Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — Goldman Sachs Global Natural Resources Conference 2019
29 slides from Ecopetrol Sa's conference presentation, November 2019
Slide 1: Goldman Sachs Global Natural Resources Conference
Goldman Sachs Global Natural Resources Conference Jaime Caballero, CFO London, November 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: Improving returns amid price volatility
Improving returns amid price volatility 755 761 718 715 720 723 X=99 X=54 X=45 X=55 X=72 X=65 120 45.4% 45.8% EBITDA 100 41.8% Margin 37.1% 37.7% 34.7% 80 66.0 67.8 USD/Bl 55.2 52.1 52.3 60 47.7 40 30.8 24.5 23.1 23.9 18.1 18.0 20 11.6 9.2 5.7 6.6 1.6 -3.9 0 2014 2015 2016 2017 2018 Jan-Sep 2019 9.6
Slide 4: Strategy 2020+: Creating value as an integrated Group
Strategy 2020+: Creating value as an integrated Group Existing Fields Reserves and Production Growth Exploration Unconventional in Colombia Competitiveness and Sustainability Strict Capital Cash Protection Discipline and Cost Efficiency International 4
Slide 5: Operating results in line with 2019 Business Plan
Operating results in line with 2019 Business Plan Production Exploration Lifting Cost 723 mboed 9M 2019 13 Wells drilled 8.79 8.53 9M 2019 3Q 2019 In line with the target 5 confirmed presence of 720 - 730 hydrocarbons - 2.4% in 3Q 2019 vs. 3Q 2018 vs. 716 mboed 9M 2018 9M 2019 9 USD/Bl* Midstream Do
Slide 6: We continue our positive trend of incorporating reserves: RRR at 129%
We continue our positive trend of incorporating reserves: RRR at 129%, the highest level in four years Proven Added Technical and Commercial Management Reserves 260 MMBOE 307 MMBOE 160 1,659 47 1,727 239 74 The highest Reserve 129 57 Replacement Ratio of the last 4 years 129% 307 MMBOE 1,606 1,679 1
Slide 7: Inorganic growth aligned with strategy
Inorganic growth aligned with strategy JV with Occidental Incremental inorganic production (e) *** Knowledge and (mboed) 160 million boe 95 thousand boed technology for Ecopetrol in 2027 transfer 120 P1 reserves addition upon Gradual increase up to 2027 First group of secondees in closing* 1Q 2020 6
Slide 8: JV with Oxy: Transformational transaction for Ecopetrol
JV with Oxy: Transformational transaction for Ecopetrol 1 2 5 4 6 Significantly Value accretive Knowledge and Improved High quality Partnership enhances transaction technology portfolio acreage with OXY reserves and transfer structure production 160 mmboe of P1 Shareholder High level of Inte
Slide 9: Pilot projects for Unconventionals in Colombia
Pilot projects for Unconventionals in Colombia Unconventionals: Transformational opportunity to boost reserves and production growth Expected timeline for Pilot Projects 2019 2020 Pilot Evaluation projects State Council MME* regulatory First pilot UNCONVENTIONALS Clarification framework execution Co
Slide 10: Upstream
UPSTREAM eco
Slide 11: Exploration in Colombia: 2019 Plan contributing to reserves addition
Exploration in Colombia: 2019 Plan contributing to short and medium term reserves addition BLOCK MC-904 13 exploratory wells 88.015 Km2 3D Regional GuaOff-10 Drilled as of September, 2019 BULLERENGUE SW-1 2.660 Km 2D 2019 projection: 17 wells MAMEY WEST-1 Round 16 5 wells more vs. 2019 plan (12 well
Slide 12: Growth strategy focused on identifying new volumes and developing current assets
The growth strategy is focused on identifying new volumes (HCIIP) and developing the potential of current assets 2019 – 2021 Strategic Priorities 9M 2019 Results mboed mboed 720 720 - 730 740 - 760 750 - 770 +1.0% 900 -0.7% 730 <1% 1.2% 3% 7% 7% 10% 700 20% 20% 25% 26% 724 716 720 723 720 500 77% 73
Slide 13: EOR-IOR opportunities represent a potential ~3.4 BBOE
EOR-IOR opportunities represent a potential ~3.4 BBOE* Cumulative Gross Potential Volume (BBOE) Recovery Development CAPEX US$ 6 – 8 Bn Factor Breakdown by Technology Main Assets HCIIP** 55.3 (US$ Bn) (US$ Bn) Basic/Primary 3.5 – 4.5 Rubiales 0.9 Cumulative Production 10.6 19% Secondary 2.3 – 3.5 Ca
Slide 14: Strengthening the international portfolio
Strengthening the international portfolio Ecopetrol Óleo e Gas do Brasil Ecopetrol America LLC Equatorial Margin: Technical evaluation of prospects and compliance of the exploration commitments. Dalmatian Foz de Amazonas: ECP 70% - JX Nippon* 30% Ceará: ECP 50% - PetroRio* 50% Potiguar: ECP 10
