Vista Energy - Earnings Call - Q3 2021

Transcript

Speaker 0

Good day, and thank you for standing by. Welcome to the Vistas Third Quarter twenty twenty one Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. Would now like to hand the conference over to your speaker today, Alejandro Cherniakov.

Please go ahead.

Speaker 1

Thanks. Good morning, everyone. We are happy to welcome you to Vista's third quarter twenty twenty one results conference call. I am here with Miguel Gallucho, Vista's Chairman and CEO Pablo Vella Pinto, Vista's CFO and Juan Gallobbi, Vistas' COO. 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 all your questions, may include forward looking 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 in accordance with International Financial Reporting Standards. 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, Exchange. The tickers of our common stock are Vista in the Vuelta Mexicana De Valores and BIST in the New York Stock Exchange. The ticker of our warrant is BTW408A.

I will now turn the call over to Miguel.

Speaker 2

Thanks, Ale. Good morning, everyone, and thank you for joining this earning call. I am delighted to share with you our results of the 2021, during which we have continued our profitable growth path and recorded positive free cash flow. During Q3 twenty twenty one, total production averaged 40,300 BOEs per day, a 59% increase year over year. Oil production was up 77% year over year, boosted by our development in Bajada Del Palo Este, where we have already tied in 60 new wells year to date.

Total revenues in Q3 twenty twenty one were $175,000,000 a 150% increase year over year, mostly driven by the increase in oil production and stronger realized oil and gas prices. Prices. Listing cost per BOE was $7.3 for the quarter, a 26% reduction year over year, reflecting the low marginal cost in Bajada Del Palo Este continue to dilute our fixed cost base. Adjusted EBITDA was 102,900,000 implying a solid adjusted EBITDA margin of 59%. Capital expenditure for the quarter was $74,100,000 in line with execution of our 2021 guidance and reflecting the completion of our fourth path for the year in Bajada Del Palo Este.

During Q3 twenty twenty one, we generate positive free cash flow of $51,000,000 driven by robust cash flow from operations and our A and D transactions. Cash at the end of the period was $266,000,000 Net debt stood at $337,000,000 implying a healthy net leverage ratio of 1.1 times adjusted EBITDA. We will now deep dive into the main operational and financial metrics. Total production during Q3 twenty twenty one was 40,300 boes per day, up 59% interannually. Production grew continues to be driven by our flagship development in Bajada Del Palo Este, where we tie in three parts in the first half of the year.

We'll also tie in a four part number nine in late September. This pad landed two wells in La Cocina and two wells in the Organico with an average length of 3,078 meters per well and 61 average stages per well. Note that this part did not contribute with production during the quarter. Given the high oil mix in Bajada Del Palo Oeste wells, we see a higher growth of oil production rate, which increased 77% year over year. During Q3 twenty twenty one, we also tie in a gas well in Entre Lomas concession, targeting the Punta Rosar formation.

This well is driving our sequential gas production growth, capturing high realization prices in the winter with a small CapEx and delivering on our planned gas commitments. Total revenues in Q3 twenty twenty one were $175,000,000 a strong interannual increase driven by the boost in oil production and realized oil prices. Realized oil prices for the quarter averaged $57 per barrel, up 46% year over year and 4% quarter over quarter. Sales to export markets accounted for 18% of the oil volumes, where sale contracts signed with Brent was trading around $72 per We still see pricings of our exported oil with discounts to Brent of less than $2 per barrel. The domestic market accounted for 82% of our total sales in the quarter with a crude oil prices of approximately $55 per barrel.

We continue to execute our strategy of building a sale book early on to lock in revenues and fund investment activities. Our entire Q4 wholesale volumes with approximately 30% of airport volumes have already been locked in at an average realized prices of around $60 per barrel. Realized prices increased 89% year over year to 4.1 per million of Btu, boosted by the gas plant winter price of $4.1 per million of Btu, applicable to approximately 67% of our total volumes. Additionally, industry prices increased from $2 per million of Btu to $4.3 year over year. Moving to Slide six, we will have a look at our lifting cost performance.

