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Pampa Energía S.A. (PAM) Q1 2019 Earnings Call Transcript

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Pampa Energía S.A. (NYSE: PAM)
Q1 2019 Earnings Call
May 14, 2019, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen and thank you for waiting. At this time, we would like to welcome everyone to Pampa Energía's first quarter 2019 results conference call. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during both companies' presentation. After the companies' remarks are completed, there will be a question and answer session. At that time, further instructions will be given. Should any participant need assistance during this call, please press *0 to reach the operator.

Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Pampa Energía's management and on information currently available to both companies. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future.

Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Pampa Energía and could cause results to differ materially from those expressed in such forward-looking statements.

Now, I will turn the conference over to Lida Wang, Investor Relations Officer of Pampa Energía. Miss Lida, you may begin your conference.

Lida Wang -- Investor Relations Officer 

Thank you very much, Gary. Good morning, everyone. Thank you for joining our call. I will briefly go through every business segment reviewing the quarter's key figures and the latest events since our last call in March. Our CEO, Mr. Gustavo Mariani, and our CFO, Mr. Gabriel Cohen, are joining us for the Q&A session.

Let me start by reminding you that our financial statements follow the International Accounting Standards, No. 29, meaning all figures reported are adjusted by TPI inflation. What does it mean? Basically, all figures in the P&L are stated as of March 2019. So, Q1 20109 results consider an average inflation of 3.8% in the quarter, while Q1 2018 results have a 58% adjustment.

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This also happened similarly to the cash flow statement. But there, all the non-monetary items coming from the balance sheet are adjusted according to the day of record, for example, property, plants, and equipment. Therefore, that affects the DNA. Balance sheet monetary items, cash, credit, and debt are stocks and therefore, there is no need for inflation adjustment. But comparative figures as of December 2018 cannot be restated as of March 2019, adjusting them by 11%.

So, as you can see on slide four, moving to the quarter figures in constant pesos as of March 2019, the adjusted EBITDA in the first quarter in 2019 recorded 8 billion pesos, 34% less compared to the EBITDA of 12.2 billion pesos recorded in the same period of 2018, namely explained by electricity distribution, EMP, and to a lower extent to petrochemicals and [inaudible] underperformance partially offset by our power generation business and our affiliate TGS's contribution.

Anyway, this adjustment by inflation that I just gave to you is very brief. If you have more questions, please know that you can always reach out to us any time. For convenience purposes only, however, today's results that we are going to discuss are translated into dollars from nominal peso currency, which are reported in our earnings release. So, let me switch to dollars.

On slide five, we want to make a quick stop by reviewing the quarter's financial highlights. The revenues fell year on year by 25%, mainly because of 98% peso average to depreciation over our regulated businesses and 50% lower gas prices offset by the commissioning of Mario Cebreiro Wind Farm.

Quarter on quarter, revenues improved by 4%, mainly because our electricity-regulated businesses got tariff increases on account of cost inflation being granted at 32% plus retroactive charges and trends in an average of 25% in addition to a higher bioregulation from better energy dispatch and gas pass through at power generation thanks to the fuel cell procurement we were allowed to do since November of last year.

EBITDA also rebounded quarter on quarter by 17%, mainly explained by the tariffs that increased at the highest rate that you're operating costs and peso appreciation. Higher contribution from natural gas liquid processing in TGF plus in power generation a higher variable margin for an operation and payments and fuel cell procurement. Also, it is worth mentioning that since Q1 2018, EBITDA margin was falling from 35% to the lowest point in Q4 2018 of 23%, rebounding to 26% in the first quarter of 2019.

Oil and gas share in the EBITDA shrunk to almost one-third of Pampa's consolidated EBITDA, while electricity, led by power generation, takes the other two-thirds. Also, 70% of Pampa's EBITDA is [inaudible], mainly from gas and power, which contributed to deliver $116 million EBITDA.

Moreover, in the first quarter of this year, we increased our capex disbursement 38% compared to the same figures last year, mainly explained by payments in catch-up investment plan and our public generation expansion we're undergoing with projects to combine cycle. If we compare it to the last quarter, capex dropped 39%, mainly driven by the fact that we are finishing our expansion in the wind farm and we released a capex plan across all our businesses, including [inaudible].

Now, moving to power generation segment, during the first quarter of 2019, we posed an adjusted EBITDA of $104 million, similar to Q1 2018, maybe given by the next margin over fuel recognition in the variable production costs in addition to the commissioning of Mario Cebreiro Wind Farm with a PPA under [inaudible] program. These effects were partially offset by lower dispatch rate, especially at our thermal power plant and a reduction in negative [inaudible] at the resolution point expected from March 2019.

