Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — Merger or Acquisition (August 2019)
15 slides from Ecopetrol Sa's merger presentation, August 2019
Slide 1: A Unique Deal
A Unique Deal Ecopetrol and Oxy form Strategic Joint Venture in the Midland Basin August, 2019
Slide 2: Legal Disclosure
LEGAL DISCLOSURE This 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
Slide 3: Overview of Transaction
Overview of Transaction Joint Venture (“JV”) agreement with Oxy to develop oil & Transaction gas properties in the prolific Midland Basin − Ecopetrol: 49% interest for US$1.5bn in an all cash transaction − Oxy: 51% interest and serves as operator ~97,000 net acres1 across Andrews, Martin, Howard
Slide 4: Transaction fully aligned with Ecopetrol's strategy
Transaction fully aligned with Ecopetrol’s strategy Existing fields Reserves and Production Growth Exploration in Colombia Competitiveness Unconventional and Sustainability Strict Capital Cash Protection International Discipline and Cost Efficiency 3
Slide 5: Permian: Fastest Growing U.S. Basin With Top-Tier Returns
Permian: Fastest Growing U.S. Basin With Top-Tier Returns The Permian Basin has the Highest Amount of Drilling Activity in the U.S. The Permian is the Leading Basin in Production Growth in the U.S. Other Appalachia Eagle Ford Bakken Haynesville DJ MidCon Permian Large-scale operator activity (# of 2
Slide 6: The Permian Basin Has Best in Class Resource Potential to Support Significant Production Growth
The Permian Basin Has Best in Class Resource Potential to Support Significant Production Growth Total Estimated Recoverable Resource1 Total Estimated Production by Basin (Bboe) (Mboe/d, 20:1 gas conversion) Permian, USA 16,000 Ghawar, Saudi Arabia Burgan, Kuwait 14,000 Safaniyah, Saudi Arabia Eagle
Slide 7: JV: Strategic Partnership with a Top-Tier and Experienced in-basin Operator
JV: Strategic Partnership with a Top-Tier and Experienced in-basin Operator 147% improvement since 2015 Oxy is a Proven, Large-scale Operator in the Permian Oxy continues to improve its well performance 25% improvement from 2017 to 2018 600 2,000 1,800 Daily operated production 500 Cum. Hz wells
Slide 8: Midland Transaction Activity and Valuations Through Time
Midland Transaction Activity and Valuations Through Time Acreage Mutiples Adjusted for Production – Deals > US$200mm ($000 per Acre)1 60 53 53 46 48 43 45 39 Midland Average 37 36 per Acre $31,87 34 34 30 27 27 JV Average per Acre $31,56 20 20 15 17 12 12 11 12 2015 2016 2017 2018 2019 WTI Spot Pric
Slide 9: Ecopetrol to Book ~160 mmboe of Proven Reserves in 2019 and Reach a Peak Production
Ecopetrol to Book ~160 mmboe of Proven Reserves in 2019 and Reach a Peak Production of ~95 kboed in 2027 Expected Total JV Production (kboed) Transaction expected to add ~160 mmboe of proved undeveloped reserves upon closing1 200 100 JV could add approximately 0.7 years to reserve life by the en
Slide 10: Summary of Selected Deal Terms
Summary of Selected Deal Terms BoD Advisor Corporate Governance Symmetric Board representation Financial Advisor Parties to consent on critical development and capex allocation decisions Agreed instances for technical and commercial decision making Legal Counsel Knowledge and Transfer Agreemen
Slide 11: Transformational transaction for Ecopetrol
Transformational transaction for Ecopetrol 1 2 5 4 6 Significantly Value Knowledge Improved High quality Partnership enhances accretive and portfolio acreage with OXY reserves and transaction technology structure xxx production transfer Strategic relationship International Undeveloped 160 mm
Slide 12: Value accretive transaction to Ecopetrol that enhances shareholder returns
Value accretive transaction to Ecopetrol that enhances shareholder returns EBITDA (US$bn) ROACE (%) 1.1 0.5% 0.2 13.1% 10.4 +11.0% 7.8 8.6% 6 2.7% 2016 2017 2018 2019-21 2022-27 2016 2017 2018 2019-21 target* 2022-27 Historical Average JV contribution/year Historical Average JV contribution Source:
Slide 13: Knowledge and technology transfer accelerates Ecopetrol's learning curve in unconventionals
Knowledge and technology transfer accelerates Ecopetrol’s learning curve in unconventionals Strategic link to Colombia Comparison of Colombia´s Unconventional vs Midland Basin Tailored Secondment Agreement with Oxy to transfer knowledge and technology to Ecopetrol Magdalena Valley Midland Allows com
Slide 14: Q&A
Q&A 13
Slide 15: Energy for the Future
octterrou ENERGY FOR THE FUTURE Ecopetrol S.A. All rights reserved. The re production of this presentation is forbidden without the written authorization of Ecopetrol S.A.