Q3 2023 Vista Energy SAB de CV Earnings Call
[music].
Operator: Good day. Thank you for standing by. Welcome to Vista's Q3 2023 Earnings Webcast. 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 hear an automated message advising your hand is raised. 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 Cherñacov, Strategic Planning and Investor Relations Officer. Please go ahead.
Good day and thank you for standing by welcome to the Vista <unk> third quarter 2023 earnings webcast.
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.
We'll then hear an automated message advising your hand is raised 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 Chevrons Nichols strategic planning and Investor Relations Officer. Please.
Go ahead.
Alejandro Cherñacov: Thanks. Good morning, everyone. We are happy to welcome you to Vista's Q3 2023 results conference call. I am here with Miguel Galuccio, Vista's Chairman and CEO, Pablo Vera Pinto, Vista's CFO, and Juan Garoby, Vista's COO. Before we begin, I would like you to draw your attention to our cautionary statement on slide two. Please be advised that your 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 US dollars and in accordance with International Financial Reporting Standards, IFRS. However, during this conference call, we may discuss certain non-IFRS financial measures such as adjusted EBITDA and adjusted net income.
Thanks. Good morning, everyone. We are happy to welcome you to rest of the third quarter of 2020 results Conference call I'm here with me.
Mr Chairman and CEO Pablo it up even though Mr CFO and Mr.
Mr Koo.
Before we begin I would like you 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 <unk>.
However, during this conference call, we may discuss certain non <unk> financial measures such as adjusted EBITDA and adjusted net income.
Alejandro Cherñacov: Reconciliations of these measures to the closest IFRS measure can be found in the earnings release that we issued yesterday. Please check our website for further information. Our company, Vista, is a Sociedad Anónima Bursátil de Capital Variable, organized under the laws of Mexico, registered in the Bolsa Mexicana de Valores and the New York Stock Exchange. Our tickers are Vista in the Bolsa Mexicana de Valores and VIST in the New York Stock Exchange. I will now turn the call over to Miguel.
Consolidations of these measures to the closest I've got Frank measure can be found in the earnings release that we issued yesterday. Please check our website for further information.
Our company Vista is associated only an hour suddenly capital body outlet organized under the laws of Mexico.
He started in the Bolsa Mexicana de Valores, and the New York Stock Exchange RT Costar data in there was something like you kind of evaluate it and be a USD in the New York Stock Exchange I will now turn the call over to Miguel.
Miguel Galuccio: Thanks, Ale. Good morning, everyone, and welcome to this earnings call. Today, I am pleased to present our results for Q3 2023, during which we record a strong growth on a sequential basis. During Q3, we focused on drilling and completion activity in Bajada del Palo Oeste. This led to a sequential growth in both oil and total production that allow us to largely replace the production from the conventional assets we transferred in Q1 2023. Total production reached 49,500 BOEs per day during Q3, which was 6% above Q2. Oil production was 41,500 barrels per day, 6% above Q2. Total revenues during the quarter were $290 million, 25% above the previous quarter. Lifting costs were $4.8 per BOE, reflecting our successful strategy to fully focus on our higher margin, lower carbon, and short cycle shale assets.
Thanks Ali and good morning, everyone and welcome to this earnings call.
Today I'm pleased to present, our results for the third quarter of 2023.
During which we recorded strong growth on a sequential basis.
During Q3, we focus on drilling and completion activity in Bajada del Palo Este is.
Led to a sequential growth in both oil and total production.
Allow us to largely replace the production from the conventional assets with the ramp in Q1 2023.
Total production reached 49 5000 Boe's per day during the third quarter, which was 6% above Q2.
Oil production was 41 5000 barrels per day, 6% about Q2.
Total revenues during the quarter were $290 million.
95% above.
Above the previous quarter lifting costs were $4 $8 per the UAE, reflecting our successful strategy to fully focus on our higher margin lower caravan and short cycle shale assets.
Miguel Galuccio: Capital expenditure was $181 million, mainly driven by 11 wells drilled and 12 wells completed during the quarter. In Q3 2023, adjusted EBITDA was $226 million, a sequential increase of 49% on the back of revenue growth and flat lifting costs. adjusted net income was $123 million, implying a quarterly adjusted EPS of $1.3 per share. We recorded -$43 million free cash flow during the quarter. This was mainly driven by a temporary increase in working capital that impacted cash flow from operation activities. The net leverage ratio at quarter end was a solid 0.7x adjusted EBITDA. I will now deep dive into our main operational and financial metrics. Total production during Q3 2023 was 49,500 BOEs per day, down 2% on an interannual basis. This is explained by two factors.
Capital expenditure was $181 million.
Mainly driven by 11 was drilled 12 wells completed during the quarter.
In Q3, 2023, adjusted EBITDA was $226 million.
A sequential increase of 49% on the back of revenue growth and flat lifting cost.
Adjusted net income was $123 million.
Implying a quarterly adjusted EPS of $1 $3 per share.
We recorded negative free cash flow of $43 million during the quarter.
It was mainly driven by a temporary increase in working capital that impacted cash flow from operation activities.
Finally, the net leverage ratio at quarter end was a solid set of <unk> seven times adjusted EBITDA.
We will now deep dive into our main operational and financial metrics.
Andres Gmez: Andres Gmez, Daniel Guardiola, Andres Gmez, Daniel Guardiola, Good day and thank you for standing by.
Total production. During Q3 2023 was 49 5000 Boe's per day down 2% on inter annual basis.
This is explained by two factors.
Miguel Galuccio: First, the transfer of the conventional asset reduced our production by almost 6,000 BOEs per day. On a pro forma basis, adjusting for the transferred asset, total production grew 12% year over year. Second, transportation capacity limited our production growth during H1. This has been unlocked since June as we started exporting oil via pipeline to Chile. Our development plan during 2023 was therefore back-loaded in terms of new well connections. The tie-in of 12 new wells in Bajada del Palo Oeste during Q3 led to a sequential growth of 6% in total production. Moreover, the monthly breakdown reflects a solid ramp-up during the quarter, with 53,000 BOEs per day of total production during September 2023.
