BOGOTÁ, Colombia, Feb. 25, 2020 /PRNewswire/ -- Ecopetrol S.A.
(BVC: ECOPETROL;NYSE: EC) announced today the Business Group's 2019
fourth quarter and full-year financial results, prepared in
accordance with International Financial Reporting Standards (IFRS)
applicable in Colombia.
TABLE
1:
|
CONSOLIDATED
FINANCIAL RESULTS
|
ECOPETROL BUSINESS
GROUP
|
|
Billion
(COP)
|
|
4Q
2019
|
4Q
2018
|
∆
($)
|
∆
(%)
|
|
12M
2019
|
12M
2018
|
∆
($)
|
∆
(%)
|
Total
sales
|
|
18,581
|
18,314
|
267
|
1.5%
|
|
70,847
|
67,820
|
3,027
|
4.5%
|
Depreciation and
amortization
|
|
2,101
|
1,881
|
220
|
11.7%
|
|
8,290
|
7,605
|
685
|
9.0%
|
Variable
cost
|
|
7,547
|
7,412
|
135
|
1.8%
|
|
27,176
|
24,774
|
2,402
|
9.7%
|
Fixed cost
|
|
2,622
|
2,649
|
(27)
|
(1.0%)
|
|
9,492
|
8,791
|
701
|
8.0%
|
Cost of
sales
|
|
12,270
|
11,942
|
328
|
2.7%
|
|
44,958
|
41,170
|
3,788
|
9.2%
|
Gross
income
|
|
6,311
|
6,372
|
(61)
|
(1.0%)
|
|
25,889
|
26,650
|
(761)
|
(2.9%)
|
Operating and
exploratory expenses
|
|
771
|
1,382
|
(611)
|
(44.2%)
|
|
3,726
|
4,592
|
(866)
|
(18.9%)
|
Operating
income
|
|
5,540
|
4,990
|
550
|
11.0%
|
|
22,163
|
22,058
|
105
|
0.5%
|
Financial income
(loss)
|
|
(245)
|
(300)
|
55
|
(18.3%)
|
|
(1,670)
|
(2,010)
|
340
|
(16.9%)
|
Share of profit of
companies
|
|
65
|
(84)
|
149
|
(177.4%)
|
|
354
|
155
|
199
|
128.4%
|
Income before
income tax
|
|
5,360
|
4,606
|
754
|
16.4%
|
|
20,847
|
20,203
|
644
|
3.2%
|
Income tax
|
|
247
|
(1,297)
|
1,544
|
(119.0%)
|
|
(5,067)
|
(7,415)
|
2,348
|
(31.7%)
|
Net income
consolidated
|
|
5,607
|
3,309
|
2,298
|
69.4%
|
|
15,780
|
12,788
|
2,992
|
23.4%
|
Non-controlling
interest
|
|
(318)
|
(296)
|
(22)
|
7.4%
|
|
(1,251)
|
(978)
|
(273)
|
27.9%
|
Net income
attributable to owners of Ecopetrol before
impairment
|
|
5,289
|
3,013
|
2,276
|
75.5%
|
|
14,529
|
11,810
|
2,719
|
23.0%
|
Impairment
|
|
(1,751)
|
(496)
|
(1,255)
|
253.0%
|
|
(1,748)
|
(347)
|
(1,401)
|
403.7%
|
Deferred tax of
impairment
|
|
471
|
130
|
341
|
262.3%
|
|
470
|
93
|
377
|
405.4%
|
Net income
attributable to owners of Ecopetrol
|
|
4,009
|
2,647
|
1,362
|
51.5%
|
|
13,251
|
11,556
|
1,695
|
14.7%
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
7,174
|
7,042
|
132
|
1.9%
|
|
31,108
|
30,798
|
310
|
1.0%
|
EBITDA
Margin
|
|
38.6%
|
38.5%
|
-
|
0.1%
|
|
43.9%
|
45.4%
|
-
|
(1.5%)
|
The figures included in this report were extracted from the
audited financial statements. The financial information is
expressed in billions of Colombian pesos (COP) or US dollars (USD),
or thousands of barrels of oil equivalent per day (mboed) or tons,
and are so noted as applicable. For presentation purposes, certain
figures of this report have been rounded to the nearest decimal
place.
In words of Felipe Bayón Pardo, CEO of Ecopetrol:
"2019 was an outstanding year for the Ecopetrol group, both
operationally and financially, reaching the targets we set in the
2019-2021 Plan update. Our financial results were the highest of
the past six years, with a net profit of COP
13.3 trillion, an EBITDA of COP 31.1
trillion and an EBITDA margin of 44%. This performance
allowed for the highest dividend payment in the Company's history
(COP 314 per share), as well as investments focused on
profitable organic (80%) and inorganic (20%) growth totalling
USD 4.4 billion, maintaining our
credit rating. The Gross Debt-to-EBITDA ratio was 1.2 times
in 2019.
