Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — JP Morgan Energy Equity Conference 2017
29 slides from Ecopetrol Sa's conference presentation, Jun 22, 2017
Slide 1: Overcoming the Industry Challenges
ECOPETROL BUSINESS GROUP Overcoming the Industry Challenges June, 2017
Slide 2: Cautionary Statement
Cautionary Statement 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 o
Slide 3: Challenging Environment and Price Recovery Still Uncertain
Challenging Environment and Price Recovery Still Uncertain Since 2014 the industry has been under pressure from falling oil prices. Between 2014 and 2016 Brent lowered its price by 55% 16% additional between 2015 and 2016 3
Slide 4: We Transformed in order to be Sustainable
We Transformed in order to be Sustainable Ecopetrol’s New Era New Leadership Transformation Plan • Structural efficiencies ex. Dilution • Renewed management team • Operational Efficiencies • New organizational structure • Improved recovery • Value over volume • New exploratory model • New Financial
Slide 5: We Accomplished Structural Savings Throughout all Segments During 2016
We Accomplished Structural Savings Throughout all Segments During 2016 Structural Savings 2014-2016 USD Bn 2019 target exceeded two years in advance 2.00 +79% New accumulated 2.2 target by 2020 +110% 1.00 1.5 1.4 1.1 1.3 0.7 1.0 0.3 0.8 0.00 2015 2016 2017 2018 2019 2020 2015 2016 Accum. Target Accu
Slide 6: Sustained Improvement in Key Operating Metrics
Sustained Improvement in Key Operating Metrics LIFTING COST (US$/BOE) DILUTION FACTOR % LTM 6.8 2016 17% 2016 6.5 -3% -42% 2015 19% 2015 7.4 2014 11.2 2014 20% DAYS OF DRILLING 2014 40 Record 16 12 2015 34 36 2016 20 26 26 20 21 5 8 6 0 Castilla Chichimene Rubiales 6
Slide 7: Ongoing stabilization process at Reficar
Ongoing stabilization process at Reficar REFINERY THROUGHPUT MEDIUM DISTILLATES YIELD REFINING GROSS MARGIN mbd (%) US$/Bl 49% 123 6.8 117 37% 5.3 2016 1Q 2017 2016 1Q 2017 2016 1Q 2017 In 2016, 39% of gasoline volume sold was imported. In 2017, it would be between 38%-35% and in 2018 between 30%-
Slide 8: We Delivered Amidst the Challenges
We Delivered Amidst the Challenges PRODUCTION 2016 1Q 2017 2016 1Q 2017 OVERPERFORMANCE EBITDA MARGIN 718 712 % 38% 43.5% MBOD 2016 1Q 2017 SOLID CASH 2016 1Q 2017 Offshore WARRIOR PURPLE ANGEL POSITION (USD Bn) 4.7 6.0 UPSTREAM 2016 1Q 2017* EBITDA/bl (USD) 10.5 13.9 REFICAR 2016 1Q 2017 POSITIVE M
Slide 9: 1Q 2017: Exceeding Goals
1Q 2017: Exceeding Goals REVENUES EBITDA LEVERAGE COP tn COP tn Times (x) +27.5% 13.4 +40.5% 3.0 5.8 2.6 2.6 10.5 4.1 2.1 2016 - 1Q 2017 - 1Q 2016 - 1Q 2017 - 1Q ND/Ebitda GD/Ebitda 2016 - 1Q 2017 -1Q Margin 39.5% 43.5% Increased revenues due to price recovery and lower differentials vs. Brent Highe
Slide 10: Benefits of Being an Integrated Group
Benefits of Being an Integrated Group COP Tn Q/Q EBITDA BY SEGMENTS EBITDA BREAKDOWN 7.0 +40% 120% 6.0 5.8 1Q 2016 1Q 2017 2% 100% 5.0 4.1 +330% 80% 33% 4.0 3.3 -24% 60% 60% 3.0 2.5 1.9 40% 57% 2.0 -3.5% 1.0 24% 1.0 0.58 0.56 20% 14% 10% - 0% Ecopetrol Upstream Downstream Midstream 1Q 2016 1Q 2017 G
Slide 11: Cash Position as a Growth Catalyst
Cash Position as a Growth Catalyst First Quarter 2017 US$ Bn 1.6 (0.2) 6.1 (1.0) (0.3) (0.1) 2.9 2.9 2.4 0.8 Initial cash balance Cash from CAPEX Portfolio Financial Exchange rate Ending cash Short term Term investments operations investment expens./dividends variation balance investments (-1 (+1 ye
Slide 12: Peer Comparison: 1Q 2017
Peer Comparison: 1Q 2017 EBITDA Margin EBITDA/bl NET DEBT/EBITDA 43% US$ 31.0 2.1x Majors IOC NOC Majors IOC NOC Majors IOC NOC 16% 32% 36% 26.2 19.9 27.6 1.4 2.0 2.3 Majors O&G IOC: Internationals NOC: National 12
Slide 13: 2017 Perspectives
2017 Perspectives PRODUCTION Fulfillment of Profitable production goal 715 mboed EXPLORATION USD 650 MM CAPEX for 2017: 5 offshore wells Colombia, 1 offshore US GOM and 11 onshore wells Colombia. REFINING Reficar: Stabilization and integrated performance test in 2H 2017 COMMERCIAL STRATEGY Responsiv
