Vista Energy to Boost Vaca Muerta Output by 55% with New SLB Frack Set

Key Takeaway

• Vista Energy aims to boost Vaca Muerta shale output by 55% to 85,000 barrels/day with a new fracking array from SLB.
• The company plans to start production on 138 new oil wells by 2026, targeting 100,000 barrels/day.
• Despite a recent drop in US depositary receipts, Vista's shares have surged over 1,000% in three years.

Vista Energy's Ambitious Expansion

Vista Energy has signed an agreement with SLB to import a new fracking array in the second half of this year, aiming to boost production in the Vaca Muerta shale region. This addition will bring Vista's total to two fracking crews and related equipment in operation. The company plans to increase output by 55% to 85,000 barrels a day by the fourth quarter and start production on 138 new oil wells by 2026, targeting 100,000 barrels a day. "We continue to commit to the growth of Vaca Muerta by incorporating cutting-edge technology into our operations," said CEO Miguel Galuccio. Vista has more than doubled its production since 2018, driving its New York-traded shares up over 1,000% in the past three years. Despite a recent 1.9% drop in its US depositary receipts to $43.57, the year-to-date advance remains at 48%.

Noble Corp's Strategic Acquisition

Noble Corp., the world's largest offshore oil-rig contractor by market value, has agreed to acquire Diamond Offshore Drilling Inc. in a $1.6 billion deal. Diamond stockholders will receive 0.2316 shares of Noble plus $5.65 for each share they own, an 11.4% premium based on the June 7 closing price. The deal will result in Diamond shareholders owning about 14.5% of Noble’s outstanding shares. Noble shares rose 1.5%, while Diamond shares increased by 10%. "Really what this does is it gives the combined company better scale and a better ability to serve customers on a global basis," said Noble CEO Robert Eifler. The combined company will have the largest selection of top-tier drillships, enhancing its capabilities in deepwater drilling. Noble will fund the cash portion of the deal through a $600 million bridge loan and plans to expand its board to include one member from Diamond.

US Oil Production Concerns

US oil production is projected to decline by about 1 million barrels per day by the second half of 2025 unless rig counts rise, according to Adam Rich, deputy chief investment officer at Vaughan Nelson. "We could probably keep the 12-13 million barrel-per-day level for six to nine more months, but if we don’t see rig counts really start moving up here, that’s going to be a big problem," Rich stated. The number of active US rigs has fallen to the lowest level since January 2022 amid industry consolidation. Oil prices would need to be closer to $90 per barrel to incentivize an increase in rig counts. US crude oil futures were trading around $77 per barrel on Monday.

Management Quotes

• Miguel Galuccio, CEO of Vista Energy:

  "We continue to commit to the growth of Vaca Muerta by incorporating cutting-edge technology into our operations. Our goal is to accelerate our capital deployment in Vaca Muerta to enable us to tie-in more wells, leaving us well-placed to achieve our production target."
  "We will deliver on our 2026 plan. Anything else that comes will make us more investible, and it will probably give others opportunities."