FINANCIAL AND OPERATIONAL RESULTS November, 2016 3Q 2016 - - PowerPoint PPT Presentation

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FINANCIAL AND OPERATIONAL RESULTS November, 2016 3Q 2016 - - PowerPoint PPT Presentation

CORPORATE GROUP FINANCIAL AND OPERATIONAL RESULTS November, 2016 3Q 2016 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


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CORPORATE GROUP

FINANCIAL AND OPERATIONAL RESULTS

November, 2016 3Q 2016
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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 Ecopetrol’s Business. Said projections and statements include references to estimates or expectations of the company regarding its future and operational results. Potential investors and the market in general should be aware that the information provided herein does not constitute any guarantee of its performance, risks or uncertainties that may occur or materialize. Real results, may fluctuate and differ from those provided herein due to several factors outside of the control of the Company. Neither Ecopetrol nor its advisors, officers, employees, directors or agents, make any representation nor shall assume any responsibility in the event actual performance of the Company differs from what is provided herein. Moreover, Ecopetrol, its advisors officers, employees, directors or agents shall not have any obligation whatsoever to update, correct amend or adjust this presentation based on the information attained or events occurred after its disclosure. This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by Ecopetrol. Neither this presentation nor any of its contents may be used for any other purposes without the prior written consent of Ecopetrol.

Cautionary Statement

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María Catalina Escobar Head of Corporate Finance and Investor Relations Luisa Lafaurie CEO Cenit Rafael Guzmán Technical VP María Fernanda Suárez VP of Strategy and Finance Juan Carlos Echeverry CEO Héctor Manosalva VP of Development and Production Max Torres VP of Exploration Patricia Zuluaga VP of Commercialization and Marketing (A) MANAGEMENT PARTICIPANTS Felipe Bayón Executive VP Carlos Alberto Vargas VP of Transformation Adolfo Tomas Hernández VP of Refining and Industrial Processes

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SLIDE 4 4

Basket differential in line with the 2020 strategy

51 47 47 39 38 38 USD 0 USD 10 USD 20 USD 30 USD 40 USD 50 USD 60 3Q-2015 2Q-2016 3Q-2016

Crude Prices (USD/bbl)

BRENT ECP BASKET

9 12

USD/bbl differential Commercial reaction capacity in a challenging environment

9

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SLIDE 5

ACTIVE RECOVERY PILOTS DAYS OF DRILLING RUBIALES EBITDA MARGIN START OF GUNFLINT PRODUCTION (MAX MBOED) SAVINGS GOAL EXCEEDED (COP) SOLID CASH POSITION (COP)

Operational excellence reflected in quarterly figures

1.9 Tn 7.7 Tn 40%

3Q PRODUCTION

(MBOED) 723

11.8 17 6 days

5

FINANCIAL OPERATIONAL

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SLIDE 6

Exceeded 2016 goal of COP 1.6 trillion

1.0 0.6 0.4 0.3 0.2 0.2 0.7 Total general Otras (33 Palancas) Perforación & Facilidades Transporte del Upstream Mantenimiento Abastecimiento O&M Midstream Dilución

6 levers comprise 80% of cumulative efficiencies (2015-2016)

Figures in Billions (COP)

Exceeded goal for structural efficiencies

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495 1,595 339 564 203 181 80 73 339 Opex Gestionable Dilución O&M Filiales Transporte Transporte Upstream Ingreso/Caja Capex Total Eficiencias

1,934

Structural Non-Structural

Figures in Trillions (COP)

3.4

O&M: Operations and Maintenance

Manageable Opex Dilution O&M Transportation Upstream Transportation Revenue Cash Capex Total Efficiencies

Total Other (33 Levers) Perforation & Facilities Upstream Transportation Maintenance Procurement Strategy O&M Midstream Dilution
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SLIDE 7

Profitable production

647 672 48 51

2Q 2016 3Q 2016 Ecopetrol S.A. Subsidiaries

4%

695 723

Successful receipt of Rubiales and Cusiana Reactivation of Caño Sur (September 2016) Start of production at Gunflint – US GOM

mboed

Rubiales – successful operation

Zero HSE incidents Reduction of 25% in days of drilling, from 8 to 6 Production increasing due to resumption of activity Investment Flexible depending

  • n price level

With less

Better level of production to meet the 2016 goal

Successful operational and environmental continuity Reduction of drilling cost by 20% versus 2015

7 HSE: Health, Safety and Environment
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SLIDE 8

7.4 5.8 6.4

2015 Jan-Sep 2016 LTM*
  • 14%

Optimization of processes is reflected in production indicators

Lifting Cost (USD/bbl)

Savings close to USD 400 MM (reduction of 20% in dilution factor vs 2014)

Dilution & Transportation Cost

* LTM: Last 12 months - 1 Oct. 2015 – 30 Sep. 2016 ** Data as of October 30, 2016

34 36 26 26 8 21 21 6

Castilla Chichimene Rubiales 2014 2015 2016
  • 38%
  • 42%
  • 25%

Days of Drilling**

Record Record

16 12

Record

6

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Chichimene– Llanos– Direct Operation

82% increase in production rate in pilot area (2,404 BOD)

Castilla– Llanos– Direct Operation

Increase in production rate of 60% in pilot area (800 BOD)

Improved recovery key in addition to production and reserves

500 700 900 1100 1300 1500 1700 1900 2100 2300 ago-11 jul-12 jun-13 may-14 abr-15 mar-16 Crude Rate (BOD) Castilla K1 Water Injection Pilot Start-up of water injection pilot 500 1500 2500 3500 4500 5500 6500 7500 mar-10 nov-10jul-11mar-12 nov-12jul-13mar-14 nov-14jul-15mar-16 Crude Rate (BOD) Chichimene Water Injection Pilot Start-up of water injection pilot

