Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — Investor Presentation (January 2012)
105 slides from Ecopetrol Sa's investor presentation, January 2012
Slide 1: Investor Presentation Jan. 2012
traducir ENERGY FOR THE FUTURE Investor Presentation Jan. 2012 1
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 Colombia: a relevant player in O&G Ecopetrol´s performance and 2011-2020 strategic plan Ecopetrol's solid financial results lever future growth Ecopetrol: a great investment opportunity 3
Slide 4: Colombia: a relevant player in O&G
Colombia: a relevant player in O&G 4
Slide 5: Colombia reaches record oil production
Colombia reaches record oil production 1,000 Total Oil Production in Colombia* and Milestones Jan-Sep11 900 (thousand barrels per day) 904 mbod 800 700 4 7 600 5 6 3 500 400 300 200 2 100 1 0 Key milestones: 1. Beginning of oil production in Colombia (1922) 2. Ecopetrol’s incorporation (1951) 3. Dis
Slide 6: Colombia is the 4th largest player in Latam
Colombia is the 4th largest player in Latam Production Reserves (Oil Reserves: Billion Barrels, Gas Reserves: TCF) Oil Production* Mexico (thousand barrels per day) Reserves 2,958 T&T Oil * Gas** Reserves 2,471 11.4 17.3 2,137 Oil * Gas** Colombia 0.8 12.9 Reserves Venezuela Oil * Gas** Reserves 1.9
Slide 7: One of the world's top 20 largest oil producers
One of the world´s top 20 largest oil producers Oil production in the world 2010 (thousand barrels per day of crude) Norway 2.1 Canada Russian Fed. 3.3 10.3 U.K. 1.3 US Iran 7.5 Algeria Irak 4.2 China 1.8 2.5 4.0 Mexico 2.9 Venezuela Saudi Arabia 2.5 10 Colombia* Nigeria 0.8 Brazil 2.4 2.1 Argentina
Slide 8: Colombia's exploration area increased 8X since 2003
Colombia´s exploration area increased 8X since 2003 2003 2008 2011 12.5 million hectares* 61.7 million hectares* 102.0 million hectares* Total contracted and reserved Total contracted and reserved Total contracted and reserved area 8% area 38% area 63% Colombia 2011 (Sep): Area under exploration • 2
Slide 9: Increasing E&P activity in Colombia
Increasing E&P activity in Colombia Exploration wells and success rates in Colombia 250 70% 56% 58% 53% 60% 48% 200 48% 50% 46% Tech. Success Rate 150 40% 41% 40% No. of wells 39% 33% 108 30% 98 100 21% 20% 70 64 45 14% 56 51 55 10% 50 28 35 41 28 21 34 26 18 14 10 19 63 0% 47 36 12 22 11 29 29 12 6
Slide 10: Colombia's O&G sector supports economic growth
Colombia´s O&G sector supports economic growth Foreign direct investment O&G Oil and products exports (USD bn) (USD bn) 16% 16% 11% 30% 37% 32% 34% 42% 45 50% 6.0 40 5.0 35 40% 30 4.0 3.3 3.4 30% 25 2.8 3.0 2.0 2.4 20 20% 2.0 15 1.1 10 10% 1.0 0.5 0.3 5 - 0 0% 2003 2004 2005 2006 2007 2008 2009 2010
Slide 11: Ecopetrol's performance and strategic plan: Overview
Ecopetrol´s performance and 2012-2020 strategic plan: Overview 11
Slide 12: Ecopetrol's transformation 2007 - 2011
Ecopetrol´s transformation 2007 - 2011 Ownership 100% Government •12% market float owned •Listed in BVC, NYSE, BVL and TSX •Dow Jones Sustainability Index Business NOC business model • Diversified Corporate Group across all segments with Model operations in Colombia • Internationalization: Colombia,
Slide 13: Capex growth across all segments with focus on E&P
Capex growth accross all segments with focus on E&P Capex per year Capex per segment 2008-2011 (USD billion) 2008-2011 5% 8.5 10% 6.3 6.0 11% 43% 4.8 US$ 25.7 bn 14% 1.8 16% Production Refining & Petroch. 2007 2008 2009 2010 2011e* Acquisitions Exploration Transportation Other * e: estimated Source:
Slide 14: Organizational consolidation leads to growth