Total lifting cost for the quarter was $27,200,000 We have managed to maintain lifting cost virtually flat quarter over quarter despite pesos FX appreciation in real terms. Lifting cost per BOE was $7.3 down 26% year over year as incremental production from Bajada Del Palo Oeste continues to absorb our fixed cost base. Sequentially, we maintained flat lifting cost per BOE with a stable production. Adjusted EBITDA for Q3 twenty twenty one stood at 102,900,000 We have quadrupled adjusted EBITDA interannually, reflecting a boost in revenues amid a stable listing cost. Adjusted EBITDA stood flat vis a vis the previous quarter, even though it does not include operating income generated by the JV with Trafigura, which added approximately $5,000,000 in Q2 twenty twenty one.

Our adjusted EBITDA margin and netback have remained strong in the quarter at fifty nine percent and $27.8 per BOE respectively. Moving to Slide eight, I will review our financial situation. During Q3 twenty twenty one, we have another positive free cash flow quarter for a total of $51,000,000 Cash flow from operating activities was $110,000,000 six times higher than in Q3 twenty twenty. Cash flow used in investing activities was $79,300,000 partially offset by the cash received through the acquisition of ConocoPhillip Argentina operation and the divestiture of Caso to Shell for a net of $58,900,000 recorded for the quarter. Cash flow used in financing activities was $22,000,000 Debt stood at similar levels and we pay interest for $25,500,000 including the semiannual payment on our syndicated loan and the full interest cost to date of Caocione Rosatiles that were canceled during the quarter.

In Q3, we repaid a total of $112,100,000 in loans and dollar denominated bonds. We also raised the equivalent of $110,000,000 in the Argentinian capital market in $2 linked bonds. Series 11 was $9,200,000 bullet during in four years with a coupon of 3.48%. Series 12 was $100,800,000 amortizing due in ten years with a coupon of 5.85%. This issuance constitute robust debt to pre finance 2022 maturities.

Also, the average debt duration has increased from one point four years at the end of Q2 twenty twenty one to two point seven years at the end of Q3 twenty twenty one. Net leverage ratio has decreased from 1.7 times adjusted EBITDA at the end of the previous quarter to 1.1 times adjusted EBITDA at the end of Q3 twenty twenty one, reflecting how cash flow from operation is driven organic deleveraging. Moving to the business development front. On September 16, we acquired 50% working interest in the Aguada Ferral and Manduraya Norte concessions from ConocoPhillips. Vista made no upfront payment with control of the acquired entity that has 6,200,000 in cash and assume the understanding investment carry of $77,000,000 due to Wintershall Dia, 50% JV operating partner of the block.

We also obtained from the seller a five year bullet line of credit of $25,000,000 available for twenty four months at LIBOR plus 2%. The rationality for this transaction is strong. These assets fit perfectly into our development strategy. The price of $2,800 per hectare is low compared to the recent transactions. With this deal, we expand our portfolio of development wells, adding approximately 150 new well locations.

We expect to contribute our Vaca Muerta expertise and low cost operating intra record to the JV. Finally, the proximity to Vaca Muerte De Palo Este of the purchased assets, in particularly Aguada Ferreira, could lead to important synergies in terms of contractors, treatment facilities and logistics. In short, through this transaction, we have added core acreage to our portfolio without stressing our balance sheet and strongly contributing to our growth potential and shareholder value creation. During Q3 twenty twenty one, we also made good progress on the ESG front. We are currently executing three projects aimed at reducing 100,000 tons of CO2 equivalent on an annualized basis.

We expect to achieve a 30% reduction in our emission intensity to approximately 29 kilos of CO2 equivalent per BOE in 2021. This leave us in a good starting point to continue reducing emissions intensity during 2022. In the meantime, we continue to work on our long term greenhouse gas reduction goals. During Q3, we have identified material projects in order to build our decarbonization plan. We are currently finalizing our carbon abatement cost curve, which is the cornerstone of our multiyear action plan to reduce greenhouse gas emissions and set corporate reduction goals.

Moving to Slide 12, I will present our revised guidance for the year, which has improved on the back of strong execution and higher realization prices. Note that the updated guidance of this slide is compared against the guidance issued in the previous quarter, which was an improvement compared to to the original guidance from 2021. We have already tied in 16 wells during the year and we are on the track to tie in the fifth part of the year for a total of 20 wells by year end. We just finished drilling this part and will start completion in November. The rig has moved to a new location to drill the sixth part of the year and is expected to deliver four additional drill and uncomplete wells by year end.

