Vista Energy, S.A.B. de C.V.
Q4 2021 Earnings Call Transcript

Published: 23 Feb 2022

[Operator:]

Good day and thank you for standing by. Welcome to the Vista's Fourth Quarter 2021 earnings webcast conference call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. 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 Fourth Quarter and full-year 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, IFRS. However, during this conference call, we may discuss certain non-IFRS measures such as adjusted EBITDA. Reconciliations of these measures to the closest IFRS measure can be found in our earnings release that we issued yesterday. Please check our website for further information. Our company, Vista, 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 VISTAA in the Bolsa Mexicana de Valores and VIST in the New York Stock Exchange. The ticker of the warrant is VPW408A. I will now turn the call over to Miguel.

[Miguel Galuccio:]

Thanks, Ale. Good morning, everyone and thank you for showing in this earning call. Today I will share with you the Fourth Quarter and full-year results of 2021. We have made excellent progress across all key fronts, delivering solid operating and financial performance, increasing and ready-to-drill-well inventory, strengthening our balance sheet, and reinforcing our commitment to sustainability. 2021 mark a turning point for our company, initiating a clear part of a strong total shareholder return. I will kick it off by going through our Q4 results, and I will then move onto full-year results. During Q4 2021, total production averaged 41,100 BOE per day, a 34% increase year-over-year. Oil production was up 41% in the same period, boosted by our development in Bajada del Palo Oeste where we dug in 20 new wells during the year. Total revenues in Q4 2021 were $196 million, a 146% increase year-over-year, mostly driven by the increase in oil production and stronger realized oil prices. Lifting cost per BOE was $7.5 for the quarter, excluding costs related to the 50% non-operated working interest we held in Aguada Federal and Bandurria Norte. This implies and inter annual reduction of 7%. A shafted EBITDA was $117 million, more than doubling year-over-year, and implying a solid adjusted EBITDA margin of 59%. Capital expenditure for the quarter was $97 million reflecting the completion of our fit part in the year in Bajada del Palo Oeste.During Q4 2021, we generate proceeding free cash flow of $62.8 million driven by robust cash flow for some operations. Adjusted net income was a solid $35.4 million showing significant progress vis -a - vis Q4 2020, which showed a loss of $21.6 million. We will now deep dive into the main operational and financial metrics of the quarter. Total production during Q4 2021 was 41.1 thousand BOE per day, up 34% inter-annually, and 2% sequentially. Production growth was driven by our flagship development in Bajada del Palo Oeste. which continues to deliver productivity above our type curve. Given the high oil mix in Bajada del Palo Oeste wells, we see a higher growth in oil production which increased 41% year-over-year to 32.4 barrels of oil per day. In December, we tie in pad number 10 consisting in four wells, two landed in La Cocina and two in Orgánico with an average length of 2,850 meters per well and 54 average stages per well. Note that this path did not contribute meaningful production in the fourth quarter. Gas production increased 15% year-over-year. The sequential decrease reflects our strategy to boost gas production during the winter in line with the higher demand and prices. Total revenues in Q4 2021 were $196 million. A strong inter-annual increase, driven by the boost in oil production and realized oil prices. Realized oil prices for the quarter averaged $60.6 per barrel, up 51% year-over-year and 6% quarter-over-quarter. Sales to export markets accounted for 33% of the oil volumes, with two sales categories during the quarter and sales contracts executed when brand was trading at around $78 per barrel on average. The domestic market accounted for 67% of our total sales in the quarter, with a crude oil price of $55.5 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 Q1 2022 oil sales with approximately 34% of export volumes, have already been lock-in at an average realized price of around $63 per barrel. Realized gas prices increased 70% year-over-year to $2.7 per median review, boosted by the plan gas summer price of $2.7 per millions of BTU applicable to approximately 70% of our total volumes. Additionally, industrial market prices