BOGOTA, Colombia, May 13 /PRNewswire-FirstCall/ --
-- In the first quarter of 2009, oil and gas production increased by
6.3%;
sales volume increased 16.2%.
-- Non-consolidated net income for the first quarter of 2009 reached COP$
1,609.26 billion, or COP$ 39.76 per share. Consolidated net income for
the same period reached COP$ 1,608.44 billion
-- Cash and investments at March 31, 2009 reached COP$ 11,555.6 billion.
-- The Company made several strategic acquisitions amounting to US$ 1,997
million.
Results for the first quarter of 2009 compared to results for the first
quarter of 2008
Ecopetrol, S.A. (BVC: ECOPETROL; NYSE: EC), the Colombian integrated natural
gas and oil company, announced today its non-consolidated and consolidated
non-audited financial results for the first quarter of 2009. Financial
statements were prepared and submitted in accordance with the Public
Accountancy System (Regimen de Contabilidad Publica, RCP) issued by the
National Accounting Office (Contaduria General de la Nacion) of Colombia, in
Colombian pesos (COP$).
Financial highlights:
Unconsolidated Consolidated
(COP$ Billion) Q1 2009 Q1 2008 % Q1 2009 Q1 2008 %
---------------------------------------------------------------------
Total sales 5,112.75 7,222.43 (29.2%) 5,240.13 7,226.77 (27.5%)
Operating profit 1,020.91 3,765.75 (72.9%) 1,062.56 3,769.41 (71.8%)
Net income 1,609.26 2,293.34 (29.8%) 1,608.44 2,293.33 (29.9%)
Earnings per
share (COP$) 39.76 56.66 (29.8%) 39.74* 56.66* (29.9%)
EBITDA 1,629.23 4,201.22 (61.2%) 1,755.55 4,204.89 (58.2%)
EBITDA Margin 32% 58% 34% 58%
*For illustration purposes
"During the first quarter of 2009, Ecopetrol successfully implemented on its
investment plan. In terms of operations, we increased our production and our
sales volumes. As a result, we had a positive operating margin, despite a
sharp decline in crude oil and natural gas prices," said Javier G. Gutierrez,
Company President.
"Furthermore, the strength of our balance sheet allowed us to make significant
acquisitions that are key to the achievement of our strategic goals. These
transactions, together with our competitive capacity to obtain blocks in
national and international rounds, have increased the scope of our operations
and helped strengthen our long-term growth," added Mr. Gutierrez.
Market environment
The first quarter of 2009 was marked by a worsening of the world's economic
recession, with a strong impact on the fundamentals of commodities that pushed
down their prices.
The Colombian economy grew at a lower rate, and the balance of payments'
current account fell sharply as a result of low commodity prices and less
trade operations with Ecuador, the United States, and Venezuela. The
persistent crisis in the United States' financial sector and the risk aversion
pushed investors to seek shelter in lower-risk assets, which contributed to
the devaluation of the exchange rate in Colombia.
These trends began to revert towards the end of the quarter with the beginning
of the recovery of the WTI price - which reached a maximum quotation of US$
54,34/Bl by the end of March -, and with the revaluation of the exchange rate,
which went down from an average of 2,512.34 COP$/US$ in February 2009 to
2,469.43 COP$/US$ in March 2009.
Sales volume results
Local Sales Volume (mboed) Q1 2009 Q1 2008 %
-------------------------- ------- ------- -
Crude Oil 83.6 73.1 14.4%
Natural Gas 62.9 67.8 (7.3%)
Gasoline 60.4 62.7 (3.8%)
Medium Distillates 90.2 88.4 2.1%
LPG and fuel oil 20.8 20.0 4.0%
Industrial and Petrochemical 14.0 14.6 (4.1%)
Other 0.1 1.3 (92.3%)
Total Local Sales 332.0 328.0 1.2%
Export Sales Volume (mboed) Q1 2009 Q1 2008 %
--------------------------- ------- ------- -
Crude Oil 183.9 131.9 39.5%
Products 56.5 44.3 27.5%
Natural Gas 22.8 8.3 175.3%
Total Export Sales 263.3 184.5 42.7%
------------------ ----- ----- ----
Total Sales Volume 595.3 512.5 16.2%
------------------ ----- ----- ----
During the first quarter of 2009, the total sales volume increased by 16.2%
compared to the first quarter of 2008, mainly due to the 78.8 thousand barrels
of oil equivalent per day (MBOED) growth in exports. The products that
increased its exported volume were natural gas to Venezuela and heavy crude
oils.
Regarding heavy crude oils, Castilla Blend rose from an export volume of 82.8
thousand barrels of oil per day (MBOD) in the first quarter of 2008 to 160.6
MBOD during the first quarter of 2009, offsetting the reduction in Vasconia
oil exports which decreased from 30.1 MBOD in the first quarter of 2008 to 3.9
MBOD in the same quarter of 2009.
Domestic sales grew by 4 MBOED, mainly due to a 10.5 MBOD increase in crude
oil sales to Sociedad Refineria de Cartagena S.A., which helped offset the 2.3
MBOD decline in gasoline sales. Such reduction was due to the beginning of the
distribution in the supply plants of the country's southwestern region of the
10% ethanol mix as of March 1, 2009, the lower consumption of liquid fuels
resulting from the restrictions of the use of vehicles during the execution of
infrastructure works in Bogota (extension of the "Pico y Placa" vehicle
circulation restriction, daily from 6 A.M. to 8 P.M.), as well as the growing
use of natural gas vehicles (ngv) driven by high gasoline prices within the
domestic market.
In spite of the increase in ngv demand, natural gas consumption felt by 4.9
MBOED due to lower natural gas consumption for industry and electricity
generation.
