Vista Energy, S.A.B. de C.V.
Q3 2021 Earnings Call Transcript

Published: 27 Oct 2021

[Operator:]

Good day and thank you for standing by. Welcome to Vista’s Third Quarter 2021 Results Conference Call. At this time all participants are in a listen-only mode. I would now like to hand the conference over to your speaker today Alejandro Cherñacov. Please go ahead.

[Alejandro Cherñacov:]

Thanks. Good morning, everyone. We are happy to welcome you to Vista’s third quarter 2021 results conference call. I am here with Miguel Galuccio, Vista’s Chairman and CEO; Pablo Vera Pinto, Vista’s CFO; and Juan Garoby, Vista’s COO. Before we begin, I would like to draw your attention to our cautionary statement on Slide 2. 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. 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, Vista Oil & Gas, is a sociedad anónima bursátil de capital variable organized under the laws of Mexico, registered in the Bolsa Mexicana de Valores and the New York Stock Exchange. The tickers of our common stock are VISTA in the Bolsa Mexicana de Valores, and VIST in the New York Stock Exchange. The ticker of our warrant is VTW408A. I will now turn the call over to Miguel.

[Miguel Galuccio:]

Thanks, Ale. Good morning everyone, and thank you for joining this earning call. I am delighted to share with you our results of the first quarter of 2021 during, which we have continue our profitable growth path and recorded positive free cash flow. During Q3 2021, total production average 40,300 boe/d, a 59% increase year-over-year. Oil production was up 77% year-over-year, boosted by our development in Bajada del Palo Oeste, where we have already tied-in 16 new wells year-to-date. Total revenues in Q3 2021 were $175 million, a 150% increase year-over-year, mostly driven by the increase in oil production and stronger realize oil and gas prices. Lifting cost per boe was $7.3 for the quarter, a 26% reduction year-over-year, reflecting the low marginal cost in Bajada del Palo Oeste continue to dilute our fixed cost base. Adjusted EBITDA was $102.9 million implying a solid adjusted EBITDA margin of 59%. Capital expenditure for the quarter was $74.1 million in line with execution of our 2021 guidance and reflecting the completion of our fourth pad for the year in Bajada del Palo Oeste. During Q3 2021, we generate positive free flow of $51 million driven by robust cash flow from operations and our A&D transactions. Cash at the end of the period was $266 million, net debt stood at $337 million implying a healthy net leverage ratio or 1.1 times adjusted EBITDA. We will now deep dive into the main operational and financial metrics. Total production during Q3 2021 was 40,300 boe’s /d, up 59% inter annually. Production grew continues to be driven by our flagship development in Bajada del Palo Oeste, where we tied-in three parts in the first half of the year. We’d also tied-in a four pads number nine in late September. This pad landed two wells in La Cocina and two wells in the Orgánico with an average length of 3,078 meters per well, and 61 average stages per well. Note that this pad did not contribute with production during the quarter. Even the high oil mix in Bajada del Palo Oeste wells, we see a higher grow of oil production rate, which increase 77% year-over-year. During Q3 2021, we also tied-in a gas well in Entre Lomas concession targeting the Vaca Muerta 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 plan gas commitments. Total revenues in Q3 2021 were $175 million, a strong inter annual increase driven by the boost in oil production and realized oil prices. Realized oil prices for the quarter average $57 per barrel, up 46% year-over-year and 4% quarter-over-quarter. Sales to export markets accounted for 18% of the oil volumes we sell contract signed with Brent was trading around $72 per barrel. 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 export volumes have already been lock-in at an average realized prices of around $60 per barrel. Realized gas prices increase 89% year-over-year to $4.1/MMBTU boosted by the gas plan winter price of $4.1/MMBTU applicable to approximately 67% of our total volumes. Additionally industry prices increase from $2/MMBTU to $4.3 year-over-year. Moving to Slide 6. We will have a look at our lifting cost performance. Total lifting costs for the quarter was $27.2 million. We have managed to maintain lifting costs virtually flat quarter-over-quarter despite pesos special FX appreciation in real times. Lifting costs 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 maintain flat lifting cost per boe with a stable production. Adjusted EBITDA for Q3 2021 stood at $102.9 million. We have quadruple adjusted EBITDA inter annually, reflecting a boost in revenues and in the stable lifting cost. Adjusted EBITDA has stood flat vis-à-vis the previous quarter, even though it is does not include operating income generated by the JV with Trafigura, which added approximately $5 million in Q2 2021. Our adjusted EBITDA in March and netback has remained strong in the quarter at 59% and $27.8 per boe respectively. Moving to Slide 8, I will review our financial situation. During Q3 2021, we have another positive free cash flow quarter, for a total of $51 million. Cash flow from operating activities was $110 million, six times higher than in Q3 2020. Cash flow used in investing activities was $79.3 million partially offset by the cash received through the acquisition of ConocoPhillips Argentina operation, and the divestiture of cash flow to Shell for a net of $58.9 million recorded for a quarter. Cash flow used in financing activities was $22 million that stood a similar levels and we pay interest for $25.5 million, including the semi-annual payment and our syndicate loan and the full interest cost to date of that were canceled during the quarter. In Q3, we repay a total of $112.1 million in loans and denominated 18 bonds. We also raised the key value $110 million in the Argentinean capital market in $2 lean bonds. Series XI was $9.2 million, bullet during in four years with a coupon of 3.48%. Series XII was $100.8 million amortizing due in 10 years with a coupon of 5.85%. These issuance constitute robust step to pre-finance 2022 maturities. Also the average debt duration have increased from 1.4 years at the end of Q2, 2021 to 2.7 years at the end of Q3, 2021. 