First the transfer of the conventional assets reduce our production by almost 6000 Boe's per day.
On a pro forma basis adjusting for the transfer of assets total production grew 12% year over year.
Second transportation capacity limited our production growth during the first semester.
Operator: Welcome to the Vista's third quarter, 2023 Earnings Webcast. 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.
This has been unlock its in June as we started exporting oil via pipeline to Chile. Our development plan. During 2023 was there a photo back loaded in terms of new waste connections.
The timing of 12, new wells in <unk> by the way during the third quarter led to a sequential growth of 6% in total production.
Moreover, the monthly breakdown reflects a solid ramp up during the quarter.
Operator: Please be advised that today's conference is being recorded.
Alejandro Cheracov: I would now like to hand the conference over to your speaker today Alejandro Cheracov, strategic planning and investor relations officer. Please go ahead. Thanks. Good morning everyone. We are happy to welcome you to Vista's third quarter, 2023 results conference calls. I am here with Miguel Galuto, Vista's chairman and CEO, Pablo Redapinto, Vista's CFO and Juan Garoby, Vista's COO. Before we begin, I would like you to draw your attention to our cautionary statement on slide two.
53000, Boe's per day of total production during September 2023.
Miguel Galuccio: Production ramp-up started in August as the tie-in of Pad Bajada del Palo Oeste 16 and Bajada del Palo Oeste 17, corresponding to the cube development pilot we were running in Bajada del Palo Oeste, was delayed to late July. During Q3 2023, we made solid progress in Bajada del Palo Este, where we focused the activity of our two drilling rigs after finalizing the pilots in Águila Mora and Bajada del Palo Este in Q2. This led to 12 new wells connected during the quarter, Pad Bajada del Palo Este-16, 17, and 18. Additionally, four-well pad Bajada del Palo Este-19, which was completed in September, was tied in October and is showing very solid productivity. We also finished drilling Bajada del Palo Oeste-20, a three-well pad with all the wells targeting La Cocina.
Production ramp up at 30 day novels, as the timing of but by highlighted by the way the 16 <unk> <unk> to.
17 countries pointing to the cube development pilot, we were running in the highest priority.
It was delayed to late July.
During the third quarter of 2023, we made solid progress in bajada del Palo Este.
Alejandro Cheracov: Please be advised that your remarks today, including the answer 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 US dollars and in accordance with international financial reporting standards, IFRS. However, during this conference call, we may discuss certain non-IFRS financials measures, such as adjusted ABDA and adjusted Notico.
We focused activity of our two drilling rigs.
Finalizing the pilots in aggregate Mora in Bajada del Palo Este in Q2.
This led to 12, new wells connected during the quarter, but below the 16 17 and 18.
Additionally, four well pads.
Hello.
19, which was completed in September we're staying in October and it's showing very solid productivity.
Alejandro Cheracov: The considerations of these measures to the closest IFRS measure can be found in the earnings release that we issued yesterday. Please check our website for further information. Our company, Vista, is associated with the capital variable, organized under the loss of Mexico, registered in the Bolsa, MexicanA de Valores and the New York Stock Exchange. Our figures are Vista in the Bolsa, MexicanA de Valores and BIST in the New York Stock Exchange.
We also finished drilling bajada del Palo Este 'twenty three.
Three well pad with older wells targeting like casino.
Miguel Galuccio: This pad is currently under completion and is scheduled to be tied in during November. Finally, we are currently drilling four-well pad in Bajada del Palo Oeste-21, which we plan to complete and connect before year-end. We expect to tie in a total of 23 new wells during H2, driving further production growth. We forecast total production of Q4 2023 at 60,000 BOEs per day, with an exit rate of 65,000 BOEs per day. The tie-in of 23 new wells during H2 is in line with our activity guidance for the year, and two wells above the original guidance. On an annualized basis, this is an activity target we set for 2024 during our last investor day, reflecting our capability to deliver 46 new wells per year. During Q3, we also made solid progress to increase mixing capacity.
This pad is currently under completion and is scheduled to be timing during November.
Finally, we are currently drilling four well pad in bajada del Palo Este 'twenty one.
Which we plan to complete and connect before year end.
We expect to tie in a total of 23, new wells during the second semester.
Miguel Galuccio: I will now turn the call over to Miguel. Thanks, Ale.
Driving further production growth we forecast total production of Q4 2023, a 60000 Boe per day with an exit rate of 65000 Boe's per day.
Miguel Galuccio: Good morning, everyone, and welcome to this earnings call. Today, I am pleased to present our results for the third quarter of 2020. III, during which we record a strong grow on a sequential basis. During Q3 we focus on drilling and completion activity in Bajada El Palo Oeste. This led to a sequential grow in both oil and total production that allow us to largely replace the production from the conventional assets with transferring Q1 2023.
The timing of 23, new wells during the second semester is in line with our activity guidance for the year.
And two with above the original guidance.
On an annualized basis. This is an activity target we set for 2020 for using our last Investor day.
Reflecting our capability to deliver 46, new wells per year.
Miguel Galuccio: Total production reached 49.5 thousand below his per day during the third quarter, which was 6% about Q2. Oil production was 41.5 thousand barrels per day, 6% about Q2. Total revenues during the quarter were $290 million, 25% above the previous quarter. Lifting cost was $4.8 per DOE, reflecting our successful strategy to fully focus on our higher-market lower carbon and short-cycle shade oil assets. Capital expenditure was $181 million, mainly driven by 11 wealthed drill and 12 wealth completed during the quarter.
During Q3, we also made solid progress to increase meaningfully in capacity, we completed the upgrade of our crude oil treatment plan, leading to a total capacity of 70000 barrels of oil per day.
