Vista Oil & Gas SAB de CV

NYSE:VIST

Earnings Call Analysis

Vista Grows Reserves and Production, Cuts Costs

In 2023, Vista achieved a production increment of 18% to 51,100 BOEs per day and a 27% increase in P1 reserves to 319 million BOEs. The company's consistent operational excellence is underpinned by a 33% year-over-year reduction in lifting costs to $5.1 per BOE, beating guidance. Financially, Vista realized a 14% growth in adjusted EBITDA to $871 million, with a 115% surge in stock price. Looking forward, the 2024 guidance anticipates further production growth by up to 35% and adjusted EBITDA increase to $1 billion to $1.15 billion.

A Year of Exceptional Growth and Strong Financial Health

The year 2023 was marked by robust operational and financial outcomes, with the company's stock price doubling, reflecting industry confidence in its management and strategic trajectory. Production significantly surpassed pre-conventional asset transfer levels with total production at 56,400 barrels of oil equivalent per day (BOEs per day), representing a 14% quarter-over-quarter and a 16% year-over-year increase. The company experienced oil production growth of 17% over the previous quarter and 18% year-over-year. This surge is attributed to the efficient tie-in of 11 wells within its development hub, Bajada del Palo Oeste, leading to lowered lifting costs by 11% and achieving $4.3 per BOE. The resulting adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) escalated by 43% year-over-year to $288 million, coupled with a net leverage ratio at a solid 0.46x of adjusted EBITDA.

Strategic Progress Ensuring Long-Term Sustainability

In alignment with its key strategic pillars, the company successfully boosted its P1 reserves by 27% to 319 million BOEs, a testament to its solid reserve replacement strategy and operational excellence. Financially, this enabled the company to achieve an adjusted EBITDA of $871 million, growing by 14% relative to 2022 and maintaining healthy leverage ratios, with gross leverage at 0.71x adjusted EBITDA and net leverage at 0.46x. These achievements reflect a systematic and sustained approach towards securing its midstream capacity to meet its 2026 production target effectively.

Forward-Looking Guidance Indicating Sustained Growth

The company aims to maintain its momentum by planning to drill and complete more wells and improve infrastructure capacity. With a CapEx forecast of $900 million in 2024, the ambition is to expand production to between 68,000 and 70,000 BOEs per day, leveraging full drilling and completion capacity. The target reflects a forecasted increase of 10–15% growth in production quarter-on-quarter, aiming to reach 80,000 barrels of oil per day by Q4 2024. Alongside production growth, a focus on reducing greenhouse gas emissions intensity solidifies the company's commitment to sustainability and its 2026 targets.

Navigating Through Infrastructure and Market Dynamics

Infrastructure projects critical for expanding production, such as the Chile connection and Vaca Muerta Norte, are proceeding as scheduled, positioning the company to optimize the strategic export opportunities. Although there's a shift in the completion timeline for the Oldelval expansion to October, this is not projected to impede the company's 2024 plan. Furthermore, domestic prices are showing a tendency towards alignment with export parity, which could inspire additional capital expenditures and investment, particularly if Argentina relaxes controls on dividend repatriation.

Earnings Call Transcript 2023-Q4

[Operator]

Good day, and thank you for standing by. Welcome to Vista's Fourth Quarter 2023 Earnings Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Vista's Strategic Planning and Investor Relations Officer, Alejandro Cherñacov.

[Alejandro Cherñacov, executive]

Thanks. Good morning, everyone. We are happy to welcome you to Vista's Fourth Quarter and Full Year 2023 Results Conference Call. I am here with Miguel Galuccio, Vista's Chairman and CEO, Pablo Vera Pinto, Vista's CFO; and Juan Garoby, Vista's COO. Before we begin, I would like to draw your attention to our cautionary statement on Slide 2. 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 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 call, we may discuss certain non-IFRS financial measures such as adjusted EBITDA and adjusted net income. Reconciliation 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, Vista 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 ticker is VISTAA in the Bolsa Mexicana de Valores and VIST in the New York Stock Exchange. I will now turn the call over to Miguel.

[Miguel Galuccio, executive]

Thanks, Ale. Good morning, and welcome to this earnings call. We have an exceptional year in 2023. We have continued to deliver strong operational and financial results with double-digit growth, improved reserves, total production and adjusted EBITDA. We also secured our midstream capacity in key projects, which underpin our updated production target for 2026.

