UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of June, 2015
Commission File Number 001-34175
ECOPETROL S.A. |
(Exact name of registrant as specified in
its charter)
|
N.A. |
(Translation of registrant’s name
into English)
|
COLOMBIA |
(Jurisdiction of incorporation or organization)
|
Carrera 13 No. 36 – 24 |
BOGOTA D.C. – COLOMBIA |
(Address of principal executive offices) |
Indicate by check mark
whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form
40-F ¨
Indicate by check mark
if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)
Yes ¨ No
x
Indicate by check mark
if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)
Yes ¨ No
x
Indicate by check mark
whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No
x
If “Yes”
is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- N/A
Ecopetrol S.A. hereby designates this report on Form 6-K
as being incorporated by reference into its registration statement on Form F-3, as filed with the SEC on July 26, 2013 (File No.
333-190198).
Exhibits
Exhibit 99.1 Interim Consolidated Financial Statements for the
three-month periods ended March 31, 2015 and 2014, as at March 31, 2015, December 31, 2014 and the opening statement of financial
position at January 1, 2014.
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
Ecopetrol S.A. |
|
|
|
By: |
/s/ Alberto Vargas Peñalosa |
|
|
Name: |
Alberto Vargas Peñalosa |
|
|
Title: |
Acting Chief Financial Officer |
Date: June 23, 2015
RECENT DEVELOPMENTS
The following discussion
of Ecopetrol S.A.’s (which we refer to as “Ecopetrol,” the “Company” or “we”)
results of operations for the three-month periods ended March 31, 2015 and 2014 should be read in conjunction with our annual report
on Form 20-F for the fiscal year ended December 31, 2014, as filed with the U.S. Securities and Exchange Commission (which we refer
to as the “SEC”) on April 28, 2015 (which we refer to as the “Form 20-F”) and, in particular, “Section
3—Business Overview” and “Section 4—Financial Review” in the Form 20-F, and with our unaudited interim
financial statements as of March 31, 2015 as filed with the SEC as Exhibit 99.1 to this Form 6-K (which we refer to as the “unaudited
interim financial statements”). We hereby designate this report on Form 6-K as being incorporated by reference into our registration
statement on Form F-3, as filed with the SEC on July 26, 2013 (File No. 333-190198).
As indicated in
paragraphs 9 and 18 of the International Accounting Standard 27 “Consolidated and Separated Financial Statements” we
must present our financial information on a consolidated basis as if they were a single entity, combining the financial statements
of Ecopetrol S.A. and its subsidiaries line by line, adding assets, liabilities, shareholder’s equity, revenues and expenses
of similar nature, removing the reciprocal items among members of our corporate group and recognizing non-controlling interest.
Our financial results for the first quarter of 2015 and results for the corresponding 2014 period were prepared on the basis of
International Financial Reporting Standards as issued by the International Accounting Standards Board (which we refer to as “IFRS”)
and are not comparable with our previously issued financial results for the first quarter of 2014 which were prepared in accordance
with the Public Accounting Regime (Régimen de Contabilidad Pública) as adopted by the Colombian National Accounting
Office (Contaduría General de la Nación).
Overview
Ecopetrol’s financial
results for the first quarter of 2015 reflect the negative effect of international oil crude prices, which was partially offset
by growth in production and the good performance of its midstream and downstream segments, the solid production of its upstream
segment and favorable operating conditions. Ecopetrol’s net income for the three-month period ended March 31, 2015 was Ps$160
billion, compared with Ps$3,888 billion for the first quarter of 2014, a decrease of 95.9%. Average production (including interests
in affiliates and subsidiaries) was 773.4 mboed, which reflects an increase of 1% compared to the first quarter of 2014. Refining
margin has continued to improve, reaching US$18.2 per barrel in the first quarter of 2015, and total volumes transported during
the first quarter of 2015 were 1,273.5 mbd, a 6% increase compared to 1,200.1 mbd transported during the first quarter of 2014.
During the first quarter
of 2015, international crude oil prices reached their lowest level in six years. As reported by Bloomberg, on January 13, 2015
the price of Brent crude reached US$46.6 per barrel, which is less than half of the January 2014 price, in response to two market
factors: first, market surplus due to world supply rising more quickly than demand; driven mostly by shale production in the United
States, and second, weaker-than-expected demand from Asian and European economies.
The global economy
in the first quarter of 2015 has been negatively affected by China’s economy continuing to slow down and continued weak results
in the United States. Also, as a consequence of the decrease in oil prices since the third quarter of 2014, oil-producing countries
have cut back investment significantly, impacting not only the oil sector, but also labor and currency markets, particularly in
non-dollar denominated economies. Several of the emerging market economies have lost their historical appeal as engines of growth,
with Brazil, Venezuela, Argentina, Russia and Greece (among others) being burdened with large public sector debt. World trade volumes
decreased by more than 1% (imports and exports), with export volumes declining globally during the first quarter of 2015. Import
volumes increased at a low rate and remained relatively positive in advanced economies, offsetting the decrease in exports, but
dropped severely in most emerging market economies outside of Latin America.
The collapse in oil
prices has taken a larger-than-expected toll on the Colombian economy. While above the Latin America-wide average, GDP growth for
2015 is expected to be lower than that for 2014 (4.6%) due to decreased private and public consumption, partly as a result of inflationary
base effects but also in response to the impact of lower oil prices. Colombia’s Central Bank has left its main policy interest
rate at 4.5% since August 2014 and is unlikely to adjust it in the short term in response to accelerated currency weakening in
late 2014 and the first quarter of 2015. Although the annualized inflation rate surpassed the Colombian Central Bank’s target
range (2% - 4%) in February and March, inflation is expected to remain within the Central Bank’s target range in the medium-term.
In conjunction with these macroeconomic changes, the Colombian Peso has experienced a decline in the terms of its exchange rate
to the U.S. Dollar, the currency in which many of our financing arrangements are denominated in, which now stands at an average
of Ps$2,469/US$1 for the first quarter of 2015.
Results of operations for the three-month period ended
March 31, 2015 compared to the three-month period ended March 31, 2014.
The following table
sets forth components of our unaudited unconsolidated income statement for the three-month periods ended March 31, 2015 and 2014.
| |
For the three-month period | | |
| |
| |
ended March 31, | | |
% Change | |
| |
2015 | | |
2014 | | |
| |
| |
(Pesos in millions) | | |
| |
Revenues | |
| | | |
| | | |
| | |
Total revenue | |
| 12,300,855 | | |
| 17,971,324 | | |
| (31.6 | %) |
Cost of sales | |
| 8,554,637 | | |
| 10,768,934 | | |
| (20.6 | %) |
Gross margin | |
| 3,746,218 | | |
| 7,202,390 | | |
| (48.0 | %) |
| |
| | | |
| | | |
| | |
Operating expenses | |
| 1,388,370 | | |
| 937,724 | | |
| 48.1 | % |
Operating income | |
| 2,357,848 | | |
| 6,264,666 | | |
| (62.4 | %) |
| |
| | | |
| | | |
| | |
Financial Income (expenses), net | |
| (1,530,274 | ) | |
| (120,912 | ) | |
| > 500 | % |
Share of profit of associates | |
| 744 | | |
| 15,314 | | |
| (95.1 | %) |
Income before income tax | |
| 828,318 | | |
| 6,159,068 | | |
| (86.6 | %) |
| |
| | | |
| | | |
| | |
Provision for income tax | |
| 472,376 | | |
| 2,094,229 | | |
| (77.4 | %) |
Consolidated net income | |
| 355,942 | | |
| 4,064,839 | | |
| (91.2 | %) |
Non-controlling interests | |
| 195,912 | | |
| 176,738 | | |
| 10.8 | % |
Net income attributable to equity holders of Ecopetrol | |
| 160,030 | | |
| 3,888,101 | | |
| (95.9 | %) |
Total Revenues
The following table
sets forth our foreign and local sales of crude oil, natural gas and refined products for the three-month periods ended March 31,
2015 and 2014.
|
|
For the three-month period
ended March 31, |
|
|
% Change |
|
|
|
2015 |
|
|
2014 |
|
|
|
|
Crude oil: |
|
|
|
|
|
|
|
|
|
|
|
|
Local sales (mbod) |
|
|
20.1 |
|
|
|
30.4 |
|
|
|
(33.9 |
%) |
Foreign sales (mbod) |
|
|
570.4 |
|
|
|
521.6 |
|
|
|
9.4 |
% |
Average price per local barrel (USD/bl) |
|
|
34.8 |
|
|
|
83.4 |
|
|
|
(58.3 |
%) |
Average price per export barrel (USD/bl) |
|
|
45.0 |
|
|
|
95.9 |
|
|
|
(53.1 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas: |
|
|
|
|
|
|
|
|
|
|
|
|
Local sales (mboed) |
|
|
81.4 |
|
|
|
79.8 |
|
|
|
2.0 |
% |
Foreign sales (mboed) |
|
|
16.2 |
|
|
|
24.0 |
|
|
|
(32.5 |
%) |
Average local price (USD/bl) |
|
|
23.0 |
|
|
|
22.1 |
|
|
|
4.1 |
% |
Average export price (USD/bl) |
|
|
27.5 |
|
|
|
31.8 |
|
|
|
(13.5 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Refined products (including petrochemicals and industrial products): |
|
|
|
|
|
|
|
|
|
|
|
|
Product local sales (mboed) |
|
|
276.5 |
|
|
|
264.9 |
|
|
|
4.4 |
% |
Foreign sales (mboed) |
|
|
72.7 |
|
|
|
108.4 |
|
|
|
(32.9 |
%) |
Average local price per barrel (USD/bl) |
|
|
72.1 |
|
|
|
115.7 |
|
|
|
(37.7 |
%) |
Average export price per barrel (USD/bl) |
|
|
52.8 |
|
|
|
97.2 |
|
|
|
(45.7 |
%) |
In the three-month
period ended March 31, 2015, total revenues decreased by 31.6% as compared to the same period in 2014, as a result of the combined
effect of:
| · | The decrease of Ps$8,221,088 million in revenues as a result of the reduction of Ecopetrol’s
average export basket by US$51.3 per barrel. |
| · | The devaluation of the Colombian peso against the U.S. dollar, from an average exchange rate of
Ps$2,004/US$1 in the first quarter of 2014 to an average exchange rate Ps$2,469/US$1 in the first quarter of 2015, resulting in
an increase in sales revenue of Ps$2,094,782 million. |
| · | Increased revenues from services provided by our transportation and logistics segment to third
parties, mainly as a result of exchange rate effects on U.S. dollar-denominated transportation tariffs (Ps$248,486 million). |
| · | Increased sales volumes of 8 mboed (Ps$207.353 million) mainly due
to: |
| - | The 0.8% increase in local sales volume in the first quarter of 2015, which is explained mainly
by increased sales of gasoline, natural gas, fuel oil and liquefied petroleum gas to meet increased demand in Colombia. |
| - | The 0.8% increase in volume exported in the first quarter of 2015, which is explained primarily
as the net effect of: 1) increased crude oil exports due to Ecopetrol’s increase in production and increased purchases from
third parties and 2) decreased natural gas exports due to the natural decline of production at the Guajira field. |
Cost and Expenses
The following table
sets forth the components of our cost of sales, operating expenses and operating income for the three-month periods ended March
31, 2015 and 2014.
| |
For the three-month period ended March 31, | | |
% Change | |
| |
2015 | | |
2014 | | |
| |
| |
(unaudited) (Pesos in millions) | | |
| |
| |
| | |
| | |
| |
Fixed cost of sales | |
| 2,118,078 | | |
| 2,149,353 | | |
| (1.5 | %) |
Variable cost of sales | |
| 6,436,559 | | |
| 8,619,581 | | |
| (25.3 | %) |
Total cost of sales | |
| 8,554,637 | | |
| 10,768,934 | | |
| (20.6 | %) |
Operating expenses | |
| 1,388,370 | | |
| 937,724 | | |
| (48.1 | %) |
Operating income | |
| 2,357,848 | | |
| 6,264,666 | | |
| (62.4 | %) |
Cost of sales
Our total cost of sales
is comprised of fixed and variable cost of sales.
Our fixed cost
of sales includes, among other items contracted services, labor costs, maintenance, taxes and depreciation. Our fixed cost of sales
decreased by 1.5% (Ps$31,275 million) in the three-month period ended March 31, 2015 as compared to the same period in 2014, primarily
as a result of:
a) Reductions in:
- Costs associated
with maintenance and contracted services: a Ps$99,326 million reduction of such costs principally at Ecopetrol as a result of optimizations
of maintenance plans and contracted services achieved during the first quarter of 2015, among others, including the restructuring
of services, lower levels of contracted services used and tariff re-negotiation for maintenance contracts.
- A Ps$5,059
million decrease in other minor items.
b) Increases in:
- A Ps$37,248
million increase in depreciation of property, plant and equipment, which resulted mainly from the increase in assets and capitalizations
of costs related to shutdowns at the Barrancabermeja refinery due to previously scheduled maintenances.
- A Ps$35,862
million increase in labor costs, mainly resulting from the signing of the collective bargaining agreement in the second quarter
of 2014 and an increase in employees hired during the first quarter of 2015 following a hiring freeze that was instituted at Ecopetrol
during the four months prior to the 2014 Colombian presidential elections, pursuant to applicable law.
Our variable
cost of sales includes, among other items, purchases of hydrocarbons from the Agencia Nacional de Hidrocarburos (the “National
Agency of Hydrocarbons” or “ANH”), purchases of crude oil from business partners, imported products, hydrocarbon
transportation services and depletion of fields and inventories. Our variable cost of sales decreased by 25.3% (Ps$2,183,022 million)
in the three-month period ended March 31, 2015 as compared to the same period in 2014 primarily as a result of:
a) A Ps$1,830,672
million decline in the purchase costs of crude oil, gas and refined products due to the net effect of:
- Lower average
purchase prices due to the decline in international benchmark prices: -Ps$2,770,504 million.
- A 23% decline
in the average exchange rate of the Colombian peso against the U.S. dollar: Ps$622,889 million.
- An increase
in volumes purchased from third parties, principally Vasconia crude purchases from Pacific Rubiales beginning in November 2014
due to the Barrancabermeja refinery’s increased need for light and medium crude oil, and increased gasoline imports to meet
increased demand in Colombia Ps$316,943 million.
b) A Ps$304,287
million decrease in inventories due to a decline in the value of inventories on a lower cost basis in the first quarter of 2015.
c) Decreased
transportation costs in an amount of Ps$65,006 million, mainly as an decrease in the use of tanker trucks as a result of the increased
availability of pipelines due to operative stability and improved environmental conditions for the operation during the first quarter
of 2015.
d) Increased
amortizations, depreciations and depletion during the first quarter of 2015, primarily as a result of increased incorporation of
reserves in 2014. The reserves added in 2014 is the base for the amortization and depletion of oil investments in 2015 (Ps$44,711
million).
e) An impairment
in the value of fuel oil inventories of Ps$37,276 million.
f) Other minor variable
items resulting in an increase of Ps$24,378 million.
Operating expenses
In the three-month
period ended March 31, 2015 as compared to the same period in 2014, our operating expenses increased by 48% (Ps$450,646 million),
as a result of the net effect of:
| - | An increase in taxes due to the wealth tax applicable for the year 2015 (Ps$611,944 million) while
no accrual was made for wealth tax expenses in 2014. For purposes of our first-time adoption of IFRS, this item is registered in
the 2015 opening balance. |
| - | A Ps$47,414 million increase in non-capitalizable items associated with the Cartagena refinery
project, a Ps$34,192 million increase in labor costs, a Ps$19,442 million increase in depreciation and a Ps$16,694 million increase
in other minor expenditures. |
| - | A Ps$279,040 million decrease in exploratory expenditures, as a result of decreased seismic activity
and fewer dry wells reported in the period. |
Financial income (expenses),
net
The following table
sets forth our financial income (expenses), net for the three-month periods ended March 31, 2015 and 2014.
| |
For the three-month period ended March 31, | | |
% Change | |
| |
2015 | | |
2014 | | |
| |
| |
(Pesos in millions) | | |
| |
Foreign exchange (loss) gain, net | |
| (1,174,852 | ) | |
| 22,993 | | |
| >(500 | %) |
Interest expenses | |
| (291,785 | ) | |
| (142,019 | ) | |
| 105.5 | % |
Other liabilities financial costs | |
| (134,320 | ) | |
| (153,196 | ) | |
| (12.3 | %) |
Other finance income (expenses), net | |
| 70,683 | | |
| 151,310 | | |
| (53,3 | %) |
Finance income (expenses), net | |
| (1,530,274 | ) | |
| (120,912 | ) | |
| >(500 | %) |
Our financial income
(expenses), net decreased by Ps$1,409,362 million as a result of the net effect of:
| - | An exchange rate loss of Ps$1,197,845 million. During the first quarter of 2014 an exchange rate
income of Ps$22,993 million was recorded while in the same period of 2015 an expense of Ps$1,174,852 million was recorded, which
resulted from the effect of the depreciation of the peso against the U.S. dollar on Ecopetrol’s net U.S. dollar liability
position at March 31, 2015. |
| - | A Ps$149,766 million increase in interest expenses derived from an increased level of indebtedness. |
| - | A Ps$61,750 million increase in other financial expenditures. |
Income before income taxes
Income before income
taxes decreased by 86.6% in the three-month period ended March 31, 2015, as compared to the same period in 2014, as a result of
the above mentioned factors.
Income tax
The 77.4% decrease
in our income tax expenditure is mainly explained by the company’s lower revenues during the first quarter of 2015 as compared
to the corresponding period of 2014. However, our effective income tax rate increased in 2015 due to the application of the presumptive
income tax method instead of the liquid tax method in the income tax calculation. We calculated our income tax using an effective
tax rate of 57%.
Net income attributable
to equity holders of Ecopetrol
As a result of the
foregoing, net income attributable to the equity holders of Ecopetrol decreased by 95.9% (Ps$3,728,071 million) in the three-month
period ended March 31, 2015 as compared to the same period in 2014.
Liquidity and Capital Resources
Liquidity
Our principal sources
of liquidity in the three-month period ended March 31, 2015 were cash generated from operations in an amount of Ps$3,298,996 million
and cash from financing activities, mainly from additional indebtedness, which totaled Ps$5,056,025 million.
Our principal uses
of liquidity in the three-month period ended March 31, 2015 were: 1) Ps$2,979,671 million for investments in natural and environmental
resources and reserves and additions to our property, plant and equipment, 2) Ps$963,677 million for debt and interest payments,
3) purchases net of other financial assets amounting to Ps$869,689 billion and 4) dividend payments amounting to Ps$181,704 billion.
For 2015, on a consolidated
basis, we expect our major cash needs to include planned capital expenditures amounting to approximately US$7,860 million, approximately
61% of which corresponds to exploration and production activities, 23% to refining and petrochemical activities and 16% to transportation
and logistics.
Use of Funds
Capital Expenditures
We plan to meet our
budgeted capital expenditures for the next two to three years mainly through cash from operating activities. We also expect to
access local and international financial markets to fund part of our capital expenditures.
Cash from operating activities
Net cash provided by
operating activities decreased by 25% (Ps$1,099,168 million) in the three-month period ended March 31, 2015, as compared to the
same period in 2014, mainly due to a 48% decrease in our gross income resulting from the decrease in international prices of crude
oil and higher operating expenses due to the wealth tax applicable for 2015, the effect of which was partially offset by a lower
income tax paid due to decreased revenues in the first quarter of 2015 as compared with the first quarter of 2014.
Cash used in investing activities
In the three-month
period ended March 31, 2015, net cash used in investing activities increased to Ps$3,767,358 million as compared to Ps$1,510,855
in the same period in 2014. This increase is primarily the result of a higher net purchases of other financial assets in an amount
of Ps$1,511,033 million due to investment of funds received from new debt incurred and higher capital expenditures in an amount
of Ps$618,105 million mainly at the Cartagena refinery, in the Rubiales, Quifa, Castilla, Cira Infantas fields and as a result
of the expansion of the Acacias and Castilla facilities.
Cash provided (used) in financing
activities
In the three-month
period ended March 31, 2015, net cash provided from financing activities increased by Ps$5,520,278 million mainly due to an increase
in borrowings of Ps$3,615,692 million as compared with the same period in 2014 and a Ps$1,146,340 million decrease in dividends
paid during the first quarter of 2015 as compared to the corresponding period of 2014 due to the last payment of dividends from
2012 having been made in the first quarter of 2014.
Dividends
On March 26, 2015,
at the ordinary general shareholders’ meeting, our shareholders approved dividends for the fiscal year ended December 31,
2014 amounting to Ps$5,468,521 million, or an ordinary dividend of Ps$133 per share. Dividends declared will be paid in a lump
sum to minority shareholders on June 22, 2015 (Ps$629,344 million). Dividends declared will be paid to the Nation according to
the payment schedule set forth below:
Month and Year of Payment | |
Total Dividend (in Ps$ millions) | |
| |
| |
October 23, 2015 | |
| 1,383,000 | |
November 20, 2015 | |
| 1,383,000 | |
December 15, 2015 | |
| 1,383,000 | |
Between December 21, 2015 and March 11, 2016 | |
| 690,177 | |
| |
| | |
Total | |
| 4,839,177 | |
FORWARD-LOOKING
STATEMENTS
This current report
on Form 6-K contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These statements are not based on historical facts and reflect our expectations for future events
and results. Most facts are uncertain because of their nature. Words such as “anticipate,” “believe,” “could,”
“estimate,” “expect,” “should,” “plan,” “potential,” “predicts,”
“prognosticate,” “project,” “target,” “reach,” “seek,” “contemplate”,
“achieve” and “intend,” among other similar expressions, are understood as forward-looking statements.
These factors may include the following:
| · | our exploration and production activities, including drilling; |
| · | import and export activities; |
| · | our liquidity, cash flow and sources of funding; |
| · | our projected and targeted capital expenditures and other cost commitments and revenues; and |
| · | dates by which certain areas will be developed or will come on-stream. |
Our forward-looking
statements are not guarantees of future performance and are subject to assumptions that may prove incorrect and to risks and uncertainties
that are difficult to predict. Actual results could differ materially from those expressed or forecast in any forward-looking statements
as a result of a variety of factors. These factors may include, but are not limited to, the following:
| · | general economic and business conditions, including crude oil and other commodity prices, refining margins and prevailing exchange
rates; |
| · | our ability to obtain financing; |
| · | our ability to find, acquire or gain access to additional reserves and our ability to develop existing reserves; |
| · | uncertainties inherent in making estimates of our reserves; |
| · | significant political, economic and social developments in Colombia and other countries where we do business; |
| · | natural disasters, military operations, terrorist acts, wars or embargoes; |
| · | regulatory developments, including regulations related to climate change; |
| · | receipt of government approvals and licenses |
| · | technical difficulties; and |
| · | other factors discussed in the Form 20-F under “Risk Factors.” |
All forward-looking
statements attributed to us are qualified in their entirety by this cautionary statement. We undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new information or for any other reason. Accordingly, readers
should not place undue reliance on the forward-looking statements contained in this current report on Form 6-K.
Exhibit 99.1
Ecopetrol
S. A.
Interim
Consolidated Financial Statements
For the
three-month periods ended March 31, 2015 and 2014, as at March 31, 2015, December 31 2014 and the opening statement of financial
position at January 1, 2014.
ECOPETROL
S.A.
Consolidated statement of financial position
at March 31, 2015, December 31, 2014 and January 1, 2014
(figures
expressed in millions of Colombian Pesos)
| |
| |
March 31 | | |
December 31 | | |
January 1 | |
Assets | |
Notes | |
2015 | | |
2014 | | |
2014 | |
Current assets | |
| |
| | | |
| | | |
| | |
Cash and cash equivalents | |
5 | |
| 10,941,003 | | |
| 7,015,731 | | |
| 8,541,138 | |
Trade and other receivables | |
6 | |
| 4,403,743 | | |
| 4,462,104 | | |
| 5,560,753 | |
Inventories | |
7 | |
| 2,804,040 | | |
| 2,953,856 | | |
| 3,573,827 | |
Other financial assets | |
8 | |
| 2,547,765 | | |
| 1,586,314 | | |
| 1,948,172 | |
Current tax assets | |
9 | |
| 1,858,426 | | |
| 2,018,486 | | |
| 1,545,325 | |
Non-current assets held for sale | |
10 | |
| 1,464,788 | | |
| 1,582,828 | | |
| 1,506,395 | |
Other assets | |
11 | |
| 1,462,011 | | |
| 1,392,527 | | |
| 707,702 | |
Total
current assets | |
| |
| 25,481,776 | | |
| 21,011,846 | | |
| 23,383,312 | |
| |
| |
| | | |
| | | |
| | |
Non-current assets | |
| |
| | | |
| | | |
| | |
Investments in associates and joint ventures | |
12 | |
| 2,441,497 | | |
| 2,392,128 | | |
| 2,657,198 | |
Trade and other receivables | |
6 | |
| 469,301 | | |
| 455,176 | | |
| 708,161 | |
Property, plant and equipment | |
13 | |
| 60,753,896 | | |
| 57,538,638 | | |
| 47,345,057 | |
Natural and environmental resources | |
14 | |
| 25,592,235 | | |
| 25,215,921 | | |
| 21,961,766 | |
Intangibles | |
15 | |
| 215,924 | | |
| 225,327 | | |
| 250,457 | |
Deferred tax assets | |
9 | |
| 3,058,059 | | |
| 3,091,013 | | |
| 3,618,084 | |
Other financial assets | |
8 | |
| 671,866 | | |
| 490,056 | | |
| 369,374 | |
Goodwill | |
16 | |
| 1,407,213 | | |
| 1,407,213 | | |
| 1,407,213 | |
Other non-current assets | |
11 | |
| 1,097,526 | | |
| 1,094,077 | | |
| 1,187,570 | |
Total
non-current assets | |
| |
| 95,707,517 | | |
| 91,909,549 | | |
| 79,504,880 | |
Total
assets | |
| |
| 121,189,293 | | |
| 112,921,395 | | |
| 102,888,192 | |
| |
| |
| | | |
| | | |
| | |
Liabilities | |
| |
| | | |
| | | |
| | |
Current liabilities | |
| |
| | | |
| | | |
| | |
Loans and borrowings | |
17 | |
| 4,611,531 | | |
| 3,456,441 | | |
| 3,121,335 | |
Trade and other payables | |
18 | |
| 12,920,633 | | |
| 8,806,021 | | |
| 9,981,321 | |
Labor and pension plan obligations | |
19 | |
| 1,308,514 | | |
| 1,380,000 | | |
| 1,337,616 | |
Current tax liabilities | |
9 | |
| 2,599,679 | | |
| 1,894,761 | | |
| 2,966,277 | |
Estimated liabilities and provisions | |
20 | |
| 901,527 | | |
| 848,051 | | |
| 1,091,782 | |
Other financial liabilities | |
21 | |
| 225,428 | | |
| 140,055 | | |
| 46 | |
Other liabilities | |
| |
| 305,906 | | |
| 297,628 | | |
| 245,767 | |
Total
current liabilities | |
| |
| 22,873,218 | | |
| 16,822,957 | | |
| 18,744,144 | |
| |
| |
| | | |
| | | |
| | |
Non-current liabilities | |
| |
| | | |
| | | |
| | |
Loans and borrowings | |
17 | |
| 38,114,386 | | |
| 31,490,900 | | |
| 19,120,078 | |
Trade and other payables | |
18 | |
| 140,673 | | |
| 126,431 | | |
| 489,238 | |
Labor and pension plan obligations | |
19 | |
| 4,192,293 | | |
| 4,274,083 | | |
| 5,414,008 | |
Deferred tax liabilities | |
9 | |
| 3,787,949 | | |
| 4,040,143 | | |
| 4,036,488 | |
Estimated liabilities and provisions | |
20 | |
| 4,842,089 | | |
| 4,718,722 | | |
| 3,584,511 | |
Other long-term liabilities | |
| |
| 358,740 | | |
| 373,960 | | |
| 508,467 | |
Total
non-current liabilities | |
| |
| 51,436,130 | | |
| 45,024,239 | | |
| 33,152,790 | |
| |
| |
| | | |
| | | |
| | |
Total
liabilities | |
| |
| 74,309,348 | | |
| 61,847,196 | | |
| 51,896,934 | |
| |
| |
| | | |
| | | |
| | |
Equity | |
22 | |
| | | |
| | | |
| | |
Equity attributable to owners of the Company | |
| |
| 45,408,136 | | |
| 49,619,504 | | |
| 49,714,416 | |
Non-controlling interests | |
| |
| 1,471,809 | | |
| 1,454,695 | | |
| 1,276,842 | |
Total
Equity | |
| |
| 46,879,945 | | |
| 51,074,199 | | |
| 50,991,258 | |
| |
| |
| | | |
| | | |
| | |
Total
liabilities and equity | |
| |
| 121,189,293 | | |
| 112,921,395 | | |
| 102,888,192 | |
The
accompanying notes are an integral part of the Consolidated Financial Statements
ECOPETROL S.A.
Consolidated statement of profit or loss
For the three month periods ended March 31
(figures expressed in millions of Colombian Pesos, except for the earnings per share, expressed in Colombian pesos)
| |
Notes | |
2015 | | |
2014 | |
| |
| |
| | | |
| | |
Revenue | |
23 | |
| 12,300,855 | | |
| 17,971,324 | |
Cost of sales | |
24 | |
| 8,554,637 | | |
| 10,768,934 | |
Gross income | |
| |
| 3,746,218 | | |
| 7,202,390 | |
| |
| |
| | | |
| | |
Administration expenses | |
25 | |
| 819,030 | | |
| 198,724 | |
Operation and project expenses | |
25 | |
| 604,953 | | |
| 796,995 | |
Other operating income and expenses, net | |
26 | |
| (35,613 | ) | |
| (57,995 | ) |
Operating income | |
| |
| 2,357,848 | | |
| 6,264,666 | |
| |
| |
| | | |
| | |
Finance results, net | |
27 | |
| | | |
| | |
Financial income | |
| |
| 205,814 | | |
| 172,208 | |
Financial expenses | |
| |
| (561,236 | ) | |
| (316,114 | ) |
Foreign exchange gain (loss), net | |
| |
| (1,174,852 | ) | |
| 22,994 | |
| |
| |
| (1,530,274 | ) | |
| (120,912 | ) |
| |
| |
| | | |
| | |
Share of profit of associates | |
| |
| 744 | | |
| 15,314 | |
Income before income tax | |
| |
| 828,318 | | |
| 6,159,068 | |
| |
| |
| | | |
| | |
Income tax | |
9 | |
| (472,376 | ) | |
| (2,094,229 | ) |
Net income for the period | |
| |
| 355,942 | | |
| 4,064,839 | |
| |
| |
| | | |
| | |
| |
| |
| | | |
| | |
Income attributable to: | |
| |
| | | |
| | |
Owners of the Company | |
| |
| 160,030 | | |
| 3,888,101 | |
Non-controlling interest | |
| |
| 195,912 | | |
| 176,738 | |
| |
| |
| 355,942 | | |
| 4,064,839 | |
| |
| |
| | | |
| | |
Earnings per share (basic and diluted) | |
| |
| 3.9 | | |
| 94.6 | |
| |
| |
| | | |
| | |
The accompanying notes are an integral
part of the Consolidated Financial Statements
ECOPETROL
S.A.