The financial results achieved demonstrate the
positive operational performance and the positioning of our crudes
in markets that generate greater value, reaching in the fourth
quarter 2019 a record differential in the crude basket of
-4.7 USD/bl. Our sales and marketing
strategy enabled us to establish a direct relationship with
refiners, strengthening our position as a reliable heavy crude
supplier for our customers, with high quality standards and
competitive delivery times, thus maximizing the value of our basket
amidst a favorable market context for heavy crudes in the
region. These favorable performance was further facilitated
by to a better average exchange rate, savings in financial expenses
from debt prepayments and a lower nominal tax rate. The foregoing
allowed to offset the lower average Brent price, which declined
from USD 72 USD/bl in 2018, to
64 USD/bl in 2019, showing our
ability to face a challenging environment, reflected in a lower net
income breakeven of 29.9
USD/bl.
2019 net profit was positively impacted as a result of our
increased stake in Inversiones de Gases de Colombia (Invercolsa) from 43% to 52%,
pursuant to the Supreme Court ruling of October 2019, whereby our interest position
changed, and this Company thus ceased to be a subsidiary and became
an associate, generating a non-recurring income in the amount of
COP 1.0 trillion.
As part of our corporate strategy, we remain committed to our
operational and financial efficiency plan. During 2019, Ecopetrol
Group's cumulative efficiencies amounted to COP 3.3 trillion, a 22% increase versus 2018 and
exceeded the target set in the 2019-2021 Plan. Based on our
efficiency roadmap, USD 126 million
of the 2020 plan were allocated to Digital Transformation, which
will allow improved productivity and efficiency through the
implementation of artificial intelligence, blockchains and bots,
among other technologies.
In operational terms, during 2019, we incorporated 408
million barrels of oil equivalent (mboe) in proven reserves,
furthering the positive trend of 2017 and 2018. At the end of the
year, the proven net reserves of the Ecopetrol Group reached 1,893
million barrels of oil equivalent. The reserves replacement ratio
was 169%, the highest of the past nine years, despite a 15% lower
Brent price versus 2018. Furthermore, average life of total
reserves increased from 7.2 to 7.8 years.
Organically, 100% of reserve replacement was achieved,
emphasizing the outstanding performance of primary, secondary and
tertiary recovery. The joint venture with Oxy allowed Ecopetrol to
incorporate 164 mboe of proven reserves (1P).
In exploration, the Group and its partners completed
the drilling of 20 wells, thus exceeding the 12-well goal set for
the year. We had a geological success rate of 40% with eight (8)
successful wells.
Near-Field Exploration strategy has been noteworthy, allowing
for short cycle reserves addition given their location near
production facilities. This strategy succeeded in adding over one
million cumulative barrels of crude in extensive tests, which were
tallied to the production of the Business Group.
An important milestone for the development of the Colombian
offshore was the agreement signed between Ecopetrol S.A. and Shell,
whereby Shell will acquire a 50% stake in the Fuerte Sur, Purple
Angel and COL-5 blocks, located in deepwater Caribbean Sea offshore
Colombia.
In the production front, we met the annual goal,
reaching 725 thousand barrels of oil equivalent per day, despite
operational incidents and public order difficulties faced during
the year. Production increase leveraged on the positive drilling
results and increased gas sales and marketing. In October, the
entry into operation of the LPG Plant of the Cupiagua field was a
remarkable event, with an expected production of between 7,000 and
8,000 barrels daily, thus escalating national supply of this energy
and providing thousands of Colombian families with access to energy
sources.
Our progress in energy transition and growth in gas
production included the agreement signed by Hocol, an Ecopetrol
Group subsidiary, on November 22,
2019 with Chevron Petroleum Company to acquire its stake in
the Chuchupa and Ballena fields, located in the Department of La
Guajira. This agreement is subject to approval by the Colombian
Superintendence of Industry and Commerce, and future developments
will be duly reported.
In the international front, we would like to stress the
signing of an agreement with Shell Brasil Petróleo Ltda. to acquire
a 30% stake in the Gato do Mato, discovery located offshore in the
pre-salt Santos Basin.
Moreover, I would also like to highlight the decision of the
Council of State which allowed making headway in the Comprehensive
Research Pilot Projects, which will provide the country with
invaluable information on the feasibility of developing
Unconventional Sites in Colombia.
During 2020, we will continue to report any progress on this
front.
In the midstream segment, the volume transported
increased by 4% compared to that of 2018, allowing operational
stability and positive financial results, with an EBITDA of
ten trillion pesos, which represents
a 15% increase compared to previous year results. Furthermore, the
new crude transportation tariffs process was completed, providing a
moderate income increase for the segment.
