Vista Energy Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
February 27, 2025

There are 9 speakers on the call.

Operator

Thank you for standing by and welcome to Vista's Fourth Quarter and Full Year twenty twenty four Earnings 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. I would now like to hand the call over to Alejandro Shenekov, Strategic Planning and Investor Relations Officer. Please go ahead.

Speaker 1

Thanks. Good morning, everyone. We are happy to welcome you to Vista's fourth quarter and full year twenty twenty four results conference call. I am here with Miguel Gallucio, Vista's Chairman and CEO Paolo Verapinto, Vista's CFO Juan Garovi, Vista's CTO and Maria Huizel, Vista's COO. Before we begin, I would like to draw your attention to our cautionary statement on Slide two.

Speaker 1

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.

Speaker 1

However, during this conference call, we may discuss certain non IFRS measures such as adjusted EBITDA and adjusted net income. Reconciliations of these measures to the closed IFRS measure can be found in the earnings release that we issued yesterday. Please check our website for further information. Our company is Societe Anonyma Busta de la Capitala Bareaole, organized under the laws of Mexico, registering the Volta Mexicana de Valores and the New York Stock Exchange. Our tickers are Vista in the Volta Mexicana de Valores and BIST in the New York Stock Exchange.

Speaker 1

I will now turn the

Speaker 2

call over to Miguel. Thanks, Ale. Good morning, everyone, and welcome to this earnings call. 2024 was another outstanding year for Vista, marked by double digit growth rate in production and adjusted EBITDA, having delivered on guidance for both metrics. We also secured new drilling, completion and oil treatment and transportation capacity, which will underpin further growth in the coming years.

Speaker 2

I will kick it off by going over the results of Q4 and later a deep dive into the highlight of the full year. The fourth quarter of twenty twenty four was marked by strong operational and financial performance, driven by new well activity in our development hub in Vaca Muerta. Total production was 85,300 Boes per day, an increase of 51% compared to the same quarter of last year and 17% compared to the previous quarter. Oil production was 73,500 barrels of oil per day, 52% year over year and 16 quarter over quarter. Total revenues during Q4 twenty twenty four were $471,000,000 50 2 percent above the same quarter of last year.

Speaker 2

Lifting cost was $4.7 per BOE, almost flat quarter over quarter. Capital expenditure was $340,000,000 driven by 11 wells drilled and 13 wells completed during the quarter, plus $64,000,000 in development facility. Adjusted EBITDA was $273,000,000 5 percent below the same quarter of last year. If we net out the income generated by the repatriation of exports at the blue chip swap rate, quarterly adjusted EBITDA grew 27% year over year. Net income was $94,000,000 implying a quarterly EPS of $0.98 per share.

Speaker 2

Deducting deferred income tax, adjusted net income during the quarter was $22,000,000 Free cash flow was $57,000,000 during the quarter. And finally, net leverage ratio at quarter end was a solid 0.63 times adjusted EBITDA. During Q4, we record another quarter of double digit production growth on a sequential and inter annual basis. Total production at 85,300 BOEs per day was 70% above the previous quarter and 51% above the same quarter last year. Production growth was driven by the acceleration of capital deployment in our core development hub.

Speaker 2

New well activities increased from 31 new wells in 2023 to 50 new wells connected during 2024. '20 '5 new wells were connected between mid August and early December, driving our understanding production performance during the last quarter of the year. Oil production was 73,500 barrels of oil per day, following the same trend, 60% above the previous quarter and 52% above the fourth quarter of last year. Gas production increased 52% on an inter annual basis and 27% on a sequential basis. In Q4 twenty twenty four, total revenues were $471,000,000 a 52% increase year over year and 2% quarter over quarter, mainly driven by oil production growth.

