Vista Energy S.A.B. de C.V. Q1 2023 Earnings Call
Okay.
Good day and thank you for standing by what was in the first quarter of 2023 earnings webcast 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.
I ask a question during the session you will need to press star one one on your telephone you will then hear an automated message everybody. Your hand is right to withdraw your question. Please press star one one again please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker.
Today, Alejandro shared vehicle strategic planning and Investor Relations Officer. Please go ahead.
Thanks. Good morning, everyone. We are happy to welcome you to <unk> first quarter 2023 results conference call I'm here with me, Mr Chairman and CEO , Pablo <unk>, CFO and one that OE T O.
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 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 I FRS. However.
However, during this conference call, we may discuss certain non <unk> financial measures such as adjusted EBITDA and adjusted net income 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 Vista is a sofa and not even our stated capital.
Under the loss of Mexico, registering their voice that make you kind of evaluate it and the New York stock exchange from this quarter onwards, you will only find that because of our stock as the warrants were canceled.
Such decrease our beta in the Oilsands.
Yes.
In the New York Stock Exchange I will now turn the call over to Miguel.
Thanks Ali good morning, everyone and welcome to the 17 call.
I'm pleased to share with you our results for the first quarter of 2023 during which we have continued to deliver strong operational and financial performance.
Total production averaged $52 2000, Boe's per day, a 19% increase year over year oil production was up 24% inter annual basis boosted by the timing of sequence in our development hub.
Total revenues in Q1 2023 were $303 million.
At 46% increase year over year, driven by higher production and a stronger realized oil prices.
<unk> cost.
<unk> was $6 $4 for the quarter, reflecting enhanced focus on our shale oil assets.
Capital expenditure was $162 million.
Including the drilling of <unk> and the completion of a west during the quarter.
Adjusted EBITDA came in very strong at $204 million for the quarter and in their annual increase of 61%.
We recorded positive free cash flow of $35 million for the quarter net leverage ratio at quarter end was <unk> 37 times adjusted EBITDA.
Adjusted net income was a solid $72 million.
Implying and in their annual increase of 84% and quarterly adjusted EPS of 0.8 dollars per share.
We will now deep dive into our main operational and financial metrics.
Total production during Q1 2023 was $52 2000 Boe per day up 19% inter annually.
<unk> was 44000 barrels oil per day up 24% year over year.
Our double digit production growth reflects the strong performance of our shale oil projects.
Which has offset the impact of the transaction to fully focus on shale operations, which became effective on March 1st.
On a pro forma basis, we recorded a 7% sequential increase in both oil and total production.
This was driven by a robust productivity of <unk> during the quarter fight in.
But.
Palo Este 15.
Plus it will.
Highlighted by the way the 23 to one in our Bajada Palo Este pilot.
For additional details on our operated production and the production of the transferred assets. Please refer to the earnings release published yesterday.
I will now share an update on our development hub.
In Bajada, Palo Este, we continued to see strong productivity with average well performance, 3% above our type curve for the first 360 days of production.
In terms of new well activity, we finished drilling pad <unk>.
This but located in the south of the block contains four ways to land in the casino and two inorganically.
We start drilling, but because <unk> 17, which also contained four with Bose, but will be completed in time by at least <unk>.
In our recently completed on time.
But our favorite Florida in the western part of the block.
<unk> is also a four well pad we landed two wells in our casino one whale in the organic growth and one well in the immediate carbonate.
This is the first well we have landed in the middle of carbonate in our I'll say that.
In Buffalo evaluated we completed and tie in the fairway of the ongoing pilot.
We are very excited by the production results we have seen.
Cumulative production for the first 60 days was 75000 <unk>.
With a peak IP 30 above 1500 Boe per day.
<unk> prove the quality of our acreage Palo Este and the continued <unk> of the play for in our flagship blocks Bajada del Palo <unk>.
Based on these successful results, we have increased our estimated ready to reduce inventory in the block from 50 to up to 150 with this.
This takes our total inventory.
Two up to south and west of which we have only drilled uncompleted 74 west to date at.
As a reminder, our entire inventory is located in 35 year concessions, 100% owned and operated by Vista.
Total revenues in Q1, 2023 were $303 2 million.
Which is 46% up compared to the same period last year, driven by oil production growth and improved realized oil prices.
Realized oil price for the quarter of $66 $6 per barrel up 4% year over year.
The average domestic price was $65 $9 per barrel, while the realized price of the export market was $69 $8 per barrel.
We expect realized oil prices during Q2 to remain broadly in line with those of Q1.
Total sales volume was 2500 barrels of oil per day higher than production.
This volume was drawn from our inventory.
<unk> transport market accounted for 58% of oil volumes and 60% of all revenues.
With 45 cargoes during the quarter for $2 4 million barrels of oil in total in line with our export focus strategy, 55% of LTM revenues came from international markets.
Realized gas prices increased 54% year over year to $4 $7 per million Btu, mainly boosted by <unk>.
<unk> accounted for 30% of our total gas volumes at the price of $8 $9 per million Btu.
Lifting cost for the quarter was $30 1 million.
2% down from the same period last year.
Lifting cost per Boe.
Was $6 $4 a reduction of 18%.
Is that annual basis, and 11% on a sequential basis.
