Vista Energy SAB de CV (VIST) 2019 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Vista's Third Quarter 2019 Earnings Conference Call.

(Operator Instructions) Please be advised that today's conference is being recorded.

(Operator Instructions)

I would now like to hand the conference over to your speaker today, Alejandro Cherñacov, Investor Relations Officer.

Thank you.

Please go ahead, sir.

Thanks.

Good morning, everyone.

This is Alejandro Cherñacov.

We are happy to welcome you to Vista's Third Quarter 2019 Results Call.

I am here with Miguel Galuccio, Vista's Chairman and CEO; and with Pablo Vera Pinto, Vista's CFO.

Before we begin, I would like to draw your attention to the cautionary statement on Slide 2, which concerns all of the information contained in the presentation materials as well as the statements made on this call.

Please be advised that our remarks today, including the answers to your questions, may include forward-looking statements.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from expectations contemplated by these remarks.

More information on forward-looking statements can be found here on Slide 2.

Our financial figures are stated in U.S. dollars and in accordance with International Financial Reporting Standards, IFRS.

However, during this conference call, we may discuss certain non-IFRS financial measures such as adjusted EBITDA.

Reconciliations of these measures to the closest IFRS measures can be found in the earnings release that we released yesterday.

Please check our website, which can be reached at www.vistaoilandgas.com for further information.

Our company, Vista Oil & Gas, is a Sociedad Anonima Bursatil de Capital Variable organized under the laws of Mexico, listed on the Bolsa Mexicana de Valores and the New York Stock Exchange.

The ticker of our common stock listing in the Bolsa Mexicana de Valores is VISTA and the ticker of our American depositary shares listed on the New York Stock Exchange is VIST.

The ticker of our warrant is VTW408A.

Miguel Galuccio will now present our third quarter 2019 results.

Good morning, everyone.

Thank you for showing in this call, in which we will present Vista's third quarter 2019 results.

Once again, results of our Vaca Muerta development in Bajada del Palo Oeste block exceeded expectations reaching 10,000 barrel of oil equivalent per day in mid-August driven by the tie-in of our second 4-well pad.

This boosted our total production, which increased 31% year-on-year.

As we will show later during this presentation, we are confirming that well productivity in Bajada del Palo Oeste is among the best of the basin, performing in line with the top wells in Vaca Muerta history in terms of well productivity.

Furthermore, based on the information from the Argentina Secretariat of Energy of August 2019, Vista became the second largest shale oil producer in Argentina.

Despite this outstanding performance in mid-August, we decided to temporarily suspend our drilling and completion activity in Vaca Muerta in response to the Argentinean government decision to arbitrarily freeze oil prices at a pre-evaluation exchange rate through a Presidential Decree 566.

We are carefully preparing our plan for activity ramp-up as soon as the regulator conditions provide for better realization prices.

In the third quarter of 2019, our production was 31,600 barrel of oil equivalent per day, 31% above the same quarter of the previous year, boosted by the production of our first 2 pads in Bajada del Palo Oeste.

Net revenues reached $105 million with higher sale volume offset by lower realized prices of crude oil and natural gas.

Adjusted EBITDA of the quarter was $46.6 million, reaching a robust adjusted EBITDA margin of 44% despite relatively low realization prices.

We closed the period with a solid cash flow position of $241 million including gross cash proceeds of about $200 million from our IPO in New York Stock Exchange and the placement of corporate bonds in the Argentinian market.

Net debt as for September 30 was $207 million, resulting in a healthy net debt leverage ratio of 1.2x LTM adjusted EBITDA.

I will go into more details regarding the above-mentioned metrics in the following slides.

Our total quarterly production was 9% above our previous quarter and 31% above the third quarter of 2018 when we start drilling our first pad in Vaca Muerta.

Our production grew an impressive 37% year-on-year, showing the acceleration potential of our Bajada del Palo Oeste project where oil is approximately 90% of the total production.

Natural gas production grew 22% year-on-year, impacted by the associated gas from our Vaca Muerta shale oil wells.

Moving on to Slide 5. Our third quarter revenues totaled $105.4 million, 10% below Q3 2018 and 12% below the previous quarter, mainly driven by lower realized crude oil and natural gas prices.