Non-Consolidated Financial Results
Unconsolidated
Income Statement (COP$ Billion) Q1 2009 Q1 2008 %
------------------------------- ------- ------- -
Local Sales 3,153.80 4,546.93 (30.6%)
Export Sales 1,723.06 2,461.25 (30.0%)
Sales of services 235.89 214.25 10.1%
-------------------- ------ ------ ----
Total Sales 5,112.75 7,222.43 (29.2%)
----------- -------- -------- -----
Variable Costs 2,585.55 2,216.80 16.6%
Fixed Costs 1,090.62 926.58 17.7%
-------------- -------- ------ ----
Cost of Sales 3,676.17 3,143.38 16.9%
---------------- -------- -------- ----
Gross profit 1,436.58 4,079.05 (64.8%)
Operating Expenses 415.67 313.30 32.7%
--------------------- ------ ------ ----
Operating Profit 1,020.91 3,765.75 (72.9%)
---------------- -------- -------- -----
Non Operating Profit/(Loss) 1,193.57 (637.04) 287.4%
--------------------------- -------- -------- -----
Income tax 605.22 835.37 (27.6%)
------------- ------ ------ -----
Net Income 1,609.26 2,293.34 (29.8%)
---------- -------- -------- ---
Earnings per share (COP$) $39.76 $56.66 (29.8%)
EBITDA 1,629.23 4,201.22 (61.2%)
EBITDA Margin 32% 58%
The net income for the first quarter of 2009 reached COP$ 1,609.26 billion,
29.8% lower than the COP$ 2,293.34 billion reported in the first quarter of
2008.
The income per share for the first quarter of 2009 was COP$ 39.76, 29.8% lower
compared to COP$ 56.66 in the first quarter of 2008.
During the first quarter of 2009, international prices fell sharply (US$/bl
43.1 average WTI as of March 2009, compared to US$/Bl 97.9 as of March 2008),
which resulted in a 63.9% drop in the price of the crude oil basket, and a
51.5% decline in the product export basket.
Differentials of crude oils and oil products exported by Ecopetrol with
reference to the WTI improved during the first quarter of 2009, when the
average differential for crude oils was US$ 13.93/Bl compared to US$ 14.60/Bl
in the first quarter of 2008.
Exports, however, went from a price equivalent to 78% of the WTI during the
first quarter of 2008 to a price equivalent to 70% of the WTI in the first
quarter of 2009, due to the fact that the percentage share of the heavy crude
oils in Ecopetrol's export basket - which have larger discounts for quality -
grew from 62.8% in the first quarter of 2008 to 87.5% during the first quarter
of 2009.
In the first quarter of 2009, domestic prices for regular gasoline and diesel
were above the international parity prices, due to the Government's decision
to capitalize a price stabilization fund.
In the case of regular gasoline, the regulated price was of an average COP$
3,831/gallon, as compared to an international parity price of COP$
2,596/gallon. The regulated price of diesel was COP$ 3,793/gallon, as compared
to an international parity price of COP$ 3,503/gallon.
The difference between domestic prices and international parity prices are
registered monthly as a payable or receivable account to Ministry of Energy
and Mines for the Price Stabilization Fund (Fondo de Estabilizacion de
Precios). Each quarter the Ministry of Mines and Energy calculates the net
difference for each product and refiner or importer. Depending on the results
of this calculation, the Fund must recognize the subsidy to the agents, or
vice versa.
Therefore, while total volumes sold increased, the impact of the above
mentioned factors resulted in total sales for the first quarter of 2009 -
which reached COP$ 5,112.75 billion - being 29.2% lower than those registered
during the same quarter of 2008.
The cost of sales increased 16.9% during the first quarter of 2009 compared to
the levels registered in the first quarter of 2008, as a result of 16.6% and
17.7% increases in variable costs and fixed costs, respectively.
Variable costs accounted for 70.3% of the cost of sales in the first quarter
of 2009, as compared to 70.5% in the same quarter of 2008.
The increase in variable costs is mainly due to an inventory variation in the
first quarter of 2009. The Company's accounting policy calculates total
inventory using a floating average price, which for crude oil and oil products
decreased by approximately 9.6 US$/bl from the beginning to the end of the
first quarter of 2009.
Therefore, the final crude oil and oil product inventory closed at COP$ 1,356
billion as of March 2009, which, compared to COP$ 1,596 billion as of the end
of December 2008, gave rise to a higher cost of sales of COP$ 240 billion in
the first quarter of 2009. Of this increase, COP$ 199 billion was due to the
change in inventory price, while the remaining COP$ 41 billion was related to
volume reduction.
The effect was the opposite in the first quarter of 2008, as the final
inventory value was COP$ 1,779 billion, while as of December 2007 it was COP$
1,368 billion, which resulted in a $411 billion decline in the cost of sales
during the first quarter of 2008.
Oil product imports also increased, mainly those of low-sulfur diesel to mix
with the national production and meet fuel quality regulations and agreements,
reaching 22 MBOD in the first quarter of 2009, compared to 12 MBOD imported
during the first quarter of 2008.
In turn, amortization and depletion increased by 54.9%, from COP$ 254.73
billion in the first quarter of 2008 to COP$ 394.52 billion during the first
quarter of 2009, as a result of higher investments in exploration and
production projects capitalized in 2008. The greater capitalization is
consistent with the Company's greater investments.
Hydrocarbon purchases fell by 26.8% despite the rise in the volume of crude
oil purchased to Agencia Nacional de Hidrocarburos (ANH), from 87.81 MBOD in
the first quarter of 2008 to 94.12 MBOD during the first quarter of 2009. The
price at which crude oil was purchased from ANH dropped from an average US$
78.27/Bl in the first quarter of 2008 to an average US$ 31.56/Bl in the first
quarter of 2009. The increase in purchases was mainly due to the need to
complete the mix requirements of the Barrancabermeja refinery with lighter
crude oils, as a result of the decline of the proprietary production of such
crude oils.
The ANH invoices hydrocarbon purchases every month using preliminary monthly
average prices and, at the end of each quarter, determines the final amount
with the final prices, which gives rise to adjustments in the financial
results of each quarter. To lower the impact of such adjustments, Ecopetrol
calculates and records a monthly provision to approximate the invoiced
preliminary value to the projected final value.
Fixed costs grew by 17.7% between the first quarter of 2009 and the same
period in 2008, mainly due to higher fees for services hired through
association contracts or directly by Ecopetrol, and to higher maintenance
costs. The company continues renegotiating its service rates.
These increases are a sign of Ecopetrol's higher production activity, and
reflect the effect of the increase in labor costs due to the new salary
policy, as well as the impact of certain non-recurring costs, among which are
the costs of testing and starting-up new compressor stations in the Guajira
fields -which will increase production capacity to meet natural gas export
obligations with Venezuela-.