increased from $1.6 to $2.7 per millions of BTU year-over-year. Total lifting costs for the quarter was $27.9 million dollars. As seen the previous quarter, we managed to maintain lifting costs virtually flat sequentially, despite effect appreciation in real terms. Lifting costs per boe was $7.5, down 7% year-over-year as incremental production from Bajada del Palo Oeste with low marginal cost continues to dilute our fixed cost base. You should know this figure do not include the impact of our 50% non-operated working interest in Aguada Federal and Bandurria Norte which at $2.4 million or $0.5 per boe to our total lifting cost. We took over operator ship and became sole concession holders of our welfare at Bandurria Norte on January 17. We started to work on several projects to reduce lifting cost through the integration of these assets with our Bajada del Palo Oeste cluster. We forecast to reduce the lifting cost per boe of this asset to single digit during 2022. Adjusted EBITDA for Q4 2021 stood at $116.5 million, an expansion of three times compared to Q4 2020, reflecting higher production rate and realized oil prices amid a stable lifting cost. Sequentially, adjusted EBITDA improved 13%. If you note that Q4 2021 includes $4.5 million of operating income generated by the JV with Trafigura, which got no impact in the previous quarter. Our adjusted EBITDA margins have remained strong in the quarter at 59%. Netback has improved 11% sequentially to $30.8 per boe, mainly driven by higher revenues per boe amidst flat operating costs. Moving to Slide 8, I will review our financial situation. Cash flow for an operating activity in Q4 2021 was a robust $138.8 million, five times higher on a year-over-year comparison. Cash flow used in investing activities was $76 million with a Capex activity of $97.3 million. This solid result led to a positive free cash flow of $62.8 million for the quarter. In turn, cash flow use in financial activities was $13.5 million, mainly driven by interest payment of $3.8 million and debt repayment of $1.6 million. This led to a cash position at VRN of $315 million. We believe that Q4 results are a good evidence of our strong operating and financial performance. This is driving profitability growth and free cash flow generation. I will now move to the full year results. First, I will highlight how our achievements in 2021 have solidified the foundations of our strategic plan. We continue to successfully underpin our growth plan by expanding reserve and now we're ready to drill well inventory, P1 reserve increased by 42% to 181.6 million boe, resulting in an implied reserve replacement ratio of 477%. These were mostly driven by organic growth in Bajada del Palo Oeste. We also acquired 50,000 core acreage in Vaca Muerta, adding approximately 300 locations to our new well inventory. Half of these locations considering an extension of our core development cluster. We increased total production 46% year-over-year to 38,800 boe per day, driven by the tie-in of 20 new wells in Bajada del Palo Oeste in line with guidance. We reduced lifting cost 18% year-over-year to $7.4 per boe, also delivering on guidance. We also reduced D&C costs by 18% year-over-year to $10 million per well on normalized basis. We have also continued to strengthen our balance sheet. Solid performance during the year has led to a reduction of our Net leverage ratio to 0.8 times adjusted EBITDA as well as a positive free cash flow of $105.9 million. We successfully raised $260 million in the Argentinean debt capital market, achieving an extension in average debt duration to 2.5 years at the year-end from 1.5 years at the end of 2020. Finally, we reinforced our commitment to sustainability. In 2021, we have published our inaugural sustainability report stressing our pledge to sustainable business practices and transparent reporting. We reduced CO and CO2 greenhouse gas emissions by 14% year-over-year to 2,360 thousand tons of CO2 equivalent by upgrading our facilities to reduce our operational carbon footprint. Last but not least, we established our ambition to become net zero in 2026 by combining a reduction of 35% in absolute greenhouse gas emissions in our operation with implementation of our own program of nature-based solutions. Moving to Slide 10, I will comment on our proved reserves, which increased by 42% vis -a - vis 2020 for a total of 181.6 million boe estimated at year-end 2021, implying a total reserve replacement ratio of 477%. These constitute an outstanding achievement by our operations team, as we continue to