Ecopetrol Investor Presentation

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Ecopetrol Investor Presentation

  1. 1. Ecopetrol S.A.Investor Presentation January of 2013
  2. 2. DisclaimerThis document was prepared by Ecopetrol S.A. with the purpose of providing the market and interestedparties certain financial and other information of the Company.This document may include strategy discussions and forward-looking statements regarding the probabledevelopment of Ecopetrol’s Business. Said projections and statements include references to estimates orexpectations of the Company regarding its future and operational results. Potential investors and themarket in general should be aware that the information provided herein does not constitute any guaranteeof its performance, risks or uncertainties that may occur or materialize. Real results may fluctuate anddiffer from those provided herein due to several factors outside of the control of the Company. NeitherEcopetrol nor its advisors, officers, employees, directors or agents, make any representation nor shallassume any responsibility in the event actual performance of the company differs from what is providedherein. Moreover, Ecopetrol, its advisors, officers, employees, directors or agents shall not have anyobligation whatsoever to update, correct, amend or adjust this presentation based on information attainedor events occurred after its disclosure.This presentation is for discussion purposes only and is incomplete without reference to, and should beviewed solely in conjunction with, the oral briefing provided by Ecopetrol. Neither this presentation norany of its contents may be used for any other purpose without the prior written consent of Ecopetrol. 2
  3. 3. Agenda 1. Ecopetrol´s overview 2. Exploration & Production 3. Downstream 4. Transportation 5. Financials 6. Corporate Responsibility 7. Summary 3
  4. 4. Overview of Ecopetrol 4
  5. 5. Capex plan focused on E&P has lead growth since 2008 Capex Growth 2008-2012 ( e ) 2007 vs. 2011/2012 11% Production 1.9 X 10% 750 mboed (Jan-Sep 2012) Total Capex 45% 8% USD 32.9 bn Reserves (1P) 1.5 X 1.8 bn boe (Dec. 2011) 15% 11% Ebitda 3.4 X USD 15.1 bn (2011) Production Acquisitions Transportation Market Cap 4.7 X Refining & Petroch. Exploration USD 128 bn (Dec. 2012) Other Source: Ecopetrol 5
  6. 6. Ecopetrol is Colombia´s top player and holds interestsin the U.S., Brazil and Peru Ecopetrol and interests in subsidiares & affiliates E&P: america Ref.& Petchem. : Transport: CENIT Biofuels: PERU * BRAZIL MidstreamKey figures: • Crude transport: 895 mbdUpstream • Products transport: 303 mbd• Production: 750 mboed Downstream• Exploratory area: 21.3 mn has. • Refining capacity: 330 mbod• 1P Reserves : 1.86 bn boe • Petrochem. prod.capacity: 500k tons /yr • Biofules prod. capacity: 100k tons / yr (biodiesel)*Figures for Jan-Sep 2012 except Sales & Marketingfor 1P Reserves as of Dec. 31. 2011 • Sales : 874 mboed • Exports 60% / Colombia 40% Source: Ecopetrol 6
  7. 7. Strategic plan with a Capex of USD 80 bn to reach aproduction of 1.3 mn “clean” barrels by 2020 USD 80 bn Biof. & other 3% 1.3 mn boed 1.3 million boed Transport Refining 5% 7% “Clean barrels” in 2020 25% Exploration • No accidents • No environmental incidents Production • Sound labor relations 60% • Delivering commitments to stakeholders • 17% ROCE Capex 2012-2020 • 85% allocated to E&PSource: Ecopetrol • 90% in Colombia 7
  8. 8. Exploration &Production • Strategy 8
  9. 9. Remarkable rise in production led by heavy oil in Colombia Average production / year (thousand barrels of crude oil and gas per day) 1,300 1,000 780 724 616 108 521 104 399 447 97 280 85 72 289 270 246 253 336 153 224 81 109 2007 2008 2009 2010 2011 2012 (e) 2015 (e) 2020 (e) Heavy oil Light and medium oil Natural gas Source: Ecopetrol 9