In line with the foregoing, gross income for the first quarter of 2009 reached
COP$ 1,436.58 billion, 64.8% less as compared to the COP$ 4,079.05 billion
reported for the first quarter of 2008. The gross margin was 28% for the first
quarter of 2009, compared to 56% in the first quarter of 2008.
Operating expenses rose 32.7% in the first quarter of 2009 as compared to the
first quarter of 2008 due to a 28.4% increase in Administrative Expenses
following the amortization of goodwill of acquired companies Propilco,
Petro-tech Peruana and Ocensa, as well as to higher labor costs resulting from
the implementation of the new salary policy and the rising number of
employees, which increased 11.4% between march 2008 and march 2009, according
to the expansion of the company.
As part of operating expenses, Marketing and Projects expenses rose by 34.0%,
mainly due to higher payments for the transportation of crude oil for export
purposes and transportation of natural gas for the Barrancabermeja refinery
and some clients, as well as to the evaluation of business opportunities,
mainly exploration and production outside Colombia.
Non-operating income increased by 287.4% as compared to that of the first
quarter of 2008, mainly due to the impact of the 14.2% devaluation of
Colombian peso during the first quarter of 2009 on the treasury portfolios
(the 72.37% of portfolio is composed by US$ dollar-denominated securities).
In the first quarter of 2009, with an average exchange rate of 2,408 COP$/US$,
the net effect of the exchange rate variation was a gain of COP$ 1.080
billion, compared to a net loss of COP$ 643 billion for the first quarter of
2008, when a 1.911 COP$/US$ average exchange rate was applied. Net financial
income amounted to COP$ 1,325.07 billion, as compared to a negative net
financial result of COP$ 277.10 billion in the first quarter of 2008.
EBITDA for the first quarter of 2009 was COP$ 1,629.23 billion, compared to
COP$ 4,201.22 billion reported in the same period of 2008. The EBITDA margin
was 32%, as compared to 58% during the first quarter of 2008.
Unconsolidated
Balance Sheet (COP$ Billion) Q1 2009 2008 %
---------------------------- ------- ---- -
Current Assets 18,713.72 14,882.03 25.7%
Long Term Assets 34,638.12 33,270.84 4.1%
---------------- --------- --------- ---
Total Assets 53,351.84 48,152.87 10.8%
------------ --------- --------- ----
Current Liabilities 18,016.00 6,464.73 178.7%
Long Term Liabilities 7,604.06 7,067.39 7.6%
--------------------- -------- -------- ---
Total Liabilities 25,620.06 13,532.11 89.3%
----------------- --------- --------- ----
Equity 27,731.78 34,620.76 (19.9%)
------ --------- --------- -----
Total Liabilities and
Shareholders' Equity 53,351.84 48,152.87 10.8%
--------------------- --------- --------- ----
Memorandum accounts 168,298.71 118,649.94
*Under Colombian accounting rules, Ecopetrol is required to maintain
in memorandum accounts record of transactions and financial
information not recognized on the financial statements
As of March 31, 2009, Ecopetrol had assets in an aggregate amount of COP$
53,351.84 billion, as compared to COP$ 48,152.86 billion at the end of 2008,
while liabilities amounted to COP$ 25,620.06 billion, against COP$ 13,532.11
billion at the end of 2008. In turn, stockholders' equity decreased as a
result of the dividend distribution. On March 26, dividends of COP$220 per
share were declared, COP$115 of ordinary dividends and COP$105 of
extraordinary dividends, for a total of COP$ 8,903.95 billion.
The increase in current assets was mainly due to the realization of long-term
investments such as bonds and private securities abroad, aimed at meeting the
Company's investment needs.
Current assets include the accounts receivable from the Ministry of Mines and
Energy as acknowledgement of the price difference in gasoline and diesel in
the amount of COP$ 4,059.34 billion, discriminated into COP$ 3,777.13 billion
for the price difference in 2008, COP $182.45 billion for opportunity cost,
and COP $99.76 billion for the price difference in 2007.
With reference to non-current assets, the following were included for the
first quarter of 2009: the US$ 23 million capitalization of Ecopetrol America
Inc., the US$ 417.8 million equity interest increase in Ocensa S.A., and the
establishment of a US$ 58 million escrow account to support negotiations for
the acquisition of Hocol.
The increase in liabilities is mainly due to the acknowledgement of the
obligation to pay the dividends declared at the General Shareholders' Meeting,
in the amount of COP$ 8,903.95 billion, which must be paid in three
installments during the months of April, August, and December 2009.
In turn, the stockholders' equity is reduced by this value, which is
transferred to liabilities as dividends payable.
The Shareholders' Meeting also approved the establishment of a Legal Reserve
(10%) of COP$ 1,163.07 billion, to reach COP$ 3,591.39 billion, and an
Occasional Reserve for new explorations in the amount of COP$ 1,492.16
billion.
Cash position
Under the Public Accountancy System (Regimen de Contabilidad Publica, RCP)
issued by the General Accountancy Department (Contaduria General de la Nacion)
of Colombia, as of March 31, 2009, the Company had COP$ 11,555.6 billion in
cash, cash equivalents, and investments, including those in portfolios at
maturity for an amount of COP$ 206.76 billion, and had no financial
indebtedness. The net cash from operating activities was COP$ 3,068.17 billion
during the first quarter of 2009, as compared to COP$ 3,330.28 billion in the
first quarter of 2008.
Consolidated Financial Results
The results of the following companies have been included for purposes of
consolidated data for the first quarter of 2009: Ecopetrol S.A., Black Gold Re
Ltda, Ecopetrol Oleo e Gas Do Brasil, Ecopetrol America Inc, Ecopetrol del
Peru S.A., Bioenergy S.A., Andean Chemicals Limited, ECP Global Energy,
Propilco S.A. (as of February 2009), ODL Finance S.A. (as of February 2009),
Ecopetrol Transportation Company (as of February 2009) and Ocensa S.A. (as of
February 2009). For the first quarter of 2008, results were only consolidated
with Ecopetrol S.A. Black Gold Re Ltda, Ecopetrol Oleo e Gas Do Brasil,
Ecopetrol America Inc., and Ecopetrol del Peru S.A.