Organizational consolidation leads to growth • Clean fuels HSE (HEALTH, SAFETY AND • Reduction in accidents and in environmental incidents ENVIRONMENT) • Emission reduction • Statement from the majority shareholder CORPORATE GOVERNANCE • Clear dividend policy • Corporate Governance Code • Competitiv
Slide 15: Ecopetrol beyond Colombia
Ecopetrol beyond Colombia Ecopetrol Corporate Group E&P: Refining & Petrochems. : E&P: Transportation: Biofuels: E&P: E&P: Source: Ecopetrol 15
Slide 16: Ecopetrol, Colombia's top player in O&G
Ecopetrol, Colombia´s top player in O&G Key figures Direct Market Share 40% of 54% of proven Area (has): exploration reserves*** Exploration • Colombia 16.1 mn * lands in • Intnal. 5.2 mn has. * Colombia* 1P Reserves: Total: 716 mboed* 1,714 mmboe** • Crude: 62% * Production • Oil: 609 mbod • Oil: 7
Slide 17: Strategic plan 2012 - 2020
Strategic plan 2012 - 2020 Goal year 2020 Capex 2012 - 2020 Other 2% Biofuels Transportation 1.3 1.3mm boed million boed 5% 1% Refining “Clean barrels” 7% • No accidents • No environmental US$ 80 bn incidents Exploration • Harmonious labor 25% relations Production • Delivering commitments 60% to sta
Slide 18: Strategic plan: Exploration & Production
Ecopetrol´s performance and 2012-2020 strategic plan: Exploration & Production 18
Slide 19: Remarkable rise in production
Remarkable rise in production Average production / year (thousand barrels of crude oil and gas per day) 716 616 107 521 104 447 97 399 315 1 85 72 289 270 253 246 294 224 109 153 81 2007 2008 2009 2010 Jan-Sep 11 Heavy oil Light and medium oil Natural gas Strategic partnerships adds 51% of total pro
Slide 20: Increased oil recovery in Colombia
Increased oil recovery in Colombia Ecopetrol´s growth in original oil in Ecopetrol´s OOIP place per region in Colombia (original oil, mmboed) Northeast 42,053 33,638 Mid Magdalena +28% +2% Catatumbo Orinoquia +2% OOIP @ 2007 OOIP @ 2009-2010 • Average Recovery Factor in Colombia of 19% • 90% of the
Slide 21: Main fields by region in Colombia
Main fields by region in Colombia Jan-Sep 2011 Region Share Main fields Avg. Production (mboed) Central 42% Castilla 111 Chichimene 30 Rubiales + Quifa 113 Northeast 29% Guajira 64 Cusiana 35 Mid Magdalena 12% La Cira 16 Infantas 3 Nare 20 Catatumbo 8% Tibú 2 South 9% Orito 3 Tenay 1 Tello 3 Source:
Slide 22: Castilla field: 100% Ecopetrol interest
Castilla field: 100% Ecopetrol interest Capex 2011 US$ 0.9 bn Average Production (mboed) 116 132 98 Heavy crude (13° API) Oil in place: 6.0 bn boe (e) 2012: 60 wells (e) 2010 2011 (e) 2012 (e) (e) estimated Source: Ecopetrol 22
Slide 23: Chichimene field: 100% Ecopetrol interest
Chichimene field: 100% Ecopetrol interest Capex 2011 US$0.6 bn Average Production (mboed) 56 Heavy crude (9° API) 36 19 Oil in place: 2.8 bn boe (e) 2010 2011 (e) 2012 (e) 2012: 40 wells (e) (e) estimated Source: Ecopetrol 23
Slide 24: Rubiales and Pirirí fields
Rubiales and Pirirí fields: 60% and 50% Ecopetrol’s share, respectively Capex 2011 US$ 0.3 bn Production (mboed) 97 107 Heavy crude (12° API) 72 Oil in place: 4.4 bn boe (e) 2010 2011 (e) 2012 (e) 2012: 90 wells (e) (e) estimated Source: Ecopetrol 24
Slide 25: La Cira Infantas field: 60% Ecopetrol interest
La Cira Infantas field: 60% Ecopetrol interest Capex 2011 US$ 0.12 bn Production (mboed) 27 Medium crude (19-22° API) 17 20 Oil in place: 4.0 bn boe (e) 2010 2011 (e) 2012 (e) 2012: 150 wells (e) (e) estimated Source: Ecopetrol 25
Slide 26: Casabe field: 100% Ecopetrol interest
Casabe field: 100% Ecopetrol interest Capex 2011 US$ 0.13 bn Production (mboed) 20 22 16 Medium crude (21-23° API) Oil in place: 1.9 bn boe (e) 2010 2011 (e) 2012 (e) 2012: 55 wells (e) (e) estimated Source: Ecopetrol 26
