Pampa Energía Aims for 20,000 Barrels Daily by 2025 as Rincón Output Surges

Key Highlights from Pampa Energía S.A.'s Q3 2025 Earnings Call

During the recent earnings call, Pampa Energía S.A. (PAM) shared insights into its performance and future outlook, emphasizing strong growth in production, financial stability, and strategic investments.

Management Perspective

CEO Gustavo Mariani highlighted the standout performance at Rincón de Aranda, where the production ramp-up significantly contributed to EBITDA. He noted that oil now makes up 34% of E&P EBITDA and 18% of total E&P. Mariani also mentioned that winter demand pushed the company to a new all-time high in production, delivering almost 18 million cubic meters of gas per day without any disruptions.

He expressed confidence in the company's fundamentals, referencing the recent share buyback of 1.5% of capital at $59 per ADR, with the stock now trading near $90.

CFO Adolfo Zuberbuhler reported that adjusted EBITDA amounted to $322 million, a 16% year-on-year increase. He emphasized the 183% year-on-year surge in CapEx to $332 million, primarily focused on Rincón de Aranda.

Zuberbuhler detailed that Oil and Gas adjusted EBITDA was $171 million in Q3, representing a 40% year-on-year rise, driven by Rincón de Aranda, increased exports, and higher industrial demand.

The company outlined a target to exit 2025 producing 20,000 barrels of oil equivalent per day from Rincón de Aranda, with plans to reach 28,000 barrels per day in H2 2026 and 45,000 barrels per day by 2027 as new processing and pipeline capacity comes online.

Outlook for the Future

Zuberbuhler stated that the best expectation for the fourth quarter of 2025 is between 18,000 and 19,000 barrels per day, with the main driver being Rincón de Aranda's continued ramp-up.

Lifting cost per barrel is expected to decrease further as output grows, with oil lifting costs projected to fall from $10 to around $9.1-$9.2 per barrel, and overall lifting cost to around $6.2 per barrel equivalent in 2026.

In the Power Generation segment, Zuberbuhler said that the EBITDA of the segment will improve by at least 15% next year due to new regulatory frameworks. However, he cautioned that outcomes would depend on competitive dynamics in the B2B market and further regulatory details.

CapEx for 2026 is forecasted to be "around $1 billion to $1.1 billion," with financing supported by a strong cash position and stable debt profile.

Financial Results

Adjusted EBITDA reached $322 million for the quarter, up 16% year-on-year, mainly attributed to Rincón de Aranda, shale oil growth, and higher B2B sales. Oil and Gas adjusted EBITDA was $171 million, reflecting a 40% increase year-on-year.

CapEx surged 183% year-on-year to $332 million, with $174 million invested in Rincón de Aranda.

Total production averaged nearly 100,000 barrels of oil equivalent per day, a 14% increase year-on-year, and rose 18% quarter-on-quarter.

Crude oil prices averaged $61 per barrel, down 15% year-on-year, partially mitigated by hedging.

Free cash flow at Rincón de Aranda was reported at $6 million in Q3, with cash and equivalents at $881 million at quarter-end. Net debt stood at $874 million, corresponding to a 1.3x net leverage ratio.

The company extended its average debt maturity to 5.6 years and maintained a strong cash position of approximately $920 million post-quarter.

Q&A Session

Guidoosolaria, Italy: Asked about future oil production after the end of El Toro's contribution. Zuberbuhler: "Our best expectation for the fourth quarter of 2025 is between 18,000 and 19,000 barrels per day."

Guo: Inquired about lifting cost evolution. Zuberbuhler: "We will see a reduction in our lifting cost for oil from $10 to around $9.1, $9.2 per barrel, and that will drive down our overall lifting cost to around $6.2 per barrel equivalent."

Guo: Asked about gas market outlook for summer. Zuberbuhler explained that with take-or-pay clauses, contracted volumes should match real demand, and associated gas will mainly impact the spot market, where Pampa is not active.

Alejandro Demichelis, Jefferies: Questioned EBITDA improvement in Power Generation. Zuberbuhler: "We basically expect that the EBITDA of the segment will improve by at least 15% next year."

George Gast, A Securities: Asked about free cash flow and D&C cost reductions. Zuberbuhler reported a 6-7% reduction in well costs in 2025 and expects further 5% reductions in 2026.

Luis, Morgan Stanley: Asked about Rincón de Aranda drilling pace and October production. Zuberbuhler: "Production during the month of October was around -- more than 16,000 barrels."

Sentiment Analysis

Analysts focused on production guidance, cost optimization, and regulatory impacts, with a constructive but probing tone, especially regarding lifting costs and CapEx sustainability.

Management maintained a confident tone in both prepared remarks and Q&A, providing precise figures and forward-looking statements, frequently emphasizing ongoing improvements and prudent financial management. Zuberbuhler often referenced, "we are very comfortable and very prudent," and "we have a very good debt profile."

Compared to the previous quarter, management's tone showed increased confidence, especially as Rincón de Aranda ramp-up exceeded prior targets, and regulatory changes in power were seen as a tailwind.

Quarter-over-Quarter Comparison

Guidance for oil production was raised, with management now expecting 18,000-19,000 barrels per day in Q4 2025, compared to prior expectations of 15,000-20,000 barrels per day by year-end.

Lifting cost outlook improved, with further reductions anticipated.

CapEx plans remain elevated but stable, mirroring the prior quarter's guidance, but management now points to a more balanced free cash flow outlook for 2026 as oil production scales.

Management sentiment shifted to more assertive optimism, and the analysts' focus turned more toward execution of production ramp-up, regulatory monetization, and capital allocation.

Risks and Concerns

Management cited ongoing regulatory uncertainty in power generation, with several details yet to be published by the Secretary of Energy, which could affect the timing and magnitude of B2B contract migration.

Exposure to macroeconomic volatility in Argentina remains a factor, as does dependency on export demand, particularly in Chile.

Deferred income tax was flagged as a variable risk, fluctuating with the gap between devaluation and inflation, making predictability difficult.

Despite high CapEx and net debt, management stressed a "very comfortable financial position" and ongoing cost optimization.

Final Takeaway

Pampa Energía reinforced its commitment to a rapid production ramp-up at Rincón de Aranda, targeting 20,000 barrels per day by the end of 2025 and 45,000 barrels per day by 2027, while maintaining prudent leverage and a robust cash position. Management anticipates further cost reductions, EBITDA growth in power generation, and continued operational efficiency gains, positioning the company to capitalize on evolving regulatory frameworks and market opportunities in both oil and gas and power segments.