Consolidated
Income Statement (COP$ Billion) Q1 2009 Q1 2008 %
------------------------------- ------- ------- -
Local Sales 3,187.16 4,546.93 (29.9%)
Export Sales 1,817.08 2,465.59 (26.3%)
Sales of services 235.89 214.25 10.1%
-------------------- ------ ------ ----
Total Sales 5,240.13 7,226.77 (27.5%)
----------- -------- -------- -----
Variable Costs 2,587.35 2,217.44 16.7%
Fixed Costs 1,170.59 926.58 26.3%
-------------- -------- ------ ----
Cost of Sales 3,757.94 3,144.02 19.5%
---------------- -------- -------- ----
Gross profit 1,482.19 4,082.75 (63.7%)
Operating Expenses 419.63 313.34 33.9%
--------------------- ------ ------ ----
Operating Profit 1,062.56 3,769.41 (71.8%)
---------------- -------- -------- -----
Non Operating Profit/(Loss) 1,172.59 (640.71) 283.0%
--------------------------- -------- -------- -----
Income tax 626.66 835.37 (25.0%)
Minority interest (0.05) $0.000 0.0%
-------------------- ----- ------ ---
Net Income 1,608.44 2,293.33 (29.9%)
---------- -------- -------- -----
Earnings per share (COP$) 39.74* 56.66* (29.9%)
EBITDA 1,755.55 4,204.89 (58.2%)
EBITDA Margin 34% 58%
*For illustration purposes
The largest contributions from subsidiary companies to total sales for the
first quarter of 2009 were made by Propilco S.A. -COP$ 200.92 billion- and
Ocensa S.A. -COP$ 117.06 billion, which accounted for 6.1% of the consolidated
revenues.
Gross profit for the first quarter of 2009 reached COP$ 1,482.19 billion,
equivalent to a 28% gross margin.
Net income reached COP$ 1,608.44 billion, 29.9% below net income for the first
quarter of 2008. For illustration purposes, the net income per share was COP$
39.74 during the first quarter of 2009.
EBITDA for the first quarter of 2009 was COP$ 1,755.55 billion. The highest
consolidated EBITDA was mainly contributed by Ocensa S.A. -COP$ 91.49
billion-, Propilco - COP$16.35 billion-, and Black Gold Re -COP$ 4.11
billion-.
Segments results
The segment results are calculated on the basis of transfer prices,
considering international parity prices as reference. In addition, the
methodology assigns fixed discounts to the crude oil that the Sales and
Marketing segment supplies to Barrancabermeja refinery.
Transpor- Sales and
COP$ Billion E&P Refining tation Marketing Corporate TOTAL ECP
1Q09 1Q09 1Q09 1Q09 1Q09 1Q09
-------------- ---- ---- ---- ---- ---- ----
Domestic Sales 1,812.94 2,366.89 488.55 944.90 (2,223.59) 3,389.69
-------------- -------- -------- ------ ------ --------- --------
International
Sales 551.33 395.49 - 776.24 - 1,723.06
------------- ------ ------ - ------ - --------
Total Sales 2,364.27 2,762.38 488.55 1,721.14 (2,223.59) 5,112.75
----------- -------- -------- ------ -------- --------- --------
Net Operating
Revenues 925.32 17.32 164.47 (77.63) (8.57) 1,020.91
--------- ------ ----- ------ ------ ----- --------
Net Income 755.34 188.75 137.12 (51.66) 579.71 1,609.26
---------- ------ ------ ------ ------ ------ --------
The Exploration and Production segment contributed 46.9% of the net income -
COP$ 755.34 billion - supported by an increase in the production of heavy
crude oils for export purposes.
The Refining segment contributed COP$ 188.75 billion to the net income as a
result of a refined product gross margin of US$ 9.4/Bl, which was affected by
the impact of a drop in inventory prices.
The Transport segment achieved a net income of COP$ 137.12 billion, which
includes the effect of revenues from larger transported volumes as compared to
the January-March 2008 period, from 728.6 MBOD to 765.4 MBOD.
The Marketing and Sales segment had a net loss of COP$ 51.66 billion due to
falling prices during the last quarter of 2008. As a result, the discounts
previously agreed for exports delivered during the first quarter of 2009 were
above those recognized by the market on the date the exports were invoiced.
The Marketing and Sales segment also assumes the differential of the discount
on the crude oil delivered to the Barrancabermeja refinery.
In the first quarter of 2009, the Corporate segment contributed COP$579.71
billion to the net income, equivalent to 36% of the total net income,
primarily due to exchange rate gains and the valuation of treasury
investments.
Business segment highlights
Exploration
By March 2009, Ecopetrol had drilled 3 exploratory wells in directly operated
and joint-venture fields, one in the Catatumbo Basin, one in Putumayo
(Quriyana-1, producer), and the other in the Llanos Basin. One well is being
drilled in the Gulf of Mexico, while drilling at another has been suspended
due to damages caused by the latest hurricane season. The commercial
exploratory success index during the first quarter of 2009 reached 33%.
Ecopetrol acquired - directly and through joint ventures - 714.9 kilometers of
seismic, while its partners acquired 285 kilometers, reaching a total of 1,000
kilometers. No seismic has been acquired abroad.
Below is a summary of exploration highlights during the first quarter of 2009:
-- January 21: Ecopetrol and Pacific Rubiales report an oil-producing
well
in Meta Department
Both companies announced that the Quifa-5 well, located within the department
of Meta, produced surface hydrocarbons. The well was drilled by Meta Petroleum
LTD., which operates the Quifa partnership agreement.
-- February 5: Ecopetrol increased its share in offshore blocks in Fuerte
Norte and Fuerte Sur
Ecopetrol S.A. and BHP Billiton Petroleum Corporation, through its Colombian
subsidiary, signed an agreement to increase Ecopetrol's share in the Fuerte
Norte and Fuerte Sur blocks. According to the terms and conditions of the
contract, BHP Billiton assigned Ecopetrol 25% of its participation in both
blocks. As a result, each company has 50% interest in the blocks.
