Q2 2022 Vista Energy SAB de CV Earnings Call
Good day, and thank you for standing by welcome.
So the second quarter of 2022 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 our session Great Press Star one one on your telephone.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today.
I don't know Chetan.
Nicole Please go ahead.
Thanks. Good morning, everyone. We are happy to work with the second quarter of 2022 conference.
Conference call I'm here with Nick.
Chairman and CEO .
He got CFO .
Yes.
Before we begin I would like to draw your attention.
Statements on slide two.
Please be advised that our remarks today, including Dr.
To your question.
We're looking statements forward.
Forward looking statements.
Great. Thank you.
Actual results could be materially different from expectations contemplated by these remarks.
Our financial figures are stated in U S dollar quite.
Quite frankly and that sort of thing.
Hi, Brett.
However, during this conference call, we may discuss certain non-GAAP financial measure.
Got it.
Reconciliations of these metrics to their Joseph Greff metrics can be found in the earnings release that we issued yesterday.
Please check our website for further.
Great.
Our company despite energy.
So C&I and only metal cutting their capital.
Organised.
Mexico Richie.
And the New York Public scheme.
Because of our common stock in the low 70 kind of evaluate MBIA.
They pick up my words.
W.
Right.
I will now turn the call where can we go.
Thanks Ali and good morning, everyone contributing 17 call.
I think to share with you our restart of the second quarter of 2022.
We have continued to deliver strong operational and financial performance.
During Q2 2022 total production average 44 8000 Boe's per day.
Importantly increase year over year.
While production was up 70% year over yet.
It's a solid well performance in bajada del Palo Este.
Actually in our two west pilot in the highlighted Palo Este.
Total revenue in Q2 2022, we're at $294 3 million bullets.
78% increase compared to Q2, 2021, driven by higher production and a stronger realized oil prices.
Lifting cost.
<unk> was $7 $8 for the quarter sequentially flat, reflecting our success in containing cost pressure.
Capital expenditure was $151 4 million.
During the drilling of two pack and the completion of three pads during the quarter.
Our production growth coupled with a strong organization pricing and continued focus on efficiency.
Adjusted EBITDA grew to $72 1 million for the quarter.
Year over year, and implying a solid adjusted EBITDA margin of 16, 8%.
During Q2 2022, we'll record a positive free cash flow of $62 6 million.
Driven by a robust adjusted EBITDA generation.
Net leverage ratio at quarter end was <unk> six times adjusted EBITDA.
Adjusted net income was it solely to $82 $3 million, implying a quarterly adjusted EPS.
Cedar point $9 per share.
We will now deep dive in our main operational and financial metrics.
Total production during Q3 2022 was $44 8000, Boe's per day up 12% annually.
Oil production was up 70% year over year and continues to be driven by our flagship development in bajada del Palo Este total.
Total shale production, which also includes by the way.
Fade out now.
74% of our total oil production.
Production growth during the quarter. It was boosted by the value of our two well pilot in <unk> by the way in February .
But number two it in because by the way in May.
With 47 with <unk> to date.
Using an avid is 5% above our type curve.
We continue to see solid performance in our core development and by the way.
During Q2, we completed and tightening but number two is on <unk>.
We are currently completing patent number 14, which we plan to retire during the coming week.
We are on track to drill and complete two additional tuck number 15, and 16, which.
Which we plan to put on production in the second semester.
When you get into the number of new words in this block by <unk>. During 2022, so by year end, we expect to have 60 wells on production.
Well I'll say that we completed on time, our first two words issuing corresponding to bust our Lafayette too.
Sure.
We there is two words.
Three a four well pad, which was driven.
By previous operators.
We are planning to complete in Thailand is back in the second half of the year.
The contraction of the Pfizer and <unk> <unk> by the way.
Currently underway.
Your line is scheduled to be ready by Q4.
Will enable us to take.
Decorated operation producing lifting costs and environmental footprint.
By the way the two ways, we gain in late February and that our ongoing pilot crush it continuing to show the study result.
120 days of production the production, both with 15% about what about bandwidth to take on normalized basis.
This initial pilot results confirmed the quality of the western part of this block.
And now we are planning to release additional three words to further derisk the acreage in the eastern barrel look later this year.
On the basis of this updated annualized water program, we are increasing our annual guidance from 24 to 32, you with guidance for this year.
Total revenues in Q2, 2022 were $294 $3 million.
