Q3 2023 Ecopetrol SA Earnings Call
[music].
Your operator today.
Welcome to Ecopetrol earnings conference call in which we will discuss the main financial and operational results for the third quarter of 2023.
There will be a question and answer session at the end of the presentation before we begin it is important to mention that the comments in this call by Ecopetrol Senior management include projections of the company's future performance. These projections do not constitute any commitment as to future results.
Nor do they take into account risks or uncertainties that could materialize as a result, ecopetrol assumes no responsibility in the event that future results are different from the projections here in this conference call.
The call will be led by Mr. Ricardo ROA CEO of Ecopetrol.
Lopez C F O Alberto Consuegra C O O and that'd be the reunion vicepresident of low emission solution.
For your attention Mr. Shaw you may begin your conference.
Good morning, everyone and welcome to Ecopetrol.
2023 results presentation before we begin today. Please allow me introduce he will soon of the new members of <unk> management team.
In the vice President of finance and sustainable value. We welcome Milena Lopez, who has been the CFO of semi test.
Asian company of the Ecopetrol group.
Hi, Milena hospital senior groups, including General director of public, creating unnatural presutti at the Ministry of Finance and public traded embryos positions at JP Morgan in the Vice President of low emission solutions, we welcomed a at reunions.
More than 28 years of experience in the energy sector has held positions in value was companies in the energy market such as transport Authority I guess it didn't assume LPGA presented here clean nomadic.
And also then up here.
<unk>.
Government introduced making him a key leader to drive our low emission solutions business line and advance the energy transition in a responsible and profitable manner.
<unk> on the other senior managers for their commitment to bring new unnoticed and experience.
To take this opportunity to thank each of our employees because it is you who make these results possible, let's move on to the next slide please I want to start by highlighting the excellent operating performance achieved during the quarter, we achieved a bearish.
741000 barrels of oil at Kibali and per day, you will have not seen since the last quarter of 2015 and volumes transported on cargoes higher than the same quarter of the previous year is sort of proves our commitment to the company's core business.
Besides in Britain modes, which have achieved significant milestones. So we used to high site in early October we confirmed the presence of natural gas indeed, the waters in the south Caribbean of Colombia in the <unk>, one well in <unk> the importance of the gas province in there.
Region in our exploration portfolio. These achievement joins familiar exploration campaign with 10 wells declared successful supplier in 2023, our accounts receivable from the fuel price stabilization fund continued to decrease 16 <unk> four trillion.
It was offset by dividends to the nation. So far this year, a cash payment of $1 nine trillion pesos on this modest difference between this port authority gas line price on the local price highlighting ecopetrol managed to win and the nation's commitment these causes salt.
In our 34% lowered accumulation than in the same period last year also I want to emphasize the commemoration of our 15 years on the New York stock has changed with Unembarrassed sorbet reaffirming our strategy for 2040 energy transfer.
Bottoms, we highlight the launch of operations of our new trading subsidiary Ecopetrol U S trading in Houston, Texas in October the commercial and operating and strategic six to a strengthening and enhancing relationships with our clients through our local support team to <unk>.
<unk> communication with consumers and suppliers, providing first sales.
Sales to market information. Additionally, on the commercial from we emphasize the performance of our subsidiary Ecopetrol trade in Asia, which has managed to market more than 100 million barrels of crude oil in the Asian market today in this thing and the strategy of diversifying customer.
And countries, reaching new destinations such as my last year, Thailand, and Japan finally up to the end of the quarter. We have made transfers to the nation of more than 45 trillion pesos through taxes royalties and dividends.
Our commitment to the country's development, let's move on the next slide place year to date up to the third quarter recovered three venues of 100, a mainstream basis on it.
<unk> of $48 five trillion pesos in net profit.
Trillium basis, all aligned with our 2023 financial plan and achieving efficiencies of two nine trillion base.
Optimistically tower, the Colombian pumps, although we will face challenges in preparation for the preliminary only new and in response to potential additional requirements for liquid fuels to support the country's electricity generation. It will put us funeral supply chain has prepared.
It's fell by building inventories in coordination with the ministry of mines, and enhancing wholesalers and generators priorities keeping to the available volume up excess diesel from the Cartagena refinery to match the potential needs of thermal power plants. Additionally.
<unk> operations have been planted to ensure this play.
Additional required fuel and supply contracts for these two wholesale distributors for apparel or plant operations have been structured similarly oil contingency operational personalities in the Adas of production transportation refining our marketing guaranteeing the country's normal.
Supply supported by our operational excellence and commitment to the energy transition. Thank you everyone for being part of the journey for your continued support of our Corporately, Let me invite Milena Lopez for the key financial and management peers. Thank you.
It is an honor to address you on my first earnings call as CFO of vehicles. The third group I'm deeply grateful for the opportunity to join the Ecopetrol team and want to take the opportunity to emphasize that our financial successes of the company results from the collective effort, which I look forward to being a part of it.
I am committed to further strengthening our market position and generating value for all our stakeholders.
<unk> group's organic investments amounted to $19 two trillion pesos year to date, the highest quarterly figure in the past seven years, representing 20% year on year growth versus September 2022, and in line with investment guidance for 2023 the.
Carbon business line closed the third quarter with executed investments totaling $13 three trillion pesos, representing approximately 70% of the group's total these resources were mainly allocated to drilling and to upstream completion activities in the reality.
Sure.
Do you see too many and Florida, Aneth field, along with exploration activities in the yellow PAA Monte.
Lower Magdalena Valley International investments for the quarter concentrated on development activities in the Permian Basin and the low emission solutions business line. The enabler of our energy transition investments resources totaling $2 four trillion versus where invested including two trillion.
The natural gas project in assets, primarily located in the Piedmont region and exploratory blocks mainly offshore.