-- March 17: Ecopetrol and Petrobras signed hydrocarbon exploration and
production agreements in Peru
Through its branch in Peru, Ecopetrol signed two agreements with Petrobras
Energia del Peru S.A. to acquire shares in two exploration and production
blocks in Peru. Ecopetrol acquired a share of 50% in the first block (Lot 110)
and of 25% in the second one (Lot 117).
-- March 19: Ecopetrol submitted the best proposals for 26 blocks in the
Gulf of Mexico (US)
Ecopetrol S.A., through its branch Ecopetrol America Inc., submitted the most
competitive proposals for 26 blocks, with a 100% share in 15 of them. The
Company made a joint proposal together with Repsol E&P USA Inc for the
remaining 11 blocks, where its interest ranges from 40% to 60%.
Production
The Company participated in the drilling of 142 development wells during the
first quarter of 2009, 33 by Ecopetrol, and the remaining 109 in joint
ventures. 127 development wells were drilled during the first quarter of 2008,
33 by Ecopetrol, and the remaining 94 with partners.
Gross equivalent natural gas and oil production rose 6.3%, from 431 MBOED in
the first quarter of 2008 (347.4 MBOD of crude oil and 83.6 MBOED of natural
gas) to 457.7 MBOED (375.7 MBOD of crude oil and 82 MBOED of natural gas) in
the first quarter of 2009.
The increase was achieved mainly in the production of heavy crudes: the
Rubiales field increased its Ecopetrol-owned production from 15 MBOD during
the first quarter of 2008 to 29.5 MBOD in the first quarter of 2009. Direct
operation in the Apiay and Castilla area fields rose from 89 MBOD in the first
quarter of 2008 to 103 MBOD in the first quarter of 2009.
Other fields that contributed to production growth during the first quarter of
2009 with respect to the same period in 2008 were La Cira and Casabe (the
former from 7.8 MBOD to 11.3 MBOD, and the latter from 9.4 MBOD to 12 MBOD),
despite the floods and heavy rainfall in the Magdalena Medio area.
In the first quarter of 2009, production was affected by a community protest
in the Putumayo region that bore no relation to Company operations, but which
cut down production in the area from 7.6 MBOD during the first quarter of 2008
to 5.1 MBOD in the first quarter of 2009.
Ecopetrol's international assets (K2 and Petro-tech Peruana) contributed with
an additional production of 6.2 MBOED during this same quarter, which is not
included in the aforementioned production of Ecopetrol.
Lifting costs for the first quarter of 2009 declined to US$ 5.44 /Bl, in
comparison with US$ 5.51/Bl in the first quarter of 2008, resulting from a
combination of higher production activity, higher costs in workover and
related services, offset by a positive impact of exchange rate during the
first quarter of 2009.
Refining
Hydro-treatment project in Barrancabermeja refinery which will reduce the
sulfur content in diesel and gasoline has been 73.1% completed.
Cartagena Master Plan is in the stage of basic engineering, which should be
finished by November 2009. The entire project should be operating by 2013, but
some plants could be operating earlier.
The Barrancabermeja Modernization project, which will allow the refinery to
improve the conversion factor to process heavy oil crudes and deliver world
class products, is on the stage of conceptual engineering, and it is expected
to be operating by the end of 2012.
213,400 daily barrels of crude oil were refined in the Barrancabermeja
refinery during the first quarter of 2009, in comparison with 228,500 daily
barrels refined during the first quarter of 2008, as a result of a scheduled
repair work at unit 150 in March 2009.
Low crude oil prices resulted in improving margins during the first quarter of
2009, and moved forward the shutdown of the refineries for scheduled
maintenance purposes. The 3:2:1 market crack spread increased by an average of
US$ 3.38 /Bl in the first two months of 2009 against the same period in 2008.
In line with this, and as a result of the sale of oil products with better
differentials against the WTI, the gross margin for Ecopetrol's refined
products during the first quarter of 2009 was of US$ 7.97/Bl, as compared to
US$ 3.76/Bl in the first quarter of 2008. In turn, the theoretical refining
gross margin of the Barrancabermeja refinery reached US$ 9.4/Bl in the first
quarter of 2009, against US$ 3.15/Bl in the first quarter of 2008.
Crude oil prices began to recover as of mid-February, reaching a maximum price
quote for the quarter of US$54.34/Bl towards the end of March. The 3:2:1
market crack spread between March 2009 and March 2008 felt by US$ 2.67/Bl.
The cost of refining at the Barrancabermeja refinery for the first quarter of
2009 was US$ 4.41/Bl against US$ 3.69/Bl in the first quarter of 2008. The
variation was due mainly to the combined effect of a lower load and higher
maintenance, personnel, and fuel (natural gas) costs, as offset by the
positive effect of a higher exchange rate in the first quarter of 2009.
Transportation
The Apiay-Porvenir oil pipeline, to carry the rising heavy crude production
from Apiay and Castilla, began an early operation phase in December 2008, and
is expected to be in full operation in the last quarter of 2009.
The Oleoducto de los Llanos Orientales S.A. - ODL, owned by Ecopetrol and
Pacific Rubiales Energy (65% and 35%, respectively), moved forward in the
construction of the Rubiales-Monterrey oil pipeline to carry heavy crude from
the Rubiales field, and is expected to be in operation in the last quarter of
2009.
The cost of transportation for the first quarter of 2009 was of COP$ 7.50 per
barrel-kilometer (US$0.29 per barrel-kilometer) against COP$ 6.30 per
barrel-kilometer (US$0.25 per barrel-kilometer) in the first quarter of 2008.
The variation was mainly due to higher salary and maintenance costs, as well
as higher project capitalization.
Investments
Investments during the first quarter of 2009, including acquisitions, reached
COP$ 3,584 billion. Without considering acquisitions, organic investments
increased to COP$ 1,222 billion, representing a 121% rise as compared to the
organic investments in the same quarter of 2008, which reached COP$ 553
billion. There were no acquisitions during that quarter of 2008.
Of the total investments, including acquisitions, 23.9% were on upstream
activities, mostly on mature fields and heavy crude fields; 7.7% on downstream
activities; and the remaining 68.4% on new business deals and acquisitions,
mainly Petro-tech Peruana (Offshore International Group) and Ocensa S.A.