  10. 10. Upstream strategy has four drivers that rise production to 1.3 mn“clean” barrels in 2020 and add 6.2 bn barrels of 1P reserves 1 Production and Increase Recovery Factor • Primary/Secondary/Tertiary Recovery • EOR/IOR (Enhanced Oil Recovery/Improved Oil Recovery) Production & 1 Recovery Factor: Prod: 840-870 mboed 2 Exploration Colombia: • Llanos Orientales Exploration • Caribe Offshore 2 Prod: 260-410 mboed • Caguan-Putumayo • Sustained activity in other basins International: • Brazil 3 Unconventional • Gulf of Mexico (U.S.) Prod: 50-200 mboed • Peru 3 Unconventional • Assesment of potential 4 Acquisitions • Joint ventures with strategic partners 4 Acquisitions 10
  11. 11. 1 Production of current fields supported by drilling, non-thermal recovery, and thermal recoveryWorkstreams Key Initiatives Screening and projects Primary recovery • Infill Drilling Horizontal and • Llanos Orientales Drilling • New area development multilateral wells • Middle Magdalena • Optimize well configurations • 21 fields implemented • Casabe Secondary and tertiary recovery • La Cira • Water injection Water Flooding (135 fields) • Upper Magdalena • Alternating water and gas injection • 21 projects in progressNon Thermal • Chemical injection • 93 fields to be implemented Recovery Gas Injection • South: 5 Projects • Magd & Central: 6 Projects In situ • Chichimene (pilot) Tertiary recovery • Quifa (pilot) Thermal • Cyclic or continuing steam- Continuous injection process • Teca Recovery Injection • In situ combustion Cyclic Injection • Santa Clara 11
  12. 12. Upstream strategy has four drivers that rise production to 1.3 mn“clean” barrels in 2020 and add 6.2 bn barrels of 1P reserves 1 Production and Increase Recovery Factor • Primary/Secondary/Tertiary Recovery • EOR/IOR (Enhanced Oil Recovery/Improved Oil Recovery) 1 Production & Recovery Factor: 2 Exploration Prod: 840-870 mboed Colombia: • Llanos Orientales Exploration • Caribe Offshore 2 Prod: 260-410 mboed • Caguan-Putumayo • Sustained activity in other basins International: • Brazil 3 Unconventional • Gulf of Mexico (U.S.) Prod: 50-200 mboed • Peru 3 Unconventional • Assesment of potential 4 Acquisitions • Joint ventures with strategic partners 4 Acquisitions 12
  13. 13. 2 Ecopetrol´s exploratory plan is focused in proven basins in Colombia Yet to Find per Sedimentary Basin (mmboe) Magdalena10.000 Lower Valley 5.500 4.000 3.585 2.636 2.000 2.000 Catatumbo 1.500 1.000 Magdalena 913 Mid Valley 750 650 550 Llanos / 366 Foothills 304 250 150 100 Magdalena 90 Upper Valley 60 40 Putumayo 10 Llanos/ M. Magd. U. Magd. Catatum. Putumayo L. Magd. Foothills Valley Valley Valley Mean Source: Ecopetrol 13
  14. 14. 2 Estimated contingent resources in Colombian frontier areas of 15 bn boes (mean) CARIBBEAN OFFSHORE PMEAN 2,900 MMBOE 380-14,000 MMBOE Potential (mn boe) SINU PMEAN 414 MMBOE 50-900 MMBOE 31000 13948 10000 STRAT TEST VMM PMEAN 92 MMBOE PACIFIC 50-200 MMBOE 2000 OFFSHORE 1500 1000 950 900 PMEAN 600 661 MBPE MMBOE 433 50-1,500MMBOE 401 200 250 100 116 115 70 50 50 50 20 10 Carib.Off Pacifico Crudos Sinu Caribe Off Pacif.Off Heavy Sinú Estrat. Strat Cayos Cays Off Pes VMM HEAVY CRUDE OIL oil MMV PMEAN 418MMBOE 70-950 MMBOE Mean Source: Ecopetrol 14
  15. 15. Ecopetrol has 37% of the total licensed acreage in Colombia2 and operates in 6 strategic basins of high potential  Exploration assets* (61 blocks) Caribbean sea 4 14.5 mn hectares Operated directly: 51 Blocks Not operated: 10 Blocks 5 Basins Ecopetrol S.A.  1 Llanos – Catatumbo Hocol S.A. 2 Mid Magdalena Valley  Equion 3 Upper Magdalena – Putumayo  4 Offshore Caribbean  5 Lower Magdalena Valley  2 6 Offshore Pacific  Pacific ocean 1  Producing assets 6 Direct: 51 Blocks Partnerships: 64 Blocks 2.1 mn hectares 3 (94% of Colombia´s production area) * Does not include the blocks awarded in the Open Round Colombia 2012 15 Source: ANH, Ecopetrol 15
  16. 16. 2 Basins in key countries with high potential Yet to find per Basin Reserves discovered in 2009 (bn boe) (mn boe) Brazil Santos (presalt) v Crude Gas Brazil Campos v U.S. West Gulf Coast v Venezuela Argentina Trin & To. Colombia Ecuador Mexico Brazil Chile U.S. West East Coast v v Countries where Ecopetrol has interests Source: Wood Mackenzie 16