Additionally, investments in the transmission and toll road businesses amounted to $3 five trillion persons and corresponded to the projects executed by Isa in energy transmission pole roads and telecommunications. These investments allowed for advances in the construction of the electric truck.
<unk> mission lines and improvements aimed at increasing the reliability of the existing network as well as in the toll road projects.
Laura.
Rupiah, let out Ganesh.
Andrew kind of live in Chile at the same time EBITDA amounted to approximately 48 trillion pesos up to September 2023, contributing to the second best financial results.
In this period in the company's history. The hydrocarbons line of business continues to be the most significant EBITDA contributor as it progress with a gradual diversification of our business lines. The Ecopetrol group continues to implement its comprehensive strategy for energy efficiency and competitiveness as of <unk>.
September 2023, we have achieved approximately two nine trillion presses inefficiencies through initiatives that have reduced costs and expenses increased revenues and optimized investment.
Please continue to the next slide as of September 2023, the company's consolidated cash balance was $14 one trillion peso with business operations as the primary source of cash generation main cash outflows that stand out where capex disbursements and dividend payments to them.
Minority shareholders.
Additionally, during the period $16 four trillion pesos of the setback accounts receivable has been offset I guess the payment of dividends to the Republic of Colombia as of September 2023. There is a notable decrease in the accumulation of the fuel price stabilization fund when compare.
Our 2022, this primarily due to ongoing increases in gasoline prices throughout the country. During the third quarter eight trillion petals of setback receivables were offset against the payment of dividends payable to the Republic of Colombia, and a one nine trillion peso payments.
Was received in cash, resulting in a fitbit accounts receivable balance of $25 seven trillium vessels at the end of the court.
Furthermore, it is worth noting that thanks to the refinancing efforts undertaken throughout the year the gross debt to EBITDA indicator at the end of the third quarter was one seven times at the same time debt maturities for 2023 had been fully refinanced and.
Continued progress in refinancing the 2020 for a mature it with this we continue to maintain.
Gross debt to EBITDA ratio below two five times long term left I want to highlight that rating agencies have maintained to cope with those rating corroborating the company's solid financial profile excellent operating performance across all segments and business lines and proven access to the global capital.
Please continue to the next slide our commitment to ESG creates value for the company and enables our energy business in the long run with regards to the environment and specifically in terms of our holistic approach to responsible water management, leading up to the third quarter of this year.
We used 114 million cubic meters of water in our operations, which means that the company avoided the capture and our discharge of this water volumes, thus reducing pressure on water resources. This amount equals to 79% of the total water.
We're required to operate the results were achieved thanks to the implementation of best practices in the reuse and recirculation of water at the Barrancabermeja and Cartagena refineries as well as our production fields in.
In line with our ambition to achieve net zero emissions by 2050 as of the third quarter of this year and using 2020 as our benchmark we achieved a cumulative greenhouse gas emissions reduction of $1 33 million tons of steel to equivalent.
In our direct emissions scope, one and two mainly in the upstream and downstream segments. This result was achieved through initiatives focused on reducing flaring and venting improving energy efficiency and through the use of renewable energies.
With regards to our ambition to generate more renewable energy for self consumption and to promote the use of cleaner energies. Our goal is to incorporate 900 megawatts by 2025. Currently we have 208 megawatts in operation we successfully completed the construction of.
Seven megawatts at the Cartagena Solar farm and currently have an additional 94 megawatts under construction regarding social development. We highlight the creation of 4442 non oil jobs and a T ESG related investment.
133 trillion vessels by the end of the third quarter, mainly through investments in items, just mentioned as well as an energy efficiency better fuel quality and investments in biodiversity by the third quarter of the year, 36% of Ecopetrol as investments were allocate.
It to energy transition initiatives.
With 51% of these resources invested in the transmission and toll roads business like 30% invested in natural gas and 19% allocated to P. ESG initiatives.
I now give the floor to Alberto Consuegra, who will lead you through a more significant milestones in the hydrocarbons business right.
Thank you Milena at the end of the third quarter. The 2023 exploration campaign was 60% complete with the drilling of 15 exploratory wells one of them located in the Caribbean offshore to interfere them onto basin and two in northern Colombia, all with gas potential also 10 wells were drilled in the dinosaurs.
Entellus spacing with liquid hydrocarbons potential in 2023, we achieved 10 exploratory successes of which I would like to highlight the following <unk> one well located in the southern Colombian Caribbean in the coal Fi block operated by shell equally check cockpit.
<unk> has a 50% interest the drought costs, one well confirmed the presence of natural gas in a new accumulation in block five where the Kronos, one purple Angel, one and Gorgon two wells are located.
Also for crude oil successes and the Yano, Saudi Entellus vision three operated by Geo Park partner of our subsidiary hopeful those are source all one salto one until it is one and the Humira one well operated by Ecopetrol in partnership with Repsol on the offshore front we.
The evaluation and appraisal plan for the <unk>, one discovery, which is suspected to be executed in 2024. We also expect to start drilling the orca north of one well operated by Ecopetrol in November of this year to date. The 2023 exploratory campaign has had success rate of 45.
Percent, which is above the industry average.
Move on to the next slide please.
During the third quarter of the year, we achieved a production of 741000 barrels of oil equivalent per day, an increase of 20000 barrels of oil equivalent per day compared to the same period of the previous year. These results are driven by the incremental production from Daniel So regardless.
Permian basin as well as the solid performance of secondary recovery fields, such as <unk> and <unk> in particular, I would like to highlight that production via secondary and tertiary recovery technologies contributed around 40% of the Capa <unk> group's production from 23 assets.
Including water injection of tissue mania in Cascadia fields. We are also maintaining our focus on efficiency.
