Q3 2020 Vista Oil & Gas SAB de CV Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to be stuck Thirdquarter Twentytwenty earnings webcast. At this time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question doing that portion of the call you wouldn't need to press star one on your telephone.
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Ill now hand, the conference over to your strategic planning and Investor Relations Officer, Mr. Alejandro Chernicoff.
Thanks, Good morning, everyone. We're happy to welcome you to be done there or it 2020 be thoughtful I'm here wouldn't you Gotta Gotta, who jumps does chairman and CEO and with blow it up you go eat the CFO.
Before we begin I would like you to draw your attention toward question I Didnt like to.
You advised that our remarks today, including the answers to your questions may include forward looking statements before.
These forward looking statements are subject to east and uncertainty that could cause actual results to be not you got anything from expectations contemplated by these remarks.
Oh finish I figure thats dealing with whatever I mean, accordance with international financial reporting standards I forever.
However, during this call we may discuss certain non I guess, where it's a financial measures such as adjusted EBITDA.
Reconciliations of these measures to the goals that I got price metrics can be found in the earnings we need that we should be.
Please take a website for further information.
Our company that we lucky that's you'll see that I know that you like I've thought about highly organized under the Gulf of Mexico, but you said it wasn't I mean and I noticed on the New York Stock Exchange did decrease of our common stock I'd be done.
And then what kind of he got Ionis M.D. I guess D. In the New York Stock Exchange. They think it'll go up I want to eat meat DW <unk> 088 had we not done niccolo, but can you go.
Thanks Telecom middle women revenue one on thank you for showing just any color there.
It's one of those when he's Wendy was marked by you saw even calling football one key operation on financial metrics, we have seen a robust consumer demand, especially in international markets, where we've gotten somewhat commissioner for.
Machine, how often can be somewhat for election, but can you fight going forward. It sounds from your husband day.
Good evening Bayano, one production, but also split paulson whatever water.
Revenue for the quarter improved from $70 million wasn't lifting costs remain singly de she's not going I know that's been viewing.
But having a growth company. We can tell you can close contributing to its only been quoting adjusted EBITDA, we reach $94 million more than doubling quarter on quarter.
I didn't want to be either due to a $225 million and net debt was $297 million.
I think already but I think we'd broncos he can be between 40, and 45 or less I bought another one at home with their successful rebasing of our development cost because by the way.
Okay, maybe last June we started drilling and completion activity back on one of them.
You know, we feed him, but number for which we completed on time late in September.
I said, we shouldn't read in his presentation.
Well, we got cheap cobalt, even completion method, we sold it in bromine savi babies, but.
We also feel anything but number five.
We have recently begun to completion, but with respect to timing you in December.
Okay nation, I would've thought that production for the quarter was 25.4 saw some views per day.
Reflecting a 7% quarter on quarter hurdle that you opened a buck I'm wondering when shown on a machine gun Buck the button number four which was connected lazy in September.
Well its introduction, we live which represent approximately 70% of all went to the production.
Was 70.5, how soon do you but to me it's worth watching it is quarter on quarter.
That's what I got production will be but if things remain the same person fulltime production.
Well, the 31% down year on year as we got 40 focus I want to be minimum in activities going on.
We've sort of gotten gold production to continue growing in Q4, I think it would fall even flat they can get them into trouble selection button in Buffalo.
Oh, what's been important revenue.
70 million dollar 34 cents improvement quarter on quarter, driven by higher on production I stronger right.
But then of course, the whole 40, new going out for the bordered on EBITDA I stayed relatively stable in the 40 to $45, but a lot of things.
Let me show Demotic, all we have to help stabilize smuggling dope crude discounts to bring that on Fort Hills I spent about a 70, so I would I don't ordinarily station, but I see where I'm sitting 9.1, but that's provided for the quarter at 40 years, plus and getting compared to Q2.
Oh, My Gosh, you have to I guess pricing was down 37% be studied to sort of quarter of 2019, mainly due to the weaker can you just you know the mine.
Thanks, Pete by coordinating a softer, but I see in the REIT related distribution segment.
But if I would have for to reduce our exposure to chart 10, but whenever you need each end market conditions. We have already could you I always say I didn't think prices fell 40 go left for Robyn for more than 80% of our Q4 forecasted collection volumes and the combination of phase two domestically.
Okay. I mean is that I'm not sure that I wouldn't greatness.
Moving onto slide six total lifting cost for the quarter was 19% lower than Q3 2019.
The rebasing of our operating cost structure will allow us to offset lower production levels.
Cost savings faulty unit lifting costs are you worried that was flat year on year.