Decreasing costs are important to facilitate expansions and incorporate reserves at business plan prices

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SLIDE 10 NISCOTA PAYERO-1 CARDÓN SEISMIC Purple Angel PLAYÓN BORANDA YDSN SEISMIC Arauca Cantagallo – Llanito - Galan Guando Sucumbios-Rumiyaco Castilla-Chichimene–Akacias-Apiay Rubiales –Sabanero GoM ONSHORE COLOMBIA (3Q)
  • IN DRILLING PAYERO-1 WELL
  • IN DRILLING BORANDA WELL
(Oct.)
  • NOGAL SEISMIC COMPLETED
ACQUISITION OF 88 Km 2D
  • CARDON SEISMIC ACQUISITION
214 Km 2D
  • START OF 3D SEISMIC
ACQUISITION AT YDSN - HOCOL ECOPETROL AMÉRICA 3Q: WARRIOR WELL, INITIATED DRILLING– OPERATOR ANADARKO

Brazil North America

ECOPETROL BRASIL 3Q: PROCESSING 854 Km2 3D- SEISMIC POT-M-567 BLOCK OFFSHORE COLOMBIA 4Q: PURPLE ANGEL WELL TO INITIATE DRILLING Evaluation of projects in mature fields Exploratory activity zone in progress

Exploration Preparing 2017 exploration campaign

10 exploration activity zone for Q4 2016 Bullerengue Chimú NOGAL SEISMIC Pegaso Cusiana-Cupiagua-Recetor Molusco Siluro Gorgon Offshore 2017
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947 869 811 248 258 265 3Q 2015 2Q2016 3Q 2016

Refined Crude * Volumes transported correspond to group’s companies and third parties.

Volumes transported* (mbod)

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  • Less revenue vs. 3Q 2015 due to lower volumes associated with the decline in country’s

production

  • Transportation system under modification to support higher-viscosity crude to Coveñas

2.86 2.57 2.43 3Q 2015 2Q 2016 3Q 2016

Midstream revenue (COP Tn)

  • 10%
  • 15%

Midstream Identifying opportunities for optimization

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Gross Refining Margin B/meja (USD/bbl)

16.7 13.5 13.4

3Q 2015 2Q 2016 3Q 2016

208 216 213

3Q 2015 2Q 2016 3Q 2016

Refinery runs at B/meja (USD/bbl)

  • 20%

+2%

  • Cartagena Refinery: 5 units completed performance tests
  • Barrancabermeja Refinery:
  • Lower international price differential on products compared to crude
  • Increase in yield of medium distillates due to implementation of

improvements in operating methods

Downstream Commissioning continues

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37% 31% 24% 44% 58% 45% 68% 61% 43% 35% 18% 1% 15% 13% 7%

36.1% 24.1% 39.5% 38.5% 40.1%

00% 05% 10% 15% 20% 25% 30% 35% 40% $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 3Q15 4Q15 1Q16 2Q16 3Q16 Downstream Midstream Upstream Márgen EBITDA

4.70 4.14 4.52 4.89 3.08

EBITDA performance (COP Tn)

Demonstrated operating capacity

Best EBITDA

  • f the last 5 quarters
13 *LTM: Last Twelve Months EBITDA Margin
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SLIDE 14 12.18 2.54 0.23 (4.70) (1.97) (2.07) (0.90) (0.85) (1.24) (0.22) Sales 3Q 2016 Varia ble costs Fixed costs Depr eciati
  • n/A
mort izat… Oper ating Expe nses Oper ating Profi t Finan cial reve nue/ exp… Inco me tax Non- contr
  • lling
Inter est Net Profi t 3Q 2016

6.62 13.55 1.38

Operating Income EBITDA Net Income

Savings and efficiencies mitigated the effect on costs by:

  • Reversion of Rubiales field
  • Operation of Cartagena Refinery
  • Seasonality of costs (greater execution

2H 2016)

Financial results leveraged by operational excellence

3Q Income Statement (COP Tn)

14 *Does not include depreciation and amortization ** Includes Financial Result and share of profit in companies

Cumulative results (COP Tn)

19.2% 39.4% 4.0% Sales Variable Costs* Fixed Costs* Deprec./ Amort Expenses Oper. Oper. Income Financial Result Income tax Non- controlling interest Net Income

Non-recurring impacts Margin

Sales Costs 8.74

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SLIDE 15 7.91 7.71

6.47 0.27

(0.63) (1.13) (3.30) (1.88) Caja inicial 3T 2016 Flujo Operación antes de impuestos Pago de impuestos* Inversion CAPEX Inversión portafolio títulos y
  • tros
Actividades de financiación Efecto variación TRM Caja final 3T 2016

Financial results Solid cash generation

3Q cash flow (COP Tn)

15 * Includes income and wealth tax

Initial cash 3Q 2016 Operating Cash Flow before Taxes Tax payment* CAPEX investment Portfolio and other investments Financing activities FX effect Final cash 3Q 2016

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Strict Capital Discipline Cash flow focus & cost efficiency Transformation Program Reserves & Production growth

Ecopetrol’s 2020 Corporate Strategy Pillars

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EXPLORATION PRODUCTION FINANCIAL

Fulfillment of goal of Profitable production 715 mboed Warrior, Payero, Boranda, Pegaso, Buyerengue and Chimú Drilling completed Purple Angel being drilled Greater available cash Solid Debt/EBITDA indicator Structural efficiencies Stable EBITDA margin

Outlook 2016 year-end

  • perational and financial excellence
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Q&A

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