Quarter on quarter, we generated 20% more, therefore recording higher net variable margin. Although we recorded an outstanding 95.5% availability at our power unit and especially 94% at our thermal unit, generation was 9% lower year on year, mainly due to the lower dispatch of Guemes and Piedra Buena thermal power plants because they have higher CVP from the partial recognition of Bolivia-imported gas, therefore placing them behind the dispatch priority.

In addition to lower [inaudible] running the system because of a lesser generation at Loma de la Lata, Piedra Buena, and [inaudible] thermal power plant, plus, a lower water level at our dams in Mendoza, mainly affecting the power plants. These variations were partially offset by the commissioning of Mario Cebreiro Wind Farm, which ranks senior in the dispatch priority because its variable cost is close to zero and a higher availability at Ingeniero White thermal power plant.

Quarter on quarter, power generation increased because electricity ran in the green and recovered 6%, plus also Q4 2018 was the lowest consumption recording in a quarter since 2014. The availability rate in the first quarter of 2019 was 95.5%, as we mentioned before. It would increase to full capacity, slightly lower than the 97.3% availability achieved in the same quarter of Q4 last year, mainly because the strategic commercial altitudes that we are doing at thermo power plants we choose to do offset higher availability in Ingeniero White.

Moving to news in power generation and a quick update of our expansion projects, on May 10th, CAMMESA granted its commercial commissioning of Number two and number three wind farms, 53-megawatt in total capacity and 14 based off wind turbines, as you can see on slide seven and then on slide eight. Both wind farms are located nearby Mario Cebreiro Wind Farm and destined to meet the demand of larger electricity consumption users through private PTA under mass error framework.

The wind farms are fully sold out at a weighted average price of $69.00 per hour and the PPA maturities range between one and ten years, with an average life of five years. All can be low at maturity.

The [inaudible] number two and number three, as we call them, demand an upfront investment of approximately $130 million, 5% below the budget, and the COD was the same day as we committed, something that makes us very proud. With these two additions, Pampa [inaudible] in total to 106 megawatts of wind energy, making a total of 14 power plants and 4 gigawatts of capacity across the country, placing as a leading company in renewables and the larger independent power producer in Argentina.

Regarding expansions we have in pipeline, we are currently in the midst of the closing to TCGT of 383 MW at Genelba, as you can see in the picture on slide nine. By the end of April, the first fire of the new gas turbine took place and a few days ago, the gas turbine was successful connected to the grid. Therefore, it reached 180 MW in full capacity, adding the 20 in [inaudible]. To the original gas turbine site in Genelba, we are expecting to start operations for 200 MW of capacity by the next few days, but we'll be building up to capacity until the combined cycle begins operations.

Additionally, we have been advancing with the rest of the infrastructure works, which are ahead of the original schedule. Moving on briefly to the east region segment, which was reviewed by our CFO, as shown in slide 10, during the first quarter of 2019, the EBITDA decreased by $114 million compared to the same period of 2018, amounting to $25 million in the quarter, mainly because of low demand electricity due to mild weather, downturn in the economic activity and price demand elasticity.

Moreover, this quarter's EBITDA was negatively affected by the variation higher than the distribution cost update, aka CPD, which last devaluation and it is overweighed in the index that also lacks CPI and the PPI in addition to higher operating costs and energy losses. This is offset by lower labor costs in dollars and deferred income from gradual increase in 2017. Quarter on quarter, EBITDA of distribution proved mainly explained by 8% greater electricity demand and less [inaudible].

Energy losses reached 17.4% rate in the first quarter of 2019, 110 basis higher than the 16.3% for the same period of 2018 and 30 basis above Q4 2018, mostly identified in residential end uses, especially low-income users that do not have access to infusion grid partially offset by lower volume of energy demand. We are targeting as users that still [inaudible] before marked discipline actions and installing customized pre-charged meters. Therefore, we are increasing our customer base but this has been offset by losses on SMEs and large users.

Energy costs increased by 19% in pesos net inflation but decreased 40% in dollars year on year, due to the increases in price were outpaced by the peso devaluation. By the way, electricity costs for residential end users, it is still subsidized compared to the full cost of generation. Currently, one-third is estimated to be subsidized.