Slide 27: Nare field: 50% Ecopetrol interest
Nare field: 50% Ecopetrol interest Capex 2011 US$ 0.13 bn NARE Heavy crude (11-13° API) Production (mboed) 21 13 17 Oil in place: 1.1 bn boe (e) 2012: 19 wells (e) (e) estimated 2010 2011 (e) 2012 (e) Source: Ecopetrol 27
Slide 28: Higher exploration activity and success
Higher exploration activity and success 6 7 International exploration wells 10 Colombian 6 exploration wells 3 6 36 6 1 30 3 Stratigraphic wells 2 16 15 Successful wells 12 13 13 5 5 8 2 4 2007 2008 2009 2010 2011 ( e ) Jan-Sep 2012 ( e ) 2011 Geological Success 16% 33% 26% 26% 57% 28
Slide 29: Ecopetrol's Oil & Gas discoveries in Colombia 2008-2011
Ecopetrol´s Oil & Gas discoveries in Colombia 2008-2011 Discoveries in Colombia 2008-2011: 2008 Arrayan-1 Lisama Norte Pachaquiaro norte-1 Tempranillo-1 Lisama Rio Zulia West 3 Oripaya Quifa-5 Norte 1P Rumbero 2009 Quiriyana-1 Quifas 7,8,9 Tempranillo norte Pachaquiaro Akacias Norte Pinocho Quifa9 2
Slide 30: 1P Reserves 2008 - 2020 (e)
1P Reserves 2008 - 2020 (e) 1P Reserves* Reserves Addition (million barrels of oil & gas equivalent) (million barrels of oil & gas) RRI ** 6,200 193% 359% 1,714 46% 1,538 1,109 1,137 109 643 357 2008 2009 2010 2008 - 2010 2011 - 2020 ( e ) Exploration Revaluations * According to SEC prices and metho
Slide 31: Strategy to deliver strong oil production growth
Strategy to deliver strong oil production growth Average production / year (thousand barrels of crude oil and gas per day) 1,300 1,000 716 730 800 Jan-Sep 2011 2011 (e) 2012 (e) 2015 (e) 2020 (e) (e): estimated Source: Ecopetrol 31
Slide 32: Upstream strategy: Increasing production
Upstream strategy 1 Increasing Production 2 Exploration Strategic lines Unconventional 3 resources ROCE : 28% 32
Slide 33: Secondary recovery and EOR
Secondary recovery and EOR • Potential for EOR/IOR: 17% of Ecopetrol´s OOIP is subject to be recovered through EOR/IOR projects. Breakdown by source In field Gas Drilling • Screening process: 12% 27% 94% of OOIP had gone through a screening WO & stimulation process to select the best technology 1% a
Slide 34: Additional gas capacity 2011-2012
Additional gas capacity 2011-2012 Main projects: Current Future Prod. Fields production production increase (mmcf) (mmcf) Gibraltar 36 mmcf Cusiana LTO II 200 270 +70 Gibraltar 0 36 + 36 Cupiagua Allowing for: 140 mmcf Cupiagua 0 140 +140 • Supply increases in demand Source: Ecopetrol 34
Slide 35: Upstream strategy: Exploration
Upstream strategy 1 Increasing Production 2 Exploration Strategic lines Unconventional 3 resources 35
Slide 36: Exploration strategy
Exploration strategy LEVERAGE GROWTH SUSTAINABILITY Share of Total Area 9% 71% 20% • Short term results to • Contingent resources • Frontier plays of late lever growth which shifts the growth development • Moderate risk • High risk • High risk Colombia EARLY PRODUCTION COL-CARIBBEAN OFFSHORE COL-PAC
Slide 37: Growing and diversified exploration portfolio
Growing and diversified exploration portfolio Exploration Area Colombia International Million hectares 21.3 exploration 5.2 Assets 16.1 exploration Assets 9 hectares 2002 1H-2011 Colombia hectares International *Includes: Ecopetrol S.A., Hocol, and Equion Source: Ecopetrol 37
Slide 38: Exploration assets in Colombia
Exploration assets in Colombia Exploration Area Blocks in Colombia 13.4 million Ha 20% 9% Atlantic Ocean Venezuela 71% Leverage Sustainability Growth Early production Pacific Proven basins Ocean 53 blocks Offshore Caribbean Heavy oil Foothills Geologic frontier Brazil • 41 E&P Contracts Ecuador • 6
Slide 39: Ecopetrol has 40% of the total licensed area in Colombia
