Vista Energy SAB de CV (VIST) 2021 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Vista's First Quarter 2021 Earnings Webcast Conference Call. (Operator Instructions) Please be advised that today's conference may be recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Alejandro Cherñacov, Strategic Planning and Investor Relations Officer. Please go ahead.

Thanks. Good morning, everyone. We are happy to welcome you to Vista's First Quarter 2021 Results Conference Call. I am here with Miguel Galuccio, Chairman and CEO; and with Pablo Vera Pinto, Vista's CFO.

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 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.

Thanks, Alejandro. Good morning, everyone, and thank you for joining this earnings call. I am thrilled to share with you our first quarter 2021 results, which shows solid operational progress and profitable growth and put us on track to deliver on our 2021 guidance.

Key operation and financial metrics have improved, both year-on-year and quarter-on-quarter. Driving this growth is our flagship project, Bajada del Palo Oeste, which continues to show improvement in terms of well cost and productivity.

In Q1 2021, we achieved a quarterly production record, with 34,100 BOEs per day, a 29% increase year-on-year. Oil production was up 56% year-on-year and 15% sequentially, boosted by the early tie in of pad #6 in Bajada del Palo Oeste at the beginning of February and pad #7 in late March.

Total revenues were $116 million, up 58% vis-à-vis Q1 2020, mostly driven by the increase in oil production, but also by an improvement in realized oil prices. Lifting cost per BOE was $7.5 for the quarter and 24% reduction year-on-year, reflecting lower incremental costs in Bajada del Palo Oeste, which dilute our fixed cost base.

Adjusted EBITDA was $58 million, an expansion of 131% vis-à-vis Q1 2020, driven by the solid increase in revenues amid flat lifting costs. Capital expenditure was $78 million, in line with execution of our 2021 guidance and reflecting the completion of 2 pads in Bajada del Palo Oeste during the quarter.

Cash at the end of the period was $163 million. In Q1, we saw a strong cash flow from operations while making good progress in liabilities management. Net debt stood at $386 million.

This week, we published our initial sustainability report, and important (inaudible) Vista commitment to embedding the principle of ESG in our strategy and developing our business in a sustainable way. The report provides an overview of our journey to become a reliable, low-cost and low carbon company. I will also go through important ESG achievements today later in the presentation.

Before we move to the detailed discussion of our results, it is important to recall that COVID-19 pandemic is still impacting Latin America. Our business continued plan and our COVID-19 protocols are well in place. The health and safety of our employees and contractors will continue to be a priority for the company.

Now please turn to Slide #4. Total production during Q1 2021 was up 29% year-on-year and 11% quarter-on-quarter. This was the result of restarting our drilling and completion activities in Q3 2020, which enable us to tie in 12 new wells since that date. In (inaudible) site, we made a good decision by accelerating our drilling plan with a second rig during Q4 2020. This enabled us to tie in pad #6 in early February and pad #7 in late March, setting the stage for a steady growth quarter-on-quarter.

The old share of Bajada del Palo Oeste production is approximately 90%, which is why we are seeing oil production increasing by 56% year-on-year and 50% quarter-on-quarter. We achieved a stable quarter-on-quarter gas production due to the addition of associated gas production from the new pad in Bajada del Palo Oeste, which offset the decline of our base production.

Total revenues in Q1 2021 were $115.9 million, 58% above Q1 2020, driven by the increase in oil production, as just mentioned. Realized oil prices in Q1 2021 was $45.5 per barrel, 6% above year-on-year. Local sales contracts accounting for 54% of our total sales in Q1 were closed in November last year when Brent was trading in the $40 to $45 range. Our strategy has been to build a sale book early on to lock in revenues and fund investment activities.

Sales to export market accounted for the remaining 46% of the volumes, with contracts signed when Brent was trading in the $50, $55 range. We continue to see pricing of our export oil discounts to Brent of less than $2 per barrel. Q2 sales, with mix of domestic and export volumes, have already been contracted with a realized oil price of approximately $53 per barrel. Realized gas pricing has decreased 9% year-on-year to $2 per million of BTU. Industry prices dropped from $2 per million of BTU in Q1 2020 to $1.2 per million of BTU in Q1 2021. This was partially offset by Plan Gas price of $2.7 per million of BTU, which applies to volumes sold to distribution companies and power generation.

