Ecopetrol Sa · BVC:ECOPETROL

Ecopetrol Sa — Q2 2010 Earnings Presentation

33 slides from Ecopetrol Sa's earnings presentation, Jul 29, 2010

  1. Slide 1: Financial and Operating Results Second Quarter 2010

    Ecopetrol S.A. FINANCIAL AND OPERATING RESULTS Second quarter of 2010 July 29, 2010

  2. Slide 2: Disclaimer

    DISCLAIMER This document was prepared by Ecopetrol S.A. 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 the probable development of Ecopetro

  3. Slide 3: Management Participants in Today's Conference Call

    MANAGEMENT PARTICIPANTS IN TODAY’S CONFERENCE CALL Javier Gutiérrez Chief Executive Officer Mauricio Echeverry General Counsel Adriana Echeverri Chief Financial Officer Hector Castaño VP of Production(A) Hector Manosalva EVP of E&P (A) Diego Carvajal VP of Exploration Claudia Castellanos EVP of Down

  4. Slide 4: Agenda

    AGENDA 1 Highlights for the second quarter 2010 2 Financial results for the second quarter 2010 3 Extension of the Strategic Plan to 2020 4 Outlook for the second semester 2010 4

  5. Slide 5: Important Progress of the Strategy During This Quarter

    IMPORTANT PROGRESS OF THE STRATEGY DURING THIS QUARTER: • Group´s producción grew 14.5% * Production higher than expected • Record production in Central region (Meta province) Diversification of exploratory portfolio • 9 blocks awarded in the 2010 Colombia Round (ANH) Refinery upgrade and high • Hyd

  6. Slide 6: 2010 Capex Plan

    2010 CAPEX PLAN: 31% GROWTH* IN ORGANIC INVESTMENTS DURING THE FIRST SEMESTER OF 2010 Organic Investments (USD mn) Key Projects (USD mn) Project Capex • Seismic 12 • Tupale-1 12 Exploration • Oripaya 9 1,933 • Other 82 82 4% ------------------------- ---- 115 6% • Rubiales 148 1,475 • Castilla 131 2

  7. Slide 7: Upstream: Solid Growth in Production

    UPSTREAM: WE COTINUE WITH A SOLID GROWTH IN PRODUCTION Highlight s of the quarter Corporate Group Production  Most competitive bids for 9 blocks in the “Colombian Round (MBOED) 2010” 593.9 518.5 6.4 26.2 2  Addtional commercial area for heavy crude oil fields 5.9 24.5 0.7 • Extension of the commer

  8. Slide 8: Downstream: Record Exports While Expanding Infrastructure

    DOWNSTREAM: WE ACHIEVED RECORD EXPORTS, WHILE EXPANDING AND UPGRADING OUR INFRASTRUCTURE Highlight of the quarter Transported volumes  98% progress in Hydro treatment project (MBD)  Development of basic engineering of B/meja modernization plan Refining  Supply of diesel with 50 ppm of sulfur in M

  9. Slide 9: Organizational Consolidation

    ORGANIZATIONAL CONSOLIDATION: WE ARE RANKED AS THE #1 COMPANY TO WORK IN COLOMBIA Highlights of the quarter Stakeholder meetings  Ranked as the “Best Company to work in Colombia” by Merco firm HR  1,373 employees with organizational, technical and leadership skills  Savings in supply chain of COP

  10. Slide 10: Agenda

    AGENDA 1 Highlights for the second quarter 2010 2 Financial results for the second quarter 2010 3 Extension of the Strategic Plan to 2020 4 Outlook for the second semester 2010 10

  11. Slide 11: Stronger Financial Results Than in 2009

    STRONGER FINANCIAL RESULTS* THAN IN 2009 Total Revenue (COP tn) Costs and Expenses (COP tn) Operating Profit (COP tn) and Operating Margin (%) 8.7 9.1 8.5 37% 7.4 6.7 32% 32% 6.4 59% 5.1 5.8 5.5 4.6 9% 30% 30% 70% 2.7 3.2 2.7 41% 2.1 2.2 21% 2Q09 3Q09 4Q09 1Q10 2Q10 2Q09 3Q09 4Q09 1Q10 2Q10 2Q09 3Q0

