Pampa Energía S.A. (PAM) Q2 2023 Earnings Call Transcript

Pampa Energía S.A. (NYSE:PAM) Q2 2023 Earnings Conference Call August 10, 2023 10:00 AM ET

Company Participants

Margarita Chun - Investor Relations

Lida Wang - Investor Relations and Sustainability Officer

Gustavo Mariani - Executive Vice President and Chief Executive Officer

Horacio Turri - Executive Director of Exploration and Production

Nicolas Mindlin - Chief Financial Officer

Conference Call Participants

Milene Carvalho - JPMorgan

Alejandra Andrade - JPMorgan

Gustavo Faria - Bank of America

Anne Milne - Bank of America

Bruno Montanari - Morgan Stanley

Lucas Caldi - Portfolio Personal

Alejandro Demichelis - Jefferies

Alejandra Aranda - Itau

Jaimin Patel - Bloomberg

Margarita Chun

Good morning, ladies and gentlemen, thank you for waiting. I'm Margarita Chun from IR and we would like to welcome everyone to Pampa Energia's Second Quarter 2023 Results Video Conference. We inform you that this event is being recorded. All participants will be in listen-only mode during the presentation. After the company's remarks there will be a Q&A session. Questions can only be submitted in writing through Zoom. Should any participant need assistance please send us a chat message.

Before proceeding, please read the disclaimer on the second 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 and could cause results to differ materially from those expressed in such forward-looking statements.

Now, I'll turn the video conference over to Lida Wang, Investor Relations and Sustainability Officer of Pampa Energia. Please go ahead.

Lida Wang

Hi. Good morning, everybody. Thank you, Margi. Hello, everyone, and thank you for joining our conference call. I will try to make it short and skip some parts already explained in the earnings release, so we can have plenty of time for Q&A with our CEO, Gustavo Mariani, who is here; Nicolas, who's joining us very soon; Horacio Turri, our Head of E&P is here to answer many questions that you might have in E&P and [indiscernible] our Corporate Finance Director.

So let's start with the quarter's figures and go straight to the adjusted EBITDA, which amounted to $222 million in Q2, 13% less year-on-year marked by soft domestic demand due to the mild winter, lower commodity prices and Peso depreciation affecting spot unregulated businesses, partially offset by the renewable and Barragan's PPA plus higher gas export sales. However, the 8% rise quarter-on-quarter is explained by the winter season and PPAs.

It is worth noting that 87% of the quarter's EBITDA was dollar-linked and the share between Power and E&P is almost even, though oil and gas is leading the pie, thanks to petchem and TGS. CapEx in Q2 was 59% higher year-on-year, mainly because of the PEPE VI wind farm construction plus E&P shale drilling and completion activity, offset by the commissioning of PEPE IV.

Moving on to the power generation as seen on Slide 4, we posted an adjusted EBITDA of $98 million in Q2, similar year-on-year, but down 9% quarter-on-quarter, mainly explained by the impact of Peso depreciation over spot prices, certain thermal outages, and lower power demand, offset by the addition of wind farms and Barragan's new PPA, plus the special prices for legacy CCGTs.

Q2 dispatch rose 17% year-on-year, led by Barragan, new CCGT and the wind farms, offset by less dispatch at [indiscernible] due to the fact that lower national power demand and the program maintenance at Ingeniero.

Take-or-pay capacity payment especially from PPAs explains most of the EBITDA. It is driven by availability and in Q2, we reached 95% below last year's almost 98%, two outages at Guemes and Genelba restored during the quarter, plus the commissioning tests in Barragan CCGT fire and diesel. However, it is way above increased availability of 74%.

Moving on to expansions, we commissioned the last wind turbines at PEPE IV in mid-June, therefore a total green capacity of 81 megawatts contributes to the power grid having invested more than $120 million, this is 5% cheaper than the budget. Regarding the PEPE VI, the project is roughly 17% advance. We are working on the facilities and have started the civil works for the high-voltage substation.

We have already received the cages, while the remaining wind turbine components are being loaded in China and arriving here within two months. The estimated COD for the first phase of 95 megawatts is in next -- Q3 of next year and the second phase of 45 megawatts is next year's Q4.

So, keep in mind that PEPE expansions are also under B2B PPAs. Last month, actually Secretary of Energy launch a new tender to add up to three gigawatts of thermal capacity, prioritizing only locations that demand is considered critical. Well, the submission is due at the end of this month and the scheduled award is in October, we are analyzing to participate here.

