Transportadora de Gas del Sur S A : Results 1Q 2022

Contacts in Buenos Aires, Argentina:
Investor Relations	Media Relations
Leandro Perez Castaño, Finance and IR Manager.	Mario Yaniskowski
[e-mail]	[e-mail]
Carlos Almagro, Investor Relations Officer
[e-mail]

tgs announces results for the first quarter ended on March 31, 2022 ("1Q2022")(1)

Transportadora de Gas del Sur ("tgs", "the Company", "us", "our", or "we") is the leader in Argentina in the transportation of natural gas, transporting approximately 60% of the gas consumed in the country, through more than 5,700 miles of gas pipelines, with a firm-contracted capacity of 82.4 MMm3/d. We are one of the main natural gas processors. In addition, our infrastructure investments in Vaca Muerta formation place us as one of the main Midstreamers at Vaca Muerta.

Our shares are traded on NYSE (New York Stock Exchange) and BYMA (Bolsas y Mercados Argentinos S.A.).

Our controlling company is Compañía de Inversiones de Energía S.A. ("CIESA"), which owns 51% of the total share capital. CIESA's shareholders are: (i) Pampa Energía S.A. with 50%, (ii) led by the Sielecki family, Grupo Investor Petroquímica S.L. (GIP) and PCT L.L.C. hold the remaining 50%.

For further information, see our websitehttps://www.tgs.com.ar/inversores/servicio-para-inversores?lang=EN

Stock Information BYMA Symbol: TGSU2

NYSE Symbol: TGS (1 ADS = 5 ordinary shares)Shareholding structure as of March 31, 2022 tgs holds 794,495,283 issued shares and 752,761,058 outstanding shares.

Buenos Aires, Argentina, May 9, 2022

During the 1Q2022, total comprehensive income amounted to Ps. 8,198 million, or Ps. 10.89 per share (Ps. 54.45 per ADS), compared to total comprehensive income of Ps. 6,063 million, or Ps. 8.05 per share (Ps. 40.27 per ADS) in the first quarter ended on March 31, 2021 ("1Q2021").

1Q2022	1Q2021
Revenues*	28,596	25,857
Operating profit*	12,262	13,335
Operating profit before depreciation*	15,230	16,062
Total comprehensive income*	8,198	6,063
Earnings per shares in Ps.	10.89	8.05
Earnings per ADS in Ps.	54.45	40.27
* (in million of Argentine Pesos)

Operating profit for 1Q2022 amounted to Ps. 12,262 million, Ps. 1,073 million below the 1Q2021. This variation was mainly due to:

•  Lower revenues from the Natural Gas Transportation segment amounting to Ps. 2,091 million due to the fact that the tariff adjustment of March 2022 was not sufficient to maintain revenues in constant currency.

•  Operating costs and administrative and commercialization expenses, excluding depreciation, increased by Ps. 3,571 million compared to 1Q2021.

•  Depreciation rose by Ps. 242 million.

•  Partially offset by higher revenues from the Production and Commercialization of Natural Gas Liquids (Liquids) segment amounted to Ps. 4,681 million.

Financial results recorded a positive variation of Ps. 1,893 million.

The income tax expense showed a decrease of Ps. 1,295 million.

(1) The financial information presented in this press release is based on interim consolidated financial statements presented in constant Argentine pesos as of March 31, 2022 (Ps.) which is based on the application of the International Financial Reporting Standards (IFRS).

1

1Q2022 highlights and subsequent events

•  On April 5, 2022, the General and Extraordinary Shareholders' Meeting of tgs (the "Meeting") was held, and among other matters, the following were approved:

  - A Ps. 1,225 million increase in the Legal Reserve together with the constitution of a Reserve for Future Capital Expenditures, Acquisition of Treasury Shares and/or Dividends amounting to Ps. 72,885 million.

  - To extend the term detailed in Article 67 of Law No. 26,831 and to maintain for an additional three-year term the 41,734,225 Class B treasury shares, which will be calculated as from November 11, 2022.

