BOGOTA, Colombia, Sept. 30, 2016 /CNW/ --
- The new 2020 plan of the Ecopetrol Group modifies the plan
presented in May 2015, is based on a
steady price scenario of 50 USD/bl,
and allows for considerable benefits in case of potential price
increases by the end of this decade.
- This new business plan is based on three pillars: i) cash
flow focus through the consolidation of savings and efficiencies,
ii) capital discipline and iii) profitable, clean and safe growth
in Upstream.
- The plan contemplates a cash surplus of more than
USD 4.800 million, a dividend
distribution policy of about 40% and debt ratios consistent with
investment grade rating.
- Capital discipline is based on a solid investment portfolio,
estimated in USD 13.000 million by
2020. Nearly 90% of the investments of the Group will be allocated
to Upstream.
- The Midstream and Downstream segments will focus their
investment in strengthening operational excellence, maintenance and
asset integrity.
- By 2020, at an average price of $50
USD/bl, estimated production would reach 760 Mboed,
equivalent to a 6% growth vis a vis 2016. At an average price
of 70 USD/bl, production could reach
830 Mboed, or 16% over the current production.
- As for exploration, at least, 1.000 million barrels of
contingent resources are expected by 2020. Moreover, the Group´s
financial flexibility enables inorganic growth.
- Ecopetrol ratifies its commitment to strictly abide to the
Ethics code, industrial and process safety, the environment,
protection of water sources and its policy to share prosperity in
all the regions where it operates.
ECOPETROL S.A. (BVC: ECOPETROL; NYSE: EC) informs that it has
updated its business plan for the period 2017-2020. This plan
seeks to generate value, profitability and sustainability, and
prepares the Group to capture the benefits derived from a potential
increase in prices. The plan is based on an average price
scenario of $50 USD/bl.
The business plan continues to be based upon the main three
pillars of the Company's Corporate Strategy launched in
May 2015, i) cash flow focus
supported on savings and efficiencies, ii) capital discipline and
iii) profitable growth in Upstream.
Cash Flow Focus
As a result of lower oil prices, Ecopetrol has designed
strategies aimed at strengthening its cash generation.
Consequently, in May 2015, Ecopetrol
launched its Transformation Program which, as of today, has
exceeded its proposed efficiency and savings goals.
Structurally, Ecopetrol has accomplished a cost reduction of
USD 1.100 Million in comparison to
2014. Furthermore, it has divested non-strategic assets and
has initiated the sale of minor fields through its Fields Round
2016 (Ronda de Campos 2016).
The new plan aims to consolidate the already achieved cost
reductions and includes new opportunities for efficiencies which
could generate up to USD 700 million
on additional savings by 2020. Additionally, it contemplates
proceeds in a range of USD 700 million to
USD 1.000 million from asset divestments.
New integrated margin optimization and operational excellence
initiatives will be adopted in all areas to allow for a cash
surplus close to USD 4.800
million. The resources derived from these actions will
be used to finance the Group´s growth and generate value to
shareholders through dividends expected at around 40% of the
profits resulting from cash generation.
As a result of its commitment to protect cash, Ecopetrol seeks
to maintain debt/ebitda levels below 3 times, consistent with
investment grade rating.
Capital Discipline
In the past few months, Ecopetrol has reinforced its Capital
Discipline process by down scaling its investment levels, directing
resources to profitable projects and adopting controls to execute
projects efficiently, timely and within budget.
The 2020 business plan contemplates investments around
USD 13.000 million under an average
price scenario of 50 USD/bl, or
USD 17.000 million under a
$70 USD/bl scenario. Nearly 90% of
the investments will be allocated to Upstream, driver of the
Company's future growth. This investment level reflects an
ambitious excellence development plan that seeks to reach CAPEX
optimizations of up to 20% in the operation of all main assets;
which translates into approximately USD
2.000 million accumulated by 2020. Such efficiencies
will allow the Group to reach higher levels of activity with the
same level of investment.