Our outstanding performance was reflected by our stock price performance, which doubled during the year. I will now present our Q4 2023 results and then move on to our full year results. During Q4, we continue to focus on drilling and completion activity in Bajada del Palo Oeste. This led to a sequential growth in total production, surpassing our consolidated production level prior to the transfer of the conventional asset in Q1 2023.

Total production was 56,400 BOEs per day during the fourth quarter, 14% above sequentially and 16% above interannually on a pro forma basis. Our production was 48,500 barrels of oil per day, 17% above the previous quarter and 18 percentage above the same quarter of last year, also on a pro forma basis. Total revenues during the quarter were $309 million, 2% above the previous quarter. We continue reducing our lifting costs, reaching $4.3 per BOE during the quarter.

Capital expenditure was $212 million, mainly driven by 11 well drilled and 7 wells completing during the quarter. In Q4 2023, adjusted EBITDA was $288 million, 43% above year-over-year, supported by the stable revenues and other operating income growth, amid lower lifting costs. Adjusted net income was $240 million, implying a quarterly adjusted EPS of $2.50 per share, mainly driven by higher adjusted EBITDA and the positive impact of the reduction in the full year income tax.

We recorded positive free cash flow of $107 million during the quarter, driven by a strong EBITDA generation and normalization of working capital compared with the previous quarter. Net leverage ratio at the quarter end was a solid 0.46x adjusted EBITDA. I will now deep dive into our main operational and financial metrics of the quarter. Total production during Q4 2023 was 56,400 BOE per day, driven by the tie-in of 11 wells in Bajada del Palo Oeste during the quarter.

This led to a sequential increase of 14%. On an annual basis, production increased 3%, reflecting that we have now surpassed the production level prior to the transfer of the conventional asset back in March 2023. On a pro forma basis, adjusting by the production of such asset, our total production growth was 16% year-over-year.

During the quarter, we recorded an outstanding performance in oil production, which increased by, which increased by 17% on a sequential basis and 18% on an annual pro forma basis. On other hand, gas production decreased 2% quarter-over-quarter, impacting our Q4 total production target and the exit rate.

This was mainly due to the fact that during the quarter, we tie-in 2 pads in the Northeast of Bajada del Palo Oeste, which has a lower gas to oil ratio than other parts of our acreage. During the fourth quarter of 2023, we continue in full development mode with 100% of the drilling and completion activity in Bajada del Palo Oeste. We tie in 11 wells during the quarter impact Bajada del Palo Oeste '19, '20 and '21.

The tie-ins boosted production in Q4 and led to an exit rate close to 60,000 BOEs per day. The tie-in of 23 new wells during the second semester of 2023 reflects full utilization of 2 drilling rigs and 1 spudder rig with a run rate of 46 new wells per year, in line with our 2024 plan, which we will discuss later on. During Q4 2023, our revenues were stable year-over-year, as oil production grow offset lower realized oil prices. Total revenues were $309 million, 2% increase compared with previous quarter and 3% decline compared to Q4 2022.

This was mainly driven by lower gas production as discussed previously, a 50% decline in gas prices. Sales to export market accounted for 49% of the oil volume and 53% of net oil revenues. We exported 2 million-barrel of oil, composed by 1.6 barrels through the Atlantic and 0.4 million barrels by pipeline to Chile. Realized oil price for the quarter averaged $67.8 per barrel, down 2% year-over-year and flat compared to the previous quarter.

The average realized domestic price was $63.7 per barrel, while the realized export price was $74.2 per barrel. We are seeing good recovery in the domestic prices with crude in line with the $65 to $66 range for January and February, which is key to found our growth plan. Lifting cost was $22.3 million for the quarter, a 38% decrease compared to the same quarter of last year.

Lifting costs per BOE was $4.30, a decrease of 40% compared to Q4 2022. These results continue to reflect the positive impact of our new operating model, fully focused on our shale oil asset, following the transfer of the conventional assets in the first quarter of the year. On a sequential basis, lifting costs per BOE was down 11%, as the ramp-up of production volumes continue to dilute fixed costs. We expect this trend to continue during 2024. The devaluation of the peso of approximately 130% led to cost savings in the second half of December.