In Q1 2021, we continue to reduce our total lifting cost per barrel, diluted by the production increase in Bajada del Palo Oeste and lower incremental listing costs. We were below the $8 per BOE mark for the first time with $7.50 per BOE for the quarter. This puts us on track to deliver on our 2021 guidance.

Moving to Slide 7. Adjusted EBITDA for the quarter was a solid $58.3 million a 131% increase year-on-year and a sequential increase of 62%. This reflects higher revenues on our successful effort to optimize costs. Adjusted EBITDA margin was 50%, reflecting an improvement of 5 percent points quarter-on-quarter and 50% points year-on-year. This margin was achieved at a realized oil price of $45.5 per barrel. Thus, we forecast a further margin expansion in the next quarter due to higher realization prices.

Our netback for the quarter was $19 per BOE, $8.5 per BOE above Q1 2020 and almost doubling year-on-year. This was driven by higher revenues per BOE due to an increase in the oil mix in our production and improved oil prices as well as cost optimizations.

Cash flow from operating activities in Q1 2021 shows a sequential increase of 35% and 74% year-on-year for a total of $36.6 million. This reflects an increase in cash flow generation, driven mainly by higher adjusted EBITDA. Cash flow from investing activities was $80 million, in line with CapEx activity of $78.1 million. Approximately 90% of this investment was deployed in Bajada del Palo Oeste.

In March 2021, we successfully raised the peso equivalent of $75 million in Argentinian capital market. Proceeds were used to replace bond debt with shorter duration and higher coupons. The average life of our financial debt increased from 1.8 to 2.2 years. We issue a $42 million facilities in pesos dollar-linked due in 3 years with a 4.25% coupon and also a $33 million facility in pesos, inflation-adjusted due in 3.5 years with a 2.73% coupon.

I will now share an update of our development in Bajada del Palo Oeste, where we continue to achieve significant improvements in well cost and productivity. Pad #7, which was tie in late March, recorded a drilling and completion cost per well of $9.5 million, a 45% improvement since our first pad. This reflects a solid learning curve, our investment in technology and the benefit of the One Team operating model we set up with our key contractors.

Drilling speed has improved to 70 days per well, down from 35 days in our first pad. Completion cost is down 50% to $110,000 per stage from 220,000 per stage in our first pad, reflecting improved completion design, a streamlined logistic and better contracts for water and sand sourcing.

In terms of productivity, our wells continue to perform above type curve. For the first 180 days, wells are 22% above type curve and in longer period, we are also seeing robust performance. The 2 pads that have more than 360 days of production history are performing 15% about type curve.

The chart on the bottom right shows our total shale production since we started our Bajada del Palo Oeste development, and the tie-in date of each pad. As shown, the activity ramp-up in Q3 2020 is driving our production increase. The early tie in of pad #6, a consequence of the accelerating with 2 rigs in Q4 2020 is paying off, boosting shale production to 21,100 BOE per day in March, such acceleration also enabled the tie in of pad #7 late in the quarter, which is already contributing to April production. Solid performance in well cost and productivity have reduced our expected development cost to approximately $7 per barrel.

At Vista, we are committed to advancing our sustainability business practices and endeavor to drive environment and social impact with our company and in communities which we operate. Last year, we accelerated the rollout of our sustainability program, which involves, among other things, prioritizing ESG focus areas that are most material and relevant to our business and key stakeholders. The government structure was also a strength and our ESG program is now overseen by the Corporate Practice Committee of the Company Board of Directors. We are now ready to set the bar high with a commitment to transparency by showing our progress on ESG matters.

We selected CRRI for the primary comprehensive disclosure of ESG matters. And SASB for industry-specific topics more relevant to our financial performance and long-term value creation. As we move forward, we intend to expand our disclosure against this and in other relevant standard. In 2020, we announced our support for the 10 principles of the United Nations Global Compact, with a commitment to report on the progress of how our strategy, culture and day-to-day operations are contributing to the UN Compact SDGs.

Additionally, we are focusing on 8 UN SDGs for 2030, where we believe we will be -- have the greatest impact. This can be seen on the right-hand side of the slide.

A key global issue is climate change and its reversal is imperative across all industries. We know that we have a critical role to play within the energy transition agenda as an oil and gas company. As such, our goal is to become a reliable producer of affordable and increasingly low-carbon energy company.