For the remaining of the year, the Secretary of Renewable Resources and Electricity Markets [inaudible] from increases in the seasonal price for residential users, thus increasing the subsidies shared to 50% at the end of the year. But this rate, the seasonal price, for non-residential users in May and in [inaudible] of this year, which is not subsidized.

Finally, last Friday, Edenor was notified that the agreement to transfer Edenor's concession from national to local regulator was approved without any change in Edenor's license agreement. Moreover, it was notified that the liabilities [inaudible] agreement was approved, ending cross-claims originated in the 2006-2017 transition period. On the one hand, the national government [inaudible] have been reclaimed, releasing from liability 6.9 billion pesos, which are composed by the energy purchases acknowledged by the government, a fraction of the loans drafted by CAMMESA, and the penalty to the national government, all recorded during the transition period.

On the other hand, Edenor waived all rights and actions against the national government, including the lawsuit filed in the year 2013 plus Edenor will pay end users for certain penalties corresponding to the same period, but executing additional investment on top of the RTI for a total amount of 3 billion pesos in a matter of five years, plus other outflows mainly corresponding to income tax for an additional 4.6 billion pesos. We find this milestone very positive for Edenor as it ends a huge burden for its balance sheet and upholds the equity value for shareholders.

As you can see on slide 11, during the first quarter of 2019, the oil and gas segment reported an adjusted EBITDA of $38 million for the continuing operation, 59% lower than the Q1 2018 and 23% lower than the last quarter, mainly because it is still respecting the downward trend in hydrocarbon solar price. The expiration of Plan Gas second generation July 2018 has a lower trading of third-party natural gas, partially offset by slightly higher production and sales of crude oil plus greater inter-segment sales to power generation.

Please remember that in Q1 2018's EBITDA includes $19 million from Plan Gas second generation recorded from our block that used to belong to Pampa until [inaudible] was merged into Pampa in 2017. To be conservative and until obtaining the gas authority's formal approval, this $19 million was reversed in Q2 '18.

Despite prices falling, our overall production in Q1 2019 increased 2% year on year and 10% quarter on quarter, reaching to 46,800 barrels of oil equivalent per day, of which 89% is composed by natural gas. On this oil side, the 15% increase in production year on year from 4,700 to 5,400 barrels of oil per day mainly responds to the beginning of crude oil production at Chirete, a [inaudible] that after an oil discovery reported by the end of November last year with very promising results. During the testing period, the block at 100% has produced 1,900 barrels per day. So, imagine, it is 30% of the total [inaudible] oil production. It is considered the most important discovery in this basin since 1984.

Pampas holds 50% working interest in this block. Additionally, the increased building activity at [inaudible] also contributed to a higher oil production. During Q1 2019, the crude oil sales price decreased on year by $4.00, reaching to $54.40 per barrel because the domestic price followed the international price per barrel and [inaudible], being 57% of our oil production.

Please turn to slide 12, where we want to explain in deeper detail the situation in gas. Regarding the gas production, the quarter reached the average of 249 million cubic feet per day, similar to Q1 2018, but 12% higher quarter on quarter, mainly explained by the production increase at the [inaudible] by the introduction of an early production facility and an agreement with YPS to use the neighboring Rincon Del Mangrullo processing plant so we are able to appoint more gas.

By March 2019, the gas production of the Mangrullo reached 148 million cubic feet per day, 53% higher than in March of last year. [Inaudible] also presented a 9% increase in gas production year on year due to the increase in capacities by the second half of 2018. These positive [inaudible] were partially offset by an excess of supply driven by the disruption of shale development, specifically backed up by the unconventional Gas Plan Resolution 46 and affected by the economic downturn.

This effect negatively impacted on the Rincon Del Mangrullo block with a lower drilling rate and natural decline and a minor decrease at [inaudible] blocks. In the first quarter of 2019, our accurate weighted average sales price for gas was $3.10 per MBTU, 50% lower year on year and 9% lower compared to last quarter, mainly due to 35% decline in end use and sales price compared to first quarter 2018.

The lower sales price was mainly driven by a reduction of the reference price for gas at power plant and the gas tenders on a non-firm basis conducted by CAMMESA, which reflected the demand seasonality and excess of supply, which also impacted negatively the commercialization in the industrial segment.

Moreover, Q1 2018 actual price of $6.3 per MBTU included Plan Gas second generation compensation, which expired at the end of June 2018 and represented $1.40 per MBTU. But of that $1.40, $0.80 were reverted in the second quarter of 2018 at this point before. This drop in prices was partially offset by a slightly higher accrual of retail price from disclose.