78% increase year over year, driven by oil production growth.
Essentially through menu actual prices.
Realized price for the quarter at $78 $4 for Nevada.
Up 43% year over year, and 22% quarter over quarter.
This reflects improvement in the domestic market, where the average was $63 2 billion provocative and international market.
I would ask of 99 six products per battery.
Thus to export markets accounted for 42% of oil volumes at 53% of all revenues, having the sports drink category in the quarter or $1 5 million bothered info tab.
Going forward, we expect to maintain you've never to affect portfolios for the reminder of the year.
Realized gas prices increased 11% year over year to $3 $9 per million Btu.
Mainly boosted by winter prices, which positively impacted may and June .
Glenn gas price was $4 $1 per million Btu, and industrial prices were $4 5 billion here in the.
Q.
In April we spot the 10% of our gas volume to Chile for a realized price of $5 $4 per million Btu.
Moving to slide seven total lifting cost for the quarter was $31 $7 million.
Listing cost per <unk> was $7 $8 up 7% year over year.
We maintained lifting cost flat quarter over quarter despite.
Pressure on peso denominated services due to the appreciation of the peso seem to think that test.
We are actively implementing tactical cost saving initiative to contain the impact of the peso appreciation.
We expect production growth in the second semester to continue using feed cost.
Now moving us to deliver the total lifting cost of $7 $5.
For the 40 year in line with our guidance.
Adjusted EBITDA for the quarter was $202 1 million.
Implying an inter annualized Roe of 19% on a sequential growth of 59%.
This reflects strong revenue growth.
Our successful efforts to maintain stable leasing costs.
Adjusted EBITDA margin came in very strong at 69% an improvement of seven percentage points in Q2 2021.
Net back was $49 five.
Sure.
76% inter annual increase.
Sequentially.
Right.
$70 improvement capturing the full appetite.
<unk> price increase.
This cash flow during Q2, 2022 was a robust $62 6 million golar.
70, <unk> increase year over year, driven by strong adjusted EBITDA generation.
Cash from operating activities was $165 $5 million.
Got it by the annual payment of income taxes for $32 $8 million.
Cash flow used in investing activities was one company $2 $9 million, mostly driven by the dividend and completion activities in our two development projects because by the way.
Phase I, which accounted for approximately 100 million Buda.
Other it investments, including gathering and devoting Nike facilities, plus two new ways in our conventional blocks for a total capex of $151 4 million BARDA.
Cash from investing was lower than our current capex, reflecting an increase in working capital.
Cash flow used in financial activities on $19 4 million.
Reflecting the issuance of $43 $5 million bond issue.
Is one matures in two years base, 6% coupon and will be used to finance part of our short term debt maturity.
We have already paid $45 million.
Principal of our syndicated 50% issue 50 percentage for that.
We are also planning to repay the $50 million bullet bonds that mature on August eight.
After such date, we expect.
<unk> to be approximately <unk> $28 million.
While below our original guidance of $575 million for API.
Going forward our plan is to maintain depth around such level by year end, although depending on market conditions, we make.
Mr. Kelly duck, the local debt market.
Net leverage ratio stood at a very healthy Cedar point.
Adjusted EBITDA at quarter end.
Q2, 2022, we have made good progress in the execution of our carbon footprint reduction projects.
We are currently optimizing the right course.
Great.
What are the main compressor stations.
Of the four compressor identified in our annual plan, coupled with have you been upgrades.
We are installing.
For recording unit in three key gathering and processing facilities in our high value plus debt.
Perfect that is scheduled for completion in Q3 2022.
We are also executing a project to connect cutting here in America.
One of our conventional block to remain electrical decrease therefore, replacing their use and that's what I got.
Energy source.
It took like Capex allocated to these projects is $5 million.
Through the execution of this plan.
We forecast to reduce our greenhouse gas emissions intensity.
<unk>.
For the year 2022.
This implies a 25% reduction compared to 2021.
Also the mix.
On track to achieve our target of reducing our intensity through 90 days of 2000.
<unk> thousand 96 in line with our net zero ambition.
Based on our solid operational excellence.
With a positive pricing environment, we are upgrading our 2022 guidance.
We are adding a new west 40, <unk> by the way phase III.
Truing behind us by the way.
These rates our starwood to a total of 32, you well tie ins for the year.
This new activity will positively impact the production of the second couple of things.
Especially boost our 2023 entry point.
