Q2 2024 Ecopetrol SA Earnings Call

August 14, 2024

First half of 2023. In addition to external effects, net profit was affected by the increase in the estimated tax surcharge.

which rose from 10% to 15% due to the rise in the price of oil in dollars per barrel.

Therefore, our strategy continues to focus on excellent operational performance with an emphasis on efficiencies and cost optimization to face the market factors to which we are exposed.

This semester we achieved efficiencies of 1.9 trillion pesos.

Materializing our Optimization and Competitiveness Strategy

with efforts across the entire production and commercialization chain. In June , we paid the second and final dividend installment to our minority shareholders, fulfilling our pillar of competitive returns for our investors.

Finally, the income receivable from the Fuel Price Stabilization Fund.

Speaker Change: PEPEC closed with a balance 61% lower than the same period last year. The balance in June 2023 was 30.9 trillion pesos versus the closing of June 2024 with 12.1 trillion pesos.

Speaker Change: It is also worth noting the lower monthly accrual, which in the January to June 2023 period was 12.9 trillion pesos.

Speaker Change: Compared to 4.5 trillion pesos in the first half of 2024. This allows us relief in cash flow and better conditions for investment execution. Let's move on the next slide now.

Speaker Change: I would like to highlight significant progress we have made in TSG in the field of science, technology and innovation.

Speaker Change: The loans of the Colombian Institute of Petroleum and Transition Energy stand out.

Speaker Change: with a project investment of 816 billion pesos until 2030. This institute positions Ecopetrol as the main actor of Colombia's energy future.

Speaker Change: The materialization of this initiative is carried out through high-impact projects such as biomass energy, hydrogen and CO2 capture, circular economy and renewable diesel production.

Speaker Change: These projects have the potential to transform the region by developing cutting-edge skills and strengthening the country's scientific capacity. In line with this investment in this area, capture benefits of 778 billion pesos improving EBITDA, ROASE and cash flow.

Speaker Change: on the environmental front.

Speaker Change: We achieved a reduction of over 136,000 tons of CO2 equivalent in scope 1 and 2.

Speaker Change: And we excited our annual energy efficiency target, achieving an optimization of 1.21 petajoules, accumulating 12.07 petajoules.

Speaker Change: which is equivalent to the annual energy consumption of the Department of the Bolivar in Colombia.

Speaker Change: In the social component, we connected 9,645 households to gas networks in the country in the first half of the year.

Speaker Change: Additionally, Hocal and the community of Canutal Consolidate, the first compressing hip energy community in the country, in the Department of Secre, certified by the Ministry of Minds and Energy.

Speaker Change: On the governance front, we have been adjusting the organizational structure.

Speaker Change: to enable differentiated management in each of the three business lines and accelerate the achievement of the objectives of our 2040 strategy.

Speaker Change: by aligning process and implementing a more agile and efficient group focus structure in decision-making execution capacity and multidisciplinary teamwork with experts at the helm of the various vice presidents.

Speaker Change: All these enable us to maintain the value proposition to investors and meet the expectations of stakeholders while driving prosperity in the country.

Speaker Change: To conclude...

Speaker Change: We highlight that for the first time the return of investment in TSG is being measured for 2023.

Speaker Change: This contributes positively to the group's net income of 1.25 trillion pesos.

Rafael Guzman: to the Regional GDP, demonstrating the financial value of sustainability for the company and society. I now hand it over to Rafael Guzman, who will speak about the hydrocarbons segment. Thank you, Ricardo.

Rafael Guzman: On the exploration front, I would like to highlight the results achieved.

Rafael Guzman: in the Offshore Gas Projects in Colombia.

Rafael Guzman: where we made positive announcements regarding the Utuva II appraisal well. This well is located in the Tidona block.

Speaker Change: with a 55.6% Ecopetrol participation and operated by Petrobras.

Rafael Guzman: The well confirmed the extension of the gas discovery made in 2022 with the drilling of the Utua I well. This result reduces the uncertainty and allows us to progress on the project plan.

Rafael Guzman: We estimate first commercial gas by year 2029.

Rafael Guzman: We are also planning to build two additional prospects with the Buena Suerte one well.

Speaker Change: Located in the title of the block, and the Commodal One Well, in the Uttar Deep Water, Grand Cold One Block, the Orca not the One Well remains under devaluation.

Speaker Change: Once the results are incorporated with the information from the two new reservoirs, a new development plan will be designed and its commercial viability will be determined.

Speaker Change: Regarding Onshore Exploration Activity

Speaker Change: We highlight the drilling of the Arantis 1 well operated by Parex and the Floreña N18.

Speaker Change: Well, operated by Ecopetrol in the field of Monte, General Region, both targeting gas and condensate. We maintain our target of green 15 exploratory wells in 2024.

Speaker Change: As of end of June , we invested $195 million in the exploration campaign with 4 wells drilled and 6 more wells that started drilling.

Speaker Change: Let's move to the next slide, please.

Speaker Change: In the first half of 2024, the Ecopetrol Group reached a production of 750,000 barrels of oil equivalent per day.

Speaker Change: An increase of 26,000 barrels of oil equivalent per day has compared to the same period last year. As seen in the left figure, these results were obtained thanks to the growth in production in the subsidiaries mainly impermanent.

Speaker Change: The incremental investments in fields such as Canosur, Rubiales, and CP09.

Speaker Change: and the contribution of recovery technologies that largely mitigated the natural decline of the fields. These recovery techniques now account for 41% of Ecopetrol Group's total production.

Speaker Change: For example, the figure on the right shows the performance of the Chichimene field and the effect of the implementation of these technologies.

Speaker Change: which has allowed the recovery factor to increase from 9% to 17%.

Speaker Change: If the expansion of our tertiary recovery is successful,

Speaker Change: As shown by the current results on the pilots, the record effective could reach up to 43% with a potential to incorporate between 300 and 1200 million barrels addition.

Speaker Change: On the other hand, we are progressing with the drilling plan.

Speaker Change: with 240 development wells drilled and completed with an average of 23 active drilling rigs.

Speaker Change: EBITDA per barrel increased by 15%, reaching $30.6 per barrel, mainly explained by higher production levels, better prices in our crude basket, and cost efficiencies. Let's move to the next slide, please.

Speaker Change: Regarding our activities in the Permian Basin, 50 new wells were put on production during the semester.

Speaker Change: for a total of 370 wells since 2019 and achieving a net production before royalties for a total of 91,400 barrels of oil equivalent per day.

Speaker Change: representing 12% of Ecopetrol Group's total production.

Speaker Change: We also highlight the strong financial results of Ecopetrol Permian. At the end of the first half of the year, we generated an EBITDA of $511 million and an 81% EBITDA margin.

Speaker Change: By year-end, we estimate an average production between 84,000 and 86,000 barrels of oil equivalent per day before royalties and the drilling of more than 110 wells.

Speaker Change: Finally, the development of Eco Patrol's assets in the Permian Basin is carried out under two different associations with OGSI as operated.

Speaker Change: We have one joint venture and one joint operating agreement. The joint venture began in 2019 for the assets located in the Midland area, and the joint operating agreement started in 2022 in the Delaware area.

Speaker Change: The JV for the Midland area could end during the first quarter of 2025 by unilateral decision of one of the partners.

Speaker Change: In that case, future development activities would continue.

Speaker Change: Not under the current JV, but through a new joint operating agreement, in which ALPC would remain as operator and Ecopetrol would retain its 49% interest over production and areas.

Speaker Change: We are currently having discussions with Oxy to define the future of the JP for the Midland area. Please move to the next slide.

Speaker Change: In the transportation segment, volumes increased by approximately 41,400 barrels per day.

Speaker Change: mainly driven by the increase in crude oil production in the Llanos region, higher crude deliveries to the Barranca Bermeja binary, and the normalization of transport operations in the Caña Limón-Coveñas pipeline, as shown in the top left figure.

Speaker Change: The segment managed to maintain solid financial results.

