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June 2016 Corporate Update – Ecopetrol S.A.

Ecopetrol S.A. · Jun 10, 2016 · 32 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. June 2016 Corporate Update – Ecopetrol S.A. – slide 1
    ECOPETROL Resilient and Transitioning to Overcome Growth Challenges June 2016 0
  2. June 2016 Corporate Update – Ecopetrol S.A. – slide 2
    Agenda 1. Key Highlights 2. 2015: Navigating the Low Crude Oil Price Environment 3. 2016: Transitioning to Growth 4. 2017: Strategy Implementation 2
  3. June 2016 Corporate Update – Ecopetrol S.A. – slide 3
    Agenda 1. Key Highlights 2. 2015: Navigating the Low Crude Oil Price Environment 3. 2016: Transitioning to Growth 4. 2017: Strategy Implementation 3
  4. June 2016 Corporate Update – Ecopetrol S.A. – slide 4
    Key Highlights Challenges Management Decisions Strengthen our exploratory activity BCG(1) Assessment Costs grew faster than 2014 revenues Build the new strategy Complexity of operations in Colombia Plunge of oil prices New…
  5. June 2016 Corporate Update – Ecopetrol S.A. – slide 5
    Key Highlights Decreasing lifting cost: 2014: USD11.29/bl, 2015: USD7.40/bl and LTM(1): USD6.70/bl World-class operator of 80% developed proved reserve base (total oil and gas reserves: mature assets and a national 1.8 bn barrels as…
  6. June 2016 Corporate Update – Ecopetrol S.A. – slide 6
    Key Financial Metrics: Resilience to Lower Crude Oil Price Environment 1Q 2016 2015 2014 1Q 2016 1Q 2015 2015 2014 Crude Basket (USD/bl) 25.1 44.3 (43.4%) 43.9 87.3 (49.7%) Net Income 0.4 (1) 0.2 (1) +125% (7.2) (2)(5) 5.0 (2)…
  7. June 2016 Corporate Update – Ecopetrol S.A. – slide 7
    Proven Reserves 2015 (1) 2015 Balance Million of barrels of oil equivalent (MMBOE) Net Addition: 16 MMBOE 2,084 (25) 16 24 (251) 1,849 1P2014 2014 Revisions Improved Recovery Extensions and Production 1P2015 2015…
  8. June 2016 Corporate Update – Ecopetrol S.A. – slide 8
    Agenda 1. Key Highlights 2. 2015: Navigating the Low Crude Oil Price Environment 3. 2016: Transitioning to Growth 4. 2017: Strategy Implementation 8
  9. June 2016 Corporate Update – Ecopetrol S.A. – slide 9
    Cost Efficiencies: Opportunities Realized since 2015 2015 Savings* 1Q 2016 Savings USD Millions USD Millions 1,009 Fixed and Variable 107 214 Costs 172 Operational 22 Expenses 213 410 53 8 Total Savings 129 110 87…
  10. June 2016 Corporate Update – Ecopetrol S.A. – slide 10
    Upstream Optimization Achievements Drilling Days in the Companys Main Fields Significant drilling-days reduction 34 (44%) 36 (39%) 26 26 22 Standardized designs and operations 19 14 12 14 Cutting-edge drilling technology…
  11. June 2016 Corporate Update – Ecopetrol S.A. – slide 11
    Sustained Lifting and Dilution Cost Reduction Enhances Heavy Crude Profitability Key drivers for lifting reduction: Lifting Cost Fewer number of well interventions due to subsoil USD/barrel strategies 12 Improvements in maintenance…
  12. June 2016 Corporate Update – Ecopetrol S.A. – slide 12
    Initiatives Aimed to Increase Efficiency and Reduce Cost in Downstream and Midstream Refining cash cost(1) Downstream: USD/barrel Strategies for optimization in (39%) maintenance and support services 7.2 4.4 3.5 Renegotiation…
  13. June 2016 Corporate Update – Ecopetrol S.A. – slide 13
    Capital Discipline: Capex Adjustment since 2015 with Significant Cuts CAPEX 2011 - 2016 2014 - 2016 USD Billions % (25%) (66%) Production (76%) 9.4 9.2 8.7 0.5 8.7 0.2 0.0 0.2 0.1 0.0 Exploration (80%) 0.2 0.0 1.7 1.0 1.6 1.3…
  14. June 2016 Corporate Update – Ecopetrol S.A. – slide 14
    Agenda 1. Key Highlights 2. 2015: Navigating the Low Crude Oil Price Environment 3. 2016: Transitioning to Growth 4. 2017: Strategy Implementation
  15. June 2016 Corporate Update – Ecopetrol S.A. – slide 15
    Exploration: Establishing a Robust and Diversified Portfolio Basin Potential Main Countries Recent Exploratory Discoveries and 2016 Activity ECOPETROL AMERICA OFF-SHORE COLOMBIA ON-SHORE COLOMBIA 1Q-2016: Leon 2 2014: ORCA…
  16. June 2016 Corporate Update – Ecopetrol S.A. – slide 16
    Production 2016: Profitable Barrels, Declining Break-Evens & Challenging Trade- Offs Ecopetrol Group Production Recovery Factor Program Thousand barrels of oil equivalent per day (mboed) 1 Bn boe of contingent 11.3* 7.4* 4.9*…