Raising our annual production guidance.
47000 barrels of oil equivalent per day.
<unk> got an increase in our exit rate to approximately 52 self environment equivalent per day.
Scott we are successfully containment effect pressure on lifting cost.
We expect production growth in the coming quarters to dilute fixed costs.
And his team cost below current levels.
This allow us to constantly maintain our original lifting cost guidance at an average of $7 $5 per bottle for the year.
We are raising our adjusted EBITDA guidance from 625 to seven can be $50 million for the year based on higher production and realized oil prices.
We are assuming an average realized price of $73 per quarter for the second half of the year.
But the guidance.
Increased from $4 million to $500 million.
Based on the initial move with activity.
As I explained earlier.
Our plan to fully repay our Cds to Barnes <unk> Noble's QED gross debt at approximately $528 million.
We are updating our gross debt level guidance to between 525 on $550 million by year end.
You didn't give 2022, we have delivered a strong financial performance driven by production growth and higher realized oil prices, maybe that doubled year on year. Adjusted net income came very strong at $82 million.
Which implies an adjusted EPS of Cedar point $9 per share for the quarter.
We continue to make great progress in on one about how that Palo Este development.
<unk> extended our core development Chihuahua payout.
Drilling and completion plan that is set to deliver CPU with gains during the year.
In Bajada del Palo Este, we continue to see very encouraging results.
Our first two wells continue to outperform the type of our corporate development look.
We remain focused on our Decarbonization plan. We are currently executing several project, which will deliver 25% year over year reduction in Guinea house gas emissions intensity during 2000 to Institute.
We have updated our guidance, reflecting a balanced capital allocation of incremental operating cash flow to additional growth and further debt reduction.
Our plan is to remain flexible on this front in the coming months.
Basically allocate our cash to grow.
They leave it actually depending on price.
Funding need for all about pushing infrastructure projects that are key to deliver on our export focused growth plan.
Youre in mainland sure we successfully executed our first share buyback program.
Purchase.
Of two 8 million shares.
I will take this opportunity to send our investors for their continued support.
Our incredible team at <unk> for their hard work and commitment.
Without the operator, please open the line for Q&A.
Thank you as a reminder to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.
Okay.
Once again standby for the Q&A roster.
Our first question comes from <unk> Levy from Morgan Stanley . Your line is open.
Hi, Good morning, everyone. Thank you very much for taking my questions and congratulations on the results.
First question is lifting costs decline appears to be well under control and the company expects to see.
Cost dilution even pushing this.
<unk> further down.
He was just wondering if you can coming to own what are their strategies is the company pursuing.
To deal with rising prices, both in the global industry, but also.
Domestic prices.
Peter.
And the second question.
What should we expect in terms of exports as the percentage of total sales into the coming quarters and in the long term.
I was just wondering because.
The guidance Slide you have included a realization price of $73 per barrel in the second half of the year. So I was just curious what are the components for that calculation.
And which bring what brink level is the company using.
Domestic price and also the percentage of exports. Thank you very much.
Thank you gentlemen for your question, so starting with the lifting cost.
As you know I mean, we are having pressure on the cost side. Nevertheless, Nevertheless, we continue keeping the guidance of $75 per barrel for the end of the year, even though we got in Q1 of <unk> than in Q2 or seven point data as well.
The reason for that is the following even though we have that pressure.
Come mainly from too.
From two elements one is clearly an element of inflation.
The other one probably less visibility.
This.
As you mentioned.
Our increased related to the fact that we had we have a startup of by the way.
We have also.
The new development.
Fair enough.
And of course that also bring a new level.
Dimension to our lifting cost that was just.
Focusing because by the way.
Nevertheless, we.
We see towards Q, Florida.
The additional production that is going to come from our activity is going once again too.
Play dilution to that cost.
And we believe we will probably be landing close to $7.
Lifting costs in Q4.
Therefore, we feel comfortable we feel confident that we can keep the guidance as it is today.
Related to the export question.
As you saw.
We are forecasting three cargoes for Q3, so that is an additional $1 5 million.
He is in language, we have forecast so far.
From these two categories we have.
Kind of what we have sold already too we've got three go to one.
The $113 per barrel and we have not three out of the second one.
And we have.
Instead of one two to be sold but all in September .
We thank you for at least three cargoes.
Therefore, I mean, we.
We basically maintaining the same level.
We've seen the same level of.
