Results for the nine-month period and quarter ended on September 30, 2017

Transcription

1 Results for the nine-month period and quarter ended on September 30, 2017 Pampa Energía S.A. ( Pampa or the Company ), the largest independent energy integrated company in Argentina, which through its subsidiaries participates in the electricity and oil and gas value chain, announces the results for the nine-month period and quarter ended on September 30, Buenos Aires, November 10, 2017 Stock Information Buenos Aires Stock Exchange Ticker: PAMP New York Stock Exchange Ticker: PAM 1 ADS = 25 ordinary shares Share capital in diluted basis: 1,938.4 million ordinary shares / 77.5 million ADSs Market Capitalization: AR$90,425 million / US$5,182 million For further information, contact: Gustavo Mariani Executive Vice-president Ricardo Torres Executive Vice-president Mariano Batistella Executive Director of Planning, Strategy & Affiliates Lida Wang Investor Relations Officer The Pampa Energía Building Maipú 1 (C1084ABA) Buenos Aires City, Argentina Tel: +54 (11) investor@pampaenergia.com Main Results for the Nine-Month Period ended on September 30, 2017 ( 9M17 ) Consolidated net revenues of AR$48,158 million 1, 163.4% higher than the AR$18,280 million for the same period of 2016 ( 9M16 ), explained by increases of AR$3,813 million in power generation, AR$8,459 million in electricity distribution, AR$7,811 million in oil and gas, AR$9,529 million in refining and distribution, AR$4,459 million in petrochemicals and AR$254 million in holding and others segment, partially offset by higher eliminations as a result of intersegment sales for AR$4,447 million. Power Generation of 11,494 GWh from 10 power plants Electricity sales of 16,440 GWh to 2.9 million end-users Production of 70.4 thousand barrels per day of hydrocarbons: 285 million cf/d of gas and 23 kboe/d of oil and NGL Sales of 1.4 million m 3 of refined products and 354 thousand tons of petrochemical products Adjusted consolidated EBITDA 2 of AR$12,811 million, compared to AR$3,252 million for 9M16, mainly due to increases of AR$2,145 million in power generation, AR$2,594 million in electricity distribution, AR$3,708 million in oil and gas, AR$556 million in refining and distribution, AR$198 million in petrochemicals, AR$343 million in holding and others segment, and AR$15 million in intersegment eliminations. Consolidated gain of AR$3,970 million, of which AR$3,094 million is attributable to the owners of the Company, higher than the AR$993 million of loss attributable to the owners in 9M16, explained by higher reported gains in power generation (AR$2,199 million), electricity distribution (AR$1,733 million), oil and gas (AR$1,629 million), refining and distribution (AR$408 million) and intersegment eliminations (AR$16 million), partially offset by losses in petrochemicals (AR$146 million) and higher losses in holding and others segment (AR$1,752 million). 1 Under the International Financial Reporting Standards ( IFRS ), Greenwind, OldelVal, Refinor, Transener and TGS are not consolidated in Pampa s income statement and balance sheet, its equity income being shown only as Results for participation in associates and Results for participation in joint businesses. For more information, please refer to section 3 of this Earnings Release. 2 Consolidated adjusted EBITDA represents the consolidated results before net financial results, income tax and minimum notional income tax, depreciations and amortizations, non-recurring incomes and expenses and non-controlling interests, and includes other incomes not accrued and other adjustments from the IFRS implementation. For more information, please refer to section 3 of this Earnings Release. Pampa Energía Q3 17 Earning Release 1

2 Main Results for the Third Quarter of 2017 ( Q3 17 ) 3 Consolidated net revenues of AR$17,357 million, compared to AR$9,897 million recorded in the third quarter 2016 ( Q3 16 ), mainly explained by increases of AR$1,339 million in power generation, AR$3,047 million in electricity distribution, AR$1,157 million in oil and gas, AR$1,379 million in refining and distribution, AR$998 million in petrochemicals and AR$88 million in holding and others segment, partially offset by higher eliminations from intersegment sales of AR$548 million. Power generation of 3,724 GWh from 10 power plants Electricity sales of 5,583 GWh to 2.9 million of end-users Production of 70.6 kboe/d of hydrocarbons: 287 million cf/d of gas and 22.7 kboe/d of oil and NGL Sales of 447 thousand m 3 of refined products and 124 thousand tons of petrochemical products Consolidated adjusted EBITDA of AR$5,090 million, compared to AR$1,464 million in Q3 16, due to increases of AR$998 million in power generation, AR$1,406 million in electricity distribution, AR$647 million in oil and gas, AR$223 million in refining and distribution, AR$8 million in petrochemicals and AR$390 million in holding and others segment, partially offset by decreases of AR$46 million in intersegment eliminations. Consolidated gain of AR$1,624 million, of which AR$1,284 million is attributable to the owners of the Company, higher than the loss of AR$932 million attributable to the owners of the Company in the Q3 16, explained by reported higher earnings in our segments of power generation (AR$779 million), electricity distribution (AR$578 million), oil and gas (AR$179 million), refining and distribution (AR$225 million) and in our holding and others segment (AR$633 million), partially offset by losses in petrochemicals (AR$133 million) and intersegment eliminations (AR$45 million). 3 The financial information presented in this document for the quarters ended on September 30, 2017 and of 2016 are based on unaudited financial statements prepared according to the IFRS accounting standards in force in Argentina corresponding to the nine-month period ended on September 30, 2017 and of 2016, and the quarter ended on June 30, 2017 and Pampa Energía Q3 17 Earning Release 2 2

