BOGOTA, Colombia, Feb. 27, 2018 /PRNewswire/ --
- 2017 net profit totaled COP 6.6
trillion, the highest of the past four
years1. 2017 profit was 16% higher
compared to 2014, despite a 45% decrease in the Brent price (2014:
~USD 100/barrel vs. 2017:
~USD 55/barrel).
- Group's Ebitda was COP 23.1
trillion, 28% higher vs. 2016. Operating cash generation
increased by COP 2.7 trillion
compared to 2016, and COP 5.3
trillion compared to 2015 when average Brent price was at
the same level as in 2017.
- Proven hydrocarbon reserves totaled 1,659 million
barrels-equivalent at the end of 2017. Average reserve life
increased to 7.1 years, and the reserve replacement index was 126%,
the highest of the past three years.
- The average Ecopetrol Group's 2017 production totaled 715
mboed, in line with the target for the year in spite of operating
and environmental challenges.
- The crude oil basket strengthen USD
2.5/barrel vs. 2016 due to our commercial efforts and a
better price environment, which brings about additional revenues of
COP 1.2 trillion. Moreover, products
basket improved by USD2.9/barrel,
making COP 1.3 trillion of additional
revenue.
- 2017 saw the successful execution of the global performance
test of the new Cartagena Refinery. Reficar reported positive Net
Income and Ebitda in 2017, marking the transition to a positive
cash generation period only six months after the 34 refinery units
were stabilized.
- In 2017 the highest load in history of the refining in
Colombia was reached: 346 thousand
barrels per day due to the stable operation of both Cartagena and Barrancabermeja
refineries.
- Group's nominal debt decreased approximately by COP 9 trillion (USD 2.9
billion) between 2016 and 2017 allowing to improve the
capital structure while maintaining a solid cash position of
COP 14.5 trillion. The Gross
Debt/Ebitda ratio was 1.9x in 2017 from 2.9x at the end of
2016.
Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) announced today the
Business Group's 2017 fourth quarter and full-year financial
results, in accordance with International Financial Reporting
Standards applicable in Colombia.
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TABLE 1:
CONSOLIDATED FINANCIAL RESULTS –
ECOPETROL BUSINESS GROUP
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A
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B
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C
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D
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E
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F
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G
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H
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I
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COP
Billion
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4Q
2017
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4Q
2016
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∆
($)
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∆
(%)
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2017
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2016
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∆
($)
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∆
(%)
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Total
Sales
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15,363
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13,313
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2,050
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15.4%
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55,210
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47,732
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7,478
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15.7%
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Operating
Profit
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5,615
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1,633
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3,982
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243.8%
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15,505
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8,253
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7,252
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87.9%
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Net Income
Consolidated
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3,623
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358
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3,265
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912.0%
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7,402
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2,404
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4,998
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207.9%
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Non-Controlling
Interests
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(196)
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(172)
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(24)
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14.0%
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(782)
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(839)
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57
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(6.8%)
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Net Income
Attributable to Owners of Ecopetrol
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3,427
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186
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3,241
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1,742.5%
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6,620
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1,565
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5,055
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323.0%
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EBITDA
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5,778
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4,474
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1,304
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29.1%
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23,075
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18,018
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5,057
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28.1%
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EBITDA
Margin
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37.6%
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33.6%
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41.8%
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37.7%
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Figures included in this report were extracted from the audited
financial statements and were the source for the calculation of
certain financial measures such as the Ebitda. The information is
expressed in billions of Colombian pesos (COP) or US dollars (USD),
or thousands of barrels of petroleum-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 the opinion of Ecopetrol S.A. CEO, Felipe Bayon Pardo:
"2017 was a year of great operational and financial
success for Ecopetrol. We are a more efficient and disciplined
Company, demonstrating our technical capabilities and resilience by
emerging stronger from the crisis of low oil prices.
"We are prepared to take advantage of opportunities that may
arise. The discipline we have established and a more favorable
price environment will allow us to better positioning to continue
growing a profitable and safe operation.
