(Ecopetrol, 12.May.2015) – Ecopetrol S.A. reports the Group’s financial results for the 1Q:15, prepared and filed in Colombian pesos (COP$) and on the basis of International Financial Reporting Standards (IFRS).
According with the article 3 of the Decree 2784 of 28.Dec.2012, the application date of the new technical framework is 31.Dec.2015, so the financial information presented prior to this date is subject to adjustments.
As indicated in paragraphs 9 and 18 of the International Accounting Standard 27 “Consolidated and Separated Financial Statements” Ecopetrol and its Corporate Group must present their financial information on a consolidated basis as if they were a single entity, combining the financial statements of the parent company and its subsidiaries line by line, adding assets, liabilities, shareholder´s equity, revenues and expenses of similar nature, removing the reciprocal items between the Corporate Group and recognizing the non-controlling interest.
In the opinion of Ecopetrol’s CEO, Juan Carlos Echeverry:
“Despite the decline in oil prices, in the 1Q:15 the Group reached a positive financial result due to the good performance of its different segments and favorable environment conditions for the operation. Thus, operating and financial results of the Group on the 1Q:15 were better than those of the 4Q:14. Particularly, March was the best month of the 1Q:15.
With respect to our exploration activities, the first geological success for the year was reported at the Bullerengue-1 well, drilled by Hocol, located in the Sinu-San Jacinto basin, which is expected to support the natural gas supply on the Atlantic Coast region. In addition, we advanced in the drilling activities in the offshore wells Kronos and Calasu, located in the southern Caribbean Sea in partnership with Anadarko as operator (50% – 50%).
Our production activities have recorded four consecutive quarters of growth, reaching 773.4 Mboe/d in the 1Q:15, a 1% increase as compared to the first and last quarters of 2014. This increase was the result of the start-up of new facilities and wells in the Castilla and Chichimene fields, both of which set production records of 124 Mbo/d and 85 Mbo/d, respectively.
Our affiliated companies increased their production to a total 51.4 Mboe/d, a 5.8% rise as compared to the 1Q:14. Highlighting Ecopetrol America’s production alone reached 6.4 Mboe/d.
Amid this low crude oil prices scenario, our refining margin has continued to improve, reaching $18.2/bbl in the 1Q:15, a 12% gain as compared to the 1Q:14 ($16.3/bbl) and a 15% gain as compared to the 4Q:14 ($15.8/bbl).
The main contributing factors to this result were the operating stability of units and the improvements designed to give value to residual streams.
In transportation, total volumes moved during the 1Q:15 were 1,273.5 Mb/d, a 6% increase compared to 1,200.1 Mb/d transported during the 1Q:14, and 3.3% more compared to the 4Q:14. This result was primarily due to higher volumes transported in the Cano Limon-Covenas and Oleoducto Transandino systems resulting from the decreased number of attacks on transport infrastructure, which went from 35 attacks on the 1Q:14 to 2 attacks in the 1Q:15.
International crude oil prices reached its lower level in 6 years during the 1Q:15 (Brent $46.6/bbl on 13.Jan.2015). As a result, our revenues were deeply affected, decreasing from COP$18 trillion to COP$12.3 trillion in the 1Q:15, a COP$5.7 trillion decrease (31.6%). The effect of lower sales oil prices (from $101/bbl to $56/bbl between the 1Q:14 and the 1Q:15) caused a decreased of COP$8.2 trillion in our revenue, that was partially offset for the positive exchange rate effect, representing a higher income of COP$2 trillion, COP$200 billion in higher sales volumes and COP$250 billion in higher income from transportation services to third parties due to the effect of the devaluation on the tariffs.
Our cost of sales declined to COP$8.5 trillion in the 1Q:15, a 21% decrease as compared to COP$10.8 trillion in the 1Q:14. This result was primarily due to the effect of lower oil prices on our purchase costs of crude, gas and refined products, as well as lower fixed costs due to the optimization of maintenance plans and contracted services achieved during the 1Q:15.
Operating costs increased by 53% during the 1Q:15 as compared to the 1Q:14, primarily as a consequence of the recording of the wealth tax applicable for year 2015.
The Colombian peso-U.S. dollar exchange rate had significant effects on the Group’s financial expenses. The impact of the depreciation of the Colombian peso over our net liability position resulted in an expense of COP$1.4 trillion during the 1Q:15.
Income before taxes for the 1Q:15 was COP$828 billion. With the income tax provision of COP$472 billion (57%) resulted in a consolidated net income of COP$160 billion.
Considering the current scenario of low oil prices, we are focused on making our operations more efficient. Our operations will continue focusing on safety, profitability and delivering positive results for our shareholders.”
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