Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ecopetrol SA (EC, Financial) achieved a production of 752,000 barrels of oil equivalent per day, the highest in nine years.
- The company reported revenues of COP98.5 trillion, EBITDA of COP42.3 trillion, and a net profit of COP11 trillion for the first nine months of 2024.
- Ecopetrol SA (EC) successfully executed a liability management transaction in the international market, raising $1.75 billion with strong investor interest.
- The company achieved a cumulative reduction of 1.89 million tons of CO2 equivalent in Scope 1 and 2 emissions since 2020.
- Ecopetrol SA (EC) has invested over COP341 billion in sustainable territorial development, benefiting 38,000 students through various projects.
Negative Points
- The refining gross margin decreased significantly to $7 per barrel, impacted by international fuel price drops and scheduled maintenance.
- The company's net income for the third quarter of 2024 decreased by approximately COP3.8 trillion compared to the same period last year.
- Ecopetrol SA (EC) faced challenges with deferred production due to social unrest, impacting production levels.
- The Midstream segment's EBITDA decreased compared to the first nine months of 2023, mainly due to external effects like exchange rate and inflation.
- The company experienced a reduction in refining EBITDA by 72% compared to the same period in 2023, affected by external factors and operational challenges.
Q & A Highlights
Q: What was the impact on the net profit of the quarter with the adjustment made on the tax, and what would have been the true impact? Also, could you provide more information about Ecopetrol's regasification projects in Colombia?
A: The adjustment on the tax surcharge from 13% to 10% had an impact of COP500 billion on the profit. Without this adjustment, the profit for the third quarter would have been close to COP3.1 trillion. Regarding the regasification projects, Ecopetrol is currently assessing pre-conceptual designs and permits. The project size is being analyzed, considering factors like gas import needs and transportation restrictions, with an expected capacity of 200 to 300 million cubic feet.
Q: Could you provide more insight into the decline in production and lifting costs?
A: The decline in production is mainly due to a decrease in gas production, while domestic oil production has grown. Ecopetrol is investing in offshore and onshore gas projects to mitigate this decline. Regarding lifting costs, the cost per barrel in the Permian is $1.3, while in Colombia, it is slightly above $13, averaging $12.3 across the company.
Q: What are the expectations for refining margins in the fourth quarter, and how will maintenance affect volumes?
A: Refining margins are expected to be within the planned range of $10 to $11 per barrel. Most scheduled maintenance was completed in the third quarter, so no major maintenance is expected in the fourth quarter, which should improve availability and margins.
Q: Could you elaborate on the potential repurchase of stocks by the government and its implications?
A: The government can increase its share in Ecopetrol up to 88.49% without altering the company's mixed economy status. The repurchase of stocks would require approval from the shareholders' meeting. This move could enhance shareholder value and improve financial indicators like ROE and ROA.
Q: What is the outlook for CapEx and production volumes for 2025?
A: Ecopetrol plans to maintain an ambitious investment plan exceeding $6 billion annually over the next three years. The company aims to sustain production levels within the range of 700,000 to 750,000 barrels per day, supported by investments in both domestic and international projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
