Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — Q1 2020 Earnings Presentation
28 slides from Ecopetrol Sa's earnings presentation, May 12, 2020
Slide 1: Operational and Financial Results First Quarter 2020
OPERATIONAL AND FINANCIAL RESULTS First Quarter 2020 May 12th, 2020 Picture: Chuchupa Field
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 Felipe Bayón Jaime Caballero Uribe CEO CFO Alberto Consuegra Juan Pablo Crane COO Head of Capital Markets 3
Slide 4: Life ensures business continuity
Life ensures business continuity RESPONSE Leadership IT Management PLAN COVID-19 • • COVID-19 Crisis Committee Health Response Committee • Secure digital connection for +9,000 employees • Diagnostic tests at Barrancabermeja • Chatbot to determine risk of Hospital contagion • CoronApp** for self-diag
Slide 5: Oil market is facing an unprecedented supply and demand shock
Oil market is currently facing an unprecedented supply and demand shock INDICATORS BASKET PRICE (USD/BL) GLOBAL SUPPLY AND DEMAND FOR CRUDE* COP mmbd 200,262 Bl USD 59.6 / BL USD 47.4 / BL COP 15 110 179,683 Bl 70.0 105 63.8 6.2 10 USD 63.8 /Bl 59.4 (7,6) 100 50.8 8.6 56.2 5 USD 50.8 /Bl 95 (10,5) 4
Slide 6: Optimization of logistics chain according to demand
Optimization of logistics chain according to demand Crude Products Commercial Strategy Storage National Demand 2020 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Mmbl 4.7 290 272 mbd Strategic 34 Positioning our crudes capacity 35 211 2.1 available 118 20 122 Forecast Customer Relationship 100 128 Addit
Slide 7: Facing this new challenge
Facing this new challenge COP 3.5 Tn >USD 130 M We maintain investments OPEX REVENUE Commercial in strategic projects (COMMERCIAL) Strategy Optimization Enhanced Oil Recovery Technologies COSTS AND EXPENSES Gas Opportunities INVESTMENT PLAN Digital Transformation USD 2.5 - 3.0 Bn FINANCING CAPEX Ren
Slide 8: Rodeo JV: Flexibility of short cycle assets
Rodeo JV: Flexibility of short cycle assets 2020 Initial Plan 2020 Updated Plan 51% 49% Ecopetrol Net Production Ecopetrol Net Production 7–9 4–5 Permian (Rodeo JV) mboed mboed Operated rigs Temporary release of rigs 4 Operated Wells Operated Wells ~ 90 / 50 ~ 22 Spud / Online Online Capex JV Capex
Slide 9: First Quarter 2020 Results
First Quarter 2020 Results FINANCIAL OPERATING ESG* Reversal of Verified reduction of Net Production COP 133 Bn (mboed) 735 Piedemonte Association Contract 178,099 Tons Income Exploratory Wells Drilling Ebitda COP 5.3 Tn 3 Gato do Mato-4 Progress with San Drilled Fernando Solar Farm Refining Schedul
Slide 10: Upstream
Upstream Picture: Cusiana Field 10
Slide 11: Progress in the incorporation of resources
Progress in the incorporation of resources MATURITY OF DISCOVERIES EXPLORATORY ACTIVITY Q1 20 Andina Flamencos Bullerengue Arrecife Esox Norte Under Production In production Planned In production commercial testing and testing and production testing 2020 OBIWAN-1 study appraisal appraisal plan testi
Slide 12: Focus on profitable production
Focus on profitable production mboed 5 4 1 5 735 ~5 730 ~27 ~8 ~14 ~1-21 660-680 Q4 19 Operative Field reversion Acquisitions 2019 Security events Q1 20 Lower activity Profitability criteria Reduced Other (operating, Natural gas Estimated performance COVID-19 Capex/ non security events) demand* Q2 2
Slide 13: Gas remains strategic priority
Gas remains strategic priority Lower self-consumption: due to lower ~ 10% Upstream Income $ throughput in refineries and closing of fields Demand contracted at fixed prices Force Majeure Demand Protection: sector measures to 5.4% mitigate impact on customers mboed Q1 Current Results Vol. 131 138 Mat