We're already capturing the benefit from the deal we signed in the previous quarter to fully focus on our commercial operation. The deal is effective as much first so cost from the quarter reflect a full month, having removed the transfer of assets from our cost base.
We estimate the lifting cost for the amount of March was around $5 per hour.
Our model shows we are well on track to deliver on our $5 $5 per Boe guidance for the full year.
Adjusted EBITDA for the quarter was $204 4 million.
Implying an inter annual growth of 61%.
This reflects strong revenue growth and lower lifting cost.
Previously.
Adjusted EBITDA margin was a robust 67% during the quarter.
An improvement of six percentage points year over year.
<unk> was $43 $5 per <unk>, a 35% inter annual increase.
These metrics have increased sequentially, reflecting improved margins driven by the transaction to fully focus on our <unk> assets.
During Q1 2023, we recorded $34.
<unk> 7 million of free cash flow cash from operating activities was $158 8 million.
This includes $60 million of upfront payment to all the bulk for the reservation of capacity in the oil pipeline expansion and a decrease of $5 million in account payables.
Flow used in investing activities was $124 million.
This is $38 million lower than the accrued capex, mainly due to $24 million in account payroll payables and $10 million.
For now our as an upfront payment for the transfer of assets.
Cash flow from financing activities was $71 1 million.
Mainly driven by debt issuance of $135 million.
We successfully issued a lien bonds with the cedar points and coupons for a 40 year maturity and 1% coupon for a five year maturity.
This was partially offset by the debt repayment of $22 5 million.
And interest payments of $7 9 million.
Gross debt stood at $659 6 million.
At the end of Q1.
Cash at the end of the period was $350 2 million.
This led to a slight reduction in the net leverage ratio to <unk> 87 times adjusted EBITDA at quarter end.
To conclude this call I will recap on today's key messages.
During Q1 2023, we made good progress in our development hub, we continues to drive production growth.
Success will result in our pilot in Bajada del Palo Este proven the quality of our assets and contributed to the addition of one country was to our ready to drink inventory.
We are already seeing the benefits of the transaction, we announced early this year to fully focus on our shale oil assets.
Our lifting costs EBITDA margins, a netback of all improved sequentially.
<unk> is effective as of March 1st we only captured effect, partially and expect further upside in the coming quarters.
During this quarter, we have one again delivered a very solid operational and financial results. This includes good progress in our <unk> organization and natural based solution project to meet our ambition to reach a scope one and two net zero by 2020.
We are well on track to deliver on our 2023 guidance across operational and financial metrics.
Earlier this week our shareholders approved in addition to our current share buyback plan.
Turning it from $20 million to $50 million.
To wrap up and before we open the call for questions I want to thank our.
Our employees and shareholders for their continued support and with that operator. Please open the line for Q&A.
Thank you.
Finder to ask a question you will need to press star one one on your telephone and wait for your name to be in now to withdraw your question. Please press star one one again please.
Standby, while we compile the Q&A roster.
Our first question comes from the line of Thiago <unk> from Morgan Stanley .
Hey, good morning, Thanks for taking my questions I have two questions here, perhaps linked to charter. The first question is about the infrastructure. The bottleneck taking place in bank of America can you give us an update on the projects have been implemented to increase value of evacuation capacity.
<unk> the timeline incremental access to pipeline, we will be able to get in the next 12 to 24 months.
And what about longer term developments are there any plans already in the making.
To the Companys knowledge and the second question is about the company's drilling plan. Your execution has been very consistent and abuse studies generating positive free cash flows.
Can you talk about the company's decision, making process related to the potential revision and acceleration of the Capex trading plan.
How should we think about the equipment and infrastructure availability in that case. Thank you very much.
Good morning, Joe. Thank you very much for your questions. So I probably would have thought.
For the second part of your question related to the production program potential acceleration decision, making process and then we move to infrastructure.
First of all let me give you a vw's ability of.
But what we are doing this year.
The production is going to come in based on the timing.
Because there's two things that are related to the drilling program and then the completion program this year.
There are different to the ones that we did last year.
First of all we have the beginning of the year in Q1, and then the effect of the transaction with the Coca Cola that is was 6000 barrel per day that basic.
Basically impact in two months of our Q Q1 number and.
And the second thing that we have in our program that they see as different tools that we have done in the past is the fact that we are.
We are drilling to drilling and completing two but based on our acute med.
<unk> technology that it means that we are drilling and completing two put together.
To avoid basically interference interference between them, but.
<unk> production so when you look at.
When you look at the drilling program and the completion program. They are worried that the production will come in is a bit differently than in the past.
We are closing Q1 with an average of 52.2 in terms of production.
We expect that Q Q1, sorry, we expect Q2 to be probably slightly light is slightly lower than number since we are going to tell you and so in the first in the first quarter with <unk>.
In the second quarter, we will pay in selling with then we will see.
Important increase in production.
In Q3, where we're going to retain toy ways.
And then.
On Q4 again, we come back to fight Wars. So Q3 really is where we have this backhaul palo.
16, and 17 coming in saying we are going to complete those two back to back so that.
Basically make the production growth this year a bit different to the ones that we have shown previously.
Now when you look at the drilling program of the year, we will finish in drilling.
Four.
The fact that we have today in the business school.
At the end of September so, that's where it probably decision intermodal acceleration that we have.
<unk>.
The decision of probably adding to it then.
In Q4, two pads that we can drill of course, we cannot complete will be completed in 2024.