Speaker 2

On a sequential basis, the relatively lower increase in total revenues compared to the 70% production increase reflect the enormalization of oil inventories from below average level in the previous quarter, as well as the commissioning of all the Vale expansion pipeline will require 70,000 barrels of oil for the line pack. Combining those effects, 280,000 barrels of oil production were not sold during the quarter. Turanolized oil price was $67.1 per barrel on average, down 1% on inter annual basis and 2% lower on a sequential basis, mainly driven by slightly lower international prices. Export realization prices were $66.6 per barrel, Tognecht realization prices were $67.8 per barrel, including volumes sold at export parity. During Q4, we continue to execute our export oriented strategy with an increasing amount of oil sold in international market, driven by the production growth.

Speaker 2

We reported 3.6 barrel of oil during the quarter, 79% above the previous year. Additionally, 1,100,000 barrel of oil were sold in the domestic market at export parity prices. Combining the sales to international buyer with a domestic buyer paying export parity, 73% of our total oil sales were sold at export parity prices. Listing costs during Q4 was $36,600,000 implying a lifting cost per BOE of $4.7 On a unit cost basis, lifting cost was up 8% year over year. This increase was driven by inflation in U.

Speaker 2

S. Dollars impacting pesos denominated contract and a ramp up in oilfield expenditures to accommodate our production growth. These effects were partially offset by the dilution of fixed costs as we continue gaining scale. Adjusted EBITDA during the quarter was $273,000,000 5 percent lower on an inter annual basis. This reflects the fact that Q4 of last year included 81,000,000 corresponding to the repatriation of export proceeds at the Blue Cheese swap rate compared to the $9,000,000 during Q4 twenty twenty four.

Speaker 2

Excluding this effect, adjusted EBITDA span 27% on inter annual basis. On a sequential basis, adjusted EBITDA was down 12%, reflecting a series of one off and temporary factor of setting the 70% total production growth. Thirdly, the normalization of oil inventories from the previous quarter and the commissioning of oil development pipeline, which I already mentioned. Secondly, the increase in trucking expenditure. Our trucking volumes increased from 12,000 to 20,000 barrels of oil per day quarter over quarter.

Speaker 2

This impacted sales expenses with an increase of $25,000,000 on a sequential basis. Finally, you should note that with this quarterly print, we have achieved our annual adjusted EBITDA guidance. During Q4 twenty twenty four, operating activities cash flow was $369,000,000 reflecting a decrease in working capital of $133,000,000 and an advance payment for maintenance expansions of $27,000,000 Cash flow used in investing activities was $312,000,000 reflecting accrued CapEx of $340,000,000 partially offset by $34,000,000 decrease in CapEx related to working capital. Free cash flow during the quarter was therefore $57,000,000 Cash flow from financing activities reflects proceeds from borrowings of $836,000,000 and the repayment of borrowings of $340,000,000 During Q4, we achieved a major milestone by refinancing all the ramp up of CapEx activities planned for 2025. Finally, cash at period end was $764,000,000 and net leverage ratio stood at a very healthy 0.63 times adjusted EBITDA.

Speaker 2

I will now move to our full year highlights. During 2024, we achieved major milestones across all four strategic pillars. We have accelerated the development of our deep short cycle well inventory in Vaca Muerta. Solid productivity results have supported the expansion of our P1 reserves to three seventy five million barrels of oil equivalent, implying a 323% reserve replacement ratio. We continue to prove our PL leading performance capabilities, driving total production to an average of BRL 69,770 per day during the year, up 36% compared to 2023.

Speaker 2

Listing cost was down 10% year over year for a total of $4.6 per BOE, reflecting our low cost asset base and our continuous focus on efficiency. We also made solid progress on the sustainability front, recording a greenhouse gas emission intensity of 8.8 kilos of CO2 equivalent per BOE, a 44% reduction compared to the previous year on the back of the capital expenditure in decarbonization projects. Our total recordable incident rate was below our target of one for the fifth consecutive year, demonstrating our focus on employee and contractor safety. Finally, we continue to successfully execute our total shareholder return strategy. Adjusted EBITDA expanded 25% compared to 2023 on the back of production growth and cost control.

