Q4 2020 Vista Oil & Gas SAB de CV Earnings Call
[music].
Ladies and gentlemen, please remain on your lines vs. This fourth quarter and full year 2020 results conference call will begin momentarily once again beef this fourth quarter and full year 'twenty 'twenty results conference call will begin momentarily. Please remain on your lines.
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Ladies and gentlemen, thank you for standing by and welcome to visa as fourth quarter and full year 2020 results conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
To ask a question during the session you will need to press star one on your telephone.
If you require any further assistance please press star zero.
Now my pleasure to introduce strategic planning and Investor Relations Officer Alejandro share Nichols.
Thanks. Good morning, everyone. We are happy to welcome you to reach the fourth quarter and full year 2020 results conference call I'm here with me egg on what you what Mr Chairman and CEO and with probably low it up even though Mr. CFO before.
Before we begin I would like to draw your attention to our cautionary statement on slide two.
Please be advised that our remarks today, including the answers to your questions may include forward looking statements.
These forward looking statements are subject to risks and uncertainties that could cause actual results to materially differ from expectations.
Ladies and gentlemen.
Our financial figures are stated in U S dollars, I mean that correlate with international financial reporting standard for it.
During this call we may discuss certain non-GAAP financial.
Financials measures such as adjusted EBITDA.
Reconciliations of these measures to the closest tire price measure can be found.
In the earnings release debt, we issued yesterday, please check our website for further information.
Our company with oil and gas is associate on only now starting to capitalize on Yodlee organized under the laws of Mexico, but the thing that was on the economy and the New York stock exchange debt.
You guys of our common stock.
In the Mexico net.
<unk> and <unk> in the New York Stock Exchange.
Debt to cap our warranty the T. W O eight day.
I will now turn the call over to Miguel.
Thanks, Alessandro and good morning, everyone on thank you for sure on in this earnings call.
The year, 2020% Ddos multiple challenges and I'm proud to say, we had up to the task.
The presentation that we share with you today shows how most of our key indicators reflect a V shape recovery on the back of any structurally low water development on operating cost.
In short I believe we have emerged stronger from the crisis.
I will respond to Covid pandemic team.
First and foremost by protecting our stuff on ensuring business continuity.
We quickly established a.
Protocol for essential oil.
Asia.
More than 75 per cent of our staff was working from home by the end of March 2020.
We adopted a new protocol to restart drilling completion I'm quoting activity.
This allow us from time to Paul was talking about caused by the way day.
First in our production, but each 35 faustian deal you per day by year end.
Our continuous focus on efficiency gateway to solidly salt Union.
During 2020, we redesigned our type well.
Based on increased total DVD and corporate actions.
This could lead to an expected development cost.
Approximately $8 per year.
We also lowered our operating cost base and then they will see more than 20 oil field services contract.
These net to EBITDA.
Actually on the lifting cost to $8 per unit.
Q4 there.
Therefore, we tend to be tied to a company that is even more precision into low oil prices and vital.
But yet in 2020, our proved reserves increased to $128 1 million barrel oil equivalent.
This imply aricept replays ratio of 371 per cent and an increase of 26 per cent beside the yard in 2019.
This result is a clear reflection of the resilience.
I was mentioning we increase reset or even though for 2020, we used $42 per barrel O'hare light oil price compared with 56 out of oil.
In 2019 to run they serve economics.
We also increased our well inventory by Derisking, the lower travel and airlines installing them behind us by the way day.
With two successful was with two salt from full country meter Latinos.
So I need more productivity through the lower travel on a as an economic play and maybe not to a 150 was to our drilling inventory.
Which now total an estimated five countries 61.
In 2020, we also maintained on a strong focus on sustainability.
Our safety metrics continued to improve having completely rework safety standards and procedures seem we took over these operational lift on three years ago.
Our total recordable incident rate for 2020 was 0.38.
Down from $1 25 in 2019.
Which was already in line with international Tier one standard.
Our first sustainability report will be published at the end of April.
After restarting drilling and completion in Q3 2020, we continued to see improving our pro forma metrics.
On your speed in particular was one country April's Hannibal, but number one.
A remarkable level of inquiry.
When we started our shale oil development drilling at weighted with Tucson.
Hundred meter lateral would take us more than 35 days.
Today, It takes us less than 20 day.
The consistent improvement independent Pete allow us to tie in patent number six.
These days before the scheduled date boosting our production exit rate for the year.
During 2020, we capture cost reduction in drilling and completions average rate that's worth two a lot of propane on flex fuel cost.
But number of seat drilling cost per lateral foot was down to $472, a 37% improvement compared to per number one.
Similarly, the completion cost for patent number zinc was down <unk> 45 per cent.
Finally drilling and completion cost per well was $9 $9 million per pet number to seek a 43% improvement compared to past number one.
Additional efficiency was obtained by improving well design.
As shown to debt.
On the slide we are increasing lateral length on total frac stages.
These are the key drivers to increase well productivity and to reduce development cost to our target of approximately $8 per the hilli.
At $9 $9 million per cost per well achieve in patent number to seek the development cost would actually be below $8 per viewing.
We will deep dive into well productivity in the next two with like.
The chart on the left shows the production per four months of our west and behind us by the way day.
Each one shows and Greg Lang the Blue line is the average production of oil with which is 25 per cent of all our tight corner showing block.
I will leave you with some additional color on our 2020 per format.
And he was we landed in a casino corresponding to put three on Florida.
Total setback on more direct cost for 30 day peak volume.
During the second half of 2020, we accelerated drilling and completion activity and volume, but number four and number five.
Booths at our production in Bajada del Palo Este two on excuse me eight of 22 sourcing deal you better day in December more than tripling, our production year on year.
Finally in the second half of the year, we started our gas and they find out the impact number one on number two.
The preliminary results of this artificially system.
It is a good fit for work on more of that that would be something with.
In the first two part we achieved production increases of around 20 per cent that comparison to gasoline.
Slide number six shows the comparison of our west against yet at West in the Permian and Bakken motivating.
She had a previous version of this chart one year ago and the mismatch is the same I would've ability to deliver world class productivity.
Doug.
In the top graph compared to the Permian was 40 of our with our top quality.
Let us.
Our base was ranked in the top 10 per cent.
Comparison is on normalized basis.
Compared to like on work out west in the bolt on graph all on what it was fall within the top 25% what else what it basically living with a top 10 per cent.
We start 2019 with are shown in purple on 2020 with our show in Black Hawk.
Highlighting that the productivity of our west ranking better year on year.
Our total proved reserves at the end of 2020 stood at $128 1 million viewers.
Up from one country one eight at the end of 2019.
Our reset replay maturation worth 371% in total on 512 per cent for oil.
Net additions were mainly driven by the incorporation of 30, new well locations and because by the way.
Share of itself are now 70% of our total proved reserves.
The important driver we are increasing 10 per cent of tight whereas you are on lower lifting costs.
Improvement more than offset a 25 per cent decrease in realized oil prices.
During 2020, we maintained a solid cash position and a very challenging macroeconomic environment.
Our cash flow from operating activities was solid at $93 8 million. Despite our best realized oil prices that were down 30% with respect 2019.
Cash at all.
Flow from investment activities was $156 1 million.
During Q2, we have stopped all drilling and completion activities in response to the sharp contraction in oil demand.
We took advantage of the flexibility embedded in our contracts to reduce our capex run rate.
He knows with them on recovery.
Disability on our new well design, we have ramped up activity again.
We use the second rig to drill on additional but on site in the 40 year end debt.
Therefore in Q4 2020 cash from investing activities was $55 9 million.
More than two times Q2 on Q3 position in Vista to capture the upside presented by the recovery of realized oil prices.
Cash from financing activities was positive at $25 7 million. During 2020, we successfully raised $100 million in bone in the Argentine capital market day single disease.