improve the quality of our core Vaca Muerta acreage and our ability to organically generate profitable growth. Net additions were at 67.6 million boe, mainly driven by the activity Bajada del Palo Oeste, where we are added 52 new wells locations, resulting in a total 134 booked locations. Total reserve in Bajada del Palo Oeste are now estimated at 155 million boe or 85% of the total proved reserves. The reduction of lifting costs by 16% year-over-year, as well as the increase in oil prices, have also contributed with our reserve additions by extending the economic life of the wells. Proved developed reserves increased 21% to $64.7 million boe, whereas proved undeveloped reserves increased 56% to 116.9 million boe. The solidified percent value at 10% discount rate attributable to business interest improve reserve is $1.5 billion using a price assumption of $55 per barrel for oil and $3.92 per millions of standard cubic feet for gas according to SAC guidelines. We will now deep dive in our key operating achievements. During 2021, we made solid progress in Bajada del Palo Oeste by tying in 20 new wells for the year. We have doubled the number of well of production. This boosted the total shale production by three times, and total oil production by 66% vis-a-vis 2020. Our 2021 development plan was delivered within budget with a total Capex of $324 million, 2% below guidance. As discussed before, we reduced drilling and completion cost by 18% year-over-year to an average of $10 million per well on normalized basis, a key contributor to our profitable growth plan. This achievement is the consequence of a clear road map. We focus on continuous improvement across several fronts. From an execution standpoint during 2021, we will reduce drilling days per well by 27% compared to 2020, and increase completion efficiency to 8.2 stages per day. We have also captured saving and completion fluids through the application of the right technologies as well as close collaboration with our service providers. In terms of procurement, we have achieved savings through the reduction of drilling and completion service rate as well in water and proppant purchases. It is worth noting that these are permanent savings already built into our cost base. In terms of productivity, our wells continued to perform above our type curve of 1.5 million boe of EUR for the first 180 days our average well considering our 32 wells is 6% above type curve. For the first 360 days, considering our first 20 wells, our average well is 9% above type curve. Our productivity and cost results have driven our development costs down to a highly competitive $7.3 per boe, a cornerstone of our high return short-cycle growth plan. During 2021, we continued to strengthen our balance sheet. Cash flow and operating activities was a robust $401.4 million, up 328% compared to 2020. Cash for an investing activities doubled year-over-year to $295.5 million, mainly driven by the increase in drilling and completion activities in Bajada del Palo Oeste. This result in a positive free cash flow of $105.9 billion, reflecting a clear turning point in our operation when compared to the negative $62.3 million in 2020. Based on our highly efficient cost structure, and with conservative rely prices in the $60 per barrel area, we are on track to deliver superior total shareholder return through profitable growth and free cash flow generation. Our successful activity in the Argentinian depth market was a key to refinance 2020 maturities, extend debt duration as shown earlier and reviews the average cost of debt to 5.8% at year-end 2021 from 6.9% at year end 2020. Finally, the expansion in adjusted EBITDA, which are shown early increased by three times inter-annually, led to an steady reduction in net leverage ratio from 3.5 times at year-end 2022 to a healthy 0.8 times at the end of 2021. I will now give you some additional color on our ESG progress. On the environmental front, we achieved significant milestones in relation to our emission reduction plan. During 2021, we finalized a study to determine our greenhouse gas emissions for 2019 and 2020, which constitute the best line against we will measure progress. We also completed our abatement cost curve, a tool that is key to prioritize projects aimed at reducing our operational footprint and outline our road map to net zero. We are currently executing several projects from these portfolio. We captured cube wins in 2021, we lead to a reduction -- 14% reduction in absolute scope 1 and 2 greenhouse gas emissions. Even as a total production