That is not a decision that we have made already but is something that we can do.
Basically moving them.
With a normal drilling plan.
Same equipment.
More longer term I would say 'twenty 'twenty four and beyond.
We are evaluating.
Different growth scenarios.
<unk> 2004 and onwards.
That is in the ideas that wherever they're at and is due to the strong performance.
We have since also we have a very strong platform that will allow us to escape.
Basically with this.
Same core people that we have.
With the Super strong inventory that we have I mean, we are talking.
About <unk> thousand wells, we have drilled only 70 of those.
The access to equipment Youtube.
Due to the long term relationship we have with our service provider.
And of course, because we have a solid financial situation income. So we are evaluating different scenarios that we are not guiding for that.
I want you to have in mind that we are doing that in term of <unk>.
Equipment, increasing equipment, I mean, I think it will be possible.
Again due to the relationship we have with the service provider.
I believe we in case, we go for any scenario that is more aggressive we will have the option to win more equipment.
And also to use the same agreement that we have.
More efficient.
Coming to infrastructure.
So let me give you.
A bit of.
A bit of.
Overall view I think you know we are winning in trucking we had been Barry.
Various from intermodal with where we're at.
Doing good old El Paso.
So although we are expecting again, Q1 2024, 40% of those little better.
Additional.
Capacity is around 300000 barrel per day coming into place in Q1 2025, the whole project should we should be complete.
In language LDL well at the port facilities expansion will be coming in and I think the new the new thing that.
We are doing at this airport.
<unk> throughout ulcer disease.
By line that already exists.
It was put in place is been testing that we speak on the offtake of that production will be enough.
That is a studying now Q2 2023 and you can expect that we will participate on that with between four and 5000 barrel of oil per day.
That will allow us to reduce a bit.
Tracking but.
Basically this is this is what we are adding.
But it will come.
Later, we are expecting that for Q3 2023.
And that basically will replace.
So.
The DIY thing is.
It's a complete with that your question.
Okay.
One moment for our next question.
Our next question comes from the line of Rodrigo <unk> from <unk> Securities.
Hi, good morning, Thank you.
That's my questions.
A follow up on.
Thompson.
Pipeline.
Commencing operations.
Can we expect higher prices so reduced discounts.
For these states.
Yeah.
Hi, Rodrigo Thank you for the question.
So again I mean.
The Chile first stage.
Morten.
We will explore between 4005 <unk>.
5000 barrel per day as I mentioned before.
We expect the pricing netback for this that should be very similar to the one that we would we get when we supported through Bahia Blanca. So.
We don't see any change on that.
As I mentioned before.
That we have also.
Unaffected on tracking for us.
We don't expect any immediate impact but.
We are tracking today, probably 2500 barrels per day.
We will reach 6000.
We will not have a.
Odessa.
We've reached probably 10000 barrel per day in demonstrating so clearly this new route of exports to Chile is helping both on export and also on cost.
Okay. Thank you.
I have a quick one so you recently announced they were progressing behind by the way.
Sure.
Chris in your well inventory.
Given that your current capital allocation priorities behind by the way would you contemplate either entering a joint venture or any other things to expedite the element of it.
No one really where we are now contemplating initial venture we're speaking because below it.
But <unk>.
By the way.
Our quarter.
So in terms of development.
If some point of time, we retain doing something probably we will be more related to the blocks that we have in the north.
But no at the moment, we are not expecting as I said, we have.
Our solid financial.
Position so.
There's no need.
Okay. That's very helpful. Thank you.
Thank you one moment for our next question.
Our next question comes from the line of Alejandro de <unk> from <unk> Securities.
Yes. Good morning. Thank you for taking my question and congratulations on the results.
A couple of questions.
First one given the economic situation in Argentina acceleration off of inflation also on <unk> could.
Could you please give us some kind of view of how you're seeing the.
The development of the domestic pricing, if we can see a situation where domestic prices come down.
In this environment and then related to these co UCB evolution of your own cost both on the lifting side, but also on the Capex.
Thank you Alejandro for question I will start with a comparable lift in broadly give you a bit of feeling on drilling as well.
Q1, we finished with a lifting cost of four.
$4 per barrel.
This lifting cost was composed due to the <unk> transaction.
Two months, where we have that conventional production with us.
The lifting cost for those two months was around seven five and then March we saw lifting cost come in below five.
And of course.
Q4 is the composition of OLED.
We will see how lifting costs behave.
In the in the following quarters, but we believe.
We will establish a lifting cost that would be around around $5. So you should expect that.
In term of drilling and we finished the here with the drilling costs are around $12 seven.
<unk> million dollars.
For our normal ways.
Today, we are seeing the drilling cost between 13 and $13 five and this was due to the appreciation of basis.
On <unk>.
Related to the gasoline.
The increase.
We see.
So first of all Q1 that the prices of the bonds.
Increased 11% in local currency, but decreased 5% in U S dollar.
<unk> basically saying higher appreciation.
Pesos.
<unk>.
Q2, I mean, what we have seen in terms of dollar term, we will see even more pressure on the appreciation of pesos, but also I mean, we expect that.
With spreads basically that.
Export pricing for us would be flat.
<unk> prices, we said broadly oil so we expect that will be around the same level that we are today.
Okay.
The main question is what happens in the second half of the year yeah.
