Slide 1: Operational and Financial Results, Fourth Quarter and Full Year 2020
OPERATIONAL AND FINANCIAL RESULTS Fourth Quarter and Full Year 2020
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: Our Speakers
OUR SPEAKERS ALBERTO CONSUEGRA FELIPE BAYÓN JAIME CABALLERO URIBE COO CEO CFO
Slide 4: Strategic progress under challenging conditions
Strategic progress under challenging conditions Safety in our operations Profitable growth TESG • Designed and implemented action plan prioritising • Focus on reserves protection • Updated renewable energy’s capacity target to the commitment to safety in our operations 400 MW by 2023 • Strengthened
Slide 5: Ecopetrol continues to deliver superior results
Ecopetrol continues to deliver superior results Net Income US$ B METRICS 2020 TARGET 2020 REAL Capex (US$ M) US$2,500 - US$3,000 US$2,674 IOCS NOCs Operating cash flow generation ~US$ 1,900 M US $ 2,500 Majors Cash breakeven* < US$30 /Bl US$ 32.7 /Bl ROACE (%) Gross debt/EBITDA <3.5x 2.8x Production
Slide 6: We faced an unprecedented price and demand contraction
We faced an unprecedented price and demand contraction DOMESTIC FUELS DEMAND* BASKET PRICE US$/BL** mbd mbd US 60.8 /Bl US 39.6 /Bl 270 3 243 31 216 3 69.8 3 20 64.2 64.2 13 123 49.2 107 102 58.6 43.2 34.4 112 98 112 2019 2020 1Q21 2019 2020 Gasoline Diesel Jet Extra Forecast Historic Brent Oil Prod
Slide 7: Reliable operations that adapted to circumstances
Reliable operations that adapted to circumstances Exploration Production Midstream Downstream GRM* (US$/Bl) Throughput (mbd) WELLS 18 10.3 9.5 8.5 mboed kbd 7.4 6.2 drilled in 2020 vs. target of 17 735 377 355 730 345 INCREASE OF 1,162 1,136 324 47% 694 979 1,027 255 678 681 926 in cumulative 4Q19 1
Slide 8: Increasing resilience of our reserves portfolio
Increasing resilience of our reserves portfolio mboe -236 AVERAGE -215 113 43 29 RESERVES LIFE 144 7.5 YEARS 1893 1770 Last 3 2020 years average RRR 115% Proven Reserves 2020 Production Economic Factors* Projects & Enhanced Extensions and Inorganic Growth Proven Reserves Last 3 years 2019 Performanc
Slide 9: We continue to make progress in unconventional reservoirs
We continue to make progress in unconventional reservoirs KALÉ PROJECT PERMIAN PUERTO WILCHES, SANTANDER 51% 49% Platform OXY ECOPETROL 4.5 hectares Knowledge transfer PERMIAN (Rodeo JV) 16 secondees CEPI* awarded by ANH ENLISTMENT Stage 20 5.2 Production mboed prior to royalties 20 22 Wells MINIMAL
Slide 10: Competitive costs adjusted to activity level
Competitive costs adjusted to activity level Total Unit Cost EG* Lifting Cost 33.9 35.4 8.7 8.6 ~30.0 <8.5 27.4 US$/Bl US$/Bl 7.5 2018 2019 2020 2021 2018 2019 2020 2021 Transportation cost per barrel Downstream total unit cost 8.2 8.1 3.3 3.3 3.1 7.6 ≤ 7.5 US$/Bl ~3.0 US$/Bl 2018 2019 2020 2021 201
Slide 11: Proven resilience amidst challenging conditions
Proven resilience amidst challenging conditions 761 718 715 720 725 697 54 45 55 72 64 43 45.4% 43.9% 41.8% 37.7% 34.7% 33.7% 70.8 67.8 55.2 52.1 50.0 47.7 30.8 31.1 23.1 18.1 18.0 16.8 11.6 13.3 6.6 1.6 1.7 2015 -4.0 2016 2017 2018 2019 2020 COP T Production Revenues Ingresos EBITDA Net Income Util
Slide 12: Fourth quarter results are rising, net of non-recurring events
Fourth quarter results are rising, net of non-recurring events Net Income 4Q20 vs 3Q20 Net Income 2020 vs 2019 COP B COP B 855 218 13,251 14,267 702 415 675 408 83 5,175 1,589 748 1,688 Δ EBITDA 1,630 Net Δ EBITDA Non Finacial Income Impairment Net Net Δ EBITDA Finacial Income Non Impairment Net Inc
Slide 13: Solid financial indicators after the crisis
Solid financial indicators after the crisis EBITDA Margin EBITDA/Bl Organic investment 30.5% 18.5 US$/Bl within the target US$ M 44.1% 34.9% 36.6% 23.2 26.6% 22.2 22.2 42.6% 34.9% 9.5 3,251 30.5% 2,674 23.6% 22.2 8.4 22.5 18.5 90 Target: 1Q20 2Q20 3Q20 4Q20 2,500– 3,000 218 1Q20 2Q20 3Q20 4Q20 335 W
Slide 14: Robust cash position with stable trend
Robust cash position with stable trend COP T Changing trend in Free Cash Flow 9.3 11.8 COP T 1.8 1.8 6.1 8.8 12.1 -1.1 1.2 8.1 -5.0 1Q20 2Q20 3Q20 4Q20 Cash OCF *** Capex Debt Dividends Others** Cash 2019* 2020* * Includes: Cash and Cash Equivalent and Other Current and Non-Current Financial Assets.
