeat. It's okay.

He says, (spoken in foreign language) which one, the hedge price or.

Hedge price? The hedge price $72.

That, if the reading phase will go down below $60 it's the same thing.

Same thing.

Same thing, right?

And in the opposite, which levels of prices will make you feel to accelerate the pace of Rincón de Aranda's development?

Okay, yeah, it's, well, first thing, it's important to clarify that this is not like opening a valve and closing a valve whenever you want. It takes time to commit the necessary equipment for drilling and particularly for completion. There is a lead time that, it makes it very difficult to make decisions on the very short term in terms of accelerating the drilling and completion of the wells.

So, there is not much room there, at least in a period of approximately one year, to accelerate significantly or decrease the rhythm of drilling and completion. Of course it is easier to decide. Eventually to stop fracking and decide to remove the frac fleet, but obviously that has costs associated which I don't think we would like to burden on our shoulders.

Great. So, another question for you, Horacio. Come on about the rea revolution from shale gas and thinking about the de-risking, okay, of Rincón de Aranda, when could we expect to see more meaningful reserve addition in that specific area?

We will see a significant change in our, reserve portfolio in Rincón de Aranda by the end of 2025. By that time, hopefully we will have, already drilled and completed 28 wells, which will, obviously boost, significantly our total reserves, particularly shale oil reserves, in the Pampa portfolio.

Power generation for Gus. Could you comment on what are the management expectations regarding further resolutions allowing generators to sign new PPAs is penalizing potential investments in greenfield power generation assets.

No, we are not currently analysing any new investment in power generation. What, we are analysing that it's related. Is there a recent invitation to install a battery package within the city of Buenos Aires. That is an investment that we are studying, but we haven't taken any.

A decision yet, and regarding the for the PPAs, we do have the B2B market to sign PPAs with what we have installed. Our wind farms for the for the matter, but we have already sold all that, capacity, so, there's no. There's no need to, we need to renew some contracts that that are maturing but we don't need to sell new capacity.

But oh, thank you. Next question from [Inbertien Bolsa Ignacio Sinicovsky]. I hope I pronounce well. My first question is about the cost of sales, which increased, thus lowering the gross margin. I understand that this is mainly explained by higher lifting costs, but could you provide a little bit more color on this? I guess all the segments have this thing, right?

No, I understand he's asking about the increasing lifting costs during the last quarter of 2024. Okay, that has to do particularly is basically based on natural gas lifting costs, and it has to do with the reduction in our production.

So, less production, the same fixed costs, so you have an impact in your lifting. It's not that we are less competitive now. And then there also is a component, which happens not only in the gas industry but all over Argentina, and it has to do with new prices or inflation in dollars.

Yeah, it happens the same in in power generation and specifically in petchem, where most of the costs are in pesos and the fact that the peso real is really appreciated gets your margins, tight. The second question from Ignacio, concerns about power generation. Now Pepe is sober, excluding potential case that the Hydros are not renewed. Well, it's about the increased capacity. We don't have any green fields projects in the pipeline. That's, if you wanted to be more color on that.

Sorry. One thing that we like about Pampa and its diversified portfolio of business segment, it's the capacity to allocate capital. Wherever we see it makes more sense. So, as we've been explaining, we are very enthusiastic with the opportunity after acquiring Rincón de Aranda in 2023 to develop the oil segment and we are We are putting all the focus and the effort of the company in the development of Rincón de Aranda.

Especially from a CapEx perspective, regarding, renewable projects. I think in the past it has been an excellent use of our capital, taking advantage of our peso generation and being able to access the official exchange rate when there was a huge GAAP between the official exchange rate and the blue-chip swap. So, we did, we build those renewable, those wind farms.

When measuring dollars, half the cost of the of what it costs anywhere else in the world, so that gave the project now that the GAAP between the official and the blue-chip swap has narrowed gives the project.

