Miguel Galuccio: First of all, starting from the free cash flow, so I don’t think Bruno expressed that he has a concern. We don’t have a concern either. We basically have been growing with our own cash flow generation. And we can continue growing toward the third rig using our own cash flow. So we are in that sense privileged compared with other developers of unconventional resources. As I said before, first semester, of course, because due to the activity, how it pick up during Q2 and Q3, we will have negative cash flow and we will have positive toward the end of the year also next year. And probably I take advantage of answering your question on the third rig, I think you can factor it in that we’re going to have that third rig fully during 2025.
Back to the question from midstream and probably putting context. So the overall capacity, the additional – the well capacity that was tendered was 315,000 barrels per day, from which we secured 31,000 of those. And we note, from also the same volume, we secured 37,000 barrels of oil per day. We prepaid $58 million for both. And in Q2, Q3 and Q4, we should have additional cash calls or expenditures of around $70 million, $40 million, $20 million and $10 million if I remember properly. Related to your question about domestic pricing. So, Q1 2024, we saw a domestic price of $66. The export parity was around $79 with a Brent of $80 per barrel. Going forward, we are assuming that $66 should be the floor. Refiners should gradually upgrade prices toward export parity since there’s no regulation in Argentina today to maintain the domestic prices fixed.
Refineries also, as I mentioned before, have a new dynamic. The consumption, the local consumption has dropped and they’re starting to export refined products. And therefore, they’re willing to pay for that additional volume export parity. One third of our local volume was recognized as export parity. So I believe we should see local prices coming up. I don’t remember if you have an additional question. I think there were three of them answered.
Operator: Our next question comes from the line of Marina Mertens from Latin Securities.
Marina Mertens: During the quarter, we saw inflation coming up by 56%, while FX went up by only 7%. However, lifting costs remain mostly unchanged. Are you seeing any pressure on the cost side due to this dynamic? And what are you expecting for the remainder of the year?
Miguel Galuccio: What you’re asking, mainly have a dynamic on impact in our lifting costs. So from the devaluation, we saw a positive impact in our lifting costs that have an impact that we captured in December. And you saw our $4.3 per barrel lifting costs. And in Q4, we’re already reflecting that saving. In Q1, we basically – when in Q4, we got only one month of effect of that devaluation, we captured that in the full quarter during Q1 2024. That allowed us to have the number that we have today that is $4.3. So part of the saving, really, we are – offset it by higher activity. We have a slightly lower production than in Q4 2023 and a bit of cost inflection during the quarter. So, if you look at our lifting costs going forward, I think you should go back to the guidance that we have that is $4.5 for the year.
We will continue having effects of the inflation with a flat effect. Nevertheless, we plan to almost double the production that we have at the beginning of the year. So, that will dilute lifting costs. So, if I have to take a guess, I will probably, with up and down, move closest to the $4.5 per barrel per BOE that we have forecasted and guide.
Operator: Our next question comes from the line of Alejandro Demichelis from Jefferies.
Alejandro Demichelis: I have two questions, if I may, please. The first one is on that extra rig capacity that you mentioned, Miguel. How are you thinking about splitting the rig capacity between the different fields? Is this kind of going to be focused entirely into the BPO, BPE kind of hub or should we expect something into the less developed areas? That’s the first question. The second question is, last quarter, you mentioned about potential M&A activity or you were looking at some of the assets in Argentina, so how are you thinking about that today?
Miguel Galuccio: The main activity continues to be focused on the development hub, that is Aguada Federal, Bajada del Palo Oeste, and Baja del Palo Oeste. Those three blocks continue to be the main target of our development. Related to an additional rig, we just brought a new one. As you know, we are ambitious, so I will not discount at some point of time we dream of adding more. But for the moment, I think we should consider that we will run full speed with three rigs and 2025 will consolidate that activity right from the beginning. So it will be another year of growth. Related to M&A activity, as you know, we are participating in the Exxon tender. As I said before, it’s a very competitive tender. It’s not that we are desperate for more resources, but we are participating and we see what happens from there.
We have a hub of further development in the north that is not in our plan yet, but at some point of time will come to realization. So that is the view I can give you so far.
Operator: Our next question comes from the line of Oriana Covault from Balanz.
Oriana Covault: This is Oriana Covault with Balanz. I have maybe one brief clarification and a follow-up. So the first one with regards to the contracted third rig that is expected for the second half, just to clarify, are you expecting any CapEx revisions due to this increased activity? Or was this already contemplated in your annual budget? I’m sorry if you already mentioned that, but I think I missed it.
