Operational and Financial Results 3rd Quarter of 2014 Nov. 4/ 2014

Operational and
Financial Results
3rd Quarter of 2014
Nov. 4/ 2014
Disclaimer
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 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 purpose without the prior written consent of Ecopetrol.
2
Management Participants
Javier Gutiérrez
Magda Manosalva
CEO
CFO
Ecopetrol
Ecopetrol
Hector Manosalva
Adriana Echeverri
VP of Development and Production
VP of Growth & Strategy
Ecopetrol
Ecopetrol
Pedro Rosales
Alberto Vargas
VP of Downstream
Financial Comptroller
Ecopetrol
Ecopetrol
Max Torres
Alejandro Giraldo
VP of Exploration
Investor Relations Officer
Ecopetrol
Ecopetrol
Rafael Guzmán
Technical VP
Ecopetrol
Thomas Rueda
CEO (Interim)
Cenit
3
Agenda
1. Highlights
2. Operational Update
3. Financials
4. Outlook for 4Q 2014
5. Q&A
4
Highlights
Exploration
• 1 discovery in the Gulf of Mexico (U.S.): Leon Well
• 5 blocks awarded in 2014 ANH Colombia Round
• Mr. Max Torres appointed as Exploration Vice-President
Production
• Increase in production vs. 2Q 2014: +2.8% (+20 mboed)
• Record production in Chichimene of 66 mboed (Sep)
• Beginning of two new non-thermal recovery pilots
Midstream
• Vasconia-Galán pipeline capacity increase : + 60 mbd
• Increase in crude transported: +5.2% vs. 3Q/2013
Downstream
• First crude export to South Korea and diversification in Asian and European markets
• Downstream segment Ebitda: COP 334 bn
• Reficar modernization: 94.7% progress
Financial
• International bond offering for USD 1.2 bn
• Moody´s and Fitch maintained ratings (Baa2/stable and BBB/stable respectively)
Organizational • New four year collective labor agreement
Consolidation
5
Investment (Jan – Sep 2014)*
(US$ million)
Allocation
Key projects
5,593
•
•
•
Facilities in Rubiales, Quifa and Casabe fields
Expansion of Acacias Station
Water treatment facility in Chichimene field
Downstream: 24%
•
•
Cartagena refinery modernization
Industrial Services Master Plan in B/meja refinery
Exploration: 16%
•
•
Drilling ( 23 exploratory and 2 strats. )
Seismic data
•
Pipeline capacity increase projects
Galán Sebastobol : +60 mbd
S. Fern. – Mont,: + 40 mbd (2014) and + 110 (2016)
Ocensa : + 35 mbd
Ayacucho – Coveñas: +25 mbd
Caño Limón – Coveñas : (optimization to 250 mbd)
•
•
R&D
IT
Production: 48%
2.687
1.327
Midstream: 11%
875
629
Other 1%
76
6
* Includes Opex and Capex cash flows allocated to investment projects
Upstream
Exploration
Highlights:
A3 Wells (Jan-Sep)
Country
Drilled
Success Evaluation
Dry
• 1 discovery in the GoM (U.S.): Leon Well
Colombia (EC + Hocol)
17
1
4
12
• 5 blocks awarded in 2014 ANH Round (1 off shore)
U.S. (Gulf of Mexico)
5
2
0
3
• Statoil begun drilling the Jacaré wildcat well (Angola)
Angola
1
0
0
1
• 17 wildcat wells drilled in Colombia (Jan-Sep)
Total
23
3
4
15
Production
Ecopetrol + Net Interests (mboed) *
755
734
51
49
685
Highlights:
•
Production growth : +~20 mboed vs. 2Q/2014
•
Record production in Chichimene: 66 mboed
•
License approvals
704
•
2Q-2014
•
Environmental license for Caño Sur
•
Transfer of industrial water to third parties
Beginning of two non-thermal recovery pilots
3Q-2014
Ecopetrol S.A.
