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.

Thank you. And as a reminder, to ask a question, you need to press star 1-1 on your telephone and wait for a name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from the line of Leonardo Marcondes from Bank of America. Your line is open.

Hi, everyone. Thank you for picking my question. So my question here is regarding the revision of the guidance for production. Could you walk us through the main drivers behind the increase in this year's production guidance? Given that CAPEX remains unchanged, what is effectively enabling this uplift? Should we attribute it mainly due to better than expected well productivity? Thank you very much.

hi leonardo thanks for the question yeah uh look at i think there's two things one uh and the more important is that we feel super confident due to the results of the 23 wells that we connect in q1 um all of them have very robust productivity so we decide basically that we will up the degree six as you saw from 140 to 143 barrel of oil equivalent per day that basically add one million barrels during 2026. If you go and try to understand a bit the quarter breakdown, I think you have to expect that Q2 will be around the production level that we are recording now in March. And then progressively you see increases in Q3 and in Q4 that will lead us to a total of 143,000 barrels per day average for the year. And as I mentioned in the presentation, this does not include the consolidation of equinox assets. Thanks for the question.

Thank you. One moment for our next question. Our next question comes from the line of Guillerme Martins from Goldman Sachs.

Your line is open. Thank you. Thank you for taking my question. I have a quick one on capital allocation. I understood you guys have maintained your CapEx guidance for the year despite the scenario of higher oil prices since your last investor day last year, right? Having said this, what should we think in terms of capital allocation this year? Miguel, you mentioned the company could use this additional cash flow from higher oil prices to pay down debt, right? What is the target net debt EBITDA we should think of? Thank you.

Thank you, Jeremy, for the question, and the answer is in line with what you mentioned. You should go back and we should go back to the capital allocation framework that we've been basically commenting for the last few years. We use our balance sheet to close 70,000 barrels of oil per day. in acquisitions when you take into consideration the acquisition of Petronas and Equinor. Now that we enter in a higher oil prices scenario and that we almost doubled the production in the last year, we believe that we should deliver using that momentum that we are living and regain financial flexibility the one that we have prior to the acquisition. That means for us going back to around the one net leverage ratio we set by year end. Additionally, we said on Tuesday we announced that the shareholders approved the extension of the share buyback plan for $150 million for 2026. so you also should assume that we will use the cash during this year to complete that acquisition of the buyback so that is pretty much how you should think of the year so you correct i mean our priority now will be delivery understood thank you you're welcome

And our next question will come from Bruno Montanari from Morgan Stanley. Your line is open. Good afternoon, everyone.

Thanks for taking my question. I wanted to explore a little bit more the pricing situation, Miguel. You mentioned that you were unable to capture the full benefits in the first quarter because you closed the prices ahead of the March rally. So can you comment on what you have been able to to secure now in the beginning of Q2? And if there is any commercial strategy change that could allow you to capture more spot prices without eventually fixing the prices one month ahead? Thank you very much.

Yeah, thank Bruno for the question.

A lot of noise in the line. But I think I managed to catch the question. So first, I would like to say that we are not changing our commercial strategy. You are going to see that we capture 100% of the high oil prices starting in Q2. There is always part of the oil sales, as you know, of the next month, which have locked in in advance. We've been doing that for many years. It's always been working capital management. As we said in the presentation, we sold essentially all the March volume before the conflict in the Middle East started, and the price of such a sale was low-keen or previous to demand. As of today, less than a third of Q2 production is priced at an average price of around $90 a brand, while the rest of the production will continue to price at the current and future price levels. So summarizing, I mean, for that we are exposed to full brand volatility for the rest of the volume that we have not yet closed. So basically not changing the strategy and also not changing the practice of locking in one man ahead that we are selling.

Very clear. Thank you very much.

You're very welcome.

Thank you. And our next question comes from Daniel Guardiola from BTG Actual. Your line is open.