As part of the decision to accelerate activity, we brought an expanded rig to drill surface and intermediate sections of three parts of the 2022 drilling campaign. We forecast this acceleration in activity will have a positive impact in our 2022 production plan. We are confirming our revised production guidance in the range of 38,000 to 39,000 BOEs per day. Year to date production is 38,100 BOEs per day and we expect the production from the fourth part of the year recently time to drive Q4 production to higher levels. We are also confirming our lifting cost of approximately $7.5 per BOE for the year.

Year to date lifting cost was $7.4 per BOE. We forecast this metric to remain in this range in Q4 despite pressure on cost by peso appreciation in real time that we have seen in Q3. We are revising upwards our adjusted EBITDA guidance from $325,000,000 to $370,000,000 Adjusted EBITDA has been positively impacted by additional production, higher realization prices from Q2 onwards and lower lifting cost per BOE. Based on additional activity in Bajada Del Palo Este, we are increasing our CapEx guidance from $310,000,000 to $330,000,000 A quick comparison of the graphs at the bottom of our screen shows we are not allocating the entire increase in adjusted EBITDA to capital expenditure, reinforcing our capital discipline and focus on free cash flow generation. Finally, we are improving our net leverage ratio guidance from 1.1 times to one times adjusted EBITDA by year end.

This reflects our successful refinancing effort during the year as well as the organic deleveraging driven by the operating cash flow generation. Gross debt guidance increased from 500,000,000 to $600,000,000 at year end, reflecting the successful ten year tenure bond issuance in Q3 twenty twenty one at an attractive chance to pre finance 2022 maturities. To finalize this call, I will recap on today's headlines. In Q3 twenty twenty one, we have seen a strong performance across all metrics, recording a $51,000,000 free cash flow. Pajar del Palo Verde continues to show solid results.

We tie in our four well pad year to date, which leaves us on track to deliver 20 new well tie ins for the year accelerating our 2022 work program. In term of cash, in Q3 twenty twenty one, we successfully issued $110,000,000 in new bonds at a competitive rate, extending average debt duration to two point seven years and pre financing 2022 maturities. On the business development front, we acquired 25,000 core acres in Vaca Muerta, adding approximately 150 net new well locations to our portfolio. Finally, as shown in the previous slide, we updated our 2021 guidance on the back of a strong year to date performance. Before we move to Q and A, I would like to announce that we call for the shareholder meeting scheduled for December 14.

In this meeting, we will initiate the process to seek formal approval for a potential share buyback program or dividend payment in early twenty twenty two. Today, we are announcing Vista's first Investor Day, a schedule to take place on December 9 and hosted by the executive team. During this event, we will present our updated strategy and medium term targets. I will now take a moment to thank our investors for their continued support and interest in our story and a special thanks to all the talented people that work at Vista for their extraordinary commitment to our company. And with that, operator, please open the line for Q and A.

Speaker 0

Our first question comes from the line of Walter Cervieszio from Santander. Your line is now open.

Speaker 3

Hello, good morning. Thank you for the color and congratulations for the good results and performance in the year and the quarter. I have three quick questions. The first one is regarding the dynamics between the exports of oil in Argentina and the local sales, I would say. Basically or in particular, why would you or why couldn't you support more in order to increase the average price that you are receiving?

That is my first question. The second question is what would you expect with the oil price, the local oil price if we have the devaluation of the currency next year, especially in the case of a discrete increase in the price of the dollar? And the last one is what I saw is that you are planning to drill four new wells in the first quarter that is not completed, but will be completed in the 2022. Is that correct? That is my question.

So those are my three questions. You.

Speaker 2

Hi, Walter, and thank you for your questions. Let me start first with the pricing related to exportation. That probably is more of a big picture question. So just to from a very I would say, an overview and a big picture will happen in Argentina with the prices. As you know, the prices in Argentina, what we are receiving is a combination of the local price with the price of the volume that we export.

Now I think the important thing here to understand is that, that volume that we export, it depends of how much Argentina overall produce. Today, Argentina are different as they were probably eight or seven years ago. We are clearly in a path of being having no problem in fulfilling the demand of the local market and becoming year by year a bit more of a net exporter. When you look at the situation, you have the capacity of the refineries top up. So we are not building any new refinery in Argentina in the near future.

Therefore, the demand and our capacity to produce gasoline for the country is stopped. And everything that we produce in excess, we go to the stock market. Now when you look at what we have produced here actually in excess in 2021, we have increased our production 7%. From that 7% of production, 31% come from Vaca Muerta. And conventional fees have declined 1%.

