Ecopetrol Sa · BVC:ECOPETROL

Ecopetrol Sa — Investor Presentation (June 2015)

46 slides from Ecopetrol Sa's investor presentation, June 2015

  1. Slide 1: Corporate Group Investor Presentation Jun 2015

    ECOPETROL Corporate Group Investor Presentation Jun 2015

  2. Slide 2: Disclaimer

    Disclaimer  This document was prepared by Ecopetrol S.A. 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 Ecop

  3. Slide 3: Agenda

    Agenda 1. Overview 2. Navigating the New Price Environment 3. Strategic Plan for 2015-2020 4. Upstream 5. Midstream 6. Downstream 7. Financials 3

  4. Slide 4: Overview

    } Overview ocBerron

  5. Slide 5: Ecopetrol: Key Investment Highlights

    Ecopetrol: Key Investment Highlights 1  Largest company in Colombia, representing 25% of the Market Capitalization of the entire Essential Part of Colombian stock market the Colombian  Oil & Gas sector accounts for over 53% of total exports from Colombia Economy  One of the 4th largest Oil & Gas

  6. Slide 6: Ecopetrol: Key Investment Highlights (Cont'd)

    Ecopetrol: Key Investment Highlights (Cont’d) 4  Production increased by 1.7x between 2008 and 2014  1P reserves 22% growth between 2010 and 2014; reserve replacement ratio of 146% in 2014 Positive above peer average Operating Track  New reserves mainly corresponding to revisions and extensions a

  7. Slide 7: Colombia: Favorable Regulatory and Fiscal Environment

    Colombia: Favorable Regulatory and Fiscal Environment Colombia: Positive Macroeconomic Environment Favorable Oil & Gas Tax Regime in Global Context  High real GDP growth, projected at 3.5 % for 2015 and 3.9% for  Colombia’s tax and royalty regime is one of the most favorable 2016 (1) on a global b

  8. Slide 8: Integrated Operations with International Presence

    Integrated Operations with International Presence Ecopetrol - Subsidiaries & Affiliates Key Operating Metrics Direct Market Share in Entities 2014 Colombia  Exploratory area:  Exploration acreage: 35% 18.6 MM ha  Proved reserves: 62%  1P Reserves: 2.08 bn boe (1)  Crude production: 63% Upstream

  9. Slide 9: O&G Financial Metrics Comparison

    O&G Financial Metrics Comparison (1) ROCE Revenue Growth 2014 2008 – 2014 CAGR 17.1% 14.3% 13.4% 12.3% 7.6% 10.3% 9.4% 0.3% 8.8% 8.6% 7.4% -0.4% -1.4% -2.5% 3.8% 3.5% 3.0% -4.6% (2) -21.6% EBITDAX per Produced BOE 2014 US$/boe 54.6 50.1 46.5 44.4 43.4 41.0 36.8 34.2 32.1 30.6 Source: Bloomberg (1) R

  10. Slide 10: Navigating the New Price Environment

    Navigating the New Price Environment

  11. Slide 11: Navigating the New Price Environment

    Navigating the New Price Environment Lifting Cost (1) US$/bbl • 2015 ~USD0.8bn CapEx cuts (to USD7.9bn or -9.2% vs. 2014) 11.3 2014  Reductions in − CapEx declining further to ~USD6bn by 2018 7.5 1Q-2015 CapEx and OpEx (-24% or –USD1.9bn from 2015), stabilizing thereafter − Growing focus on E&P Cap

  12. Slide 12: Strategic Plan for 2015 - 2020

    Strategic Plan for 2015 - 2020

  13. Slide 13: Our strategic objectives: Pursuing sustainability and value creation

    Our strategic objectives: Pursuing sustainability and value creation Profitable production Exploration and Operational (value over volume) Recovery as growth excellence and and efficient barrels drivers to ensure sustainability in sustainability  870 mboed by 2020 Midstream and  1.7 bn boe (1) of

