Q1 2022 Vista Oil & Gas SAB de CV Earnings Call
Ladies and gentlemen, please remain on your line your conference call will begin in approximately two minutes. Once again. Please remain on your lines. Your conference call will begin in approximately two minutes. Thank you.
[music].
Ladies and gentlemen, thank you for standing by.
Welcome to <unk> first quarter 2022 earnings conference call. At this time, all participants are in a listen only mode. After the speaker 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.
It is now my pleasure to introduce strategic planning and Investor Relations Officer, Alejandro churn of golf.
Thanks, Good morning, everyone.
We're happy to welcome you to <unk> first quarter 2022 results conference call.
With me, Gary <unk>, Chairman and CEO .
Pablo would have been <unk> CFO and one guy.
<unk>.
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.
The uncertainties that could cause actual results to be materially different from expectations contemplated by these remarks.
Our financial figures are stated in U S dollars and in accordance with international financial reporting standards.
All right.
However, during this conference call, we may discuss certain non <unk> financial measures such as adjusted EBITDA.
Reconciliations of these measures to the closest <unk> measure can be found in the earnings release that we issued yesterday. Please check our website for further information.
Our company is.
Is that 40 nanometer will suddenly capital already organized under the laws of Mexico registered in the world coming he cannot do I notice in the New York Stock Exchange data you guys have a common stock at EBITDA in there was something that you kind of evaluate and be Ibs D. In the New York stock exchange.
Taking care of our warrants.
T W O eight eight.
I will now turn the call over to Neil.
Thanks Ali good morning, everyone and thank you for showing in this earnings call.
I am delighted to share with you our results of the first quarter of 2022.
Showing our robust performance across all key operational and financial metrics.
During Q1 2022 total production of it at 43 9000, Boe's per day, a 29% increase year over year.
Oil production was up 35% year over year boosted by solid performance highlighted by the way.
Total revenues in Q1, 2022 were $207 9 million.
79% increase compared to Q1 2021.
Given by the production increase.
Realized pricing.
Lifting cost per Boe.
<unk> was $7 $8 for the quarter in line with guidance for the year.
Adjusted EBITDA was $127 1 million.
Implying solid adjusted EBITDA machine of 61%.
Capital expenditure for the quarter was $80 6 million.
Reflecting drilling activity and the completion of our first two ways in <unk> by the way.
During Q1 2022, we generated positive free cash flow of $33 million driven by robust cash flow from operations.
Additionally, we reduced gross debt by $35 million.
Adjusted net income of the quarter was a solid $39 $1 million.
We will now deep dive into the main operational financial metrics.
Total production. During Q1 2022 was 43 8000 boe's per day up 29% instead of annually.
Production growth continues to be driven by our flagship development in <unk> by the way.
Which now represent 70% of our total production.
In this quarter production was boosted by but number nine and number 10.
But we're tight in Q4 2021, and then now producing in line with our type curve.
During Q1, 2022 gas production increased 9% year over year, mainly driven by associated gas from Bajada del Palo <unk>.
As shared with the market last week, we are excited with the successful results of our first two wells in <unk>.
Steve.
Corresponding to put number 11 next to our flagship development.
<unk>.
Both with targeted local senior lending sung of Buck on water and were completed with an average of 46 stages per well.
After 60 days since first oil the average peak production was about 2004 country Boe's per day, but it was.
This result continues to prove our track record as it took back a motivator and the high quality of our assets.
Importantly, the location of that was close to the eastern border of Palo Este.
Confirms our geologic model.
At the same time.
To the continuity of the play into it.
By the way.
Where do we hold as part of the acreage.
But number 11 is the first phase of our five well pilot program.
The next three wells will be drilled in two parts to the east as shown on the map.
Upon completion of the first pilot we have.
A clear basis to upside our portfolio already to deal with bank of America.
<unk> by the way, we have finished drilling, but 12 and 13, which will be completed during Q2.
We are on track to deliver 24 with <unk> by year end as per our guidance.
