Vista Energy - Earnings Call - Q1 2021

Transcript

Speaker 0

Ladies and gentlemen, thank you for standing by, and welcome to the Vistas First Quarter twenty twenty one Earnings Webcast Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. Please be advised that today's conference may be recorded. I would now like to hand the conference over to your speaker today, Alejandro Chernikov, Strategic Planning and Investor Relations Officer.

Please go ahead.

Speaker 1

Thanks. Good morning, everyone. We are happy to welcome you to Vista's first quarter twenty twenty one results conference call. I am here with Miguel Gallucho, Chairman and COO and with Pablo Verapinto, Vista's CFO. 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, IFRS.

However, during this conference call, we may discuss certain non IFRS financial measures such as adjusted EBITDA. 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, associated anon in Mabulsati Le Capital Variables, organized under the laws of Mexico, registered in the Wells San Mexican Valores and the New York Stock Exchange. The ticker of our common stock are Vista in the Wells San Mexican Valores and BIST in the New York Stock Exchange.

The ticker of our warrants is VTW408A. I will now turn the call over to Miguel.

Speaker 2

Thanks, Alejandro. Good morning, everyone, and thank you for joining this earning call. I am thrilled to share with you our first quarter twenty twenty one results, which show solid operational progress and profitable growth and put us on track to deliver on our 2021 guidance. Key operation and financial metrics have improved both year on year and quarter on quarter. Driving this growth is our flagship project in Bajada Del Palo Este, which continues to show improvement in terms of well cost and productivity.

In Q1 twenty twenty one, we achieved a quarterly production record with 34,100 BOEs per day, a 29% increase year on year. Oil production was up 56% year on year and 15% sequentially, boosted by the early tie in of March. Total revenues were $116,000,000 up 58 vis a vis Q1 twenty twenty, mostly driven by the increase in oil production, but also by an improvement in realized oil prices. Lifting cost per BOE was $7.5 for the quarter and 24% reduction year on year reflecting lower incremental cost in Bajada del Palo Este which dilute our fixed cost base. Adjusted EBITDA was $58,000,000 an expansion of 131% vis a vis Q1 twenty twenty driven by the solid increase in revenues amid flat lifting costs.

Capital expenditure was $78,000,000 in line with execution of our 2021 guidance and reflecting the completion of two pad in Bajada Del Palo Verde during the quarter. Cash at the end of the period was $163,000,000 In Q1, we saw a strong cash flow from operations while making good progress in liabilities management. Net debt stood at $386,000,000 This week we published our initial sustainability report, an important MyToy Invista commitment to embedding the principle of ESG in our strategy and developing our business in a sustainable way. The report provides an overview of our journey to become a reliable low cost and low carbon company. I will also go through important ESG achievements today later in the presentation.

Before we move to the detailed discussion of our results, it is important to recall that COVID-nineteen pandemic is still impacting Latin America. Our business continuity plan and our COVID-nineteen protocols are well in place. The health and safety of our employees and contractors will continue to be a priority for the company. Now please turn to Slide number four. Total production during Q1 twenty twenty one was up 29% year on year and 11% quarter on quarter.

This was a result of restarting our drilling and completion activities in Q3 twenty twenty, which enable us to tie in 12 new wells since that date. In hindsight, we made a good decision by accelerating our drilling plan with a second rig during Q4 twenty twenty. This enabled us to tie in part number six in early February and part number seven in late March, setting the stage for a steady growth quarter on quarter. The oil share of Bajada Del Palo Oeste production is approximately 90%, which is why we are seeing oil production increasing by 56% year on year and 50% quarter on quarter. We achieved a stable quarter on quarter gas production due to the addition of associated gas production from the new pad in Bajada Del Palo Verde which offset the decline of our base production.