3 Table of Contents Main Results for the 9M Main Results for the Q Relevant Events News from Power Generation Segment Transener: Response to the Motion for Reconsideration of the Integral Tariff Review ( RTI ) Applicable to the Period Call for Public Hearings Recognition of Edenor s Investments News from Oil and Gas, and Refining and Distribution Segments Corporate Reorganization Modifications in the Company s Board of Directors and Supervisory Committee Debt Securities Transactions Financial Highlights Consolidated Balance Sheet Consolidated Income Statement Cash and Financial Borrowings Analysis of the Q Analysis of the Power Generation Segment Analysis of the Electricity Distribution Segment Analysis of the Oil and Gas Segment Analysis of the Refining and Distribution Segment Analysis of the Petrochemicals Segment Analysis of the Holding and Others Segment Analysis of the Nine-Month Period, by Subsidiary Analysis of the Quarter, by Subsidiary Information about the Conference Call Pampa Energía Q3 17 Earning Release 3 3

4 1. Relevant Events 1.1 News from Power Generation Segment Awarding of Closing to Combined Cycle Project at Genelba Thermal Power Plant ( CTGEBA ) On October 18, 2017, under the call for closing to combined cycle and co-generation projects, Resolution No. 926-E/2017 of the Secretariat of Electric Energy ( SEE ) was published, whereby the Ministry of Energy and Mining ( MEyM ) selected projects to enter into Wholesale Power Purchase Agreement ( PPA ) with the Wholesale Electricity Market Company ( CAMMESA ). Genelba Plus s closing to combined cycle, which will add an incremental capacity of 383 MW to CTGEBA s current facilities owned by the Company (the Project ), is among the twelve selected projects, which altogether will add more than 1.8 GW of power capacity to the grid. The Project consists of the installation of a new gas turbine and a steam turbine, as well as other enhancement works over the current Genelba Plus s gas turbine, which altogether will complete the second combined cycle at CTGEBA, with a gross power capacity of 552 MW and 52% of efficiency. The Project s investment budget is estimated around US$360 million, and the Project s engineering, equipment procurement and construction ( EPC ) will be jointly carried out by Siemens and Techint. Its commissioning at open cycle is expected for the second quarter of 2019, and as closed cycle for the second quarter of The PPA will be effective for a term of fifteen years and will remunerate a fixed price of US$20,500 per MW per month and a variable price of US$6 per MWh. Along with this expansion, CTGEBA, which is located in Marcos Paz, Province of Buenos Aires, will have two combined cycles and will reach a total installed capacity of 1.2 GW. Currently, Genelba generates power with a 674 MW combined cycle and a 169 MW Genelba Plus s gas turbine, in which the Project will be conducted. Once all expansion projects are commissioned, Pampa Energía will contribute a total installed capacity of 4.3 GW to the Argentine grid Commissioning of the New Thermal Power Plant Parque Pilar ( CTPP ) On August 31, 2017, CAMMESA granted the commercial operation of CTPP, pursuant to the PPA executed between CAMMESA and Pampa as awardee under the Call for New Generation Capacity pursuant to SEE Resolution No. 21/2016. The project, which consisted of the construction of a new thermal power plant in the Pilar Industrial Complex (located at Pilar, Province of Buenos Aires), is made up of 6 cutting-edge high-efficiency Wärtsilä engines, with a total power capacity of 100 MW and able to fire either natural gas or, alternatively, fuel oil. It is worth pointing out that said commissioning was achieved before the terms stipulated in the PPA, as from which time the applicable supply obligations became effective II RenovAr Tender Pursuant to MEyM Resolution No. 275-E/2017 published in the Public Gazette ( BO ) on August 17, 2017, it opened the National and International Call RenovAr Program II Round for the electric energy from renewable sources contracted within the Wholesale Electric Market ( WEM ). The Call s purpose is to install power capacity for up to 1.2 GW, taking into consideration the source, power capacity, technology and region, with a maximum price for each specific technology. Pampa Energía Q3 17 Earning Release 4 4

5 On October 19, 2017, technical proposals were opened, with 228 projects submitted for a total offered power capacity of 9.4 GW, including, among other technologies, 58 wind farm projects for 3.8 GW and 99 solar farm projects of 5.3 GW. The Company submitted the projects shown in the table. The stipulated date for the awarding of tenders is set on November 29, Project MW Province Wind-farm Las Armas 32 Buenos Aires Q De La Bahía 49 Buenos Aires Q Total 81 Estimated date of commissioning Technical Problem at CTGEBA On September 22, 2017, a technical problem occurred in one of the two gas turbines at the combined-cycle in CTGEBA. Consequently, the combined-cycle generation capacity has been reduced by 50%, operating with a 337 MW power capacity. Moreover, all applicable claims were filed and notices were given to the corresponding insurance companies. The Company is currently working on the failure together with the generator s manufacturer, Siemens. Repair tasks are expected to be completed by the end of the year. 1.2 Transener: Response to the Motion for Reconsideration of the RTI Applicable to the Period On October 31, 2017, Transener was served notice of Resolutions No. 516/2017 and 517/2017 issued by the National Electricity Regulatory Agency ( ENRE ), whereby this regulatory body partially upheld the motions for reconsideration of the RTI filed in April 2017 against ENRE Resolutions No. 66/2017 and 73/2017 for Transener and Transba, respectively. The informed resolutions establish new tariff schemes for Transener and Transba, applicable retroactively to February 1, 2017, representing an increase of 4% in capital base and 8% in regulatory revenues, compared to the amounts granted in the RTI conducted in February As regards the semiannual cost variation adjustment pursuant to the RTI, Transener requested the ENRE an approximate of 11% increase retroactive to August As of the date of this Earnings Release, the ENRE has not issued an instruction providing for its application. 1.3 Call for Public Hearings New Natural Gas Prices at Transportation System Entry Point ( PIST ) Pursuant to MEyM Resolution No. 400-E/2017, published in the BO on October 23, 2017, a public hearing was called for November 15, 2017, to discuss new PIST prices for natural gas and propane gas for the distribution of undiluted propane gas through pipes, which should be effective as from December 1, Transportadora del Gas del Sur ( TGS ) Pursuant to Resolution No. 62/2017 issued by the National Gas Regulatory Agency ( ENARGAS ) and published in the BO on October 20, 2017, a public hearing was called to discuss TGS transitory tariff adjustment, resulting from the RTI process implemented in April Pampa Energía Q3 17 Earning Release 5 5