Miguel Galuccio: We completed the upgrade of our crude oil treatment plant, leading to a total capacity of 70,000 barrels of oil per day. Stage 1 of Oleoductos del Valle expansion is well advanced, with 7,500 barrels of oil per day of trunk pipeline capacity already available for Vista, and another 5,000 barrels per day planned for mid-2024. The Vaca Muerta Norte Pipeline is on track to be commissioned before year-end. This is expected to add another 12,500 barrels of oil per day of trunk pipeline capacity for Vista. Expansions to our oil treatment capacity and transportation capacity constitute key enablers to our updated strategic plan, which has a production target of 70,000 BOEs per day for 2024, and 100,000 BOEs per day for 2026.
Stage, one of all well value expansion is well advanced.
7500 barrels of oil per day of trunk pipeline capacity already available for Vista, and another 5000 barrels per day planned for mid 2024.
The bulk of Mortal noted by line is on track to be commissioned it before year end.
D C suspected.
Another 12500 barrels of oil per day.
Miguel Galuccio: In Q3 2023, a 60WDA was $226 million, a sequential increase of 49% on the back of revenue grow and flood lifting cost. A 60WN was $123 million, employing a quarterly-assisted EPS of $1.3 per share. We recorded negative free cash flow of $43 million during the quarter. It was mainly driven by a temporary increase in working capital that impacted cash flow from operation activities. Finally, the net level ratio at quarter end was a solid 0.7 times a 60WDA.
By line capacity for Vista.
Expansions to our oil treatment capacity and transportation capacity constitute key enablers to our updated strategic plan.
Which has a production target of 70000 Boe's per day for 2024 and.
100000, Boe's per day for 2026.
Miguel Galuccio: Total revenues in Q3 2023 were $290 million, 13% down year over year, and 25% above Q2 2023, on the back of higher export volumes and oil realization prices. Realized oil price for the quarter averaged $67.6 per barrel, down 12% year over year and 5% above the previous quarter. The average realized domestic price was $61.7 per barrel, while the realized export price was $74.9 per barrel. Domestic crude oil prices were impacted by the drop in prices to $56 per barrel Aguila, following the devaluation of the Argentinian pesos from 14 August until the end of October. This led to approximately $5 million or lower adjusted EBITDA during Q3 2023. Sales to export market accounted for 55% of oil volume and 61% of oil revenues.
Total revenues in Q3 2023 were $290 million.
13% down year over year, and 25% of our Q2 2023 on the back of higher export volumes and oil realization prices.
Miguel Galuccio: I will now deep dive into our main operational and financial metrics. Total production during Q3 2023 was $49.5,000 DOE per day, down 2% on interannual basis. This is explained by two factors. First, the transfer of the conventional asset reduced our production by almost $6,000 DOE per day. On a platformer basis, adjusting for the transfer asset total production grew 12% year over year. Second, transportation capacity limited our production grow during the first semester.
Realized oil price for the quarter at $67 per barrel down 12% year over year, and 5% above the previous quarter.
Average realized domestic price was $61 $7 per bottle that why the realized export price was $74 $9 per barrel.
Domestic crude oil prices were impacted by the drop in prices to $56 per barrel following the devaluation of the Argentinian peso.
On August 14 until the end of October.
This led to approximately $5 million or lower adjusted EBITDA during Q3 2023.
Miguel Galuccio: This has been unlocked in June as we started sporting all the API line to Chile. Our development plan during 2023 was there four back-loaded in terms of new wealth connections. The time of 12 new wealth in the fall of the year during the third quarter led to a sequential growth of 6% in total production. Moreover, the monthly breakdown reflects a solid ramp up during the quarter with 53,000 DOE per day of total production during September 2023.
Sales to export market accounted for 55% of volume and 61% of oil revenues.
Miguel Galuccio: We exported 2.2 million barrels of oil composed by four cargos through the Atlantic, including the cargo deferred from Q2 and 0.4 million barrels by pipeline to Chile. Realized gas prices decreased 24% interannually to $3.3 per million of BTU, mainly driven by lower price paid by clients in industrial segment. The sequential decline in realized gas prices was driven by lower gas export volumes. Lifting cost was $21.9 million for the quarter, a 37% decrease vis-à-vis Q3 2022. Lifting cost per BOE was $4.80, 35% below the same quarter of last year. These results continue to reflect the positive impact of our new operating model, fully focused on our shale asset following the transfer of the conventional asset in the Q1 of the year. We expect a similar lifting cost performance during Q4.
Spotted $2 2 million barrels of oil.
Both by four cargoes through the Atlantic, including the category differ from Q2, and Cedar point 4 million barrels by pipeline to Chile.
Realized gas prices decreased 24% inter annually to $3 $3 per million Btu, mainly.
Miguel Galuccio: Production ramp up started in August as the time of the fall of the year 2016 and fall of the year 2017, corresponding to the QF development pilot we were running in the fall of the year 2017, was delayed to late July. During the third quarter of 2023, we made solid progress in Bajada del Paloeste where we focused the activity of our two drilling rigs after finalizing the pilot in Aguilamora and Bajada del Paloeste in YouTube.
Mainly driven by lower price paid by clients in the industrial segment.
The sequential decline in realized gas prices was driven by lower gas export volumes.
Lifting cost was $21 9 million for the quarter, a 37% decrease vis vis Q3 2020 to.
Lifting cost per <unk> was $4 $8, 35% below the same quarter of last year.
These results continue to reflect the positive impact of our new operating model.
Miguel Galuccio: This led to 12 new wells connected during the quarter past Bajada del Paloeste 16, 17 and 18. Additionally, four wells packed Bajada del Paloeste 19 which was completed in September was 10 in October and is showing very solid productivity. We also finished drilling Bajada del Paloeste 20, a three wells packed with all the wells targeting La Cosina. This part is currently under completion and is scheduled to be done during November. Finally, we are currently drilling for World Path in Bajada del Paloeste 21 which we plan to complete and connect before year end.
Fully focused on our CLO asset following the transfer of the conventional assets in the first quarter of the year.
We expect similar lifting cost performance during Q4.
