Ecopetrol Group Announces its Results for the Second Quarter and First Half of 2016
August 16, 2016 at 07:00 AM EDT
BOGOTA, Colombia, Aug. 16, 2016 /PRNewswire/ -- Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) ("Ecopetrol" or the "Company") announced today the Ecopetrol Group's financial results for the second quarter and first half of 2016, prepared and filed in Colombian pesos (COP$) in accordance with International Financial Reporting Standards (IFRS) applicable in Colombia.
Some explanatory figures in this report are expressed in U.S. dollars (US$) and thus indicated where applicable. Figures expressed in billions of COP$ amount to COP$1 thousand million.
In the view of Ecopetrol S.A.'s CEO, Juan Carlos Echeverry G.:
"April marked my first year leading Ecopetrol. A year characterized by a sharp drop in oil prices, challenging the oil and gas industry. We also witnessed a strong El Niño weather phenomenon, the closure of the border with Venezuela and attacks on transport infrastructure.
The renewal of the management team, the adjustment and austerity measures, as well as the focus on profitable production and the preservation of both cash flow and leverage metrics have enabled Ecopetrol to navigate the price scenario and present positive operating and financial results in the second quarter of 2016.
Net income attributable to Ecopetrol shareholders reached COP$787 billion, 117% higher as compared to the first quarter of 2016, thanks to a 34% recovery in Brent crude price, a decrease in our operational costs and structural savings efforts. Our EBITDA margin remained solid at around 39%.
In the second quarter of 2016 the Company reported savings of COP$392 billion pesos, for a cumulative COP$813 billion pesos for the first semester. The savings target for 2016 is COP$1.6 trillion pesos.
We raised COP$725 billion from the divestment of part of our stake in Interconexión Eléctrica S.A. E.S.P. (ISA) and Empresa de Energía de Bogotá S.A. E.S.P. (EEB). Further, we launched "Ronda Campos 2016", an initiative to offer our interest in 20 minor oil fields located in Catatumbo, Middle and Upper Magdalena Valley, Llanos and Putumayo regions.
Ecopetrol received Rubiales and Cusiana fields and now operates more than 500 thousand barrels per day. The Rubiales field gave us 53 thousand barrels per day of additional production, partially offsetting the impact of lower investments in other assets and the temporary suspension of some fields.
The Company successfully completed the startup process of the 34 units that comprise the Cartagena Refinery.
In the last sixteen months we have comprehensively renewed our management team, attracting people with broad experience and an important record in major international oil and gas companies.
It is the case of the Chief Operating Officer, Chief Financial Officer, Chief Transformation Officer; as well as the Vice-presidents of Refining, Social and Environmental Sustainability, Legal Affairs, and most regional Vice Presidents; additionally, new people will soon arrive to lead in Procurement and in Transportation. Finally, two vice-presidencies were created: Engineering and Projects, and Compliance.
The transformation plan has 500 ongoing tasks. These initiatives have already begun to materialize in Ecopetrol's results. For example, the dilution cost reduction initiative, which is part of the efficiency front, has reduced Ecopetrol's diluent purchases by almost 14 thousand barrels per day. The cumulative savings in 2015 and the first half of 2016 amounted to COP$726 billion pesos. This initiative is crucial for viable production projects in heavy crudes that represent 57% of the Corporate Group's oil production.
The Company's priority has been the protection of the cash flow. In the second quarter of 2016 the cash balance was strengthened with resources from divestments and the international loan with the Export Development Canada (EDC) for US$300 million as well as the reopening of the international bond due to 2023 for US$500 million, a clear sign of the capital markets' confidence. With these resources Ecopetrol has fulfilled close to 85% of its financing needs for 2016. Moreover, Standard and Poor's and Fitch Ratings reaffirmed the BBB investment grade rating for Ecopetrol.
The Company's 2017-2020 business plan is being reviewed in line with our forecasted price scenarios and our efficiency gains achieved, these gains could be even greater in the future. We hope to present our updated medium-term goals no later than October of this year.
Ecopetrol continues its transformation in order to position itself as a competitive player, strengthening its exploration and production portfolio to capture opportunities arising from a fundamental recovery in oil prices, and increasing structurally efficiency in Refining and Transport to ensure financial sustainability and creation of value for its shareholders."
The complete report is available in www.ecopetrol.com.co
Bogota, August 16, 2016
Ecopetrol is the largest company in Colombia and is an integrated oil & gas company; it is among the top 50 oil companies in the world and among the four top ones in Latin America. Besides Colombia - where it generates over 60% of the national production - it has exploration and production activities in Brazil, Peru & the US (Gulf of Mexico). Ecopetrol owns the largest refinery in Colombia and most of the pipeline and multi-product pipeline network in the country, and is significantly increasing its participation in bio-fuels.
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 Corporate Finance and Investor Relations (A)
Media Relations (Colombia)
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SOURCE Ecopetrol S.A.