6 The public hearing, which will be held on November 14, 2017 in the City of Bahía Blanca, Province of Buenos Aires, will determine the new tariff schemes effective as from December 1, Electricity Sector On October 25, 2017, the MEyM issued Resolution No. 403-E/2017 whereby the ENRE called for a public hearing for November 17, 2017 in order to discuss: (i) (ii) (iii) (iv) (v) New reference prices for power capacity and energy within the WEM for the summer seasonal period (the Seasonal Price ), reaching the coverage of almost 100% of the WEM s monomic cost as of December 2018; The electricity savings incentive plan; The social tariff; The electricity distribution methodology; and The cost of remunerating the extra high voltage power transmission. Following this hearing, another hearing will be held pursuant to ENRE Resolution No. 526/2017, in order to inform the impact of the previously-mentioned measures on Edenor s end-users bills. As regards the item (iv) above, on October 31, 2017, Edenor was informed through ENRE Note No. 128,399 that the MEyM instructed this entity to defer until December 1, 2017, the application of the 18% tariff increase on the Distribution Value Added ( VAD ) scheduled in the RTI for November 1, This increase should be recognized in real terms, pursuant to the RTI update mechanism provided for by ENRE Resolution No. 63/2017. Moreover, as regards the deferral in the implementation of the Own Distribution Costs ( CPD ) variation monitoring mechanism, which, according to the RTI, should have been applicable since August 2017, it is informed that this item will be applicable as from December 1, 2017, also using the abovementioned update mechanism for its recognition in real terms. In August 2017, after verifying the activation of the trigger clause, Edenor requested the application of the CPD variation for the first semester (January- June, 2017), which amounted to 11.63%. 1.4 Recognition of Edenor s Investments On October 4, 2017, SEE Resolution No. 840-E/2017 was published in the BO, which recognized the amount of AR$323 million in consideration of works performed before the termination of the Fund for Electricity Distribution Expansion and Consolidation Works ( FOCEDE ), which had been implemented to administer the funds generated as a result of the application of ENRE Resolution No. 347/2012. Its implementation is conditional upon Edenor waiving all administrative and/or judicial claims associated with the FOCEDE it may have already brought, as well as any other future claims against the National Government, the MEyM, the SEE, the ENRE and/or CAMMESA. Therefore, on October 9, 2017, Edenor stated that it had no administrative or judicial claims against these bodies related to FOCEDE, considering that the direct appeal filed in 2015 by Edenor against ENRE Resolution No. 356/2014 which imposed a penalty for the failure to timely apply FOCEDE s remaining funds is not covered by this requirement. As of the date of this Earnings Release, Edenor is conducting all applicable business and procedures to enforce the recognition of this receivable. Pampa Energía Q3 17 Earning Release 6 6

7 1.5 News from Oil and Gas, and Refining and Distribution Segments Modification to the Encouragement Program for the Investment in Development of Natural Gas Production from Unconventional Reservoirs in Neuquina Basin On November 2, 2017, MEyM Resolution No. 419-E/2017 was published in the BO; this resolution amends the terms and conditions provided for by MEyM Resolution No. 46-E/2017 issued in March The new resolution measures the monthly average unconventional gas production for the July June 2017 period (the Initial Production ) and classifies concessions into the following categories: (i) undeveloped ( Pilot ), with an Initial Production lower than 17.7 million cf/day; and (ii) developing, with an Initial Production higher than or equal to 17.7 million cf/day. Undeveloped concessions applying for the incentive may obtain a guaranteed minimum price for their whole production, provided they reach an annual average production equal to or higher than 17.7 million cf/day during a twelve-month period by December 31, Developing concessions may only apply for the incentive the incremental portion on top of their Initial Production. The reference price for incentive calculation will be the domestic market s weighted average reported by the MEyM s Secretariat of Hydrocarbon Resources. Moreover, permanence in the program is conditional upon the blocks meeting the investment plan timely informed to the provincial enforcement authority; otherwise, collected amounts should be returned, adjusted by the Argentine National Bank s interest rate. As of the date of this Earnings Release, the Company is analyzing the impact and its inclusion to the mentioned program Suspension of the Producers and Refiners Agreement On September 22, 2017, the MEyM notified, through Note No /2017, the signatories to the Agreement for the Transition to International Prices of the Argentine Hydrocarbon Industry (the Producers and Refiners Agreement ) of its suspension as from October 1, Going forward, the domestic price of crude oil barrel to be used as raw material for refining and gas pump prices would be determined based on domestic market rules. The Producers and Refiners Agreement had established a gradual convergence path for the domestic price of crude oil until achieving parity with international markets during the course of 2017, as well as a price adjustment mechanism for the gas pump prices of refined products. Consequently, on October 1, 2017, the Company increased its prices for high-grade gasoline and diesel oil by 11%, and for Podium gasoline and Podium diesel by 5% in its distributor channel. Furthermore, on October 23, 2017, the Company increased its prices for Podium gasoline by 12%, for high-grade gasoline and Podium diesel by 10%, and for diesel oil by 9% in its gas station network Bioethanol Price Adjustment On October 31, 2017, MEyM Resolution No. 415-E/2017 was published in the BO, which modifies the procedure to determine the purchase price for corn- or sugarcane-based bioethanol to be blended with gasoline for automotive use. This modification results in a 1.5% decrease in the purchase costs of bioethanol, a raw material that should make up 12% of the volume of gasoline for automotive use sold in the Argentine territory. Pampa Energía Q3 17 Earning Release 7 7