We are still closely monitoring the full impact of this event on our lifting cost of Q1 2024. Adjusted EBITDA during Q4 2023 was $288 million, an increase of 43% year-over-year. Adjusted EBITDA performance was supported by production growth and lower lifting costs. It also includes $81 million in gains from repatriation of 27% of export proceed at the blue-chip swap exchange rate. This gain has been accounted for -- in other income. This benefit has been extended and currently allow us to repatriate 20% of our exports at blue-chip swap rate.

We continue to see an expansion of margins. Adjusted EBITDA margin was 73% during the quarter, an interannual increase of 7 percentage points. Note that we have added the other income from the repatriation of export proceed at the blue-chip to our revenues to calculate our adjusted EBITDA margin. This provides a more accurate representation of our margins. For more detail, please see the earnings note released yesterday afternoon.

Netback during the quarter was $55.6 per BOE, a 39% increase year-over-year. During Q4 2023, we have another positive free cash flow quarter. Cash from operating activities was $347 million, reflecting higher adjusted EBITDA generation and normalization of working capital related to sales collections. Cash flow used in investing activities was $240 million, in line with the capital expenditures of $212 million and a $17 million increase in working capital related to CapEx.

Free cash flow during Q4 2023 was therefore $107 million. Cash used in financing activities was $67 million, driven by the prepayment of local bonds adjusted by peso inflation as well as bond series III in currency. Net leverage ratio stood at 0.46x adjusted EBITDA at quarter end. Cash at the end of the period was $213 million. We now move on to the full year results. During 2023, we made solid progress across our 4 strategic levers. We increased P1 reserves and well inventory, reflecting the growth potential and the quality of our asset base.

P1 reserves increased 27% year-over-year to 319 million BOEs. While inventory increased 28% year-over-year to 1,150 wells, of which only 99 were on production at the end of 2023. We also delivered solid operational performance maintaining our status as a leading operator in Vaca Muerta. Total production was 51,100 BOEs per day, a 5% interannual increase or 18% on a pro forma basis, adjusted by the transfer of the conventional assets in March 2023. Lifting cost was reduced 33% year-over-year to $5.1 per BOE. Our cost-saving delivery was better than planned reflecting a 7% improvement vis-a-vis our $5.5 per BOE guidance.

Additionally, we made a strong progress in sustainability. We reduced emission intensity by 13% to 15.6 kilogram of CO2 equivalent, which places our company in the best quartile compared to the comparable upstream player worldwide. I am also very proud of our safety track record. Total recordable incident rate, including employee and contractors, was below 1 every year for the last 4 years, with 0.2 for 2023.

Finally, during 2023, we continue to deliver robust total shareholder returns. Adjusted EBITDA was $871 million, up 14% compared to 2022. Our stock price increased 115% from December 31, 2022, up to date. As I mentioned previously, P1 reserves increased 27% compared to 2022 for a total of 318.5 million BOEs estimated at year-end 2023. This implies a total reserve replacement ratio of 458% and 485% for oil.

Proved reserve life increased by 20% to 17 years. Net additions were 85.5 million BOEs driven by the activity in Bajada del Palo Oeste, where we added 40 new well locations and Bajada del Palo Este, where we added 26 locations. This resulted in a total of 297 booked well locations in our P1 reserves. The certified present value at 10% discount rate attributable to the company interest in P1 reserves is $3.3 billion using a price assumption of $66.5 per barrel for oil according to the SEC guidelines.

During 2023, we also achieved significant operating milestones. We tie-in 31 new wells, 2 above our original guidance. The drilling and completion activity boosted our total production leading to an 18% increase year-over-year on a pro forma basis. Most of our drilling and completion activity in the first semester targeted the derisking of our blocks. Solid productivity result in Agila Mora and Bajada del Palo Este allowed us to expand our inventory by 250 wells.

During the year, we successfully secured that take away capacity to deliver on our 2026 plan. We obtained capacity in 2 key projects, 12,500 barrels of oil per day in the Vaca Muerta Norte pipeline and 31,500 barrels of oil per day in the Oldelval expansion.

The treatment plant in our development hub was expanded to 70,000 barrels of oil per day. We are currently working on another project to increase total treatment capacity to 85,000 barrels of oil per day before year-end. In terms of export volumes, in 2023, we increased oil exports to 52% of total oil sales, up from 44% in 2022. This was boosted by higher production and the start-up of exports to Chile, which reached 4,700 barrels of oil per day in Q4 2023.