Total revenues in Q1, 2022 were $207 9 million.
A strong annual increase driven by the boost in oil and gas production and better realized prices.
Realized oil prices for the quarter.
$64 $1 per barrel.
41% year over year, and 6% quarter over quarter.
Sales to export market accounted for 33% of all volumes, having 42 categories in the quarter or a medium barrel of oil in total.
These sales contracts were executed with an avalanche Brent of $85.
Initial discounts to brand, where our own one door that Nevada.
They don't make the market accounted for 67% of oil volumes in Q1 2022.
Domestic crude oil at $57 per barrel.
Continuing to show improvement.
Improvement over the last few quarters.
<unk> says to domestic market, we're at close to $60 per barrel on average.
We have already locked in 100% of April at Macy's.
Got an export we have sold one category in April with about $100.
We forecast to sell between one and two additional cargoes during the quarter, which should enable us to significantly increase our revenues during Q2.
We don't make prices around $60 Mark we estimate.
Above $70 per barrel in Q2.
Realized gas prices increased 48% year over year to $3 per million Btu may.
Mainly boosted by the plan gas price of $2 $7 per million Btu.
It is also of $2 $7 per million Btu.
In addition, 10% of our gas volumes were sold to the export market for a realized price of $5 $9 per million Btu.
Driving 10% quarter over quarter increase in <unk>.
Nevertheless realized gas pricing.
Total lifting cost for the quarter was $38 million.
We maintained lifting cost being fairly flat quarter over quarter. Despite peso set fixed application in real time.
Lifting cost but it.
Seven $8 up 3% year over year.
Driven by that acquisition of Pandora.
Pandora North day, partially offset by the incremental production from <unk> by the way.
Which continues to absorb our fixed cost base.
We started executing our lifting cost optimization program in our fifth element warrior North sea. So far we achieved a 58% cost reduction in this block.
$2 4 million, 50% working interest in Q4, 2000 $21 million to $2 million one country percent working interest in Q1 2022.
We expect further appreciation of the peso in real time in the coming months, our current outlook for Q2 2022 weeks around $8 per unit.
However.
Even by the cost savings in the welfare that amount already in North Sea <unk> in combination with the incremental volume from <unk>.
We forecast a lifting cost of $7 $5 per Boe.
For the full year and this is in line with guidance.
Adjusted EBITDA for Q1, 2022 was $127 1 million.
This reflects an expansion of 118% year over year, driven by strong revenue growth and a stable cost.
Adjusted EBITDA improved 9% sequentially, even though it does not include operating income generated by this JV with Trafigura, which added approximately $4 $5 million in Q4 2021.
Our adjusted EBITDA margin was 61%.
Improving by 11 percentage points year over year, and two percentage points quarter over quarter.
Netback was $32 $2 per seat.
69% inter annual increase.
This was driven by an increase in realized oil price to $64 $1 per barrel and an increase in the oil to gas mix with a stable cost per view.
<unk> is now 81% of our total production driven by the growth in Bajada del Palo Este.
During Q1 2022, we recorded.
Strong financial performance with $33 million of positive free cash flow and $35 million.
Gross debt reduction.
Cash flow from operating activities was one country at $12 9 million.
Reflecting still navy destination.
Change in working capital for the quarter was negative $21 million.
The main driver behind the sequential reduction in free cash flow.
In Q1, 2022, we normalize the collection cycle thrown our domestic crude uptake us.
With whom we have reached an agreement in December 2000 to one facility.
Accelerated payment.
Cash flow used in investment activities.
The payment to wintershall for the acquisition of <unk> was $799 million.
The main Capex drivers in Q1, 2022, where there isn't activities in 12 and 13 in <unk> by the way.
On the completion of the <unk> 11 impact highlighted by the way.
Cash flow used in financial activities was 50.
$3 1 million.
Mainly driven by the payment of 45 million principal of our syndicate loan.
Of our bonds CDN support.