Miguel Galuccio: On this basis, we are on track to outperform our full-year lifting cost guidance by around 5%, with a forecast of approximately $5.2 per BOE for the year. Adjusted EBITDA for the quarter was $226 million, a slight decline of 3% year over year. The inter-annual decrease in revenues was almost fully offset by the lower lifting cost and $20 million of other income generated by the JV with Trafigura. We connected the last 12 wells under the JV during the quarter. During Q3 2023, we recorded a strong sequential expansion of margins. Adjusted EBITDA margin was 78%, an increase of 12 percentage points vis-à-vis Q2. Additionally, we recorded a netback of $49.8 per BOE, 39% above the previous quarter. These results were mainly driven by savings in lifting costs, additional sales volumes, and other income from the JV with Trafigura.
On this basis, we are on track to outperform our full year lifting cost guidance by around 5% with a forecast of approximately $5 $2 per the UAE for the year.
Adjusted EBITDA for the quarter was $226 million.
A slight decline of 3% year over year.
They're in their annual decrease in revenues was almost fully offset by the lower lifting cost and $20 million of other income generated by the JV with Trafigura.
Miguel Galuccio: We expect to tie in a total of 23 new wells during the second semester, driving further production growth. We forecast total production of Q4 2023, a 60,000 B.O, is per day with an exceed rate of 65,000 B.O, is per day. The tie-in of 23 new wells during the second semester is in line with our activity guidance for the year and two wells above the original guidance. On an analyzed basin, this is an activity target we set for 2024 during our last investor day, reflecting our capability to deliver 40 new wells per year.
We connected the last 12 with under the <unk> during the quarter.
During Q3 2023, we recorded strong sequential expansion of margins.
Adjusted EBITDA margin was 78% an increase of 12% points vis vis Q2.
Additionally, we recorded a netback of $49 $8 per the UAE.
39% above the previous quarter.
These results were mainly driven by savings in lifting cost.
Additional states volumes another income from the JV with Trafigura.
Miguel Galuccio: We expect adjusted EBITDA to be between $215 and 230 million in Q4, noting that Q4 will not include income from the JV with Trafigura. Also, that there is uncertainty around the realized oil prices, both on the domestic Medanito and the international Brent benchmark. During Q3 2023, cash from operating activities was $117 million, reflecting income tax payments of $22 million and a temporary increase in working capital of $66 million. Cash flow used in investing activities was $161 million, in line with the capital expenditures of $181 million for the quarter. During Q3 2023, we recorded free cash flow of -$43 million. We issued a dollar-linked bond for $70 million at a very competitive term, five-year bullet maturity and 0.99% coupons. We also repaid $22.5 million corresponding to the final installment of our syndicate loan, further reducing the share of our cross-border US dollar debt.
We expect adjusted EBITDA to be between 215 $230 million in Q4.
Miguel Galuccio: During Q3, we also made solid progress to increase mainstream capacity. We completed the upgrade of our crude oil treatment plan leading to a total capacity of 70,000 barrels of oil per day. Stage one of all the value expansion is well advanced with 7500 barrels of oil per day of track pipeline capacity already available for VISTA and another 5000 barrels per day planned for mid 2024. The Vaca Mordano or the pipeline is on track to be commissioned before year end.
Noting that Q4 will not include income from the JV with Trafigura.
Also that there is uncertainty around the realized oil prices.
Both on the domestic.
In International Brent benchmark.
During Q3 2023 cash flow in operating activities was $170 million.
Reflecting income tax payments of $22 million and a temporary increase in working capital of $66 million.
Cash flow used in investing activities was $161 million.
Miguel Galuccio: This is expected to add another 12,500 barrels of oil per day of track pipeline capacity for VISTA. Expansions to our oil treatment capacity and transportation capacity constitute key enablers to our updated strategic plan, which has a production target of 70,000 B.O, is per day for 2024 and 100,000 B.O, is per day for 2026. Total revenues in Q3, 2023 were $290 million, 13% down year over year, and 25% about Q2, 2023, on the back of higher expor volumes and oil realization prices.
In line with capital expenditures of $181 million for the quarter.
During Q3, 2023, we recorded negative free cash flow of $43 million.
We issue a dollar link bone <unk>.
$70 million.
Very competitive term.
By year bullet maturity and Cedar point 99 coupons.
We also repaid $22 5 million corresponding to the final installment of our syndicated loan further.
Further reducing the share of our cross border U S dollar debt.
Miguel Galuccio: Net leverage ratio stood at 0.7 times adjusted EBITDA at quarter end. Finally, cash at the end of the period was $174 million. To conclude this call, I will summarize today's key messages. During Q3 2023, we made robust progress in Bajada del Palo Oeste. The tie-in of 12 new wells leave us well on track to deliver 31 tie-ins for the year. This activity increase has led to a substantial production ramp-up during the quarter. Considering that another 11 well tie-in are scheduled for Q4, we are forecasting 60,000 BOEs per day of total production during such quarter. This will leave us well-placed to achieve our 70,000 BOEs per day target during 2024. We have made solid progress in increasing treatment and transportation capacity, which are key pillars of our growth plan. Our oil treatment plan has recently been upgraded to 70,000 barrels of oil per day.
Net leverage ratio stood at Cedar 0.7 times adjusted EBITDA at quarter, and finally cash at the end of the PEO was $174 million.
To conclude this call I will summarize today's key messages.
During Q3 2023, we made robust progress in bajada Palo OSD.
Miguel Galuccio: The average realized domestic price was $61.7 per barrel, why the realized export price was $74.9 per barrel. Domestic crude oil prices were impacted by the drop in prices to $56 per barrel, including the evaluation of their centennial pesos, from August 14 until the end of October. This led to approximately $5,000,000 or lower asha TWA during Q3 2023. Sales to export markets accounted for 55% of oil volume and 61% of oil revenues.
<unk> of 12, new wells leave us well on track to deliver 31 times for the year.
This activity increase has led to a substantial production will ramp up during the quarter.
Considering that another 11 wells that are.
Scheduled for Q4, we are forecasting 60000 boe's per day of total production during such quarter.
