Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — Q3 2015 Earnings Presentation
27 slides from Ecopetrol Sa's earnings presentation, November 2015
Slide 1: Corporate Group Financial and Operational Results 3Q-2015
CORPORATE GROUP FINANCIAL AND OPERATIONAL RESULTS 3Q-2015 November, 2015
Slide 2: Cautionary Statement
Cautionary Statement 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 o
Slide 3: Management Participants
MANAGEMENT PARTICIPANTS Juan Carlos Echeverry Héctor Manosalva CEO VP of Development and Production Juan Pablo Ospina Max Torres VP of Commerce and VP of Exploration Marketing Orlando Díaz María Fernanda Suárez VP of Refining and Industrial VP of Strategy and Processes (A) Finance María Catalina Esc
Slide 4: Agenda
Agenda Market Overview 3Q-2015 Highlights Operational Update Financial Results Outlook Q&A 4
Slide 5: Agenda
Agenda Market Overview 3Q-2015 Highlights Operational Update Financial Results Outlook Q&A 5
Slide 6: The current business environment represents a challenge to the O&G industry
The current business environment represents a challenge to the O&G industry Oil Prices USD/COP Average* $ 3,500 USD 120 104 BRENT $ 3,000 2,936 USD 100 2,500 85 ECP BASKET $ 2,500 USD 80 $ 2,000 1,909 63 USD 60 53 51 $ 1,500 39 USD 40 $ 1,000 USD 20 $ 500 USD 0 $0 3Q-2014 2Q-2015 3Q-2015 3Q-2014 2Q-
Slide 7: Agenda
Agenda Market Overview 3Q-2015 Highlights Operational Update Financial Results Outlook Q&A 7
Slide 8: Focused on Generating Value
Focused on Generating Value Cumulative Savings of COP$ 1.6 Tn vs. COP$1.4 Tn initial target New savings target of COP$2.2 Tn Downward trend in unitary costs consolidates US$1.03/Bl of the reductions in the cumulative lifting cost in 2015 are attributable to optimization strategies and higher efficie
Slide 9: Cost Efficiency: Efficiency opportunities have materialized
Cost Efficiency : Efficiency opportunities have materialized Manageable Costs Savings* Cumulative Bugdet Savings (COP$Tn) (COP$Tn) E&P 5.3 4.8 0.07 0.18 Centralized Expenses ** 1.6 1.3 0.63 Corporate 0.20 COP$1.6 Tn 3.7 Refining 3.5 Commercialization Jan-Sep 2014 Jan-Sep 2015 0.56 Fixed Costs Variab
Slide 10: Reficar: Latin America's most modern refinery
Reficar: Latin America’s most modern refinery LOWER COST OF FEEDSTOCK: lower-cost crudes processing Heavy 165 MBD Medium 80 MBD 70% 100% 30% Pre-modernization Modernized Feedstock Processing ~100 MBD of Heavy Crude, Extra Heavy Crude and Sour 70% local crude and 30% imported crude 10
Slide 11: Reficar: Higher production of valuable products
Reficar: Higher production of valuable products PRODUCTS 165 MBD 2% Bottoms 80 MBD Mid - Distillates Naphtha & Gasoline 64% Propylene & LPG 24% 35% 28% 34% 7% 6% Pre-modernization Modernized International Fuel Quality Standards : Gasoline of less than 50 ppm vs. 2400 ppm and Diesel of 10 ppm vs. 800
Slide 12: Reficar: Quality Products for International Markets
Reficar: Quality Products for International Markets PROPANE GAS PROPANE GAS 4.7 MBD JET FUEL Hydrocracker JET FUEL Unit 16 MBD HIGH SULPHUR DIESEL ULTRA LOW Diesel Alkylation Unit SULPHUR DIESEL Hydro 90 MBD VACUUM Treatment GASOIL Unit HIGH OCTANE GASOLINE Crude Fluid 17.5 MBD Unit Catalytic Crude
Slide 13: Reficar: Start-up Timeline
Reficar: Start-up Timeline* Oct Nov Jan Mar 2nd sem. 2015 2015 2016 2016 2016 Crude Unit Hydro treatment Throughput 86.6 MBD Delayed Coke Hydrocracker Cracking Throughput : 90 MBD Naphtha Hydrotreater Alkylation 3Q 2015 Highlights Throughput : 147 MBD Stabilized Refinery Purchase of Industrial Sep t
Slide 14: Agenda
Agenda Market Overview 3Q-2015 Highlights Operational Update Financial Results Outlook Q&A 14
Slide 15: Production: Reduction in lifting cost and drilling days per well
Production: Reduction in lifting cost and drilling days per well Lifting Cost Drilling Days per Well 10.9 -23% -44% -50% 36 38 7.3 34 US$/bl 28 26 21 20 24 19 14 14 14 Jan-Sep 2014 Jan-Sep 2015 Castilla Chichimene Provincia 2014 Jan-Jun 15 Jan- Sep 15 2015 Record Lower lifting cost due to optimiza
Slide 16: Production: Volumes in line with guidance despite the drop during 3Q 2015
Production: Volumes in line with guidance despite the drop during 3Q 2015 Ecopetrol + Net Interests* 761 755 752 50 54 51 741 mboed 55 702 707 704 686 Jan- Sep 14 Jan-Sep 15 3Q/14 3Q/15 Ecopetrol Net Interests • Impact on 3Q 2015 production vs. 3Q 2014 due to public order disruptions, -26,000 mboed
Slide 17: Exploration: Progress in the exploratory campaign
Exploration : Progress in the exploratory campaign • Subsidiary in Colombia for offshore operations, optimizing the tax burden • Resumed drilling of Calasú well (Colombian Caribbean offshore ) • Drilling initiation of Leon -2 appraisal well in the GoM and 2 wildcat wells : Muérgana Sur and Champeta.