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 2021. Reflecting how cash flow from an operation is driven organic deleveraging. Moving to the business development front, on September 16, we’ve acquired 50% working interest in the Aguada Federal and Bandurria Norte concessions from ConocoPhillips. Vista made no upfront payment with control of the acquire entity that has $6.2 million in cash and assume the understanding investment carry of $77 million due to Wintershall via 50% be operating partner of the block. We also obtain from the seller a five-year bullet line of credit of $25 million available for 24 months at LIBOR plus 2%. Rationality for this transaction is strong, this asset fit perfectly into our development strategy. The price of $2,800 per acre is low compared to the recent Vaca Muerta M&A transactions. With this well, 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 capital cost to the . Finally the proximity to Bajada del Palo Oeste of the purchase asset in particularly Aguada Federal could lead to important synergies in terms of contractors, development facilities and logistics. We showed this transaction, we have added core acreage to our portfolio without stressing our balance sheet and strongly contributing to our grow potential and shareholders’ value creation. During Q3 2021, we also make good progress on the ESG front. We are currently executing three projects, aim at reducing 100,000 tons of CO2 equivalent on an analyze basis. We expect to achieve a 30% reduction in our emission intensity to approximately 29 kilos of CO2 equivalent per boe in 2021. This will leaves 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 de-carbonization plan. We are currently finalizing our carbon abatement cost curve, which is the cornerstone of our multi-year action plan to reduce greenhouse gas emissions and set corporate reduction goals. Moving to Slide 12, I will present our revised guidelines for the year, which has improved on the back of a strong execution and higher realization prices. Note that the update guidance of this slide is compared against the guidance issued in the previous quarter, which was an improvement compared to the original guidance from 2021. We have already tied-in 16 wells during the year, and we are on the track to tied-in the fifth pad of the year for a total of 20 wells by year end, which has finished drilling this part and will start completion in November. The rig that we moved to a new location to be drilled with the six 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 inspire 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 boe/d. Year-to-date production is 38.1000 boe/d and we expect the production from the fourth pad of the year recently tied-in to drive Q4 production to higher levels. We are also confirming our lifting cost of approximately $7.50 per boe for the year, year-to-year lifting cost was $7.4 per boe. We forecast this metric to remain in this range in Q4. Despite pressure on cost by best appreciation in real time and we have seen in Q3. We are revising upwards our adjusted EBITDA guidance from $325 million to $370 million. 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 by Bajada del Palo Oeste we are increasing our capital guidance from $310 million to $330 million. 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 1 times adjusted EBITDA by year-end. These reflects our successful pre-financing effort during the year, as well as the organic deliver action driven by the operating cash flow generation. As of debt guidance increase from $500 million to $600 million at year end, reflecting the successful 10 year tenure bond issuance in Q3 2021 at an attractive task to pre-finance 2022 maturities. To finalize this call, I will recap from today’s headlines. In Q3 2021, we have seen a strong performance across all key operational and financial metrics, recurring a $51 million free cash flow. Bajada del Palo Oeste continues to show solid results. We tied-in our four well pad year-to-date, which leads us on track to deliver 20 new wells tied-ins for the year, accelerating our 2022 world program. In term of cash, in Q3 2021 we successfully issue $110 million in new bonds at a competitive rate, extending average debt duration to 2.7 years, a pre-financing 2022 maturities. On the business development front, we acquire 25,000 core acreage 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&A, I would like to announce that we call for the shareholders 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 2022. Today, we are announcing this Vista’s Investor Day, schedule to take place on December 9 and hosted by the executive team. During this event, we will present our update strategy and New Year term target. 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&A.