Debt stood at $576 2 million at the end of the period.
<unk>, 6% sequentially.
Have already achieved our debt reduction target for the year.
Net leverage ratio decreased from three times adjusted EBITDA at the end of Q1 2021 to a healthy.
<unk> eight times adjusted EBITDA at the end of Q1 2022.
Moving to slide 10, I will present, an update of our guidance for the year.
Regarding activity.
Two shell always during Q1.
This is in line with guidance, leaving us on track to Titan 24 with for the year.
Total production was $43 9 million Boe's per day in Q1 2022 in language plan.
We maintained our 2022 guidance of 46 to 47000 Boe's per day.
20% increase.
2021.
As <unk> discussed lifting cost for the quarter was slightly higher sequentially.
We were expecting this increase due to the effects of deflation in real terms and the consolidation of the recently acquired assets.
The ongoing cost reduction initiatives in our fate at a monthly annuity and increasing production in the second semester will be the main drivers to review lifting cost back to $7 $5 per unit for the year in language guidance.
We are raising our adjusted EBITDA guidance to $625 million, an increase of $50 million.
To the original guidance.
This reflects an assumption of $64 of realized oil price for the year in line with Q1 2022 prices.
We see additional upside to this EBITDA guidance.
The current international prices scenario prevails.
We maintain our original capex guidance of approximately $400 million.
Nothing that we are currently evaluating additional activity in our high return short cycle shale oil projects for the second semester.
Regarding gross debt during Q1, we essentially achieved our target of debt reduction for the year.
We are currently analyzing options to make further debt reductions and additional drilling activity given the additional free cash flow expected due to higher realized oil pricing.
Before moving to Q&A, let me share with you that we are making good progress in our sustainability right.
We are timely executing projects to reduce greenhouse gas emissions intensity by 25% in 2022 compared to 2021.
We are also making good progress in the execution of the project that are key to achieving our net feet of ambition in 2026.
Got it won't upset for nature based solutions.
We will publish our sustainability report next month, where we present more details on our ESG priorities.
In addition, we are including the Cfd disclosure, which is key for shareholders to understand our governance strategy and risk related to climate change.
In Q1 2020 to retain our first two wells and because by the way.
Which showed robust production levels.
This is very important milestone to prove our shoulders, you can model and the continued need of our play into the highlighted by the way Steve look.
On the financial front, we have another positive free cash flow quarter.
We recorded adjusted net income of $39 1 million.
Additionally, we further strengthened our balance sheet by reducing debt by four.
In one quarter.
In Q1 2020 to our operation in our financial performance was solid putting us on track to deliver on 2022 guidance.
We have raised our.
Our adjusted EBITDA guidance by $50 million to $625 million for the year.
Earlier this week, we held our annual general shareholders meeting in which we obtained approval to initiate our first share buyback program.
For $23 $4 million.
<unk> is an important step in our strategy to deliver shareholder return.
I will take this opportunity to also thank our investors for their continued support.
Our incredible team at Vista for their hard work and continued commitment.
And with that operator, please open the line for Q&A.
Certainly.
As a reminder to ask a question you will need to press star one on your telephone.
Withdraw your question press the pound key.
Our first question comes from the line of <unk> Levy with Morgan Stanley .
Hi, Good morning, everyone. Congratulations on the results and thank you for taking my questions. My first question is on crude exports.
I wanted to get more color on your expectations for crude oil exports into the coming quarters and years.
From from Boa Vista, and if you have any thoughts on Argentina too.
Also if you could share with us the carrying amount of spare capacity.
In the Argentine audio transportation system just for.
Just to get an idea of how much time does the company in the country has before it can become.
Nishu.
And then the second question.
I just wanted to pick your brain and see if you if you have identified and increasing the appetite from international companies more recently to accelerate that really competing thing Rocco great. Thank you.
Thank you Jeremy for your question.
Thank you for the congratulations so starting with the export for the second quarter.
We continue to see that in the second quarter, we'd be able to support a one 5 million barrels.