Net Interests
7 * Includes royalties and net interests in production from Hocol, Equión, Ecopetrol América Inc. and Savia
Secondary Recovery Pilots (Non Thermal)
Pilots per Regions in 2014
Schedule (as of Sep 30)
1Q
8
3Q
4Q
Beginning of six pilots in 2014
Mid Mag &
Catatumbo
5
South
4
Llanos
4
WF:
CEOR:
WAG:
H&P :
2Q
Highlights
2
Water flooding
Chemical enhanced oil recovery
Water alternating gas
Huff & Puff
1
1
1
2
3
3
•
3Q: Two pilots started
• Palo Grande (CEOR)
• Provincia (H&P)
•
Oct: 1 pilot in Casabe (CEOR)
Tertiary Recovery (Thermal recovery in heavy oil fields)
Pilots in Colombia:
Teca-Cocorná
2013
2014
2015
2016
2017
2018
2019
2020
2021
onwards
Air Injection
Chichimene
Other fields
Steam Injection
Teca-Cocorná
Pilot construction and start up
Chichimene Air Injection Pilot (ECO-GSAI):
• Facilities construction: 75% progress
• Key equipment: built, imported and delivered
9
Full implementation
Chichimene
Mid & Downstream
Midstream
Volumes Transported by Cenit (mbd)
1,174
1,232
243
252
• Increase in transported volumes : + 5% vs. 3Q/2013
• Rising volumes in Ayacucho - Covenas oil line (increasing
volumes from Bicentenario pipeline)
980
932
3Q-2013
Crude Oil
Refining
Highlights:
3Q-2014
Products
• Less attacks to pipelines
• Stronger financial results (higher crude-product spread)
B/meja Gross Refining Margin
(USD / Bl)
•
15,5
•
10,2
Oper. Profit: COP 173 bn (vs - 297 in 3Q/2013)
Ebitda: COP 334 bn (vs. 35 in 3Q/2013)
• Reficar modernization project:
•
3Q-2013
Sales
3Q-2014
•
Crude Exports Destinations (mbd)
454
9
25
35
43
154
475
15
18
37
84
176
10
145
3Q-2013
3Q-2014
Consolidated revenues in line with 2013 despite lower
prices, production and higher discounts in 2014
•
Local sales: + 11% vs. 3T/2013
• Gas: higher local demand
• Oil: higher sales to subsidiaries
•
Exports: +2% vs. 3T/2013
• Increase in crude exports to Asia and Europe
• Contract for crude exports to South Korea
Latam
Europe
Asia
189
•
Others
West Cost (USA)
Gulf of Mex (USA)
94.7% progress
Mechanical completion of 16 units
Net Income Drivers*
3,97
Net
Income
(COP tn)
+0.33
-0.60
3Q-2013
Price
1. Price Decrease
11
2.36
-0.94
FX
-0.25
Transport
Fees
-0.16
Affiliates
Others
3Q-2014
• Lower sales prices (crude, product and gas) due to decrease
in benchmarks and higher discounts
2. COP/USD Devaluation
• Non operational loss: mark to market of USD liabilities.
(future revenues should increase due to COP devaluation)
3. Higher Pipeline Fees
• Bicentenario pipeline shipping fee (operating Nov. 2013)
• Increase in pipeline shipping fees (starting Jul. 2014)
4. Lower Subsidiaries Profit
• Losses of E&P subsidiaires (mainly U.S. and Brazil )
5. Other
• Lower tax provision and other expenses
* Ecopetrol S.A. (Unconsolidated)
Income Statement Drivers (COP$ Tn) *
16,22
+0.05
-0.40
Revenues
3Q-2013
-1.15
Volumes
-0.14
Price
Other
FX
7,85
Variable
costs
Volume
2,35
Fixed
costs
3Q-2013
0,31
3Q-2013
Non
operational
12
(-)
-$0.53
(+)
+$0.23
(-)
+$0.49
(-)
-$0.93
(-)
3Q-2014
-0.21
Prices
+0.16
-0.12
Depletion
of fields
+0.26
+0.01
Stocks
Others
3Q-2014
2,58
+0.11
-0.05
SG&A
-$1.64
7,33
-0.47
3Q-2013
14,58
3Q/2014 vs.
3Q 2013
Tran. Fees
Maint.
+0.27
+0.12
Provisions Exploratory Expenses
Other
+0.10
0,80
Other
3Q-2014
-0.61
0.32
-0.65
-0,16
-0,12
3Q-2013
FX (Valuation of
USD Liab.)
Affiliates
Others
* Ecopetrol S.A. (Unconsolidated)
3Q-2014
3Q-2014
Key Financial Results (COP$ tn) *
50%
8.2
38%
3Q/2014 vs 3Q/2013
5.5
Ebitda and
Ebitda Margin
-$2.7
3Q-2013
3Q-2014
6.0
3.3
Pre-Tax Income
3Q-2013
-$2.8
3Q-2014
2.1
0.9
Income Tax
3Q-2013
-$1.1
3Q-2014
25%
Net Income and
Net Margin
13
* Ecopetrol S.A. (Unconsolidated)
4.0
16%
2.4
3Q-2013
3Q-2014
-$1.6
4Q 2014 Outlook
Exploration
•
•
Finalize drilling of 4 wildcats and complete the 2014 drilling campaign
Assessment of wildcats:
Colombia: Orca (offshore) and Nueva Esperanza (CPO-09)
International: Jacaré (Angola)
•
•
18 mboed production growth in Chichimene and Castilla fields
new wells
water & crude handling facilities
13 non-thermal recovery pilots started in 2014
•
Start operation of Delta 35 project in Ocensa
•
Reficar modernization project:
Mechanical completion and reception of 29 out of 31 Process Units
Begin pre-commissioning process
•
Finalize transition to IFRS (starting Jan. 1/2015)
Production
Midstream
Downstream
Financial
14
Investor Relations
• Phone
(+ 571) 234 5190
• Email
investors@ecopetrol.com.co
• Website
www.ecopetrol.com.co
15
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Ecopetrol S.A. All rights reserved. The re production of this presentation is forbidden without the written authorization of Ecopetrol S.A.