Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — Investor Presentation (August 2013)
51 slides from Ecopetrol Sa's investor presentation, August 2013
Slide 1: Investor Presentation
ECOPETROL S.A. Investor Presentation August 2013
Slide 2: Disclaimer
Disclaimer This document was prepared by Ecopetrol S.A. with the purpose of providing the market and interested parties certain financial and other information of the Company. This document may include strategy discussions and forward-looking statements regarding the probable development of Ecopetro
Slide 3: Agenda
Agenda 1. Overview 2. Exploration & Production 3. Downstream 4. Transportation 5. Financials 6. Outlook 3Q 2013 3
Slide 4: Overview
Overview ectterrot
Slide 5: Capex plan focused on E&P has lead growth since 2008
Capex plan focused on E&P has lead growth since 2008 Capex Growth 2008-2012 2007 vs. 2012/2013 7% 4% Production 2.0 X 8% 778 mboed (2Q-2013) Total Capex 13% USD 31 bn 48% Reserves (1P) 1.6 X 1.9 bn boe (Dec. 2012) 20% Ebitda 1.6 X USD 14.7 bn (12 months to the 2Q-2013) Production Acquisitions Transp
Slide 6: Ecopetrol is Colombia's top player with interests in the U.S., Brazil and Peru
Ecopetrol is Colombia´s top player and holds interests in the U.S., Brazil and Peru Ecopetrol and interests in subsidiaries & affiliates E&P: america Ref.& Petchem. : Transport: Biofuels: PERU Midstream * BRAZIL • Crude transport: 944 mbd Key figures: • Products transport: 240 mbd Upstream Downstrea
Slide 7: Strategic plan with Capex of USD 75 bn to reach 1.3 mn clean barrels by 2020
Strategic plan with a Capex of USD 75 bn to reach a production of 1.3 mn “clean” barrels by 2020 USD 75 bn Biof. & other 3% 1.3 1.3mn boed million boed Transport Refining 5% 7% “Clean barrels” in 2020 25% Exploration • No accidents • No environmental incidents Production • Sound labor relations 60%
Slide 8: Exploration & Production
Exploration 2¢°@.%: & Production Biases Loo PAR 2 a” 0g I ecorrow i es" Se
Slide 9: Rise in production led by heavy oil in Colombia
Rise in production led by heavy oil in Colombia Average production / year (thousand barrels of crude oil and gas per day) 1,300 1,000 785 798 724 754 46 616 54 52 111 126 521 36 100 447 22 98 399 93 85 72 570 591 614 482 362 406 327 2007 2008 2009 2010 2011 2012 1H-2013 2013 (e) 2015 (e) 2020 (e) Cr
Slide 10: E&P strategy has four drivers to reach 1.3 mn clean barrels in 2020
E&P strategy has four drivers that rise production to 1.3 mn “clean” barrels in 2020 and add 6.2 bn barrels of 1P reserves 1 Production and Increase Recovery Factor • Primary/Secondary/Tertiary Recovery • EOR/IOR (Enhanced Oil Recovery/Improved Oil Recovery) Production & 1 Recovery Factor: Prod: 840
Slide 11: Main fields by region in Colombia
Main fields by region in Colombia Average Production in 1H-2013* (mboed) Central 27% Castilla 117 Chichimene 52 Eastern 21% Rubiales 121 Quifa 27 Northeast 21% Guajira 58 Cusiana 33 Middle 15% La Cira 23 Magdalena Nare 17 Catatumbo 7% Tibú 2 South 8% Orito 3 Tello 2 Minor fields 1% * Accounts for EC
Slide 12: Central Region: Meta province (Llanos Orientales)
Central Region: Meta province (Llanos Orientales) Main fields Production (mboed) 128 • Heavy crude (13° API) 110 111 Castilla • Oil in place: 5.5 bn boe (e) • Ecopetrol´s interest: 100% 2011 2012 2013 (e) • Heavy crude (9° API) 65 Chichimene • Oil in place: 2.8 bn boe (e) 32 44 • Ecopetrol´s interes
Slide 13: Middle Magdalena Region
Middle Magdalena Region Main fields Production (mboed) 20 22 24 • Medium crude (20-32° API) La Cira • Oil in place: 3.9 bn boe (e) Infantas • Ecopetrol´s interest: 52% 2011 2012 2013 (e) 19 23 28 • Medium crude (22-24° API) Casabe • Oil in place: 1.8 bn boe (e) • Ecopetrol´s interest: 100% 2011 2012
Slide 14: Northeast Region: Casanare and Guajira provinces
Northeast Region: Casanare and Guajira provinces Main fields Production (mboed) 64 59 57 • Dry Gas Guajira • Oil in place: 1.283 mboe Ballena – Riohacha - Chuchupa • Ecopetrol´s interest: 57% (2012) 2011 2012 2013 (e) 36 36 29 • Light crude (31° - 36 ° API) Cusiana • Oil in place: 1.783 mboe • Ecope