8 Therefore, on November 4, 2017, Pampa accompanied the measure adopted by the major market players by reducing suggested gasoline prices at gas stations, thus transferring this cost reduction to end consumers, except in the Provinces of Chubut and Santa Cruz Termination of Petrolera Pampa s Service at Medanito - La Pampa Block Pursuant to the offer made to Pampetrol, whereby Petrolera Pampa performed operating services for the exploitation of hydrocarbons in the 25 de Mayo Medanito Sudeste block, located in the Province of La Pampa ( Medanito La Pampa ), it was terminated on October 28, The Company performed all its obligations under the offer, returned the facilities as and when required and in an operating status, and provided all the applicable environmental documentation Tender for Hydrocarbon Exploration Licenses in Unconventional Blocks Under the Public Tender No 1/ V Round, for the selection of companies interested in the exploration, development and eventual exploitation of the blocks located in the Province of Neuquén and concessional in favor of the Gas y Petróleo del Neuquén S.A. ( GyP ), on November 1, 2017, the Board of Directors of GyP has proceed to award in favor of the Company for the offer summited for Las Tacanas Norte block. Las Tacanas Norte block has 120 km 2 surface and is neighboring to El Mangrullo block, which the Company currently operates. The accepted offer consists of drilling 8 wells targeting Vaca Muerta formation, and other exploratory studies. The exploratory license is for a 4-year term ( ). The awarded block is shown in the map. 1.6 Corporate Reorganization Merger of Thermal Power Plant Loma de la Lata ( CTLL ), Electricidad Argentina S.A. ( EASA ) and IEASA S.A. ( IEASA ) Regarding the merger by absorption between CTLL, as absorbing company, and EASA and IEASA, as absorbed companies, on August 11, 2017 and pursuant to the Board of Directors Resolution No. 347, the ENRE decided, by a majority of votes, to deny the merger authorization request filed by CTLL. CTLL has appealed this resolution before the SEE timely and in due form as it considers that it does not conform to law. As of the issuance of this Earnings Release, the SEE has not rendered a decision in this respect. Should the required approvals fail to be obtained, the Company will have to roll back the effects of the merger. Pampa Energía Q3 17 Earning Release 8 8

9 1.6.2 New Corporate Reorganization Process On September 22, 2017, the Company resolved to incorporate Petrolera Pampa S.A. ( Petrolera Pampa ) into its corporate reorganization process, which had been previously disclosed on August 23, Consequently, subject to obtaining the corresponding corporate and regulatory approvals, Pampa, in its capacity as absorbing company, will merge by absorption the following companies of the economic group (the Absorbed Companies, in brackets it is stated Pampa Energía s direct and indirect stake): Petrolera Pampa (49.5%); Central Térmica Güemes S.A. ( CTG, 90.4%); CTLL (100%); EG3 Red S.A. (100%); Bodega Loma la Lata S.A. (100%); Inversora Diamante S.A. (91.6%); Inversora Nihuiles S.A. (90.3%); Inversora Piedra Buena S.A. (100%); Pampa Participaciones II S.A. (100%); and Transelec Argentina S.A. (100%) This reorganization would become effective as from October 1, 2017, all of which subject to obtaining all the necessary corporate and regulatory approvals and the corresponding registration of the merger and dissolution without liquidation of the Absorbed Companies before the Public Registry. Furthermore, since Petrolera Pampa and Pampa s shares are subject to the public offering regime and listed in the Argentine stock market Bolsas y Mercados Argentinos ( ByMA ), the Boards of Directors of both companies resolved to propose to their respective Shareholders Meetings an exchange ratio based on the volume-weighted average stock price of Pampa and Petrolera Pampa s shares traded over the last six calendar months, determined retroactively as from the closing of operations on September 22, 2017, with a resulting exchange ratio of Pampa s ordinary shares in book-entry form, with a face value of AR$1 each and granted the right to one vote per share, for each Petrolera Pampa s ordinary share in book-entry form, with a face value of AR$1 each and granted the right to one vote per share. The economic group led by the Company would thus complete the corporate consolidation process initiated with the merger by absorption with Petrobras Argentina S.A., continued with other intragroup reorganizations and finishing with the above-mentioned merger. 1.7 Modifications in the Company s Board of Directors and Supervisory Committee On October 31, 2017, the Company s Board of Directors received the resignations presented by: Mr. Diego Salaverri, to his position as director and executive director of legal affairs, effective October 31, 2017; Mrs. Clarisa Lifsic, to her position as independent director and member of the Audit Committee, effective October 31, 2017; Mr. Javier Campos Malbrán, to his position as independent director, effective December 1, 2017; and Mr. Damián Burgio, to his position as alternate supervisory auditor, effective October 31, Pampa Energía Q3 17 Earning Release 9 9