On Slide 6, our E&P business posted an adjusted EBITDA of $97 million for the quarter, just 4% down year-on-year. The oil and gas exports most contributed to quarter, offset by the soft retail gas demand because of the mild winter. However, quarter-on-quarter EBITDA was up 58%, mainly driven by gas seasonality. Our total lifting costs grew by 50% year-on-year and 7% quarter-on-quarter, this is disappointing, but increased treatment costs.

Efficiency-wise, however, the productivity from new wells possibly impact the lifting cost per BOE, which grew at a slower pace of 11% year-on-year and 9% down quarter-over-quarter, recording $6.5 per BOE. In Q2, our total production averaged above 67,000 BOE per day, this is 4% higher than last year. Zooming in, crude oil represented 8%, still it reached 17% of the segment's revenue, mostly because of increased oil exports, offset by the drop link with Brent, getting a realized price of $65 per barrel.

This outlook breakdown should change at the end of next year following the agreement with Total to acquire the 45% remaining stake at Rincon de Aranda, a shell black oil block in Vaca Muerta. This marks the beginning of our shale development aiming to keep exploiting the full potential of Vaca Muerta. We want to replicate our success story as a sole owner and operator in El Mangrullo. That block is run as one of the best-producing blocks in Neuquina Basin. In consideration of Rincon de Aranda, we agreed swap our Mario Cebreiro wind farm. This move does not prevent us from developing more renewable energy, which is the case with the recently commissioned PEPE IV and with the current construction undergoing in PEPE VI.

About gas, our sales in Q2 grew by 4% yearly, averaging 10.6 million cubic meters per day, mainly explained by higher volumes exported to Chile. This is even during peak season and increased demand for thermal generation from CAMMESA, offsetting the soft retail demand. The average gas price of the quarter was $4.7 per MMBtu, 7% up year-on-year. This is mainly thanks to the export to Chile.

Let me follow-up on the Q2 production. As peak season starts in Q2, plan gas agreed deliveries prioritize retail, but as you can see on Slide 9, the warmer winter negatively impacted the retail demand. Curtailing production to below the maximum volumes agreed under Plan Gas. The delay in the commissioning of the Nestor Kirchner pipeline also affected the gas output in July until today as we are delivering the 4.8 million cubic meters ramp-up that we agreed with the ground. Picking up the production to more than 15 million cubic meters per day to date.

So we are reaching a new all-time high. Despite the weather, the Q2 production increase was mainly supported by exports as we pick up deliveries to Chile. Even during the winter as you can see in the graph below. You can see in this chart as well that we're under take-or-pay for the upcoming months and this actually ends in -- the clearance ends on April 2024.

On top of this, we could add spot sales. Weather is something we can manage, but operation execution, we can. So as you can see on Slide 10, the new shale wells performance is in line with what we've expected. Note that Sierra Chata's maximum daily production range from 750,000 cubic meters over -- to over 1 million cubic meters. These results confirms Sierra Chata upside potential, one of the most productive blocks in the Vaca Muerta gas window. Pad P2 was drilled and completed during the quarter. We are now completing one pad and drilling an other one.

In El Mangrullo, we drilled and completed Pad 2 and Pad 3 in Q2. Pad 3 still flow outperform our expectations. And Pad 2 is currently under testing right now because it has just started production. But this is all in line with the shale gas well in Vaca Muerta, our prices here. We are also completing one pad and drilling another here in El Mangrullo.

So let's move on to the Petrochemical business that posted $10 million of EBITDA in Q2, almost half year-on-year, driven by the significant drop in international prices and lower exports, offset by higher volumes source of reforming products. However, EBITDA was up 43% quarter-on-quarter, primarily because of better prices and SBR demand, offset by lower styrene and polystyrene sales. Sales volume was 17% up year-on-year, mainly driven by reforming as the plant had maintenance last year, offset by lower exports. In Q2, 41% of the total sales volume was exported.

Well, moving onto the financial position, in Q2 we recorded a free cash flow of $44 million. This is mainly due to the expansionary CapEx in gas and power, higher debt service driven by Peso debt for principal -- the principal gets diluted by the devaluation. Also working capital improved due to better collection days from CAMMESA. By Q1, it was almost 16 days delayed and Q2 improved to 50 days delays, so 10 days better. Now it substantially improved to 36 days. So almost 15 days more improvement.

