On Friday, Vista Energy (NYSE:VIST) discussed second-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

Vista Energy reported a strong second quarter of 2026, with total production at 156,000 boes per day, a 32% increase year-over-year. Oil production rose to 135,000 barrels per day, a 33% increase.

Total revenues reached $1.15 billion, an 89% growth from the previous year, driven by higher oil production and prices. Adjusted EBITDA grew 99% year-over-year to $805 million.

The acquisition of Equinox Assets in Vaca Muerta significantly contributed to the company's performance, enhancing its scale and positioning to benefit from higher oil prices.

Free cash flow was $491 million, with a strong cash position of $605 million. The company aims to reduce its net leverage ratio to around 1 by year-end 2026.

Vista Energy plans to maintain its $3 billion EBITDA guidance but provided sensitivity guidance due to oil price volatility.

Management emphasized ongoing strategic initiatives, including organic growth and potential future M&A activities, while maintaining flexibility in capital allocation.

Full Transcript

OPERATOR

Good day everyone and thank you for standing by. Welcome to Vista Energy's second quarter 2026 earnings webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Now, it's my pleasure to hand the conference to Vista's Strategic Planning and Investor Relations Officer, Alejandro Chernikov. Please proceed.

Alejandro Chernikov, Strategic Planning and Investor Relations Officer

Thanks. Good morning everyone. We are happy to welcome you to Vista Energy's second quarter of 2026 results conference call. I am here with Miguel Gallucho, Vista's Chairman and CEO; Pablo Vera Pinto, Vista's CFO; Juan Garobi, Vista's CTO; and Matias Huejzel, 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 the expectations contemplated by these remarks. Our financial figures are stated in US 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. My company is Associedad Anonyma Bursatio de Capital Bariable, 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.

Miguel Gallucho, Chairman and CEO

Thanks, Ale. Good morning and welcome to this earnings call. The second quarter of 2026 was marked by the closing of the acquisition of Equinox Assets in Vaca Muerta. This milestone, in combination with organic growth, took our company to a new scale, leaving us in an excellent position to capture the upside of higher oil prices. As a result, adjusted EBITDA and free cash flow generation recorded substantial interannual and sequential increases. Total production was 156,000 boes per day, 32% above the previous year.

Oil production was 135,000 barrels per day, up 33% vis-a-vis the previous year. Total revenues during the quarter were $1.15 billion, an impressive growth of 89% compared to the same quarter of last year. Lifting cost was $4.50 per boe, 4% below year over year. Capital expenditure was $467 million driven by strong progress in new well activities during the quarter. Adjusted EBITDA was $805 million, an interannual increase of 99%. Net income was $322 million, an increase of 37% compared to the same quarter of last year and 199% versus the previous quarter, including the gain from La Margachica acquisition in Q2 2025.

Net income expanded by more than 9 times year over year. We recorded earnings per share of $3 during the quarter net of the keynote acquisition payment. Free cash flow was $491 million reflecting a significant boost in adjusted EBITDA generation and a meaningful improvement in working capital. Finally, our net debt ratio at quarter-end was 1.41 times adjusted EBITDA on a performance basis. Reflecting last 12 months figures for the acquired asset, the ratio was 1.25 times adjusted EBITDA, marking a significant reduction year on year and reflecting a very strong balance sheet.

Total production during Q2 averaged 156.1 thousand boes per day. This represents an interannual increase of 32% and a sequential increase of 16%. There are two drivers behind this boost. The first is organic growth. We connected 19 new wells in the last 12 months with very solid productivity, generating a 20% production growth compared to Q2 last year. On top of this, the consolidation of our working interest in Manduria Sur and Bajada del Toro as of May 1st added 14.2 thousand barrels of oil equivalent per day on average for the quarter.

This reflects a run rate of about 21,000 boes per day which will impact fully in the third quarter. Our total production in May and June was on average 161.6 thousand boes per day. Quarterly average oil production was 135.4 thousand barrels per day, 33% higher year over year and 60% above the previous quarter. Gas production increased 30% on an interannual basis and 15% sequentially. Total revenues during Q2 were $1.15 billion, a material growth of 89% compared to the previous year and 66% versus the previous quarter, driven by a solid increase in oil production and higher oil prices.

