INVESTING IN COLOMBIA S OIL AND GAS SECTOR, AND OVERVIEW OF ECOPETROL JP Morgan Latam Conference New York and Boston, April 21-23 of 2009 1
AGENDA Investment Environment in Colombia Oil and Gas Industry in Colombia Ecopetrol: Overview, Track Record, and Strategic Growth Plan 3
AGENDA Investment Environment in Colombia Oil and Gas Industry in Colombia Ecopetrol: Overview, Track Record, and Strategic Growth Plan 4
POSITIVE INVESTMENT ENVIRONMENT IN COLOMBIA Stable democratic government; improved security conditions Sustained positive GDP growth rates; higher credit ratings Stable monetary policy and exchange rates Favorable conditions and…
STRONG ECONOMIC PERFORMANCE: AVERAGE GDP GROWTH OF 5.2% SINCE 2003, EXPORTS DOUBLED SINCE 2000, AND RATINGS CLOSE TO INVETMENT GRADE (BB+/Ba1) GDP Consumer Price Index 9% 7,50% 10% 6,80% 7% 4,90% 7,7% 5% 8% 3,40% 4,70% 6,5%…
COMPETITIVE CONDITIONS FOR PRIVATE INVESTMENT INCLUDE FAVORABLE TAX RATES AND LEGAL STABILITY Tax rates, and deductions Lower tax rates Current tax rate of 33%, down from 38.5% in 2006 Tax free transfer of profits or dividends…
POSITIVE CONDITIONS HAVE LED TO SUSTAINED INCREASE INVESTMENT IN COLOMBIA Investment (% GDP) 30 25 20 15 10 5 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Foreign Direct…
AGENDA Investment Environment in Colombia Oil and Gas Industry in Colombia Ecopetrol: Overview, Track Record, and Strategic Growth Plan 9
SPECIFIC FAVORABLE CONDITIONS OF THE OIL AND GAS INDUSTRY IN COLOMBIA Transparent and stable regulatory framework Medium discovery potential Excellent geographical location Open door policy for private investment Extensive…
COLOMBIA HAS A TRANSPARENT, STABLE REGULATORY AND INSTITUTIONAL FRAMEWORK FOR THE OIL AND GAS SECTOR Institutional Structure Regulatory and legal framework Favorable and stable contractual Policies Exploration and Production…
COLOMBIA PRESENTS COMPETITIVE STRONG E&P INVESTMENT OPPORTUNITIES Colombias strengths in E&P Competitive landscape Potential of hydrocarbons discovery Attractive legal and economic framework Favorable contractual terms Political…
E&P MAP OF COLOMBIA SHOWS MEDIUM DISCOVERY POTENTIAL Total Area for E&P (million hectares) E&P Land Map of Colombia Caribbean Sea Total Area Sedimentary Basins164.4 (100%) Panama Venezuela Total Contracted + Prepared 61.6…
RECENT AUCTION ROUNDS ATTRACTED PARTICIPATION OF INTERNATIONAL COMPANIES 2007 2008 Caribe Round Colombia Round Heavy Crude Oil Round BP Meta Petroleum Meta Petroleum Petrobras KNOC Shell Hess Ongc Videsh Exxon Mobil Ongc Videsh…
AS A RESULT OF IMPORTANT REGULATORY CHANGES COLOMBIA ENTERED A NEW EXPLORATORY CYCLE IN 2003 Exploratory Cycle (seismic kms and no. of exploratory wells) Seismic activity (kms) No. of wells 30.000 120 2003: Beggining of a new…
CONTINUED GROWTH IN E&P ACTIVITY IN COLOMBIA SINCE 2003 HAS LEAD TO A HIGHER PRODUCTION OF OIL AND GAS Number of Wells and Seismic Activity (thousand sq. kms) No. of wells Seismic 120 96 30 100 70 25 56 16 80 20 1 60 35 2 47…