Hi, good morning, Miguel and team, and thanks for the presentation. I have a question on cost inflation, especially considering the current environment of higher prices. I wanted to ask if you've seen any early signs of service cost inflation in rigs, track crews, logistics, sand, et cetera. And how should we think about the balance going forward between pricing tailwinds and potential cost pressure? And to what extent you believe your efficiency gains can somehow offset this potential inflation?

So that would be my question. Thanks, Daniel, for the question. A very good question.

So, first of all, probably the best thing for me to say and to clarify that we have not had any tariff change, okay? And we will not allow any tariff change. Now, the existing contract, as some of them, I would say many of them, are just using gasoline prices. So we are seeing some tariff adjustment on those cases. that we could consider inflation. We are also seeing some impact on the peso component due to the flat effects. Now, saying all that, and as you mentioned, we have a very solid cost reduction plan in place. So the project that we are executing will allow us to offset most of those effects. So we are on track and we are basically confirming our guidance of $11.7 million for drilling and completion cost per well, and also the $4.3 that we mentioned in terms of lifting costs. So we are super confident. Yes, we are seeing some pressure or adjustment on the contract due to the price of gasoline, but the plan that we have in place will allow us to offset that small impact.

Thank you, Miguel.

Thank you. And our next question will come from the line of Alejandro Demichelis from Jefferies. Your line is open.

Yes, good morning. Thank you very much for taking my question. Miguel, you just talked about your hedging strategy and how you're dealing with the commercial part. Maybe you can talk about how the new trading vehicle should be operating, how much risk it should be taking, and how can that continue to improve your commercial cost?

Thank you, Ale, for the question. Yes, so first, I mean, the reason why we create a trading company, the main reason, and we explained it before, is to access to new markets. But basically, we generate more demand from the Milanito oil. And also, we create some additional margins since we are selling our own oil on a delivering basis. As we said, I mean, when we look at what we have done, we are achieving both. We are reaching new markets. As an example, Malaysia, Australia, Thailand, Singapore, that we didn't reach before, we are reaching now. And we are also capturing additional margins on the 25 million barrels that Basa expects to trade during 2026. So we are not a trading company. So Basa's goal is not to take any trading risk. take position to cover the volume that we sold, and usually also only for the following month until the oil is delivered. So, I mean, I think it's super important to clarify because we need Beza for that reason. And we should not look at Beza as a trading company. And of course, I mean, the two objectives that we put us in line of the creation of Beza, we are achieving it.

That's very clear. Thank you. You're welcome.

Thank you. And our next question will come from the line of Enrique Cuna from JP Morgan. Your line is open.

Hi, good morning. Thanks for taking up our question here. We have a question on working capital. Could you provide more color on the impact it had on free cash flow in the quarter? Specifically, in the report, you mentioned around $200 million related to VEISA, which was not included in our estimates here. So, could you elaborate on the contract effects from VEISA, and what should we expect going forward?

Yes, Enrique, of course. I mean, happy to elaborate on that.

So, basically, the ramp-up of VEISA operations generates two one-offs, as we explained. One is related to the fact that Beza sold most of its production on a delivery basis in type of FOB. That was what we were doing before, which is what we were doing with all the trading companies that we were using before the creation of Beza. This extended the revenue collection cycle by the transit of the ship. So just let me give you an example. An oil vessel that takes around 20 to go from Puerto Rosales to West Coast in U.S. Also now we are seeing more demand from the Asian buyers, but also we take that transit time much more time. I would say probably 40 days of transit time. And that is basically the change that we have, what we did before, what we have today. This is the first one off. The second effect is related to base a short-term which consists on buying physical oil from Vista Argentina and selling a forward contract at the same price to lock in that revenue. So, for example, in the month of March, with significant price volatility, our EBITDA reflects the realization of price of $60, but the invoice to be collected by Beza reflects the market price that was between $90 and $100. leading to an increase in working capital. So that are the two effects that we have. One is related to the realization of the price and the short hedge that Beza takes every time it sells. And the other one is the change of us that today we are selling on delivery basins in terms of FOB that we were doing before.