Speaker Change: Achieving the second-best historical results for the first half of the year, generating an EBITDA of 5.5 trillion pesos, representing a contribution of 20% of the total EBITDA for the Ecopetrol Group.

Speaker Change: The EBITDA reduction compared to the first half of 2023 is mainly explained by external effects, such as exchange rates and inflation.

Speaker Change: partially offset by higher revenues and cost efficiencies as shown in the bottom right figure. Let's move to the next slide.

Speaker Change: In the first half of 2024, the refineries achieved historic throughputs of 426,000 barrels per day, as shown in the top left figure, thanks to an operational availability of more than 96 percent.

Speaker Change: The timely execution of scheduled major maintenance activities, and the maximization of domestic crude loads, and an outstanding performance in HSP.

Speaker Change: The gross refining margin stood at $12 per barrel, impacted by the weakening of global diesel.

Speaker Change: Jet and Gasoline Spreads

Speaker Change: the strengthening of the Brent differential and the decrease in domestic gasoline demand.

Speaker Change: Given the above, EBITDA stood at 1.9 trillion pesos in the first half of 2024, 59% less than the same period of the previous year, mainly affected by the aforementioned external variables.

Speaker Change: In line with the energy transition strategy, we highlight the approval of Phase I of the dedicated plant project for the production of sustainable aviation fuels at the Barranca Bermeja refinery.

Speaker Change: Let's go to the next slide.

Speaker Change: During the first half of 2024,

Speaker Change: will remain focused on materializing our comprehensive efficiencies.

Speaker Change: and Competitiveness Strategy.

Speaker Change: Allowing us to leverage operating performance and partially offsetting the external effects of inflationary pressures, exchange rate revaluations, cost increases, and energy tariffs.

Speaker Change: As of June of 2024,

Speaker Change: The Ecopetrol Group incorporated efficiencies of 1.9 trillion pesos in our CAPEX, OPEX, and revenue levels.

Speaker Change: with an increase of 19% compared to the efficiencies obtained during the first half of the previous year.

Speaker Change: Cost efficiencies were focused on reducing electricity consumption, reliability, and surface maintenance.

Speaker Change: to Reduce Lifting Costs, Optimizing Gas Transportation Tariffs,

Speaker Change: and capturing refining margins, which mitigated the increases in cost in refining. Finally, the lifting transportation and refining cash costs were impacted by exogenous factors related to exchange rate inflation.

Speaker Change: Gas Price and El Niño Phenomenon. However, when normalizing this effect in each of the indicators, cost levels are similar to those obtained in the first half of 2023.

Speaker Change: Now I will turn it over to David. We'll discuss the main milestones of the energies for the transition business line.

David: Thank you, Rafael.

David: From the Ecopetrol Group, we reaffirm our commitment to the country's energy security.

Speaker Change: Unlike with the projected deficit of national gas to meet the demand from the second half of 2025 to 2029, ranging between 120 and 530 million cubic feet per day.

Speaker Change: We are focused on executing our 2024-2034 Grants Roadmap. This involves maximizing domestic onshore and offshore production in the Caribbean, as well as exploring various alternatives related to regasification and energy imports.

Speaker Change: Among the alternatives under evaluation is the utilization of Colombia's Natural Gas Regasification Terminal, SPEC-LNG, with a capacity of up to 530 million cubic feet per day.

Speaker Change: Other regasification options with capacities of up to 1,030 million cubic feet per day are being considered in projects located in various areas from Buenaventura to La Guajira.

Ricardo Gas: Regarding gas inputs.

Speaker Change: Ecopetrol Group continues to support PDVSA's Colombia branch within the framework of the contract signed in 2007 in the activities necessary to rehabilitate the Antonio Ricarte gas pipeline with the goal of importing gas in 2025, provided we have the approval of the U.S. government through OFAC.

Speaker Change: The use of any of the alternatives presents various challenges.

Speaker Change: Included licensing, environmental permits, prior consultations, implementation timelines, competitiveness of alternatives, regulatory flexibility for the commercialization of imported gas, and transportation infrastructure, to name a few.

Speaker Change: As part of our efforts.

Speaker Change: We close the first half of 2024.

Speaker Change: with a gas and LPG production of 173,000 barrels of oil equivalent per day, representing 23% of the group's total production and 68% market share in Colombia and an EBITDA of close to 1.5 trillion pesos.

Speaker Change: On the energy transition front, we highlight significant advancements in energy efficiency by the end of the first half of 2024.

Speaker Change: As of June 2024, we achieved an accumulated energy optimization of 1.2 petajoules with an impact of over 104,000 tons of CO2 equivalent and savings of nearly 73 billion pesos in Ecopetrol Group's operations.

Speaker Change: Exceeding the annual internal target of 1.1 petajoules, thanks to significant contributions from Ocol and the optimization projects of the gas injection system in Cruciana, among other initiatives.

Speaker Change: The Energy Efficiency Program has accumulated 12.07 petajoules since the beginning of measurement in 2018, equivalent to the annual energy consumption of the Department of Bolivar in Colombia.

Speaker Change: On the social front, we continue working on the sustainable development of the communities where we operate.

Speaker Change: To date, our social gas program has managed to connect more than 45,000 low-income households to the natural gas network in 12 departments of Colombia with various strategic partners.

Speaker Change: By the end of 2024, we will complete 70,000 connections and sign 10 new projects in La Guajira, Bolívar, Atlántico, Arauca, Huila, Santander, Norte de Santander, and Nariño.

Javier: I now turn the world over to Javier, who will discuss our Transmission and Roads business line and the main financial milestones.

Javier: Thank you, David.

Javier: Now let's continue with the results of the Transmission, Roads, and Telecommunication Business Live.

Javier: In the first half of the year, the Transmission and Roads business maintained a solid financial performance despite the impact of the Colombian peso revolution against currencies such as the U.S. dollar, Chilean peso, and Brazilian real.

Javier: Evita decreased by approximately 12% compared to the first half of 2023.

Speaker Change: Reaching for 0.5 Trillion Pesos However

Speaker Change: Normalizing the exchange rate conversion effect, the results surpassed those obtained in 2023. In line with our strategic diversification objective, the transmission and roads business maintains its participation in Ecopetrol Group's results.

Speaker Change: reaching 15.9% of the group's total EBITDA for the first half of 2024. Among the most relevant milestones for the second quarter of 2024 are

Speaker Change: First, in Brazil, Issa Cetepi was awarded 24 Transmission Network Informants.

Speaker Change: which together will add up to a capex of 542 billion pesos.

Speaker Change: Second, in Colombia, it's assigned to private countries.

Speaker Change: The first one for the execution of the Atlántico-Photovoltaic Connexion project.

Speaker Change: We change to Connect, Obey.

Speaker Change: at the Savannah Largo Station in the Department of Applied.

Speaker Change: The second, to be developed through SACELC, consists of connecting the Valledupar I, II, and III solar projects in the Department of Cesar. The awarded projects add up to a reference capex of 84 billion pesos.

Speaker Change: They are the entry into operation of the following projects.

Speaker Change: One in Chile, the Ruta del Doha concession, and two in Brazil. Here's team informants to the ISA CETEPI network.

Speaker Change: She continues to advance in the construction of 31 energy transmission projects.

Speaker Change: In the country square, it has a presence. Once operational, they would have more than 5,380 kilometers of circuit to the network and generate approximate revenues of 1.3 trillion pesos between 2024 and 2030.

Speaker Change: Let's move on the next slide to detail the group's financial performance.

Speaker Change: The net income for the first half of 2024 decreased by approximately 2.3 trillion pesos compared to the first half of 2023. However, when normalizing the effect associated with external factors,

Speaker Change: by 3.3 trillion pesos, we would have an increase by 10%, leveraged by the operation results of all our business lines.

Speaker Change: The main external factors that affected net income were the lower average exchange rate and higher inflation net of the positive effect of a higher premium price.

Speaker Change: Impacted EBITDA generation by 5.3 trillion pesos.