Speaker 2

Our share price increased 83% from year end 2023 to year end 2024. P1 reserves increased 18% compared to 2023 for a total of $375,000,000 boes estimated at year end 2024. This implies a total reserve replacement ratio of three twenty three and three thirty nine. Net additions were 82,200,000.0 boes, driven by activity in Baja Del Paloeste, where we added 52 new wells locations Baja Del Paloeste, where we added 34 locations and Aguaa Ferral where we added 15 locations. This results in a total of four country book well locations in our P1 reserves.

Speaker 2

The certified present value at a 10% discount rate attributable to the company interest in P1 reserve is $4,000,000,000 using a price assumption of $69.4 per barrel for oil according to SEC guidelines. During 2024, we achieved significant operating milestone to continue driving profitability to grow. We successfully ramp up our new well activity from 31 new well tie ins in 2023 to 50 in 2024. This led to a robust inter annual production growth and delivery of our annual guidance for new well connections and total production. We increased our oil tracking transportation capacity to 37,000 barrels of oil per day, which was a key enabler to deliver our production growth plan.

Speaker 2

In turn, production growth led an increase in all exports. During 2024, we export 10,600,000 barrels of oil, 29% above 2023 for a total of $748,000,000 of net revenues. We also achieved a key milestone that will unlock further profitability growth going forward. We secured three drilling rigs and two frac sets, which enable us to ramp up to 50 new wells connections in 2024, as well as guiding for 52 to 60 connections in 2025. We recently finished upgrading our oil treatment plants to a capacity of 90,000 barrels of oil per day.

Speaker 2

We have already identified projects to expand this capacity further and we'll allocate CapEx to this effort during 2025. We also make cash contribution to fund the expansion of the Olugal pipeline, which is now complete. The pipeline is currently ramping up and we expect it to reach full capacity by quarter end. As a reminder, this down 32,000 barrels of oil per day of field transportation capacity in this pipeline. We have also partnered in Vaca Mortazur company securing an additional 50,000 barrels per day of transportation, storage and export capacity in the project.

Speaker 2

During 2024, we made solid progress in reducing the carbon footprint in our operations. We reduced our total scope one and two emissions by 28% compared to 2023, even as we increased total production during the year. Measured by intensity at 8.8 kilogram of CO2 per BOE for 2024, the decrease was 44% year over year. Our single digit intensity played beta well within the first quarter of global oil and gas operation, materializing our ambition to become a low cost, lower emissions upstream producer. To achieve this, we increased the uptake of renewable energy in our operation, replacing gas fired power generation.

Speaker 2

This includes the startup of the first gas compression station powered by renewable energy in Latin America. We also made improvements in vapor recovery units to improve reliability and construct a gas pipeline from our Federal to Baja del Paloeste to increase gas evacuation capacity. Moving to natural based solution front, our subsidiary, IKED made solid progress across all verticals. We planted 1,800 hectares combining afforestation and reforestation projects in Corrientes and Formosa provinces. We also completed critical facilities, including fire protection, fences, water wells and housing in our forest conservation project in Salta.

Speaker 2

Finally, we increased the amount of hectares under management in our regenerative livestock and agriculture project in Salud, Cordoba and Buenos Aires. During 2024, we have continued to deliver strong financial metrics resulting in superior total shareholder returns. Asserted EBITDA increased by 25% year over year to $1,100,000,000 above the midpoint of our 1.9 wide guidance range. ROCE remains strong at 24%, specifically as it is measured at year end, it was negatively impacted by the issuance of $600,000,000 of debt, which will be applied to high return new work CapEx during 2025. Without such effect, proceed in 2024 would have been closer to 30%.

Speaker 2

The strong operational and financial performance during the last three years allow us to deliver an average ROCE of 35%. EPS per share increased 18% year over year to $5 per share, reflecting solid bottom line performance in 2024. Moreover, we continue to maintain robust financial ratios. We successfully tapped to the local and international debt market to fund the acceleration of our CapEx plan, maintaining a healthy net leverage ratio at 0.6 times adjusted EBITDA and gross leverage ratio of 1.3 times adjusted EBITDA. Finally, we repurchased $100,000,000 of company stock during 2024 at an average price of $48 per share.