Gasoline prices do not increase or do not follow inflation, then we may see domestic crude oil prices coming down.
Yes, it's a possibility definitely.
Of course, I mean, if it if it.
Yeah.
Export prices or the brand is strong that there will be an intention to the market.
With five for our crude oil prices.
But yes, you could have in the second half due to the actual conditions also due to the election.
Pressure on the local market definitely.
That's great. Thank you.
That pressure goes more to the refineries to the people that have integrated.
Integrated operation in D&S.
Thank you one moment for our next question.
Our next question comes from the line of Andreas Cardona from Citi.
Hi, good morning, everyone.
A question and I would like to understand how is Dilly Creek two axis.
A lot of market working so far.
If you can provide an update would be very appreciated. Thanks.
Okay.
Thank goodness for the question.
Yes, I mean, we've been giving updates on that.
In October 20 of 2022.
Basically establish.
As I said before that was follow but.
Few formalities from the secretary of energy and beginning of January .
And also <unk>.
That adhere to the regime and Av.
And our Shanghai.
Will happen after that.
Several requests.
Due to basically the degree based on the incremental production that we have in Q3 2022 incremental production that we have in Q4 and in Q1 2023.
So we are expecting to receive the certificate.
That is to access around $66 million in 14 and in foreign currency. This was for 2014 2200 $30 million, respectively for the third quarter as I mentioned before.
Of course.
Still some uncertainty around when we would receive <unk> certificate.
I mean, we are filing based on the degree and based on nickel them into production that we are we are seeing coming in.
Okay.
Youre welcome.
Thank you one moment for our next question.
Our next question comes from the line of Oriana cobalt from Milan.
Hi, Good morning, Thanks for taking my question. This is identical with balanced.
I had.
Three questions. If I may go why do they want that would be great.
First one is a follow up with regards to the ADESA pipeline and exports to Chile, just to understand maybe if you have more information and will this be carried out.
Carried out under firm contract or saw that spot and if so do you.
Have any information at all.
Fees that the owners of the pie will charge for it.
Youre right.
Adding.
Adding to what I said.
That is still in negotiation, but you should expect get fill contract.
Alright.
Perfect. Thank you and maybe just moving on to the OLED.
Pipeline can you comment about what levels are you currently operating.
<unk> to your limits based on the current capacity like taken aside the expansion and do you see like this currently with 10 capacity with potentially a slowdown in the drilling program towards late 2023 or 'twenty four just before the expansion comes through.
Today, we are current capacity basically we are top up our plan. The way that's been built is to take advantage of everything that it come from.
From all the us the two stages are coming in and particularly for for this year. So I mean, our plan is in line with the capacity that we can access around the world.
I understand.
One final one.
The lack of iteration and like correct, but closer with the harvest season.
Dollar Intel.
Do you see any potential impact in terms of access to the inputs and just thinking of infrastructure needs or equivalent.
Higher than that.
You're already on.
We have not have any issues.
Import equipment, we have done few importations.
Have all the equipment in place today.
On the service companies that we are using.
Ones that basically have quite a bit of it.
Coke in the country, but in the few cases that we got your exit to imports I mean, we would been able we have been able to bring the equipment that is required so far.
Perfect. Thank you very much.
You're welcome.
Thank you.
A reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.
Our next question comes from the line of Scott also from Credit Suisse.
Congratulations on the results thanks for the questions.
Two quick topics I wanted to follow up with one of the on the well.
I mean, you have substantial room potentially true.
Either grow further your inventory or to develop the inventory you already have.
No.
The recurring question, how do you feel about the balance between.
Capex buyback deleveraging, particularly.
Particularly I guess would be the recent backdrop.
From the macro front I mean for one hand, you have Argentina growing exports from.
<unk> four.
Good.
<unk>, gaining access to the dollars and eventually.
Using that to remunerate shareholders.
Versus continue reinvesting in your existing portfolio.
Question on <unk>.
Broadly on inventory and capital allocation.
And then I guess, the second question would be on lifting cost.
If I remember correctly you did six four.
And the guidance for the year is five five so what do you think is.
But between those two numbers and if youre tends to reach the guidance for the year. Thank you.
Thank you Rajeev for your question.
Starting with the first part.
Definitely when we look.
I mean, what we can do.
In term of continue creating value.
The main the main thing is that basically we can do and we are analyzing our related as I mentioned before due to the strong performance that we have and due to the platform that we have.
GSK as I said, because we have the people who have the equipment.
Have a solid financial performance is to accelerate or to further grow.
In terms of.
Drilling and completion and basically accelerating the use of this well.
For you that we have in <unk> I think that is the main.
This is the main driver to add additional value.
Our stock and to Vista.
Nevertheless.
Then when you look at going forward.
Our ability to generate.
EBITDA and cash.
We can continue doing our buyback program and we can continue.
And also we plan to continue.
Whereas in the company.
It makes sense.
So.
Three of them are not exclusive I've seen the first one is probably the more important part of because in.
In the current context with our current inventory and with our current performance, it's clear that the best way that we can.
<unk> value.
In terms of the lifting cost as I mentioned before I mean.
We drove the quarter was $6 four.
On the last man, we really start to see.
The effect of our pure conventional production.
<unk> costs.
We see that number.
Today close to five so we guide for five five I think you should you'll see the number probably more close to $5 to $5 five okay.