  17. 17. 2 International exploration assets with 8.7 mn Has U.S.A. EC America 0.1 mn Has Miocene GOM Paleogene Jurassic EC Peru 4.4 mn Has Para Maranhao Marañón Marañón EC Brazil Ucayali Sechura 0.1 mn Has Huallaga Salaverry Ucayali Brazil Campos Lima Peru Santos Espiritu Santo Para-Maranhao Savia Peru Campos Santos 4.1 mn Has** Includes only Ecopetrol’s 50% interest Source: Ecopetrol 17
  18. 18. Upstream strategy has four drivers that rise production to 1.3 mn“clean” barrels in 2020 and add 6.2 bn barrels of 1P reserves 1 Production and Increase Recovery Factor • Primary/Secondary/Tertiary Recovery • EOR/IOR (Enhanced Oil Recovery/Improved Oil Recovery) 1 Production & Recovery Factor: 2 Exploration Prod: 840-870 mboed Colombia: • Llanos Orientales Exploration • Caribe Offshore 2 Prod: 260-410 mboed • Caguan-Putumayo • Sustained activity in other basins International: • Brazil 3 Unconventional • Gulf of Mexico (U.S.) Prod: 50-200 mboed • Peru 3 Unconventional • Assesment of potential 4 Acquisitions • Joint ventures with strategic partners 4 Acquisitions 18
  19. 19. 3 Unconventional hydrocarbon potential in Colombia Methane Hydrate 120 - 1200 TCF (Karson, 1994) Gas in Situ 434.2 TCF HM - CARIBE 32 TCF GAC - GUAJIRA 2010) (Arthur D´little, Shale Oil/Gas 31.7 TCF (Highest GAC - CESAR potential in Mid Magd Valley 29 TCF) SH - CATATUMBO Coal Bed Methane GAC - MONTERIA 7.5 TCF ( Highest potential LA LUNA SH - VMM in Cesar 2,4 TCF and FORMATION POZO COYOTE Guajira 3,4 TCF) GAC - CORDILLERA Tight sands SH- CORDILLERA 1.2 TCF HM - PACIFICO Tar sands SH - VSM Potential Volume 23,762 mn boe Ecopetrol focus areas SH - PUT Source: Arthur D´Little 19
  20. 20. Exploration & Production• Update 2012-2013 20
  21. 21. Production goal for 2013 of 798 mboed Goal 2013 Production 2011-2013 Ecopetrol including interest in subsidiaries and affiliates (mboed) 2% Central 3% Northeast 2% 7% East 10% 27% 798 7% Mid Magd. 780 Catatumbo 798 mboed 15% South Hocol 724 19% Equión 18% Savia and minor fields • Cupiagua 2011 2012 (e) 2013 (e) Fields with higher • Castilla production growth • Chichimene • Guajira 21
  22. 22. Higher exploration activity and geological success Exploratory Plan 61 60 # of wells 16 Stratigraphic wells 53 22 17 15 International exploration 11 wells 5 3 Colombian 7 8 exploration wells 11 29 30 Successful wells 6 19 10 Drilled wells 15 3 38 34 12 2 6 1 28 11 Jan – Sep 2012 12 2 13 5 16 5 13 4 2007 2008 2009 2010 2011 (2) 2012 exp. 2013 exp. Geological Success (1) 16% 33% 26% 26% 49%(1) Success rate for A3/A2 wells; (2) A1 wells are not included(2) 2011: Success rate 18/37= 49% (2 wells in evaluation) 22
  23. 23. Offshore exploration in Colombia, Brazil and U.S. Gulf CoastColombia International 2012: 2012: • Mapalé 1: Presence of dry gas • Itaúna: (Brazil) 2013-2014: • Additional studies • Fuerte Norte, Fuerte Sur and RC-9: • Parmer: (U.S. GoM) Obtaining environmental feasibility • Presence of hydrocarbons studies • Dalmatian: (U.S. GoM) • RC-8, RC-10 and RC-12 : Planned 3D • Presence of hydrocarbons seismic surveys GUA OFF 3 SHELL TAYRONA RC-12 2013-2014: RC-10 RC-11 RC-9 RC-12 • Logan: (U.S. GoM) TAYRONA RC-8 GUAJIRA RC-7 • Appraisal well by 2014 RC-6 RC-4RC-5 • Itaúna: (Brazil) FUERTE NORTE • Expected appraisal well by 2013 FUERTE SUR 23
  24. 24. Downstream• Refining• Sales & Marketing 24
  25. 25. Downstream strategy 1 Operational Excellence 2 Value Creation 3 Profitable & Sustainable growth 4 Market & Clients 25
  26. 26. Operational Excellence: Secure processes to preserve1 safety, the environment and operational efficiencyBarrels spilled due to operational causes Accident frequency rate(Bls / yr) (hours lost per million worked hours) 3,91 158 2,46 1,64 2,10 1,55 6 10 0 0 0 Jan-Sep- 2007 2008 2009 2010 2011 Jan-Sep- 2008 2009 2010 2011 2012 2012 Energy loss Index Non-scheduled turnarounds: B/meja + Reficar 163 (Days) 160 499 153 145 139 364 248 296 Jan-Sep- 2008 2009 2010 2011 Jan-Sep- 2006 2008 2010 2012 2012 26
