OPERATIONAL AND FINANCIAL RESULTS
Transcript of OPERATIONAL AND FINANCIAL RESULTS
RESULTSOPERATIONAL AND FINANCIAL
Second Quarter 2019August 13, 2019
LEGAL DISCLOSUREThis document was prepared by Ecopetrol S.A. (the “Company” or “Ecopetrol”) with the purpose
of providing the market and interested parties certain financial and other information of the
Company.
This document may include strategy discussions and forward-looking statements regarding the
probable development of Ecopetrol’s business. Said projections and statements include references
to estimates or expectations of the Company regarding its future and operational results.
Potential investors and the market in general should be aware that the information provided
herein does not constitute any guarantee of its performance, risks or uncertainties that may occur
or materialize. Actual results may fluctuate and differ from those provided herein due to several
factors outside of the control of the Company. Such forward-looking statements speak only as at
the date in which they are made and neither Ecopetrol nor its advisors, officers, employees,
directors or agents, make any representation nor shall assume any responsibility in the event
actual performance of the Company differs from what is provided herein. Moreover, Ecopetrol, its
advisors, officers, employees, directors or agents shall not have any obligation whatsoever to
update, correct, amend or adjust this presentation based on new information or events occurring
after its disclosure. Additional factors that may affect the future results of Ecopetrol are set forth
in the section entitled “Risk Factors” in the Company’s Report on Form 20-F for the year ended
December 31, 2018 and in the Company’s other filings with Securities and Exchange Commission
(the “SEC”), which are available at www.sec.gov.
This presentation is for discussion purposes only and is incomplete without reference to, and
should be viewed solely in conjunction with, the oral briefing provided by Ecopetrol. Neither this
presentation nor any of its contents may be used for any other purpose without the prior written
consent of Ecopetrol.2
MANAGEMENT PARTICIPANTS
3
Felipe Bayón
CEO
María Catalina Escobar
Head of Capital Markets
Alberto Consuegra
COO
Jorge Osorio
VP Development and Production
Jorge Arturo Calvache
VP Exploration
Jaime Caballero Uribe
CFO
Milena López
Director of Strategy and Finance
- Cenit
Tomás Hernández
VP Downstream
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OUTSTANDING RESULTSREFLECTING OPERATIONAL AND FINANCIAL STRENGTH
Bre
nt
Daily U
SD
/Bl
EBITDARevenues Net Profit Production (mboed) X= Average Brent ROACE
12.3% 14.6% 13.2% 14.1% 13.4%
733
X=69
723
X=69
728
X=64
724
X=76
721
X=75
4
EBITDA margin
COP Tn
17.017.9 18.3
15.9
18.3
8.6 8.07.0 7.4
8.3
3.5 2.8 3.0 2.7 3.5
50.7%
44.7%
38.5%
46.1% 45.4%
-5,0%
5,0%
15,0%
25,0%
35,0%
45,0%
55,0%
0,0
5,0
10,0
15,0
20,0
25,0
2T 2018 3T 2018 4T 2018 1T 2019 2T 20192Q 2018 3Q 2018 4Q 2018 1Q 2019 2Q 2019
MARKET CONDITIONS ENVIRONMENT WITH HIGH VOLATILITY
2019
Exchange rateBrentBrent Peso
2018
Dec US
58/Bl
US 66.2 /Bl
3,189 /US
US 71.2 /Bl
2,849 /US
COP 211.0 BlCOP 202.7 Bl
Jan-Jun Jan-Jun
Brent - Peso Global Gross Refining Margin*
*Corresponds to the simple average of refining margins in Europe, US and Singapore. Source: Wood Mackenzie. **Range built with minimum and maximum margins observed between 2014-2018.
Thousa
nds
of
peso
s per
barr
el
(CO
P /
Bl)
5
Weak crack spreads for gasoline and
heavy naphtha
Increasing cost of the diet
Basket Price
20192018Jan-Jun Jan-Jun
CrudesBrentHistoric Brent SpreadProducts
Crude spread: Record in 2Q 2019
Stable product spread (gasolines
fuel oil and diesel )
Brent - Peso indicator strengthened by a
higher exchange rate
0
2
4
6
8
10
12
14
16
18
ene.
feb.
mar.
abr.
may.
jun.
jul.
ago.
sep.
oct.
nov.
dic
.
usd
/bl
Rango '14-'18 2018 2019 Promedio 5 años**
Mar.