Strategic developments
E&P acquisitions
Ecopetrol's exploration and production strategy is focused on the production
of one million barrels of oil equivalent per day by 2015. To reach this, the
Company works on three fronts: developing current fields, finding new
reserves, and acquiring national and international reserves.
Within this context, the following transactions took place in the first
quarter of 2009:
Offshore International Group
With the joint acquisition of the Offshore International Group in equal parts
by KNOC and Ecopetrol for US$ 900 million plus US$ 92 million in working
capital, the Company acquired one of the exploration and production companies
with the longest track record in Peru (Petro-tech Peruana) and its companies
that provide maritime services in the northern coast of Peru, renowned for
their experience in shallow water offshore operation, which contributes 12
MBOD, of which 50% corresponds to Ecopetrol (6 MBOD).
2P (proven + probable) total reserves estimated by Ecopetrol are 112 million
equivalent barrels, of which 85 million correspond to 1P reserves. 50% of this
corresponds to Ecopetrol.
Furthermore, Petro-tech Peruana has valuable exploratory resource potential,
with 11 shallow-water blocks in Peru (1 in production and 10 in exploration
stages), which comprised the third largest offshore surface in South America
(9.5 million hectares).
Ecopetrol and KNOC's preliminary estimates are of annual average investments
of US$ 250 million for the next 10 years. Current production level could be
doubled by the end of this year, and future production increases will depend
mainly on the results of the exploratory activity.
Hocol
Hocol´s acquisition (to be finalized in June) aims at strengthening
Ecopetrol's position in Colombia, providing reserves, production, and cash
flow in the short run, as well as strengthening the Company's exploration
portfolio. In addition for an efficient production operation, HOCOL has 13
exploration blocks. The transaction value is US$ 580 million as company value
plus an estimated US$ 168 million for working capital.
The agreement includes an additional payment clause in accordance with the 2P
reserves to be certified at the Huron well, Niscota block, certification that
is still pending. The clause contemplates the payment of an amount that
depends on the average WTI price during the six months prior to the reserve
certification date, and another payment corresponding to a percentage of the
average WTI for the value of the 2P reserve certified, with a maximum value of
US$ 50 million.
Ecopetrol estimates total reserves of 61 million barrels of oil equivalent in
2P reserves (proven + probable).
Downstream acquisitions
The Downstream strategy aims at improving margins through a rise in the
refineries' capacity and conversion level, the expansion of the petrochemical
sector, the higher operating efficiency, as well as the expansion of the
transport infrastructure to support Upstream and Downstream growth.
Cartagena S.A. refinery
On March 3, Ecopetrol announced the reaching of an agreement with Glencore on
the main terms and conditions on which a sales agreement would be signed for
all of Glencore's shares in Refineria de Cartagena S.A. (51%). Through this
operation, Ecopetrol affirms its commitment to the development of the Project
to expand and modernize the Cartagena refinery.
The base negotiation price is US$ 549 million, which may be adjusted as a
result of the due diligence process undertaken by Ecopetrol. The estimated
date for the finalization of the transaction was extended to May 29, 2009.
Currently, Ecopetrol is evaluating the synergies that may be achieved through
the integration of the Barrancabermeja and Cartagena Modernization Master
Plans, as well as the development of its petrochemical plan.
Moreover, the Company expects to optimize the scheduling of the joint
production of both refineries and the use of the transportation systems
between Barrancabermeja and Cartagena.
Ocensa S.A.
On March 17, Ecopetrol finalized the operation for the acquisition of the
shares of Enbridge Inc. of Canada in Ocensa S.A., a strategic asset due to its
position as most important crude output route from the area with the highest
potential to the most important refining center and ports of export. Ecopetrol
increased its share from 35.3% to 60%. The transaction value was US$ 417.8
million.
Presentation of results
On Thursday, May 14, Ecopetrol's senior management will give two online
presentations to discuss the results of the first quarter of 2009:
In Spanish In English
8 AM Bogota (9 AM EDT) 10 AM Bogota (11 AM EDT)
The webcast will be available at www.ecopetrol.com.co. Please access the
website 10 minutes before the start of the call to download the required
software. A copy of the webcast will be made available for one year after the
live event.
About Ecopetrol S.A.
Ecopetrol S.A. (NYSE: EC; BVC: ECOPETROL) is Colombia's largest company as
measured by revenue, profit, assets, and shareholders' equity. Ecopetrol is
also Colombia's only vertically integrated crude oil and natural gas company,
with operations in Colombia, Brazil, Peru, and the U.S. Gulf Coast. Its
subsidiary companies include Colombia's largest petrochemical producer,
Propilco, as well as Black Gold Re Ltda., Ecopetrol Oleo e Gas do Brazil
Ltda., Ecopetrol America Inc., Ecopetrol del Peru S.A., Andean Chemicals
Limited, COMAI, Bioenergy S.A., ODL Finance S.A., ECP Global Energy and
Ecopetrol Transportation Company. Ecopetrol is one of the 40 largest oil
companies in the world, and one of the four largest oil companies in Latin
America. It is mostly owned by the Republic of Colombia, and its stock is
traded on the Bolsa de Valores de Colombia S.A. (BVC) under the ticker
ECOPETROL and on the New York Stock Exchange through its ADR under the ticker
EC. The company divides its operations into five business segments, which
include exploration and production; transport; refining; marketing of crude
oil, natural gas, and refined products; and a corporate center.
For further information on Ecopetrol, visit www.ecopetrol.com.co
Forward looking statements
This release contains forward looking statements relative to business
prospects with reference to operating and financial results and to Ecopetrol's
growth prospects. These are mere projections, and, as such, are based only on
top management expectations with reference to the future of the Company and
its ongoing access to capital to finance the Company's business plan. These
projections basically depend on variations in market conditions, government
regulations, pressure from competition, the performance of the Colombian
economy and of the industrial sector, among other factors, and due to this,
they are subject to changes without prior notice.
ECOPETROL S.A.
