Transportadora de Gas del Sur S.A. (TGSU2) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 reached ARS 85.7 billion, up from ARS 45 billion in Q2 2023, driven by higher natural gas transportation EBITDA.

• Total revenues increased to ARS 264.3 billion in Q2 2024, a rise of ARS 53.6 billion year-over-year.

• Operating profit for Q2 2024 was ARS 126.6 billion, ARS 70.5 billion higher than Q2 2023, mainly due to tariff adjustments and higher segment revenues.

• Major bond refinancing completed: $490 million seven-year bond issued at 8.875% (8.5% in some reports) to refinance and cancel the $470 million 2025 bond.

• Announced a $700 million natural gas transportation expansion proposal, targeting operational status by winter 2026.

Financial highlights

• Natural gas transportation EBITDA surged to ARS 84.6 billion in Q2 2024, up from ARS 19 billion, due to a 675% tariff increase.

• EBITDA from the liquids business decreased 6% to ARS 37.7 billion, mainly from lower ethane prices and volumes.

• Midstream and other services EBITDA rose 27% to ARS 29.7 billion, supported by higher export and conditioning volumes.

• Cash position increased by ARS 4 billion to ARS 572 billion ($629 million at official rate).

• CapEx for the quarter was ARS 50.8 billion; working capital rose by ARS 24.4 billion.

Outlook and guidance

• ENARGAS granted a 675% tariff increase effective April 3, 2024, with a further 4% adjustment from August 2, 2024.

• Five-year tariff review process underway, with public hearing expected January and new tariffs by Q1 2025.

• CapEx deployment for the $700 million expansion could start in Q1 2025, pending government approval.

• Liquid volumes in Q3 2024 expected to be slightly lower due to major maintenance and weather factors.

• License extension process is underway, with a technical and legal report supporting compliance and a potential decree within 120 days of recommendation.