TGS

Business Context and Reporting Period

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

Filing Type: Form 6-K (Report of Foreign Issuer)

Reporting Period: Second Quarter ended June 30, 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.) in accordance with IFRS.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased by Ps. 71,375 million (15.4%) year-over-year, driven primarily by the Liquids Production and Commercialization segment.
• Profitability Surge: Operating profit rose by Ps. 52,661 million, and comprehensive income more than doubled to Ps. 133,145 million.
• Segment Performance:
  • Liquids Production: Revenues jumped Ps. 78,143 million due to higher sales volumes (+56%), improved gas quality, and favorable international prices. Operating profit increased by Ps. 48,144 million.
  • Natural Gas Transportation: Revenues decreased Ps. 7,138 million due to IAS 29 restatement impacts, though operating profit still grew Ps. 11,869 million.
  • Midstream & Telecommunications: Operating profit declined Ps. 7,352 million due to higher taxes and depreciation.
• Financial Results: Improved by Ps. 60,191 million, moving from a loss of Ps. 79,313 million in 2Q2025 to a loss of Ps. 19,122 million in 2Q2026, largely due to higher gains on financial assets.
• Debt Position: Net debt increased significantly to Ps. 497,604 million from Ps. 120,098 million at year-end 2025, reflecting new borrowings and investment activities.

Guidance, Outlook, and Strategic Developments

• Integrated NGLs Project: Reached Final Investment Decision (FID) with an estimated investment of US$ 3.0 billion. Expected to generate US$ 1.2 billion in annual exports, with operations commencing in March 2030.
• Regulatory Approval: Adherence to the Incentive Regime for Large Investments (RIGI) was approved for the expansion of the Perito Francisco Pascasio Moreno Gas Pipeline, providing regulatory and tax predictability.
• Credit Ratings:
  • S&P Global Ratings upgraded long-term local and foreign currency debt ratings to "B" from "B-".
  • Moody's upgraded notes rating to "B1" from "B2".
• Capital Allocation: Investing cash outflows increased to Ps. 500,732 million due to higher placements in financial assets and increased CapEx. Financing cash flow turned positive due to the absence of dividend payments (which totaled Ps. 270,657 million in 2Q2025) and new loan incurrences.
• Risks: Forward-looking statements highlight risks related to foreign exchange rates, interest rates, inflation, regulatory changes, and potential caps on market prices.

Investor Verification Checklist

• Currency Impact: Verify the specific impact of IAS 29 restatements on reported revenues and the distinction between nominal and constant peso figures.
• Debt Maturity: Review the maturity profile of the US$ denominated debt to assess refinancing risks given the increased net debt position.
• Project Execution: Monitor the timeline and capital expenditure schedule for the US$ 3.0 billion Integrated NGLs Project.
• Dividend Policy: Confirm the rationale for the suspension of dividend payments in 2Q2026 and future payout expectations.
• Operational Volumes: Validate the sustained increase in liquids production volumes (+56%) and the quality improvements at the Cerri Complex.