In 2020, we achieved an important initial milestone toward this goal by determining our referencing line for greenhouse Scope 1 and Scope 2 emissions. We are now working on setting corporate reduction goals and designing an action plan to reduce greenhouse emissions in our operation in the short, medium and long term. This will be presented in our next sustainability report.

I am also proud of our safety track record since we took over the operation of the asset in 2018. This has been achieved by implementing a culture of learning and always prioritizing safety as a bedrock of how we operate, also, by aligning our practices with the guidelines, set by International Association of Oil and Gas Producer Operating Management System.

In Slide 11, we highlight our key ESG metrics. Our KPIs demonstrate Vista progress on its material commitment. First, as noted, we have set the basis for establishing emission reduction goals by having established our GHG inventory for 2019 and 2020. In 2020, Scope 1 and Scope 2 emissions amounted to 417,000 tons of CO2 equivalent. In our operation, 99% of our hydrocarbon is transported by pipelines, and we use 100% of sand boxes to minimize the amount of silica in the air. Throughout this period, we have prioritized the health and safety of our employees and contractors, with focus on our ambitious goal we set out just a few years ago, reaching TRIR, in line with Tier 1 international oil and gas companies. TRIR for 2020 was 0.38, a 90% improvement since we took over this operation. I am particularly proud of the progress we made against our commitment to the fifth UN SDG goals of gender equality. In 2020, 50% of our new hires were women, which is well ahead of historical hiring diversity rates. We made contributions to enhance the progress of well-being in the communities where we operate, particularly considering the hardship experienced as a result of the COVID-19 pandemic.

Importantly, our entire organization is aligned with the ESG strategy, with 100% of our employees short-term incentive compensation, including a relevant component of sustainability goals.

A focus on (inaudible) and independent governance has reinforced our ability to execute on our strategic objectives. To ensure we continue to achieve our goal, the key roles and functions are in place to strengthen ESG governance and secure oversight and accountability for our sustainability issues and objectives.

Moving on to Slide 12. I will discuss our progress with respect to 2021 guidance. Our annual work program for Bajada del Palo Oeste is on track to deliver 16 new wells tied in during the year. We have tied in 4 wells in pad #6 in February and another 4 wells in pad #7 in late March. Pad #8 with 4 additional wells is already drilled and is currently waiting for completion. Production is showing steady growth, having increased 11% quarter-on-quarter. The performance of our Bajada del Palo Oeste development and the recent tie in of pad #7, which should provide another step increase, is forecasted to leave us on track to deliver between 37,000 ad 38,000 BOEs per day in 2021.

As previously shown, lifting cost decreased to $7.50 per BOE in Q1, in line with guidance. Adjusted EBITDA in Q1 2021 was strong and according to guidance, having tie in our first 2 pad and lock in oil prices for Q2 above the $45 per barrel guidance, put us on track to finish the first half of the year ahead of guidance.

CapEx in Q1 was executed as per our annual work program and is in line with guidance. Finally, gross debt has increased marginally due to capital market insurance during March, the proceeds of which were used to cancel short-term debt in April. In summary, we have made solid progress during Q1, and we are well positioned to deliver on 2021 guidance.

To finalize this call and before we move to Q&A, I will recap on today's headlines. In Q1 2021, we have seen a solid recovery in key operational financial metrics. Adjusted EBITDA was very solid at $58 million, with a margin of 50% and realized oil prices of $45 per barrel. We see further upside this margin in Q2, having lock in our Q2 sale prices at around $53 per barrel.

Bajada del Palo Oeste continues to show improvement in drilling and completion costs with productivity above type curve. This has lowered our expected development costs to approximately $7 per barrel.

In terms of cash, in Q1 2021, we saw a solid increase in cash flow from operations. Also, we successfully tapped the capital market to reduce cash interest expense and extend the average duration of our debt and strengthening our balance sheet. Sustainability is vital to our business strategy, and I am confident that we have the right people, process, commitment and accountability structure in place to advance our role in solving the complex energy and environment challenges we all face. In this context, I'm proud we have published our inaugural 2020 sustainability report.

With Scope 1 and 2 GHG emissions baseline that are established, during 2021, we will set corporate goals with respect to short, medium and long-term reduction of greenhouse emissions in our operation, that will be detailed in our next sustainability report.

Finally, as discussed in the previous slide, we are solid, on track to deliver our 2021 guidance.

