Vista Oil & Gas surpasses end-2021 target for rate of output

Buenos Aires — Vista Oil & Gas plans to ramp up its oil production in Vaca Muerta, as wells already producing in Argentina's biggest shale play prove to be more productive than expected, CEO and chairman Miguel Galuccio said April 28.

The company was producing 43,000 boe/d on April 28, higher than its 40,000 boe/d expected exit rate for 2021, Galuccio said in a conference call with investors for the Mexico City-based company's first-quarter financial results.

In February, Vista set a target to reach average oil and natural gas production of 37,000 boe/d to 38,000 boe/d this year and end the year at 40,000 boe/d, led by the development of Bajado de Palo Oeste, its biggest block in Vaca Muerta. Of the total oil production, 90% is coming from Vaca Muerta, Galuccio said.

The year-end target is up from an average of 34,100 boe/d in the first quarter of 2021, when total output increased 29% from 26,500 boe/d in the year-earlier period, as a 56% year-on-year increase in oil production to 26,400 b/d offset a 19% year-on-year decline in gas output to 1.14 million cu m/d, according to company data.

"We are on track to deliver our 2021 guidance," Galuccio said. "The fact is that we are performing above guidance today when you look at production."

Lifting costs down

The growth is being helped by a reduction in lifting costs, which fell 24% to $7.50/boe in the first quarter of this year from $9.90/boe a year earlier and $8/boe in the fourth quarter of 2020, the company said.

Drilling and completion costs have also come down to $9.5 million for its seventh well pad from $17.4 million for its first, while productivity has been 15% above the company's expectations for a well in operation for 360 days, according to Vista data.

Further growth in 2022

The growth comes as Vista presses ahead on plans to tie in 16 oil wells this year in Vaca Muerta, taking the number of those in production for oil to 36 by the end of 2021.

Of the 16 wells, eight wells have already been tied in this year, and four more wells have been drilled and are awaiting completion, Galuccio said.

He said the company, encouraged by the results, may incorporate another rig in the fourth quarter to speed the drilling pace.

While Galuccio said an additional rig won't provide much more production growth than the year-end target of 40,000 boe/d, it will provide "a much better starting point" for production growth in 2022, which he expects could reach 45,000 boe/d to 50,000 boe/d.

The growth, he added, will allow the company to accelerate its development of Vaca Muerta, as well as to reduce costs with new measures like in-basin frac sand supplies so that the company can be profitable even when oil prices are low.

Indeed, Galuccio said the company is running a high profit with oil at $45/b, which is less than than the current $67/b for Brent, the international reference price followed in Argentina.

"With today's oil prices, 2022 looks very bright for Vista," Galuccio said.