  27. 27. Value Creation: Modernization projects increase revenues2 by maximizing output of medium distillates and gasoline Barrancabermeja Production Reficar Production 250 mbd 250 mbd 80 mbd 165 mbd 1% 0,5% 3,1% 3% Petrochemicals Petroquímicos 7% 7% 4% 4% Propylene Propileno GLP LPG 34% 40% LPG GLP 36% Destilados Medios 54% Mid Distillates Destilados Mid Distillates Medios Gasoline Gasolinas Gasoline Gasolinas 34% Fuel && Coke Fuel Coque 29% Fuel & Coque Fuel & Coke 48% 37% 24% 28% 5% 1%Curent2012 (2012) With PMRB (2017) Project Curent (2012) With Project (2014) With Project 2012 Expansión Current restrictions: Reficar 1. Refineries configuration: • Medium conversion constraints the production of gasoline and medium distillates. • Diesel quality does not meet regulatory standards. 2. Supply: Imports to comply with Colombian environmental quality standards. 27
  28. 28. Value Creation: Processing crudes based on the availability in2 Colombia and reducing the cost of feedstock Quality of crude basket: Quality of crude basket: Barrancabermeja Reficar 17% 10% 7% 20% Livianos Light 20% 19% 45% Medium Medios 93% 70% 61% Pesados y ácidos Heavy & Sour 38% 2012 Current With Project After Project PMRB 2012 Current Expansión With Project (2012) (2017) (2012) Reficar (2014) Current restriction in configuration: Limited load of heavy crude oil (lower cost vs. medium and light crudes) 28
  29. 29. Profitable & Sustainable Growth: Key projects in Refining3 to improve profitability and meet market conditions Reficar (Cartagena) refinery modernization project •  Refining capacity from 80 to 165 mbd • High conversion from 76% to 97% • Processing of heavy, extra-heavy and sour crude oils • International fuel quality standards (sulfur content) • Gasoline < 30 ppm • Diesel < 10 ppm • Finding opportunities in the regional markets of purchasing crude oil and exporting fuels Scope • Crude Distillation • FCC Naphtha HDT • VDU • 2 ULSD Hydrotreater Units • Coker • 2 Hydrogen Plants • Hydrocracking • Gas Plant • FCC revamp • 2 Sulfur Plants 29
  30. 30. 3 The modernization of Cartagena Refinery reached 71% progress (as of Sep. 30 / 2012 ) Progress: Weight Progress EPC contract Weight Progress Site prep & FEED 10.0% 100% Engineering 14% 97.2% EPC contract 76.2% 73.2% Docks and tanks 5.8% 64.8% Procurement 51% 92.6% Third party supplies, Modules 2% 100.0% comissioning and startup 8.0% 23.0% Construction 33% 31.3% Total Progress 71.4% Total Progress 73.2% Timeline: Executed Capex: End of mechanical completion Description USD mn Financing/insurance/taxes 321 EPC Commiss. & Start up Engineering-PMC 901 Procurement 1,298 1Q-10 to 4Q -13 3Q-13 to 1H-14 Construction 752 Other 99 Capex Total 3,371 30
  31. 31. 3 Profitable & Sustainable Growth: Key projects in Refining to increase the conversion factor and margin of the refineries Barrancabermeja refinery modernization project   45 mbd of clean and valuable fuels  High conversion from 75 to > 95%  Processing of heavy, extra-heavy and sour crude oils Revamps  Domestic fuel quality standards (sulfur content) New units  Gasoline <150 ppm Capex  Diesel <50 ppm Scope • Three new processing units: • Five new auxiliary units • Delayed Coking • Environmental units: amine, sour water • Hydrocracking and sulfur recovery • Coker Naphtha Hydrotreating • LPG treating unit • Two Hydrogen Plants • Storage tanks • Six new utilities units 31
  32. 32. Modernization of Barrancabermeja refinery reached3 12.3% progress (as of Sep. 30 / 2012) Phases Weight ProgressProgress: I,II y III Conceptual and basic engineering 6.7% 100% Detailed engineering 4.9% Procurement and Contracting 4.0% IV Construction 1.3% Commisioning 0.0% Subtotal Phase IV 93.1% 6.0% V Closure 0.2% 0.0% Total Progress 12.3%Timeline: Executed Capex:1Q-09 to 3Q-11 Description USD mn 3Q - 17 Engineering 193.0 Phases Commiss. Equipment purchases 98.7 Site Prep. EPC Construction 45.9 I, II & III & Start up PMC (Management and Control) 93.1 1Q-12 to 1Q-15 2Q-13 to 2Q-17 Other Owner Costs 21.7Capex Total 452.4 32
