Ecopetrol S.A. Q2 FY2026 earnings call

• Overall Financial Performance

  • Ecopetrol Group delivered Q2 2026 revenue of 40.2 trillion Colombian pesos, EBITDA of 17.7 trillion Colombian pesos, and net income of 6.1 trillion Colombian pesos, representing year-over-year increases of 35%, 59%, and 235% respectively. Q2 2026 EBITDA margin reached 44%, 6 percentage points higher than Q2 2025.
  • First half 2026 net income hit 9 trillion Colombian pesos, matching the full-year net income achieved in 2025. The group generated 6 trillion Colombian pesos in free cash flow in the first half of 2026.
  • Gross debt to EBITDA ratio closed at 2.0x group-wide, and 1.3x when excluding ISA's debt, maintaining a strong financial position.
  • US$2.9 billion in organic investments were executed in the first half of 2026, in line with plan: 63% allocated to hydrocarbons, 29% to Transmission and Toll Roads, 8% to energy transition initiatives, with 71% of total investments located in Colombia.
  • Efficiency gains reached 2.6 trillion Colombian pesos in the first half of 2026, the highest on record for this period.

• Exploration and Production

  • Eight exploratory wells were drilled in the first half of 2026, resulting in two successful discoveries: Copo Azul 1 (on test, reached a maximum 35 million cubic feet per day) and post-quarter Sandia 1, which expands offshore Caribbean natural gas resource potential.
  • A 76-day operational blockade in Meta department and power supply disruptions at key assets reduced first half production, but blockades have been lifted and recovery actions are underway.

• Gas and Energy Transition

  • Ecopetrol supplies ~62% of Colombia's natural gas demand and 38% of national LPG demand, having offered 293 GBTUD of firm long-term gas supply in 2026.
  • Buenaventura regasification project is 73% complete, expected to launch in Q4 2026 with 60 GBTUD capacity. The Puerto Bahia floating regasification project is on track for startup in Q1 2027 with up to 500 million cubic feet per day capacity.
  • Renewable energy self-generation portfolio reached 951 megawatts, with the Kifar Solar Farm launched and progress continuing on the Winpachi wind project and 49% stake acquisition in the JK1 and JK2 wind projects.
  • 1.6 petajoules of energy efficiency gains were achieved in Q2 2026, toward a full-year target of 3.14 petajoules, generating 48.5 billion pesos in cost savings.

• Inorganic Growth

  • Received regulatory approval from Brazil's CVM to launch the public tender offer for Brava Energia, with the process advancing per plan.

1. Hydrocarbons Segment: First half 2026 EBITDA reached 25.7 trillion Colombian pesos, a 26% increase year-over-year, with EBITDA margin expanding from 38% to 45%. First half 2026 average production reached 713,000 barrels of oil equivalent per day, impacted by operational blockades and power supply disruptions that deferred 23,000 barrels of daily production. 2. Refining Segment: Delivered record quarterly performance, with integrated throughput reaching 439,000 barrels per day (the highest in company history). Average refining gross margin hit 29.8 USD per barrel, up from 12.5 USD per barrel in Q2 2025. Cartagena refinery achieved a record gross margin of 31.6 USD per barrel following completed major maintenance, while Barrancabermeja refinery also hit record throughput levels. 3. Midstream (Transportation) Segment: Transported more than 1.1 million barrels per day in Q2 2026, a 3.8% increase year-over-year, driven by logistics optimization and higher refined product deliveries that offset lower domestic crude production. 4. Transmission and Toll Roads: Maintained positive momentum, securing new contract awards totaling US$428 million in the quarter, strengthening long-term growth and value creation.