MAJOR OIL AND GAS COMPANIES OPERATE IN COLOMBIA UPSTREAM DOWNSTREAM TALISMAN ENERGY ENBRIDGE PACIFIC RUBIALES OCENSA GRAN TIERRA ENERGY OLEODUCTO DE COLOMBIA PETROMINERALES NEXEN C&C ENERGY BP BHP BILLITON CEPSA CHEVRON…
AGENDA Investment Environment in Colombia Oil and Gas Industry in Colombia Ecopetrol: Overview, Track Record, and Strategic Growth Plan 18
ECOPETROL S HIGHLIGHTS Transforming in to a global energy player Among the four largest oil and gas companies in Latin America Market leader in Colombia Major upstream growth potential Increasingly efficient refinery,…
ECOPETROL HAS BEEN IN THE OIL AND GAS BUSINESS FOR MORE THAN 50 YEARS, AND IN 2003 BEGAN TO TRANSFORM INTO A GLOBAL ENERGY PLAYER Key milestones From a local oil & gas . To a global energy player company 1951 2003 2004 2005 2006…
ECOPETROL HAS THE LEADING MARKET SHARE IN THE SEGMENTS OF THE OIL AND GAS CHAIN IN COLOMBIA Portfolio highlights 2008 Business Area Current levels (Dec/08) Market Share in Colombia Exploration P1 Reserves* 1,473 MMBOE 62% Oil:…
ECOPETROL IS BALANCING ITS PORTFOLIO WITH LOCAL AND INTERNATIONAL OPPORTUNITIES Local Exploration Projects International Exploration Projects Offshore Caribbean Round Tayrona GULF OF Caribbean Round MEXICO Fuerte K2 7 Blocks…
ECOPETROL S POSITIVE PRODUCTION TRENDS Gross production evolution (MBOED) * Regional production breakdown (Dec 31/08) * Gulf of Mexico K2: 0.3 mboed (0.1%) Gas 741 EC Heavy 645 638 641 649 661 crude oil Catatumbo Orinoqua EC Light…
IMPROVING ENVIRONMENTAL, SAFETY, AND SECURITY PERFORMANCE Environmental incidents Accidents (per million of labor hours) 112 5.8 88 59 56 2.6 1.8 1.7 2005 2006 2007 2008 2005 2006 2007 2008 Frecuency of combined accidents…
STRATEGIC PLAN DEFINES AMBITIOUS TARGETS FOR 2015 THAT CALL FOR A CAPEX INVESTMENT OF US 60 BN DURING 2008-2015 Mega Goals From .To Capex investment 2008-15 of USD 60bn Upstream: USD 38 bn Current Goal Increase 2008 2015 2008-15…
2009 INVESTMENT PLAN OF US6.2 BN, A 29% INCREASE VS. 2008 Capex plan 2009 per segment (USD bn) Core elements of 2009 capex plan per segment Domestic exploration across Colombia Exploration 1.05 International exploration in our…
A TRACK RECORD OF REVENUE GROWTH, IMPROVING OPERATING MARGINS, AND CASH GENERATION Revenues (local and exports) (US billion) 15.1 11.1 9.1 5.5 5.7 6.5 7.7 3.1 36.4% 63.6% 3.0 39.0% 3.5 38.5% 27.9% 2.4 42.1% 2.6 40.0% 8.0 72.1%…
HIGHER PROFITABILITY AND ATTRACTIVE DIVIDENDS Net income (USD billion) 5.2 2.6 1.0 1.6 1.7 0.8 2003 2004 2005 2006 2007 2008 Dividends declared per share (USD cents) 12,00 131,9% * 140,00% 10,00 120,00% 89,9% 100,00%…
STRONG BALANCE SHEET: NO FINANCIAL DEBT AND THE FLEXIBILITY TO FUND GROWTH BY LEVERING THE CAPITAL STRUCTURE Consolidated Balance sheet (US billion) 10.60 44.4% 6.30 29.0% 10.60 50.7% 64.6% 8.90 64.0% 9.60 59.3% 20.9 23.9 21.7…