The fuel cell procurement for our power generation helped recover gas production levels, we are testing almost all our production there. Though it does not include pricing, we are currently selling at the [inaudible] price but cap at CAMMESA reference price. Plus, it helps to have a certain uptick, especially during weak demand periods and to monetize some synergies between power and gas segments.

As you can see on the slide 12, the average gas prices that recorded to demand are plunging, especially since 2018, when the energy ministries back then decided to cut the reference price for gas by power generation by $1.00 per MBTU. Afterwards, the combination of all [inaudible] restructuring, weak domestic demand, bottlenecks on [inaudible] infrastructure, non-existent ways of exporting or storing gas, CAMMESA, a market maker, and intervening the stock -- all of these factors resulted in gas prices falling to the lowest point in years and recovering the margin of breakeven costs in the system.

We did not have certainty of gas prices in the winter season with the exception of retail segment, which holds [inaudible] contracts. As we approach the winter season, the excessive supply and as evidence show in the past, the domestic production is not enough to cover the domestic gas demand, leading to cover the deficit with expensive gas imports from LNG and Bolivia.

Moving on to the news in the segment, the gas regulators drafted new final tariffs for [inaudible], effective from April to September 2019, in which it considers the price for natural gas as a raw material for $69.00 per MBTU. That's the average price from the [inaudible] that happened in February of this year.

However, discounts in the months of April and May at the factory in relation to partial financing possibility of the winter build summer season, that will be borne, in theory, by the government. Keep in mind that Pampa was awarded during the last tenure for [inaudible] on a firm basis for 12 months as of April 2019 at a price above the tender average of $4.62 per MBTU. With 200,000 [inaudible] that triples during winter.

Moreover, last month, Pampa was credited the Natural Gas Program Bond for a face value of $89 million maturing on June 2021. Corresponding to [inaudible] as of today, [inaudible] equivalent to $12 million have already been collected. We've been approved to credit further $54 million but haven't collected anything. So, we are taking all the necessary actions before the corresponding authority.

Before we move on from oil gas, I wanted to give you a quick update on our operations. During the first quarter of 2019, six wells were drilled and ten wells were completed. Our focus is the development of blocks with high gas reservoirs and the exploration of shale gas potentially in [inaudible] reservoir. During Q1 2019, we drilled one shale gas well and completed four high gas wells.

Finally, regarding our shale activities during Q1 2019, the site tracks for two Vaca Muerta wells at El Mangrullo block were built, each with their own extension of 8,200 feet. These are the first responsive wells to Vaca Muerta that we operate and their completion is expected to be in the following month, in which approximately 40 [inaudible] fractures are to be performed in each objective.

Moreover, since the discovery at El [inaudible] block turned out to be commercially feasible, by the end of the last month, applications were filed for the granting of an exploitation license for the [inaudible] and a three-year exploration period extension for the remaining area of the block.

Since we divested all the assets on refining and marketing, we are going to skip all the details to briefly comment on petrochemicals, in which we posted an adjusted EBITDA negative of $0.2 million during the quarter of 2019, lower year on year quarter and quarter, mainly because of the downward trend in international prices in dollars, weaker demand, domestic demand, export duties, and higher costs of imported and NAFTA. These effects were partially offset by incremental export sales, lower cost of gas, and optimization of fixed costs by shutting down two small-scale plants that were not functional with the current business environment.

In operating terms, total sales volume of our petrochemicals segment decreased by 5% year on year in Q1 '19, totaling 83,000 pounds mainly due to the lower sales of the styrene and synthetic rubber plus closing of DOP's plant in Zarate and ethylene plant in San Lorenzo, partially offset by higher export of these common products.

Finally, our holding and others segment presenting an adjusted EBITDA of $49 million in the first quarter of 2019, similar to the same period of 2018, but overperforming to Q4 2018 by 28%. This is mainly due to a higher income from fees collected from holding, partially offset by lower EBITDA in dollars adjusted by our ownership at our affiliates, Transener, TGS, and Refinor, mainly because of the [inaudible]. Plus, we got reallocation of expenditures to all the businesses and inclusion of [inaudible]'s dispatch facility census and higher cost of fees to counter for.

I'm going to only briefly review TGS as they just had their earnings call yesterday. TGS's EBITDA adjusted by our indirect stay of 25.65% contributed to Pampa $29 million in the quarter, so an implicit total of $113 million, 18% lower than Q1 2018, mainly due to FX variation, higher than the last PPI that covers cost variation for gas transportation business. The drop in reference is [inaudible] in dollars for NGL and higher export duties, partially offset by the full implementation of the tariff increase, cost variation, higher natural gas processing volumes, and lower cost of gas per unit.

