CORPORATE GROUP
FINANCIAL AND OPERATIONAL RESULTS
August 2016 2Q 2016
FINANCIAL AND OPERATIONAL RESULTS August 2016 2Q 2016 Cautionary - - PowerPoint PPT Presentation
CORPORATE GROUP FINANCIAL AND OPERATIONAL RESULTS August 2016 2Q 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 of
CORPORATE GROUP
FINANCIAL AND OPERATIONAL RESULTS
August 2016 2Q 2016This 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
2Lina María Contreras Head of Corporate Finance and Investor Relations (A) Thomas Rueda CEO Cenit Rafael Guzmán Technical VP María Fernanda Suárez CFO Juan Carlos Echeverry CEO Max Torres VP of Exploration MANAGEMENT PARTICIPANTS Felipe Bayón COO Carlos Alberto Vargas Chief Transformation Officer Juan Pablo Ospina VP of Commerce and Marketing Adolfo Tomas Hernández VP of Refining and Industrial Processes Hector Manosalva VP of Development and Production
Min 27.9
20 30 40 50 60 70 80
ene mar may jul sep nov Brent Price (USD/BL)
2015 2016
4We proved the ability to reinvent ourselves in a
challenging environment
Source: BloombergAverage 1H2016: 41.2 Average 2015: 53.7
20-Jan-2016“El Niño” Weather phenomenon Closure of the border between Colombia and Venezuela Attacks to transportation infrastructure Local Environment International Environment
Jan Mar May Jul Sep Nov
We reinvented ourselves to be sustainable
and competitive
New Leadership Financial Strength
Transformation Plan
Procurement
Projects
presidency
Relations with Environment
Structural changes that support positive results
5In 2Q 2016 we obtained strong results
Net Income 2Q 2016 COP$787 Bn 1H 2016 COL$ 1,150 Bn Divestments of COP$725 Bn
Positive Financial Results
Reversion of Rubiales and Cusiana fields Reficar: Successful startup process Additional savings in 1H 2016 of COP$0.8 Tn
Operational Results Higher efficiency and lower costs
6Transformation Plan - Cost Evolution (P&L)
2014 2015 PY 2016 BCOP Energía Generales Materiales Carrotanques Mantenimiento Asociadas Contratos Energy Generals Materials Trucks Maintenance Associated Contracts COP TrillionEfficiency targets in Opex , Capex and Revenues Transformation Plan - Cost Savings (P&L)
1.0 2.4 3.1 3.5 3.9 4.5 2.2 2.8 2015 2016 2017 2018 2019 2020 Metas de ahorro iniciales Real 2015 & Real a Jun 2016 +114% Initial saving targets 2015 real & 1H 2016 real 9.1 7.1 6.1We gained structural operational efficiencies through
2.0
Tn COP2.8
Tn COP3.0
Tn COP Structural Non StructuralWe do things differently, obtaining efficiencies in our
UPSTREAM MIDSTREAM DOWNSTREAM
Opex
Opex
ECOPETROL S.A. Contracted Services
2015 vs 2014 1H 2016 vs 2015 Normalize efficiencies to crude oil prices, diluent prices and exchange rate (USD/COP)Capex Opex
812.1 1.8 2014 2015 2016
Viscosity: 200 cSt 300 cSt 405 cSt
600 cSt
YearsDilution Costs in heavy and extra heavy crude as structural
reduction example
Optimization EmphasisDilution factor decrease
(% diluent / Normalized heavy crude volume) 20.0% 18.5% 16.8% 2014 2015 Jun-2016 Decrease of 210 trucks per day and 608,000 Km/year Take advantage of the increase in capacity of Pozos- Galán pipeline Codilution Increase of cSt Ahorro Diluyente KBD Dilution Optimization Strategies 9Dilution total savings
Real efficiency Dec of 2016 Forecast 394 332 726 177 177 509 903 2015 2016 AcumuladoCOP Bn
Accumulate Diluent Savings MBDMain fields drilling reactivation in 2016
Production