These variations were offset by seasonality. Additionally, we raised $147 million net from the local markets. In summary, we generated $103 million of net cash flow in the quarter, achieving a cash position of $872 million in the end of the period.

So moving onto the Slide 11, we show our consolidated financial position including our affiliates at ownership, but just let's focus on the restricted group that reflects the bond parameter. We posted a gross debt of $1.7 billion, similar to last quarter. However, the net debt and the leverage ratio substantially decreased due to the divestment of Cebreiro wind farm and Peso debt dilution, because of the Peso depreciation recording $786 million and 1.1 times net debt-to-EBITDA. The average life was also reduced to 3.2 years until 2027, as you can see here, there is no relevant debt maturities that we face.

Well, this concludes our presentation. Now, I will turn the word to Margarita, who will poll for questions. Thank you so much for hearing us.

Question-and-Answer Session

A - Margarita Chun

Thank you, Lida. The floor is now open for questions. [Operator Instructions]. Our first question comes from Milene Carvalho and Alejandra Andrade of JPMorgan. They have in total six questions covering E&P, Power and Financial sector. Let's start with the E&P business. Pampa gas volumes were quite strong, due to the beginning of winter season including volumes exported to Chile and deliveries for thermal generation demand by CAMMESA, what should we expect for the third quarter?

Gustavo Mariani

Hi, good morning everybody. Do you all see me? Hi, good morning everybody. This question gives me the opportunity to make a comment that I wanted to do because to reinforce something that Lida said that today is a historic day for Pampa and we are very proud of it. Although the Nestor Kirchner pipeline has been operational since early last week, ENARSA did not request from the producers the full 11 million cubic meters of natural gas per day that the new pipeline can transport. That is because, the worse still, LNG ship in Bahia Blanca with gas to deliver, so the system needed to empty that ship before being able to initiate from the Neuquina Basin the 11 million cubic meters of natural gas per day.

Today is the first day that ENARSA is nominating those 11 million and out of those 11 million we are contributing 44%, so 4.8 million cubic meters of natural gas per day. So that will make us a new record of production today about 16.5 million or close to 16 million cubic meters of natural gas per day. That as we are seeing online on our system, we are already delivering. So everything is working as it should. We are extremely proud. I take this opportunity to congratulate Horacio and all his team because they have done an outstanding job. We are very proud of this achievement that is extremely significant for Pampa. So having made this comment Horacio, you can complete the question -- the answer, sorry.

Horacio Turri

Hey, good morning to everybody. Thank you, Gustavo for the introduction. Well, as you mentioned, it is true that we've been able to double our production since 2020. We started with 7 million cubic meters a day on the winter peak and we are now reaching close to 16 million, out of which around 15 million goes to the local market and we have authorization for exports to Chile of around 1 million, a little bit less than that, close to 900,000. All of these comes from our developments, both in Sierra Chata and Mangrullo. In both cases we were very surprised with the performance and the productivity of the rock and we were able to strike significant results in both cases.

Margarita Chun

Thank you, Horacio. Our second question is regarding the power generation business. What was responsible for the margin construction, is there any product maintenance scheduled for the second half this year?

Lida Wang

Hi, Milene. Yes, we do. We usually do some maintenance when there is soft peak season usually September-October. So yes, we do. But year-on-year, the production this year greatly surpasses last year, thanks to the combined cycles commissioning and new wind farms. So the maintenance is partially offseting the increase year-on-year.

Gustavo Mariani

Lida and I would add that part of the margin contraction is because of the fact that the legacy capacity remuneration lags or goes below the appreciation of the official exchange rate and inflation. So that's another reason why margins are contracting on part of our power generation business.

Lida Wang

Yes, actually, we say in earnings release, should we not have that differential remuneration for the CCGTs, the thermal power units will have -- well now the thermals are 8% down year-on-year, but I think if we didn't have that special remuneration, it would have been down 30%. So sure, it could have been worse. So the depreciation, it's killing the legacy margin.

Margarita Chun

Thank you, Lida and Gus. We have one more question about power generation. Can you comment on your participation on the tender for new thermal capacity?

Gustavo Mariani

We are studying the -- we're are studying a couple of projects. There is not much information that I can provide right now. It's going to be a -- they have put a cap on the -- on the prices, which you have to be very careful when evaluating the projects and also you have to take into consideration, what's going to be the macroeconomic conditions next year, when you will have to develop the project on 2024 and 2025 for open cycle projects. You have 24 months to deliver. And so we are studying because a lot of implications or a lot of complexities that we need to analyze, we don't have clarity yet. Hopefully, we'll be able to provide more information on the next call. Most probably, although the bids are expecting by the end of this month, I think most probably that they will be delayed.