Slide 14: Continuous capture of efficiencies
Continuous capture of efficiencies Dilution Cost Lifting Cost Drilling Days (USD/Bl) (USD/Bl) (Days) 23.6 8.7 8.6 8.2 20.7 7.1 - 7.8 19.1 4.5 4.1 3.7 8.5 7.3 6.5 2018 2019 Q1 20 2018 2019 Q1 20 2020 (e) 2018 2019 Q1 20 Castilla Rubiales Use of naphtha from Optimizaciónof Optimization decontracts con
Slide 15: Midstream
Midstream Transporte
Slide 16: Stability amid a challenging environment
Stability amid a challenging environment Transported volumes (mbd) Revenue (COP Tn) EBITDA (COP Tn) 1,137 1,136 3.05 3.18 2.57 2.49 1,071 1,068 260 263 2.73 2.19 266 272 2.50 1.94 805 796 877 873 78% 80% 84% 78% Q1 17 Q1 18 Q1 19 Q1 20 Q1 17 Q1 18 Q1 19 Q1 20 Q1 17 Q1 18 Q1 19 Q1 20 Products Crude E
Slide 17: Downstream
Downstream Picture: Barrancabermeja Refinery
Slide 18: Adapting operations to new demand conditions
Adapting operations to new demand conditions Sales Volume (MBD) Throughput (MBD) Diesel -21% Q1 20 161 165 350 345 367 365 Gasoline 131 Jet 305 195 199 219 215 165 -44% -23% 154 146 149 150 140 138 Jan.20 Feb.20 Mar.20 34 35 116 90 Q1 19 Q1 20 Jan.20 Feb.20 Mar.20 20 Barrancabermeja Cartagena Jan.20
Slide 19: Financial Results
Financial Results Resultados Excepcionales
Slide 20: Net income impacted by inventory valuation and recognition of impairments
Net income impacted by inventory valuation and recognition of impairments COP Tn 2.75 0.74 0.14 1.24 1.04 0.03 1.07 0.93 0.68 0.16 0.13 Net Income Q1 19 Price and exchange rate Volume effect* Costs+expenses+DD&A Non-recurr. Financ. expens.+ Tax Provision Non-controlling interest Income before Impair
Slide 21: Financial indicators reflect market conditions
Financial indicators reflect market conditions Ebitda Margin (%) Ebitda Q1 20 Gross debt /Ebitda* COP 5.3 Tn 34.9% % by segment 1.6x 6.4% 5.3% 3.0% 5.4% E&P Midstream 28.3% 32.2% 34.9% 47.3% Downstream 45.4 43.9 46.1 34.9 1.2 1.2 1.2 1.6 65.3% 62.5% 62.1% 47.3% 2018 2019 Q1 19 Q1 20 2018 2019 Q1 19
Slide 22: Robust cash position to face market conditions
Robust cash position to face market conditions Cashflow COP Tn 2.6 3.5 12.1 0.6 1.5 11.7 0.4 Cash balance 2019* Cash flow from Capex Debt Dividends Other** Cash balance Q1 20* operations Ecopetrol Ocensa ODL Bicentenario Invercolsa Financing Nuevo Endeudamiento Maturity profile 11.9 COP Tn 2.7 6.8 8
Slide 23: Short-term financial framework
Short-term financial framework @ USD 30-40 /Bl CASH PROTECTION CAPITAL DISCIPLINE RESILIENCE / FLEXIBILITY Sustainable production CAPEX Cash flow @ <USD 30 /Bl USD 2.5 – 3.0 Bn Breakeven Previous USD 4.5 - 5.5 ~USD 26 /Bl OPEX optimizations Net Income Staggered Sanction Breakeven COP 3.5 - 4.5 Tn Pr
Slide 24: 2020 Perspectives @ USD 30-40/Bl
2020 Perspectives @ USD 30 – 40 /Bl Our priorities: Q2 2020 (e) 2020 (e) Commitment to life Production 660 - 680 664 - 710 (mboed) Adapting to a new reality Transported 800 - 1,000 850 - 1,100 Cash protection and capital Volume (mbd) discipline Crude Differential -9.0 / -13.0 -9.0 / -11.0 (USD/Bl) S
Slide 25: 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
Slide 26: Q&A
Q&A
Slide 27: Q&A Participants
Q&A PARTICIPANTS Felipe Bayón CEO Alberto Consuegra Jaime Caballero Uribe COO CFO Pedro Manrique Jorge Calvache Commercial and Marketing VP VP of Exploration Walter Fabian Canova Milena López VP of Refining and Industrial Director of Strategy and Processes Finance - Cenit Juan Manuel Rojas Jorge Oso
Slide 28: De todos, para todos