As of September 2023, the upstream segment achieved one eight trillion pesos inefficiencies accounting for 61% of the Ecopetrol group total efficiency. Thanks to the execution of initiatives that have allowed us to reduce drilling completion and dilution costs the lifting cost.
Increased around $2 $72 per barrel versus the third quarter of 2022, mainly explained by higher inflation reflected in the increase in electricity tariffs and contracted services, partially offset by efficiencies totaling 24 cents per barrel <unk>.
Finally on the Carbonization front, the upstream segment reduced 351000 tons of Cotwo equivalent above the expected target for the year contributing to 83% of the group's greenhouse gas emission reduction. These results were achieved thanks to energy efficiency.
You've seen the PNM on the fields and the reduction of methane emissions in fields, such as Dinah could pass yours has been in Provincia among others.
At year end, we expect prolonged in the range of 720 to 731000 barrels of oil equivalent per day.
Let's move on to the next slide please.
In the Permian Basin 33, new wells were drilled during the quarter for a total of 312 cumulative wells since 2019, reaching an average production of 66300 barrels of oil equivalent per day net to our corporate troll before royalties by the end of September.
A record production of 120000 barrels of oil equivalent per day was achieved in our Permian assets of which 74000 barrels of oil equivalent per day or copper total net in line with our <unk> strategy, our assets maintain a low carbon intensity between seven and eight.
Kilograms of sealed to per barrel also progress has been made in the initiative to replace diesel with compressed natural gas in drilling and completion generation operations, achieving an average cumulative substitution of 30% by year end, we expect on average production between 60.
Two to 64000 barrels of oil equivalent per day before royalties and the drilling of more than 110 wells, let's move on to the next slide please.
In the midstream segment transported volumes increased by approximately 52000 barrels per day as compared to the third quarter of the previous year, mainly due to the higher production in the Janos region and additional barrels from third parties that were outside of our pipeline network we highlight.
That in September 2023, a 42 month crude oil evacuation breakout was achieved reaching 850000 barrels per day, showing pre pandemic levels.
And the pipeline transport, we highlight the performance of the puzzles Colorado's gallon system, which reached their pumping rate of 160000 barrels per day, achieving a system transportation record with Reg pumping to about around government had refinery during the third quarter of the year a successful deluge.
<unk> test offerings, the Alice crude oil was performed at the Monterrey station were 88500 barrels of NAFTA were received for dilution and in total 562000 barrels of frugality crude were diluted from approximately 15 degrees to 21 degrees API quad.
Which leverages the midstream strategy of becoming an integrated logistics service provider by offering solutions that reduce transportation costs for shippers finally during the quarter the cost per barrel transported decreased by 43 cents per barrel compared to the same period of the previous year, mainly explained by <unk>.
Your maintenance and contracted service costs as well as higher volumes of crude oil and products transported.
Let's move on to the next slide please.
In the downstream segment during the third quarter scheduled maintenance were executed in line with the annual plan to guarantee the operational availability and reliability of the assets.
As of the end of September 90% of their annual shutdown plan was completed and in October the maintenance of the crude oil unit you all one in the Cartagena refinery was also concluded.
Binaries achieved a consolidated throughput of 410000 barrels per day, and an integrated gross margin of $26 per barrel supported by the continuous operation of the interconnection of the card at the Hana crude plans IP.
<unk> bites acronym in Spanish.
The removal of bottlenecks, while achieving 95, 1% operational availability.
This resulted in an EBITDA of $2 five trillion pesos, mainly explained by the incorporation of efficiencies feedstock optimization higher polypropylene prices as well as favorable gasoline diesel and jet fuel prices during the quarter, we made progress in achieving milestones, including the production.
<unk> of premium gasoline with less than 15 parts per million of sulfur at both refineries.
Paving with recycled plastic asphalt enrolled southern wireline government refinery.
Cynthia a subsidiary of their capital group.
Since the start of the first advanced chemical recycling project in South America, which in its first stage will recover around 500 tonnes of plastic waste that is difficult to recycle and transform into a raw material for new plastic elements with the first delivery of pure <unk>.
Oh from post consumer plastic waste to the Barrancabermeja refinery. This project officially begins in Colombia and opens the door to producing 100% circular polypropylene from post consumer plastic finally during the third quarter the refining cash cost increased by one point.
$24 per barrel compared to the <unk> 2022, primarily due to the rescheduling of activities from previous months higher cost execution increased operational activity and inflation I will now hand over the floor to <unk>, who will comment on the main milestones of the law.
<unk> solution business. Thank.
Thank you Alberto and Ricardo for introducing me is a true honor to address all of join this new role within the company that serves all Colombians I'd like to begin by expressing my gratitude for the trust. The company has placed in me.
Fermi my commitment to continue contributing to a more sustainable growth, while delivering value to our investors.
As of September 2020 than.
Natural gas and LPG production reached 151000 barrels equivalent per day, representing about 23% of the group's production mix without generated EBITDA of $2 five trillion pesos.
Did that margin of 40% reinforcing our commitment to position these natural gas as the energetic transition fuel during the third quarter of 2020, we launched different infomercial processes that contribute to the group strategic objectives. Among them. We highlight the completion of the long term gas.
Commercialization process of the humanized <unk> scanner and compare what fees. In addition to the public offering of LPG quantities for the period between September 2020 in February 2020 volumes that will supply approximately 7%.
All of the domestic market.
On the other hand, the operation of our Scottsdale, and San Fernando Solar Parks. In addition to the contagious small hydroelectric plant has allowed us to reduce close to 19000 tons of cotwo equivalent and capture savings of more than 28 billion peso. So far this year likewise.
We made progress in the construction of the solar parks of cap Diana <unk>, Pope as a culture and basketball now of our subsidiary Senate. In addition to the part of the subsidiary <unk> Crusher. This as part of our efforts to incorporate non conventional energy sources to our NFC matrix contribution.