Oil export increased 54% year over year, reaching 8.6 million barrels in the quarter, representing 72% of our total sales volume. Parity oil prices in Q2 were $89.4 per barrel, 44% above the previous year and 49% above the previous quarter. In both cases driven by higher Brent and an improvement in differentials, we sold 100% of our oil volumes at export parity prices both domestically and internationally. In Q2, lifting cost was $4.50 per boe, an interannual reduction of 4% reflecting our low-cost asset base and fixed cost dilution.

As we continue to gain scale on a sequential basis, lifting costs increased driven by the impact of inflation on peso-denominated goods and services amid flat FX rates. Selling expenses were $4.10 per boe, an 8% increase year over year mainly driven by higher oil prices impacting turnover. Adjusted EBITDA during the quarter was $805 million, 99% higher interannually and 79% higher sequentially driven by a material expansion of revenues amid flat unit cost. Similarly, adjusted EBITDA margin was 70%, an expansion of 3 percentage points compared to the same quarter of last year and 5 percentage points above the previous quarter. Netback increased 51% year over year to $57 per boe. In Q2 2026, cash flow from operating activities was $985 million, reflecting a decrease in working capital of $274 million, mostly driven by the full normalization of the working capital position of our trading subsidiary IZA.

We also made an income tax payment of $53 million. Cash flow used in investing activities was $886 million, reflecting accrued capex of $467 million, the $392 million payment related to the Equinor acquisition, and an increase in capex-related working capital of $21 million net of the Equinor acquisition. Free cash flow was $491 million during the quarter, leaving us well placed to deliver on our annual guidance. Cash flow from financing activities was negative $110 million, driven by the repayment of borrowings for $810 million and interest payments of $88 million, partially offset by proceeds from borrowings for $856 million.

Finally, our cash position remains very strong, standing at $605 million. At the end of Q2, our net debt ratio stood at 1.41 times adjusted EBITDA or 1.25 on a pro forma basis considering the last 12 months of adjusted EBITDA for the acquired assets. To conclude this call and before we move to Q&A, I will make some closing remarks. During Q2, we materially increased the scale of our company on the back of solid organic growth and the successful closing of the acquisition of our interest in the Bandur Yasur and Bajada del Toro blocks in Vaca Muerta.

This allowed us to capture the benefit of the oil price spike in Q2, leading to a substantial boost to adjusted EBITDA and free cash flow generation. In line with our capital allocation framework, we plan to use part of the free cash flow to reduce our net leverage ratio to our target of around 1 times by the end of the year. We made very good progress on our annual work program and are well on track to deliver our 2026 guidance. We are maintaining our $3 billion EBITDA guidance at $85 per barrel as of now.

But I want to provide a sensitivity due to the prevailing volatility in oil prices. For every $10 per barrel change in the second semester, adjusted EBITDA changes approximately $200 million. Before we move to Q&A, I would like to thank all Vista employees for their hard work during the quarter as well as our investors for their continued support. Operator, we can now move to Q&A.

OPERATOR

Thank you so much. And as a reminder, to ask a question, simply press star 11 to get in the queue and wait for your name to be announced. To withdraw your question, press star one. Our first question is from Alejandro Demichelis with Jefferies. Please proceed.

Alejandro Demichelis, Jefferies

Yes, good morning gentlemen. Thank you very much for taking my question. Miguel, one question please. You just have consolidated Bandur Yasur and Bajada del Toro. Could you please provide some kind of color on how that is going and how you see the development of these assets going forward? Please. Thank you.

Miguel Gallucho, Chairman and CEO

Hi Ale. Thank you very much for the question. We took over our share in the asset in May and everything I have to say is moving along as we expected. Our share was consolidated at approximately 19,000 boe per day in Bandur Yasur and 2,000 boe per day in Bajada del Toro. In Manduria Sur, actually, we have three rigs running, so you can expect production to remain relatively flat or maybe it can grow slightly toward the end of the year. We are also starting the discussion with our partner YPF regarding the plan for 2027.