  17. June 2016 Corporate Update – Ecopetrol S.A. – slide 17
    Strategic Focus on Exploration and Production from 2017 Onwards CAPEX 2016-2020 % 1% 3% 14% 7% 38% 90% 47% Approved 2016 2017-2020 (e) (average per year) UPSTREAM DOWNSTREAM MIDSTREAM OTHERS 17
  18. June 2016 Corporate Update – Ecopetrol S.A. – slide 18
    Downstream: Improved Refining Capacity; High-Value Products and Clean Fuels Reficar Conversion Factor*: 97.0% 3% 2% Processing 100 MBD of Heavy Crude, Extra Heavy Crude and Sour 35% Propylene LPG 70% local crude and 30%…
  19. June 2016 Corporate Update – Ecopetrol S.A. – slide 19
    Midstream: Increasing Transport Capacity Enhances the Ecopetrol Group's Cash Flow Pipeline System Capacity* Key Transportation Assets Thousand barrels per day (mbod) 1,268 1,328 1,336 Santa Marta Pipelines: 5,269 km(1) and 32…
  20. June 2016 Corporate Update – Ecopetrol S.A. – slide 20
    2016: Ongoing Transformation into a more Efficient and Competitive Company Focus on capital discipline and cash flow protection Capital Discipline 2016 CAPEX reduction Efficiency Focus Ecopetrol Groups savings amounted USD129…
  21. June 2016 Corporate Update – Ecopetrol S.A. – slide 21
    Optimizations: Reduction in Direct and Indirect Employees Ecopetrols Employees* 53,600 (48%) 39,000 44,450 28,000 30,300 19,300 9,150 8,700 8,700 2014 2015 1Q 2016 Direct Employees Indirect Employees Ecopetrols total…
  22. June 2016 Corporate Update – Ecopetrol S.A. – slide 22
    2016: Leveraging Cost-efficiencies by Enhancing Productivity and Sustainability Management and Cultural Transformation Leadership Program Management team renovation New culture and leadership with international experience*…
  23. June 2016 Corporate Update – Ecopetrol S.A. – slide 23
    2016 Cost-efficient Financing Strategy: 50% of Requirements Fulfilled 2016 Financing Needs Outstanding Debt* USD million USD million 1,500 -1,900 Company Total (1) (%) Remaining Financing Ecopetrol 12,934 74% Reficar 3,065 17%…
  24. June 2016 Corporate Update – Ecopetrol S.A. – slide 24
    2016-2017 Divestment Program: Portfolio Rotation to Generate Cash Divestment Program comprising non- Divestments strategic assets and equity USD million participations: o Second round of EEB offering (1) o Second round of ISA…
  25. June 2016 Corporate Update – Ecopetrol S.A. – slide 25
    Agenda 1. Key Highlights 2. 2015: Navigating the Low Crude Oil Price Environment 3. 2016: Transitioning to Growth 4. 2017: Strategy Implementation 25
  26. June 2016 Corporate Update – Ecopetrol S.A. – slide 26
    Securing the Companys Future: Mid - Term Strategy Update May to August 2016 4Q-2016 I Baseline and business II III Business Plan Strategic Options portfolio Announcement Business segment Alternatives prioritization Companys long…
  27. June 2016 Corporate Update – Ecopetrol S.A. – slide 27
    2017 Onwards: Continue Positioning for the Future in order to Secure Long Term Growth, Financial Sustainability and Value Creation Flexibility Secure Financial Efficiencies Strength Association Scenario Strategy…
  28. June 2016 Corporate Update – Ecopetrol S.A. – slide 28
    Appendix 28
  29. June 2016 Corporate Update – Ecopetrol S.A. – slide 29
    Financial Results: Net income increased by 127% between 1Q 2015 and 1Q 2016 Net Income (1) (COPBn) 39.5% 127% EBITDA Margin 38.9% 363 160 1Q -2015 1Q - 2016 (COPTn) 1Q 2016 1Q 2015 Revenues 10.5 12.3 - 15% Costs and…
  30. June 2016 Corporate Update – Ecopetrol S.A. – slide 30
    Ecopetrol Groups Net income Net Income Variation 1Q 2015 vs. 1Q 2016 (1) (COPBn) REVENUES COST OF SALES EXPENSES FINANCIAL RESULT (COP1,816 Bn) COP1,109 Bn (COP51 Bn) COP 1,394 Bn (405) (28) (353) 160 179 (52) 363 1,799 (…
  31. June 2016 Corporate Update – Ecopetrol S.A. – slide 31
    Income by Segment Income Variation by Segment 1Q 2015 vs. 1Q 2016 (1) (COPBn) 1Q 2015 E&P Downstream Midstream Eliminations 1Q 2016 EBITDA Margin 1Q 2016 17.3% 11% 79.9% (1)Figures under Colombian IFRS 31
  32. June 2016 Corporate Update – Ecopetrol S.A. – slide 32
    Cash Flow: Strong Cash Position Cash Flow 1Q 2016 (1) (COLmm) 1,315 596 3,725 1,058 788 458 7,636 6,550 Caja Inicial Initial Operacin Inversin Pago dividendos Aumento neto Pago intereses Efecto variacin Caja Final…

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