Apr.
Feb.
Jan.
May.
Jun.
Jul.
Aug.
Sep.
Oct.
Nov.
Dec.
Range 14-18** 5-year average
71.7
OPERATING RESULTS COMMITTED TO ACHIEVING OUR GOALS
Exploration Midstream
Production Downstream
7261H 2019 mboed
3641H 2019 mbd
10Wells drilled
1H 2019
+5.2%Transported Volumes
1H 2019 Vs. 1H 2018
6
3 with presence of
hydrocarbons
Active commercial
strategy
In line with 2019
target
Operational
flexibility to supply
crude oil and refined
products
7232Q 2019 mboed
3792Q 2019 mbd
CONTINUED FOCUS ON EFFICIENCIESFOR A PROFITABLE AND SAFE OPERATION
*Includes lifting costs of subsdiaries (Hocol and Ecopetrol America Inc)
7
Lifting Cost*(USD/Bl)
Maintenance to improve integrity
New workovers to maintain production
Increase in secondary recovery
Dilution Factor(%)
Drilling Cost(USD/ft)
Transport of higher-viscosity crudes
by pipeline
Substitution of imported diluent
with local light crudes
20.0%18.5%
16.9%15.0% 14.8% 14.6%
2014 2015 2016 2017 2018 1H 2019
Use of rigs with the latest
technology
Redesign and implementation of
well delivery process
482
381 312
232 270 292
2014 2015 2016 2017 2018 1H 2019
8.38.9
1H 2018 1H 2019
Upstream
Picture: Rubiales Field
Pastora Norte-1
Jaspe-8
Provenza-1
Boranda-2 ST
Cira 7000 ST-1Andina Norte-1
Cosecha CW-1 ST-1
Habanero - 1
Cosecha CW-1
Mamey West-1
Successful (3)
Dry (5)
Drilled (10)
Under Evaluation (2)
3D seismic (2)
2D seismic (1)
LLA 86LLA 104
GUA OFF 10
LLA 87
COR 9
MC 904 (EAI)
88,015 Km²
3D Regional
12,315 Km² 3D
Rounds 6, 16
and Transfer of
Rights
2,660 Km 2D
Round 16
Saturno Block
EXPLORATION ACTIVITY STRENGTHENING OUR PORTFOLIO
2 out of 6 drilled wells in 2Q 2019
confirmed presence of hydrocarbons: Andina Norte-1 and Boranda-2 ST
Investing in Colombia5 blocks in 2019 PAAP*:
Internationalization Approval of 10% stake in Saturno block
(Santos)**
Award to Ecopetrol America of the MC
904 Block in US GoM
BRAZIL
PURCHASE OF SEISMIC
GoM - MEXICO
PURCHASE OF SEISMIC
* Permanent Area Assignment Process. ** Approval granted July 17, 2019
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Activity 1H 2019
Gua Off-10 (100% ECP) COR-9 (100% Hocol)
LLA-86 (50% Hocol; 50%
Geopark)
LLA-87 (50% Hocol;
50% Geopark)
LLA-104 (50% Hocol;
50% Geopark)
685 682 720
36 41 730
2Q 2018 2Q 2019 1H 2019 2019 Target
Base production Incremental
Recovery program
contribution to production*
PRODUCTIONGROWTH IN LINE WITH 2019 TARGET
Production (mboed)
10
30% 8.3%Subsidiaries’ contribution
to production
Incremental production mitigates decline
Scheduled maintenance included in the 2019 target
DRILLING CAMPAIGN RESULTS
119 121
Rubiales
mboed 113 116
Castilla
2%2%
6.2 20
323%
Akacias** (CPO 09)
42 45
8%
Cupiagua
1418
Yarigui
18
28%
*Recovery: Growth by inclusion of pilots in expansion phase and better performance. **Akacias: total production, Ecopetrol holds a 55% stake.