Nice dollar IRR, now that the That the blue-chip swap the spread has collapsed. The yields, in these projects are for us not attractive enough and we prefer to deploy capital on other segments than, something like, what we are doing in Rincón de Aranda. That's a more color to the question.

Right.

I think we talk about it, but what do you think in general, the deregulation that happened, they started the guidelines out there, do you think it's positive in general or negative?

They are definitely very positive or for the sector as a whole and especially for PAA for several reasons. The first one is that we are in an integrated company, so, and the rationale behind that decision early at the very beginning of PAA is being able to.

To procure our own fuel so that our gas production goes into our power plants, something that we haven't been able to take advantage of in the past decade, and we hope we will be able to take advantage of that situation beginning in at the end of this year.

The second thing is that is very good news for Papa is because of the competitiveness of the portfolio of our power generation assets. We have CCTGs with very high thermal efficiency. We have CCTGs. Located at the wellhead, so that means that we don't have to incur in, yeah, in gas transportation cost which is another adds to the competitive competitiveness of our assets.

And so, we, it's definitely excellent news. It is not easy, as we have always said to eliminate all this regulation and go from a highly regulated environment to free-market situation.

It takes time to implement it. It will need time to go all the way to that situation, but it's definitely a move in the right direction and excellent news for Pampa.

Great. Gustavo Faria from Bank of America, he asked what's the next steps regarding this regulation and procedures and what's the implementation process of this power sector liberalization.

Next steps are the sector, different market participants, like power generators, distributors, big industries. Everybody that is involved in the sector will give its comments to the Secretary of Energy and this guideline will go from guidelines into definitive regulatory--.

Framework.

Yeah, a new regulatory framework that we expect will be published during the winter so that the sector will have time to adapt and take any decisions necessary to be implemented beginning in November.

Gustavo Faria is also asking a little bit like what's going to, how the prices will work in the double click comparing, for example, Greenfield projects, new energy with this spot market or his new potential B2B market that is going to be created.

What a different dynamic how the price dynamics will work in each.

Again, it's too early to tell 11 thing that I would say is that you have to keep in mind that the regulator will always keep in mind the total cost of the system.

And knowing that, If the total cost of the of the of the systems goes up, that means that the final user will have to pay higher prices or that the national government will have to increase subsidies. The regulator will be very focused on avoiding any significant increase in the overall cost of the system. So, I imagine more than an increasing the cost of the system that would increase the margins for power generator.

I'm imagine more stable prices but a redistribution so that you have to focus on the portfolio that each power generator owns and how this new regulation affects its portfolio. I as a base case would assume maintaining current prices. Something that is in the guideline is that the regulator is thinking about for the spot price going into a marginal system.

But they do a full marginal system until we end the transition, and I think that what the regulation regulator thinks about the transition until there is new gas transportation infrastructure in place so that the system can fully eliminate the use of liquids.

The regulator will not allow margins to go up significantly and they will cap the margins of the of the of the power generator again with the goal of avoiding hikes or significant prices, price increases in the sector.

Great.

Well, he asked about EBITDA again, it's too early to tell, so how it's going to impact. So, we'll turn again to Horacio Gustavo asks, what's the outlook of gas exports to Chile and Brazil in 2025 regarding capacity and pricing.

Looking, wait, looking on the gas prices and then looking long term. Most of the upside from gas exports will be coming from new pipelines or new LNG.

So, let's go first to Chile. We've seen, in, during the last quarter of 2024, a reduction in, the Chilean gas demand, just, a mirror of what happened in Argentina, combination of hydro and, low temperatures for the summer.

Now we're looking at, ramping up of the Chilean demand. We are currently exporting around $1.4 million cubic meters per day, at a price which is around $5 per million BTU at the way ahead.

That will probably be reduced, in the coming 15 days, the next two weeks when we foresee a reduction in temperatures and a very, some, a mild climate. As the autumn sets in, and we will go back to our previous, exports, levels that are in the range of 600,000 meter per day.

