Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — Q2 2020 Earnings Presentation
32 slides from Ecopetrol Sa's earnings presentation, Aug 5, 2020
Slide 1: 2nd Investor Day 2020: 2Q20 Results and 20-22 Plan
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: Operational and Financial Results Second Quarter 2020
O P E R AT I O N A L AND FINANCIAL R E S U LT S Second Quarter 2020
Slide 4: Our Speakers
OUR SPEAKERS Felipe Bayón Jaime Caballero Uribe CEO CFO Alberto Consuegra COO 3
Slide 5: Committed to life and business continuity
Committed to life and business continuity Gradual increase in operating activities # of work-fronts in worksites* DIGITAL Beginning of Preventive Beginning of Mandatory TRANSFORMATION 350 Isolation in Ecopetrol Isolation in Colombia ~ 9,000 300 250 Employees with secure digital # of work-fronts 20
Slide 6: Unprecedented contraction with gradual recovery
Unprecedented contraction with gradual recovery GLOBAL OIL SUPPLY AND DEMAND* DOMESTIC FUELS DEMAND** BASKET PRICE US$/BL*** mmbd mbd mbd 62.3 US$/ Bl 37.1 US$/ Bl 105 10 290 272 Jet 34 71.7 Jet 8 35 Forecast 66.2 100 6 211 202 118 Diésel 20 184 6 Diésel 4 49.9 95 122 149 5 59.8 42.1 2 100 2 104 106
Slide 7: Results impacted by market conditions
Results impacted by market conditions 723 720 730 735 677 X= 69 X= 62 X= 62 X= 51 X= 33 18,309 18,014 18,581 15,072 8,307 8,270 8,442 7,174 5,257 3,487 3,011 4,009 1,996 133 25 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 COP B Revenues EBITDA Net Income Production (mboed) X=Average Brent 7
Slide 8: Operating milestones
Operating milestones Exploration Midstream mbd Colombia Merecumbe-1 gas well MERECUMBE (SUCCESSFUL) 927 1,031 2Q 2020 1H 2020 924 919 937 discovery* (Dep. Atlántico) Transported volume International (mbd) April Abril May Mayo June Junio Ecopetrol´s entry in Gato do Mato Relief to producers to discov
Slide 9: Interventions reflected in cost trend change
Interventions reflected in cost trend change Group operating costs and expenses* Quarterly trend Monthly trend COP T COP T 0.49 0.41 2.69 2.84 1.0 1.1 2.28 2.35 0.9 0.9 0.8 0.8 0.8 0.8 0.8 0.8 0.7 0.7 1Q 2Q Jan Feb Mar Apr May Jun 2019 2020 2019 2020 Lifting cost Transportation cost per barrel (US$/
Slide 10: Financial metrics adjusted to current juncture
Financial metrics adjusted to current juncture EBITDA Ebitda/Bl Stable organic EBITDA Margin 7.3 COP T 15.3 US$/BL US$ M investment levels 45% 44% 46% Target 31% 3,521 3,000 – 3,400 30.8 31.1 39.6 35.8 15.7 37.4 7.3 15.3 2018 2019 1H19 1H20 2018 2019 1H19 1H20 Gross Debt 2% Cash 6% / Ebitda Breakeve
Slide 11: Positive net income despite worst conditions on record
Positive net income despite worst conditions on record COP T (Variation between periods) 6.23 -5.95 1.01 -0.93 0.22 -3.00 3.10 -0.03 0.08 0.16 -0.49 Net Price and Volume Costs + Financial Tax Non- Net income Non- Impairments Net Income Income Utilidad FX effect Efecto precio effect Efecto volumen ex
Slide 12: Business Plan Update 2020-2022
BUSINESS PLAN U P D AT E 2020 – 2022
Slide 13: Plan responds to crisis and protects pillars of 2020+ Strategy
Plan responds to crisis and protects pillars of 2020+ Strategy 1 Reserves and Production Growth RESERVES AND PRODUCTION GROWTH Existing Fields: enhanced recovery technology and focus in opportunities that generate the most value Exploration in Colombia: drilling of +30 wells during 2020-2022 Unconve
Slide 14: Upstream
Upstream Picture: Cusiana
Slide 15: Upstream investments focused on sustainability
Upstream investments focused on sustainability Exploratory Resources to +400 Northern Area 8% US$ 9,000 - 10,000 M wells +30 delimit (2020-2022) E&P Capex (2020-2022) mmboe 2020 (2020-2022) PRODUCTION Llanos Area 700-720 mboed 46% Central Area (2020-2022) 18% Base vs incremental production % 5% 2% 3
Slide 16: Profitable production and reserves protection
Profitable production and reserves protection FOCUS ON VALUE AND OPTIONALITY RESERVES POTENTIAL UNCHANGED (%) Percentage share in production volumes 2020-2022 **HCIIP and Recovery Factor - Ecopetrol S.A.- 1.3% - 3% 20 19 19 19 19 19 19 19 Primary 65 18 18 18 18 60 20 1% - 4% 60 16 55.3 56.7 18 Recov
