Morning, everyone, and thank you for waiting. I am Margarita Chung from Miranda IR, and we would like to welcome everyone to Pampa Energía's first quarter 2022 results video conference. We inform you that this event is being recorded. All participants will be in listen-only mode during the presentation. After the company's remarks, there will be a Q&A session. Questions can only be submitted in writing through Zoom. Should any participant need assistance, please send us a chat message. Before proceeding, please read the disclaimer that is located on the second page of our presentation. Let me mention that forward-looking statements are based on Pampa Energía's management's beliefs and assumptions and on information currently available to the company. They involve risks, uncertainties, and assumptions because they are related to future events that may or may not occur.
Investors should understand that general economic conditions and 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 video conference over to Lida Wang, Head of Investor Relations and Sustainability of Pampa Energía. Please go ahead.
Good morning, everyone. Thank you for joining our conference call. We are pleased to share our first quarter 2022 results. Our CEO, Mr. Gustavo Mariani, and our CFO, Mr. Nicolás Mindlin, are both here and joining us for Q&A. Let's start with the quarter's figures. Revenues increased by 32% year-on-year to $555 million, driven by gas exports, commodity prices, updated legacy prices, and Energía Plus. All of them were partially offset by expired PPAs at Loma de la Lata and Piquirenda, and lower than inflation tariff increases in utility business. Roughly 81% of our sales were dollar-linked. The Adjusted EBITDA amounted to $226 million, 11% up year-on-year and 13% up quarter-on-quarter, explained by the same reasons detailed before, offset by higher expenses, intense E&P activity, and lower petchem margins. Quarter-on-quarter, seasonality boosted the EBITDA.
As you can see on the right below, the share between electricity and oil and gas is balancing, driven by our gas business. CapEx in Q1 almost doubled last year's figure, mainly due to the growing Plan Gas commitment and power expansions at Barragán and PEPE III. However, it was 30% down quarter-on-quarter because of higher disbursements at PEPE III and Barragán expansions. Moving on to the power generation, as seen on slide four, we posted an EBITDA of $121 million in Q1, 5% up year-on-year and 15% up quarter-on-quarter, mainly contributed by higher spot prices and thermal B2B margin, besides the outage that happened in Barragán last year. However, this was partially offset by one of the Loma de la Lata's PPA maturity and increased peso link expenses.
Last month, spot energy prices were adjusted by 30% as of February, plus another 10% increase from June 2022. Also, the load factor coefficient was permanently eliminated. Power plants with a lower dispatch rate just collect the full availability payment. Moving on to the Pampa Power generation operating figures, Q1 was 10% up year-on-year, surpassing again industry average that only achieved 1% growth. We recorded higher thermal dispatch at almost all our units, in line with the country's reliance on thermal generation to cover the reduced hydro generation and increase local demand. The power generation business relies on capacity payment, like a take-or-pay. So availability is what matters most. In Q1, we reached an outstanding availability of 98% without a significant outage, better than the 95% achieved in 2021. Again, Pampa's availability was way above the system availability of 74%.
Regarding our thermal expansion, the closing to CCGT in Ensenada Barragán is almost 80% advanced. Most of the power grid is ready, and we continue getting ready boilers, high voltage facilities, and transformers. More than 1,000 people are working daily on this project. Nevertheless, the successful commissioning require additional time to review works carried out years ago, postponing the COD to the fourth quarter of 2022. PEPE III wind farm expansion is roughly 25% advanced. We made substantial progress in the civil works and continue working on the control system and different permits with the regulator. We also started to install cable piping in the foundations. The estimated COD is split in two stages, the first one, 50 MW by February 2023, and the remaining 31 MW by May 2023. Now, moving on to the E&P business.
Even though it was an off-peak season, we posted an Adjusted EBITDA of $56 million in Q1, 30% up year-on-year and 22% up quarter-on-quarter, mainly boosted by export volumes and prices, higher industrial gas demand, offset by increased costs related to the growing activity and export expenses. Our total lifting costs increased by 32% year-on-year, but it's 27% down quarter-on-quarter, explained by the increased activity to keep a high production level to export more and prepare for the 2022 gas winter commitment. Efficiency-wise, lifting costs reached less than $6 per BOE, similar year-on-year and 25% down quarter-on-quarter. Our total production averaged almost 58,000 bbl of oil equivalent per day. Of that, 91% is gas. On the oil side, which represented 24% of the segment's revenue in the quarter, the volume sold was 62% up year-on-year and 12% up quarter-on-quarter, being 5,200 bbl per day.