Slide 15: Business Plan Update 2021-2023
BUSINESS PLAN UPDATE 2021-2023
Slide 16: Organic plan responds to market conditions and maintains value proposition
Organic plan responds to market conditions and maintains value proposition METRICS 2021 2021- 2023 Organic Investment US$ 3,500 – 4,000 M US$ 12,000 – 15,000 M Restore Operating Cash Flow growth path US$ 3,500 – 5,000 M US$ 14,000 – 16,000 M EBITDA Margin 35% - 38% Gross Debt/Ebitda <2.5x Increases
Slide 17: Focus on growth and addition of production and reserves
Focus on growth and addition of production and reserves competitive at ≤ US$ 45 - 50/bl Base vs incremental production trend (%) E&P Investment US$ 9,000 -11,000 M (2021-2023) 8% 1% 3% 21% Gas Investment ~US$1,300 M 33% (2021-2023) 92% 78% 64% 2021 2022 2023 PRODUCTION (mboed) Base Incremental Explo
Slide 18: Growing operating cash generation underpins the business plan
Growing operating cash generation underpins the business plan 2020-2023 Cashflow (US$ Bn) Cashflow Sensitivity US$ M 0.5 – 1.0 ~ 18.0 ~ 16.0 0.0 ~ 2.0 2.0 ~ - 2.3 +/- 1 US$/Bl -450 450 ~ 14.0 0.5 – 1.0 ~ 16.0 2021 +/- 100 -500 500 COP/USD 2022 +/- 5 MBD -180 180 Production 2023 Assumptions 2.3 Brent
Slide 19: We increased our TESG ambitions
We increased our TESG ambitions 2021 – 2023 INVESTMENTS 2 6 2 Award SOLAR PARKS RENEWABLE 45 MW DECARBONIZATION ENERGY ~600 0 400 MW portfolio US$ M 0 Adopt SCM CUMULATIVE WATER 120 – 130 2 World Economic Forum EMISSION REDUCTION of 3.0 MtCO2e US$ M 2 55 VARIABLE DIGITAL 3 COMPENSATION STRATEGY % li
Slide 20: Potential Acquisition of ISA
POTENTIAL ACQUISITION OF ISA
Slide 21: The energy transition comes with challenges and opportunities
The energy transition comes with challenges and opportunities Global View Colombia View 400 Primary energy demand by fuel Primary energy demand by fuel Energy generation MMb / d3 3.0 MM TJ TWh 189 Renewables1 3% 162 2.5 300 89 Renewables1 Others2 ANNUAL 139 Hydroelectric 65 2037: Gas peak 2.0 116 Ot
Slide 22: Ecopetrol defined axes to respond to energy transition
Ecopetrol defined 4 axes to respond to energy transition COMPETITIVENESS DIVERSIFICATION DECARBONIZATION TESG • Improve costs and production times • Reposition new businesses in Accelerate and prioritize Harmonize economic, social and • Gas value chain opportunities O&G decarbonization and energy ef
Slide 23: ISA is a profitable, unique, regional energy infrastructure platform
ISA is a profitable, unique, regional energy infrastructure platform with attractive growth prospects ENERGY IMPROVES RISK GROWTH TRANSITION PROFILE Potential growth in EBITDA Regulated and long term Strategic position in the concession revenues provide energy value chain CAGR: 15% 2014-2019 stable
Slide 24: Financial structure creates value and leverages stability
Financial structure creates value and leverages stability PROFORMA • Post transaction Gross Debt/EBITDA*** Accretive* (times) • EPS: Incremental 2021+ • Float: ~US$ 2.7 B → ~US$ 5.4 B (improves 2.8 2.5 2.4 2.0 liquidity and stock support) • Market liquidity EQUITY • DEBT 2020: largest equity issuanc
Slide 25: A more robust GE with greater capacity to generate value
A more robust GE with greater capacity to generate value SCALE AND MATERIALITY CONTRIBUTION ANALYSIS STABLE CASH FLOWS ARE INCORPORATED WITHOUT REDUCING EXPOSURE TO BRENT EBITDA per Line of Business Revenue 2019 90% 10% Revenue 12M 3Q20 86% 14% EBITDA 2019 85% 15% 5% 17% + EBITDA 12M 3Q20 79% 21% 32
Slide 26: In summary
In summary 2020 Results demonstrate resiliency and competitiveness 21-23 ORGANIC PLAN: EBITDA, production and reserves growth ~US$ 4-5 B/Year investments, self-funded Higher prices provide upside vs US$ 45-50 /Bl Plan ISA: TRANSFORMATIONAL OPPORTUNITY Energy transition, growth, improved risk profile
Slide 27: Q&A
Q&A
Slide 28: Q&A Participants
Q&A PARTICIPANTS Felipe Bayón CEO Jaime Caballero Uribe Alberto Consuegra CFO COO Jorge Calvache Jorge Osorio VP of Exploration VP of Development and Production Milena López Strategy and Finance VP- Walter Fabian Canova Cenit VP of Refining and Industrial Processes Pedro Manrique Commercial and Mark
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Slide 30: Glossary
GLOSSARY Acronym Definition Bl Barrel Bn Thousand of million bped Barrels of oil equivalent per day COP Colombian pesos ESG Environmental, Social and Governance GEE Business Group JV Joint Venture kbd Thousand of barrels per day kbped Thousand of barrels of oil equivalent per day KTON Thousand of to