Slide 14: Our Focus is set on Reserves
Our Focus is set on Reserves Full Year 2016 RRR Excluding Price Effect: 79% RRR: -7% 2,000 Reserve Life : 6.8 years 1,849 -235 1,800 -202 186 1,598 1,600 1,400 Mboe 1,200 1,000 800 600 Balance Dec 15 Prod. 2016 Price Cost Opt. Balance Dec 16 Costs Optimization Lower transportation cost 20% drop in S
Slide 15: Growth Catalysts
Growth Catalysts Exploration focused in highly prospective basins Increased recovery factor to seize the potential of current producing assets Unconventional Oil & Gas resources potential Cash available to capture inorganic growth opportunities 15
Slide 16: 2017 Exploratory Campaign
2017 Exploratory Campaign EXPLORATORY US GOM CAMPAIGN 2017 Target: 250 mmboe contingent resources EXPLORATORY WELL OPERATOR 16
Slide 17: Relevant Discoveries
Relevant Discoveries LARGE CHUCHUPA/ BALLENA 1969 to date: DISCOVERIES 903 Mmboe Accumulated Production Mmboe New gas Province LA CIRA CAÑO INFANTAS LIMON 1918 to date: 1983 to date: 831 Mmboe 1,033 Mmboe CUSIANA CUPIAGA 1989 to date: 1,373 Mmboe CASTILLA RUBIALES CHICHIMENE 1969 to date: 1981 to da
Slide 18: Relevant Discoveries
Relevant Discoveries DISCOVERIES GORGON – RECORD IN COLOMBIA CROSSED GREATEST WATER LAYER IN COLOMBIA’S OFFSHORE DRILLING KRONOS, GORGON AND PURPLE ANGEL HISTORY 18
Slide 19: A Gas Cluster in Offshore Colombia with Significant Potential
A Gas Cluster in Offshore Colombia with Significant Potential New Gas Province in Colombian Caribbean Offshore Ecopetrol and Anadarko discovered Gorgon-1 August 2015 New Discovery 2017 February 2017 DISCOVERY 260-360 feet 2017 EXPLORATION CAPEX (80 -110 meters) US$ 652 MILLION Net gas sand interval
Slide 20: Significant Potential of the Recovery Program
Significant Potential of the Recovery Program Bn BOE ORIGINAL OIL IN PLACE 1 POTENTIAL BY TECHNOLOGY 1 0.20 19% 53.9 23% 28% 1.99 39 2.92 1 2 10.47 1.96 2.92 BN BOE 0.74 OOIP/OGIP Cumulative Proven Potential Remaining oil Production Reserves recovery Primary Non thermal Thermal Current recovery fact
Slide 21: Proven ability to add production and reserves through Recovery Factor
Proven ability to add production and reserves through Recovery Factor ‘La Cira Infantas’ – Mid-Magdalena Valley – Partnership Infill and water injection recovery 70000 60000 program since 2005. Reserves Crude Rate (BOD) Incremental 50000 Production through increased in 259 Mmboe through 40000 infill
Slide 22: Opportunities to Grow in Colombia
Opportunities to Grow in Colombia 22
Slide 23: Unconventionals’ Potential Around the World
Unconventionals’ Potential Around the World Colombia*: 5 – 8,4 bn boe * Source for Colombia´s estimation: Arthur D. Little, 2017 bnboe: billions of barrels of oil equivalent 23
Slide 24: Mexico Round represents New Opportunities
Mexico Round represents New Opportunities Area 6: 559 square kilometers with its partner PC Carigali México (Petronas subsidiary). Operating profits offered to the Mexican government was 65.19%. Area 8: 586 square kilometers with its strategic partner Pemex. Operating profit offered to the Mexican g
Slide 25: Ecopetrol’s 2020 Corporate Strategy Pillars
Ecopetrol’s 2020 Corporate Strategy Pillars 25
Slide 26: Ecopetrol’s 2020 Business Plan
Ecopetrol’s 2020 Business Plan 26
Slide 27: Ecopetrol’s 2020 Business Plan
Ecopetrol’s 2020 Business Plan * 10.5 * 2016 figure 27
Slide 28: Ecopetrol’s 2020 Corporate Strategy Pillars
Ecopetrol’s 2020 Corporate Strategy Pillars ECOPETROL 2020 CAPEX USD Bn 13 (3.3/year) PRODUCTION PERFORMANCE 760 MBOED EBITDA/bl 12 UPSTREAM (USD) OPERATIONAL EXCELLENCE SOLID CASH POSITION (USD) 5 Bn (EBITDA TO 2020) USD Bn 0.7 LEVERAGE 3.0x – 2.5x REDUCTION Targets under a price assumption of USD
Slide 29: Para uso restringido en Ecopetrol S.A. Todos los derechos reservados. Ninguna parte de esta
Para uso restringido en Ecopetrol S.A. Todos los derechos reservados. Ninguna parte de esta presentación puede ser reproducida o utilizada en ninguna forma o por ningún medio sin permiso explícito de Ecopetrol S.A.