The increase was mainly driven by both local and foreign demand recovery. Oil price was almost $70 per barrel, primarily due to the exports and rather local rise. Regarding gas, as shown on slide eight, our volume sold maintained at 9 million cubic meters per day since the 2021 winter, placing the off-peak surplus on exports and local industries. Our production outperformed the industry average, which grew by 13%. This productional performance was led again by El Mangrullo, that represented 69% of the quarter's production. This block is wholly owned and operated by us with the outstanding productivity boosted by its active drilling and completion of wells, and the growing evacuation capacity to be ready for this winter. It was also followed by Río Neuquén's growth, which almost doubled year-on-year, in addition to Sierra Chata block. Our average gas price of the quarter was $3.5 per million BTU.
This is 27% up year-on-year and 14% up quarter-on-quarter. This is thanks to the export prices. Also, spot prices converge to the Plan Gas levels. The year-to-date sales breakdown now is fairly distributed. Take-or-pay contracts, export contracts with Chile that ended last April, stepped in CAMMESA and the retail due to seasonality. It is worth highlighting that Pampa led the export market through the GasAndes pipeline that connects to Chile. Also, compared to last year Q1, we are growing our B2B industry share. Regarding our operations, this quarter, we drilled 12 gas wells and completed nine gas wells, all of them tight and mostly at El Mangrullo block. We expect drilling activities to accelerate even more during the winter to achieve more than 11 million cubic meters per day of production.
As mentioned in previous calls, in preparation for the output surge, we are expanding the gas treatment plant at El Mangrullo. This month, we are adding 2.5 million cubic meters per day of capacity, and by the third quarter of this year, the total capacity will reach above 13.5 million cubic meters per day, more than the double of last year's capacity. Moving on the petchem business. We posted an EBITDA of $6 million, 67% lower year-on-year because of higher raw material costs, especially virgin naphtha. This is offset by the significant rise in commodity prices. Quarter-on-quarter, the EBITDA is down 33%, driven by a lower volume of reforming products. Sales volume was 7% down year-on-year, mainly due to lower reforming products dispatched as fasón, instead of the end product. In Q1, 37% of the sales were exports.
Regarding cash flow, the free cash flow was almost breakeven because of the increased CapEx and Loma de la Lata expiry PPA. This quarter, our restricted group CapEx grew to $74 million compared to $31 million last year. Although we are raising our expansion CapEx in the core business, they are self-financed by their outstanding operating performance. Note that working capital is negative this quarter, mainly driven by CAMMESA's delay in payments. In addition, we incurred debt for $33 million, mostly from the green bond. In summary, we generated $34 million of net cash in the quarter, achieving $607 million of cash position by the end of March. Additionally, we continue divesting non-core businesses. We are transferring our stake in Venezuela oil blocks, ensuring a clean exit for Pampa. Pampa will collect 50% of any potential compensation to these blocks. Moving on to slide 11.
This slide shows the consolidated figures, including our affiliates at ownership. Let's focus on the restricted group that reflects the Pampa perimeter. We posted a gross debt of $1.5 billion, 97% dollar-denominated, bearing an average interest rate of 7.8%. The average life decreased slightly to 4.1 years. During the quarter, we issued our first green bond in pesos, equivalent to $28 million, due in 18 months to finance our PEPE III expansion. However, net debt, very important, decreased to $845 million. The net leverage ratio remains similar at 1.2 times. In the next 12 months, the company just faces less than $20 million of maturities. Therefore, we expect to keep strengthening our balance sheet and focusing the investment on our core businesses. This is the end of our presentation. Now, I will turn the word to Margarita, who will open the floor for questions. Thank you.
Thank you, Lida. The floor is now open for questions. If you have a question, please send us through Zoom chat. We will read and answer them in the order received. Also, please make sure your name and company are correctly displayed so that we can introduce you to the audience. Please lower your hand once your question is answered. Should any participant need assistance, send us a chat message or raise your hand. Please hold while we poll for questions. The first question is regarding the new gas pipeline, Néstor Kirchner. The question comes from Anne Milne and Frank McGann of Bank of America, and Bruno Montanari of Morgan Stanley. There are three questions. First one is the expected timeline of the new pipeline. Second one is Pampa's perspective given the new pipeline.
The third one is, if there is no transportation limitation, what will be the expected production for 2023 and 2024?
Okay. I prefer the question one at a time, and then I'll do my best. Regarding the timeline for the Néstor Kirchner pipe, the news is that the pipes for the constructions has already been awarded. As far as I understand, the supply of those pipes are in a way that makes the feasibility of having the new pipeline ready for next winter, a possibility. What has not been yet published is the bidding document for the construction of the pipe. We are expecting those documents or the bidding process to start any time in the next few weeks. Assuming that happens, and assuming that once they publish the bidding documents, bidders will have about 30 days to prepare their offers and a few more weeks for the government to decide to which construction company award the project.