  14. Slide 14: Maintain focus on production capabilities

    Maintain focus on production capabilities 1 Production  Focus on value creation rather than volume expansion – “Profitable barrels” 1  Profitable and sustainable production (870 mboed by 2020) 2 Exploration  Safe and clean operation 3 Midstream & downstream Continued focus on increasing recovery

  15. Slide 15: Focus on exploration with diversified and sizeable opportunities

    Focus on exploration with diversified and sizeable opportunities 1  Build a sustainable Exploration Portfolio to deliver future growth and value creation Production 2  Focus on material projects onshore and offshore Colombia, Gulf of Mexico and Brazil offshore 2  Portfolio optimization through di

  16. Slide 16: Maximize value in both Midstream and Downstream

    Maximize value in both Midstream and Downstream 1 Production  Continue capturing efficiencies in operations 3  Reficar project completion in 2015 2  Optimization of product and sales mix Exploration  Increased focus on processing heavy crudes into gasoline and mid-distillates thus maximizing pro

  17. Slide 17: Target of 6 Bn USD of Structural Cumulated Savings by 2020

    Target of 6 Bn USD of Structural Cumulated Savings by 2020 UPSTREAM • Materials and services • Transportation and dilution of heavy crudes Structural savings targets 2015-2020 • Maintenance • Energy costs 6B At least 1 Bn USD of yearly structural savings DOWNSTREAM • Gross margin optimization • Ener

  18. Slide 18: CAPEX 2015 – 2020: Focus in the upstream and Capex reductions

    CAPEX 2015 – 2020: Focus in the upstream and Capex reductions Target Investment Plan 2015 - 2020 7.9 - 27% Exploration & Production Others 6.7 6.8 6.0 5.8 5.8 78% 85% 88% 88% 59% 61% 2015 2016 2017 2018 2019 2020 18

  19. Slide 19: Upstream

    4 Upstream ocBerron

  20. Slide 20: Operational Metrics

    Operational Metrics Production Growth Reserve Replacement Ratio (1) 2008 – 2014 CAGR 3-Year Average, % (2012 – 2014) 9% 131% 129% 120% (2) 3% 3% 112% 111% 107% 97% 95% 94% 90% 0% 0% 80% 0% (1%) (2%) (2%) (3%) Oil as a % of Total Reserves Lifting Cost 2014 2014 US$/boe 85% $47.1 69% 63% 62% 56% $30.5

  21. Slide 21: Diversified and Growing Resource Base

    Diversified and Growing Resource Base Original Oil & Gas in Place: Ecopetrol + Partners in Colombia(1) bn boe 58.6% 53.3 Produced 9.8 19.7 2.7 1P Reserves Resources 4.7 33.6 36.1 Remaining Oil 2007 2007-2014 Revisions + New Fields 2014 Average 1Q 2015 Production by Product (2) Average 1Q 2015 Ecopet

  22. Slide 22: 1P Reserves

    1P Reserves 1P Reserves 2010-2014 2014 Highlights mmboe • + 5.7% in proved reserves vs 2013 +22% 2,084 • Reserves/production of 8.6 years (8.1 in 2013) 1,972 1,857 1,877 1,714 • 2010-2014 sustained growth: +22% • Reserves replacement ratio of 146%, above 1,677 the industry‘s average • Oil reserves r

  23. Slide 23: Increase in Proved Reserves

    Increase in Proved Reserves 1P Reserves (1) Balance: 2007 – 2014 (2) Sources of Addition: 2008 - 2014 mmboe Extensions RRR (3) 2008 - 2014: 164% and discoveries 2,084 34% Revisions 619 2,300 52% 1,210 Gas 353 2.300 mmboe Oil 1,426 1,465 857 (4) Improved Acq. / 2007 Production Addition 2014 recovery

  24. Slide 24: Improved Recovery

    Improved Recovery Initiated Improved Recovery Pilots in 2015 1Q 2015 Highlights • First pilot started during 1Q, Llanito (H&P). REGION MILESTONES 2015 • 3 additional pilots to start during 2Q to reach 1Q 2Q 3Q 4Q half of the total 8 planned for 2015. • Results in 21 pilots that have initiated inject