Volume in this burden in Q4 that we have seen mainly in Q3.
As you know in Argentina, we had increase in production and we are not the only one.
Therefore, one our market is.
It's food.
Four.
Uh huh.
If fully set up.
That no other seem to do we did maybe I need to crude oil in Argentina, So I mean.
The only option for the country for that so for the industry is just part of it. So we continue seeing that trend going in the sudden detection.
I think if you let me know so I think I remember the guidance of $73 and how we see long term exports.
Yes, we continue seeing the guidance.
73. This is composed of approximately an international price of Nike live with us.
Price between 60 and $65.
You see the levers that we are today and in terms of percent shows the production that.
That serves the local market.
<unk> production that we export.
We we are to date, probably another show a 40% we see 2020 for around 52006 that around 60%.
Again, as everybody increase and we see the plan of the rates in our plan that is quite aggressive.
US more mid I need to production coming to place from brick and mortar.
More volumes the country will have to export and we play we play a part in that.
Thank you one more for questions.
Our next question comes from the line of Alejandro Demichelis from now Securities. Your line is open.
Yes, good morning, gentlemen, and congratulations on great results a couple of questions. If I may 1st one is just to follow up on the export question.
How you're seeing the.
Export approvals, because we have seen some delays on some of the approval. So wanted to understand how much visibility you get for those.
And then the second question more strategically is it seems that we'd be updated guidance you already more or less around the 2026 plan that you gave us late last year.
Want to understand a bit better how you're seeing that kind of you know long.
Long term plan now given that you're already kind of spending as much if you want to just spend.
By 2026.
Your EBITDA is around the level of 2024 that you guided before.
How youre seeing the loan book.
Yes.
So for your question.
The first five are quite straightforward.
There were the payment.
The permit process works.
Is it following I mean, one day look at it.
The look on market is fully supplied.
US is mainly traffic mainly.
And a portion writing as well.
We ask for a permit to the secretary of energy and then usually we get the permit I mean equally weak.
We could delay of days of delay, but again I mean in language I said before.
One of them the local market is fully supplied in two days supply.
That's nothing to do I mean is in the best interest of the country to get those proceeds in Houston, the best interest of the industry will proceed.
It would be coming to the important that also for the country.
But commodity is one of the main promise in terms of bringing Brazil to Argentina. So therefore, I mean, so far we have not have any problem with the word impediment.
Okay.
Related to your second question.
Yes, definitely we are ahead of our guidance.
Clearly we have at least from the oil price.
Less of the element that we have guided in term of production in terms of the percentage of production that are going to be airport.
Lifting costs and so on we added bolt on on on our budget.
Therefore, we continue.
We continue to deliver delivering on the promise.
Yes, we are.
I mean.
Cash at the fed.
Assessment that we did this year was related to Capex.
Clearly in this environment.
The rich portfolio of.
But our shakes locations, where we have income.
We decided to make them move to increased activity at the end of the lease.
And as I said in the call.
Being able to.
And that 2023.
A higher starting point.
Definitely you will play in the economic stuff. So that is the first move that we did.
We have to use our capex this year for share buyback okay.
Was for US a way of.
We're getting back to our shareholders.
Something in the current environment.
We will look at next year, what is the main theme that we can do in case again, we have.
Cash and what is the most sensitive and it seems that that.
We have to go for 2023, I think not a decision that we have taken.
Ready.
Nothing that we can guide on it.
Okay.
In that barometer, how do you see buybacks given that you have finished already your program for this year.
I cannot guide on that but it's a program that.
<unk> is there to stay so if it makes sense in 2023 that you have an additional program we will do so.
That's great. Thank you.
But it was going on.
Thank you one moment for our next question.
Okay.
Our next question comes from the line of Marcello.
From credit Suisse. Your line is open.
Okay.
Thank you very much congratulations on the results.
Very very strong results I have actually two follow ups for it for today the first one.
On the activity in 2022.
As you mentioned I mean, eight wells were added to the blend.
My question is whether.
Those additions were driven by mostly by the crude oil prices environment mean for the second half of the year that you are considering or if those additions were actually also driven by.
Let's see fastest execution during the first the first half of the year.
And if we actually could expect more to.
To come.
Let's see.
Both.
Domestic and international prices get better if there is any upside to the capex and the upside of course to activity.
And just for my second follow up as well.
