What Vista Energy thinks of Milei’s two key oil proposals

Argentine driller Vista Energy welcomed oil market liberalization measures proposed by the government of Javier Milei.

Mexico-listed Vista is among upstream firms eyeing production and export growth and plans to hike annual capex in Argentina to US$900mn this year, up from US$734mn in 2023.

Milei has announced measures to lift government controls on oil prices and oil exports.

Vista CEO Miguel Galuccio said during the company’s 4Q23 results call: “We have a very positive view of some of the proposed changes the government is making, such as no price intervention by the government and freedom of exports.

“I believe both things are very good to attract investment to Argentina. Argentina has a very unique opportunity in terms of bringing more proceeds through exports and clearly these two initiatives will help the country a lot in terms of bringing more investment and, of course, exporting more, and Vista is an example of that.”

The measure to lift export controls was included in a mammoth decree published in December, which drew opposition, chiefly over labor reforms in it. A congressional committee was due to start the process of analyzing the decree and others on Thursday despite associated deadlines having expired, local press reported.

This month Argentina was still publishing export authorization requests under a system established to help ensure local refinery demand is met. 

Galuccio also referred to Argentina’s capital controls, in particular restrictions on repatriating dividends. A freeing of controls would “resonate with investors and us” and spur additional Vista output growth, he said. An easing may first require an improvement on the macroeconomic front. 

Vista’s investment push falls under a strategy underpinned by a midstream expansion drive that has resulted in 31,500b/d and 12,500b/d of transport capacity secured on concessionaire Oldelval’s expansion project and YPF's Vaca Muerta Norte duct, respectively.

Completion of the first phase of the Oldelval expansion, originally planned for 1Q24, is now due for October, with 150,000b/d capacity expected to come online then. 

The delay, stemming from pump acquisition problems, “does not impact our plan,” Galuccio said. The Oldelval project will boost capacity between the Neuquén basin and the Atlantic coast.

Vista, whose treatment plant can now process up to 70,000b/d following an upgrade, is aiming to hit a production rate of 100,000boe/d in 2026, up from 56,400boe/d reported for 4Q23. The company is boosting treatment capacity further. “We're currently working on another project to increase total treatment capacity to 85,000b/d before year-end,” Galuccio said.

Following the sale last year of conventional hydrocarbons assets to Aconcagua, Vista has become fully focused on the Vaca Muerta unconventional hydrocarbons formation.

Galuccio said the firm was “well on track” to hit the 2026 goal and that its M&A radar was spinning, referring to ExxonMobil Vaca Muerta assets being put on the block. 

In terms of upstream, Galuccio said the company was looking to bring in additional oilfield equipment: “We’re having discussions with several oil service company providers to see if we can bring more equipment in terms of drilling and completion capacity into the country.”

EXPORTS, REVENUE, PRODUCTION

Last quarter Mexico-listed Vista exported 2Mb, representing 49% of total oil sale volumes and 53% of total oil revenues. 

Of the exports, 1.6Mb was shipped via the Atlantic and 400,000b to Chile through the Otasa duct. 

The company's quarterly revenue fell 3% year-on-year to US$309mn against a backdrop of a 2% decline in the average crude price to US$67.8/b. On the local and international markets, the average realized oil price in the quarter was US$63.7/b and US$74.2b/d, respectively.

“We’re seeing good recovery in domestic prices, with crude in line with a US$65-66 range for January and February, which is key to fund our growth plan,” Galuccio said. 

Argentina has been setting a local oil price via negotiations between drillers, refiners and the government. An original aim was to shield the country from international price volatility. 

In December, Vista was Argentina's third-biggest oil producer after YPF and Pan American Energy, according to a report from the General Mosconi institute energy think tank.