Lifting cost reduction you had when you gotta wasn't even by the renegotiation of most of our open contracts I'm, just maybe 2% improving in the failure index or whatever mature to feed which allowed for 36% reduction in the number of whether you get arrangement, yeah, I don't want to hear.
Reported on boarding can even built on cost was driven by having a store or when Montana and other working seven seas to brick lead activity levels.
We expect most of the savings to remain in that would of course base going forward.
Therefore as production volumes pick up we should see it continues the lifting cost per watt.
I wish I did EBITDA for the quarter was $24.3 million.
It can be 38% increase quarter on quarter on the back of probably of revenues driven by NPD in both oil production volumes, an orientation prices and show.
To the right of the slide copy we controlled cost.
Adjusted EBITDA margin was 35% something 50% point B study Keytruda 2020.
Moving to slide eight I would caution you didn't abusing believe from $220.7 million to $225 million, maintaining a solid cash position I mean capital expenditure would you agree.
Touching on operation activities was $19.1 million, while cash used for investing activities was $23.2 million driven by the ramp up in fact, I'm one of the P. Beattie.
Additionally, we should've generated cash from financing activities of $8.5 million.
Like the newborn shrunk in the options I'm capital market I sitting million dollars at very competitive does.
$10 million in business 18 months boosted the variable rate, we'd any spread a 187 basis points.
$20 million in Italy bond.
36 months Mullett, what's your problem.
I will now have you an update about our back on what I call should be behind us by the way.
As I mentioned earlier, we definitely started drilling and completion activities on the vast global economy goes I mean don't get reputation pricey.
He got in Batam before we have previously was before stopping operations due to the creep academic.
No. It was we've redefined as well and completed the Diavik for one but.
Two wells were landed in like a senior and completed with 44 on 51 Frac stages, respectively.
The two other whereas were landed in the California section, but I'm worried that it had a lot of new song we are testing.
And were completed with 26 and city one patients respectively.
The result in drilling and completion metric, we have achieved our impressive I've always continuing to K P. I across the board did.
Good evening speech was 854 feet per day on average four but number for 81% of all the first but we.
Drilling cost per lateral foot was $592, 21% down for an hour for spot.
Such improvements were driven by group PBT games on the successful renegotiation of our release 77 is right.
Completion cost for the button number for Kim very slowly at $133000 pay state it must be saving be savvy or previous but driven by savvy didn't grow up on course, and a reduction in fact hit the right.
Finally, total drilling and completion cost per well for button number four was $11.4 million.
34% below our first but on a normalized basis, 20% below I wouldn't be but an in line with the new wood cost I shared with you in our previous call.
Before was of the button number for where timing between late September and early October.
So we will keep you posted on productivity resource in funded update it.
The mean time, we share an update view of the productivity of the show of.
Oh good care.
He bought to.
To the right the slide each well is making great.
They have it any way shown in light blue for the first eight one country 80 days have seen that the production.
I'm showing there will be 17% about 1.5 million do you are you I think we've disclosed in our previous earning calls.
I cannot really know how excited I am by the progress of our development economics, and then understanding the liberty of our operations team.
Before we move to Q Renee I will summarize today highlight.
Hi Tech during Q3 Twentytwenty the main topics have been recovery.
Miszewski solid sequential growth in all key operational and financial metrics.
During production revenues and adjusted EBITDA.
We have a startup in drilling and completion activities in Buckeye Valuated Navy dashing, our loan development growth and stronger realization prices.
We completed but number four we can achieve outstanding K P for all drilling and completion metrics, allowing us to achieve it doesn't normalize drilling and completion cost of $11.4 million, but with 20% below our previous spot.
We are currently completing but number five which we expect to dining before year end.
With our behind by New oil have you been domain plan back on track with back to delivering strong production growth, enabling 2021.
To close the presentation.
I've always family like two cents or Beast employees for their own standing shop in creating a better company in these challenging times.
And the liberally brutally so quarter on quarter.
I also would like to send our investors for their continued support and utilities in our company.
Thank you for listening I will now move to Kiani.
Thank you and ladies and gentlemen asked I reminder, to ask a question you will need to press star one on your telephone to withdraw your question press the pound or hash key please standby we compiled the culinary roster.
Okay.
Our first question is from Bruno Montanari with Morgan Stanley. Please go ahead.
Morning.
Hello, Thanks for taking my questions two questions here first you shed a little bit more color on the expectations and perhaps early results of the new landing zones, especially in the Carbonite.
And also what are you targeting in terms of ending loans were at number five.
And second question is more about Mako.
I think all the operating figures you report your going pretty much in the right direction.
Strong years.
But the exchange rate in particular seems to be a challenge. So how is the company dealing with the complexity of FX conversion.
Being able to keep the U.S. dollars outside of Argentina. So how are you dealing with it. Thank you very much.