Consolidated statement of other comprehensive income
For the three month periods ended March 31
(figures expressed in millions of Colombian Pesos, except for the earnings per share, expressed in Colombian pesos)
| |
2015 | | |
2014 | |
| |
| | |
| |
Net income for the year | |
| 355,942 | | |
| 4,064,839 | |
| |
| | | |
| | |
Components of comprehensive income of income tax that may be reclassified subsequently to profit or loss: | |
| | | |
| | |
| |
| | | |
| | |
Accumulated foreign currency translation | |
| 1,129,571 | | |
| (291,201 | ) |
Net fair value gain (Loss) on available-for-sale financial assets, net of taxes | |
| (118,239 | ) | |
| 29,065 | |
| |
| 1,011,332 | | |
| (262,136 | ) |
Components of comprehensive income of income tax that will not be reclassified subsequently to profit or loss: | |
| | | |
| | |
| |
| | | |
| | |
Remeasurement of defined benefit obligation, net of taxes | |
| 85,779 | | |
| 62,147 | |
Other comprehensive income for the period | |
| 1,097,111 | | |
| (199,989 | ) |
| |
| | | |
| | |
Total comprehensive income for the year | |
| 1,453,053 | | |
| 3,864,850 | |
| |
| | | |
| | |
Attributable to: | |
| | | |
| | |
Shareholders | |
| 1,238,308 | | |
| 3,688,112 | |
Non-controlling interests | |
| 214,745 | | |
| 176,738 | |
| |
| 1,453,053 | | |
| 3,864,850 | |
The
accompanying notes are an integral part of the Consolidated Financial Statements
ECOPETROL S.A.
Consolidated statement of cash flows
For the three month periods ended March 31
(figures expressed in millions of Colombian Pesos)
| |
2015 | | |
2014 | |
| |
| | |
| |
Cash flows from operating activities: | |
| | | |
| | |
Net income for the period attributable to owners of Ecopetrol S.A. | |
| 160,030 | | |
| 3,888,101 | |
Adjustments to reconcile net income to cash provided by operating activities: | |
| | | |
| | |
Non-controlling interest | |
| 195,912 | | |
| 176,738 | |
Deferred income tax | |
| (284,176 | ) | |
| 20,551 | |
Depreciation, depletion and amortization | |
| 1,586,918 | | |
| 1,574,939 | |
Foreign exchange loss (gain) | |
| 1,174,852 | | |
| (22,993 | ) |
Finance costs recognised in profit or loss | |
| 426,105 | | |
| 295,215 | |
Gain on disposal of non-current assets | |
| 494 | | |
| (3,956 | ) |
Impairment of assets | |
| 41,748 | | |
| 2,076 | |
Fair Value Loss (gain) on financial assets valuation | |
| 60,563 | | |
| (5,875 | ) |
Share of profit of associates | |
| (744 | ) | |
| (15,314 | ) |
Movements in working capital: | |
| | | |
| | |
Trade and other receivables | |
| 354,043 | | |
| (457,012 | ) |
Inventories | |
| 140,296 | | |
| 274,417 | |
Trade and other payables | |
| (1,402,364 | ) | |
| (741,597 | ) |
Current tax assets and liabilities | |
| 1,036,629 | | |
| 1,378,992 | |
Labor and pension plan obligations | |
| (153,131 | ) | |
| (142,636 | ) |
Estimated liabilities and provisions | |
| 21,075 | | |
| 29,154 | |
Other assets and liabilities | |
| 65,855 | | |
| (485,079 | ) |
Income tax paid | |
| (125,109 | ) | |
| (1,367,557 | ) |
Net cash provided by operating activities | |
| 3,298,996 | | |
| 4,398,164 | |
| |
| | | |
| | |
Cash flow from investing activities: | |
| | | |
| | |
Investment in property, plant and equipment | |
| (2,089,147 | ) | |
| (1,471,042 | ) |
Investment in natural and environmental resources | |
| (890,524 | ) | |
| (839,714 | ) |
Payments for intangibles | |
| (6,973 | ) | |
| (83,834 | ) |
(Purchases) sales of other financial assets | |
| (869,689 | ) | |
| 641,344 | |
Interest received | |
| 73,690 | | |
| 109,990 | |
Proceeds from sales of property, plant and equipment | |
| 15,285 | | |
| 132,401 | |
Net cash used in investing activities | |
| (3,767,358 | ) | |
| (1,510,855 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Proceeds from borrowings | |
| 5,056,025 | | |
| 1,440,333 | |
Repayment of borrowings | |
| (560,606 | ) | |
| (1,373,703 | ) |
Interest paid | |
| (403,071 | ) | |
| (348,252 | ) |
Capitalizations | |
| 11 | | |
| 43 | |
Dividends paid | |
| (181,704 | ) | |
| (1,328,044 | ) |
Net cash generated/(used in) financing activities | |
| 3,910,655 | | |
| (1,609,623 | ) |
| |
| | | |
| | |
Effects of exchange rate changes on the balance of cash held in foreign currencies | |
| 482,979 | | |
| 81,926 | |
| |
| | | |
| | |
Net increase in cash and cash equivalents | |
| 3,925,272 | | |
| 1,359,612 | |
Cash and cash equivalents at the beginning of the period | |
| 7,015,731 | | |
| 8,541,138 | |
Cash and cash equivalents at the end of the period | |
| 10,941,003 | | |
| 9,900,750 | |
| |
| | | |
| | |
Non-cash transactions: | |
| | | |
| | |
Payment of income tax through offset of recoverable balances | |
| 594,451 | | |
| - | |
The
accompanying notes are an integral part of the Consolidated Financial Statements
ECOPETROL S.A.
Consolidated statement of changes in equity
For the three month periods ended March 31, 2015 and 2014
(figures expressed in millions of Colombian Pesos)
| |
Subscribed
and
paid-in capital | | |
Additional
paid-
in capital | | |
Legal
reserves | | |
Other
reserves | | |
Other
comprehensive
income | | |
Retained
earnings | | |
Non-controlling
interests | | |
Total
Equity | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance as of December
31, 2014 | |
| 10,279,175 | | |
| 6,607,613 | | |
| 4,938,718 | | |
| 13,170,693 | | |
| 3,821,973 | | |
| 10,801,332 | | |
| 1,454,695 | | |
| 51,074,199 | |
Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 160,030 | | |
| 195,912 | | |
| 355,942 | |
Dividends declared | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (5,468,520 | ) | |
| (197,631 | ) | |
| (5,666,151 | ) |
Additions to paid-in capital | |
| - | | |
| 5 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 5 | |
Additional paid-in capital
receivable | |
| - | | |
| 6 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 6 | |
Release of reserves -
Occasional | |
| - | | |
| - | | |
| - | | |
| (12,823,783 | ) | |
| - | | |
| 12,823,783 | | |
| - | | |
| - | |
Appropriation of reserves | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Legal | |
| - | | |
| - | | |
| 23,617 | | |
| - | | |
| - | | |
| (23,617 | ) | |
| - | | |
| - | |
Fiscal | |
| - | | |
| - | | |
| - | | |
| 439,757 | | |
| - | | |
| (439,757 | ) | |
| - | | |
| - | |
Occasional | |
| - | | |
| - | | |
| - | | |
| 15,037,180 | | |
| - | | |
| (15,037,180 | ) | |
| - | | |
| - | |
Other comprehensive income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Actuarial
valuation | |
| - | | |
| - | | |
| - | | |
| - | | |
| 85,779 | | |
| - | | |
| - | | |
| 85,779 | |
Net
fair value gain (loss) on available-for-sale financial assets | |
| - | | |
| - | | |
| - | | |
| - | | |
| (118,239 | ) | |
| - | | |
| - | | |
| (118,239 | ) |
Foreign
currency translation | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,129,571 | | |
| - | | |
| 18,833 | | |
| 1,148,404 | |
Balance as of
March 31, 2015 | |
| 10,279,175 | | |
| 6,607,624 | | |
| 4,962,335 | | |
| 15,823,847 | | |
| 4,919,084 | | |
| 2,816,071 | | |
| 1,471,809 | | |
| 46,879,945 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance as of January 1, 2014 | |
| 10,279,175 | | |
| 6,607,541 | | |
| 4,700,873 | | |
| 10,354,141 | | |
| 245,711 | | |
| 17,526,975 | | |
| 1,276,842 | | |
| 50,991,258 | |
Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 3,888,101 | | |
| 176,738 | | |
| 4,064,839 | |
Dividends declared | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (10,690,342 | ) | |
| (103,229 | ) | |
| (10,793,571 | ) |
Additions to paid-in capital | |
| - | | |
| 43 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 43 | |
Additional paid-in capital
receivable | |
| - | | |
| 30 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 30 | |
Release of reserves -
Occasional | |
| - | | |
| - | | |
| - | | |
| (10,161,139 | ) | |
| - | | |
| 10,161,139 | | |
| - | | |
| - | |
Appropriation of reserves | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Legal | |
| - | | |
| - | | |
| 228,326 | | |
| - | | |
| - | | |
| (228,326 | ) | |
| - | | |
| - | |
Occasional | |
| - | | |
| - | | |
| - | | |
| 12,823,784 | | |
| - | | |
| (12,823,784 | ) | |
| - | | |
| - | |
Other comprehensive income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Actuarial
valuation | |
| - | | |
| - | | |
| - | | |
| - | | |
| 62,147 | | |
| - | | |
| - | | |
| 62,147 | |
Net
fair value gain (loss) on available-for-sale financial assets | |
| - | | |
| - | | |
| - | | |
| - | | |
| 29,065 | | |
| - | | |
| - | | |
| 29,065 | |
Foreign
currency translation | |
| - | | |
| - | | |
| - | | |
| - | | |
| (291,201 | ) | |
| - | | |
| - | | |
| (291,201 | ) |
Balance as of
March 31, 2014 | |
| 10,279,175 | | |
| 6,607,614 | | |
| 4,929,199 | | |
| 13,016,786 | | |
| 45,722 | | |
| 7,833,763 | | |
| 1,350,351 | | |
| 44,062,610 | |
The
accompanying notes are an integral part of the Consolidated Financial Statements
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Contents
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Ecopetrol S.A. is a mixed economy company,
with a commercial nature, constituted in 1948. Dedicated to commercial or industrial activities arising from or related to the
exploration, production, refining, transportation, storage, distribution, and selling of hydrocarbons, their by-products and associated
products on its own or through its subsidiaries (“Ecopetrol”, the “Company” or Ecopetrol Business Group).
11.51% of Ecopetrol S.A.’s shares
are publicly traded on the Colombian, New York, Lima and Toronto Stock Exchanges. The remaining shares (89.49% of the total outstanding
shares) are owned by the Ministry of Finance and Public Credit.
The address of the principal office of
Ecopetrol S.A. is Bogotá – Colombia, Carrera 13 No. 36-24.
| 2.1 | Statement of compliance and authorization
of financial statements |
IFRS have been adopted in Colombia for
the periods beginning January 1, 2015, in conformity with Law 1314 of 2009, Regulatory Decree 2784 of December 2012, Decrees 3023
and 3024 of 2013 and Decree 2615 of 2014.
These interim consolidated financial statements
for the three month period ended March 31, 2015 and 2014 have been prepared in accordance with International Accounting Standard
(IAS) 34 – Interim Financial Reporting and do not include all of the information required for full annual financial statements.
These are the Group´s first IFRS condensed consolidated interim financial statements for part of the period covered by the
first IFRS annual financial statements and IFRS 1 First-time adoption of International Financial Reporting Standards has
been applied. Effects originated in application of IFRS are set out in note 4.
These interim consolidated financial statements
were approved by the Administration of the Company on June 22, 2015. The Consolidated financial statements for the years ended
December 31, 2014 and 2013 have been prepared in accordance with Public Accounting Regime issued by the Contaduría General
de la Nación (CGN – National Accounting Office) and other legal dispositions, which were considered as previous
Generally Accepted Accounting Principles (previous GAAP). Previous GAAP differs in certain respects from IFRS, as disclosed in
Note - 4 - First time adoption of International Financial Reporting Standards - IFRS.
Principal accounting policies are set
out in note 3 to these interim consolidated financial statements.
| 2.2 | Basis of consolidation |
For presentation purposes, the interim
consolidated financial statements were prepared by consolidating all companies set out in Exhibit 1, which are those that Ecopetrol
is able to control directly or indirectly. Control is achieved when the Company:
| · | has
power over the investee; |
| · | is
exposed, or has the rights, to variable returns from its involvement with the investee;
and |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
| · | has
the ability to use its power to affect its returns. |
When the Company has less than a majority
of the voting rights of an investee, it still has power over the investee when the voting rights are sufficient to give it the
practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and
circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:
| · | the
size of the Company’s holding of voting rights relative to the size and dispersion
of holding of the other shareholders; |
| · | potential
voting rights held by the Company, other vote holders or other parties; |
| · | rights
arising from other contractual arrangements; and |
| · | any
additional facts and circumstances that indicate that the Company has, or does not have,
the current ability to direct the relevant activities, at the time that decisions need
to be made, including voting patterns at previous shareholders´ meetings. |
All intragroup assets and liabilities,
equity, income, expenses and cash flows relating transactions between entities of the Group were eliminated on consolidation.
The consolidated financial statements
have been prepared on a historical cost basis except for financial assets that are measured at fair value through profit or loss
and / or through other comprehensive income at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on fair value of the consideration
given in exchange for goods and services.
Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. In estimating the fair value of an asset or liability, the Group takes into account the characteristic of the asset or liability
if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
| 2.4 | Presentation and functional currency |
Transactions included in these financial
statements are valued and presented in Colombian pesos, the currency of the primary economic environment in which Ecopetrol operates.
This is also its functional currency.
The statement of profit or loss and statement
of cash flows of subsidiaries with functional currencies different from Ecopetrol’s functional currency are translated at
the exchange rates at the dates of the transaction or based on the monthly average rate. Assets and liabilities are translated
at the closing rate and other equity items are translated at exchange rates at the moment of the transaction. All resulting exchange
differences are recognized in other comprehensive income.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
In preparing the financial statements
of Ecopetrol, transactions in currencies other than the entity’s functional currency are recognized at the rates of exchange
prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies
are translated at the rates prevailing at the date and variations presented on translation are recognized
in financial results, net. Non-monetary items carried at fair value that are denominated in foreign currencies are translated
at the rates prevailing at the date when the fair value was determined.
| 2.6 | Classification of assets and liabilities
between current and non-current |
In the consolidated statement of financial
position, assets and liabilities are classified according to their nature between current, being those with a maturity date equal
or less than twelve months, and non-current, being those with a maturity date greater than twelve months.
| 2.7 | Net earnings per share |
Net earnings per share is calculated based
on net earnings for the period attributable to the controlling stockholders, divided by the weighted average number of subscribed
shares in circulation during the period. There are no potentially dilutive securities.
The
accounting policies indicated below have been applied consistently for all the periods presented, unless otherwise stated.
| 3.1 | Significant accounting judgments and
estimations |
The preparation of financial statements
requires that the Company’s management make estimates about the carrying amounts of assets, liabilities, income, expenses
and commitments recognized in the Financial Statements. These estimates are carried out based on the best available information
on the matters under review. Revisions to accounting estimates are recognized prospectively in the period in which the estimate
is revised.
The following are the critical judgments
and estimations that have the most significant effect on the amounts recognized in the consolidated financial statements.
| 3.1.1 | Oil and Gas reserves |
The reserves audit process is conducted
annually as of December 31 in accordance with the United States Securities and Exchange Commission (SEC) definitions and rules
set forth in Rule 4-10(a) of SEC Regulation S-X and the disclosure guidelines contained in the SEC’s Modernization of Oil
and Gas Reporting final rule.
The estimated reserve amounts are based
on the average prices during the 12-month period prior to the ending date of the period covered in the report, determined as the
unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period, unless
prices were defined by contractual arrangements, as required by the SEC regulations.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Reserves estimates are prepared using
geological, technical and economic factors, including projections of future production rates, oil prices, engineering data and
length and amount of future investments with a certain degree of uncertainty. These estimates that are based on conditions in
existence as of the date of the report which could significantly differ from other conditions during the year or in future periods.
Any changes in regulatory and/or market conditions could materially change the quantity and value of our reserves.
Changes to estimates of proved developed reserves affect prospectively the amounts of depreciation, depletion
and amortisation charged and, consequently, the carrying amounts of exploration and production assets. It is expected, however,
that in the normal course of business the diversity of the asset portfolio will limit the effect of such revisions. The outcome
of, or assessment of plans for, exploration or appraisal activity may result in the related capitalised exploration drilling costs
being recognised in in the Consolidate statement of profit and loss that period.
Information about the carrying amounts
of exploration and production assets and the amounts charged to income, including depreciation, depletion and amortisation, is
presented in Note 14.
| 3.1.2 | Abandonment of fields and other
facilities |
According to environmental and oil regulations,
the Ecopetrol Business Group must recognize the costs for the abandonment of oil extraction and transportation facilities, which
include the cost of plugging and abandoning wells, dismantling facilities and environmental remediation in the affected areas.
The estimated costs of dismantling and
removing these facilities are recorded in the functional currency of each company at the time of the installation of the assets.
The estimated obligations created for the abandonment and dismantling are subject to annual reviews and adjusted to reflect the
best available estimate, due to technological changes and political, economic, environmental and security issues, and also relations
with stakeholders.
The calculations of these estimates are
complex and involve significant judgments made by Management, such as internal projections of costs, future inflation and discount
rates. We consider that the retirement costs and obligations are reasonable, based on the experience of the Ecopetrol business
group and market conditions; nevertheless, significant variations in external factors used for the calculation of the estimate
could significantly impact the financial statements.
| 3.1.3 | Pension plan and other benefits |
The determination of the expense, liability
and adjustments relating to our pension plans and other retirement benefits requires us to use judgment in the determination of
actuarial assumptions. These include the number of active employees with indefinite term contracts, retirees and their heirs,
pension benefits, healthcare and education expenses, the number of temporary employees who will remain with us until retirement,
voluntary retirement plans and pension bonds. The calculation of pension bonds is maintained to comply with our pension obligations,
pursuant to Decrees 1748 of 1995, 1474 of 1997, and 876 of 1998, as well as Law 100 of 1993 and its regulatory decree.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
These actuarial assumptions include estimates
of future mortality, withdrawal, changes in compensation and discount rates as well as the estimated rate of return on pension
bonds and other plan assets. These assumptions are reviewed annually for actuarial valuation purposes and may differ materially
from the actual results due to the changing economic and market conditions, regulatory events, court rulings, higher or lower
retirement rates, or longer or shorter life expectations of employees.
We consider that the assumptions used
for the recognition of our obligations under defined benefit plans are reasonable based on our experience and market conditions.
| 3.1.4 | Impairment of oil and gas assets |
During annual impairment testing management
must make reasonable and supportable assumptions and estimates with respect to, among other factors, (1) the fair value of reserves,
(2) oil fields’ production profiles and future production of refined and chemical products, (3) future investments, taxes
and costs, (4) future capital expenditures and useful life for properties and (5) future prices, among other factors. Any change
in the variables used to prepare such assumptions and estimates may have a significant effect on the results of the impairment
tests.
Ecopetrol performs annual impairment tests
of goodwill in reference to fair value. Goodwill, for impairment testing purposes, is allocated to each of the cash-generating
units (or groups of cash generating units) that are expected to benefit from the synergies of the combination.
Fair value is determined using the discounted
free cash flow methodology that requires significant assumptions and estimates to be made. The Company considers that the assumptions
and estimates used are reasonable and supportable based on the current market conditions and are aligned to the risk profile of
the related assets. However, different assumptions and estimates may be used which would lead to different results. Valuation
models used are sensitive to changes in the underlying assumptions. For example, sales volumes and prices that will be paid for
the purchase of raw materials are assumptions that may vary in the future. Adverse changes in any of these assumptions could lead
to recognition of goodwill impairment.
| 3.1.6 | Litigation Assessments |
We are subject to claims for regulatory
and arbitration proceedings, tax assessments and other claims arising in the normal course of business. Management and legal counsel
evaluate these situations based on their nature, the likelihood that they materialize, and the amounts involved, to decide on
any changes to the amounts accrued and/or disclosed. This analysis, which may require considerable judgment, includes assessment
of current legal proceedings brought against us and claims not yet initiated. In accordance with management’s evaluation
and guidance provided by IFRS, we create provisions to meet these costs when the liability is probable and reasonable estimates
of the liability can be made.
Ecopetrol considers that the payments
required to settle the quantities related to the claims, in case of loss, will not vary significantly from the estimated costs,
and therefore will not have a material adverse effect on our financial statements taken as a whole.
Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities
in our financial statements and their respective tax bases. Deferred taxes on assets and liabilities are calculated based on enacted
or substantively enacted statutory tax rates that will be applied to our taxable income during the years in which temporary differences
between the carrying amounts and tax bases are expected to be reversed.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
The classification of financial instruments
depends on the nature and purpose for which the financial assets or liabilities were acquired and is determined at the time of
initial recognition. All regular way purchases or sales of financial instruments are recognized and derecognized on a trade date
basis. Regular purchases or sales of financial assets are those that require delivery of assets within the time frame established
by regulation or agreement in the marketplace.
Financial assets and financial liabilities
are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial
assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss)
are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through
profit or loss are recognized immediately in profit or loss.
Financial assets through profit or loss
and through other comprehensive income are stated at fair value. Financial instruments at amortized cost, loans and trade receivables,
other receivables and financial assets held-to-maturity are measured at amortized cost using the effective interest method.
Equity investments available for sale
that do not have a market quotation price and which fair price cannot be reliably measured are measured at cost less any loss
for impairment identified at the end of each reporting period
Fair value
The fair value hierarchy is based on the
level of market available information which includes the security liquidy and availability of exchange prices or indicators generated
from market operations (rates, curves, volatilities and other required valuation variables).
.
Level 1: Quoted prices (unadjusted) in
active markets for identical assets and liabilities. For the Company, level 1 inputs include marketable securities that are actively
traded.
Level 2: Inputs other than Level 1 that
are observable, either directly or indirectly. For the Company, Level 2 inputs include quoted prices for similar assets, prices
obtained through third-party broker quotes, and prices that can be corroborated with other observable inputs for substantially
the same term as the contract.
Level 3: Unobservable inputs. The Company
does not use Level 3 inputs for any of its recurring fair –value measurements. Level 3 inputs may be required for the determination
of fair value associated with certain non-recurring measurements of non-financial assets and liabilities. The Company uses Level
3 inputs to determine the fair value of certain non-recurring non-financial assets.
Effective interest method
The effective interest method is a method
of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees, transaction costs
and other premiums or discounts that are included in the calculation of the effective interest rate) through the expected life
of the financial instrument (or, when appropriate, at a shorter period), to the net carrying amount on initial recognition.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Impairment
Financial assets at amortized cost are
assessed for impairment indicators at the end of each reporting period. Financial assets are considered to be impaired when there
is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated future cash
flows of the investment have been affected. For financial assets measured at amortized cost, the amount of the impairment loss
recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted
at the financial asset’s original effective interest rate.
De-recognition of financial assets
and financial liabilities
Ecopetrol derecognizes a financial asset
when the contractual rights to the cash flows from the asset expire and when it transfers substantially all the risks and rewards
of ownership of the asset to another party. If neither the risks nor rewards of ownership are transferred and the Company continues
to control the transferred asset, its retained interest in the asset and any associated liability for amounts it may have to pay
continue to be recognized. If all the risks and rewards of ownership of a transferred financial asset are retained, the financial
asset and any collateralized borrowing for the proceeds received are recognized.
| 3.2.1 | Cash and cash equivalents |
Cash and cash equivalents include negotiable
investments and special funds with maturity dates that fall within ninety (90) days of their acquisition and are subject to minimal
risks of changes in value.
| 3.2.2 | Financial assets at fair value
through profit or loss |
Financial assets at fair value through
profit or loss are financial assets held for trading acquired principally for the purpose of selling them in the short term. Financial
assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on re-measurement recognized
in profit or loss.
Loans to employees are initially recognized
using the present value of the future cash flows, discounted at the current market rate of return for similar loans. If the interest
rate is less than the current market rate, fair value will be less than the amount of the loan. This difference is recorded as
a benefit to employees.
| 3.2.3 | Available for sale financial assets |
Available for sale financial assets are
equity instruments of other non-controlled or non-strategic companies where the Company does not exercise any type of control
or significant influence thereon and where the Company does not intend to sell the instruments in the short term. They are recognized
at their fair value and unrealized losses or profits are recognized in other comprehensive income. At the time of sale or impairment
of the assets the related adjustments are attributed to the results of the period.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
| 3.2.4 | Loans and receivables |
Financial assets with fixed or determinable
payments that are not quoted in an active market are classified as current, except for those that have a maturity date longer
than twelve months from the statement of financial position date, which are classified as non-current. Loans and receivables,
including trade and other receivables, are measured initially at fair value and then at amortized cost using the effective interest
rate method.
| 3.2.5 | Financial liabilities |
Financial liabilities correspond to the
financing obtained by the Company through bank credit facilities and bonds, accounts payable to suppliers and creditors.
Bank credit facilities and bonds are initially
recognized at their fair value, net of transactions costs incurred, and subsequently carried at amortized cost. The difference
between the amount received and its nominal value is recognized in the results of the period during the time of amortization of
the financial obligation, using the effective interest rate method.
Accounts payable to suppliers and creditors
are short term financial liabilities recorded at their face value, since they do not differ significantly from their fair value.
| 3.2.6 | Derivative financial instruments |
Ecopetrol may enter into hedging agreements
to reduce exposure to the fluctuations of international crude oil and products prices and foreign exchange and interest rates.
We do not use derivative financial instruments for speculative purposes. Ecopetrol has established control activities to assess,
approve and monitor derivative financial instruments. During the past few years, these types of instruments have not been recurrent
or have not generated any significant impact on the financial statements.
During 2014, exchange rate derivative
were utilized, however, these instruments did not meet the necessary requirements for the application of hedge accounting and
the impact with respect to the fair value movements was recognized directly in the results of the period.
Inventories include assets extracted,
in production process, transformed or acquired for any reason, for the purpose of being sold, transformed and consumed in the
production process, or as part of services delivered.
Crude oil is valued at its production
cost, including necessary expenses incurred to transport the inventory to its current locations.
The cost of inventories is determined
under the weighted average method, which includes acquisition costs (deducting commercial discounts, rebates obtained and other
similar amounts), transformation, as well as other costs incurred in order to deliver the inventories to their current location
and conditions, such as transportations costs.
Inventories of consumables (spare parts
and supplies) are recognized as inventory and subsequently charged to expense, maintenance or projects, as such elements are consumed.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Ecopetrol makes an evaluation of the net
realizable value of inventories at the end of the period, recording, with charge to profit and loss, an impairment to the value
when they are overvalued. When the circumstances that previously caused impairment cease to exist, or when there is clear evidence
of an increase in the net realizable value due to a change in economic circumstances, the amount thereof is then reversed.
Associates and joint ventures are considered
related parties. Investments in associates and joint ventures are accounted for using the equity method and are initially recognized
at cost. The Company's investment in associates and joint ventures includes goodwill identified on acquisition, net of any accumulated
impairment loss.
The Company's share of the profit or loss
of its associates and joint ventures is recognized in the statement of income and its share of reserve movements is recognized
in the Company reserves.
Unrealized gains on transactions between
the Company and its associates and joint ventures are eliminated to the extent of the Company's interest.
Accounting policies of associates and
joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Company.
| 3.4.1 | Investments in associates |
An associate is an entity over which the
Group has significant influence but not control. Generally these entities are those in which a equity interest is maintained from
20% to 50% of the voting rights. See Exhibit I for a detail of these companies.
A joint venture is a joint arrangement
whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control
exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
Joint operation contracts are entered
into between Ecopetrol and third parties in order to share risk, secure capital, maximize operating efficiency and optimize the
recovery of reserves. In these joint operations, one party is designated as the operator to execute the expense and investment
budget and report to partners according to their participation interests. Furthermore, each party takes its share of the hydrocarbons
(crude oil or gas) produced according to its agreed participation.
When Ecopetrol participates as a non-operator
partner, it records the assets, liabilities, revenues, costs and expenses based on information reported by the operators. When
Ecopetrol is the direct operator of the joint venture contracts, it records its percentage of the assets, liabilities, revenues,
costs and expenses, based on each partner’s participation interests in the line items corresponding to assets, liabilities,
expenses, costs and revenues.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
| 3.6 | Non-current assets held for sale |
Non-current assets and disposals groups
are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than
through continuing use. This condition is regarded as met only when the sale is expected to qualify for recognition as a completed
sale within one year from the date of classification and the asset (or disposal group) is available for immediate sale in its
present condition. These assets are measured at the lower of their carrying amount and fair value less costs to sell.
| 3.7 | Property, plant and equipment |
Recognition and measurement
Property, plant and equipment are presented
at cost less accumulated depreciation and accumulated losses for impairment. Tangible components related to natural and the environmental
resources are part of property, plant and equipment.
All directly attributable costs of bringing
the asset to the location and condition necessary for it to be capable of operating in the manner intended by management are considered
capitalizable. Such costs are mainly: a) purchase price, including import duties and non-refundable purchase taxes; b) costs of
employee benefits arising directly from the construction or acquisition; c) all directly attributable costs of bringing the asset
to the location and condition necessary for it to be capable of operating in the manner intended by management; d) borrowing costs
incurred in loans directly attributable to the acquisition and construction of assets and; e) the initial estimate of the costs
of dismantling and removing the item.
