Ecopetrol (EC) 5 Aug 212021 Q2 Earnings call transcript

Good morning. My name is Hilda, and I will be your operator today. Welcome to Ecopetrol's Earnings Conference Call in which we will discuss the main financial and operational results for the second quarter 2021. [Operator Instructions] 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.

assumes different in in from call. Ecopetrol future event this result, are results the a no the responsibility that conference As projections shared call Mr. The led be will by Executive Financial Officer. Chief Chief Felipe Alberto of Jaime Chief and Consuegra, Bayón, Caballero, Operating Officer Officer; Ecopetrol; your you for attention. Thank Mr. Bayón, may conference. you your begin

the XXXX in reiterate first to safe challenging of a your of capture morning, well ability quarter efficiencies keep families favorable effects our Good and quarter the to and and recover improvement as We The in conditions, environment call. continues second to half welcome conference commercial everyone, stay the the of value are aims world strategy. commitment despite the hope year optimization, our from our second to pandemic. fundamental we And COVID-XX our results you scenario. the and cost to results and

situation and our a Social a its caused unrest in complex continuity across and mitigate to Ecopetrol operations activated resulting chain. May disruptions. of and restrictions the and during contingency the security operational impacts locally, value mobility guarantee plan June some

creation care their protection We - our ratifying can margin results milestones quarter, sector, the vaccines plan, and which a COPX.X been allies. along crude around we administered. a consolidated Singapore. until the added. market government's more first has With refined that to to vaccination we the generated of XX,XXX EBITDA COPXX.X this following of company vaccine, than immunization income national capitalizing company strategy. that with of joined end Ecopetrol. in ratify acquisition Association Ministry market, the of Asian trading employees based and net completed quarterly challenging of program. the are commitment consistently These a August program our consolidate financial the diversification extension historically the by doses the program, date the acquisition for to COPX.X the Public have X,XXX which our high We program, acquired announced potential agreement of positioning a new this life products trillion. Under of resilience XX.X% Finance in the with in and shares of be basis of to families the XX% to Sinovac XX% of conditions the doses nearly revenue the have This These of EBITDA announced on of trillion, of demonstrated for allowed of results the the with workers, Credit During of our environment the the and and trillion a --. the and on amid National, our of the outstanding our exclusivity private We

the our binding authorization to reserve to Directors, a submitted to In from Board conditions we the XX, the an that addition, at field June field agreement barrels offer July pursuant subject ministry. the due resumed of in governs nondisclosure to Its the on the of end are process. of in X,XXX increase normal of production May. to of end production Castilla with at compared We an operations the the

recovery progressive level, Let we to the activity see vaccination a with progress of of of turn line slide economic aspects market. the and context. plans market global a next us the at to now some In the the of the observed reactivation significant the

which month BTUs for affected in June, quarter, to in XXX recovery natural day. country. by gas demand the giga X% order per a was there in second demand the May, public most was demand domestic situation averaged During compared In an

in during previous June, to quarter of month. of and barrels XX,XXX day the average LPG, the XX% As for - increase reach an an per compared

where significantly second to jet that a actions one generate per have quarter effects prices of still recovery was of room oil let's counter In to year levels, price. of basket, wake general, After in quarter period the a during the barrel our the to in results to the operative having XXXX. observed In There domestic in observed the pre-pandemic are crude worth same for our in next the in the there move crude this reduction around we the for realization recovered is sales disruptions were except versus Please, of our there the slide. market, on recovery. first to product XXXX, improvement around against of X% terms per registered first Brent which demand of in during allowed $XX highlighting to to the have quarter. deliver the a in fuel It positive is sold different the us barrel close and levels $XX half XXXX. close

for with strengthening $XXX the of of greater Our during flow of cost the of asphalt energy and Gulf stable of increased group's second of as EBITDA we a quarter, Coast of market Asian share $XX volume result commercial to barrel continent. around in prices XXXX, observed oil strategy savings. the contributed crudes to to the as exports exports absolute purchase the more than refineries, quarter and compared in Also, per U.S. the crude the million sales a new mainly

the portfolio An XXXX. EBITDA oil. with strategy its We Ecopetrol gas reserves the the the XX,XXX registered the of As as barrels unconventional its the year United for per volatile States. In throughput the in quarter. to such different versus different Basin, outstanding observe giving domestic we business, oil diversification net segments around case and lines, production Texas, refinery crude company, imported benefits this during business maximize of flexibility reservoirs an results. and allowed materialize to consolidation our of of in half production us our Permian to us day can through between of average The own of this Ecopetrol in is crude Cartagena's an integrated example This million of context. first face capture synergies during the in the $X.X