On cash flow generation, we returned to shareholders. You mentioned also during the call. The call dates I mean part of the extra cash generated in the year.
We will go towards reducing gross debt right repaying bones.
My question is I mean looking forward even for 'twenty 'twenty tree or you also mentioned that in the previous question.
What will be let's see the balance that you have in mind between.
Let's see deleveraging more and.
Possibly or potentially actually.
Reading buybacks or dividends or return to shareholder in general and if you could also mention what are the main hurdles.
For those shareholders returns right. Thank you very much guys.
Okay.
Yeah.
Thank you Marcelo for the question. So lets turn for the third one is quite a three or four to one so let me go through.
What we have done so far in the PBT on where we are adding in the.
In the second half.
Sure.
Well, we did in Q2 was that impact but number two is on Putnam.
Putnam with Athene, Okay, both of them with very good.
And also and I will say that if we complete in our phase two.
Two was.
That we'd already.
But the.
The concession.
We drill another two was in our federal Street.
For the second cohort.
Planned to die and so this one is <unk>.
Two is that we need in.
In Q1.
For the second couple of days.
To dine, but number 14 15 and 16.
14 is already drilled well drilling behind by the way.
15 or 16.
And we will drill additional two was.
In there, but that is our fair city.
And we will complete.
Those four wells in our phase three so we are adding to.
Additionally, with two well if it is that we are not in our current program.
And also we have two wars pilot to be treated in.
Hum.
And more of that.
Now we have not really yet that is towards the end of the year.
And the others seem to have no mention that complete the program is in Q1, which we drill.
Drew was in Bajada del Palo Este.
And we have two additional wells to drill in <unk> by the way in the second half of the year. So when you add all that we're going to end up.
In the second part of the year with 21 times and this is going to it will be complete in.
32 times and this is eight times about the original guidance that we did.
We will do that with the $100 million of Capex and this is will be it for this year. So we will not be a vote, we will not add more capex in activity to the one that we are guiding to.
To date, and what we are going to execute it.
Related to the additional Capex ive seen pretty much everything that you mentioned is on the table.
We clearly are.
The cough and aim to retain a return to shareholders.
We've been clear on that on our Investor day, we we being clear on that and inevitable quarter, earning call review that we are having.
And of course.
Additionally, with the.
Again with a rich portfolio that we have with them. We they will put a format that we are having and the current oil prices.
And activity is always on the table.
Buyback program Cup satisfies many well it was very well received by our shack cordless, so definitely will be on the table.
For next year.
Dividends is something that yes, it could be on the table you know the distinction that we have today.
In the country, we don't believe that restriction will be there forever. So it's something that at some point of time, we can consider.
And that you don't make you didn't mention but I think is important is additional infrastructure, okay, where clearly we are going to invest to add capacity to worry about question totally evacuation.
All set.
Why because we are increasing.
You know <unk> is going to be beat and built in the in the next year. So this is when would it be there we will invest and we would be.
Yeah.
<unk> one other thing that I think is important is the new decree that.
Plus a lot of money.
That was issued by the Ministry of economy.
We could easily keep access to Mike Okay, something that we didn't have before and it will be a sort of U S. Dollars. So that also when in the in the play what we do what would the cash and the ability that we have to repatriate them. Soon you will play a role is going to is going to give us.
Yeah.
And an additional level of freedom and when countries decide what we do with our cash.
Alright, Thank you very much.
Youre going to work.
Thank you one more for our next question.
Our next question will come from the line of the risk on that from Citi. Your line is open.
Hi, good morning.
Installations on the results.
Two questions.
First maybe following up with the previous question you were talking about the need to develop infrastructure.
So I wonder what are they like we see the place where we suppose youre, having Palo Este you guys getting some early positive results. The highest valuation you may also have some early production well said.
The question is if the facilities.
Amping up plus production could do over the next 12 18 months.
Well in place to secure this production will flow.
The second question has to do with the Capex behind Palo Este number.
Number 12, and 13 I remembered the there was an increase of the previous part so I would like to understand if we are seeing.
Realization.
How it's performing.
Okay.
Yes.
Thank you very much for your question Andreas.
Look at the first part.
Related to facilities.
Well.
I wouldn't say I would take two different.
Uh huh.
There's two different part of the facilities I think go for different channels. The first one is the facilities related to us on a normal development that we're doing because by the way.
Oh by the way.
We are hit off of.
Creating the capacity that we need.
