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: First Quarter (1Q) ended March 31, 2026

Filing Date: May 5, 2026

Currency: Millions of constant Argentine Pesos (Ps.) based on IFRS and IAS 29 restatement.

TGS is Argentina's leading natural gas transporter, moving approximately 60% of the country's consumption through 5,700 miles of pipelines. The company operates three main segments: Natural Gas Transportation, Liquids Production and Commercialization, and Midstream and Telecommunications. As of March 31, 2026, the company had 752,761,058 outstanding shares.

Key Financial Metrics

Note: Negative net debt indicates a net cash position. All debt is denominated in foreign currency.

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased by Ps. 56,637 million (13.2%) year-over-year. This was driven by significant growth in the Liquids Production segment (+Ps. 46,058 million) and Midstream segment (+Ps. 17,679 million), partially offset by a decline in Natural Gas Transportation revenues (-Ps. 7,101 million) due to IAS 29 currency restatement effects.
• Profitability: Operating profit rose by Ps. 62,246 million (33.3%). The increase was fueled by higher segment revenues and a positive swing in "other operating results" (Ps. 9,149 million gain vs. Ps. 18,054 million loss in 1Q2025), largely due to reduced climate event charges and insurance recoveries.
• Cost Structure: Cost of sales and administrative expenses increased by Ps. 21,595 million. The primary driver was higher natural gas purchase costs for liquids production (+Ps. 22,783 million), partially offset by lower repair and maintenance expenses (-Ps. 11,364 million).
• Cash Flow: Operating cash flow decreased slightly by Ps. 2,248 million due to higher tax and interest payments and working capital increases. Investing cash outflows surged by Ps. 390,152 million, primarily due to increased acquisitions of financial assets and Property, Plant, and Equipment (PPE).

Outlook, Commentary, and Risks

• Regulatory Changes: In March 2026, the Secretariat of Energy issued Resolution No. 66/2026, redefining the contractual framework for natural gas transportation to align with the Vaca Muerta production scheme. ENARGAS concluded this reorganization in April 2026 with an "almost neutral impact" on monthly revenues.
• Capacity Expansion: On April 15, 2026, TGS awarded approximately 5 MMm³/d of incremental transportation capacity from the Perito Moreno Gas Pipeline expansion following a public tender that received requests for 32 MMm³/d.
• Shareholder Actions: A shareholders' meeting on April 15, 2026, approved increasing the Legal Reserve by Ps. 23,030 million and the Reserve for Future Investments/Dividends by Ps. 437,568 million.
• Financial Position: The company maintains a strong net cash position of Ps. 234,762 million as of March 31, 2026, up from Ps. 112,253 million at year-end 2025. However, the company notes risks related to foreign exchange rates, interest rates, and potential caps on market prices affecting asset values.
• Forward-Looking Statements: Management cautions that future results may differ materially from expectations due to regulatory changes, market dynamics, and inflation escalation factors.

Investor Verification Checklist

• Currency Restatement Impact: Verify the specific impact of IAS 29 inflation adjustments on reported revenues and costs, as nominal figures differ significantly from constant peso figures.
• Liquids Production Volumes: Confirm the sustainability of the 53% volume increase in liquids production, which was partly driven by a low comparison base due to the March 2025 climate event at the Cerri Complex.
• Regulatory Tariff Review: Monitor the implementation details of Resolution No. 66/2026 and the upcoming five-year tariff review (RQT) process to ensure the "neutral impact" on revenues holds.
• Investing Cash Outflows: Review the composition of the Ps. 605,616 million used in investing activities, specifically the Ps. 470,026 million allocated to financial assets not considered cash equivalents.
• Debt Maturities: Assess the schedule of foreign currency-denominated debt repayments against the company's net cash position and operating cash flow generation.