The plan includes a USD 11.500
million investment in Upstream, with a potential upsize in a
better oil price environment.
After a period of sustained growth, the Midstream and Downstream
will focus mainly in efficiency, asset maintenance and integrity
through the investment of USD 1.500
million.
Profitable Growth in Upstream
In a challenging price environment, Ecopetrol has obtained
significant achievements throughout its key segments. The
Group has been able to mitigate the decline of its fields by
incorporating assets such as Rubiales and Cusiana, in addition to
the initiation of secondary recovery projects. In terms of
exploration, important discoveries in the Colombian Caribbean Coast
and the Gulf of Mexico have
materialized.
As for Production, in a scenario of an average of $50 USD/bl, Ecopetrol expects to grow at a rate
of 6% in comparison to 2016 aiming to reach 760 Mboed by
2020. More than 90% of this production will come from
Ecopetrol's current asset portfolio, out of which nearly half will
be the result of improved recovery projects in which Ecopetrol has
already proven solid performance. If prices were to reach
$70 USD/bl and $80 USD/bl, production could reach 830 Mboed and
870 Mboed correspondingly.
The optimizations and profitable growth contemplated in the Plan
will result in a greater ebitda/bl, increasing from USD 7 in 2016 to USD
12 by 2020.
In Exploration, Ecopetrol seeks to incorporate, at least, 1.000
million barrels of contingent resources by 2020, mainly derived
from high value projects in offshore Colombia, the reassessment of opportunities in
onshore Colombia and the
consolidation of international areas such as the Gulf of Mexico, Brazil and other areas of the Americas.
During the period 2016 – 2020, The Company expects to add 600
million barrels of proven reserves from current fields and
exploration.
The plan's financial flexibility will allow Ecopetrol to
evaluate inorganic growth options to accelerate reserves
addition.
* * * * * * * * * * * * * * *
With this plan, the Corporate Group will continue displaying its
commitment to ethics, a clean and safe operation, while
strengthening its ties to the communities. The priority of
our operation will continue to be HSE Excellence and the
construction of an environment of fulfillment, commitment and
mutual development for its employees and stakeholders. Innovation
and knowledge generation will be the drivers for growth.
To summarize, the 2017-2020 Business Plan intensifies the
strategic focus in search of sustainability, profitability and
value generation thus preparing the Group to reap from the benefits
of a potential improvement in prices, based on seven basic
pillars:
Ecopetrol is the largest company in Colombia and is an integrated oil & gas
company; it is among the top 50 oil companies in the world and
among the four top ones in Latin
America. Besides Colombia -
where it generates over 60% of the national production - it has
exploration and production activities in Brazil, Peru
& the US (Gulf of Mexico).
Ecopetrol owns the largest refinery in Colombia and most of the pipeline and
multi-product pipeline network in the country, and is significantly
increasing its participation in bio-fuels.
This release contains statements that may be considered
forward looking statements within the meaning of Section 27A of the
U.S. Securities Act of 1933 and Section 21E of the U.S. Securities
Exchange Act of 1934. All forward-looking statements, whether made
in this release or in future filings or press releases or orally,
address matters that involve risks and uncertainties, including in
respect of the Company's prospects for growth and its ongoing
access to capital to fund the Company's business plan, among
others. Consequently, changes in the following factors, among
others, could cause actual results to differ materially from those
included in the forward-looking statements: market prices of oil
& gas, our exploration and production activities, market
conditions, applicable regulations, the exchange rate, the
Company's competitiveness and the performance of Colombia's economy and industry, to mention a
few. We do not intend, and do not assume any obligation to update
these forward-looking statements.
For further information, please contact:
Head of Corporate Finance and Investor Relations (A)
Maria Catalina Escobar
Phone: (+571) 234 5190
E-mail: investors@ecopetrol.com.co
Media Relations (Colombia)
Jorge Mauricio
Tellez
Phone: + 571-234-4329
E-mail: mauricio.tellez@ecopetrol.com.co
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SOURCE Ecopetrol S.A.