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October 2016 Corporate Update – Ecopetrol S.A.

Ecopetrol S.A. · Oct 31, 2016 · 40 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. October 2016 Corporate Update – Ecopetrol S.A. – slide 1
    ECOPETROL Resilient and Transitioning to Overcome Growth Challenges October 2016 0
  2. October 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. 2017-2020: Business Plan Update 2
  3. October 2016 Corporate Update – Ecopetrol S.A. – slide 3
    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…
  4. October 2016 Corporate Update – Ecopetrol S.A. – slide 4
    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)…
  5. October 2016 Corporate Update – Ecopetrol S.A. – slide 5
    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)…
  6. October 2016 Corporate Update – Ecopetrol S.A. – slide 6
    Agenda 1. Key Highlights 2. 2015: Navigating the Low Crude Oil Price Environment 3. 2016: Transitioning to Growth 4. 2017-2020: Business Plan Update 6
  7. October 2016 Corporate Update – Ecopetrol S.A. – slide 7
    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…
  8. October 2016 Corporate Update – Ecopetrol S.A. – slide 8
    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…
  9. October 2016 Corporate Update – Ecopetrol S.A. – slide 9
    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…
  10. October 2016 Corporate Update – Ecopetrol S.A. – slide 10
    Initiatives Aimed to Increase Efficiency and Reduce Cost in Down & 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 Renegotiation of…
  11. October 2016 Corporate Update – Ecopetrol S.A. – slide 11
    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…
  12. October 2016 Corporate Update – Ecopetrol S.A. – slide 12
    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…
  13. October 2016 Corporate Update – Ecopetrol S.A. – slide 13
    Agenda 1. Key Highlights 2. 2015: Navigating the Low Crude Oil Price Environment 3. 2016: Transitioning to Growth 4. 2017-2020: Business Plan Update
  14. October 2016 Corporate Update – Ecopetrol S.A. – slide 14
    Since 2014, cash flow focus has been the pillar of a solid financial basis 1. Challenging price 2. Ambitious saving 3. Efficient cost scenario targets reductions Brent USD/bl USD (Bn) COP (Bn) 70 10 9.1 65 Target 2020 +38% USD…
  15. October 2016 Corporate Update – Ecopetrol S.A. – slide 15
    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…
  16. October 2016 Corporate Update – Ecopetrol S.A. – slide 16
    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…
  17. October 2016 Corporate Update – Ecopetrol S.A. – slide 17
    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…
  18. October 2016 Corporate Update – Ecopetrol S.A. – slide 18
    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…
  19. October 2016 Corporate Update – Ecopetrol S.A. – slide 19
    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…
  20. October 2016 Corporate Update – Ecopetrol S.A. – slide 20
    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%…
  21. October 2016 Corporate Update – Ecopetrol S.A. – slide 21
    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 Fields…
  22. October 2016 Corporate Update – Ecopetrol S.A. – slide 22
    Agenda 1. Key Highlights 2. 2015: Navigating the Low Crude Oil Price Environment 3. 2016: Transitioning to Growth 4. 2017-2020: Business Plan Update 22
  23. October 2016 Corporate Update – Ecopetrol S.A. – slide 23
    Ecopetrols 2020 Corporate Strategy Pillars Cash flow focus & cost efficiency Transformation Program Reserves & Strict Capital Production Discipline growth 23
  24. October 2016 Corporate Update – Ecopetrol S.A. – slide 24
    Improving efficiency and operational indicators (2015-2016) Upstream Midstream OPEX Transport maintenance USD -20% -21% cost (COP/bl) 230 MM Fluid treatment cost -12% -11% -60 -40 -20 0 (COP/bl) -19% Energy cost (COP/KWH) USD…
  25. October 2016 Corporate Update – Ecopetrol S.A. – slide 25
    Capital Discipline: Lower investments while achieving goals CAPEX Financial strength Projects Reduction 3.0 to 3.5 25% between Gross Debt/EBITDA 100% units of the 2014 and 2015 ratio New Cartagena Refinery in 54% between…