So saying all that, what I'm saying is today, we are not in a situation of scarcity that we used to be in Argentina when we have to import oil, where domestic market is fulfilled. And every single barrel that we produce on the top is it go to the export market. Now going to the export market, we first of all, the local price today, our realized price has been around 55. We have not seen we have seen prices increase during the year, but we have not seen prices increase during the last few years. And we have seen international pricing going up.

So today, we have an issue, and the issue is that we are a bit too decoupled of the Port Parity. And we believe we will have a correction. In electionary years, no matter where government is in charge, we have always seen a delay on the transfer of pricing to the pump. I believe after elections, we should see a movement coming from the integrated players in the country. When it comes to the export, well, see really the pricing that we are realizing, as you know, fully aligned with the export with the Brent prices and with a discount, that is the discount that we know.

We have a discount on quality that the last tender that we have was less than one. And we have the export tax. And that gives you 10%, 11% reduction on the revenue pricing. And we've been very successful basically tackling that market. When you look at the 2020 and 2021, we did have an additional cargo that we export this year.

And for us, that portion represent today 30% of our production for the year. So that means 30 production of our production of the year, we have allocated to the export market. So that's your first question. Let me go to the second question related to drilling plan in Q4. So we finished drilling our fifth part of the year, what we call or what you've seen in our maps for you guys is Pad 10, with an average lateral length of 2,800 meters.

Currently, it's starting completion. We plan to tie in this well in Q4, most likely will be December. We are then moving the drilling rig to a new location. That is part six of the year, so our sixth part of the year. And that is expected to this rig is expected to deliver four additional drill and then complete well by year end, okay?

So that wells are going to be completed in 2022. Also, we brought an spudder rig to drill surface and intermediate sections for three parts, and that is already on today starting to drill our first part. That is more related to the campaign the drilling campaign of 2022. And the idea of that is to accelerate activity, and that, for sure, will have a positive impact in our production plan in 2022. Going for your last question related to the valuation impact.

Well, we've been through that before. The valuation impact have usually in Argentina, a positive impact on the CapEx, a positive impact on the lifting cost because dilute our pesos par in dollars when come to basically cost of both development and lifting and have a negative impact historically in our top line because we see an spike of devaluation or a drop on the top line that is difficult to transfer at the same moment instantaneously into the pump, usually take few months to recover. I think before seeing evaluation, we need to see a recovery in our price pricing in the pump. And that's that I mean, if we have devaluation effect, clearly, we hit our top line, and it's going to benefit us on the cost side. So Walter, I hope I have answered your question.

Speaker 3

Yes. Thank you very much. That was perfect.

Speaker 0

Thank you. Our next question comes from the line of Regis Cardoso from Credit Suisse. Your line is now open.

Speaker 4

Hi, good morning Miguel, good morning Alejandro. Congratulations on the results. Two questions from my side. First one is regarding the last slide on presentation where you talk about distributions either in the form of dividends or buybacks. How do you I mean, do you envisage that capital allocation between accelerating the development of Vaca Muerta given that you still have a very substantial inventory of wells in Baharra De Paolo and you acquired additional assets.

So you have plenty to do in your existing assets. At the same time, of course, shares have been very undervalued as a result of the very high discount rates in Argentina and so on. So of course, the buyback would also make sense from that perspective. So my question really is how you balance that view? Is that the additional the marginal cash generation that you will use?

Do you need to set some money or some cash aside for servicing the debt because you might not have access to dollars because of capital restrictions, foreign capital restrictions in Argentina. So if you could comment on what are how do you balance capital allocation? Where do you get the resources from given the capital flow restrictions? And how do you balance between distributions and reinvesting in the existing assets? So that's one of the questions.

I'll go ahead with the second one. Just very briefly, it's something you already touched on. But when we think of the spread between Brent prices and realized oil prices in Argentina, What do you think are the discussions that are still open? Is there anything in the hydrocarbon level that could change that spread? Is it still mostly the dynamics of whether the refineries are able to pass it through?

Is it something that you believe you will develop more of an export market for your oil? I mean, you actually reduce that spread between realized oil price and Brent prices? Thanks.

