Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — IPO Roadshow (April 2020)
28 slides from Ecopetrol Sa's IPO roadshow presentation, Apr 27, 2020
Slide 1: Investor Presentation
1 April 2020 Investor Presentation Issuer Free Writing Prospectus Filed pursuant to Rule 433(d) Registration No. 333 - 225381 April 24, 2020
Slide 2: Disclaimer
2 Disclaimer This presentation was prepared by Ecopetrol S.A. (the “Company” or “ Ecopetrol ”) with the purpose of providing interested parties certain financial and other information of the Company. This presentation is for discussion purposes and highlights basic information about Ecopetrol and th
Slide 3: Summary Terms of the Offering
Summary Terms of the Offering 3 Issuer Ecopetrol S.A. Format SEC Registered Ranking Senior Unsecured Notes Expected Ratings Fitch: BBB - (Negative) | S&P: BBB - (Stable) | Moody’s: Baa3 (Stable) Currency USD Size Benchmark Tenor 10 year Coupon Payment Semi - annual Use of Proceeds General corporate
Slide 4: Business Overview
Business Overview 1 4
Slide 5: Ecopetrol at a Glance
5 $24 $32 $32 2 0 17 2 0 18 2 0 19 $36 $52 $11 $11 $13 $29 $37 $50 $39 $ ( 20 ) $ ( 30 ) $ ( 33 ) $55 $68 $71 2 0 1 8 2 0 1 9 Ecopetrol at a Glance O verview Key Facts Our Businesses Leading player in Colombia with international footprint in highly prospective basins with world class partners Upstre
Slide 6: 2019 Key Highlights
6 Net Income Attributable to shareholders of Ecopetrol COP 13.7 tn 2019 2019 Key Highlights 98% in Colombia vs. 720 mboed in 2018 72 5 Production mboed 2019 7 confirmed presence of hydrocarbons Exploration Wells d r i l l ed 19 Efficiencies in operational processes Lifting Cost 8 . 5 6 8.66 2019 201
Slide 7: Response to COVID-19 and Brent Decline: Adjustments to 2020 Investment Plan
Response to COVID - 19 and Decline in Brent Oil Prices: Adjustments to 2020 Investment Plan A US$1.2 Billion Decrease in the 2020 Investment Plan New Earnings Distribution Proposal In November 2019, Ecopetrol’s Board of Directors approved between US$4.5 and US$5.5 billion for the 2020 investment p
Slide 8: Investment Highlights
2 Investment Highlights 8
Slide 9: Key Investment Highlights
Strategy Focused on Value Generation and Sustainable Growth ESG Focus and Commitment to Creating Value to Society Strong Operational Performance Outstanding Financial Track Record and Credit Profile Sound Corporate Governance and Experienced Management Team Key Investment Highlights 1 4 2 3 5 ▪ Focu
Slide 10: Creating Value as an Integrated Group
Existing Fields Unconventional Exploration in Colombia In t ernati o nal Reserves and Production Growth Cash Protection and Cost Efficiency Strict Capital Discipline Comp e tit i v en e s s and Sustainability 1. Strategy Focused on Value Generation and Sustainable Growth 2. Strong Operational Perfor
Slide 11: Consistent Reserves Growth
11 1,727 (2 4 2) 94 67 83 164 1,893 Balance 2018 Production 2019 Improved Recovery Extensions and Discoveries Revisions Inorganic Growth Balance 2019 Technical and Commercial Management 244 MMBOE Disciplined organic and inorganic incorporation +33% vs. 2018 incorporation 408 MMBOE 2019 Reserves Repl
Slide 12: Complementary Value Accretive Inorganic Growth Aligned With Strategy
12 JV with OXY 164 mmboe 1P Farm - in agreement in the Esox discovery Shell EP O f fs ho r e Ventures Limited 1 50 % 50% Acquisition of the Chuchupa and Ballena fields from Chevron 2 100% 51 % 49% 30% 20% 50% Acquisition of the Gato do Mato discovery Permian (Rodeo JV) 21.43% 57.14% 42.86% Unconvent
Slide 13: Operations Highlights
13 Reserves Replenishment Ratio (IRR) Exploration Wells (as of Dec 31, 2019) Production (mboed) Downstream (mboed) 20 17 19 2 0 17 2 0 18 2 0 19 715 720 725 2 0 17 2 0 18 2 0 19 1 , 0 91 1 , 1 10 Transported Volumes (mbod) 1,1 5 3 2 0 17 2 0 18 2 0 19 347 375 376 2 0 17 2 0 18 2 0 19 126% 129% 169%
Slide 14: Strong Financial Track Record
14 EBITDA Margin 1 (%) Net Income 3 (COP tn) Gross Debt / EBITDA 2 (x) Dividend Distribution (COP tn) $7 .2 $ 1 1 .4 $13 .7 2 0 17 2 0 18 2 0 19 1 . 8 x 1 . 2 x 1 . 2 x 2 0 17 2 0 18 2 0 19 $0 .9 $3 .7 $12 .9 2 0 17 2 0 18 2 0 19 42 . 6 % 46 . 0 % 44 . 4 % 2 0 17 2 0 18 2 0 19 Source: Ecopetrol’s 20