ECOPETROL HAS HIGH STANDARDS OF CORPORATE GOVERNANCE PRACTIVES DRIVEN BY AN INDEPENDENT BOARD OF DIRECTORS Ownership structure Corporate Governance Code Unilateral Statement of the principal January 2009 shareholder (The Nation…
AN EXPERIENCED MANAGEMENT WITH AVERAGE 13 YEARS IN THE INDUSTRY LEADS ECOPETROL S 6,500+ EMPLOYESS Senior Management Javier G. Gutierrez Core business unit CEO Corporate 2 years Adriana Echeverri Chief Financial Officer 14…
2008 WAS A YEAR OF SIGNIFICANT ACHIEVEMENT FOR ECOPETROL Financial Increased Profitability Unique Balance Sheet Strength Operating Continued industry-leading production increases Exploration successes Greater International…
STRATEGIC TRANSACTIONS IN 2009 Acquired 50% share of Petro Tech (Off Shore International Group Inc) 50/50 partnership with KNOC (total value of US900 million) Strengthens ECs international E&P operation (12 mboed and 100 million of…
EXPLORATION AND PRODUCTION HIGHLIGHTS IN 2009 Signed a Participation Agreement with Anadarko Through subsidiaries, EC will have a 50% participation in the BMC-29 concession located in the Campos Basin in Brazil. Confirmed oil…
CONTACT INFORMATION - ECOPETROL S.A. Investor Relations Department Director Alejandro Giraldo (alejandro.giraldoecopetrol.com.co) Specialists Claudia Trujillo: (claudia.trujilloecopetrol.com.co) Silvia Angulo:…
ADDENDA 37
Produce One Million barrels of oil equivalent per day in 2015 Productions CAGR : 12% 1 MMBOEPD MBOEPD International GAS 132 25% 190 MBOEPD 550 MBOEPD 462 41 National OIL 61 75% 810MBPD 427 448 406 2008 Goal…
Sliding Scale Royalties Hydrocarbon production by field (kbpd) % of royalties…
Windfall profit clause Contracts 2003-2008 New Contracts M (economic Payment : Pr Vc Q rights of M Payment : Pr Vc Q M ANH) Amount : Vc Q Pr: Price at delivery point (US/BL) Vc: Volume of contractor (kbpd) Q: Take of ANH (%) P Po…
GROWTH STRATEGY MAINLY FOCUSED ON THE UPSTREAM BUSINESS Organic growth and acquisitions Upstream Capex (USD million) Further development of existing asset base Enhance recovery factor in brown fields (La Cira-Infantas and…
PRICE DEFINITION FOR GASOLINE, DIESEL AND NATURAL GAS IN COLOMBIA IS LINKED TO INTERNATIONAL PRICES Regulation Sales to public price Dec 2008 (Bogota) Price definition Gasoline: USD 3.38/gl Gasoline Defined by the Ministry of Mines…
ECOPETROL HAS INCREASED ITS YEARLY CAPEX BY ALMOST 10X SINCE 2003 Capex plan 2003 2009 (USD mn) 29% 6.224 163% 4.824 36% 40% 12% 9% 1.760 922 1.255 Capex in 553 651 USD million 2003 2004 2005 2006 2007 2008 Sol. 2009…
Exploration Capex of US1.0bn for 2009 Exploration Drilling Seismic , G&G USD998 mn USD732 mn USD 218 mn 32 G&G Seismic 34 186 2 6.27 No. of wells 8 KM Equiv. 732 24 7 1.53 Drilling 3 4 Local International Local…
Production Capex Of US2.7bn for 2009 Production capex 2009 4% In progress Investment (USDmn) Direct Partnerships 23% Seismic Activity Drilling 32% Main fields (60%) 890 567 Casabe 32% 227 - 9% Rubiales - 270 Plants and…
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