Understood. Thank you.
Thank you at this time I would now like to turn the conference back over to <unk> for closing remarks.
Well, thank you very much.
For your interim report on continued support.
Looking forward to see you in a quarter.
Good day everybody.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
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Good day, and thank you for standing by welcome to the Vista.
This 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 one on your telephone you will then hear an automated message advising your hand is right to withdraw your question. Please press star one.
One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Alejandro Chattanooga strategic planning and Investor Relations Officer. Please go ahead.
Thanks. Good morning, everyone. We are happy to welcome you to <unk> first quarter 2023 results conference call I'm here with me <unk>, <unk>, Chairman and CEO , Pablo <unk>, <unk> CFO and <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 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 I FRS.
However, during this conference call, we may discuss certain non <unk> financial measures such as adjusted EBITDA and adjusted net income 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 Vista is a sofa and letting our stated capital.
Under the laws of Mexico, registering their voice I'm actually kind of a loaded and the New York stock exchange from this quarter onwards, you will only find the ticker of our stock as the warrants were canceled.
<unk> Vita in the resi market kind of evaluate and be Isd in the New York Stock Exchange I will now turn the call over to Miguel.
Thanks Ali good morning, everyone and welcome to the 17 call I am pleased to share with you our results for the first quarter of 2023 during which we have continued to deliver strong operational and financial performance.
Total production averaged 52 2000 boe's per day, a 19% increase year over year.
Production was up 24% on an internal basis boosted by the timing of sequence in our development hub.
Total revenues in Q1 2023 were $303 million.
A 46% increase year over year, driven by higher production and a stronger realized oil prices.
Lifting cost.
<unk> was $6 $4 for the quarter, reflecting enhanced focus on our shale oil assets.
Capital expenditure was $162 million.
Including the drilling of <unk> and the completion of <unk> during the quarter.
Adjusted EBITDA came very strong at $204 million for the quarter and in the annual increase of 61%.
We recorded positive free cash flow of $35 million for the quarter net leverage ratio at quarter end was <unk> 37 times adjusted EBITDA.
Adjusted net income was a solid $72 million.
Implying and in their annual increase of 84% and quarterly adjusted EPS of <unk> $8 per share.
We will now deep dive into our main operational and financial metrics.
Total production during Q1 2023 was $52 2000 Boe per day up 19% Inter annual oil production was 44000 barrels oil per day up 24% year over year.
Our double digit production growth reflects the strong performance of our shale oil projects.
Which has offset the impact of the transaction to fully focus on shale operations, which became effective on March 1st.
On a pro forma basis, we recorded a 7% sequential increase in both oil and total production.
This was driven by a robust productivity of <unk> during the quarter five impact Bajada del Palo Este 15.
It was highlighted by the way 23 to one in our bajada Palo Este pilot.
For additional details on our operated production and the production of the transferred assets. Please refer to the earnings release published yesterday.
I will now share an update on our development hub.
In parallel Palo Este, we continued to see a strong productivity with average well performance, 3% above our type curve for the first 360 days of production.
In terms of new well activity, we finished drilling pad <unk>.
This but located in the south of the block contains four ways to land in a casino and two inorganically.
We start drilling, but <unk> 17, which also contained four with most part will be completed in time by at least <unk>.
We recently completed on time.
But our ill fated, Florida in the western part of the block.
He is also a four well pad we landed two wells in our casino one whale in the organic go on one well and immediate carbonate.
This is the first well we have landed in the middle of carbonate in our I'll say that.
In Bajada del Palo Este, we completed anti in the fairway of the ongoing pilot.
We are very excited by the production results we have seen.
Cumulative production for the first 60 days was 75000.
With a peak IP 30 above 1500 Boe per day.
This prove the quality of our acreage Mohamed Palo Este and the continued <unk> of the play for in our flat sheet blocks Bajada del Palo Este.
Based on these successful results, we have increased our estimated ready to build inventory in the block from 50 to up to 150 with this.
This takes our total inventory.
<unk> 2000, west of which we have only drilled uncompleted 74 wells to date.
As a reminder, our entire inventory is located in 35 year concessions, 100% owned and operated by Vista.
Total revenues in Q1, 2023 were $303 2 million.
Which is 46% up compared to the same period last year, driven by oil production growth and improved realized oil prices.
Realized oil price for the quarter averaged $66 $6 per barrel up 4% year over year.
The average domestic price was $65 $9 per barrel, while the realized price of the export market was 69 $8 per barrel.
We expect realized oil prices during Q2 to remain broadly in line with those of Q1.
Total sales volume was 2500 barrels of oil per day higher than production.
Volume was drawn from our inventory.
<unk> transport market accounted for 58% of oil volumes and 60% of all revenues.
With 45 cargoes during the quarter for $2 4 million barrels of oil in total in line with our export focus strategy, 55% of LTM revenues came from international markets.
Realized gas prices increased 54% year over year to $4 $7 per million Btu, mainly boosted by.
<unk> accounted for 30% of our total gas volumes at the price of $8 $90 per million Btu.
Lifting cost for the quarter was $30 1 million.
2% down from the same period last year.
Lifting cost per <unk>.
<unk> was $6 $4 a reduction of 18%.
Is that annual basis, and 11% on a sequential basis.