Speaker 2

Thank you, Raji, for your question. And your first question is probably helped me to set up the stage for really the detailed discussion that we are going to have in our Investor Day in December. But it's a very good question and let me touch briefly on that. So first of all, I would say the important thing or the most important thing is that our operation and the results of our operation basically our performance in terms of cost lifting plus development. You know we have managed to take the operation from the 30 plus plus that we were all the way down to probably 14 between seven of the development cost and lifting cost due to the performance of our operation, also performance of our reservoir in terms of strategy for completion, high intensity fracking and the placement of the well and also on the strategy of Cube that we have to have an operation that generate consistently and that is very important positive free cash flow.

And we are now at that stage. How we seeing that utilization of this pretty positive cash flow going forward, as you said, in the environment that we are, okay, with all the positive and the constraints as well. First of all, we have the ambition and we plan continue growing, okay? We are a growing company and we will continue growing at double digit rate, not only in production, but more importantly in profit and EBITDA. So that is our main priority.

Now with the free cash flow that we plan to have, I mean, we believe we can do more than that. And the second thing that you will see that we will address, I will say that at the normal pace is to use that cash flow that we have to delever the company, okay? And it's not that we have a problem of leverage today. We will probably end up the year at one of ratio net debt versus EBITDA or probably lower, okay? But I think it's a good policy for us.

Now we are having that cash is to continue deleveraging the company. And then second or third, the way that we think about distribution, we see the distribution a total return to shareholders, okay? And that total return on shareholders can be in two forms, okay? One is could be a plan to buy back shares, but today probably make a lot of sense. And second, it could come point of time that we could have a dividend policy.

We have not made a decision on that, but where we have made a decision and that's why we are preparing our holding company to receive these new positive results from Q4 onwards is to be able to distribute in one of those form part of our free cash flow that we are generating, okay? So that is for your first question. Brent to realized prices, again, I think it's back to the previous question of Walter. It will be depend I mean, this bucket, it will depend of our ability as an industry to continue growing as an industry and as a country, because if needed for the industry, it's needed for the country as well to moving to continue growing our production base. Therefore, to have more excess of barrel to export.

I think this is the name of the game for Argentina. Hydrocarbon law is a hydrocarbon law that I don't think is touching the local prices. It was originated to address part of the constraint that we have that you mentioned and you know, distribution of cross border, I would say cross border, be able to move proceed per border in a country today that we are exporting. And what on the other hand, we continue needing investment because in order to grow our production base, we continue to need investment and we need more vistas and more company coming to Argentina. So I think that was the origin of the idea of having a law that incentivize that investment.

I think if the law address that, I think we are winning something. For that, you don't need more than four articles in the law. Today, are discussing country. I think that is a bit too much, okay? No need it.

We have a law that we passed in 2014 that it has been working extremely well in terms of the legal framework of the Hydrocarbons law. What we need is four articles in the law to incentivize investment to grow production, to create work for the country and to become a real and serious net exporter in a country that we have that potential. If that law with those four articles address that, it will be a good thing that this government does.

Speaker 4

Very clear, Miguel. Thank you very much for the complete answer.

Speaker 0

Thank you. Our next question comes from the line of Gil Herme Levy from Morgan Stanley. Your line is now open.

Speaker 5

Hi, good morning everyone and thank you very much for taking my questions. My questions are actually related to the newly acquired acreage from Canucko Philips. So I just wanted to understand how should we think about investments in these new blocks that are operated by Wintershall? How does the operator think about production ramp up into the coming years and the drilling campaign at those areas? And also, if you could comment on the expected attractiveness and productivity of those areas comparing those with what we have seen at Bajada de Palo West?

Thank you very much.

Speaker 2

Thanks, Guilherme, for your question. And well, look, first of all, you said that it was a very good acquisition for us. Both Block, Aguasera and Bandurria Norte are concessions that we know extremely well. We were in the process at the time that kind of fulfill both those areas. So for us, it's nothing new.

The fact that we have managed to make a transaction, know that from payment and even just assuming the understanding investment carry that we have with Dea, I think it was a very good deal. The asset fits first of all, perfectly our strategy because it's not only that our high quality asset, also our neighbor assets to our operation would have very strategic value for us, particularly, I will say, Aguada Ferral. With Wintershall, we have a very good relation at all levels in the company and operational level and also the talk. We have discussed already, I have discussed with Mario and the idea is to cooperate and collaborate in the plan for 2022. What is the plan?