  33. 33. 3 Profitable & Sustainable Growth: Refining results in 2020 will improve due to the execution of projects that add value to the crude oil Optimize Process heavier crudes operating costs and produce more value added products Utilities ProjectProcess heavier crudes and produce higher Barranca quality fuels modernization project Reficar Project 2012 2013 2014 2015 2017 2020 Reficar Ebitda Barranca Ebitda 2013: Starting of 2017: Starting of updated refinery updated refinery * Figures depend on international prices (crack spreads) behavior 33
  34. 34. Market & Clients: 4 Rising Colombian demand for medium distillates & gasoline *Ecopetrol’s Sales 2011 2013 ( e ) 2015 ( e ) (KBDC) Med. Dist. 131 140 149 Gasolines & LPG´s 92 94 95 Liquid fuels consumption in Colombia** 350 300 CAGR Thousand barrels per day 250 200 150 CAGR 100 50 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Medium distillates Gasolines LPG*Source: Ecopetrol and UPME (Mining and Energy Planning Agency). Total energy consumption Includes biofuels 34
  35. 35. Market & Clients:4 Strong commitment for better air quality Sulfur content (average parts per million) 4,500 4,500Diesel Other cities in Colombia 2500 Medellín 3,000 3,000 Bogotá & Public 2.130 2.037 Transportation Systems In Colombia 1.2001200 500 341 215 178 176 198 28 20 20 29 15 2007 2008 2009 2010 2011 2012Gasoline 1,000 1.000 727 700 214 199 2007 2008 2009 2010 2011 2012 Source: Ecopetrol 35
  36. 36. 4 Market & Clients: Diversifying crude references and export destinations Destinations of Crude Exports Crude References Caribbean Other 3,8% Other U.S. 3,2% and Other 4% WTI 1% Canada 10,4% Maya 21% Europe U.S. Gulf 7,4% Coast 441 mboed 42,9% Jan-Sep 2012 U.S. WestCoast 7,7% Central Brent 75% America 10,3% Far East 14,3% Source: Ecopetrol 36
  37. 37. 4 Market & Clients: Developing gas market Total consumption: Colombia + Exports Sufficiency and exportable surplus (GBTUD) SUPPLY AND NEW FINDINGS 1,062 1,086 1,061 Conventional 1,036 907 • Offshore Caribbean: 9 - 35 TCF 721 760 • Foothills: 1 - 4 TCF Unconventional • Gas Shale: Mid Magdalena Valley and Catatumbo 15- 32 TCF 2006 2007 2008 2009 2010 2011 1H-2012 Colombian Gas Balance Refineries Petrochemical Industrial LDC CNGV Power Plants ExportsLDC: Colombian gas utility companiesCNG: compressed natural gas Source: Ecopetrol 37
  38. 38. Market & Clients:4 Growing in biofuels through current and new projects Biodiesel Production of Biofuels (thousand tons per year )• Max. Capacity : 100,000 tons/yr (2,000 bls/day)• Production 2011: 99,304 tons• Blending of 2% biodiesel at Barranca refinery 450 380• Ecopetrol´s interest: 50% 280 180 100 Ethanol 2011 2013 2016 2018 2020• Total Capex US$282 million Ecodiesel Bioenergy Ecodiesel 2 Etanol Ethanol Bioenergy 2• Start of operations: 2nd quarter 2013• Max. Capacity: 480,000 liters/day Subject to further approvals• Future blending of 10% through wholesalers• Ecopetrol ´s interest : 92% Source: Ecopetrol 38
  39. 39. Transportation & Logistics • Current Capacity • CENIT • Key Projects 39
  40. 40. Rising Transport Capacity and Key Projects Transported volume and capacity Key transportation assets Transportation Capacity Pozos – Galan (thousand barrels per day) Coveñas Port Ayacucho – Coveñas +300 MBOD* Product line Pipeline (770 MBOD)** +45 MBOD* Santa Marta +3 MBOD* (90 MBOD)** 1.163 (45 MBOD)** 936 Ocensa Coveñas Cartagena Pipeline 441 +100 MBOD* 333 (560 MBOD)** Ayacucho Banadía ODC Unloading facility Crude oil Products Pipeline 2007 3Q 2012 +15 MBOD* Financial results B/Bermeja Banadia for the second quarter +40 MBOD Storage (210 MBOD)** Sebastopol +100 MB Vasconia Transported Volumes Poliducto Andino Cusiana Araguaney (thousand barrels per day) Porvenir Pipeline Monterrey +53 MBOD* Santiago Castilla – (53 MBOD)** Rubiales 895 Apiay Apiay Pipeline 517 +105 MBOD* Tenay 303 (190 MBOD)** 194 Rubiales – Apiay – Porvenir Tumaco Pipeline Monterrey Pipeline Crude oil Products Orito +50 MBOD* +100 MBOD* (210 MBOD)** 2007 Jan-Sep 12 (340 MBOD)** * Capacity increase projects fully implemented ** Current capacity 40