  25. Slide 25: Exploration in Colombia and Abroad

    Exploration in Colombia and Abroad Highlights 2011 –2014 2015  Acquisition of new blocks and areas:  3 offshore wells: 2 in the Colombian Caribbean (Calasú • Successful participation rounds and Kronos), one in the US GoM (Sea Eagle) • Colombia: 5 blocks in round 2014 & 12 blocks in round 2012  4

  26. Slide 26: Midstream

    Midstream 26

  27. Slide 27: Midstream Overview

    Midstream Overview Cenit Highlights 1Q 2015 Highlights 2011 – 2014  Guarantees Ecopetrol the required capacity for  Expansions in pipeline, storage and port capacity hydrocarbon transportation enabling transport of increasing production,  Access to all oil and gas companies, based on clear especi

  28. Slide 28: Downstream

    Downstream 28

  29. Slide 29: Refining Modernization to Improve Profitability

    Refining Modernization to Improve Profitability Ecopetrol holds 100% of the refining capacity in Colombia, which makes it a self-sufficient vertically integrated company Pre-Modernization Future (1) Reficar (Cartagena) • Capacity 80 mbd 165 mbd • Increase load • Nelson Index 5.4 10.4 capacity of hea

  30. Slide 30: Financials

    Financials 30

  31. Slide 31: Sales Growth Driven by Exports

    Sales Growth Driven by Exports Total Sales (1) Destination of Crude Oil Exports mboed Local sales (2) Price of Crude Export Basket (3) US$ / barrel mboed (% of total) Exports Other 570 $103 $91 U.S. $99 $86 Asia 1,029 1,037 923 881 913 659 238 (42%) 540 537 654 521 $43 359 384 376 375 378 312 2012 2

  32. Slide 32: Corporate Group's Net Income and Earnings

    Corporate Group´s Net Income and Earnings Net Income (COP$Tn) 3.89 - 5.45 - 0.11 0.16 + 0.28 + 0.45 + 1.01 - 0.18 + 0.27 (1) 1Q 2014 Volume Price FX Taxes Exploratory Interests Other 1 Q 2015 Activity Earnings by segment (COP$Tn) Highlights by Segment E&P 3.89 - 3.38  Lower total sales mainly due t

  33. Slide 33: Financial Highlights: Ecopetrol S.A. Cash Flow

    Financial Highlights: Ecopetrol S.A. Cash Flow 2014 Ecopetrol S.A. Cash Flow (1) US$ billion + 7.18 - 6.78 2.65 - 6.00 + 3.17 + 1.20 -0.31 1.11 Initial Cash Net cash from CapEx Dividend New Debt Other Fx differences Final Cash Balance Balance operations Payments inflows/outflows 1Q-2015 Ecopetrol S.

  34. Slide 34: Ecopetrol Group's Investment 2015

    Ecopetrol Group´s Investment 2015 * Investment (US$ million) Allocation Key Projects Production • Production of 760 thousand boed 7,860 US$ 4,185 mm • Investments for the development of fields mainly in the Llanos Orientales region • Projects for increasing the recovery factor Downstream • Completio

  35. Slide 35: Financials Highlights: Debt & Liquidity

    Financials Highlights: Debt & Liquidity Sources of Funding Debt by Currency Ecopetrol Consolidated Debt 1.0% 0.5% 3% 2% 1% 14.8% 17% 5% 10.8% 21% 68% 4.6% 68.3% 83% Int'l Bonds & ECA's Local Bonds Ecopetrol Reficar Bicentenario USD COP Local Loans Int'l Loans Local Leasing Other Ocensa ODL Others Co

  36. Slide 36: Primary equity offerings and shareholders

    Primary equity offerings and shareholders Primary Equity Offerings of Ecopetrol Ecopetrol´s market float (BVC, NYSE and TSX) (April 30/2015) US$ 2.8 bn Foreign inv. 10.1% and ADRs 20.0% Retail inv. 2.6% US$ 3.4% 1.3 bn 1.4% 11.5% of the 8.5% ownership 1.8% Other 3.7% Total Authorized Round 1 (2007)