Thank you, we know figure to material question or selling with the coordinated way works that we gave me the Dover.
Well, we are a very exciting would then become less than 30 days of production at the moment.
One of the where you can see that on selling value by the day and the other one is that on 1000 Boe per day, what I've got actually is around 60%.
Decreasing and the pressure that is something that we really follow kills and give you a good indication of the quality of mid Wales is around 300 indicators. So all in all it really really starting condition one of the ways to collect from TV to love It OLED.
But on the other one that was really like this out for limitation that we've got our concession is 2200 meter let the relevant SMB chirping.
The true was outstanding in the kind of mid section.
For that for.
For the kind of what they where you've seen the independent the need that we use for the norm I was so interval between with black and better. We go food was likely be something that we learned in our.
Our past experience. So we believe this is the way to complete those wells are now we are very excited that clearly we'd have three says if he works.
Look like it's going to work on there is going to make our portfolio more richer in demos.
Options.
Two two language.
When you come to pass price quite frankly is going to test the north area of our conversation.
So you mean completion design, we are going to choose to sell things like kind of a little less at Illinois 50.
50 meter.
Base between stages, so it's going to be a high density entity, but.
So I mean, it should be it should be a very good very good but we know what is happening at the north of our transition. So we know that the area is MPD would one and then after that we will go through it but but six is going to be 15 days side of our consent.
So no it should be but five should be it should be a good a very good but we.
So you've got to let your question that is coming on FX restrictions on board.
Well he launched in mid September the Central Bank of Argentina announced a new capital control that require entities with calculating the national debt and kind of currency look I was over $1 million.
Basically pushing to refinance those plan.
As far as between October 15, Twentytwenty on March 31st when he can do one.
Direct 19, Clangers requires that companies syntel only up to 40% of the principal in cash accessing official exchange rate market in Argentina, and refinancing the remaining 60%.
We have a.
You know 45 million.
Shanler installment of the syndicated loan that Capex cross border impact to us so that basically he really stuck out in 20, I mean, you've got 50% or 60% is.
$22.5 million with 13% in the 60% of the 22.5 that are that ever to be renegotiated in January. So we have already started contracting discussions with the banks.
$30 million no. It is not a big issue for us So I think he's going to have.
In.
Specifically for a word.
ER operation and for our financing a very mild impact.
The impact of course, yes, secondly, got studies or.
Affect control in Argentina, and going forward.
And perception of when this is going to come to an end and if it's anything.
That is going to is not a good position in the fact that we have a concern to us and of course that aspect broadly where our perception in the near future.
Uh huh.
Perfect. Thank you so much bigger.
Thank you. Our next question comes from and that kind of going out with Citigroup. Please go ahead.
And everybody I just want to ask two questions. The first one really has to do with the first portion of Blue No news if the carbonate section at <unk>.
Proves to be successful will you look at incremental drilling location over the 400 wells that you have.
Already mentioned in the past and the second is if the nine to $9 per barrel lifting costs. That's already reflect the full effect of the new contract terms. Thank.
Thank you.
[noise] I embrace and thinking about your question. So yes, the tea leaves the carbonate it's something that we have not considered in order for the country was portfolio. So I think it will have two effects on the portfolio first of all clearly more locations.
Second.
The fact that we manage where we do reservoir management in and we use a Q technique that will allow us also to become better Oh I'm too broadly cover any stake in any kind of potential but in China issue. So I think.
I have two dimension effect, a one for sure movies more locations second allow us to have a.
More freedom intermodal, we do reservoir management for my follow or pullback by the estate wasted. So it's a it's a really good it will be a very good news and those will perform well.
Every sign that we are getting now is is pretty encouraging.
In terms of leasing goes yes, the lifting cost of 99 that you see each of the new prices of the renegotiation that we have done in every single contract.
Effected we'd be got three pulling unit during this quarter.
Quarter. So therefore, you have the full the full cost base, where you don't eat the food production base and production as we go forward with Islam is going to increase therefore lifting costs you shouldn't go ish shoes come now the other thing I think will affect lifting.
Because going forward is the fact that the way leave our garden leave initiative is looking pretty good.
For unconventional I'm sure that will have an impact not only on the productivity of the wells because the math, if we manage to minus those wells.
We artificially in early stage, but also in demo lifting cost she will not require butte pulling you need in order to service those words.
Thank you.
Thank you. Our next question it sounds nice sell many idle with credit Suisse. Please go ahead.
Good morning, everyone. Thank you for taking the question correctly, which was on the results.
Just.
Two quick questions here first one is production. So we saw good for 32.
Dozens or or Boes per day in June.
Preclude numbers were lower than the first.