Ecopetrol has 40% of the total licensed area in Colombia Ecopetrol S.A. Hocol S.A. Caribbean sea Hocol S.A. EQUION 4 Exploration assets (71 blocks) 16.1 mn Hectares 5 Operated directly: 52 Blocks(74%) Not operated: 18 Blocks (26%) Venezuela Basins 1 Llanos – Catatumbo 2 Mid Magdalena Valley
Slide 40: Llanos basin
Llanos basin Total Area: 8.8 mm Hectares No. of Blocks: 71 Operated by ECP • 33 Exploration Not operated by ECP • 38 Production Prodution ECP SIRIRI LLA • Operator: 63% • Non Operator: 37% LLA Operated by Hocol CATLEYA LLA ARAUCA 38 39 42 ANH COSECHA LLA Other Operators 52 PACIFIC ANH LLA 41 ARAUCA
Slide 41: Caño Sur block: 100% Ecopetrol interest
Caño Sur block: 100% Ecopetrol interest OCELOTE COCLI CPO 8 GUARROJO CARACARA LLANOS 37 APIAY VALDIVIA ALMAGRO QUIFA CPO 10 CUBARRAL CPO 11 RUBIALES CPO 9 PIRIRI CAÑO SUR CAMOA CAÑO SUR CPO 16 CAÑO SUR CAÑO SUR Ecopetrol Exploration CPO 17 Ecopetrol Corporate Group Production Drilling Activity in Ca
Slide 42: Catatumbo basin
Catatumbo basin Caribbean Sea Total Area: 0.2 mm Hectares No. of Blocks: 6 2 Exploration 4 Production Operator: 87% Venezuela Non Operator: 3% Operated by ECP RIO DE ORO Corporate group has 56% of the Production ECP CATGUAS SOLANA PET contracted area CARBONERO TIBÚ CERRO GORDO Not Operated by
Slide 43: Middle Magdalena Valley basin
Middle Magdalena Valley basin Caribbean Sea Total Area: Venezuela 1.1 mm Hectares No. of Blocks: 38 4 Exploration PLAYÓN 34 Production Operator: 45% MAGDALENA MEDIO Jurassic & Operated by ECP Calcareous play Non Operator: 55% Production ECP DE MARES Not operated by ECP VMM 6 Corporate group ha
Slide 44: Caguan and Putumayo basins
Caguan and Putumayo basins Prospectivity analysis Pacific Ocean Stratigraphic Models MACAYA HUPECOL Total Area: GUAUYACO CAG-5 CONSORCIO SAMICHAY B MECAYA 0.6 mm Hectares GRANTIERRA META TERECAY SAMICHAY A AREA ORITO ALEA 1848 TACACHO PACIFIC PACIFIC Frontier area No. of Blocks: 10 OCCIDENTALC AREA
Slide 45: Upper Magdalena Valley Basin
Upper Magdalena Valley Basin Total area: 0.4 mm Hectares No. Of blocks: 28 3 exploration 25 production Operator: 64% Non operator: 36% Corporate group has 45% of VSM 3 TELPICO the contracted area CHIPALO Pacific VSM 10 Ocean TOLDADO Tertiary plays Calcareous Plays VSM 12 VSM 9 Structural plays
Slide 46: Caribbean offshore basin
Caribbean offshore basin Caribbean Sea GUA OFF 3 TAYRONA SHELL RC-12 RC-10 RC-11 RC-12 RC-9 TAYRONA RC-8 GUAJIRA RC-7 RC-6 RC-4 RC-5 Total Area: Venezuela FUERTE 3.8 mm Hectares NORTE No. of Blocks: 13 FUERTE Potential analysis 12 Exploration SUR 1 Production Operated by ECP Operator: 41% Not op
Slide 47: Guajira-Sinu-Lower Magdalena Valley basins
Guajira-Sinu-Lower Magdalena Valley basins Total Area: 2.2 mm Hectares Caribbean Sea TIBURÓN OMIMEX No. of Blocks: 12 8 Exploration MARÍA COCHITA TPICC 4 Production SIVESTRE CR 1 PACIFIC Operator: 64% LA MONA AZABACHE CR 2 RIO RANCHERIA Non Operator: 36% SIN SJ N-1 OGX SSJN-3 PACIFIC CR 3 Corp
Slide 48: Pacific Offshore basin
Pacific Offshore basin Total Area: 1.0 mm Hectares No. Blocks: 3 3 Exploration Operator: 33% Pacific Non Operator: 67% Ocean Corporate group has New exploration plays 100% of the BOROJO contracted area NORTE BOROJO TUMM OFF-3 SUR Operated by ECP Other operators Source: Ecopetrol 48
Slide 49: International exploration assets
International exploration assets Ecopetrol America Inc. 0.3 mm Has Miocene Paleogene Exploration Area GOM Jurassic 9.6 mm Has GoM Miocene Brazil post-salt pre-salt Peru marañón Ecopetrol Peru 4.8 mm Has Para Maranhao Peru offshore Marañón Marañón Ecopetrol Brasil Sustainability Ucayali Sechura Ucaya
Slide 50: Upstream strategy: Unconventional resources