Margarita Chun

Thank you, Gus. The next question is regarding the financial area. Are you seeing any difficulty to access to the dollars?

Nicolas Mindlin

Perfect. Well, in fact, the situation has been tighter this month, especially regarding the access for paid services. However, every critical good imports that we needed especially for our new wind farms were accessed. So it is true that access to the official FX is being harder and takes more time. It did not affect so far our CapEx plans and any delay has not been critical so far. So we expect to continue this. Hopefully, we don't see any delays in CapEx.

Margarita Chun

Thank you. We have one more question. Just to confirm that the roughly $56 million of new debt in Q2 is what allowed you to have all the dollars for the $93 million of the '23 bond repayment?

Nicolas Mindlin

Yes, that's exactly correct. There is this 60-40 rule in which if you can get dollar finance for the 60%, you can access the official FX for the remaining 40% and that's why we issued only $55.7 million, which is exactly the 60% of the $92.9 million holdouts. The transaction was a two-year local hard dollar bond at 4.99% rate, which is very convenient for us. And with that we gain access to the remaining 40% at the official FX using our Pesos, paid fully without any issues in 2023 holdings.

Margarita Chun

Thank you, Feto. Additionally, they asked it seems that the state of the local capital market is quite healthy. Could you confirm that, the local market -- local capital market?

Nicolas Mindlin

Yes, it is. If you see year-to-date we get total financing of around roughly $450 million using both capital markets and local banks. And we issue different instruments at different moments, dollar-linked bonds at 0% rate for five years and peso rates -- at fixed peso rates below inflation rate. So there is a lot of pesos in the local market that we profit of that situation to finance this year's CapEx. So as long as there is an overhang amount of pesos, I think that we will profit from that situation and it's for the company to profit.

Margarita Chun

Thank you, Feto. Our next question comes from Bank of America, Gustavo Faria and Anne Milne. They have several questions as well. We will start with the E&P business. The export prices of gas to Chile was a big driver for higher gas prices in the quarter. Pampa has approval to export until April next year. However, how do you see the gas exports to Chile in the middle -- do you see the export to Chile a relevant driver for gas prices from 2025 onwards?

Horacio Turri

Yes. Okay. I would say that, definitely, it will be a driver. I think there are three elements to take into account. The first one is that it is very probable that we will be shifting from yearly contracts as we have today to multi-year contracts, given that the government has the certainty that there is enough gas to supply both the local demand and the regional market. So this is something that we should be seen as from next year.

The second issue is that, it is very probable also during the winter, at least in the Central area of Argentina and Chile through AES Andes. We will see the 5 million per day authorization exports being replied as from next year as well. And we have to take into account as well that there is a blend that's already been approved on its way to reverse the flow of the Northwest pipeline that will eventually made it possible to reach the North Chilean market -- the North Chilean electricity market with Argentina gas. So again, we think that Chile is going to be a major player in Argentina's exports in the coming years.

Margarita Chun

Okay. Our next question from Gustavo Faria, thermal power plants tender. How is Pampa's appetite for the thermal power generation tender in October? I think we covered this. [Foreign Language]. Which power plant is the most likely to receive an additional capacity, which CapEx per megawatt do you see for additional power plant capacity?

Gustavo Mariani

Yes. We already covered, but to answer the question, I would say that we have a mild appetite quite different from the voracious appetite or hunger that we had in the land gas tender last year. The conditions -- the surrounding conditions are quite different and the uncertainties of the macroeconomic scenario for Argentina going forward is uncertain. So we have quite a different appetite that the one that we had for example, for Plan Gas auction last year.

Regarding which plant, we are both studying a greenfield and a brownfield, but we are not starting two projects, most likely if we go with just one project. Regarding which CapEx per megawatt of installed capacity, we still don't have the -- would request it from the suppliers prices, we still don't have those. But guessing about $800,000 per install megawatt of open cycle capacity and about $1 million for a combined cycle that I would say would be the prices that were initially working with.

Margarita Chun

Okay. The other question is renewables growth. You recently announced its asset swap with another E&P focus decreasing renewals capacity, what levelized cost of energy or energy prices breakdown for new projects do you see for renewables projects in Argentina for new auctions? What's the main bottleneck for the renewals growth?