This would leave us well placed to achieve our 70000 boe's per day target during 2024.
We have made solid progress in increasing treatment and transportation capacity.
Miguel Galuccio: We sported 2.2 million barrels of oil composed by four cargoes through the Atlantic, including the cargo transfer from Q2 and 0.4 million barrels by pipeline to Chile. Realized gas prices decreased 24% internally to $3.3 per million of it used, mainly driven by lower price pay by clients in industrial segments. The sequential decline in realized gas prices were driven by lower gas export volumes. Lifting cost was $21.9 million for the quarter, a 37% decreased vis-à-vis Q3 2022.
Which are the key pillars of our growth plan.
Our oil treatment plan has recently been upgraded to 70000 barrels per day.
Miguel Galuccio: The Oldelval expansion has recently added 7,500 barrels of trunk pipeline capacity for Vista, which will be increased further by the Vaca Muerta Norte project and the completion of the second part of stage 1 of Oldelval expansion. Finally, we recorded a strong financial metric reflected by earnings per share of $1.3 and an adjusted EBITDA margin of 78%. To wrap up, and before we open the call for questions, I wish to thank our employees for their hard work and commitment during the quarter. I also thank our stockholders for their continued trust in our company. We will now move to Q&A. Operator, please open the line.
Youll well by the banks shown has recently added 7500 embarrassed.
Trunk pipeline capacity for beta, which will be increased further by the bulk commodity not the project and the completion of the second part of stage one of OLED <unk> expansion.
Finally, we recorded strong financial metrics.
Reflected by earnings per share of $1 $3.
And adjusted EBITDA margin of 78%.
To wrap up and before we open the call for questions.
Miguel Galuccio: Lifting cost per VOE was $4.8, 35% below the same quarter of last year. These results continue to reflect the positive impact of our new operating model. Fully focused on our shadowed asset following the transfer of the conventional asset in the first quarter of the year. We expect a similar lifting cost performing during Q4. On this basis, we are on track to outperform our full year lifting cost guidance by around 5% with a forecast of approximately $5.2 per VOE for the year.
I wish to thank our employees for their hard work and commitment during the quarter.
I also thank our stockholders for their continued trust in our company.
We will now move to Q&A operator, please open the line.
Operator: As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Rodrigo Nistor from Latin Securities.
As 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, please standby, while we compile the Q&A roster.
Our first question comes from the line of Rodrigo Nissan from Latin Securities.
Miguel Galuccio: Assisted a VDA for the quarter was $226 million. It's like the decline of 3% year over year. Their inter-annual decrease in revenues was almost fully offset by the lower lifting cost and $20 million of other inconsegenerated by the SHV with Trafigura. We connected the last 12 wells under the SHV during the quarter. During Q3 2023, we recorded an extra sequential expansions of margins. Assisted a VDA, margin was 78% and increased of 12% points vis-à-vis Q2.
Rodrigo Nistor: Hi. Good morning. Congrats on the results. I have two questions. Given Argentina's current political and macroeconomic landscape, how do you anticipate the trajectory of domestic prices? What are your expectations regarding discounts on export prices and how you're positioning to optimize profitability in these conditions? Thank you.
Hi, good morning, Congrats on the results so I have a.
Two questions again, Argentina's current political macroeconomic landscape, how do you anticipate trajectory up domestic prices.
Then also what are your expectations regarding discounts on export prices and how youre positioned.
Optimized brokerage <unk>. Thank you.
Miguel Galuccio: Hi, Rodrigo. Thank you for your question. Look at pricing going forward, we are seeing first, probably important, we are seeing export pricing with upside at least of $2 or $3 more than Q2 as consequence of higher Brent. Also, we believe the discount of our export pricing will be probably for Q4 below probably $2 to $3. In terms of local prices, October, we are still selling at $56 per barrel. November and December, we are in the negotiation with the refineries. The gap today between export parity and domestic prices is around 40%. Therefore, the local market needs to start to normalize. Definitely, the normalization, it will be very important to drive investment in Vaca Muerta and generate more volumes for the country. I expect that November and December, there should be a push for normalization in the local market.
Hi, Rodrigo Thank you for your question.
Look at pricing going forward, we are seeing first brought important we're seeing export pricing with upsides, a list of two or $3 more.
Miguel Galuccio: Additionally, we recorded a netback of $49.8 per VOE, 39% above the previous quarter. These results were mainly driven by savings in lifting costs, additional sales volumes, and other inconse from the SHV with Trafigura. We expect a short VDA to be between $215 and $233 million in Q4, noting that Q4 will not include inconse from the SHV with Trafigura. Also, that there is uncertainty around the relies on practice. Both on the Domestik Medanito and the International Benchmark.
More than Q2 as consequence of.
Higher brand and also we believe the discount on export pricing will be preferred.
Q4.
Below probably two to $3.
In terms of local prices.
October we are still selling at $56 per barrel.
November and December we are under negotiation with our refineries.
The gap today between export parity on domestic prices is around 40%.
Therefore, the local market niches start to normalize.
Miguel Galuccio: During Q3 2023, cash for an operating activities was $170 million, reflecting in contact payments of $22 million and a temporary increase in working capital of $66 million. Cash flow used in investing activities was $161 million in line with the capital expenditures of $181 million for the quarters. During Q3 2023, we recorded negative free cash flow of $43 million. We issued a dollar-linked bond for $70 million at a very competitive time, fire bullet maturity and 0.99 coupons.
Definitely the normalization it will be very important to the investment in back amortize generate more volumes for.
For the country. So I expect that November and December there should be a boon for normalization.
In the local market.
Rodrigo Nistor: Okay. Yeah, that was really clear. Thank you.
Okay that was really clear thank you.
Miguel Galuccio: Thank you.
Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Walter Chiarvesio from Santander.
Thank you one moment for our next question.
Our next question comes from the line of Walter <unk> from Santander.