If all that process happens in the next month and a half, so that by mid-July, the construction companies are awarded, there is a possibility of having the new pipeline ready by next winter. It's a very tight schedule, so everything has to happen very soon and without any major complications. But still possible to have the new pipeline ready that will add 11 million cubic meter more of evacuation capacity out of the Neuquén Basin, for next winter. It's only 11 because it's without any compression. It is already known that the compression plants won't be ready for next winter. Those plants will be ready a few months after. So for winter of 2024, this pipeline with compression will be providing 20 million cubic meters , 22 million cubic meters of natural gas per day additional to the existing capacity.
Thank you, Gustavo.
The other two?
The second question is about the perspective of Pampa's participation in this new pipeline.
Well, I assume that after awarding the construction of the pipe, the government will be making a new round of Plan Gas bidding process in order to fill this new pipeline. We will participate in that process, and we are eager to gain a portion of those 11 cubic meters of additional production from the new generation.
The last question was about if there is no transportation bottleneck, what will be the potential of E&P in the case of Pampa?
We have a huge potential to continue growing. Short term, meaning for next winter or for the winter of 2024, I would say that we have the possibility to double our current production. We are currently at 11 million cubic meters . So beginning two weeks ago, we finished some early production facilities that grew the available capability in El Mangrullo. Thanks to that, now we are producing close to 11 million cubic meters of natural gas per day. Could we double that production level in two years? Yes, that's totally feasible for Pampa. Maybe a growth of 40%, 50% for next winter and another in the following year. But whether we go to those levels or not will depend on how successful we are in the bidding process of the next round of the Plan Gas and how much volume we are awarded there.
We have the capability to continue growing at the same pace that we have been growing recently. But as I said, whether we go there or not, it will depend on if we are successful in the auction.
Thank you, Gus. Our next question comes from Bruno Montanari from Morgan Stanley and Marina Mertens from AR Partners. They would like to know about the expectations for gas exports in the coming quarters and if there is additional gas export permits in place right now.
Firm gas exports ended at the end of April. We had firm exports from October of last year until the end of April. Starting May 1st, there are no longer any firm exports awarded to anybody in the industry. From October to April, as Lida has just explained, we have been a very important participant in the export market. We have been exporting about 3 million cubic meters of natural gas per day, so roughly 30% of our total production. We hope and we would like to continue with same level of export starting again in October of this year. So during the summer months, that goes from October until next April. Whether we are successful on that or not, we don't know. During the winter, there are no firm exports, but there are spot exports that will depend on two things.
As is happening these first two weeks of May, we have very mild weather, so Argentina is currently exporting gas to Chile at a price that it has to be, because of regulations, north of $7.35. We are currently exporting close to 1 million cubic meters of natural gas per day. As the weather gets colder, there will be more consumption in Argentina, so those export to Chile should end. We believe that this winter, the production of the Neuquén Basin will be slightly above the evacuation capacity out of the Neuquén Basin. So there will be small quantities of gas that will not be able to be consumed in Argentina.
If that happens, and for those producers that have capability to produce in excess of their commitments with the Plan Gas and with the local sales to the industry, there could be marginal spot exports to Chile during the winter. That's the situation regarding the export market.
Thank you, Gustavo. Our next question is the same from Bruno Montanari. He would like to know also about the oil export potentials for Pampa.
Regarding oil, we don't expect any major change in terms of quantities produced, are about the same that you have seen in this first quarter. There has been a significant increase from previous year, but we are not expecting any significant growth going forward. The share of our exports has been roughly about 30%-35%. There could be a slight increase in that percentage of oil exports. We would not expect any major change to what you have seen in the first quarter.
Thank you, Gustavo. Our next question comes from Frank McGann from Bank of America and Marina Mertens from AR Partners. They would like to know if we have further PPAs potentials, upcoming PPAs in the renewable market besides PEPE III expansion.
We are all the time monitoring the market because we would like to continue growing our share of renewable energy that we produce. After the 80 MW, we don't have anything on the pipeline. As you know, we are building this 80 MW expansion in PEPE III. That will come online, the first 50 MW in early next year, probably February of next year, and the other 30 MW by early second quarter of next year. We don't have anything on the pipeline, but we are all the time monitoring this market, which is extremely competitive. We have very aggressive colleagues in this market, and we are probably a little bit more picky on the IRR of the projects that we want to go after. Monitoring all the time that segment, but we don't have anything confirmed besides the 80 MW that we are currently working on.
Thank you, Gustavo. Our next question comes from several people. They are Marina Mertens from AR Partners, Florencia Mayorga from MetLife, Alejandro Demichelis from Nau Securities, Alejandra Andrade from JP Morgan, and Victor Flórez from STX. The question is about the 2023 bond.