Crude oil realization prices was $48.7 per barrel, 28% below Q3 2018.

During the first half of the quarter, realization prices was $55.5 per barrel, impacted by a lower Brent prices and the introduction of an export parity based formula.

Additionally, during the second half of the quarter, realization price was $42.5 per barrel as a consequence of the Presidential Decree 566, which imposed a [9-day] price freeze in local currency on crude oil.

Average natural gas price was down 31% vis-à-vis the third quarter of 2018, mainly due to the current gas oversupplied in domestic market and the effect of the local currency devaluation on realization prices from gas distribution companies, which is regulated.

We now move to OpEx.

As shown on the first chart, the total operating expenses for the quarter were $28.4 million, 8% above Q3 2018, mainly as a result of increasing activity in Bajada del Palo Oeste.

More importantly, the second chart shows OpEx per barrel of oil equivalent, which was $9.8, 19% below previous quarter and 17% below Q3 2018.

This year-on-year reduction is the result of Vista's unique combination of assets, which enabled us to launch a Vaca Muerta project using the existing infrastructure and field services of our conventional assets with minimal incrementing costs.

Vista's effort to rightsize this operation since our takeover is paying off as evidenced by the strong cost reduction achieved as compared to the pro forma lifting cost of this asset, which was $70 per BOE in 2017.

Moving on to Slide 7. Our adjusted EBITDA for the quarter was $46.6 million, and our adjusted EBITDA margin was 44%, increasing 1 percent point with respect to the previous quarter despite the lower realized prices, which were offset by the reduction in lifting costs and increase in shale oil production.

During Q3 2019, we significantly strengthened our cash position, thanks to the successful IPO and the [bond] placement in the Argentinian market mentioned earlier.

As a result of these events, cash from financing activities was $164.3 million.

Cash flow from operating activities in the third quarter was $62.9 million, and cash flow from investing activities was negative $60.4 million.

As a result, cash balance at the end of the third quarter of 2019 was $241.3 million, coming from $74.5 million at the end of Q2 2019.

Total financial debt stood at $448.1 million.

Our gross leverage ratio was 2.6x LTM EBITDA, and our net leverage ratio was 1.2x LTM adjusted EBITDA.

Finally, I would like to mention that September 11, the Board of Directors of Overseas Private Investment Corporation, OPIC, a U.S. government agency that promotes investment in the emerging market, approved a $300 million loan facility to Vista to fund our Bajada del Palo Oeste project.

The closing of this financing is subject to customary conditions present, and we are currently working on a definitive documentation to have funding available during the first quarter of 2020.

Moving on to Slide 9. I am thrilled to share with you the latest data regarding the performance of our wells in Bajada del Palo Oeste.

In August, we finished drilling our third 4-well pad with excellent results in terms of drilling efficiency.

As the top left chart show, we improved drilling speed by 55% and reduced our cost per foot by 20% vis-à-vis our first pad.

Production results of our second pad are proving to be even better than our first pad with peak IP-30 at 1,660 barrels of oil equivalent per day on average.

The new wells from this pad are, on average, 34% above our type curve for the first 95 days of production on a cumulative basis.

Our first pad is also showing a solid production performance, being 20% above our type curve for the first 215 days of production on a cumulative basis.

In the previous slide, we compare our Bajada del Palo Oeste wells against our own type curve.

We now compare against actual production from other Vaca Muerta wells.

This chart shows the top 150 shale oil horizontal wells of Vaca Muerta by cumulative production of the first 90 days, and I believe we summarized, like no other, Vista's ability to deliver outstanding results.

Not only all of our wells ranked in the first 2 quartiles, we have also drilled the most productive wells and the third one in Vaca Muerta up to date.

Moving to our last slide, I would like to share with you some key messages.

First of all, the fact that our Vaca Muerta project kept delivering productivity results above our type curve and continuous progress in our drilling and completion performance.

Also, we significantly reduced lifting cost to less than $10 per BOE by leveraging unconventional production ramp-up with our existing conventional assets at a minimum incremental cost.

