On Thursday, Citi reiterated a Neutral rating with a $53.00 price target on Vista Oil & Gas, S.A.B. de C.V. (NYSE: VIST), following the company's strategic update for 2025. The update was a key focus during the conference call, where Vista Oil & Gas outlined an increased production guidance to 95-100k barrels of oil equivalent per day (boed) from the previous 85k boed.
The company's plan includes a capital expenditure (CapEx) budget of $1.1 to $1.3 billion, which aligns with Citi's estimate of $1.1 billion. Vista Oil & Gas also announced a 52-60 well drilling program. The firm has secured a second fracking set and a third drilling rig, positioning them to potentially complete 50-54 wells this year despite lower equipment availability.
The analyst noted that the adjusted EBITDA estimate has been raised to $1.5 to $1.6 billion from $1.4 billion, surpassing Citi's projection of $1.45 billion. This increase is attributed to better-than-expected price assumptions, with realized oil prices forecasted at $67 to $72 per barrel, compared to Citi's estimate of $63 per barrel.
Regarding logistics, the company appears to have mitigated midstream capacity risks for the next year. New OldelVal capacity is expected to come online in November 2024 and April 2025. Moreover, Vista has secured 124 thousand barrels per day (kbpd) of oil evacuation capacity for the year ending 2025, including 37kbpd by trucking. This capacity, coupled with potential additional resources from other operators' spare capacity, supports the company's production goals, suggesting a possible exit production rate of around 100kbpd.
In other recent news, Vista Energy announced remarkable growth in its Q2 2024 results, with total production surging by 40% year-over-year to 65,300 barrels of oil equivalent per day. This led to a 66% rise in total revenues for the quarter, reaching $397 million, and a significant rise of 90% year-over-year in adjusted EBITDA to $288 million. In recent developments, Vista Energy has been actively executing a share repurchase plan, buying back thousands of its Series A shares across multiple transactions facilitated by Citibanamex Casa de Bolsa.
UBS has upgraded Vista Energy stock from Neutral to Buy, increasing the price target to $60.00 from a previous target of $55.00, in response to the company's consistently outperforming production outlook. UBS expects Vista Energy to update its mid to long-term guidance, reflecting these positive developments. Additionally, JPMorgan initiated coverage on Vista Energy, assigning an Overweight rating.
InvestingPro Insights
Vista Oil & Gas's strategic update aligns well with several key metrics and insights from InvestingPro. The company's impressive gross profit margin of 76.14% for the last twelve months as of Q2 2024 supports its ambitious production and EBITDA targets. This high profitability is further emphasized by an InvestingPro Tip indicating that Vista operates with impressive gross profit margins.
The company's growth trajectory is also reflected in its financial metrics. With a revenue of $1.33 billion in the last twelve months and a strong revenue growth of 65.55% in Q2 2024, Vista appears well-positioned to fund its planned $1.1 to $1.3 billion CapEx budget. Another InvestingPro Tip notes that analysts anticipate sales growth in the current year, aligning with the company's increased production guidance.
For investors considering Vista's valuation in light of these developments, it's worth noting that the stock is trading at a P/E ratio of 10.71, which an InvestingPro Tip suggests is low relative to near-term earnings growth. This could indicate potential upside if the company meets its ambitious targets.
InvestingPro offers 13 additional tips for Vista Oil & Gas, providing a comprehensive analysis for investors looking to delve deeper into the company's prospects.
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