Slide 15: Production of current fields supported by drilling and recovery
1 Production of current fields supported by drilling, non-thermal recovery, and thermal recovery Workstreams Key Initiatives Screening and projects Primary recovery • Infill Drilling Horizontal and • Llanos Orientales Drilling • New area development multilateral wells • Middle Magdalena • Optimize w
Slide 16: Production 1H-2013
1 Production 1H-2013 Production: Ecopetrol + net interests Pumpjack in Apiay Field (thousand barrels of oil equivalent / day) 762 778 753 785 2 1 2 1 8 18 6 18 7 18 6 18 25 21 27 21 709 732 699 739 2Q-2012 2Q-2013 . 1H-2012 1H-2013 Ecopetrol Hocol Savia Equion EC America Production of main fields (t
Slide 17: Upstream strategy has four drivers to reach 1.3 mn clean barrels
Upstream strategy has four drivers that rise production to 1.3 mn “clean” barrels in 2020 and add 6.2 bn barrels of 1P reserves 1 Production and Increase Recovery Factor • Primary/Secondary/Tertiary Recovery • EOR/IOR (Enhanced Oil Recovery/Improved Oil Recovery) 1 Production & Recovery Factor: 2 Ex
Slide 18: Ecopetrol has 37% of total licensed acreage in Colombia
Ecopetrol has 37% of the total licensed acreage in Colombia 2 and operates in 6 strategic basins of high potential Exploration assets* (61 blocks) Caribbean sea 4 15.7 mn hectares Operated directly: 51 Blocks Not operated: 10 Blocks 5 Basins Ecopetrol S.A. 1 Llanos – Catatumbo Hocol S.A. 2 Mid
Slide 19: International exploration assets: 8.7 mn Has
2 International exploration assets: 8.7 mn Has U.S.A. EC America 0.1 mn Has Miocene GOM Paleogene Jurassic EC Peru 4.4 mn Has Para Maranhao Marañón Marañón EC Brazil Ucayali Sechura Ucayali 0.1 mn Has Huallaga Salaverry Brazil Campos Lima Peru Santos Espiritu Santo Para-Maranhao Savia Peru Campos Sa
Slide 20: Exploration activity and geological success
2 Exploration activity and geological success Wildcat Wells (A3/A2) 39 7 33 28 3 7 6 23 19 9 2 3 2 2 1 15 2 3 8 12 1 1 1 1 2 9 3 21 20 4 16 3 12 13 13 9 7 4 2005 2006 2007 2008 2009 2010 2011 2012 2013 Plan Ecopetrol S.A ECP Brasil ECP Peru ECP USA Hocol Savia Geological 16% 33% 26% 26% 49% 52% Succ
Slide 21: Exploration 1H-2013
2 Exploration 1H-2013 Castilla field A3/A2 Exploratory activity in Colombia Ecopetrol + net interests (Number of wells) Drilled Successful 2nd quarter Ecopetrol 1 1 Hocol* 1 0 Total 2 1 1st semester Ecopetrol 4 3 Hocol* 2 1 Total 6 4 Highlights: • 66% exploratory success rate in Colombia in 1H/2013
Slide 22: Upstream strategy has four drivers to reach 1.3 mn clean barrels
Upstream strategy has four drivers that rise production to 1.3 mn “clean” barrels in 2020 and add 6.2 bn barrels of 1P reserves 1 Production and Increase Recovery Factor • Primary/Secondary/Tertiary Recovery • EOR/IOR (Enhanced Oil Recovery/Improved Oil Recovery) 1 Production & Recovery Factor: 2 Ex
Slide 23: Unconventional hydrocarbon potential in Colombia
3 Unconventional hydrocarbon potential in Colombia Methane Hydrate 120 - 1200 TCF (Karson, 1994) Gas in Situ 434.2 TCF HM - CARIBE 32 TCF GAC (Arthur D´little, 2010) - GUAJIRA Shale Oil/Gas 31.7 TCF (Highest GAC - CESAR potential in Mid Magd Valley 29 TCF) ORIPAYA WELL (2013) SH - CATATUMBO Coal Bed
Slide 24: 1P Reserves
1P RESERVES 1P Reserves balance* Reserves addition vs. production*** (million of barrels of oil equivalent) 2010-2012 (million of barrels of oil equivalent) 1,877 1,857 981 1,714 643 2010 2011 2012 Addition Production RRR** 193% 165% 109% * SEC standards (net of royalties) ** RRR: Reserve replacemen
Slide 25: Exploration and Production Costs
Exploration and Production Costs 17.02 F&D cost 15.63 2009-2011 12.43 8,20 USD/bl Latin America 2012 Lifting cost 16.43 19.54 2011 11.53 USD/bl 2012 Source: Herold and Ecopetrol 25
Slide 26: Downstream
3 Downstream ectterrot
Slide 27: Projects in refining improve profitability: Reficar modernization
