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September 2016 Investor Presentation – Ecopetrol S.A.

Ecopetrol S.A. · Sep 2, 2016 · 36 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. September 2016 Investor Presentation – Ecopetrol S.A. – slide 1
    ECOPETROL Resilient and Transitioning to Overcome Growth Challenges September 2016 0
  2. September 2016 Investor Presentation – 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. September 2016 Investor Presentation – 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. September 2016 Investor Presentation – 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. September 2016 Investor Presentation – Ecopetrol S.A. – slide 5
    Key Highlights Decreasing lifting cost: 2014: USD11.23/bl, 2015: USD7.39/bl and LTM(1): USD6.1/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. September 2016 Investor Presentation – Ecopetrol S.A. – slide 6
    Key Financial Metrics: Resilience to Lower Crude Oil Price Environment 1Q 2016 2015 2014 2Q 2016 1Q 2016 1H 2016 1H 2015 Crude Basket (USD/bl) 38.1 25.1 (52%) 30.7 47.9 (35.9%) Net Income 0.78 (1) 0.36(1) (117%) 1.2 (1) 1.7 (1)…
  7. September 2016 Investor Presentation – Ecopetrol S.A. – slide 7
    Proven Reserves 2015 (1) 2015 Balance Million of barrels of oil equivalent (MMBOE) Net Addition: 16 MMBOE 2,084 -251 -404 275 47 -1 1,849 154 -55 1P 1P 2014 2014Production Efecto Price Precio(3) Effect(3) Additions(4)…
  8. September 2016 Investor Presentation – 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. September 2016 Investor Presentation – Ecopetrol S.A. – slide 9
    We do things differently, obtaining efficiencies in our operational key metrics UPSTREAM MIDSTREAM Opex Opex Transportation maintenance Fluid treatmentFluido cost (COP/boe) Costo decost Mantenimiento (COP/bl) Costo Tratamiento…
  10. September 2016 Investor Presentation – Ecopetrol S.A. – slide 10
    Sustained Lifting and Dilution Cost Reduction Enhances Heavy Crude Profitability Key drivers for lifting reduction: Lifting cost USD/barrel 8 Optimized subsurface and above ground (18%) maintenance 6 Increased self generation with…
  11. September 2016 Investor Presentation – Ecopetrol S.A. – slide 11
    Dilution Costs in heavy and extra heavy crude as structural reduction example Optimization Emphasis Dilution Optimization Strategies Dilution factor decrease (% diluent / Normalized heavy crude volume) Viscosity: 200 cSt 300 cSt 405…
  12. September 2016 Investor Presentation – Ecopetrol S.A. – slide 12
    Upstream Optimization Achievements Drilling Days in the Companys Main Fields Significant drilling-days reduction 34 (44%) 36 (42%) 26 26 21 Standardized designs and operations 19 14 12 14 Cutting-edge drilling technology…
  13. September 2016 Investor Presentation – Ecopetrol S.A. – slide 13
    Initiatives Aimed to Increase Efficiency and Reduce Cost in Downstream and Midstream Refining cash cost(1) Downstream: USD/barrel Strategies for optimization in (40%) maintenance and support services 7,2 4,4 3,5 4,3…
  14. September 2016 Investor Presentation – Ecopetrol S.A. – slide 14
    Cost Efficiencies: Opportunities Realized since 2015 2015 Savings* 1H 2016 Additional USD Millions Savings USD Millions 1.009 Fixed and Variable 192 214 Costs 172 Operational 68 Expenses 213 410 53 8 Total Savings 260…
  15. September 2016 Investor Presentation – Ecopetrol S.A. – slide 15
    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…
  16. September 2016 Investor Presentation – Ecopetrol S.A. – slide 16
    Agenda 1. Key Highlights 2. 2015: Navigating the Low Crude Oil Price Environment 3. 2016: Transitioning to Growth 4. 2017: Strategy Implementation
  17. September 2016 Investor Presentation – Ecopetrol S.A. – slide 17
    Exploration: Pursuing high-value and quality prospects Basin Potential Main Countries Recent Exploratory Discoveries and 2016 Activity ECOPETROL AMERICA OFF-SHORE COLOMBIA ON-SHORE COLOMBIA 2Q 2016: APPRAISAL 2014: ORCA discovery…
  18. September 2016 Investor Presentation – Ecopetrol S.A. – slide 18
    Reserves Incorporation Strategy Towards Sustainability and Growth Exploration Increase in OOIP* o Portfolio upgrade 60 +60% Bn boe 51 53 54 o Short term: onshore near field exploration 49 50 46 47 39 and key areas 40 34 35…