I will now go through a summary of our main metrics for the year.
Proof resettle were up 26% year on year with $128, one medium bogey as of December 2020.
Total production was $26 six <unk> per day.
On April 10 down year on year impacted by the effect of the COVID-19 on crude oil demand during Q2.
Oil production stood at $18 3000 barrels per day.
Up <unk>, 4% from 2019.
Given by the ramp up of activity in Q3 on Q4, because by the way day.
Which has more than 90% of oil production.
The light oil prices were $37 $2 per barrel on average for the year.
30% below 2019 net reduction of oil demand caused a contraction in that last one on the oil prices.
Revenues were $274 million, 34% down year on year impacted by the lower production on prices.
Lifting costs improved 70% to $90 per <unk> down from $10 $8 in 2019.
In Q2, we set up.
Therefore to renewables gained more than 20 key oil field service contracts to Rebase our cost structure.
With savings on court on per month, and the lower rate on highly efficient.
Adjusted EBITDA was $96 million for the year down 44 77 2019.
But showing strong sequential recovery during the year you can see in the chart on the right.
Capex for the year was $224 million.
In language was hoping like Dean on 30% lower than our traditional 'twenty 'twenty plan guidance.
Finally cash at the end of the period was $203 million, which leave us in a solid position to fund investing activities during 2021.
In sum 2020 was a challenging year, but we have successfully weathered the storm.
The metric that's a V shaped recovery, including total production on adjusted EBITDA as shown on the right.
For 2020 metrics are solid showing progress on disability pre pandemic levels.
I will discuss the fourth quarter of 2020 in the following slides.
Production in Q4, 2020 were 36000 barrels per day, a 21% improvement quarter on quarter, driven by activity around putting because by the way day.
Production increased 31 per same quarter on quarter to 23 per 1000 barrels per day.
Revenue were $80 million, increasing 14 per cent me Savi Q3, 2020, driven by improvements in production volumes on price.
Q4, 2020 lifting costs can very solid at $8 per barrel. Thanks to our efforts to keep expenditures under control Amit production increases due to the annuity to fixed costs.
Adjusted EBITDA improved 48% sequentially to $36 million for the quarter.
More importantly, it is up 1% year on year, reaching on adjusted EBITDA margin of 45 per cent.
Capex in Q4 was $97 million for the quarter driven by the activity ramp up I mentioned earlier.
Finally cash at the end of the PDR was a solid $210 million with net debt of $330 million.
These constitute and robust starting point to keep developing behind by the way day in 2021.
Moving to slide 11.
Total production is fully recover from the COVID-19 pandemic impact on it is actually up 2% year on year.
We are back on our profitable growth, but driven by a one of a Hyatt bioactive development.
But production was 23% up year on year on 31% sequentially due to the solid number four on the early timing of patent number five.
Gas production during the quarter decreased 3% sequentially as we continue to focus on what are the relevant because by the way day week.
A light oil assets with associated gas production.
Revenues for the reported increased 14 per saying with respect to Q3, mainly driven by higher crude oil production.
Realized oil price was essentially flat quarter on quarter, but these are still down year on year impacted by 29% decline in Brent.
We have partially offset this effect through our commercial effort to reuse the discount to Brent of our oil.
Therefore realized oil prices were only 70% down year on year.
In Q4, we continue our market and therefore cash per crude oil.
Approximately 20% of our revenue came from an export market in the quarter.
We plan to continue this strategy in Q1 2021, a couple of things very competitive discount to Brent in our latest tender.
That on $2 per barrel.
Gas prices were down 27% year on year impacted by softer demand in industrial segment.
We really affected by the important measure.
Net income for Q4 2020 came very solid at $22 6 million represented a 12% reduction year on year.
They think of per the UAE was $8 per barrel 14 below Q4 2019 on 19 below Q3, 2020, driven by the dilution of fixed costs as the production increase.
Net of cost efficiency.
Adjusted EBITDA was $35 $9 million in Q4 2020.
1% above Q4 2019.
Evidence of V shaped recovery.
Adjusted EBITDA was boosted by higher revenues from flood lifting costs, leading to a 48% expansion quarter on quarter.
Adjusted EBITDA margin was 45% improving 10 percentage points sequentially on a percentage point yet on it yet.
This performance was achieved with a realized oil price of $40 per Nevada, we keep 70% down year on year.
Net back or adjusted EBITDA per order on a Q4 2020 was $12 $7 per day.
I think the thing that back debt in Q4, 2019, with an average oil and gas realized price debt was $7 lower.
This is a clear evidence of Vista potential for further margin expansion at higher oil prices.
We are realizing today cash.
Cash at the end of Q4 2020 was $203 million.
In Q4, 2020 customer operation was $27 million 41 per cent increase quarter on quarter, driven by higher adjusted EBITDA generation.
Cash from investing activities was $55 9 million mainly.
Mainly driven by activity on pumping behind by the way day.
As I explained earlier.
Finally cash flow from financing activities was positive in Q4 2020, we raised another $20 million in the Argentine capital market in dollar linked bond with maturity.
32 on 48 months.
I will now briefly on our guidance for 2021.
He is quite exciting considering the challenging 2020, we went through.
Instead move activities and because by the way that we plan to keep drilling and completion.
At current run rate.
With wondering Rico operation in our core acreage.
We expect to die in 16 shale, whereas during the year for a total of 36 producing wells by year end.
Our production guidance for 2021 is between 37 and 38 <unk> per day.
A 40% improvement year on year with.
We want that to be dying each quarter, we forecast sequential growth quarter on on.
On exit rate above 40000 Boe's per day.
Our plan reflects a lifting cost at least $8 per Boe for the year, we are expecting a slight sequential increase in Q1 2021 due to a ramp up in pulling activity at one quarter we show.
Action year on year with a total annual production of at least 12 per cent compared to 2020.
We are targeting adjusted EBITDA at $275 million.
Tripling, our 2000 Twenty's adjusted EBITDA based on a conservative $45 per barrel realized oil price.
For every day, though that added to our realized oil price adjusted EBITDA good growth.
We are planning capital expenditure for 2021 to be in line with adjusted EBITDA of $275 million.
At our conservative oil price and Audi.
Finally, we plan to maintain gross debt at current levels to achieve a quick normalization of our leverage ratios by Q3 2021.
I will now recap on the main points of two day presentation. We continued to deliver a world class well prove D V. D. Now what about Palo core acreage our operating as well is performing 25% about Vista type curve on 70% of our was ranked in the commodity top Tim.
Dan.
The ramp up of activity in Q4, 2020 boosted our production setting the stage for continued grow in 2021.
Our rebased cost structure led to a lifting cost of $8 per day Youre in Q4.
On an adjusted EBITDA margin of 45% at $40 per bottle.
This leaves Q4 2020 machines about Q4 2019 levels when oil prices were 17% higher on proof, our resilient to lower oil price scenario in the future.
We maintain a solid balance sheet with over $200 million on cash at the end of 2020 fully prepare to face our 2021 capex plan.
For 2021, we expect solid growth metrics with production, increasing 40% year on year on adjusted EBITDA tripling to $275 million.
We expect adjusted EBITDA margin above 50%, we realized oil price is at $45 per barrel.
Before we move to Q&A section.
<unk> like to thank.
Our investors for their continued support.
On the team at Vista for their passion on our car worth during a very challenging year.
We will now move to Q&A.
Okay.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone.
Draw your question press the pound key.
Please standby, while we compile the Q&A roster.
Okay.
Our first question comes from the line of Andreas <unk> with Citi.
Hi, good morning, everyone.
Non little Pablo on the half.
Two questions.
First one on knees and when we look at your 2021 guidance. There are four part study.
Get into to drill. The question is what is the strategy. There are you got a good thing to death, but he is the new zones that you test with Pat number five on number of seats or are you targeting to test a new areas in the block. The second question has to do with oil.