Adjusted EBITDA margin was a solid 44%, 1 percentage point above previous quarter, driven by incremental Vaca Muerta production volumes and a significant decrease in lifting costs, which offset the lower realized prices.

Finally, I would like to highlight the fact that we managed to react quickly to the sudden change in market conditions following the price control imposed by the Argentinian government by stopping our unconventional drilling and completion activity.

We delayed the completion of our third pad, which will no longer expect to be tied in during 2019 as previously planned.

As a result of this, we have updated our production guidance for the current year.

We now forecast average daily production of 28,000 to 29,000 BOEs per day.

Adjusted EBITDA is forecast to be in the $160 million to $180 million range on an annualized basis depending on the bit of recovery of our oil price after Presidential Decree 566 expires or if the Argentinian government decides to extend price regulation to year-end.

We are carefully reviewing our plan to resume activity as quickly as possible as soon as regulatory conditions provide for better realization prices.

Capital expenditure is forecast to be between $225 million and $275 million on an annualized basis depending on whether we resume drilling and completion activities in Q4 2019 or we postpone it to Q1 2020.

To conclude the first part of this call and before opening the line for questions, I want to thank the entire team at Vista for their hard work and commitment and our investors for their continuous support.

We will now open this call for Q&A.

(Operator Instructions) And our first question is from Regis Cardoso from Crédit Suisse.

I wanted to discuss a little bit prices because, I mean, third quarter results were outstanding from an operating perspective.

I mean, production is ramping up, very promising results from the wells.

Yet the financial results disappointed, mainly on the back of prices, right?

So my question would be what do you think is realistically right?

What do you think would be the ideal path forward?

Is it something that relates to export tariffs?

Is it something that involves prices gradually...

(Operator Instructions)

Regis, are you there?

I think, [Gigi], we lost Regis.

Maybe we can follow-up with the second question, and we wait for him to dial in again.

Our next question is from Bruno Montanari from Morgan Stanley.

So good to see some very encouraging performance of the wells.

Just wondering what differentiates the 2 best performances as shown on Slide 10 from the other ones more in the middle of the pack?

Is this most geologically driven?

Or were those wells drilled and completed differently to achieve the better performance?

And also wondering if the new wells to come online in the future will have similar features to the -- to those top 2?

And then second question, quickly, I just wanted to understand the company's strategy for the remainder of the year and into 2020.

In case of a scenario where the price normalization takes place rapidly, how quickly can you reactivate the rigs and then ramp-up your spending?

All right.

Thank you, Bruno, for the question.

Look at -- first, related to the performance of the well, I think what you see is clearly a result of probably 2 or 3 things.

The first one is that clearly we are in a good place in Vaca Muerta.

I mean, the decision and the block of Bajada del Palo Oeste is second to none in terms of quality of oil and quality of the rock.

This is clearly the case.

We could have a doubt at the beginning.

Today, there's no more doubt about that.

So the natural of the resource is pretty good.

Second, I think you can differentiate between the upper organic and the kitchen as 2 clearly different level of productivity.

And third is related to the way that we have managed our completion, navigation and position of the well.

I think the key strategy that we have adopt in the way of trying to minimize any kind of interference is paying off.

I think the placement of the wells using power drive as a tool to really navigate the rock in the best location, well placement and also performance on the drilling side is paying off.

And third, the completion strategy that we have moved from the completion strategy in our first pad with what we already were aggressive because we went through 75 meter stages with 10 clusters, but for Vaca Muerta, that was probably high density at that time and 34 stages.

We moved to 60 meter stages, same number of cluster, and 45 stages in a well of 2,700 meters -- 2,100 meters, and now we are moving to 60, 10 with 45 stages and 2,700 meters.

That is the plan.

So the completion strategy is clearly moving into a more high-density mode as we move into the different pad.

And you can see between the first pad and the second pad, the result is quite encouraging.

So that also is showing that we -- our completion strategy is paying off.

And four, and probably the most important thing, we managed to execute all those strategies because -- I mean, you could see that sometimes you have a strategy, but that operator didn't manage to drill the full length of the well or they didn't manage to put all the stages or they didn't manage to perforate all the clusters.

