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Strategy and Current Situation – Ecopetrol S.A.

Ecopetrol S.A. · Apr 10, 2008 · 55 slides

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Slides

  1. Strategy and Current Situation – Ecopetrol S.A. – slide 1
    STRATEGY AND CURRENT SITUATION Adriana Echeverri Chief Financial Officer adriana.echeverriecopetrol.com.co Bogot, April 10th, 2008
  2. Strategy and Current Situation – Ecopetrol S.A. – slide 2
    Agenda 1. Ecopetrol Overview 2. Local and International context 3. Ecopetrol figures 3.1. Operational Outcomes 3.2. Financial Data 3.3. Social Responsibility 4. 2008 2015 Strategy 4.1. Projects 5. Corporative Governance…
  3. Strategy and Current Situation – Ecopetrol S.A. – slide 3
    Agenda 1. Ecopetrol Overview 2. Local and International context 3. Ecopetrol figures 3.1. Operational Outcomes 3.2. Financial Data 3.3. Social Responsibility 4. 2008 2015 Strategy 4.1. Projects 5. Corporative Governance…
  4. Strategy and Current Situation – Ecopetrol S.A. – slide 4
    Maximize the value of the firm and reach a reasonable profitability level Stock Performance (COP) 2.100 2.080 2.095 2.025 1.990 2.050 2.000 2.025 1.980 1.950 1.900 1.920 1.910 1.870 1.860 1.790 1.800 1.815 1.700 1.720…
  5. Strategy and Current Situation – Ecopetrol S.A. – slide 5
    Daily Trading 70.000.000 2.500 Daily Average Value Traded = US19.624.127 Daily Average Number of Trades = 710 60.000.000 2.000 50.000.000 Value Traded (USD) Number of Trades 1.500 40.000.000 30.000.000 1.000…
  6. Strategy and Current Situation – Ecopetrol S.A. – slide 6
    Leading company in the petroleum industry in Colombia Fourth petroleum company in Latin America and 39th in the PIW* league tables Largest company in Colombia (assets, net worth and profits**) Duff & Phelps Rating: AAA local.…
  7. Strategy and Current Situation – Ecopetrol S.A. – slide 7
    Ecopetrol constitutes a global energy and More details petrochemical company with emphasis in petroleum, gas, and alternative fuels TOTAL COLOMBIA Local Sales: Transportation 255 KBD Barranca: 250 KBD network of crude Exports…
  8. Strategy and Current Situation – Ecopetrol S.A. – slide 8
    Ecopetrol is being transformed into a global energy company 2003 2004 2005 2006 2007 2008 Decree 1760/03 ANH Law 1118/06 Initial Public ADRs Listing Sector Contract Authorization for Offering (IPO) in the United Deregulation New…
  9. Strategy and Current Situation – Ecopetrol S.A. – slide 9
    Agenda 1. Ecopetrol Overview 2. Local and International context 3. Ecopetrol figures 3.1. Operational Outcomes 3.2. Financial Data 3.3. Social Responsibility 4. 2008 2015 Strategy 4.1. Projects 5. 2008 Goals 15
  10. Strategy and Current Situation – Ecopetrol S.A. – slide 10
    Reactivation of the exploratory cycle in Colombia Ecopetrol has been actively involved in current areas 30.000 80,0 A NEW EXPLORATORY CYCLE CAO LIMON 70,0 Equivalent seismic kilometers 25.000 APIAY SAN FRANCISCO No. of…
  11. Strategy and Current Situation – Ecopetrol S.A. – slide 11
    Hidrocarbon sector has changed in the last years. Ecopetrol is not the only player of the market Royalty System Hidrocarbon Sector Policy Ministry of Mines & Energy Starting 2003: Separation of roles Government / Company Ecopetrol is…
  12. Strategy and Current Situation – Ecopetrol S.A. – slide 12
    Royalty system changed in 2002 (Law 756 and Decree 3176) Return 25% 18,75% Percentage of production 20% Light crude oil 15% Heavy crude oil 8% < 150 API 6% 0 5 125 400 600 Daily oil production (KBPD) Source::…
  13. Strategy and Current Situation – Ecopetrol S.A. – slide 13
    Foreign direct investment in Colombia has been growing Foreign Direct Investment MUSD E&P Contract Profitability 10.240 Contractual and Legal Stability 9.028 Democratic Security Policy 6.464 Improved Environmental Licensing…
  14. Strategy and Current Situation – Ecopetrol S.A. – slide 14