Upstream strategy 1 Increasing Production 2 Exploration Strategic lines Unconventional 3 resources 50
Slide 51: Unconventional resource potential in Colombia
Unconventional resource potential in Colombia 120 - 1200 TCF (Karson, 1994) MH - CARIBE Methane hydrates 32 TCF CBM (Arthur D little, 2010) - GUAJIRA Gas in Situ 434.2 TCF CBM - CESAR Shales 31.7 TCF (Higher potential in VMM 29 TCF) SH - CATATUMBO CBM - MONTERIA Coal Bed Methane 7.5 TCF (Higher pote
Slide 52: Gas shale in Middle Magdalena Valley: Initial steps for Ecopetrol
Gas shale in Middle Magdalena Valley: Initial steps for Ecopetrol Drivers Regional geological knowledge Land positioning SH - CATATUMBO Access to infrastructure and Focus area to start Shale social - environmental Mid Magdalena Unconv. strategy knowledge Valley SH- CORDILLERA Access to poten
Slide 53: Sources of production growth 2011 - 2015
Sources of production growth 2011 - 2015 Incremental production by source: 2011-2015 (thousands of equivalent barrels of oil per day) 1,000 106 27 20 117 730 2011 (e) Current fields Colombian Expl. National Unconventional International Expl. 2015 (e) 2015 Exploration Exploration International (e) :
Slide 54: Breakdown of production 2020
Breakdown of production 2020 Production by source: 2020 (thousands of equivalent barrels of oil per day) 50 1,300 110 300 840 Current fields Colombian Expl. Colombia InternationalExpl. International Unconventional Total 2020 Exploration Exploration (e) : estimated Source: Ecopetrol 54
Slide 55: Exploration and Production Costs
Exploration and Production Costs 17.98 17.61 F&D cost 2008-2010 8.58 USD/bl Latin Central America & South America World Ecopetrol Lifting cost 20.30 2010 8.80 8.50 USD/bl Peers* max Peers* min Ecopetrol** *Peer group includes: Petrobras, Marathon, Hess, Repsol and Oxy **Lifting cost of Ecopetrol Jan
Slide 56: HSE (Health, Safety & Environment)
HSE (Health, Safety & Environment) Accident frequency with labor time loss (days away of work per mm labor hrs.) 8.2 2.7 2.3 1.6 1.2 1.1 0.9 2005 2006 2007 2008 2009 2010 Jan-Sep 2011 Source: Ecopetrol 56
Slide 57: Strategic plan: Downstream
Ecopetrol´s performance and 2011-2020 strategic plan: Downstream
Slide 58: Downstream strategy
Downstream strategy 1 MARKET FOCUS 2 MARGIN IMPROVEMENT 3 OPERATIONAL EXCELLENCE 58
Slide 59: Sustained growth in revenues driven by exports
Sustained growth in revenues driven by exports Total Sales 841 719 547 650 475 Local sales Thousand barrels per day of crude oil & gas 480 302 356 148 216 327 331 348 363 361 Exports 2007 2008 2009 2010 Jan - Sep 2011 Exports Crude oil 480 24 Products 356 56 302 20 37 7 Natural gas 216 49 148 16 400
Slide 60: Crude references and export destinations
Crude references and export destinations U.S. East Coast Canada U.S. Gulf Coast Destinations Caribbean and other Far East South America Jan-Sep 2011 76% 15% 8% 1% Crude References 2010 84% 14% 5% WTI Maya Brent Otros 60
Slide 61: Developing gas market
Developing gas market Total consumption (including exports) Self-sufficiency for the country and 1034 1036 1061 exportable surplus 907 760 721 Supply and new findings GBTUD Conventional •Offshore Caribbean: 11 - 35 TCF •Foothills: 2 - 5 TCF 2006 2007 2008 2009 2010 1H-2011 Unconventional Refineries
Slide 62: Potential gas markets
Potential gas markets +100 mmcfd Panama (power plants) +700 mmcfd Caribbean and Central America +250 mmcfd Ecuador + 265 mmcfd Barrancabermeja and Cartagena refineries 62
Slide 63: Strategic plan: Refining
Ecopetrol´s performance and 2011-2020 strategic plan: Refining
Slide 64: Rising demand for medium distillates