10 1.8 Debt Securities Transactions Loan Granted to Finance Corti Wind Farm Project (the Corti Project ) With the purpose of diversifying and optimizing financing sources, our power generation affiliate Greenwind S.A. executed as a borrower a credit facility for US$104 million with the Inter-American Investment Corporation ( IIC ), the Inter-American Development Bank ( IDB ) s multilateral financial institution. The Santander Bank and the Industrial and Commercial Bank of China Limited Dubai Branch ( ICBC ) acted as participants. This credit facility represents an important milestone for Pampa since it is the first loan by a multilateral institution granted to a project awarded under the RenovAR tenders. Moreover, the loan offers a tenor of 9 year door-to-door, an unprecedented term in Argentina for this kind of transactions, and is secured with a corporate lien granted by Pampa. Net proceeds from this facility will be allocated to the construction, operation and maintenance of the Corti Project, located in Bahía Blanca, Province of Buenos Aires, consisting of the installation of Vestas 100 MW power capacity windmills, which commissioning is scheduled for the second quarter of The Corti Project contributes to the increase and diversification of Argentina s energy matrix, as well as to the supply of clean energy, avoiding CO 2 emissions by approximately 213,000 tons per year during the life of the project Redemption of CTG s Corporate Bonds ( CBs ) On September 11, 2017, CTG redeemed 100% of its outstanding US$-link Series VIII CBs at a 7% fixed rate maturing in 2020 for an original face value of US$1.4 million plus interest accrued until the redemption date Loan Granted to Edenor On October 11, 2017, Edenor was granted a loan by ICBC in the amount of US$50 million and for a 36-month term, which will be allocated to the financing of its investment plan and working capital Upgrade to Pampa Group s CBs Ratings Because of the favorable regulatory environment resulting from the implementation of the RTI, which enhances the predictability over short and medium-term cash flow generation, credit rating agency Standard & Poor s Global Ratings ( S&P ) upgraded the ratings of Transener and Edenor s CBs. By the end of August 2017 Transener s global rating was upgraded from CCC+ to B, whereas local rating was upgraded from rabb+ with a positive outlook to raa+ with a stable outlook. Moreover, in mid-september 2017, S&P upgraded Edenor s CBs global rating from CCC+ to B- and local rating from rabb+ with a positive outlook to rabbb with a stable outlook. Finally, as a result of the upgrade in the global rating of Argentina s sovereign debt from B to B+ and in its local rating from raa+ to raaa by the end of October 2017, S&P also upgraded Pampa and TGS s ratings. In the case of Pampa, the global rating was upgraded from B to B+, whereas, in the case of TGS, the global rating was upgraded from B to B+ and the local rating from raa+ with a stable outlook to raaa with a stable outlook. Pampa Energía Q3 17 Earning Release 10 10

11 1.8.5 Loans Granted to Pampa Energía In October 2017, Pampa entered into bank loans with local financial entities for a total amount of AR$2,270 million, maturing in August 2018 and October 2019 and accruing interest at a 22% weightedaverage fixed rate. Additionally, it executed export pre-financing loans with local financial entities for a total amount of US$68 million, maturing in August, October and December 2018, and accruing interest at a 2.8% average fixed rate. Pampa Energía Q3 17 Earning Release 11 11

12 2. Financial Highlights 2.1 Consolidated Balance Sheet (AR$ Million) ASSETS As of As of Participation in joint businesses 4,692 3,699 Participation in associates Property, plant and equipment 47,102 41,090 Intangible assets 1,909 2,014 Other assets 2 13 Financial assets with a results changing fair value Investments at amortized cost 1 62 Deferred tax assets 1,636 1,232 Trade receivable and other credits 5,407 4,469 Total non-current assets 61,724 54,108 Other Assets - 1 Inventories 4,154 3,360 Financial assets with a results changing fair value 11,864 4,188 Investments at amortized cost Financial derivatives 4 13 Trade receivable and other credits 16,136 14,144 Cash and cash equivalents 462 1,421 Total current assets 32,834 23,150 Non-current assets held for sale Total assets 94,590 77,277 EQUITY As of As of Share capital 1,935 1,938 Share premium and other reserves 4,842 4,828 Repurchased shares 3 - Cost of repurchased shares (72) - Statutory reserve Voluntary reserve 5,146 3,862 Other reserves Retained earnings 1,731 (11) Other comprehensive result Equity attributable to owners of the parent 14,311 11,054 Non-controlling interests 3,987 3,020 Total equity 18,298 14,074 LIABILITIES Accounts payable and other liabilities 5,675 5,336 Borrowings 33,053 15,286 Deferred revenues Salaries and social security payable Defined benefit plan obligations 1, Deferred tax liabilities 3,685 3,796 Income tax and minimum expected profit tax liability Tax payable Provisions 5,377 6,267 Total non-current liabilities 50,386 33,140 Accounts payable and other liabilities 14,921 12,867 Borrowings 4,962 10,686 Deferred income 3 1 Salaries and social security payable 1,814 1,745 Defined benefit plan obligations Income tax and minimum expected profit tax liability 890 1,454 Tax payable 2,395 2,392 Provisions Total current liabilities 25,906 30,063 Total liabilities 76,292 63,203 Total liabilities and equity 94,590 77,277 Pampa Energía Q3 17 Earning Release 12 12

13 2.2 Consolidated Income Statement (AR$ Million) 9-Month Period 3 rd Quarter Sales revenue 48,158 18,280 17,357 9,897 Cost of sales (33,954) (15,490) (11,972) (8,179) Gross profit 14,204 2,790 5,385 1,718 Selling expenses (3,610) (1,702) (1,179) (851) Administrative expenses (3,611) (2,379) (1,246) (1,448) Exploration expenses (51) (76) (28) (76) Other operating income 2,955 2, ,187 Other operating expenses (2,463) (1,117) (826) (719) Results for participation in joint businesses 820 (194) 263 (121) Results for participation in associates Results from sale of equity share in companies and financial instruments Operating income 8, , Financial income 1, Financial costs (3,692) (3,039) (1,273) (1,619) Other financial results (1,325) 157 (534) (78) Financial results, net (3,970) (2,399) (1,442) (1,469) Profit before tax 4,319 (2,069) 1,832 (1,294) Income tax and minimum expected profit tax (349) 525 (208) 176 Net income for the period 3,970 (1,544) 1,624 (1,118) Attributable to: Owners of the Company 3,094 (993) 1,284 (932) Non-controlling interests 876 (551) 340 (186) Net income per share for the period attributable to the owners of the Company Basic and diluted income per share (0.5855) (0.5495) Pampa Energía Q3 17 Earning Release 13 13