increased 46% year-over-year, these led to a 39% reduction in intensity to 24.1 kilos of CO2 per boe. We have our line a plan to reduce emission in our operation by 35% through 2026. We also kicked of projects for our own portfolio of natural based solutions to offset the remaining CO2 emissions with implementations of forest and soil carbon sequestration. The combination of these two plus dive our ambition to became net zero emissions in 2026. Moving to the social front, we have made good progress regarding our people and the communities in which we operate and live. The safety of our employees and contractor working in our operation continues to be our main priority. In 2021 total recordable incident rate was 0.29, improving on the 0.38 rate record in 2020, which was already well about Tier-1 international oil and gas standards. In terms of diversity, we continue with implementation of our gender program, which comprehensively address multiple fronts such as hiring, mentoring, and advancement, training and awareness. A new policy is focused on diversity, equity, and inclusion. As an example of our progress and ambition target, during 2021, 60% of our new hires were women. We made good progress in strengthening our local supply chains. In 2021, the total value of local purchases was $78 million, reflecting a 56% increase year-over-year. The share of the local supplier increased to 21% of total purchases. We continue to invest in social infrastructure in Cartiel. During 2021, we completed the first phase of an 8 kilometers bicycle lane, assigned company premises for children's productivity and sponsored a local female table tennis player. In some of governance, we made a good progress in reported not only by ensuring our -- I now would report last April. We are working closely with our board, which is engaged in activities through the corporate practice committee. Finally, we are showing leadership in the region, having disclosed our net zero ambition in our Investor Day in December. We look forward to publishing our net report in May 2022. In 2021 we establish an internal cargo price of $50 per tone of CO2 equivalent to reflect the cost of emission in strategic planning and capital allocation exercises. Finally, we also trending in governance by issuing policies related to human rights, conflict of interest and anti-corruption, and training staff to continue improving awareness. On January 17, we had acquired a 50% working interest in Aguada Federal and Bandurria Norte concessions from Wintershall there. This mean we are now our operators and sole concession holders of both blocks. These a payment of $90 million in January, while an additional $50 million are due in eight quarterly installments. The transaction effectively canceled the carry consideration of $77 million assumed when we acquired the initial 50%. So the implied valuation of the deal is approximately $2700 per acreage, which is significantly below historic M&A multiples in Vaca Muerta. Through the combined deals with Conoco in September and Wintershall in January, we have added more than 50,000 core Vaca Muerta acreage and 300 new well locations to our inventory. Being the operators of the block, we expect to quickly replicate the successful operating model of Bajada del Palo Oeste, capturing synergies to reduce lifting cost and D&C cost. Also being owners of 100%, we will regain additional flexibility in our development plan. We have already taken control of the blocks. We are now integrating the asset with this operations, gaining full advantage of the senior ships we can capture using existing groups or certain services, some procurement. These projects are forecasted to reduce the block lifting costs to single-digit during 2022. We are building a pipeline to connect our welfare add to part number five located in the northwest of our Bajada del Palo Oeste. Despite lines affected to become operational in the second half of the year, allowing all evacuation equation of the three producing work in our Aguada Federal throughout our Bajada del Palo Oeste cluster. This will lower transportation and training costs and eliminate the carbon footprint of the track currently used for transportation. We are also planning to complete four already drilled but uncompleted wells in Aguada Federal in Q4 2022. In 2021, we delivered a strong performance across all key financial metrics. Realized crude oil prices improved 48% year-over-year from $37.2 per barrel in 2020 to $54.9 per barrel in 2021. We exported 3.1 million barrels of oil, which represent 28% of