Before we move to Q&A section, I would like to thank our investors for their continued support and all the team at Vista for their usual hard work and commitment. And with that, operator, please open the line for Q&A.

(Operator Instructions) Our first question comes from Bruno Montanari with Morgan Stanley.

Good to see the continued evolution [pad by pad], Miguel, was very impressive. I have a couple of questions here. First, on pricing, what is your view on how oil prices in Argentina can converge to the international benchmark, even with the $53 lock in for Q2, the discount is still a fairly large versus export Brent, right? And then also get your views on whether the company believes that natural gas incentive scheme is going to work properly this time around.

My second question is more long term. And taking into consideration the experience you have had now with 7 pads, getting into the pad #8 now. If all the stars align and the reservoir response is positive, how low can lifting cost be? And how low can your drilling and completion cost be? I'm not talking about the next quarter or year, but philosophically, just looking at the potential of the asset, where could cost in drilling and completion cost be?

Thank you very much for your question. A good one, as always. Look, starting with pricing, I think, first of all, we need to keep in mind that price in Argentina have 2 different effects. The fair effect when we talk about export prices is the fact that we are preselling our volumes ahead of time. That we are doing because we are securing revenue, but also because the way that the market in Argentina, the local market works is we believe that every time that we secure volumes in the local market, we free up volumes for exporting. So when the refineries feel that they are -- will supply, okay, they don't cross our exportation. So that effect, we have to keep it in mind.

So then it's important to define what is export parity. So you're talking about export Brent. But really, our market is export parity. And export parity in Argentina is -- used to be Brent below 10%. Due to the new regulation today, it's Brent minus 8%. And also, you have to add to that, the discount on commercial volumes that in Q2 2020 used to be below $10, and today is $2. So as an example, if you would take today Brent of [$61] and you discuss $2 of commercial discount, you go to [$59]. And if you dare to take 8%, you are in [$54]. So that is the export parity that we have, if we take a picture of today.

Pump prices are running below export parity today. Pump prices, as you know, evolve during tie in. We have had pump prices that are above export parity in certain moments, and now we have a pump price that is below export parity. I will say, if you take today, probably we are $2, $3 below export parity.

As I mentioned before, pricing in Argentina, pump prices have inertia. Inertias to go down. We have never seen going down, and inertias to go up. So that is the name of the game here.

In terms of gas prices, I will say, first of all, for Vista, when you look at our top line, our revenues, the revenue coming from gas is less than 10%. So it's not really meaningful for us today. It was 2 years ago. But as we become a company that is more [oily], as we develop a more unconventional resources, the gas is having less an impact. I do believe the gas scheme that they put in place makes sense for the government because every time that they don't have local supply, they have to import, and the differential cost is big. And we see companies that are placed over gas resources with this new scheme picking activity. So my view on that is, that is in place, and I think is going to work.

In terms of more your philosophical or a long-term question, this is very interesting. And of course, we have a view, even though I cannot give you precise numbers, otherwise, I will be disclosing something I don't have to disclose yet. But do we believe we can really in the lifting cost arena perform below $7? Lifting cost, we have mainly 2 effect as we develop more unconventional as we are going to continue growing production, therefore, diluting our -- part of our fixed costs. And on the other hand, we know that maintenance wise -- operational wise, our unconventional is a lower lifting cost operation compared with our conventional operation. So as we add more volume, we dilute the cost. As we add more unconventional ways, we dilute lifting costs. So I think we can dream of being well below $7 per barrel.

In terms of drilling and completion costs, also, I think we can expect at some point of time to be below $7. I think there, you have 2 effects. One effect is clear that we are performing above our type curve today. We've been performing above type curve already for a while. So I don't see that changing. And the other thing that we believe we can do if we could continue reducing more than drilling costs. I mean, I am not sure we can drill faster than we are drilling today. But on the completion side, I think we're still having certain proofs that we can reduce their costs. One example could be a proppant sand. As you know, we have a strategy to source in-base sand, and we are developing that in order to have an impact in a component that is really meaningful to our completion costs.

So the answer is yes. I think we can think of being well below the numbers that we are today forecasting to the end of the year. It's going to take time and it's going to take hard work. But I think we have the strategy, and we have the people to do it.

Our next question comes from Andres Cardona with Citigroup.

I have a couple of questions. My first one, it's following with the previous questions about realization prices. I would like to understand if there is any progress with the hydrocarbon law? And if you can let us know how much of your production was exporting during the first quarter? And if you can give us some color for the second Q?

