Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — Santander's 23rd Annual Latin America Conference (January 2019)
38 slides from Ecopetrol Sa's conference presentation, January 2019
Slide 1: Santander's 23rd Annual Latin America Conference
Santander's 23rd Annual Latin America Conference January 2019 Photo: Cartagena Refinery- Archives: Ecopetrol
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: 2020+ Strategy: Focus on Profitable Growth
2020+ STRATEGY FOCUS ON PROFITABLE GROWTH EOR Reserves and Production growth RESERVES AND Cash protection PRODUCTION Strict capital and cost discipline GROWTH efficiency Exploration Unconventional TRANSFORMATION PROGRAM Inorganic growth 3
Slide 4: Best Financial Results in the Past Years
BEST FINANCIAL RESULTS IN THE PAST 4 YEARS 120.0 USD/Bl 755 761 718 715 716 100.0 X=99 X=54 X=45 X=55 X=73 66.0 37% 35% 38% 42% 48% 80.0 55.2 52.1 47.7 49.5 60.0 24.5 23.1 23.8 40.0 18.1 18.0 8.9 5.7 6.6 1.6 -3.9 20.0 2014 2015 2016 2017 Jan-Sept 2018 COP Tn EBITDA Revenue EBITDA Net Income Producti
Slide 5: Solid Results
SOLID RESULTS PROFITABLE GROWTH 2016 2017 Jan-Sep17 Jan-Sep18 1P RESERVES 1,598 1,659 NET PROFIT 3.19 8.90 MMBOE COP Tn AVERAGE 6.8 7.1 EBITDA MARGIN 43% 48% RESERVE LIFE Years NET DEBT/EBITDA 1.7x 1.1x RESERVE -7% 126% REPLACEMENT RATIO DOWNSTREAM 340 371 Throughput/MBD Upstream: Midstream: Downstr
Slide 6: Commercial Strategy
COMMERCIAL STRATEGY MAXIMIZING REVENUE Crude Prices USD/Bl 75 76 8.4 62 67 67 64 67 55 52 60 51 51 55 51 47 5.9 53 12 45 35 47 46 46 42 44 39 38 38 34 25 11.4 11.1 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Brent ECP Basket Spread (Q) % Crude Oil Basket vs. Brent (Q) Proac
Slide 7: Sustained Improvement in Key Operating Metrics
SUSTAINED IMPROVEMENT IN KEY OPERATING METRICS DILUTION COST LIFTING COST (USD/Bl) (USD/Bl) 20.0% 18.5% Benchmark* 16.9% 15.7% 14.6% Sep 2018 8.5 2017 7.6 6.7 Dilution 2016 5.1 4.7 Factor 6.5 4.2 3.9 2015 7.4 2014 11.2 2014 2015 2016 2017 Sep 2018 REFINING CASH COST** COST OF SALES/REVENUES (USD/Bl)
Slide 8: Sólidos Resultados Financieros
SÓLIDOS RESULTADOS COMPROMETIDOS CON LA EXCELENCIA UPSTREAM FINANCIEROS EBITDA 7.1 COP Bn MÁRGEN EBITDA 49% DIFERENCIAL DE PRECIO 7.3 REFINACIÓN Carga/KBD 360 1T2018 USD/BL REFICAR, MAYOR CARGA HISTÓRICA EN MARZO CON UN PROMEDIO DE 16O KBD ENTORNO Logramos restablecer las operaciones cumpliendo los
Slide 9: Production
PRODUCTION ON TRACK TOWARDS GOAL Production DRILLING CAMPAIGN RESULTS (MBOED) (+14.5 MBOED in 4 fields) 26.2% 2.0% 16.5% 2.7% 725 MBOED 120.1 122.5 113.3 116.4 22.9 28.9 18.2 21.2 721 724 715 La Cira- Infantas Rubiales Quifa 701 Castilla 3Q 2017 3Q 2018 RIGS 1Q 2018 2Q 2018 3Q 2018 2018(e) 41 42 44
Slide 10: Successful Reserves Addition
SUCCESSFUL RESERVES ADDITION 295 MMBOE IN ADDITIONS FOR A REPLACEMENT OF 126% AND EXTENDED RESERVES LIFE TO 7.1 YEARS Technical and Commercial Management 94 1659 1598 201 MMBOE -234 67 13 44 4 73 295 MMBOE Balance 2016 2016 Balance Producción 2017 Production 2017 Recobro Enhanced Extensiones Extensi
Slide 11: Significant Potential from Existing Fields
SIGNIFICANT POTENTIAL FROM EXISTING FIELDS RF (%) 19% 23% 32% 36% 36% 53.8** Recovery Factor Billions BOE Potential RF through Primary, EOR and IOR technologies *OOIP does not include: 6.4 BBOE of exploration and 7.6 BBOE of Subsidiaries Closing figures 2017, gross unrisked numbers RF: Recovery Fact
Slide 12: Successful Recovery Program
SUCCESFUL RECOVERY PROGRAM CONTRIBUTING TOWARDS PRODUCTION TARGET 17 MBOED 166 Recovery Pilots Production 550 716 15 1 1 149 MBOED Campos prod. Secondary/Terciary Pilotos Water Injection Pilotos Polymer Piloto Inyección Otros Steam Injection Othercampos Fields Producción 3Q18 2S1S Recovery Contribut