Walter Chiarvesio: Hello, good morning. Congratulations for the results, and thank you for taking my question. My question is regarding this differentiated FX scheme that the government just introduced for the oil and gas companies. What is the impact for Q4, and what do you think this could evolve, well, actually for Q4 because we have elections in the middle? If you think that this could continue in Q1 or Q2 next year, what is your view about it? Thank you.
Hello, Good morning, congratulations for the results and thank you for taking my question.
Miguel Galuccio: We also repay $22.5 million corresponding to the final installment of our syndicate loan, further reducing the share of our cross-border U.S, dollar debt. Net-level ratio stood at 0.7 times at CDVDA, at Corel N. Finally, cash at the end of the period was $174 million.
My question is regarding the <unk> Bill.
Scheme.
The government has just introduced for the oil and gas companies.
What is the impact for the fourth quarter and whether you think this could evolve.
Well actually for the fourth quarter, because we have elections in the middle East you think that this could continue in the first quarter or second quarter next year. What is your view about it. Thank you.
Miguel Galuccio: To conclude this call, I will summarize today's key messages. During Q3 2023, we made robust progress in the low value of this. The time of 12 new wells leave us well on track to deliver 31 times for the year. This activity increase has led to a substantial production ramp up during the quarter. Considering that another 11-welfth time at Schedule for Q4, we are forecasting $60,000 per day of total production during such quarter.
Miguel Galuccio: Hi, Walter, and thank you for your question. Yes, it's this program that we call on oil and gas dollar. We include in the program export for an equivalent of $135 million, which we liquidate 75% through the central bank and 25% through the blue chip swap. That will generate for us an additional revenues of around $55 million. Our calculation in financial income, we expect around a net income impact between $10 and 30 million. Regarding the continuation of this program after elections, to be honest with you, I don't know. It will all depend more on the macroeconomic program that the next president put in place.
Hi, Walter Thank you for your question yes.
The program that we call on oil and gas dollar, we including the program.
Exports for an equivalent of $135 million.
<unk>, 75% through the central bank and 75% through the Blue chip swap.
That will generate for us and additional revenues of around $55 million.
On our calculation and financial Inc income.
Miguel Galuccio: This could leave us well-placed to achieve our $70,000 per day target during 2024. We have made solid progress in increasing treatment and transportation capacity, which are key pillars of our grow plan. Our oil treatment plan has recently been upgraded to $70,000 per day. The oil valve expansion has recently added $7,500 in barrels of track-py-line capacity for data, which will be increased further by the Bacamurta-Northy project and the completion of the second part of stage 1 of all the oil valve expansion. Finally, we recorded a strong financial matrix, reflected by earnings per share of $1.3, and a short TWA margin of 78%.
We expect around net income impact between 10 and $30 million.
Regarding the continuation of the program after the elections.
To be honest with you I don't know.
You will all depend more on the macroeconomic add program that the next pressing and put in place.
Walter Chiarvesio: Thank you very much. A follow-up question, if I may, is how this dynamic is impacting your production cost vis-a-vis higher revenues due to this differentiated currency? In terms of margin looking forward, I mean. I guess that for Q1, Q4, the pressure on cost on dollars may be higher, I guess. Is that the case, or?
Thank you very much.
A follow up question if I may is.
How would this.
Dynamics, you're seeing pricing.
Your production cost.
<unk> hi.
<unk> revenue.
Appreciate that clarity.
In terms of margin report, what I mean.
I guess, that's for the first quarter fourth quarter.
The pressure on cost a lot of maybe.
Miguel Galuccio: To wrap up, and before we open the call for questions, I wish to thank our employees for their hard work and commitment during the quarter. I also thank our stockholders for their continued trust in our company.
Hi.
So.
Miguel Galuccio: No, Walter, I don't think it will impact our margins. Not at all. I think this will be more related to financial incomes, but not the margin per se.
No no I don't think we will embark our margins.
Im not sure Ive seen this will be more related to financial incomes.
No the margin per se.
Operator: We will now move to Q&A operator. Please open the line. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by when we compile the Q&A roster. Director.
Walter Chiarvesio: Okay, perfect. Understood. Thank you very much.
Okay perfect understood. Thank you very much youre very welcome.
Miguel Galuccio: You're very welcome.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Oriana Covault from Balanz.
Thank you.
One moment for our next question.
Our next question comes from the line of Oreo cobalt from the lines.
Oriana Covault: Hi, good morning. Thanks for taking my questions. This is Oriana Covault with Balanz. I have three. If we could go one by one, that would be great. The first one is just a follow-up on the expected volumes for Q4. Recalling the guidance that you have set for 2023, 55,000 barrels per day. It seems that you might be running a tad behind with 60,000 barrels per day expected for Q4. I just wanted to understand if we should perhaps expect a lower production number for the full year, and what could additional drivers be there for increased volumes? Thanks. That would be the first one.
Hi, good morning, Thanks for taking my questions.
Rodrigo Nistor: Our first question comes from the line of Rodrigo Nistor from Latin Securities. Hi, good morning, congrats on the results. So I have a two questions.
And I have three.
If we can find one by one that would be great.
The first one is just a follow up on the expected volumes for the fourth quarter.
Im recalling the guidance that you have set for 2023.
55000 barrels per day.
It seems that you might be running a tad behind with 60000 barrels per day expected for the fourth quarter. So I just wanted to understand this is Lisa.
Perhaps expand.
Miguel Galuccio: Thank you. Hi, Rodrigo. Thank you for your question. Look at pricing going forward. We are seeing first, probably important. We are seeing as per pricing with upside at least of two or three dollars more than Q2 as consequence of higher brand. And also we believe the discount of on equal pricing will be probably for Q2 for below or two to three dollars. In the local prices October, we are still selling at $56 per barrel.
The number for the full year.
What can additional drivers be there for increased volume.
That will be fixed.
