Ecopetrol Business Group presents its Second Quarter and First Half 2017 Results
August 08, 2017 at 19:03 PM EDT
BOGOTA, Colombia, Aug. 8, 2017 /PRNewswire/ --
Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) today announced the Ecopetrol Business Group's second-quarter and first half 2017 financial results, prepared and presented in billions of Colombian pesos (COP) according to International Financial Reporting Standards applicable in Colombia.
The figures included in this report are unaudited, expressed in billions of pesos (COP) or US dollars (USD), or in thousands of barrels of petroleum equivalent per day (mboed) or tons, as applicable. For presentation purposes, certain figures of this report were rounded to the nearest decimal place.
In the opinion of Ecopetrol S.A. CEO Juan Carlos Echeverry G.:
"Ecopetrol is focusing on the next pillar of its 2020 strategy, 'profitable growth.' Over the past two years we have embarked upon a profound transformation, and as a result have achieved financial soundness with ratios that are among the highest in the global industrial rankings.
The time has come to build on that financial soundness and discipline, and to concentrate our efforts on Ecopetrol's profitable growth. Profitable growth is supported on four basic pillars: i) increased exploratory activity, ii) development of improved recovery pilots and infill projects, iii) exploring opportunities in Unconventionals, and iv) advancing in opportunities for inorganic growth.
Operational and financial performance in the first half of the year was outstanding. The EBITDA margin of 43% is one of the highest in the industry and we closed out the period with a solid cash position of COP 10.4 trillion. During the quarter we distributed COP 945 billion in dividends to our shareholders on 2016 earnings, and prepaid an international commercial banking loan of USD 1,925 million (approximately COP 6 trillion). The Ecopetrol Group's nominal debt declined some 12.9% during the second quarter of 2017. The risk rating agencies have recognized our achievements and confirmed our investment-grade credit rating. For its part, S&P upgraded our stand-alone rating from BB to BB+.
Excellent commercial management and the global scarcity of heavy crude helped capture market opportunities in international sales. Ecopetrol's export basket spread improved significantly, to -USD 6.6/bl in the second quarter.
In line with our commitment to profitable growth, we created the Project Maturity Center with a view to ensure that projects generate value, maintain the highest standards and are executed on time and within budget.
During the quarter, the exploratory campaign continued to show outstanding results. The Warrior-2 well, located in the Gulf of Mexico, was declared successful upon confirming the presence of light crude, making it the second discovery in that area in the past eight months. This discovery is consistent with Ecopetrol's goal of positioning itself as a pan-American company. The Siluro well, in the Colombian offshore, did not yield the expected results with the presence of hydrocarbons. Thus, four discoveries were made in five wells, a success rate of 80% for the half-year period. In line with the search for growth opportunities, we participated in Round 2.1 in Mexico and were awarded two blocks in association with Pemex and Petronas.
In the second half of the year Ecopetrol will drill the Molusco well in the Colombian offshore, a milestone for the Company since it will be the first well of this kind operated directly by Ecopetrol. The second half's exploratory campaign will focus more on the Colombian onshore, with the drilling of 10 wells.
The Business Group's average production in the first half totaled 715 thousand barrels of oil equivalent per day, in line with the 2017 production goal. We succeeded in maintaining our production rate despite public security situations and operational events that have arisen. Pilot recovery programs are making satisfactory progress; by year-end we will have four recovery pilots that have completed the evaluation stage. One year after regaining control over the Rubiales and Cusiana fields, we have succeeded in maintaining stable and safe operations.
An important operational achievement has been sustaining stable bi-directional operation on the Bicentenario oil pipeline to extract crude from the Caño Limón field and thus, to a certain extent, mitigate the closure of the Cano Limón - Coveñas oil pipeline. Thanks to the bi-directional operation at Bicentenario, we have succeeded in performing major maintenance work on the Caño Limón oil pipeline without affecting production.
At Reficar we have completed performance testing on 28 plants, 82% of the refinery's 34 units. The alkylation unit is already in operation after undergoing maintenance to correct problems of the cooling water system. The Barrancabermeja refinery has built a profitable and efficient operation, with a margin of USD 13.9/bl for the half-year period.
In the Midstream we note the first shipment of heavy crude with viscosity greater than 500 centistokes (cst - viscosity measurement). This helped demonstrate the commercial viability of high-viscosity crude and encourages us to continue the transport testing of heavy crude at 600 cst, with a view to extending this capacity to other oil pipeline systems. During the quarter, crude pumping was initiated for operational stabilization of the San Fernando - Monterey system, and progress was made on commissioning and tests.
Structural savings for the half-year period totaled COP 516 billion, representing 70% of the year's savings goal (COP 740 billion).
On May 31 Ecopetrol published its annual 20-F report for fiscal year 2016. By publishing the 20-F, the Company fulfilled its reporting obligation to the Securities and Exchange Commission (SEC), the New York Stock Exchange (NYSE), bondholders and other creditors. The joint work of the Board of Directors, the 2014-2015 period auditors, the 2016 auditors and Ecopetrol management successfully completed the due diligence process to publish the 20-F.
Ecopetrol as a Company is committed with the country's development, the environment and generating value for its shareholders. Our commitment to financial soundness remains current and will leverage the focus on profitable growth needed to deliver outstanding results to the benefit of the Company's sustainability."
The earnings release will be available on Ecopetrol's website: www.ecopetrol.com.co
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.
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SOURCE Ecopetrol S.A.