"In 2017 we remained focused on seeking excellence and safety
in all our operations and meeting our production goals with a
better balance of reserves. These are basic foundations for the
Company's growth. The rigorous allocation of investment resources,
solid cash position and financial indicators, less leverage, a
sustained investment-grade rating and the successful culmination of
large projects were key aspects to the results we attained.
"We are successfully experiencing Ecopetrol's "profitable
growth". Net profit in 2017 totaled 6.6
trillion pesos, the highest in the past four years and some
16% over 2014 profit, even with a Brent price 45% lower. EBITDA and
EBITDA margin were 23.1 trillion
pesos and 42%, respectively; EBITDA margin was up four
percentage points over 2016, and is one of the highest in the
global oil and gas industry.
"For the year as a whole, cash break-even was at 40 dollars per barrel.
"We closed out the year with a solid cash position of
14.5 trillion pesos (approximately
4.8 billion dollars), enabling
opportunities for future inorganic growth. The 2017 year's cash
position allowed us to prepay debt totaling 2.4 billion dollars, which is reflected in a 17%
reduction in the Ecopetrol Group's nominal debt, strengthening its
capital structure. Our Gross Debt/EBITDA indicator was at 1.9x for
2017, versus 2.9x in 2016.
"Total investment in 2017 totaled 2.2
billion dollars, out of which 80% was allocated to the
Exploration and Production segment, in line with our proposed 2020
Business Plan. It is important to note that despite lower
investment during the year, the Company met its operating
goals.
"We are satisfied with the results achieved with our 2017
certification of reserves, which showed a change of trend. Proven
reserves totaled 1,659 million barrels of oil equivalent, average
life increased to 7.1 years and reserve replacement index was 126%,
the highest in the past three years. This result was broadly
leveraged by the success of our program to increase the recovery
factor and the ongoing development of our fields.
"As a result of proactive commercial approach and a scarcity
of heavy crude worldwide, we succeeded in reducing the crude basket
spread by 2.5 dollars per barrel, to
-6.9 dollars per barrel, an
improvement of some 27% over the 2016 figure. Thanks to this
progress, additional revenue of 1.2 trillion
pesos was generated for Ecopetrol. Also, in 2017 a new
energy marketing subsidiary was incorporated.
"The company met its 2017 production goal, at 715 thousand
barrels of oil equivalent per day. This result was possible despite
some operational events and public security issues, especially on
the Caño Limón Coveñas oil pipeline. An important achievement was
to be able to maintain a stable bi-directional operation on the
Bicentenario oil pipeline and moving all our heavy crude along the
same corridor. In 2017 some 500 development wells were drilled,
reflecting a significant increase in activity versus 2016.
"The recovery program saw outstanding results and is
continuing to mature toward an expansion phase for pilots that have
successfully completed the analysis stage. The purpose of the
recovery program is to expand enhanced recovery technologies to
other fields, as for example in Chichimene, one of our main fields,
which initiated the mature expansion of water-injection technology
throughout the entire field, based on the positive results obtained
in the pilot phase.
"2017 was a year of intense exploratory activity, as we
worked hard to build the foundations for the Company's future
growth. We ended the year with a total of 21 wells drilled. Through
this deployment of activity we succeeded in incorporating more than
250 million barrels of oil equivalent in contingent resources,
leveraging the future increase in the Business Group's
reserves.
"It is important to highlight the experience we gain with the
drilling of the Molusco-1 well, the first offshore well operated by
Ecopetrol. This well ended up fulfilling projected plans with no
technical, environmental or operational incidents. Through this
project, Ecopetrol has acquired experience in offshore exploration,
following the industry's highest HSE standards.
"In line with the strategy of growth and increased
international activity, we were awarded new exploratory blocks in
Mexico (blocks 6 and 8) and
the United States (Garden Banks
77, 78, 121 and 122 in the US Gulf of Mexico). In turn, an
additional stake was acquired in block K2 (Gulf of Mexico), contributing to our 2017
reserves and production balance.