Slide 15: Midstream
MIDSTREAM Transporte
Slide 16: Focused on achieving higher efficiencies of oil pipelines and capturing growth opportunities
Focused on achieving higher efficiencies of oil pipelines and capturing growth opportunities of product pipelines 2019 – 2021 Strategic Priorities 9M 2019 Results Revenues EBITDA Transported Volumes 1,100 – 1,250 mbd COP Tn +35% COP Tn +38% Higher efficiency and optimization of transportation system
Slide 17: Downstream
DOWNSTREAM ja)
Slide 18: Capturing value from current assets and profitable investments
Capturing value from current assets and profitable investments, in response to current market conditions 2019 – 2021 Strategic Priorities 9M 2019 Results Throughput Average Daily Throughput 370 – 400 mbod 215 221 223 229 222 217 Maximum value from existing assets 158 155 145 153 150 151 mbd Refining
Slide 19: Generating synergies as an integrated company to take advantage of IMO 2020
Generating synergies as an integrated company to take advantage of IMO 2020 UPSTREAM MIDSTREAM Greater production of light crudes by 41% Supply chain optimization to ensure the quality of the refineries' (17 mbd to 27 mbd) diet. Greater production of intermediate low sulfur crude to improve Increase
Slide 20: Financial Results
Resultados Financial Excepcionales Results
Slide 21: Main indicators support our financial strength
Main indicators support our financial strength Net Income EBITDA Margin EBITDA per Gross Debt segment / EBITDA** 9.2 COP Tn 45.8% 6.4 7.8 1.3x 1.7 1.1 8.9 9.2 COP Tn 45.4% 45.8% 2.9 37.7% 41.8% 7.8 7.9 1.9 15.6 15.0 3.0 0.7 0.5 1.2 1.3 2.8 5.3 13.2 3Q 18 3Q 3T 18 3T 19 19 Sep-18 Sep-19 2016 2017 201
Slide 22: Improved CAPEX execution capability
Improved CAPEX execution capability USD Bn Expected FY CAPEX execution +29% 4.4 – 5.0 0.33 0.13 0.03 0.01 USD Bn 0.9 – 1.1 0.9 – 1.1 1.8 2.3 9M 2018 E&P Refin. Down Mid Transp. Corp. 9M 2019 1.2 – 1.6 O 2.3 r g 0.1 3.5 – 3.9 a 0.1 n 1.6 i 0.3 c 2.3 1.1 0.7 9M 2019 D&C P&C ++ WO* WO* Facilities Facil
Slide 23: Solid cash position
Solid cash position COP Tn Cash 14.5 Dec 2018* OCF ex WK 20.3 COP 16.0 Tn* WK 0.2 Cash balance as of September 2019 Capex 7.4 COP 20.3 Tn Dividends 10.1 Operating cash flow Debt 2.3 COP 12.7 Tn Free cash flow Other** 1.2 Cash 16.0 Sep 2019* Business Plan 13.9 Cash 2019*** *Includes: cash and equival
Slide 24: We continue committed to cost efficiency
We continue committed to cost efficiency FINDING & DEVELOPMENT COST DILUTION COST 3- year average (2016-2018)* 20.0% (USD/Bl) 19.8 Dilution 17.3 14.8% 14.8% 14.6% 14.8% 14.8% Factor 16.3 6.7 14.7 Average:14.7 US$/Bl 12.4 12.3 5.3 11.5 11.3 4.9 4.6 10.5 10.3 9.9 4.3 8.2 3.9 1 2 3 4 5 6 7 8 9 10 11 12
Slide 25: New 2019 – 2023 savings target shows our commitment to efficiency
New 2019 – 2023 savings target shows our commitment to efficiency and transformation Exploration Corporate & Digital Agenda • Regional competitive practices • Projects procurement • Greater synergies between • Digital Transformation- First Group’s subsidiaries Phase (10 projects) COP 11.5 Tn in effi
Slide 26: New 2019 – 2023 savings target (ESG)
New 2019 – 2023 savings target shows our commitment to efficiency and transformation Exploration Corporate & Digital Agenda • Regional competitive practices • Projects procurement • Greater synergies between • Digital Transformation- First Group’s subsidiaries Phase (10 projects) US$ 4 Bn in efficie
Slide 27: Advancing in the path of sustainability
Advancing in the path of sustainability Decarbonization plan Renewable energies Water recycling 87 20% reduction in greenhouse emissions 21 MW Installed in solar energy 66 70 73 66 by 2030 Castilla Solar Farm 69.0 Millions of m3 52.9 56.8 Will supply energy to 52.4 53.5 Castilla Field Low carbon emi
Slide 28: 2019 year-end outlook
2019 year-end outlook • Closing of Permian deal with Occidental Growth and • Advance in the purchase of 30% of the Gato do Sustainable Value Mato discovery - Brazil – with Shell 50% and Strategy Total 20% • Preparation for Pilot Projects (unconventionals) Fulfillment of Business Plan targets • Produ
Slide 29: 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.
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