Speaker 2

This outstanding performance across all financial metrics was recognized by the market and is reflected in the evolution of our share price, which increased 83% from year end 2023 to year end 2024. I will make some closing remarks before we move to Q and A. During 2024, we completed another year of robust operational and financial performance, having delivered again on our annual guidance. We record a solid 36% increase in total production and a P1 reserve replacement ratio of 323%. We updated our twenty twenty five targets after securing our third drilling rig and second track set.

Speaker 2

This allow us to bring forward the target we have initially planned for 2026 to 2025. Additionally, we secured enough oil treatment, transportation and export capacity to deliver on our updated 2025 production target and our 02/1930 mission. We made significant reduction in Greece, coal gas emissions through solid execution of decarbonization projects and made good progress in the development of our MBS portfolio. We recorded a strong financial result with an adjusted EBITDA of 1,100,000,000 and deliver robust return measured by adjusted EBITDA margin and ROCI. We also deliver on our superior total shareholder return proposition with a 83% stock price appreciation and a share repurchase of $100,000,000 In summary, 2024 has been an outstanding year for our company.

Speaker 2

A final comment from my side, I am very proud of our staff, their commitment and passion, which have always been key to our success, many sense to all of them. Operator, we can now move to Q and A.

Operator

Thank you. Our first question comes from Bruno Montanari of Morgan Stanley. Your question please, Bruno.

Speaker 3

Good morning, Miguel, Ale and team. Thanks for taking my question. I wanted to focus on production. If you could talk about the setup for production now in the first quarter of the year and how we should think about the trajectory throughout the following quarters by the end of the year, it would be great. Thank you very much.

Speaker 2

Hi, Bruno. Thanks for your question. I would like to take the opportunity of that question to explain how we plan our development that drive our production forecast. I think you were spot on with your comment in your report when you state that we have to look to the full year growth numbers. The two principle things that guide our development plan are how to optimize our operational efficiency and also how we optimize the productivity of our wells.

Speaker 2

So every time that we our people plan the development for the year and for the life of the well, they are looking at the NPV. They are not looking at how I would report quarterly to you. And unfortunately, that will make my work a bit more difficult, but I'm sure if you do it the other way, they will destroy value. In 2024, we we grew 36% year on year and we grew 51% Q4 twenty twenty three to Q4 twenty twenty four. We averaged in the year 70,000 barrel per day.

Speaker 2

For 2025, we have guided 95 to 100 barrel per day, would imply a growth of 35% to 40%. This is a number that we have to look at. Now, if we go to Q1 and then back to your question, Q1 twenty twenty five, we are expecting flat to a bit lower production on sequential basis. This is driving by two factors. When we plan Q1 new well connection with slightly delay activity to time with all the expansion ramp up.

Speaker 2

We pick our tracking around mid December I'm planning for production grow in Q1, we have implied increasing the tracking fleet in January prior to ramp up to a rundown in February in line with Olduvial commissioning. So that will be complicated from logistic and contractual point of view. So we end up planning for the quarter, as I said, with flat to probably slightly lower production. Additionally, it's fair to comment that we entered January with a slightly lower production than we expected. We have delay in connecting four parts for the year.

Speaker 2

Now again, to achieve the 95,000 or 100,000 at average in 2025, we plan to ramp up production with a big ramp up in Q3 and Q4. And also we will see EBITDA ramp up in time in Q2. So I hope I have answered your question and again same for your comment in your report.

Speaker 3

Super. Thank you very much, Miguel.

Operator

Thank you. Our next question comes from Andre Calona of Citi. Please go ahead Andre.