    Agenda 1. Ecopetrol Overview 2. Local and International context 3. Ecopetrol figures 3.1. Operational Outcomes 3.2. Financial Data 3.3. Social Responsibility 4. 2008 2015 Strategy 4.1. Projects 5. Corporative Governance…
  15. Strategy and Current Situation – Ecopetrol S.A. – slide 15
    Agenda 1. Ecopetrol Overview 2. Local and International context 3. Ecopetrol figures 3.1. Operational Outcomes 3.2. Financial Data 3.3. Social Responsibility 4. 2008 2015 Strategy 4.1. Projects 5. Corporative Governance…
  16. Strategy and Current Situation – Ecopetrol S.A. – slide 16
    Sustained increase of investments to pursuit growth Total Annual Investments 1.760 10% Commercialization and Corporative 40,2% Transport 6% 14% Refining 58% Production 13% Exploration Source: Ecopetrol…
  17. Strategy and Current Situation – Ecopetrol S.A. – slide 17
    Exploration: Activity is increasing Ecopetrol Exploratory Blocks Ecopetrol Seismic Km 35 32 4.000 3.773 29 27 28 3 9 21 23 1 3.200 21 1 2.481 2.400 14 26 26 22 23 1.651 326 21 1.600 7 855 0 800 2003 2004 2005 2006 2007…
  18. Strategy and Current Situation – Ecopetrol S.A. – slide 18
    In 2007 Ecopetrol consolidated the strategy of internationalization in E&P Reserves Graph Unites States Gulf of Mexico 1 block Per 3 blocks 6 TEA Brasil 7 blocks Source: Ecopetrol Strategy and Current Situation 24
  19. Strategy and Current Situation – Ecopetrol S.A. – slide 19
    ECP continue making significant efforts in reserves 2007 vs. 2006 Outcomes Return Reserves Certification 1.752 -9,5% Crude 1.750 1.610 1.602 1.558 1.500 1.420 1.456 1,4% Gas 575 507 511 422 1.250 364 428 1.000 Crude…
  20. Strategy and Current Situation – Ecopetrol S.A. – slide 20
    Total sales continue growing Increase of production in Ecopetrol 4.4% 500 454 474 Increase of natural gas production 433 442 420 400 because of an increase in sales to 148 171 169 174 the industrial sector and an 161 300…
  21. Strategy and Current Situation – Ecopetrol S.A. – slide 21
    With an oil price of US61.24/bl, the export basket of Ecopetrol presents an increase share of heavy crudes that amplify the differential with the WTI Gas historical prices Ecopetrols export basket Source: Ecopetrol…
  22. Strategy and Current Situation – Ecopetrol S.A. – slide 22
    Colombian gas price is much more stable and lower than in the US market Return Source: Ecopetrol Strategy and Current Situation 28
  23. Strategy and Current Situation – Ecopetrol S.A. – slide 23
    Sustained local sales growth Subsidies Elimination Crude supply to Refinera 14% 326 de Cartagena 286 300,0 277 1 Optimization in refineries 262 265 58 11 13 diets 10 09 14 Commercial strategy 54 58 62 67 efficiency 200,0 73…
  24. Strategy and Current Situation – Ecopetrol S.A. – slide 24
    Ecopetrol still works of the subsidies elimination that were increased due to the higher oil prices during 2007 Return Strategy and Current Situation 30
  25. Strategy and Current Situation – Ecopetrol S.A. – slide 25
    The new structure of the Refinera de Cartagena implied a decrease in Ecopetrol exports 200 171 174 169 14,9% 161 148 150 91 94 Crude Castilla achieve a 88 101 53 100 better position at GOM KBD 50 95 Increase in crude…
  26. Strategy and Current Situation – Ecopetrol S.A. – slide 26
    Ecopetrol total production of hydrocarbons is growing 3,6% 399 400 376 385 367 367 69 72 61 65 75 300 KBD 200 306 311 316 327 292 100 00 2003 2004 2005 2006 2007 Crude Natural Gas Source: Ecopetrol Strategy…
  27. Strategy and Current Situation – Ecopetrol S.A. – slide 27
    There is a positive trend in crude production Heavy Crudes and Mature Fields Production Ecopetrol crude production 3,5% 316 327 292 306 311 KBD Monthly crude production 343 344 326 329 326 327 331 338 350 311 308 315 323…
  28. Strategy and Current Situation – Ecopetrol S.A. – slide 28