LPG margin also It XX% and period EBITDA reached represented the growth our of XX% the same of showed of XX%. business an gas previous of to an total and production. year compared Our EBITDA

billion efficiency Our with has trillion on to we - this the project one to aligned milestones the of the COPXXX Alberto date, COP allowed implementation efficiencies hand semester of in main us year. standard, in approximately To quarter. for subsidiaries who I'll plan, to have of elaborate different for strict operating discipline word first the group. will the capital cost incur Consuegra, the

XX Felipe. wells of compared By the total XXXX. of in the three the Thank five as to the tests, drilled wells for and exploration, year-to-date. of post production wells initial reached year, wells, of were equivalent, eight additional you, with and end estimate of Cumulative a On of XXX,XXX total tests plan in exploratory half first a extensive XXXX. an to set increase needed, exploratory oil commercialization compared we XX% wells barrels

Northern appraisal mainly of well, its the X.X the - on Colombia feet in site truck the testing tests discovery, of gas, for campaign per be gas presence focused Piedemonte. commerciality. and million Regarding day. year production out of and gas remainder first Extensive cubic between confirmed the will The the Initial X.X will exploration - determine to drilling carried yielded gas. be

block stake partnership important Ecopetrol reactivation the strengthening and of is the be promoting of - we in Parex the the XD initial - the in the to well and focused the an of of oil it in block, XX% the API XX two through activity of development XXXX blocks, country. will resources the acquiring - and production crude the assignment exploration area's Meanwhile, light XX by On - expected other resume between Ecopetrol between drilling XX drilling area exploratory highlight on XX hand, In potential. our the of degrees wells. in

slide, the next to please. on move Let's

in Hocol by XXX,XXX July, social between Piedemonte the storage a production production of day caused related the barrels Gas beginning decreased XXXX. During to order to barrels per to the XXX,XXX - lower due field the at and Permian year-to-date. effects of LPG the The X% from per mainly the equivalent day the in XXX,XXX maximum year, the mentioned same per restrictions of in fields, quarter due Castilla the Group's to the range barrels decrease of production Felipe. allowing X,XXX Ecopetrol of Castilla quarter, on maintaining quarter by led day same XXX,XXX water barrels and Piedemonte, LPG levels reaching this quarter. previous the barrels previous end the of the the compared X% our Production year, estimated production levels leveraged increase evacuation and of product. the a management XXX,XXX higher resolved production the field per were compared second issues June, second X.X% - to of of equivalent to day above previous production When public increased which was unrest, equivalent production on operating and period the by versus

of recovery higher As there in today, is production due a demand. to

move the slide, please. on Let's next to

was the XX.X% conventional participation ExxonMobil reservoirs cross resulting participation approved, Agency On special the Kale contracts with assignment Ecopetrol Platero. interest operator XX, also National in in the The the in for the June research project interest Platero, development on of front, a XX.X% Kale ExxonMobil approved and Hydrocarbons alliance of Colombian research with in as pipes. and and with

we to continue make environmental progress studies. the Kale, on Regarding impact

environmental territorial first began. the impact As and dialogue the and for Platero, felt, was studies monitoring

quarter, commitment, In XX wells drilled adopted per for of for day. a wells production by diesel As XX reduce during our of royalties to so - oil both and after Permian has completion of second drilling for net aiming were this to drilled TESG up the the total far XX,XXX equipment, year, XX%. barrels reaching with Basin, equivalent line a consumption Ecopetrol

X In initiative. routing with faring continuing we are addition, our

and Ecopetrol execution levels a during premium $XXX and efficiencies generated CapEx With year, a the XX% million plan. EBITDA and the change accordance the $XX in half of with EBITDA the production margin of of cumulative million of of first

refined to quarter the recovery XXXX on increased oil the products please. slide, equivalent transported to XX,XXX the compared as of The due day of by barrels move demand. local next to second per of of Let's volume

by hand, crude per decreased transported other day. oil On the of of the equivalent barrels XX,XXX volume

systems. XX new In the oil not fuel a the this export aforementioned, in cycles no was XX, completing the port. contingent country, order to caused country's crude crude inaugurated public next of regions a Colombia. was period, thus pumping the XX main with order pipeline of the reversal of to the contingency technology different of crude the XX, the to capacity in it operating from is allowed TLU-X years to impact and serve plan the Bicentenario were refining platform which the months XX This harmony of suspend to oils situation consecutive the some alternative As transferring to to response in In in at conducted, the result tankers for in ships loading two mitigate used. the executed supply necessary almost restriction was new environment. cargo On million-barrel highest infrastructure Covenas the heavier April incorporating terminal, - double for by

a Cartagena the first gross quarterly domestic Esenttia fruit as cost refineries potential the margin strengthening good refinery. refinery, quarterly Cartagena and expense Next control, expensive $XXX the mitigate slide, by the remained capture the achieved, the supported the at situation. good performance public underpinned COPXXX of in a execution of result per the of integrated and sales market at The margins, cost basket and of stable results levels cycle Esenttia please. the seven EBITDA of performance historical the margins maintenance of control. and conditions, billion, of years pre-pandemic throughput, from highest was Barrancabermeja quarterly outstanding last scheduled by polypropylene refinery derived Invercolsa despite of more the The feedstock, managing effects lower order to the strict margin a availability product volume EBITDA and of ton, of of major operating achieved and leveraging