Price, how do you expect to see the realization price has seen 2021 and in particular on the first quarter, how should we think about debt given the street.
Frictions in the local market on the second on the last question has to do with the lifting cost.
But as she reduction of 20% credit on quieter on.
Betty solid guidance for next year at similar levels, but what I would like to understand is can you split it between E on.
Unconventional production unconventional production the lifting how does it look for each of them. Thanks.
Yes.
Hi, Andrea Thank you for your question.
Would you talk to.
Look at just the study with the first question really deal with a strategy of day regimen for 2021.
Well I mean between end of 2020 on the campaign that we are going to dovetail on we're talking 2021.
We are not planning to be released new songs.
That would be clearly means we got proofing carbonated by force.
I mean, we are amazed with the result of the carbonate, but we don't have a plan to develop further away from the kind of one eight.
<unk> 2021.
I don't want to say that that is not going to change, but that is not the plan at the moment with core debt give us optionality and personality that we didn't know a few months ago.
And again, we are following closely.
Well if it goes with a two day continue performing quiet about our titles.
Now some of the bad yes.
It has been placed in a position where should I speak clearly, we can say that we had a sort of day.
In our area.
But number seek with all the way to the east.
Number five with all the way to the north and therefore.
Yes, that's seinfeld.
<unk>.
It's helping us to repay area no back 678 year night that is what we have a hit in 2021.
In the quarter.
Commodity so we have drilling per production release.
On 'twenty 'twenty, one you're focused on that focus on the guidance and focus on the financial report.
That is pretty much the strategy. So you would see the dose but seek seven eight a night.
Basically the core of the quota.
By the way.
And from a pricing.
Are you as you have seen we havent given we are basically running our members on our plan for 'twenty 'twenty, one with $45, but about it on guidance.
We finished 2020 Q4 week.
Realized prices were 40.
On one thing is important for us to understand on that.
D 90 day dynamic growth pricing, we have two source of revenues one coming from our local refineries on one coming from on our books.
But.
Each agreement on faith, putting some seem that we close.
We closed a hip.
Reported.
A few months of production.
There are 40 in Q1, we've been meeting with the crisis.
That we close in December and November.
And affordably.
For the refinery, but I'd seen low price of the pump.
Actually the NAMIC could be nourishing housing demand.
On the basically just to be fair it goes both ways.
When Brent price is gone up we don't see that debt.
Price on the refineries assets immediately mirroring the bang on.
Then Bren come down also we don't see it basically we have never seen a pound reduction in Argentina price.
Argentina EBITDA.
So for.
For Q1.
We should expect for ICF.
Price is close to our guidance, okay, it could be slightly above budget.
Going to be close to our guidance.
For Q2.
Yes.
Price is I believe that will be play out in our guidance for us for whatever I mentioned before.
If you if you're willing our local refinery price.
Pricing two day.
But we have seen we don't mention any names out of about $50 put about it.
So I guess does that give you.
Kind of a sense of where we are pricing wise to day, where we were where we are going to be in Q1 on where we expect to be true.
The last question is regarding lifting cost or.
Lifting gross before our unconventional first of all I don't know if we can I mean, we cannot completely because between conventional and unconventional but.
We look at the lifting gross of unconventional assets incremental lift in gross.
Because southern Cal we are using the platform that we have in the convention convention and demo facilities.
Uh huh.
Simon from the people.
Good setup at dusk unsold.
So.
I wouldn't say that we're lifting costs weighed on conventional is probably close to affordable without the loggers.
And today, we are having eight on we started the separation with 17 with no production coming from the unconventional.
So we plan doesn't go that low.
<unk> gross probably to continue growing EBITDA quite a bit of balance as we increase the percentage of volume unconventional production.
Duluth.
Gross but we got four day four day called wholly scheme.
So.
We can say per lift can go through on income mentioned ankle mentioned I don't see that is going to be.
Okay.
And to access sites.
But clearly as we add unconventional production at sort of not a lot of third.
I don't know if anything goes we see our total it can cause a decreasing.
Thank you guys and congratulations again.
Thank goodness.
Thank you and our next question comes from the line of Alejandro Demichelis with and they use securities.
Yes, good morning, gentlemen.
Couple of questions. Please could you.
Give us some kind of guidance, how you see the drilling and completion costs evolving on.
Conversion price.
You are going to be focusing on the core perfect question and then the second question.
On.
Would you say in total.
Pricing dynamics in Argentina, but if prices remain high can we see capex going up much more than the rundown on.
Or do your guidance now.
Yeah.
Thank you Alexander for your question so.
Good evening on completion growth from development growth overall.
[laughter] gunk.
Come up come down when they beat it seems with debt operation more than maybe we'd probably a lot.
And that's happening base basically in.
Four months when I mean per four months is leading this fleet completion strategy on.
Also.
Basically the renegotiation on day rates that we need to oil.
All the contracts.
During a pandemic, but also eat for pandemic.
I don't know if you recall.
The way that we can oh.
Our main service companies, mainly drilling rig from 76.
Based on something that we are very proud of debt.
A scheme that we call <unk>.
We not only.
Paid for it's Gotta be sheesh, we also pay per performance and.
On a four months is Michelle Ah.
I see come on per four months of us on the service company. So even we reward people on the rig site.
We did see me net with the.
Famous keen for service companies.
People in order to create debt that maintain the speed.
And of course, but it will you see in <unk>.
On slide number four.
Come down from an hour from instead.
And then people from 17 $4 million two nine per night.
And we believe we have.
<unk> room to continue reducing.
We set.
Probably I.
I would say another medium for sure.
Maine.
Sources of.
Cost reduction could be for example sang.
So I need something that we continue.
Developing.
We are thinking in developing our own source, we are investing capex in doing that you see here on also we are looking at another.
Another modification in the process, if you see that being debt it somewhere else that we believe could also bring further cost reduction in terms of low sheet.
So we really like this on.
So.
The short answer for you is yes.
We believe we can we could continue to using the drilling cost probably not at the speed that we've been doing so far but there's still room to improve there.
From a capex.
Well, we basically.
But it's just the guide on is what we call plan.
On.
We have no plan to change debt, but we have a plan to look at where we are in Q4.
So if in Q4, but it is realized price is to be more.
Precise.
Sure.
The lower room.
We are on.
[noise] quiet about our plan on.
Our plan is a very aggressive plan. So it has to be.
And understanding situation and pricing performance.
We have been on option in our.
In our Dean on in our plan to.
Probably.
<unk> SEC pvt.
For Q4.
You remember that one of the thing that we did during the pandemic on was for me a very.
Hey, Larry.
A very bold.
Volume movement was we commit to them key set of its companies with non term contracts.
But building in debt and low flexibility.
So we got the Frac fleet contracted for a few years, we have re contracted from few yes, we feel like she believes in our contract to Q that on just dumped on.
On Tuesday.
That makes him uniquely we basically are commanding the speak on the performance and the timing of our the way we are.
We are shedding those contract with other companies.
One of them choosing to use because of where those are.
Equipments are not dedicated to us.
But at the same time, we come on debt.
We we own those contracts.
Nobody can move on so that is helping us in Q4, if you we want really to take advantage of renewed price scenario.
On pricing scenario to be able to.
You could even get Pvp.
If you require.
Okay. Thank you.
Just a follow up when you talked about the increasing activity come on we see a second rig coming on each engine tumor.
Uh huh.
For your model I would consider it a one more but in Q4 on.
Additionally.
But number 10.
Okay. That's fantastic. Thank you.
Youre welcome.
Thank you.
Next question comes from the line of Marcel Jim theory.
With credit Suisse.
Yeah.
Good morning, everyone. Good morning, Miguel Thanks for taking the questions and congratulations on day results.