Spare parts and servicing equipment are
carried as inventories and recognised as an expense as they are consumed. Major spare parts and stand-by equipment that the entity
expects to use during more than one period are recognized as property, plant and equipment.
Any gain or loss arising from the disposal
of a property, plant and equipment item is recognized in profit or loss in the period incurred.
Subsequent disbursements
All disbursements made on the existing
assets in order to increase or extend the initial expected useful life, increase productivity or productive efficiency, that allow
a significant reduction of operating costs, increase the level of reserves in exploration or production areas or replace a part
or component of an asset that is considered critical for the operation are considered additions or improvements and are recognized
as property, plants and equipment.
The costs of the day-to-day servicing,
repair or maintenance of an item of property, plant and equipment are recognised as expense when incurred. However, major inspections
performed, are capitalized.
Depreciation
Property, plant and equipment is depreciated
using the straight-line method, except for those associated with Exploration and Production activities which are depreciated using
the technical units-of-production method. Technical useful lives are updated annually considering factors such as: additions or
improvements (due to parts replacement or critical components for the asset’s operation), technological advances, obsolescence
and other factors; the effect of this change is recognised in future periods. Depreciation of an asset commences when it is available
for use.
Useful lives are determined based on the
period over which an asset is expected to be available for use, physical exhaustion, technical or commercial obsolescence and
legal limits or restrictions over the use of the asset.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Estimated useful lives are between the
following ranges:
Plant and equipment |
10 – 60 years |
Pipelines, networks and lines |
9 – 58 years |
Buildings |
15 – 74 years |
Others |
3 – 42 years |
Lands are recorded independently of buildings
and facilities and have indefinite useful lives therefore they are not subject to depreciation.
Depreciation methods and useful lives
are reviewed annually by business units and adjusted if appropriate.
Investment properties
As investment property is recognized when
the property owned by the Company is used to obtain income, appreciations or both, rather than in the production or supply of goods
or services, for administrative purposes or for their sale in the ordinary course of operations.
The acquisition cost of an investment
property consists of its purchase price and any directly attributable disbursement. Cost model is used for measurement after initial
recognition.
| 3.8 | Natural and environmental resources |
Recognition and measurement
Ecopetrol uses the successful efforts method
to account for exploration and production of crude oil and gas activities, also considering IFRS 6 – Exploration for the
evaluation of mineral resources.
Exploration costs
All costs associated with exploration
and evaluation are capitalized as exploration and evaluation assets pending determination of whether the exploration drilling
is successful or not; if determined to be unsuccessful all costs are expensed.
Exploration costs are those incurred with
the objective of identifying areas that are considered to have prospects of containing oil and gas reserves, including geological
and geophysical (G&G), seismic costs, exploratory wells, exploratory-type stratigraphic test wells, among others. Exploratory
wells costs are recognised as assets pending determination of commercial viability and if not are expensed as exploration expenses.
Other expenditures are expensed when incurred.
An exploration and evaluation asset is
classified as such once the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. Before
reclassification, assets are assessed for impairment, and any resulting impairment is recognised. Exploration and evaluation assets
are assessed for impairment when facts and circumstances suggest its carrying value is below its recoverable value.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Development costs
Development costs correspond to those
costs incurred to obtain access to proved hydrocarbon reserves and to provide facilities for extracting, treating, gathering and
storing. When a project is approved for development, the accumulated value of the acquisition and exploration costs is classified
as natural and environmental resources and costs subsequent to the exploration phase are capitalized as development costs of the
properties that contain such natural resources assets. All development costs are capitalized, including drilling costs of unsuccessful
development wells.
Production costs
Production costs are those incurred to
operate and maintain productive wells as well as the corresponding equipment and facilities. The production activity includes
extraction of oil and gas to the surface, its gathering, treatment and processing as well as storage in the field. Production
costs are expenses at the time they are incurred unless they add reserves, in which case they are capitalized.
Production and support equipment is recognised
at historical cost and is part of property, plant and equipment and subject to depreciation.
Capitalized costs also include dismantlement,
retiring and restoring costs, as well as the estimated cost of future environmental obligations. The estimation includes plugging
and abandonment costs, facility dismantling and environmental recovery of areas and wells. Changes arising in new abandonment
liability estimations and environmental recovery are capitalized to the related asset.
Capitalized costs include net income obtained
by the sale of crude oil from extensive testing, since they are considered necessary to complete the asset.
Depletion
Depletion of natural and environmental
resources are determined using the unit-of-production method, using proved developed reserves as a base. Depletion factors are
reviewed annually, based on the reserve report.
Reserves are audited by internationally
recognized external consultants and approved by the Company’s Board of directors. Proved reserves consist of the estimated
quantities of crude oil and natural gas demonstrated with reasonable certainty by geological and engineering data to be recoverable
in future years from known reserves under existing economic and operating conditions, that is, at the prices and costs that apply
at the date of the estimate.
Impairment
Assets associated to exploration, evaluation
and production are subject to review annually for possible impairment in their recoverable value. See policy 3.11 – Impairment
of assets.
| 3.9 | Capitalization of borrowing costs |
Borrowing costs related to the acquisition,
construction or production of a qualifying asset that requires a substantial period of time to get ready for its intended use
are capitalized as part of the cost of that asset when it is probable that future economic benefits associated with the item will
flow to the Company and costs can be measured reliably. The other borrowing costs are recognized as finance costs in the period
in which they are incurred.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Intangible assets with finite useful lives
that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization
is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are
reviewed at the end of each reporting period, with the effect of any changes in estimates being accounted for prospectively.
Expenditures on research activities are
recognized as an expense in the period in which they are incurred.
Goodwill
is the excess of the purchase price over the fair value of the identifiable assets
and liabilities of acquired companies, measured at the acquisition date. The carrying amount of
goodwill is not amortized and is reviewed annually for possible impairment losses.
For the purposes of impairment testing,
the discounted cash flow method is used to assess impairment of goodwill. If the net present value is less than the carrying amount,
the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the Cash Generating Units (CGU)
or group of CGUs and then to the other assets of the CGU or group of CGUs. Any impairment loss is recognized directly in profit
or loss. Once an impairment loss on goodwill is recognized, it is not reversed in subsequent periods.
Leases are classified as finance leases
whenever the terms of the lease transfer substantially all the risks and rewards of ownership. All other leases are classified
as operating leases.
Assets held under finance leases, when
Ecopetrol is the lessee, are recognized in the statement of financial position at an amount equal to the fair value of the leased
asset or, if lower, the present value of the minimum lease payment. The corresponding liability to the lessor is included in the
consolidated statement of financial position as a finance lease obligation.
Lease payments are apportioned between
finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of
the liability. Finance expenses are recognized immediately in profit or loss.
Operating lease payments are recognized
as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the
time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases
are recognized as an expense in the period in which they are incurred.
In order to evaluate the recoverable amount
of tangible and intangible assets, Ecopetrol compares the carrying amount with its recoverable amount at the end of each reporting
period or earlier, if there is any indication that an asset may be impaired.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
In order to make an impairment analysis,
the assets are grouped into cash generating units (CGU), provided that those assets individually considered do not generate cash
inflows that, to a great extent, are independent from those generated by other assets or CGUs. The grouping of assets in different
CGUs requires the exercise of professional judgment and the consideration, among other parameters, of the business segments. In
this sense, in the segment of Exploration and Production, each CGU corresponds to each one of the different contractual areas
commonly called “fields”; by exception, in those cases in which the cash inflows generated by several fields are interdependent
on each other, those fields are grouped into a single CGU. In the case of the Refining and Petrochemicals segment, the CGU´s
correspond to each one of the refineries of the group and for the segment of Transportation each pipeline is taken as an independent
CGU.
The recoverable value is the higher of
the fair value less costs of sale and value in use. If the recoverable amount of an asset (or of a CGU) is lower than its net
book value, its book value (or that of the CGU) is reduced to its recoverable amount, recognizing a loss for impairment of value
as expense.
The value in use is determined as the
sum of the future discounted cash flows adjusted to the estimated risk. The estimates of future cash flows used in the evaluation
of impairment of assets are made with projections of commodity prices, supply and demand estimates and the margins of the products.
In case of assets or cash generating units engaged in the evaluation and exploration of reserves, proved, probable and possible
reserves are considered, with a risk factor associated to them also being considered.
Once a loss for impairment of value has
been recorded, future amortization expense is calculated on the basis of the adjusted recoverable value.
Impairment losses may be reversed, except
those corresponding to goodwill, only if the reversal is related to a change in estimates used after the loss for impairment was
recognized. These reversals shall not exceed the book value of the assets net of depreciation or amortization that would have
been determined if the impairment had never been recognized.
In the reclassification of any non-current
asset to non-current assets held-for-sale, the book value of these assets is revised to its fair value less costs to sell. No
other provision for depreciation, depletion or amortization is recorded if the fair value less costs to sell is less than the
book value.
| 3.14 | Provisions and Contingent Liabilities |
Provisions are recognized when Ecopetrol
has a present obligation (legal or constructive) as a result of a past event, it is probable that Ecopetrol will be required to
settle the obligation, and a reliable estimate can be made of the amount of the obligation. Where applicable, they are recorded
at present value.
Disbursements related to the conservation
of the environment for current or future operations, are accounted for as expenses or assets, as it may correspond. Disbursements
related to operations of the past that do not contribute to the obtaining of current or future income, are charged to expenses.
The creation of these provisions coincides
with the identification of an obligation related to environmental remediation and Ecopetrol has adequate information to determine
a reasonable estimate of the respective cost.
Contingent liabilities are not recognized
but are subject to disclosure in the explanatory notes whenever the outlay of resources is possible, including those which values
cannot be estimated.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Asset retirement obligation
Liabilities associated to the retirement
of assets are recognized when there are current obligations, either legal or implied, related to the abandonment and reclamation
of wells, facilities, pipelines, buildings and equipment, as the case may be; they must be recognized using the discounted cash
flow technique taking into consideration the economic limit of the field or useful life of the respective asset. When it is not
possible to determine a reliable estimate in the period in which the obligation originates, a provision is recognized when there
is sufficient information available to make the best estimate.
The book value of the provision is reviewed
and adjusted annually considering changes in the variables used for its estimate. The increase in the provision due to the passage
of time is recognised as an interest expense.
Income tax expense is comprised of income
tax payable for the period (including, income tax and complementary taxes and income tax for equality - CREE, as appropriate)
and the effect of deferred taxes in each period.
The provision for income tax and complementary
taxes and income tax for equality (CREE), as appropriate, is calculated based on the higher of the taxable income and presumptive
income (the minimum estimated amount of profitability on which the law expects to quantify and collect the income tax). Taxable
profit differs from profit before tax as reported in the consolidated statement of profit or loss, because of items income or
expense that are taxable or deductible in other periods, special taxable deductions, taxable losses and income or expenses that
are non-taxable or non-deductible according to the applicable tax laws in each jurisdiction. Current tax is calculated by applying
the enacted or substantially enacted tax rates, as of the close of the corresponding fiscal year.
Deferred tax is accounted for under the
liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the carrying amounts of existing assets and liabilities in our consolidated financial statements and their respective
tax bases. Deferred tax liability is recognized for all temporary differences. Deferred taxes asset is recognized for all deductible
temporary differences and for all tax losses to be amortized, insofar there is a reasonable expectation that such differences
will be offset against taxable profits.
Deferred taxes on assets and liabilities
are calculated based on enacted or substantively enacted statutory tax rates that we believe will be applied to our taxable income
during the years in which temporary differences between the carrying amounts and tax bases are expected to be reversed.
Deferred tax asset carrying amounts are
reviewed at the end of each reporting period and reduced if it is no longer probable that tax income will be available in the
future, that allows full or partial recovery of the asset.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Deferred taxes are not recognized when
they arise in the initial recognition of an asset or liability in a transaction (except in a business combination) that, at the
time of the transaction, does not affect the accounting or tax profit, or in respect of the taxes on the possible future distribution
of accumulated profits of subsidiaries or investments accounted for by the equity method, if at the time of the distribution it
may be controlled by Ecopetrol S.A. and it is probable that the retained earnings will be reinvested by the Group companies and
therefore, will not be distributed to Ecopetrol S.A.
The Colombian tax regime does not contemplate
any taxation on economic groups or consolidated financial situations. There is therefore no obligation under the Colombian tax
regime to make the calculation of the deferred taxes based on the consolidated financial statements. Nevertheless, because of the
requirement under IFRS to report deferred tax, it is calculated as the sum of the tax calculated in the individual financial statements
of the companies of the Ecopetrol Business Group plus or minus deferred taxes on business combinations, intragroup transactions
or other adjustments at a consolidated level.
Salaries and benefits for Ecopetrol staff
are governed by the Collective Labor Agreement 01 of 1977, and in their absence, by the Substantive Labor Code. In addition to
the legally mandated benefits, employees are entitled to fringe benefits which are subject to the place of work, type of work,
length of service, and basic salary. Annual interest of 12% is recognized on accumulated severance amounts for each employee,
and the payment of indemnities is provided for when special circumstances arise that result in the non-voluntary termination of
the contract, without just cause, and in periods other than the probationary period.
Ecopetrol S.A. belonged to the Special
Pension Regime, under which allowances are the responsibility of the company and not a Pension Fund. However Act 797 of January
29, 2003 determined that Ecopetrol employees who joined the Company as of that date would be subject to the provisions of the
General Pension Regime. Consequently allowances for employees retired as of July 31, 2010 are still Ecopetrol’s responsibility.
Likewise, these employees are entitled to such pension bonus if they worked with Ecopetrol prior to January 29, 2003, but whose
employment agreement expired without renewal before that date.
All social benefits of employees who joined
the Company before 1990 are the responsibility of Ecopetrol, without the involvement of any social security entity or institution.
The cost of health services for the employee and his/her relatives registered with the Company is determined by means of a mortality
table, prepared based on facts occurring during the year.
For employees who joined the Company subsequent
to the entry into effect of Law 50 of 1990, the Company makes periodic contributions for severance payments, pensions and occupational
injuries the funds created for these respective obligations.
In 2008, Ecopetrol S.A. partially switched
over the value corresponding to monthly pension payments from its pension liabilities, transferring the said liabilities and their
underlying amounts to pension-related autonomous equities (PAP, per its acronym in Spanish). The funds transferred, and returns
on those funds, cannot be redirected nor can they be returned to the Company until all of the pension obligations have been fulfilled.
The switched obligation covers allowances and pensional bonds payments; while health and education remains under the labor liability
in charge of Ecopetrol.
Employee-benefits are divided in four
groups comprised as follows:
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
| a) | Short term employee benefits and
post-employment benefits |
Benefits to employees in the short term
correspond mainly to those which payment will be made in the term of twelve months following the closing of the period in which
the employees have rendered their services. This includes mainly salaries, severance, vacations, bonuses and other benefits.
Post-employment benefits of defined contributions
correspond to the periodic payments for pensions that the Company makes to the respective funds that assume these obligations
in their entirety.
The above benefits are recognized as a
liability after deducting any already paid amounts.
| b) | Post-employment defined benefit
plans. |
In the defined benefits plan, the Company
provides the benefits agreed to current and former employees and assumes the actuarial and investment risks.
The following benefits are classified
as long-term defined benefit plans recognized in the financial statements according to the valuations made by an independent actuarial:
| - | Health care to relatives |
The liabilities recognized in the balance
sheet in respect of these benefit plans is the present value of the defined benefit obligation at the balance sheet date, minus
the fair value of plan assets.
The defined benefit obligation is calculated
annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation
is determined by discounting the estimated future cash outflows using market interest rates, and that have terms to maturity approximating
the terms of the related pension obligation.
Actuarial gains and losses arising from changes
in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.
There is no service cost for pensions plan
as the beneficiaries were retired on as before July 31, 2010. The service cost is generated by the other benefits that includes
current employees in the Company, recognized in the income statement, reflects the increase in the defined benefit obligation resulting
from employee service in the current year, benefit changes curtailments and settlements.
| c) | Other long-term benefits |
Other long-term benefit is the five-year
term bonus which also makes part of the actuarial valuation. This benefit is a cash bonus accrues on a yearly basis and is paid
out at the end of each five-year period that an employee works in the Ecopetrol S.A. The company records in the profit and loss
statement the service cost, net liability interests and adjustments of defined benefit plan net liability
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Termination benefits are recognized only
when a detailed plan exists for such process and there is no possibility to withdraw the offer. The Company recognizes a liability
and an expense for termination benefits at the earlier date between the date when the offer of said benefits cannot be withdrawn
and the date when the restructuration costs are recognized.
These benefits are not part of the actuarial
valuation and they relate mainly to retirement allowances.
Revenue from crude oil and natural gas
sales is recognized at the time of transfer of title to the buyer, including risks and rewards of ownership. In the case of refined
and petrochemical products, revenue is recognized when products are shipped by the refinery and subsequently adjusted in accordance
with the volumes actually delivered. Revenue from transportation services is recognized when products are transported and delivered
to the buyer in accordance with sale terms. In other cases, revenue is recognized at the time it is earned and a true, probable
and quantifiable right to demand its payment arises.
Under current regulations, Ecopetrol and
Refinería de Cartagena S.A, sell regular gasoline and ACPM at a regulated price.
Per Decree 1880 of 2014, the Ministry
of Mines and Energy semi-annually calculates and liquidates Ecopetrol’s net position to be stabilized for each fuel by the
Fuel Price Stabilization Fund (FEPC). The net position is calculated by summarizing all differentials throughout the half year
and the result is an amount in pesos in favor of the Company or the FEPC and chargeable to the FEPC. The differential is calculated
as the volume reported by the Company at the time of sale multiplied by the difference between the international parity price
and the reference price. The international parity price the daily prices of gasoline and diesel oil of the respective month in
pesos, indexed to the Unites States of America Gulf market in accordance with Resolution 18 0522 of 2010 and the Producer Price
reference defined by the Ministry of Mines and Energy.
Costs and expenses are presented according
to their function; they are detailed in the related disclosures in cost of sales, administrative, operating, projects and other
associated expenses.
New standards and interpretations that
apply for annual periods beginning on 1 January 2016 or later, and which have not been applied in preparing these consolidated
financial statements are as follows:
Standard |
|
Description |
|
Effective
date |
|
|
|
|
|
IFRS 9 – Financial Instruments
|
|
Includes the requirements of classification
and measurement of impairment and hedge accounting; and in relation to the impairment of financial assets, IFRS 9 requires
an expected credit loss model, as opposed to an incurred credit loss model under IAS 39. Therefore it is no longer necessary
for a credit event to have occurred before credit losses are recognized. |
|
January 1st, 2018 |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
IFRS 15 – Revenue from Contracts
with customers
|
|
Establishes a single comprehensive
model for entities to use in accounting for revenue arising from customers.
Under IFRS 15, an entity recognizes
revenue when (or as) a performance obligation is satisfied, i.e. when “control” of the goods or services underlying
the particular performance obligation is transferred to the customer.
IFRS 15 will supersede the current
revenue recognition guidance including IAS 18 – Revenue, IAS 11 Construction Contracts and the related interpretations
when it becomes effective. |
|
January 1st, 2017 |
|
|
|
|
|
Amendments to IFRS 11 –
Accounting for Acquisitions of Interests in Joint Operations |
|
The amendments to IFRS 11 provide guidance
on how to account for the acquisition of a joint operation that constitutes a business. |
|
January 1st, 2016 |
|
|
|
|
|
Amendments to IAS 16 – Property,
plant and equipment and IAS 38 – Intangible assets |
|
Amendments clarify the acceptable methods
of Depreciation and Amortization and prohibit entities from using a revenue-based depreciation method for items of property,
plant and equipment. The amendments introduce a rebuttable presumption that revenue is not an appropriate basis for amortization
of an intangible asset. |
|
January 1st, 2016 |
|
|
|
|
|
Amendment to IFRS 10 - Consolidated
Financial Statements and IAS 28 Investments in Associates and Joint Ventures |
|
Amendments clarify that a full gain
or loss is recognized when a transaction involves a business (as defined under IFRS 3). A partial gain or loss is recognized
when a transaction involves assets that do not constitute a business, even if those assets are in a subsidiary. |
|
January 1st, 2016 |
Ecopetrol does not anticipate that the
application of the new and the amended standards will have a significant impact on the consolidated financial statements.
| 4. | First time adoption of International
Financial Reporting Standards - IFRS |
As part of the implementation process
of International Financial Reporting Standards (hereinafter ¨IFRS¨) In conformity with the provisions of Law 1314 of 2009,
Regulatory Decree 2784 of December 2012 and Decrees 3023 and 3024 of 2013, Ecopetrol S.A. belongs to Group 1 of preparers of financial
information and, consequently, the issuance of the first financial statements under Financial Reporting Standards shall be as
of December 31, 2015 and opening statement financial position as of January 1, 2014, being the transition date.
In preparing these Financial Statements
in accordance with IFRS 1, First-time Adoption of International Financial Reporting Standards (IFRS 1), we applied the following
optional and mandatory exemptions from full retrospective application of IFRS:
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
| 4.1 | Exemptions to retrospective application
chosen by the company |
| (a) | Business combinations
– IFRS 1 includes an optional exception for business combinations as an alternative
to applying IFRS 3 retrospectively (business combinations that occurred before the date
of transition to IFRS). However, the entity may elect to restate business combinations
from any date prior to the date of transition. If any business combination is restated,
then all later business combinations must also be restated and also has to apply IFRS
10. |
Ecopetrol applied the exemption
set out above for all business combinations that occurred up to the date of transition. Therefore, it has not restated any business
combination that took place before January 1, 2014.
| (b) | Fair value used as deemed
cost of property, plant and equipment – The exemption to IFRS 1 allows fair
value, at the date of the transition to IFRS, to be used as deemed cost of property,
plant and equipment, intangible assets and investment properties. IFRS 1 establishes
that a revaluation under previous GAAP (RCP), at the date of transition or previous,
may be used as deemed cost, at the date of the revaluation, if it is broadly comparable
to: |
| § | Depreciated
cost under IFRS. |
Ecopetrol elected to measure certain
land properties at fair value as at the transition date and use that amount as its deemed cost in the opening IFRS balance
sheet. Fair value was measured on the basis of a valuation performed by external, independent experts. See Note 4.2 (1)
(i)
For other Property, plant and equipment
items, useful lives where established according to appraisals and technical support from the operating areas of the Company. Accumulated
depreciation was recalculated based on these new useful lives and adjustments were recognized in the opening IFRS balance sheet.
For minor property, plant and equipment items such as office equipment, computer equipment and vehicles the Company has considered
depreciated or revaluated cost under RCP as deemed cost at transition date, since it is comparable to its depreciated cost in
accordance with IFRS. See Note 4.2 (1) (v)
| (c) | Leases – The exemption
on IFRS 1 establishes that a company may determine whether arrangements in existence
on the date of the transition to IFRS contain leases on the basis of the facts and circumstances
existing at the date of transition. |
Ecopetrol elected to apply this exemption
and therefore has considered the facts and circumstances existing at the date of transition to determine the existence of implied
leases in its contracts and agreements.
| (d) | Decommissioning liabilities
included in the cost of property, plant and equipment – A first-time adopter
may elect not to comply with requirements of IFRIC 1 for changes in decommissioning,
restoration and similar liabilities. Therefore the Company can: |
| i. | Measure the liability as at the
date of transition in accordance with IAS 37; |
| ii. | To the extent that the liability
is within the scope of IFRIC 1, estimate the amount that would have been included in
the cost of related asset when the liability arose, by discounting the liability to that
date using its best estimate of the historical risk-adjusted discount rate that would
have applied for that liability over the intervening period and; |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
| iii. | Calculate the accumulated depreciation
on that amount, as at the date of transition to IFRSs, on the basis of the current estimate
of the useful life of the asset, using depreciation policy adopted by the entity under
IFRS. |
Ecopetrol elected to apply this exemption
and measure its Asset Retirement Obligation as at the date of transition and estimate the cost of the related asset and depreciate
it to the transition date.
| (e) | Borrowing costs –
IFRS 1 permits the entity to either capitalize borrowing costs relating to the construction
of any qualifying assets; or designate a date before the date of transition and apply
the standard to borrowing costs related to qualifying assets for which the commencement
date for capitalization is on or after that designated date. (See Note 4.2(1)(iv)) |
The Company elected to apply this exemption
and adopted as a policy to capitalize borrowing costs under IAS 23 starting on the transition date, January 1, 2014.(See Note
4.2(1)(ii))
| (f) | Classification of financial
instruments – IFRS 1 includes a number of optional exemptions for first-time
adopters, applying IFRS 9, in relation to the designation of previously recognized financial
instruments. Ecopetrol elected to apply the following exemptions: |
| i. | A first-time adopter may designate
a financial asset as at fair value through profit or loss provided that the asset meets
the criteria for such classification as at the date of transition to IFRS. |
| ii. | An entity may designate an equity
instrument as at fair value through other comprehensive income provided that the asset
meets the criteria for such classification as at the date of transition. |
| (g) | Fair value measurement of financial
assets or financial liabilities at initial recognition – Ecopetrol applied
measurement of financial assets and liabilities at fair value prospectively at the date
of transition. |
| (h) | Financial assets and intangible
assets service concession arrangements – Ecopetrol recognized financial assets
and intangible assets at carrying amounts at the date of transition to IFRS. |
| (i) | Fair value measurement of financial
assets or financial liabilities at initial recognition – Ecopetrol applied
measurement of financial assets and liabilities at fair value prospectively at the date
of transition. |
| (j) | The Effects of Changes in
Foreign Exchange Rates – IFRS 1 permits the entity do not determine the cumulative
translation differences recognized in other comprehensive income that existed at
the date of transition to IFRSs. If this exemption is applied, the cumulative translation
differences for all foreign operations are deemed to be zero at the date of transition
to IFRSs. |
| 4.2 | Reconciliation of financial position
|
The reconciliations that follow reflect
the impact of the transition to IFRS on the financial position previously reported by Ecopetrol:
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Equity reconciliation at March 31, December
31 and January 1, 2014:
| |
December 31, | | |
March 31, | | |
January 1, | |
| |
2014 | | |
2014 | | |
2014 | |
Consolidated shareholders’ equity under previous GAAP | |
| 68,545,972 | | |
| 63,053,198 | | |
| 71,119,203 | |
Property, plant and equipment and natural resources (1) | |
| (22,901,793 | ) | |
| (21,190,074 | ) | |
| (21,246,532 | ) |
Non-controlling interest in Equion (2) | |
| (1,017,201 | ) | |
| (1,281,457 | ) | |
| (1,222,118 | ) |
Deferred tax (3) | |
| (530,725 | ) | |
| (69,978 | ) | |
| (268,794 | ) |
Deferred charges (4) | |
| (230,516 | ) | |
| (528,186 | ) | |
| (706,655 | ) |
Non-controlling interests (5) | |
| 4,195,935 | | |
| 4,731,000 | | |
| 4,573,748 | |
Foreign currency translation (6) | |
| 1,400,203 | | |
| 23,577 | | |
| - | |
Liabilities and assets at amortized cost, equity method and others (7) | |
| 1,378,162 | | |
| 597,264 | | |
| 132,252 | |
Employee benefits liability (8) | |
| 234,162 | | |
| (1,272,734 | ) | |
| (1,389,846 | ) |
Consolidated equity under IFRS | |
| 51,074,199 | | |
| 44,062,610 | | |
| 50,991,258 | |
| (1) | The detail of adjustments related
to property, plant and equipment and natural resources, is as follows: |
| |
December 31, | | |
March 31, | | |
January 1, | |
| |
2014 | | |
2014 | | |
2014 | |
Reversal of revaluation and provisions recognized under RCP (i) | |
| (21,211,265 | ) | |
| (22,241,913 | ) | |
| (22,294,768) | |
Non-capitalizable borrowing costs, elimination of inflation adjustments and others (ii) | |
| (2,321,353 | ) | |
| (260,311 | ) | |
| (341,480 | ) |
Assets impairment (iii) | |
| (495,110 | ) | |
| (414,806 | ) | |
| (428,151 | ) |
Abandonment costs (iv) | |
| (492,779 | ) | |
| (298,630 | ) | |
| (366,847 | ) |
Depreciation (v) | |
| 1,618,714 | | |
| 2,025,586 | | |
| 2,184,715 | |
Total property, plant and equipment adjustments | |
| (22,901,793 | ) | |
| (21,190,074 | ) | |
| (21,246,532 | ) |
| i. | Reversal of revaluations and provisions recognized under previous GAAP
were made since the Company elected to recognize its property, plant and equipment, other than lands, at its cost. |
| - | Borrowing costs non-capitalized under IFRS in the amount of $2,212,286 (March
31, 2014 - $101,067. Due to the exemption adopted by the Company which is described in Note 4.1 there is no value for this adjustment
at the opening balance. Under previous GAAP, the Company capitalized a higher value of expense for exchange differences relating
to capital expenditures, while under IFRS, the exchange difference is limited to a hypothetical interest expense in the functional
currency and the interest expense on the debt. |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
| - | Sales of oil production for assets under extensive tests in exploration and evaluation phase are
recorded as a lower value of assets under IFRS of ($157,420) (March 31, 2014 - $146,677 and (January 1, 2014 - $146,985). Under
previous GAAP these sales are recognized as income. |
| - | Adjustment for assets related to incorporated institutional equity in the amount of $41,204 (March
31, 2014 - $40,300 and January 1, 2014 - $43,033) |
| - | A decrease of $116,029 (March 31 and January 1, 2014 - $174,400) due to embedded leases not
recognized under previous GAAP and other minor amounts. |
| iii. | Recognition of impairment of assets in accordance with
IAS 36 – Impairment of assets, taking into account that the Company established its Cash Generating Units (CGUs) as
the oil and gas production fields or groups of fields, refineries and pipelines. |
| iv. | Discount to present value of dismantling and abandonment
of asset costs for the Business Group companies and depreciation of the related abandonment assets under IFRS. The amounts were
not discounted under previous GAAP. |
| v. | Under previous GAAP useful lives of property, plant and equipment were established under tax criteria,
while under IFRS useful lives are established based on technical and economic criteria. Therefore depreciation was recalculated
to reflect this change. Moreover, for the exploration and production segment’s fixed assets, the depreciation method was
changed from straight-line to technical-units of production. In addition, we eliminated the inflation adjustments due to they are
not permitted under IFRS. These values were eliminated from the opening balance. |
| (2) | Non-controlling interest in Equion: There is a lower
value of equity due to the fact that under IFRS, the investment in Equion is recognized using the equity method, while under previous
GAAP Equion was recorded as a consolidated entity. |
| (3) | Net decrease in deferred tax generated by variations
in measurement of assets and liabilities under IFRS that resulted in temporary differences in assets (liabilities). Main variations
are: increase in carrying amount of property, plant and equipment generating a higher deferred tax liability, presumptive tax
excesses and tax loss carry forwards generating a higher deferred tax asset. |
| (4) | Deferred charges: Decrease due to the fact that some
assets recognized as deferred assets under previous GAAP are considered expenses under IFRS, such as tax on equity and others. |
| (5) | Non-controlling interest: Increase due to the fact that
under IFRS it is presented as an equity item, while under previous GAAP is presented as a liability. |
| (6) | Corresponds to the foreign currency translation, for
consolidation purposes, of those companies under the Business Group with a functional currency different to Colombian peso. |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
| (7) | Includes the following adjustments: |
| - | Financial obligations and accounts payable valuation at amortized cost of 735,433 (March 31, 2014
- $615,981 and January 1, 2014 - $38,257). Under Previous GGAP, transaction costs are recorded directly in the statement of income,
while IFRS are taken into account for calculating the effective interest rate and carried at amortize under cost. |
| - | Equity method for investments in associates and jointly controlled entities under IFRS of $652,562
(March 31, 2014 - $260,195 and January 1, 2014 - $319,729). The adjustment is mainly due to the variation in the calculation of
the equity method because the asset base of these associates was determined in accordance with IFRS. |
| - | Financial assets at fair value and other minor adjustments $9,833 (March 31, 2014-$278,912). At
January 1, 2014, other adjustments primarily include adjustments of inventory at net realizable value and the amortized cost of
receivables is presented of $211,046. |
| (8) | Under IFRS, the assets that back the pension liability
(pension-related autonomous equities - PAP) are part of the balance sheet, as well as the liabilities corresponding to labor obligations
subject to actuarial estimation (pensions, pension bonds, five year period benefit, health and education). Such estimation is
made under IFRS guidelines using the projected unit credit method, which differ from estimations performed under previous GAAP. |
Another difference between IFRS
and previous GAAP corresponds to the discount rate used in the actuarial calculations under IFRS is a long-term rate while previous
GAAP, the discount rate is fixed by law (the average inflation in years).