Having said so, it is also true that by May of 2025, we expect, these first, exports through the Gasoducto del PacÃfico. To the region of the BiobÃo in Chile, that will be around 350,000 cubic meters per day. So, we will be back to our 1 million cubic meters per day, exports to Chile again. And, regarding prices, we don't foresee major differences from what happened, or what's happening right now.

In terms of, the future and Brazil, the question is whether we are going to be exporting through pipelines or through LNG, I would say that we will be doing probably both. Argentina will be probably doing both, exporting through the existing. Capacity infrastructure obviously to Chile, which is already happening with through [Ghazanes] and starting with Gasoducto del PacÃfico and we will have to see how it works with Brazil, whether the. The possibility of moving gas from Vaca Muerta to the region of Sao Paulo is going to happen in which volumes and prices.

The potential demand is around 20 million cubic meters per day, but it's still a question mark on what the transportation cost is going to be and whether that gas is going to be competitive or not in Brazil vis a vis the LNG imports of the Brazilian industry.

LNG, well, we can, mention, our LNG project very briefly. As Gustavo mentioned before, we are in the process of deciding whether we will move forward with an FID or not in the coming future. The to the project consists of two vessels, the first one of 2.5 million TPA tons per year, and the second one, 3.5 million. So, a total of 6 million tons per year, both, which represents approximately 25million to 26 million cubic meters per day.

We have a 20% participation in the project, and we will, still have to understand the final economics. We need transportation capacity to be built from Noen to the spot where the. Vessels are going to be moored, and this is something that we will be analysing in the coming months.

Great, another question for you, and this is coming from Claudia Rivera from Santander. She asked what, what's, what happened with the margins in oil and gas, this quarter is lower than the previous quarter. It's something that it's going to see. Currently during the year, I think she doesn't know that it's seasonal.

Yeah, and she's comparing with the previous quarter and there's basically 22 things happen there. They require lower prices because of seasonality and lower volumes. So that's basically why.

Yeah, the best quarters in Tampa and for power and gasses.

Yes, third and third quarter, particularly second and third.

Second and third, when the winter is, and the Q4 is the weakest because it's.

The it's always the transition, yeah, the transition from winter to spring and summer.

And Q2, Q3, Q1, let's say Q1 it's the first--.

For 2025 January was not--, I mean, it was not outstanding, but I would say that probably February and March are going to be so. The demand has been pretty strong, and not only in Argentina but also as I mentioned in Chile. So, I think we're going to be looking, at least from the gas standpoint to a a good, first quarter in 2025.

Well, Florencia Torres from MetLife, she's asking for the potential deregulation. I think we covered it all, yeah, and this is another caller she's asking for CapEx budget per business in 2025. I, let me give you a reminder, we don't give guidance, but we do can share with you our budget initially right now again, read the disclaimer that we said. You want to say something about the budget of CapEx or I could tell, no. It's close to $1 billion right, more than $1 billion.

$1.1 billion. Yeah, total CapEx for this year around one north of $1.1 billion being Rincón de Aranda, the about. $750 million of that $1.1 billion will be deployed. Rincón de Aranda for the development of shale oil.

Reserves, yeah, basically power and gas shipment maintenance, right?

Yes, natural gas is just a few, wells to be drilled this year, around 4 wells, we're going to be drilling, yeah, drilling and completing 44 wells.

We will be drilling, one part of, in Sierra Chata, for 2025, and eventually we'll start the drilling and completion and particularly the drilling of, an additional two parts for 2026.

But--.

Great. And another question, how much do you expect Rincón de Aranda to contribute for the total LDA in 2025?

Our estimated VDA for Rincón de Aranda is around $180 million for 2025.

And this is for goose. I know that it's only less than 1% of the EBITDA. What can you give me any update on the damages in Nihuiles?

The damage on it was Nihuiles, we have three dams along the river. Two of them have been damaged, and the damage had been catastrophic, so.