2Q 20192Q 2018
723721 726
2019 Target
Transporte
Midstream
Picture: ODL
842 879
273 279
MIDSTREAMSOLID OPERATIONAL AND FINANCIAL PERFORMANCE
Mbod
Transported Volume
Crude Refined products
2Q 2018 2Q 2019
+3.8%
12
2.3 2.5
2Q 2018 2Q 2019
EBITDA
COP Tn+10.8%
1,115 1,158
3.1 3.1
2Q 2018 2Q 2019
Cost per Barrel Transported
USB/Bl
Revenues
+11.5%
Tariff period of 4 years
Valid until June 30, 2023
New Crude
Transportation Tariffs
MODERATE increase in segment
revenues
Assures Tariffs STABILITY
2.9 3.2
2Q 2018 2Q 2019
Picture: Cartagena Refinery
Downstream
14
*Average spread between January and June of each year. USGC benchmark indices. ** Quarterly Intermediate Crude Benchmark *** Quarterly Heavy Crude Benchmark
12.0 11.8 10.5
13.911.1 10.5 10.3
12.5 11.5 11.1 12.19.1
11.0
6.6
CartagenaBarrancabermeja
4T 184T 17 1T 18 2T 18 3T 18 1T 19 2T 19
Historic 20-year minimum spreads vs Brent for gasoline and
naphtha
Strengthening of crude prices delivered to our refineries
2Q refining gross margin affected by decline in spreads,
appreciation of the diet and major maintenances
-10
-5
0
5
10
15
20
25
30
35
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Gasoline Naphtha Diesel Lineal (Naphtha)
Price Spread vs Brent* (USD/Bl)
Jan – Jun for each year
Gross Margin (USD/Bl)
Tendencia (nafta)
-10
-8
-6
-4
-2
0
4T17 1T18 2T18 3T18 4T18 1T19 2T19
Crudo Intermedio* Crudo Pesado**
Crude Diet Benchmark vs. Brent (USD/Bl)
DOWNSTREAMCHALLENGING MARKET ENVIRONMENT
Trend (naphtha)
4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19
4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19
Heavy crude ***Intermediate crude **
222 215 221 223 229
196229
147 145 153 158 150 155 150
4T 17 1T 18 2T 18 3T 18 4T 18 1T 19 2T 19
Barrancabermeja Cartagena
34% 29% 21% 20% 23% 13% 18%
66% 71% 79% 80% 77% 87% 82%
4T 17 1T 18 2T 18 3T 18 4T 18 1T 19 2T 19
Crudo Importado Crudo Nacional
Cartagena Refinery
Throughput (mbd)
Throughput Composition - Cartagena
15
Benefits: Ensuring a 4-year cycle
Hydrocracking Unit
First maintenance since its entry into operation in 2016
Barrancabermeja Refinery
Diesel Hidrotreating Unit
First major maintenance since 2010
Benefits: Ensuring the quality of diesel in terms of low sulfur
content < 15 ppm*
DOWNSTREAM OPERATING RESULTSPREPARED FOR MARPOL
Stable operations in 2Q 19
4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19
Imported crude Domestic crude
4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19
*ppm: parts per million
Resultados Excepcionales
Financial
Results
33.8 36.1 38.131.9
45.154.7
71.7 66.2
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40
60
80
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10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
90,0
2016 2017 2018 1H 2019
17
EBITDA Margin Gross Debt
/ EBITDA*
Net Debt
/ EBITDA*
EBITDA /Bl ROACE**
45.7% 1.0x1.2x
37.4 USD/Bl
37.7% 41.8% 45.4% 45.7%
2016 2017 2018 1H 2019
2.9
1.91.2 1.2
2016 2017 2018 1H 2019
2.4
1.51.0 1.0
2016 2017 2018 1H 2019
23.330.0
39.6 37.4
2016 2017 2018 1H 2019
Net Income
Breakeven
31.9 USD/Bl
Brent
15.8
10.3
1.0
4.4
15.7
10.0
0.6
5.1
64% 4% 32%
-1500000%
-1400000%
-1300000%
-1200000%
-1100000%
-1000000%
-900000%
-800000%
-700000%
-600000%
-500000%
-400000%
-300000%
-200000%
-100000%
0%
100000%
200000%
300000%
400000%
500000%
600000%
700000%
800000%
900000%
1000000%
0,0
5,0
10,0
15,0
20,0
25,0
30,0
EcopetrolGroup
Upstream Downstream Midstream
1H 2018 1H 2019 Contribution to the GE's EBITDA
EBITDA PER SEGMENT (COP Tn)
13.4%
*EBITDA calculated in the last 12 months; **ROACE = Operating income after taxes/ Capital Employed (Figure in pesos)
FINANCIAL RESULTS SUSTAINED POSITIVE TREND
2.7%
8.6%
13.1% 13.4%
2016 2017 2018 1H 2019
14.5
16.3 1.73.8
4.1
1.8
7.0
0.3
12.7
Caja Dic 2018* FCO ex CT Capital deTrabajo
Pago impuestorenta
Capex Deuda Dividendos Otros Caja Jun 2019*
SOLID CASH POSITION SUPPORT AGAINST VOLATILITY
COP Tn
*Includes: Cash and Cash Equivalents, Others Current and Non-Current Financial Assets. ** Includes Variation Between Periods in Other Current and Non-Current Financial Assets.