| 4.3 | Reconciliation of net income |
Reconciliation of net income for the year
ended December 31, 2014 and the three month period ended March 31 2014:
| |
December 31 | | |
March 31 | |
| |
2014 | | |
2014 | |
| |
(12 months) | | |
(3 months) | |
Consolidated net income
under previous GAAP | |
| 7,510,270 | | |
| 3,287,378 | |
Foreign currency exchange and borrowing costs (a) | |
| (1,739,471 | ) | |
| 186,901 | |
Consolidation, crude oil over/under lift, inventories, equity method and other (b) | |
| 236,478 | | |
| (77,979 | ) |
Property, plant and equipment and natural resources (c) | |
| (488,709 | ) | |
| (14,509 | ) |
Deferred taxes (d) | |
| 533,953 | | |
| (69,978 | ) |
Deferred charges (e) | |
| 527,712 | | |
| 521,326 | |
Actuarial liability (f) | |
| 438,863 | | |
| - | |
Consolidated net income under IFRS | |
| 7,019,096 | | |
| 3,888,101 | |
Accumulated foreign currency translation | |
| 2,717,632 | | |
| (291,201 | ) |
Net fair value gain (loss) on available-for-sale financial assets | |
| 76,436 | | |
| 29,065 | |
Remeasurement of defined benefit obligation | |
| 782,194 | | |
| 62,147 | |
Total comprehensive
income under IFRS | |
| 10,595,358 | | |
| 3,688,112 | |
| (a) | In 2014 the effect is a net decrease of $1,739,471 mainly
due to: lower value of capitalized borrowing costs and foreign currency exchange amounting to $2,212,286 due to a increase in
the foreign currency exchange generated for the Group’s companies with functional currency different to Colombian peso in
the amount of $472,815. |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
| (b) | Decrease in net income in 2014 by $236,478 mainly due
to: a) ($167,998) adjustments at consolidation level of differences between previous GAAP and IFRS, mainly in unrealized gains
and equity method in associates; b) ($21,395) adjustments to over/under lift at fair value; c) ($77,753) adjustments to inventory
at net realizable value; and d) ($2,271) for other minor adjustments. These adjustments are offset by an increase of $501,353
mainly because of the application of equity method and the effects in non-controlling interests. |
During first quarter of 2014
net income decreased by $77,979 mainly due to: a) ($99,243) of adjustments to over/under lift at fair value; b) ($27,856) equity
method and non-controlling interests adjustments and; c) a $49,120 increase mainly due to differences in consolidation between
IFRS and previous GAAP.
| (c) | Property, plant and equipment generated a net decrease
of $488,709 in 2014 ($14,509 – first quarter of 2014) mainly related to: a) increase by $46,740 ($131,529 – first
quarter of 2014) for a lower depreciation and amortization expense and; b) decrease by $535,449 ($146,307 – first quarter
of 2014) due to: |
| i) | impairment of assets $90,332 ($28,773 first quarter of
2014) |
| ii) | decrease related to discount to present value of abandonment
costs liability $143,059 ($69,528 first quarter of 2014) |
| iii) | A decrease on other fixed assets for costs that cannot
be capitalized under IFRS and others minor items by $302,058 ($49,006 first quarter of 2014). |
| (d) | There are differences from deferred tax under IFRS and
previous GAAP, due to variations in the measurement of assets and liabilities under IFRS, which have resulted in temporary differences
in assets (liabilities). In 2014 deferred tax expense decreased by $533,953. Among the main variations in net income under IFRS
for 2014 there are a) higher value of deferred tax assets by $671,741 originated in the change for recording capitalized interests
and foreign currency exchange b) increase in the carrying amount of property, plant and equipment as a result of a lower rate
of depreciation under IFRS and c) other temporary differences that generate a lower value of deferred tax by $4,239. During the
first quarter of 2014, there is a decrease in income by $ 69,978, due to: a) lower value of deferred tax assets by ($34,078) caused
by a lower carrying amount of property, plant and equipment construction in progress under IFRS compared to previous GAAP, b)
Difference in the abandonment cost under previous GAAP that generate higher deferred tax expense by $23,509 and c) other minor
adjustments by $10,569. |
| (e) | Deferred charges generated an increase in net income
mainly as a result of elimination of the last equity tax payment by $490,923 which under IFRS is recognized in equity as an opening
financial statement adjustment and under previous GAAP was expensed during 2014. Elimination of assets that under IFRS cannot
be classified as deferred assets by $33,629 ($30,043 - first quarter of 2014). |
| (f) | Adjustments in actuarial valuations that relate to long-term
employee-benefits (pensions, severance, five-year term, health and education) were performed in accordance with IFRS criteria.
The last valuation was made at December 31, 2014. |
| 4.4 | Reconciliation of cash flow |
At the end of the first quarter
of 2014, cash and cash equivalents under previous GAAP amounted $9,511,483 and under IFRS amounted to $9,900,750. The difference
between IFRS and previous GAAP of $389,267 is explained by:
a) A $241,358 decrease in cash
for the non-consolidation of Equion Energy Limited.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
b) A $153,708 decrease due to
the fact that changes of criteria of presentation of resources recorded under previous GAAP as other financial assets.
c) An increase of $476,909 due
to at the end of March 2014, the consolidation under previous GAAP was prepared with the Reficar's financial statements available
at that date (February 2014). For IFRS, available information corresponded to March 2014.
The transition from Colombian
GAAP to IFRS did not materially change the underlying cash flows of the Company.
The main changes in operating
activities are justified by the impact explained in section 4.3 and reclassifications of financial interest paid and receipts,
which for previous GAAP regulations were recorded under operating cash flows. The change in investment activities is generated
by the presentation of interest received under investing activities and the difference in the criteria for capitalization of maintenance
of fixed assets; and the change in financing activities is for the presentation of interest paid under financing activities which
were presented within operating activities under previous GAAP.
| 5. | Cash and cash equivalents |
The balance of cash and cash
equivalents is comprised as follows:
| |
March 31, | | |
December 31, | | |
January 1, | |
| |
2015 | | |
2014 | | |
2014 | |
Banks and corporations | |
| 7,514,895 | | |
| 5,117,770 | | |
| 6,429,567 | |
Short term investments | |
| 2,288,523 | | |
| 880,455 | | |
| 616,344 | |
Special funds (1) | |
| 1,136,478 | | |
| 1,016,780 | | |
| 1,494,760 | |
Cash | |
| 1,107 | | |
| 726 | | |
| 467 | |
| |
| 10,941,003 | | |
| 7,015,731 | | |
| 8,541,138 | |
| (1) | Includes restricted cash used exclusively for the
repayment of the loan acquired by Oleoducto Bicentenario S.A.S. for the amount of $94,432 as of March 31, 2015 ($96,740 as of
December 31, 2014 and $111,482 as of January 1, 2014). |
Fair value of cash and cash equivalents
approximates its carrying amount due to its short-term nature (less than 3 months maturity) and high liquidity.
| 6. | Trade and other receivables |
The balance of trade and other
receivables is comprised as follows:
| |
March 31, | | |
December 31, | | |
January 1, | |
| |
2015 | | |
2014 | | |
2014 | |
Current portion | |
| | | |
| | | |
| | |
Customers | |
| | | |
| | | |
| | |
Foreign | |
| 1,791,028 | | |
| 1,718,507 | | |
| 2,934,134 | |
National | |
| 1,344,818 | | |
| 1,203,480 | | |
| 1,118,960 | |
Related parties (see note 29) | |
| 145,056 | | |
| 75,561 | | |
| 164,711 | |
Price differential to be received from the Ministry of Mines and Energy (1) | |
| 314,872 | | |
| 750,055 | | |
| 1,058,739 | |
Accounts receivable from employees (2) | |
| 139,332 | | |
| 135,421 | | |
| 60,177 | |
Industrial service clients | |
| 18,361 | | |
| 1,686 | | |
| 13,004 | |
Reimbursements and investments yields | |
| 15,955 | | |
| 141 | | |
| 122 | |
Doubtful accounts | |
| 9,169 | | |
| 8,667 | | |
| 25,819 | |
Various debtors | |
| 634,321 | | |
| 577,253 | | |
| 210,906 | |
Total | |
| 4,412,912 | | |
| 4,470,771 | | |
| 5,586,572 | |
Minus – Allowance for doubtful accounts (3) | |
| (9,169 | ) | |
| (8,667 | ) | |
| (25,819 | ) |
Total
current | |
| 4,403,743 | | |
| 4,462,104 | | |
| 5,560,753 | |
Non-current portion | |
| | | |
| | | |
| | |
Customers | |
| | | |
| | | |
| | |
Foreign | |
| 15,848 | | |
| 16,530 | | |
| 2,506 | |
National | |
| 9,478 | | |
| 9,788 | | |
| 5,664 | |
Accounts receivable from employees (2) | |
| 318,589 | | |
| 305,117 | | |
| 244,207 | |
Doubtful accounts | |
| 238,947 | | |
| 235,810 | | |
| 227,372 | |
Price differential to be received from the Ministry of Mines and Energy (1) | |
| 77,510 | | |
| 77,510 | | |
| 77,510 | |
Others | |
| 47,876 | | |
| 46,231 | | |
| 378,274 | |
Total | |
| 708,248 | | |
| 690,986 | | |
| 935,533 | |
Minus – Allowance for doubtful accounts (3) | |
| (238,947 | ) | |
| (235,810 | ) | |
| (227,372 | ) |
Total
Non-current | |
| 469,301 | | |
| 455,176 | | |
| 708,161 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
| (1) | Account receivable from the Ministry of Finance and Public Credit, arising from the regular motor gasoline
and diesel price differentials pursuant to Resolution 180522 issued on March 29, 2010. During the first quarter of 2015, this account
has been reduced as a result of the International Parity Price has been lower than the index price. The Ministry makes the payment
in consideration of the resolution for the net liquidation position in favor of Ecopetrol for months with pending payments. |
| (2) | The administration, management and control of loans
granted to employees by Ecopetrol were transferred to Cavipetrol, which, in its capacity as administrator, monitors, in its database
and financial system, the details per employee of said loans and their respective conditions. |
| (3) | The following shows the changes in allowance for doubtful
accounts: |
| |
March 31 | | |
December 31 | |
| |
2015 | | |
2014 | |
Opening balance | |
| 244,477 | | |
| 253,191 | |
Additions (new allowances) | |
| 44 | | |
| 2,430 | |
Accounts receivable write-off | |
| (225 | ) | |
| (19,628 | ) |
Effects of exchange rate changes on allowances and other | |
| 3,820 | | |
| 8,484 | |
Closing balance | |
| 248,116 | | |
| 244,477 | |
Carrying amounts of trade and other receivables
approximates to its fair value.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
The balance of Inventories is comprised
as follows:
| |
March 31, | | |
December 31, | | |
January 1, | |
| |
2015 | | |
2014 | | |
2014 | |
Finished products | |
| | | |
| | | |
| | |
Crude oil | |
| 673,079 | | |
| 611,718 | | |
| 1,019,621 | |
Fuels | |
| 866,408 | | |
| 931,440 | | |
| 894,837 | |
Petrochemicals | |
| 111,684 | | |
| 140,118 | | |
| 86,101 | |
Purchase products | |
| | | |
| | | |
| | |
Fuels | |
| 102,817 | | |
| 44,169 | | |
| 65,615 | |
Crude oil | |
| 210,529 | | |
| 224,106 | | |
| 296,289 | |
Petrochemicals | |
| 36,976 | | |
| 25,515 | | |
| 21,732 | |
Raw materials | |
| | | |
| | | |
| | |
Crude oil | |
| 160,910 | | |
| 174,290 | | |
| 255,748 | |
Fuels | |
| 40,889 | | |
| 58,158 | | |
| 40,011 | |
Agricultural Products | |
| 685 | | |
| 681 | | |
| - | |
Products in process | |
| | | |
| | | |
| | |
Fuels | |
| 299,415 | | |
| 376,635 | | |
| 484,745 | |
Petrochemicals | |
| 17,138 | | |
| 16,133 | | |
| 11,282 | |
Materials for the production of goods | |
| 417,088 | | |
| 440,807 | | |
| 419,107 | |
Materials in transit | |
| 47,452 | | |
| 62,083 | | |
| 79,229 | |
Total | |
| 2,985,070 | | |
| 3,105,853 | | |
| 3,674,317 | |
Minus – Allowance
for inventories (1) | |
| (181,030 | ) | |
| (151,997 | ) | |
| (100,490 | ) |
Total | |
| 2,804,040 | | |
| 2,953,856 | | |
| 3,573,827 | |
(1) The following shows a breakdown of
the changes in the allowance for inventories:
| |
March 31, | | |
December 31, | |
| |
2015 | | |
2014 | |
Opening Balance | |
| 151,997 | | |
| 100,490 | |
Allowance increase | |
| 35,748 | | |
| 74,195 | |
Use of allowance | |
| (6,715 | ) | |
| (22,688 | ) |
Closing Balance | |
| 181,030 | | |
| 151,997 | |
The Increase in the inventory allowance
is mainly due to the adjustment of inventory to its net realizable value due to the current fluctuations in international crude
oil prices and derivatives.
The balance of other financial assets is
comprised as follows:
| |
March 31, | | |
December 31, | | |
January 1, | |
| |
2015 | | |
2014 | | |
2014 | |
Assets measured at fair value through profit and loss (1) | |
| | | |
| | | |
| | |
Securities issued by financial entities | |
| 1,628,414 | | |
| 610,678 | | |
| 711,417 | |
Securities issued or secured by US government | |
| 392,302 | | |
| 257,697 | | |
| 271,525 | |
Securities issued or secured by Colombian government | |
| 328,324 | | |
| 271,253 | | |
| 92,969 | |
Securities issued or secured by government sponsored enterprise (GSEs) | |
| 265,994 | | |
| 261,896 | | |
| 204,259 | |
Other financial assets | |
| 37,068 | | |
| 27,137 | | |
| 62,238 | |
| |
| 2,652,102 | | |
| 1,428,661 | | |
| 1,342,408 | |
Assets measured at amortized cost | |
| | | |
| | | |
| | |
Other financial assets | |
| 567,431 | | |
| 600,738 | | |
| 832,790 | |
Securities issued or secured by Colombian government | |
| 98 | | |
| 46,971 | | |
| 142,348 | |
| |
| 567,529 | | |
| 647,709 | | |
| 975,138 | |
Total | |
| 3,219,631 | | |
| 2,076,370 | | |
| 2,317,546 | |
| |
| | | |
| | | |
| | |
Current | |
| 2,547,765 | | |
| 1,586,314 | | |
| 1,948,172 | |
Non-current | |
| 671,866 | | |
| 490,056 | | |
| 369,374 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
| (1) | Includes restricted resources made up of fixed yield
investments entered into based on the court rulings linked to the Derecho Comuneros – Santiago de las Atalayas y Pueblo
Viejo de Cusiana proceedings, with regard to the attachment and seizure of royalty payments that Ecopetrol was to have paid pursuant
to Royalty Contracts Nos. 15, 15A, 16 and 16A, declared null by statute in the State Council ruling of September 13, 1999. At
March 31, 2015 this resources amount to $594,011 (2014 - $548,412 and January 1, 2014 -$371,386). |
The classification of the other financial
assets at fair value at March 31, 2015, December 31, 2014 and January 1, 2014 is comprised as follows:
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Assets measured at fair value through profit and loss | |
| | | |
| | | |
| | | |
| | |
Securities issued by financial entities | |
| - | | |
| 70,014 | | |
| 1,558,400 | | |
| 1,628,414 | |
Securities issued or secured by US government | |
| - | | |
| 328,324 | | |
| | | |
| 328,324 | |
Securities issued or secured by Colombian government | |
| 327,717 | | |
| 64,586 | | |
| | | |
| 392,303 | |
Securities issued or secured by government sponsored
enterprise (GSEs) | |
| - | | |
| 265,993 | | |
| | | |
| 265,993 | |
Other financial assets | |
| - | | |
| 37,068 | | |
| | | |
| 37,068 | |
| |
| 327,717 | | |
| 765,985 | | |
| 1,558,400 | | |
| 2,652,102 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total
|
Assets measured at fair value through profit and loss | |
| | | |
| | | |
| |
|
| |
Securities issued by financial entities | |
| - | | |
| 210,296 | | |
| 400,381 | | |
610,677 |
Securities issued or secured by US government | |
| - | | |
| 271,252 | | |
| | | |
271,252 |
Securities issued or secured by Colombian government | |
| 257,697 | | |
| - | | |
| | | |
257,697 |
Securities issued or secured by government sponsored
enterprise (GSEs) | |
| - | | |
| 261,896 | | |
| | | |
261,896 |
Other financial assets | |
| - | | |
| 27,138 | | |
| | | |
27,138 |
| |
| 257,697 | | |
| 770,582 | | |
| 400,381 | | |
1,428,660
|
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total
| |
Assets measured at fair value through profit and loss | |
| | | |
| | | |
| | | |
| | |
Securities issued by financial entities | |
| - | | |
| 641,657 | | |
| 69,761 | | |
| 711,418 | |
Securities issued or secured by US government | |
| - | | |
| 92,969 | | |
| | | |
| 92,969 | |
Securities issued or secured by Colombian government | |
| 135,662 | | |
| 135,863 | | |
| | | |
| 271,525 | |
Securities issued or secured by government sponsored
enterprise (GSEs) | |
| 8,251 | | |
| 196,007 | | |
| | | |
| 204,258 | |
Other financial assets | |
| 5,730 | | |
| 56,508 | | |
| | | |
| 62,238 | |
| |
| 149,643 | | |
| 1,123,004 | | |
| 69,761 | | |
| 1,342,408 | |
Ecopetrol´s portfolio securities
are valued, in their majority, at market prices. As well, the portfolio is made up by some investments in instruments called CDTs
(Certificates of Deposit) in pesos that use the margin methodology for the calculation of the market value.
For the US dollar denominated investments,
five information suppliers are taken as reference: JP Morgan, Bloomberg, Merrill Lynch, Reuters and Infovalmer. For the investments
denominated in pesos, the supplier of prices and margins is Infovalmer, an entity authorized by the Financial Superintendency of
Colombia that provides the information for valuation of investments locally.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
| 9. | Tax assets and liabilities and current and deferred
income tax |
The balance of current tax assets and liabilities
is comprised as follows:
| |
March 31, | | |
December 31, | | |
January 1, | |
| |
2015 | | |
2014 | | |
2014 | |
Current tax assets | |
| | | |
| | | |
| | |
Taxes credits to be claimed to the government | |
| 1,371,024 | | |
| 1,474,388 | | |
| 1,324,436 | |
Income tax and income tax for equality (CREE) | |
| 342,136 | | |
| 324,758 | | |
| 132,646 | |
Other receivables taxes | |
| 145,266 | | |
| 219,340 | | |
| 88,243 | |
Total | |
| 1,858,426 | | |
| 2,018,486 | | |
| 1,545,325 | |
| |
| | | |
| | | |
| | |
Current tax liabilities | |
| | | |
| | | |
| | |
Income tax and complementary taxes | |
| 964,343 | | |
| 537,745 | | |
| 446,178 | |
Income taxes for equality -CREE | |
| 478,121 | | |
| 674,977 | | |
| 1,452,575 | |
Income taxes for equality -CREE surcharge | |
| 17,424 | | |
| - | | |
| - | |
Industry and commerce tax and other minor taxes | |
| 358,526 | | |
| 412,427 | | |
| 247,138 | |
National tax on gasoline and surtax on gasoline | |
| 290,082 | | |
| 269,612 | | |
| 267,459 | |
Wealth tax | |
| 491,183 | | |
| - | | |
| 552,927 | |
Total | |
| 2,599,679 | | |
| 1,894,761 | | |
| 2,966,277 | |
Income
tax and complementary taxes
The Tax
regulations applicable to Ecopetrol S.A.’s establish the following:
| (a) | Starting January 1, 2013, taxable revenues in Colombia are taxed at the rate of 25% for income tax and
complementary taxes, except for taxpayers with an express provision for special rates. The basis for determining the income tax
may not be lower than 3% of the taxpayer’s net equity on the last day of the immediately preceding taxable period (presumptive
income), except for those taxpayers that have different regulations established by law. |
| (b) | Beginning with the 2007 fiscal period, the inflation adjustments
system was eliminated for tax purposes, and the tax on capital gains was reestablished for legal persons on the total taxable
capital gains obtained by taxpayers during the year, which will be taxed in accordance with the rates that are in effect at the
closing of each period. |
| (c) | Starting January 1, 2013, Law 1607 of December 2012 created
the income tax for equality (CREE) as a contribution from taxpaying companies and legal and naturalized persons filing income
and complementary taxes to benefit workers, job creation and social investment. Taxpayers of income and complementary taxes are:
Corporations, Legal persons and similar foreign corporations and entities with national source income. Taxpayers should not file
the CREE return, if they are Individuals, Nonprofit entities, Companies declared as part of
the free trade zone as of December 31, 2012 or that had filed an application as of December 31, 2012, Free trade zone users subject
to the special income and complementary tax rate established in article 240-1 TC. |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Tax
reform
On December 23rd, 2014, Law 1739 provided for tax reform including the following provisions:
| - | Set a surtax on the income tax for equality (CREE) for those tax payers
established in the article 20 of Law 1607 of 2012. The surtax will increase the rate of income tax for equality (CREE) by 5% in
2015, 6% in 2016, 8% in 2017 and 9% on 2018. |
| - | Established a wealth tax, which defines as its taxable event the possession of wealth as of January
1, 2015, 2016 and 2017, to be paid by income tax payers. Wealth tax is generated by the possession of wealth as of January 1, 2015,
that is higher than or equal to $1.000 million pesos. In this law, the concept of wealth is equal to gross equity minus debt at
said date. At March 31, 2015, Ecopetrol recognized the wealth tax of 2015, considering the best estimate of its equity. The Company
will adjust the amounts estimated when the tax settlement is made in May 2015. |
Income tax expenses
The following shows a breakdown of the
income tax and complementary taxes, income tax for equality – CREE and income tax for equality – CREE surcharge recognized
in profit and loss for the first quarter of 2015 and 2014:
| |
2015 | | |
2014 | |
Current taxes | |
| | | |
| | |
Income tax | |
| 530,202 | | |
| 1,531,494 | |
Income tax for equality – CREE | |
| 154,884 | | |
| 542,184 | |
Income tax for equality – CREE surcharge | |
| 71,466 | | |
| - | |
| |
| 756,552 | | |
| 2,073,678 | |
Deferred taxes | |
| | | |
| | |
Deferred income tax | |
| (245,370 | ) | |
| (67,906 | ) |
Deferred income tax for equality – CREE | |
| (76,777 | ) | |
| 88,457 | |
Deferred income tax for equality – CREE surcharge | |
| 37,971 | | |
| - | |
| |
| (284,176 | ) | |
| 20,551 | |
Income tax expense | |
| 472,376 | | |
| 2,094,229 | |
Income tax expense is recognised based on management's estimate of the weighted average annual income
tax rate expected for the full financial year. The estimated average annual tax rate used for the first quarter of 2015 is 57.03%
(the estimated annual tax rate for the first quarter of 2014 was 33%). This increase is mainly due to adjustments related with
foreign exchange currencies on investments due to a higher devaluation in 2015 as compared to the same period in 2014, an increase
on leases related with the new wealth tax and the CREE surtax for 2015.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Deferred income
tax
The balance of deferred taxes at March
31, 2015, December 31, 2015 and January 1, 2014 is comprised as follows:
| |
March 31, | | |
December 31, | | |
January 1, | |
| |
2015 | | |
2014 | | |
2014 | |
Asset – Deferred income tax and complementary taxes | |
| 2,366,709 | | |
| 2,376,651 | | |
| 2,795,133 | |
Asset – Deferred income tax for equality – CREE | |
| 603,911 | | |
| 632,434 | | |
| 822,951 | |
Asset – Deferred income tax for equality – CREE surcharge | |
| 87,439 | | |
| 81,928 | | |
| - | |
| |
| 3,058,059 | | |
| 3,091,013 | | |
| 3,618,084 | |
| |
| | | |
| | | |
| | |
Liability – Deferred income tax and complementary taxes | |
| (2,682,414 | ) | |
| (2,908,435 | ) | |
| (3,007,027 | ) |
Liability – Deferred income tax for equality – CREE | |
| (943,532 | ) | |
| (1,033,122 | ) | |
| (1,029,461 | ) |
Liability – Deferred income tax for equality – CREE surcharge | |
| (162,003 | ) | |
| (98,586 | ) | |
| - | |
| |
| (3,787,949 | ) | |
| (4,040,143 | ) | |
| (4,036,488 | ) |
Total deferred income tax | |
| (729,890 | ) | |
| (949,130 | ) | |
| (418,404 | ) |
The following shows a breakdown of the
changes in deferred assets and liabilities:
| |
March 31, | | |
December 31, | | |
January 1, | |
Deferred tax asset in relation to: | |
2015 | | |
2014 | | |
2014 | |
Accounts payable | |
| 167,731 | | |
| 203,347 | | |
| 547,888 | |
Inventories | |
| 1,026 | | |
| 57,970 | | |
| 726 | |
Trade and other receivables | |
| 1,149 | | |
| 18,371 | | |
| 41,480 | |
Property, plant and equipment | |
| 450,785 | | |
| 378,318 | | |
| 290,328 | |
Other assets | |
| 65,915 | | |
| 63,807 | | |
| 537,200 | |
Financial obligations | |
| 143,130 | | |
| 105,206 | | |
| 47,457 | |
Provisions of employee benefits | |
| 228,991 | | |
| 258,973 | | |
| 469,633 | |
Estimated liabilities and provisions | |
| 1,712,673 | | |
| 1,721,087 | | |
| 1,390,170 | |
Other liabilities | |
| 28,714 | | |
| 29,986 | | |
| 44,905 | |
Income received in advance | |
| 902 | | |
| 838 | | |
| 563 | |
Tax losses | |
| 215,589 | | |
| 215,589 | | |
| 202,240 | |
Intangibles | |
| - | | |
| - | | |
| 87 | |
Tax liabilities | |
| 1,879 | | |
| 744 | | |
| 80 | |
Excess of presumptive income tax | |
| 38,297 | | |
| 34,652 | | |
| 38,170 | |
Others | |
| 1,278 | | |
| 2,125 | | |
| 7,157 | |
Total | |
| 3,058,059 | | |
| 3,091,013 | | |
| 3,618,084 | |
| |
March 31, | | |
December 31, | | |
January 1, | |
Deferred tax liabilities in relation to: | |
2015 | | |
2014 | | |
2014 | |
Trade and other payables | |
| 22,144 | | |
| 21,053 | | |
| 39,258 | |
Financial obligations | |
| 106,802 | | |
| 139,585 | | |
| 146,590 | |
Trade and other receivables | |
| 50,958 | | |
| 5,928 | | |
| 5,943 | |
Natural and environmental resources (1) | |
| 1,493,855 | | |
| 1,358,247 | | |
| 1,939,618 | |
Investments | |
| 36,050 | | |
| 27,626 | | |
| 23,610 | |
Goodwill (2) | |
| 518,411 | | |
| 514,878 | | |
| 322,124 | |
Inventories | |
| 3,266 | | |
| 11,322 | | |
| 323,525 | |
Property, plant and equipment (1) | |
| 1,294,275 | | |
| 1,790,018 | | |
| 1,131,025 | |
Other assets | |
| 36,158 | | |
| 37,257 | | |
| 58,271 | |
Other | |
| 226,030 | | |
| 134,229 | | |
| 46,524 | |
| |
| 3,787,949 | | |
| 4,040,143 | | |
| 4,036,488 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
(1) For tax
purposes, natural resources and PP&E have a specific useful life. According to IFRS the useful life is determined by a technical
analysis. This difference will result in a difference in the depreciable basis for accounting and tax purposes.
