TGS reported strong Q3 2025 results driven by nonregulated businesses and positive financial results despite a slight decline in regulated natural gas transportation EBITDA. Key operational and financial takeaways:
- Major new contract: TGS was awarded the Perito Moreno pipeline expansion (awarded Oct 17). The project entails $560 million of CapEx to add 90,000 HP via three new compressor plants and expansion, with TGS operating/maintaining the pipeline for 15 years and able to commercialize the incremental capacity under a dollar-denominated unregulated tariff. The company filed for RIGI approval to secure tax benefits.
- Total announced expansion investment: In addition to the Perito Moreno $560M, TGS plans ~$220M to expand regulated pipeline capacity (Salliqueló–Greater Buenos Aires) for a combined program of roughly $780 million.
- CapEx deployment schedule and financing: For the Perito Moreno expansion, management expects ~$150M in 2025 (mostly in Q4), ~$450M in 2026, and the remainder (~$27M) in the first five months of 2027. Short-term financing already includes ~$70M in bank loans for import funding; additional financing options and partners (particularly for the liquids/processing portion) are being evaluated. No equity raise is being contemplated at this time.
- Q3 financials (constant ARS as of 30-Sep-2025): Net income ARS 112 billion (vs ARS 68.8B a year earlier). Consolidated EBITDA contribution came roughly 47% from regulated transport and 53% from nonregulated businesses. Liquids EBITDA tripled to ARS 55.2 billion, midstream/other rose to ARS 61.2B, while regulated gas transportation EBITDA declined ~ARS 10.5B due to tariff adjustments lagging inflation and higher opex.
- Liquids strength drivers: Higher exported volumes (61k t in Q3 vs 43k t prior year), higher ethane sales (91k t vs 53k t), higher plant throughput (315k t vs 173k t), and domestic butane price deregulation that allowed sales closer to export parity. These were partly offset by extraordinary flood-related expenses (~ARS 8.9B, expected to be recovered via insurance) and higher feedgas prices.
- Cash and liquidity: Cash position increased 22% q/q to ARS 875B (approx. $638M at official rate). Q3 EBITDA generation ~ARS 219B. CapEx in period ARS 87B; paid interest ARS 29B and income taxes ARS 61B.
- Financials impacted by macro: Q3 saw a positive swing in income from financial assets (higher domestic yields) but a larger FX loss due to float and depreciation after the Central Bank allowed the USD to float. Inflation exposure losses fell.
- Other items: Management estimates insurance recovery for the March 7 flood could exceed $50M (with ~$10M possibly collected in the current year and the remainder thereafter). FID for the Tratayén facility could occur in Q1 of next year. Management is evaluating participation in other pipeline projects (e.g., new pipeline to potential LNG facilities) but has no concrete decision yet.
Investor implications: The Perito Moreno award materially increases regulated-network responsibilities and gives TGS an opportunity to monetize incremental capacity with dollar-denominated tariffs, supporting long-term cash flows but requiring significant near-term CapEx. Strong liquids and midstream performance (driven by Vaca Muerta volumes and price/deregulation tailwinds) diversify revenue sources and helped offset regulated business pressure from inflation vs tariff lag. Watch execution on the expansion CapEx and financing, insurance recovery timing, FX/inflation dynamics, and Q4 seasonal effects on gas production when assessing near-term cash flow and earnings sustainability.
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