• Full-year 2026 production is maintained at a target range of 730,000 to 740,000 barrels of oil equivalent per day, with production recovery actions underway to offset Q2 disruptions.
• The outstanding FEPEC (Fuel Price Stabilization Fund) receivable balance is expected to end 2026 in a range of 8 trillion to 12 trillion Colombian pesos, based on an assumed Brent price range of 84 to 90 USD per barrel and an exchange rate range of 3,200 to 3,600 pesos per USD.
• 2027 FEPEC accrual is forecast to reach 1 trillion to 3 trillion Colombian pesos, subject to Brent price volatility, product crack spread changes, and new Colombian government policy decisions.
• If the Brava Energia acquisition is successful, results will be consolidated in Ecopetrol's Q3 2026 financials, with an expected incremental production contribution of ~42,000 barrels of oil equivalent per day for Ecopetrol's 51% stake.

• Operational disruptions: A 76-day blockade of operations in Meta department and power supply issues at key producing assets reduced production by ~23,000 barrels per day in the first half of 2026, delaying planned capacity expansion projects.
• Weather-related risk: High probability of El Niño conditions in H2 2026 creates potential for wildfires, water resource disruptions, and operational impacts that could affect production and energy system reliability.
• Regulatory and policy risk: The FEPEC receivable balance growth and future collection depend on policy decisions from the new incoming Colombian government, including potential changes to fuel pricing formulas or domestic fuel subsidy policy.
• Environmental approval risk: Timing of regulatory and environmental permits for new exploration and development projects remains a key ongoing challenge, which could delay project execution if approvals are delayed.
• Market price risk: Refining margins depend on international product crack spreads and crude price differentials, which are volatile and can compress from current elevated levels.

Q: Given the recent Colombian presidential election, what past key achievements does management highlight, what have been the biggest project challenges, and what are key priorities moving forward? / A: Key achievements over the past few years include a high exploration success rate (exemplified by the Copo Azul and Sandia 1 gas discoveries), meaningful growth of renewable and self-generation capacity to power operations, and progress on enhanced oil recovery projects that mitigate natural production decline from mature fields. The biggest ongoing challenge is meeting strict environmental compliance requirements for new projects, particularly for exploratory work. Going forward, priorities will continue to focus on traditional core businesses (exploration, production, refining, transportation), while expanding offshore gas resource development on the northern coast, advancing light and heavy crude development in key basins, and pursuing conventional and unconventional resource development that meets all environmental regulations and capital discipline requirements.

Q: What is the H2 2026 production outlook after Q2 disruptions, and what are expectations for collecting FEPEC receivables under the new government? / A: Q2 production was reduced by ~23,000 barrels per day due to the 76-day Meta blockade and power outages, but blockades were lifted prior to the call, and production recovered to nearly 730,000 barrels per day by late June. Management maintains the full-year 2026 production target of 730,000 to 740,000 boepd, with mitigation plans in place for potential El Niño impacts. FEPEC payments have historically been made on schedule, and the 8-12 trillion peso year-end receivable range is based on 84-90 USD/bbl Brent and 3200-3600 COP/USD assumptions. Future collection timelines will depend on new government policy, as the new administration has identified closing the fuel subsidy gap as a priority, with potential adjustments to end-user fuel prices or pricing formulas under discussion.

Q: What is the outlook for the Permian Basin joint venture activity, and will the 2026 drilling plan be adjusted? / A: The 2026 activity level was agreed with partner Oxy last year based on then-current price and industry conditions, which resulted in a reduced initial plan. Given the current favorable price environment, the partners have agreed to add 7 additional wells to the 2026 campaign that were not in the original plan. Activity levels for 2027 will be re-evaluated based on the future price scenario agreed by both partners, with the short-cycle nature of Permian assets providing significant flexibility to adjust activity.

Q: What is the timeline for the Brava Energia acquisition, and when will results be consolidated? / A: Regulatory approval from Brazilian authorities was received, and the public tender offer will launch immediately after the call, with settlement expected on August 17, 2026 if successful. If the acquisition of a 51% stake is completed, results will be consolidated in Ecopetrol's Q3 2026 financials, and the transaction is expected to add approximately 42,000 barrels of oil equivalent per day to Ecopetrol's production on a pro forma basis.