    ECP has duplicated the heavy crudes and mature fields production Return Heavy crudes production Heavy Crudes 18,6% 81,3 Substantial growth of Rubiales 68,5 10,8 60 8,5 8,5 Potential development of Castilla 46 46 8 KBD 8 8…
  29. Strategy and Current Situation – Ecopetrol S.A. – slide 29
    Increase in gas production mainly motivated by industrial and natural gas for vehicles demand Gas Sales 80 75 4,4% 72 4 69 65 4 61 3 64 3 3 48 Kebcd 71 68 32 62 66 58 16 0 2003 2004 2005 2006 2007 Own…
  30. Strategy and Current Situation – Ecopetrol S.A. – slide 30
    Important Investments for increasing gas sales Return Gas Sales contract subscription of gas of Gibraltar, 30 Mcfd Aproval with partners expanding Cusiana plant in 70 Mcfd Daily average demand increase in 5,4% 234.805 vehicles…
  31. Strategy and Current Situation – Ecopetrol S.A. – slide 31
    Incremental cost due increasing maintenance and oilfield services costs industry inflation Lifting costs Refining costs 27% 75% US/Bl US/Bl Transportation cost Refining margin and 15,8% Loading capacity Transported…
  32. Strategy and Current Situation – Ecopetrol S.A. – slide 32
    Higher margins and optimizing loads Return Loading Capacity Gross Refining Margin -0,9% 312,2 309,9 310 12 11,37 305,6 19,2% 10,60 299,6 10 9,06 300 296,3 8,89 8 7,24 290 KBD 6 280 4 270 2 260 0 2003 2004 2005…
  33. Strategy and Current Situation – Ecopetrol S.A. – slide 33
    Increase in transported volume and significant reduction of stolen products and attacks Return Stolen Transported Volume KBCD 9% 710,4 651,8 578,8 600,3 603,2 600 193,8 180,7 152,2 155,1 159,4 400 KBD 516,6…
  34. Strategy and Current Situation – Ecopetrol S.A. – slide 34
    Revenues presented a 21% increase and the Ebitda a 28% increase 11,08 Higher local and 10 international prices 8,21 8 Recognition of fuel subsidies 6,79 to Ecopetrol US Billion 6 5,46 5,15 4 4,15 3,61 Cease-savings in…
  35. Strategy and Current Situation – Ecopetrol S.A. – slide 35
    Important operational income growth 4,36 4 3 2,57 2,12 Elimination of capitalization 1,98 2 of reserves USD Billion 1,65 1,51 1,42 1,09 1 0,88 Nominal effective tax rate 0,57 from 34% to 26,7% 0 2003 2004 2005…
  36. Strategy and Current Situation – Ecopetrol S.A. – slide 36
    Company outcomes Cessation of capitalization of 23,88 State contributions Demerger of Faep in favour of 20 18,82 the Nation Bomts: Recognition of Ecogas 15 14,30 13,31 debt and registration of deferred 11,70 income USD…
  37. Strategy and Current Situation – Ecopetrol S.A. – slide 37
    Liabilities: Chances to create value by optimizing the capital structure Financial indicators Investment Portfolio Ecopetrol has no financial debt. Leveraging of the company to be started by 2009. Short Term 87% of pension…
  38. Strategy and Current Situation – Ecopetrol S.A. – slide 38
    Agenda 1. Ecopetrol Overview 2. Local and International context 3. Ecopetrol figures 3.1. Operational Outcomes 3.2. Financial Data 3.3. Social Responsibility 4. 2008 2015 Strategy 4.1. Projects 5. Corporative Governance…
  39. Strategy and Current Situation – Ecopetrol S.A. – slide 39
    Shareholders Suppliers Customers Our Stakeholders Partners Employees State Society Source: Ecopetrol Strategy and Asamblea General Current de Situation Accionistas 2008 50 46
  40. Strategy and Current Situation – Ecopetrol S.A. – slide 40
    Ecopetrol is a recently capitalized company listed at the Bolsa de Valores de Colombia (BVC) from Return November 27th 2007 482.941 new shareholders* In 32 departments And 1.092 towns Pension Funds 3,7% Colombian Citizens…
  41. Strategy and Current Situation – Ecopetrol S.A. – slide 41
    Incentives for employees Employees Return Adjustment of the compensation policy. In 98,3% 2007 were 1.605 wage increases , 749 No. de empleados performance bonuses and 541 retention bonuses. In order to follow the best…
  42. Strategy and Current Situation – Ecopetrol S.A. – slide 42