  41. 41. CENIT: Transport new business model • Growing investment in Oil & Gas in Colombia. Current • Country´s rising production driven mainly by heavy crudes. • Existing infrastructure operating at full capacity. Situation • High operating standards. • Third party access to transport systems.New Model • Diversified funding alternatives for new infrastructure. “CENIT” • Separate roles:100% owned • Cenit: planning, commercial strategy, and management.by Ecopetrol • Ecopetrol: operator of transport & logistics infrastructure. • Colombian specialized company in transport & logistics. • Access to all O&G companies, based on clear and transparent rules. Benefits • Ecopetrol focused in other business segment and generating profit from transport. • Cenit will guarantee Ecopetrol the required capacity for hydrocarbon transport. 41
  42. 42. Future increase in capacity in order to meet demand Colombian demand vs. Capacity* 2012 – 2014: (mbd)2.500 Crude Oil Pipeline - Key Projects 1. San Fernando – Monterrey System: +390 mbod2.000 2.020 2. Bicentenario Phase 1: +120 mbod 3. Magdalena Medio System: +75mbod 1.472 4. Caño Limón – Coveñas: +55 mbod 1.4461.500 1.377 1.287 Pipeline - Key Projects 1.133 988 1. Galán - Sebastopol: +110 mbod*1.000 2. Costa Norte Colombiana – Galan: +90 mbod** Post 2014: 500 Crude Oil Pipeline - Key Projects 1. Carmentea (EBC) – Araguaney: +460 mbod 0 2010 2011 2012 2013 2014 2015 2016 2. Bicentenario Phase II & III: +330 mbod 3. Pacífico Colombiano: +450 mbod Fuel Oil Diluent 4. Oleoducto Coveñas – Cartagena: +300 mbod Third parties production Royalties Partners Ecopetrol´s production **Projects in engineering and economic analysis. The capabilities Pipeline Capacity Total Capacity* and build times are subject to the results of engineering. * Includes trucks Source: Ecopetrol 42
  43. 43. Ecopetrol´s Financials• Preserving fundamentals• Cost saving initiatives• Cash generation 43
  44. 44. Sustained growth in revenues driven by exports Total Sales (mboed) 857 874 733 650 Local sales Exports 547 494 518 475 302 370 Local sales* 148 31% 216 59% Exports 41% 327 69% 331 348 363 363 356 2007 2008 2009 2010 2011 Jan-Sep-12 Exports (mboed) 518 494 24 5% 25 Natural gas 370 55 53 10% 302 7 52 85% Products 216 20 49 148 16 51 414 441 Crude oil 311 53 36% 233 95 64% 149 2007 2008 2009 2010 2011 Jan-Sep-12 * Local sales include sales to Free trade zones Source: Ecopetrol 44
  45. 45. Financial results driven by rising production, higher prices andcost saving initiativesPrice of Crude 99,7 99,1 104,7Export Basket 61,8 72,0(USD/bl) 30.4 24,8 19,4 13,4 Local 14,1 12,8 10.5 42% 7,8 ExportsTotal Sales 9,2 4,9 65% 35% 7,2 5,6 11,6 17,0 14,3 58%(USD bn) 2008 2009 2010 2011 Jan-Sep-2012 45% 50% 48% 45% Ebitda 38% 39%Margins 36% 29% 36% 43% 40% Operating 19% 27% Net 23% 25% 2008 2009 2010 2011 Jan-Sep-2012 34% ROEReturns 24% 28% 28% 16% 20% 18% ROA 17% 13% 10% 2008 2009 2010 2011 Jan-Sep 12 45
  46. 46. Strong financial results compares to industry peers Financial Results Jan-Sep 2012 Peers** Ecopetrol Min Max Sales growth (US$)* 10% -2% 5% Operating margin 40% 8% 39% EBITDA margin 48% 12% 57% Net margin 25% 4% 24% Financial Debt / Assets 6% 12% 34% ROA (12 months) 17% 2% 7% ROE (12 months) 28% 4% 11% * Growth compared to Jan – Sep 2011 **Sample group includes: Petrobras, Marathon, Hess, Repsol and Oxy Source: Companies´quarterly reports and Bloomberg 46
  47. 47. Cost saving initiatives: Lifting, refining and transport costs Workstreams Key Initiatives Lifting Cost •Standardize required well workovers Production •Corrective maintenance of high cost facilities (gas plants, drilling rigs, tanks and lines) •Outsourced water treatment Refining cash cost •Procurement of catalysts with refineries specs Refining • Standardize maintenance of critical equipment • Minimize vapor leaks and losses in electrical lines Transportation cost •Improved reliability of lines and pumping systems Transport •Higher utilization of energy during off-peak hours • Reduce service expenses 47