14 2.3 Cash and Financial Borrowings (AR$ Million) Cash (1) (as of September 30, 2017) Consolidated Financial Statements Ownership Adjusted Bank and Financial Debt (as of September 30, 2017) Consolidated Financial Statements Ownership Adjusted Power generation 1,452 1,254 Electricity distribution 1, Refining & distribution Petrochemicals - - Holding and others 7,657 7,657 Oil and gas 1, Total 12,540 10,925 Power generation (2) 3,085 3,085 Electricity distribution 3,155 1,626 Refining & distribution - - Petrochemicals - - Holding and others 25,972 25,972 Oil and gas 2,615 1,295 Total 34,827 31,978 Note: (1) It includes cash and short-term investments. (2) It does not include regulatory liability held against CAMMESA for AR$3,189 million Summary of Listed Debt Securities (AR$ Million) Company Security Maturity Amount Issued Amount Outstanding Coupon In US$ Transener 1 ON Series % Edenor ON par at fixed rate % CTLL ON Series 4 US$-Link % TGS 1 ON par at fixed rate % Pampa Energía ON Series T at discount & fixed rate % ON Series I at discount & fixed rate % In AR$ CTLL ON Series A Badlar Privada ON Series E Badlar Privada Note: (1) Affiliates are not consolidated in Pampa s financial statements, according to the IFRS standards. (2) Bond Note dollar-link, with initial FX rate of AR$ /US$. Pampa Energía Q3 17 Earning Release 14 14

15 3. Analysis of the Third Quarter 2017 Consolidated net revenues of AR$17,357 million, compared to AR$9,897 million recorded in Q3 16, mainly explained by increases of AR$1,339 million in power generation, AR$3,047 million in electricity distribution, AR$1,157 million in oil and gas, AR$1,379 million in refining and distribution, AR$998 million in petrochemicals and AR$88 million in holding and others segment, partially offset by higher eliminations from intersegment sales of AR$548 million. Power generation of 3,724 GWh from 10 power plants Electricity sales of 5,583 GWh to 2.9 million of end-users Production of 70.6 kboe/d of hydrocarbons: 287 million cf/d of gas and 22.7 kboe/d of oil and NGL Sales of 447 thousand m 3 of refined products and 124 thousand tons of petrochemical products Consolidated adjusted EBITDA of AR$5,090 million, compared to AR$1,464 million in Q3 16, due to increases of AR$998 million in power generation, AR$1,406 million in electricity distribution, AR$647 million in oil and gas, AR$223 million in refining and distribution, AR$8 million in petrochemicals and AR$390 million in holding and others segment, partially offset by decreases of AR$46 million in intersegment eliminations. Consolidated gain of AR$1,624 million, of which AR$1,284 million is attributable to the owners of the Company, higher than the loss of AR$932 million attributable to the owners of the Company in the Q3 16, explained by reported higher earnings in our segments of power generation (AR$779 million), electricity distribution (AR$578 million), oil and gas (AR$179 million), refining and distribution (AR$225 million) and in our holding and others segment (AR$633 million), partially offset by losses in petrochemicals (AR$133 million) and intersegment eliminations (AR$45 million). Consolidated Adjusted EBITDA Calculation, in AR$ million 9M17 9M16 Q3 17 Q3 16 Consolidated operating income 8, , Consolidated depreciations and amortizations 3,963 1,796 1,433 1,201 Consolidated EBITDA under IFRS standards 12,252 2,126 4,707 1,376 Adjustments from generation segment (172) (10) 2 (3) Deletion of profit from tax amnesty (174) Others 2 (10) 2 (3) Adjustments from distribution segment (254) 1, Adjustments from retroactive penalties (333) Late payment interests Adjustments from oil and gas segment 70 (85) 38 (96) Results for sale of property, plant and equipment - (358) - (358) Cease of operations in Medanito block (La Pampa) Devaluation of wells Deletions of results from share in associates (28) (4) (17) (4) OldelVal's EBITDA adjusted by ownership Adjustments from refining and distribution segment Deletions of results from share in associates (17) (1) (17) (1) Refinor's EBITDA adjusted by ownership Adjustments from petrochemicals segment Contingencies from Ex Petrobras Argentina Adjustments from holding and others segment Deletion of profit from tax amnesty (128) Expenses related to the acquisition of Petrobras Argentina Results from the sale of participation in subsidiaries - (480) - (480) Deletions of results from share in joint ventures/associates (824) 197 (265) 121 TGS's EBITDA adjusted by ownership Transener's EBITDA adjusted by ownership Others 25 (12) - - Consolidated adjusted EBITDA 12,811 3,252 5,090 1,464 Pampa Energía Q3 17 Earning Release 15 15