We are already capturing the benefit from the deal we signed in the previous quarter to fully focus on our <unk> operation the deal if the effect as much first so cost from the quarter reflect a full month, having removed the transferred assets for in our cost base.
We estimate the lifting cost for the amount of March was around $5 per hour.
Our model shows we are well on track to deliver on our $5 $5 per Boe guidance for the full year.
Adjusted EBITDA for the quarter was $204 4 million.
Implied in <unk> growth of 61%.
This reflects strong revenue growth and lower lifting cost.
Previously.
Adjusted EBITDA margin was a robust 67% during the quarter, an improvement of six percentage points year over year.
Netback was $43 $5 per the UAE at 35% inter annual increase.
These metrics have increased sequentially, reflecting improved margins driven by the transaction to fully focus on our <unk> assets.
During Q1, 2023, we recorded $34 7 million of free cash flow.
Cash from operating activities was $158 8 million.
This includes $60 million of upfront payment to all the bulk for the reservation of capacity in the oil pipeline expansion and a decrease of $5 million in account payables.
A slow used in investment activities was $124 million.
This is $38 million lower than the accrued capex, mainly due to $24 million in account payroll payables and $10 million received from an account power.
From payment for the transferred assets.
Cash flow from financing activities was $71 1 million.
Mainly driven by debt issuance of $135 million.
We successfully issued a lien bonds with a zero percent coupon for a 40 year maturity and 1% coupon for a five year maturity. This was partially offset by the debt repayment of $22 5 million and interest payments of seven 9 million.
Gross debt stood at $659 6 million.
At the end of Q1.
Cash at the end of the period was $350 2 million.
This led to a slight reduction in the net leverage ratio to Cedar point 87 times adjusted EBITDA at quarter end.
To conclude this call I will recap on today's key messages.
During Q1 2023, we made good progress in our development hub, we continues to drive production growth.
The successful results in our pilot in Bajada del Palo Este proven the quality of our assets and contributed to the addition of one country was through our ready to drink inventory.
We are already seeing the benefits of the transaction, we announced early this year to fully focus on our shale oil assets.
Our lifting costs EBITDA margins, a netback have all improved sequentially.
<unk> is affected as much first we only capture the effect, partially and expect further upside in the coming quarters.
During this quarter, we have one again delivered a very solid operational and financial results. This includes good progress in our de Carbonization natural based solution project to meet our ambition to reach a scope one and two net zero by 2026.
We are well on track to deliver on our 2023 guidance across operational and financial metrics.
Early this week our shareholders approved in addition to our current share buyback plan.
I need from $20 million to $50 million.
To wrap up and before we open the call for questions I want to thank our.
Our employees and shareholders for their continued support and with that operator. Please open the line for Q&A.
Thank you.
Minder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.
To withdraw your question. Please press star one one again, please standby, while we compile the Q&A roster.
Our first question comes from the line of Thiago <unk> from Morgan Stanley .
Hey, good morning, Thanks for taking my questions I have two questions here, perhaps linked to each other the first question is about the infrastructure the bottleneck.
Taking place in Vaca Marta can you give us an update on the projects have been implemented to increase value of evacuation capacity, including the timeline incremental access to pipeline.
Be able to get in the next 12 to 24 months.
And what about longer term development.
Are there any plans already in the making to.
The Companys knowledge and the second question is about the company's drilling plan. Your execution has been very consistent and if he stays generating positive free cash flows can you talk about the company's decision, making process related to the potential revision and acceleration of the Capex trading plan.
How should we think about the equipment and infrastructure and have the ability in that case. Thank you very much.
Good morning, Joe. Thank you very much for your questions. So I probably would have thought.
For the second part of your question related to the production program potential acceleration decision, making process and then we move to infrastructure.
So first of all let me give you a VW stability of.
But what we are doing this year on how the production is going to come in based on the timing.
Because there's two things that are related to the drilling program and the completion program. This year.
Are different to the ones that we did last year.
First of all we have the beginning of the year in Q1, and net effect of the transaction with icon Gower that this was 6000 barrel per day that basically impact in two months of our Q Q1 number and.
And the second thing that we have in our program that it is different tools that we have done in the past is the fact that we are.
We are drilling to drilling and completing two pack based on our acute med.
<unk> technology that it means that we are drilling and completing two put together.
To avoid basically interference interference between them, but.
A quarter delay in production so when you look at.
When you look at the dividend program and the completion program the way that the production will come in exhibit definitive will have done in the past.
We are closing Q1 with an average of $52 two internal production.
We expect that Q Q1, sorry, we expect Q2 to be probably slightly light is slightly lower than number since we are going to tell you and so in the first in the first quarter with <unk>.
In the second quarter, we will pay in serving with that we will see.
Important increase in production.
In Q3, where we're going to retain toy west.
And then.
On Q4 again, we come back to fight was so Q3 really is where we have this backhaul palo.
16, and 17 coming in saying we are going to complete those two back to back so that.
Basically make the production growth this year a bit different to the ones that we have shown previously.
Now when you look at the drilling program of the year we.
We will finish in drilling.
Four.
The fact that we have today in the business.
At the end of September .
This further probably decision intermodal acceleration that we have.
The decision of probably adding too but at the end of day in Q4, two pads that we can drill of course, we cannot complete will be completed in two in 2024.
That is not a decision that we have made already but is something that we can do.
Basically moving them.
With a normal drilling plan.
Same.
With me.