Non Audited Income Statement
Unconsolidated
COP$ Million 1Q-09 1Q-08 % 4Q-08
--------- --------- - ---------
Income
Local Sales 3,153,804 4,546,931 -31% 3,775,862
Export Sales 1,723,061 2,461,249 -30% 2,096,748
Sale of Services 235,888 214,254 10% 263,278
------- ------- -- -------
Total Income 5,112,753 7,222,434 -29% 6,135,888
========= ========= === =========
Cost of Sales
Variable Costs
Purchase of Hydrocarbons 1,399,973 1,913,668 -27% 1,676,560
Amortization and Depletion 394,519 254,729 55% 225,088
Imported products 544,050 426,637 28% 192,455
Inventories 240,005 (411,069) 158% 388,872
Other 7,006 32,837 -79% 331,000
Fixed Costs
Depreciation 151,630 168,583 -10% 167,518
Services Contracted with
association 251,614 206,350 22% 415,349
Maintenance 64,946 54,053 20% 272,707
Other 622,428 497,595 25% 997,059
------- ------- -- -------
Total Cost of Sales 3,676,171 3,143,383 17% 4,666,608
========= ========= == =========
Gross Profits 1,436,582 4,079,051 -65% 1,469,280
========= ========= === =========
Operating Expenses
Administration 94,028 73,241 28% 126,321
Selling and Projects 321,644 240,058 34% 628,350
------- ------- -- -------
Operating Income 1,020,910 3,765,752 -73% 714,609
========= ========= === =======
Non Operating Income
(expenses)
Financial Income 3,147,425 1,515,315 108% 4,887,913
Financial Expenses (1,822,388) (1,792,417) 2% (3,273,121)
Non Financial Income 202,683 128,061 58% 671,504
Non Financial Expenses (334,152) (488,000) -32% (297,500)
-------- -------- --- --------
Income before income tax 2,214,478 3,128,711 -29% 2,703,405
========= ========= === =========
Provision for Income Tax 605,217 835,366 -28% 651,103
Minority interest
--------- --------- --- ---------
Net Income 1,609,261 2,293,345 -30% 2,052,302
========= ========= === =========
EBITDA 1,629,228 4,201,217 -61% 1,150,941
EBITDA MARGIN 32% 58% 19%
EARNINGS PER SHARE $39.76 $56.66 -30% $50.71
Notes
In the fourth quarter of 2008 COP$65,924 billion of BOMT´s amortization
were reclassified from Selling expenses to Non financial expenses
Consolidated
COP$ Million 1Q-09 1Q-08 %
--------- --------- -
Income
Local Sales 3,187,155 4,546,931 -30%
Export Sales 1,817,076 2,465,593 -26%
Sale of Services 235,888 214,254 10%
------- ------- --
Total Income 5,240,119 7,226,778 -27%
========= ========= ===
Cost of Sales
Variable Costs
Purchase of Hydrocarbons 1,399,973 1,913,668 -27%
Amortization and Depletion 394,519 254,729 55%
Imported products 544,050 426,637 28%
Inventories 240,005 (411,069) 158%
Other 8,806 33,471 -74%
Fixed Costs
Depreciation 222,580 168,583 32%
Services Contracted with
association 251,614 206,350 22%
Maintenance 64,946 54,053 20%
Other 631,448 497,595 27%
------- ------- --
Total Cost of Sales 3,757,941 3,144,017 20%
========= ========= ==
Gross Profits 1,482,178 4,082,761 -64%
========= ========= ===
Operating Expenses
Administration 100,428 73,282 37%
Selling and Projects 319,199 240,058 33%
------- ------- --
Operating Income 1,062,551 3,769,421 -72%
========= ========= ===
Non Operating Income
(expenses)
Financial Income 3,200,927 1,511,646 112%
Financial Expenses (1,874,833) (1,792,417)
Non Financial Income 203,010 128,061 59%
Non Financial Expenses (356,516) (487,999) -27%
-------- -------- ---
Income before income tax 2,235,139 3,128,711 -29%
========= ========= ===
Provision for Income Tax 626,655 835,366 -25%
Minority interest (50) - 0%
--- - -
Net Income 1,608,434 2,293,345 -30%
========= ========= ===
EBITDA 1,755,551 4,204,886 -58%
EBITDA MARGIN 34% 58%
EARNINGS PER SHARE $39.74* $56.66* -30%
* For illustration purposes
ECOPETROL S.A.
Balance Sheet
Unconsolidated
Year ended
At March 31, December 31,
COP$ Million 2009 2008 2007
---- ---- ----
Assets
Current Assets
Cash and cash equivalents 4,905,199 1,870,246 3,466,184
Investments 4,056,917 3,749,919 5,954,502
Accounts and notes receivable 5,823,977 5,443,419 2,269,645
Other 3,927,628 3,818,446 3,798,794
Total Current Assets 18,713,721 14,882,030 15,489,125
Non Current Assets
Investments 9,803,942 11,300,362 4,125,858
Accounts and notes
receivable 204,772 193,135 202,565
Property, plant and
equipment, net 8,205,783 7,202,263 6,151,951
Natural and environmental
properties, Net 6,908,475 6,831,465 5,128,917
Resources delivered to
administration - - 8,986,861
Other 9,515,147 7,743,614 8,009,939
Total Non Current Assets 34,638,119 33,270,839 32,606,091
---------- ---------- ----------
Total Assets 53,351,840 48,152,869 48,095,216
========== ========== ==========
Liabilities and Equity
Current Liabilities
Financial obligations - - 3,569
Accounts payable and
related parties 12,969,595 1,787,526 1,141,161
Estimated liabilities
and provisions 661,771 668,795 1,435,943
Other 4,384,631 4,008,406 3,478,984
Total Current
Liabilities 18,015,997 6,464,727 6,059,657
Long Term Liabilities
Labor and pension
plan obligations 2,247,638 2,164,787 10,316,041
Estimated liabilities
and provisions 2,832,880 2,503,508 2,732,554
Other 2,523,543 2,399,091 2,179,321
Total Long Term
Liabilities 7,604,061 7,067,386 15,227,916
--------- --------- ----------
Total Liabilities 25,620,058 13,532,113 21,287,573
========== ========== ==========
---------- ---------- ----------
Equity 27,731,782 34,620,756 26,807,643
========== ========== ==========
---------- ---------- ----------
Total Liabilities and
Shareholder's Equity 53,351,840 48,152,869 48,095,216