And we continue also to see that is one point.
Bye bye.
Continue exporting during the rest of the year.
We were able to export around 1 million $1 million in the third quarter.
We already have.
One medium for sure that we're going at this point in the second quarter.
There is a third category that we can allocate on the second quarter. So we are very very confident on that.
I think this is the result.
You can see in Q2.
Your next question was related to.
Question on capacity.
No.
Actually all the.
The main trunk line that transport crude oil between new cleaner racing on by a lot.
<unk> is running around 265000 Boe per day okay.
Actually happen instead of capacity, we've said between 10 and 15%.
By the end of the year they are planning to.
To add additional capacity of around 15 to 20000 barrels per day.
They are planning to use the likely reduction nations to reduce friction and that will add additional capacity towards the end of the year.
Also we understand that the teams have plans to add one more by line to double the capacity.
In a step toward 2024.
The step is going to be probably Q3, Florida.
Of 2023.
So.
Defeat that.
That clients go ahead as planned we should be okay to export.
I mean.
Seniors 14, what we plan to support and taking in consideration the growth that we are having impact on water.
B.
We should be in good shape.
Thank you.
And our next question comes from the line of Walter <unk> with Santander.
Hello. Good morning. Thank you for taking my question. So congratulations on the results.
I will.
Like to ask you.
But give us an idea.
How is it local.
Local price dynamic indeed.
In these high prices.
Thank you.
Okay.
Are you seeing conversations to increased prices at the bottom of the oil price locally whatever thoughts you could give us on that would be great.
And the other thing is that you expect cost ratios in the future given the global.
Inflationary trends economy.
No in particular in the oil industry.
For me thank you.
Thank you Walter for your question and before we start with your question, probably adding 2 billion of equity under that scheme.
Regarding the update I go back a moat of international players.
So we.
We see.
Up at Diamond turned sharply as we move in there moving particularly the ones that are today.
In the commodity.
We see them cutting growing plan and I think one thought that is showing that is.
Production growth have increased 40% in one year from 160000 barrels to 220000 borrowers.
Is the running rate is a 40% increase in regards to you. This is not coming jumper.
Total production of Bank of America, So clearly the rest of the players having current appetite.
No.
What theyre going to your question in Denmark prices.
So you see I mean, we have upgraded our EBITDA from 575 to 625.
The 575 EBITDA number it was done with a realized price of $60.
We're seeing an average of 64.
We are expecting an average of 64.
Going forward into 'twenty.
<unk> 25 that we have.
That we have signal now.
For the city.
We have it in Q1.
So in Q2, we are seeing local price it at lease of $60.
We are coming from 57 four.
Export prices.
The.
Basically the point that we have today is the one category that we are really close that.
That was a brand or one country. Three so you should expect realized prices around 95.
So.
That is for pricing.
Q2, I would set.
We estimate that we will be around 70.
Yes.
All the movement in prices.
If positive.
The local price as you would know the pain.
Suncorp willing to.
The pump price.
So what.
What will happen with the pump I cannot I can expect that logically.
We will see further increase.
Pieces that we have seen since the beginning of the year so far in April .
8%.
In dollars.
So we should expect to see further price increases.
The pump that will be the logical thing to happen.
We are seeing.
<unk>.
Pressure.
Cost inflation, yes.
Really we do.
We are seeing cost inflation on the Opex side. This is linked to the real peso appreciation in Argentina.
But we're still keeping our $7 $5 per barrel lifting cost mark.
And we restated today.
Our guidance.
That's really the main effect that is allowing us to do that is first of all I mean, we are fighting.
We are fighting that inflation in every corner, we have another organization that is doing that and we've been we are pretty good doing that but also.
The main effects that allow us to maintain that that guidance is the fact that we are adding more unconventional production.
That dilute our fixed costs and dilutive or lifting cost and that's why we are maintaining the guidance. We also see pressure from our.
Our main service.
Our main oilfield service providers.