More longer term I, we said 'twenty 'twenty four and beyond.
We are evaluating different growth scenarios.
<unk> 2004 and onwards.
That is in the ideas that we're evaluating is due to the strong performance.
That we have and also we have a very strong platform that will allow us to escape.
Basically with this.
<unk> core people that we have.
With the Super restaurant inventory that we have I mean, we are talking about.
Our south and West we have really only 70 of those.
The access to a premium Youtube.
Due to the long term relationship we have with our service provider.
And of course, because we have a solid financial situation income.
So we are evaluating.
<unk> scenarios that we are not guiding for that.
You should have in mind that we are doing that in demo.
Equipment, increasing equipment, I mean, I think it will be possible.
Again due to the relationship we have with the service provider.
I believe we.
We engage will go forward in a scenario that is more aggressive we will have the option to win more equipment.
And also to use the same equipment that we have.
More efficient.
Coming to infrastructure.
So let me give you.
A bit of.
A bit of overall view I think you know we are winning tracking we have been very.
But he is strong and we are doing with <unk>.
So although we are expecting again, Q1 2024, 40% of those little better.
Additional capacity is around 300000 barrel per day coming into place in Q1 2025, the whole project should we should be complete.
In language LDL well at the port facilities expansion will be coming in and I think the new the new thing that.
We are doing is the exports to Chile throughout ASUR. This is.
By line that already exists.
It was put in place is been testing that we speak on the offtake of that production will be enough.
You can expect that we will participate on that with between four and 5000 barrels of oil per day.
On that.
Will allow us to reduce a bit.
Tracking but.
Basically this is this is what we are adding.
<unk> will come.
Later, we are expecting that for Q3 2023.
And that basically will replace or task.
So.
But the DIY thing is.
It's a complete with that your question.
Thanks, Dan.
One moment for our next question.
Our next question comes from the line of Rodrigo Mr from <unk> Securities.
Hi, good morning, Thank you.
You believe you asked my questions.
<unk>.
Follow up on.
Thompson pipeline.
Commencing operations.
Can we expect higher prices so reduced discounts.
For these things.
Hi, Rodrigo Thank you for the question.
So again I mean.
The Chile first stage.
<unk>.
We will as part of between 4005 <unk>.
<unk> thousand barrels per day as I mentioned before.
We expect the pricing netback for this that should be very similar to the one that we would we get when we supported through Bahia Blanca. So.
We don't see any change on that.
As I mentioned before.
That we have also.
In effect on tracking for us.
We don't expect any immediate impact but.
We are tracking to the probably 2500 barrels per day.
We will reach 6000, if you will not have a.
Tessa.
We'll bridge, probably 10000 barrel oil per day in demonstrating so clearly and this new route of exports to Chile is helping both on export and also on cost.
Okay. Thank you.
A quick one so you recently announced they were progressing behind by the way there, which we showed an increase in your inventory.
Given that your current capital allocation priorities are behind by the way would you contemplate into entering a joint venture or any other things to expedite the elements behind that.
Yeah.
No one really where we are now contemplating initial venture with peaking buckhead below it.
<unk>.
Our quarter show in terms of development.
If some point of time, we retain doing something probably we will be more related to the blocks that we have in the north.
But no at the moment, we are not expecting as I said, we have.
A solid financial.
Position so.
There's no need.
Okay. That's very helpful. Thank you and welcome.
Thank you one moment for our next question.
Our next question comes from the line of Alejandro de <unk> from <unk> Securities.
Yes. Good morning. Thank you for taking my question and congratulations on the results.
A couple of questions.
First one given the economic situation in Argentina acceleration off of inflation also on <unk> could.
Could you please give us some kind of view of how you're seeing the.
The development of the domestic pricing, if we can see a situation where domestic prices come down.
In this environment and then related to these <unk> evolution of your own cost both on the lifting side, but also on the Capex.
Thank you Alejandro for question I will start with the second part of lifting probably give you a bit of feeling on drilling as well.
For Q1, we finished with a lifting cost of four.
For the last part about it.
This lifting cost was composed due to their conchobar transaction.
Two months, where we have that conventional production with us.
The lifting cost for those two months was around seven five.
And then March we saw lifting cost come in below five.
And of course.
<unk> four is the composition of all that.
When we see our lifting costs behave.
In the in the following quarters, but we believe.
We will establish a lifting cost that would be around $5. So you should expect that.
In term of drilling and we finished the year with the drilling costs are around $12 seven.
<unk> million dollars.
For our normal ways today, we are seeing the drilling cost between 13 and $13 five mm.
This was due to the appreciation of pesos.
Related to the gasoline.
The increase.
We see.
So first of all Q1, the prices of the bonds.
Increased 11% in local currency, but decreased 5% in U S dollar due to basically saying higher appreciation of.
Pesos.
<unk>.
Q2, I mean, what we have seen in terms of dollar term, we will see even more pressure on the appreciation of pesos, but also I mean, we expect that.
With spreads basically that.
Export pricing for us would be flat.
Local prices, we said it all yours.
We expect that will be around the same level that we are today.
Okay.
The main question is what happens in the second half of the year yeah.
Gasoline prices do not increase or do not follow inflation, then we may see domestic crude oil prices coming down.
Yes, it's a possibility definitely.
Of course, I mean, if it if it.
The export prices or the brand is strong that will be the intention to their market and we are.
