Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — Credicorp Capital XVII Andean Investor Conference 2019
34 slides from Ecopetrol Sa's conference presentation, Sep 24, 2019
Slide 1: Credicorp Capital XVII Andean Investor Conference 2019
Credicorp Capital XVII Andean Investor Conference 2019 September, 2019 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: Delivering sustained results amid a challenging environment
Delivering sustained results amid a challenging environment 755 761 718 715 720 726 120 X=99 X=54 X=45 X=55 X=72 X=66 45.4% 45.8% EBITDA 100 41.8% Margin 37.1% 37.7% 34.7% 80 67.8 66.0 USD/Bl 55.2 60 52.1 47.7 40 34.2 30.8 24.5 23.1 18.1 18.0 15.6 20 11.6 5.7 6.6 6.2 1.6 0 -3.9 2014 2015 2016 2017 2
Slide 4: Operating results: committed to achieving our goals
Operating results: committed to achieving our goals Exploration Midstream 10 +5.2% Wells drilled Transported Volume 1H 2019 1H 2019 Vs. 1H 2018 3 with presence of Active commercial hydrocarbons strategy Production Downstream 726 723 364 379 1H 2019 mboed 2Q 2019 mboed 1H 2019 mbd 2Q 2019 mbd In line
Slide 5: RRR at 129%, the highest level in four years
We continue our positive trend of incorporating reserves: RRR at 129%, the highest level in four years Proven Added Technical and Commercial Management Reserves 260 MMBOE 307 MMBOE 160 1,659 47 1,727 239 74 The highest Reserve 129 57 Replacement Ratio of the last 4 years 129% 307 MMBOE 1,606 1,679 1
Slide 6: Strategy 2020+: Creating value as an integrated Group
Strategy 2020+: Creating value as an integrated Group Existing Fields Reserves and Production Growth Exploration Unconventional in Colombia Competitiveness and Sustainability Strict Capital Cash Protection Discipline and Cost Efficiency International 6
Slide 7: Upstream
UPSTREAM 19
Slide 8: Exploration in Colombia: 2019 Plan contributing to reserves addition
Exploration in Colombia: 2019 Plan contributing to short and medium term reserves addition 2019 Investment Plan Commitments 1H 2019 Exploration Activity • 12 Exploratory wells • 50,000 km of seismic GoM - MEXICO PURCHASE OF SEISMIC • Investment of 12% (US$ 420 M) of total capex BRAZIL for 2019 MC 90
Slide 9: Growth strategy focused on new volumes and developing current assets
The growth strategy is focused on identifying new volumes (HCIIP) and developing the potential of current assets 2019 – 2021 Strategic Priorities 6M 2019 Results Production (mboed) mboed 720 720 - 730 740 - 760 750 - 770 900 721 723 726 <1% 1.2% 3% 7% 7% 10% 36 41 730 700 20% 20% 25% 26% 500 685 682
Slide 10: EOR-IOR opportunities represent a potential ~3.4 BBOE
EOR-IOR opportunities represent a potential ~3.4 BBOE* Cumulative Gross Potential Volume (BBOE) Recovery Development CAPEX US$ 6 – 8 Bn Factor Breakdown by Technology Main Assets HCIIP** 55.3 (US$ Bn) (US$ Bn) Basic/Primary 3.5 – 4.5 Rubiales 0.9 Cumulative Production 10.6 19% Secondary 2.3 – 3.5 Ca
Slide 11: Internationalization in high prospective basins
Internationalization in high prospective basins US Unconventionals • Projects under evaluation position Current • Drivers: know how / short cycle access GoM - USA Mexico Brazil • K2, Gunflint and • Blocks 6 and 8 awarded position Current position Current position Current • Pre-salt blocks (Pau Brasi
Slide 12: Strengthening the international portfolio