Speaker Change: Likewise, the net positive effect between the lower valuation of dollar-denominated debt and taxes contributed by 2 trillion pesos.

Speaker Change: It is important to note that during the second quarter of 2024, the additional income tax rate was adjusted from 10% to 15%, with an effect for the entire first half of the year. On the other hand,

Speaker Change: At the end of the first half of 2024, Ecopetrol's gross equity position was

Speaker Change: 16 Trillion Pesos. Operating Cost Flow Generation of 23.1 Trillion Pesos stands out, where we collected the receivable from the Fuel Price Stabilization Fund for approximately 13 Trillion Pesos. Likewise,

Speaker Change: The most significant cash outflows were due to capex of 8.5 trillion pesos and net dividend payments of 12.2 trillion pesos, including payments from Ecopetrol S.A. to the nation and mineral tax.

Speaker Change: as well as payments from ISA, midstream subsidiaries, and Invercosa to their non-controlling shareholders.

Speaker Change: During the first half of 2024, the total payment of dividends to minority shareholders of approximately 1.5 trillion pesos was made, and 9.1 trillion pesos were credited to the payment of dividends to the nation, leaving a balance to be paid in the second half of the year of 2.2 trillion pesos.

Speaker Change: Cash flow has had a positive impact on its working capital mainly due to two factors. Higher collection from the PEPEC and the continued decrease in its accumulation due mainly to the increase in the price of cash flow.

Speaker Change: of the Accumulative Balance in 2023.

Speaker Change: 7.6 trillion pesos are still to be collected.

Speaker Change: which are expected to be collected on a quarterly basis for the rest of the 2024. With these collections...

Speaker Change: and maintaining an average monthly accumulation of less than 1 trillion pesos. We maintain our estimate of closing the year with a balance of the PEPEC between 8 and 10 trillion pesos.

Speaker Change: subject mainly to fluctuations in the international market price of crude oil and the exchange rate. Regarding the decree on large diesel consumers which came into effect on August 3rd, 2016,

Speaker Change: We estimate that it will have a positive impact of cash.

Speaker Change: of approximately 230 billion pesos for the remainder of 2024.

Speaker Change: Likewise, any additional increase in the price of diesel directed to other consumers could contribute to further reducing the cut. Let's move to the next slide.

Speaker Change: In terms of Evita.

Speaker Change: The exploration, production, transportation, and refining business line stood out for maintaining the largest share.

Speaker Change: of the total at 85%. It is also noteworthy that 36% of our EBITDA provides stability to the group's revenues and operating cash flow through our midstream and transmission and roads business.

Speaker Change: regarding the management of death maturities.

Speaker Change: to maintain a proactive dynamic in anticipating reflux needs.

Speaker Change: through their management operations carried out in the first half of the year. The main activities of 2024 and 2025 were successfully managed.

Speaker Change: Likewise, in July alone, of 1 trillion pesos was disbursed, and in August we initiated the refinancing of the 2026 maturities with the announcement of the prepayment of 250 billion dollars of the bond. With this operation,

Speaker Change: which would be effective on September 5th. We will reduce the maturity towers to around $2,100 million.

Speaker Change: And we continue to monitor the market to manage the remaining 2026 maturities.

Speaker Change: For 2024, no increase in debt levels in the Co-Petrol SA is expected associated with the organic activities of the portfolio given the current level of available liquidity. For its part, the gross debt EBITDA ratio closed in June at two times.

Speaker Change: This level remains in line with our long-term guidelines, whereas we seek to maintain a level below 2.5 times.

Speaker Change: Regarding investments, a dynamic of execution in line with the annual financial plan is maintained, reaching $2,660 million for the first semester.

Speaker Change: Investments were made primarily in Colombia with a participation of 59%, the United States with 20%, and in Brazil and other countries the remaining 21% was executed.

Speaker Change: In the allocation of COPEX, the hydrocarbon business line maintains the largest contribution to execution, representing

Speaker Change: 68% of the group's total investment. For exploration and production activities of the hydrocarbon line, 81 of the resources were allocated, mainly in the Rubiales, Castilla-Cañizur, and CPO9 fields and internationally impaired.

Speaker Change: In the refining segment, 11% of the total hydrocarbon CAPEX was allocated to guarantee the continuous operation of the refiners.

Speaker Change: The transmission business, the remaining 8% was executed in maintenance and repair activities. In the energy transition line, approximately 12% of the group's total investment was allocated. Of this percentage,

Speaker Change: The sources were used primarily for the growth of the gas chain, with an 85% share in the Tijuana Block located off Columbia Caribbean Offshore, the Casanare Department, and Perlin. In this same business line,

Speaker Change: 15% of CAPEX was allocated to energy efficiency and renewable energy products.

Speaker Change: Finally, in the transmission and road sign investment equivalent to 20% of the gross total investments were made. Most of the investments were focused on the energy transmission business, with a 83% share in Brazil, Peru, and Chile.

Speaker Change: and Colombia, followed by the roads business with 15%, and finally telecommunications with 2%. I now turn the work over to Ricardo for the closing remarks.

Ricardo Gas: Thank you, Javier. I would like to close this results call by highlighting that despite the challenges external factors have present, our results reflect the commitment to executing the business plan.

Ricardo Gas: The production and transportation figures are above the set target, while the drilling wells and refinery loads remain within the expected range.

Ricardo Gas: regarding financial targets.

Ricardo Gas: We highlight CAPEX with a 47% achievement of the annual target and we present an a bit demergent ROASE and efficiency figures that exceed what was announced in the plan. The second half of the year will be intensive investment.

Ricardo Gas: and our exploration activity. We will continue to advance in the development of offshore gas, the management of the gas deficit for 2025-2026.

Ricardo Gas: and the Acceleration of Energy Transition Projects.

Ricardo Gas: such as the completion of the solar project in La Sida in two projects associated with energy justice with social impact for one.

Ricardo Gas: All these with a focus on cost control and maximization of efficiencies, seeking to maintain sustainable financial management over time.

Speaker Change: Finally, I thank all our employees for their high contribution to the results and you for your participation in this results call. With this, we now open the Q&A session.

Speaker Change: Thank you.

Speaker Change: Now we will begin the Q&A session.

Speaker Change: We will begin firstly with the questions in Spanish and then we'll have a space for those in English. We recommend

Speaker Change: asking only three questions so everybody can participate. Catherine Ortiz from Corredores de la Vivienda is in line with the question. The floor is yours.

Speaker Change: and many more. Thank you. Thank you.

Speaker Change: Good morning, everyone. Can you hear me?

Speaker Change: Yes, we do.

Speaker Change: Perfect. Thank you for your presentation.

Speaker Change: I have a question that relates...

Speaker Change: to death.

Speaker Change: We've heard a lot about the deficit of gas that's being evidenced in Colombia, and one of the strategies that has been mentioned by Ecopetrol is to decrease the consumption

Speaker Change: of this fuel in the refineries to generate a surplus of gas in the system. I would like to know, in that sense,

Speaker Change: More details about this. I mean, how much are we talking about? How many?

Speaker Change: How many, what's the amount for how long, what's the effect of that measure on the margins that you may have in the segment of refination and in Ecopetrol.

Speaker Change: When you adopt this measure, what it would it really mean as to a benefit for the company? That's my question. Thank you.

Speaker Change: Andrs Prez, David Riao,

Speaker Change: Good morning. Thank you for your question. I'm the

Speaker Change: I am the VP of Transition Energies. Indeed, one of the possibilities that the group has been working on is to identify the opportunities to optimize gas consumption. Now we've found that we can seek

Speaker Change: on efficiency of 24 giga cubic meters gigabytes and this has been done now so for the future we can

Speaker Change: Reach 14 in addition. How do we do this? Throughout the chain, downstream, as you've mentioned, but also in other stages.

Speaker Change: We can reach it by substituting with other energy fuels, for instance, in some cases, taking more electric energy from the network.