Total revenues in Q1 twenty twenty one were $115,900,000 58% above Q1 twenty twenty driven by the increase in oil production I just mentioned. Realized oil prices in Q1 twenty twenty one was $45.5 per barrel, 6% above year on year. Local sales contracts accounting for 54% of our total sales in Q1 were closed in November when Brent was trading in the $40 to $45 range. Our strategy has been to build a sale book early on to lock in revenues and fund investment activities. Sales to export market accounted for the remaining 46% of the volumes with contracts signed when Brent was trading in the $50 $55 range.

We continue to see pricing of our export oil discounts to Brent of less than $2 per barrel. Q2 sales with mix of domestic and export volumes have already been contracted with a realized oil price of approximately $53 per barrel. Realized gas pricing has decreased 9% year on year to $2 per million of Etude. Inductress prices dropped from $2 per million of Etude in Q1 twenty twenty to $1.2 per million of H2 in Q1 twenty twenty one. This was partially offset by plant gas price of $2.7 per million H2, which applies to volumes sold to distribution companies and power generation.

In Q1 twenty twenty one, we continue to reduce our total lifting cost per barrel, diluted by the production increase in Bajada del Palo Verde and lower incremental lifting cost. We were below the $8 per BOE mark for the first time with 7.5 per BOE for the quarter. This puts us on track to deliver on our 2021 guidance. Moving to Slide seven, adjusted EBITDA for the quarter was a solid $58,300,000 a 131% increase year on year and a sequential increase of 62%. This reflects higher revenues on our successful effort to optimize costs.

Adjusted EBITDA margin was 50% reflecting an improvement of 5% points quarter on quarter and 60% points year on year. This margin was achieved at a realized oil price of $45.5 per barrel. Thus, we forecast a further margin expansion in the next quarter due to higher realization prices. Our netback for the quarter was $19 per BOE, dollars 8.5 per BOE above Q1 twenty twenty and almost doubling year on year. This was driven by higher revenues per BOE due to an increase in the oil mix in our production and improved oil prices as well as cost optimizations.

Cash flow from operating activities in Q1 twenty twenty one shows a sequential increase of 3574% year on year for a total of $36,600,000 This reflects an increase in cash flow generation driven mainly by higher adjusted EBITDA. Cash flow from investing activities was $80,000,000 in line with CapEx activity of $78,100,000 Approximately 90 of this investment was deployed in Bajada Del Palo Este. In March 2021, we successfully raised the peso equivalent of $75,000,000 in Argentinian capital markets. Proceeds were used to replace bond debt with shorter duration and higher coupons. The average life of our financial debt increased from one point eight to two point two years.

We issue a $42,000,000 facilities in pesos dollar linked due in three years with a 4.25% coupon and also a $33,000,000 facility in pesos inflation adjusted due in three point five years with a 2.73% coupon. I will now share an update of our development in Bajada Del Palo Este where we continue to achieve significant improvements in well cost and productivity. Pad number seven which was tied in late March recorded a drilling and completion cost per well of $9,500,000 a 45% improvement since our first pad. This reflects a solid learning curve, our investment in technology and the benefit of the one team operating model we set up with our key contractors. Drilling speed has improved to seventy days per well down from thirty five days in our first pad.

Completion cost is down 50% to $110,000 per stage from $220,000 per stage in our first pad reflecting improved completion design, a streamlined logistics and better contracts for water and sun sourcing. In terms of productivity, our wells continue to perform above Tycoon. For the first one hundred and eighty days wells are 22% above Tycoon and in longer period we are also seeing robust performance. The two pads that have more than three sixty days of production history are performing 15% above high curve. The chart on the bottom right shows our total shale production since we started our Baja Del Palo Alto development and the tie in date of each pad.

As shown, the activity ramp up in Q3 twenty twenty is driving our production increase. The early tie in of pad number six, a consequence of decelerating with two rigs in Q4 twenty twenty is paying off, boosting shale production to 21,001 BOEs per day in March. Such acceleration also enabled the timing of pad number seven late in the quarter, which is already contributing to April production. Solid performance in well cost and productivity have reduced our expected development cost to approximately $7 per barrel. At Vista, we are committed to advancing our sustainability business practices and endeavor to drive environment and social impact with our company and in communities which we operate.