COP 8.8 TnCash Flow From Financing Activities
Government $5.4
Minority shareholders $1.1
Non-controlling $0.5
COP 6.7 TnFree Cash Flow
18
Cash Dec 2018* OCF(operating cash flow)
WK Income tax
payment
Debt Dividends Others** Cash Jun 2019*
1.0 1.4
0.26 0.09 0.03 0.01
1H 2018 E&P Down Mid Corp 1H 2019
1.4
3.5 – 4.0
2.1 – 2.6
0.9 0.9
1S 2019 2S 2019 JV - Permian*** Total
STRATEGIC INVESTMENTSFOCUSED ON GROWTH AND SUSTAINABILITY
*Drilling and Completion ** Business opportunities and studies in Exploration, Midstream and Downstream *** Subject to approval by US authorities. Not included in the Company’s organic plan 18
+38%
1,392 0.50.2
0.1
0.1
0.1
P&C* FacilidadesOtros produc. Info YacimientosOtros seg.**
USD M
Initial Pay. $750
Carry $50 - 60
Capex ECP $65 - 75
USD Bn
O
r
g
a
n
i
c
Inorganic
0.4
1.0
1S 2019
Crecimiento
Continuidad y Emergente
1.4
Expected FY CAPEX execution
USD Bn
1H 2019
Growth
Continuity and Emerging
D&C*1H 2019 2H 2019
Facilities
Other Produc.
Other Seg.**
Oil Reservoirs info
1H 2019
4.4 - 4.9
2010 2011 2012 2013 2014 2015 2016 2017 2018 1H 19
Eficiencia Energética Aprovechamiento de Gas
COMMITMENT TO SUSTAINABILITY
20
13.6 17.5 15.8 17.68.9
52.452.9 56.8
69.0
35.6
2015 2016 2017 2018 1H 19
Agua Residual Agua de Producción
+3.8%
CO2 Emissions Reduction
First oil and gas company in Colombia
that verifies the reduction of over
one million tons of CO2 in its
operating processes
In the first half of 2019, over
44 million m3 of water were
recycled (+4% vs. 2018)
2928
32 32
2623
19 18 19 19 1918 18
16 1614
18
1311
1010
0
10
20
30
40
50
10'-15'
2016
2017
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Delivery of ultra low-sulfur diesel to
the New Transmilenio bus fleet in
Bogota (fewer than 10 parts per
million – ppm)
* Measured on July 28. B2 diesel: 98% fossil and 2% biodiesel. Source: Cenit.
Maximum allowed
2018 2019
Sulfur Content – Diesel B2*(National Average – PPM)
Water Recycling
Energy Efficiency Use of Gas Residual water Production water1,338
1,229
1,093
956
725
511
282
14066
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MOVING FORWARDIN THE RIGHT DIRECTION
Access to the Permian –US- in partnership
with OXY
Larger position in the Pre-salt in Brazil
Definition of crude transport tariffs
Operational results in line with the plan
Continuous focus on efficiencies
Solid financial results
Strategic milestones
21
Q&A
Q&A PARTICIPANTS
Jorge Arturo Calvache
VP Exploration
Jaime Caballero Uribe
CFO
Felipe Bayón
CEO
Alberto Consuegra
COO
Juan Manuel Rojas
VP Corporate Strategy and
New Business
Pedro Manrique
VP Commercialization and
Marketing
Milena López
Director of Strategy and
Finance - Cenit
Rodrigo Dalle Fiore
VP Development
Tomás Hernández
VP Downstream