Speaker 4

Thank you. Good morning everyone. Miguel, following on the how to forecast production of maybe going towards 2026, linking it with the Vaca Muerta salt expansion, could you please provide us an update about the status of the project, the dates of key dates of capacity, midstream capacity addition, how are you planning the production, your equation between whenever you feel the capacity at Old Del Valle along till the first capacity from Vaca Muertasur is available?

Speaker 2

Hi, Andres. Thank you for your question. I think the main part of evacuation capacity that today is under contractual or under discussion is BeMo. So let me give you an update on that one to begin with. So we are seeing very good progress in that project.

Speaker 2

We already signed all the relevant documents related to the shareholder rights. I think also we need securing field transportation for capacity. That capacity as a reminder is 50,000 barrel oil per day for us. We know that the main APC contractors have been awarded the contraction of the pipe, also the storage tank at the terminal and as well the port. Also, we know that the purchase order for the loan lead items have been placed.

Speaker 2

And in our estimation, we expect that project to be ready in mid-twenty twenty seven. The rest of the capacity is soldelval, okay, that we know that as you know, it's going to be ready in Q2 and the rest we have all in hand. So I think going forward and looking to the future, the main thing for the medium long term for us is Vaca Muertasur.

Operator

Thank you. Our next question comes from Tassos Vasconcelos of UBS. Please go ahead Tassos.

Speaker 5

Hi, Miguel. Hi, everyone. Thanks for taking my question here. Miguel, Vista has been able to increase the equipment set in the past few years, bringing additional drilling rigs and frac set and so on. So a question we have is on the internal process, the mindset from the company to evaluate eventually signing a fourth drilling rig and of course, eventually increasing further the potential of annual wells drilling.

Speaker 5

So maybe split the question here in two parts. What are the main metrics, the main drivers vis a vis the main risks in bottlenecks that the company look at when deciding to bring additional drilling rigs? And the second part of the question, if you do decide to bring this additional drilling rig, the fourth one, what could be the timing for the decision and how could this impact the current guidance of 52 wells to 60 wells per year? This is my question. Thank you.

Speaker 2

Thank you, Tazlo. Very good question. So we have discussed and we have the option to get a four rig from Nabors. The company we have on a strategic relationship, as you know, all rigs that we run today are coming from them and this discussion is always ongoing. So we have a board rig available to bring in at the same time of condition that we have had due to the relationship that we have with them.

Speaker 2

In term of the decision making process to make that call, I would say that there are two probably main elements that we are following and it will have to be positive for us to consider that. One is related to Andre's question before is the midstream project. So having the capacity in hand to have evacuation. And I will say the second one in my view is brand prices. I think we know we are looking at the 2025 with softer brand prices that we saw in 2024.

Speaker 2

And if it's within our forecast range, I think it's something that we will consider at some point of time. If it's something change, it's clearly a no go. So that are the main two factors that we will be looking into.

Speaker 5

All right. Thank you.

Operator

Thank you. Our next question comes from Alejandro Dimitchellis of Jefferies. Please go ahead, Alejandro.

Speaker 3

Yes. Good morning, gentlemen. Thank you very much for taking my question. Miguel, I think you mentioned in your remarks that the pipe on the other valve duplicates is completed and you expect the full ramp up by the end of this quarter. Is that right?

Speaker 3

Just to confirm that. And if that is the case, how do you see your cost evolving during the rest of the

Speaker 2

Hi, Alejandro. Thank you for your question. So in case double Elval, the pipeline contraction is already finalized. The line pipe is in the pipe now and we are already seeing a ramp up in flowing volumes. So based on the information that we have, we expect a continued ramp up and have full capacity available end of Q1 and early Q2.

Speaker 2

As you know, this will add 350,000 barrel of oil per day to the system, what corresponds 31,500 barrel of oil per day for Vista. We also know that expansion of the port terminal is also moving forward. So also we have been informing that is a good progress on the storage tank and dock. So I believe Oled Valley is a reality already and we have access to that. In terms of cost, clearly that we have a big impact to us on the tracking front.