Gustavo Mariani

The main bottleneck is transportation capacity. That's why until there is a growth in the grid, it's not easy to increase renewable capacity in the system. The way we circle way around that situation for our PEPE VI expansion is going directly to the 500 kilowatt high voltage grid most of -- all of our other wind farms were connected to 132-kilowatt grid. So for new auction, so for a significant expansion of the renewal power generation, it is required to expand the transportation rate.

Margarita Chun

All right. Let's move on to another analyst. This is from Bruno Montanari from Morgan Stanley. Can you give us more color on the developmental plan for Rincon de Aranda? What will be the timeline for development and potential shale oil -- production coming from the fill? Can you give us an idea of the necessary CapEx for the development of the area?

Horacio Turri

Okay. We already have one well drilled and completed in Rincon de Aranda. We've tested that well. We have a DOC well as well. But to go to your question, we will be starting the development -- not the development or the pilot plan for Rincon de Aranda in the first quarter of 2024. Our plan is to drill two pads out of four wells each and also the surface facilities in order to be able to evacuate the production. That will probably end by the end of 2025 and the total amount of CapEx for this initial pilot plan will be around $200 million.

Now, the second stage or the development stage for Rincon de Aranda will probably take the plateau production of the block to around 20,000 barrels a day, but that will happen couple of years now in advance, since we start the negotiations for additional transportation capacity in order to evacuate the full production of the plant.

Margarita Chun

Okay. This question is quite similar to one that asked, but can you comment on the challenges $10 for the [indiscernible] equipment and other international purchases? I think we covered this.

The next question is from Lucas Caldi from PPI. We have noted deceleration in El Mangrullo production due to low residential demand. Our own Plan Gas contracts under the take or pay have you generated revenues despite the lower production? How are you analyzing natural gas demand risks now that the Nestor Kirchner of pipeline is working and will enable higher gas output?

Horacio Turri

Yes. Well, we don't see a risk in natural gas demand. I would say that as Lida mentioned before, we had a very mild winter. This don't happen every year. So the Plan Gas was structured in order to be able to match the demand and the supply of the local market and this is how we see it. There is a take-or-pay of around 75%, but we foresee in the future that the Plan Gas will be fully called and supplied by the industry. We don't see any major risks there.

And what was the other part of the question again? Generated revenues -- yes, we did generate revenues despite the lower production, because we were able to export additional volumes to Chile apart from our firm contracts, and that's basically what we explained before regarding our increase in total revenues, although we were restricted in local production.

Margarita Chun

Well, the other question from Lucas was about Rincon de Aranda, so we'll skip that. We already answered it. Alejandro Demichelis from Jefferies. He is asking, how do we see domestic and export volumes going forward until next year? I think you little bit...

Horacio Turri

We've already covered that.

Margarita Chun

Yes, glimpse you did that. And he also asked for Rincon de Aranda and you also covered that. Walter Chiarvesio is also asking about Rincon de Aranda, I think we also covered that. He says also, why the average price of energy sold has been declining in the recent quarter versus the previous year? This is the same, the fact that the increases granted in the spot energy, it's discretional. They are not covering depreciation to the peso effects, that's why. However, the differential remuneration that is contributed by the dollar for CCGTs is helping, but it's not helping to cover the depreciation.

The next question comes from Marina Mertens from Latin Securities. She asks, well Rincon de Aranda, which we cover and the timeline of the capital deployment, which we covered. Do you have the estimates of crude, we recover. This one is new. What do you expect in terms of carried adjustments for legacy units and the regulated segments of TGS and Transener? Do you feel the upcoming tariff reviews will take place?

Gustavo Mariani

To our surprise, there has been a significant tariff increase for both for TGS and Transener this year and election year, which is the first time it happens in a decade. So although as national elections approaches, I'm little bit more reluctant to think that there will be significant increases from now on. The truth is that the remuneration, both for power transmission, for electricity transmission for TGS, for natural gas transportation, and for legacy capacity in power generation the tariff prices are significantly lagging in all the variables and the industry, and it's hurting the industry significantly. So, although I don't expect anything significant, there is a chance that we get some adjustment in the next couple of -- before year-end. [Foreign Language].

Margarita Chun

Well the other question from Marina, it's about what's the focus -- what's Pampa focused the most in the medium term? I will say it's still a [indiscernible], but if you want to confirm it again? What's the focus in the medium-term?