(2) According
to Colombian tax law, intangibles and goodwill are able to be amortized, for IFRS purposes, goodwill cannot be amortized, this
difference results in a deferred tax liability.
Variations of deferred tax balances at
March 31, 2014 and 2015 were recognized through profit or loss with the exception of the following that were recognized as set
out below:
Concept | |
2015 | | |
2014 | | |
Recognized
through: |
Deferred (liability) asset – financial assets | |
| (75,595 | ) | |
| 14,973 | | |
Other comprehensive income |
Deferred asset – Remeasurement of defined benefit obligation | |
| 54,842 | | |
| 32,015 | | |
Other comprehensive income |
Accumulated taxable losses will be deductible
in future years, depending on the country regulations. As of December 31, 2014, companies of the Group had accumulated taxable
losses and excess of presumptive income as follows:
Expiration
date | |
Tax
losses
December 2014 | | |
Deferred
taxes December 2014 | | |
Excess
of
presumptive
income December
2014 | | |
Deferred
taxes December 2014 | |
2014 | |
| 203 | | |
| 30 | | |
| 77,982 | | |
| 11,697 | |
2015 | |
| - | | |
| — | | |
| 59,092 | | |
| 8,864 | |
2016 | |
| - | | |
| - | | |
| 36,460 | | |
| 5,469 | |
2017 | |
| - | | |
| - | | |
| 33,953 | | |
| 5,292 | |
2018 | |
| - | | |
| - | | |
| 16,169 | | |
| 2,550 | |
2019 | |
| - | | |
| - | | |
| 1,019 | | |
| 252 | |
2020 | |
| - | | |
| - | | |
| 2,143 | | |
| 528 | |
Without expiration date | |
| 1,389,528 | | |
| 215,558 | | |
| - | | |
| - | |
Total | |
| 1,389,731 | | |
| 215,588 | | |
| 226,818 | | |
| 34,652 | |
Most of the tax losses carry forward (without
expiration date) related to a subsidiary's operation (Reficar). According to tax legislation, Reficar's operational activity is
taxable under a special tax rate of 16%.
Transfer pricing
Income taxpayers who
had entered into transactions with related parties abroad, and/or with residents of countries considered to be tax havens, are
under the obligation of determining, for income tax purposes, their ordinary and extraordinary income, costs and deductions, and
assets and liabilities, taking into account the denominated market prices and profit margins for these transactions (Arm’s
length principles). Based on the opinion of the Company’s advisor, no significant changes are expected for taxable year 2014
related to the compliance with the principle of full jurisdiction set out in Article 260-2 of the Colombian Tax Code, and there
are no foreseen adjustments to the determination of income tax expenses for the said year.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
To date,
the Company, with its Transfer Pricing external consultants, is in process of preparing the informative Transfer Pricing statement
of year 2014 and its corresponding corroboratory documentation; however, based on preliminary results, no adjustments to the income
tax provision derived from the 2014 price analysis, affecting the results of the period, are required.
| 10. | Non-current assets held for sale |
The balance of Non-current assets held
for sale is comprised as follows:
| |
March 31, | | |
December 31, | | |
January 1, | |
| |
2015 | | |
2014 | | |
2014 | |
Equity instruments (1) | |
| | | |
| | | |
| | |
Empresa de Energía de Bogotá (1) | |
| 1,025,534 | | |
| 1,072,867 | | |
| 968,735 | |
Interconexión Eléctrica S.A | |
| 437,816 | | |
| 508,527 | | |
| 536,222 | |
Other minor assets | |
| 1,438 | | |
| 1,434 | | |
| 1,438 | |
Total | |
| 1,464,788 | | |
| 1,582,828 | | |
| 1,506,395 | |
| (1) | In April 13, 2015 as part of Law 226 of 1995, the National
Government issued approval to start the divestiture process of the Shares that Ecopetrol S.A. owns in Interconexión Eléctrica
S.A. E.S.P., taking in the recommendation of Ecopetrol’s Board of Directors. Ecopetrol S.A.’s stock ownership in Interconexión
Eléctrica S.A. ESP amounts to a total of 58,925,480 shares (equivalent to a 5.32% of the total outstanding shares). |
We have obtained all governmental
authorizations in order to start the divestiture process (Decree 2305 of November 13, 2014) of the shares that Ecopetrol S.A. owns
in Empresa de Energía de Bogotá S.A. ESP. Stock ownership is for a total of 631,098,00 stocks (equivalent to a total
of 6.87% of the total outstanding shares).
Resources obtained from the
sale will be used to fund the Company’s investment plan.
These equity instruments are
measured at fair value through other comprehensive income. Its hierarchy level is 1, using as reference quoted prices of shares
on the Bolsa de Valores de Colombia.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
The balance of other assets is comprised
as follows:
| |
March 31, | | |
December 31, | | |
January 1 | |
| |
2015 | | |
2014 | | |
2014 | |
Current | |
| | | |
| | | |
| | |
Partners in joint operations (See note 30) | |
| 732,015 | | |
| 763,444 | | |
| 158,826 | |
Advanced payments to contractors and suppliers | |
| 446,226 | | |
| 328,677 | | |
| 332,001 | |
Prepaid expenses | |
| 172,754 | | |
| 259,575 | | |
| 181,260 | |
Related parties (see note 30) | |
| 52,141 | | |
| 9,338 | | |
| 15,558 | |
Other advances and agreements | |
| 58,875 | | |
| 31,493 | | |
| 20,057 | |
Total current | |
| 1,462,011 | | |
| 1,392,527 | | |
| 707,702 | |
Non-current | |
| | | |
| | | |
| | |
Trust funds (1) | |
| 489,818 | | |
| 483,480 | | |
| 460,545 | |
Prepaid expenses | |
| 230,905 | | |
| 226,402 | | |
| 401,235 | |
Facility abandonment funds | |
| 23,779 | | |
| 22,756 | | |
| 19,403 | |
Advances and deposits | |
| 17,596 | | |
| 16,626 | | |
| 11,660 | |
Other assets | |
| 335,428 | | |
| 344,813 | | |
| 294,727 | |
Total non-current | |
| 1,097,526 | | |
| 1,094,077 | | |
| 1,187,570 | |
Total | |
| 2,559,537 | | |
| 2,486,604 | | |
| 1,895,272 | |
| 1) | Includes mainly pension funds administered by the Fiduciaria Bancolombia Trust, received upon termination
of the Asociación Cravo Norte contract with Occidental de Colombia and deposits to the Oil Savings and Stabilization Fund
(from the Spanish Fondo de Ahorro y Estabilización Petrolera - FAEP) in Ecopetrol’s favor to address the remainder
of the National Royalties Fund. Its sole purpose is the payment of debts and financing development programs and projects in hydrocarbon
producing and non-producing municipalities and departments. |
12. Investments
in associates and joint ventures
The balance of Investments
in associates and joint ventures is comprised as follows:
| |
March 31, | | |
December 31, | | |
January 1, | |
| |
2015 | | |
2014 | | |
2014 | |
Investments in joint ventures | |
| | | |
| | | |
| | |
Equion Energía Limited | |
| 1,455,365 | | |
| 1,392,896 | | |
| 1,634,603 | |
Investments in associates | |
| | | |
| | | |
| | |
Offshore International Group | |
| 1,030,809 | | |
| 1,017,435 | | |
| 879,621 | |
Invercolsa S.A. | |
| 36,442 | | |
| 58,672 | | |
| 109,664 | |
Ecodiesel Colombia S.A. | |
| 25,648 | | |
| 29,892 | | |
| 25,342 | |
Serviport S.A. | |
| 8,445 | | |
| 8,445 | | |
| 8,445 | |
Sociedad Portuaria Olefinas | |
| 649 | | |
| 649 | | |
| 649 | |
| |
| 2,557,358 | | |
| 2,507,989 | | |
| 2.658.324 | |
Minus – impairment of investments | |
| | | |
| | | |
| | |
Offshore International Group | |
| 114,735 | | |
| 114,735 | | |
| - | |
Serviport S.A. | |
| 1,126 | | |
| 1,126 | | |
| 1,126 | |
| |
| 115,861 | | |
| 115,861 | | |
| 1.126 | |
Total | |
| 2,441,497 | | |
| 2,392,128 | | |
| 2,657,198 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
The details of the investments in associates
and jointly controlled entities´s ownership, economic activity, domicile, country of operations and financial information
is shown in Exhibit I.
The following shows a breakdown of the
changes in the investments in associates:
| |
March 31 | | |
December 31 | |
| |
2015 | | |
2014 | |
Opening balance | |
| 2,392,128 | | |
| 2,657,198 | |
Effects of equity method through profit or loss | |
| 744 | | |
| 167.999 | |
Effects of equity method through equity | |
| 86,063 | | |
| 348.696 | |
Dividends declared | |
| (37,438 | ) | |
| (667.030 | ) |
Impairment | |
| - | | |
| (114.735 | ) |
Closing balance | |
| 2,441,497 | | |
| 2,392,128 | |
Restrictions over investments in associates
As of May 15, 2015, regarding the legal
proceedings of Invercolsa S.A.: The cessation extraordinary appeal put forth by AFIB S.A. and Fernando Londoño Hoyos against
the order of the Superior Court of the Judicial District of Bogota – Civil Chamber, on January 11, 2011 and confirming the
first order issued by the 28th Civil Circuit Court on February 8, 2007 have been submitted to the civil chamber of the
Supreme Court of Justice.
It is made clear that the judgment by
the Superior Court of Bogotá at January 11, 2011: i) Declared the absolute nullity of the purchase of the 145 million shares
of Invercolsa by Fernando Londoño Hoyos. ii) Declared that Ecopetrol and others were the owners and holders of the 145
million shares. iii) Ordered the recording in the shareholders’ book the cancellation of such purchase, including the pledge
in favor of Pacífico Colombia y Panamá banks, as well as the payment in kind of the shares of Arrendadora Financiera
Internacional Bolivariana S.A. iv) Ordered Fernando Londoño Hoyos and AFIB to return to Ecopetrol the dividends received
from Invercolsa, along with the new shares received as profit and/or reappraisal. v) Declared that Fernando Londoño Hoyos
had not acquired or was the holder in good faith of the 145 million shares of Invercolsa; therefore, he does not have any right
of recourse against the plaintiffs for the amount he had paid for those shares. v) Ordered Invercolsa to adjust its operation
and the Shareholders’ Meeting to the declarations made in the sentence. vii) Acquitted the defendants INVERCOLSA, Corredor
and Alban. viii) Ordered Fernando Londoño to pay the court costs and Ecopetrol in respect of the acquitted defendants.
The balance of assets,
liabilities and results of material associates and joint ventures is comprised as follows:
| |
Equion Energía
Limited | | |
March 31, 2015
Offshore International Group * | | |
Equion Energía
Limited | | |
December 31,
2014 Offshore
International
Group | | |
Equion Energía
Limited | | |
January 1, 2014
Offshore
International
Group | |
Statement of financial position | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Current assets | |
| 1,184,109 | | |
| 319,711 | | |
| 1,052,893 | | |
| 350,969 | | |
| 1,900,976 | | |
| 386,259 | |
Non-current assets | |
| 2,006,682 | | |
| 1,928,948 | | |
| 1,984,484 | | |
| 1,893,465 | | |
| 1,512,282 | | |
| 1,663,223 | |
Total assets | |
| 3,190,791 | | |
| 2,248,659 | | |
| 3,037,377 | | |
| 2,244,434 | | |
| 3,413,259 | | |
| 2,049,482 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Current liabilities | |
| 802,091 | | |
| 484,482 | | |
| 815,463 | | |
| 511,918 | | |
| 793,321 | | |
| 562,447 | |
Non-current liabilities | |
| 252,939 | | |
| 385,456 | | |
| 217,461 | | |
| 380,543 | | |
| 151,488 | | |
| 410,689 | |
Total liabilities | |
| 1,055,030 | | |
| 869,938 | | |
| 1,032,924 | | |
| 892,461 | | |
| 944,809 | | |
| 973,136 | |
Equity | |
| 2,135,761 | | |
| 1,378,721 | | |
| 2,004,453 | | |
| 1,351,973 | | |
| 2,468,450 | | |
| 1,076,346 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other complementary information | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash and cash equivalents | |
| 534,337 | | |
| 46,869 | | |
| 470,710 | | |
| 63,858 | | |
| 155,479 | | |
| 47,112 | |
Financial obligations, short-term | |
| 682,575 | | |
| 329,603 | | |
| 690,741 | | |
| 334,944 | | |
| 737,610 | | |
| 307,329 | |
Financial obligations, long-term | |
| 548 | | |
| 34,878 | | |
| 447 | | |
| 35,046 | | |
| 3,817 | | |
| 115,999 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
Statement of profit or loss | |
Equion
Energía
Limited | | |
Three month
period ended
March 31,
2015
Offshore
International
Group | | |
Equion Energía
Limited | | |
Three month
period ended
March 312014 Offshore
International
Group | |
Revenue | |
| 241,853 | | |
| 64,987 | | |
| 333,653 | | |
| 118,629 | |
Costs | |
| (187,525 | ) | |
| (75,770 | ) | |
| (130,633 | ) | |
| (64,511 | ) |
Administration and other expenses | |
| (36,643 | ) | |
| (23,022 | ) | |
| (13,440 | ) | |
| (15,188 | ) |
Financial income (expenses) | |
| 19,121 | | |
| (838 | ) | |
| 38,470 | | |
| (992 | ) |
Income tax | |
| (16,324 | ) | |
| 2,308 | | |
| (73,974 | ) | |
| (16,785 | ) |
Net income for the period | |
| 20,482 | | |
| (32,335 | ) | |
| 154,075 | | |
| 21,153 | |
The following shows a reconciliation of
equity among the most significant participations and the book value of investments:
| |
March 31, 2015 | | |
December 31, 2014 | | |
January 1, 2014 | |
| |
Equion
Energía
Limited | | |
Offshore
International
Group * | | |
Equion
Energía
Limited | | |
Offshore
International
Group | | |
Equion
Energía
Limited | | |
Offshore
International
Group | |
Equity of the associate | |
| 2,135,761 | | |
| 1,378,721 | | |
| 2,004,453 | | |
| 1,351,973 | | |
| 2,468,450 | | |
| 1,076,346 | |
Adjustment unrealized loss | |
| (18,758 | ) | |
| | | |
| (9,938 | ) | |
| | | |
| | | |
| | |
Adjusted equity | |
| 2,117,003 | | |
| 1,378,721 | | |
| 1,994,515 | | |
| 1,351,973 | | |
| 2,468,450 | | |
| 1,076,346 | |
% of Ecopetrol’s ownership | |
| 51 | % | |
| 50 | % | |
| 51 | % | |
| 50 | % | |
| 51 | % | |
| 50 | % |
Ecopetrol’s ownership | |
| 1,079,672 | | |
| 689,361 | | |
| 1,017,203 | | |
| 675,987 | | |
| 1,258,910 | | |
| 538,173 | |
Goodwill | |
| 375,693 | | |
| 341,448 | | |
| 375,693 | | |
| 341,448 | | |
| 375,693 | | |
| 341,448 | |
Carrying
amount of the investment | |
| 1,455,365 | | |
| 1,030,809 | | |
| 1,392,896 | | |
| 1,017,435 | | |
| 1,634,603 | | |
| 879,621 | |
* Information for Offshore
International Group at February, 2015
13. Property,
plant and equipment
The following shows a breakdown of the
changes in property, plant and equipment and its depreciation and impairment for the first quarter of 2015 and year ended December
31, 2014
| |
Property
Plant
and
equipment | | |
Pipelines,
networks and
lines | | |
Work
in progress
(1) | | |
Buildings | | |
Lands
(2) | | |
Other | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Cost | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at December 31, 2014 | |
| 15,964,763 | | |
| 19,385,762 | | |
| 23,993,566 | | |
| 5,185,398 | | |
| 4,211,299 | | |
| 3,208,517 | | |
| 71,949,305 | |
Additions | |
| 225,372 | | |
| 319,450 | | |
| 1,374,583 | | |
| 131,532 | | |
| 20,224 | | |
| 17,985 | | |
| 2,089,146 | |
Interest capitalized | |
| - | | |
| - | | |
| 198,714 | | |
| - | | |
| - | | |
| - | | |
| 198,714 | |
Effect of exchange rate differences | |
| - | | |
| - | | |
| 32,257 | | |
| - | | |
| - | | |
| - | | |
| 32,257 | |
Disposals | |
| (6,663 | ) | |
| (7,663 | ) | |
| - | | |
| (82 | ) | |
| - | | |
| (6,196 | ) | |
| (20,604 | ) |
Foreign currency translation | |
| 147,549 | | |
| 272,555 | | |
| 374,645 | | |
| 26,658 | | |
| 83,354 | | |
| 19,527 | | |
| 924,288 | |
Reclassifications | |
| 235,191 | | |
| (66 | ) | |
| 633,851 | | |
| 62 | | |
| - | | |
| 28,538 | | |
| 897,576 | |
Balance at March 31, 2015 | |
| 16,566,212 | | |
| 19,970,038 | | |
| 26,607,616 | | |
| 5,343,568 | | |
| 4,314,877 | | |
| 3,268,371 | | |
| 76,070,682 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accumulated depreciation and Impairment | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at December 31, 2014 | |
| (7,268,758 | ) | |
| (5,597,583 | ) | |
| - | | |
| (1,127,434 | ) | |
| - | | |
| (416,892 | ) | |
| (14,410,667 | ) |
Depreciation expense | |
| (251,031 | ) | |
| (301,406 | ) | |
| - | | |
| (82,861 | ) | |
| - | | |
| (37,756 | ) | |
| (673,054 | ) |
Impairment losses recognized in profit or loss | |
| (233 | ) | |
| (12 | ) | |
| - | | |
| (1 | ) | |
| - | | |
| (5,713 | ) | |
| (5,959 | ) |
Eliminated on disposals of assets | |
| 5,124 | | |
| 7,397 | | |
| - | | |
| 21 | | |
| - | | |
| 3,509 | | |
| 16,051 | |
Foreign currency translation | |
| (103,692 | ) | |
| (125,476 | ) | |
| - | | |
| (8,429 | ) | |
| - | | |
| (5,443 | ) | |
| (243,040 | ) |
Reclassifications | |
| (131 | ) | |
| 13 | | |
| - | | |
| (11 | ) | |
| - | | |
| 12 | | |
| (117 | ) |
Balance at March 31, 2015 | |
| (7,618,721 | ) | |
| (6,017,067 | ) | |
| - | | |
| (1,218,715 | ) | |
| - | | |
| (462,283 | ) | |
| (15,316,786 | ) |
Net Balance at
March 31, 2015 | |
| 8,947,491 | | |
| 13,952,971 | | |
| 26,607,616 | | |
| 4,124,853 | | |
| 4,314,877 | | |
| 2,806,088 | | |
| 60,753,896 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
All amounts in millions of pesos unless
otherwise stated
| |
Property
Plant
and
equipment | | |
Pipelines,
networks and
lines | | |
Work
in progress
(1) | | |
Buildings | | |
Lands
(2) | | |
Other | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Cost | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at January 1, 2014 | |
| 14,326,459 | | |
| 15,951,313 | | |
| 17,827,867 | | |
| 3,862,087 | | |
| 4,037,110 | | |
| 2,941,639 | | |
| 58,946,475 | |
Additions | |
| 1,305,892 | | |
| 2,776,702 | | |
| 4,068,869 | | |
| 929,553 | | |
| 117,151 | | |
| 593,038 | | |
| 9,791,205 | |
Interest capitalized | |
| - | | |
| - | | |
| 198,924 | | |
| - | | |
| - | | |
| - | | |
| 198,924 | |
Effect of exchange rate differences | |
| - | | |
| - | | |
| 36,357 | | |
| - | | |
| - | | |
| - | | |
| 36,357 | |
Disposals | |
| (217,125 | ) | |
| (29,725 | ) | |
| (15,202 | ) | |
| (18,425 | ) | |
| (6,948 | ) | |
| (265,746 | ) | |
| (553,171 | ) |
Foreign currency translation | |
| 578,526 | | |
| 220,846 | | |
| 652,576 | | |
| 83,106 | | |
| 214,884 | | |
| 54,685 | | |
| 1,804,623 | |
Reclassifications | |
| (28,989 | ) | |
| 466,626 | | |
| 1,224,175 | | |
| 329,077 | | |
| (150,898 | ) | |
| (115,099 | ) | |
| 1,724,892 | |
Balance at December 31, 2014 | |
| 15,964,763 | | |
| 19,385,762 | | |
| 23,993,566 | | |
| 5,185,398 | | |
| 4,211,299 | | |
| 3,208,517 | | |
| 71,949,305 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accumulated depreciation and Impairment | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at January 1, 2014 | |
| (6,216,426 | ) | |
| (4,217,533 | ) | |
| - | | |
| (840,590 | ) | |
| - | | |
| (326,869 | ) | |
| (11,601,418 | ) |
Depreciation expense | |
| (905,443 | ) | |
| (1,088,778 | ) | |
| - | | |
| (313,547 | ) | |
| - | | |
| (158,352 | ) | |
| (2,466,120 | ) |
Impairment losses recognized in profit or loss | |
| (44,206 | ) | |
| (42,793 | ) | |
| - | | |
| 34,849 | | |
| - | | |
| (21,278 | ) | |
| (73,428 | ) |
Eliminated on disposals of assets | |
| 157,615 | | |
| 18,665 | | |
| - | | |
| 2,755 | | |
| - | | |
| 73,613 | | |
| 252,648 | |
Foreign currency translation | |
| (263,802 | ) | |
| (322,247 | ) | |
| - | | |
| (21,972 | ) | |
| - | | |
| (13,299 | ) | |
| (621,320 | ) |
Reclassifications | |
| 3,504 | | |
| 55,103 | | |
| - | | |
| 11,071 | | |
| - | | |
| 29,293 | | |
| 98,971 | |
Balance at December 31, 2014 | |
| (7,268,758 | ) | |
| (5,597,583 | ) | |
| - | | |
| (1,127,434 | ) | |
| - | | |
| (416,892 | ) | |
| (14,410,667 | ) |
Net
Balance at December 31, 2014 | |
| 8,696,005 | | |
| 13,788,179 | | |
| - | | |
| 4,057,964 | | |
| - | | |
| 2,791,625 | | |
| 57,538,638 | |
Ecopetrol S.A.
Notes to consolidated financial statements
All amounts in millions of pesos unless
otherwise stated
| (1) | Mainly includes investments made for the modernization
of the Cartagena Refinery in the amount of $18,653,730 (2014 - $16,598,809 and January 1, 2014 - $11,408,900). |
| (2) | The balance of land includes $930,045 (December 31, 2014
and January 1, 2014 -$939,045) for investment properties corresponding to land and lots kept for leasing. For the initial measurement
of these assets, their fair value was used as deemed cost and its subsequent measurement is made by the cost method. Income generated
relating to leases during the first quarter of 2015 amounted to $409 (first quarter of 2014 -$383). |
| | During the evaluated period there were no changes
caused by additions, disposals and/or impairment of these lands. |
14. Natural
and environmental resources
The following shows a breakdown of the
changes in Natural and environmental resources and its depletion and impairment for the first quarter of 2015 and year ended December
31, 2014:
| |
Oil
investments | | |
Abandonment
costs | | |
Exploration
and
Evaluation | | |
Total | |
Cost | |
| | | |
| | | |
| | | |
| | |
Balance at December 31, 2014 | |
| 37,459,879 | | |
| 1,965,202 | | |
| 6,114,020 | | |
| 45,539,101 | |
Additions (1) | |
| 657,192 | | |
| - | | |
| 275,779 | | |
| 932,971 | |
Capitalization of projects | |
| - | | |
| - | | |
| (13,393 | ) | |
| (13,393 | ) |
Dry wells | |
| - | | |
| - | | |
| (42,447 | ) | |
| (42,447 | ) |
Interest capitalized | |
| - | | |
| - | | |
| 31,208 | | |
| 31 ,208 | |
Effect of exchange rate differences capitalized | |
| - | | |
| - | | |
| 46,804 | | |
| 46,804 | |
Foreign currency translation | |
| 339,898 | | |
| 12,379 | | |
| 71,017 | | |
| 423,294 | |
Reclassifications | |
| (284,517 | ) | |
| | | |
| (10,678 | ) | |
| (295,195 | ) |
Balance at March 31, 2015 | |
| 38,172,452 | | |
| 1,977,581 | | |
| 6,472,310 | | |
| 46,622,343 | |
| |
| | | |
| | | |
| | | |
| | |
Accumulated depletion and Impairment | |
| | | |
| | | |
| | | |
| | |
Balance at December 31, 2014 | |
| (19,517,736 | ) | |
| (805,444 | ) | |
| - | | |
| (20,323,180 | ) |
Depletion expense | |
| (796,457 | ) | |
| (71,078 | ) | |
| - | | |
| (867,535 | ) |
Foreign currency translation | |
| (130,846 | ) | |
| (4,677 | ) | |
| - | | |
| (135,523 | ) |
Reclassifications | |
| 322,474 | | |
| (26,344 | ) | |
| - | | |
| 296,130 | |
Balance at March 31, 2015 | |
| (20,122,565 | ) | |
| (907,543 | ) | |
| - | | |
| (21,030,108 | ) |
Net
Balance at March 31, 2015 | |
| 18,049,887 | | |
| 1,070,038 | | |
| 6,472,310 | | |
| 25,592,235 | |
| (1) | During 2015 first quarter, additions are represented
mainly to the drilling plan in the following fields: Rubiales, Quifa, Castilla y La Cira Infantas, and the extension of the Acacías
and Castilla 3 station. |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
| |
Oil
investments | | |
Abandonment
costs | | |
Exploration
and
Evaluation | | |
Total | |
Cost | |
| | | |
| | | |
| | | |
| | |
Balance at January 1, 2014 | |
| 31,277,931 | | |
| 1,227,664 | | |
| 5,575,489 | | |
| 38,081,084 | |
Additions (1) | |
| 4,741,394 | | |
| 63,508 | | |
| 1,973,174 | | |
| 6,778,076 | |
Additions in abandonment costs | |
| | | |
| 645,679 | | |
| | | |
| 645,679 | |
Capitalization of projects | |
| - | | |
| - | | |
| (120,505 | ) | |
| (120,505 | ) |
Dry wells (2) | |
| - | | |
| - | | |
| (1,563,384 | ) | |
| (1,563,384 | ) |
Interests capitalized | |
| | | |
| | | |
| 92,633 | | |
| 92,633 | |
Effect of exchange rate differences capitalized | |
| | | |
| | | |
| 16,931 | | |
| 16,931 | |
Disposals | |
| (11 | ) | |
| - | | |
| - | | |
| (11 | ) |
Foreign currency translation | |
| 878,789 | | |
| 28,351 | | |
| 165,594 | | |
| 1,072,734 | |
Reclassifications | |
| 561,776 | | |
| - | | |
| (25,912 | ) | |
| 535,864 | |
Balance at December 31, 2014 | |
| 37,459,879 | | |
| 1,965,202 | | |
| 6,114,020 | | |
| 45,539,101 | |
| |
| | | |
| | | |
| | | |
| | |
Accumulated depletion and Impairment | |
| | | |
| | | |
| | | |
| | |
Balance at January 1, 2014 | |
| (15,471,266 | ) | |
| (648,052 | ) | |
| - | | |
| (16,119,318 | ) |
Depletion expense | |
| (2,972,799 | ) | |
| (135,082 | ) | |
| - | | |
| (3,107,881 | ) |
Impairment losses (3) | |
| (478,180 | ) | |
| - | | |
| - | | |
| (478,180 | ) |
Eliminated on disposals of assets | |
| 11 | | |
| - | | |
| - | | |
| 11 | |
Foreign currency translation | |
| (323,148 | ) | |
| (14,506 | ) | |
| | | |
| (337,654 | ) |
Reclassifications | |
| (272,354 | ) | |
| (7,804 | ) | |
| - | | |
| (280,158 | ) |
Balance at December 31, 2014 | |
| (19,517,736 | ) | |
| (805,444 | ) | |
| - | | |
| (20,323,180 | ) |
Net
Balance at December 31, 2014 | |
| 17,942,143 | | |
| 1,159,758 | | |
| 6,114,020 | | |
| 25,215,921 | |
| (1) | Additions are represented mainly in the following fields:
Castilla, Casabe, Chichimene, Rubiales, Pauto, Caño Sur Este, Quifa, Cusiana, Nare y Akacías CPO-9. |
| (2) | Includes mainly dry wells in Ecopetrol S.A. of $527,670,
Ecopetrol America Inc. by $462.060, Ecopetrol Brazil by $116,608, Ecopetrol Germany by $285,548 and Hocol S.A. by $171,467. |
| (3) | During 2014 an impairment was recognized for $474,552 related to oil and gas activities,
resulting from the evaluation based on the estimated fair value of future cash flows of principal oil investments. |
The depletion method used is the units-of-production
method.