Speaker 2

In mid December, we picked 30,000 barrels per day on tracking and the cost went up all the way up north of $20 per barrel. So in Q2, all that cost is going to disappear and clear that will impact EBITDA. So it's a good news for us that Old Del Val finally came through.

Speaker 3

That's great. Thank you. And in terms of the other costs, so lifting costs and drilling costs, how are you thinking about those evolving?

Speaker 2

Drilling costs, I think is we don't see the drilling costs going up during the year and lifting costs. As you know, we are planning to be slightly down to 2024.

Speaker 3

That's clear. Thank you.

Operator

Thank you. Our next question comes from Bruno Amorim of Goldman Sachs. Your line is open, Bruno.

Speaker 6

Thank you. Good morning, everybody. Hi, Miguel, Alejandro and Jean. Thanks for taking my question. Can you please comment on your views for the overall M and A environment in Vaca Muerta?

Speaker 6

Some foreign players decided to leave, but not all of them necessarily operate the assets. Are those still your potential targets given some assets are operated by your local competitors? What can you comment on the M and A environment? Thank you.

Speaker 2

Thanks, Bruno, for your question. As you know, I mean, we call for a shareholder meeting that will take place next Monday to prepare Vista to be prepared for potential M and A activity. Our attitude, the way that we are, we are always very pragmatic. I will set discipline and opportunistic on the M and A front. So we are always looking on everything that is happening that match with our focus that is still being Baca Muerta shale oil.

Speaker 2

So I think to answer your question, you have to take that we are disciplined pragmatic opportunities. So we will look at to everything, okay, that is on the table on that respect. And we've been proving to be pretty good on the B side as well. Thanks for your question Bruno.

Speaker 6

Thank you.

Operator

Thank you. Our next question comes from Melin Carvallo of JPMorgan. Please go ahead, Melin.

Speaker 7

Hello, everyone. Thank you so much for the opportunity and congrats on the results. One of the things that we have been discussing with investors is whether run prices could change somehow operations and CapEx. We are seeing accommodation at the lower level and at JP we do expect it to go a little bit lower. So if you could please comment on how do you see this impacting operations and how the flexibility of CapEx considers the brand prices at lower levels?

Speaker 2

Hi, Milene. Thank you very much for your question. When we look at the downside risk in Brent and we look at this year, I mean, we see, as I mentioned before, a supply demand fundamentals to be with a market that would be softer than we have seen in 2024. This is mainly driven by the slow oil demand, which is forecast to grow only 1,000,000 barrels during this year. And on the other hand, on the supply side, we see at least 1,200,000 barrels coming in, driven by Brazil, USA, Guyana also is coming within Greece, Canada and interestingly enough Argentina also appear in the list with an increase of 100,000 barrel per day.

Speaker 2

So we have built our plan with a price assumption of Brent of in a range of $70 to $80 This implies $63 to $72 of Rala oil prices. And we are currently seeing Q1 prices higher on the higher part of this range that we have forecast. So Q1 is coming ahead of what we plan. So if either realizable prices are between 65 and 67, we will probably maintain our current plan. In case I will set that the realized prices go below 55, then we will consider Ashasteel our capital investment for the year.

Speaker 2

As you know, we have a super flexible portfolio. We always said that we have a short cycle CapEx since the drilling and the completion take almost a month. So we are always have the flexibility to stop and also to accelerate. So but these are the parameters that you need to think that will drive for us to review our CapEx plan. I don't forecast that we will be below 55 this year, but we have the ability to react if that happens.

Speaker 7

All right. Thank you very much.

Speaker 2

You're welcome, Irene.

Operator

Thank you. Our next question comes from Walter Gievesio of Santander. Please go ahead, Walter. Walter, your line is open. Please make sure your line is unmuted.

Operator

If you're not speakerphone, lift your handset.

Speaker 3

Can you hear me?

Operator

Yes, sir. Please proceed.

Speaker 2

Yes. Hi. Sorry. Yes. Hello.