For this regulated business, TGS was granted to four semiannual cost variation update of 26% as of April 2019 based on PPI variation between August 2018 and February 2019. Also, for the midstream business, by the end of last month, TGS completed the first stage of 31 miles south trans-guiding gas pipeline plus partial commissioning of the gas condition of the plant in [inaudible] starting from this month, with firm contracts for 28 million cubic feet per day plus interruptible gas transportation.

In line with the strategy in Vaca Muerta, TGS submitted a project for the construction of a gas pipeline of over 620 miles to connect the [inaudible] to greater Buenos Aires and the [inaudible] area. As of today, there is no news about that. Moreover, on April 23, TGS paid a total of 7.2 billion of cash dividends.

As for Transener, its EBITDA adjusted by our indirect share of holding contributed $11 million in the quarter of 2019, for an inclusive total of $42 million, 30% lower than the same period of 2018, maybe because the last cost update was lower than the effects variation, partially offset by lower operating costs mainly due to higher awards for quality of service and lower level costs.

The fourth cost variation update stipulated and in the tariff review was granted on March 22 and effective as of February '19, granting 25% and 27% increase for Transener and [inaudible], respectively. Moreover, Transener approved 3.3 billion pesos cash dividend. The payoff payment is May 16th.

On March 27th, the board of Pampa approved a new share buyback program for $100 million. We see a huge upside potential in the value of our assets that will be matured as soon as the market turmoil goes away. In time, we'll consider repurchasing our own shares, one of the best investment actions toward shareholders that we are undertaking. As of today, under this new program, Pampa acquired 2.2 million ADRs and the outstanding shares amount to 73 million ADRs.

Now, let me switch back to pesos adjusted by inflation. In terms of net income attributable to the owners of the company, Pampa reported a consolidated gain of 6.4 billion constant currency pesos in the first quarter of 2019, 13% higher than the same period of 2018, mainly explained by the higher gain of 6 billion pesos from the lower disturbed tax liabilities as we join the optional cash revelation last March 27th, a higher profit of 4 billion pesos due to this passive monetary position that we have, partially offset by the underperformance or EBITDA by 4 billion pesos, higher losses of 3 billion pesos due to the 15% depreciation against dollar in Q1 2019, currency in which most of our company's financial liabilities are denominated, and higher charge of income tax for almost 1 billion pesos.

Finally, moving to slide 16, we must highlight the low-end wealth spread leverage of the company as well as the solid cash position held compared to other peers in the industry and in Argentina. Always we have been very productive toward cash and liability management, especially after witnessing volatility, high-yield, and narrowing the international financing market. We continue redeeming the short-term facilities, highlighting that as of today, Pampa regained maturity and free cash flow of almost $170 million.

As of March 31st, the consolidated cost-cutting including affiliates of ownership remains at $2.1 billion, $0.2 billion below December of last year, of which 99% is denominated or linked with US dollars, bearing and average interest rate of 7.2% and 80% is placed at the parent. Even after canceling almost $150 million, the principal maturities belonging to Pampa stand alone. They are less than 2019 and combined with 2020 amounts to $278 million, which is exceeded by the pro forma $382 million of cash position at the parent after debt redemptions and share repurchases.

Currently, we hold a higher cash position. Moreover, consolidated cash after debt repayment amounts to $355 million, which is down from the $716 billion in December 2018, mainly because of the debt redemption and share repurchases, partially offset by the operating cash flow. Back in Q1 2019 closing, we were holding 86% of our cash in US dollars. Therefore, net debt slightly increased to $1.5 billion and net debt to last 12 months EBITDA remained low at 1.5 times. We also show here stand-alone key debt figures for our bond holders.

So, this concludes our presentation. Now, I will turn it over to the operator who will open the floor for questions. Thank you.

Questions and Answers:

Operator

Thank you. The floor is now open for questions. If you have a question, please press *1 on your touch-tone phone at this or any time. If at any point your question is answered, you may remove yourself from the queue by pressing *2. Questions will be taken in the order they are received. We do ask that when you pose your question that you pick up your handset to provide optimum sound quality. Please hold while we poll for questions.

Our first question comes from Bruno Montanari with Morgan Stanley. Please go ahead.