Last year we accelerated the rollout of our sustainability program which involved among other things prioritizing ESG focus areas that are most material and relevant to our business and key stakeholders. The governance structure was also a strength and our ESG program is now overseen by the Corporate Practice Committee of the Company Board of Directors. We are now ready to set the bar high with a commitment to transparency by showing our progress on ESG matters. We selected CRRI for the primary comprehensive disclosure of ESG matters and Sub B for industry specific topics more relevant to our financial performance and long term value creation. As we move forward, we intend to expand our disclosure against these and another relevant standard.

In 2020, we announced our support for the 10 principles of the United Nations Global Compact with a commitment to report on the progress of how our strategy, culture and day to day operations are contributing to the UN compact ADCS. Additionally, we are focusing on eight UN ADCS for 2030 where we believe we will have the greatest impact. This can be seen on the right hand side of the slide. A key global issue is climate change and its reversal is imperative across all industries. We know that we have a critical role to play within the energy transition agenda as an oil and gas company.

As such, our goal is to become a reliable producer of affordable and increasingly low carbon energy company. In 2020, we achieved an important mission milestone toward this goal by determining our reference best line for in house scope one and scope two emissions. We are now working on setting corporate reduction goals and designing an action plan to review greenhouse emissions in our operation in the short, medium and long term. This will be presented in our next sustainability report. I am also proud of our safety track record since we took over the operation of the asset in 2018.

This has been achieved by implementing a culture of learning and always prioritizing safety as a bedrock of how we operate. Also by aligning our practices with the guidelines set by International Association of Oil and Gas Producers Operating Management System. In Slide 11, we highlight our key ESG metrics. Our KPIs demonstrate Vista progress on its material commitment. First, as noted, we have set the basis for establishing emission reduction goals by having established our CHG inventory for 2019 and 2020.

In 2020, Scope one and Scope two emissions amounted to 470,000 tons of CO2 equivalent. In our operation 99% of our hydrocarbon is transported by pipelines and we use 100% of some boxes to minimize the amount of silica in the air. Throughout this period we have prioritized the health and safety of our employees and contractors with focus on our ambitious goal we set out just a few years ago, reaching TRR IR in line with TR1 international oil and gas companies. TRR IR for 2020 was 0.38, a 90% improvement since we took over this operation. I am particularly proud of the progress we made against our commitment to the fifth UN ADG goals of gender equality.

In 2020, 50% of our new hires were women, which is well ahead of historical hiring diversity rates. We made contributions to enhance the progress of well-being in the communities where we operate particularly considering the hardship experience as a result of the COVID-nineteen pandemic. Importantly, our entire organization is aligned with the ESG strategy with 100% of our employees short term incentive compensation including a relevant component of sustainability goals. A focus on Stronetics and independent governance has reinforced our ability to execute on our strategic objectives. To ensure we continue to achieve our goal, the key roles and functions are in place to extend ESG governance and secure oversight and accountability for our sustainability issues and objectives.

Moving on to Slide 12, I will discuss our progress with respect to 2021 guidance. Our annual work program for Bajada Del Palo Verde is on track to deliver 16 new wells tie in during the year. We have tie in four wells in Pat 6 in February and another four wells in Pat 7 in late March. Pat 8 with four additional wells is already drilled and is currently waiting for completion. Production is showing a steady growth having increased 11% quarter on quarter.

The performance of our Bajada del Palo Alto development and the recent tie in of Pat number seven which should provide another step increase is forecasted to leave us on track to deliver between 37,038 BOEs per day in 2021. As previously shown, lifting cost decreased to $7.5 per BOE in Q1 in line with guidance. Adjusted EBITDA in Q1 twenty twenty one was strong and according to guidance having tying our first two part and lock in oil prices for Q2 above the $45 per barrel guidance put us on track to finish the first half of the year ahead of guidance. CapEx in Q1 was executed as per our annual work program and is in line with guidance. Finally, gross debt has increased marginally due to CapEx market insurance during March, the proceeds of which were used to cancel short term debt in April.