I have two questions for today.
The first one could you provide.
It does.
Kind of a capex breakdown I mean, how much is on conventional homewood.
On a conventional.
And if a blend gas four is.
Probably impacting on how much does it impact and it's too on the Capex side.
Is there any risk.
Restriction rigs.
Regarding the capital restrictions from the Central Bank and maybe a second topic.
I mean, some more general way.
Where should we expect on Vista productions.
Going to the next few years, let's see.
Thank you for the court to conditions.
Thank you Marcelo on a really good question so.
For the Capex breakdown.
So we are we are.
We are reporting on the guidance $275 million.
From which they must surely east, Florida, but commodity unconventional drilling. These 60 wells drilled on the 16 completions. So you have a day or probably around $220 million of unconventional.
On a.
Capex then you've got on its more Fortunately for convention on their own $25 million.
You have $40 million in Mexico.
You have.
Less than $10 million on a on a sun initiative related to the previous question.
Alexandra on.
And that you have on others to complete the 275 million, but that is mainly the breakdown. So most of the investment.
As related to.
But from what about development balance to be more precise on data you have oil. So you have any split between drilling and completion you have investment in facilities you have an investment on our studies. So that debt is that is the bulk of oil.
Weighted investment.
Your next question was related to.
<unk>.
So maybe just a follow up a quick follow up on the previous questions.
I mean is there any impact of plagued us for on the Capex I mean, how much.
It would be the capex.
There wasn't a blend gas for.
So Glenn gas I mean, we.
We are not very meaningful so all the guidance that we gave if if <unk> got two our oil development the blood gas gas gave us an additional pricing.
But if it's out on $1 per million Btu, so that if oil what.
What we get from language, we participate in the blackout, because we saw that upside, but we have not changed at all our development plan on water with strategy and development due to us because our main machines, our main business on the nature of our associates.
If oil focus.
I mean your question I think it's a it's a very good question. It relates to how we see on beef going forward in Denmark from development on pricing so.
If he if he ate big keep what we have what we have to go through in 2020 PM probably late 2019.
The main achievement.
The team has been the structure of our cost base.
Base in two main elements 18.
Operations.
The channel efficiencies I know.
So from a performance.
The fact that today, we have a total.
Development goes on where we need from the lift can go what he piece.
That put us as I mentioned in the presentation.
Position to have better margin that we have a year ago.
Week $5 <unk> price of $40 a margin of 45 per cent machine, so there'll be that so.
It has been the main achievement.
In 2021.
On the Iraq definitely structuring and also higher prices on the stronger demand.
What we are doing is returning to profitable growth.
And we are returning to profitable growth with a minimum elaboration on union one Rick.
On one Frac fleet.
In a moment, but everybody is fighting for reach something simple like crazy in Argentina, we haven't secured on not only secure I mean, we are at 10 basis.
Based on debt if you shouldn't see that we create with the same crew with the same rig with the same frac fleet with the same scheme.
Two years ago.
Going forward on Boeing on 'twenty 'twenty, two and onwards, we can spin youll see growth even with these minimum operational unit that we mentioned one rig on one truck fleet.
But.
And in this scenario that we that go on.
With that minimum.
Commitment, we are going to be a company that we are going to be creating free cash flow. So we are going to be generating free cash flow.
That was it.
The next decision from what has to made in 2022 on one word is what we are going to do with that free cash.
On this we have different ideas different scenarios on of course is going to depend on the context, but 2021.
In 2021, we are going to green economy.
Everything that we have done in demonstrate structuring the lifting cost on the development cost of Vista.
And then you see the context places like for US 'twenty 'twenty two onwards now the decision is what we're going to do with a company that's got free cash flow generation and very good numbers.
I caught back up answer your question.
Yeah very clear thank you very much.
Thank you.
And our next question comes from the line of <unk> Fernandez with balance.
Yeah.
Good morning to everybody. Thank you for the materials on and congratulations on the recent performance on renewals.
Any questions I would like to go one by one if you don't mind.
The first one is related to what we have seen in the media or in the press talks about.
Certain industry players in conversations refinery to syncrude producer to conversations regarding an internal crude price.
Would you go on please see if this is something that it's really moving forward or maybe we should.
But to see higher crude prices before this really becomes something.
Color on figures well. Thank you for the question.
I think as I mentioned before.
During the presentation.
I think just got a week a week.
Net.
To date refineries.
Paying about $50 per Nevada, so that's.
About 50 over by the D. C D C, where we are two day.
As I mentioned before.
We should have any narrow Shane Argentina on IHOP.
I have been through these cycles before and then Dinesh and means that we seek in internationally.
Crude oil prices when they were in Greece.
We don't capture that immediately in the look on monarch.
The difference between what I have to leave before and two day.
Even though we have additional volume that can be airport.
So our realized price is now is a basket of local CRU.
Prices on.
On.
Uh huh.
A portion of.
Of pricing that come from our expert.
But they look at crises.
We have seen in the bus debt in order to manage that in the next year they are us.
And I've been through to periods, where the industry.
Basically you get together and agree how to transition that.
Net pricing, what kind of never seen either industry not to fight for export parity.
Or even to fight for something that is between export and import parity.
So how we get to at 430 P M.
We'd be basically there in the market.
On agreement between producers.
Total users operators on refineries in order to get there. So I'm not surprised that they are doing more so on the price on that.
People getting together, we have not yet participated.
We have this conversation, but in the past.
More than conversations I've seen may being a dynamic too to get into DCF per body, but again it does not in Argentina.
Coming to the palm onto the refinery crises.
Immediately when we see an increase from international crude oil prices.
That's great. Thank you and my second question is related to.
Two possibilities hopefully you see it are you going to be getting close to 40000 barrels equivalent barrels per day production.
Hopefully, we will see more growth in.
2022, 2023, so what is your limit now in terms of treatment capacity and where do you think you will need to do.
Yes.
It's a good question on as I mentioned before I think.
'twenty 'twenty two 'twenty 'twenty free.
We've got a company that will be simulating cash and we will.
We'd be in a situation, where we can decide what we do with add on of course, one of them showing is would it be continue growing on even more reach on.
On and continue willing since we have the reset of day to do that.
We mentioned that share with addition of the kind of on Hey, we've got probably north of 500 locations to be drilled.
So the question will be what is the base.
Our plan.
In demo facilities.
It seems that even though we got two day debt, what we call ready to feed esignature nerio debt, we come and go on a share at 18 cash without.
Adding much more capex in additional facilities doesn't mean, our facilities we handle on.
50000 barrel per day, we no issues with just eat such Betty.
It's more incremental Capex, if you really want to go to.
<unk> reached three weeks on affinity that the regimen, we will have to plan for additional capex in Denmark facilities.
Mainly about debt each on our stations on some probably refinery.
Treatment plants.
Yeah.
And finally are you looking into M&A or not really at right now.
We always look to M&A because for US. It continues exercise that we do just to just to just broadly to keep rush island should keep looking uneven to compare what we have.
The reality is very difficult to find on opportunities that much on the quality of the resources that we have on the quality of the economy that we have on.
And also we are very pragmatic we no debt.
But we are very good.
What we do.
On one element of that is the focus that we have so.
Saying that yes, we're looking.
Well, we have look at it.
He proof that never get even close to what we have income so.
Just to give you a short answer to day that focuses on where are we adding because by the way the embark on more of the on on.
This is where we went wrong to be concentrated in the next to EPS.
Also see value in being a pure play a very focused player.
Doing what we do.
That's great. Thank you very much.
Okay.
Thank you and I'm showing no further questions so with that I'll turn the call back over to management for any closing remarks.
Right.
Well. Thank you very much for participating we are really happy to win.
Being here on.
I mean take the pandemic on opportunity.
Raising our I would of course and really very excited.