Speaker 2

Thank you for taking my question. Going back to the listing and CapEx cost,

Speaker 3

can you develop a little bit what

Speaker 2

is the impact of the super peso on that? I know that the netback margins are strong, but is that something that or if you can quantify how much has impacted in 2024? And how do you see 2025? And looking forward, if this is something that we should be concerned, I mean, the impact of the stronger currency in Argentina. That's it for me.

Speaker 2

Walter, thanks for the question. Probably starting with the lifting costs. So as you know, I mean, we record in Q4 '4 point '7 dollars per barrel. This of lifting cost that was 1% down vis a vis our Q3. And basically, I'm planning that because the reason of that was that we start to we continue capturing the benefit of economy of scale and the dynamic on the lifting costs that every time that we ramp up production, we dilute our feed costs.

Speaker 2

We also as you mentioned, we see cost pressure during 2024, driven by the flat effects and the peso inflation. This effect will still play a role in the co dynamic and will continue offsetting some of the savings that we continue putting in place. Now we think that this effect will be lower will have a lower impact in 2025 as we assume that peso inflation continue to decelerate. So during 2025, we expect a slight reduction in lifting costs as we continue to invest in cost cutting initiatives and also as we continue increasing production. So we are guiding lifting costs between $4.3 and $4.5 per barrel.

Speaker 2

On the CapEx side, 70% of our CapEx as you know is U. S. Dollar denominated and 30% is peso denominated. We are assuming our plan that our cost of well is going to be between $14,000,000 and $14,500,000 There, I will say one thing that we are doing that we have not communicated, but I'm happy to share with you with the new promotion of Matthias Guevsel, our COO of the company, we have the benefit of having Pangaroi that have run the operations since the start of Vista and have not is not only an international and very seasoned manager, but also within his skill set, he come from the well construction site. So we have asked him to start a multiyear plan to look at what we can do not to improve the efficiency of our CapEx, but look into what we can do to change the game in term of what we do in term of well contraction.

Speaker 2

So we have put with him he have built a full team task force that will be focused in a multi year effort with one rig assigned to try what we can do to change the game or to change the way that we do things on the well construction side. So I have high hope for that initiative as well. Thank you for your question. Thank you very much for the answer.

Operator

Thank you. Our next question comes from Leonardo Macandes of BofA. Please go ahead, Leonardo.

Speaker 1

Hi, everyone. Thanks for taking my question here. So my question is, why don't you guys accelerate the production growth by bringing more equipment, more wells in Argentina? And if the answer is limited capital availability, why not think about potential follow on capital increase given that Visa has one of the best valuations in Latin America? Thank you very much.

Speaker 2

Thank you, Leo. Very good question. I think the reason why we trade one of the highest in LatAm is because we provide a higher growth with the best in class operational track record. As I mentioned before, Tiburon last year, we grew 36% year over year and this year we plan to grow again between 3540%. So it's not really a capital issue.

Speaker 2

As I mentioned to Kim as well, there is an art to find a sweet spot that combine the activity intensity that is required to fulfill the plan, as well as being very cautious of what is the velocity that we apply to the development of our field in order to optimize the output and NPV of the production that we put in place. So as you know, as we develop our plan, we develop our field, we have a combination of intensity in development and the risky and de risking at the same time. We have to de risk areas to make sure that we will continue drilling the best well that we can drill to maximize the value of or the development of those fields. So but to your question, I think is not a matter of CapEx. I think we are growing super fast.

Speaker 2

I mean double digit 35%, forty % growth. And we believe we are optimizing the way that we manage the reservoir and we optimize NPV or we are putting in place. And yes, as you mentioned, we have probably one of the best multiples. Now, I believe we also continue to be cheap. When you go back to U.

Speaker 2

S. And you look at companies like Vista growing 35%, forty % a year, back ten years ago, their multiple was around eight and we're multiple today is about four. So I feel we're still cheap for the growth that we are delivering. And thanks for your question, Leo.