Our operation, in that sense, has been flawless.

The second question is how prepared we are to restart up?

Super prepared.

We review -- we work on our restart plan in daily basis.

We are trying to make up this situation that is not good an opportunity, and the opportunity has been around the OpEx, as you see, but also is around the CapEx.

So we are working with the service providers in order to have a better contract alignment in order to have better CapEx.

But at the end of the day, we know in the long term, it's part -- it's important part of the game.

So we have one -- the main rig that provides us the ability to drill horizontal wells, it's our neighbor rig.

That neighbor rig is in standby.

So we can start that rig anytime.

We have the frac site from Schlumberger where we are rediscussing even more alignment into the contract in hand, and we have our completion team and drilling team taking advantage of this moment to review every single item in order to basically restart operation with better performance than the one that we have.

So we are ready.

Our next question is from Regis Cardoso from Crédit Suisse.

Sorry, everyone.

I think the line cut.

So the first question was in regards to the path forward in terms of price normalization.

I mean, realistically, what could we expect?

I mean, what do we need to see so that you would resume activity in terms of price normalization, export tariffs, capital flows, export authorizations, (inaudible) accounts?

I don't know.

What needs to be in place so that you can move forward with the plan?

And then assuming that, that doesn't happen, right?

What is the contingent plan?

How low can you go in terms of CapEx expenditure so you guarantee that you don't -- I mean, that you wouldn't invest in wells that would produce at a too low oil price environment so it doesn't return -- so it doesn't give the appropriate returns?

Thank you, Regis, and good question.

So look, in terms of pricing, I will say that clearly, first of all, from the macro point of view, let me start with the big picture.

I think from the macroeconomic point of view and from energy security point of view, there are 2 very important reasons for whoever is the government in the next period for Argentina to really putting value of Vaca Muerta.

I will say from the macroeconomic point of view, because whoever is there and manages the economy, it will need U.S. dollars.

And the main source of U.S. dollar -- of new U.S. dollars in Argentina, when you look around, there are no many new sources.

Probably, the main source is Vaca Muerta in 2 dimensions.

One is investment, and second is the huge capacity that today in 2019 Vaca Muerta has of making Argentina a net-like crude oil exporter.

The second aspect, I think, is energy security.

I still remember in 2012 when I went back to the country, we were in a situation where we have very expensive gasoline.

And the very expensive gasoline came from the fact that we need to import to sell, okay?

So the one thing that is worse of having expensive gasoline is not having gasoline.

So I would say from the macroeconomic point of view, whoever is sitting in the driving seat of the country, he will see Vaca Muerta, I guess, as an opportunity.

Now in term of pricing specifically, I think there are 2 aspects of this.

First of all, we need to see normalization of the local crude oil prices within the country.

I will say the normalization toward to import parity and toward to import parity mean that we need to get there some time.

That doesn't mean that we are going to get there tomorrow, okay?

That is going to be gradually.

And second aspect is I would say that we have this big opportunity of [becoming] net exporter.[All have to happen].

I think there are 2 situations that today I will not say part of the policy, but are measurements that have been taken.

And most -- these 2 measurements are not long-term measurements that are [hurtful] to our industry.

The first one is the export tax.

And not only the export tax, the decree that allows the refineries to close exportation of oil and gas producer, a situation that has not -- I have not seen in my 25 years of experience anywhere else in the world.

That has to be reviewed, definitely.

And second, the -- and second, the 566 decree that freezes oil prices and not only that freezes, it [pacifies] also something that we have not seen in the past in Argentina.

These 2 measurements have a due date.

The first one was done for 2 years with a peso formula in terms of export tax.

And the second one has 90 days.

So it will expire in a few days, okay?

So therefore, as we said, the path forward is normalizing local crude oil prices toward to import parity and second, getting -- making the opportunity of becoming a net exporter in reality.

That 2 things, I think, will be good for the country and will allow us to go full speed.

And just in case that doesn't happen, what could you do in terms of CapEx to -- I mean so that you're not investing to produce at an oil price of $40 when elsewhere in the world it's $60?