On top.
<unk> 'twenty 'twenty, one with a growth plan. So thank you for your support thank you for reported duration on a have a good day.
Ladies and gentlemen, thank you for participating on today's conference. This does conclude the program and you may now disconnect.
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Okay.
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Ladies and gentlemen, thank you for standing by and welcome to Vista is fourth quarter and full year 'twenty 'twenty results conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
To ask a question during the session you will need to press star one on your telephone.
If you require any further assistance please press star zero.
Now my pleasure to introduce strategic planning and Investor Relations Officer Alejandro share Nichols.
Thanks. Good morning, everyone. We are happy to work on and get the rest of the fourth quarter on full year 2020 results conference call and share with me I got low choppy start Jan on our CEO and with Pablo it up into this tough CFO.
Before we begin I would like to draw your attention from our cautionary statement on slide two.
Yeah based on our remarks today, including the answers to your questions may include forward looking statements.
Forward looking statements are subject to risks and uncertainties that could cause actual results to materially differ from expectations contemplated by these remarks.
All financial figures are stated in U S dollars, I mean, not quite up with international financing reporting standard for it.
However, during this call we may discuss certain non financial measures such as adjusted EBITDA.
It's the nature of these measures to the closet day upright measure can be found.
In the earnings release that we issued yesterday, please check our website for further information.
A company with the oil and gas that bucket on only now starting to capitalize on Yodlee organized under the laws of Mexico, but you're saying there was havoc on Io I noticed on the New York stock exchange debt.
Cash off our common stock at Vista.
In the Mexico net.
Both each day and you see in the New York Stock Exchange.
Debt to cap on warranty.
T W O eight eight.
I would now tell the crowd the call over to legal.
Thanks, Alessandro and good morning, everyone on thank you force rank in this early in court.
Hey, you have got it right.
The percentage, that's multiple challenges and I'm proud to say, we had up to the task.
The presentation that we share with you today shows how most of our key indicators reflect a V shape recovery on the back off on a structurally low water development on operating cost.
In short I believe we have to emerge stronger from the crisis.
Our response to Covid pandemic team.
First and foremost by protecting our staff on ensuring business continuity.
We quickly established protocol for essential oil field operations.
75% of our staff was working from home by then March 2020.
If you like we adopted a new protocol to restart drilling completion I'm quoting activity.
This allow us to trying to force, while passing behind by the way day.
Boost in our production, but in each 35000 per day by year end.
Our continuous focus on efficiency gave way to solve the consult.
In 2020, we redesigned our type well.
Based on increased from DVD and corporate actions.
These got net to our expected development cost.
Of approximately $8 per year.
We also lowered our operating cost base and renegotiating more than 20 oil field services contract.
These net whether that's from the lifting cost to $8 per euro in Q4.
Therefore, we've gotta be tying to a company that is even more resilient to low oil prices and vital.
But yet in 2020, our proved reserves increased to $128 1 million barrel oil equivalent.
This imply 70 plays ratio of 371 per cent and then an increase of 26 per cent beside the yard into something like low.
This result is a clear reflection of debt senior.
It was mentioned Natalie we introduced me setting even though for 2020, we used $42 per barrel O'hare light oil price.
With 56, but a lot of it in 2019 to run the sort of economics.
We also increased our well inventory by Derisking. They know what a couple of net lending so on and behind us by the way day.
With two successful wells with 2004 countries like Iraq.
So all in well productivity through the lower carbonate as an economic play, enabling us to add 150 west to our drilling inventory.
Which now total an estimated 551.
In 2020, we also maintained on a strong focus on sustainability.
Our safety metrics continue to improve having completely rework safety standards and procedures. Since we took over these operational lift on three years ago.
Our total recordable incident rate for 2020 was 0.38 down from $1 25 in 2019.
Which was already in line with international Tier one standard.
Our first sustainability report will be published and then of Apis.
After restarting drilling and completion in Q3 2020, we continued to see improving now on a pro forma metrics.
Pete in particular was one country eight per cent out part number one.
And remarkable in any quarter.
When we started our shale oil development drilling at weighted Tucson, 800 meter lateral that would take us more than 35 days.
Two day takes less.
120 day.
On a consistent improvement in there and it did allow us to time Pat number six.
Before the scheduled date boost in our production exit rate for the year.
During 2020, we capture cost reduction in drilling and completion savings rate as well as to where that propane aflac doing cost.
And Pat numbers seat drilling cost per lateral foot was down to $472, a 37% improvement compared to per number one.
Similarly, the completion cost for patent number eight was down 45 per cent.
Finally drilling and completion cost per well was $9 $9 million per pet number I think a 40% improvement compared to Pat number one.
Additionally, efficiency was obtained by improving will decide on.
As shown to the right on the slide we are increasing lateral length and total frac stages.
These are the key drivers to increase well productivity to reduce development costs to our target of approximately $8 per unit.
On the $9 9 million dollar cost per well achieve in putnam to seek their development cost.
Probably be below $8 per viewing.
We will deep dive into where productivity in the next two at night.
The chart on the left shows the production performance of our west and behind Us by the way day.
Each well shows and Greg Lang the Blue line is the evidence production of all way, which is 25 per cent of all our tight corner showing block.
We gave you some additional color on our 2020 per form.
And he was we landed in low casino corresponding to pad three on Florida setback on more direct cost for 30 day peak oil.
During the second half of 2020, we accelerated drilling and completion activity and tightening, but number four and number five is boosted our production and behind us by the way to on exchange rate of <unk>.
92, South San Diego you per day in December more than tripling, our production year on year.
Finally in the second half of the year, we started our gas lift pilot in patent number one on number two debt.
The preliminary results of this artificially system.
It's a good fit for work on mortality Sunbelt way.
In the first two but we achieved production increases of around 20% debt.
Comparison to gas lift.
Slide number six shows the comparison of our work against the other way in the Permian on back amortization.
I see on a previous version of this chart one year ago and the message is the same our ability to deliver work that productivity is still.
Still intact.
In the top graph compared to the Permian weighted 40 about what was our top quality warehouse.
Our best it was ranked in the top 10%.
Comparison is on normalized basis.
Compared to like on work out west in the bolt on graph all on what it was all within the top 25 per cent.
What else what it basically living with a top 10 per cent.
This debt yourself from 19 wells are shown in purple.
In 2020 with our show in black highlighting that the productivity of our west ranking bad debt year on year.
Our total proved reserves at the end of 2020 stood at $128 1 million.
Up from one country one eight at the end of 2019.
Our recent replay maturation worth 371 per cent in total on 512 per cent for oil.
Net additions were mainly driven by the incorporation of 30, new well locations and because by the way.
Share of itself are now 70% of our total property tax.
The important driver we are increasing 10% of day, whereas you are on lower lifting costs.
Improvement more than offset 25 per cent decrease in realized oil prices.
During 2020, we maintained a solid cash position and a very challenging macroeconomic environment.
Our cash flow from operating activities was solid at $93 $8 million. Despite our best realized oil prices that were down 3% with respect yourself from Nike.
Cash outflow from investment activities was $156 1 million.
During Q2, we have stopped all drilling and completion activities in response to the sharp contraction in on demand.
We took advantage of the flexibility embedded in our contracts to reduce our capex run rate.
In August with them on recovery.
Disability on our new well design, we have ramped up activity again.
We use the second rig to drill on additional but on site.
In before year end debt.
Therefore in Q4 2020 cash from investing activities was $55 9 million more than two times Q2 on Q3 position and beat that you capture the upside presented by the recovery of realized oil prices.
Cash from financing activities was positive at $25 7 million dollar during 2020, we successfully raised $100 million in bone in the Argentine capital market day single digit.
I will now go through a summary of our main metrics for the year.
Proof reseller were up 26% year on year with $128 1 million as of December 2020.
