Ecopetrol Sa · BVC:ECOPETROL
Ecopetrol Sa — FY2008 Earnings Presentation
24 slides from Ecopetrol Sa's earnings presentation, Feb 18, 2009
Slide 1: Financial and Operating Results for the Fourth Quarter and Full Year 2008
FINANCIAL AND OPERATING RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2008 February 18, 2009
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: Management Participants in today's conference call
Management Participants in today´s conference call • Javier Gutierrez, Chief Executive Officer • Adriana Echeverri, Chief Financial Officer • Nelson Navarrete, EVP of Exploration & Production • Pedro Rosales, EVP of Downstream • Mauricio Echeverry, General Counsel • Alejandro Giraldo, Director of In
Slide 4: Fourth Quarter and Full Year 2008 Highlights
Fourth Quarter and Full Year 2008 Highlights • Continued strong financial and operating performance, supported by increased production across all product categories • Increased exploration in Colombia and entered into important joint exploration agreements internationally • Maintained industry-leadi
Slide 5: Improved Operating Results
Improved Operating Results • Driven by Increased Production, Market Prices and Cost Controls Ebitda and Ebitda Margin (COL$ Trillion) 5
Slide 6: Significant Growth in Production
Significant Growth in Production • Oil & Gas Production Increased by 10.4% in Q4*; Annual Production up 12.6%** Production evolution (MBOED) Key drivers: 399 •Increase in production of heavy crude oils from Llanos Orientales •Optimization of brown fields •Increase in recovery factor •Sales of natura
Slide 7: Refinery Operations
Refinery Operations • The conversion factor for the refinery was 78% in the fourth quarter of 2008. Refinery runs and utilization in Barrancabermeja Refinery (MBOD and Utilization %) 243 (97%) 232 232 234 230 (94%) 227 (93%) (93%) (92%) 223 (91%) 224 (89%) (90%) 2003 2004 2005 2006 2007 2008 2007-4Q
Slide 8: Fourth Quarter and Full Year 2008 Total Sales
Fourth Quarter and Full Year 2008 Total Sales (COL$ Trillion) 33.90 32.75 12.30 36.3% 11.57 35.3% 22.32 22.33 6.32 28.3% 6.33 28.3% 21.18 64.7% 21.60 63.7% 6.95 6.14 16.00 71.7% 16.00 71.7% 2.21 31.8% 2.10 34.2% 4.74 68.1% 4.04 65.8% 2007-4Q 2008-4Q 2007 Total ECP 2008 Total ECP 2007 Consolidated 20
Slide 9: Volume Trends, Domestic & International
Volume Trends, Domestic & International • Total Q4 sales increased by 14.6% •International accounted for 42.4%, up from 31.8% in 2007 Total Sales Volume (MBOED) 573 547 500 462 474 433 448 420 243 42.4% 216 39.5% 159 31.8% 148 31.2% 169 174 161 171 39.5% 37.8% 37.7% 38.3% 326 68.8% 331 60.5% 341 330
Slide 10: WTI Reference Price Trends
WTI Reference Price Trends • Market prices impact Q408 and full year financial results 170 160 150 140 130 120 110 Average WTI Full year 2008 100 USD 99.7/Bl 90 Average Basket of ECP exported US$/Bl 80 crude price Full year 2008 USD 83.0/Bl 70 Average Basket of ECP exported 60 product price Full yea
Slide 11: Cost of Sales and Operating Expenses
Cost of Sales and Operating Expenses • Variable costs accounted for 63.1% in 2008, up from 52.6% in 2007 • Costs driven by higher purchases of hydrocarbons, higher costs of services and maintenance contracts and increased labor costs Cost of Sales (COL$ Trillion) 21.49 20.11 2.46 11.4% 2.11 10.5% 5.
Slide 12: Lifting, Refining & Transportation
Lifting, Refining & Transportation • Ecopetrol’s costs remained below the industry average • Low lifting costs due to focus on onshore production Lifting Costs (US$/BOE) Refining Costs (US$/Bl) 8,3 5,7 7,2 4,8 5,2 3,9 3,5 3,3 2005 2006 2007 2008 2005 2006 2007 2008 Transportation Costs (US$ cents/Bl
Slide 13: SG&A Expenses
SG&A Expenses • 2008 SG&A increased as seismic activity almost doubled and the cost of evaluating E&P opportunities outside of Colombia increased SG&A Expenses (COL$ Trillion) 2.45 2.12 1.49 1.49 2.07 84.5% 1.75 82.5% 0.82 1.17 1.17 78.5% 78.5% 0.51 0.77 93.9% 0.42 82.4% 0.32 21.5% 0.37 17.5% 0.32 2
Slide 14: Non Operating Results
Non Operating Results • 2008 Non operating profit driven by exchange rate fluctuation, asset revaluations and returns on portfolio investments 2007 (COL$ Trillion) 2007-4Q 2007 Total ECP 2007 Consolidated 7.95 7.94 6.77 -1.18 6.76 -1.18 2.18 2.18 1.99 1.99 1.09 1.09 2.07 1.99 -0.08 4.68 4.78 4.67 4.