That will be on the Capex side.
But.
That is a matter of how we move forward on how we negotiate.
How many options that we have but we have seen.
Cost pressure in all fronts.
Thank you very much.
Do we have any further questions.
Yes, I'm showing our next question comes from the line of Regis Cardoso with credit Suisse.
Hi, good morning, Thanks Miguel.
Critical congratulations on the results two quick follow ups from my side and then two questions the follow ups.
On lifting cost.
Eight currently.
So you said you plan to reach the objective of seven perhaps I understand you can still reduce.
Cost from here just wanted to understand how do you balance between.
Getting a higher cost base, whether for that are in the duty in North Bay.
Versus the cost inflation.
We've discussed right I think.
The inflation, we're leaving now has been a bit of a surprise for everyone.
I wanted to get a sense of how much youre getting affected by this.
The other follow up is just quickly on the realized.
Export prices.
Wanted to get a sense of.
What should we compare export prices to do price.
Lagging one mode.
Because the implied export prices in the first quarter seemed relatively low compared to Brent prices.
To get a sense like why is that.
I believe there will be a significant improvement for the second quarter.
If you want to tackle those to me, though when I just for the other two quick ones.
Okay Richard.
<unk> for the second one is quite straightforward.
I mean you.
You can expect a lack of two months on the export parity on the export prices and.
But probably the effect.
Are you seeing now too.
<unk> you.
Probably the data and of course, I mean, you remember.
<unk>.
Question is quite simple.
RIN prices and the discount on.
Tax is 8%.
Plus the commercial discounts.
You have seen we have been reducing from our first export of $5 two or one door later.
Sometimes less than one dollar. So this is you have to calculate then for what you see in the quarter yet you can see a lack of two months.
Early and that of course is going to.
Is going to think how to create a bit of noise on the prices that we're seeing but for example, we have one cargo that we support in Q2 that was done at one country portable water I think.
The realized price was.
95, okay. So.
Giving you that data. This is they've got award that we support in the first part of your of Q2 and we haven't.
Two more triple Okay. So that is.
The second question.
The first question I don't know.
We understand it but.
Sure.
So I just wanted to get a sense.
Much of the cost lifting cost reduction could come from efficiency gains.
<unk> and <unk>.
And how much could it increase from an inflation perspective.
Okay. So from.
<unk> north is not producing okay. So a one off.
Yes.
Today, Yes, we will see a reduction.
A bigger reduction because we are laying a 10 kilometer pipeline and we have to date, we are tracking to date.
At current lifting cost probably $30 per barrel, you will come down towards the end of the year to $10 per barrel. Now. This is in 500 barrels of oil per day of production. Okay. So the effect in the total production is still small so.
Not really something that is really going to move.
They need it.
Now on the Opex side, we are getting a lot of pressure.
What we are doing is to fight in that pressure of the FX rate.
Efficiencies.
And I think.
In absolute value, we will not be able to.
Reviews that effect right.
Couple that to neutralize a great chassis with efficiencies so.
Of the fact that we are part of the season allow us to maintain the same fight the additional volumes that come from the unconventional production, but we are going to add during the year.
Is unconventional that doesn't have a lifting cost of $7 $5, but about it.
And much lower lifting cost therefore are with you.
Our feed cost and that is what allow us to maintain the guidance.
I hope so that is clear.
Very clear thanks, so much if I may just two quick ones on the investment side.
And this capex plan of $400 million.
Many rigs and how many pads.
Embedded in this plan and whether you continue to your plan on continue to drill in Bajada del Palo <unk>.
After the recent results.
Okay. So.
So we have.
In the plan, we got one.
Okay. This is the actual plant.
With that upgrade plan.
We basically are going to drill 24 with this again, we are looking to we will review that.
It is clear that we are generating better EBITDA clear that we are generating more cash so towards the second part of the quarter to one division that we are going to make people yet additional activity.
And also if we want to further reduce debt.
The 24 wells that we are going to gain.