Bruno Montanari -- Morgan Stanley -- Analyst

Good morning, everyone. Thanks for taking my questions. Two quick ones -- first, on investments, on the back of the recent macro situation in Argentina and gas prices, how should we think about your company's plan and the budget for 2019 in the coming quarters?

The second one, I know it's difficult to talk about gas prices during the winter, but is it fair to assume we have seen the trough in realizations now in Q1 at $3.10 per MBTU? If you could try to give us your best estimate of how prices will be set during the winter, more like the mechanism rather than the actual result, that would be good for us to understand the framework. Thank you very much.

Gustavo Mariani -- Chief Executive Officer

Hi, Bruno. Gustavo here. How are you? Regarding capex and due to the environment, we've been adjusting what we could and what we thought would make sense. So, we have lowered by slightly more than $100 million our capex in the EMP business from $360 million to approximately $260 million that we are going to do this year.

In the case of power generation, it's the same number. We will be expanding $260 million. That is to finish the two wind farms that we already did, plus continue with the expansion of Genelba, of which we will be evaluating the gas turbine in a couple of weeks. It has already done its first fire and it's on trial. We are continuing with the closing of the cycle. So, the combined cycles of Genelba will be completed and evaluated by the second half of next year.

Regarding gas prices, I think it was the second part of your question, we believe or we hope that we have seen the bottom of the pricing and that we did 3.1 average that we sold on the first quarter. We should see it pick up during the winter. But honestly, unfortunately, it's still a regulated market and it's difficult to forecast pricing and only a portion of the segment can be contracted in a short time.

Bruno Montanari -- Morgan Stanley -- Analyst

All right. That's very helpful. Thank you very much.

Operator

Again, if you have a question, please press * then 1. The next question comes from Frank McGann with Bank of America Merrill Lynch. Please go ahead.

Frank McGann -- Bank of America Merrill Lynch -- Analyst

Two quick questions -- one, just in terms of gas production and perhaps oil production, the expectations for the next several quarters -- clearly, you're cutting back on the capex and the overall pricing environment is less favorable, but I'm wondering how you're seeing the absolutely level of production that you're likely to see. Then similarly I guess on the generation side with the capacity that is starting up, how should we think about that in terms of potentially higher volumes as we go out into the second quarter, second half of the year?

Gustavo Mariani -- Chief Executive Officer

I think the first part of your question, we couldn't hear you very clearly, but it was regarding the production level for the remainder of the year. We think we will be producing about 7.5 million cubic meter per day during the winter and slightly lower in production to around 7 million per day up to the winter on the fourth quarter.

Approximately half of the capex that we mentioned in the previous question, we are able to maintain production flat and we are only developing those wells that have extremely good returns, even at these prices. Obviously, we don't have 100 wells like that to develop, but we have a few very productive wells that we can drill in order to keep production at these levels. Even at these prices, they are profitable.

Can you repeat the second part of your question?

Frank McGann -- Bank of America Merrill Lynch -- Analyst

Just in terms of generation with the capacity that's been completed, how much additional generation in terms of volume could we potentially see in the second half of the year? I know that depends on a lot of other factors as well, but just to give an idea of the kind of upside we could see in terms of volumes.

Gustavo Mariani -- Chief Executive Officer

Capacity -- since last Friday, we added a 100 MW wind farm, of which we are expecting roughly 55% of those factors as an average for both of them and around $25 million of EBITDA. So, in Genelba, what we will be added a few weeks from now is 190 MW of capacity out of a total of 385 MW that we will be adding when the combined cycle is closed next year.

These expansions, I don't have it in here, the number of the EBTIDA. I don't have it here, the additional EBITDA that the gas turbine will be generating for the remainder of the year, but the number I have in my mind is the combined cycle will be adding around $90 million of EBITDA. That will be next year once the turbine is also operating.

Frank McGann -- Bank of America Merrill Lynch -- Analyst

Great. That's very helpful. Thank you.

Operator

This concludes the question and answer session. At this time, I would like to turn the floor back to Miss Wang for any closing remarks.

Lida Wang -- Investor Relations Officer 

Okay. Thank you so much for participating on our call. Any questions you may have, our team is available for you. Have a nice day.

Operator

Thank you. This concludes today's presentation. You may disconnect your line at this time and have a nice day.

Duration: 45 minutes

Call participants:

Lida Wang -- Investor Relations Officer 

Gustavo Mariani -- Chief Executive Officer

Bruno Montanari -- Morgan Stanley -- Analyst

Frank McGann -- Bank of America Merrill Lynch -- Analyst

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