Miguel Galuccio: Thank you, Oriana, for your question. Let me first start with a recap of Q3. Q3 production in barrel of oil equivalent was 49.5 thousand barrels of oil equivalent per day. It was pretty much flat with last year, and quarter on quarter, it was 6% increase. In term of oil production was 41.5. That was driven by the tie-in of the 2 wells, as I explained in the call, from Bajada del Palo Oeste. We have the delay of the tie-in of the Cube to late July. This Cube supposed to be tie-in early July, and that was basically the delay that we are having and the shortage that we're having on production. On pro forma basis, and this is basically after the transfer of conventional asset, the production increased year on year 12%.
Thank you Daniele for your question.
So let me first Doug with regard both Q3, so Q3 production in barrel of oil equivalent was 49 five.
$49 5000 barrels oil equivalent per day, it was pretty much flat with last year and quarter on quarter, we're 6% increase.
Intermodal oil production was 41 five.
Miguel Galuccio: November and December, we are on the negotiation with the refineries. The gap today between export parity and domestic prices is around 40%. Therefore, the local market needs to start to normalize. Definitely the normalization. It will be very important to drive investment in Bacamorta and generate more volumes for the country. So I expect that November and December, they should be a push for normalization in the local market.
That was driven by the timing of the two wells as I explained in the in the call from behalf Palo Este and we have the delay of the timing of the acute <unk>. This <unk> suppose to beta in early July.
Rodrigo Nistor: Okay, that was really clear. Thank you.
Operator: One moment for our next question.
That was basically the later we are having in the short as it were having on production on pro forma basis.
And this is basically after the transfer of conventional asset the production increase year on year, 12% and if you look at the monthly breakdown issue lie we were $45 six.
Miguel Galuccio: If you look at the monthly breakdown, in July, we were 45.6 barrel of oil per day, 49,900 barrel of oil per day in August, and 53,000 barrel of oil per day in September. In Q4, we will connect additional 11 wells, which we expect to be more or less a 60,000 barrel of oil per day by Q4 average. Our exceed rate in order to be 60 average, you can assume that it will be probably around 65 barrel of oil per day equivalent. This will leave us well on track to deliver our 70,000 barrel of oil equivalent per day average for the next year, 2024, as we have defined as target. I think this is pretty much what is planned. The only delay that we have in production was, as explained, coming from Cube.
Barrel of oil per day.
49, four night thousand barrel per day in August and 53000 barrels oil per day in September.
Walter Chiarvezio: Our next question comes from the line of Walter Chiarvezio from Santander.
So.
In Q4, we will connect additional 11 wells.
We expect to be more or less a 60000 barrel per day by Q4 operators.
Walter Chiarvezio: Hello, good morning. Congratulations for the results. And thank you for taking my question. My question is regarding the differential sex scheme that the government has introduced for the oil and gas companies. What is the impact for the first quarter? What do you think this could evolve? I'll actually for the fourth quarter because we have elections in the middle. If you think that this could continue in the first quarter or second quarter, what do you view about it? Thank you.
So our exit rate right in order to be 60 average you can assume it will be probably around 65 out of a vote per day, a key role in.
This will leave us well on track.
<unk> delivered our 70000 barrel of oil equivalent per day average for <unk>.
<unk> of the next year 'twenty for us.
Final target.
So I think this is pretty much where is playing and the only delay that we have in production was as explained coming from Q.
Miguel Galuccio: Hi, Walter. And thank you for your question. Yes. Is this program that we call on oil and gas dollar? We include in the program export for an equivalent of one hundred and thirty five million dollars, which will liquidate 75% through the central bank and 25% through the blue cheap swap. That we generate for us an additional revenues of around fifty five million dollars and our calculation in financial income. We expect around a net income impact between ten and thirty million dollars. Regarde a continuation of this program after elections to be honest, who do you, I don't know, he will all depend on more on the macroeconomic theorem that the next president put in place.
Oriana Covault: Yeah, that's very clear. Thank you. Just another one, understanding the natural gas businesses is rather marginal to Vista. Just, we noticed this decrease in prices for the industrial segment, if there's any color that you can share on this regard vis-a-vis the planned gas prices, that they were very differentiated. Thanks.
Okay, that's very clear thank you.
Sure.
Another one.
And in the natural gas basins is rather marginal to the staff and yes I would.
This decrease in price of 'twenty industrial selling days any color that you can scan data.
We have been planning.
Planned gas prices and we're very differentiated.
Yes.
Miguel Galuccio: Yeah. No additional colors as everything that you know. I mean, commercial gas prices were lower due to the Argentina current situation and devaluation and so on. No more to read into.
Yes, no no no no additional callers us everything that you know I mean.
Commercial gas prices were lower due to Argentina currency to Asia and under evaluation and so on no no more to read into.
Oriana Covault: Okay. Just one last one, regarding the working capital drag for your free cash generation, any insights in terms of this increase in receivables that we saw quarter-over-quarter? Is this normalizing already through early Q4?
Okay, and just one last one.
Regarding the working capital drag for.
For full year free cash flow generation and any impact in terms of these increasingly receivables that we saw quarter over quarter.
Miguel Galuccio: Thank you very much. And the follow-up question, if I may, is how this dynamics is impacting your production cost, Vista Vista, higher revenues due to this big ratio of currency. In terms of margin looking for what I mean, I guess that for the fourth quarter, the pressure on cost on dollars may be higher, I guess, at the case. No, Walter, I don't think it will impact our margins, not at all. I think this will be more related to financial incomes, but not the margin per se. Okay, perfect. Thank you very much. You're very welcome. Thank you.
Normally I can already too early fourth quarter.
Miguel Galuccio: It's normalized. As you know, this is the effort that basically was delayed, the collection from September to October, and it's normalized.
If normalized you know.
I mean this is Doug.
Doug.
Basically will delay.
Operator: One moment for our next question.
The collection from September to October and is normalized.
Oriana Covault: Perfect. Thank you very much.
Okay. Thank you very much youre welcome.
Miguel Galuccio: You're welcome.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Mateus Tostes from Citi.
Thank you one moment for our next question.
Our next question comes from the line of Matt says Joseph from Citi.
