Argentine oil driller shares views on Rigi regime, framework law

Argentine hydrocarbons firm Vista Energy – one of the country’s biggest oil producers – questioned the potential impact the Rigi investment promotion regime may have on the upstream sector.

The comments came during a call with investors, where the wider economic reform law, known as framework law, was also discussed.

“It’s unclear to me the applicability of Rigi to the upstream business overall; it’s probably more clear in regards to infrastructure,” Vista CEO Miguel Galuccio said.

He added, however, that using Rigi to “accelerate” development of the Vaca Muerta shale play – where Vista has placed its bets – was “clearly a no-brainer for me for the country.” 

Galuccio alluded to the importance of the secondary legislation that will need introducing to guide implementation of Rigi as well as the framework law. Rigi and the framework law bill were recently voted into law.

“How this is regulated is going to be key,” Galuccio said. 

Rigi grants a series of tax and exchange control benefits for 30 years to large projects, those over US$200 million, carried out by special purpose vehicles. 

Among those that may bite the dangling carrot first is state-controlled hydrocarbons company YPF, which has a multibillion-dollar LNG-exporting project planned. 

On framework law, a major slab of deregulation-focused legislation, Galuccio referred to the sections that lift state control over prices and exports. 

“The framework law has two main statements that are important to our industry: one is the principle of no price intervention by the government in pricing of crude oil and products, and the second one is the principle of freedom of export of crude oil and products as well,” Galuccio said. “The spirit of these principles is good.” 

President Javier Milei is working to deregulate the economy, slash subsidies and pull in private investment, goals reflected in the framework law and Rigi.

The hydrocarbons sector receives supply-side subsidies related to the Plan Gas program. In January-April, amid climbing end-user rates, associated gas subsidy transfers were 11.4 billion pesos (US$12.4mn), down 49% year-on-year, according to a report from the General Mosconi institute energy think tank. 

PRODUCTION, REVENUE, GUIDANCE

Vista oil production climbed 46% year-on-year in Q2 to 57,200b/d, driven chiefly by new wells at flagship area Bajada del Palo Oeste in Vaca Muerta.

Vista is betting heavily on shale after offloading assets in conventional fields.

Overall company revenue was up 66% to US$397mn, as the average local realized oil price registered at US$68.90/b, compared to US$76.60/b (net of export tax) fetched on the international market. 

Vista exported 1.93 million barrels in the quarter, up 22%. Vaca Muerta drillers are laser focused on the export market, given local demand for the type of crude they produce, Medanito, is met. 

Gas output climbed 17% to 1.26 million cubic meters per day in the quarter, with the average price obtained US$3.90/MMBTU (million British thermal units). 

Gas exports accounted for a total of 14% of volumes and fetched a price of US$7.70/MMBTU.

Capex deployed over the quarter rose 93% to US$346mn. 

A 2024 Vista hydrocarbons production exit rate of 85,000boe/d is forecast, resulting in average production for the year of 68,000-70,000boe/d, investors were told.

Vista has previously said it was aiming to achieve a production rate of 100,000boe/d in 2026. Vista expects to revise up 2025 guidance this year, investors heard.

The company was Argentina’s third-biggest oil driller by output in May, according to operator data published by local consultancy Economía & Energía. Vista production was 57,800b/d, up 41.6%. National oil production was 698,800b/d, up 8.5%. The biggest is state-controlled player YPF, followed by non-listed driller Pan American Energy.

A unit of Mexico-headquartered Vista Oil & Gas, the company has previously said a lifting of capital controls would help spur a further phase of production development.

MIDSTREAM

Vista has increased crude treatment capacity to 85,000b/d from 70,000b/d, secured a second frac set and connected to the Vaca Muerta Norte duct, which carries crude to the local Luján de Cuyo refinery and to the Otasa export pipeline to Chile.

Vista is also working to expand dispatch by truck.

Transporting crude by road is “key while the pipeline system is being expanded,” Galuccio said, referring to midstream work being carried out by oil pipeline concessionaire Oldelval and due to add capacity by year-end. 

Vista’s dispatch capacity, the call was told, comprises 43,000b/d on the current Oldeval infrastructure, 12,000b/d on Otasa, and trucking capacity of around 13,000b/d. 

Next year, as more Oldeval capacity becomes operational, trucking operations should stop. 

M&A

Vista is vying for shale assets being offloaded by the local unit of US major ExxonMobil.

Galuccio told investors assets would be “nice to have” but were not critical to company plans, reflecting comments made in previous calls. 

“We are participating in the process; I think we are a competitive bidder. We will compete hard to see what is the result.”