Beauty tools, all of 900 megawatts operating and construction by 2025. Additionally, the energy efficiency program has achieved the optimization of three four megawatts and more than two five donaldson's gigabit tiers.
In an initial reduction of 198000 tons of steel to equivalent and an energy cost efficiency of about 38 billion pesos. The equivalent of an electric energy optimization of five 9% accumulated from 2018 to date allows us to continue advising towers.
Six 3% by the close of 2023 plus times. This front, we highlight ongoing initiatives for the inclusion of technological tools throughout the operation such as artificial intelligence applied to energy planning and optimization of power resources.
Barton dimension that Ecopetrol in response to the El Nino event has prepared to meet the increased needs of these are required for 10 months for web generation at the same time, we have been managing that.
Renewables self generation projects that contribute to reduce their energy requirements of National Electric system. Finally, we highlight two important initiatives to improve the welfare of their commute the social gas program, reaching 2023 has connected more than 14000 families to natural gas service in rollout.
Areas of our heater and expansion of the meter LNG agreement in Buenaventura until November this year, either support and reliability to the gas supply for 37000 families. In this area of the cons I now pass the floor to our pressures to cut over.
Thank you Debbie.
The transmission and drove business generated positive operational and financial results in the third quarter of the year. These results led us in the <unk> business in Brazil, and Colombia, and Chile. This was reflected in 10% contribution to the group's revenue.
10% to EBITDA, 5% to net profit over the nine most of the year. So one of the most relevant milestone for the quarter include herbs.
We're through Isa Sipp therapy of lottery winner in Brazil, three expirations with a representing sell capex of approximately $2 nine trillion pesos.
<unk> will be embarrassed to gradually until the initio people cooperations can 22009 second in Peru, there were three projects through the consortium transient photo and the commissioning of the connections of the novelty market solar project and declination today, but a couple of ton del Sol collector.
I believe the 2020 megawatts to the Colombian electrical system Isa continues to advance in the construction of 39 energy transmission projects in the countries, where it suppresses representing <unk> 7190 kilometers of additional.
Secret to the network with where an operator, we generate approximately $372 million in revenue.
Progress continues in the execution of their route by the lower project in the works in the concession area and rutile out of Andrew Taylor reuse.
Regenerate new income and exchange students of the concern is assumed to Adams.
Move on the next slide for the closing message.
To close by recognizing the commitment of Ecopetrol employees to operational excellence on the currency to more sustainable future.
Victor in these positive results I want to remind all of our shareholders invest total stakeholders of our commitment to the investment plan outlined in the 2040 is strategy. This leads us to have a solid hydrocarbons business that supports the MLP.
The transition.
With a stronger team on a clear vision for 'twenty 'twenty four we are prepared to overcome the challenge.
<unk> continues to be a driving force for Colombia is development.
<unk> two economic growth on the well being of communities. Thank you everyone for being part of this journey.
I open the Q&A session.
[music].
Okay.
Thank you very much we will start the session for Q&A.
And today's to RP is online with a question you'd start to RP go ahead with your question.
Okay.
Mr. <unk>. Please go ahead with your question.
Okay.
Okay.
Okay.
Wow.
Andres Who's able to ask his question.
We will have a question from Goldman Sachs. When do you expect that accumulation for.
Yeah.
CPC yet.
So we're being zero.
Yes.
Good morning.
We will go into details with a report from Milena Lopez.
And in this period, we can tell you that we have advanced very significantly in closing this gap with the one we started this year in January with 33.4 billion passes.
Yeah.
Studies.
With the stabilization.
Oil caps with kidney said that beyond 16, Dalian with help from the nation in money from 1.9 billions in the re.
Resources assigned to the operation in the gut.
He never if in Erie in the production of liquid.
<unk>.
Were to Miss Milena Lopez, our CFO.
Thank you Tim and thank you to allow for your question, Yes, Hi, keep you update of contacts with the advantage of the high Tech and how we see it.
Head, we have to underline that.
<unk> continues.
Diminishment of the third quarter, thanks to the increase.
The oil prices by the government National government.
We went from a 2022 with a balance of 37 billion pesos with Alphatec data from this year to some Chinese III, we expect to close wave 2020 1 billion pesos.
So there is a continuous improvement that we see quarter from quarter end.
He says.
We have had several increases in.
Oil prices first one was in November six contract prices, we expect two more worrying criticism thesis going into spring oil to market prices.
Is where it is going to be from a D.
These increases in our IOL prices this would be closed.
Next year, the National government has given the indication that progressively there will be the increase in T cells. So that by the end of the year, we will have a diesel price. According to market. These stellar set after December 2024, we will have no maura accumulations of attack.
This is the important.
A key problem Hell.
As our balances have taken have been paid to the 12 months. Following the following the accumulation D has been the policy of agreement with the Covenant that I understand to continue like this we have 8 billion pesos to be paid from here to the end of the year that we expect to receive the compulsion.
And this is going to be dividends already decrease.
Around $5 million.
And there is another part which is going to be two.
Really in places that will be paid.
Net cash displays going to bring us to the end of the year.
22, 21 billion pesos to the end of the year.
Okay. Thank you very much next question comes from Andres Duarte from coffee Columbian how Mr. <unk> you can ask your question.
Yeah.
Yeah.
Mr. Duarte, we're listening to you you can ask your question.
Hello.
Good morning, you can ask your question.
Yeah.
Yes.
Okay.
At Westwood.
I'm, having some trouble with the communication.
So.
I will.
Thank you my questions and thank you for taking my.
Questions into consideration.
I wish great luck to everyone meeting them.
The rest of the year.
The investment of the infrastructure for offshore cash, which we expect.