Slide 15: Capex Overview
$ 4 .6 $ 7 .2 $ 1 2.0 $0.6 $ 0 .7 $0.8 $ 0 .6 $1.5 $ 0 .5 $ 6 .1 $ 8 .5 $ 1 4.0 2019 2017 Exploration and Production 2018 Refining and Petrochemicals Transport and Logistics 1. Strategy Focused on Value Generation and Sustainable Growth 2. Strong Operational Performance 3. Outstanding Financial Trac
Slide 16: Well-Balanced Debt Structure
Debt Breakdown by Currency (as of Dec 31, 2019) Debt Breakdown by Rate (as of Dec 31, 2019) 1. Strategy Focused on Value Generation and Sustainable Growth 2. Strong Operational Performance 3. Outstanding Financial Track Record 5. Sound Corporate Governance and Experienced Management Team 4. ESG Focu
Slide 17: Robust Cash Flow Generation and EBITDA Conversion
17 71 . 3 % 7 1 .2% 87 . 3 % 1. Strategy Focused on Value Generation and Sustainable Growth 2. Strong Operational Performance 3. Outstanding Financial Track Record 5. Sound Corporate Governance and Experienced Management Team 4. ESG Focus and Commitment to Creating Value to Society 3 Robust Cash Flo
Slide 18: Balance Sheet Snapshot and Gross Debt
18 Hig h lig h ts Balance Sheet Snapshot (COP tn.) Gross Debt (COP tn.) Ecopetrol benefits from a strong balance sheet and liquidity position as it continued to improve its credit metrics in 2019 Improving credit profile is primarily the result of proactive debt repayment and revised business pl
Slide 19: ESG Strategies and Initiatives
19 Emission reduction and water management Creating Value to Society Social and Environmental Investment • In line with Ecopetrol’s objective of reducing the carbon emissions associated with its operations, the 2020 Investment Plan allocates: • Investment in project that helps reduce carbon emission
Slide 20: Board of Directors
Sergio Restrepo Isaza Independent Board Member » Former Vice President of Capital Markets and Corporate Development at Bancolombia Group » Former board member of Cementos Argos, Compañía Nacional de Chocolates, Conavi, SUAM, among others » B.A. in Management from EAFIT Unversity of Medellín, with an
Slide 21: Management Team
Juan Pablo Crane Head of Capital Markets » +20 years of experience occupying financial positions » Former Board member of Concesionaria Vial del Pacifico, Deputy Director of Public Credit, Director at private equity firm SK Latam Capital, Director at financial advisory firm Astris Finance and Direct
Slide 22: Supplemental Information
Supplemental Information 3 22
Slide 23: Upstream Business Snapshot
715 720 725 2 0 17 2 0 18 2 0 19 Revenues (COP tn.) Upstream Business Snapshot Total Production (mboed) Key Highlights Leading Position in Colombia And Across Relevant Zip Codes Fast - growing upstream incumbent with robust track - record in LatAm and US Well - Balanced Portfolio of O&G Fields High
Slide 24: Midstream Business Snapshot
Revenues (COP tn.) Midstream Business Snapshot Transported Volume (k bpd) Key Highlights Constant Cash Contributor Strong and stable results with low uncertainty, contributing 32% to the Group’s EBITDA 1 Crude Transportation Tariff Stability Crude transportation tariff negotiation during 2018, assur
Slide 25: Downstream Business Snapshot
$28 $36 $36 2 0 17 2 0 18 2 0 19 Downstream Business Snapshot Throughput (mboed) Revenues (COP tn.) Key Highlights Ample Space to Increase Production in Barrancabermeja Increase of conversion capacity to meet increase in demand Tangible Synergetic Opportunities Down the Road Maximize synergies betwe
Slide 26: Appendix
Appendix bro 26
Slide 27: EBITDA Reconciliation
27 EBITDA Reconciliation Source: Ecopetrol’s 2019 20 - F; data is presented for the years ended December 31st 1 Comprises taxes and contributions related to fixed costs of sales, taxes related to administrative expenses, and taxes related to operations and project expenses. COP bn. 2017 2018 2019 Ne
Slide 28: Key Definitions
28 Key Definitions Bl : Barrel Boed : Barrels of oil equivalent per day CAGR : Compound annual growth rate estimated as Initial Balance Ending Balance 1/(Number of years) − 1 Cash and Cash Equivalents Margin: Cash and Cash Equivalents / Revenues Cash Flow Conversion: Net Cash Flow From Ope