Total production was 26 6000 per day.
9% down year on year impacted by the effect of the COVID-19 on crude oil demand during Q2.
Oil production stood at $18 3000 barrel per day.
0.4% from 2019, driven by the ramp up of activity in Q3, and Q4 in <unk> by the way day.
Which gas more than 90% of oil production.
The light oil prices were $37 $2 per barrel on average for the year, 30% below 2019.
Election of oil demand caused a contraction in international oil prices.
Revenues were $274 million, 34% on year on year impacted by the lower production on prices.
Lifting costs improved 70 per cent to $9 per <unk> down from $10 $8 in 2019.
During Q2, we set up a specific task force to renewable scale more than 20 key oil field service contracts to Rebase, our cost structure with savings on court on per month in the lower rate and higher efficiency.
Adjusted EBITDA was $96 million for the year down 44 per 77 2019.
But showing strong sequential recovery during the year you can see in the chart on the right.
Capex for the year was $224 million in language yourself from 19, 3% lower than our original 2020 plan guidance.
Finally cash at the end of the period was $203 million, which leave us in a solid position to fund investing activities during 2021.
In sum 2020 was a challenging year, but we have successfully weathered the storm.
The metric that's a V shaped recovery, including total production on adjusted EBITDA as shown on the right Q.
Q4, 2020 metrics are solid showing progress with PREPA.
And any clarity on.
I will discuss the fourth quarter of 2020 in the following slides.
Production in Q4, 2020 were 36000 barrels per day, a 21% improvement quarter on quarter, driven by activity ramp up in because by the way day.
Oil production increased 31 per same quarter on quarter to 23.1 thousand barrels per day.
But having you on where $80 million, increasing 14% vis vis Q3, 2020, driven by improvement in production volumes on price.
Q4, 2020 lifting cost came very solid at $8 per barrel.
Two our efforts to keep expenditures under control Amit production increases due to the annuity to fixed costs.
Adjusted EBITDA improved 48% sequentially to $36 million for the quarter.
More importantly, it is up 1% net on yet reaching an adjusted EBITDA margin of 45 per cent.
Capex in Q4 was $97 million for the quarter driven by the activity ramped up I mentioned earlier.
Finally cash at the end of the video was a solid $210 million with net debt of $330 million.
These constitute and robust starting point to keep developing behind by the way day in 2021.
Moving to slide 11.
Total production is fully recover from the COVID-19 pandemic impact on it is actually up 2% year on year.
We got to work on our profitable growth, but driven by our higher bioactive development.
What production is 23% up year on year on 31% sequentially due to a very solid number four and the early timing of patent number five.
Gas production during the quarter decreased 3% sequentially and we continue to focus our development and because by the way day.
<unk> is a light oil assets with associated gas production.
Revenues for the quarter increased 14% with respect to Q3, mainly driven by higher crude oil production growth.
Light oil price was essentially flat quarter on quarter, but is still down year on year impacted by 21% decline in Brent.
We have partially offset this effect through our commercial effort to reuse the discount to brand of our oil.
Therefore realized oil prices were only 70% down year on year.
In Q4, we continue our market and therefore cash per crude oil.
Approximately 20% of our revenue came from an export market in the quarter.
We plan to continue this strategy in Q1 2021, I have obtained very competitive discounting to brand in our latest tender on that.
Around $2 per barrel.
Gas prices were down 27% year on year impacted by softer demand in industrial segment severely affected by the quarantine measures.
This income for Q4, 'twenty 'twenty to embellish on it at $22 6 million.
That represented a 12% reduction year on year.
Think of per viewer you was $8 per barrel 14 below Q4, 2019, I'm 19 below Q3, 2020, driven by the dilution of fixed costs at the production increase and higher cost efficiency.
Adjusted EBITDA was $35 $9 million in Q4 2020.
1% above Q4, 2019, a solid evidence of V shaped recovery.
Adjusted EBITDA was boosted by higher revenues on slide lifting costs, leading to a 48% expansion on quarter on quarter.
Adjusted EBITDA margin was 45% improving 10 percentage points sequentially on a percentage point year on year. Despite.
This performance was achieved with a realized oil price of $40 per barrel, which is 70% down year on year.
Net back or adjusted EBITDA per barrel of oil.
For 2020 was $12 $7 per day.
I think the thing it back debt in Q4, 2019, with an average oil and gas at a price that was $7 lower.
Is that clear evidence of Vista potential for further margin expansion at higher oil prices.
Realizing today.
Cash at the end of Q4 2020 was $203 million in.
In Q4, 2020 customer on operation was $27 million, a 41% increase quarter on quarter, driven by higher adjusted EBITDA generation.
Cash from investing activities was $55 9 million maybe.
Mainly driven by activity on pumping behind by the way day.
As I explained earlier.
Finally cash flow from financing activities was positive in Q4 2020.
You raised another $20 million in the Argentine capital market in dollar lien bonds with maturity of 30 to 48 months.
I will now present, our guidance for 2021.
It is quite exciting considering the challenging 2020, we went through.
In terms of activities on behalf by the way that we plan to keep drilling and completion.
At current run rate.
With one drilling rig corporation in our core acreage.
We expect your time 16 shale oil wells during the year for a total of 36 producing wells by year end.
Our production guidance for 2021 is between 37 and 38000 Boe's per day.
40% improvement year on year.
We want to retain each quarter, we forecast sequential growth quarter on.
On exit rate about 40000 barrels per day.
Our plan reflects a lifting cost at least $8 per the UAE for.
For the year, we're expecting a slight sequential increase in Q1 2021 due to a ramp up in pulling activity adult quarter, We show a reduction year on year with a total annual reduction of at least 12 per cent compared to 2020.
We are targeting adjusted EBITDA at $275 million tripling, our 2000 Twenty's adjusted EBITDA based on a conservative $45 per barrel realized oil price.
Do you have any though that added to our realized oil price adjusted EBITDA good growth.
Yeah.
We are planning capital expenditure for 2021 to be in line with adjusted EBITDA at $275 million.
Our concern about if oil prices and audio.
Finally, we plan to maintain gross debt current levels to achieve a quick normalization of our leverage ratios by Q3 2021.
I will now recap on the main points of two day presentation, we continued to deliver a world class well productivity on our behalf Palo core acreage I.
Whenever you ask well is performing 25% about Vista.
Right cool on 70% of our were ranked in the commodity top 10 per se.
<unk>.
The ramp up of activity in Q4, 2020 boosted our production setting the stage for continue growth in 2021.
Our rebased cost structure led to a lifting cost of $8 per day Youre in Q4.
On an adjusted EBITDA margin of 45% at $40 per barrel.
This leaves Q4 2020 machines about Q4 2019 levels when oil prices were 70% higher on proof, our resilient to lower oil price scenario in the future.
We maintain a solid balance sheet with over $200 million on cash at the end of 2020 fully prepare to face our 2021 Capex plan.
For 2021, we expect solid growth metrics with production, increasing 40% year on year on adjusted EBITDA tripling to $275 million.
We expect adjusted EBITDA margin about 550%, we realized oil price is at $45 per barrel.
Before we move to Q&A section I would like to thank.
Our investor for their continued support.
All the team at Vista for their passion on our car work during a very challenging year.
We will now move to Q&A.
Okay.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone.
Go on your question press the pound key.
Please standby, while we compile the Q&A roster.
Yeah.
Okay.
Our first question comes from the line of Andreas <unk> with Citi.
Hi, good morning, everyone on.
No.
I have two questions.
First one on knees and when we look at your 2000 and 'twenty one guidance there are four part study.
To get into to drill. The question is what is the strategy. There are you targeting two debt risk the new zones that you test with Pat number five on number six or are you targeting to test a new areas in the block. The second question has to do with oil.