Speaker Change: Undoubtedly the decision to optimize energy consumption goes through the capital management because it has to be feasible economically for the group.

Speaker Change: [inaudible]

Speaker Change: The next question is from Daniel Guardoglia from Petršek.

Daniel Guadolia: Mr. Guardiola, the floor is yours.

Daniel Guadolia: Hello, good morning everyone. I have a couple of questions about the operation of Ecopetrol and premium. The first question

Daniel Guadolia: Can you share with us?

Speaker Change: Why did the corporate world disregard the business of buying

Speaker Change: Crown Rock and can you also provide details of the merits that the company signed that transaction and which were the pushbacks that

Speaker Change: One, when you disregarded this business with Crown Rock, that's my first question. Second question is also related to this business. I understand that you are dealing with Oxy since March.

Speaker Change: And this is the result that you have on JV in Broaddale, which gave you the option to enter any agreement that actually had a MIDLAC.

Speaker Change: So...

Speaker Change: My question is, if you disregarded this, why didn't you go through that call option to defend it in the market and go through that option? And my third question,

Speaker Change: The current operation that you have in Delaware, is it something that the companies see as something strategic on a long-term basis? Or eventually, do you think, after the JV ends in the first quarter of 25?

Speaker Change: you start to dismantling this operation in the States. These are my three questions.

Speaker Change: Thank you, Daniel. I am the CEO of Grupo Ecopetrol. Firstly...

Speaker Change: I'd like to highlight that one of the reasons why

Speaker Change: After we went through all of the proceedings of analyzing and evaluating internally.

Speaker Change: with our corporate governance.

Speaker Change: We have to keep in mind.

Speaker Change: that Ecopetrol is one of the companies that has a very high level of depth.

Speaker Change: By the end of July, $27.7 billion

Speaker Change: And that's about it.

Speaker Change: 115 trillion pesos, Colombian pesos, and this high level of debt.

Speaker Change: is setting us in a ratio of the abid the debt that's high and the idea in our policy is not to exceed

Speaker Change: An indicator of debt that's above 2.5. So with this transaction at 3.6 billion dollars.

Speaker Change: with for 2526. [inaudible]

Speaker Change: We are exceeding this matrix, keeping also in mind that there's a lower price of oil that could even impact this more, this indicator. Second.

Speaker Change: Print the result of the evaluation of the business we had with Oxy to close this transaction.

Speaker Change: An element took place that's less relevant, and it's.

Speaker Change: We had to redevelop.

Speaker Change: The ending of this because we needed the approval from the Ministry of Treasury.

Speaker Change: to look at this public debt, which was 100%.

Speaker Change: that we had to leverage financially.

Speaker Change: for this eventual transaction.

Speaker Change: and with the survey that we've made with the government with this entity.

Speaker Change: We were told that it was unfeasible to have an approval of this level of debt. And that could be happening right in the middle of the announcement of closing the deal.

Speaker Change: And with that, also.

Speaker Change: We would be exposed.

Speaker Change: to have to pay a sanction that's established at $270 million. And that's why we made the decision to not...

Speaker Change: Cake

Speaker Change: This asset.

Speaker Change: as part of the assets, inorganic assets that we have, that we're constantly evaluating. This was a window of opportunity that took place, maybe next year, with the announcement made by Oxy to acquire 100% of the assets of the croc.

Speaker Change: So those are the reasons why we made the decision to not advance to close this deal.

Speaker Change: As to your second question,

Speaker Change: I think I answered the first and second. We've never denied the great figures of the business in terms, technical, economic, environmental, that was

Speaker Change: made by the entire board of directors.

Speaker Change: and the internal evaluation committees of the company.

Speaker Change: So that was very interesting with figures and all those friends.

Speaker Change: But we also have to keep in mind that for no one, it was a surprise that the current policy of the government, exploration and exploitation of non-conventional resources is no longer a priority.

Speaker Change: So, right now we are focusing on the exploration and exploitation of resources offshore in the country.

Speaker Change: And it's a priority also here to see more production and incorporation of resource reserves from our own wells and fields.

Speaker Change: And it's also of interest.

Speaker Change: to develop projects.

Speaker Change: related to energy transition, decarbonization, energy efficiency, clean energies, renewable energies. These are projects that are part of our investments plan.

Speaker Change: in 2024. Now let's get the floor to Nicolas, who can answer.

Nicolas: your fourth and fifth questions. Daniel, good morning. I'm Nicholas, VP of the Strategies and New Businesses and thank you for your questions.

Nicolas: With regards to the question if we are dealing with Oxy since March and the option to monetize that option, I'd like to give two comments.

Speaker Change: We sat down with Auxie since December when they announced, so I think it's worth to precise that to the market, and that we were with Auxie since December talking. And second,

Speaker Change: The agreement that we have with OXXI in which we appoint an area of mutual interest and in which any of the parties that would bring a new deal to that area.

Speaker Change: had the obligation to provide it to the other party. The spirit of that agreement is between AXI and Ecopetrol. It's not thought.

Speaker Change: that through that option to bring third parties to the table. So honoring the spirit of the agreement, the intention always was to for us to exercise that option.

Speaker Change: If we determine to do so, so going to the other question, this, our long term strategy and how we see the operation in 25. Remember, we still have.

Speaker Change: Two areas of activities right now in premium with Oxy, Midland, and Delaware, the joint venture that we have with Midland.

Speaker Change: Ends in 2025, but it's important to remember one thing that we have the joint venture. The other is that we still independent.

Speaker Change: of the ownership that we have over the land and the assets and the existing production. So when it comes to the option to extend the joint venture, we're having active discussions about that with Oxy.

Speaker Change: And as I said, we have the ownership of those lands, so we have an option in any case. And I think that with that, we answer your two other questions. Thank you.

Speaker Change: Thank you.

Speaker Change: Andrs Prez,

Speaker Change: We also have with us Alejandra de Andrade from J.P. Morgan. Mr. Andrade.

Speaker Change: Ms. Andrade, hello my question is also related.

Speaker Change: to Oxy and you talk about the depth

Speaker Change: But making the calculations and adding the debt, it represented, with that investment, I only see an increase of debt of 0.2 times.

Speaker Change: That's even without...

Speaker Change: giving the benefit of the EBITDA to those operations. So I'd like to understand, if you calculate because you wanted to see if the other operations fell with the EBITDA, or how did you reach that calculation that you talked about of surpassing the 2.5 times?

Speaker Change: Thank you.

Alahabra: Hello Alejandra, good morning and thank you for your question. Our projections...

Alahabra: that we saw align with our plans approved and how

Speaker Change: We could incorporate the $3.7 billion estimated of additional debt, led us to increases of the indicator by $25 and $26, slightly above $2.5.

Speaker Change: Here, it's important to keep in mind that these projections are at prices.

Speaker Change: relatively close to what we're seeing today in the market and incorporated a bit pressure on us if there was a drop or a change.

Speaker Change: of the prices in the market. So in our calculations and projections, when we incorporated this in the market models, we did exceed slightly in 25, 26. Our goal.

Speaker Change: to not exceed 2.5 times the depth indicator. Perfect, thank you for your answer.

Stepaniel Mosquera: Stepaniel Mosquera from Credit Corp Capital has a question for us. The floor is yours.

Speaker Change: Thank you for your presentation. I'd like to ask more on a medium term basis. Do you have any update or do you plan to make an update on your CAPEX plan and production plan?

Speaker Change: and many more. Thank you. Thank you.

Speaker Change: TEFANIA

Speaker Change: Please.

Speaker Change: Place your audio in Spanish so we can hear you.

Stefania: Can you hear me?

Speaker Change: Now we can. Please repeat your question.

Speaker Change: Yes, my question is more focused on a medium term basis. I'd like to ask, are you making an, are you going to have an update of CAPEX in production?

Speaker Change: Thank you for your time.

Speaker Change: Thank you, Stephania. I am the CEO.

Speaker Change: For now, we do not have any changes among what we've announced.