oil sales volumes in 2021. Over the same period, total revenues increased by 138% from $274 million to $652 million. Higher revenues combined with a reduction of lifting cost, described earlier, led to a boost in adjusted EBITDA, which quadrupled to $380 million for 2021, exceeding our guidance of $370 million. Return on average capital employed was 70% in 2021. A significant turnaround considering that the minus 5% recorded in 2020 and reflecting solid execution of our profitable growth plan. Adjusted net income is showing the same trend with $79 million in 2021, vis -a - vis, a loss of $150 million recorded in 2020. These results leave us well on track to deliver on the five-year plan we laid out in our last Investor Day. I will now present our updated guidance for 2022, which reflects a more contracted view across key metrics and incorporate activity in Aguada Federal. We expect to tie-in 24 new wells during the year. Most of their activity is planning Bajada del Palo Oeste where we will tie-in 16 wells. The first four well path it's planned to be tied-in during April. To fulfilled pilot commitment in unconventional concessions, we are currently tying-in two wells in Bajada del Palo Oeste and we plan to drill, complete, and tie-in two wells in Aguila Mora. Finally, we plan to complete and tie-in the four wells that we are already drilling in Aguada Federal. This well program is forecasted to deliver a solid production growth of approximately 20% year-over-year, leading to an average between 46,000 and 47,000 boe per day for 2022. We forecast the exit rate to be around 50,000 boe per day. We expect lifting costs to remain flat at $7.5 per bOE, including Aguada Federal and Bandurria Norte. We have the right projects in place to adapt that quite a block to Vista lifting costs standard and also offset the slight inflation we are seeing in Sanofi's services driven by the appreciation of the best in real times during the second half of 2021. We expect adjusted EBITDA to reach between 550 and 575 million an inter-annual growth of approximately 48%. This forecast is based on an average realized oil price of $60 per barrel. We are planning to export 5.5 million barrels of oil, which represent 40% of our crude oil sales, an increase of 77% in exporting volume year-over-year. As a reference, if the Brent averaged $90 for the remainder of the year in line with the spot prices, it adds approximately $50 million of adjusted EBITDA. Capex guidance is in the range of $375 million to $400 million, reflecting additional activity in Aguada Federal. This Capex is partially front-loaded during the year as we build infrastructure for our new production, impacting free cash flow in the first two quarters. For the full-year, we continue to expect positive cash flow. Finally, we expect to reduce gross financial debt from $611 million at December 2021 to $575 million forecasted as of December 2022. To wrap up, during 2021 we have seen solid operating performance delivering on activity production, lifting costs, and adjusted EBITDA guidance. We expanded proved reserve by 42%, driven by the strong performance of Bajada del Palo Oeste. We also added 300 new well locations to our inventories through M&A activity in Vaca Muerta. We successfully refinanced debt maturities, extending average debt duration and lower average cost of debt. Our balance sheet was further strengthened with the reduction in net leverage ratio to 0.8 times. We delivered a strong financial performance, recording a 70% return on average capital employed and an adjusted net income of $79 million. We'll reinforce commitment to sustainability with solid progress and reducing emissions. We re-use absolute greenhouse gas emission by 14% year-over-year and laid out a comprehensive plan to become net zero in 2026. We have laid out an ambitious set of target for 2022, as shown in our guidance. We expect to continue delivering solid improvement across key operating and financial metrics. In short, 2021 was a turning point for our company, initiating a clear part of a strong total shareholder return. In this respect, we plan to submit for shareholder approval at $20 million share buyback program in our next general shareholder meeting, expected to take place in April 2022. I will now take a moment to thank our investor for their continued support and interest in our company. I will also like to thank all this stuff at Vista for their hard work during 2021, which was a key factor in delivering the results showing today. And with that, Operator, please open the line for Q&A.