In summary, we have made solid progress during Q1 and we are well positioned to deliver on twenty twenty one guidance. To finalize this call and before we move to Q and A, I will recap on today's headlines. In Q1 twenty twenty one, we have seen a solid recovery in key operational and financial metrics. Adjusted EBITDA was very solid at $58,000,000 with a margin of 50% realized oil prices of $45 per barrel. We see further upside is margin in Q2 having locked in our Q2 sale prices at around $53 per barrel.

Bajada del Palo Verde continues to show improvement in drilling and completion costs with productivity above type curve. This has lowered our expected development costs to approximately $7 per barrel. In term of cash, in Q1 twenty twenty one we saw a solid increase operations. Also, we successfully tapped the capital market to reduce cash interest expense and extend the average duration of our debt strengthening our balance sheet. Sustainability is vital to our business strategy and I am confident that we have the right people, process commitment and accountability structure in place to advance our role in solving the complex energy and environment challenges we all face.

In this context, I'm proud we have published our inaugural 2020 sustainability report. With the Scope one and two, ESG emissions baseline data established during 2021 we will set corporate goals with respect to short, medium and long term reduction of green cow emissions in our operation that will be detailed in our next sustainability report. Finally, as discussed in the previous slide, we are solid on track to deliver our 2021 guidance. Before we move to Q and A sections, I would like to thank our investors for their continued support and all the team at Vista for their usual hard work and commitment. And with that, operator, please open the line for Q and A.

Speaker 0

Thank you. Our first question comes from Bruno Montanari with Morgan Stanley. You may proceed with your question.

Speaker 3

Good morning, everyone. Thanks for taking my question. Good to see the continued evolution pad by pad, Miguel, this is very impressive. I have a couple of questions here. First on pricing, what is your view on how oil prices in Argentina can converge the international benchmark?

Even with the $53 you locked in for Q2, the discount is still fairly large versus spot rent, right? And then also get your views on whether the company believes that natural gas incentive scheme is going to work properly this time around? My second question is more long term. And taking into consideration the experience you have had now with seven beds, getting into the bed number eight now. If all the stars align and the reservoir response is positive, how low can lifting costs be?

And how long can your drilling and completion costs be? I'm not talking about the next quarter or a year, but philosophically, just looking at the potential of the assets, where could cost and drilling and completion cost go? Thank you very much.

Speaker 2

Hi, Bruno. And thank you very much for your question. A good one as always. Luca, starting with pricing, I think first of all, we need to keep in mind that price in Argentina have two different effects. The fair effect when we talk about export prices is the fact that we are pre selling our volumes ahead of time.

That we are doing because we are securing revenue, but also because the way that the market in Argentina, the local market work is we believe that every time that we secure volumes in the local market, we free back volumes for exporting. When the refinery feel that they are well supplied, okay, they don't cross our importation. So that effect we have to keep it in mind. So then it's important to define what is export parity. So you're talking about export brand, but really our market is export parity.

And export parity in Argentina is used to be brand below 12% due to the new regulation today is brand minus 8%. And also you have to add to that the discount on commercial volume that in Q2 twenty twenty used to be below $10 and today is $2 So as an example, if we take today event of $61 and you discuss $2 of commercial discount, you go to $59 And if that should take 8 percent, you are in $54 So that is the export parity that we have if we take a picture of today. And pump prices are running below export parity today. Pump prices, as you know, evolve during time. We have had pump prices that are above export parity in certain moments and now we have a a pump price that is below export parity.

I would say that if you take today probably we are $2.03 dollars below export parity. As I mentioned before, pricing in Argentina, pump prices have inertia. Inertia has to go down. We have never seen going down and inertia to go up. So that is the name of the game here.

