Ecopetrol S.A. Announces 2018 First Quarter Results

The figures included in this report are not audited. The financial information is expressed in billions of Colombian pesos (COP) or US dollars (USD), or thousands of barrels of oil equivalent per day (mboed) or tons, as so indicated where applicable. For presentation purposes, certain figures in this report were rounded to the nearest decimal point.

To review the full report please visit the following link: https://www.ecopetrol.com.co/english/documentos/Ecopetrol%20Q1%202018%20Earnings%20Report.pdf

The financial results for the first quarter of 2018 were the best of the past four years. It is highlighted the EBITDA of COP 7.1 trillion and the EBITDA margin of 49%. Net profit totaled COP 2.6 trillion and net margin came in at 18%. We are maintaining a solid cash position at COP 16.6 trillion and a Gross Debt / EBITDA ratio of 1.7x, reflecting i) greater efficiency and cost reductions through the transformation plan, ii) capital discipline, iii) stabilization of the Cartagena Refinery, and iv) better crude prices and margins versus the Brent price.

Our commercial strategy continues to yield good results. We have succeeded in keeping our spread on the crude sales basket in the first quarter of 2018 at levels close to those of 2017, at -USD 7.3 per barrel, despite the increase in crude prices. The spread improved 12% versus the first quarter of 2017.

We took advantage of the favorable price environment we experienced during the quarter. Brent crude saw a 23% price increase as compared to the same period of 2017, increasing from an average of USD 54.6 per barrel to USD 67.2 per barrel.

Average production during the first quarter totaled 701 thousand barrels of oil equivalent per day, a result of a challenging public security environment. In February, certain communities in the Department of Meta blocked roads and attacked oil infrastructure, causing temporary closures at the Castilla, Chichimene and CPO9 fields. This event had an estimated negative impact of 12 mboed during the quarter (3 mboed averaged over the year). It is worth to highlight we did succeed at restoring operations in total compliance with security and environmental protocols. In March we resumed our production trend with a monthly average of 712 mboed, which increased to 715 mboed at the end of the first quarter.

Even with the attacks that occurred during the first quarter, we are keeping our 2018 production goal within a range of 715-725 mboed.

Our operating results remain solid. As part of the exploratory campaign, we drilled two wells during the quarter. The Búfalo-1 well, located in the Valle Medio del Magdalena basin, is under evaluation, while the Jaspe-6D well in the Llanos Orientales basin was declared successful.

"We are keeping our annual production target within a range of 715-725,000 barrels of oil equivalent per day."
Ecopetrol S.A. CEO
Felipe Bayón Pardo

In the transport segment, the San Fernando - Monterrey system has now entered into operation. This new system is key to our extra-heavy crude extraction strategy. Partial crude oil transport tests were also executed at up to 700 centistokes (cSt - a measure of viscosity) in some of our oil pipeline systems, with a view to achieving greater dilution efficiencies.

The reversal strategy on the Bicentenario Oil Pipeline, implemented since 2017, reduced the impact of the attacks on the Caño Limón - Coveñas oil pipeline, allowing us to maintain the flow of operations in Caño Limon field and other nearby fields. During the first quarter of 2018, the Caño Limón - Coveñas system was in operation 9 days, a situation that resulted in the execution of 12 reversal cycles.

In the Refining segment, we experienced stable operations in our refineries system, with total throughput of some 360 thousand barrels of oil per day. The Cartagena refinery achieved average throughput of 144 mbd during the quarter, exceeding the 2017 average figure of 136 mbd. The Cartagena refinery's average gross refining margin totaled USD 11.5/bl, up 69% over the same period in the previous year (USD 6.8/bl). As a result of the refinery's stable operations, we enjoyed seven consecutive months with a gross margin in double digits. During the quarter, the refinery's crude diet used approximately 71% of domestic crudes, demonstrating consolidation in the process of optimizing the crude diet and operating costs.

We achieved a milestone in the country's refining industry:

"We achieved the greatest throughput in the history of the Cartagena refinery, with an average of 160 mbd in March," said Felipe Bayón Pardo.

Between March 14 and 22, specific tests were performed at the Cartagena refinery in which a throughput of 165 mbd was reached through the period. These tests are a good indicator of opportunities to continue consolidating the optimization process.

At the Barrancabermeja refinery we noted stable throughput in the first quarter versus the same period of 2017, achieving an average of 215 mbd. The Barrancabermeja refinery's average refining margin was USD 11.8/bl, primarily impacted by lower spreads in gasoline and fuel oil prices, consistent with performance on the international markets.

On March, 2018, an unexpected seepage of water and traces of crude oil occurred near the Lisama 158 well, located in the municipality of Barrancabermeja, in the village of La Fortuna. It is estimated that between March 12 and 15, 550 barrels of crude, mixed with mud and rainwater, seeped into the streams of La Lizama and Caño Muerto. Ecopetrol activated its contingency plan for containing the spill and permanently resolve this situation in accordance with its risk management and HSE protocols. As of March 30, flows from the Lisama-158 well had been controlled and a specialized "snubbing unit" equipment had been installed to record logs and identify the optimal means of permanently and safely shutting down the well.

Our priority and commitment has always been a safe operation to the people and the environment. In view of this unfortunate incident, we are committed to this region of the country and will continue to work closely with the communities and authorities to restore the environmental and social conditions as soon as possible, and determine the causes of the incident.

On April 19, Ecopetrol filed its annual report on form 20-F for the fiscal year 2017 with the US Securities and Exchange Commission (SEC), demonstrating our commitment to the highest standards of corporate governance and transparency.

Ecopetrol's profitability outstands. The Company is totally committed to its growth and the country's development. The Ecopetrol Group's priority will continue to be the operational excellence, the commitment to ethics and transparency, safety as a basis for its operations, and proper care for the environment and the communities in which we operates, seeking shared prosperity at all times. We are focused on growth in the reserves, the profitable production and the operational excellence, delivering outstanding results to the benefit of shareholders, and the sustainability of both the company and the country.

Felipe Bayón Pardo
Ecopetrol CEO

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This release contains statements that may be considered forward looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. All forward-looking statements, whether made in this release or in future filings or press releases or orally, address matters that involve risks and uncertainties, including in respect of the Company's prospects for growth and its ongoing access to capital to fund the Company's business plan, among others. Consequently, changes in the following factors, among others, could cause actual results to differ materially from those included in the forward-looking statements: market prices of oil & gas, our exploration and production activities, market conditions, applicable regulations, the exchange rate, the Company's competitiveness and the performance of Colombia's economy and industry, to mention a few. We do not intend, and do not assume any obligation to update these forward-looking statements.

For further information, please contact:                 

Head of Capital Markets
María Catalina Escobar
Phone: (+571) 234-5190
E-mail: [email protected]

Media Relations (Colombia)
Jorge Mauricio Tellez 
Phone: (+571) 234-4329 
E-mail: [email protected]

SOURCE Ecopetrol S.A.

Related Links

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