Slide 13: Successful Projects
SUCCESSFUL PROJECTS ADDING PRODUCTION AND RESERVES ‘La Cira Infantas’ – Mid-Magdalena Valley – Partnership 70000 Infill and water injection recovery 60000 Crude Rate program since 2005. Reserves Incremental 50000 Production (BOD) increased in 259 mmboe through 40000 through infill the increase of th
Slide 14: Recovery Program
RECOVERY PROGRAM RESULTS TO INCREASE RESERVES Chichimene, an example of recovery potential PILOT EXPANSION Pilot Results – Incremental Recovery Factor % Potential initial Secondary Expansion (Higher production) 10% 8.6% Lower range Incremental percentage 8% Primary 6% Pilot results of production 6.1
Slide 15: Near Field and Extensions
“NEAR FIELD” AND EXTENSIONS RESERVES AND PRODUCTION POTENTIAL LORITO AND NUEVA ESPERANZA SAURIO 2 LOCATION: Meta Department LOCATION: Meta Department CPO-09 BLOCK APIAY-SURIA AKACÍAS BLOCK FIELD SAURIO-2* LORITO-1 Productive Wells New Potential development area Next to Llanos 37, CPO-10 and Caño Sur
Slide 16: Ecopetrol Expands Its Presence in Brazil
ECOPETROL EXPANDS ITS PRESENCE IN BRAZIL Pau-Brazil Block Santos: one of the most prolific basins in the world High materiality combined with low risk Strategic partners with experience in the offshore CONSORTIUM 50% 30% 20% Saturno Block Located in central part of Santos basin Portfolio g
Slide 17: Exploration Activity
EXPLORATION ACTIVITY POLLERA-1 2018 SSJN-1 SN-15-17 GULF OF MÉXICO 337 Km COLOMBIA ONSHORE: PURCHASE OF 2D AND 3D SEISMIC ARRECIFE-1 Light Oil Discovery in the Well Andina-1 COYOTE-2 ANDINA-1 REX NE-02 ST1 (Tame, Arauca) 60.075 Km 2D VIM-8 PULPO-1 Commerciality declaration of the REX-NE CAPACHOS
Slide 18: Discoveries
DISCOVERIES WORK IN PROGRESS ONSHORE Coyote-1 Boranda-1 Lorito-1 Infantas Cosecha V- 01 Bullerengue-1 Near Field Re-entry of Field Evaluation Start of Oriente-1 Drilling of Appraisal of the Coyote-1. Drilling Plan (extended Discovery exploration Commerciality appraisal wells Gas Discovery and testin
Slide 19: Unconventional's Potential in Colombia
UNCONVENTIONAL’S POTENTIAL IN COLOMBIA Middle Magdalena Valley Basin Cesar-Ranchería Basin Potential of recoverable resources between Potential of recoverable tight gas 2.0 and 7.0 BBOE* greater than 10 TCF** *BBOE: billions of barrels of oil equivalent **TCF: Trillion of cubic feet 17
Slide 20: Potential Economic Benefits of Unconventional
POTENTIAL ECONOMIC BENEFITS OF UNCONVENTIONAL 30 USDBn 1.3 X 124k FDI Oil Sector Added Value Employment per year Per year ~ 10% of the GDP in Consolidation stage The full development 2017 in the in the development of La Luna formation consolidation stage* of the MMV* basin for 30 years * Calculated
Slide 21: Midstream
Midstream
Slide 22: Midstream: Strong EBITDA Growth
MIDSTREAM STRONG EBITDA GROWTH EBITDA Transported Volume COP Tn 7.1% 1.6% MBOD 1,086 1,103 267 274 6.00 6.42 819 829 Jan-Sep 2017 Jan-Sep 2018 Jan-Sep 2017 Jan-Sep 2018 Crude Refined San Fernando - Monterrey System came into operation in 2018 and P135 in the second half of 2017 The transported volum
Slide 23: Downstream
Downstream
Slide 24: Downstream: Cartagena Refinery
DOWNSTREAM CARTAGENA REFINERY Throughput (MBD) Margin and throughput composition 12.5 11.5 12.1 +16% 10.3 11.1 Margin 7.7 (USD/Bl) 6.8 National 39% 42% 49% 66% 79% 80% 147 145 153 158 crudes 71% 136 Imported crudes 61% 58% 51% 34% 29% 21% 20% 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18 1Q 17 2Q 17 3Q 17 4Q 17 1Q
Slide 25: Downstream: Barrancabermeja Refinery