  37. Slide 37: Investor Relations

    Investor Relations • Phone + 571 234 5190 • Email investors@ecopetrol.com.co • Website www.ecopetrol.com.co 37

  38. Slide 38: Appendix

    Appendix 38

  39. Slide 39: Financial Obligations: Ecopetrol S.A.

    (1) Financial Obligations: Ecopetrol S.A. 1 • Issued / Outstanding: COP$1.84 tn (May 2013) / COP$1.84 tn 2013 Local • Maturity: 12 years (including 3-year grace period) Syndicated Loan • Interest rate: DTF + 2.5% anticipated quarterly rate •Amortization: semiannual • Outstanding: US$333 mm Loans: 20

  40. Slide 40: Financial Obligations: Ecopetrol S.A.

    (1) Financial Obligations: Ecopetrol S.A. 3 International Bonds: USD 7.2 bn • Issued / Outstanding: US$1.5 bn (Jul 2009) / US$1.5 bn • Coupon: 7.625% (semiannual) Jul 2009 • Maturity: 10 years (Jul 23, 2019) • Amortization: bullet • Issued / Outstanding: US$2.5 bn (Sep 2013) / US$2.5 bn • Amortizati

  41. Slide 41: Financial Obligations: Subsidiaries

    Financial Obligations: Subsidiaries • Issued: COP$800 bn (Aug 2013) • Issued: COP$500 bn (Oct 2009) Local Commercial • Outstanding: COP$640 bn • Outstanding: COP$200 bn EC´s Share • Maturity: 7 years (including 2-year grace period) Securitization • Maturity: 7 years Loan 65.00% • Interest rate: DTF

  42. Slide 42: Colombia's O&G growth trend

    Colombia´s O&G growth trend Crude oil production Exploratory wells drilled (A3) MBOD No. of wells CAGR: 14% CAGR: 7% 1,010 990 1,029 126 131 915 944 113 112 115 785 99 671 588 525 529 531 70 75 56 35 6 1Q -2015 2006 2009 2012 2005 2007 2008 2010 2011 2013 2014 1Q 2015 2006 2009 2012 2005 2007 2008 2

  43. Slide 43: Income Statement: Ecopetrol Consolidated

    Income Statement: Ecopetrol Consolidated (1) US$ billion (2) 2010 2011 2012 2013 2014 1Q14(3) 1Q15(3) Total Revenues 22.1 35.7 38.3 37.7 34.5 9.0 5.0 Gross Income 8.4 15.8 15.8 14.9 11.9 3.6 1.5 Operating Income 6.8 14.0 13.5 11.7 8.3 3.1 1.0 Operating Margin 31% 39% 35% 31% 24% 35% 19% Income befor

  44. Slide 44: Balance Sheet: Ecopetrol Consolidated

    Balance Sheet: Ecopetrol Consolidated US$ billion (1) 2010 2011 2012 2013 2014(5) 1Q15(5) Total Assets 35.9 47.5 64.4 68.6 47.2 47.3 Total Debt 4.7 4.5 7.8 11.5 14.6 16.6 Net Debt 2.7 1.0 3.3 6.9 11.7 12.3 Total Liabilities 14.1 18.2 26.3 29.4 25.8 29.1 Shareholders’ Equity 21.6 28.2 36.6 36.9 20.7

  45. Slide 45: Dividends

    Dividends Dividends per share (COP$) and payout ratio Extraordinary Dividend Ordinary Dividend Payout Ratio 300 291 37 36 260 225 33 105 145 133 115 263 255 91 227 145 133 115 115 91 2008 2009 2010 2011 2012 2013 2014 2015 89.9% 76.5% 70.1% 70.3% 79.9% 79.9% 80.1% 70.0% Source: Ecopetrol 45

  46. Slide 46: Para uso restringido en Ecopetrol S.A. Todos los derechos reservados. Ninguna parte de esta

    Para uso restringido en Ecopetrol S.A. Todos los derechos reservados. Ninguna parte de esta presentación puede ser reproducida o utilizada en ninguna forma o por ningún medio sin permiso explícito de Ecopetrol S.A.

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