Will we expect to get these objectives are also the estimates you gave does the ones to the end of the year.
Sure.
I'm afraid this sound it is not clear.
Okay.
Okay I have several questions that are now if may be you want to answer the first one that has to do with the concessions for the offshore production.
And if you are going to do an investment in transportation infrastructure. The other one is the estimate of production for 2024, especially which is going to be the evolution of our production costs are associated and the last one would be.
If you can remind me the detail for investments related to the hydrogen production specifically if you already have some investments you have considered for the transportation of the liquid and also for our increasing the triplet itself.
Renewable.
Energy I do apologize for the.
Connection problems have been having thank you very much.
Thank you Andre for your questions.
First of all we have to tell you that the investments for the development of maturity of the project resources found in the region of the offshore Caribbean.
Began this year in the assignment of resources either.
Perforation well one at Orca, one that will be maintained in 2024 and will continue with the campaigns for them.
Perforation.
And call on all in D E Commerce owner exploratory well, Alberta will give you details for these expectations for production and also the objective for production from next year.
We will expect to keep very important our resources to maintain.
These at the closing of 2023. This is what we want to do we want to maintain these production regimes that we will get to in 2023 and add the third question will be given to Debbie three annual who's going to answer too.
A question for the hydrogen production and transportation infrastructure for the incorporation also from liquids and the install capabilities.
That we have stopped.
Updated for the strategy 2048.
New York.
Thank you good asset stock market.
For your question Andrei SaaS for the next steps in the off shore complementing with Ricardo said I would say this is Gary Yu in RF Tam we expect.
In Kenya, defining and confirming the potential that we have any chihuahua.
This means to have appraisal wells.
That will all.
Starting 2024 25.
We also can share that we had good news from the mines Ministry and the government on the expedition of normality of abandonment. So that the wells that we will do as appraisal will be able to be used as development wells.
Well.
We will also proceed with the environmental licensing this is key and the third point would be if we can use the existing infrastructure into Cuba again to bring the gas from Ochoa from the prospect of this area of our caddy, They know RT and <unk>.
Todd English showed with Gs Kronos cloud Chris Corrigan.
Everything is defined within the blow of calls five floor can we have a perspective for gas at long term, we have to work on the development scheme.
And we would be using it as the system of evacuation of these gas weighted which would have.
A dedicated to the interior of the country. This would be for the offshore as the <unk>.
Area.
And for these last quarter, we're looking at our production over a 730 barrels.
The challenges we will face will be for example.
Ooh phenomena that Nino that is going to be very aggressive and clothes for Dolby Allison Kirsty Yeah. We have to look into this we haven't seen it yet.
But I think in October we have had a higher production than expected.
And for costs.
I think we are looking at any inflationary impact.
And this is gonna take is that the lifting cost for the last quarter is going to be very close to what we are.
I had a in this third quarter. This year close to 11 four night at these places seen a place between 11 to $12 a barrel.
And for the end of 2023 for the perspective 2024 will be part of that conversation. We will have once we define the business plan.
For the third question, we give the floor to WWE on you Vice President the low emission sites president considering that the last <unk> updated the.
2048, Gen that we announced in New York, a few months before we announced these objectives for 2030.
To incorporate about 900 megabytes newly generated for nonconventional renewable energy. These subjective we have established for 2025 and the expectation for 2030 is to be able to.
I have.
1900 Mega Watts from these non Briton arena probable energies in la guajira them for more details I give the word to Mr. <unk>. Thank you President Mr. President.
As you mentioned, we have anticipated the delivery of three novels energy that has to do with the hydrogen projects and shocking about them.
As we mentioned in the question.
We are maturing several initiatives as Wilson Alastair in the period between 2023 and 2030, we have understood. This at this stage for learning and is scaling to go after 2030 in a stage of mature.
Every day in it when entering hydrogen to be the leader in these energetic factor in the country.
<unk>.
In particular, we are maturing and several initiatives we have two projects one in each refinery for green hydrogen hydrogen. These projects are on their study they are being matured and we expect to get for them to give the most.
<unk> value possible in these circumstances of course this is a new technology that has challenges in the supply chain and in the implementation and construction of the projects. Additionally, Andina pilot scale. These will start operating at the end of the year in <unk>.
Yes.
Later next year.
In character Hain Amber roads dams.
We sure are going to bring us to these new stage of tests and possibilities that I just mentioned thank you.
The Caddo Santa Wang from Columbia has a question for you Mr. Sandler. Please go ahead.
Okay.
Morning, everyone.
Thank you very much breakout at Amelia and Alberto David for these stays Sir I have two questions. First one is very simple is say if you can give us a little more color on the declaration of Minister Bonnie Yeah. When he mentioned the entrance of a competitor only in solar energy solar and Alec.
Energy.
Z theyre getting bigger programs for you for self consumption or easy to stay in.
Generation for commercialization of these type of energy and a secondary issue would be about the production that I just heard Alberto about some restrictions.
The fan Nino phenomena that could having some fields for 2024 I would like to know if we could have some guidelines about production and the production of 740, which is very positive for three key but what can we expect to.
2024, thank you very much.
Thank you very much have regard for your questions.
Okay.
The first question is in the defense as Debbie said and as I presented the note last question related to the incorporation of the role of Ecopetrol in the production of clean energies from Sun.
Sun or wind and J O Terramax D. C is already part of the strategy that we announced to the market a few months ago. There are no plan says so she ate it to this that could be new or that could have more expectations to those that have been already placing nonconventional.
Our energy is always in the line of allowing the capacity of Ecopetrol to coverage on demand and also in the line of being able to develop.
These are potential of our resources of nature.
In the E R Lake and that some projects in guajira.
As a important resource cost efficient resource in D expectations of Ecopetrol to be had.