This is 130 megawatts between both of them of capacity. The damages, as I said, has been catastrophic. It's still very hard to get to the site because the roads has been destroyed, so we not, we still, despite this probably happened several weeks ago, we still cannot access to the site with heavy equipment to do the remediation of all the damage, but we still have to do the assessment, the proper assessment of the damage of the equipment, that will take several months and so probably three or four months from now we will be in a condition to say how much it will cost and how long it will take to get those two centrals to those stations to. Being able to dispatch again we have full coverage of the, from the insurance company or both from.

Material, perspective and also lot of lots of like--. Well, we will nevertheless, this is a bit way below 1% of our EBDA generation, so, it's a very marginal issue forum.

Great. Andres Cirigliano from [Balance], I think we already covered but not with this, detail. It says what's the FID this is FID on plant, what's the timeline, what's the estimates and production that we are thinking about.

We are thinking about a plan of 2 million tons production per year that will consume about 3 million cubic meters of natural gas per day. That's roughly the size of the plant that we are estimating that and that's what we need to, one of the.

Yeah, one of the most important data that we are looking for is what will be the total cost of this of building this plan that we estimate it will be in the range of $2.5 billion. Timeline, we are expecting the proposals from the EPC contractors by the third or fourth quarter of this year. So, it will be a decision that Pampa will be taken by most probably by year end.

Very good. Perle deli he's asking if there is any progress with the conversion of the North pipeline, gas pipeline in terms of increasing gas exports, I think you addressed a little bit, yeah, in the previous question about Bolivia and Brazil.

Florencia, again, she's pimping up, asking regarding field procurement. While you're an integrated company, how easy is for you guys to self-supply your plants under current infrastructure? Do you need further infra development to be 100% self-supplied? It's a weird question.

I think your question relates to gas transportation, availability. We have, for example, Loma de la Lata, that is located at Wellhead that doesn't need any transportation because of its, location, so that can be easily supplied. In the case of Genelba, we do have some, from, gas transportation capacity that we own. So, we are able to service. Half of one of the CCDGs of Genelba.

Other than that, we depend on new gas transportation. New gas transportation capacity and having to acquire firm transportation capacity from future infrastructure being built and the initiative, the private initiative that the TGS has proposed and that we expect that will be That the process will soon move forward with the Secretary of Energy or with the NASA putting in the street the bid documents for that for that private initiative.

And that could be an alternate an alternative for Pampa to acquire gas transportation capacity for some of the remaining assets. We don't need to secure a gas firm gas transportation capacity for all our assets. So only for those that we hope that they will be dispatched on a firm basis through throughout the year. Those are the ones that make sense to acquire, firm transportation capacity.

Yeah, well, this is very important for this transition period of time. Camea will still procure in the PPAs at least, so it's only. It's never going to be so far for this time period, time being, it's not going to be 100% self-procure, right? It's only for the spot and as you said very well for the speakers, it doesn't make any sense.

Okay, so, let's get to another questions quickly. Tom Devine from Beekman Place advisors cost of capital in general terms. Rank major segments of your business by expected return of capital. You know what question then, what's the random you said. But cost of capital, the hack.

Yeah.

Cost of capitalism and for the impairment, for the impairment, we publish in our financial statements, the footnotes and how we calculate the cost of capital by segment. If I remember correctly, I think for power generations it's like 12% for EMPs like 13%, no, and so on.

Next question, the last one. I know the previous one. This is for you, Horacio. Regarding hedge contracts for oil, what's the length of the contract?

As we mentioned before, we hedged, May, December '25.

There's one last question from Bruno Montanari. When we talk about LNG project, you're talking about only from Goa.

Right? That is right. We're talking about the water project.

(inaudible) there's no more questions and just in time in 1 p.m., just one hour, thought we reached the top of the hour. Thank you so much, the three of you for being here.

Thank you for attending our conference call. If you have any questions, just email us, Raquel and I will be more than happy to help you. I hope you have a good day. We see each other next May for the Q1 results. Have a good day. Thank you.

Thank you.