========== ========== ==========
Memorandum Accounts 168,298,711 118,649,940 64,180,245
Consolidated
Year ended
At March 31, December 31,
COP$ Million 2009 2008
---- ----
Assets
Current Assets
Cash and cash equivalents 5,340,424 2,113,803
Investments 4,308,734 3,749,919
Accounts and notes
receivable 6,345,547 5,877,282
Other 4,261,016 3,963,896
Total Current Assets 20,255,721 15,704,900
Non Current Assets
Investments 5,333,076 8,688,320
Accounts and notes
receivable 161,609 194,912
Property, plant and
equipment, net 10,760,563 8,077,488
Natural and environmental
properties, Net 8,425,236 8,054,049
Resources delivered to
administration - -
Other 9,597,665 7,982,743
Total Non Current Assets 34,278,149 32,997,512
---------- ----------
Total Assets 54,533,870 48,702,412
========== ==========
Liabilities and Equity
Current Liabilities
Financial obligations 170,080 281,026
Accounts payable and
related parties 12,859,069 1,708,647
Estimated liabilities
and provisions 717,446 673,973
Other 4,464,972 4,036,126
Total Current Liabilities 18,211,567 6,699,772
Long Term Liabilities
Labor and pension
plan obligations 2,247,638 2,164,787
Estimated liabilities
and provisions 2,867,197 2,542,791
Other 2,558,403 2,432,394
Total Long Term Liabilities 7,673,238 7,139,972
--------- ---------
Total Liabilities 25,884,805 13,839,744
========== ==========
---------- ----------
Equity 27,730,956 34,619,717
========== ==========
---------- ----------
Total Liabilities and
Shareholder's Equity 54,533,870 48,702,412
========== ==========
Memorandum Accounts 168,549,091 118,874,631
ECOPETROL S.A.
Non Audited Cash Flow Statement
Unconsolidated
COP$ Million 1Q-09 1Q-08 % 4Q-08
--------- --------- - ---------
CASH AT THE BEGINNING
OF PERIOD 1,870,246 3,466,184 5,541,572
========= ========= =========
OPERATING ACTIVITIES
Cash received from clients 4,931,556 6,216,254 -21% 5,531,813
Cash from financial interest 208,144 325,498 -36% 974,305
Cash received from restricted
FAEP fund and others - - 0% -
Other payments - - 0% -
Payment of financial interest (7,859.00) (155) 4970% (232.00)
Cash paid to suppliers and
contractors (465,241) (1,601,161) -71% (2,188,248)
Payment of royalties and
other contributions (798,838) (565,740) 41% (1,120,967)
Payment of income and
other taxes (571,795) (722,590) -21% (356,192)
Payment of salaries, fringe
benefits and social security (108,655) (172,179) -37% (264,233)
Payment of retirement pensions
and transfer to funds (119,142) (149,648) -20% (142,933)
-------- -------- --- --------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,068,170 3,330,279 -8% 2,433,313
========= ========= == =========
INVESTING ACTIVITIES
Net increase in investment 1,238,306 (1,695,073) 173% (1,665,129)
Investment in natural and
environmental properties (1,281,444) (303,168) 323% (2,251,065)
---------- -------- --- ----------
NET CASH USED IN INVESTING
ACTIVITIES (43,138) (1,998,241) -98% (3,916,194)
======= ========== === ==========
FINANCING ACTIVITIES
Dividends paid - - 0% (2,327,170)
Capitalization in Cash and
additional paid-in capital 9,921 319,962 -97% 138,725
Payment of financial obligations - (3,569) 100% -
- ------ --- -
NET CASH USED IN FINANCING
ACTIVITIES 9,921 316,393 -97% (2,188,445)
===== ======= === ==========
--------- --------- -- ----------
CASH VARIATION 3,034,953 1,648,431 84% (3,671,326)
========= ========= == ==========
CASH AT THE END OF PERIOD 4,905,199 5,114,615 -4% 1,870,246
========= ========= == =========
Consolidated
COP$ Million 1Q-09 1Q-08 %
----------- ----------- -
CASH AT THE BEGINNING
OF PERIOD 2,113,803 3,749,899
========= =========
OPERATING ACTIVITIES
Cash received from clients 5,242,483 6,237,454 -16%
Cash from financial interest 208,905 325,638 -36%
Cash received from restricted
FAEP fund and others - - 0%
Other payments - - 0%
Payment of financial interest (7,859.00) (155.00) 4970%
Cash paid to suppliers and
contractors (390,607) (1,662,220) -77%
Payment of royalties and
other contributions (798,838) (565,740) 41%
Payment of income and
other taxes (571,795) (722,590) -21%
Payment of salaries, fringe
benefits and social security (109,973) (172,217) -36%
Payment of retirement pensions
and transfer to funds (119,142) (149,648) -20%
-------- -------- ---
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,365,012 3,290,522 2%
========= ========= =
INVESTING ACTIVITIES
Net increase in investment 1,247,240 (1,621,446) 177%
Investment in natural and
environmental properties (1,332,810) (348,610) 282%
---------- -------- ---
NET CASH USED IN INVESTING
ACTIVITIES (85,570) (1,970,056) -96%
======= ========== ===
FINANCING ACTIVITIES
Dividends paid - - 0%
Capitalization in Cash and
additional paid-in capital 9,921 319,962 -97%
Payment of financial
obligations (62,742) (3,569) 1658%
------- ------ ----
NET CASH USED IN FINANCING
ACTIVITIES (52,821) 316,393 -117%
======= ======= ====
--------- --------- --
CASH VARIATION 3,226,621 1,636,859 97%
========= ========= ==
CASH AT THE END OF PERIOD 5,340,424 5,386,758 -1%
========= ========= ==
SOURCE Ecopetrol S.A.
Alejandro Giraldo, Investor Relations Director, +571-234-5190, or fax,
+571-234-5628, investors@ecopetrol.com.co; or Media relations (Colombia):
Jorge Mauricio Tellez, +571-234-4329, or fax, +571-234-4480,
mauricio.tellez@ecopetrol.com.co, both of Ecopetrol S.A.