Bajada del Toro, as you know, is an appraisal block. The plan we are analyzing with YPF is to file reapplication this year and over the next two years. We will then drill some pilot wells to reach some of the areas and land the zone and start to contract the facilities based on what we believe could be the production of the block. And we will then plan to move to full development and contract and put some dedicated rigs to develop Bajada del Toro.

Thanks, Ale, for your question.

OPERATOR

One moment for our next question please. It comes from Daniel Guardiola with BTG Pactual. Please proceed.

Daniel Guardiola, BTG Pactual

Hi, good morning Miguel and team and thank you for your presentation. I have a question on the production outlook for the company. Could you provide us the expected quarterly production trajectory through 2026 including the contribution from Bajada del Toro and Manduria Sur? And another question on production outlook is I would like to know if for 2027 and 2028, where you expect significant organic growth, is there a specific Brent price threshold at which you would rather prioritize free cash flow generation over production growth?

And if so, how should investors think about the growth, shareholder distributions, and maintaining leverage within your target range?

Miguel Gallucho, Chairman and CEO

Thank you for your question. So starting with the first part, the consolidation of Manduria Sur and Bajada del Toro took us to about 160,000 barrels per day month. Today in July, we are at 162. We forecast Q3 at 160 and Q4 at 170. And we are confident in reaching our guidance that we provide. That is 158 barrels of oil per day equivalent for the year. I am personally probably a bit more optimistic that we can even go a bit above these numbers. Related to your second part of the question, I mean we make our plan at $65 that happened in November last year.

So we said you should consider that we are not going to revise any sinusoid number at the moment. And of course, at some point in time, we need to re-guide. We will do it, but for the moment, those are the numbers. Thank you for your question.

OPERATOR

Thank you. Our next question is from Tasso Vasconcellos with UBS. Please proceed.

Tasso Vasconcellos, UBS

Hi Miguel. Hi Tim. Thank you for taking my question. Miguel, I think I might have some kind of follow-up question on these capital allocation alternatives. If you look at the production utilization outlook that you have released for 2026 and 2027 and assume a Brent at something close to $70 per barrel, we view here that Vista could end 2027 close or even below one time net debt to EBITDA. You still haven't paid any dividends, but you were quite successful in doing some very, very accretive M&As.

From now on, what's the best capital allocation alternative that you see for Vista? Do you still view some additional M&As on the radar as an alternative here or should dividends become a high priority for Vista? Thank you.

Miguel Gallucho, Chairman and CEO

Thank you, Tasso, for your question. Yes, look, as I always have stated, growth has been and remains our priority within our capital allocation strategy. With the additional cash that we generate, we will still keep full flexibility within the capital allocation metric that we have shown many times. That means continuing seeking M&A, additional capex now for the Rigi projects that create a new opportunity for us in the future, and buyback in the short term and potentially define a return to shareholder policy that we have discussed before.

And I think we are not at the stage to do it today, but it's something that we will consider in the future. Now, in the near term, the focus is to deleverage the company and as we stated in this call, to close 2026 very close to our aim, that is one time net leveraging ratio. If it's possible with the cash that we have generated, we believe that is possible to achieve. So our capital allocation mindset today is around all those dimensions.

OPERATOR

Thank you. Our next question comes from Leonardo Marcondes with Bank of America. Please proceed.

Leonardo Marcondes, Bank of America

Hi Miguel. Hi everyone. Thank you for picking my question here. So my question is regarding the drilling and completion capex for the wells, right? I mean given the strong pickup in Vaca Muerta activity and the significant decline year to date in Argentina's country risk, do you see room to renegotiate lower fees with the oil servicing companies that are putting their rigs and equipment in Argentina? Thank you.

Miguel Gallucho, Chairman and CEO

Thank you, Leonardo, for the question and a good one. So as Argentina's macroeconomic situation continues its normalization process, the price of oil services becomes for me more a function of scale, volume, and competition. Nevertheless, I would say Vista has demonstrated once again that innovation continues to play an important role in reducing the NC cost. An example of these are the latest projects that we did in cost reduction within the completion process.