We are just starting technical discussion. Clearly, it's a lot that we cannot on that technical discussion. It's not new for the country, neither for you guys that as an operator today, we rank between the most efficient operation of the basin. And therefore, of course, we have Pinch Watt. And the way that we structure the JV, of course, we have a saying on the program for 2022.

So we together will have to agree what exactly is that program that we are going to implement. So we are on that discussion. I don't think yet we have a clear program for next year.

Speaker 0

Thank you.

Speaker 2

Our next question Sorry, Jeremy. I mean, you have another question or not? Because I thought that I answered that.

Speaker 0

Thank you. Our next question comes from the line of Andres Cardona from Citigroup. Your line is now open.

Speaker 6

Yes, good morning. Miguel, Alejandro, Congratulations for the results. Most of my questions have been asked, but I still have two. Miguel, if maybe you can comment about the cost of path number nine. And also, if you have some visibility about realization prices for the fourth quarter, if you have keep your strategy of selling in advance, because it has been very good guidance over the last couple of quarters.

So that will be from my side. And again, congratulations on the results.

Speaker 2

Thank you, Andre, for your question. And yes, let me tell you first about Part nine. So we complete and tie in Part nine in September, okay? We land two wells in La Cocina and two wells in Organico. The average lateral length, if you remember properly, was close to 3,100 meters, and we placed 51 average stages per well.

So that was I mean, operationally, we went even farther than we used to go. And also, we managed to place in average more spaces than we used to do, and that was part of the plan. Yes, we have a sidetrack in one of the wells. So we drilled three wells without issues, and we have one well of the pad that due to technical issues. One, we were running casing, we would have to sidetrack.

Basically, what we did is we recover the casing and then basically we run again with cement and with high track it. This operation, the effect for the quarter that basically did was pushing twenty twenty five days our production. What is today of the pack around 3,000 barrels per and it's not fully clean. So still cleaning up. It was pushed twenty five days from September to October.

Also, we have in that particular well an overrun cost. So all those wells today, we are drilling on normalized basis around $10,000,000 In this well, we have a $4,000,000 additional. So that was the full impact of the sidetrack of one well in the complete path, okay? So nothing I mean, we have drilled already 10 paths. The performance has been exceptional.

Of course, we investigate, we do, we prove and so on. But it's of running an operation. So no major impact, very slight impact in what we do. And the path for what I'm seeing from the production today, choke is looking good, is looking around well type. So that is your first question.

Your second question was related to our outlook on prices for Q4, okay? So as I mentioned in the call, in Q4, we have already locked 100% of our revenues, okay? We managed in Q4 to place two cargoes. That means 30% of our total volume. In October 1, to be told, basically, was good prices what we have in October was Brent prices around $73 We managed to have a realized price of around 66.

And in December, we sold another cargo to an up, okay? Brent at that time was around 83. We managed to realize prices of 76, okay? And domestic volume were placed to basically Trafigura, YPF and others. So that is what we have already looking for Q4.

So you when you look at the whole thing, you should expect that our average sale prices will be around $60 per barrel for the basket. Hope I answered your question, Andres.

Speaker 6

Yurik, thanks a lot.

Speaker 0

Thank you. Our next question comes from the line of Ezequiel Fernandez from Valens. Your line is now open.

Speaker 7

Hi, good morning. This is Ezequiel Fernandez from Valens. Thank you for taking the time to do the call and all the complete materials as always. I have three questions. I would like to go one by one, if you don't mind.

The first one is relating to pricing. It has two parts. Going back a little bit to what Andres Cabana was just asking, we had some news articles in Argentina recently talking about the internal price of crude going for $60 per barrel at the moment. I don't know if you can confirm that and that is for the lighter oil such as the one Vista Self and also what was the discount versus Brent on your export sales during the third quarter?

Speaker 2

Okay. Well, you very much for your question, Ezequiel. Okay. Simply related to your first question on the $60 per barrel in the local market, the reality is we have not seen those prices in the local market, okay? We were probably seeing prices more today around 55.

If anybody is getting 60, congratulation to them. I think we should go through those numbers. And as you know, I mean, those numbers the local number depend mainly of many things, but one is the price of the pan and the negotiation with the refinery, okay? So we have not seen prices of 60% shut blindly. And second, in terms of the export, Bo, is exactly what I said to you previously, okay?

You see discounts of around 10% in export. You can basically place probably $15 of the $10 that you will see today to quality, okay? That depends on the tender, we see a range, and we've been very successful. Not long ago, that price was around $5 okay? And we today are talking about $1 $1.5 $2 And the other part is the 8% of the fore tax.