Projects in refining improve profitability: Reficar modernization Reficar (Cartagena) refinery modernization project • Refining capacity from 80 to 165 Scope mbd • Crude Distillation • FCC Naphtha HDT • High conversion from 76% to 97% • VDU • 2 ULSD • Processing of heavy, extra-heavy and • Coker H
Slide 28: Projects in refining improve profitability: Barrancabermeja modernization
Projects in refining improve profitability: B/meja modernization Barrancabermeja refinery modernization project 45 mbd of clean and valuable fuels High conversion from 75 to > 95% Revamps Processing of heavy, extra-heavy and sour crude oils New units Domestic fuel quality standards (sulfur
Slide 29: Refining modernization projects increase revenues
Refining modernization projects increase revenues: maximizing output of medium distillates and gasoline Barrancabermeja Production Reficar Production 250 mbd 250 mbd 80 mbd 165 mbd 1% 0.5% 3% 3% Petrochemicals Petroquímicos 7% 7% 4% 4% Propylene Propileno GLP LPG 34% 40% LPG GLP 36% Destilados Medio
Slide 30: Refining modernization reduces costs: crude basket
Refining modernization reduce costs: Processing crudes available in Colombia and reducing cost of feedstock Quality of crude basket: Quality of crude basket: Barrancabermeja Reficar 17% 10% 7% 20% Livianos Light 20% 19% 45% Medium Medios 93% 70% 61% Pesados Heavyy&ácidos Sour 38% 2012 Current With A
Slide 31: Market & Clients: Diversifying crude references and export destinations
Market & Clients: Diversifying crude references and export destinations Destinations of Crude Exports: 2Q 2013 Crude References: 2Q 2013 South U.S. East America Coast 1.2% 1.9% Europe 6.7% U.S. West Maya 42% Coast 5.9% Central U.S. Gulf America Coast 6.2% Price of crude: 567 mboed 44.0% US$100.7/bl
Slide 32: Transportation & Logistics
00 Gee Transportation deiws Ort & Logistics ectterrot
Slide 33: Rising Transport Capacity and Key Projects
Rising Transport Capacity and Key Projects Transported volume and capacity Key transportation assets Coveñas - Transport Capacity Cartagena +25 MBOD* Pozos – Galan Ayacucho – Coveñas (thousand barrels per day) Product line (135 MBOD)** Pipeline +45 MBOD* Santa Marta +3 MBOD* (90 MBOD)** 1,220 Coveña
Slide 34: Cenit: new transport model starting April 1, 2013
Cenit: new transport model starting April 1/ 2013 Operational Financial • Revenue sources • Dividends from Cenit • Client of Cenit (transportation of • Service fees from operations and crude and products) maintenance contracts Ecopetrol • Contractor of Cenit for the operation • Transportation costs
Slide 35: Transport 1H-2013
Transport 1H-2013 Bicentenario pipeline Transported volumes by pipeline Transported volumes by trucks building site (thousand barrels per day) (thousand barrels per day) 1,184 1,148 223 240 925 944 105 107 3 3 44 23 58 81 2Q-2012 2Q-2013 2Q-2012 2Q-2013 Products Crude Refined Naphta Crude Highlights
Slide 36: Financials
5 Financials ectterrot
Slide 37: Sales growth driven by exports
Sales growth driven by exports Total Sales (mboed) 919 857 881 733 650 Local sales Exports 547 494 521 539 475 370 Local sales* 302 57% Exports 148 31% 216 43% 327 69% 331 348 363 363 359 380 2007 2008 2009 2010 2011 2012 1H-2013 Exports (mboed) 539 494 521 24 22 4% 25 54 58 Natural gas 370 55 11% 8
Slide 38: Financial results (1/2)
Financial results (1/2) Price of Crude 99.7 99.1 102.6 100.7* Export Basket 61.8 72.0 (USD/bl) 30.4 33.1 19.4 13.4 14.1 Local 14.1 12.8 16.2 7.8 Exports Total Sales 9.2 65% 7.2 11.6 17.0 19.0 6.9 9.2 42% 4.9 35% 5.6 58% (USD bn) 2008 2009 2010 2011 2012 1Q-2013 Operating 39% 43% 36% Margins 36% 29%
Slide 39: Financial results (2/2)
Financial results (2/2) 20.0 50.0% Operating 10.0 39% 29% 36% 43% 38% 33% Income (USD bn) 13.2 12.7 6.5 3.8 7.0 5.4 and Margin (%) - 0.0% 2008 2009 2010 2011 2012 1H-2013 Operating income Operating margin 36% Net Income (USD bn) 19% 23% 27% 25% 22% and Net Margin (%) 8.4 5.0 4.3 8.3 2.4 3.6 2008 200
Slide 40: P&L 2Q/2013: Ecopetrol S.A.