[Operator:]

Our first question comes from the line of Bruno Montanari from Morgan Stanley. Your line is now open.

[Bruno Montanari:]

Good morning, everyone, and thanks for taking my questions. I have three quick ones. I think looking at the guidance, it looks very achievable and we know that the company has been able to deliver and over-deliver on the guidance. So just wondering what would lead to upside in production and margins for 2022? Wondering if there is any room to accelerate drilling. The second question is about the capital structure. How would we think perhaps about either a fast prepayments of debt or an increase in shareholder remuneration. So how do you find that balance to be when looking at the capital structure? And last, what are you seeing recently in the industry in terms of cost and Capex inflation? If there is any specific bottleneck because of that for your activities in Argentina? Thank you very much.

[Miguel Galuccio:]

Hi, Bruno. Thank you for your question. And thank you for your comments. So starting with the first one as a source of acceleration. Yes, definitely we have did portfolio of opportunities and locations that we can use. I will set for this year sources acceleration that we are not planning yet to use, but we have it and we have it in mind. And we shall have the discussion internally. Our one hour federal where so far we are shut planning to complete the fourth tax that we have there and we believe that is a low-hanging fruit and also an area that is near to our main center of operation that is Bajada del Palo Oeste that of course we believe is going to give us flexibility and potential to grow from the development plan point of view. And the other is the possibility of adding in Bajada del Palo Oeste, and I will say not early than the second half of the year. Again, that is not in the plan. These are a potential way of accelerating related to your question. In terms of debt, we are not planning to prepay. We're planning to review debt when the maturities due. First, as we have announced we will reduce from 611 our debt position that we started year-end 2021 to 575 at year-end 2022. Us, as we announced in December, that also we are planning to take their depth farther around to $400 million, and that's -- we will see how we move on that. As you know, we have restriction -- cross-border restriction and the idea is first to reduce our cross-border debt. I think we will give that priority to that and then be flexible in how we distribute back to shareholders through different means. Of course, one, is that we are announcing today is the buyback program. clearly pressures in the industry years, definitely there is pressure in the industry. Now, we don't see that pressure in the industry today from prices of services to be a bottleneck. We have long-term contracts and long-term relationships with our main contractors, so really, we don't see a bottleneck there. Infrastructure is not about the nature of it but I think it's something that we need to keep being very proactive in Argentina. Particularly, to make sure that we continue upgrading that pipeline and that facilities, since the rate of growing in Vaca Muerta have been proved during the last two years to be good one. So we should keep an eye doing that. So what was the other question? No, that was --

[Bruno Montanari:]

Thank you.

[Miguel Galuccio:]

Thank you.

[Operator:]

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

[Andrés Cardona:]

Good morning, everyone. And thanks a lot for the presentation. Miguel, congratulations on the results on both sides, on the financial and the reserves front. I have two questions. Maybe the first a followup from Bruno's question, about how to accelerate the 2022 guidance? You mentioned some alternatives, but my question is what do you need to trigger those optionalities? And if the facilities that you currently have in place are enough or are becoming a bottleneck? And the second question may have to do with the talks that the IMF and the Argentinean government are taking place. It seems they are getting closer to reach an agreement. And my question is, if you may expect change at the capital controlled front or do you think it will remain in place for longer? Thanks and congratulations again.

[Miguel Galuccio:]

Thank you Andrés, for your question. On the first one, related to acceleration in terms of context, like we've said the -- what we need in order to put that in operation, we have it. We have access to . We have our internal infrastructure, is ready. We have facilities and we spare capacity to allocate further grow during this year. I think what is going to determine if you will really accelerate the plan or not is going to be the context. As you see, we are basically coming in Q1 better than we planned context-wise, meaning pricing, exportation, and the rest. So I think that is going to be key. I mean, how we see the context playing. I was at export pricing, yes. In terms the of IMF agreement, I believe it was required and understand is on the way to be perfect it. So I mean, good news for Argentina in that front. If that is going to reset affect controls, EFI controls to me are related to lack of foreign currency. We need to see how the economy roll out after the IMF agreement, which other economic measure the government take. And that's how we change that access to currency. But I mean we are not betting that that is going to drastically change very soon. Hope I answered your question, Andrés. Thank you.

[Andrés Cardona:]

Thank you.

[Operator:]

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

[Regis Cardoso:]

Hi, Miguel, Alejandro. Thanks for taking the questions. One of the questions going back to the return shareholder topic, I just wanted to think of dividends, buybacks, other ways you could get returns back to shareholders in light of not just your investment plans, but also in light of the capital restrictions, ready access to dollars. Is there anything, for instance, the hydrocarbon law that was proposed a while back that would allow you to keep part of the export revenues? Is there any trigger, something like I need to be exporting X amount, and then I need to have at least X percent of revenues? I mean, what would be necessary for you to actually be able to distribute cash to shareholders and is it just to be sure if it's dividends or if you do buybacks. The same logic applies. And then if I may ask a second question about the lifting costs went up a little bit this quarter to $8 per barrel probably, partly explained by the new asset additions. So I just wanted to get a sense of how do you see these -- the lifting cost going forward on a consolidated basis. Thank you.