So that production one because self operation on the other one because of the issue. So we have been very.
Betty deletion in the sense of creating that capacity that allow us to date.
To basically accommodate our plan in the future plans. So we are not bottleneck and let's put it that way in terms of development our main.
By the way the way, where we've got more of the activity we had in connecting our fate.
Right.
That is giving us additional flexibility.
Yes.
Motorways in our favor.
Got it.
End of quarter, we will be ahead of doing whatever we have to do.
To develop both bloke.
We'll figure it out.
And by the way.
He gave us.
Very good surprise since their wells that we drilled there has confirmed that the western side of our buyout of the.
Our eastern side of Palo Este groups, and our western side of our held by the effects of certain potential now yes.
A question that is the connection between our facilities.
The port.
In the Atlantic in this case in Bahia Blanca.
And we have three.
Three main projects ongoing one.
Is solid advice.
You know we have today by line with the full capacity of 280000 barrel per day that we are already as an industry you've seen.
We'll be a public tender where producers will be additional capacity will be part of that group and that you expect to be to take place in the next quarter. Okay. So far.
As far as he goes if fees at the end of Q2.
Place, we will have two stages of that process and we will get additional capacity unless it will be.
So capex as I mentioned before.
You have to do than we have oil tanking that also have a project to upgrade or a storage.
Also.
They are basically.
Drilling in the channel.
On creating facilities to be able to.
Note.
Tanks of the double of the capacity that we are doing today.
Also is expected to take place during the second semester of this year.
Additional infrastructure projects that are ongoing for example export to Chile.
That is affordable.
By line.
By the time they are the tough 150000 barrel per day capacity that need to be reactivated and also that we bring to the industry and to the country.
Export capacity. So this pretty much it was run on our part we probably don't come on the rise we are.
Participating.
So let me take your question on Capex.
Although we are facing inflation that would be facing inflation on the opex, we need to also on capex.
We see that stabilize using your own words.
We don't see.
Part of that increase on that 12, capex that we have.
We see potential further reduction on one project that is to come in.
But it is becoming in place because we have executed already is our own sand plant. So we will start to see the impact on that.
In the in the future quarters.
I'm sure for the second half of the year, we will start to see some of that.
Equally but in a meaningful reduction to our completion costs.
And I think is very important and this pressure keeps.
It's coming along very well so we have no cough any issue of performance.
And the plan is already.
It's already starting up.
I Hope I answered your question Andre.
Thank you and congratulations again.
Thanks.
Thank you.
Our next question.
Our next question is from Jay.
<unk> from <unk> Your line is open.
Hi, Good morning, this is Scott.
Thank you for taking my question.
Okay.
On your results I guess my question today is related to completion activity.
Some industry research indicates that a significant portion of the frac pumps are way past their maintenance schedule and must enter reverse soon do you see that as an issue for your activity. Thank you very much.
Good luck.
Thank you for your question.
The short answer is no we don't see an issue on on on maintenance.
So you know I mean, we early on in our operation we sized to have.
I will say the strategic partnership with service providers in this case for drilling and completion.
We are having a good neighborhood in Hollywood Schlumberger.
With that ill operation with less than 40 Frac stages per day today, we are performing.
10.
So we.
We are doing many things differently that we did at this stage, but maintenance is key I mean, a niche business that we know very well. So the banks have been maintained has been set up.
Payout.
I R flowing in Argentina in Cumming, Georgia without any problem. So I mean, the short question too and I understand that this is a business I know very well be the same.
I've been in that business. So no I don't see any issue or any issue with that.
We said, we added with a top service provider in the industry. So that is their show up in our shop, but of course, we always keep.
Keep an eye on how they maintain that equipment.
You should not affect any any any issue with that that delay our plans.
Excellent. Thank you. Thank you very much.
Yes.
Thank you.
One moment for our next question.
Yes.
Our next question will come from Carlo from the Lance Your line is open.
Hi, Thanks for taking my question is is there an echo both with violin.
Two follow ups first one regarding your export me, we noticed that you had consistently achieved to hijack Bernie.
Then your local peers that well focus on light oil. So I don't know if you have any thoughts that you could share on how do you manage to.
To achieve this.
Okay.
So, yes, I mean, I don't know, what you mean high to our peer but.
The fact that we achieve.
The northern part or you've got to have additional volume and in northern Chicago additional volume you've got to run.
It's not only you got your ROE is the velocity in which you would do so.