Rising demand for medium distillates Ecopetrol’s Production 2010 2013 2016 Med. Dist. 120 175 200 Gasolines & LPGs 120 150 195 300.0 Liquid fuels consumption in Colombia 250.0 Thousand barrels per day 200.0 150.0 100.0 50.0 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20
Slide 65: Strong commitment to air quality
Strong commitment to air quality Diesel Sulfur content (parts per million) Colombia 4,500 3,000 Medellín 2,500 1,200 Bogota and Public 500 500 500 50 Transportation 50 Systems 2001 2007 2008 2009 2010 2012 Gasoline 1,000 727 700 231 2008 2009 2010 2011 Source: Ecopetrol 65
Slide 66: Refining margin increase
Refining margin increase Refining Margin ULSD* Imports 13.30 USD/bl Thousand barrels/day Lower 39 7.70 imports 25 4.41 3.53 Before HDT ** With HDT ** 2008 2009 2010 Jan-Sep 11 1H - 2010 2H-10, 1H-11 Cost Market control conditions 21.8 7.11 Crack Spread 3:2:1 USD/bl 5.98 5.49 12.4 Refining Cost 5.33
Slide 67: Main refining projects
Main refining projects Cartagena Reficar Estimated Billion +/- 10% Investment Capacity of 165MBD Modernization Barrancabermeja Estimated Billion +/- 11% Investment Capacity of 250MBD 67
Slide 68: Cartagena - expansion and upgrading
Cartagena - expansion and upgrading Lower cost of crude Premium quality products Conversion <75% >95% 7% 16% 36% 45% 23% 36% 93% 51% 61% 28% 4% 2010 2013 2010 2013 Fuel & Coke Heavy Medium Light Med. distill. Gasolines & LPG's 6 8 68
Slide 69: Cartagena - expansion and upgrading: CAPEX US$ 4.0 Bn
Cartagena - expansion and upgrading Goals • Increase refining capacity from 80 to 165 MBD • High conversion factor • 15 ppm sulfur for gasoline and diesel ULSD CDU 70 Status 165 HCU FCC HCN 39 40 20 Overall EPC completion (Sep-2011): 44.5% ALKY VDU DCU 9.7 102 45 Timeline New IIIQ - 13 Revamp Commis
Slide 70: Barrancabermeja modernization
Barrancabermeja modernization Lower cost of crude Value added products Conversion <75% >95% 1% 1% 7% 8% 10% 24% 21% 34% 41% 55% 41% 69% 46% 21% 18% 4% 2010 2016 2010 2016 Fuel &Coke Medium dist. Heavy Medium Light Gasolines LPG´s Petrochem. 70
Slide 71: Barrancabermeja modernization: Capex US$ 3.4 Bn
Barrancabermeja modernization Goals NHT REF • Load >175 MBD of Colombian acid/heavy oils 13 9.5 • High conversion factor (> 95%) CDU ULSD ALKY • Better quality of fuels 250 57 7 Status FCC HCN 89 21 HCU • Front-End Engineering Design: 100% 80 • Acquisition of lands for new plants: 100% • Advances in
Slide 72: Projected margin improvement from investment projects
Projected margin improvement from investment projects Process heavier crudes Optimize Process heavier crudes and produce higher operating costs and produce more quality fuels value added products Barranca Utilities Project modernization project Reficar Project 2012 2013 2014 2015 2016 2020 Reficar E
Slide 73: Operational excellence
Operational excellence Barrels spilled due to operational Accident frequency rate causes (hours lost per million worked hours) (Bls / yr) 4.3 3.9 158 3.0 2.5 1.9 1.6 1.7 6 0 10 0 2007 2008 2009 2010 1H-2011 2005 2006 2007 2008 2009 2010 1H-2011 Days of unscheduled interruptions Energy loss index 1,5
Slide 74: Strategic plan: Biofuels
Ecopetrol´s performance and 2011-2020 strategic plan: Biofuels 74
Slide 75: Higher percentage of biofuels in fuel blends
Higher percentage of biofuels in fuel blends Ethanol Biodiesel 25.0 B14 Thousand barrels/day 20.0 E20 Thousand barrels/day 20.0 B13 15.0 E14 15.0 B10 E10 10.0 10.0 5.0 5.0 0.0 0.0 2009 2011 2013 2015 2017 2019 2021 2023 2009 2011 2013 2015 2017 2019 2021 2023 Demand Offer Demand Offer 38.8 Land use
Slide 76: Growth through current and new projects: Biodiesel and Ethanol