15. Intangibles
The following shows a breakdown of the
changes in Intangibles and its amortization for the first quarter of 2015 and year ended December 31, 2014:
| |
Licenses
and
software | | |
Other
intangibles | | |
Total | |
Cost | |
| | | |
| | | |
| | |
Balance at December 31, 2014 | |
| 445,813 | | |
| 147,189 | | |
| 593,002 | |
Additions | |
| 5,495 | | |
| 1,475 | | |
| 6,970 | |
Disposals | |
| (539 | ) | |
| - | | |
| (539 | ) |
Effect of exchange rate differences | |
| 2,213 | | |
| | | |
| 2,213 | |
Reclassifications | |
| 14,315 | | |
| | | |
| 14,315 | |
Balance at March 31, 2015 | |
| 467,297 | | |
| 148,664 | | |
| 615,961 | |
Accumulated amortization | |
| | | |
| | | |
| | |
Balance at December 31, 2014 | |
| (322,462 | ) | |
| (45,213 | ) | |
| (367,675 | ) |
Depletion expense | |
| (28.653 | ) | |
| (2,449 | ) | |
| (31,102 | ) |
Disposals | |
| - | | |
| | | |
| - | |
Effect of exchange rate differences | |
| (1,260 | ) | |
| | | |
| (1,260 | ) |
Balance at March 31, 2015 | |
| (352,375 | ) | |
| (47,662 | ) | |
| (400,037 | ) |
Net
Balance at March 31, 2015 | |
| 114,922 | | |
| 101,002 | | |
| 215,924 | |
Useful lives | |
| <5 years | | |
| <5 years | | |
| | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
| |
Licenses
and software | | |
Other | | |
Total | |
Cost | |
| | | |
| | | |
| | |
Balance at January 1, 2014 | |
| 411,859 | | |
| 137,002 | | |
| 548,861 | |
Additions | |
| 26,406 | | |
| 12,221 | | |
| 38,627 | |
Disposals | |
| (539 | ) | |
| - | | |
| (539 | ) |
Effect of exchange rate differences | |
| 5,204 | | |
| - | | |
| 5,204 | |
Reclassifications | |
| 2,883 | | |
| (2,034 | ) | |
| 849 | |
Balance at December 31, 2014 | |
| 445,813 | | |
| 147,189 | | |
| 593,002 | |
Accumulated amortization | |
| | | |
| | | |
| | |
Balance at January 1, 2014 | |
| (262,583 | ) | |
| (35,821 | ) | |
| (298,404 | ) |
Depletion expense | |
| (58,884 | ) | |
| (9,392 | ) | |
| (68,276 | ) |
Disposals | |
| 539 | | |
| - | | |
| 539 | |
Reclassifications | |
| 1,156 | | |
| - | | |
| 1,156 | |
Foreign currency translation | |
| (2,690 | ) | |
| - | | |
| (2,690 | ) |
Balance at December 31, 2014 | |
| (322,462 | ) | |
| (45,213 | ) | |
| (367,675 | ) |
Net Balance at December 31, 2014 | |
| 123,351 | | |
| 101,976 | | |
| 225,327 | |
Useful life | |
| <5 years | | |
| <5 years | | |
| | |
16. Goodwill
The balance of Goodwill through business
combinations is comprised as follows:
| |
March 31 | | |
December 31 | | |
January 1st | |
| |
2015 | | |
2014 | | |
2014 | |
| |
| | |
| | |
| |
Transport | |
| | | |
| | | |
| | |
CENIT Transporte y Logística de Hidrocarburos S.A.S.(1) | |
| 683,496 | | |
| 683,496 | | |
| 683,496 | |
Exploration and production | |
| | | |
| | | |
| | |
Hocol Petroleum Limited | |
| 537,598 | | |
| 537,598 | | |
| 537,598 | |
Refining and petrochemicals | |
| | | |
| | | |
| | |
Andean Chemical Limited | |
| 127,812 | | |
| 127,812 | | |
| 127,812 | |
Propilco S,A, | |
| 108,137 | | |
| 108,137 | | |
| 108,137 | |
| |
| 1,457,043 | | |
| 1,457,043 | | |
| 1,457,043 | |
Minus – Impairment losses | |
| | | |
| | | |
| | |
Hocol Petroleum Limited (2) | |
| (49,830 | ) | |
| (49,830 | ) | |
| (49,830 | ) |
| |
| | | |
| | | |
| | |
Total | |
| 1,407,213 | | |
| 1,407,213 | | |
| 1,407,213 | |
| (1) | CENIT’s Goodwill arose from the acquisition
of Ocensa in 2009. |
| (2) | As of December 31, 2014 and January 1, 2014, the Business
Group evaluated the recoverability of the carrying amount of goodwill by comparing it to the fair value of the CGU. The process
implied projections of future cash flows after taxes, market variables and discount rates after taxes and risks associated with
the segment of the evaluated company. |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
Ecopetrol S.A. recognized an
impairment loss as of January 1, 2014 of $49,830, related to the CGU of Hocol Premium Limited.
17. Loans
and borrowings
| 17.1 | Composition of loans and borrowings |
| |
Weighted
average effective
interest rate at
March 31, 2015 | | |
March
31
2015 | | |
December
31
2014 | | |
January
1st
2014 | |
Local-currency | |
| | | |
| | | |
| | | |
| | |
Bonds | |
| 8.97 | % | |
| 1,931,255 | | |
| 1,931,140 | | |
| 1,927,467 | |
Syndicated loans | |
| 7.94 | % | |
| 4,437,248 | | |
| 4,446,529 | | |
| 4,597,181 | |
Other | |
| 8.24 | % | |
| 778,202 | | |
| 726,414 | | |
| 454,954 | |
Total local-currency | |
| | | |
| 7,146,705 | | |
| 7,104,083 | | |
| 6,979,602 | |
| |
| | | |
| | | |
| | | |
| | |
Foreign-currency | |
| | | |
| | | |
| | | |
| | |
Bonds | |
| 6.12 | % | |
| 19,840,731 | | |
| 18,527,409 | | |
| 7,821,818 | |
Commercial loan – Modernization plan at the Cartagena Refinery | |
| 2.00 | % | |
| 8,146,325 | | |
| 7,480,719 | | |
| 5,831,549 | |
Other commercial loans (1) | |
| 4.07 | % | |
| 6,076,557 | | |
| 1,125,480 | | |
| 835,935 | |
Other (2) | |
| 1.22 | % | |
| 1,515,599 | | |
| 709,650 | | |
| 772,509 | |
Total foreign-currency | |
| | | |
| 35,579,212 | | |
| 27,843,258 | | |
| 15,261,811 | |
Total financial
obligations | |
| | | |
| 42,725,917 | | |
| 34,947,341 | | |
| 22,241,413 | |
Minus – short-term | |
| | | |
| 4,611,531 | | |
| 3,456,441 | | |
| 3,121,335 | |
Total long-term | |
| | | |
| 38,114,386 | | |
| 31,490,900 | | |
| 19,120,078 | |
| (1) | In February 2015, Ecopetrol S.A. entered into a commercial loan of US$1,925 million. The following international
banks participated in the facility: JP Morgan Chase Bank, N.A; BNP Paribas; Mizuho Bank Ltd; Bank of America, N.A.; HSBC Bank USA,
National Association; Banco Bilbao Vizcaya Argentaria S.A., Grand Cayman Branch; Banco Santander S.A.; Citibank, N.A. The loan
has a February 2020 maturity date and beans interest at a rate per annum of Libor + 140 basis points. |
In May and
September 2014, Ecopetrol S.A. issued bonds for an amount of US$2,000 and US$1,200 million, respectively. The first issuance has
a May 2045 maturity date and a 5.875% coupon rate. The second issuance has a January 2015 maturity date and a 4.125% coupon rate.
| | In May, 2014, Oleoducto Central S.A. issued international bonds (RegS/144A) for the amount of US$500
million with a 4% coupon rate, maturing in May 2021. |
| (2) | Includes remittances financed in U.S. dollars with the
national bank for the payment of imports that amounted to US$459 million (2014-US$196), with a financing rate of Libor and a spread
between 0.5 and 0.8%. |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
The following table details
the main characteristics of the Group’s most significant loans:
Type | |
Company | |
Disbursement
date | |
Original amount (millions) | |
Maturity | |
Interest
rate | |
Principal
payment |
| |
| |
| |
|
| |
| |
| |
|
| |
| |
Dec/2010 | |
COP $ |
97,100 | |
Dec/2015 | |
Floating | |
Bullet * |
| |
| |
Dec/2010 | |
COP $ |
138,700 | |
Dec/2017 | |
Floating | |
Bullet |
| |
| |
Dec/2010 | |
COP $ |
479,900 | |
Dec/2020 | |
Floating | |
Bullet |
Bonds in local-currency | |
Ecopetrol S.A. | |
Dec/2010 | |
COP $ |
284,300 | |
Dec/2040 | |
Floating | |
Bullet |
| |
| |
Aug/2013 | |
COP $ |
120,950 | |
Aug./2018 | |
Floating | |
Bullet |
| |
| |
Aug/2013 | |
COP $ |
168,600 | |
Aug./2023 | |
Floating | |
Bullet |
| |
| |
Aug/2013 | |
COP $ |
347,500 | |
Aug./2028 | |
Floating | |
Bullet |
| |
| |
Aug/2013 | |
COP $ |
262,950 | |
Aug./2043 | |
Floating | |
Bullet |
| |
Ecopetrol S.A. | |
May/2013 | |
COP $ |
1,839,000 | |
May/2025 | |
Floating | |
Semi-annually |
Syndicated loan in local-currency | |
ODL Finance S.A. | |
Aug/2013 | |
COP $ |
647,029 | |
Aug./2020 | |
Floating | |
Quarterly |
| |
Oleoducto Bicentenario | |
July/2012 | |
COP $ |
2,100,000 | |
July/2024 | |
Floating | |
Quarterly |
| |
| |
July/2009 | |
USD $ |
1,500 | |
July/2019 | |
Fixed | |
Bullet |
| |
| |
Sep/2013 | |
USD $ |
350 | |
Sep/2018 | |
Fixed | |
Bullet |
Bonds in foreign-currency | |
Ecopetrol S.A. | |
Sep/2013 | |
USD $ |
1,300 | |
Sep/2023 | |
Fixed | |
Bullet |
| |
| |
Sep/2013 | |
USD $ |
850 | |
Sep/2043 | |
Fixed | |
Bullet |
| |
| |
May/2014 | |
USD $ |
2,000 | |
May/2045 | |
Fixed | |
Bullet |
| |
| |
Sep/2014 | |
USD $ |
1,200 | |
May/2025 | |
Fixed | |
Bullet |
| |
Oleoducto Central S.A. | |
May/2014 | |
USD $ |
500 | |
May/2021 | |
Fixed | |
Bullet |
| |
| |
Dec/2011 | |
USD $ |
2,747 | |
Dec/2027 | |
Fixed | |
Semi-annually |
International commercial loans | |
Refinería de Cartagena S.A. | |
Dec/2011 | |
USD $ |
310 | |
Dec/2027 | |
Floating | |
Semi-annually |
| |
| |
Dec/2011 | |
USD $ |
440 | |
Dec/2025 | |
Floating | |
Semi-annually |
| |
Ecopetrol S.A. | |
Feb/2015 | |
USD $ |
1,925 | |
Feb/2020 | |
Floating | |
Bullet |
| |
| |
Mar/2013 | |
USD $ |
245 | |
July/2023 | |
Floating | |
Semi-annually |
| |
| |
Mar/2013 | |
USD $ |
151 | |
July/2019 | |
Floating | |
Semi-annually |
*
Bullet - Face value is paid in full on the maturity date.
| 17.2 | Maturity of financial obligations |
The following is the maturity of financial
obligations as of March 31, 2015:
| |
Up to 1 year | | |
1 – 5 years | | |
5-10 years | | |
> 10 years | | |
Total | |
Local-currency | |
| | | |
| | | |
| | | |
| | | |
| | |
Bonds | |
| 250,618 | | |
| 669,066 | | |
| 647,160 | | |
| 364,411 | | |
| 1,931,255 | |
Syndicated credit | |
| 498,110 | | |
| 2,337,586 | | |
| 1,550,497 | | |
| 51,055 | | |
| 4,437,248 | |
Other | |
| 177,801 | | |
| 235,067 | | |
| 131,137 | | |
| 234,197 | | |
| 778,202 | |
Total local-currency | |
| 926,529 | | |
| 3,241,719 | | |
| 2,328,794 | | |
| 649,663 | | |
| 7,146,705 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign-currency | |
| | | |
| | | |
| | | |
| | | |
| | |
Bonds | |
| 1,081,391 | | |
| 7,368,932 | | |
| 7,444,683 | | |
| 3,945,725 | | |
| 19,840,731 | |
Syndicated credit | |
| 695,671 | | |
| 3,822,003 | | |
| 3,628,651 | | |
| - | | |
| 8,146,325 | |
Commercial loans | |
| 561,282 | | |
| 5,329,483 | | |
| 185,792 | | |
| - | | |
| 6,076,557 | |
Other | |
| 1,346,658 | | |
| 108,966 | | |
| 14 | | |
| 59,961 | | |
| 1,515,599 | |
Total foreign-currency | |
| 3,685,002 | | |
| 16,629,384 | | |
| 11,259,140 | | |
| 4,005,686 | | |
| 35,579,212 | |
Total Financial
obligations | |
| 4,611,531 | | |
| 19,871,103 | | |
| 13,587,934 | | |
| 4,655,349 | | |
| 42,725,917 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
Financing obtained by Ecopetrol S.A. through
capital markets, which correspond to issuance of local and foreign bonds, syndicated credit and others financial obligations are
not guaranteed.
Reficar entered into an international commercial
loan for $ 3,497 million to finance the expansion project of the refinery in Cartagena in 2011. This operation imposes restrictions
on the Reficar´s debt ratio, except for certain conditions expressly set out in contracts about working capital needs. Regarding
financial covenats, Reficar is required to maintain a coverage ratio of minimum debt service of 1.50: 1 at certain times of the
loan’s life.
Under the same transaction, Reficar entered
into a commercial trust and Security and Depositary Agreement to receive the resources of the new refinery to meet specific purposes
such as operating expenses, interest and others.
For the case of the financing obtained
by Oleoducto Bicentenario SAS for the construction of the project and start up of the pipeline, the creation of a main fund was
established to manage the funds for the payment of the syndicated loan. (See Note 5).
The following shows the loan’s fair
value:
| |
March 31, 2015 | | |
December 31,
2014 | | |
January 1,
2014 | |
Fair value of the loans: | |
| 43,598,868 | | |
| 33,564,765 | | |
| 21,755,619 | |
Business Group’s financial obligations
are recognised at its amortized cost, which corresponds to the present value of cash flows, discounted at the effective interest
rate.
For the measurement at fair value, bonds
and securities in local currency were valued using Infovalmer reference prices for the local market, while for the bonds in US
dollars the source taken was Bloomberg. Regarding the remaining financial obligations for which there is no market benchmark a
present value discounting technique was used. These rates incorporate market risk through certain benchmarks (Libor, DTF) and the
credit risk (spread) of the Company.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
18. Trade
and other payables
The balance of trade and other payables
is comprised as follows:
| |
March 31, | | |
December 31, | | |
January 1, | |
| |
2015 | | |
2014 | | |
2014 | |
Current | |
| | | |
| | | |
| | |
Dividends payable | |
| 5,472,224 | | |
| 3,704 | | |
| 1,313,596 | |
Suppliers | |
| 4,885,072 | | |
| 6,187,110 | | |
| 5,767,754 | |
Partner advances (See note 30) | |
| 1,236,746 | | |
| 1,113,908 | | |
| 849,933 | |
Deposits received from third parties | |
| 302.633 | | |
| 312,787 | | |
| 613,812 | |
Related parties (see note 29) | |
| 92.909 | | |
| 107,820 | | |
| 127,093 | |
Income and VAT tax withholdings | |
| 48,462 | | |
| 58,214 | | |
| 50,568 | |
Various creditors | |
| 882,587 | | |
| 1,022,478 | | |
| 1,258,565 | |
Total current | |
| 12,920,633 | | |
| 8,806,021 | | |
| 9,981,321 | |
Non-current | |
| | | |
| | | |
| | |
Suppliers | |
| 26,862 | | |
| 30,432 | | |
| 33,457 | |
Various creditors | |
| 113,811 | | |
| 95,999 | | |
| 455,781 | |
Total non-current | |
| 140,673 | | |
| 126,431 | | |
| 489,238 | |
Carrying amount of trade and other payables
approximates its fair value due to their short term mature.
19. Labor
and pension plan obligations
The balance of labor and pension plan obligations
is comprised as follows:
| |
March 31, | | |
December 31, | | |
January 1, | |
| |
2015 | | |
2014 | | |
2014 | |
Post-employment benefits | |
| | | |
| | | |
| | |
Health | |
| 4,841,071 | | |
| 4,787,784 | | |
| 5,127,275 | |
Education | |
| 550,565 | | |
| 584,053 | | |
| 512,800 | |
Pension | |
| 102,925 | | |
| 104,324 | | |
| 730,865 | |
Pension bonds | |
| (347,702 | ) | |
| (252,994 | ) | |
| 13,183 | |
Other | |
| 45,280 | | |
| 48,126 | | |
| 34,537 | |
| |
| 5,192,139 | | |
| 5,271,293 | | |
| 6,418,660 | |
Welfare benefits and salaries payable | |
| 237,318 | | |
| 308,804 | | |
| 266,420 | |
Other post-employment benefits | |
| 71,350 | | |
| 73,986 | | |
| 66,544 | |
Total | |
| 5,500,807 | | |
| 5,654,083 | | |
| 6,751,624 | |
| |
| | | |
| | | |
| | |
Current | |
| 1,308,514 | | |
| 1,380,000 | | |
| 1,337,616 | |
Non-current | |
| 4,192,293 | | |
| 4,274,083 | | |
| 5,414,008 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
The following shows a breakdown of the
changes in assets and liabilities of post-employment benefits:
| |
Pension and pension bonds (1) | | |
Other | | |
Total | |
| |
March 31, | | |
December 31, | | |
March 31, | | |
December 31, | | |
March 31, | | |
December 31, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
Liabilities opening balance | |
| 11,559,018 | | |
| 12,193,924 | | |
| 5,419,963 | | |
| 5,674,612 | | |
| 16,978,981 | | |
| 17,868,536 | |
Current service cost | |
| - | | |
| - | | |
| 15,771 | | |
| 64,020 | | |
| 15,771 | | |
| 64,020 | |
Past service cost | |
| - | | |
| - | | |
| - | | |
| (87,465 | ) | |
| - | | |
| (87,465 | ) |
Interest expense | |
| 198,436 | | |
| 821,783 | | |
| 96,903 | | |
| 386,675 | | |
| 295,339 | | |
| 1,208,458 | |
Actuarial gains (losses) | |
| - | | |
| (771,717 | ) | |
| - | | |
| (233,590 | ) | |
| - | | |
| (1,005,307 | ) |
Other | |
| - | | |
| - | | |
| (3,945 | ) | |
| 13,136 | | |
| (3,945 | ) | |
| 13,136 | |
Paid benefits | |
| (153,506 | ) | |
| (684,972 | ) | |
| (91,776 | ) | |
| (397,425 | ) | |
| (245,282 | ) | |
| (1,082,397 | ) |
Liabilities-closing balance | |
| 11,603,948 | | |
| 11,559,018 | | |
| 5,436,916 | | |
| 5,419,963 | | |
| 17,040,864 | | |
| 16,978,981 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Plan assets-opening balance | |
| 11,707,688 | | |
| 11,449,876 | | |
| - | | |
| - | | |
| 11,707,688 | | |
| 11,449,876 | |
Return on plan assets | |
| 209,704 | | |
| 761,674 | | |
| - | | |
| - | | |
| 209,704 | | |
| 761,674 | |
Benefits paid | |
| (154,446 | ) | |
| (685,082 | ) | |
| - | | |
| - | | |
| (154,446 | ) | |
| (685,082 | ) |
Actuarial gains (losses) | |
| 85,779 | | |
| 181,220 | | |
| - | | |
| - | | |
| 85,779 | | |
| 181,220 | |
Plan assets-closing balance | |
| 11,848,725 | | |
| 11,707,688 | | |
| - | | |
| - | | |
| 11,848,725 | | |
| 11,707,688 | |
Net post-employment benefits liability (asset) | |
| (244,777 | ) | |
| (148,670 | ) | |
| 5,436,916 | | |
| 5,419,963 | | |
| 5,192,139 | | |
| 5,271,293 | |
| (1) | There is no service cost for pension and pension bound plans because the beneficiaries were all
retired from July 31, 2010. |
The following shows a breakdown of the
changes in profit and loss and other comprehensive income for the quarters ended on March 31, 2015 and 2014:
| |
March 31, | | |
March 31, | |
| |
2015 | | |
2014 | |
Recognized in profit and loss | |
| | | |
| | |
Service cost | |
| 15,771 | | |
| | |
Interest cost | |
| 295,339 | | |
| 302,115 | |
Return on plan assets | |
| (209,704 | ) | |
| (192,076 | ) |
| |
| 101,406 | | |
| 110,039 | |
| |
| | | |
| | |
Recognized in other comprehensive income | |
| | | |
| | |
Pension | |
| 80,101 | | |
| 58,033 | |
Pension bonds | |
| 5,678 | | |
| 4,114 | |
| |
| 85,779 | | |
| 62,147 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
Plan assets
The Company funded pension and pension
bonds plans through five trust funds. The composition by type of investment is comprised as follows:
| |
March 31, | | |
December 31, | | |
January 1, | |
| |
2015 | | |
2014 | | |
2014 | |
Bonds issued by the Colombian Government | |
| 4,500,764 | | |
| 4,298,278 | | |
| 4,311,575 | |
Bonds of private entities | |
| 3,515,636 | | |
| 3,591,046 | | |
| 3,567,065 | |
Other bonds of public entities | |
| 797,757 | | |
| 825,970 | | |
| 864,917 | |
Bonds of foreign entities | |
| 270,546 | | |
| 230,772 | | |
| 196,404 | |
Other local-currency | |
| 2,050,684 | | |
| 2,070,405 | | |
| 2,037,551 | |
Other foreign-currency | |
| 480,865 | | |
| 480,712 | | |
| 389,416 | |
Variable yield | |
| 232,473 | | |
| 210,505 | | |
| 82,948 | |
| |
| 11,848,725 | | |
| 11,707,688 | | |
| 11,449,876 | |
The fair value hierarchy of plan assets
is comprised as follows:
| |
March 31 | | |
December 31 | | |
January 1st | |
Fair value | |
2015 | | |
2014 | | |
2015 | |
Level 1 | |
| 5,193,103 | | |
| 4,504,887 | | |
| 4,815,213 | |
Level 2 | |
| 6,655,622 | | |
| 7,202,801 | | |
| 6,634,663 | |
| |
| 11,848,725 | | |
| 11,707,688 | | |
| 11,449,876 | |
The fair value of the plan assets is calculated
using prices quoted in the relevant assets’ market. The Company obtains these prices through reliable financial data suppliers
recognized in Colombia or abroad, depending on the investment.
For the securities issued in local currency,
the fair value of the plan assets is calculated using information published by INFOVALMER, supplier of prices authorized by the
Financial Superintendence of Colombia. According to its methodology, prices may be calculated based on market information at the
valuation date or estimated based on historic inputs in accordance with the criteria established for the calculation of each of
the prices.
The fair value is calculated based on the
most representative market of the transactions carried out through the electronic platforms approved and supervised by the regulator.
The estimated fair value is calculated
for the investments that do not have sufficient information to estimate an average market price, by replicating the prices quoted
for similar assets or prices obtained through quotations from stock brokers. This estimated price is also given by INFOVALMER as
a result of the application of robust methodologies approved by the financial regulator and widely used by the financial sector.
Actuarial assumptions
The
following are the actuarial assumptions used in determining the present value of defined employee benefit obligations at January
1, 2014 and December 31, 2014. Actuarial assumptions used at closing date of 2014 were used for the projections based at March
31, 2015.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
December 31, 2014
| |
Pension | | |
Pension bonds | | |
Health | | |
Education | | |
Other benefits | |
Discount rate | |
| 7.50 | % | |
| 7.00 | % | |
| 7.50 | % | |
| 6.75 | % | |
| 7.50 | % |
Salary growth rate | |
| 4.25 | % | |
| N/A | | |
| N/A | | |
| N/A | | |
| 4.25 | % |
Expected inflation rate | |
| 3.00 | % | |
| 3.00 | % | |
| 3.00 | % | |
| 3.00 | % | |
| 3.00 | % |
Cost tendency (1) | |
| N/A | | |
| N/A | | |
| 10.40 | % | |
| 7.50 | % | |
| N/A | |
January 1, 2014
| |
Pension | | |
Pension bonds | | |
Health | | |
Education | | |
Other benefits | |
Discount rate | |
| 7.00 | % | |
| 6.25 | % | |
| 7.00 | % | |
| 6.50 | % | |
| 6.75 | % |
Salary growth rate | |
| 4.50 | % | |
| N/A | | |
| N/A | | |
| N/A | | |
| 4.50 | % |
Expected inflation rate | |
| 3.00 | % | |
| 3.00 | % | |
| 3.00 | % | |
| 3.00 | % | |
| 3.00 | % |
Cost tendency (1) | |
| N/A | | |
| N/A | | |
| 10.40 | % | |
| 7.50 | % | |
| N/A | |
| (1) | The cost tendency is the projected increase for the initial year and the rate blends into the expected
inflation rate. |
The mortality table used for all calculations
was RV-08 “Valid Annuitants” for men and women 2005-2008, of the Colombian Social Security Institute – ISS.
Duration of benefit obligation
According to the latest actuarial valuations,
weighted average duration (in years) of the liability for defined benefits, for each plan is comprised as follows:
| |
December 31 | | |
January 1st | |
| |
2014 | | |
2014 | |
Pension | |
| 11.3 | | |
| 12.7 | |
Health | |
| 13.3 | | |
| 14.9 | |
Education | |
| 5.7 | | |
| 5.6 | |
Pension bonds | |
| 10.7 | | |
| 12.1 | |
Five-year term | |
| 7.0 | | |
| 7.5 | |
Severance | |
| 7.0 | | |
| 11.3 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
Sensitivity analysis
Some relevant actuarial assumptions changes
could occur at the presentation date of these financial statements. The sensitivity analysis below has been determined based on
reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other
assumptions constant at December 31, 2014:
| |
Pension | | |
Pension
bonds | | |
Health | | |
Education | | |
Other
benefits | |
Discount rate | |
| | | |
| | | |
| | | |
| | | |
| | |
-50 basis points | |
| 11,580,791 | | |
| 651,975 | | |
| 5,117,292 | | |
| 703,682 | | |
| 31,571 | |
+50 basis points | |
| 10,362,677 | | |
| 586,365 | | |
| 4,492,644 | | |
| 665,038 | | |
| 29,468 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Inflation rate | |
| | | |
| | | |
| | | |
| | | |
| | |
-50 basis points | |
| 10,358,095 | | |
| 618,808 | | |
| - | | |
| - | | |
| - | |
+50 basis points | |
| 11,581,821 | | |
| 617,188 | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Salary growth rate | |
| | | |
| | | |
| | | |
| | | |
| | |
-50 basis points | |
| - | | |
| - | | |
| - | | |
| - | | |
| 29,435 | |
+50 basis points | |
| - | | |
| - | | |
| - | | |
| - | | |
| 31,597 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Cost tendency | |
| | | |
| | | |
| | | |
| | | |
| | |
-50 basis points | |
| - | | |
| - | | |
| 4,496,688 | | |
| 666,565 | | |
| - | |
+50 basis points | |
| - | | |
| - | | |
| 5,110,409 | | |
| 701,901 | | |
| - | |
The Company performed a sensitivity analysis
related to the interest rate variation on plan assets. See section 29 – Risk management for further information
| 20. | Estimated liabilities and provisions |
The following shows a breakdown of the
changes in the different categories of estimated liabilities and provisions for the quarter ended on March 31, 2015 and year ended
December 31, 2014:
| |
Provision for abandonment (1) | | |
Legal proceedings (2) | | |
Provision comuneros (3) | | |
Environmental contingencies and others (4) | | |
Total | |
Balance at January 1, 2014 | |
| 3,214,132 | | |
| 537,440 | | |
| 445,364 | | |
| 479,357 | | |
| 4,676,293 | |
Additions (recoveries) | |
| 698,920 | | |
| (210,144 | ) | |
| 106,133 | | |
| 228,681 | | |
| 823,590 | |
Expenditures | |
| (104,163 | ) | |
| (27,238 | ) | |
| - | | |
| (49,270 | ) | |
| (180,671 | ) |
Financial cost | |
| 194,769 | | |
| - | | |
| - | | |
| - | | |
| 194,769 | |
Foreign currency translation | |
| 37,118 | | |
| (507 | ) | |
| - | | |
| 16,181 | | |
| 52,792 | |
Balance at December 31, 2014 | |
| 4,040,776 | | |
| 299,551 | | |
| 551,497 | | |
| 674,949 | | |
| 5,566,773 | |
Current | |
| 189,721 | | |
| 292,451 | | |
| - | | |
| 365,879 | | |
| 848,051 | |
Non-current | |
| 3,851,055 | | |
| 7,100 | | |
| 551,497 | | |
| 309,070 | | |
| 4,718,722 | |
| |
| 4,040,776 | | |
| 299,551 | | |
| 551,497 | | |
| 674,949 | | |
| 5,566,773 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
| |
Provision for abandonment
(1) | | |
Legal proceedings (2) | | |
Provision comuneros (3) | | |
Environmental contingencies and others (4) | | |
Total | |
| |
| | |
| | |
| | |
| | |
| |
Additions (recoveries) | |
| 51,305 | | |
| 4,298 | | |
| 43,239 | | |
| 26,419 | | |
| 125,261 | |
Expenditures | |
| (11,073 | ) | |
| (2,979 | ) | |
| - | | |
| (5,691 | ) | |
| (19,743 | ) |
Financial cost | |
| 50,626 | | |
| - | | |
| - | | |
| - | | |
| 50,626 | |
Foreign currency translation | |
| 15,116 | | |
| 113 | | |
| - | | |
| 5,470 | | |
| 20,699 | |
Balance at March 31, 2015 | |
| 4,146,750 | | |
| 300,983 | | |
| 594,736 | | |
| 701,147 | | |
| 5,743,616 | |
Current | |
| 211,109 | | |
| 294,421 | | |
| | | |
| 395,997 | | |
| 901,527 | |
Non-current | |
| 3,935,641 | | |
| 6,562 | | |
| 594,736 | | |
| 305,150 | | |
| 4,842,089 | |
| |
| 4,146,750 | | |
| 300,983 | | |
| 594,736 | | |
| 701,147 | | |
| 5,743,616 | |
| (1) | The increase of the provision for abandonment costs was generated mainly by drilling of wells for
secondary recovery, exchange rate increase and decrease in the discount rate. |
| (2) | The following is a summary of the legal proceedings, for which allowances have been recognized
in the consolidated financial statements due to a probable outflow of resources: |
| |
| |
March 31, | | |
December 31, | | |
January 1, | |
Type of action | |
Suit | |
2015 | | |
2014 | | |
2014 | |
| |
| |
| | |
| | |
| |
Class action suit | |
Contributions to the solidarity and electric-power-generation income redistribution fund, pursuant to Law 142 of 1994. | |
| 141,505 | | |
| 141,505 | | |
| 283,010 | |
| |
| |
| | | |
| | | |
| | |
Class action suit | |
By extension of the Garcero Association Contract, in defense of the public heritage and free economic competition. | |
| 77,592 | | |
| 77,592 | | |
| 155,184 | |
| |
| |
| | | |
| | | |
| | |
Proceeding for damages | |
Compensation for damages for hydrocarbon easement in property near the Refinería de Cartagena | |
| 11,019 | | |
| 11,019 | | |
| - | |
| |
| |
| | | |
| | | |
| | |
Labor proceedings | |
Labor proceeding of 2007 for the reassessment of salaries and social benefits to 232 Ecopetrol contractors. | |
| 10,060 | | |
| 10,060 | | |
| - | |
| |
| |
| | | |
| | | |
| | |
Labor proceedings | |
Proceeding to reassess social, legal and extralegal benefit payments and monthly pension payments made under the saving stimulus heading. | |
| 4,902 | | |
| 4,731 | | |
| 18,689 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
| (3) | Included the interim relief ordered by the Council of State in its decree 1994 in the invalidity
action brought by the Ministry of Mines and Energy against Comuneros (community members) of Santiago de las Atalayas and
Pueblo Viejo de Cusiana, corresponding to the attachment and seizure of the payments to be made by Ecopetrol for royalties, based
on Royalty contracts declared null and void by the Council of State in its ruling of 1999, in which it was ordered that said interim
relief should be cancelled and that the attached and seized amounts should be handed over to the State – the Ministry of
Mines. Ecopetrol has capacity as receiver. Of said amount, $90,752 corresponds to the value initially recognized by Ecopetrol,
as well as the valuation of the fund containing the resources; $503,984 corresponds to net interest income generated. In a ruling
on December 12, 2012, notified by edict on January 21, 2013, the Council of State declared that the special plea for reconsideration
filed by the Comuneros was dismissed. In November 2014, a new application was filed whereby Ecopetrol reiterated its request
that the amounts seized in these proceedings be handed over, as the Company has paid the Nation and the beneficiary territorial
entities the amount of total royalties incurred during the enforcement of the interim relief, and subsequently, these resources
belong to Ecopetrol. See Note 8. |
| (4) | Mainly includes a provision to cover the works of relocation of the intake of the Cucuta Aqueduct
as a result of the rupture of the Caño Limon-Coveñas pipeline and environmental provisions for potential events that
may impact the regions where the Company has presence. |
| 20.1 | Legal proceedings not recognized |
The following is a summary of the proceedings,
for which allowances have not been recognized, according to evaluations by the Company’s internal and external advisors:
| |
| |
March 31, | | |
December 31, | | |
January 1, | |
Type of action | |
Suit | |
2015 | | |
2014 | | |
2014 | |
| |
| |
| | |
| | |
| |
Class action | |
Contributions to electric-power-generation pursuant to Law 142 of 1994. | |
| 219,944 | | |
| 219,944 | | |
| 219,944 | |
Labor proceedings | |
Proceeding to reassess social, legal and extralegal benefit payments made under the saving stimulus heading. | |
| 16,561 | | |
| 16,561 | | |
| 16,561 | |
Contractual administrative | |
Breach of contract, the plaintiff declaring the rupture of the economic equilibrium thereof. | |
| - | | |
| 112,637 | | |
| - | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
| 20.2 | Detail of contingent assets |
Following is the detail of the major assets
contingencies, which probability of occurrence is eventual:
| |
| |
March 31, | | |
December 31, | | |
January 1, | |
Type of action | |
Claims | |
2015 | | |
2014 | | |
2014 | |
| |
| |
| | |
| | |
| |
Nullity and reinstatement of the right | |
Nullity of Resolution number 113 of 1971 from the Presidency of
the Republic, in respect of the ownership of the subsoil to private parties known with the name of Santiago de Las Atalayas
and Pueblo Viejo de Cusiana. | |
| 175,000 | | |
| 175,000 | | |
| 175,000 | |
Indemnification for third party liability | |
Arbitration court formed to settle the differences between Offshore LLC against Ecopetrol and KNOC. | |
| 191,347 | | |
| 176,885 | | |
| - | |
Civil ordinary general | |
Nonfulfillment of the contract for delivery of hydrotreating units. | |
| 142,715 | | |
| 142,715 | | |
| 142,715 | |
Contractual administrative | |
Nonfulfillment of the pipeline purchase order | |
| 21,231 | | |
| 21,231 | | |
| 21,231 | |
Nullity and reinstatement of the right | |
Nullity of the administrative act that established a special contribution for public works contracts | |
| 14,956 | | |
| 14,956 | | |
| - | |
Nullity and reinstatement of the right | |
Nullity of the administrative act that established a special contribution for public works contracts | |
| 13,214 | | |
| 13,214 | | |
| - | |
| 21. | Other financial liabilities |
Other financial liabilities are comprised
by Oleoducto Central S.A. and Hocol S.A. derivative financial instruments whose purpose is to hedge the risk in exchange rate changes
to protect the cash flows required by these companies. Balance at March 31, 2015 in the statement of financial position is $225,428
(2014 - $140,055 and January 1, 2014 - $46), which corresponds to its fair value at Level 2 hierarchy, valued according to observable
inputs, using the forward price methodology.