Slide 15: Key Acquisitions and Other Equity Investments
Key Acquisitions and Other Equity Investments • Investment of COL$9.42 trillion, (US$4.8 billion); E&P comprised 53% • Upstream acquisition of K2; downstream investment in Propilco; value-added products such as Bioenergy Investment (US$ million) 6,224 3% Other US$0.18 bn 10% Transportation US$0.60 b
Slide 16: Balance Sheet
Balance Sheet Strong Balance Sheet, No Financial Debt and the Capacity to Fund Growth by Leveraging Capital Structure Consolidated Balance sheet (COL$ Trillion) 55.7% 49.5% 71.1% 40.7% 35.2% 35.8% 64.8% 64.2% 59.3% 50.5% 44.3% 28.9% 2003 2004 2005 2006 2007 2008 Assets Equity Liabilities Assets 2008
Slide 17: Results By Segment - Highlights
Results By Segment - Highlights Domestic Sales (COL$ Trillion) International Sales (COL$ Trillion) 15,35 7,37 12,03 9,26 7,57 1,69 3,24 1,27 2,16 2,57 1,011,19 1,23 1,64 1,64 -4,86 -5,12 0,92 E&P Refining Transportation Sales and Corporate E&P Refining Sales and Corporate Marketing Marketing 2007 20
Slide 18: Important E&P Activity in Q4 2008
Important E&P Activity in Q4 2008 • Hydrocarbons found in the Quifa-5 Well (Colombia) • Awarded 4 blocks in Llanos Orientales and Middle Magdalena Valley (Colombia). • Joint exploration agreements reached in the U.S. Gulf Coast with: BP ENI StatoilHydro 18
Slide 19: Growing International Portfolio Diversifies Risk
Growing International Portfolio Diversifies Risk • Investment in international exploration increased by 41.4% Local Exploration Projects International Exploration Projects Offshore Caribbean Round Tayrona Caribbean Round GULF OF MEXICO Fuerte K2 7 Blocks and 9 new prospects Venezuela Foothills PERU
Slide 20: Investments in Refining, Fuel Quality, and Transportation
Investments in Refining, Fuel Quality, and Transportation • Barrancabermeja hydro-treatment project is 60% completed • Pipeline projects underway • Modernization program in Cartagena Refinery • Participating in project to produce palm-based biodiesel by 2009 and advancing plans to produce sugar cane
Slide 21: 2009 Investment Plan of US$6.2 billion
2009 Investment Plan of US$6.2 billion: 29% Increase vs. 2008 2,72 1,05 0,81 0,87 0,60 0,18 Exploration Production Refining and Transportation Other Acquisitions Petrochemicals Investments 21
Slide 22: Production Capex of US$2.7bn for 2009
Production Capex Of US$2.7bn for 2009 Production capex 2009 4% In progress Investment (USD$mn) Direct Partnerships 23% Seismic Activity Drilling 32% Main fields (60%) 890 567 • Casabe 32% 227 - 9% • Rubiales - 270 Plants and Workovers facilities • Castilla 259 - • Yarigui Cantagallo 219 - • La Cira
Slide 23: Exploration Capex of US$1.0bn for 2009
Exploration Capex of US$1.0bn for 2009 Exploration Drilling Seismic , G&G USD$998 mn USD$732 mn USD$ 218 mn 32 G&G Seismic 34 186 6.27 2 8 No. of wells KM Equiv. 732 24 7 1.53 Drilling 3 4 Local International Local International Local International Explotatory drilling 67% 33% Initiating exploratory
Slide 24: 2008: A Year of Significant Achievement
2008: A Year of Significant Achievement • Financial Increased Profitability Unique Balance Sheet Strength • Operating Continued industry-leading production increases Exploration successes • Improved International Profile Joint exploration agreements reached with world class partners Acqu