During 2023, we also made solid progress in our emissions reduction and nature-based solution projects. Our decarbonization projects included the installation of a new vapor recovery unit, optimization of glycol dehydration process and the addition of renewables to our energy matrix among other projects. Implementation of such projects led to the reduction of Scope 1 and 2 in greenhouse gas emissions by 13% year-over-year. As previously discussed, emission intensity was also reduced by 13% over the same period to 15.6 kilos of CO2 equivalent per BOE.

Regarding nature-based solutions, our subsidiary, Aike achieved significant milestones during the year. We finalized planting our flagship project in Rolón Cue with 2.5 million trees, and initiated soil preparation activities in a neighboring plot of land in Villa Zenaida. We have initiated work in our forest conservation project in [indiscernible] and also made good progress in regenerative agriculture and livestock projects. In parallel, we started the process to certify the carbon credit of our projects with Verra. We have consistently delivered strong financial metrics over the last 3 years, resulting in superior total shareholder returns.

Adjusted EBITDA increased by 14% year-over-year to $871 million, in line with the midpoint of our original guidance. ROACE was 39%, consistently delivering top-tier return on capital in the energy sector. Adjusted EPS per share was $5.2, an increase of 24% compared to 2022, driven by unadjusted net income of $191 million.

We maintained healthy financial ratios with gross leverage at 0.71x adjusted EBITDA and net leverage at 0.46x. This outstanding performance across all financial metrics is reflected in the evolution of our share price, which more than doubled since year-end 2022 to this date, outperforming our peers in LatAm after in space. I will now share our 2024 guidance. As discussed during our Investor Day last September, we plan to increase the number of tie-ins to 46 by utilizing our existing drilling and completion capacity in full. The entire drilling campaign will be focused on our development hub with most wells in our flagship development in Bajada del Palo Oeste.

Based on this activity, CapEx is forecast to increase to $900 million in 2024. According to our model, this activity will boost our production to between 68,000 and 70,000 BOEs per day during 2024. We expect lifting costs to continue to decrease and the back end focus on efficiency and the dilution of fixed costs by additional production volumes. We are forecasting $4.5 per BOE in 2024. Adjusted EBITDA is forecast to increase to between $1 billion and $1.15 billion using a realized oil price of $65 to $70 per barrel.

Finally, we expect to continue reducing our greenhouse gas emissions intensity during 2024 in line with our 2026 reduction targets. I will now summarize the key takeaways of today's presentation. During 2023, we delivered robust operational and financial performance with double-digit growth, improved reserves, total production and adjusted EBITDA. The transfer of our conventional asset converted Vista into a fully focused Vaca Muerta company with lower cost and higher margins.

Our robust performance during the year continues to prove our ability to deliver on our superior total shareholder return proposition reflected by our peer-leading share price performance. We issued an updated strategic plan, supported by our large high-quality inventory, our operating credentials, our existing drilling and completion capacity and having secured midstream capacity to deliver on our production targets.

In this respect, we are well on track to double our production to 100,000 BOEs per day by 2026. Our 2024 guidance is the first step in this direction, with production growth of 35% and adjusted EBITDA growth of 23%. We plan to deliver on our 2024 and 2026 targets using our own cash generation.

Before we move to Q&A, I would like to thank our investors for their continued support and the entire team at Vista for their commitment and hard work during 2023. I look forward to an equally successful 2024 and seeing you in our next earnings call. Operator, please open the line for Q&A.

[Operator]

[Operator Instructions] First question is from Bruno Montanari with Morgan Stanley.

[Bruno Montanari, analyst]

Miguel, many great achievements in the year with the reserves, the cost evolution and the financial results, which speak for themselves. So I have 2 questions, one about -- actually both about production. But the first question, there was a bit a shortfall in production versus the original targets you had.

I understand the gas issue you mentioned, but it seems that for oil, there was also a little bit less production. So if you could add a little bit more color on why that happened and then what the company is doing to overcome that, that would be great.

And then if you could discuss what more can you do in 2024? You mentioned that you're fully utilizing the existing equipment. So is there any optionality to bring more equipment to Argentina? What is the likelihood of that happening? So how should we think about this 68,000 to 70,000 barrels per day or more confident on the -- on reaching 70,000, if there is upside to that number. So any color there would also be super helpful.