Large producer of hydrogen in low emissions in each zone roofing areas or south consumption and what we determined in the in the roadmap for 2024 and D World context for expert Dc's Fargo, what rehab study.
<unk> already.
And the expectation of Capex of each project to arch specific we could for example have a participation with some other I E. In these generation projects. We could also develop them my hour sounds spread we also have the possibility to have contracts for.
Long term energy that wouldn't.
Ask a capex additional capex.
And this is something we're going to be looking into and deciding the investments associated to these important issue of the economy. The new roadmap of the energetic transition that we have established for the second question now I'll give the floor to Alberto so that he can get.
Details on the repercussions that could have fun eventual critical condition of the El Nino phenomenon that has been evaluated.
We have heard there is gonna be a moderate situation that could have the worst.
Pea ridge for the effects of hydrological and energetic.
Products by the end of next year.
Thank you Ricardo yes, this impact in the year of <unk>.
Damon.
We would only see them at the beginning of next year and demand does that go from January to March for the guidance for the next year, we have to be very prudent and.
Careful.
We have investment than a variability for.
Resources for Fab tech to be able to establish which is going to be these range of production, but vice president as already told us that we have to try to maintain at least the same production level of 2023.
So for now this is the information that we should.
Our work with and we expect to have these conversations that level of our board of directors and to have something that we could communicate to the market.
Thank you very much.
Thank you next question comes from Alejandro and rallying Jpmorgan Ms. Sandra you can ask you a question Hello. Thank you for taking my questions I have two questions first.
I would like to ask if you could explain a bit better the work capital that impacted the flow the cash flow this year and the first quarter yes.
Please select the interpretation mode. So that we can here.
Can you hear me, yes, thank you very much.
So I have two questions.
First one is sabra working capital for the quarter that impacted impacted cash flow. If you could give us more details on what happened and the second one is for the refinancing exercise is that you are carrying out this year and for next year and that level of Ecopetrol.
You'll have a syndicated loan and have you been able to extend these are known and you have a short term debt I would like to understand why that was refinanced why it has to be done scale and reach out the exercise that you are performing in this sense. Thank you very much.
Thank you Alejandro for these questions.
About these I give the floor to Milena Lopez our CFO.
Thank you Ricardo.
Thank you Alejandro.
First thing.
The working capital when we have a change.
We ship out the 8.9 billion pesos sandwich.
The first component is the net of the more feedback movements, which is around two point they fill it.
And.
Largest want to ease their rent 4.4 point 5 billion, which affected working capital and a third is this change in stock we have five about 5 million barrels that affect these figure as well D C's where the.
Back to on the work capital.
And for the second.
Question the maturities for 2023 have been refinanced and we manage spend this has been a finished we have to the maturities for 2000 Twenty's work that we are working on we have about.
Why a jinan tread building Tyler this is a club deal.
No.
<unk> $400 million.
And the difference of that 600.
It is important to note that in January 2025, we have a bonus of <unk> 15, a $100 million all of these we are refinancing it during next year and it's important to mention that this credit is going to you we'd be refinanced there, especially with the same banks we have been.
About this and we have presented all the documents from the Ministry of Finance and D. C is important to underline is key.
Also.
And for the other question on the adjustment for oil prices I think we already answered. This question. Thank you very much. Thank you.
Okay.
Thank you very much we do not have more questions live questions. So we will lay a read there from UBS, we have for them for the expectations of adjustment in the prices for <unk>.
Oil at in future, especially pizza since it has a gap with international prices and the larger participation in the Tribeca.
And also a question as the year ends the attention is on the expectation of dividends do we have to expect something closer to the lower or higher branches of the 40% to 60% with the tax our income tax are higher.
But the government using it sparked to compensate the E S P.
ISP.
Yes.
Thank you Daniel for the question on T expectation for adjustments on the oil prices seen what.
We have on this year and next year.
Manhattan, Milan already presented to what we talked.
<unk> talked about with the Ministry of Finance and these shows that in these deliberations with these platform that we have from the.
Ah.
Oil prices on diesel prices are going to continue advancing even if we do not have a punctual figure I don't know what these increased sales going to be the evaluations of the finance Ministry tell us that there is going to be a deliberation of fees.
As a T cell.
We are going to continue with the restriction to apply and get to an equal price and the price for oil for the final consumer we have indicated which are the numbers with which we would negotiate.
And that Ecopetrol would have fat from these policy articulated by the National government.
For the liberation of subsidy oil prices and with the oil and diesel for data stabilization of prices.
With the expectation of dividends I gave the word floor to mealynose. So that she can tell us what it's being observed in the ministry of finance in the medium term.
Figures and the declaration of a possible approval and.
Andrew.
Distribution of dividends next year. Thank you for your question I'm going to divide the answering to the first component, giving clarity on what is left for this year and then the expectations for next year in order to finish the fight back payments from here to December.
31st there is the possibility of an extraordinary dividend to pay these 0.9 may Lillian me, saying for this year, we are going to receive this amount in net adds.
And so there will be not cerner dividends. This year, so the policy of dividends.
We have a policy for a payout of between 40 and 60% and in extraordinary circumstances.
We have given higher pay ups wait.
We do not have a range to give you for next year in what is payment could be these will be determined in marching the general shareholders' assembly and as long as.
Soon as we May have some information, where we will be giving it to you.
Thank you.
Alejandro from HL is from Nash Security Act.
<unk>.
Can we expect cash flow for next quarter, and which level that is sustainable for a copay card.
Yes.
Thank you Alejandro for the question one part of it was already answered by Molina, but I gave her the floors. So that she can ask answer the question with the expectation of cash flow for the next quarters.
I think that when we look at the free cash flow for Ecopetrol. The main subject to ease that moves. These cash flows that fit that got counts, which is a.