  48. 48. Competitive lifting and refining cash costs Lifting cost: Refining cash cost: Ecopetrol ranked 7th Ecopetrol in 2nd quartile within Latam * Lifting cost / bl Ranking 32,86 49 Petrobras Higher Mayor Costo 45 Q4 Conoco Phillips 25,65 cost 21,8 43 Marathon Q-IV Q3 20,73 40 Q-III Hess Q-II 18,56 36 Occidental Q2 Q-I 17,22 34 GRB Chevron Lower 16,39 32 Menor Costo cost Q1 Exxon Mobil Anadarko 12,49 23 2004 1 2006 2 2008 3 20104 10,67 7 Ecopetrol Ecopetrol B/meja refinery Talisman 6,38 5 Source: Solomon Associates. Fuel Study 2010 * Lifting cost estimated by Herold; Source: Herold – Global Upstream Performance Review 2012 48
  49. 49. Strong cash flow, low indebtedness, and investment grade ratings Initial Sources Uses Final 25,2 0,6 0,1 31,0 17,6Cash FlowJan-Sep 3,2 4,7 2012 5,1 0,4 5,2(USD billion) Initial Cash Operations Other Offering Cash Operations Capex Dividends FX Ending cash Available Difference Assets Liabilities Debt Ratios * Inventories 50,2 • Liabilities / Assets: 0.41x 1.5 Other long term 2.3 Other short term • Financial obligations / 2,6 Labor obligations Cash and cash equivalentsBalance 3,1 Estimated liabilities Total Liabilities: 15.4% 7.7 Accounts receivable 20.4 • Financial obligations/ EbitdaSheet and provisions Natural and environmental Financial obligations (12 month): 0.19 xSep 30/2012 9,2 resources 2.0(USD$ billion) Other long term 1.9 3.1 Other short term • EBIT/ Interest expenses: 84x 3.2 Property, plant and 2.4 • Total debt / Capital: 0.11x 11.3 Accounts payable and equipment (net) 7.6 related parties • Debt / 1P Resvs.: USD 2.71/bl 10.7 InvestmentsCredit Ratings S&P: BBB- (Positive) / Fitch: BBB- (Stable) / Moody´s: Baa2 (Stable) * Does not include subsidiaries 49
  50. 50. Capex plan of US$80 billion between 2012-2020 focused onE&P, mainly funded with internal cash generation USD 80 bn USD 80 bn Biof. & other 3% 9% 5% Equity Transport Refining 7% 16% Debt 25% Exploration Production Cash 75% 60% generation Uses Sources • Long term crude oil price assumption for 2012-2020 Capex plan: WTI USD80/bl (real 2012) • Required debt financing as function of crude oil price • ROCE: 36% (2009-2011) 50
  51. 51. Capex of US$9.5 billion for 2013 Breakdown of Capex Key goals/projects per segment 2% • 34 exploratory wells Exploration • 26 in Colombia 19% • 8 International Production US$9.5 Exploration • Average Production: 798 mboed Production • Ecopetrol: 750 mboed billion 44% Refining • Subs. + Aff. : 48 mboed 18% Transport • Modernization of B/bermeja and 18% Other Refining C/gena facilities • Industrial services project at B/meja • Increase crude transportationCapex allocation: Transport capacity by 170 mbod in 2013 and 250 mbod in 2015 • 69% to Ecopetrol S.A. and 31 % to Subsidiares and Affiliates • R&D • 95 % in Colombia Other • IT • 62% to E&P • HSE * Source Ecopetrol 51
  52. 52. CorporateResponsibility• HSE• DJSI 52
  53. 53. Improving HSE (Health, Safety & Environment) metrics Accident frequency with labor time loss Environmental Incidents (# accidents per mn labor hrs.) (number of events)2,28 116 1,56 1,22 1,24 1,02 59 56 0,85 41 41 232007 2008 2009 2010 2011 Jan-Sep-2012 2007 2008 2009 2010 2011 Jan-Sep-2012 • New operational model • Full awareness within employees and contractors • Risk management best practicesSource: Ecopetrol 53
  54. 54. Ecopetrol in the Dow Jones Sustainability Index (World DJSI)since 2011 Ecopetrol´s 2011-2012 Corporate Sustainability Assessment 82 88 76 77 74 78 70 61 59 51 53 41 Economic Environmental Social Total EC 2011 EC 2012 Avg O&G 2012 Key facts of 2011-2012 Ecopetrol´s Assessment: • 340 companies in the 2012 (41 added and deleted) in DJSI world index (12 in O&G) • Among the 10% best rated O&G companies worldwide • 2012 assesment improved vs. 2011 • One of four Colombian companies included in the index Source: Corporate Sustainability Assessment, SAM-DJSI 54
  55. 55. Summary 55
  56. 56. Ecopetrol is fully committed to deliver on its 2020strategic goals Ecopetrol: a sustainable and reliable investment • E&P sound strategy and asset base to raise production and add reserves • Projects to improve returns in refining and deliver high quality products • Diversified markets and increasing exports • New business model to expand transport infrastructure and provide services • Financial strength to fund growth and effective cost control • High returns on investments and thorough Capex allocation • Improving HSE performance • Recognized CSR practices - part of DJSI (World) since 2011 • Strong Corporate Governance 56