Look at, Regis -- I mean, we see our company, and we've been proving in a very strategic plan that we've been executing the value of Vista.

And the value of Vista today in terms of business [thesis], I would say, it is pretty much proof on the sense that we know where we are, and we are in a top-quality reservoir shale.

Second that we can realize that value because we have the ability to execute.

And this is basically Vista team.

I think we have the best management team in the region by far.

And it's not because I'm saying, it's been proved by result.

And second now, it's just a question of having the conditions to realize that value.

Now we are not going to destroy value if the conditions are not there because the results will be there for long.

So we will be patient.

We will be smart, and we will turn the machine in when the conditions are there.

Otherwise, we will wait.

Our next question is from Pedro Medeiros from Citibank.

Can you hear me okay now?

Yes.

Now it's okay, Pedro.

Okay.

I was having technical issues.

Okay.

Well, first of all, Miguel, team, congratulations on the results, okay?

I think they were quite good despite the challenging above-surface conditions for the quarter and for the continued progress in the shale drilling and I think production performance, okay?

I have a couple of questions.

They're mostly follow-ups to the previous questions, okay?

And the first one, when we look at Slide #9, and you put out -- you laid out a graph showing the improvement in drilling speed and drilling cost and average performance per well between the 3 drilling pads, I wanted to understand this as perhaps the storyline, okay?

When we look at pad #2, it's showing better performance even though you have drilled, well, shorter lateral lengths with shorter frac spacing and greater density.

When you -- when we look at the third pad, it seems that you are now jumping to a longer lateral length and keeping up with the frac business and the higher density fracs that you used in the second pad, and you showed a significant decline in drilling costs.

So I just wanted to understand, is this somehow like a testing mode to see the best well template that you guys want to use for most of your drilling locations?

Or is this very specific, customized solutions for each drilling pad and the geology underneath?

So I can understand how we can continue to see progress in terms of your drilling speed and perhaps towards the well productivity rates.

Can you elaborate on that, Miguel?

Yes, Pedro.

And just to put out my second question, which is linked to this one, like if you can specify a little more about how and what exactly was the main driver behind the lower drilling costs for pad #3 and how that fits your target?

Or if we can assume that you could continue showing further progress in terms of declining drilling costs for the future pads.

Okay.

Thank you, Pedro, for the question.

And the 2 of them are linked.

So when you look at Slide 9, okay?

We are not talking about completion feet per day.

We are talking about drilling the feet and dollar per lateral feet also is pure drilling.

So what has happened in drilling is that I think you've seen there are basically 2 effects, okay?

As you know, we have this concept of One-Team.

So this One-Team contract is basically a performance contract where we align objective between neighbors, Schlumberger and us, okay?

That One-Team concept has been proved very successful in term of getting better performance and basically going superfast on the learning curve.

So first of all, we start the operation basically on the average performance of the basin where it's quite amazing for any startup.

But second, I mean, the level of alignment and if you visit the operations, will be nice for you to see it that we have between the 3 companies is incredible.

We have, in drilling, a concept that's called technical limit.

So every time that we drill a well, we have a curve that is a technical limit.

That technical limit curve, it shows basically a curve that is ideal.

It's how fast we can go if everything is perfect, okay?

If you -- tomorrow, you wake up and you go to your office, and you have all green line, okay?

Your car started on time, your coffee was on time, everything goes perfect.

So we are always working with the 2 contractors toward that curve.

We have a target curve and that target curve when we get it, we pay bonus, and we pay bonus across-the-board, all the people that work on the location.

So that is creating a level of alignment that is difficult to see when you treat your contractors as pure suppliers, okay?

This is something, of course, that I know very well.

I used to manage Integrated Project Management for Schlumberger.

So I try different business scheme in order to get that level of alignment.

Second aspect is technology, okay?

One thing you have seen between the pads that we have drilled is that we start with downhole motors.

Downhole motor is the simple way of drilling a horizontal well, and we move to power drive.

And not only we move to power drive, we move to power drive max 15, a technology that's never been tried outside U.S. That technology allows -- power drive is basically a mechanic arm that allow you to build a curve in a much more efficient way that -- a downhole motor.