Gustavo Mariani

The medium-term as Horacio explained is to become a player on oil production as well. So to diversify our E&P segment that is today almost fully concentrated on natural gas. We are projecting an expansion in oil production. That's why we've done this acquisition of Rincon de Aranda that by the way, if that was delivered what we are expecting, they will deliver, the acquisition of Rincon de Aranda was an exceptional transaction when compared to all previous transactions done in the market in terms of cost per acreage.

So we are extremely happy with this acquisition, although we have to -- we would have preferred to pay it in cash, instead of pay in cash, we had to give one of our wind farms in exchange, which was costly for ourselves. But on the other hand, we have been developing wind farms quite significantly last year and we are in the middle of a very significant project going forward. So we will replace with -- we will more than replace what we have given to total in exchange for Rincon de Aranda. So we are quite happy with this -- this transaction.

Margarita Chun

Well, the next question comes from [indiscernible]. She makes a lot of questions, but I think they are all answered. The only one that I will say, Feto, you can say, we have more projects or whatever, the formula should be local market?

Nicolas Mindlin

We are revising the CapEx numbers for this year to see how much we still need to finance if any. We would probably use a mix of our own cash capacity, which is huge and probably maybe some local debt if there is a very good opportunity. But so far we have, what have been done this year so far that we got a lot of bank debt and local debt. We think we are pretty much covered for the year. So if any new issue has been done in the following months will some more opportunistic about the case to grab an opportunity and rates or more on the opportunistic side on the need side of cash because we already have the funded the CapEx for this year, already.

Margarita Chun

Thank you, Feto. Well the next question comes from [indiscernible]. I think we answered pretty well from Rincon de Aranda. Jaimin Patel from Bloomberg. He also asked for the U.S. dollar access and how the access for dollars it is? Feto, covered that. [Indiscernible] she is asking, according to the press, action cash poding [ph] keeps RG assets on sale, would you be interested in making an offer?

Nicolas Mindlin

We have been invited to participate in the process. We are studying the asset. It's a very interesting asset. There is not much information that we can provide at this point other than we are analyzing the opportunities.

Margarita Chun

Great. Here is -- well Ezequiel Fernandez asked for Rincon de Aranda, as you get finished from balance as for Rincon de Aranda, I think we covered that too. (inaudible) asking for legacy price hike. We covered that too. A question from the audience says, how Pampa prepares for upcoming elections and how do you think the different outcomes can affect the Company's performance?

Gustavo Mariani

The answer to that is, we are not preparing in any special way and that's basically because we feel that we are in a segment of the economy that is in a way. We don't think that the energy policies will differ significantly going forward, depending on the outcome of the elections. On the major issues within, there will be changes on the margins, but nothing significantly. And we have a business on the E&P side, on the power generation side, on the petrochemical that is we feel isolated from the different potential outcomes of the election. Probably more on the financial side, the way that we have been preparing by having a very strong balance sheet with lot of liquidity, with the debt profile very well spread over time. So we feel quite strong to face any outcome of -- any potential outcome of the election or any turmoil that the uncertainty -- political uncertainty might generate.

Margarita Chun

Great. Well, this one I think, a quick color about actually he says -- actually, it's a tricky one, he says,. Alejandra Aranda from Itau, would you be willing to increase oil acreage in the short-term?

Horacio Turri

We just acquired Rincon de Aranda. We have a very significant challenge there, but we are always looking for new opportunities. If the price is right, we eventually you might be willing to consider that.

Margarita Chun

Well, I think the last one, it's about large part of your cash position is in generation vehicles. Could you please explain in which financial instruments are you invested, particularly if part of that is hard dollars, I think he wants to know...

Nicolas Mindlin

As you can see in our balance sheet, we have a very well-diversified portfolio. Our main investors are dollar denominated and what is important to note is recently, this year we've been issuing pesos dept. So our peso position is short. So we expect any speeding devaluation or call impact will in our peso position will be offset by our short-term debt in pesos. That's it.

Margarita Chun

All right. There are no more questions. And it's 10 minutes to 12:00. I don't know if Gustavo, Horacio, Nico, anybody who would like to add something else. If you have any questions that is left and you want to do it, just contact us. We are more than happy to help you. It's been a great quarter and hope to see you soon in November, the fourth quarter conference call. Thank you very much and have a good day.