[Miguel Galuccio, executive]

Bruno, thank you very much for your comment. And regards to production, yes, first of all, as we said -- I mean, we closed -- let me give you a bit of explanation. We closed Q3 2023 at almost 50,000 barrel per day. At that time, we guide on a sequential growth of 20% for Q4. We achieved really not a 20%. We achieved an oil production increase of [ 17% ] quarter-on-quarter, but natural gas production decreased 2%.

In oil, we've made very good effort to offset the lower production of the Q pilot that we mentioned before. The Q was a pilot, and we were testing to frac once and 8 wells at the same time. And clearly, the intensity of the fracture, even though we are evaluating, it didn't give the results that we were expecting for.

At the BOE level, the impact of 2% in quarter-on-quarter decrease in gas production a plain half of the quarter miss. Gas production decreased by 2 factors. One, basically the well that we connected have lower gas oil ratio in the Northeast of Bajada del Palo Oeste. And also, we have higher downtime of the legacy wells -- or the legacy conventional wells that we have in production.

Regarding our 2024 guidance, we reiterated a target of 20,000 barrels oil per day. You should expect that Q1 2024 is at similar levels compared with Q4 2023. We plan to tie-in this quarter 11 wells. We have 3 of them already tie-in. And as we tie-in the rest towards the end of Q1, you should see the second half of -- the first half of Q2 with a robust production growth for Q2 then. From Q2 onwards, I think you should expect between 10% and 15% growth quarter-on-quarter arriving around in Q4 to an average of 80,000 barrels oil per day.

Regards the activity, our current plan is to fully utilize all our contracted rigs. We have 2 working rigs and 1 spudder. We are working on potentially speeding up the tie-in of 1 or 2 parts that are included in 2024 plan, hiring and spot drilling and completion rig and completion capacity. So I think this 1 is -- pretty much is going to happen.

In parallel, we are looking and we are having discussions with several oil service company providers to see if we can bring more equipment in terms of drilling and completion capacity to the country. So that discussion is ongoing. So you can factor in the fact that we are going to have -- contracting a spot drilling rig and some completion capacity for 1 or 2 pads. The other thing is, as we said, it's under negotiation. We will see if we get the right conditions to really bring more equipment to the country.

[Bruno Montanari, analyst]

Great. Super clear. And just to confirm, these potential addition of new equipment would be upside to the existing drilling plan, right?

[Miguel Galuccio, executive]

That's correct, Bruno.

[Operator]

It comes from the line of Tasso Vasconcellos with UBS.

[Tasso Vasconcellos, analyst]

I have 2 questions on my side. The first one, it would be great to hear your thoughts on Middle East government so far. What is going on better or worse than initially expected? And if it changes your company's expectations for the next 1, 2, 3, 4 years at an extent. My second question, looking forward, of course, 1 of the main drivers for the case is production growth, right?

We already discussed it a bit on what's dependent on the company, the drilling campaigns and so on. But of course, part of this increase in production is dependent on investment in infrastructure. So it would also be great to hear your thoughts on how investment in increasing this outflow capacity throughout Argentina is going on, if they are on track? And if you see any risk potential delays on these investments? Those are my questions.

[Miguel Galuccio, executive]

So thank you very much for your question, and welcome to this call. I guess it's your first time. So good to have you here. Regarding the first part of your question on how we see the government. So we have a very positive view on some of the proposing changes that the government is making such as no price intervention by the government and freedom of export.

I believe both things are very good to attract investment to Argentina. Argentina have a very unique opportunity in terms of bringing more proceeds to Argentina through export. And clearly, this 2 initiatives will help a lot the country in terms of bringing more investment and of course, exporting more, and Vista is an example of that.

So we welcome this initiative. We support this initiative. I think the industry also was present at the Congress discussion through the president of a chamber that we have just in companies, the CEPH and basically, she verbalized that support with the President of Congress. So that is pretty good.

Regarding infrastructure and the progress that we have on that, I think we are basically pretty much on track with the Chile connection, and what we call Vaca Muerta Norte, that is in place. And we are exporting the volumes that we thought we will be exporting -- at the time that we thought we will be exporting.

The 1 that is delayed is the project of Oldelval. So we are facing delayed on the Phase I that should be finished -- is supposed to be finished the first quarter of 2024, and now is delayed to October. In Q1 2024, the full project is supposed to deliver 120,000 barrels oil per day. Now we believe it's going to be -- we will be getting 120,000, 150,000 in October. The pipeline was not an issue. We have an issue or they have an issue or speeding delay with the provision of pump, but this issue is resolved.