So I mean, if we could you explain why there were the higher pressure local reflow and these were reopened.
And if.
For me the second question.
Capex going forward I mean.
We expect the same level.
Going forward or I mean or higher higher number given to that number five.
And also should we expect a similar cost or will that number but we do thank you for taking the questions.
Thank you Marcella for your question so are.
Regardless production basically what you have seen is.
No.
You know I mean really Cobiz, we don't believe I mean, a name we.
If it got really again, but also we have the effect of the flush production when we stopped drilling and we have the three parts of which have seen they are you have a combination of two effect.
I want to say that these the build up of pressure that leave us a flush production when we opened that.
And then you have the second effect that was the fact that we shut in our third spot before.
Thats not beat on production. So when you look at Wolfcamp in Sydney.
I would say it enough mm end of March.
Well it was covered on phase three 2000 Boe per day.
Until needed or screen, when we really start to reopen you will see two effects. One is the because of Oh, but three undoubtedly effect that you see there is the flat showing as coming from the mid double production and we should see.
The thing that happened then you have a both physically nation Oh. This opinion of that build up pressure that is basically flat and this is it's a show one and do you see the decline over the past three the handicapping relation will define the median peak I'm second then you've got the flush production.
One of the subsidy as well.
So that's the effect is around 4500 barrels oil per day.
And then after that you will see another in effect on production, but the fact that we shut in pad, one and two and three.
When we were.
Completing the past four okay and that is to avoid.
Basically what we call a frac heat and in order to be able to have a very good completion on.
This is a technique that we use we use.
Yes, sure we shut in the West for a few days and then we reopened then we go back to normal production. So all that enamels escaping err on.
On the same site, saying that now we're going to be timing, one but every quarter. So we will know the effect of the bundle. Nick So you should see first of all.
Overlap in decline and the new plants coming on is solely profile of growing production going forward. Okay. So we are planning to access with a very good rate.
On the other end of December.
In terms of Capex well.
Well, we we finished the year with around.
Two candidates or EBITDA about $200 million.
We believe that we will gain one Patterson every quarter going forward for Twentytwenty one so.
I think you should assume that capex will be around the same level in them of course, but when I mean, the the election of development costs and particularly of course, well have really has been incredible.
We assign assays as I mentioned in the presentation and you have seen on the numbers.
We have managed to reduce the cost of that whereas in normalized basis, well thought out.
Okay more than more than 30%.
And that creates a completely different development costs are going forward. So we are we're looking today or the development costs are down 8.4% so completely different cost base to the one that we thought when we started developing.
[noise] estimation, if you look at if you if you look at on the EBITDA margin point of view and you go back to two years ago and you look at we were generated around 40% EBITDA margin with.
Prices a void of $60.
So today, we're already weekly shade, similar or about EBITDA margins.
In the current environment, we are talking about between 40 and $45 say about it.
Alright, because very much because it's very clear.
Sure.
Thank you and a fine line, there ladies and gentle until I ask a question when you need to press star one on your telephone.
Our next question is from Alex then Shelly with any securities. Please go ahead.
Good morning, gentlemen.
I would see it you can assume that decline for conventional next year it will be.
Between five and 10%.
We can still see.
Drilling and completion cost on a per well basis coming lower than the 11.4 that we you you put it put a for profit for.
Yes, I think you can count on that.
Of course, we are for you continue I mean as our team continued to initial than they are doing.
I will say that less opportunities now.
I believe we see having more opportunities in south a particular area.
We are for example, we're working in a new initiative for Sun.
Where.
Basically we are aiming to come partially in partnering with somebody or were on some money. So thats really views farther down the cost study. So we'll go forward revenue to the use a lot.
Of Sun.
In terms of dollar per ton.
So I don't have on the domain CAD, but let me look at I think we started operation into more $7 per ton.
Probably about $200 per tonne and today, we are around 18 so.
It is already two turn reduction and I think we can take it further down.
Because you're importing less than what you were before we're not we're importing today, we and Celgene.
Thrown suppliers and the next step I mean, basically what the cup coupled with Chinese they'd be more sign more look at Santa available.
More competition.
And better handling in demo mainly seems that.
The way that we write a sound that way that that that they get from the different.
Our CSD capex expenditure in next year.
Weve continued spending capex on facilities, no and weak Catholic Eitan in demo facilities for 2021, and you can count than we will continue reducing price of course of well us and we move forward with the development.
Okay, that's fantastic forgive me up.
You're welcome.
Thank you im not showing any further questions in the queue.
Portion demand. Thank you very much appreciate your support and interest on EBITDA and looking forward to see you.
In the next quarter. Thanks.
And with that ladies and gentlemen, we thank you for participating in today's program. You may now disconnect have a wonderful day.
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