Hope that answers your question. Thank you.

Thank you. Our next question comes from Tasso Osconcelos from UBS. Your line is open.

Hi, Miguel. Hi, Ali. Miguel, you already mentioned a little bit about your pricing, the discount or premium to brand prices, Meganito and so on. But can you also comment on that agreement that you had with the local refineries in Argentina? in terms of setting some kind of limit on pricing when oil prices are too high, but also some kind of protection when it moves to lower in determined periods. That's more for us to understand how we should think about the disagreement looking forward.

Thank you.

Caetano, thank you very much for the question. So first, probably prices in the domestic market continue to fully reflect a poor parity. And I think that is super important to understand. There was no agreement to fix prices. Now, what we did was to discuss an agreement to mitigate the financial impact of raising crude oil prices resulting from the conflict that we have in Middle East. So that agreement was that the buyer will recognize fullest poor parity but paying up to $95 to $100 brand for April and May. So any positive difference between the price that they paid and the international market price will be deferred and paid no later than July 31st. This agreement does not have any material impact on our cash flow, as you know, and is only applied to a third of our local sales. equivalent to 15,000 barrels of oil per day, or around 10% of our total. The rest of the volume continues to be priced and paid at export parity. So that is what we did. I think it was very smart. It took the consensus of very few people. And again, we continue receiving and reflecting full export parity in the local market.

That's very clear. Thank you, Miguel.

Thank you. And our next question will come from the line of Andres Cardona from Citi. Your line is open.

Hi, good morning, Miguel. I'm Pim. The province of Buenos Aires of Neuquén, sorry, is considering to do a new round of soil keeping blocks, from what I see on the media. Could you share your thoughts about this opportunity, timing, if the assets are located in a relatively core acreage or it's more type of frontier, any column that you could share, it's appreciated.

Thank you, Andres. Yes, I think look at, I mean, very good timing of the province to put this out. We always going to look into anything that is on the basin that we can participate. Nevertheless, I mean, when you look at what basically they are offering, I would say there's a lot of border of the basin and gas, okay? As you know, our strategy is very concentrated in oil. There could be an oil block that we will look at it, but I mean, very early to tell you if we will do anything. But we believe very good initiative from the province.

Miguel, do these blocks have the same royalties scheme, or are they introducing an incremental rate?

Could you repeat, sorry?

Yes, if the new blocks may have the same royalties rate that the traditional shale accolades as in Pacamarca.

Yes, Andres, I understand it's the same, okay? And to be honest, I cannot give you details. We will look at how the process evolves, but there should not be any changes. on the scheme.

Thank you.

One moment for our next question. Our next question comes from Michael Furrow from Pickering Energy Partners. Your line is open.

Hello, and thanks for taking our question. Look, we were just hoping to get a quick update regarding the Equinor deal. I know it's still a bit early for the company to issue pro forma guidance until that deal closes in early May, but what do you see as a good run rate for annual net turn in lines on the Vendoria Sur assets, and what could the associated CapEx look like?

Yes, Michael, thank you for the question.

So as we mentioned, we now received pending approval that we have from the Chilean antitrust authorities. So all conditions present basically have been met, and we are planning to close this deal early May. Regarding the CAPEX, it will be around $200 million, and also assuming that the deal closes in May, the consolidation will be as first of May. The assets are producing around 20,000 barrel oil per day at Vista working interest, and I think there could be a little upside on this in the coming quarter. With that production assumption, you should assume that we generate around $3 billion of EBITDA.

Great. Thank you. You're welcome.

And our next question will come from the line of George Castout from Latin Securities. Your line is open.

Good afternoon, Miguel, and thank you for taking my question. Kelly, it's a very volatile environment, but I was wondering if you could comment on the Medanito discount to Brent. Are you seeing that move a lot, and how should we think about the differential in 2Q and beyond?