Speaker Change: From the first quarter call that we made in production and in terms of CapEx, we're still going to be making investments up to $6 billion at the top that we have as reference.

Speaker Change: with a good development as of June. And in production...

Speaker Change: We have what we have. We've done what we've announced with a goal.

Amelia Barrall-Stay: of 730 million barrels a day.

Amelia Barrall-Stay: If the conditions allow us.

Amelia Barrall-Stay: especially in terms of prizes and production that we've been recording in these months.

Amelia Barrall-Stay: The idea is to keep with that path of production, but we're still committed to what we have announced in the first quarter.

Speaker Change: Perfect. Thank you for your answer.

Speaker Change: Next question from Andres Duarte from Corfi Colombiana. Mr. Duarte, the question is yours, and the floor is yours.

Speaker Change: Thank you.

Speaker Change: [inaudible]

Speaker Change: Mr. Duarte, please.

Speaker Change: [inaudible]

Speaker Change: Also, we have Ricardo Sandoval from Bancolobia. Mr. Sandoval, the floor is yours.

Ricardo Sandoval: Good morning and thank you for this call. I'd like to ask you about Reficar. We've read in the press that this refinery could

Ricardo Sandoval: Go through a major overhaul maintenance, and I would like to know what we can expect in the second half of the year when it comes to the burdens there. Could there be an additional need to import products? Could you talk about the margins?

Speaker Change: If this main, if this overhaul takes place. Second, a follow up question really.

Speaker Change: Could you please tell us more what it would mean to end or what are the consequences of ending the joint venture with Oxy?

Speaker Change: and to see Ecopetrol with its

Speaker Change: Keeping the ownership, could you give us more information about the consequences of ending this if it takes place? Thank you.

Ricardo: Ricardo, good morning.

Ricardo: This is Walter Canova, VP of Refinery and Industrial Processes. I would like to talk about your first question.

Ricardo: Indeed, as we've said.

Speaker Change: We had a first half of the year with high refinery burdens with record levels and an operational availability above 96 percent. As you've heard in the media,

Speaker Change: In the month of July , basically, and part of August .

Speaker Change: We are programming not only in the refinery of Barranco Hermeja, where we intervene one of the plants of oil.

Speaker Change: and that overhaul will take 40 days and it's...

Speaker Change: We've already finished this, and Barranca is already at its high production levels. We think it will remain at those levels for the rest of the year. When it comes to Repicar,

Speaker Change: We have foreseen to make the overhaul of Hydrococker, which is one of the units that's most important of this refinery.

Speaker Change: This overhaul is foreseen to be made in 50 days.

Speaker Change: And we're in day 30 now. It's underway. So we're doing very well with that. And we fortunate to end it on time. At Hydrocarca Cartagena, there's been no impact.

Speaker Change: On the oil, the refinery remains at its capacity of 200,000 barrels a day, and we believe that it will stay like that thanks to the gas oils that we make.

Dada Blade: Undoubtedly

Speaker Change: For Cartagena, there will be an impact on the margin because since the plant stopped.

Speaker Change: We lose commercial levels.

Speaker Change: That what we see

Speaker Change: is that by the end of the year, we will end with a margin of $10 to $12 per barrel, consolidated by both refineries. And we will have average loads in the range that we already stated.

Speaker Change: 420, 430,000 barrels a day.

Speaker Change #100: By the end of the year, after stopping Barranca Bermeja, as I mentioned, which already did, we already did, and advancing very well with TREFICAD and Cartagena. So I hope that this answers your questions.

Speaker Change: Thank you.

Speaker Change: Ricardo, good morning. Nicolas Azcunaga, VP of Strategy and New Businesses. So let me discuss your second question with regards to what happens in 2025 with the end of the joint venture with Oxy. And basically there are four alternatives here. The first, and we're working on it, is to expand the joint venture. The second, is to expand the

Speaker Change: The second option is to continue operations with Oxy, but through a joint development agreement, and we can, I can talk about this, these differences. The third option is that Ecopetrol will assume the role as an operator.

Speaker Change: And it's part and next. It's a sell our part there. Those are the four options. And to make a comment about the difference between the joint venture and the joint development agreement. The joint venture has many things, but one.

Speaker Change: is that we have.

Speaker Change: Development Plans and Capital Investment Plans with a horizon that's longer and that

Speaker Change: Under the other agreement, joint agreement, would it take place? But remember, that is a common practice for the development.

Speaker Change: of that basin. So these are the four alternatives that we have. And I think that with that, I answer your questions.

Speaker Change #101: Thank you, clearly. Thank you so much for your answers.

Speaker Change #102: Let's continue with the session in English. We recommend to all of the analysts to choose an interpretation.

Speaker Change #102: The language in which you will be answering, we have Luiz Carvalho from GPS. Mr. Carvalho, ask your question, please. Yes. Can you hear me well?

Speaker Change #103: Andrs Prez,

Luis Carvalo: I mean, would the company consider, for example, divesting some of the non-core assets in order to actually to increase, let's say, the upstream, I would say, part of the business in order to fulfill...

Speaker Change #105: The country needs from both reserves and production, production growth ahead.

Speaker Change #105: So that's the first one. The second one is mostly with regards to the challenges that the company has in terms of increasing reserves and also the country in terms of the natural gas demand.

Speaker Change #106: So, how the management is seeing investing more in renewables or, you know, cognizant about the decline on the production and taking the risk of having to import more. So, what's the balance here between, let's say, within the capital allocation strategy?

Speaker Change #107: And lastly, if you can provide a bit more details on the FEDPAC, this quarter we saw somehow it decreased, but what is the expectation towards the second half of the year? Thank you.

Speaker Change #107: Thank you.

Speaker Change #108: Thank you for watching, please subscribe, like, and turn on the notification bell to not miss any of the new videos.

Speaker Change #108: Good morning, Ricardo Roa, and thank you.

Speaker Change #109: for your several questions. I'm going to try to answer your questions. Firstly.

Speaker Change #110: The window of opportunity that we had between the acquisition of inorganic assets and Permium with Oxy

Speaker Change #111: was not incorporated in our investments plan for 2024 or in the tri-annual plan 24-26 that we announced at the end of the year to the market, close to $20 billion.

Speaker Change #111: So with this window of opportunity, we went through the entire evaluation, keeping in mind that within our investments portfolio that was approved by the

Speaker Change #111: Board of Directors for this year. There are many projects underway. First, to what we've been doing to increase significantly our production of oil and gas.

Speaker Change #111: Second.

Speaker Change #111: As a result of that higher production, we have more volumes.

Speaker Change #111: Transported By Our Assets

Speaker Change #111: And third, there's a big burden in everything that has to do with our refineries. So what's...

Speaker Change #111: the target of our investments plan.

Speaker Change #111: That was at $5,600 to $6,600 million, which was our expectation for this year. It's focused

Speaker Change #111: on Increasing Production and Incorporating Resorts.

Speaker Change #111: of $600 million are destined with our allies to develop exploratory activities in different perforations that we'll be doing this year.

Speaker Change #111: There are major resources there and also they're focused on incorporating.

Speaker Change #111: within our Matrix Projects of Energy Efficiency.

Speaker Change #111: Bah!

Speaker Change #111: We are signing now.

Speaker Change #112: to be used in green hydrogen and refineries and to incorporate

Speaker Change #112: Clean Energy Projects

Speaker Change #112: Wind and solar

Speaker Change #112: and La Guajira.

Speaker Change #112: So these projects are underway.

Speaker Change #112: They're incorporated in this year's plan.

Speaker Change #112: And that's where we plan to sustain the operational technical achievements for the first half of the year. And in terms of the gas, logically,

Speaker Change #112: Colombia has, since 2017, Colombia has been demanding a lot of gas.

Speaker Change #112: And...

Speaker Change #112: To make an import of liquefied gas

Speaker Change #112: In a market that's open and free.

