Transportadora De Gas Sa Ord B (NYSE:TGS) detailed a mix of financing and operating updates during its fourth-quarter 2025 earnings call, highlighting a major bond issuance tied to pipeline expansion projects while discussing segment-level performance shifts that drove lower year-over-year net income.
Financing and project updates
Chief Financial Officer Alejandro Basso said the company successfully issued a new $500 million bond in November with a 10-year maturity and an 8% yield. He noted that demand was strong and the transaction was oversubscribed, with the total order book reaching $1.3 billion.
On the commercial side, management said it launched open seasons on February 9 to contract incremental capacity on a firm basis. Basso said bids for the “repaid” (prepaid) capacity—described later in Q&A as 40% of total capacity—are expected on March 16. Bids for the remaining capacity will be received after ENARSA completes the reallocation of 21 million cubic meters per day currently assigned to CAMMESA.
In Q&A, management said construction progress on the Perito Moreno expansion was “as expected.” Basso outlined expected CapEx deployment of around $100 million in 2025 (mainly advances), more than $500 million in 2026, and the remainder in 2027. He added the company expects to place three new compressor stations into service by May 2027.
Fourth-quarter net income down year over year
For the fourth quarter of 2025, TGS reported total net income of ARS 124 billion, compared to ARS 170.5 billion in the fourth quarter of 2024 (figures in constant Argentine pesos as of Dec. 31, 2025, under IFRS hyperinflation accounting).
Basso attributed the decline primarily to:
- The absence of a ARS 52.1 billion reversal of a property, plant, and equipment impairment provision recorded in the fourth quarter of 2024;
- A negative variation in financial results of ARS 17.9 billion;
- A decline in liquids EBITDA of ARS 18.1 billion.
Those headwinds were partially offset by higher EBITDA from the midstream business (up ARS 16.2 billion) and a slight increase in natural gas transportation EBITDA (up ARS 2.7 billion), according to management.
Segment performance: transportation steady, liquids weaker, midstream stronger
TGS said fourth-quarter 2025 EBITDA for its natural gas transportation business totaled ARS 109.8 billion, slightly above ARS 107.1 billion in the prior-year quarter. Basso said revenue increased due to tariff adjustments of ARS 31.9 billion, but these were not enough to offset an inflation loss effect of ARS 40.9 billion. He also cited higher transportation services (mainly interruptible transportation) and lower operating expenses as supporting the modest EBITDA increase.
EBITDA for the liquids segment decreased to ARS 83.9 billion from ARS 102 billion a year earlier. The CFO said the decline was mainly driven by lower export prices (down between 17% and 33%), reducing EBITDA by ARS 31.1 billion. Higher operating costs and insurance-reimbursable expenses linked to a climate event in March 2025 reduced EBITDA by ARS 12.8 billion and ARS 4.9 billion, respectively.
Management said those pressures were partially offset by:
- A positive monetary effect of ARS 13.7 billion, as the exchange rate increased faster than inflation (43.5% versus 31.5%);
- Improved domestic butane pricing after deregulation under Programa VAR starting January 25, enabling export-parity pricing and adding ARS 9.9 billion in revenue;
- Higher liquids sales volumes, rising 4.4% year over year from 338,000 metric tons to 353,000, contributing ARS 7 billion of incremental EBITDA.
Basso added that the average natural gas price—the liquids segment’s main variable cost—was stable at $1.6 per million BTU year over year.
Midstream and other services EBITDA rose 36% to ARS 60.7 billion from ARS 44.5 billion. Management attributed the increase primarily to higher sales tied to incremental natural gas volumes transported and conditioned in Vaca Muerta. Transported volume increased from an average of 28 million cubic meters per day in the fourth quarter of 2024 to 33 million in the fourth quarter of 2025, while conditioning volume increased from an average of 19 million to 27 million cubic meters per day. The company also reported a ARS 5 billion positive monetary effect, partially offset by ARS 8.1 billion in higher operating expenses.
Financial results and liquidity
TGS reported a negative variation in financial results of ARS 17.9 billion in the quarter. Basso said the key drivers included ARS 12.3 billion of higher interest costs, mainly due to higher net debt following the November bond issuance, and an ARS 8.1 billion decrease in income from financial assets due to lower domestic investment yields. Inflation exposure loss increased by ARS 2.1 billion.
These negatives were partly offset by the absence of an import tax charge that had been recorded in the fourth quarter of 2024. Management said the tax was eliminated at the end of 2024, and therefore no charge was incurred in the fourth quarter of 2025. The prior-year quarter tax rates were cited as 7.5% for imports of food and 25% for imports of services.
On cash flow, Basso said the company’s cash position in real terms increased by ARS 864 billion during the quarter to ARS 1,808 billion, equivalent to approximately $1.25 billion at the official exchange rate, largely due to the $500 million bond issuance. Fourth-quarter EBITDA totaled nearly ARS 259 billion, with 57% generated by non-regulated business activities, which management said underscored the increased relevance of non-regulated operations.
CapEx was almost ARS 96 billion, working capital rose by ARS 76 billion, and the company paid ARS 5.7 billion in interest and ARS 61.6 billion in income taxes, while obtaining ARS 150.3 billion in short-term loans. Management also noted real returns from financial investments declined by ARS 11.8 billion, mainly because the exchange rate rose less than inflation during the quarter.
Q&A: NGL project timing, pricing outlook, and dividends
During Q&A, management said it was negotiating terms with gas producers for its NGL project and expected to reach final investment decision (FID) before June, “maybe May.” Asked about competitive dynamics, Basso characterized competition as a risk but said the company was working with YPF and other gas producers.
On tariff evolution in the transportation business, Basso said adjustments were “moving smoothly” and that the company had obtained the inflation-based adjustments it was due, calculated monthly with a blend of wholesale price index and CPI. He also said dollar-reported results can fluctuate depending on whether the peso appreciation exceeds inflation.
On liquids pricing into 2026, Basso acknowledged recent international NGL price weakness but said the company was still seeing “a very good margin” and expected pricing to be similar to the prior year, while noting geopolitical conflicts could potentially have a positive impact—particularly for natural gasoline, which he said is more closely related to Brent pricing.
When asked about dividends in 2026, Basso said he did not see potential dividend payments as the company moves forward with the NGL project, while noting the decision ultimately depends on shareholders.
Management also addressed insurance reimbursements tied to the March 2025 climate event, stating it had already collected advance payments of almost $10 million and was expecting a final audit from the insurance adjuster in the current month, with potential collection timing around June or July.
About Transportadora De Gas Sa Ord B (NYSE:TGS)
Transportadora de Gas del Sur SA (NYSE:TGS) is an Argentina‐based midstream energy company principally engaged in the transportation, storage and processing of natural gas. Established in 1992 following the privatization of the state‐owned gas utility, TGS operates one of the country’s largest pipeline networks, carrying gas from production basins in the Neuquén and Golfo San Jorge regions to major consumption markets in Buenos Aires and beyond. The company’s infrastructure supports both domestic supply and export volumes bound for neighboring countries.
In addition to its core pipeline business, TGS maintains a significant gas processing division that extracts natural gas liquids (NGL) and produces liquefied petroleum gas (LPG) and other by‐products.
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