  12. Slide 12: Segment Financial Results

    SEGMENT FINANCIAL RESULTS* 5.3 5.4 3.9 3.5 2.6 2.7 Sales 0.72 0.73 (COP Tn) E&P Refining Transportation Sales & Marketing 1Q-2010 2Q-2010 2.0 1.9 Net Income 0.2 0.1 (COP Tn) -0.2 -0.2 0.04 -0.06 E&P Refining Transportation Sales & Marketing 1Q-2010 2Q-2010 64.3% Ebitda X% 3.5 Margin Ebitda (COP Tn)

  13. Slide 13: Flexibility and Strength to Finance Growth

    FLEXIBILITY AND STRENGTH TO FINANCE GROWTH Initial Sources Uses Final 0.2 16.5 9.5 Cash Flow* Apr-Jun -5.5 8.0 6.8 -1.6 2010 -1.3 - 0.001 (COP Tn) Initial Cash Operations Others Cash available Operations Capex Dividends FX Loss Ending Cash Assets Liabilities Debt Ratios 59.09 Cash and cash equivalen

  14. Slide 14: Consolidation of Ecopetrol's Group

    WE MOVE FORWARD TO THE CONSOLIDATION OF ECOPETROL´S GROUP % Revenues Net Income Company Ecopetrol (COP bn) (COP bn) Highlights of the quarter • Production of 34.6 MBOED Hocol 100 542 46 • Hocol: Most competitive bids for 5 blocks in the EXPLORATION Savia 50 75* 10* “Colombian Round 2010” & PRODUCTIO

  15. Slide 15: Agenda

    AGENDA 1 Highlights for the second quarter 2010 2 Financial results for the second quarter 2010 3 Extension of the Strategic Plan to 2020 4 Outlook for the second semester 2010 15

  16. Slide 16: Most Relevant Elements in the Investment Plan 2011-2020

    MOST RELEVANT ELEMENTS IN THE INVESTMENT PLAN 2011-2020 Complementary strategic guidelines Guidelines 1. 2. Profitable growth Organizational consolidation 3. Corporate responsibility Production of 1.3 million of “clean” barrels per day in 2020 • Goal of producing 1.0 million barrels in 2015 remains

  17. Slide 17: Investment Plan Goals 2011-2020

    INVESTMENT PLAN GOALS 2011-2020 ROCE Operational goal 2011 - 12 2015 2020 • Avg production 2011: 750 1,000 1,300 Exploration & (MBOED) 20% Production • Reserves addition 2008-12: 1,800 2008-15: 3,200 2008-20: 6,000 (MMBOE) 11% • Becoming a leader in Refining in Latin America Refining • Barrancaberme

  18. Slide 18: Production and Reserves Addition Goals 2011-2020

    PRODUCTION AND RESERVES ADDITION GOALS: 2011-2020 Reserves addition Production 2007-2020 (average prod / yr) 2008-2020 Million boe xxx Year end production 6,000 Non Conv. 566 9% 1,302 Acquisitions 2,133 36% 35 16 1,000 871 26 401 Exploration 685 39 750 175 67 615 48 46 75 30 Subsidiaries 3,301 55% 3

  19. Slide 19: Investment Plan Sources and Uses 2010-2020

    INVESTMENT PLAN SOURCES AND USES 2010-2020 0% 100% 6% 7% 0.2 80.2 7% 5.0 25% 5.5 5.5 55% 20.0 Uses 44.0 (US bn) Production Exploration Refining Petrochemicals Transport Organizational Total Consolidation 100% 62-67% 80.2 50-54 25-29% Sources 20-23 7-8% (US bn) 5.5-6.5 Total Net Cash Debt* Stock Gene

  20. Slide 20: Investment Plan: 55% Between 2011-2015 and 45% Between 2016-2020

    INVESTMENT PLAN: 55% BETWEEN 2011-2015 AND 45% BETWEEN 2016-2020 100% 55% 80.2 44.3 Investment 45% 2011-2020 35.9 (US bn) Total 2011-2015 2016-2020 0% 100% 2% 9% 44.3 12% 0.7 0.1 Investment 21% 4.2 55% 5.2 2011-2015 9.5 24.5 (US bn) Production Exploration Refining Transport Petrochemicals Organizati

  21. Slide 21: Investment Plan Key Projects

    INVESTMENT PLAN KEY PROJECTS Start of Investment Key projects operations (USD bn) • New international exploratory activity 11.5 Exploration • Local portfolio Ongoing 4.2 • Affiliates in Brazil, U.S. and Peru 3.8 • Technology to increase the recovery factor from secondary to tertiary 12.0 • Increase