•  Within the framework of the investment plan executed by tgs for the development of Vaca Muerta, on April 29, 2022, a Decree No. 822/22 was published in the Official Gazette of the Province of Neuquén, which approved the extension of the natural gas transportation concession granted by Decree No. 379/18 in relation to the Vaca Muerta gas pipeline, while ratifying the complementary agreement signed on March 22, 2022 between tgs and the Province of Neuquén. This agreement includes the construction and operation of a new natural gas pipeline that will have an extension of 32.1 kilometers, running from Los Toldos to El Trapial areas, and will transport up to 17 MMm3/d of natural gas. The work is expected to be completed by June 2023.

•  On April 22, 2022, the Energy Secretariat issued Resolution No. 271/2022 extending until December 31, 2022 the transitory economic assistance of 20% on butane sold under the Plan Hogar.

  Analysis of the results

  Total revenues amounted to Ps. 28,596 million in 1Q2022, a Ps. 2,739 million decrease compared to Ps. 25,857 million in 1Q2021.

  The breakdown of operating costs, administrative and commercialization expenses, excluding depreciation, for 1Q2022 and 1Q2021 is shown in the table below:

Concept	MM of $
Natural gas purchase (RTP)	7,476	56%
Labor costs	1,937	14%
Taxes, fees and contributions	1,904	14%
Repair and maintenance	541	4%
Other fees and third parties services	1,199	9%
Other charges	375	3%
Total	13,432

1Q2022	Variation
% s/ total	MM of $	% s/ total	MM of $
4,673	46%	2,803	60%
1,473	15%	464	32%
1,464	15%	440	30%
778	8%	(237)	(30%)
1,388	14%	(189)	(14%)
315	3%	60	19%
10,091	3,341

1Q2021

%

Operating costs and administrative and selling expenses, excluding depreciation, increased by approximately Ps. 3,341 million in 1Q2022 compared to 1Q2021. This variation is mainly explained by higher: (i) natural gas processing costs (higher prices), (ii) labor costs, and (iii) export taxes. These effects were partially offset by lower third-party fees and services, PPE repair expenses and turnover tax.

Financial results are presented in gross terms considering the effect of change in the currency purchasing power ("Gain on monetary position") in a single separate line. In 1Q2022, financial results experienced a positive variation of Ps. 1,893 million compared to 1Q2021. This variation is mainly due to a lower loss generated by financial assets of Ps. 3,021 million and a lower negative exchange difference of Ps. 1,438 million (as a consequence of the lower liability position in foreign currency during 1Q2022). These effects were partially offset by the lower gain on monetary position results of Ps. 2,272 million and the negative result following the notes repurchase of Ps. 605 million.

Natural Gas Transportation

Operating profit before depreciation of the Natural Gas Transportation segment decreased by Ps. 1,673 million.

Natural Gas Transportation

1Q2022

1Q2021 Variation

Variation in %
Revenues	6,173	8,264	(2,091)	(25%)
Intercompany revenues	181	341	(160)	(47%)
Operating and maintenance costs	(1,902)	(2,243)	341	(15%)
Other administrative and selling expenses	(764)	(886)	122	(14%)
Other operating results	71	(43)	114	n/a
Operating profit before depreciation	3,760	5,433	(1,673)	(31%)
Depreciation of Property, plant and equipment (PPE)	(2,216)	(2,009)	(207)	10%
Operating profit	1,544	3,424	(1,880)	(55%)

(In million of Argentine pesos)

Natural gas transportation revenues accounted for approximately 22% and 32% of total revenues in 1Q2022 and 1Q2021, respectively.

Revenues from this segment derive mainly from firm natural gas transportation contracts, which represented approximately 83% and 79% of the total revenues of this segment in 1Q2022 and 1Q2021, respectively.

Natural Gas Transportation Operational information

This tariff segment, subject to ENARGAS regulation, received its last tariff increase of 60% as of March 1, 2022 after no increments were recorded in the past three years.

The decrease in operating profit before depreciation was mainly due to lower revenues given the tariff adjustment which did not offset the negative variation associated with the inflation restatement effect under IAS 29.