DOWNSTREAM BARRANCABERMEJA REFINERY Throughput (MBD) Gross Margin (USD/Bl) +11% +32% 201 222 215 221 223 14.6 13.9 12.0 11.8 10.5 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Synergies between refineries Margin recovery Stability of operation 3Q 2018 maximum throughput and margins of the
Slide 26: Financial Results
Financial Results
Slide 27: Outstanding Results
OUTSTANDING RESULTS AS OF SEPTEMBER 2018 Operating Ebitda Margin Ebitda GE/bl* Cash Flow EBITDA PER SEGMENT 48% 47.3 17.9 23.8 48% 49% USD/B COP Tn 17.3 38% 42% 47.3 17.0 17.9 35% 30.0 48,7 11.7 14.2 15.6 22.1 23.5 9.8 2015 2016 2017 Sep-18 2015 2016 2017 Sep-18 2015 2016 2017 Sep-18 1.7 1.5 6.0 6.4
Slide 28: Net Income: Reflection of Financial Strength
NET INCOME REFLECTION OF FINANCIAL STRENGTH COP Tn (Variation between periods) 4.6 2.0 0.1 0.3 0.7 0.2 0.1 0.9 0.0 2.8 1.0 Utilidad 3T Ingresos Costos DD&A Gastos Actividad Dif. En cambio Resultado Prov. Renta Interes no Utilidad 3T Net2017 Income Revenues Costs DD&A Operating Exploratory operaciona
Slide 29: Capex: Focused on Profitable Growth
CAPEX FOCUSED ON PROFITABLE GROWTH USD Million 789 1,798 Increased Activity Development Wells Workovers ~80% vs execution 677 +600 492 1H18 ~421 +400 318 1,009 57 44 1,553 11 2017 Jan-Sep18 2017 Jan-Sep18 2018 (E) 876 Future Growth 117 Pau-Brasil block 60 107 Development of enhanced oil recovery tec
Slide 30: 2019 Investment Plan
2019 INVESTMENT PLAN USD $3.5 TO $4.0 BILLION Enhanced Oil Recovery Pilots Of total investment will be allocated in Colombia 30
Slide 31: Consolidated Debt/EBITDA: Committed to Lower Leverage
CONSOLIDATED DEBT/EBITDA COMMITTED TO LOWER LEVERAGE COP Tn 2.9 x 2.9 x 2.6 x 2.4 x 1.9 x 1.4 x 0.8 x 1.1 x 1.5 x 1.4x 0.5 x 53.2 52.2 1.1x 46.7 43.8 43.5 0.2 x 0.5 x 35.0 35.6 35.0 28.6 22.2 28.5 27.4 23.1 27.8 29.5 13.7 24.5 18.1 18.0 13.4 5.8 2012 2013 2014 2015 2016 2017 3Q 2018 Gross Debt Net D
Slide 32: Debt Profile
DEBT PROFILE ECOPETROL GROUP SEPTEMBER 2018 (USD Million) COP; 9.60% Currency 151 USD; 2,134 1,720 35 90.40% 480 2022 416 151 2024 425 70 2,294 1,490 1,671 2,000 LIBOR; IPC; 492 Interest rate 574 861 938 129 4.2% 96 4.0% 14 15 18 2019 406 57 DTF; 0 0 0 0 0 0 0 0 0 0 0 147 5.0% 2018 2020 2021 2023 20
Slide 33: Consolidated Debt: Strategic Use of Cash
CONSOLIDATED DEBT STRATEGIC USE OF CASH Consolidated Debt by Company September 2018 Nominal figures in USD Million Company USD Debt COP Debt(1) Total Ecopetrol 11,298 519 11,817 Average life(2) 10.2 years Bicentario - 417 417 Relevant figures Average cost COP 8.07% ODL - 169 170 (Sep/2018) Bioenergy
Slide 34: Committed to Reducing Greenhouse Effect
We are committed to reducing greenhouse effect Reduction Reduction Target 2025 2010-2017 2018-2025 TO REDUCE 3.7Mt CO2e 13.1Mt CO2e 3.5 Millions of tons of CO2e times the emissions of the last 8 years Gas Use Energy Efficiency Renewable Energies 34
Slide 35: Expanding Renewable Energy Resources
We might expand renewable energy resources from 43 MW to 181 MW Current Capacity (MW) BIOMASS Potential Installed Capacity (MW) SOLAR HYDRO Reduction of CO2 emissions KTons/year
Slide 36: Profitable and Sustainable Growth
2018 PROFITABLE AND SUSTAINABLE GROWTH Committed to production goal: 715 -725 MBOED Increase in activity in line with the investment plan Capital discipline under current oil price scenario Cleaner fuels and incorporation of sources of renewable energy
Slide 37: Energy for the Future
octterrou 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.
Slide 38: Oil and Gas Infrastructure
OIL AND GAS INFRASTRUCTURE
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