16 3.1 Analysis of the Power Generation Segment Power Generation Segment, Consolidated (AR$ million) % % Sales revenue 6,775 2, % 2,760 1, % Cost of sales (3,732) (1,601) % (1,343) (884) +51.9% Gross profit 3,043 1, % 1, % Selling expenses (63) (37) +70.3% (27) (21) +28.6% Administrative expenses (267) (323) -17.3% (97) (128) -24.2% Other operating income NA 37 9 NA Other operating expenses (156) (66) % (26) (22) +18.2% Results for participation in joint businesses (4) - NA (2) - NA Operating income 2, % 1, % Finance income % % Finance costs (723) (549) +31.7% (283) (252) +12.3% Other financial results % % Profit before tax 2, % 1, % Income tax and minimum expected profit tax 57 (255) NA (255) (82) % Net income for the period 2, NA 1, NA Attributable to: 9-Month Period 3 rd Quarter Owners of the Company 2, NA 1, NA Non-controlling interests % % Adjusted EBITDA 3,309 1, % 1, % Increases in property, plant and equipment 4,728 1, % 1, % Depreciation and amortization % % In Q3 17, power generation gross margin was AR$1,417 million, 164% higher than the same period of 2016, mainly due to the update in the legacy remuneration scheme by the application of SEE Resolution No. 19E/2017. Pursuant to this resolution, as from February 2017 the remuneration is US$-nominated for power capacity and dispatched energy, gradually increased from a minimum remuneration discriminated by technology and scale, followed by an increase to a base remuneration with availability commitment ( DIGO ) in May 2017, and reaching to the full and final remuneration scheme as from November It is worth mentioning that during the entire Q3 17 the legacy capacity was billed under the new scheme of base remuneration (being thermal units monthly subject to DIGO and real availability); while in Q3 16 the remuneration scheme for the legacy capacity was AR$-nominated and under a lower pricing scheme, pursuant to SEE Resolution No. 22/2016. Furthermore, the increase in gross margin is explained by the devaluation in the nominal exchange rate with impact on our new capacity contracts (Energy Plus and SE Resolution No. 220/2007) and our legacy capacity remuneration, as well as the new contracts at CTLL for the units GT04 and GT05 and CTPP 4 coming into force. The increase in gross margin is also explained by the full quarter inclusion of Pichi Picún Leufú Hydroelectric Plant ( HPPL ), CTGEBA and EcoEnergía Co-Generation Plant ( EcoEnergía ), which during Q3 17 contributed sales by 1,776 GWh over the total of 4,108 GWh sold. The joint performance of the assets CTGEBA, HPPL and EcoEnergía was higher compared to the same period of 2016, mainly due to the higher water flow at HPPL (+113 GWh), partially offset by lower dispatch due to a programmed maintenance service during September 2017 at Genelba Plus s turbine (-26 GWh). 4 For further information, please refer to section of this Earnings Release. Pampa Energía Q3 17 Earning Release 16 16

17 In operating terms, Pampa s power generation during Q3 17 increased by 9% compared to Q3 16, mainly due to the full quarter inclusion of former Petrobras Argentina s assets plus its performance improvement mentioned before (+599 GWh), higher generation at CTG (+164 GWh) due to higher availability of natural gas in the region, and the commissioning of the gas turbine GT05 at CTLL (+31 GWh) and at CTPP (+63 GWh). These increases were partially offset by lesser generation at CPB due to lower dispatch (-470 GWh) and lower water flow at HINISA and HIDISA (-97 GWh). Summary of Electricity Generation Assets HINISA HIDISA HPPL 1 CTLL 2 CTG 3 CTP CPB CTPP 4 CTGEBA 1 Eco- Energía 1 Installed Capacity (MW) ,656 New Capacity (MW) Market Share 0.7% 1.1% 0.8% 2.1% 1.0% 0.1% 1.7% 0.3% 2.3% 0.04% 10.1% 9-Month Period Net Generation 9M17 (GWh) ,247 1, , , ,494 Market Share 0.5% 0.3% 0.4% 3.2% 1.4% 0.1% 1.3% 0.1% 3.9% 0.1% 11.2% Sales 9M17 (GWh) ,247 1, , , ,488 Net Generation 9M16 (GWh) ,807 1, , ,662 Variation Net Generation 9M17-9M % -14.5% % +15.6% +18.4% +10.3% -24.3% na % % +50.0% Sales 9M16 (GWh) ,807 1, ,722-1, ,158 Average Price 9M17 (US$ / MWh) Average Price 9M16 (US$ / MWh) na Average Gross Margin 9M17 (US$ / MWh) na Average Gross Margin 9M17 (US$ / MWh) na 3.3 na Third Quarter Hydroelectric Thermal Net Generation Q3 17 (GWh) , , ,724 Market Share 0.3% 0.2% 0.6% 3.3% 1.4% 0.1% 0.8% 0.2% 3.9% 0.1% 10.9% Sales Q3 17 (GWh) , , ,108 Net Generation Q3 16 (GWh) , ,428 Variation Net Generation Q3 17 vs. Q % -41.4% % +2.8% +49.8% +21.2% -64.4% na +49.0% +75.0% +8.6% Sales Q3 16 (GWh) , , ,663 Avg. Price Q3 17 (US$/MWh) Avg. Price Q3 16 (US$/MWh) na Avg. Gross Margin Q3 17 (US$/MWh) na Avg. Gross Margin Q3 16 (US$/MWh) na na 7.6 na na na 12.0 Total Note: Gross margin before amortization and depreciation. FX rate of AR$/US$: 9M ; 9M ; Q ; Q (1) The figures from HPPL, CTGEBA and EcoEnergía accounts from the closing of the acquisition in August (2) The installed capacity of CTLL includes 210 MW from GT04 and GT05. (3) CTG s average gross margin considers results for CTP. (4) CTPP commissioned as from August 29, The increase in gross margin was partially offset by higher labor costs, higher energy purchase costs to cover contracts from devaluation in the nominal exchange rate and higher depreciations due to new units, programmed maintenance services and the Purchase Price Allocation as a result of the acquisition of former Petrobras Argentina s assets. Net operating costs increased by 39% compared to Q3 16, mainly due to higher labor costs and the full quarter inclusion of HPPL, CTGEBA and EcoEnergía power plants. Net financial results had a positive variation of AR$46 million compared to Q3 16, recording a AR$2 million profit in Q3 17, mainly due to higher gains from the holding of financial instruments and the recognition of net interest to the credits held against CAMMESA by the former Petrobras Argentina s generation assets. These effects were partially offset by lower gains from net exchange difference and higher interest losses on financial liabilities and loan agreements with CAMMESA. Adjusted EBITDA increased by 201% over Q3 16 to AR$1,493 million, mainly due to a better remuneration for legacy capacity, Peso devaluation, the full quarter inclusion of former Petrobras Argentina's Pampa Energía Q3 17 Earning Release 17 17

