Transportadora de Gas Del Sur S.A. (NYSE:TGS) Q2 2020 Earnings Conference Call - Final Transcript

Aug 10, 2020 • 10:00 am ET


Transportadora de Gas Del Sur S.A. (NYSE:TGS) Q2 2020 Earnings Conference Call - Final Transcript


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Good morning. My name is Doug, and I'll be your conference operator today. At this time, I'd like to welcome everyone to TGS' Second Quarter 2020 Results Earnings Conference Call. TGS issued its earnings report last Friday. If you did not receive a copy via e-mail, please do not hesitate to contact TGS Investors Relations department.

Before we begin the call today, I would like to remind you that forward-looking statements made during today's conference call do not account for future economic circumstances, industry conditions and company performance and financial results. These statements are subject to a number of risks and uncertainties. All figures included herein were prepared in accordance with the international financial reporting standards and are standard in Constant Argentine pesos as of June 30, 2020, unless otherwise noted.

Joining us today from TGS in Buenos Aires is Alejandro Basso, Chief Financial Officer; Leandro Perez Castano, Finance Manager; and Carlos Almagro, Investor Relations Officer.

And now, I'd like to turn the call over to Mr. Basso. Sir, please begin.

Alejandro Basso

Thank you. Good morning, everyone, and thank you for joining us today on this conference call to discuss the second quarter earnings and highlights for Transportadora de Gas del Sur. To begin, I would like to talk about some relevant corporate events that have occurred since our last quarterly earnings call. First, I would like to make some remarks regarding how COVID-19 has impacted our operations. Since March 20, Argentina has been in different degrees of quarantine depending on how serious the virus has been affecting populations of different provinces.

I would like to remind you that all activities related to the natural gas industry are considered essentially. Under this context, we have been running smoothly our operations respecting all the protocols, which aimed to protect the health of our employees, suppliers and contractors.

On last quarter's conference call, I mentioned our concern regarding potential further deterioration of our financial metrics in the following quarters. As a result of the very low reference international prices of propane, butane and natural gasoline, which fell below $200 per metric ton in March, and more difficulties in collecting our transportation deals from the distribution companies, as they experienced some difficulties in the collection from their residential retailer and industrial clients.

Regarding the liquids reference international prices, they have partially recovered around $250 in the case of the LPG and around $350 in the case of natural gasoline. Such levels are still below the average prices we had in 2019, but they give us a better outlook in the liquid business segment. In relation to the collection of our natural gas distribution clients, it has improved, but our concern remains high, considering that the collections may be eroded due to the general deterioration of their clients' income as a result of significant reduction of the economic activity all over the country.

Another topic to mention is the decision made by the government through this decree number 543 to extend the tariff revision for another