Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total production reached 65,300 BOEs per day, marking a 40% year-over-year increase and a 19% quarter-over-quarter increase.
- Oil production was 57,200 barrels per day, a 46% increase compared to the same quarter last year.
- Total revenues for the quarter were $397 million, a 66% increase compared to the same quarter last year.
- Adjusted EBITDA was $288 million, a 90% increase year-over-year, driven by robust revenue growth and lower lifting costs.
- Net leverage ratio at quarter-end was a solid 0.56 times adjusted EBITDA, indicating strong financial health.
Negative Points
- Free cash flow was only $8 million during the quarter, impacted by higher capital expenditures.
- Lifting costs increased in absolute terms by 31% compared to the same quarter last year due to higher costs in gathering, processing, compression, and power generation.
- Trucking costs are high, at approximately $15 per barrel, with significant volumes being transported by truck due to pipeline capacity constraints.
- There is uncertainty regarding the applicability of the RIGI chapter to upstream projects, which could impact future investments.
- Potential delays in the Oldelval pipeline project could necessitate further reliance on costly trucking for oil transportation.
Q & A Highlights
Q: Could you please comment on your exit production for the second quarter and how your third quarter should look like in terms of outputs? Also, could you provide more details on the reason for hiring a second frac crew from Schlumberger?
A: The ramp-up of Q2 was driven by 11 wells in Bajada del Palo Este. We recorded 65.3 barrels of oil per day on average for Q2. For Q3, we expect double-digit growth, not less than 10%. The second frac set will arrive in Q4 2024, providing flexibility for our 2025 plan but will not impact 2024 production.
Q: Can you share the main positive effects for Vista related to the approval of the omnibus law, especially the applicability of the RIGI chapter? Also, what are your expectations for trucking capacity towards the end of the year and into 2025?
A: The law includes principles of no price intervention and freedom of exports, which are positive. The applicability of the RIGI to upstream projects is unclear and will depend on regulation. Trucking costs are around $15 per barrel. We plan to truck 13,000 barrels per day in Q3 and potentially 20,000 barrels per day in Q4, depending on Oldelval's progress.
Q: Could you give us an outlook on local pricing and export volumes? How do you see Oldelval's situation evolving?
A: Realized oil prices averaged $72 per barrel in Q2, with 64% of volumes sold at export parity. We expect export volumes to reach 50% in Q3, with export parity potentially around 70%. Oldelval's progress will be key for Q4 and 2025.
Q: What are your expectations for production exit rates for this year and next year? Also, can you provide updates on potential M&A opportunities, specifically regarding Exxon's asset divestment?
A: We expect to exceed 89,000 barrels per day by year-end 2024. For 2025, we plan to drill at least 54 wells. Regarding Exxon's assets, we are participating in the process and are a competitive bidder, but confidentiality is important.
Q: Could you provide an update on the new drilling rig and frac set? Also, if there are delays in the Oldelval project, to what extent could trucking capacity be expanded?
A: The third rig has been operational since Q1 2024, and a new state-of-the-art rig will be operational in October. The second frac set will arrive by year-end. We have a trucking capacity of 30,000 barrels per day, which can be expanded if needed.
Q: Given the new drilling and fracking capacity, how will you allocate this capacity across different asset blocks? Also, what drove the increase in lifting costs between Q1 and Q2?
A: We will focus on Bajada del Palo Oeste, Bajada del Palo Este, and Aguada Federal. The increase in lifting costs to $4.5 per BOE was due to spending on gathering, processing, and compression to accommodate production growth, as well as cost pressures from peso inflation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