Growth through current and new projects Biodiesel Production of Biofuels (thousand tons per year ) • Max. Capacity : 100,000 tons/yr (2,000 bls/day) • Production Jan-Sep 2011: 2,140 MBOED 450 • Blending of 2% biodiesel at Barranca refinery 380 • Ecopetrol´s interest: 50% 280 180 100 Ethanol 2011 201
Slide 77: Growth through current and new projects
Growth through current and new projects Research Agricultural and Industrial ► Improvement in varieties of sugarcane and palm Investment of USD 516 mm through 2020 ► Development of new raw materials ► By-product management Alliances with strategic partners Benefits Potential Partners ► Lower agricul
Slide 78: Strategic plan: Transportation and Logistics
Ecopetrol´s performance and 2011-2020 strategic plan: Transportation and Logistics 78
Slide 79: Transportation strategy
Transportation strategy 1 INFRASTRUCTURE FOR PRODUCTION GROWTH 2 OPERATIONAL EXCELLENCE ROCE: 11% 79
Slide 80: Capacity increase
Capacity increase Transported volumes (mbod) 1,223 1,036 292 710 752 800 265 72% 223 194 209 2007-2011 931 771 517 542 576 2007 2008 2009 2010 Jan-Sep 11 Crude oil Products Crude transportation capacity (mbod) 872 887 910 991 1,076 24% 2007-2011 2007 2008 2009 2010 Jan-Sep 11 80
Slide 81: Open business model for developing infrastructure
Open business model for developing infrastructure Cartagena Transported crude volume daily average: • 2010: 771 MBOD Coveñas Retiro Orú Tibú • 2011: 931 MBOD Ayacucho Caucasia Río Zulia Payoa Toledo B/Bermeja Banadia Caño Limón Samoré Sebastopol ECOPETROL 100% Vasconia Santa Rosa Velásquez Santa Sof
Slide 82: Transportation projects 2011-2013
Transportation projects 2011-2013 Projects 2011-2013 (Capex USD 3.8 bn): 1. ODL Rubiales – Monterrey (+ 180 MBOD) Dec. 11 Pozos Colorados 2. Pozos Colorados – Galán (+ 60 MBOD) Dec. 11 Cartagena 2 3. Caño Limón – Coveñas optimization to 220 MBOD (+60MBOD) Feb. 12 Coveñas 11 6 4. Orito – Tumaco (+ 40
Slide 83: Pipeline capacity increase 2010-2016
Pipeline capacity increase 2010-2016 Increase in capacity of pipeline systems (mbod) 2,205 1,705 1,705 1,355 1,455 1,240 1,315 1,137 991 1,033 2010 I H-2011 II H-2011 I H-2012 II H-2012 I H-2013 II H-2013 2014 2015 2016 2011 – 2013 2014 – 2016 • Ocensa (Seg. III): from 390 to 420 mbod • Pipeline to
Slide 84: Operational excellence
Operational excellence Attacks against infrastructure Accident frequency with labor time loss (No. of attacks) (days away of work per mm labor hrs.) 249 6.51 167 173 133 2.70 85 95 84 66 1.92 47 51 44 34 1.03 1.03 0.95 0.76 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Jan-Sep 2005 2006 200
Slide 85: Ecopetrol's solid financial results lever future growth
Ecopetrol´s solid financial results lever future growth 85
Slide 86: Ecopetrol's solid financial results lever future growth
Ecopetrol´s solid financial results lever future growth Strong financial results support 1. investment grade ratings 2. Increased float and ADR liquidity 3. Assured funding for capex plan 86
Slide 87: Financial results driven by rising production (1/2)
Financial results driven by rising production, higher prices and cost saving initiatives (1/2) $ 99.70 $ 98.40 WTI $ 79.50 (Avg. price in USD/bl) $ 72.30 $ 61.80 19.4 22.1 14.1 9.6 12.8 15.0 60% 11.6 Total Sales * 2.7 39% 4.9 5.6 (USD bn) 6.9 61% 9.2 7.2 7.8 7.1 40% 2007 2008 2009 2010 Jan-Sep 11 Lo
Slide 88: Financial results driven by rising production (2/2)
Financial results driven by rising production, higher prices and cost saving initiatives (2/2) Net Income* and Net Margin* (USD$ bn) 36% 23% 27% 23% 18% 19% 5.0 6.0 4.3 1.5 2.2 2.4 2006 2007 2008 2009 2010 Jan-Sep 11 Net income Net margin Ebitda & Ebitda Margin * (USD bn) 45% 51% 44% 47% 45% 38% 11.