Slide 17: Gas is a strategic priority
Gas is a strategic priority Supply and Demand Balance* FOCUS: 2,500 2,000 Regasification • Development of Piedemonte 1,500 • Strengthening of Guajira GBTUD assets 1,000 • Development of Offshore Potential Colombian Caribbean 500 Supply base: • Time to Market Producers Declaration 0 2020 2021 2022 20
Slide 18: Progress in unconventional reservoirs
Progress in unconventional reservoirs PPIIs* PERM IAN MID - MAGDALENA VALLEY (VMM) Prospect Area 51% 49% OXY 1.3 m acres ECOPETROL Ecopetrol Area PERMIAN ~730 k acres (Rodeo JV) Knowledge transfer Preliminary agreement 15 secondees with ExxonMobil PPIIs’ technical regulations Structuring Social & En
Slide 19: Midstream
Midstream Picture: Oleoducto de Los Llanos
Slide 20: Focus on integrity and reliability of supply
Focus on integrity and reliability of supply STRATEGIC PRIORITIES • Integrity and reliability of 2020 - 2022 TARGETS infrastructure • Logistical flexibility and efficiency in transportation of heavy crudes 1,000 - 1,025 • Cost Efficiency Transported volumes (kbd) INVESTMENTS EBITDA contribution • Ma
Slide 21: Downstream
Downstream Picture: Barrancabermeja Refinery
Slide 22: Competitiveness in low price environment
Competitiveness in low price environment STRATEGIC TARGET 2020-2022 PRIORITIES 300 - 380 • Initiatives to improve margin and Throughput (mbd) capacity • Reliability of the operation Cartagena Refinery • Maximizing value of existing assets • Cost efficiency Current With IPCC* 150 200 Throughput capac
Slide 23: Financials
Resultados Excepcionales Financials
Slide 24: Optimized portfolio that safeguards value proposition
Optimized portfolio that safeguards value proposition INVESTMENT PLAN 11% 2% 2020-2022 7% Upstream Safe, reliable and 11,000 – 13,000 Midstream profitable Downstream production 2020 -2022 (US$ M) 80% Corporate Cash flow protection STRATEGIC 80% 20% THEMES: COLOMBIA INTERNATIONAL 25% gas, energy tran
Slide 25: Investment plan underpinned by cashflow growth
Investment plan underpinned by cashflow growth 2020-2022 Cashflow (US$ M) 4,506 2,416 Cashflow Sensitivity 646 17,375 US$ M 11,436 +/- 1 US$/Bl -508 508 2020 1,942 2021 4,359 -497 497 +/- 100 COP/USD 2022 5,134 3,203 +/- 5 MBD -152 152 Production Initial Operating Net additional Interest Other Avail
Slide 26: Intensified focus on cost efficiency
Intensified focus on cost efficiency 2020 COST SAVINGS INCREMENTAL TARGET BY 2022 GROUP - WIDE UPSTREAM • • Austerity measures Remote work • Synergies between segments (dilution 2.5 – 3.0 • Headcount strategy) 2021 -2022 (COP T) • Contract renegotiations 22% • Digital petrotechnical TOTAL COST PER B
Slide 27: TESG commitment
TESG* commitment DECARBONIZATION INNOVATION AND TECHNOLOGY INVESTMENT 2020-2022 Reduction of 20% emissions by 2030 MW RENEWABLE ENERGY 184 ~158 US$ M 34 43 Initiatives in place: 3 6 27 SOCIO-ENVIRONMENTAL INVESTMENT Renewable energy portfolio: 85 300 MW** by 2022 64 51 3% increase in energy 30 21 50
Slide 28: Growing value creation
Growing value creation TARGET METRIC 2020 2020- 2022 US$ 3,000 – 3,400 M US$ 11,000 – 13,000 M FINANCIAL Organic Investments Operating Cashflow ~US$ 1,900 M US$ 11,000 M – 12,000 M Cash Breakeven* < US$30 /Bl US$ 30 - 40 /Bl Gross Debt / EBITDA (x) <3.5x <2.5x OPERATIONAL Production (mboed) ~700 ~70
Slide 29: 20-22 Plan summary
20-22 Plan summary Responds to the crisis and protects pillars of 2020+ Strategy Stable investment levels and profitable production that protects EG’s sustainability Growing value creation Ratified commitment to TESG 29
Slide 30: 2nd Investor Day 2020
2" INVESTOR DAY 2020 2Q20 RESULTS AND 20-22 PLAN (“bel 17) [se eee
Slide 31: Q&A Participants
Q&A PARTICIPANTS Felipe Bayón CEO Alberto Consuegra Jaime Caballero Uribe COO CFO Jorge Osorio Jorge Calvache VP Development and VP Exploration Production Milena López Walter Fabian Canova Director of Strategy and VP Downstream Finance - Cenit Juan Manuel Rojas Pedro Manrique VP Strategy and Busines
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