New landmark as world-class operators +500 mboed Rubiales field reversion
I Sem 2014 I Sem 2015 I Sem 2016 Average Cost (USD/ interventions) 1H 2014 1H 2015 1H 2016
11Production
Improvement in our processes generates consistent results
Lifting Cost USD/bl Wells Interventions
34 36 26 26 19 21
Castilla Chichimene 2014 2015 2016
Drilling Days
2016 record: 12 days 2016 record: 18 days7.4 4.8 5.4 6.1
1 2 3 4 5 6 7 8 2015 1T 2016 2T 2016 U12M
2015 1Q 2016* 2Q 2016* LTM**
1
ONSHORE COLOMBIA (2Q)
ECOPETROL AMERICA
Brazil North America
Exploration
Pursuing high-value and quality prospects
ECOPETROL BRASIL
2Q: PROCESSING 854 Km2 OF 3D SEISMIC POT-M-567 BLOCK CARDON 12OFFSHORE COLOMBIA
4Q: BEGINNING DRILLING OF “PURPLE ANGEL-1” WELL PURPLE ANGEL-1REASSESSMENT OF MATURE FIELDS INTEGRATING EXPLORATION AND PRODUCTION TEAMS
979 952 869 250 264 258
200 400 600 800 1000 1200 14002T 2015 1T 2016 2T 2016
Refinados Crudo
2Q 2015 1Q 2016 2Q 2016
Refined Products Crude
Transportation
Cash flow generation remains through this segment
*Transported volumes correspond to the ECP group and third parties: Percentages were calculated with complete numbersTransported Volumes *(kbod)
13Higher income versus 2Q 2015 despite a lower transported volume leveraged by:
630 903 779
100 200 300 400 500 600 700 800 900 10002T 2015 1T 2016 2T 2016
2Q 2015 1Q 2016 2Q 2016
Net Income COP$Bn
24%
Refining Completion of Reficar's start up
14Start up Jul/2016 Stabilization 2H 2016 Optimal Operation 2017
Refining
Persistent efforts on segment´s efficiency
*Figures correspond to ECP Group. Include the operation of B/meja refinery and Essentia (Propilco). Percentages computed without rounded figures 15Gross Refining Margin in B/meja (USD$/Bl)
17.2 14.1 13.5
2T 2015 1T 2016 2T 2016 2Q 2015 1Q 2016 2Q 2016
4.6 3.5 4.3
2T 2015 1T 2016 2T 2016 2Q 2015 1Q 2016 2Q 2016
Cash Operating Cost ($USD/Bl)*
fuel oil and crude oil
Operational Income
COP$ Tn
3.55 1.60 2.48
2Q 2015 1Q 2016 2Q 2016 55%
Net Income
COP$ Tn
EBITDA
COP$ Tn
1.51 0.36 0.79
2Q 2015 1Q 2016 2Q 2106
5.52 4.14 4.52
2Q 2015 1Q 2016 2Q 2016
Financial Results
Reflecting operational strength
16117% 9%
38.5% % EBITDA Margin 39.4% 39.5% Percentages computed without rounded figuresPublic Offering
2Q 2016
Data Room Access
2Q 2016
Auction
4Q 2016
Assets Transfer
2Q 2017
Council of Ministers
2Q 2016
Release of Decree
3Q 2016
First Stage
4Q 2016
Second Stage
2017
377
ISA EEB
348
17Successful Divestments in 2Q 2016 for
COP$725 Bn
2Q 2016 Divestments (COP$ Bn)
Divestments proceeds are not included in our Cash Flow planning
Divestment in Minor FieldsCash Flow
Strong cash flow generation
COP$ Bn
Cash Flow 2Q 2016
187,636 7,918
4,117 725 932 (3,344) (955) (1,002) (191)
2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000
Caja inicial 2T 2016 Flujo Operación antes de impuestos Pago de impuestos* Inversion CAPEX Desiversiones Inversión portafolio títulos y otros Financiación Efecto variación TRM NETO Initial 2Q2016 Operating Cash Flow before Taxes Tax payment* CAPEX Divestments Portfolio and2H 2016 Outlook
19 TD: Total DepthOperational and Financial Excellence Business Plan 2017-2020 Update Beginning drilling ‘Warrior’ (US GoM, reaches its TD in 2016), ‘Purple Angel’ (appraisal of Kronos) and 3
Results of appraisal well ‘LEON 2’ and exploratory well ‘Payero’ Since July 19th ‘Gunflint’ reached 20 mboed (Ecopetrol interest of 31.5%)
Closing a year of transition