Slide 89: Higher weighted equity capital structure, low indebtedness
Higher weighted equity capital structure, low indebtedness and growing asset base 34,0% 31,0% Return on Equity 19,0% 16,0% 20,0% 24,2% 19,0% 13,0% Return on Assets 10,8% 10,0% 41.0 34.3 Balance Sheet 23.1 24.4 24.7 21.9 24.4 (Usd$ billion) 12.9 17.6 15.2 16.6 10.2 12.4 Assets 9.5 6.8 Liabilities Equ
Slide 90: Internal cash generation sufficient to fund capex
Internal cash generation sufficient to fund capex, acquisitions and operations Cash flow* (USD bn) Initial Sources Uses Ending 2.4 0.5 23.4 10.6 14.9 3.5 2.4 4.1 2009 5.6 0.3 2.5 Initial cash Operations Debt Other Cash available Operations CAPEX Acquisitions Dividends FX difference Ending cash 22.7
Slide 91: ROCE 2008-2011 is above the 17% hurdle rate
ROCE 2008-2011 is above the 17% hurdle rate ROCE 2009 - 2011 27.3% 24.5% 23.2% 17.8% 2009 2010 2011 ( e ) 2009-2011 ( e ) ROCE= After tax operational income / Average Capex 91
Slide 92: Financial obligations
Financial obligations* • Outstanding: COL$ 2.2 trillion Local • Term: 7 yrs. (including 2yr. grace period) syndicated loan • Interest rate: DTF + 4% T.A. • Amortization: Semiannual • Outstanding: US$1.5 billion • Coupon 7.625% (Semiannual) International • Term: 10 yrs. (Jul. 23 / 2019) Bond 2019 • A
Slide 93: Investment grade ratings
Investment grade ratings • Moody´s Baa2 / Stable (Jul.2009) Credit • S&P BBB- / Stable (Mar. 2011) Ratings • Fitch BBB- / Stable (Jun. 2011) MAX. CURRENT (Sep. 11) Key • Total Debt /EBITDA < 2x 0.2x Ratios • EBIT/ Interest expenses > 5x 46.9x • Total debt / Capital < 45% 13.9% • Debt / 1P bl. (USD/b
Slide 94: Capex plan of US$80 billion between 2012-2020
Capex plan of US$80 billion between 2012-2020 Uses 1% Sources 2% 5% 9% 7% 16% 25% US$80 US$80 billion 60% billion 75% Production Exploration Cash generation Refining Transportation Debt Other Biofuels Equity offering * Source Ecopetrol 94
Slide 95: Capex plan of US$8.5 billion for 2012
Capex plan of US$8.5 billion for 2012 Breakdown of Capex 2012 Capex per segment 2012 4% 4% • 42 exploratory wells • 36 in Colombia Exploration • 6 International • Average Production 24% • Corporate group: 800 mboed Production • Ecopetrol: 750 mboed US$8.5 48% • Focus in the llanos basin billion • Mo
Slide 96: Diversified shareholder base
Diversified shareholder base Primary Equity Offerings of Ecopetrol Ecopetrol´s ownership (Nov-11) Proceeds US$2.8 US$ bn Foreign Other inst. bn inv. in ord. 1.3% Main shares ADRs instit. inv. 10.1% 1.3% Colombia* 20.0% 0.4% 4.1% Retail inv. US$1.3 4.4% bn* 1.6%* 8.3% Republic of Colombia 88.5% Total
Slide 97: Increased trading and liquidity of ADRs
Increased trading and liquidity of ADRs Total daily traded volume (USD million) Trading 25.1 21.8 29.4 Ordinary Shares 13.9 12.7 ADRs 24.2 15.5 11.6 15.5 0.9 1.1 6.3 2008 2009 2010 Jan-Sep 2011 % of ADRs in Ecopetrol´s ownership 1.2% % ADRs 0.6% 0.1% 0.2% 2008 2009 2010 Jan-Sep 11 Number of institut
Slide 98: Dividend payout ratio of ~70%
Dividend payout ratio of ~ 70% Dividend per share (USD) and payout ratio Extraordinary dividend $0.10 Ordinary $105 $0.08 dividend $0.06 $0.05 Payout ratio $115 Dividend yield 2008 2009 2010 2011 89.9% 76.5% 70.1% 70.3% 5.0% 9.2% 2.9% 3.7% 98
Slide 99: Ecopetrol: new member of Dow Jones Sustainability Index – World
Ecopetrol: new member of Dow Jones Sustainability Index – World DJSI 2011 Corporate Sustainability Assessment of Ecopetrol Major milestone in Ecopetrol´s 82 76 2011 – 2020 Strategic Plan 60 59 • Part of the index since Sep 8th 2011 48 (four years ahead of schedule) 41 • One of the 12 O&G companies i
Slide 100: In summary: Ecopetrol is a great investment opportunity
In summary: Ecopetrol is a great investment opportunity 100
Slide 101: One of the highest production growths in O&G
One of the highest production growths in O&G Production growth: 2008-2010 54% 39% 32% 25% 11% 11% 7% 6% 2% 0% -4% -15% Ecopetrol Murphy Occidental Petrobras Marathon Hess Chevron Exxon Shell BP Conoco Repsol Source: Quarterly reports and 20Fs (SEC) 101
Slide 102: Strategic goals 2020
Strategic goals 2020 • 1.3 mmboed of production 1.0 mmboed by 2015 1.3 million boed • 6.2 bn boe of “clean barrels” 1P Reserves addition • No accidents • US$ 80 Bn Capex 2012-2020 • No environmental incidents • Harmonious labor • ROCE E & P: 28% relations • Deliver commitments to stakeholders Transp
Slide 103: Ecopetrol's investment highlights
Ecopetrol’s investment highlights Strong position in Colombia’s dynamic O&G sector that offers attractive growth opportunities. Proven track record of delivering strategic goals, generating value for our shareholders. Best corporate governance practices to deliver transparency and trust. Corporate g
Slide 104: Investor Relations
Investor Relations • Phone + 571 234 5190 • Email [email protected] • Website www.ecopetrol.com.co 104
Slide 105: 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. 105