Payable and are accountable.
The person receiving the account.
And inevitably does is the highest limit that we have and the cash flow.
I can repeat what I said at last the question is does this balance has been reducing itself quarter as diminishing quarter after quarter. So if we look at the accumulation figure of detectives here. This was about 7.9 billion peso.
If we look at the figure in the third.
Quarter D. C area. These was about falling 6.7 billion four seven to be exact and when we look at the figures from here to the end of the year is the figures going to be lower because we continued with the increasing gas prices.
So the most important it was that we're going to see during next year's coming gonna be DS one and we're going to have the increase in diesel prices and this is going to take is to eliminate from here to the end of next year to generate our third the elimination of these cash flows in that.
In Ecopetrol and I've said this many times these policy of dividends from 40 to 60 is what we consider the level of dividends for long term debt. The company should have in order to have enough cash to have our plan of investments and cash flow.
As there are exceptional events, we have paid a higher dividend and these has happened in last year in order to cross it will flip back and it's important to underline that this has been possible because we have had.
Could.
Prices that are higher so they go hand in hand, and he's not something different to what our peers have done in other.
Oil companies, which is a re buying stocks and this is something we cannot do so disorder of ideas. This is what I think that.
It could be the medium term policy in respect to dividend.
Thank you.
Leonardo Tomorrow can be from bank of America asked which Artie expectations of production for the fourth quarter and from where should come most of the <unk> of these increase and also the investments of capping capital N B's a quarter have been very high diesel buses.
Higher investment of the company in the last seven years most of it was in absolute train right. So does it mean that we're going to see a higher increase of the production in the fourth quarter.
Yes, Thank you Leonardo.
Yes.
I guess.
One of the questions is usually they are production expectations.
For what is left in this year and the expectations are for growth for next year. We have already mentioned that we expect to close the year.
We they production close to 730 barrels per day. These coli as said at.
At the beginning was in the 735 barrels per day, and we also reported eating these at third quarter and very importantly investments in the upstream and also in D energies for low emission energy and for me.
More detail on to both questions I give the floor to Alberto Consuegra.
Thank you to answer your question.
I would say that the highest.
Would the investment would be on that.
Ruby Allison Daniel Shaw and these have the greatest investment and also the best expectation for production of course, the investments for capital this quarter I've been very eye for capital execution.
Which means that the number of wells that we had component template. It in the plan at a number of interventions in wells or treatment of wells.
Have been executed in line.
And we have 732 wells already drilled in the end by the end of the year. So in fact, this investment is being giving the off stream.
And as the President said, we are waiting to see any factor in the growing production with that is going to take us.
Above 730 barrels by the end of the year.
Thank you very much Argos team Gonna soda from Cambridge is asking for it.
Charlie alternatives that you analyze to refinance the credit of 1.6.
Yeah.
Thousands of millions.
Consolidated E D F.
J D.
That that went to 4000 million dollars. Thank you Abu <unk> for these.
Question.
Milena please take the floor.
I think you are going to stay in a we have fair.
Kras syndicated credit of $200 million and the other amortization for our credit is a short term credits. That's indicated we're going to refinance, especially mainly with the same banks of the syndicated so D. C has been agreed and aging process.
The maturities of these 400 million Willa.
They do it with local bank and these are short term credit, especially with local bank that are being getting mature when we look at it that Atlas holiday they play.
<unk>.
We have to surrender rate or that there we have loans in the east that when we talk about the debt that we have to pay next year in ecopetrol.
I'm talking about these 1800 million dollars. The rest is just credits that we have in D. C.
<unk> is a is.
He say is of course, the great challenge and we have things in Peru, Chile, and Brazil that are being consolidated.
Thank you very much Santiago Ludella from K Coty is asking from a roll of Ecopetrol in generating energy in Colombia, which would be the implications in the investment.
Plan of the company.
Okay.
Yeah.
Thank you Santiago.
As we have said in other answers to similar questions a.
Cope it.
Needs, a roadmap and expansion India Corporation of.
Renewable energy production is to lever each one production in the demand of these.
Electric energy in order to Caveri, each one that needs for energy.
So we have some important resources for being corporation of these non conventional.
Energy resources.
1600 Mega Watts in projects that we are evaluating where the scheme of incorporation of energy has not been decided yet.
And it has a lot to do with possibilities have starting with being partner with a third party to develop a project or be the full owner of D active ups generation or incorporating these energies through the long term contracts of P. P.
Is that.
It also gave us an opportunity that would require low investment.
Until a financing that could be from the image enough to scheme of the project we are going to have the necessity.
Of making important investments or doing it with third parties. Thank you.
Lily Yang from H, a beauty asks could you. Please mention the plan investment plan for 2024 and 'twenty five.
That's right.
Thank you.
Neil Thanks for the question.
Yes, we have an expectation Shan expectation of construction for the roadmap for 2024, 25, and 26 is that treats tree triangle.
And we are considering being the board of directors at for the goals of invest money 24 weekend had tells that we expect to have the levels of production that we are going to have these year.
And we are based in the San based on these levels, we are determining the investment.
Possibilities to be presented to the board of director for the desk, our expenses and investments for next year.
Millet now you'll have to floor formal details. Thank you Ricardo Hi, Lady.
The only thing I could add to what Ricardo said, because we are building the plan at this moment.
And maybe at the beginning of December we will.
Be able to tell you how we see the investments in our production goals et cetera, but we have to see that we have.
And investment.
Plan that is all in line with the production, which is six to seven.
Billion and I think we will be within these figures and we'll give you gave you details in December thank you very much.
Got that in Rfps from buried in that our stakeholders.
Taking to account the strategic plan of our copper Ecopetrol that we just now and.
<unk> focused on gas is there the possibility to import gas from Venezuela.