Price, how do you expect to see the realization price has seen 2021 on in particular on the first quarter had you would think about that given the.
Frictions in the local market on the second on the last question has to do with the lifting cost. It's an impressive reduction of 20% credit on Quater on a very solid guidance for next year at similar levels, but what I would like to understand is can you split it between a.
Unconventional production unconventional production the lifting how does it look for each of them. Thanks.
Yes.
Hi, Andrea Thank you for your question.
Would you talk to them.
Look at just the study with the first question really our strategy on a day regimen for 2021.
Well I mean between end of 'twenty 'twenty on the campaign that we are going to dovetail on we're talking 2021.
We are not planning to be released new songs medically. He means we got proofing carbonate impactful.
I mean, we are amazed with the result of the carbonate, but we don't have the plan to develop from there was something kind of one eight in 'twenty and 'twenty one.
I don't want to say that debt is not going to change, but that is not the plan at the moment of course debt give us optionality and personality that we didn't know cash.
On a few months ago.
And again, we are following closely.
Action well, if it goes well.
Continued performing well above our tight curve.
Now some of it but yes.
It has been placed in a position where geographically we can say that we have sort of de risking our ADR.
But number of seats all the way to the east.
Number five with all the way to the north.
And therefore it.
Yes, that's seinfeld.
<unk>.
It's helping us to literally theory, no back 678 year Knight, we have a hit in 2021 iron ore in the quarter at each commodity.
So we had really good production really.
And 'twenty 'twenty, one focus on that focus on the guidance and focus on the financial charge. So that is pretty much. The strategy. So you will see the dose but seek seven a night.
Basically the core of the quota.
By the way.
And from a pricing.
Are you as you have seen we are giving we are basically running our members on our plan for 'twenty 'twenty, one with $45 a bit about it on guidance.
We finished 2020 Q4 week.
Price is a 40.
On one thing is important for us to understand on H D. 90 day dynamic pricing, we have two source of revenues one coming from our local refineries on one coming from on our export.
Exports.
Each agreement, putting some seem that we close.
We closed a hip or a quarter or sometime.
On a few months of production there are 40 in Q1, we've been leading with the crises.
Now we close in December on November.
Unfortunately.
For the refinery pricing or price of the pump gas.
The NAMIC Covid nourishing Argentina.
Basically just to be fair it goes both ways.
When Brent price is gone up we don't see that right price on debt refunding that each asset.
Meanwhile, in Japan on when Brian come down also we don't see it basically we have never seen a pound reduction in price and there are certain Argentina.
So.
For Q1.
I think we should expect but icf's average realized.
Price is close to our guidance okay. It could be slightly above that is going to be close to our guidance.
For Q2.
Yes.
I believe it will be quite you have our guidance for us for whatever I mentioned before.
If you if you're willing our local funding how do you price.
Pricing two day.
But we are seeing we don't mention any names out of about $50 per about it.
So I guess does that give you a kind.
Kind of expense, where we are pricing wise today, where we were on where we're going to be in Q1 on.
We expect to be neutral.
The last question is regarding lifting cost on.
Lifting gross.
For our unconventional first of all I don't know if we can I mean, we can explain it because between conventional and unconventional but.
We look at the lifting cost of unconventional as an incremental lift in gross.
Because southern Cal we are using the platform that we have in the convention convention and demo facilities.
Our assignment for the people of debt.
That could certainly be task on shore.
So.
I would say that we're lifting costs were on conventional is probably close to forgo that.
Great.
And today, we are having eight on we started the separation with 17 with non production coming from the unconventional.
So we plan that that income that lifting gross probably to continue growing EBITDA carve out of balance as we increase the percentage of volume unconventional production.
Dilute that.
Because that we have for the total I couldnt hold lifting.
So.
We can say per lifting go through on convention unconventional I don't see that is going to be.
And to exercise.
But clearly as we add unconventional production at sort of that about a third of.
Got it.
We see our total lifting cost.
Good evening.
Okay.
Thank you guys and congratulations again.
Thank you Andreas.
Thank you and our next question comes from the line of Alejandro Demichelis with and they use securities.
Yes, good morning, gentlemen.
Couple of questions. Please could you.
Give us some kind of guidance, how you see the drilling and completion cost evolving on a little.
Unconventional, but now that you are going to be focusing on the core perfect. First question and then the second question.
Yeah.
I understand what you're saying in total pricing.
Pricing dynamics in Argentina, but if prices remain high can we see capex going up much more than doubling down on.
What you're guiding now.
Yeah.
Thank you Alexander for your question so.
Good evening on completion growth from development goes well at all.
Yeah.
The coming down when it would be seen.
It seems we start operation more than they need probably not oh.
And that's happening base basically in about.
Four months when I mean per four months is leaving the fleet.
Completion strategy.
On also.
Basically the renegotiation on day rates that we did with all the contracts.
During a pandemic, but also eat for pandemic.
I don't know if you recall, but.
The way that we constructed our main service companies, mainly is really great and certainly sees you base on.
On something that we are very proud of that scheme that we call one team.
Where we not only.
On page four set of issues, we also pay for performance.
They put a four months is Michelle.
I see come on per four months of us on the service company. So even we reward people on the rig site.
We did see we did famous key.
For service companies are not what people in order to create debt that maintain the speed.
Drilling cost per well you see in our world.
Slide number four.
Come down from that would affect us from 70 per foot $17 $4 million two nine per night.
And we believe we have room to continue reducing our <unk>.
We said Ah.
Probably.
I would say another million for sure Maine.
Sources of cost.
Cost reduction could be exported from both sides.
So I need something that we continue.
Developing.
We are thinking in developing our own source, we are investing capex in doing that you see here on also we are looking at another another.
Another modification in the process.
Is that being addicted to somewhere else that we believe could also put in further cost reduction in timber low sheet Dick.
So we relied on so.
The short answer for you.
Yes.
We believe we will continue using the drilling growth probably not at the speed that we've been doing so far but there's still room to improve their income.
In terms of Capex.
Well, we we basically.
But it's let's say guidance on is what we call <unk>.
<unk> plan.
We have no plan to change debt, but we have a plan to look at where we are in Q4. So in Q4, but it is a realized price is to be more.
Precise.
On show Us that we have a lower room.
We are on.
Quiet about our plan on our plan is a very aggressive plan. So he has to be.
Understanding situation in term of pricing or performance.
We have been on option in our.
Sure.
In our Dean on in our plan to.
Probably.
Increased activity.
For Q4, you have to remember that one of the thing that we did during the pandemic on was for me a very.
Eddie.
Hey, Barry.
Volume movement once we commit to them key set of its companies with long term contracts.
On building in debt a little flexibility. So we got the product fleet contracted for a few years.
We have been re contracted for a few years, we feel like she believes in our contract true to that on just up.
And two day, we that flex uniquely we basically are commanding the beat on the performance and the timing of our the way we are.
We are shedding those contract with other companies.
Then choose reviews because of where those are.
The equipment are not dedicated to us.
But at the same time, we come on debt because we own those contracts. So that was a move also debt is helping us in Q4, if we werent really to take advantage of the new price scenario.
Pricing scenario to be able to increase the activity.
If you require.
Okay. Thank you I've got a follow up when you talked about the increase in activity come on we see a second rig coming on each engine.
Tubular.
I'll wait for your model I would consider one more bought in Q4.
And at least going on.
That number again.
Okay. That's fantastic. Thank you.
Youre welcome.
Thank you.
And our next question comes from the line of Marcel Jim theory.
With credit Suisse.
Yeah.
Good morning, everyone. Good morning, Miguel Thanks for taking the questions and congratulations on day results.
I have two questions for today.
The first one could you provide a cool right. This kind of Capex breakdown I mean, how much is unconventional how much is.
Conventional.
And if a blend gas for us.
Impacting and how much does it impact and it's too on the Capex side.