Downhole motor is more simple, but power drive is more effective.

And power drive max 15, you have a way that building, that dog leg, that angle in such a way that you can land a horizontal well without pulling out the hole.

So in a normal operation, you build a curve, you get to the landing point, you pull out the hole, you change your assemble, and you come back with horizontal well.

In a 3,000-meter well, this is 1 day to 2-day trips to pull out the hole and to come back in.

What we did here is we land and we continue with horizontal, thanks to new technology.

Of course, Schlumberger is deploying this technology with us because we are somehow a preferred client in the way that we -- they win or they get a better contract as they go faster.

So this is what has happened in drilling.

In completion, what you see -- what I explained before is basically we are going to high-density completions.

And we've been doing this step by step, and they have been proved very successful in the sense that we have been able to reduce the length of the clusters, the length of the stages and allow with less length, now 60 meters, what we are planning to allocate in cluster.

For Vaca Muerta, the standard was 75 meters and 7 clusters, okay?

And we are moving to 10 and 60 meter.

So this is basically we're going, and we have managed to execute that extremely well.

Going forward, a lot of our efforts is in reducing well costs.

And to reduce well costs, drilling speed is very important, but also completion is very important.

There, we are looking to also more level of alignment in term of contract with frac fleet, in this case, with Schlumberger.

Second, sand is a very important product.

And we are also thinking what else we can do in order to have better prices there, okay?

In terms of logistics and so on.

You have seen few of the things that we have done.

We are being innovative.

We have -- you have seen this concept of silo bag where we are basically storing sand on location with a very innovative way of having silos that are -- bags that are being used to store crops in Argentina.

And we have modified this technology to store sand.

So there's a lot of things that are ongoing that are aimed to reduce well costs.

Okay.

And Miguel, just to understand, when you -- when we look at pad #1 lateral length, pad #2 and pad #3, it seems now that you tested shorter lateral, now you're growing the lateral length.

Is that a trend like are you testing the template?

Or like could you -- are you considering to go even longer?

And perhaps, we will see a further decline in development cost with the promising results?

Or is that very specific for each pad?

So Pedro, on the length of the wells, there are 2 dimensions that play, okay, and decided.

The first is a very simple one.

It's the symmetry of the block, okay?

We are blessed for Bajada del Palo to have a very good symmetry because we are not in a triangle, we are in a square.

So back to the cube technology to put in a way, it's much easy to fit a square in a cube or cube in a cube than cube in a triangle.

Now there's other things at play in the symmetry.

For example, frac falls, okay?

So sometimes, the symmetry of the wells or the length of the well are depending on the symmetry of the block, okay?

What is exactly -- what happened when we went shorter at 2,500 meters?

So that is one aspect.

The second aspect is the length, okay?

And the length in term of the maximum length.

What is your best NPV potential?

Or what is your maximum NPV potential dependent of the length of the well?

My view -- my technical view is if the shaft's NPV was a function of the length of the well, we should be drilling 4,000-meter wells.

But physically, that is not the case because the drawdown at the end of a horizontal well is going to decline as longer is the well.

And also, if you want to go for a 4,000 or 5,000-meter well, you need a new hole dimension, okay?

And a new hole dimension means expensive casing, more drilling fluid.

So as you increase the diameter of your well, you are increasing the well cost.

So what is the optimum length of the well is something that somehow we are testing and the industry is testing, okay?

I am the idea of 3,000-meter well is borderline, okay?

Now we are testing this in a very practical way.

So we drilled 2,500 meters.

Now we are going to 2,700 meters, okay?

So far, I lived on results.

And the result is my second pad is better than the first, and I want the third to be better than the second, okay?

It's not going to be always the case.

We will reach our technical limit there, but this is the line of thought, okay, that we are following up.

Okay.

Perfect.

And just 2 last follow-ups, okay?

The first one is I'm not sure if you have addressed this through the call, but would you mind giving additional color in stripping off the lifting costs between your unconventional project and your conventional production and the sustainability around the lifting cost improvement in the third quarter, considering that part of that was currency driven?

I know you gave guidance on a consolidated basis, but I just wanted to understand the unconventional bracket within that.