18 generation assets, together with the commissioning of units at CTLL and CTPP, and the recognition of a higher price for assignments of gas, partially offset by higher labor and energy purchase costs. The following table shows a summary of the committed expansion projects, in which CTGEBA s 383 MW project is included: Project MW Equipment Provider Marketing Capacity US$/MWmonth Awarded Price Variable US$/MWh Total US$/MWh Estimated Capex in US$ million 1 Date of Commissioning Thermal Loma de la Lata 15 MAN Res. SEE N 19/17 na na na 18 Q GE US$ PPA for 10 years 23, August 5, 2017 Parque Ind. Pilar 100 Wärtsilä US$ PPA for 10 years 26, August 29, 2017 Ing. White 100 Wärtsilä US$ PPA for 10 years 21, Q Cierre Genelba Plus 383 Siemens US$ PPA for 15 years 20, GT: Q / CC: Q Renewable Pampa Eólico I (Corti) Vestas US$ PPA for 20 years na na Q Total Note: (1) Amounts without VAT. (2) Awarded price does not consider incentive and adjustment factors. 3.2 Analysis of the Electricity Distribution Segment Electricity Distribution Segment, Consolidated (AR$ million) % % Sales revenue 17,576 9, % 6,457 3, % Cost of sales (12,720) (9,351) +36.0% (4,638) (3,405) +36.2% Gross profit 4,856 (234) NA 1,819 5 NA Selling expenses (1,460) (1,101) +32.6% (441) (339) +30.1% Administrative expenses (1,009) (819) +23.2% (379) (324) +17.0% Other operating income % % Other operating expenses (612) (357) +71.4% (299) (82) % Operating income 1,845 (1,953) NA 729 (728) NA Finance income % % Finance costs (1,152) (1,233) -6.6% (380) (449) -15.4% Other financial results 71 (288) NA (13) 23 NA Profit before tax 946 (3,334) NA 400 (1,105) NA Income tax and minimum expected profit tax (256) 1,078 NA (100) 368 NA Net income for the period 690 (2,256) NA 300 (737) NA Attributable to: 9-Month Period 3 rd Quarter Owners of the Company 370 (1,363) NA 159 (419) NA Non-controlling interests 320 (893) NA 141 (318) NA Adjusted EBITDA 1,911 (683) NA 869 (537) NA Increases in property, plant and equipment 2,873 2, % 1, % Depreciation and amortization % % In Q3 17, net sales increased by AR$3,047 million in relation to Q3 16, mainly due to the implementation of the first stage of the 42% tariff increase as from February 2017, as a result of the new tariff scheme from the RTI in addition to last year s injunction that negatively affected Q3 16 performance. Moreover, Edenor s customers increased by 2%. Pampa Energía Q3 17 Earning Release 18 18

19 As of September 30, 2017, the amount generated by the gradual application of the tariff increase amounts to AR$4,197 million approximately, which is recognized by ENRE but in accordance with the reporting standards, is not recognized in Edenor s financial statements. This amount is payable in 48 installments as from February 1, 2018 and will be included in the resulting VAD at that date. The sales increase was partially offset by the non-accrual of FOCEDE, as a consequence of the RTI implementation, registering AR$172 million in Q3 16. Moreover, a lower electricity sales was recorded in Q3 17, which decreased by 3% in GWh terms compared to the same period in 2016, mainly explained by tariff increase and mild winter. Edenor's Sales by Type of Customer 9-Month Period In GWh Part. % Clients In GWh Part. % Clients % GWh % Clients Residential 7,138 43% 2,553,412 7,621 45% 2,489, % +2.6% Commercial 2,656 16% 362,796 2,765 16% 359, % +0.8% Industrial 2,765 17% 6,859 2,770 16% 6, % +0.5% Wheeling System 2,960 18% 708 3,011 18% % -0.7% Others Public Lighting 551 3% % % - Shantytowns and Others 371 2% % % +2.9% Total 16, % 2,924,215 17, % 2,857, % +2.3% Third Quarter Residential 2,464 44% 2,553,412 2,631 46% 2,489, % +2.6% Commercial % 362, % 359, % +0.8% Industrial % 6, % 6, % +0.5% Wheeling System % % % -0.7% Others Variation Public Lighting 197 4% % % - Shantytowns and Others 148 3% % % +2.9% Total 5, % 2,924,215 5, % 2,857, % +2.3% Net operating costs, excluding energy purchases, increased by 7% compared to Q3 16, mainly due to higher salary costs, fees for third-party services, operating taxes and provision for sales credits, caused from a higher billing resulting from the new tariff schemes, partially offset by a lower penalties charge by ENRE because of a change in the valuation criteria. Energy purchases increased by 72% compared to Q3 16, due to the increase in electricity prices as subsidies are being removed gradually, partially offset by a decrease in electricity losses, which posted 18.4% of the demanded electricity in Q3 17 in comparison to 18.9% reached in Q3 16. Operating results increased by AR$1,457 million compared to Q3 16, mainly due to the RTI s new tariff scheme application and lower penalties charge, partially offset by higher operating expenses. During Q3 17, losses on net financial results decreased by AR$48 million to a loss of AR$329 million, mainly due to a higher profit from the holding of financial instruments, partially offset by higher interests and net exchange rate losses as a result of a higher devaluation of the Argentine Peso against the US Dollar, currency in which Edenor s financial liabilities are denominated. Adjusted EBITDA in Q3 17 for our electricity distribution segment posted a gain of AR$869 million, which includes late payment penalties collected from our customers for AR$26 million. In Q3 16 the adjusted EBITDA amounted to a loss of AR$537 million and included AR$27 million of late payment penalties and a reclassification of financial interest on the penalties balance for AR$70 million. Pampa Energía Q3 17 Earning Release 19 19