[Operator:]

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

[Walter Chiarvesio:]

Hello, good morning. Thank you for the call and congratulations for the good results and performance during the year on the quarter. I have three quick questions. The first one is regarding the dynamics between the export of oil in Argentina and the local sales, I would say basically, or in particular, why would you or why couldn’t you export more in order to increase the average price that you’re 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 evaluation of the currently in next year, especially in the case of the 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 first part of 2022. Is that correct? That is my question. So those are my three questions. Thank you.

[Miguel Galuccio:]

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, step two from a very – I would say an overview and a big picture will happen in Argentina with the prices, as the prices in Argentina, whether we are receiving is a combination of the local price with the export price of the volume that we export. Now, I think the important thing here to understand is that volume that we export, it depends on how much Argentina overall produce. Today Argentina at different I think were probably eight or seven years ago. We are clear in a pad of being having no problem in fulfill the demand of the local market, and becoming year-over-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 top and everything that we produce in excess, we go to the export market. Now, when you look at what we can produce here to be in excess in 2021, we have increased our production 7%. From that 7% production, 31% come from Vaca Muerta and conventional fields have declined 1%. So saying all that, what I’m saying is, today we are not in a situation of a 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 equal to the export market. Now going to the export market, we first of all, the local price today what our live price has been around 55. We have not seen – we have seen prices increased during the year, but we have not seen prices increased 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 to the couple of the export authority and we believe, we will have a correction. In election at years, no matter where government is in charge, we have always seen a delayed on the transfer of pricing to pump. I believe after elections, we should see a movement coming from the integrated players in the country. When come to the export, what we see really the pricing that we are realizing as you know fully aligned with the export with the Brent prices and with the discount is the discount that we know, we have a discount on quality that the last time that we have was less than one. And we have the export tax and that give you 10%, 11% reduction on the revenue pricing. And then 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 pad of the year, what we call or what you see in our maps for you guys is at thing. We know now that allotted a length of 2,100 meters. Currently is starting completion. We plan to tied-in this well in Q4 most likely will be December. We are then moving the reach to a new location that is back six of the year. So our six pad of the year, and that is expected to deliver or additional drill and uncomplete well by year end. Okay. So that’s where it’s going to be completed in 2022. Also, we brought an farther to drill surface and intermediate sections for three parts and that is already on today starting to drill our first pad 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, we have a positive impact in our production plan in 2022. Going for your last question related to the evaluation impact. Well, we’ve been through that before. The evaluation impact have usually in Argentina, a positive impact on the CapEx, a positive impact on the lifting cost because dilute our pesos foreign dollars when come to basically cause of both development and lifting and have a negative impact historically in our top-line, because we see an spike that of the evaluation or a drop on the top-line that is difficult to transfer at the same moment instantaneously into the Brent, usually take few months to recover. I seen before senior evaluation, we need to see a recovery in our price pricing in the pump. And that’s, I mean, if we have an evaluation effect it clearly we hit our top-line and it’s going to benefit us on the cost side. So Walter, hope I have answered your question.

[Walter Chiarvesio:]

Yes. Thank you very much. That was perfect.