Okay. As you may know, there is a regulation in place until December 2022 that allows companies to pay 40% of capital maturities and refinance the other 60%. Since our 2023 bond is not reached by the current regulation, we will need an agreement with the central bank in order to execute that deal. We are actively analyzing alternatives regarding our 2023 maturity, and it should be quite reasonable to expect a liability management sooner than later, but that will depend on us getting the approval of the central bank. The main objective of this will be to have an even more stronger profile and a clean path to continue investing in our core business and in the gas segment during the next few months and years.
Thank you, Nico. Our next question comes from Martin Arancet. He would like to know, what are your drilling plans for the remainder of 2022 in terms of new wells? What are you thinking about exploration on new areas? Are you going to need more facilities in the near future, or are you already okay with existing infrastructure and the 13.5 million cubic meters per day of treatment upgrade?
Regarding facilities, we have been working for the past year and a half, I think, already, on a big expansion in El Mangrullo, a new gas treatment plant for almost 5 million cubic meters of natural gas per day. That plant will be ready by the end of this winter. That will elevate the production capacity out of El Mangrullo from current 8.5 million to about 13.5 million. That is just El Mangrullo. Adding all the rest of the areas where we operate and produce, we have roughly about 16 million, 17 million of production capacity without building new facilities. Without building new gas plants. Obviously, we will have to build some surface infrastructure, but not big gas treatment plants. Regarding drilling, we have just finished the campaign, or we are finishing the campaign that elevated our production capacity from the level of 9 million cubic meters per day.
That is what we have been producing throughout all the summer, in the third quarter of last year and the first quarter of this year. Now we are producing 11 cubic meters of natural gas per day. We will stay at those levels until early next year. But we will begin a new campaign in order to, as you know, keep production at these levels. You know that in this industry, you need to drill all the time in order to maintain your production. We will be ready to grow production. We want to be ready to grow production in case we are awarded in the next auctions. We will be doing a drilling campaign in Sierra Chata. That is the area that we share with ExxonMobil, that we operate.
We'll have a drilling campaign in El Mangrullo in order to have gas available for next winter.
One of the questions roughly saying, what is left for the remainder of the year is 25 wells to be drilled and completed.
Thank you, Gus and Lida. The next question comes from Marina Mertens from AR Partners. By how much should power generation EBITDA drop following Ensenada Barragán PPA maturity, and how much should be offset by the commissioning of the 280 MW?
Well, full year before the PPA expired was $160 million per year. But now that the old PPA expired and the new PPA is ramping up by the third quarter, fourth quarter of this year. Pro forma, a year full, it's around $130 million of EBITDA, both, the combined cycle.
Thank you, Lida. Please wait, as we wait for the next question. Our next question comes from Lilyanna Yang of HSBC. Hi. What prices would you need to see in coming Plan Gas auctions so as to support production volume growth? Could you remind us of gas export prices you think you can get going forward? Thanks.
Gas export prices and?
Gas export is already done. Plan Gas potential prices. Upcoming winter auctions.
For this 11 million, the government has yet to decide how many of those 11 million they will like them on a flat basis, so throughout the year, or just for the winter period. A portion of those 11 million, the government will want them on a flat basis, and a portion will want them just for the winter. For the flat portion, I expect something similar to the first Plan Gas. I suspect that the government will put a ceiling price similar to the previous one. The previous one was $3.70. For this, the fact is that for that portion that is auctioned on a flat basis, so throughout the year, the fact is that the industry needs to take into account the amortization of all the new facilities that are needed to be built in order to supply that gas.
Plus gas treatment, pipelines, et cetera. Probably, the price ceiling will be north of the $3.70 that was issued for the first round of the Plan Gas. Regarding the winter price, it is difficult to say, but it is going to be obviously higher than that. It is difficult to say, but because it will depend whether it is matched with firm exports to the neighbor countries. That will reduce the price and make it more similar to the flat portion. What else? Okay. Now, regarding gas exports to Chile during this winter, as I said, there is a resolution from the Secretary of Energy that the floor price for those exports is $7.35. Again, export of gas to Chile during the winter is going to be very marginal for us and for the industry as a whole.
Starting in October, we expect a similar price as the firm exports that we had this year around north of $5 for the summer.
Thank you, Gus. Thank you for the questions. This concludes the Q&A section. We will turn to Lida for final remarks.
Gus, would you like to say something more that nobody asked? Nico? No. Well, this ends our presentation for Q1. Anything that you have or any questions that comes to your mind after the call, just reach us out. We are always available for you. Thank you for joining us, and have a good day.