Speaker Change #112: 21% of the LNG

Speaker Change #112: GetMarket was made by the U.S., which is the highest of all the suppliers.

Speaker Change #112: UPS Andres Gmez, Andres Gmez, Ana Rojas,

Speaker Change #112: under this condition of liquefied natural gas.

Speaker Change #113: and that's why through an infrastructure that we made in Cartagena, we have been importing amounts, significant amounts.

Speaker Change #113: of this liquefied

Speaker Change #113: So, in past months.

Speaker Change #113: Also, we've been having these infrastructures and this is what we we have already immediately when we decide to import the liquefied natural gas.

Speaker Change #113: with the deficit that we've announced.

Speaker Change #113: I don't know if this answers your entire question. If there's something else that you need, we can clarify it for you.

Speaker Change #114: No, that was that was very clear. Thank you. Thank you very much.

Speaker Change #114: [inaudible]

Speaker Change #114: Next question is from Carlos Moraes from Morgan Stanley. Mr. Moraes, the floor is yours.

Carlos Moraes: Hi everyone, thank you all for taking my questions, have too.

Carlos Moraes: The first, can you comment on the outlook for lifting cost? Is it still reasonable to expect a convergence now to $10 per barrel? And the second, can you comment on what role production to stand above the top end of the range presented in the operational preview?

Carlos Moraes: [inaudible]

Carlos Moraes: Andrs Prez, Luiz Carvalho

Carlos Moraes: Andrs Prez,

Rafael Guzman: Good morning, Carlos. I am Rafael Guzman, VP of Hydrocarbons. Thank you for your questions. As to costs of elevation, there are two answers. First,

Speaker Change #116: Indeed, we've seen an increase since the first semester of last year to this year up to $.7 per barrel, which sets us today at $12.1 per barrel. This $12.7 increases mainly from external factors such as the exchange rate with the dollar pesos, inflation, and factors also because of the El Nino weather phenomenon. And these increased $12.4 of the $12.7 observed.

Speaker Change #116: We also had increases in operations that were compensated mainly in efficiencies and more production. And there's where we have our focus, to have more efficiencies.

Speaker Change #116: and to produce more with the same wells that we have today.

Speaker Change #116: So...

Speaker Change #116: With this, as we said before, we will have our elevation costs from $12 to $13 this year, and surely they will be closer to $12 than $13, this in terms of the elevation costs.

Speaker Change #117: When it comes to premium, we also have a lot of, we already provided many details today.

Speaker Change #118: We have good investments, but also very good results. We've reached a production...

Speaker Change #118: Close to 90,000 barrels per day and for the year we expect 84 to 86.

Speaker Change #118: because the most activity of the investment is made at the beginning of the year and production will be shown also at the end of the year. Thank you for your questions.

Speaker Change #118: Thank you very much for watching this video.

Speaker Change #118: We also have Rodrigo Almeida from Banco Santander, Michelle Almeida.

Speaker Change #118: [inaudible]

Rodrigo Neira: Can you hear me?

Rodrigo Neira: Thank you very much.

Speaker Change #120: Yes, okay, so I have a couple questions here. First one,

Speaker Change #121: It's regarding capital structure.

Speaker Change #122: So I think you'd be nice if you could give us a number of more or less what I know that's not in this strategic plan that we released but...

Speaker Change #123: What's your minimum cash position? I think the reasoning behind my question here is that today you have around $4 billion in cash.

Speaker Change #124: And then if we adjust that...

Speaker Change #124: to the expectation of reducing this APEC fund.

Speaker Change #126: This could potentially go up to around seven billion dollars, which would be a cash position similar to your

Speaker Change #127: Biggest Peers in the Region, so if you could please give us some color on what's your running rate for cash position through the plan would be nice. My second question here is going back to the gross debt calculation regarding the crown rock analysis. So could you just confirm to us that...

Speaker Change #128: If you're looking at going above two and a half times gross debt and we maintain the current gross debt you're using a 40 trillion peso EBITDA, is that it?

Speaker Change #129: and also if you could help us understanding if you're including the calculation of your gross debt to EBITDA, the debt that you repaid in July also.

Speaker Change #130: And then finally here, just from a strategic standpoint, when you're analyzing these decisions,

Speaker Change #131: Are they always driven by gross debt to EBITDA or do you use any other metrics such as interest coverage ratios and other things because when we look at, for example, your capacity to cover interest.

Speaker Change #131: It seems very okay to us, so I wanted to understand if you incorporate other metrics as well when analyzing this sort of M&As. Thank you.

Speaker Change #131: Thank you.

Speaker Change #131: [inaudible]

Speaker Change #131: Andrs Prez, Luiz Carvalho

Speaker Change #132: and many more. Thank you. Thank you.

Speaker Change #133: Carlos, good morning and thank you for your...

Speaker Change #133: for your questions.

Speaker Change #134: Indeed, we are.

Speaker Change #135: In June , in a position of cash flow of 6 billion pesos. And I think it's worth telling you where the 16 billion is, so you can get more color of this.

Speaker Change #135: Close to 5 billion are in Ecopetrol SA.

Speaker Change #135: Seven billion are at ESA and I think that it's important to mention this because not all of that cash is in Colombia. There's what we also have in Chile, Brazil, and Peru. And that cash flow is what ESA needs to operate and meet its projects.

Speaker Change #135: assigned. So when you look at that cash available for hydrocarbons, you have to keep in mind that. The rest is in the meat stream and in some corporate companies. So.

Speaker Change #135: It's good to give you that color.

Speaker Change #135: With regards...

Speaker Change #135: to the possibility to increase.

Speaker Change #135: The goal of 2.5 depth EBITDA, this is the goal that we have incorporated in our strategy. And when we look at the balance.

Speaker Change #135: and the possible fluctuations of prices in the other times and the levels of diversification of the company for now.

Speaker Change #135: We have not thought about incorporating a new goal above 2.5 times.

Speaker Change #136: Now with regards. Thank you very much.

Speaker Change #137: To the base.

Speaker Change #137: or the elements used when we decide to enter an investment.

Speaker Change #137: In addition to the cash flow and the levels of depth of it, we keep in mind the strategic lines, the risk profiles returns.

Speaker Change #137: potential generation of cash flow. And another important element is to recognize the decarbonization needs. And all this is framed within the capital discipline that the company has.

Speaker Change #137: So the depth is a very important to take care of the position of cash flow also. But there are other elements like those that I've mentioned.

Speaker Change #138: Okay, so I have a couple follow-ups here.

Speaker Change #139: When we look, so they're going back to the first question, what is a number that we could use in our models for a minimum cash position for Ecopetrol Group as a whole?

Speaker Change #140: If you could help us, I think that would be helpful. Thank you.

Speaker Change #140: [inaudible]

Speaker Change #141: Especially at Ecopetrol Israel we seek to be within a range between 2 and 2.5 billion pesos of cash flow. We believe that the 16 billion, and if you look at it historically they compare very well, but it's not a position of cash flow that allows us

Speaker Change #142: And I don't know if that's really your question. To incorporate...

Speaker Change #142: Acquisitions.

Speaker Change #142: and Entirely with our own cash flow in any case

Speaker Change #142: and looking at the levels.

Speaker Change #143: of the possible transaction that we're reviewing. It wasn't possible to make the mix significantly, so that's why we always reviewed.

Speaker Change #143: The Need of Depth

Speaker Change #144: Perfect, that's very, very helpful. Thank you very much.

Speaker Change #144: and Maria Hoyos. Thank you. Thank you. Thank you.

Guillermo Marquez: We also have with us Guillermo Marquez from Golden Sacks. Mr. Martins.

Speaker Change #146: Hi, thanks for taking my questions. I have two quick ones from my side. The first one on production outlook. You mentioned that you are not planning to update your guidance for the year. So in all, that implies a significant decline in average output for the second half of the year.

Speaker Change #147: We are trying to understand what will be the reasons behind this implying sequential decline. And secondly, on StepTech, we are wondering if you could provide more details on what is the company foreseeing for the balance for the end of the year.

