Ecopetrol Group Announces Third Quarter and YTD Results for 2016
November 15, 2016 at 05:56 AM EST
BOGOTA, Colombia, Nov. 15, 2016 /PRNewswire/ -- Today, Ecopetrol S.A. ("Ecopetrol" or the "Company") (BVC: ECOPETROL; NYSE: EC) announced the Ecopetrol Group's financial results for the third quarter and first nine months of 2016, prepared and expressed in billions of Colombian pesos (COP) pursuant to International Financial Reporting Standards (IFRS) applicable in Colombia.
Certain explanatory figures in this report are stated in US dollars (USD) and are indicated as such when applicable.
Juan Carlos Echeverry G., CEO of Ecopetrol S.A., commented:
"Ecopetrol has attained a strong operating and financial performance during the third quarter of 2016, reporting the highest level of EBITDA and EBITDA margin in the last five quarters, as a result of: i) the effectiveness of austerity measures; ii) increased efficiency and cost savings; iii) focus on capital discipline; iv) its proven capacity as an effective operator; and, v) higher crude oil prices compared with the beginning of the year.
The Company was able to operate the Rubiales and Cusiana fields both efficiently and safely, and sustained steady production levels in Castilla and Chichimene, despite lower investment. Favorable price forecasts allowed the Company to develop projects in order to gradually increase production of oil by 25 thousand barrels per day in 2017 and to reactivate the Caño Sur field, that help mitigate the declining of mature fields, a clear demonstration of its swift ability to respond to environmental conditions.
It is important to note that production grew by 3.9% during this quarter compared to the prior quarter, reaching a level of 723 thousand equivalent barrels of oil per day. This increase is explained, in part, by the reversion of the Rubiales field and the start of production at Gunflint in the US Gulf of Mexico, where we've started to reap the benefits of investments made in previous years.
The Group has overcome the period of low oil prices and has returned to the path of growth in production.
After the start-up of the 34 units at the Cartagena Refinery complex, which was completed on July 11th, we initiated the stabilization and performance testing period.
During the third quarter, the Ecopetrol Group reported an EBITDA of COP 4.9 trillion and an EBITDA margin of 40%. This good result demonstrates our commitment to operational excellence, cost efficiency, and capital discipline.
The net profit attributable to Ecopetrol shareholders in the third quarter rose to COP 229 billion. The decrease in relation to the reported profit for the second quarter is explained mainly by a higher income tax provision. This provision is the result of an update in the estimated tax rate for the year-end close, which reflects a higher tax charge as a consequence of the increase in international oil prices.
Cumulative savings totaling COP 1.9 trillion for the year exceed the target savings of COP 1.6 trillion set for 2016. Of these savings, the transformation plan managed to consolidate cumulative structural savings of COP 1.6 trillion within the first nine months of the year (COP 617 billion during the third quarter); and the Group achieved COP 300 billion in non-structural reductions.
The most relevant cumulative savings for the year include COP 563 billion from the heavy crude dilution initiative and COP 203 billion from line maintenance in the Midstream segment.
The savings achieved contributed to mitigate the impact on the Company's costs from the reversion of the Rubiales field and the start-up of the Cartagena refinery, as well as its seasonal trend which consistently shows higher execution in the second semester each year.
The third quarter ended with a solid cash position of COP 7.7 trillion, which allowed Ecopetrol to prepay a COP 990 billion loan that it had contracted with Bancolombia at the beginning of this year.
The Company continues to strengthen its social and environmental relations model, which aims to achieve sustainable and shared growth with communities in the areas of operation and the development of local governance. It also works to strengthen managerial leadership, commitment to life and effective risk management of people, facilities, and processes.
Ecopetrol has an optimistic view of the future. Its update to the 2020 Business Plan is based on three core pillars: i) cash focus and cost efficiency, ii) strict capital discipline, and iii) reserve and production growth. These pillars will strengthen its financial sustainability and allow it to leverage opportunities for organic and inorganic growth, thereby generating value and profit for shareholders."
The complete report is available in www.ecopetrol.com.co
 Ranking based on production directly operated.
For further information, please contact:
Head of Corporate Finance and Investor Relations Maria Catalina Escobar
Media Relations (Colombia)
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SOURCE Ecopetrol S.A.