    Partners First class partners are part of our philosophy Return Next Upstream Joint Participation in Competitive Bids BP BURLINGTON Entry Project Partners CEPSA CHEVRON Project offers to Partners EMERALD EXXONMOBIL Mutual…
  43. Strategy and Current Situation – Ecopetrol S.A. – slide 43
    Partners Maintain business long term relations that provide mutual benefit Return 102% Some international companies in the MUSD country have strengthen its participation New foreign players in the country look for…
  44. Strategy and Current Situation – Ecopetrol S.A. – slide 44
    Agenda 1. Ecopetrol Overview 2. Local and International context 3. Ecopetrol figures 3.1. Operational Outcomes 3.2. Financial Data 3.3. Social Responsibility 4. 2008 2015 Strategy 4.1. Projects 5. Corporative Governance…
  45. Strategy and Current Situation – Ecopetrol S.A. – slide 45
    Agenda 1. Ecopetrol Overview 2. Local and International context 3. Ecopetrol figures 3.1. Operational Outcomes 3.2. Financial Data 3.3. Social Responsibility 4. 2008 2015 Strategy 4.1. Projects 5. Corporative Governance…
  46. Strategy and Current Situation – Ecopetrol S.A. – slide 46
    Investments 2008 - 2015: 60 MMUSD Downstream USD 20 billion Organizational Consolidation USD 2 billion Exploration & Production USD 38 billion Source: Ecopetrol Strategy and Current Situation 67
  47. Strategy and Current Situation – Ecopetrol S.A. – slide 47
    Exploration and Production Total investment: US 38 Billion 2008 2015 Trends International exploration Globalization and diversification National exploration Increase exploration activity Enhance recovery factor Asset…
  48. Strategy and Current Situation – Ecopetrol S.A. – slide 48
    Return Exploring: Increase the searching for reserves NATIONAL Drill 45 wells in average per year until 2015 respect to 12 in 2007. MAIN PROJECTS BEING DEVELOPED TAYRONA Prof. Prog: Prog: 13.760 TEMPRANILLO PETROLEA NORTE…
  49. Strategy and Current Situation – Ecopetrol S.A. – slide 49
    Refineries upgrade Refining Projects Trends Higher conversion of distillates Clean Fuel Higher capacity to process heavy crudes Projects Hydrotreatment: December 2009 - US580 Million Retraining Refinera de…
  50. Strategy and Current Situation – Ecopetrol S.A. – slide 50
    Petrochemical fostering Being a petrochemical leader Take advantages of the integration and synergies with the Refinera de Barrancabermeja Increase in the production of polyethylene and polypropylene (110 KTA) with investments of…
  51. Strategy and Current Situation – Ecopetrol S.A. – slide 51
    Leader in energy diversification Biodiesel Ecodiesel Colombia S.A. incorporation with Ecopetrol participation and 7 palm growers at Magdalena Medio: Construction of a biodiesel plant in Barrancabermeja (2008) Production of 100.000…
  52. Strategy and Current Situation – Ecopetrol S.A. – slide 52
    Ensuring transport capacity by optimizing assets integration Transporting Projects Network extension for heavy crude 230 Km pipeline for heavy crude transporting from Rubiales and Pirir to Monterrey in Meta Castilla naftha…
  53. Strategy and Current Situation – Ecopetrol S.A. – slide 53
    Good governance practices ECOPETROLs Code of Good Governance complies with the guidelines of the IFC, OCDE and Resolution 275 / 2001, Law 964 / 2005, and Cdigo Pas (Country Code). CODE OF GOOD GOVERNANCE Equal rights and treatment…
  54. Strategy and Current Situation – Ecopetrol S.A. – slide 54
    Why would you invest in Ecopetrol COUNTRY: The country offers very attractive conditions to invest in E&P HYDROCARBON SECTOR Sector with high historic profitability COMPANY: Leading company in the hydrocarbon sector in…
  55. Strategy and Current Situation – Ecopetrol S.A. – slide 55
    Machado y Molina Asociados 2008 Para uso restringido en Ecopetrol. Todos los derechos reservados. Ninguna parte de esta presentacin puede ser reproducida o utilizada en ninguna forma o por ningn medio sin permiso explcito de Ecopetrol.

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