Ecopetrol SA Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Operational Achievements: Produced 752,000 barrels of oil equivalent by end of September 2024 (highest in nine years). Achieved historic refining throughput of 418,000 barrels per day. Orotoy station started receiving crude oil from Akacias field. Favorable court ruling for offshore Sirius-2 well operations.
• Financial Results: Closed first nine months of 2024 with revenues COP98.5 trillion, EBITDA COP42.3 trillion, and net profit COP11 trillion. EBITDA margin was 43%. Successfully executed $1.75 billion bond issuance in international market.
• Sustainability: Cumulative CO2 equivalent emissions reduction of 1.89 million tons since 2020. Invested COP341 billion in sustainable territorial development. Implemented over 100 digital solutions for energy efficiency and decarbonization.

Segment Performance

• Hydrocarbon: Achieved production of 752,000 barrels of oil equivalent by end of September 2024. Exploration CapEx of $330 million in first nine months (highest in last four years). Upstream net income was COP2.7 trillion in Q3 2024.
• Midstream: Transported volumes increased by over 21,000 barrels per day in first nine months compared to 2023. EBITDA for Midstream was COP8.3 trillion, contributing 20% to the total EBITDA of Ecopetrol Group.
• Refining: Reached historic throughput of 418,000 barrels per day. EBITDA for refining in first nine months was COP2 trillion, 72% less than same period in 2023.
• Transition Energy: Committed to supply 551 GBTUD/day of natural gas in 2025 (65% of national demand excluding thermoelectric generation). Achieved energy efficiency savings of 14.2 petajoules since 2018.
• Transmission and Roads: ISA's results positively impacted by tariff revision, with revenue up 8% and EBITDA up 7% in first nine months, contributing 12% to group revenues, 18% to EBITDA, and 6% to net income.

Guidance

• Production: Expect to close 2024 with average refining throughput between 415,000 to 420,000 barrels per day. Project efficiencies between COP4.2 trillion and COP4.5 trillion by year-end.
• Exploration: Estimated drilling of 16 exploration wells by year-end, including the Sirius-2 well.
• Natural Gas: Committed to supply 551 GBTUD/day of natural gas in 2025. Aim to contribute 370 GBTUD/day to the market by 2026.

Risks

• External Factors: Impact of exchange rate and inflation on margins and costs.
• Regulatory: Uncertainties in environmental permits and prior consultations for offshore projects.
• Operational: Maintenance challenges, third-party damages to pipelines, and impact of social unrest on production.

Question and Answer

Q: What was the impact on net profit of the quarter with the adjustment made on the tax and what would have been the true impact?

A: Camilo Barco mentioned reversal of a 13% surcharge, recalculated at 10%, which had an impact of COP500 billion on profit. Without this, the third quarter profit would have been close to COP3.1 trillion.

Q: Could you share information on regasification projects in Colombia, including cost and involvement?

A: David Riano stated Ecopetrol is assessing regasification projects, including the Chuchupa project, with pre-conceptual design and permit processes underway. Details on size and cost are part of ongoing assessments.

Q: Regarding the resignation of Board members, are they replaced?

A: Unidentified Company Representative explained that with seven members on the Board (out of nine), corporate governance principles are still met, and plans for replacing members are tied to ordinary shareholder meetings in March 2025.