And also if the government have even if the government has increased.
The price of oil.
Well to close the fact that the cap.
How much corresponds to the oil and how much to diesel and when would increase that begin.
In the Fitbit.
Thank you Kathleen.
Yeah.
Yes.
First of all.
We are evaluating in the medium and the high.
Level fees balance off offer of natural gas in the country, where we are studying alternatives self supply.
Or a source in the different.
Sources that Columbia has.
Imported natural gas says, especially to balance these relation offer demand that we have very tight with the presence of phenomena, such as El Nino, where dairies larger demand for it.
Terrific.
Production in the industry and commerce and residential consumption. So facing these expectations our scenarios allow us to see that there would be some gas deficits for next year from a 31 their G T W. A way.
And for 2026 six to 250.
G B T per day.
And we are considering different alternatives in order to leverage these said deficit of the country. A in these medium ranges scenarios says so I give the floor to Debbie demand.
And for the second question, we have already explained in detail, which are the expectations that ecopetrol has in closing these gap that began this year with that back our resources that has significantly been reduced.
The policies of the government.
With liberating these are price and getting to these parity price and we would be by the middle of next year differed trimester, where would be facing disparity costs that will be translated to the users first a part of.
Good question.
Mr. Leandro and then for the second part of the question Milena.
I'll tell you asked them for their participation of gas and diesel in closing these are feedback gap that would increase the demand of these.
The products in the country, Yes. My surprise, we are working very hard in guaranteeing D. Energetic security for these Oh L.
Covering the spec.
Expected demand without problem, we're looking at different options, and we will see which portfolio will allow the best efficiency in answering due to these demand has the precedent setting it is an option and the country in the third quarter of 2023.
According to about two and eight three Jimmy D V a birthday, which could cover a percentage of the national consumption. The important thing Columbia has allow us to guarantee the supply of gas in the country and we have to say that there is a source of energy.
That has to be contemplated among other because there is not only one possibility for important and in the group we have analyzed several additional to the one we have.
Today, and always looking for the best efficiency and rebounding responding to these demand and guaranteeing the supply in the short medium and large and long term.
Okay.
As for your question for the differentiation of the fed backing allele and a diesel.
The accumulated deficit corresponds to oil to gas surpass rural.
In monetary terms, the third quarter as two 7 billion pesos.
We're a to an eight.
These 700 were from gas sand the reservoir DSO. So next year, we're going to have to parity with gas.
And Oh.
So the next the deficit would be due to diesel.
Thank you very much Danielle.
B D C.
Which would be the goal.
Oil prices are to have for the offshore infrastructure at price discovered investment covered.
Thank you for the question on these of course, all the exercise says.
That could take us to a price oh offshore gas.
For it to be for the expectation to be viable. All these analyses are being evaluated for.
There are important reserve of volumes.
And on the quantity.
In order to develop the necessary infrastructure for.
<unk> export and all of these elements. So once we do all the analysis will give us a very clear sign we have not design clear figures on this.
And are we could give us a price a rough reference price.
The prices that are being are in the market and that that has been compromised.
And this would be a reference but it is not the one that is giving us the reference value for gas that could make viable leads our expert nation.
Or it's a commercialization into the system.
Thank you.
Diego Sanchez from them.
Alleanza on Lotus.
Which has allowed us for atrophy got and the potential indemnity.
Easy has it been considered to certain niche stocks.
And 50% in order to country viewed that the market doesn't go beyond our borders.
She vessels.
I think this would be one of the alternatives, but we do not having the agenda or the ministration of Ecopetrol or the board of directors a proposal of this type.
We there are elements that we are going to studying this strategy that the country could consider but for now Morgan thinking anr placement itself additional stops in the market. We are first thinking about the reinforcement of the traditional lie.
Since in generating greater.
Our wealth.
And of course aid would be one of the actions that we will evaluate to together with the board of directors, but today they.
This subject is not N D agent Africa PEPFAR.
Okay.
With a low dose.
Yes, and for the low dose and devaluation with a C. B I, we have worked in the board of directors.
With the character hangover scenery.
In.
Getting older France, ready, where we can have.
Follow these are resources, we expect that we expected last month by the end of last month, so the Oh.
Sentencing, the judiciary and these refinery in the court of New York. It has taken some time so that CPI in the markets do not have many M.
Many active so we could continue with the.
See the.
We're talking about $1 billion.
Yeah.
And these resources we are following.
We're talking about the United Kingdom.
Hold on.
And we have important resources and they entered the collaboration of CPI of these markets to do a re negotiation or.
No review of Yeah.
Yes.
We have had two.
Hired the best attorneys and followed the best.
Yeah.
And the best process for this panel G. N D. C is going to be in the New York.
Port and also the judiciary, yes.
Levels that could accept these recall negotiation of C. B I would do from the passive.
Yes.
And this is why we are continuing to see.
We're seeing this study and the decision on the future of the company never sweetener.
Okay.
Thank you Jenny take as it is from action sex Genesee one notice.
Can we expect an increase seven level of depth facing 2024.
Okay.
Nope.
Milena here.
As for the debt for next year.
We have a series of credits that we will be refinancing. So the question is from the incremental debt.
There will be no substantially increasing the debt next year, depending on the level of payment of dividends and the speed of the increments of diesel of the increase of diesel we could have a marginal debt to.
I have four hour Additionally investment bad.
Figures very low compared to these years, there could be something marginal from ecopetrol, but nothing really significant.
Yeah.
We do not have more questions that it small manta will give the floor to Mr. Precedent for a final closing.
Yeah.
Words, I want to reiterate our.
And thank all the team of Ecopetrol and to you all thank you for your participation in these third at resolves coal Forder third quarter, a great end of day for all of you. Thank you very much.
So we finish our conference.
[music].
Yeah.