Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — Investor Presentation (July 2020)
34 slides from Ecopetrol Sa's investor presentation, July 2020
Slide 1: Ecopetrol
Ecopetrol July 2020 Picture: Chuchupa Field 1
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: Ecopetrol is an integrated oil & gas company
ECOPETROL IS AN INTEGRATED OIL & GAS COMPANY UPSTREAM • 5 countries: Col, US (GoM and Permian), Mexico, Peru, Brazil • 20 exploration wells in 2019 • Production 725 mboed MIDSTREAM • 5 companies: CENIT, Ocensa, ODL, ODC, OBC • Installed evacuation capacity: • Oil pipelines: ~1,300 kbd • Product pipe
Slide 4: 68 years of operation in Colombia
Incumbent position of the Group in Colombia* 68 years of operation gives us a deep knowledge of the environment in which we operate 56.7 BBOE de HCIIP 82% of oil pipelines capacity 1,893 MMBOE belongs to Ecopetrol, directly or through Sustainability of of Proven Reserves subsidiaries the Core Busine
Slide 5: 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 6: 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 6
Slide 7: Operating milestones
Operating milestones Exploration Midstream mbd Colombia MERECUMBE (SUCCESSFUL) 927 1,031 2Q 2020 1H 2020 924 919 937 Merecumbe-1 gas well discovery* Transported volume International (mbd) April Abril May Mayo June Junio Ecopetrol´s entry in Gato do Mato Relief to producers to discovery formalized GA
Slide 8: 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$/
Slide 9: Financial metrics adjusted to current juncture
Financial metrics adjusted to current juncture EBITDA EBITDA/Bl Stable organic EBITDA Margin 7.3 COP T 15.3 US$/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 10: Upstream
Upstream Photo: Rubiales Field 11
Slide 11: Consistent reserves growth
Consistent reserves growth Technical and Commercial Management 264 MMBOE Rodeo JV Incorporated Proven Permian Basin Reserves 164 20 1,893 408 MMBOE 1,727 242 94 67 103 Reserves Replacement Ratio 428 MMBOE 169% Average Reserve Balance 2018 Production Enhanced Extensions and Projects Inorganic Price E
Slide 12: 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 13: 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 14: 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 15: 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 16: Midstream
Midstream Photo: Oleoducto de Los Llanos
Slide 17: 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 18: Downstream
Downstream Photo: Barrancabermeja Refinery 24
Slide 19: 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 20: Financials
CONFIDENTIAL INFORMATION Resultados Financials Excepcionales 20
Slide 21: 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 22: 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$/Bl -508 508 2020 1,942 2021 4,359 -497 497 +/- 100 COP/USD 2022 5,134 3,203 +/- 5 MBD -152 152 Production Initial Operating Net additional Interest Other Avail
Slide 23: Intensified focus on cost efficiency
Intensified focus on cost efficiency 2020 COST SAVINGS INCREMENTAL TARGET BY 2022 GROUP - WIDE UPSTREAM • • Austerity measures Remote work • Synergies between segments (dilution 2.5 – 3.0 • Headcount strategy) 2021 -2022 (COP T) • Contract renegotiations 22% • Digital petrotechnical TOTAL COST PER B
Slide 24: Growing value creation
Growing value creation TARGET METRIC 2020 2020- 2022 US$ 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 25: ESG Initiatives
ESG Initiatives Photo: Kiara Abello, Jorge Pérez and Javier Salazar; Yopal, Casanare 37
Slide 26: 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 27: Making Progress in Diversity and Inclusion
Making Progress in Diversity and Inclusion Victims of Ethnicity and Internal Conflict, Sexual Gender Disability Other Social Veterans and Orientation Ex-Combats Conditions • Women participation • Inclusive labor • Economic, social and • Cultural awareness • Awareness, training in leadership and envi
Slide 28: Fully Committed to Best Corporate Governance Practices
Fully Committed to Best Corporate Governance Practices Board of Directors Protection of Minority Corporate Governance Board Oversight Ethics and Compliance Orlando Ayala Shareholders Model Independent • Best Corporate • Commitment to • Independent directors: • New Corporate Governance Practices Tran
Slide 29: Investor Relations
Head of Capital Markets: Juan Pablo Crane juan.crane@ecopetrol.com.co Investor Relations Officer: Lina María Contreras lina.contreras@ecopetrol.com.co Investor Relations Team: Adriana Baptiste Investor adriana.baptiste@ecopetrol.com.co Investor Relations Luisa Marcella Mosquera luisa.mosquera@ecopet
Slide 30: Definitions
Definitions Acronym Definition bboe Billion barrels of oil equivalent Bl Barrel boed Barrels of oil equivalent per day CAGR Compound Annual Growth Rate CEOR Chemical Enhanced Oil Recovery CFFO Cash Flow From Operations EOR Enhanced Oil Recovery ESG Environmental, Social and Governance Gbtud Giga BTU
Slide 31: Slide 31
Slide 32: Ecopetrol Corporate Structure
Ecopetrol Corporate Structure ECOPETROL CAPITAL AG 100% Upstream Midstream Downstream Financial/ Investment Vehicle BLACK GOLD RE 100% Equity Participation Foreign Company with Brach Headquartered in Colombia for fiscal purposes ECOPETROL ECOPETROL HOCOL PETROLEUM CENIT 100% 100% 1% ANDEAN ECOPETROL
Slide 33: Subsidiaries
Subsidiaries AMÉRICA COSTA AFUERA BRASIL MÉXICO Upstream Midstream Downstream ENERGÍA Comercialización
Slide 34: Oil and Gas Infrastructure
OIL AND GAS INFRASTRUCTURE