Raquel Cardasz: Thank you very much, Horacio. Yes, Gustavo.
Gustavo Mariani: Sorry if I could just to add to Horacio is just to recall to all of you that Rincon de Aranda is the area that last year, we acquired the other 50% from our former partner by swapping by exchanging a wind farm of 100 megawatts that we own in exchange for their 50% ownership in the area. Rincon de Aranda is 240 square kilometers or 60,000 acres area. And we knew at that moment that we were doing a very good and cheap transaction, probably the cheapest acquisition of acreage in the Vaca Muerta area. Now with the results of this first well and having the first well among the best three of the area is extremely optimistic. So confirms that we did an excellent transaction and we are very optimistic with the development of this area moving forward.
Horacio Turri: Sorry just a little bit more information about Rincon de Aranda. As Gustavo mentioned, those 60,000 acres account for approximately 220 wells that could be drilled. And we think that in due time, we might be able to achieve a total production ranging from 35,000 to 40,000 barrels a day. So it’s quite a challenge and an opportunity for Pampa in the shale oil segment.
Raquel Cardasz: Thank you very much. Next question comes from Gustavo Faria from Bank of America. The first one says, last week, Brazilian government stated its intentions to import gas of Vaca Muerta. In your view, what is the most feasible time line for this? Do you have any preliminary estimates on how Pampa’s gas production could grow? And what internal CapEx should you perform to increase the gas production?
Horacio Turri: All right. Currently, we know that there have been developing negotiations between the Brazilian and the Argentinian government to make use of this off-peak gas capacity. We are still waiting for the outcome. There are different alternatives in place. One of them is making use of the current Bolivian gas pipeline capacity in order to export gas from Argentina. This necessarily needs the second tranche of the Nestor Kirchner pipeline to be finished as well as the reversion Gustavo mentioned before. Either if we want to go through Bolivia or through the Uruguaiana pipeline connecting Uruguaiana to Porto Alegre. So we are still trying to understand what the final negotiations will end up with, but definitely, this would add off-peak demand of around 20 million to 40 million cubic meters per day.
And if the necessary capacity is built in order to overcome the winter shortage, we eventually might have that additional capacity all year round. But we are just seeing the first steps of the negotiation.
Raquel Cardasz: Thank you very much, Horacio. Next question comes from Bruno Montanari from Morgan Stanley. The first one says, regarding the developers with backup with CAMMESA’s past due receivables and credit impairment other than the impact this has on the working capital pressure. What other financial implications could arise from the current situation based on the company’s interactions with CAMMESA and the government, what is the best alternative to fix the current problem. Given that the mindset of the current administration is to have free market practices across all sectors, should we see a faster pace of tariff hikes to the consumer, which would allow CAMMESA to honor its payments with the power industry.
Gustavo Mariani: Difficult question to answer, Bruno. Regarding credit impairments, I believe, basically what the haircut that we took into account in the first quarter accounts for roughly 40% discount. I think worst case scenario could be in the 50% discount range. So it would be a marginal further haircut that we may need to take. Regarding ongoing working capital pressure, I hope and as I explained before, I hope we have seen the worst and that from now onwards, CAMMESA will begin to pay current and on time. That is crucial to the agreement. And I think that the Secretary of Energy has been doing an excellent job in order to ensure that basically doing what it needed to be done the most that was increasing tariffs and a significant portion of the demand is currently paying the full price of electricity.
Only those, what we call the N2 and N3 that are the lower and middle income of residential users are still subsidized. And those I think it will need to continue to be subsidized and the pace at which those subsidiaries will disappear. I’m not in a condition to say that it’s more related to not it’s more a political and social issue that the government needs to decide on. Make sure if I Let me read the question or see if there’s anything else that I’m missing. [Foreign Language]. It was a long question. So just a shorter question, so I can answer them completely. Well I think I have basically covered.
Raquel Cardasz: Thank you very much, Gus. Second question from Bruno is, Pampa has indicated it wants to pursue investment in its shale oil acreage. How should we think about the time line for CapEx acceleration? And how does the issue with CAMMESA impact the capital allocation through process in the short to medium term?
