Vista Energy S.A.B. de C.V.

Good day and thank you for standing by. Welcome to VISTA's first quarter 2026 earnings webcast conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, we'll open up for questions. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's call is being recorded. I would now like to hand it over to our first speaker, Alejandro Chernikov, Vista's Strategic Planning and Investor Relations Officer. Please go ahead.

Thanks. Good morning, everyone. We are happy to welcome you to Vista's first quarter 2026 results conference call. I am here with Miguel Galucho, Vista's Chairman and CEO, Pablo Verapinto, Vista's CFO, Juan Garobi, Vista's CTO, and Matias Weisel, Vista's COO. Before we begin, I would like to draw your attention to our cautionary statement on slide two. 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 the 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 and adjusted net income. 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 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. Our tickers are VISTA, in the Bolsa Mexicana de Valores and BIST in the New York Stock Exchange. I will now turn the call over to Miguel.

Thanks, Ale. Good morning and welcome to this earning call. During the first quarter of 2026, we made solid progress in our annual work program on the back of a robust new wealth productivity. Total production was 135,000 VOEs per day, up 67% year over year, Oil production was 117,000 barrels per day, an increase of 68% vis-a-vis the previous year. Total revenues during the quarter were $394 million, 58% above the same quarter of last year. Lifting costs was $4.3 per VOE, 8% below year-over-year. Capital expenditure was $391 million, driven by a strong progress in new well activity during the quarter. Adjusted EBITDA was $451 million, an inter-annual increase of 64%. Net income was $108 million, leading to earnings per share of $1 during the quarter. Free cash flow was minus $341 million, impacted by $331 million of non-recurrent items of which $206 million corresponded to the initiation of base operation on a delivery basis. Without these non-recurring items, precast flow in the quarter would have been almost neutral. Finally, our net leverage ratio at quarter end was 1.7 times adjusted EVDA. During Q1, 2026, we tie in 23 wells, 12 in Baja del Palo Oeste, four in Baja del Palo Este, and seven net wells in La Marga Chica. This represents very good progress compared to our guidance of 80 to 90 wells for the full year. Solid well productivity of the tying wells drove a material production increase from 127.4 thousand BOEs per day in January to 143.2 thousand BOEs per day in March. Total production during Q1 averaged 134.7 thousand buoys per day. This represents an interannual increase of 67%, reflecting organic growth and our largest scale after the acquisition of La Marga Chica. Oil production was 116.7 thousand barrels per day, 68% higher year over year. Gas production increased 62% on an interannual basis. In Q1 2026, total revenues were $694 million, 58% above the previous year, driven by a solid increase in oil production, which more than offset lower oil prices. Oil exports more than doubled year over year, reaching 7.2 million barrels in the quarter, representing 67% of our total sales volume. Realized oil price in Q1 was $60.1 per barrel on average, down 12% on interannual basis, and up 2% on a sequential basis in both cases driven by Brent. We sold 100% of oil volumes at export parity prices, both domestically and internationally. Higher oil prices owing to war in Middle East has a minor impact in Q1 revenues, as we have mostly locked in March prices when the conflict started in February 28. We expect higher oil prices to significantly boost adjusted VDA and freeze cash flow during Q2 2026 and onwards. In Q4, lifting cost was $4.3 per VOE, 8% below the same quarter of last year, reflecting our low-cost asset base and fixed-cost dilution as we continue to gain scale. Selling expenses were $3.8 per VOE, down 41% on inter-annual basis, mainly driven by the elimination of oil tracking as of the end of Q1 2025. Adjusted EVDA during the quarter was $451 million, 64% higher inter-annually, mainly driven by the consolidation of 50% working interest in La Marga Chica and organic production growth in our core development hub, which more than offset lower oil prices. On a sequential basis, adjusted EVDA increased 2%, driven by higher realized oil prices. Adjusted VDA margin was 65%, up three percentage points compared to the same quarter of last year, driven by lower export duties, selling expenses, and lifting costs, which offset lower oil prices. In Q1, 2026, cash flow from operating activities was $86 million, mostly impacted by Q1 of negative items. a working capital impact of $206 million as a consequence of ramping up our trading operation, which moved a large part of our export from FOB to delivery basis and at a higher brand price. Second, an outflow of $46 million corresponding to a tax payment in Mexico, which has been booked in previous quarters. Cash flow used in investing activities was $427 million, reflecting accrued CAPEC of $391 million, a decrease in CAPEC-related working capital of $53 million, and the $80 million deposit related to the Kinora acquisition. As a result, free cash flow was minus $341 million during the quarter. Net of the working capital, one-off impacts, and decking or deposit, recurring free cash flow was minus $10 million during the quarter. These impacts were expected and do not change our positive free cash flow forecast for the year, including payments to Equinor. Additionally, as we will show in the following slide, free cash flow is forecast to be materially higher than our original expectations. Cash flow from financing activities were $118 million driven by proceeds from borrowings for $590 million, partially upset by the repayment of borrowings for $130 million and the interest payments of $27 million. Finally, our cash position remains very strong, standing at $615 million at the end of the quarter. Our net leverage ratio stood at 1.7 times adjusted EBITDA. Today, we are updating our annual guidance to reflect the impact of robust production performance, as well as a more constructive view of oil prices. Based on the solid progress of our new oil campaign, with 23 tie-ins to date and robust productivity, we are increasing our full-year production guidance from 140,000 to 143,000 BOEs per day. more than a million barrels of oil equivalent for the year. Importantly, our CAPEC guidance remains unchanged. We forecast to spend between $1.5 and $1.6 billion of CAPEC in 2026. Considering the current oil price volatility, we are showing different scenarios for Q2 through Q4, $75, $85, and $95 rent. Based on this new production and oil price assumptions, we are forecasting a material increase in our financial metrics. In the $85 per barrel scenario, our adjusted EVDA guidance increased to $2.6 billion, an improvement of $700 billion from our previous guidance. Assuming $95 brand for Q2 through Q4, adjusted EVDA will be $2.9 billion, and at $75 Brent, it will be $2.3 billion. Our 2026 free cash flow guidance increased to $700 billion, assuming our best case of $85 Brent in Q2 through Q4. This is half a billion dollars more than in the original guidance. Assuming $75 for the same period, free cash flow for the year will be $400 million, whereas at $95, it will be $1 billion of free cash flow for the year. This updated guidance does not reflect the closing of Equinor Argentina acquisition. Last week, we completed all the conditions precedent to close the transaction. We expect closing to occur in early May. and guidance will be updated probably after. On a preliminary basis, after consolidating the acquired asset, we forecast 2026 adjusted EBITDA guidance to increase to $3 billion, assuming $85 brand for Q2 to Q4. To conclude this call, and before we move to Q&A, I will make some closing remarks. Solid execution of our annual work program delivered material production growth during the quarter. Based on our production performance and a more contracted view on oil prices, we have updated our 2026 guidance, which now reflects more production as well as a material improvement to adjusted EVDA and free cash flow projections. Our new scale following the execution of two important M&A transactions that add up to our 70,000 BOEs per day, place us in an excellent position to benefit from this positive oil pricing cycle. We expect a significant boost to adjusted EVDA and free cash flow as of Q2 2026. This additional cash generation will allow us to strengthen our balance sheet by significantly reducing our leverage ratios during 2026, emerging from this price cycle as a strong and more flexible company. Before we move to Q&A, I would like to thank all our employees for their hard work during the quarter. Operator, we can now move to Q&A.