Slide 18: Midstream: Segment results continue presenting a positive trend
Midstream : Segment results continue presenting a positive trend Volumes Transported *(mbd) Midstream Ebitda (COP$Tn) 2.1 1,232 1,195 252 248 1.1 980 947 3Q-2014 3Q-2015 3Q-2014 3Q-2015 Crude Products • Volumes decreased mainly as a result of public order disruptions • Positive segment results contr
Slide 19: Downstream: Stronger margins and lower fixed costs
Downstream : Stronger margins and lower fixed costs associated to the optimization strategy B/Meja Gross Refining Margin Cash Operating Cost ($USD/Bl)* (USD/Bl) 16.7 6.5 15.5 4.3 3Q-2014 3Q-2015 3Q-2014 3Q-2015 • Higher refining margin due to initiatives to increase value of streams and better diffe
Slide 20: Agenda
Agenda Market Overview 3Q-2015 Highlights Operational Update Financial Results Outlook Q&A 20
Slide 21: Financial Results
Financial Results (COP$Tn) 3Q 2015 Jan-Sep. 2015 Revenues 13 39.3 EBITDA 4.7 15 Investments (USD$Bn) 1.6 4.7 Operating Cash Flow 3.9 7.8 Net Income 0.65 2.3 EBITDA Margin 36% 38% 21
Slide 22: Corporate Group's Net Income
Corporate Group’s Net Income • Lower income -23% • Lower cost of sales -17% • Reduction of vs. 3Q 2014 as a result of: vs. 3Q 2014: operational expenses • Lower basket prices, • Lower costs and -25% vs. 3Q 2014: -41.4/Bl vs. purchased volumes • Lower exploratory 3Q2014* • Optimization of expenses, s
Slide 23: Hedge Accounting
Hedge Accounting Hedge effect on profit 3Q - 2015 (COP$Tn) • It properly reflects the (-) Deferred tax and revenues effect company’s risk management (+) Financial Result Net impact on profit 3.9 • Natural hedge of FX risk: 2.2 export revenues hedged with -1.7 long term dollar debt • US$5,440 million
Slide 24: Net Income by Segment: Strength of an integrated company
Net Income by Segment: Strength of an integrated company E&P Downstream Midstream • Lower income • Strong refining • Positive effect of the • Reduction of costs margins Colombian peso and expenses helps depreciation on offset fall in tariffs (in US$) revenues (COP$Tn) 1.7 -1.6 0.3 -0.1 0.6 0.3 3Q 20
Slide 25: Cash Flow: Solid cash flow generation
Cash Flow : Solid cash flow generation (COP$Tn) Cash Flow 3Q 2015 Cumulative Cash Flow Jan-Sep 2015 8 1414 7 0.74 1212 6 3.67 3.67 2.92 1010 5 2.66 1.48 88 3.16 4 0.39 0.15 66 0.15 10.25 3 2 3.95 4.02 44 7.85 6.18 1 22 0.02 1.21 1.70 0 00 SOURCES USES NET SOURCES FUENTES USES USOS NET NETO Sources:
Slide 26: Outlook Year-end 2015
Outlook Year-end 2015 • Total 2015 savings : COP$ $2.2 Tn • 2015 average production of 760 mboed. • Results from Calasú and Muérgana Sur wildcat wells • Pozos Colorados – Galán pipeline capacity expansion from 95MBD to 130MBD. • 2016 Investment plan update • Active Asset portfolio management 26
Slide 27: Q&A
Q&A 27