In terms of gas prices, I will say first of all for Vista, when you look at our top line, our revenues, the revenue coming from gas is less than 10%. So it's not really meaningful for us today. It was two years ago, but as we become a company that is more only as we develop unconventional resources, the gas is having lesser impact. I do believe the gas scheme that they put in place makes sense for the government because every time that they don't have local supply, they have to import and the differential cost is big. And we see companies that are placed overgas resources with this new scheme picking activity.

So my view on that is that is in place and I think is going to work. In terms of more your philosophical or long term question, What is very interesting and of course we have a view even though I cannot give you precise numbers. Otherwise I will be disclosing something I don't have to disclose yet. But do we believe we can really in the lifting cost arena perform below seven? Lifting cost, we have mainly two effect as we develop more unconventional as we are going to continue growing production, therefore diluting our part of our fixed cost.

And on the other hand, we know that maintenance wise operational wise our unconventional is a lower lifting cost operation compared with our conventional operation. So as we add more volume, we dilute fixed cost. As we add more unconventional weight, we dilute lifting cost. So I think we can dream of being well below $7 per barrel. In terms of drilling and completion costs, also I think we can expect at some point of time to be below $7 I think there you have two effects.

One effect is clear that we are performing above our type curve today. We've been performing above type curve already for a while. So I don't see that changing. And the other thing that we believe we can do, if we could continue reducing more than drilling costs, I mean, we I am not sure we can drill faster than we are drilling today. But on the completion side, I think we're still having certain probes that we can reduce their cost.

One example could be a proppant, sun. As you know, we have a strategy to source in base sun and we are developing that in order to have an impact in a component that is really meaningful to our completion costs. So the answer is yes. I think we can think of being well below the number that we are today forecasting to the end of the year. It's going to take time and it's going to take hard work.

But I think we have the strategy and we have the people to do it.

Speaker 3

Great. Very clear. Thank you, Miguel.

Speaker 2

Thank you, Bruno.

Speaker 0

Thank you. Our next question comes from Andres Caudones with Citigroup. You may proceed with your question.

Speaker 4

Thank you. Good morning Miguel, Alejandro. I have a couple of questions. My first one, it's following with the previous questions about realization prices, I would like to understand if there is any progress with the hydrocarbon law and if you can let us know how much of your production was exported during the first quarter and if you can give us some color for the second Q? And then the second question is, if you can help us to understand what is the situation between the unions and the oil and gas industry at Vaca Muerta?

And if you have seen any impact here at your operations?

Speaker 5

Thank you, Andre, for your question.

Speaker 2

So I will start first with the exports and building up on Bruno's question. So in Q1, the percentage of export was 46%. So we have a mix again of local market volumes that we closed in Q4 twenty twenty for export. And that volume that we pre sold was 46%. In Q2, of course, we have a better visibility and better prices on the local market.

We apply the same strategy and we the component on the local market was 75% for local and 25% for export. And as I mentioned in the presentation, it's already on the pocket. Back to what Bruno said, I mean if you look at if I'm looking now as a plot where we usually follow the average sale prices in the local market and the Brent spot forward curve. If you guys made that curve from January 21 to June 21, you will see how this inertia that I mentioned works and you see the gap between export and local prices narrowing down. The gap is still there and part of the gap back again is the export parity and the commercial discount that we have.

That also with the commercial discount has been reduced a lot. I mean we have tenders of $1 today and we are averaging $2 of a commercial discount. In terms of the impact that we have due to the social demonstration, So first I want to say that we have no impact on production. Vista has no impact on production. We managed to navigate that issue extremely well.

The social demonstration was driven or start by health workers. Did affect drilling and completion activity? Yes, because there was we were mobilizing a drilling rig from one part to other and that was affected because there was many road blockage. And I will say this today look like it's almost resolved, Nothing something that we have to watch, something that we are accustomed to, not only for the one that we have operated in Argentina, but also in another part of the world is something that we need and we have to deal with. Hopefully, we see this normalizing in the next few days.