Mateus Tostes: Hi, good morning, and congratulations for the results. I'd just like to hear some of your thoughts regarding the devaluation after the PASO, and how is that playing vis-a-vis your lifting costs. How do you think that that could move forward, especially after the elections, if there's another devaluation, too. Thank you.
Hi, good morning, congratulations for the results I just like to hear so much your thoughts regarding the devaluation of the peso and how is the theme of visa Europe.
On your lifting costs.
How do you think that.
Good.
Move forward, especially after the elections, if there is another deeper renovation too. Thank you.
Oriana Covault: Our next question comes from the line of Oriana Covault from Balans. Hi, good morning. Thanks for taking my questions.
Miguel Galuccio: Hi, Mateus. Thank you for your question. Look, a devaluation could help to reduce lifting costs marginally. We always, after devaluation, we have an impact on expenditures and particularly lifting costs. That, of course, in the different cycle of Argentina, start to catch up again. I think you can assume that in a period of a year, usually have a neutral effect. The main impact on lifting cost reduction will come from production increase, as we have seen and demonstrated many times in the past. We will start to see partially that impact in Q4. If you have to basically put an impact in lifting costs, you should look at the production increase. That is what is going to drive the lifting cost down.
Hi materials.
Your first question.
Miguel Galuccio: This is the first board with balance. I have three. If we could go one by one, that would be great. The first one is just a follow-up on the expected volumes for the fourth quarter, recalling the guidance that you have said for 2023, 55,000 per day. It seems that you might be running a tad behind with 60,000 dollars per day expected for the fourth quarter, so I just wanted to understand if we should perhaps expect a lower production number for the full year.
Look at a devaluation.
Will help to reduce lifting costs Marsh marsh annually.
We always after the devaluation, we have an impact.
Expenditures in particular, our lifting cost.
Of course in a different cycle of Argentina.
To catch up.
Again.
I think.
You can assume that.
In a period over year usually have.
Notable effect.
But the main impact on lifting cost reduction will come from production increase.
Miguel Galuccio: And what could additional drivers be there for increased volumes? Thanks. That will be the first one. [inaudible] That was driven by the time of the two worlds as I explained in the in the call from Bajal Paloeste. And we have the delay of the time of the queue to lay shoelike this cube supposed to be time early shoelike and that was basically the delay that we are having and the short as we have in on production on performance basis.
We have seen and demonstrated many times in the past.
We'll start to see partially that impact in Q4, so if you have too.
Basically put that impact in lifting cost you should look at the production increase that is what is going to drive the lifting cost down.
Mateus Tostes: Perfect. Thank you. Thanks a lot.
Perfect. Thank you.
Miguel Galuccio: You're welcome.
Thanks, a lot Youre welcome.
Operator: Thank you. I would now like to turn the call back over to Miguel Galuccio for closing remarks.
Thank you.
I would now like to turn the call back over to Miguel Galoot Shaw for closing remarks.
Miguel Galuccio: Well, thank you very much. It was a good quarter. I would like to continue thanking you for the support and the participation on those calls. I'm looking forward to see you in Q4. Have a very good day.
Well, thank you very much.
It was a good quarter.
We'd like to continue.
Sinking you for the support and participation on this call and looking forward to see you in Q4.
Have a very good day.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
This concludes today's conference call. Thank you for participating you may now disconnect.
Miguel Galuccio: And this is basically after the transfer of conventional asset, the production increase year or year 12%. And if you look at the monthly breakdown in shoelike, we were for 45.6 barred hoi per day, 49.9,000 barred hoi per day in August and 53,000 barred hoi per day in September. Let's go. In Q4, we will connect additional 11 wells. We expect to be more or less at 60,000 barrels per day by Q4 average.
Okay.
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Miguel Galuccio: So our exceed rate in order to be 60 average, you can assume that would be probably around 65 barrels per day equivalent. This will leave us well on track to deliver our 70,000 barrels of oil equivalent per day average for next year, 24, as we have defined as target. So I think this is pretty much what is playing. And the only delay that we have in production was as explained coming from Q. Yeah, that's very clear.
Yes.
Sure.
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Miguel Galuccio: Thank you. Just another one, an understanding the natural gas licenses is rather marginal to Vista. But just, I will notice this decrease in prices for the industrial segment. So is there any color that you can share? And this regard vis-à-vis the planned gas prices that were very differentiated? Thanks. Yeah, no additional colors as everything that you know, commercial gas prices were lower due to the Argentina current situation and the valuation and so on, no more to reach each other.
Miguel Galuccio: Okay. And just one last one regarding the working capital drag for your free gas generation. And any insights and concerns of this increase in receivables that we saw a quarter over quarter. Is this normal icon already through early fourth quarter? It's normalized. As you know, I mean, this is the export that basically was delayed the collection from September to October. And it's normalized. Perfect. Thank you very much. You're welcome. Thank you. One moment for our next question.
Maseus Toastus: Our next question comes from the line of Maseus Toastus from City. Hi, good morning and congratulations for the results. I just like to hear some of your thoughts regarding the evaluation after the puzzle and how it's been vis-à-vis your lifting cost.
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Miguel Galuccio: And how do you think that that could I move forward, especially after the election, if there's another evaluation, too? Thank you. Hi, Maseus. Thank you for your question. Look at the evaluation. Cool help to reduce lifting costs marginally. And we always after the evaluation, we have an impact on expenditure, some particular lifting costs, that of course in the different cycles of Argentina start to catch up again. And I think you can assume that in a period of a year usually in neutral effect.
Miguel Galuccio: But the main impact on lifting co-reduction we come from production increase, we have seen and demonstrate many times in the past. We will start to see partially that impact in Q4. So if you have to basically put an impact in lifting costs, you should look at production increase. That is what's going to drift the lifting costs down. Perfect. Thank you. Thanks. You're welcome. Thank you.
Miguel Galuccio: I would now like to turn the call back over to Miguel Galuccio for closing remarks. Well, thank you very much. It was a good quarter. I would like to continue thanking you for the support and the participation on those calls and looking forward to see you. Thank you for having a very good day.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you.
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