Strengthening the international portfolio Ecopetrol Óleo e Gas do Brasil Ecopetrol America LLC - EA Equatorial Margin: Technical evaluation of FOZ DO CEA prospects and compliance of the RÁ AMAZONAS exploration commitments. 200 km Dalmatian 50% 100% Foz de Amazonas: ECP 70% - JX Nippon* POTIG PO 30
Slide 13: Unconventionals in US: JV with OXY
Unconventionals in US: JV with OXY will allow us to book ~160 mmboe of proven reserves in 2019 and reach a peak production of ~95 kboed in 2027 Transaction Joint Venture (“JV”) agreement with Oxy to develop oil and gas properties in the prolific Midland Basin − Ecopetrol: 49% interest for US$1.5bn
Slide 14: Ecopetrol to Book ~160 mmboe of Proven Reserves in 2019
Ecopetrol to Book ~160 mmboe of Proven Reserves in 2019 and Reach a Peak Production of ~95 kboed in 2027 Expected Total JV Production Transaction expected to add ~160 mmboe of proved undeveloped reserves upon closing1 200 (kboed) JV could add approximately 0.7 years to reserve life by the end of
Slide 15: A transformational transaction for Ecopetrol
A transformational transaction for Ecopetrol EBITDA (US$ Bn) 1.1 0.2 Knowledge and Technology Improved Portfolio Structure 10.4 Transfer 7.8 International onshore presence 6 High level of planned activity provides rapid knowledge transfer Lighter crude and natural gas 2016 2017 2018 2019-21 20
Slide 16: Knowledge and technology transfer accelerates learning curve in unconventionals
Knowledge and technology transfer accelerates ecopetrol’s learning curve in unconventionals Strategic link to Colombia Comparison of Colombia´s Unconventional vs Midland Basin Tailored Secondment Agreement with Oxy to transfer knowledge and technology to Ecopetrol Magdalena Valley Midland Allows com
Slide 17: Geologic Basins with Unconventional Potential
8 Geologic Basins with Unconventional Potential S-SJ Sinú San Jacinto* CR Cesar Ranchería ★ Shale oil up to ~0,2 bnboe ★ CBM and Shale gas > 10 TCF (e) ★ Shale gas ~2 and 66 TCF VIM Lower Magdalena Valley* Cat Catatumbo ★ Shale gas ~ 0.8 and 18 TCF ★ Gas ~ 0.2 and 1.4 TCF (e) VMM Middle Magdalena Va
Slide 18: Midstream
MIDSTREAM Transporte 31
Slide 19: Higher efficiencies of oil pipelines and growth in product pipelines
Focused on achieving higher efficiencies of oil pipelines and capturing growth opportunities of product pipelines 2019 – 2021 Strategic Priorities 6M 2019 Results 3.2 2.9 Transported Volumes 2.5 1,100 – 1,250 mbd 2.3 COP Tn Higher efficiency and optimization of transportation systems 2Q 2018 2Q 2019
Slide 20: Downstream
= — ssi wert DOWNSTREAM |
Slide 21: Capturing value from current assets and profitable investments
Capturing value from current assets and profitable investments, in response to current market conditions 2019 – 2021 Strategic Priorities 6M 2019 Results Average DailyThroughput Throughput 370 – 400 mbod 222 215 221 223 229 196 229 Maximum value from existing assets 147 145 153 158 150 155 150 mbd R
Slide 22: Generating synergies as an integrated company to take advantage of IMO 2020
Generating synergies as an integrated company to take advantage of IMO 2020 UPSTREAM MIDSTREAM Greater production of light crudes by 41% Supply chain optimization to ensure the quality of the refineries' (17 mbd to 27 mbd) diet. Greater production of intermediate low sulfur crude to improve Increase
Slide 23: Financial Results
Financial Results Resultados Excepcionales
Slide 24: Main indicators support our financial strength