P&L 2Q/2013: Ecopetrol S.A. Revenues Income Statement (USD$ billion) • Higher production (+$360 mn) (USD$ billion) • Higher average exchange rate (+$188 8.2 8.2 mn), • Lower average prices Revenues 8.2 2Q-2012 2Q-2013 Variable Costs • Higher transport costs due to the change Variable Costs 4.0 (USD$
Slide 41: Cash Flow and Balance Sheet: Ecopetrol S.A.
* Cash Flow and Balance Sheet: Ecopetrol S.A. Initial Sources Uses Final 8.6 0.3 0.1 13.6 8.1 Cash flow 2Q/2013 4.6 1.7 (USD$ billion) 1.6 2.3 Initial Cash Operations Other FX Diff Cash Available Operations Capex Dividends Ending Cash Assets Liabilities Debt Ratios** Stocks 51.0 1.2 Other short term
Slide 42: Financial Obligations
Financial Obligations* • Issued: May. 2013 / COP$1.84 trillion Local • Outstanding: COP$1.84 trillion Syndicated • Maturity: 12 years (including 3-year grace period) 1 • Interest rate: DTF + 2.5% anticipated quarterly rate Loan • Amortization: semiannual • Issued / Outstanding: Jul. 2009 / US$1.5 bi
Slide 43: Primary offerings and shareholders
Primary offerings and shareholders Primary Equity Offerings of Ecopetrol Ecopetrol´s shareholders (Jul 31/2013) USD 2.8 bn 10.1% Main instit. 20.0% Foreign inv. ADRs, 1.0% Other Instit., Inv. In ord. 1.9% Colombia, Shares, 0.7% 4.3% Retail inv., US$1.3 3.6% bn 1.4% 8.3% 445 thousand shareholders Rep
Slide 44: Dividend payout ratio of ~70%
Dividend payout ratio of ~ 70% Dividends per share (COP$) and payout ratio Total Dividend $300 $291 Extraordinary Dividend $225 $ 37 $ 36 Ordinary Dividend $ 105 $ 263 $ 255 $ 115 $ 115 $ 145 $ 91 2008 2009 2010 2011 2012 2013 Payout ratio 89.9% 76.5% 70.1% 70.3% 79.9% 79.9% Source: Ecopetrol 44
Slide 45: Capex plan of US$75 billion 2013-2020 focused on E&P
Capex plan of US$75 billion between 2013-2020 focused on E&P, mainly funded with internal cash generation Biof. & other 3% 9% 5% Equity Transport Refining 7% 16% Debt 25% Exploration 75% Production Cash 60% generation Uses Sources 45
Slide 46: Ecopetrol in the Dow Jones Sustainability Index since 2011
Ecopetrol in the Dow Jones Sustainability Index (World DJSI) since 2011 Ecopetrol´s 2011-2012 Corporate Sustainability Assessment 82 88 76 77 74 78 70 61 59 51 53 41 Economic Environmental Social Total EC 2011 EC 2012 Avg O&G 2012 Key facts of 2011-2012 Ecopetrol´s Assessment: • 340 companies in the
Slide 47: Capex of US$9.5 billion for 2013
Capex of US$9.5 billion for 2013 Breakdown of Capex Key goals/projects per segment Drilling: 1% • 33 A3/A2 wells •26 in Colombia • 7 International Exploration • 12 Strats wells in Colombia 19% Production • 11 A1 wells: Exploration • 10 in Colombia • 1 International 44% Refining Seismic: 8,500 Kms in
Slide 48: Outlook 3Q 2013
% 8) Outlook IecoO yl 30/2013 gio. £,) ectterrot
Slide 49: Outlook for 3Q-2013
Outlook for 3Q-2013 • Drilling campaign • Colombia: Exploration Ecopetrol S.A.: 3 A3 wells, 5 Strats wells Subsidiaries: 2 A1 wells • International: 1 A1 well and 1 A3 well in the US GoM • Drilling campaign of development wells to reach the 798 MBOED in 2013 Production • Environmental license fo
Slide 50: Investor Relations
Investor Relations • Phone + 571 234 5190 • Email [email protected] • Website www.ecopetrol.com.co 50
Slide 51: Energy for the Future
SEP ENERGY FOR THE FUTURE Ecopetrol S.A. All rights reserved. The re production of this presentation is forbidden without the written authorization of Ecopetrol S.A.