So all the equipment is in hand. So in October, we're supposed to have this 150,000 coming in, in line. The delay does not impact our plan. We have no capacity in Oldelval open access today. We are actually using 44,000 barrels per day, as we speak. And also we have Vaca Muerta Norte, and we have the tracking that give us flexibility. So we don't see any issues in infrastructure for 2024.

[Operator]

[Operator Instructions] It comes from the line of Marina Mertens with Latin Securities.

[Marina Mertens, analyst]

I have 2 questions. First, considering all the changes going on in Argentina's politics and economy, the favorable outcomes of Bajada del Palo and the recent announcement of the increased reserves. What would be the need to accelerate the already ambitious CapEx plan. And thus, the [indiscernible] play any role in this decision and the other 1 on domestic prices. We observed a rebound in the price of the local barrel in December, which continued into January. What are you anticipating for the remainder of the year?

[Miguel Galuccio, executive]

Marina, thank you very much for your question. I will start with the second part. During basically the quarter, we were requested additional volume by local refineries. The price that we reflect by the earnings reflect basically a mix between domestic sales, part of which we've been providing, as you said, the local price. And the additional volumes that were paid are export parity. Of course, we see as a positive trend that domestic market is willing to validate the export parity.

And we welcome everything that is moving in that direction. Regarding to additional CapEx, I mean, our plan for 2024, I will say, this is ambitious. The growth that we are aiming for is probably 1 of the highest in the last 5 years is 35%. So therefore, I will say, there's probably a little room to aim a bit higher.

Now if you ask me 1 thing that going forward, we help to continue those level of growth or even to aim higher will be free access to be able to repatriate dividends or proceeds. Anything in terms of freeing the controls that we have today in Argentina, clearly, we resonate with investors with us and with the additional growth.

[Operator]

It comes from the line of Daniel Guardiola with BTG Pactual.

[Daniel Guardiola, analyst]

I have a couple of questions from my end. The first 1 is on the capital structure of the company. I mean clearly, right now, you're running a very under levered balance sheet, which makes sense considering that most of your operations are in Argentina. But bear in mind that the macroeconomic environment may improve towards the second half of the year, you're having a better visibility in terms of pricing dynamics. Would you consider this structure or this low leverage to be suboptimal?

And can you share with us what will be for you guys an optimal capital structure? So that would be my first question. And my second question is regarding growth. I mean I understand your 2024 plan is already a very ambitious one. By looking beyond 2024, what I'm seeing is -- in Vaca Muerta is a very concentrated basin with a few players with not a lot of opportunities, especially in organic opportunities. And I wanted to know if you were taking a look at the current process that Exxon is running to basically sell their Vaca Muerta assets. That would be my 2 questions.

[Miguel Galuccio, executive]

Daniel, Sorry, I was mute. First of all, also welcome you to this call, and thank you very much for your question. As you mentioned, I mean, we feel very comfortable at the current stage with the way that we run the company leverage wise. And also, you correctly mentioned the room for us to have a bit more leverage. But for that, we have to have a reason.

As you also mentioned, I mean, our growth program is super ambition. And we have the luxury to grow using our own cash flow generation. And I think that has been somehow recognized by the market and is part of the -- part of what you see in the evolution of the stock price of Vista, I believe, is related to the way that we run the company. That doesn't mean, as you said, this is a change -- there's an important change in context that we can basically aim for further growth and have a different leverage ratio going forward.

One of the things that could, for example, change the dynamics is that we have an acquisition. And of course, we are always active on that front. We are very, very -- I mean, very active in terms of looking for new opportunities. In the particular case that you mentioned, yes, I mean they have interest assets. And yes, we are looking into that, probably nothing more that I can comment at this stage. Just the fact that, yes, we look every single opportunity that arose in Vaca Muerta that is our turf.

[Daniel Guardiola, analyst]

Can I squeeze in an additional question?

[Miguel Galuccio, executive]

Yes, Daniel, go ahead.

[Daniel Guardiola, analyst]

Regarding your cost structure, I mean, you have done a terrific job. You're not streamlining your cost structure, not bringing down your lifting cost from, I don't know, 13 or 12.5, 5 years ago to very low levels right now, close to 4.3, 4.4. Do you foresee additional room to streamline your overall cost structure, not only lifting but maybe also the SG&A.