Speaker 1

Got it. Thank you very much.

Operator

Thank you. Our next question comes from Juan Jose Munoz Rios of BTG. Please go ahead, Juan.

Speaker 4

Hi, everyone. Thank you for the opportunity. Just in the Paco Mortaz for project, I want to ask how much is the CapEx associated to the project in 2025 to be deployed for you? Thank you.

Speaker 2

Hi, Panko Se. Thanks for your question. So first probably, we were to comment that we separate CapEx from investment. So CapEx, we still expect to be between $1,000,000,000 and $1,300,000,000 and that does not include the Vaca Muertasur investment. The total project investment for Baca Muertasur is estimated around $3,000,000,000 There is a potential bank financing of 40% to 60% of that project.

Speaker 2

So in our calculation, we are assuming that our equity investment will be in the range of $120,000,000 to $180,000,000 So that is how you have to look our CapEx and investment for the year.

Speaker 5

Okay, thanks.

Operator

Thank you. Our next question comes from Marina Mertens of Latin Securities. Please go ahead, Marina.

Speaker 8

Hi, good morning and thank you for taking my question. So regarding the potential lifting of capital controls, what would be the main benefits for Vista? Do you expect any improvements on at an operational level and could it eventually lead to accelerating your growth plan?

Speaker 2

Thank you, Marina. Good question. I think the ease or lift of capital control will benefit the full industry. And of course, it's going to benefit us. If you think about what could be the main benefit probably, I think about two elements.

Speaker 2

The third element is it will make us more competitive. It will make us more competitive because we will probably have two impacts. One is more investment coming into Argentina. So again, more competition, more companies and I think that is good. I always believe that as we scale up our activity, we all benefit.

Speaker 2

So today, Vaca Morta run with 33 rigs, U. S. Run between 405 rigs. So if you will go to 100, one hundred and 50 rigs, the cost of drilling, it will be a completely different one. And therefore, we'll become more competitive.

Speaker 2

Also for service companies to come over to Argentina or to increase the capacity that they have today, I think a niche or lift on capital control will make a big difference. As you know, I mean, I used to run a service company, so I know how much it means for them. So it will be a super good news and it will make the whole industry in Vaca Muerta more competitive due to these two effects. Thank

Operator

you. Our next question comes from Orianna Kovalt of Balanci. Please go ahead, Orianna.

Speaker 7

Hi. Thanks for taking my question. This is Ayanna Kovalt with your balance. I have you mentioned, Brent pricing and potential volatility impacting your CapEx plans and so on. So I'm curious to know if you've considered establishing any hedging policy just to mitigate the potential effects of volatility?

Speaker 7

Thank you.

Speaker 2

Hi, Oriana. Thanks for your question. Yes, we have done that exercise and we have the discussion many times during the last several years that we've been running business in Argentina. And the answer is that the answer that we have come up with is that we are already naturally hedged, being a very low cost producer, having no last dematurities and also having that flexibility of a short cycle CapEx where we can accelerate and stop at any time. And I think we proved that during the COVID-nineteen years.

Speaker 2

Also, I mean, let's face it, I mean, many of our investor can hedge themselves more efficiently than we do. And also, if we hedge and we end up having being successful on the hedging strategy, it will be considered one off. And if we hedge and we miss it, it will damage us. So no, the answer is we don't plan to hedge and every time that we go through that discussion, we convince ourselves that being natural hedge is the best way that we can hedge our business.

Speaker 7

Thank you very much.

Operator

Thank you. I would now like to turn the conference back to Miguel Gallucio for closing remarks. Sir?

Speaker 2

Well, thank you very much for participating, for your question, for your reports. And I take the opportunity to thank also all the team of Vista that have made this 2024 possible. It was a difficult plan to deliver with international remote, but we make it happen. So thanks to them and all the great to the people that work with us. Thank you very much and have a good day.

Operator

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

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Earnings Conference Call
Vista Energy Q4 2024
00:00 / 00:00
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