[Miguel Galuccio:]

Thank you, Regis, for your question. Yes, as you mentioned, we have restriction in Argentina and also we have part of our cashing dollars, as you know. We have decided that the more effective way of getting back to investor at the moment and in the current condition, with a buyback program that we will launch now in April. We have partial access to dollar currency to repay debt. So also, we believe we are doing and we will continue doing that is good to gradually continue reducing the . That is how we believe is weak. We could make the best use of our proceed today under the current conditions. As you mentioned, I mean, I think there is a win-win for the industry and for the country in having a program that somehow is the restriction based on investment and based on the capacity that today we have to kind of proceed cross border to exportation. Definitely will be pushing. We are vocal about that because it's a no - brainer and it's a win-win for country and the industry. I don't think we need a law, but I hope at some point of time, there's a kind of a scheme of program that will allow us on the under country to take advantage of that opportunity that we have. I will set I mean, I cannot farther comment on that because there's nothing concrete yet to date. In term of lifting costs and yes as you mentioned, with that rescission of our Aguada Federal, we anchorage, we are at low opportunity and also we brought an area that's of high lifting cost. The current run rate today of OPEX expenditure, there is around $20 million. We have a target to reduce that at the end of 2022 to approximately $7 million. What it means, we want to take that lifting cost that today is quite high, to take it to a single-digit number by the end of the year, where we're planning to do what we are today first, per initiatives is to eliminate the trucking. So we will be led by line that connect Aguada Federal to Bajada del Palo Oeste. I don't know I'd say 10-kilometer pipeline. So it's not a big deal. We will use the treatment plant of Bajada del Palo Oeste cluster. and also we will use existing contract for chemicals, security, safety services, everything that we have in place. Lifting cost one of the we add more locations and we add more production, we managed to reduce that and we will take advantage of that. So yes, we are working on that, the impact on our lifting cost today is marginal. Nevertheless, nothing, as you know, we will tackle, we will reduce it. And if we achieve our plan, our lifting cost at the end of the year will be close to probably $6.5 per barrel. So we are on the case.

[Regis Cardoso:]

Very clear. Thanks, Miguel, for the answers.

[Operator:]

Thank you. Our next question comes from the line of Walter Chiarvesio from Santander. Your line is now open.

[Walter Chiarvesio:]

Hello, good morning. Congratulations for the results and thank you for taking my question. Actually, was quite already answered. But to follow-up with with the well drills in the other blocks out of PBO, I understand this doesn't mean that the kickoff was more massive development in these new blocks, especially in Aguada Federal. Is that correct? It's my first question. This is more testing wells, or pilot wells rather than drilling more and the focus will keep being BPO in the short-term. And what is the productivity that you expect in these new blocks compared to Bajada del Palo Oeste. That's from my side.

[Miguel Galuccio:]

Thank you Walter for your follow-up question. Yes. Well, you said this correct. I mean, we are not planning yet for development of our . We are completing four wells that were drilled, a non-complete. We are basically not given where we are going to drill those wells. We are going to complete as well, that means fracking those wells and put on production. Lay the pipeline to tie-in those wells directly to the facilities that we have in behind but this is what we are planning at the moment. Do we -- if it does work, are good works. What sheet that nothing that made us think that area is different to what we have. It will be for sure good quality. But of course those well, the bank, how they've been really, how well, let me in land, how they are completed on song. We will be really responsible for the completion with didn't place it was so any way we are positive about the results. And of course, after we see the performance of the well, yes, there's potential to do more in Aguada Federal is the Location is prime and is neighbor of Bajada del Palo Oeste. It's a natural place to grow. The rest is these two wells in Bajada del Palo Oeste that we are cleaning up right now and we are not planning to drill more during this year there. And then we have two wells in . That is further north that also is shut these two well. So again, back to your question we could add Bajada del Palo Oeste. And yes, our FETA engage those four wells that we complete are very good. He also -- he give us an upside to grow more if we need it.

[Walter Chiarvesio:]

Perfect. Thank you very much.

[Miguel Galuccio:]

You're very welcome, Walter.

