Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — Emerging Markets Corporate Conference - Bank of America Merrill Lynch 2017
26 slides from Ecopetrol Sa's conference presentation, May 31, 2017
Slide 1: Overcoming the Industry Challenges
ECOPETROL BUSINESS GROUP Overcoming the Industry Challenges May 31, 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
Challenging Enviorment We have challenged ourselves to improve Challenging Enviorment 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 • Renewed management team • Structural efficiencies ex. Dilution • New organizational structure • Operational Efficiencies • Value over volume • Improved recovery • New exploratory model Financial Streng
Slide 5: We accomplished structural savings throughout all segments during 2016
We accomplished structural savings throughout all segments during 2016 Structural Savings 2014-2016 4.3 COP Tn 0.3 0.2 0.4 2.2 0.4 0.2 0.7 2.1 2.1 2015 2015 Dilution Contract Mgt. Midstream Upstream transp. Drilling,Energy,Crude Other 2016 2016 Purchases, subsoil maintenance CAPEX 2014-2017 USD bn 8
Slide 6: Key Operational Efficiencies
Key Operational Efficiencies LIFTING COST DILUTION FACTOR USD/bl 2016 17% -3% 2016 6,5 -42% 2015 7,4 2015 19% 2014 2014 20% 11,2 DAYS OF DRILLING TRANSPORTATION COST USD/bl 2014 2015 40 36 2016 RECORD 34 12 16 26 26 3,3 -3% 20 21 2016 20 5 8 6 2015 3,4 0 Castilla Chichimene Rubiales 6
Slide 7: We closed 2016 exceeding goals and with a solid cash position
We closed 2016 exceeding goals and with a solid cash position FINANCIAL OPERATIONAL EBITDA PRODUCTION MARGIN 38% OVERPERFORMANCE 718 MBOD EBITDA/bl 10.5 UPSTREAM (USD) WARRIOR CRUDE OIL DISCOVERY SAVINGS GOAL EXCEEDED (COP) 2.2 Tn REFICAR POSITIVE 34 UNITS SOLID CASH MARGIN AND LOAD 14 Tn POSITION (
Slide 8: 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 9: During 1Q 2017 we continued to reap results
During 1Q 2017 we continued to reap results FINANCIAL OPERATIONAL EBITDA 43.5% PRODUCTION 712 MARGIN OVERPERFORMANCE mbod 8.3 CRUDE BASKET PURPLE ANGEL AND USD/BL Vs BRENT GORGON DISCOVERY HEAVY CRUDE OIL EBITDA GE (COP) 5.8 Tn TRANSPORT 600 cst SOLID CASH REFICAR POSITIVE 17.5 Tn MARGIN AND LOAD 34
Slide 10: Benefits of being an Integrated Group
Benefits of being an Integrated Group The EBITDA margin is among the highest in the industry, it reflects our operational strength 10
Slide 11: 1Q 2017: Exceeding Goals
1Q 2017: Exceeding Goals REVENUES EBITDA LEVERAGE COP tn COP tn Veces (x) 13.4 3.0 5.8 2.6 2.6 10.5 +27.5% +40.5% 4.1 2.1 2016 - I 2017 - I 2016 - I 2017 - I ND/Ebitda GD/Ebitda 39.5% 43.5% 2016 - I 2017 - I Ecopetrol is one of the few Oil & Gas companies that reported positive results Margin 11
Slide 12: Peer Comparison
Peer Comparison NET INCOME NET LOSS 1Q 2016 2Q 2016 3Q 2016 4Q 2016 2016 1Q 2017 12
Slide 13: 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 13
Slide 14: Cash position as a growth catalyst
Cash position as a growth catalyst First Quarter 2017 The cash position is a result of the operational excellence we have achieved and the commitment to be more efficient every day 14
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 potencial Cash available to capture inorganic growth opportunities 15
Slide 16: 2016 – 2017 Exploratory campaign
2016 – 2017 Exploratory campaign 16
Slide 17: Important Discoveries
G RAN D ES Bagi Y DESCUBRIMIENTOS 903 1 PRODUCCION ACUMULADA Mpbe: millones de barriles de petrdleo equivalentes Nueva — Provincia Gasifera PURPLE ANGEL as 2017 ms LA CIRA : : INFANTAS CANO LIMON KRONOS C De 1918 a hoy: | De 1983 a hoy: aoe 8 31 Mbpe CUSIANA- We CUPIAGUA De 1989 a hoy: 1.373 Mbpe t
Slide 18: Important Discoveries
Important Discoveries GORGON – RECORD IN COLOMBIA CROSSED GREATEST WATER LAYER IN COLOMBIA’S OFFSHORE DRILLING HISTORY
Slide 19: Natural gas cluster in the Colombian Caribbean
Natural gas cluster in the Colombian Caribbean
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 53.9 19% 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: Unconventionals' potential around the world
Unconventionals’ potential around the world: Colombia*: 5 – 8,4 bn boe * Source : Arthur D. Little, 2017 bnboe: billions of barrels of oil equivalent
Slide 22: Ecopetrol's 2020 Corporate Strategy Pillars
Ecopetrol’s 2020 Corporate Strategy Pillars 22
Slide 23: Ecopetrol's 2020 Corporate Strategy Pillars
Ecopetrol’s 2020 Corporate Strategy Pillars ECOPETROL 2020 CAPEX USD Bn 13 (3.3/año) PRODUCTION PERFORMANCE 760 MBOED EBITDA/bl 10.5 UPSTREAM (USD) OPERATIONAL EXCELLENCE SOLID CASH (EBITDA TO 2020) 0.7 POSITION (USD) 5 Bn USD Bn LEVERAGE 3.0x – 2.5x REDUCTION
Slide 24: 2017 Perspectives
2017 Perspectives • 17 exploratory wells drilled: 6 offshore Colombia and 11 onshore Colombia. • Production Target: 715 Mboed • Robust liquidity opens up opportunities for inorganic growth • Gross Debt/Ebitda: 2.5-3x • New target savings of USD 0.24 Bn 1 in 2017. • Stabilization of Reficar and integ
Slide 25: Outstanding Operational performance and Financial Excellence
Outstanding Operational performance and Financial Excellence PRODUCTION Fulfillment of Profitable production goal 715 mboed FINANCIAL Greater available cash Solid Debt/EBITDA indicator Structural efficiencies Stable EBITDA margin EXPLORATION USD 650 MM CAPEX for 2017 Committed to search for new rese
Slide 26: Restricted use notice
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. 26
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