Pampa Energia (NYSE: PAM) reported a 28% quarter-on-quarter increase in adjusted EBITDA to $415 million for the second quarter of 2026. The growth was driven by record oil production and improved margins in its power generation segment.

Financial Performance

The company’s adjusted EBITDA reached an all-time quarterly high, supported by gas seasonality and stronger spot power margins. Oil and gas adjusted EBITDA surged 74% sequentially to $182 million, more than double the year-ago figure. This segment benefited from the ramp-up at Rincón de Aranda and higher output billing due to gas self-supply to power plants.

Power generation adjusted EBITDA rose 39% year-on-year to $155 million. The improvement stemmed from strong spot margins under a new regulatory framework that reintroduced marginal costs into pricing. However, this was partially offset by the mandatory maturity of Energía Plus contracts and outages at specific assets.

Production and Operations

Total production hit a quarterly record of 107,500 barrels of oil equivalent per day. Crude oil production tripled year-on-year, reaching an average of 22,000 barrels per day at Rincón de Aranda alone. The block contributed one-third of total oil and gas EBITDA, up from just 6% last year.

Gas production increased 10% year-on-year to over 14 million cubic meters per day. Intersegment consumption for self-supply rose significantly to 31% of total sales, compared to 3% last year, as the company prioritized feeding its own power plants under the new market framework.

Strategic Investments

Pampa Energia announced a $2.7 billion investment to build Latin America’s largest urea plant in Bahía Blanca. The project aims to monetize shale gas reserves from Vaca Muerta, with completion targeted for late 2029. The plant will have an annual capacity of 2.1 million tons.

Capital expenditure decreased 21% year-on-year to $279 million, with $165 million allocated to Rincón de Aranda. The company plans to invest an additional $700 million this year to reach a production plateau of 45,000 barrels per day next year.

What the Numbers Show

The shift in gas sales strategy is evident in the balance sheet dynamics. While total gas sales volumes grew, the proportion sold under regulated Plan Gas contracts fell from 80% last year to 56% in Q2. Concurrently, intersegment self-supply jumped to 31%. This structural change indicates a deliberate pivot toward capturing higher spot margins via internal power generation rather than selling at lower regulated prices, despite temporary transportation constraints.

Balance Sheet and Cash Flow

Free cash flow was negative $128 million in Q2, though it improved sequentially due to stronger EBITDA generation and lower capex. Cash and equivalents increased by $604 million quarter-on-quarter to $1.3 billion. Gross debt stood at $2.6 billion, resulting in net debt of $1.3 billion and a net leverage ratio of 1.4 times trailing twelve-month EBITDA.