Yes, thank you for the question, and we're happy with this one.

So, yes, we have seen significantly stronger Medanito differentials. This is driven by the supply tightness of Asia and is also contributing to the higher realization price that you saw in Q2. We saw a low volatility in the last month from basically minus three prior to the Middle East event to a range of plus six tonight that was more recently. We believe that this trend will continue depending on how the oil market dynamic unfolds. I mean, there's still a lot of uncertainty there, but I will say you should assume that we will continue selling on a premium price, at least for the near future.

Thank you. Thank you.

Thank you, Jorge.

And our next question will come from the line of Ignacio Sabelli from Itaú BBA. Your line is open.

Yes. Hi, everyone. Congrats on the results, and thanks for taking my question. I would like to understand how the new scope of the RIGI benefits you. What are the plans? Are there any blocks development that could be targeted here? And maybe understand what are the timeframes? When are you going to submit any project? And also, until when can you submit any project? Thanks.

Yes, thank you, Ignacio, for the question. Yes, we are currently preparing the documentation to apply for RIGI for two of our future development blocks. One is Aguilamora and the other one is Bandurria Norte. After closing the Quinoa deal, we will have also a better understanding of Bajada del Toro, which we believe also could apply to the RIGI, but the application of that in particular has to be submitted by its operator, the YPF. But we are quite confident that also that one will apply. Regarding your second question on timing, we plan to submit the documentation by the end of Q2. The Minister of Energy then has to analyze all the information before the approval based on what we've seen is happening with other companies that have asked for the REGIE that will take probably a few months. I would like to add that the impact of RIGI is very positive for what we saw on the evaluation that the two blocks that we present, it creates fiscal incentives and also it moves us to accelerate the cap of investment in those blocks that otherwise would be at the tail of our plan. So, very good initiative for the ORMEN on this one and it will help to bring that block from the north a bit closer in our plan. Awesome.

Thanks. Very clear.

Thank you. Our next question will come from the line of Oriana Caval from Balance. Your line is open.

Hi. Thanks for taking that question. I have a quick one regarding the non-operated assets. Specifically, how do you see the contribution from these areas

Thank you.

Thank you, Oriana, for the question. Yeah, look, La Marga Chica is performing quite well. When we acquired the block, if you remember, we were producing around 38,000 barrels per day. This is Vista working interest. And in Q1, we produced around 48 barrels of oil per day, so a 25% increase. For the rest of the year, as we said, we are expecting a flattish forecast or even a slightly growth. But yes, happy with acquisition, happy with the performance, happy with the relationship that we have today with YPF, the operational level. everything is working pretty well.

Thank you. You're welcome.

Thank you. And our next question will come from Matias Cataruzzi from AdCap. Your line is open.

Hello. Good day, Miguel and management team. My question is as follows. How would the 2026 EBITDA and free cash flow guidance look

at a branch of 105 or 115 dollars per barrel in the new guidance framework thank matthias i like this question so i think as a rule of thumb the way you got it if you consider that every 10 increase between q2 and q4 you have to think that we will capture around $275 million of EBITDA and $250 million of free cash flow. So back to your numbers, I mean, we show early $95 brand for Q2 to Q4. EBITDA will be estimated around 2.9 in 2026. And at Harry 5, that same EBITDA will be 3.2. an $915 brand, it will be almost $3.5 billion. In the case of free cash flow, a $95 brand scenario, the free cash flow will be around $1 billion for the full year, and $105, $1.25, and $115, $1.5 billion of free cash flow during the year.

Thank you for the question. Thanks to you.

Thank you. I'm not showing any further questions at this time. I want to turn the call back over to Miguel for any closing remarks.

So, guys, thank you very much for the participation, for the good question. Very positive about what is coming up. We are starting the year from the operational point of view and the production point of view in good grounds. and very confident for Q3, Q4, and Q4. It should be an excellent year for us. Thank you very much for the continued support and have a good day.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.