The impact in the profit and loss for the
quarters ended on March 31, 2015 and 2014 is a loss of $94,453 and $303, respectively.
The main components of equity are comprised
as follows:
Ecopetrol S.A.
Notes to Consolidated Financial Statements
| 22.1 | Subscribed and paid-in capital |
Ecopetrol’s authorized capital amounts
to $15,000,000, and is comprised of 60,000,000,000 ordinary shares at a par value of $250 pesos 41,116,698,456 of such shares have
been subscribed represented by 11.51% of non-controlling interest and 88.49% held by Government entities. The value of the reserve
shares amounts to $4,720,825 comprised by 18,883,301,544 shares. At March 31, 2015, subscribed and paid-in capital amounts to $10,279,175.
There no potentially dilutive instruments.
On March 26, 2015, the General Stockholders’
Meeting approved the capitalization of occasional reserves of Ecopetrol S.A. for $14,760,892 through the mechanism of increase
of face value. Upon completion of the relevant processes in the second quarter, the face value of the shares will be $609 pesos
per share and the subscribed and paid capital will amount to $25,040,067. This capitalization of reserves did not modify the number
of ordinary registered shares.
| 22.2 | Additional paid-in capital |
Mainly corresponds to: (i) surplus with
respect to its nominal value derived from the sale of shares upon capitalization in 2007, in the amount of $4,457,997, (ii) $31,351,
the value generated by the process of placing the shares on the secondary market, arising from the calling of guarantees from debtors
in arrears, according to the stipulations of Article 397 of the Commercial Code, (iii) to the surplus over nominal value arising
from the sale of shares awarded in the second round, which took place in September 2011, in the amount of $2,118,492, and (iv)
Additional paid-in capital receivable $216.
The balance of equity reserves is comprised
as follows:
| |
March 31, | | |
December 31, | | |
January 1, | |
| |
2015 | | |
2014 | | |
2014 | |
Legal | |
| 4,962,335 | | |
| 4,938,718 | | |
| 4,700,873 | |
Occasional | |
| 15,152,392 | | |
| 12,938,995 | | |
| 9,956,268 | |
Tax and mandatory | |
| 671,455 | | |
| 231,698 | | |
| 397,873 | |
| |
| 20,786,182 | | |
| 18,109,411 | | |
| 15,055,014 | |
Legal reserve
The Colombian Code of Commerce establishes
the obligation of the appropiation of 10% of net income to our legal reserves until our legal reserves meet 50% of suscriped capital.
The legal reserve can be used as compensation for losses or for distribution in the event of liquidation of the Company.
Occasional reserves
This corresponds to the appropriation of
earnings ordered by the Stockholders’ meeting to carry out new explorations and future investments, as well as unrealized
profits between group companies. On March 26, 2015, the Stockholders’ Meeting approved, after the appropriation of the occasional
reserves of the 2014 period, the capitalization of occasional reserves for $14,760,895, through the mechanism of face value increase.
This transaction will be formalized in the second quarter once the respective legal processes are performed.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
Tax and mandatory reserves
The Colombian tax regime contemplates the
appropriation of the profits for the period equivalent to 70% when the value of the depreciation claimed for tax purposes exceeds
the accounting depreciation. This reserve may be released to the extent that the depreciations subsequently accounted for exceed
those claimed annually for tax purposes, or the assets that generated the higher value deducted are sold.
In addition, Decree 2336 of 1995 established
the obligation to establish a reserve for valuation of investments. The profits that are generated at the closing of the accounting
period as a consequence of the application of special valuation systems at market prices and that have not been made in the name
of the Company will be taken to a reserve.
| 22.4 | Retained earnings and payment of dividends |
The following shows the balance and a breakdown
of the changes in retained earnings:
| |
March 31 | | |
December 31 | |
| |
2015 | | |
2014 | |
Retained earnings | |
| 2,816,071 | | |
| 10,801,332 | |
Balance at beginning of year | |
| 10,801,332 | | |
| 17,526,975 | |
Income attributable to owners of Ecopetrol | |
| 160,030 | | |
| 7,019,096 | |
Appropriation of reserves | |
| (2,676,771 | ) | |
| (3,054,397 | ) |
Dividends declared | |
| (5,468,520 | ) | |
| (10,690,342 | ) |
Balance at end of year | |
| 2,816,071 | | |
| 10,801,332 | |
On the results of the 2014 year end, the
General Stockholders Meeting approved the distribution of an ordinary dividend per share of $133 pesos that will be paid to the
minority stockholders in June 2015 for $629,344 and to the majority stockholder in 4 installments payable in the months of October,
November and December 2015 and March 2016, for a total value of $4,839,177.
In 2014 ordinary dividends of $227 pesos
were paid per share and extraordinary for $33 per share, for a total dividend of $260 pesos per share, which were paid in their
entirety as of December 31, 2014.
| 22.5 | Other comprehensive income |
Includes income and expenses derived from
the defined benefits plan, valuation of non-current assets held for sale and foreign currency translation controlled companies’
financial statements with functional currency different to Ecopetrol S.A.’s
Ecopetrol S.A.
Notes to Consolidated Financial Statements
The following is the detail of revenue
for the three month periods ended March 31:
| |
2015 | | |
2014 | |
National sales | |
| | | |
| | |
Mid-distillates | |
| 2,478,322 | | |
| 2,948,867 | |
Gasoline | |
| 1,490,006 | | |
| 1,519,602 | |
Services | |
| 1,109,809 | | |
| 811,221 | |
Natural gas | |
| 414,567 | | |
| 318,649 | |
Crude | |
| 151,622 | | |
| 455,603 | |
Asphalts | |
| 119,148 | | |
| 119,646 | |
L.P.G. and propane | |
| 61,581 | | |
| 129,074 | |
Other products | |
| 436,896 | | |
| 531,302 | |
| |
| 6,261,951 | | |
| 6,833,964 | |
Recognition of price differential (1) | |
| (435,183 | ) | |
| 436,461 | |
| |
| 5,826,768 | | |
| 7,270,425 | |
Foreign sales | |
| | | |
| | |
Crude | |
| 5,274,050 | | |
| 8,194,402 | |
Fuel oil | |
| 584,979 | | |
| 1,182,088 | |
Natural gas | |
| 100,188 | | |
| 138,917 | |
Propylene | |
| 3,216 | | |
| 16,645 | |
Gasoline and turbo fuel | |
| - | | |
| 89,798 | |
Diesel | |
| - | | |
| 179,738 | |
Other products | |
| 511,654 | | |
| 899,311 | |
| |
| 6,474,087 | | |
| 10,700,899 | |
Total revenues | |
| 12,300,855 | | |
| 17,971,324 | |
| 1) | Corresponds to the application of Decree 1880 of September 2014 and Resolution 180522 of 2010,
which defined the procedure for price differentials (value generated by the difference between parity price and regulated price,
which can be positive or negative). See section 3.17 – Revenue recognition for more details. |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
The following is the detail of cost of
sales according to their function for three month periods ended March 31:
| |
2015 | | |
2014 | |
Variable costs | |
| | | |
| | |
Imported products (1) | |
| 2,764,883 | | |
| 3,302,991 | |
Depreciation, depletion and amortization | |
| 1,179,081 | | |
| 1,223,792 | |
Hydrocarbon purchases - ANH (2) | |
| 814,886 | | |
| 1,781,847 | |
Purchases of crude in association and concession | |
| 602,215 | | |
| 793,150 | |
Hydrocarbon transportation services | |
| 320,576 | | |
| 385,582 | |
Purchases of other products and gas | |
| 244,341 | | |
| 379,009 | |
Services contracted in associations | |
| 149,092 | | |
| 162,253 | |
Gas royalties in cash (3) | |
| 122,371 | | |
| 84,685 | |
Electric power | |
| 97,316 | | |
| 89,793 | |
Processing materials | |
| 53,909 | | |
| 61,579 | |
Adjustment of inventories to net realizable value | |
| 31,682 | | |
| (5,594 | ) |
Volume adjustments and other allocations | |
| 56,207 | | |
| 360,494 | |
| |
| 6,436,559 | | |
| 8,619,581 | |
Fixed costs | |
| | | |
| | |
Maintenance | |
| 401,334 | | |
| 463,168 | |
Services contracted in associations | |
| 376,922 | | |
| 393,251 | |
Labor costs | |
| 376,134 | | |
| 340,272 | |
Depreciation and amortization | |
| 362,324 | | |
| 325,076 | |
Services contracted | |
| 282,609 | | |
| 303,772 | |
Taxes and contributions | |
| 117,439 | | |
| 137,387 | |
Materials and operating supplies | |
| 65,237 | | |
| 73,162 | |
Hydrocarbon transportation services | |
| 24,232 | | |
| 936 | |
Non-capitalized project costs | |
| 23,660 | | |
| 42,996 | |
General costs | |
| 88,187 | | |
| 69,333 | |
| |
| 2,118,078 | | |
| 2,149,353 | |
| |
| 8,554,637 | | |
| 10,768,934 | |
| 1) | Corresponds mainly to purchases of ACPM and diluent agents to facilitate the transportation of
heavy crude oil. |
| 2) | Corresponds mainly to the purchases of crude royalties that Ecopetrol makes from the ANH derived
from national production, both by the Company in direct operation and by third parties. |
| 3) | Through Resolution 877 of September 2013, the National Hydrocarbons Agency established that, starting
January 1, 2014, it will collect payment for royalties generated by gas production in cash and not in kind. |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
| 25. | Administration, operation and project expenses |
The following is the detail of administration,
operation and project expenses, according to their function, for the three month periods ended on March 31:
| |
2015 | | |
2014 | |
Administration expenses | |
| | | |
| | |
Taxes (1) | |
| 611,960 | | |
| 18,793 | |
Labor expenses | |
| 122,185 | | |
| 99,222 | |
General expenses and other | |
| 59,784 | | |
| 56,869 | |
Depreciation and amortization | |
| 25,101 | | |
| 23,840 | |
| |
| 819,030 | | |
| 198,724 | |
Operation and project expenses | |
| | | |
| | |
Commissions, fees, freights and services | |
| 186,027 | | |
| 194,892 | |
Taxes | |
| 101,847 | | |
| 89,564 | |
Exploration expenses | |
| 84,533 | | |
| 363,573 | |
Labor expenses | |
| 76,921 | | |
| 65,692 | |
Maintenance | |
| 54,334 | | |
| 46,236 | |
Audit fees | |
| 24,000 | | |
| 14,500 | |
Depreciation and amortization | |
| 20,412 | | |
| 2,231 | |
Various | |
| 56,879 | | |
| 20,307 | |
| |
| 604,953 | | |
| 796,995 | |
| (1) | Includes mainly the recognition of wealth tax. See Note 9 – Current tax assets and liabilities
for more details. |
| 26. | Other operating income and expenses, net |
The following is the detail of other operating
income and expenses, according to their function, for three month periods ended on March 31:
| |
2015 | | |
2014 | |
Deferred Build, Operate, Maintain and Transfer Contracts (BOMT) income | |
| 43,384 | | |
| 34,965 | |
Compensation received | |
| 5,448 | | |
| 1,779 | |
Earnings from the sale of materials and property, plant and equipment | |
| 4,186 | | |
| 4,139 | |
Loss on fixed assets and natural resources disposals | |
| (3,211 | ) | |
| (151 | ) |
Recovery of legal proceeding’s provisions | |
| (15,737 | ) | |
| (9,626 | ) |
Recovery of other provisions, net | |
| (10,066 | ) | |
| (7,670 | ) |
Gas pipeline availability under BOMTS contracts | |
| (28,915 | ) | |
| (24,727 | ) |
Other income (expenses), net | |
| 40,524 | | |
| 59,286 | |
| |
| 35,613 | | |
| 57,995 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
The following is the detail of finance
results, net for three month periods ended on March 31:
| |
March 31, | | |
March 31, | |
Finance Income | |
2015 | | |
2014 | |
Financial income from financial assets | |
| 116,332 | | |
| 8,976 | |
Yield and interest | |
| 73,690 | | |
| 109,990 | |
Dividends | |
| 15,792 | | |
| 53,187 | |
Gain on fair value of derivatives | |
| - | | |
| 55 | |
| |
| 205,814 | | |
| 172,208 | |
Finance costs | |
| | | |
| | |
Interest (1) | |
| (291,785 | ) | |
| (142,019 | ) |
Other liabilities financial costs | |
| (134,320 | ) | |
| (153,196 | ) |
Loss on fair value of derivatives | |
| (97,453 | ) | |
| (358 | ) |
Other finance expenses | |
| (37,678 | ) | |
| (20,541 | ) |
| |
| (561,236 | ) | |
| (316,114 | ) |
Foreign exchange (loss) gain, net | |
| (1,174,852 | ) | |
| 22,994 | |
Financial result, net | |
| (1,530,274 | ) | |
| (120,912 | ) |
| (1) | Interest was capitalized to natural resources and property plant and equipment for $229,922 and
$195,434 for the three month periods ended March 31, 2015 and 2014 respectively. |
Our business depends substantially on international
prices for crude oil and refined products. The prices for these products are volatile; a sharp decrease could adversely
affect our business prospects and results of operations.
A large proportion of our revenues come
from sales of crude oil, natural gas and refined products. These products are indexed to international reference prices such as
Brent. Consequently, fluctuations in those international indexes have a direct effect on our financial condition and results of
operations.
Prices of crude oil, natural gas and refined
products have traditionally fluctuated as a result of a variety of factors including, among others, competition within the oil
and natural gas industry; changes in international prices of natural gas and refined products; long-term changes in the demand
for crude oil, natural gas and refined products; regulatory changes; changes in the cost of capital; adverse economic conditions;
transactions in derivative financial instruments related to oil and gas and development or availability of alternative fuels.
The Ecopetrol business group has a policy
approved by the Board of Directors that permits it to use derivative financial instruments in the organized market or over the
counter (OTC) to cover itself from the risk of price fluctuations of crude oil and refined products associated to physical transactions.
The Company has established appropriate process to handle risk that include constant monitoring of physical and financial market
to identify risks in order to subsequently prepare and execute hedging strategies. As of this date there have been no hedging transactions
performed to cover this type of risk.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
The following table provides information about
the sensitivity of our Gross Income as of March 31, 2015, to variations of US$1 in the index price of our products and of 1% in
the COP$/US$ exchange rate.
| |
| | |
Effect on our income before tax | |
| |
Results as of March 31,
2015 | | |
Variation +/- US$1 in index
prices | |
Gross income | |
| 3,746,218 | | |
| 109,105 | |
| |
Results as of March 31
2015 | | |
Variation +/- 1% COP$/US$ (2) | |
Gross income | |
| 3,746,218 | | |
| 101,693 | |
The group operates mainly in Colombia and
makes sales in the local and international markets. We are exposed to the exchange rate risk that arises from various foreign currency
exposures due to our commercial transactions and assets and liabilities held in foreign currency. The
impact of fluctuations in exchange rates, especially the Peso/U.S. dollar rate, on our operations could be material.
The U.S. dollar/Peso exchange rate has
fluctuated during the last several years. The Peso depreciated 7.1% in 2014. During the first quarter of 2015 the peso depreciated
7.7% going from a closing rate at December 31, 2014 of $2,392.46 to $2,576.05 peso per dollar. During the first quarter of 2014,
the peso depreciated 2% going from a closing rate at January 1, 2014 of $1,926.83 to $1,965.32 at March 31, 2014 peso per dollar.
When the Peso appreciates against the U.S.
dollar, our revenues from exports decrease when converted into Pesos. However, imported goods, oil services and interest on external
debt denominated in U.S. dollars become less expensive for us. Conversely, when the Peso depreciates against the U.S. dollar, our
revenues from exports, when converted into Pesos, increase, and our imports and external debt service become more expensive.
The following table shows the impact a
variation of 1 and 5% in the exchange rate of Colombian peso Vs United States of America dollar would have on the assets and liabilities
held in said currency at March 31, 2015:
Variation in the exchange rate | | |
Effect in income before taxes (+/-) | | |
Effect in other comprehensive income (+/-) | |
| 1 | % | |
$ | 213,261 | | |
$ | 38,426 | |
| 5 | % | |
$ | 1,016,041 | | |
$ | 384,264 | |
Sensitivity analysis includes only monetary
assets and liabilities held in foreign at closing date. The sensitivity analysis for income and cost is shown in Section 29.1 –
Price risk.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
Credit risk is the risk that the Company
may suffer losses as a consequence of the nonfulfillment of the contracts for purchase and sale of crude oil, gas, refined and
petrochemical products and transportation services, in addition to the financial institutions in which it keeps investments or
the counterparties with which it has contracted derivative financial instruments.
In performance of the purchase and sale
process of crude oil, gas, refined and petrochemical products and transportation services, the Company may be exposed to credit
risk in the event that customers fail to comply with their payment obligations. The administration of this risk has designed mechanisms
and procedures that have permitted the Company to minimize the probability of materialization, thus safeguarding the Company’s
cash flow.
The Company makes a continuous analysis
of the financial strength of its counterparties, which implies their classification according to their risk level and financial
supports in the event of a cessation of payments. In addition, a constant monitoring is made of the national and international
market conditions in order to establish early alerts of major changes that may have an impact on the timely payment of obligations
from customers of the Company.
For the receivables portfolio that is considered
deteriorated, an individual analysis is made that permits us to analyze individually the situation of each customer and thus define
the applicable allowance to be established, such as age of receivables. The group carries out the administrative and legal actions
necessary to recover past due accounts receivable, as well as the collection of interest from customers who do not comply with
payment policies.
As of March 31, 2015, the business group
does not have significant concentrations of credit risk. The following is the analysis of the receivables aged by customer in default
but considered not impaired, as of March 31, 2015:
| |
March 31, | |
| |
2015 | |
Less than 3 months overdue | |
| 143,105 | |
Between 3 and 6 months overdue | |
| 15,968 | |
More than 6 months overdue | |
| 1,728 | |
Total | |
| 160,801 | |
Interest rate risk arises from our exposure
to changes in interest rates, as we have fixed and floating-rate instruments in our investment portfolio and issuances of floating
rate debt linked to LIBOR, DTF and IPC rates. Thus, volatility in interest rates may affect the fair value and cash flows related
to our investments and floating rate debt.
As of March 31, 2015, approximately 34%
of our total indebtedness consisted of floating rate debt. If market interest rates rise, our financing expenses will increase,
which could have an adverse effect on our results of operations and financial condition.
Ecopetrol S.A. controls the exposure to
interest rate risk by establishing limits to its effective duration, Value at Risk and Tracking Error.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
The trust funds linked to Ecopetrol S.A.’s
pension obligations (PAP) are also exposed to changes in interest rates, as they include fixed- and floating-rate instruments that
are marked to market. Colombian regulation for pension funds, as stipulated in the Decree 941 of 2002 and Decree 1861 of 2012,
indicates that they have to follow the same regime as the regular obligatory pension funds in their moderate portfolio.
The following table provides information
about the sensitivity of our results and other comprehensive income, for the next 12 months, to variations in interest rate of
100 basis points:
Variation in interest rate | |
Financial liabilities (Financial expenses) | | |
Financial assets (Financial income) | | |
Trust funds (Other comprehensive income) | |
+ 100 basis points | |
| (140,267 | ) | |
| (20,582 | ) | |
| (343,437 | ) |
- 100 basis points | |
| 138,596 | | |
| 20,582 | | |
| 343,437 | |
Sensitivity analysis of discount rates
on pension plans is shown in its corresponding note of Labor and pension plan obligations.
Our ability to access the capital necessary
to finance our investment plans on terms acceptable to us, can be limited due to deterioration in market conditions. A new financial
crisis could worsen the risk perception in the emerging markets.
Risks related to Colombia’s political
and regional environment could also make it more difficult for us and our subsidiaries to access international capital markets.
These conditions, along with significant write-offs in the financial services sector and the re-pricing of credit risk, can make
it difficult for us to obtain funding for our capital needs on favorable terms. As a result, we may be forced to revise the timing
and scope of these projects as necessary to adapt to existing market and economic conditions, or access the financial markets on
terms less favorable, therefore negatively affecting our results of operations and financial condition.
Liquidity risk is managed in accordance
with our policies aimed at ensuring that there are sufficient net funds to meet the Company's financial commitments within its
maturity schedules, with no additional costs. The main method for the measurement and monitoring of liquidity is cash flow forecasting.
The following is a summary of the maturity
of financial liabilities as of March 31, 2015. The amounts disclosed in the table are the contractual undiscounted cash flows.
Consequently, these amounts may not reconcile with the amounts disclosed on the Consolidated statement of financial position.
| |
Up to 1 year | | |
1 - 5 years | | |
5
- 10 years | | |
> 10 years | | |
Total | |
Loans (Principal and Interests) | |
| 4,794,164 | | |
| 24,255,239 | | |
| 18,730,630 | | |
| 18,822,602 | | |
| 66,602,635 | |
Accounts payable | |
| 12,920,633 | | |
| 140,673 | | |
| - | | |
| - | | |
| 13,061,306 | |
Other financial liabilities | |
| 225,428 | | |
| - | | |
| - | | |
| - | | |
| 225,428 | |
Total | |
| 17,940,225 | | |
| 24,395,912 | | |
| 18,730,630 | | |
| 18,822,602 | | |
| 79,889,369 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
The main objective of Ecopetrol’s
Capital Management is to secure a financial structure that will optimize the Company’s cost of capital, that maximizes the
returns to its shareholders and permits access to financial markets at a competitive cost to cover is financing needs.
The leverage index at the relevant periods
is comprised as follow:
| |
March 31, 2015 | | |
December 31, 2014 | | |
January 1st, 2014 | |
Financial obligations (Note 18) | |
| 42,725,917 | | |
| 34,947,341 | | |
| 22,241,413 | |
Cash and cash equivalents (Note 5) | |
| (10,941,003 | ) | |
| (7,015,731 | ) | |
| (8,541,138 | ) |
Other non-restricted financial assets (nota 8) | |
| (2,619,062 | ) | |
| (1,520,110 | ) | |
| (1,939,745 | ) |
Net financial debt | |
| 29,165,852 | | |
| 26,411,500 | | |
| 11,760,530 | |
Equity (Note 22) | |
| 46,879,945 | | |
| 51,074,199 | | |
| 50,991,258 | |
Leverage (1) | |
| 38.4 | % | |
| 34.1 | % | |
| 18.7 | % |
(1) Net financial debt / (Net financial
debt + Equity)
The most representative balances as of
March 31, 2015, December 31, and January 1, 2014, with related parties in which Ecopetrol holds investments where it exercises
significant influence and joint ventures are included in accounts receivable, suppliers, accounts payable and loans, as follows:
| |
Accounts receivables | | |
Other assets | | |
Accounts payable | | |
Loans | |
Joint ventures | |
| | | |
| | | |
| | | |
| | |
Equion Energía Limited | |
| 107,618 | | |
| 52,141 | | |
| 73,469 | | |
| 92,149 | |
Associates | |
| | | |
| | | |
| | | |
| | |
Invercolsa S.A. | |
| 31,212 | | |
| - | | |
| - | | |
| - | |
Ecodiesel Colombia S.A. | |
| 6,226 | | |
| - | | |
| 15,168 | | |
| - | |
Serviport S.A. | |
| - | | |
| - | | |
| 4,272 | | |
| - | |
Balance at March, 2015 | |
| 145,056 | | |
| 52,141 | | |
| 92,909 | | |
| 92,149 | |
| |
Accounts receivables | | |
Other assets | | |
Accounts payable | | |
Loans | |
Joint ventures | |
| | | |
| | | |
| | | |
| | |
Equion Energía Limited | |
| 75,561 | | |
| 9,338 | | |
| 84,006 | | |
| 36,728 | |
Associates | |
| | | |
| | | |
| | | |
| | |
Ecodiesel Colombia S.A. | |
| - | | |
| - | | |
| 20,308 | | |
| - | |
Serviport S.A. | |
| - | | |
| - | | |
| 3,506 | | |
| - | |
Balance at December, 2014 | |
| 75,561 | | |
| 9,338 | | |
| 107,820 | | |
| 36,728 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
| |
Accounts receivables | | |
Other assets | | |
Accounts payable | | |
Loans | |
Joint ventures | |
| | | |
| | | |
| | | |
| | |
Equion Energía Limited | |
| 164,711 | | |
| 15,558 | | |
| 102,529 | | |
| 578,423 | |
Associates | |
| | | |
| | | |
| | | |
| | |
Ecodiesel Colombia S.A. | |
| - | | |
| - | | |
| 22,890 | | |
| - | |
Serviport S.A. | |
| - | | |
| - | | |
| 1,674 | | |
| - | |
Balance at January 1, 2014 | |
| 164,711 | | |
| 15,558 | | |
| 127,093 | | |
| 578,423 | |
Outstanding amounts are not guaranteed
and will be settled in cash. No guarantees have been granted or received. No expense has been recognized in the current period
or in previous periods in respect to uncollectable or doubtful accounts related to amounts due by related parties
The most significant transactions with
related parties for the quarters ended on March 31, 2014 and 2015 are comprised as follows:
| |
Period ended March 31, 2015 | | |
Period ended March 31, 2014 | |
| |
Sales and services | | |
Purchase of products and services | | |
Sales and services | | |
Purchase of products and services | |
Joint ventures | |
| | | |
| | | |
| | | |
| | |
Equion Energía Limited | |
| 147,485 | | |
| 122,503 | | |
| 126,031 | | |
| 44,984 | |
Associates | |
| | | |
| | | |
| | | |
| | |
Ecodiesel Colombia S.A. | |
| 315 | | |
| 53,286 | | |
| 304 | | |
| 47,323 | |
Total transactions | |
| 147,799 | | |
| 175,790 | | |
| 126,334 | | |
| 92,307 | |
Compensation of directors
Based on a resolution adopted at our annual
shareholders’ meeting in 2012, compensation for directors is the equivalent of four to six minimum monthly wage salaries,
which totals approximately $3,700 for 2014 and $3,900 for 2015. Fees for attendance at virtual meetings are set at 50% of the in-person
meeting fee. The Board of directors is not subject to any variable remuneration.