  22. Slide 22: Agenda

    AGENDA 1 Highlights for the second quarter 2010 2 Financial results for the second quarter 2010 3 Extension of the Strategic Plan to 2020 4 Outlook for the second semester 2010 22

  23. Slide 23: Outlook for the Second Semester of 2010

    OUTLOOK FOR THE SECOND SEMESTER OF 2010  Estimated average production for 2010 of aprox. 615 mboed  20 exploratory wells drilled in 2010 E&P • 15 in Colombia • 5 international  Aprox.14,700 kms of seismeic for 2010  Hidrotreatment plant in B/meja starting operations in August  Initial blending

  24. Slide 24: Energy for the Future

    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. 24

  25. Slide 25: Operating Results

    OPERATING RESULTS* Production (MBOED) Sales (MBOED) Refinery Runs B/meja (MBOD) 553,2 559.3 738,3 514,4 542,1 713,3 708,1 488,5 632,3 656,7 99,8 99,5 94.9 17% 93,3 100,3 334,0 319,5 360,5 49% 298,6 311,4 442,3 453,7 464.4 83% 229,2 395,2 414,1 345,3 379,3 388,6 377,8 51% 215,5 218,3 333,7 213,7 211,

  26. Slide 26: Investment Plan

    INVESTMENT PLAN USD millones 6,925* 6,305 387 735 Acquisitions Organizational consolidation 4,824 2,363 1294 Transport Refining and Petrochemical 1,238 Production 151 Exploration 103 613 571 517 435 3,558 1,760 1,255 1,962 2,189 922 951 515 473 2005 2006 2007 2008 2009 2010 * Does not include acquis

  27. Slide 27: Production

    PRODUCTION Thousand barrels of oil equivalent per day (MBOED) 593.9 586.4 7,6 6,4 26,2 2 521 26 6 15 552,9 559.3 500 447 376 385 399 2005 2006 2007 2008 2009 1Q-2010 2Q-2010 k2 Savia Hocol Ecopetrol 27

  28. Slide 28: Exploration

    EXPLORATION Seismic equivalent kilometers 9,201 6,789 5,589 4,584 4,654 2,668 3,081 2005 2006 2007 2008 2009 1Q-2010 2Q-2010 28

  29. Slide 29: Reserves Balance

    RESERVES BALANCE– MBOE CORPORATE GROUP – SEC AFTER ROYALTIES IRR: 98% 65% 46% 351% 29

  30. Slide 30: Accident Rate

    ACCIDENT RATE Rate of accidents (# of accidents / million of man - hours) 5,8 2,6 1,8 1,7 1,3 1.5 1,2 2005 2006 2007 2008 2009 1Q-2010 2Q-2010 30

  31. Slide 31: Returns on Assets and Equity

    RETURNS ON ASSETS AND EQUITY 24% 21% 20% 18% 12% 12% 15% Return on Assets 9% 10% 9% 8% 7% 9% 11% 10% 13% (ROA) 9% 9% 40% 39% 37% 34% 26% 26% 28% 22% 22% 24% 23% Return on Equity 16% 18% 17% 16% 16% 23% 19% (ROE) 31

  32. Slide 32: Operating Costs

    OPERATING COSTS Lifting cost(USD/BOE) 7,2 8,3 7,2 7,2 5,2 5,8 2006 2007 2008 2009 2T2009 2T2010 Refining cost (USD/Bl) Transportation Cost (cents US /Bl-km)* 0,43 0,30 5,8 6,0 0,40 0,37 0,41 4,5 5,5 0,35 5,3 3,5 2006 2007 2008 2009 2T2009 2T2010 2006 2007 2008 2009 2T2009 2T2010 * Estimado con la ta

  33. Slide 33: Our Sales Volume Has Increased

    OUR SALES VOLUME HAS INCREASED Local sales Exports Sales 2010-2Q (mboed) 739 650 Crude 475 547 Total sales 302 361 148 216 251 (mboed) Natural gas 327 331 348 378 739 385 2007 2008 2009 2010-2Q 102 Products Crude Products Natural gas 361 302 0 U.S. GoM 56 2% 5%4% 20 7% Far east Exports 216 49 16 (mb

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