Liquids Production and Commercialization

Liquids Production and Commercialization revenues accounted for approximately 70% and 59% of total revenues in 1Q2022 and 1Q2021, respectively. During 1Q2022, production reached 292,626 tons (5,245 tons higher than 1Q2021).

Production and Commercialization of Liquids

1Q2022 1Q2021 Variation Variation in %

(In million of Argentine pesos)

Revenues	19,974	15,293	4,681	31%
Operating and maintenance costs	(8,811)	(5,903)	(2,908)	49%
Other administrative and selling expenses	(1,304)	(710)	(594)	84%
Other operating results	(5)	344	(349)	(101%)
Operating profit before depreciation	9,854	9,023	831	9%
Depreciation of PPE	(185)	(178)	(7)	4%
Operating profit	9,669	8,845	824	9%

Operating profit before depreciation in this business segment during 1Q2022 was Ps. 831 million above 1Q2021, reaching Ps. 9,854 million (compared to Ps. 9,023 million recorded in 1Q2021). This variation mainly stems from the increase in revenues of Ps. 4,681 million, which were partially offset by higher natural gas processing costs of Ps. 2,803 million (resulting from a higher U.S. dollar-denominated price), a higher export withholding tax charge of Ps. 570 million and the positive effect of the insurance recovery of Ps. 359 million recorded in 1Q2021.

Liquids revenues were Ps. 19,974 million in 1Q2022, up Ps. 4,681 million from 1Q2021. This was mainly due to the increase in international reference prices of Ps. 4,555 million, higher tons shipped of Ps. 2,360 million and the nominal variation of the exchange rate in U.S. dollar-denominated revenues of Ps. 1,743 million.

These effects were partially offset by higher negative impact of the IAS 29 restatement of Ps. 4,842 million.

Total volumes dispatched recorded an increase of 17%, or 45,827 tons, compared to 1Q2021, mainly due to higher quantities of propane exported, and ethane and butane sold in the local market. On the other hand, the tons of propane delivered to the local market decreased as a result of the drop in seasonal demand.

The breakdown of volumes dispatched by market and product and revenues by market is included below:

1Q2022	1Q2021	Variation
(in tons)
Local market
Ethane	94,946	75,435	19,511
Propane	39,896	48,301	(8,405)
Butane	45,477	36,971	8,506
Subtotal	180,319	160,707	19,612
Foreign market
Propane	75,610	50,807	24,803
Butane	30,913	31,801	(888)
Natural gasoline	36,287	33,987	2,300
Subtotal	142,810	116,595	26,215
Total	323,129	277,302	45,827
1Q2022	1Q2021
(in million of Argentine Pesos)
Local market	7,706	7,102
Foreign market	12,268	8,191
Total Revenues	19,974	15,293
Other Services and Telecommunications

This business segment mainly includes services such as midstream and telecommunications, representing approximately 9% of our total revenues in 1Q2022 and 1Q2021.

Other Services and Telecommunications

1Q2022 1Q2021 Variation Variation in %

(In million of Argentine pesos)

Revenues	2,449	2,300	149	6%
Operating and maintenance costs	(564)	(473)	(91)	19%
Other administrative and selling expenses	(268)	(219)	(49)	23%
Other operating results	-	(3)	3	100%
Operating profit before depreciation	1,617	1,605	12	1%
Depreciation of PPE	(567)	(540)	(27)	5%
Operating profit	1,049	1,066	(17)	(2%)

Operating profit before depreciation increased by Ps. 12 million mainly as a result of a Ps. 149 million increase in revenues in 1Q2022, which was partially offset by the increase in the operating costs of Ps. 140 million.

The increase in revenues was mainly due to: (i) higher natural gas transportation and conditioning services at Vaca Muerta area amounting to Ps. 537 million, (ii) the nominal effect of the exchange rate on U.S. dollar-denominated revenues of Ps. 210 million, and (iii) higher natural gas compression services of Ps. 133 million. These effects were partially offset by the impact of IAS 29 restatement of Ps. 739 million.