  26. October 2016 Corporate Update – Ecopetrol S.A. – slide 26
    Transformation Model Changes in leadership, procurement & surroundings relations Leadership Procurement Surroundings 18 new Senior New procurement model New model for Management shared members, out of 20 3400 reduction in…
  27. October 2016 Corporate Update – Ecopetrol S.A. – slide 27
    Competitive Growth Operational excellence and additional efficiencies by 2020 Efficiencies through the Transformation plan(1) (USD Bn) +130% 1,5 1,2 1,4 1,1 0,7 0,8 1,1 0,3 2015 2016 2017 2018 2019 2020 Target…
  28. October 2016 Corporate Update – Ecopetrol S.A. – slide 28
    Profitable production growth Flexible investment plan focused on Upstream Investment level optimization Focus on Upstream vs. Mid & Down Ecopetrol Total Capex, 2017-20 (USD Bn) Capex distribution by segment (%) 31% 85% 30 100 24…
  29. October 2016 Corporate Update – Ecopetrol S.A. – slide 29
    Business plan secures the companys profitability and sustainability at 50 USD/bl Planning the Strategy at 50 USD/bl Brent (USD/bl) 90 Previous Plan 80 80 70 70 70 70 An increase in prices is not 60 contemplated 50 50 50 50 in…
  30. October 2016 Corporate Update – Ecopetrol S.A. – slide 30
    Profitable production growth 760 Mboed in 2020 at 50 USD/bl, upturn is subject to price performance Growth between 6% and 22% Profitable barrels Production (Mboed) EBITDA/barrel at 760 Mboed (USD/bl) 22% 328% 1,000 16% +6% 870…
  31. October 2016 Corporate Update – Ecopetrol S.A. – slide 31
    Profitable production growth Current assets portfolio is the base for 2020 production target Production breakdown 2020 and comparison at 2016 (mboed) 1.000 +6% +9% 760 830 800 49 49 715 18 26 39 69 314 600 346 400 94%…
  32. October 2016 Corporate Update – Ecopetrol S.A. – slide 32
    Profitable production growth Proven ability to add production and reserves through Recovery Factor La Cira Infantas Mid-Magdalena Valley Partnership 70000 Crude Rate (BOD) Infill and water injection recovery program 60000…
  33. October 2016 Corporate Update – Ecopetrol S.A. – slide 33
    Profitable production growth Focus on main development and production assets Rubiales Castilla Infill Wells Infill Wells USD 1.400 MM USD 790 MM investment towards investment towards 2020 2020 Quifa Cao Sur Infill Wells…
  34. October 2016 Corporate Update – Ecopetrol S.A. – slide 34
    Profitable production growth Colombias offshore is the best long term gas supply opportunity 34
  35. October 2016 Corporate Update – Ecopetrol S.A. – slide 35
    Estimated reserves growth Financial flexibility will allow further development in the Americas Offshore GOM-US Offshore Colombia Onshore Mature Fields Colombia (Mid-term) Latam Off-shore Mexico (Mid-longterm) Ecuador…
  36. October 2016 Corporate Update – Ecopetrol S.A. – slide 36
    Profitable growth in Midstream and Downstream Cash flow generation and profit maximization Operational excellence represents USD 0.7 Bn of impact in EBITDA by 2020 720 Transportation: Investment rationalization and profit 240…
  37. October 2016 Corporate Update – Ecopetrol S.A. – slide 37
    Midstream, a cash flow source The expansive cycle has been fulfilled Capacity Main Pipelines Thousand barrels per day (mbd) 1,445 1,276 1,301 1,310 Santa Marta 1,096 Cartagena Coveas 307 307 352 385 385 Ayacucho…
  38. October 2016 Corporate Update – Ecopetrol S.A. – slide 38
    Financial Sustainability Groups viability at 50 USD/bl and upside with higher prices Sources and Uses of cash, 2017-2020 (USD Bn) 25 21.3 16.5 20 15 10 4.0 4.8 5 0 Sources: Uses: Available cash Additional cash…
  39. October 2016 Corporate Update – Ecopetrol S.A. – slide 39
    Financial strength Reduce Debt/Ebitda and preserve Investment Grade rating Maintain strict Reduce Capital Discipline financial leverage 4 Focus on profitable projects 3.6 3,0 3 Divestment of non-strategic assets 2 40%…
  40. October 2016 Corporate Update – Ecopetrol S.A. – slide 40
    2017-2020 Business plan : Seven main pillars Segments 40 Main Pillars

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