(Ecopetrol, 6.May.2019) — Ecopetrol S.A. announced today the Ecopetrol Group’s financial results for the first quarter of 2019, prepared in accordance with International Financial Reporting Standards applicable in Colombia.
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, and this is so indicated where applicable. For presentation purposes, certain figures of this report were rounded to the nearest decimal place.
In words of Felipe Bayón Pardo, CEO of Ecopetrol:
“During the first quarter of 2019, the Ecopetrol Group reported a net profit of COP 2.7 trillion and an EBITDA of COP 7.4 trillion, equivalent to a 46% EBITDA margin. These results were achieved even with a lower Brent price, which went from 67.2 dollars per barrel in the first quarter of 2018 to 63.8 dollars per barrel at the end of the first quarter of 2019.
The Ecopetrol Group’s production in the first quarter totaled 728 thousand barrels of oil equivalent per day, positioning it near the upper range of the 2019 target. These results reflect the positive response of the reservoir with primary and secondary recovery; the development of gas markets and the effective execution of the investment plan.
In the first quarter of 2019, 158 development wells were completed, with an average of 41 drills in operation, 13 more than those used in the first quarter of the previous year.
We highlight the operational stability achieved during the quarter, leveraged in the adequate management of the environment, allowing a continuous operation in all the regions where we operate. This contributed to the increase in production compared to the same period of 2018, which was affected by a challenging environment of public order in the department of Meta.
Sales volumes totaled 909 thousand barrels of oil equivalent per day, 7% higher than in the first quarter of 2018, driven by higher production levels and increased sales from the Cartagena refinery. This growth allowed the Ecopetrol Group to moderate the impact of the scheduled maintenance of the Barrancabermeja refinery’s Diesel Hydrotreatment plant (HDT).
Likewise, the first quarter of the year showed a favorable macroeconomic environment, where a higher exchange rate, a lower effective tax rate and greater savings in financial expenses allowed us to compensate for the lower Brent price. At the end of the quarter, the crude oil price spread registered -7.6 dollars per barrel, similar to the level of -7.3 dollars per barrel reached in the same period of 2018.
On exploration, the Ecopetrol Group confirmed its interest in the Colombian offshore by signing two new Exploration and Production agreements, for the COL-5 (100% ECP – Operator) and GUA OFF-1 (50% Repsol – Operator, 50% ECP) blocks, both in the Caribbean.
On the Colombian onshore, the Ecopetrol Group and its partners completed the drilling of three exploratory wells, of which the Jaspe-8 appraisal well confirmed the extension of the Jaspe discovery to the basalt sands of the Carbonera Formation, while the other two were declared dry.
In line with our international expansion strategy, Ecopetrol Brasil purchased 10,374 km2 of 3D seismic and 2,660 km of 2D seismic to assess the potential of blocks to be offered in Rounds 6 and 16, in the Santos and Campos basins.
The midstream segment continued to be a major cash generator for the Group. Crude oil volumes transported in the first quarter of 2019 increased 11% over the same period of 2018, as a result of greater production. Eight reversal cycles were executed on the Bicentenario oil pipeline, allowing us to mitigate the impact of attacks on the Caño Limón – Coveñas oil pipeline infrastructure.
The Cartagena refinery continued with its optimization process, achieving a throughput of 155 thousand barrels per day, 7% higher than in the first quarter of 2018, as a result of stable operations and the implementation of initiatives to eliminate bottlenecks in some units.
Gross margin at the Cartagena refinery was USD 11 per barrel, compared to USD 11.5 in the first quarter of 2018. The weakening of gasoline and naphtha prices, which began to become evident in the fourth quarter of 2018, continued to impact the margins, but this was offset by lower costs of raw materials, given the greater share of local crude in the refinery’s feedstock in the first quarter of 2019 (87%), as compared to the same period of 2018 (71%).
The Barrancabermeja refinery had a throughput of 196 thousand barrels per day, due to the scheduled maintenance of the Diesel Hydrotreatment unit (HDT) to replace the catalyzer and inspect equipment. This maintenance will allow the production of around 66 thousand barrels of virgin diesel, which it will deliver with a sulfur content of between 10 and 15 parts per million (ppm). This effort is in line with our commitment to deliver higher-quality diesel to the country.
The Barrancabermeja refinery’s gross margin was USD 10.5 per barrel, as compared to USD 11.8 in the first quarter of 2018, impacted by the weakening of refined products prices, in addition to the operational effect resulting from the maintenance of the period.
In terms of investments, in the first quarter of 2019 we had very positive results, with the Ecopetrol Group’s investments totaling USD 647 million, an increase of 59% as compared to the first quarter of 2018. This was an improvement in the rate of investment execution from beginning of year, compared to previous years. Investments were primarily concentrated in the upstream segment, an increase of 46% as compared to the first quarter of 2018. It is important to highlight the maturing trend of key projects during the current year, in which 74% of the funds required have already been allocated to execute the projects.
Continuing with our strategy of obtaining greater efficiencies, in the first quarter of the year we had savings of COP 487 billion, related primarily to CAPEX efficiencies in drilling costs and facilities construction.
Finally, I would like to highlight two events of great importance to the market, which occurred in the first quarter of the year: first, the update of the 2019-2021 business plan, which seeks to maximize value creation by taking advantage of our leading position as an integrated company in Colombia, subject to renewed criteria of sustainability, competitiveness and profitability; and second, the Ordinary Shareholders Meeting’s approval last March 29th of a dividend of COP 225 per share, supported by the Company’s solid financial performance, early fulfillment of its goals and robust cash position at the end of the 2018 fiscal year.
We remain committed to operations that are safe and that protect our workers and the environment; efficient and profitable, that generates value to our shareholders and shared prosperity in the regions in which we operate, all within an ethical business framework.
To review the full report please visit the following link: https://www.ecopetrol.com.co/english/documentos/Reporte%201Q19%20-%20Ingl%C3%A9s.pdf