During 2019, the pipeline network continued to suffer from
incidents attributable to third parties. However, the provisional
operations through the Bicentennial pipeline allowed us to reduce
these impacts.
With respect to refining, during 2019 we achieved a
record high average throughput of 374 thousand barrels per day in
the two refineries, which validates good performance despite some
unscheduled operational events. The joint gross margin for the
downstream segment was $ 10 USD/bbl,
mainly affected by the lower product prices and the strengthening
of medium and heavy crude, in line with the behavior of the
international market.
As part of our efforts to contribute towards preserving the
environment, in 2019 we declared our commitment to reduce
CO2 (carbon dioxide) emissions by 20% for 2030 and reduce the
operation's vulnerability to climate change.
This reduction has been ongoing for several years, and in
2019 we achieved a cumulative reduction of 1.6 million tons of CO2
equivalent from our direct operations through the uninterrupted
implementation of energy efficiency projects, the reduction of
routine flare stack flaring in Chichimene and the use of renewable
energies.
In this latter front, the Company has the goal of
incorporating approximately 300 MW of unconventional renewable
energy by 2022. In line with this goal, the Castilla Solar Park was
inaugurated with 21 MW of installed capacity and the construction
of the San Fernando Solar Park with 50 MW capacity is planned for
2020, which will become the largest energy self-generation project
developed in the country. This project will prevent the emission of
over 410 thousand tons of CO2 into the atmosphere over the next 15
years. The renewable energy goal will allow Ecopetrol to increase
its share in these sources from the current 5% to 20% in
2022.
In January 2020 we endorsed the
World Bank World-led initiative "Zero Routine Flaring by 2030" as
part of our decarbonization plan.
Alternatively, we continue with our commitment to offer the
country cleaner fuels. In December, the diesel distributed in
Colombia had a weighted average of
10 parts per million of sulphur (ppm) and 110 ppm in gasoline,
levels below those required by the current Colombian regulation of
50 ppm in diesel and 300 ppm in gasoline.
Socio-environmental investment totaled
COP 245,462 million, evidencing our
commitment to the well-being of communities and the
environment.
On the governance front, most notable is the completed
orderly transition as regards to changes in our Board of Directors,
as well as the creation of the Innovation and Technology Committee
of the Board, which will promote further progress towards digital
transformation, one of the enablers of our strategy.
Having reached in advance the most significant operational
and financial milestones outlined in our Business Plan 2019-2021,
with a Company successfully operating and financially robust, we
are prepared to face new challenges.
The 2022 Plan includes amongst its most significant goals: i)
reaching production levels of 780 - 800 mboed; (ii) increase
reserves while maintaining the minimum organic replacement rate of
100%, net of price effect; iii) enable an optimal throughput of the
integrated refining system at a level between 370 - 420 mbd; iv)
increase transported volumes to 1,10 - 1,25 million barrels of oil
equivalent per day; (v) invest between USD
13-17 billion, which reflect a level of return on capital
above 12% at Plan prices; vi) maintain a strong cash flow position
and a gross debt-to-EBITDA ratio of 1.0 - 1.5 times, which
safeguards the Company's investment grade; and, vii) consolidate
the ESG strategy (Environmental, Social, and Governance). The Plan
incorporates continuous portfolio optimization and appraising asset
value generation.
We reiterate our commitment to profitably growing our
production and reserves through sustainable results, reducing the
impact of our operations, encouraging good environmental practices
and promoting socio-environmental development in those territories
where the Ecopetrol Group is present".
To review the full report please visit the following link:
https://www.ecopetrol.com.co/english/documentos/Reporte%204T19%20%20Ingl%C3%A9s%20VF.pdf
This release contains statements that may be considered
forward looking statements within the meaning of Section 27A of the
U.S. Securities Act of 1933 and Section 21E of the U.S. Securities
Exchange Act of 1934. All forward-looking statements, whether made
in this release or in future filings or press releases or orally,
address matters that involve risks and uncertainties, including in
respect of the Company's prospects for growth and its ongoing
access to capital to fund the Company's business plan, among
others. Consequently, changes in the following factors, among
others, could cause actual results to differ materially from those
included in the forward-looking statements: market prices of oil
& gas, our exploration and production activities, market
conditions, applicable regulations, the exchange rate, the
Company's competitiveness and the performance of Colombia's economy and industry, to mention a
few. We do not intend, and do not assume any obligation to update
these forward-looking statements.
For further information, please contact:
Juan Pablo Crane de Narváez
Head of Capital
Markets
Phone: (+571) 234 5190
E-mail: investors@ecopetrol.com.co
Jorge Mauricio Tellez
Media Relations (Colombia)
Phone: (+ 571) 234 4329
E-mail: mauricio.tellez@ecopetrol.com.co
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SOURCE Ecopetrol S.A.