[Miguel Galuccio, executive]

Yes. Yes. Look, Daniel, we come from a long way of reducing, particularly the lifting cost. And I believe we have little room less as the result of the growing production. Most of the lifting costs -- probably 70% of the lifting cost structure is fee cost. So as we grow production, we will be diluting part of that cost, 70% of those. So I think we have a little room going forward. But I will say also that we are achieving the technical limit on things that we can do.

So the reduction that we see in lifting cost is going to be more [indiscernible] number and not big reduction as we experienced at the beginning.

[Operator]

[Operator Instructions] Our next question is from Paula Greca with TPCG.

[Paula Greca, analyst]

I would like to know what the reason why crude oil exports declining in 4Q '23 in terms of volumes sold? Was it because of an increase in real demand from local refineries, so you are limited to export?

[Miguel Galuccio, executive]

Paula, look, I think there was 2 reasons why that happened. One is a matter of stock at the end of the year in the terminal that basically we experience almost every year. And the second part is related to the fact that, yes, we have more demand on the local market -- a bit of more demand in the local market that as explained before, we sold our export parity. So this is pretty much the reason.

[Operator]

Comes from the line of Andrés Felipe Cardona with Citi.

[Andres Cardona, analyst]

Solid results. And I have 2 very quick questions and perhaps 1 more detailed. So the first is what is the implied realization price for the local sales or the domestic sales? The second 1 is what is the assumption in terms of export taxes and if the export tax remain -- sorry what is the assumption of volumes exported and if the export tax remained at 8% at the end? And the more detailed question is why to consider M&A and not accelerate on the existing portfolio? I mean, you have close to 1,150 drilling locations, why to pursue M&A at this stage?

[Miguel Galuccio, executive]

Andres, this is Miguel. So the line was not so good, but I think I managed to listen so the Q1 local prices that we are seeing so far is 66. So it's quite good. Export tax today is 8%, and I think there was a third question related to...

[Andres Cardona, analyst]

Miguel, the question on the local crude sale prices, what is incorporated in the guidance? And the last question was why to consider M&A at this point and not accelerating the existing portfolio you have over 1,100 drilling locations, right?

[Miguel Galuccio, executive]

Yes. Sorry, Andres, the line is not so good. But again, I mean, in terms of pricing, what we run in our plan was between 65 and 70 total. This is realized price. Today, we will look at, as a local price, what the refinery is paying for us, 66. This is Q1, okay? Now our guidance was a plan between $1 billion EBITDA and $1,150 EBITDA looking at the range -- price range of realized price in 65 to 70, realized pricing, local price Q1, 66 today.

In terms of M&A, I don't think you will see anything that will impact our planning during 2024, okay? And as I mentioned before, we are basically active M&A-wise, as have we been in the past, evaluating opportunities that are today in place that mainly is 1 that was the question, I don't remember from who before.

[Operator]

[Operator Instructions] One moment for our last question, please. It comes from the line of Alejandro Demichelis with Jefferies.

[Alejandro Anibal Demichelis, analyst]

Just 1 quick question, Miguel. You are talking about accelerating production, if you can or M&A and so on. Can you talk about how you see potentially to bring in partners into your acreage. If that's something that in the current situation of Argentina, improving conditions in Argentina that you could see feasible?

[Miguel Galuccio, executive]

Alejandro, yes, thank you for your question. I mean, yes -- I mean when we talk about M&A, we consider everything. As you know, I mean, we have today, our activities concentrating in what we call the development hub. And the development hub is our Bajada del Palo Oeste. And Bajada del Palo Oeste now became part of the development hub. So everything that we have in the North, particularly Aguila Mora is a place that in the future, yes, we could consider to bring a partner to add capital. We are very well -- I mean we are recognized and we are very well positioned, as low cost, low carbon and reputable operator. So yes, when we look at M&A, this is something that we could consider in the future.

[Operator]

And with that, we conclude the Q&A session. I will turn the call back to Miguel Galuccio for final comments.

[Miguel Galuccio, executive]

Well, guys, thank you very much for participating for your question, for the support and looking forward to see you next quarter.

[Operator]

Thank you, ladies and gentlemen. You may now disconnect.