The health workers have achieved and have arrived to an agreement with the provincial government. So we see that issue probably resolving now or in the next few days. Related to the Hydrocarbon Law, the initiative is still alive. There's a lot of discussions between the government and the companies. As I have said before, I think the important thing we have a law that oil and gas law that consider unconventional that is working.

So I think the main point to address there is if we see any change in the fact that we have an scheme or make a need for cross border repatriation of dividends for the people that invest in Argentina. And the other main thing to consider if we're going to have a low that stimulate Vaca Muerta development is related to export. As we have more volume to export, the better we become the business for Argentina and somehow a bit more decoupled will be of the local pricing and is what makes sense for Argentina because it's going to create an inflow of dollar to Argentina economy that is exactly what the economy needs. So incentive by airport and anything that they can do in this build to incentive by airport is really the name of the game. But I cannot say more than that.

These are the topics and the discussions are ongoing.

Speaker 4

Thank you, Miguel, and congratulations for the results.

Speaker 2

Thank you, Andres, for the question.

Speaker 0

Thank you. Our next question comes from Alejandro Dimichelis with NAU Securities. You may proceed with your question.

Speaker 6

Yes. Good morning, gentlemen. A couple of questions. Just as a follow-up to what you were saying Miguel on the impact of the social demonstrations. So you were talking about some impact on drilling and completion.

So can we see an impact on your next pad? Can that path kind of move to the next quarter? That's the first question. And then the second question is, I think in previous calls, you were kind of targeting almost one part per quarter. Is that still the plan going forward?

Speaker 2

Alejandro, thank you for the question. Yes, I mean so far we see no impact. When I said that we have basically lose some time on the demobilization and mobilization of the drilling rig from one part to the other, That is real. Nevertheless, we were ahead drilling wise. So we don't see impact on our plan.

So again, everything shows that the situation after the agreement is normalizing. So we are not forecasting any impact on production and we continue with the same plan of tightening one part per quarter. We also are leaving us room to create or to accelerate our 2022 plan if we have room in Q4 even to pick up one more drilling rig. But this is not in our plan, but it's something that we have in mind.

Speaker 6

Okay. And then just to kind of close that, I think in your 2021 guidance you were saying the plan was to tie in 16 wells. You're already tying eight. You have four ready to be complete and tied in. So it seems that you have the whole of the second half to tie in only four wells.

So can we see more wells being tied into the second half of the year then?

Speaker 2

Yes. So we have tied in eight. We are going to tie another four in Q2. And yes, as you said, in this second half, we have four more to tie in. Can we drill four more in Q4?

Yes, we could. Can we tie in those in Q4? Yes, we could. Can have impact in 2021? Minimal.

Speaker 6

Yes. No, that's clear. But it seems that you are well ahead of the guidance at least on the drilling and completion.

Speaker 2

Yes, we are.

Speaker 6

That's great. Thank you.

Speaker 7

You're welcome.

Speaker 0

Thank you. Our next question comes from Ezekiel Fernandez with Balance. You may proceed with your question.

Speaker 8

Good morning to everybody. Thank you for the always very complete materials, and congratulations on the progress in Baja del Palo. Most of my questions have been already answered. I have only one that I would like to stress on maybe related to what Miguel was commenting on the new hydrocarbons law. In early April, the government issued the FX regulations, which are not new, but that they reinforced the notion that exporting companies will have greater flexibility in accessing the official FX market for debt repayment and even dividends.

I'm talking about I was wondering if this particular legislation impacts your financial strategy and if you're thinking about potential dividends?

Speaker 2

Thank you, Cecile, for the question. And the answer is no. I mean, are not planning to use the MULK to repatriate funds. The dollars that we need, we already brought it before that regulation was in place. And we have no visibility that we are going to bring any more dollars in this year.

As you know and you see and you follow us and you see our cash flow generation and balance sheet, we are starting to generate cash. And that now is going to be, as we continue with our plan, something that we'll do. So we have no plans to use the move and to repatriate even to use that.