But I mean, today around another $8 So that is the discount that we are getting in export. It's very straightforward. And the only variance is the quality. And the quality of Vaca Muerta and the recognition of the quality of Vaca Muerta is a super positive story. So no difficulties when we got support.

Again, back to the previous question, the key for us, the key for the industry, the key for Argentina is to create more volumes to invest more in order to have more volumes going to the airport. This is a win win situation for everybody.

Speaker 7

Great. Thank you. My second question is related to income taxes. Given your investment pace during the past years, Vista has not been paying income taxes up to now, if I'm not mistaken. I wanted to get a sense if you are budgeting or thinking that you're to be you're going to start paying some next year?

Speaker 2

Yes, Ezequiel. That's correct. You can see in the balance of Vista in our statement that everything that we call current taxes. It's basically what we are forecasting we should pay during the next year.

Speaker 7

Okay, great. And my final question, and this might be a little bit early to ask, tell me if it's so, if you could comment a little bit of your lower carbon and ESG initiatives for next year?

Speaker 2

Yes. Well, thank you for answering that. And I think we present a bit of that in the presentation. We basically we are reducing around 100,000 ton of CO2 equivalent in annualized basis. And this is what we are doing in 2021.

For next year, we expect a further reaction. And on December 9, in our Investor Day strategy, we will present exactly what we will do. We are super excited about the plan that we have. Our four month plans are CapEx assigned to that. And I think in terms of becoming a low carbon operator, we are already low cost, low carbon operator.

I think we are reserving for December 9 the news to present there. So if you excuse me, I will let me hold that card in order to give it to everybody during that day that this is going to be an important day for us.

Speaker 7

That's perfect. That's all from my side. Thank you very much.

Speaker 2

Thank you very much.

Speaker 0

Thank you. Our next question comes from the line of Konstantinos Popaglia from Puente. Your line is now open.

Speaker 8

Thank you very much. Good morning and congratulations on your results. This has clearly been quite a fruitful call. I have two quick questions for you. The first one is for you.

The first one is a following regarding follow-up regarding on dividends. Just to make sure, how are you planning on paying dividends if this is a decision reached by the shareholders meeting? Is there a need for authorization from the Argentine Central Bank to actually distribute dividends? And my second question is regarding what net leverage for the next year or so. What could you expect in terms of net leverage for 2022 or 2023?

Does it make a difference if you decide to accelerate production growth? And if so, are you considering accessing the international market to obtain funds to boost your strategic plan? Once again, thank you very much.

Speaker 2

Yes. Thank you, Constantino, your question. And again, I mean, we are tight time that we for sure we will cover in December 9 with a full activity. Now back to what we discussed before, I mean, the positive thing is that we are creating consistently a positive cash flow from the operation. So back to what I said before, our first priority, because it's our story, to continue growing and we are planning to continue growing and we will present that plan in detail again in December 9, but we will continue growing in double digit rate.

Then I'm back to your second question. We when you look at our deviation from the point of view of net debt versus EBITDA, we've been coming down. We are landing in one this year, what is a super number. And I believe you will see a further reaction in 2022. Now beside that, we are planning to use part of the cash to delever our absolute number of debt, okay?

So you should expect that part of the cash will have that use. Of course, there's a caveat there. I mean and for everything that we do with cash is our FX restriction. That is something that we don't have control, okay? And it's something also that can change from one year to other in Argentina and we will adapt to that.

And the third element of cash is distribution. We think in total shareholder returns, okay? That is how we think. So that distribution is not necessarily dividend. It could be dividends, but also could be share buybacks, okay?

Whatever makes more sense to our shareholder in basically whatever make more sense to Vista, okay? So we are not talking all this dividend. We are talking that the portion of the cash is going to be distributed as a total shareholder return. Clear. Thank you Thank very

Speaker 0

you. This time, I am showing no further questions. I would like to turn the call back over to Miguel Galluccio for closing remarks.

Speaker 2

Well, thank you very much, gentlemen and ladies. Another great quarter for us. And I just thank you for the support and for continue being aside us. And I'm looking forward to see you in December 9 on our Investor Day, where we will give you an update on the strategy of Vista going forward. Thank you very much.

Have a good day.

Speaker 0

This concludes today's conference call. Thank you for participating. You may now disconnect.