[Operator:]

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

[Oriana Covault:]

Hi, this is Q - Oriana Covault from Balanz. Thanks for taking my questions, and congratulations for a good quarter. I had a couple of followups. First and foremost, just to ratify, the Capex guidance for 2022 is already including the acquisition of the remaining 50%, the $375 million to $400 million that you are putting in your presentation. That's on one end. The second question that I had is that it's our understanding that refineries might be running at higher levels this year, and that this could impact export levels. So just we were wondering what is your take on this and is it reasonable to say that we would be expecting lower export levels this year, but kicking off to 2023. And last, in your ESG strategy you could further elaborate on these natural based solution portfolios and what are you doing? Those details would be great for us. Thank you.

[Miguel Galuccio:]

Thank you, Oriana, for your question. So the first one, but it's your affirmation on GAAP is correct. So include shuts activity on Aguada Federal, the CAPEX does include the buying of the area. Okay. Related to export level, and I think if I understand your question correctly, maybe the option of the refineries or their willingness of the refinery to load a refining a bit more to create some related to whatever for the local market. Look at, I mean, yes it could happen. I think most of the refineries around by operators are fully integrated. So really if the refinery decide to take local prices or to push local prices against export prices, that volume that we can afford to clear soup broke to subsidize the local market. If they do that, integrator like why BK YPF or others, I mean business wise they are shooting in their foods. And I don't think that is good business, good business practice. It could happen, could happen. If it happens, they are no managing the business well. Related to your question on sustainability, so just to put in context a bit, so the sustainability program. We find the best line in 2020 with our actuarial baseline was 420 tons, around 39 kilograms for CO2 -- of CO2 per boe of intensity. This year we managed to take this 420 to 360, and intensity from 39 to 24.1. As we mentioned, 14% and 39% reduction. Further down to 2026, we want to take it to 265 in absolute number of Co2 and our intensity to 9, that will be intensity wider reduction of 75%. And the rest, we announced that is going to be offset through MBS. That MBS initiative company is have been put in place, things are in place. And actually we are working in their portfolio of what we are going to address this year. I cannot disclose much yet because I think it's not time to disclose. But just for you to have a view, we will tackle from that portfolio around four projects this year. Projects have been somehow identified and we are working on that. As we have more concrete news we will update you. But this is everything I can say at the moment. So we have created structure and we have a team in place. And basically, we are going through the main priority within our portfolio and we will have actual project up and running this year.

[Oriana Covault:]

Perfect. Thank you very much.

[Miguel Galuccio:]

Thank you.

[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. My question for you today concerns evacuation capacity for oil. How much spare capacity does Oldelval have as you mentioned now? And how does it affect your expansion plans on Bajada del Palo Oeste and on Aguada Federal? Do you think we could expect Vista to use its cash to buy stakes in trunk lines so as to integrate operations, now that export starts growing and become a significant portion of your revenues? Thank you very much. Did you receive my question?

[Miguel Galuccio:]

We received your question. We started to answer and we were in mute. So related to your question on track pipeline and Oldelval. Yes, definitely Oldelval today -- first of all, today we have no the capacity issue. Oldelval try-and-buy line currently have the capacity of 225,000 barrel per day. They are planning an increase to 265,000 in the first date, adding some station. And then, also we understand there is another plan to farther upgrade the facility to 375,000 with pipeline and so on. One is, it will be executed more in the short-term. The other one, it would take a bit more time. So my comment on that is that we don't have today a capacity for evacuation problem, but we need to act because everybody is growing. We are not planning at the moment you take any taking on Valhalla, I don't think given we have the opportunity to to do so. So answering your questions, we don't have today -- nothing on the table to be bought of the management on all the guidance.

[Constantinos Saprias:]

Thank you very much.

[Miguel Galuccio:]

Welcome, Constantino.

[Operator:]

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

[Miguel Galuccio:]

Ladies and gentlemen, thank you very much again for your question, your interest and follow-up on reports on Vista. So have a good day and looking forward to see you next quarter.

[Operator:]

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