<unk> from Palo.
16 from behalf by the alloy.
For an hour data backs, so this or whether or when is it that we're going to basically complete on time and to for Wrangler model. This is the 24 that we have today in our plant.
Very clear thanks, so much.
Youre welcome.
Thank you next.
Next question comes from the line of Alejandro Demichelis with Niu Securities.
Hello Alessandro.
Alejandro please check your mute button.
Hello, Thank you me now.
Yes.
Yes.
That's great. Thank you.
So.
Well first thank.
Thank you very much for taking the call and congratulations Jeff I wanted to follow up on the situation of <unk>.
Accelerating activity. So could you please give us some kind of feeding.
What are you thinking about doing it.
If you think you have enough money on you like what would the outlook. Please.
Yes that is very simple.
We decide to add activity would be most likely.
One but.
In Bajada Palo Este.
We could also look at our Riverwalk paydowns that we today perceived as a continuation of a highlight by the way.
But today.
Yes.
Information that we got is going to be most likely if you will is going to be one more part.
Are you there.
Hello.
Okay, something seems to be wrong with this line will move on our next question is from Andres Cardona with Citigroup.
Hi, good morning, everyone.
Regulations for both our results and.
The successful.
Drilling at Palo Este, let me start from there.
Do you have plans to drill the east side of Bajada Palo Este. After a good resource of behind sorry, do you have plans to lead the east side of Bajada Palo Este. After the positive results you have at the highest by Louis and the second one is could you could see more deals like the ones you did with Trafigura.
Or do you any incremental cash flow, you're ready to accelerate Bayou rone and maybe why not do both right.
Balance these potential better return that you can get because of higher prices on accelerates.
In both ways. So I just wanted to hear your thoughts about these possibilities.
Yes.
Okay.
Thank you very much for your question, so starting with the <unk> by.
So let me let me tell you first of all our high priority that I think is.
It's important to understand.
So we have it in the near term plan of five wells in Bahar evaluate different which we drill the first two was as you said.
On the west.
Our patio.
<unk> on the use of our <unk> by the way on the West.
By the way.
Yes.
These two wells that we completed in Q1, whereas two well of around 2250 meters.
That's 46 Frac stages, and we saw initial production of around two $2400 per day.
This production is.
Production on these.
It basically proof expectation of proof our shoulders you can moderate.
Improve our service you can model mainly in two parameters one is portal pressure and the other one is API gravity.
Gravity of those was around.
Around 30.
30 API.
And also I mean, this pullback on water is a fantastic news, but because it proves that we can have these kind of productivity with Terry.
Gravity with.
So this somehow is very encouraging so as per your question. Yes of course this is proving that.
Our.
Each site.
<unk>.
It's good but also is proving that in that area, where we lead the pack. We probably we have said we cannot around 50 location within.
The web site.
By the way very close of the fact that we do.
So.
Very very good news very encouraged about that what is left is for us to drill another three words.
We probably place it but what are the center of the block.
No worries.
And then probably we will drill farther east one.
Well just to up Chuck to finish assessing.
The opportunity the complete opportunity were hired by the way.
Any other question.
Yes. Our next question comes from the line of <unk> cobalt with the loans.
Okay.
Hi, This is Harry on the call with Barry. Thanks for taking my question I had three questions sorry for the expansion that they should be rather quick.
First looking at implied royalty rate for the quarter, it looks higher than the 12%.
Are there any specific royalty rates for some of the work that we are making.
So we are having a hard time listen to you can you speak slowly.
Because the line is not so good so I can get the question.
Yes, I'm sorry.
Give me better now.
Yes.
Okay.
My first question was around royalty rate when we look at the implied royalty rate for the quarter it looks higher than the 12%.
For the unconventional well so just trying to figure out if there's any specifics.
Okay.
Okay.
Alright.
Look at this is a mix of the 12% that we have in unconventional plus 15% that we have on the conventional <unk>.
The calculation should be quiet straightforward so.