  57. 57. Investor Relations • Phone + 571 234 5190 • Email investors@ecopetrol.com.co • Website www.ecopetrol.com.co 57
  58. 58. SEP ENERGY FOR THE FUTURE Ecopetrol S.A. All rights reserved. The re production of this presentation is forbidden without the written authorization of Ecopetrol S.A. 58 58
  59. 59. Corporate Group 1P Reserves: 2008 - 2011 1P Reserves* (million barrels of oil & gas equivalent) 164% 193% IRR ** RRI** 351% 1,857 1,714 46% 1,538 1,137 2008 2009 2010 2011 * Estimated using SEC prices and methodology ** RRI: Reserve replacement index Source: Ecopetrol 59
  60. 60. Main fields by region in Colombia Region Share Main fields Production* (mboed) Central 26% Castilla 115 Chichimene 38 East 18% Rubiales + Quifa 121 Northeast 21% Guajira 60 Cusiana 37 Middle 16% La Cira 22 Magdalena Nare 16 Catatumbo 10% Tibú 2 South 8% Orito 3 Tello 5 Minor fields 1% * EC´s production Jan-Sep of 2012 Source: Ecopetrol 61
  61. 61. Central Region: Meta province (Llanos Orientales)Main fields Production (mboed) • Heavy crude (13° API) 110 114 98 • Oil in place: 5.5 bn boe (e) Castilla • 2012: 60 wells (e) • Ecopetrol´s interest: 100% 2010 2011 2012 (e) • Heavy crude (9° API) 47 32 Chichimene • Oil in place: 2.8 bn boe (e) • 2012: 40 wells (e) 19 • Ecopetrol´s interest: 100% 2010 2011 2012 (e) • Heavy crude (13.5° API) • Oil in place: 4.45 bn boe (e) 96 102 72 Rubiales-Pirirí • 2012: 193 wells (e) • Ecopetrol´s interest: Rubiales 60% - Piriri 50% 2010 2011 2012 (e) • Heavy crude (13.5° API) 15 20 Quifa • Oil in place: 1.87 bn boe (e) • 2012: 87 wells (e) 2 • Ecopetrol interest: 40% 2010 2011 2012 (e) (e) estimated 62 Source: Ecopetrol
  62. 62. Middle Magdalena Region Main fields Production (mboed) ** • Medium crude (20-32° API) 27 31 35 La Cira • Oil in place: 3.9 bn boe (e) • 2012: 139 wells (e) Infantas • Ecopetrol´s interest: 52% 2010 2011 2012 (e) • Medium crude (22-24° API) 19 24 17 • Oil in place: 1.8 bn boe (e) Casabe • 2012: 47 wells (e) • Ecopetrol´s interest: 100% 2010 2011 2012 (e) 26 32 32 • Heavy crude (11-12° API) • Oil in place: 1.3 bn boe (e) Nare • 2012: 87 wells (e) (*) 2010 2011 2012 (e) • Ecopetrol´s interest: 50% (e) estimated(*) 25 Abarco Fase I, 10 Abarco Fase II, 18 Underriver Fase II, 5 Underriver Fase III, 29 Moriche Fase III(**) Prod 100% Source: Ecopetrol 63
  63. 63. Northeast Region: Casanare and Guajira provinces Main fields Production (mboed) • Dry Gas 68 Guajira • Oil in place: 1.283 mboe 64 61 Ballena – Riohacha - • 2012: 3 wells ** Chuchupa • Ecopetrol´s interest: 57% (2012) 2010 2011 2012 (e) • Light crude (31° - 36 ° API) 35 34 24 Cusiana • Oil in place: 1.783 mboe • 2012: 2 wells ** • Ecopetrol´s interest: 69% (2012) 2010 2011 2012 (e) • Light crude (>40° API) 23 24 Cupiagua • Oil in place: 1.585 mboe 17 Cupiagua – Cupiagua Sur • 2012: 7 wells (e)** • Ecopetrol´s interest: 100% 2010 2011 2012 (e) • Light crude (41° - 45 ° API) Piedemonte • Oil in place: 985 mboe 11 15 22 Pauto - Floreña • 2012: 4 wells (e) ** • Ecopetrol´s interest: 50% (2012) 2010 2011 2012 (e) ** Includes new wells, sidetracks, deepening , workover, among others. (e) estimatedSource: Ecopetrol 64
  64. 64. Catatumbo Region: Arauca - Casanare Main fields Production (mboed) • Light crude (29.5° API) 53 48 42 • Oil in place: 1.9 bn boe (e) Cravo Norte • 2012: 358 wells (e) • Ecopetrol´s interest: 73% 2010 2011 2012 (e) • Light crude (31.2° API) Rancho • Oil in place: 0.14 bn boe (e) 7 22 21 Hermoso • 2012: 15 wells (e) • Ecopetrol´s interest: 82% 2010 2011 2012 (e) 12 11 10 • Light crude (31.2° API) Rondón • Oil in place: 0.05 bn boe (e) • 2012: 23 wells (e) • Ecopetrol´s interest: 50% 2010 2011 (e) 2012 (e) (e) estimated Source: Ecopetrol 65

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