[Operator:]

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

[Regis Cardoso:]

Hi, good morning, Miguel. Good morning, Alejandro. Congratulations on the results. Two questions from my side. First one is regarding, the left light on presentation, where you talk about distributions either in the form of dividends or buybacks. How do you, I mean, how do you, envisage that capital allocation between accelerating the development of Vaca Muerta given that you still have a very substantial inventory for wells in Bajada del Palo 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, very high discount rate in Argentina and so on. So of course, the buyback would also make sense from that perspective. So my question really is, how do you balance that view that, 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 location, where you get the resources from given the capital flow restrictions and as you balance between distributions and reinvesting 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 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, can you actually reduce that spread between realized oil price and Brent prices? Thanks.

[Miguel Galuccio:]

Thank you, Regis for your question and your third question is probably helped me to set up the stage for really the detail discussion that we are going to have in our in Investor Day in December. But it’s a very good question. And let me touch briefly on that. So, first of all the, I will say the important thing, the most important things is that our operation and the results of our operation, basically our performance, in terms of cost lifting plan development that, we have managed to take the operation from the 30 plus that we were all the way down to probably 14, between seven of development costs and lifting costs 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, the strategy of cube that we have to have an operation that generate consistently. And that is very important, positive free flow. And we are now that, at that stage. How we’re 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. But first of all, we have the ambition and we plan continue growing. Okay. We are a growing company and we will continue growing a 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 deliver as 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 the deliberation the company. And on the second asset, the way that we think about distribution, we see the distribution, a total return to shareholders. Okay? And the total return on shareholders can be in two forms. Okay one is, could be a plan to buy back shares to very probably make a lot of sense. And second, it could come a point of time that we could have a dividend policy. We have not made a decision on that, but we have made a decision and that why we are preparing our holding company to receive this 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 rely prices again, I think it’s back to the previous question of Walter is it will be depend, I mean in this bucket, it will depend of our ability as a industry to continue growing as an industry and as a country, because it is needed for the industry needed for the country as well. To moving – to continue growing our production base, they are afford to have more excess to export. I think this is the name of the game for Argentina. Is Negro carbon low that I don’t think is touching the local prices. It was originated to average pad of the constraint that we have, that you mentioned that, distribution of cross border, I would say cross border be able to move proceed to 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 visitors and more company coming Argentina. So, I think that was the origin of the idea of having a low that incentivize that investment. I think if the low average that, I think we are winning something for that you don’t need more than four articles on the low today we are discussing country. I think that it’s a bit too much okay. No needed. We have a low that we passed in 2014 that it has been working extremely well in term of the legal framework of the carbon low. 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 exporter in a country that we have that potential, if with that law with those four articles address that, it will be a good thing that this government does.

[Regis Cardoso:]

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

[Operator:]

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

[Unidentified Analyst:]

Hi, good morning everyone. And thank you very much for taking my questions. My questions are actually related to the newly acquired acreage from ConocoPhillips. 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 del Palo Oeste? Thank you very much.

[Miguel Galuccio:]

Thank you for your question. Well look at, first of all to said that it was a very good acquisition for us both block Bandurria Norte concessions that we know extremely well. We were in the process at the time that kind of fulfilled both those areas. So for us, it’s nothing new. The fact that we have managed to make a transaction, we know that from payment and even assuming the understanding investment carrier that Wintershall have there, I think it was a very good deal. The asset fits first of all, perfectly our strategy, because it’s not only that are high quality asset also are enable assets to our operation would have very strategic value for us, particularly I will set our – with Wintershall we have a very good relation at all levels in the company and operational level and also on the top. We have discuss 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 started studying technical discussion. Clear it’s a lot that we cannot on that technical discussion is not new for the country needed for you guys that as an operators today, we rank in between the most efficient operation of the basin. And therefore, of course, we have teach what, and the way that is structured the JV, of course, we are saying on the program for 2022. So, we together, we have to agree what exactly 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.

[Operator:]

Thank you. Our next question…

[Miguel Galuccio:]

The other question was – sorry, I mean, you have another question or not, because I thought that I answer that.

[Operator:]

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

[Andrés Cardona:]

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 pad 9 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.