With five for our crude oil prices.
But yes, you could have in the second half due to the actual conditions also due to the election.
Pressure on the local market definitely.
That's great. Thank you.
That pressure goes more to the refineries to the people that have integrated.
Integrated operation in D&S.
Thank you one moment for our next question.
Our next question comes from the line of Andreas Cardona from Citi.
Hi, good morning, everyone.
A question and I would like to understand how is Dilly Creek two axis.
Marc Keith working so far.
If you can provide an update would be very appreciated. Thanks.
Okay.
Thank you Andreas for the question.
Yes, I mean, we've been giving updates on that.
In October 'twenty or 'twenty to 'twenty, two the central block.
Basically established.
As I said before that was follow but.
Few formalities thrown the figure of energy and beginning of January .
And also <unk>.
That adhere to the regime and Av.
<unk>.
It will happen after that.
We filed several requests.
Due to basically the degree based on the incremental production that we have in Q3 2022 incremental production that we have in Q4 and in Q1 2023.
So we are expecting to receive the certificate.
That is to access around $66 million in 14 and in foreign currency. This was for 2014 2200 $30 million.
Respectively for the three quarters as I mentioned before.
Of course.
Still some uncertainty around when we would receive <unk> certificate, but I mean, we are filing based on the degree and based on nickel them into production that we are we are seeing coming.
Thank you.
Youre welcome.
Thank you one moment for our next question.
Our next question comes from the line of Oriana cobalt from Milan.
Hi, Good morning, Thanks for taking my question. This is again I followed with balance.
Got it.
Any questions.
They go one by one that would be great.
One is a follow up with regards to the ADESA pipeline and exports to Chile, just to understand maybe if you have more information and will this be carried out.
Carried out under firm contract or saw that spot and if so.
Do you have any information about fees that the owners of the pie will charge for it.
Yes, Brian .
Thus, adding.
Adding to what I said.
That is still in negotiation, but you should expect get fill contract.
Okay.
Alright.
Perfect. Thank you and maybe just moving on to the OLED.
Pipeline can you comment about what levels are you currently operating.
<unk> to your limits based on the current capacity like taken aside the expansion and do you see like this currently with 10 capacity with potentially a slowdown in the drilling program towards late 2023, or 'twenty 'twenty four just before the expansion come through.
From all the lull us the two stages are coming in and particularly for for this year. So I mean, our plan is in line with the capacity that we can access around the world.
Sure.
I understand and maybe just one final one.
We estimate the market deterioration in like correct, but closer with the harvest season.
High dollar Intel.
Do you see any potential impact in terms of access to the inputs and just thinking of infrastructure needs or equipment.
Yes.
You're already on.
We have not have any issues.
Import equipment, we have done few importations I mean, we have all the equipment in place today.
And the service companies that we are using I want that basically have quite a bit of it.
In the country, but in the few cases that we got your exit to imports I mean, we would been able we have been able.
<unk> in the agreement that is required so far.
Perfect. Thank you very much.
You're welcome.
Thank you.
A reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.
Our next question comes from the line of Scott also from Credit Suisse.
Congratulations on the results thanks for the questions.
Two quick topics I wanted to follow up with one of the on the road.
Okay.
I mean you have.
So room potentially true.
Either grow forever your inventory or to develop the inventory you already have.
No.
A recurring question how do you feel about the balance between.
Capex buyback deleveraging, particularly.
Particularly I guess with the recent backdrop.
From the macro front I mean for one hand, you have Argentina growing exports.
<unk> four.
Good.
Porters gaining access to the dollars eventually.
Using that to remunerate shareholders.
Versus continue reinvesting in your existing portfolio.
Question on <unk>.
Broadly on inventory and capital location.
And then I guess, the second question would be on lifting cost.
If I remember correctly, you did six four and the guidance for the year is five five so what do you think is.
Between those two numbers and if youre tends to reach the guidance for the year. Thank you.
Thank you Rajeev for your question.
Starting with the first part.
Definitely when we look.
I mean, what we can do.
In term of continue creating value.
The main the main thing is that basically we can do and we are analyzing our related as I mentioned before due to the strong performance that we have and new to the platform that we have to.
<unk> case as I said, because we have the people we have the equipment we have.
Our solid financial performance is to accelerate or to further grow.
In terms of.
Drilling and completion and basically accelerating the use of the thousand well portfolio that we have in <unk> I think that is the main.
This is the main driver to add additional value.
Our stock and to Vista.
Nevertheless.
When you look at going forward.
Our ability to generate.
EBITDA and cash.
We can continue doing our buyback program and we can continue.
And also we plan to continue deleveraging the company.
It makes sense.
So.
Three of them are not exclusive.
The first one is probably the more important part of because.
In the current context with our current inventory and with our current performance is clearly the best way that we can.
Ta value.
In terms of the lifting cost as I mentioned before I mean.
We drove the quarter with $6 four.
And the last month, we really start to see.
The effect of our pure conventional production.
Shifting costs.
We see that number.
Today close to five so we guide for five five I think you should you should.
You'll see the number probably more close to $5 to $5 five okay.
Understood. Thank you.
Thank you at this time I would now like to turn the conference back over to <unk> for closing remarks.
Well, thank you very much.
For your interest report and continued support.
Looking forward to see you next quarter have a good day everybody.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.