And then the second question is, if you can help us to understand what is the situation between the unions and the oil and gas industry at Vaca Muerta? And if you have seen any impact yet at your operations?

Thank you, Andres, for your question. So I will start first with the export and building up on Bruno's question. So in Q1, the percentage of export was 46%. So we have a mix, again, of local market on volumes that we closed in Q4 2020 for export, and that volume that we presold was 46%.

In Q2, of course, we have a very -- a better visibility and better prices on the local market. We apply the same strategy, and we -- the component on the local market was 75% for local and 25% for export. And as you -- as I mentioned in the presentation, it's already on the pocket.

Back to what Bruno said, I mean, if you look at -- I'm looking now at a plot where we usually follow the average sale prices in the local market and the Brent export forward curve. If you guys made that curve from January '21 to June '21, you will see how this inertia that I mentioned works, and you see the gap between export and local prices narrowing down. The gap is still there. And part of the gap back again is the export parity and the commercial discount that we have. That also with the -- and the commercial discount has been reduced a lot. I mean we have tenders of $1 today, and we are averaging $2 of a commercial discount.

In terms of the impact that we have due to the social demonstration, so first, and what you said that we have no impact on production. Vista have no impact on production. We managed to navigate that issue extremely well. The social demonstration was driven or start by headworkers, did affect drilling and completion activity, yes, because there was -- we were mobilizing a drilling rig from one pad to other, and that was affected because there was many road blockage. And I will say this is today look like is almost resolved. Nothing -- something that we have to watch, something that we are accustomed to, not only for the ones that we have operated in Argentina, but also in another part of the world, it's something that we need and we have to deal with. Hopefully, we see this normalizing in the next few days. The headworkers have achieved and agreed -- have arrived to an agreement with the provincial government. So we see that issue probably resolving now in the next few days.

Related to the hydrocarbon law, the initiative is still alive. There's a lot of discussions between the government and the companies. As I have said before, I think the important thing, we have a law that -- oil and gas law that consider unconventional and is working. So I think the main point to address there is if we see any change in the fact that we have a scheme or make a need for cross-border repatriation of dividends for the people who are investing in Argentina. And the other main thing to consider, if we're going to have a [low stimulus], Vaca Muerta development is related to export. As we have more volume to export, the better we become the business for Argentina. And somehow a bit more decoupled will be of the local pricing and it's what makes sense for Argentina because it's going to create a new flow of dollar to Argentina economy, that is exactly what the economy needs. So incentive export and anything that they can do in this build to incentive I guess export is really the name of the game. But I cannot say more than that. These are the topics and the discussions are ongoing.

Congratulations for the results.

Thank you, Andres, for the question.

And your next question comes from Alejandro Demichelis with Nau Securities.

A couple of questions. Just as a follow-up to what he was saying, Miguel, on the impact of the social demonstrations. So you were talking about some impact on drilling and completion. So can we see an impact on your next pad? And can that pad kind of move to the next quarter? That's the first question.

And then the second question is, I think in previous calls, you were kind of targeting almost 1 pad per quarter. Is that still the plan going forward?

Alejandro, thank you for the question. Yes, I mean, so far, we see no impact. When I said that we have basically lose some time on the demobilization and mobilization of the drilling rig from 1 pad to the other, that is real. Nevertheless, we were ahead drilling wise. So we don't see impact on our plan. So again, everything shows that the situation after the agreement is normalizing. So we are not forecasting any impact on production and we continue with the same plan of tying in 1 pad third quarter. We also are leaving us room to create or to accelerate our 2022 plan. If we have room in Q4, even to pick up 1 more drilling rig, but this is not on our plan, but it's something that we have in mind.

Okay. And just to kind of close that, I think in your 2021 guidance, you were saying the plan was to tie in 16 wells. You already tied in 8. You have 4 ready to be completed and tied in. So it seems that you have the whole of the second half to tie in only 4 wells. So can we see more wells being tied into the second half of the year then?

Yes. So we have tied in 8, we are going to take another 4 in Q2. And yes, as you said, in this second half, we have 4 more to tie in. Can we drill 4 more in Q4? Yes, we could. Can we tie in those in Q4? Yes, we could. Can have impact in 2021, a minimal.