I'm not sure if that's different between 15 and 12% is what you're seeing but happy to follow up with Alexander on that one if you want to have more detail.
Alright that sounds that sounds great maybe if we could move to the following on this.
Global industry trends that are testing on availability and cost of rigs.
Do you expect this to have a particular effect on capex per well or the speed of your development plan post 2020 for anything in particular for they said that we should have in consideration.
No not really early on I mean, we as I mentioned to you on the Capex side also goes up.
We'll recap oil service oilfield services.
Contact pressure.
We have contract in place so it will be more of a it seems for the future.
And then we will have probably inflation from wages and other things. So we will actually we got in terms of the rate.
We continue as I said before with the 24 wells set to have an idea because you saw in Q1 that we shut in.
By the way.
Now Q2, we should see.
A wood coming in from <unk>.
Q3, another for a ways forefront bajada del Palo Este from and put on a wall failure disorder.
We are going to complete it.
In Q4, we should expect another forwards from by the way.
On <unk>.
<unk> from AGL Armada, Okay. So this will complete it would be the pace and the velocity, where we complete.
The plan that we have outlined so far.
Of course, this is done with one and a half week.
No.
Also we will evaluate the possibility of adding one Pat.
Sure.
Second part of the year, but that has not been decided yet.
Okay.
Perfect. Thank you and just one last one.
We have heard some rumors about potential new law that should allow us borders hickey.
I'm, sorry for use with tariff off shore.
What is your take on this DSD days with solid ground or what's the timing on e-commerce .
Yes.
So yes, we've got plenty of discussion on that is clear for the company that is that we wouldn't situationally PD allowed to flexible license out.
Cross border there.
What are the moving of proceed.
So I understand.
The minister.
Bank, how positive with adding favorably that it's a win win situation.
Situations for countries and the industry. So.
I will not comment on the likelihood of that to happen, but I think it would make a lot of sense.
Perfect.
That sounds great. Thanks for taking the question.
Or are there any thoughts.
Thank you for.
Interesting.
Thank you.
Our next question comes from the line of Voorhees.
Moro with fundamental.
Yes. My question is regarding behind Thanks, Dan If you can comment on that we sold so far relative to your long term plan.
Ian.
Now that you have completed these wells.
Do you have.
Any change on that platform or is it going 90, I'm wondering if you can comment.
Thank you.
Thank you for your question so I mean.
What kind of evaluate the first thing that we need to do is to complete the delineation. So we just completed the first part of that.
The easy part of that because we completed first but.
Very close to by the way.
It is fantastic news because.
Allow us to.
Demonstrate that in that block surrounding where we did the first but as I mentioned before probably would have already additional 50 locations now before deciding what will be our strategy to really tackle the full block we need to finish the delineation.
That we could decide if you want to be alone if we want to bring a partner in that.
If you want to sell part of the globe, whatever but so far we need to do is to finish the completion of the remediation that will as I said before it would take.
Regional <unk>.
So far we believe that one is going to be in the middle of the block.
And then one one but very further east okay as we move further east.
We know that was one of the formation that will.
We'll not be present, we need to we need to really.
Try to recalibrate and demonstrate how is that.
Well more than that we have.
Working exactly.
With a reality so that would be the first step.
Then we can decide commercially what is the strategy to develop to fully develop.
As you know we have to date in our <unk>.
Our well inventory HMD 50 ways okay.
That's coming from because by the way.
Wow.
So we have really.
More reserves that we can be shipped at the pace that we're growing so it would be plenty of options for us to develop ahead by the way.
Okay. Thank you.
Yeah.
Youre welcome Jorge.
Thank you and I'm showing no further questions so with that I'll hand, the call back over to Mcgill for any closing remarks.
Ladies and gentlemen, thank you very much for for attending.
This conference call.
We are super happy with the results.
And also we.
We'd like to take the opportunity to thank you for your support and portfolio announcer for the interest. So we're looking for what you see you next quarter.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.
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