And the last one is your -- I understand that the third drilling pad is still on hold to be placed in production, but is there any base case you're working with to start up production in these wells?

Yes.

So the first part on the lifting cost, I think the effect of unconventional clearly it will be there.

Today, the amount of production coming from unconventional, I don't think it has a huge impact on the lifting cost.

I think most of the lifting cost reduction that you have seen is our effort on the conventional wells that we have done.

And I think the team that we have is doing a super job.

In a field visit at some point of time, we can go further on how the frequency of intervention has changed since we took the field, okay?

And of course, unconventional helped.

We are thinking also how we are going to manage artificial-wise the unconventional.

And once again, Vista is going the Vista way.

So you will see probably that the way that we are going to manage those wells is going to be different than the way that the industry in Argentina is managing those, okay?

But today, probably main -- main part of the result that we are going -- you are seeing in the lifting cost is basically the work that we are doing to improve the main basically OpEx line that come from the conventional wells.

How sustainable is this?

I think so far we have managed that -- to reduce from 17 to 13, from 13 to 12, and now we are below 10.

There's an effect here of the devaluation.

I will say probably my calculation is between $0.50 and $1, okay?

Is that -- $0.50, $1.

I think we will be -- we will see a small revamp there.

I believe the lifting costs will continue decreasing and will be -- continue being below what it was going forward.

I think the improvement that we have -- we get are there to stay.

And we have done also a lot of things in term of the organization.

We just basically reorganized the field in order to be much more effective and much more productive.

Also -- I mean this is a level of detail that we probably show at some point of time.

So that's the lifting cost.

In term of the third part, yes, we are ready to do it.

I mean, we are just waiting for the conditions.

But operationally, we are ready.

We have the frac fleet there.

We are still having an agreement with Schlumberger.

We are just waiting for the conditions.

We are waiting for the price.

Okay.

Fair enough.

You can assume that around December, if everything goes as we expect, we should be ideally working on it.

Okay.

Perfect.

Okay.

Congratulations again for the Vista team on the results, okay?

Thank you, Pedro.

Our next question is from David Neuhauser from Livermore Partners.

Most of my questions were answered, so I'll ask you more big picture, Miguel, as you look out with the election coming close to a week away, what are your expectations?

And how are you guys dealing with the current situation at hand?

Thank you, David, for the question.

Look at -- I mean, of course, we -- as you know, we have the result of PASO that have showed that one of the parties is quite ahead of the other.

We are basically seeing the numbers than anybody else.

So there's the most likely case that, that party came into power.

We are working, as always, very close to whoever have the chance to manage the country.

And of course, we are working on presenting and discussing what is required to basically put Vaca Muerta value that today is living a moment of a standby basically.

The Peronist Party showed very much interest.

There have been a few headlines that I think have been positive.

One from Alberto Fernandez saying that export is very important for the country, okay?

And as I mentioned before, I would say whoever is in the driving seat in the next period will require investment, would require U.S. dollars.

And the source, there's one new source of potential U.S. dollar for the country, are investment in Vaca Muerta and proceeds that come in from export like crude oil.

So that is positive.

One of the person that also has been working on the energy sector has -- is talking about a potential Vaca Muerta (inaudible) okay?

And of course, we are very active and working and proactive to basically give them our input in term of what need to be done and what is required in order to restart Vaca Muerta activity and bringing Vaca Muerta to its full potential, okay?

So that's our comment, David, for the call.

At this time, I'm showing no further questions.

I would like to turn the call back over to Miguel Galuccio for closing remarks.

Thank you very much, [Gigi], for organizing this.

Gentleman, thank you very much for your coverage, for the report, for the interest of following up on Vista.

Thank you for your patience during this period of time in Argentina.

I'm still very positive in the medium and long term.

And as I said before, we have proved that this is -- we are -- we are having probably one of the better resources in the world, unconventional, and we have the machine to put it in value.

So I have no doubt about Vista future, and I appreciate all your support and your coverage.

Thank you very much.

Ladies and gentlemen, this concludes today's conference call.

Thank you for participating.

You may now disconnect.