Daniel Dyson: Any guidance on schedule for future receipts from the government or what's the company parsing for future accumulation from now until the end of the year will be really helpful. Thank you.

Daniel Dyson: Andrs Prez, David Riao,

Daniel Dyson: Good morning. Thank you for your questions. I am Rafael Guzman.

Speaker Change #149: Yes, we are aware that the current production level is way above the range.

Speaker Change #150: of 730, 735.

Rafael Guzman: We have to keep in mind, however, two things. The production of Permium has been high in the first half of the year because of the large activity and the plans we had, but in the second half of the year, it will decline, as I've mentioned.

Rafael Guzman: Currently to an average above 90, but for the second half of the year, it will be 80,000 barrels per day in Colombia. We also have uncertainties for the second semester. Thank you very much.

Rafael Guzman: We have several entrances of new productions.

Rafael Guzman: that could be delayed and uncertainty also in actions.

Rafael Guzman: In Colombia, as we've seen in the early in the year.

Rafael Guzman: Because of third parties that limit the production of several fields. So that's why we keep our range.

Rafael Guzman: that I've described before.

Rafael Guzman: despite the production levels. But to end, I'd like to mention that undoubtedly we worked hard to maximize the production of all of our fields.

Rafael Guzman: And that's the result that we've had to date.

Speaker Change #151: Good morning, Javier Cárdenas. With regards to FedBank, let me say several things. We're ending the semester with an accounts receivable of $12.4 billion pesos. The collection in these first six months is close to $13 billion pesos, exactly $12.6.

Speaker Change #151: So we have to charge in the third and fourth quarter of 2020

Speaker Change #151: which is 12.4 billion pesos and we expect to collect this in September and December.

Speaker Change #151: of this year.

Speaker Change #151: And with regards to the projection.

Speaker Change #151: We project a range of accounts receivable at the end of the year of 8 to 10 billion pesos.

Speaker Change #151: This assumes, and will be subject to,

Speaker Change #151: to the exchange rate levels and international prices, but the projection does not incorporate at any additional increase in DC. So if there's an increase, the figure.

Speaker Change #151: would be lower than what I'm saying.

Speaker Change #151: Thanks so much.

Speaker Change #152: Thank you for watching, please subscribe, like, and turn on the notification bell to not miss any new videos.

Speaker Change #153: Thank you. For now, we have no other questions. Now we're going to read, live, now we're going to read those that arrived in writing.

Speaker Change #154: Could you please tell us about the increased share of TELTA and ODC when it comes to strategic fit and the value?

Speaker Change #155: Alte Apeta,

Speaker Change #155: Good morning, Alexander Cadena, President of the Senate. As you mentioned in June , we mentioned that Senate

Speaker Change #156: Purchased 100% abducted to Colombia, which are the stock sums.

Speaker Change #157: 7.14 of the oil lines of Colombia. We have to say that this acquisition was made because we had the resources and that is a transaction that has good medium and long-term returns.

Speaker Change #158: The terms of the transaction, however, are confidential, but when it comes to a census issuance of bonds, these were presented to the rating firms, which perceived that the transaction was positive.

Speaker Change #158: [inaudible]

Speaker Change #158: Andrs Prez, David Riao,

Speaker Change #158: Alejandro Sanchez from Alianza asked two questions. One.

Speaker Change #159: Why do we have the reaffination margins degraded? Do you expect to have higher levels in the next quarter?

Walter Canova: Good morning, Alejandro Walter Canova, VP of Refinery and Industrial Processes.

Speaker Change #161: Yes, undoubtedly, when you look at 2020-2024, we have a first quarter in which the refined refination margins were $15 per barrel.

Speaker Change #162: Stronger than what we foresaw.

Speaker Change #163: In our budget plan, but in the second quarter, as you indicated, there was a fall.

Speaker Change #164: to $9 per barrel, so an average.

Speaker Change #164: The first semester is practically at $12 per barrel, which is aligned with what we foreseen for 2024, which we considered was not going to be as strong as 2022 and 2023, which were historically high.

Speaker Change #164: The fall and the second quarter is related to the fall of diesel that dropped $11 per barrel and gasoline. So the most relevant products that we have and produce

Speaker Change #164: Obviously had a substantial drop in that hit directly, the Gross Margin, in the second quarter. And...

Speaker Change #164: And in the third and fourth quarter, we see margins.

Speaker Change #164: More normal.

Speaker Change #164: below two digits between 10 and $12 per barrel. And that's where we think that we will end the year 2024 with the projections that we have today.

Speaker Change #164: Andres Gmez

Speaker Change #164: Andrs Prez,

Speaker Change #164: Next question from Alejandro Sanchez of Alianza is

Alejandro Sanchez: In past quarters, we've seen more loads and delivery uploads. Why is this taking place? Because it's much more expensive than other options. Will we see more of these types of deliveries? Thank you.

Alejandro Sanchez: Good morning and thank you for your question. This is Felipe Trujillo, VP of Commerce and Marketing.

Alejandro Sanchez: Andres,

Speaker Change #166: The full sales made in the Colombian ports.

Speaker Change #166: and those that we're talking about, that you're asking about, is because it's done through the subsidiaries that we have in Singapore in the U.S.

Speaker Change #167: When we make DAP sales, we're talking about capturing 50 to 80 U.S. cents per barrel more. So the question is, yes.

Speaker Change #167: While we find more value with sales gap, we will capture those opportunities because the freight and logistics is very important to capture value within the commercial strategy of Ecopetrol.

Speaker Change #167: Thank you.

Hernangoy Cochea: Hernan Goycochea from Latin Finances.

Speaker Change #169: and many more. Thank you. Thank you.

Speaker Change #169: Good morning, I'm Javier Cárdenas. With regards to our financing plans for the rest of the year, I have several things to say. First, we have no increased debt plan.

Speaker Change #169: in our investments plan. Second.

Speaker Change #169: We are focused on reducing the risk of refinancing.

Speaker Change #169: Remember we have an important tower in 2026 and therefore we've announced the anticipated payment of 250 million dollars of the bond with that maturity.

Speaker Change #169: With regards to possible issuances, Ecopetrol constantly reviews

Speaker Change #169: It's options in the local and international market, and we're always monitoring the market and seeking the best conditions. It's important to mention.

Speaker Change #169: that we are anticipating and, again, looking to refinance the Tower 2026, seeking the best conditions and the best moments.

Speaker Change #169: to make them.

Speaker Change #169: Andrs Prez, David Riao,

Speaker Change #170: Herman Cristancho from Corredores de Vivienda asks, ecopetrol is really, does have the financial position to think about inorganic growth?

Speaker Change #170: Hermann, good morning. Javier Cardenas again.

Speaker Change #171: Ecopetrol is ending the semester with a cash flow position that's robust of 16 billion pesos. So, that's first. Second, Ecopetrol...

Speaker Change #171: constantly is looking at alternatives within its portfolio to have an organic growth and seeking different alternatives in its portfolio.

Speaker Change #171: Organic as well.

Speaker Change #171: There are spaces for financing. Undoubtedly now for the transaction with oxy the levels were substantially high.

Speaker Change #171: and within the size and the strategic reserve and the projections, keeping in mind risks and returns, we're still evaluating everything and we continue reviewing and when there's something attractive.

Speaker Change #171: and that that's where we would have the option.

Speaker Change #172: Thank you very much for watching this video.

Speaker Change #172: Andrs Prez,

Speaker Change #172: Timon Diaz from Proteccion, asks two things. First...

Speaker Change #173: Could you provide us an update of the wills?

Speaker Change #173: that are being analyzed.

Speaker Change #174: To be closed and to continue.

Speaker Change #173: Yes, Rafael Guzman, Simone, your question.

Speaker Change #175: At the end of the semester, we had a perforation of four welds, exploratory welds, Milonga, Machique, Territos Norte, and Jocoto.

Speaker Change #175: Three of these wells.

