TGS

Business Context and Reporting Period

Company: Transportadora de Gas del Sur S.A. (TGS)

Reporting Period: Fourth Quarter (4Q) ended December 31, 2025

Filing Date: February 27, 2026

Business Overview: TGS is Argentina's leading natural gas transporter, moving approximately 60% of the country's gas consumption via 5,700 miles of pipelines. The company also operates as a major natural gas processor and midstream provider in the Vaca Muerta formation. Financial results are presented in millions of constant Argentine pesos (Ps.) under IFRS.

Key Financial Metrics

Note: Net financial debt is presented as a negative position indicating a net cash position relative to debt obligations in the source text context, though total financial debt increased to Ps. 1,705,606 million.

Material Changes vs. Prior Period

• Profit Decline: Operating profit decreased by Ps. 53,658 million year-over-year. This was primarily driven by the absence of a Ps. 52,127 million reversal of Property, Plant, and Equipment (PPE) impairment recorded in 4Q2024.
• Revenue Growth: Total revenues increased by Ps. 15,079 million (3.3%), driven by the Natural Gas Transportation and Other Services segments, partially offset by lower revenues in the Liquids segment.
• Cost Increases: Cost of sales and administrative expenses rose by Ps. 12,847 million due to higher depreciation (Ps. 6,941 million), insurance premiums (Ps. 5,465 million), and third-party services (Ps. 4,748 million).
• Financial Results: Shifted from a positive Ps. 7,788 million in 4Q2024 to a negative Ps. 10,084 million in 4Q2025, attributed to higher interest expenses and lower returns on financial assets.
• Segment Performance:
  • Natural Gas Transportation: Operating profit fell significantly due to the non-recurring impairment reversal in the prior year, despite revenue growth from tariff adjustments.
  • Liquids: Operating profit decreased by Ps. 14,342 million due to lower export prices, accounting restatements (IAS 29), and climate-related event charges.
  • Midstream: Operating profit increased by Ps. 11,296 million, driven by higher volumes and USD-denominated revenue effects.

Guidance, Outlook, and Risks

• Capital Markets Activity: In November 2025, TGS successfully issued US$500 million in 10-year bonds (2035 Notes) at a 7.75% coupon, pricing at an 8% yield. The offering was oversubscribed with US$1.3 billion in demand.
• Liquidity: Cash flow from financing activities surged to Ps. 855,835 million in 4Q2025, primarily due to the bond issuance and new bank borrowings of Ps. 150,328 million.
• Investing Activities: Cash used in investing activities increased to Ps. 227,440 million, reflecting higher investments not classified as cash.
• Risks and Contingencies:
  • Climate Events: The Liquids segment faced charges related to a climate-related event.
  • Regulatory and Accounting: Significant impacts from IAS 29 (inflation accounting) restatements and potential caps on market prices.
  • Forward-Looking Statements: The filing includes standard disclaimers regarding risks related to future financial position, regulatory changes, foreign exchange rates, and interest rates.

Key Facts for Investor Verification

• Impairment Reversal Impact: Verify the sustainability of operating margins excluding the one-time Ps. 52,127 million impairment reversal recorded in 4Q2024.
• Debt Structure: Confirm the maturity profile of the new US$500 million 2035 Notes and the total foreign currency-denominated debt exposure (Ps. 1.7 trillion).
• Liquids Segment Volatility: Assess the exposure to export price fluctuations and climate-related operational disruptions in the Liquids segment.
• IAS 29 Restatements: Review the magnitude of accounting restatements due to inflation (IAS 29) which negatively impacted reported revenues in both Transportation and Liquids segments.
• Cash Flow Divergence: Analyze the significant drop in operating cash flow (down ~50% YoY) despite revenue growth and the heavy reliance on financing activities for liquidity.