Ecopetrol SA Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Hydrocarbons Strategy: Continued exploration, achieved milestones in Caribbean and Brazil, approved final investment decision for Gato do Mato in Brazil, production resilient despite external events.
• Refinery Actions: Addressed maintenance impacts, optimized costs, approved projects for quality improvement and biofuels (e.g., Barrancabermeja fuel quality baseline, Cartagena naphtha hydrotreater improvements).
• Natural Gas Projects: Signed regasification contract in Pacific, launched natural gas commercialization process, supplied significant portion of national demand.
• Financials: Stable quarter, early payments from Fuel Price Stabilization Fund, paid dividends, invested $1.2 billion, leverage indicators steady.
• Corporate Governance: General Shareholders' Meeting in March, published integrated and governance reports, reduced greenhouse gas emissions and increased water reuse.

Segment Performance

• Hydrocarbons: Closed the quarter with an average production of 745,000 barrels of oil equivalent per day, in line with annual goals. Exploration campaign had milestones in Caribbean offshore and Brazil.
• Transportation: Maintained resilience, controlled social events, developed infrastructure to reduce logistics time and cost.
• Refineries: Throughput temporarily affected by scheduled maintenance, refining margin decreased by $3.9 per barrel vs Q1 last year, explained by product differentials, maintenance, operational events.
• Natural Gas: Supplied ~68% of national natural gas demand, with regasification projects in Pacific (potential 60 giga BTUD, starting 2026) and Caribbean (up to 250 giga BTUD, starting 2027).
• Energy Transition: Renewable energy self-generation expected to surpass 1,000 MW, energy efficiency program saved COP 23 billion in Q1, with 21.18 petajoules accumulated since 2018.

Guidance

• Investment plan built around price range to adapt to market scenarios, maintaining capital discipline.
• Lifting cost target below $12 per barrel for the year.
• Focus on efficient production decisions, portfolio rotation, and differentiated crude marketing to maintain competitive returns.

Risks

• Price volatility due to geopolitical tensions and OPEC+ supply affecting Brent prices.
• Refinery maintenance impacting throughput and refining margins.
• Tax uncertainties with DIAN rulings on VAT for imported fuels, potential reserve requirements.

Question and Answer

Q: Could you confirm the impact of $1 drop in Brent price on EBITDA?

A: Ricardo Roa stated impact of each dollar change in Brent on EBITDA is COP 0.74 billion.

Q: When will Ecopetrol make reserve for DIAN's tax ruling?

A: Camilo Barco explained it depends on administrative process, preliminary stage, could take 2-5 years.

Q: Sensitivity of production to CapEx reduction?

A: Rafael Guzman said 99% of production has breakeven below $55, no immediate cut needed but flexibility exists.

Q: Details on regasification contract in Pacific?

A: David Riano said contract is for 5 years, starts commercialization in July 2025, capacity 60 Giga BTU per day.