Horacio Turri: Okay. We don’t see any relationship between the CAMMESA problem and our investments in oil. It’s a completely different market. And we don’t see any relation between those two. Regarding the investment pace, sorry, as we mentioned before, we will probably be drilling and completing two pads that of four wells each, so it’s a total of eight wells, and that will account to approximately $160 million plus the necessary facilities in order to evacuate that initial production.
Raquel Cardasz: Thank you, Horacio. Next question comes from Lilyanna Yang from HSBC. First one says, could you give more detail about the write-off of CAMMESA receivables? And in which circumstances you would be able to reverse such write-off unexpected payment for the remaining balance.
Gustavo Mariani: Sorry, more details about the write-off. The write-off, as I explained before, December and January transactions account for ARS85 billion, that is capital plus interest. Regarding the interest, there is a doubt how those will be accounted for, whether we should do a complete write-off whether they will be paid with bonds or whether they will be paid in cash. The three alternatives and it’s not clear what the proposal is. And just depending on that outcome, the discount could be between 30% and 50%. So our write-off stands right in the middle. It could be a slight decrease or increase depending the final outcome of the negotiation in the case that we eventually decide to accept the proposal if we are being granted other issues that are not related to the discount, but with things that may happen in the future. As this is an ongoing negotiation, I’d rather don’t give much information.
Raquel Cardasz: Thank you, Gus. Next question from Lilyanna says, if we can give an update on the Nestor Kirchner pipeline status and outlook for easing the infrastructure constraint. And if there are any changes in the outlook for the pricing scheme of natural gas?
Gustavo Mariani: Okay. I think also we covered this. But again, Gasoducto Nestor Kirchner increased the evacuation capacity from the Neuquen Basin in 11 million cubic meters of natural gas per day that happened in August of last year. Once the two compression plants that are currently being built are ready, the capacity doubles. So it goes from 11 to 22. The first of this compression plant will be ready in a month or so increasing 6 million, so going from 11 to 17. Once the second compression plant is ready, goes from 17 million to 22 million cubic meters. And the other question is any changes in the outlook of, as you know, there is the plan gas scheme that hasn’t basically said volume and prices, commitment of volume and prices for the industry until 2028. So no, we are not expecting any changes to that.
Raquel Cardasz: Thank you, Gus. Next question comes from Paula La Greca from TPCG. First one says, is there any other Energia SA tariff increase in the upcoming months? The last one was 74% in February.
Gustavo Mariani: Hi, Paula. Yes, you are right. It was a 74% increase in February. I don’t recall when it was the previous adjustment, but I think it was in February of former year. So this 74% lagged significantly. The inflation that was accumulated throughout the former 12 months. So it was short of the expectation of the industry. And since then, we have been running, unfortunately, high inflation every month. So we hope it will come in the next few months. Actually, we hope it will come in the next few weeks. But honestly, I cannot give you any clarity because, as I said previously, there haven’t been any at least from our side. I don’t know of our colleagues, but from ourselves, there hasn’t been any discussion with the authorities.
Raquel Cardasz: Thank you, Gus. The second question from Paula says, would you please give more color on the petrochemical business sales.
Gustavo Mariani: The petrochemical business sales. The Petchem business has two parts. One, what we call the reformer that it’s a business that its drivers are more related to international prices, basically price of crude, vis-a-vis refined products and this international spread of those pricing drives the economics of this part of the business, which in the past few years have been profitable or has been in good levels vis-a-vis former years and at least what we are seeing in the future markets is that this trend will continue. The other part of the business, what we call the credit cost, those are more related to the economic activity, especially because it’s related to across all industries, especially constructions, but many other industries, durables, many other industries are, we are suppliers of many industries.
And so it’s more dependent on the economic activity of the country. We have already seen significant declines of 15%, 20%, 25% vis-a-vis and part of that you’ve seen that on the figures that we published yesterday. And we think that this trend will continue until the rebound of the economy comes, hopefully at some point in the second semester.
Raquel Cardasz: Thank you very much, Gus. Next question comes from Marina Mertens from Latin Securities. First one says, which amount will be considered when calculating the outstanding debt. Will it include accrued interest and FX differences. Is there a possibility of recognizing an additional amount.