"In the transport segment, we highlight the stable transport
of heavy crude with viscosity greater than 600 centistokes (cst – a
viscosity measurement), thereby reducing dilution requirements.
Late 2017 saw the completion of the San
Fernando - Monterrey
pipeline, the most important infrastructure in the Orinoquia
region, providing us greater capacity to transport heavy
crudes.
"In refining, we achieved important operational milestones
that yielded significant value to the Business Group. We note that
in its second year of operations, the new Cartagena refinery is generating positive net
profit and EBITDA, marking a significant change of trend in its
financial figures. This important asset, which belongs to every
Colombian, shows why it is considered the most modern refinery in
Latin America.
"The new Cartagena refinery
completed its stabilization stage in December 2017 with the execution of the global
performance test, having a sustained load of 144 thousand barrels
per day or 96% of its capacity during 60 days and a refining margin
of 12.5 dollars per barrel in the
fourth quarter of 2017. This milestone initiates the operational
optimization phase.
"The Barrancabermeja refinery has consolidated a profitable
and efficient operation, with an average refining margin of
13.5 dollars per barrel. During the
year the Bioenergy project was completed and achieved several
technical and operational milestones.
"It is important to highlight that in December we reached an
historic peak load of 393 thousand barrels per day on one specific
day of the month. These successes were achieved while both
refineries were operating stably and optimally.
"The Transformation program remains a critical part of our
growth. In 2017 operating efficiencies of 2.6 trillion pesos were reported versus the
initial goal of 750 billion pesos.
The key efficiency drivers in 2017 were energy, heavy crude
handling, sales spread, optimization of the refining segment, and
water management.
"Process Safety showed the best results of the past nine
years, with a Level 1 Process Safety Incidents Indicator of five
incidents, a decline of 17% versus 2015 and 2016. This result was
largely due to the implementation of safe practices and the
strengthening of leadership in the area, at the management
levels.
"With a view to aligning our practices with global standards,
Ecopetrol S.A. obtained OHSAS 18001 certification (Occupational
Health and Safety) and ISO 14001 certification (Environmental
Management), confirming its high HSE standards and enhancing its
market competitiveness.
"The year 2018 comes with significant challenges for
Ecopetrol. Increasing our production to a level between 715 and 725
thousand barrels of oil equivalent per day, maintaining operational
excellence, safety in our operations and solid financial metrics
are our priorities. For 2018 we project investment ranging from 3.5
to 4.0 billion dollars, with a major
focus on Exploration and Production, which accounts for 85% of the
CAPEX plan.
"In the Exploration and Production segment we plan the
drilling of over 620 development wells, at least 12 exploratory
wells, the use of 28 rigs and the acquisition of over 41,000
kilometers of 2D and 3D seismic. We also project developing
activities at some 20 pilot projects to implement improved recovery
technologies.
"In the refining segments, efforts are focused on optimizing
operations at the new Cartagena
refinery, where we forecast an EBITDA of at least 500 billion pesos and a double-digit refining
margin. The Company expects to achieve a milestone in refined
products, with its two refineries processing between 350 and 375
thousand barrels of oil per day.
"As part of the revision of the Corporate Responsibility
strategy, in December 2017 the
Corporate Responsibility Office was created, with the purposes of
identify, adopt and facilitate the incorporation of initiatives
that leverage the achievement of business objectives and ensure
Ecopetrol's position as an organization that acts responsibly with
its stakeholders.
"The Ecopetrol Group's 2018 priorities will continue to be
operational excellence, a commitment to ethics and
transparency, safety as a pillar of its operations, care for its
workers, protection of the environment, shared growth with
communities, within a framework of joint prosperity and safe
operations."
To review the full report please visit Ecopetrol's
website: www.ecopetrol.com.co
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:
Capital Markets Manager
María 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
1 Comparison made against financial results reported
under IFRS as adopted in Colombia
in 2015
with transition period on January
First, 2014.
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SOURCE Ecopetrol S.A.