Is there any risk.
Restriction regarding.
Regarding the capital restrictions from the Central Bank and maybe a second topic.
I mean, some more general way.
Where should we expect in Vista productions.
Gross.
On to the next few years, let's see.
Thank you for the court to conditions.
Thank you Marcelo on a really good question so.
Sure the Capex breakdown. So we are we are.
We are reporting on the guys on $275 million.
From which Ah they must surely be Florida, but commodity.
Conventional drilling these 60 wells drilled on the 16 completions. So you've got a day, our brewery around $220 million of.
Unconventional Capex then you've got on there's more bullish on for convention on their own $25 million.
You have 40 million low rise in Mexico.
You have.
<unk>.
Less than $10 million on a on a sun initiative related to the previous question on Colombia.
And you can draw on.
And that you have on others to complete the 275 million, but that is mainly the breakdown. So most of the investment is related to embark on more of the development behind by low.
To be more precise and there you have oil. So you have any split between drilling and completion you have investment in facilities you have investment in another study.
So that debt that is the bulk of oil.
When investment.
Your next question was related to.
Chuck.
Yeah.
But maybe just a follow up a quick follow up on the previous questions.
I mean is there any impact of blend Gus for on the Capex I mean, how much would.
It would be the capex.
There wasn't a blend gas for.
So Glenn gas I mean, we are not renewing forgot so all the guidance that we gave if it is associated gas to our oil development the plan gas gas.
In addition on pricing.
But this is out on $1 per million Btu, so that if oil.
What we get from language, we participate on the blank gas because we saw that upside.
We have no change at all our development plan in the water with strategy and development due to gas because our main machine our main business on the nature of our associates is our oil focus.
I mean your your question I think it's a it's a very good question. It relates to how we see on beef going forward in turmoil from development on pricing so.
If he if you take what we have what we have to go through in 2020 on broadly in late 2019, I seen the main achievement.
Yeah.
<unk> has been the structure of our cost base our base in two main elements 18 operation.
Channel efficiencies I know.
Also reservoir performance.
The fact that to date, we have a total development cost from the lifting go where it is.
That put us as I mentioned in the presentation in a position to have a better margin that we have a year ago.
We can fight on that less in price of $40 a margin of 45 per cent.
Machine, so there'll be that so.
That is has been the main achievement.
Good day 21.
On the back of that restructuring and also higher prices on the stronger demand.
What we are doing is returning to profitable growth.
And we are returning to profitable growth with a minimum of elaboration on union one rig.
Moving on one Frac fleet.
In a moment, but everybody is fighting for reach something simple like crazy in Argentina, we haven't that secure and not only secure I mean, we are on a daily basis.
Based on debt if you shouldn't see that we create with the same crew with the same rig with the same frac fleet with the same scheme.
Two years ago.
Going for going on 2022 and onwards.
We continue seeing growth, even with minimal operation that you'd need that we mentioned one rig on.
Non truck fleet.
But.
And in the scenario that we've got good oil and we that minimum.
Commitment, we are going to be a company that we are going to be creating free cash flow. So we are going to be generating free cash flow.
The other.
The next decisions on what has made in 2022 on onward is what we are going to do with that free cash.
On this we have different ideas different scenarios on of course is going to depend on the context, but 2021.
In 2021, we are going to really harvest.
Every team that we have done in demo restructuring the nifty gross on the development cost of Vista, and then you see the context plays right, whereas 'twenty 'twenty two on work now the decision is what we're going to do with a company that got free cash flow generation and very low numbers.
I'd go back I've answered your question.
Yeah very clear thank you very much.
Thank you.
And our next question comes from the line of <unk> Fernandez with balance.
Good morning to everybody and thank you for the materials on and congratulations on the recent performance per renewal.
I have three questions. So I would like to go one by one if you don't mind.
The first one is related to what we have seen in the media or in the press.
Talks about.
Certain industry players in conversations refinery Syncrude produces your conversations regarding an internal crude price.
Would you go on there. Please if this is something that it's really been reported or maybe we should expect.
To see higher crude prices before this really becomes something.
Yes Hello.
Hello, and thank you for the question Luke.
Look at I think as I mentioned before.
During the presentation.
I think just a week a week.
Net.
Two day refineries.
Paying about $50 per Nevada, So that's about a $50 per barrel. This is easy to where we are today.
I mentioned before.
We should have on you know Shane Argentina, a nice growth has been through these cycles before.
The net is a means that.
What we seek in internationally.
Crude oil prices when they were in Greece.
We don't capture that immediately in the low end market.
The difference between what I have to leave before and two day.
Even though we have additional volume that can be airport. So our realized price is now is a basket of local grew.
Ics on.
Yes.
On the portion.
<unk> of pricing that come from our expert.
But you can look at prices, we have seen in the bus debt in order to might not that dinesh here. They are.
As <unk> been on I mean through two periods, where the industry.
Basically you get together and agree how to transition that.
Net debt pricing will have never seen either industry not to fight for export parity or even to fight for something that is between export and import parity.
So how we get to export parity equally be basically the NAV because the market.
Oh on agreement between but on.
Users are operators on refineries in order to get there. So I'm not surprised that they are doing more so on the price on that.
People getting together, we have not yet participated or any of these conversations.
But in the past.
More than conversations I've seen day being a dynamic too to get you to the shipper.
But again it does not in Argentina are coming to the bomb on sugar.
Crises.
Immediately when we see an increase from international net crude oil prices.
Yeah.
That's great. Thank you.
Second question is related to possibilities.
Hopefully this year, you're going to be getting close to 40000 barrels equivalent barrels per day on production.
Hopefully we will see more growth in 2022, 2023, so where does your limit now in terms of treatment capacity and where do you think you will need to go.
Yes look it's a good question on as I mentioned before I think.
2022 2023.
We've got a company that we'd be simulating cash and.
We'd be in a situation, where we can decide what we do with add on of course, one of them would be continue growing on even more rigs on a on.
On continued willing seas, we have set a day to do that.
We mention debt share with addition of they've got about Hey, we've got probably north of 500 locations to be drilled. So the question will be what is the pace in our plan.
In demo facilities. This scenario that we have two day debt, what we call ready to feed esignature nerio debt. We can go on a share related cash without.
Adding much more capex in additional facilities.
Our facilities we handle.
I don't know 50000 barrel of oil per day, we know issues, we just eat such Barry.
It's more incremental Capex, if you will really weren't too low too.
To reach three weeks on affinity that'd be relevant we will have to plan for additional capex in term of facilities.
Mainly about debt each on our stations on some probably refinery.
Treatment plants.
And finally are you looking into M&A or not right now.
We always look to earn money is for US. It continues exercise, we do chest to chest too just broadly to keep rush island should keep looking uneven two compared with what we have.
The reality is very difficult to find on opportunities that much on the quality of the resources that we have on the quality of the economy that we have on on also we are very pragmatic we know that we are.
But we are very good.
What we do on one element of that is the focus that we have so.
Yes, we're always looking.
Well, we have new garik.
He proof that never get even close to what we have income so.
Just to give you a short on two day that focuses on where are we adding because by the way the embark on more of the on ER on D. C, where we don't want to be concentrated in the next two years, we also see value in being a pure play a very focused player.
Doing what we do.
That's great. Thank you very much.
Okay.
Thank you.
I'm showing no further questions so with that I'll turn the call back over to management for any closing remarks.
Right.
Hi, guys. Thank you very much for participating.
Sure.
Really happy to win Oh being here on having to take the pandemic as an opportunity.
Raising our I would of course and really very excited.
On top.
<unk> 'twenty 'twenty, one with a growth plan. So thank you for your support. Thank you for your participation on a have a good day.
Ladies and gentlemen, thank you for participating on today's conference. This does conclude the program and you may now disconnect.