Speaker 8

Great. Thank you very much.

Speaker 7

You're welcome.

Speaker 0

Thank you. Our next question comes from Frank McGann with Bank of America. You may proceed with your question.

Speaker 5

Good morning. Most of the questions have been already asked. But just maybe to follow-up a

Speaker 4

little bit on some of

Speaker 5

the other comments that you've made towards your activity this year, it's fairly clear. As you look into 2022, what are your thoughts in terms of where you'll be focused?

Speaker 2

Hi Frank. Thank you for the question. So 2022 we will basically have we will continue. So far our view is we continue with this strategy of drill to fill mode. We're still having spare capacity in our facilities with minimum CapEx investment to go all the way to 45,050 thousand barrels day.

So the strategy will be continued to be the same. That strategy what it does is create a company that in 2022 generate a lot of cash. When you look at $45 that is the plan that we have today with lifting cost of $7 and development cost of $7 let's put. So we have become a cost producer that clearly have margin of 50% at low oil prices. So 2022 will be a year where we are going to be above the cash flow curve and we will have to decide what we do with that cash that we generate.

Of course, the option to accelerate the development of the resources that we have that are huge is an option, but of course, we have another option. Something that we are adding to that strategy is that now we don't want to be only low cost, we want to be a low carbon operator. And I'm not saying that in a mode of fashion. We are really putting this plant on sustainability and do we believe that we have the agility, the team and the power to become a low carbon producer. Of course, our unconventional development is helping in the lifting cost, is helping in the low cargo as well because our operation today of unconventional is probably in kilogram per CO2 half of the CO2 emission that our conventional operation does.

So that is another objective that we have. And I think that objective we have to realize between now and 2022. But 2022 with today oil prices looks very bright for Vista.

Speaker 7

Okay, great. Thank you very much.

Speaker 0

Our next question comes from Marcelo Guimiro You may proceed with your question.

Speaker 7

Good morning, everyone. Thank you very much for taking the questions and congratulations on the results and also on the achievements on the ESG front. My questions were mostly answered before, but I have just a follow-up question on the production and

Speaker 2

the

Speaker 7

CapEx part. I mean, saw production at 34,000 BOE in the first quarter with Bahrain and Palo Oeste going all the way up to 21,000 barrels per day in March. But the 2021 guidance is 37,000, 38 with exit rate at 40 I mean, could you provide us some color on when do you expect to tie in the other wells? You already said that you could tie in more wells than the plan. And, how should we see, production evolving through the year?

Could production grow even further than the guidance? Thank you very much, guys.

Speaker 2

Thank you, Marcelo, for the question. So yes, I mean, the fact is that we are performing above guidance today. When you look at production and also for what we are seeing of the performance of Q2, production today of Vista is about 40,000 barrels per day. When you take the picture of today, I think it's 43,000 barrels So we are performing above guidance. Nevertheless, we have half of the year to go.

The activity that we plan is still the same. So we are talking about a potential additional pad in Q4, but the reality is that pad is not in the plan. And if we have that pad in the plan, it's going to have minimal impact on production. It will more be important for 2022 because it's going to create it's going to help us to have a much better starting point, something that we did this year and I think it's important. Nevertheless, for the guidance of 2021, it will make no difference.

So if we are above guidance, how we finish the year, we pretty much depend that the quality and the timing of the pad that are coming in Q2 and the one that we are going to study in Q3 come in place with the quality that we discussed. But the short answer is yes, we are performing production wise above guidance so far.

Speaker 7

All right. Thank you very much. Very clear.

Speaker 0

Thank you. And I'm not showing any further questions at this time.

Speaker 5

I would now like to turn the call back over to Miguel Galluccio for any further remarks.

Speaker 2

Gentlemen, thank you very much for your question and continued support. And I wish you all healthy and I wish you a good day. Thank you very much.

Speaker 0

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.