Main indicators support our financial strength EBITDA Margin Gross Debt Net Debt / EBITDA* / EBITDA* 45.7% 1.2x 1.0x 45.4% 45.7% 2.9 37.7% 41.8% 1.9 2.4 1.2 1.2 1.5 1.0 1.0 2016 2017 2018 1H 2019 2016 2017 2018 1H 2019 2016 2017 2018 1H 2019 EBITDA /Bl Net Income ROACE** Breakeven 37.4 US$/Bl 31.9 U
Slide 25: Strategic investments: focused on growth and sustainability
Strategic investments: focused on growth and sustainability USD Bn Expected FY CAPEX execution +38% USD Bn 4.4 - 4.9 0.26 0.09 0.03 0.01 Inorganic 0.9 0.9 1.0 1.4 1H 2018 E&P Down Mid Corp 1H 1H 2019 2019 USD M Initial Pay. $750 Carry $50 - 60 2.1 – 2.6 Capex ECP $65 - 75 1.4 0.1 3.5 – 4.0 Organic 0
Slide 26: Our strong cash generation underpins our financial priorities
Our strong cash generation underpins our financial priorities 2019 - 2021 Cumulative Cash Flow* Financial Priorities Initial Balance 5 Profitable Value creation Optimal leverage Operating Growth for our shareholders management Cash Flow 22 Generation Capex 15 US$ 4.0 Bn of Cash US$ Bn as of Jun, 201
Slide 27: The achieved results place the Group in a robust competitive position
The achieved results place the Group in a robust competitive position ROACE ROACE (%) 2018 54 45 55 72 66 65 14 12 13.1% 13.4% ECP* 10 > 11.0% 8 8.6% 6 4 2 2.7% 1.9% 0 -2 2015 2016 2017 2018 1H LTM 2019 2019 - 2021 -40 0 40 80 120 160 200 240 280 BRENT (US$/Bl) CAGR Free Cash Flow 2015 - 2018 (%) IO
Slide 28: We continue making efforts to improve our cost efficiency
We continue making efforts to improve our cost efficiency Finding and Development Cost Dilution Cost 3-year average vs peers (2016-2018) Dilution Cost Dilution Factor 20.0% 19.8 10 20.0% 17.3 16.3 9 14.8% 14.8% 14.6% 14.8% 15% 18.0% 14.7 8 6.7 16.0% Ecopetrol US$/Bl 12.4 12.3 11.5 11.3 14.7 7 5.3 14
Slide 29: New 2019–2023 savings target shows our commitment to efficiency
New 2019 – 2023 savings target shows our commitment to efficiency and transformation Exploration Corporate & Digital Agenda • Regional competitive practices • Projects procurement • Greater synergies between • Digital Transformation- First Group’s subsidiaries Phase (10 projects) US$ 3.6 Bn in effic
Slide 30: New 2019–2023 savings target (ESG)
New 2019 – 2023 savings target shows our commitment to efficiency and transformation Exploration Corporate & Digital Agenda • Regional competitive practices • Projects procurement • Greater synergies between • Digital Transformation- First Group’s subsidiaries Phase (10 projects) US$ 4 Bn in efficie
Slide 31: Ecopetrol commits to reducing its greenhouse gas emissions by 2030
Ecopetrol commits to reducing its greenhouse gas emissions 20% by 2030 CO2 Emissions Reduction Water Recycling Sulfur Content – Diesel B2* (Tons CO2-equivalent) (Millions of cubic meters ) (National Average – PPM) 2010 2011 2012 2013 2014 2015 2016 2017 2018 1H 19 Maximum Allowed 50 20 66 +31% 140 4
Slide 32: Strategic delivery on track
Strategic delivery on track Access to the Permian –US- in partnership with OXY Strategic milestones Larger position in the Pre-salt in Brazil Definition of crude transport tariffs Solid financial results Operational results in line with the plan Continuous focus on efficiencies Committed to th
Slide 33: 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 34: Oil and Gas Infrastructure
OIL AND GAS INFRASTRUCTURE 49
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