So we basically are.
Being seems if.
The last four or five years settling.
Offtake us again traffic mainly in pricing.
One is true auto setup.
And we know that for the last five years every quarter every month.
The address.
What is basically the volume that we have managed to boot.
Incentive fees, because when we have investment we have.
And that is what we report as we grow more with Baltimore, because there are no more refineries in Argentina voting.
Voting into activity so the market of Ashanti Nice Cup.
Every ton if tomorrow, if next year, we produced 60000 barrels per day.
We were still selling the same amount of volume to traffic Wugang ryzen and we will have additional 10000 to export. Okay. So that is pretty much. The game. If you Miss and you have the capability to grow particular, we're talking about made in it of course.
Then the rest is to export market.
I mean.
Our.
Our competitor the veterinary industry is doing the thing I will add we don't have a refinery business. So if you have a refinery then we will have to set a first our refinery. This is not the case with diabetes appeared up upstream player.
Perfect.
Thanks, and maybe just following up on on Capex, we noticed.
And I think you partly addressed it.
But I wanted to just to make sure that these implied cap ex parent conventional well julien that seem to have been a bit.
On the inflationary pressure during the second quarter.
How are you seeing the market as inflation numbers have been rising it in water.
Yes.
<unk> has taken to address these higher inflation that could be translated into higher capex.
Yes, as I mentioned before we have inflation in Capex Tim.
I mean that inflation come also let's face it with the increase in oil prices.
So that is normal in the industry I think we've handled breathing well.
First of all we have long term contracts did help a lot. When you have inflation because you are not talking about what is going to happen in it.
In a service that you have on court.
Salaries on call people and going to try to charge you.
Whatever.
But the fact is that we've got long term contracts with those companies. So we are not talking about what is happening with deflation today, we're talking what is happening with the next three years. So those contract settlements that are secure.
This is an inflation mitigate or to sell.
Second part of the inflation that we've got to take on.
And one thing that we continue doing on.
To be honest with you to MISO.
Well it seems we have managed to come to continue having innovation in concept and cost saving initiatives.
The impact in our in our operation.
Looking back we used to drill those well in 35 days.
We have a recorder and colder weather.
That was really an important date, so this kind of.
<unk> innovations and initiatives that are a cost saving initiative, even though we are approaching the technical cooler we continue having it as I mentioned before one that is coming in line.
The fact that we manage to create a source of Sun.
Close to where we operate.
This will start to have an impact.
In our in our <unk>.
Well cost.
Potentially equally half a million dollar.
Impact in our World class when you look at the inflation for this year it probably was.
Uh huh.
In those orders there.
Therefore, I mean, we we got inflation, we continue to come in.
Cost saving initiatives, so to be honest with you.
Inflation is there you've seen.
Nothing we wouldn't do anything that we can do to reduce debt.
The minimum.
Perfect. Thanks, and just one last one on my side.
I noticed that your quarterly production.
Alan.
From prior quarter does seem to have dropped significantly so just to understand if you could share some color whether it was is that transitory.
The transitory impact and what drove this thank you.
Okay.
Yes.
Thank you Danielle.
Question, Yes, what you saw in several years. So once we need was to close out I'll say it otherwise.
Florida.
In a protocol that is normal course for us that is to avoid.
What the heat.
Something that we knew.
When we put out was that out of me yet.
Nice.
Others.
What we do in order to because basically when you frac the water can communicate with another well.
The life.
Boy that is closing that well that is needed by the place where youre going to frac.
A few.
A few days before that allow the way to build that pressure and the rest are all have.
<unk> all been in communication of having interference. So what you was what you saw in our I'll say that it was exactly that was our people our operations following that protocol.
Then you open.
Yeah, Yeah, so level should go back to normal levels back to in the third quarter. Okay. No. Thank you very much.
All my questions and congratulations on the good quarter.
Thank you.
I'm showing any further questions in the queue I'll turn the call over to Miguel <unk> CEO for any closing remarks.
Well once again, thank you for participating thank you for support uncovered.
We are very proud of the result of this quarter.
If broadly.
Due to the completion of many thing that we've been working for them for the last few years.
We foresee that we will continue on that trend. So thank you very much for your support on the category day everybody.
And this concludes our conference call. Thank you for participating you may now disconnect everyone have a great day.
Yeah.
Sure Pete to.
Raise your hand during Q&A you can dial one one.
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