As an example, we moved some supply from a thousand kilometers away to in-basin or Vaca Muerta mining supply and lately to Bajada del Paloma that basically means tens of kilometers away from where we operate. We're engineering the completion process to move to wet sand that also cuts a lot of the cost of supply sand and now we are switching from our frac pump from gasoline to gas pump that also is reducing cost. So I will say today, I mean with the macroeconomic situation of Argentina, again I would say competition, scale, and I will not discount innovation, particularly after what we have demonstrated.

Of course, as the macroeconomic situation continues improving, that is all good news. And that helps. Definitely. Thanks for the question, Leo.

OPERATOR

Thank you so much. One moment for our next question. It comes from Geller Martins with Goldman Sachs. Please proceed.

Geller Martins, Goldman Sachs

Hi, Miguel. Hi, Tim. Thank you for taking my question. I have a quick one from my side here. It was about the Amazon Pipeline. Could you please explain to us or provide an update on the development of the pipeline? And also if you could comment, do you see any risks of having to use trucking again, particularly when considering ramp-up in production in the second half of the year? Thank you.

Miguel Gallucho, Chairman and CEO

Hi Guichermes, thank you for the question. The project construction of Bemos is basically progressing very well overall. The project execution today is 65%. The pipeline is at 82%, onshore storage as reported is at 38%, and the offshore terminal at 73%. So we forecast that the full project completion date will be by the middle of 2027. Having said that, and I think Oracio commented, the shipment of very specific components like the mooring buoy is being affected by the Strait of Hormuz closure.

And the Bemos team is basically analyzing different alternatives to solve that issue. But the project remains on schedule and so far we don't expect any changes in our plan of evacuation, neither the need of adding trucking capacity. So I mean we are positive with the progress overall.

OPERATOR

Thank you. Our next question comes from the line of Andres Cardona with Citi. Please proceed.

Andres Cardona, Citi

Hi, good morning all. I have a question about M&A. Right. We are seeing interest from permanent players in entering Vaca Muerta. Would you consider any opportunity to farm in areas such as Aguilamora or Bajada del Toro to try to maximize the value and production profile? And on the other hand, you mentioned growth remains a key pillar of the investment case. And I wonder if you see any opportunity over the short term. Are you evaluating any opportunity as of now?

Thank you.

Miguel Gallucho, Chairman and CEO

Hi Andres, thanks for the question. So I would say, as you know, we not only have been very successful operating Vaca Muerta assets, but also we have been very successful creating value through M&A. Our track record in the last few years includes the acquisition of Agua Ferrera, Manduria Norte, Huiconoko Philip, and Wintershall in 2021 and 2022, La Margachica, La Silla from Petronas, and most recently Bandur Yasur and Bajada del Toro from Equinor.

So needless to say that with the strategy that we have today, we are always using our full creativity to continue consolidating core acreage in Vaca Muerta shale oil assets that continue to be our focus and we continue looking and being very creative in anything that we can add to what we have. Respect to our acreage position in the North, at the moment, we are not looking to dilute ourselves particularly in the current market condition with a strong balance sheet that we have at the moment.

So it's not something that we are thinking of today. Of course, conditions can change and the strategy can change and we can do something different in the future. But no, at the moment that's not the way that we look at that area. Thanks for the question.

OPERATOR

Our next question comes from Michael Fuhreau with Pickering Energy Partners. Please proceed.

Michael Fuhreau, Pickering Energy Partners

Good morning Miguel and to the rest of the Vista team there. Given the strong start to the year with 50 net tie-ins already completed by the end of the quarter, the 100 to 110 annual guide appears achievable to us. So if efficiency gains continue and provide the company with the opportunity to drill and complete more wells this year than originally planned, how would you think about the trade-off between staying within the current activity and capex budget versus capitalizing on these efficiency gains by adding a few more wells this year but potentially spending a bit more than the current plan?