  19. September 2016 Investor Presentation – Ecopetrol S.A. – slide 19
    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 19
  20. September 2016 Investor Presentation – Ecopetrol S.A. – slide 20
    Refining: Completion of Reficar's start up Start up Stabilization Optimal Operation Jul/2016 2H 2016 2017 The start up of the 34 units of the modernization project was completed in July Begin of the stabilization stage and…
  21. September 2016 Investor Presentation – Ecopetrol S.A. – slide 21
    Downstream: Improved Refining Capacity; High-Value Products and Clean Fuels Reficar 165 KBD 3% Processing 100 MBD of Heavy 2% Crude, Extra Heavy Crude and Sour 35% Propylene 70% local crude and 30% LPG imported crude Naphta…
  22. September 2016 Investor Presentation – Ecopetrol S.A. – slide 22
    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…
  23. September 2016 Investor Presentation – Ecopetrol S.A. – slide 23
    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 USD260…
  24. September 2016 Investor Presentation – Ecopetrol S.A. – slide 24
    Optimizations: Reduction in Direct and Indirect Employees Ecopetrols Employees* 53,600 (47%) 39,000 28,400 44,450 30,300 19,700 9,150 8,700 8,700 2014 2015 2Q 2016 Direct Employees Indirect Employees Ecopetrols total…
  25. September 2016 Investor Presentation – Ecopetrol S.A. – slide 25
    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*…
  26. September 2016 Investor Presentation – Ecopetrol S.A. – slide 26
    2016 Cost-efficient Financing Strategy: 85% of Requirements Fulfilled Outstanding Debt 2016 Financing Needs USD million USD million 1,500 - 1,900 Company Total (%) Ecopetrol 13,489 75% Remaining Financing Reficar 2,915 16%…
  27. September 2016 Investor Presentation – Ecopetrol S.A. – slide 27
    2016-2017 Divestment Program: Portfolio Rotation to Generate Cash 2Q 2016 Divestments (COP Bn) Council of Release of First Second Stage Ministers Decree Stage 2Q 2016 3Q 2016 4Q 2016 2017 348 377 Divestment in Minor…
  28. September 2016 Investor Presentation – Ecopetrol S.A. – slide 28
    Agenda 1. Key Highlights 2. 2015: Navigating the Low Crude Oil Price Environment 3. 2016: Transitioning to Growth 4. 2017: Strategy Implementation 28
  29. September 2016 Investor Presentation – Ecopetrol S.A. – slide 29
    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…
  30. September 2016 Investor Presentation – Ecopetrol S.A. – slide 30
    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…
  31. September 2016 Investor Presentation – Ecopetrol S.A. – slide 31
    Appendix 31
  32. September 2016 Investor Presentation – Ecopetrol S.A. – slide 32
    Ecopetrol Groups Net income Net Income Variation 2Q 2015 vs. 2Q 2016 (1) (COPBn) REVENUES COST OF SALES EXPENSES FINANCIAL RESULT (COP2,258 Bn) COP1,074 Bn COP114 Bn COP414 Bn (586) 827 (413) (2,870) (51) 0 (13) 1.507 565…
  33. September 2016 Investor Presentation – Ecopetrol S.A. – slide 33
    Income by Segment Income Variation by Segment 2Q 2016 vs. 2Q 2015 (1) (COPBn) 29,4% EBITDA Margin -287 10,5% 76,4% -643 61 1,507 149 787 2Q 2015 E&P Downstream Midstream Eliminations 2Q 2016 33 (1) Figures under…
  34. September 2016 Investor Presentation – Ecopetrol S.A. – slide 34
    Cash Flow: Strong cash flow generation Cash Flow 2Q 2016 COP Bn 18.000 16.000 14.000 4,117 (3,344) 12.000 10.000 (955) 725 (1,002) 932 (191) 8.000 6.000 7.636 4.000 7.918 2.000 0 Initial 2Q2016 Operating Tax CAPEX…
  35. September 2016 Investor Presentation – Ecopetrol S.A. – slide 35
    Groups Debt Amortization Profile (US Millones) Ecopetrol Bicentenario Bioenergy Ocensa ODL Reficar 2,713 2,448 2,129 2,000 1,671 1,535 1,343 942 940 568 504 525 309 132 97 57 14 15 11 2016 2017 2018 2019 2020…
  36. September 2016 Investor Presentation – Ecopetrol S.A. – slide 36
    Groups Debt Maturity (years) Interest rate 0-1 IPC DTF 4% 10+ 12% LIBOR 10% 1-5 19% 45% 14% 5 - 10 Fija 67% 29% Currency Instrument Local leasing Local bonds 1% 4% ECAs COP 17% 15% International Loans USD 14%…

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