[Miguel Galuccio:]

Thank you, Andrés for your question. And yes, let me tell you first about pad 9. So, we complete and tied-in by 9 in September. Okay. We learn two ways in La Cocina and two ways in Orgánico. The average lateral length, if you remember properly was close to 3,100 meters and we place 61 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 small stages that we used to do. And that was part of the plan. Yes, we have a side track in one of the well, so we drill 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 and we cement and we sidetrack it. This operation the effect for the quarter that is basically did was pushing 20 to 25 days our production. What is today of the pad around 3000 barrel per day and is not fully clean. So still cleaning up. It was pushed 25 days from September to October. Also we have in that particular well, an overran cost. So all those well today, we are drilling normal basis around $10 million. In this well, we have a $4 million additional. So that was the full impact of the sidetrack for one well in the complete pad. Okay. So nothing, I mean, we have drill already 10 pad the performance have been exceptional. Of course, we investigate, we do, we prove and so on. But it’s part of running an operation. So, no measure impact there is likely impact in what we do. And the pad program seen from the production today choke is looking good. It’s looking around, well type. So that is your first question. Your second question was related to, I will look on prices for Q4. Okay? So, as I mentioned in the call, in Q4, we have already looked 100% of our revenues. Okay? We manage in Q4 to place two cargos. That means 30% of our total volume in October 1 to be basically that was good prices what we have in October was same prices around 73. We manage to have realized prices around 66, and in December we sold another cargo to an enough. Okay. Brent at that time was around 83. We managed to realize prices of 76. Okay. And domestic volume were placed to basically 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 answered your questions, Andrés?

[Andrés Cardona:]

Yes. Thanks a lot.

[Operator:]

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

[Ezequiel Fernandez:]

Hi, good morning. This is Ezequiel Fernandez from Balanz. 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 Andrés Cardona 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 sell and also what was the discount versus Brent on your export sales during the third quarter?

[Miguel Galuccio:]

Okay. Well, thank 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 will probably seen prices more today around $55. If anybody’s getting $60 my congratulations to them, I think we should go to 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 short blindly. And second in term of the export. What is exactly what I said to previously, okay? You see discounts of around 10% in export. You can basically place probably $1.5 of the $10 that we see today to quality. Okay. But depend of the tender, we see a range and we’ve been very successful and no long ago that that price was around $5. Okay, and which they are talking about $1, $1.5, $2. And the other part is the portion of the export tax that, I mean today around another $8. So that is a discount that we are getting in export is very straightforward. And the only variance is the quality. And the quality of Vaca Muerta and the recognition, the quality of Vaca Muerta is a super positive story. So I mean no difficulties when we’ve have to 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 dashboard. This is a win-win situation for everybody.

[Ezequiel Fernandez:]

Great. Thank you. My second question is related to income taxes, given your investment pays during the past years, Vista has not been pay any 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 going to be start paying some next year?

[Miguel Galuccio:]

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

[Ezequiel Fernandez:]

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?

[Miguel Galuccio:]

Yes. Well, thank you for answer 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 basin. 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 former plant, our cap assigned to that. And I think in term of becoming a low carbon operator we are already low cost, a 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 is going to be an important day for us.

[Ezequiel Fernandez:]

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

[Miguel Galuccio:]

Thank you very much Ezequiel.

[Operator:]

Thank you. Our next question comes from the line of Constantinos Saprias from Pointe Des. Your line is now open.

[Constantinos Saprias:]

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 regard – 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 Argent Bank central bank to actually distribute dividends? And my second question is regarding what the 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 time? Once again, thank you very much.

[Miguel Galuccio:]

Yes. Thank you, Constantinos for your question. And again, I mean, we are termed that we, for sure we will cover in December 9 with a full activity team. Now back to what we discussed before, I mean, the policy is seen 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 is to continue growing and we are planning to continue growing, and we will present that plan in detail and again in December 9, but we will continue growing and double-digit rate. Then I’m back to your second question, we – when you look at our deliver reaction from the point of view of net debt versus EBITDA, we 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 deleverage our absolute number of debt. Okay? So, you should expect that part of the cash we 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 fair element of cash is distribution. We think in total shareholder returns, okay. That is how we think. So that distribution is not necessary dividend. It could be dividend, but also could be share buyback. Okay. Whatever makes more sense to our shareholder in and basically will 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. Very clear.

[Constantinos Saprias:]

Very clear. Thank you very much.

[Operator:]

Thank you. At this time, I am showing no further questions. I would like to turn the call back over to Miguel Galuccio for closing remarks.

[Miguel Galuccio:]

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 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.

[Operator:]

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