Speaker Change #175: will be closed. Milonga, Machi, and Rocota.

Speaker Change #175: Doritos Norte is being evaluated and these are results as of the first quarter of the year.

Simon Diaz: Second question from Simon Diaz from Ficcion is, could you provide an update of the processes with SIC and the potential class actions?

Speaker Change #177: Made by International Investors

Speaker Change #178: Thank you for your question. Simón, I am the CEO of Grupo Ecopetrol, indeed.

Speaker Change #178: We have been talking with the Superintendents of Trade.

Speaker Change #178: technical halls or teams looking at these processes.

Speaker Change #178: with this control entity, especially approaching

Speaker Change #178: the process of hiring air transportation for the company's work. We've offered a guarantee, a program of guarantees.

Speaker Change #178: to ensure

Speaker Change #178: the competition and equal conditions for the availability of

Speaker Change #178: Helicopters.

Speaker Change #178: that can provide the service.

Speaker Change #178: to handle the timetable.

Speaker Change #178: of the process.

Speaker Change #179: We would have a space for another participant today. We are evaluating the offers we've received. We invited 11 participants.

Speaker Change #179: national and international we see we've we're evaluating them all and we're monitoring the process constantly along

Speaker Change #180: with a preventive monitoring made by the Procuraduría.

Speaker Change #180: which

Speaker Change #180: We practically

Speaker Change #180: have included.

Speaker Change #180: in every phase of the process.

Speaker Change #181: This is why we are waiting for the results of the SIC.

Speaker Change #181: on the Guarantees Program that we've presented.

Speaker Change #181: to guarantee an open process that's competitive for this process.

Speaker Change #181: [inaudible]

Speaker Change #181: that

Speaker Change #181: With regards to the class action, so far we have been notified by any control body of any class actions.

Declan: Declan has three questions.

Declan: from Santander.

Speaker Change #183: Do you internally, you already have the 2.5 times of Adivta.

Speaker Change #183: so

Speaker Change #184: But when it comes to the lower productions that you have,

Speaker Change #185: if Oxy is involved.

Speaker Change #186: and many more. Thank you. Thank you. Thank you.

Speaker Change #186: Thank you, Declan, for your question.

Speaker Change #186: As I mentioned initially, in our investments plan, we are working on exploratory activities.

Speaker Change #186: and an alliance that we announced with the Parrocks.

Speaker Change #186: to have more exploitation and a higher incorporation of organic reserves of the country of oil and gas.

Speaker Change #186: And we continue working hard and constantly.

Speaker Change #186: to be able.

Speaker Change #186: to have this exploratory phase.

Speaker Change #186: to be able to ensure, again in the future, the provision of both resources.

Speaker Change #186: We haven't stopped.

Speaker Change #186: of stopping exploratory activities, no. And instead, we already have technical teams with the director of hydrocarbons here and that of the ministry to evaluate the contracts.

Speaker Change #186: that were suspended. We've advanced that

Speaker Change #186: what they've mentioned, several assets.

Speaker Change #186: that have been abandoned or closed for some reason and that we should have a presence or we need significant reserves to reactivate these wells and develop

Speaker Change #186: They're more assurance to meet the goal.

Speaker Change #186: because every three years we have to ensure a hundred percent of the reserves that are needed. Understanding that more production makes us

Speaker Change #186: It makes us exceed what's planned, but still we look for opportunities.

Speaker Change #186: and to make mergers and acquisitions. That's constantly part of our plan, and we have a map.

Speaker Change #186: that includes also some disinvestments but also we seek to consolidate

Speaker Change #186: the chance to acquire projects.

Speaker Change #186: as we've announced, or to have a share with some allies that are also interested in making evaluations. That's a goal that a cooperative patrol has to seek a business opportunity that may take place. How can we finance this?

Speaker Change #186: by issuing debt bonds, seeking resources on a short-term basis with banks, and also

Speaker Change #186: keeping ahead an expectation and with a good level of liquidity a cash flow to leverage surely.

Speaker Change #186: with the investments plan that we have established of these investments that we keep in mind.

Speaker Change #187: Andres Duarte from Corte Colombiana has three questions. First...

Speaker Change #188: Could you please tell us if there are facilities of liquefaction?

Speaker Change #189: and Permium to bring gas from there. How does, how much does it cost to bring gas to Colombia?

Speaker Change #190: and many more. Thank you. Thank you.

Speaker Change #190: Thank you. This is David Zanio, Executive VP of Energies for Transition. The first thing that we have to underscore here, and as it was mentioned by our CEO,

Speaker Change #191: In the world, there are 20 markets of LNG exploitation. The largest in 2023 was that of the USA, with a share of 21%, meaning

Speaker Change #191: in that market.

Speaker Change #191: we have the chance to access

Speaker Change #191: to amounts that the country may need.

Speaker Change #191: Secondly...

Speaker Change #191: for to look at that molecule.

Speaker Change #191: and for the transportation of that in Columbia, we have to access.

Speaker Change #191: to regasification facilities. But Columbia, and Columbia currently has some in Cartagena through the spec plant that has a capacity now.

Speaker Change #191: to use that service. There the conditions to access will determine

Speaker Change #192: for joining us today. Thank you. Thank you.

Speaker Change #193: Oil that are projected and levels of liberation or increase production.

And over offers it.

Speaker Change #194: In countries worldwide. So the expectation of a bed that is related to C. E prices lower I cannot provide you the data as you can understand but.

Speaker Change #194: It is said that.

Speaker Change #194: The trends in that path.

Speaker Change #194: Lastly at the risk throughout the asks.

Speaker Change #195: Could you please update us on your expectations for.

Speaker Change #195: For the production exportation of cost of Gila Gram eight years of implementation for the production of hydrogen.

Speaker Change #195: Thank you again, Barry the annual V P.

Speaker Change #196: Of energies for the transition when it comes to hydrogen we have advanced to develop a strategy in the group to begin to produce low emission of hydrogen and in that line. We're developing now a project to produce.

Green hydrogen in dust industrially and got the hand, now and we expect this to be in operation in the year 2026. In addition, we are evaluating the feasibility of an additional project at Barrancabermeja.

Speaker Change #196: With regards to the chance of exporting.

Speaker Change #196: With the analysis that we made within the company, we see that as the market, especially in Europe.

Speaker Change #197: Well, there and the day there could be a decade up 30, and there the cost of any offers including Colombia could be four and a half dollars.

Speaker Change #197: Per kilogram of Green hydrogen placed in Europe.

Speaker Change #197: And we believe with the figures analyze that Columbia does that have the potential of a competitive renewable energy to reach.

Speaker Change #197: Those price levels and therefore it to be.

Speaker Change #197: A relevant player in that market when it develops.

Speaker Change #197: Okay.

Speaker Change #198: Thank you.

Speaker Change #199: There are no further questions now, let's listen to the closing remarks of the C E O.

Speaker Change #198: Okay.

CEO: We would like to thank you for joining us.

Speaker Change #201: I'd like to congratulate our great team our executives and.

Speaker Change #202: And our thousands of workers who constantly.

Speaker Change #202: Work hard so we can have these excellent results.

And every segment of our traditional activities.

Speaker Change #202: And the App operations.

Speaker Change #202: Again, we are committed at Grupo ecopetrol to to be firm to protect our traditional business and to execute our investment plans.

Speaker Change #202: And we bet on meeting the goals.

Speaker Change #202: And to create wealth that we've shown in recent years for the country for our shareholders and of course.

Speaker Change #202: So at Ecopetrol can still be.

Speaker Change #202: Great.

Energy assets there.

Speaker Change #202: That the that Columbia requires to leverage.

Speaker Change #202: It's projects for.

Speaker Change #203: Energy transition. Thank you very much for joining us today.

Speaker Change #204: Thank you all with this we end.

Speaker Change #203: Our call of the <unk>.

Speaker Change #204: The results of the first half of 2024.

Speaker Change #205: Now you can hang up.

Speaker Change #205: [music].