The total compensation paid to our Directors,
executive officers and senior management during 1st quarter 2015 amounted to $5,092 (2014 - $9,058). Our Directors are
not eligible to receive pension and retirement benefits from us. The total amount set aside to provide pension and retirement benefits
to our eligible executive officers at December 31, 2014 totals $13,958.
Government related parties
Colombian Government holds control of Ecopetrol
S.A. with a stock ownership of 88.49%. The most significant transactions with governmental entities are comprised as follows:
Ecopetrol S.A.
Notes to Consolidated Financial Statements
| a) | Purchase of oil from the National Hydrocarbons Agency - ANH |
Because of the nature of the business,
the company has a direct relationship with ANH, the entity that operates under the Ministry of Mines and Energy, which objective
is to manage the oil and gas reserves and resources owned by the Nation.
Ecopetrol S.A. purchases the crude oil
that the ANH receives from all producers in Colombia at the prices set in accordance with a jointly established formula, which
reflects the export sale prices (crude oils and products), adjustment to the API gravity quality, sulfur content, transportation
rates from the wellhead to the ports of Coveñas and Tumaco, refining process cost and a commercialization rate. This contract
was extended to June 30, 2015.
Up to December 2013, the Company commercialized,
on behalf of the ANH, the natural gas received by the latter in kind from the producers. Since January 2014 the ANH receives the
royalties for production of natural gas in cash.
The purchase value of oil and gas from
the AHN is detailed in Note 25-Cost of sales.
Regular gasoline and diesel (ACPM) sale
prices are regulated by the National Government. In this event, there are differentials between the volume reported by the Companies
at the time of the sale and the difference between the parity price and the benchmark price, the parity price being that corresponding
to the daily motor gasoline and diesel (ACPM) prices observed during the month. These differentials may be in favor or against
the producers. The value of this differential is detailed in Note 24 – Revenue.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
The Company carries out exploration and
production operations through Exploration and Production (E&P) Contracts, Technical Evaluation (TEA) Contracts and Agreements
signed with the Agencia Nacional de Hidrocarburos (National Hydrocarbons Agency, hereinafter ANH), as well as through Partnership
Contracts and other types of contracts in various forms. The main joint operations at the close of March 2015 one as follows:
Contracts in which Ecopetrol is not
the operator:
Partners |
|
Contract |
|
Type |
|
Geographic
area of
Operations |
|
%
Participation |
Perenco Oil and Gas Colombia Limited |
|
Boquerón |
|
Production |
|
Colombia |
|
75% |
Perenco Colombia Limited |
|
Casanare |
|
Production |
|
Colombia |
|
60% |
Occidental de Colombia LLC |
|
Cravo Norte |
|
Production |
|
Colombia |
|
55% |
|
Rondón |
|
Production |
|
Colombia |
|
50% |
Chevron Petroleum Company |
|
Guajira |
|
Production |
|
Colombia |
|
57% |
|
CE-M-715 |
|
Exploration-ANH |
|
Brasil |
|
50% |
Mansarovar Energy Colombia Ltd. |
|
Nare |
|
Production |
|
Colombia |
|
50% |
Equion energia Ltd |
|
Piedemonte |
|
Production |
|
Colombia |
|
50% |
Meta Petroleum Corp. |
|
Quifa |
|
Production |
|
Colombia |
|
40% |
|
Rubiales (1) |
|
Production – Shared-risk participation |
|
Colombia |
|
60% |
| (1) | In March, 2015, Ecopetrol and Pacific Rubiales Energy announce that they have agreed not to extend
the Rubiales risk participation and Piriri joint venture contracts that expire in 2016. As a result, Ecopetrol will obtain a 100%
interest in both fields as of June, 2016. |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
Contracts in which Ecopetrol is the
operator:
Partners |
|
Contract |
|
Type |
|
Geographic area
of Operations |
|
%
Participation |
Talisman Colombia Oil & Gas Ltd |
|
Niscota |
|
Exploración |
|
Colombia |
|
20% |
|
CPO9 |
|
Exploración |
|
Colombia |
|
55% |
|
Mundo Nuevo |
|
Exploración |
|
Colombia |
|
15% |
Occidental Andina Llc |
|
LA CIRA |
|
Producción |
|
Colombia |
|
61,5% |
Exxonmobil Exploration Colombia |
|
VMM29 |
|
Exploración |
|
Colombia |
|
50% |
Lewis Energy Colombia Inc |
|
SSJN1 |
|
Exploración |
|
Colombia |
|
50% |
| 31.1 | Basis of classification |
The Group operates under three segments:
1) Exploration and Production, 2) Transportation and Logistics and 3) Refining, petrochemicals and Biocombustibles
| 1) | Exploration and Production - this segment includes the Company’s oil & gas exploration
and production activities. Revenue is derived from the sale of crude oil, regulated fuels, nonregulated fuels and natural gas to
inter-company segments, at market prices, and to third parties (local and foreign). Costs include those costs incurred in production.
Expenses include all exploration costs that are not capitalized. |
| 2) | Transportation and Logistics - this segment includes the Company’s sales and costs
associated with the transportation of crude oil, motor fuels, fuel oil and other refined products. |
| 3) | Refining and Petrochemicals - this segment includes the Company’s refining activities
performed in Barrancabermeja and Cartagena refineries, where crude oil from locations is transformed into products. Revenue is
derived from the sale of goods sold, both internally and to third parties (local and foreign), including refined products such
as motor fuels, fuel oils and petrochemicals at market prices and some regulated fuels. This segment also includes sales of industrial
services to third parties. |
These functions have been defined as the operating
segments of the Group since these are the segments (a) that engage in business activities from which revenues are earned and expenses
are incurred; (b) whose operating results are regularly reviewed by the Group’s chief operating decision maker to allocate
resources to the segments and assess their performance; and (c) for which discrete financial information is available. Internal
transfers represent sales to intercompany segments and are recorded and presented at market prices.
| 31.2 | Financial information by segments |
The following segment information is reported
based on the information used by the Board, as the highest body to make strategic and operational decisions of these business segments.
The performance of the segments are based primarily on analysis of income, costs, expenses and results for the period generated
by each segment , which are regularly monitored.
Ecopetrol S.A.
Notes to Consolidated Financial Statements
The information disclosed in each segment
is presented net of transactions between Group companies.
The following presents the consolidated
statement of profit and loss and other comprehensive income as of March, 2015 and 2014:
| |
Consolidated statement of profit and loss and other comprehensive income for the three month period ended 31 March 2015 | |
| |
Exploration and
production | | |
Refining and
petrochemicals | | |
Transportation
and logistics | | |
Eliminations | | |
Total | |
Third party sales | |
| 6,328,960 | | |
| 4,903,969 | | |
| 1,067,926 | | |
| - | | |
| 12,300,855 | |
Inter-segment sales | |
| 1,226,132 | | |
| 203,304 | | |
| 1,423,714 | | |
| (2,853,150 | ) | |
| - | |
Total Revenue | |
| 7,555,092 | | |
| 5,107,273 | | |
| 2,491,640 | | |
| (2,853,150 | ) | |
| 12,300,855 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Fixed costs | |
| 1,623,328 | | |
| 467,996 | | |
| 637,253 | | |
| (610,499 | ) | |
| 2,118,078 | |
Variable costs | |
| 4,232,726 | | |
| 4,179,153 | | |
| 260,701 | | |
| (2,236,021 | ) | |
| 6,436,559 | |
Gross income | |
| 1,699,038 | | |
| 460,124 | | |
| 1,593,686 | | |
| (6,630 | ) | |
| 3,746,218 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Administration expenses | |
| 390,118 | | |
| 187,515 | | |
| 241,734 | | |
| (337 | ) | |
| 819,030 | |
Operation and projects expenses | |
| 360,030 | | |
| 274,857 | | |
| 35,080 | | |
| (65,014 | ) | |
| 604,953 | |
Other operating income and expenses, net | |
| (18,821 | ) | |
| (20,815 | ) | |
| 4,023 | | |
| - | | |
| (35,613 | ) |
Operating income | |
| 967,711 | | |
| 18,567 | | |
| 1,312,849 | | |
| 58,721 | | |
| 2,357,848 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Financial income and expenses, net | |
| (1,263,791 | ) | |
| (347,175 | ) | |
| 142,169 | | |
| (77,269 | ) | |
| (1,546,066 | ) |
Share of profit of associates | |
| 690 | | |
| 42 | | |
| 12 | | |
| - | | |
| 744 | |
Investment income | |
| 60,695 | | |
| (22,279 | ) | |
| 4,962 | | |
| (27,586 | ) | |
| 15,792 | |
Income before tax | |
| (234,695 | ) | |
| (350,845 | ) | |
| 1,459,992 | | |
| (46,134 | ) | |
| 828,318 | |
Income tax | |
| 69,135 | | |
| 50,532 | | |
| (592,187 | ) | |
| 144 | | |
| (472,376 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income for the period | |
| (165,560 | ) | |
| (300,313 | ) | |
| 867,805 | | |
| (45,990 | ) | |
| 355,942 | |
Income attributable to: | |
| | | |
| | | |
| | | |
| | | |
| | |
Owners of the Company | |
| (165,560 | ) | |
| (298,359 | ) | |
| 669,939 | | |
| (45,990 | ) | |
| 160,030 | |
Non-controlling interests | |
| - | | |
| (1,954 | ) | |
| 197,866 | | |
| - | | |
| 195,912 | |
| |
| (165,560 | ) | |
| (300,313 | ) | |
| 867,805 | | |
| (45,990 | ) | |
| 355,942 | |
Complementary information | |
| | | |
| | | |
| | | |
| | | |
| | |
Depreciation, depletion and amortization | |
| 1,222,860 | | |
| 137,362 | | |
| 226,696 | | |
| - | | |
| 1,586,918 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
| |
Consolidated statement of profit and loss and other comprehensive income for the three month period ended 31 March 2014 | |
| |
| |
| |
Exploration and production | | |
Refining and petrochemicals | | |
Transportation and logistics | | |
Eliminations | | |
Total | |
Third party sales | |
| 9,816,893 | | |
| 7,384,970 | | |
| 769,461 | | |
| - | | |
| 17,971,324 | |
Inter-segment sales | |
| 1,997,783 | | |
| 216,433 | | |
| 1,160,349 | | |
| (3,374,565 | ) | |
| - | |
Total Revenue | |
| 11,814,676 | | |
| 7,601,403 | | |
| 1,929,810 | | |
| (3,374,565 | ) | |
| 17,971,324 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Fixed costs | |
| 1,540,816 | | |
| 446,961 | | |
| 642,013 | | |
| (480,437 | ) | |
| 2,149,353 | |
Variable costs | |
| 4,696,352 | | |
| 6,645,096 | | |
| 108,201 | | |
| (2,830,068 | ) | |
| 8,619,581 | |
Gross income | |
| 5,577,508 | | |
| 509,346 | | |
| 1,179,596 | | |
| (64,060 | ) | |
| 7,202,390 | |
| |
| | | |
| | | |
| | | |
| | | |
| - | |
Administration expenses | |
| 35,355 | | |
| 77,204 | | |
| 86,165 | | |
| - | | |
| 198,724 | |
Operation and projects expenses | |
| 661,047 | | |
| 179,796 | | |
| 7,660 | | |
| (51,508 | ) | |
| 796,995 | |
Other operating income and expenses, net | |
| (25,264 | ) | |
| (12,248 | ) | |
| (20,523 | ) | |
| 40 | | |
| (57,995 | ) |
Operating income | |
| 4,906,370 | | |
| 264,594 | | |
| 1,106,294 | | |
| (12,592 | ) | |
| 6,264,666 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Financial income and expenses, net | |
| (93,159 | ) | |
| (54,972 | ) | |
| (12,645 | ) | |
| (13,323 | ) | |
| (174,099 | ) |
Share of profit of associates | |
| 11,838 | | |
| 3,375 | | |
| 101 | | |
| - | | |
| 15,314 | |
Investment income | |
| 53,999 | | |
| 6,853 | | |
| 3,810 | | |
| (11,475 | ) | |
| 53,187 | |
Income before tax | |
| 4,879,048 | | |
| 219,850 | | |
| 1,097,560 | | |
| (37,390 | ) | |
| 6,159,068 | |
Income tax | |
| 1,664,503 | | |
| 103,014 | | |
| 326,712 | | |
| - | | |
| 2,094,229 | |
Net income for the period | |
| 3,214,545 | | |
| 116,836 | | |
| 770,848 | | |
| (37,390 | ) | |
| 4,064,839 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Income attributable to: | |
| | | |
| | | |
| | | |
| | | |
| | |
Owners of the Company | |
| 3,214,545 | | |
| 118,516 | | |
| 592,430 | | |
| (37,390 | ) | |
| 3,888,101 | |
Non-controlling interests | |
| - | | |
| (1,680 | ) | |
| 178,418 | | |
| - | | |
| 176,738 | |
| |
| 3,214,545 | | |
| 116,836 | | |
| 770,848 | | |
| (37,390 | ) | |
| 4,064,839 | |
Complementary information | |
| | | |
| | | |
| | | |
| | | |
| | |
Depreciation, depletion and amortization | |
| 1,244,894 | | |
| 137,607 | | |
| 192,438 | | |
| - | | |
| 1,574,939 | |
| 31.3 | Sales of products by segment, geographic areas, customers and investments |
Sales of products by segment March 31,
2015 and 2014:
| |
Sales of products by segment | | |
| | |
| |
| |
for the three month period ended 31 March 2015 | | |
| | |
| |
| |
| | |
| | |
| | |
| | |
| |
| |
Exploration and production | | |
Refining and petrochemicals | | |
Transportation and logistics | | |
Eliminations | | |
Total | |
Local sales | |
| | | |
| | | |
| | | |
| | | |
| | |
Medium distillates | |
| 387 | | |
| 2,477,935 | | |
| - | | |
| - | | |
| 2,478,322 | |
Gasolines | |
| - | | |
| 1,054,823 | | |
| - | | |
| - | | |
| 1,054,823 | |
Natural gas | |
| 486,468 | | |
| - | | |
| 81 | | |
| (71,982 | ) | |
| 414,567 | |
Crude oil | |
| 1,277,662 | | |
| - | | |
| - | | |
| (1,126,040 | ) | |
| 151,622 | |
Diesel and asphalts | |
| 12,686 | | |
| 106,462 | | |
| - | | |
| - | | |
| 119,148 | |
Plastic and rubber | |
| 0 | | |
| 169,327 | | |
| - | | |
| - | | |
| 169,327 | |
L.P.G. and propane | |
| 27,193 | | |
| 34,388 | | |
| - | | |
| - | | |
| 61,581 | |
Services and other products | |
| 107,239 | | |
| 373,974 | | |
| 2,491,419 | | |
| (1,595,254 | ) | |
| 1,377,378 | |
Total local sales | |
| 1,911,635 | | |
| 4,216,909 | | |
| 2,491,500 | | |
| (2,793,276 | ) | |
| 5,826,768 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign sales | |
| | | |
| | | |
| | | |
| | | |
| | |
Crude oil | |
| 5,274,050 | | |
| - | | |
| - | | |
| | | |
| 5,274,050 | |
Fuel oil | |
| - | | |
| 584,979 | | |
| - | | |
| - | | |
| 584,979 | |
Plastic and rubber | |
| - | | |
| 258,647 | | |
| - | | |
| - | | |
| 258,647 | |
Natural gas | |
| 101,690 | | |
| - | | |
| - | | |
| (1,502 | ) | |
| 100,188 | |
L.P.G. and propane | |
| 2,089 | | |
| 7,432 | | |
| - | | |
| - | | |
| 9,521 | |
Other products and services | |
| 265,628 | | |
| 39,306 | | |
| 140 | | |
| (58,372 | ) | |
| 246,702 | |
Total foreign sales | |
| 5,643,457 | | |
| 890,364 | | |
| 140 | | |
| (59,874 | ) | |
| 6,474,087 | |
Total sales by segment | |
| 7,555,092 | | |
| 5,107,273 | | |
| 2,491,640 | | |
| (2,853,150 | ) | |
| 12,300,855 | |
Ecopetrol S.A.
Notes to Consolidated Financial Statements
Sales of products by segment for the three month period ended 31 March 2014 |
| |
Exploration and production | | |
Refining and petrochemicals | | |
Transportation and logistics | | |
Eliminations | | |
Total | |
Local sales | |
| | | |
| | | |
| | | |
| | | |
| | |
Medium distillates | |
| - | | |
| 2,964,368 | | |
| - | | |
| (15,501 | ) | |
| 2,948,867 | |
Gasolines | |
| - | | |
| 1,956,063 | | |
| - | | |
| - | | |
| 1,956,063 | |
Crude oil | |
| 1,711,608 | | |
| - | | |
| - | | |
| (1,256,005 | ) | |
| 455,603 | |
Natural gas | |
| 379,327 | | |
| - | | |
| 6 | | |
| (60,684 | ) | |
| 318,649 | |
Plastic and rubber | |
| - | | |
| 151,652 | | |
| - | | |
| - | | |
| 151,652 | |
L.P.G. and propane | |
| 53,411 | | |
| 75,663 | | |
| - | | |
| - | | |
| 129,074 | |
Diesel and asphalts | |
| 10,185 | | |
| 109,461 | | |
| - | | |
| - | | |
| 119,646 | |
Other products and services | |
| 192,817 | | |
| 405,895 | | |
| 1,929,499 | | |
| (1,337,340 | ) | |
| 1,190,871 | |
Total local sales | |
| 2,347,348 | | |
| 5,663,102 | | |
| 1,929,505 | | |
| (2,669,530 | ) | |
| 7,270,425 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign sales | |
| | | |
| | | |
| | | |
| | | |
| | |
Crude oil | |
| 8,887,532 | | |
| - | | |
| - | | |
| (693,130 | ) | |
| 8,194,402 | |
Fuel oil | |
| - | | |
| 1,182,088 | | |
| - | | |
| - | | |
| 1,182,088 | |
Plastic and rubber | |
| - | | |
| 236,859 | | |
| - | | |
| - | | |
| 236,859 | |
Diesel | |
| - | | |
| 179,738 | | |
| - | | |
| - | | |
| 179,738 | |
Natural gas | |
| 146,424 | | |
| - | | |
| - | | |
| (7,507 | ) | |
| 138,917 | |
Gasolines | |
| - | | |
| 89,798 | | |
| - | | |
| - | | |
| 89,798 | |
L.P.G. and propane | |
| 747 | | |
| 8,453 | | |
| - | | |
| - | | |
| 9,200 | |
Other products and services | |
| 432,625 | | |
| 241,365 | | |
| 305 | | |
| (4,398 | ) | |
| 669,897 | |
Total foreign sales | |
| 9,467,328 | | |
| 1,938,301 | | |
| 305 | | |
| (705,035 | ) | |
| 10,700,899 | |
Total sales by segment | |
| 11,814,676 | | |
| 7,601,403 | | |
| 1,929,810 | | |
| (3,374,565 | ) | |
| 17,971,324 | |
Sales by geographic zones
Operating revenue by geographic zones is
comprised as follows:
Zone | |
March 31, 2015 | | |
Participation | | |
March 31, 2014 | | |
Participation | |
Colombia | |
| 5,666,303 | | |
| 46.1 | % | |
| 6,949,781 | | |
| 38.7 | % |
United States of America | |
| 2,969,623 | | |
| 24.1 | % | |
| 4,636,818 | | |
| 25.8 | % |
Asia | |
| 1,311,677 | | |
| 10.7 | % | |
| 3,751,915 | | |
| 20.9 | % |
Europe | |
| 1,276,801 | | |
| 10.4 | % | |
| 1,165,516 | | |
| 6.5 | % |
Central America and Caribbean | |
| 857,330 | | |
| 7.0 | % | |
| 1,102,719 | | |
| 6.1 | % |
South America | |
| 200,410 | | |
| 1.6 | % | |
| 354,477 | | |
| 2.0 | % |
Other | |
| 18,711 | | |
| 0.2 | % | |
| 10,098 | | |
| 0.1 | % |
Total | |
| 12,300,855 | | |
| 100 | % | |
| 17,971,324 | | |
| 100 | % |
Concentration of customers
In 2015 one customer of the refining segment
accounted for 10% (2014 – 11,1%) of total sales. No other customers accounted for more than 10% of total sales. There was
no exposure that affects the financial position of Ecopetrol if the company lost the client.
Non-current assets-distribution by geographic
zone
The majority of the Company’s assets
and activities are located in Colombia. The financial position and results of operations of those subsidiaries located outside
of Colombia are not material to the Group.
Capital expenditures
The following table shows a breakdown of
the changes of capital expenditures during the first quarter 2015 and year ended December 31, 2014:
Ecopetrol S.A.
Notes to Consolidated Financial Statements
| |
Capital expenditures in first quarter 2015 | |
| |
Exploration and production | | |
Refining and petrochemicals | | |
Transportation and logistics | | |
Total | |
Property, plant and equipment | |
| 813,043 | | |
| 767,029 | | |
| 509,074 | | |
| 2,089,146 | |
Natural resources | |
| 932,971 | | |
| - | | |
| - | | |
| 932,971 | |
Intangibles | |
| 5,475 | | |
| 167 | | |
| 1,328 | | |
| 6,970 | |
Total | |
| 1,751,489 | | |
| 767,196 | | |
| 510,402 | | |
| 3,029,087 | |
| |
Capital expenditures for the year ended December 31, 2014 | |
| |
Exploration and production | | |
Refining and petrochemicals | | |
Transportation and logistics | | |
Total | |
Property, plant and equipment | |
| 669,254 | | |
| 3,878,758 | | |
| 2,406,216 | | |
| 6,954,228 | |
Natural resources | |
| 9,615,053 | | |
| - | | |
| - | | |
| 9,615,053 | |
Intangibles | |
| 27,564 | | |
| 10,103 | | |
| 960 | | |
| 38,627 | |
Total | |
| 10,311,871 | | |
| 3,888,861 | | |
| 2,407,176 | | |
| 16,607,908 | |
Ecopetrol Business Group
Notes to the consolidated financial statements
All amounts in millions of pesos unless
otherwise stated
Exhibit 1. Consolidated companies,
associates and joint ventures
Consolidated subsidiaries
Company | |
Ownership | | |
Activity | |
Subsidiaries | |
Country/Domicile | |
Geographic
area of operations | |
Net
Equity | | |
Income
(loss) for the period | |
Ecopetrol Global Energy | |
| 100 | % | |
Investment vehicle. | |
Ecopetrol
América Inc., Ecopetrol oleo & Gas do Brasil Ltda, Ecopetrol del Perú S. A., Ecopetrol Germany Gmbh,
Refinería de Cartagena S. A., Bioenergy S. A. | |
Spain | |
Spain | |
| 3,517,411 | | |
| (33 | ) |
Ecopetrol Oleo é Gas do Brasil Ltda. | |
| 100 | % | |
Hydrocarbon exploration and exploitation. | |
Sociedad portuaria de oleofinas y
derivados, Propileno del Caribe S. A | |
Brazil | |
Brazil | |
| 16,612 | | |
| (6,909 | ) |
Ecopetrol del Perú S. A. | |
| 100 | % | |
Hydrocarbon exploration and exploitation. | |
- | |
Peru | |
Peru | |
| 67,309 | | |
| (2,253 | ) |
Ecopetrol América Inc. | |
| 100 | % | |
Hydrocarbon exploration and exploitation. | |
Ecopetrol Perú S.A, Ecopetrol Oleo
é Gas do Brasil Ltda.,Propileno del Caribe S. A,Sociedad portuaria de oleofinas y
derivados | |
United States of America | |
United States of America | |
| 2,855,297 | | |
| (67,625 | ) |
Black Gold Re Ltd. | |
| 100 | % | |
Reinsurer of Ecopetrol and its subsidiaries. | |
- | |
Bermuda | |
Bermuda | |
| 446,725 | | |
| 9,586 | |
Ecopetrol Germany Gmbh | |
| 100 | % | |
Hydrocarbon exploration and exploitation. | |
- | |
Germany | |
Angola | |
| 2,686 | | |
| 101 | |
Hocol Petroleum Limited | |
| 100 | % | |
Investment vehicle. | |
Hocol S. A. | |
Bermuda | |
Bermuda | |
| 3,585,265 | | |
| 18,435 | |
Hocol S.A | |
| 100 | % | |
Hydrocarbon exploration, exploitation and
production. | |
Oleoducto Central S.A.-ODC | |
Cayman Islands | |
Colombia | |
| 2,039,010 | | |
| (16,157 | ) |
Andean Chemicals Ltd. | |
| 100 | % | |
Investment vehicle. | |
Bioenergy S. A., Refinería de Cartagena,
Propileno del Caribe S. A. y Comai S.A. | |
Bermuda | |
Bermuda | |
| 4,685,000 | | |
| 15,822 | |
Ecopetrol Business Group
Notes to the Consolidated Financial Statements
Refinería de Cartagena S.
A. | |
| 100 | % | |
Hydrocarbons refining, marketing
and distribution. | |
- | |
Colombia | |
Colombia | |
| 8,099,205 | | |
| (157,606 | ) |
Propileno del Caribe Propilco S. A. | |
| 100 | % | |
Production and marketing of polypropylene
resin. | |
Comai S. A., Refinería de Cartagena.,
Bioenergy S. A. Sociedad Porturaria Olefinas y Derivados | |
Colombia | |
Colombia | |
| 1,001,507 | | |
| 24,172 | |
COMAI - Compounding and Masterbatching Industry | |
| 100 | % | |
Manufacturing of polypropylene compounds
and master batches for a wide range of uses. | |
Refinería de Cartagena., Bioenergy
S. A., Zona franca de Cartagena S.A , Sociedad Portuaria del Dique | |
Colombia | |
Colombia | |
| 76,481 | | |
| 14,423 | |
Bioenergy S. A. | |
| 93,47 | % | |
Biofuels production. | |
Bioenergy Zona Franca S. A., Amandine Holdings
Corp. y Los Arces Group Corp. | |
Colombia | |
Colombia | |
| 258,228 | | |
| (14,467 | ) |
Bioenergy Zona Franca S. A. S. | |
| 93,47 | % | |
Biofuels production. | |
- | |
Colombia | |
Colombia | |
| 112,100 | | |
| (15,480 | ) |
Amandine Holdings Corp. | |
| 93,47 | % | |
In a winding-up process. | |
- | |
Panama | |
Panama | |
| 6,657 | | |
| - | |
Los Arces Group Corp. | |
| 93,47 | % | |
In a winding-up process. | |
- | |
Panama | |
Panama | |
| 5,100 | | |
| - | |
Cenit S.A.S. | |
| 100 | % | |
Almacenamiento y Transporte por ductos de
Hidrocarburos. | |
Oleoducto Bicentenario, Ocensa, ODC, ODL,
Serviport | |
Colombia | |
Colombia | |
| 15,091,710 | | |
| 694,823 | |
Oleoducto Central S. A. - Ocensa | |
| 72,65 | % | |
Pipeline transportation of crude oil. | |
- | |
Colombia | |
Colombia | |
| 2,248,321 | | |
| 465,967 | |
ODL S. A. | |
| 65 | % | |
Pipeline transportation of crude oil. | |
- | |
Panama | |
Panama | |
| 1,044,815 | | |
| 69,994 | |
Oleoducto de Colombia S. A. – ODC | |
| 73 | % | |
Pipeline transportation of crude oil. | |
- | |
Colombia | |
Colombia | |
| 305,339 | | |
| 56,028 | |
Oleoducto Bicentenario de Colombia SAS | |
| 55.97 | % | |
Pipeline transportation of crude oil. | |
- | |
Colombia | |
Colombia | |
| 826,845 | | |
| 60,472 | |
Ecopetrol Capital AG | |
| 100 | % | |
Financing, liquidation of funding for companies,
groups or any business or related activity. | |
- | |
Switzerland | |
Switzerland | |
| 732,030 | | |
| 20,164 | |
Ecopetrol Global Capital SL | |
| 100 | % | |
Investment vehicle. | |
- | |
Spain | |
Spain | |
| 8 | | |
| - | |
Ecopetrol Business Group
Notes to the Consolidated Financial Statements
Associates and joint ventures
Company | |
Ownership | | |
Activity | |
Country/Domicile | |
Geographic
area of operations | |
Net
Equity | | |
Income
(loss) for the period | |
Associates | |
| | | |
| |
| |
| |
| | | |
| | |
Invercolsa S.A. | |
| 43,35 | % | |
Investment in companies of transport
and distribution of Natural Gas and L.P.G. in Colombia. | |
Colombia | |
Colombia | |
| 129,265 | | |
| 4,159 | |
Offshore International Group | |
| 50 | % | |
Hydrocarbon exploration, development, production
and processing. | |
United States of America | |
Peru | |
| 1,378,721 | | |
| (32,335 | ) |
Ecodiesel Colombia S.A. | |
| 50 | % | |
Production, marketing and distribution of
biofuels and oleo chemicals. | |
Colombia | |
Colombia | |
| 63,748 | | |
| 3,963 | |
Serviport S.A. | |
| 49 | % | |
Services for oil-vessel loading and unloading
support; supply of equipment for the same purpose; technical inspections and loading measurements. | |
Colombia | |
Colombia | |
| 12,704 | | |
| 8,083 | |
Sociedad Portuaria Olefinas y Derivados S.A. | |
| 50 | % | |
Construction, use, maintenance, adequation
and administration of ports and private or public docks facilities. | |
Colombia | |
Colombia | |
| 1,050 | | |
| (202 | ) |
| |
| | | |
| |
| |
| |
| | | |
| | |
Joint Ventures | |
| | | |
| |
| |
| |
| | | |
| | |
Equion Energía Limited | |
| 51 | % | |
Hydrocarbon exploration, exploitation and
production | |
United Kingdom | |
Colombia | |
| 2,135,761 | | |
| 20,482 | |
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