Miguel Gallucho, Chairman and CEO

Hi Michael. Yeah, interesting way of looking at this. I think we should probably look at different elements of that question. I think as the basin continues gaining scale and competition, I believe, I'm convinced more than believe that there is room to gain cost efficiencies in our operation and Vaca Muerta overall. As you know, I mean when we compare with Permian we're still having a gap in terms of cost but I believe there is less room to improve operational efficiency, for example drilling time, number of frac stations per day.

When you compare where we are today, I mean we are very efficient in what we do so far. So therefore there's limited upside to increase activity in the very short term with the current oil service equipment and drilling rig that we have in the country. Of course, if the service companies bring more equipment to the country, I think in the midterm or long term we can do better. But in the short term, I don't think the efficiency gap that we have on particular Vista could allow us to do really more with the same equipment.

Yes, we're still having room for cost saving.

OPERATOR

Thank you. And we have a question from Tiago Cascero with Morgan Stanley, please proceed.

Tiago Cascero, Morgan Stanley

Hey, good morning. Thank you for taking my question. I think most of my questions were already addressed here. So Miguel, over the past few months we have seen some projects across the industry being submitted to the RIGI framework. And so I would like to better understand here how has been the process for Vista so far in terms of timeline. You mentioned in the first question the plan to add Bajada del Toro in the framework. But should we still think of Aguilamora and Bandura Norte as other projects most likely to be included?

Or has your thinking about the scope of the submission changed? Thank you.

Miguel Gallucho, Chairman and CEO

Hi Tiago. Thanks. So yes, we are currently finalizing the documentation to file the application of RIGI for Bandura Norte, which will probably take place in the coming weeks. We are also working on other projects, Aguilamora, Corino, Namargo Norte, and Bajada del Toro with YPF. Now that should go to the Secretary of Energy. They have a team where they analyze all the information before approval. And what we are seeing is that process, it will take a few months.

So the short answer is yes, we are going to file those projects one very soon and then we have to take a few months to get the result from the Secretary of Energy. But yes, I mean we are very happy with what the government did in terms of the RIGI and that clearly has helped us to push forward some of the projects that we have in our plan.

OPERATOR

Thank you. One moment for our next question is from Vicente Salanga with Bradesco BBI. Please proceed.

Vicente Salanga, Bradesco BBI

Hi Miguel, Alejandro, hello Vista. Thank you for taking my question. We noticed that Bajada del Palo Este's production dropped from March to May. Wanted to know if there's anything particular going on there or just a cyclical process of tying up wells. And if you could share with us what was your exit output for Bajada del Palo Este in the quarter. Thank you very much.

Miguel Gallucho, Chairman and CEO

Hi Vicente, thanks for the question. So let me probably put your question in context. So let's look at the big picture of development. The rationale of our development plan and activity is based on many elements. One is of course production, the other is delineation and de-risking of the future areas where we are looking for development or to drill facility capacities minimizing frack hit. So there are many things that we look at and all those elements we look at within the full core development hub, which includes Bajada del Palo Este, Bajada del Palo Oeste, Agua Ferrera, and Corino Namargo Norte.

So there's nothing specific that is going on today in Bajada del Palo Este and the overall production in the operative core development hub grew 10% from Q1 to Q2 basically when if I remember properly from 83,000 I think to north of 90,000 barrels of oil per day equivalent. So then of course if you look at field by field that you can see changes so you can see a field dropping and another field coming up. But the rationale is not based on those field names.

We take the full development hub, the full core development hub as one and we allocate capital activity based on the elements that I said before.

OPERATOR

Thank you. And this will conclude our Q&A session and I will turn the call back to Miguel Gallusio for closing comments.

Miguel Gallucho, Chairman and CEO

Well, very strong quarter guys. Thank you very much for the support. Once again, thank you to all the Vista employees, co-workers, friends that have made us come to the point that we are today, a very strong company, and we're looking forward to continuing performing and delivering. Thank you very much and have a good day.

OPERATOR

And this concludes our conference. Thank you for participating and you may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.