Okay. Yes. No, that's clear. But it seems that you are well ahead of the guidance, at least on the drilling and completion.

Yes, we are.

Our next question comes from [Ezekiel] Fernandez with [Valance].

Congratulations on the progress in Bajada del Palo. Most of my questions have been already answered. I have only one that I would like to stress on maybe related to what Miguel was commenting on the new hydrocarbons law. In early April, the government issued the FX regulations, which are not new, but they reinforce the notion that exporting companies will have greater flexibility in accessing the official FX market for debt repayment and even dividends. I'm talking about (inaudible).

I was wondering if this particular legislation impacts your financial strategy and if you're thinking about potential dividends?

Thank you, Ezekiel, for the question. And the answer is no. I mean we are not planning to use the (inaudible) to repatriating funds and the dollars that we need, we already brought it before that regulation was in place, and we have no visibility that we are going to bring any more dollars in this year. As you know, you see and you follow us and you see our cash flow generation and balance sheet, we are starting to generate cash and that now is going to be, as we continue with our plan, something we will do. So we have no plans to use the (inaudible) more and to repatriating and to use that.

Our next question comes from Frank McGann with Bank of America.

Most of the questions have been already asked, but just maybe to follow-up a little bit on some of the other comments that you've made. Towards your activity this year, it's fairly clear. As you look into 2022, what are your thoughts in terms of where you'll be focused?

Frank, thank you for the question. So 2022, we will basically have -- we will continue. So far, our view is we'll continue with this strategy of drill to fill mode. We're still having spare capacity in our facilities with minimal CapEx investment to go all the way to 45,000, 50,000 barrel per day. So the strategy will be continue to be the same. That strategy what it does is create a company that in 2022 generate a lot of cash.

When you look at $45, that is the plan that we have today with lifting cost of $7 and development cost of $7, let's put. So we have become a low-cost producer that clearly have margin of 50% at low oil prices. So 2022 will be a year where we are going to be above the cash flow curve and we will have to decide what we do with that cash that we generate. Of course, the option to accelerate the development of the resources that we have that are huge is an option but of course, we have another option.

Something that we have added to that the strategy is that now we don't want to be only low cost. We want to be a lower carbon operator. And I'm not saying that in a mode of fashion. We are really putting this plan on sustainability. And we believe that we have the agility, the team and the power to become a low-carbon producer.

Of course, our unconventional development is helping in the lifting cost, is helping in the low cargo as well because our operation today of unconventional is probably in kilogram per CO2, half of the -- that's half the CO2 emission that our conventional operation does. So that is another objective that we have. And I think that objective we have to realize between now and 2022. But 2022, with today oil prices, looks very bright for Vista.

(Operator Instructions) Our next question comes from Marcelo Gumiero with Crédit Suisse.

Congratulations on the results and also on the achievements on the ESG front. My questions were mostly answered before. I have just a follow-up question on the production and the CapEx part. I mean we saw production at 34,000 BOE in the first quarter with Bajada del Palo Oeste all the way up to 21,000 per day in March. But the 2021 guidance is 37,000, 38,000 with exit rate at 40,000 I mean could you provide us some color on when do you expect to tie in the other wells? You already said that you could tie in more wells than the plan. And how should we see production evolving through the year, could position grow even further than the guidance?

Thank you, Marcelo, for the question. So yes, I mean the fact is that we are performing above guidance today. When you look on production and also forward, we are seeing of the performance of Q2, production today of Vista is about 40,000 barrels per day. When you take the picture of today, I think it's 43,000. So we are performing above guidance. Nevertheless, we have half of the year to go. The activity that we plan is still the same. So we are talking about a potential additional pad in Q4, but the reality is that pad is not in the plan. And if we have that pad in the plan, it's going to have minimal impact on production, it will more be important for 2022 because it's going to create -- it's going to help us to have a much better starting point, something that we did this year, and I think it's important. Nevertheless, for the guidance of 2021, it will make no difference. So if we are above guidance, how we finish the year, we pretty much depend that the quality and the timing of the pad that are coming in Q2 and the one that we are going to start in Q3 come in place with the quality that we've got. But the short answer is yes, we are performing production-wise above guidance so far.

And I'm not showing any further questions at this time. I would now like to turn the call back over to Miguel Galuccio for any further remarks.

Gentlemen, thank you very much for your question and continued support, and I wish you are all healthy, and wish you a good day. Thank you very much.

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