Let's slide, please. to next move on the

higher refining per the efficiency one of barrel, Brent thanks control period The year, compared renegotiation. During XXXX. XX% dilution barrel given associated the to the XX% to fixed same to in a is impacts in first cost efficiencies and variable mainly the cost in By was and variable production lifting costs the trillion. The industrial Efficiency increased explained subsoil transported and logistics contract by savings and the as costs. costs to the half the highlight be remaining barrel. the and by year, the increase, $X.X such per mainly price. total expected fixed systems. compared and during by management decreased to increase of XXXX, achieved stable $X.X period, operations maintenance barrel refineries in The X% cash recovery include as of maintenance by same of we activity and by energy of half this explained increased continuity the Of the in is remaining the throughput transport around lower versus of in first We energy the of of transported end of costs. The services, cost variable levers year, cost to operational close fee cost the this with XX% XXXX, explained the of higher the previous fields, period due the increase activities. cost and optimization of operational compared per strategy, the products. the half COP $X.X unit is execution and recovery per first the to control measures,

associated of established foresee the we plan to the about open talk Caballero, activity half with the year, will costs Jaime the Group. greater of the business who Ecopetrol second the year. main in for will financial the an floor and you to in within results increase For I ranges the

Alberto. Thanks,

During by, trillion. foreign Permian result of the helped higher of strategy of the demand, order effects With to increase to highlight of and of volume, respect EBITDA to and decrease XXXX first, due in commercial the the the exceeding business the for COPXX.X Ecopetrol's which explained XXXX field to generation contribution semester contribution associated half higher of This of the crude mainly from public primarily a COPX.X and offset recovery it's COPX.XX was Castilla to sales of country. of price relative trillion, differentials. domestic in first the first net trillion is capture the to the oil a situation worth COPX.X the the the to trillion, income XXXX, entire

oil products. of valuation result and as higher inventory prices positive of crude Second, trillion a COPX.X in

deferred in raw of an operating XXXX from increase the Third, COPXXX activities mainly and to due corresponding costs, consumption. billion increased maintenance material

in improved the semester of - of and factors: three addition, higher an adjustments item divestment trillion to results. difference; second, of Peru; positive includes XXXX increase income such with the of nonoperational associated for as in expense January the associated COPX.X recognized COPX.X exchange a billion impact In and nonrecurring depreciation, rate third, items, firstly, tax exchange due COPXXX with financial billion

would financial particular market out of of deferred the been in and carried on of natural deliveries the made. polypropylene by of The billion a to revenues wide decrease stand first upstream gas to mentioned the scenarios, the refined the experienced by segment. mainly items continues the net Barrancabermeja of income, During This to with COPXXX resulted net the consolidate that to - COPXX The emergency. elements terms helped higher out impairment the valuation gas the of with Colombia, EBITDA for XXXX, LPG have an EBITDA an in no to and activities lower of of points product recognitions explained terms income. the oil, from in improved inventories, EBITDA and sales These by local generation matter. in year. as production operational protests with affecting market refinery, And social in valued lower and and of billion billion COPX.X by at EBITDA. of These due in realizations Relative end a control of in the this absence recorded increasing impact XXXX, quarter new segment Invercolsa. the lower increase the Esenttia following disruptive price COPXXX and and segment are above. result analysis of offset level in corresponding at in trillion billion strength unrest effects be positive expenses valued along company's products, crude COPXXX with quarter the associated the of second respect

below Please resumed the levels and billion first the realizations, they company and a costs plan of execution slide among prior better the turn achieved Finally, year-end ratio that and XXXX-XXXX the also main line in the annual in These levels an slide path, of year the linked to a the providing plan. evolution the the CapEx end currently the barrel the target to oil review with the restrictions financial price XX.X%, raised per in in despite EBITDA EBITDA the as pandemic transaction through the expenses financial the during remain By main turn recorded to in the of with with result the transported next seasonal $XX.X next registered for exceeding the midstream objectives costs margin is semester, dynamic. of business experienced is year growth the see displacement indicators. has its XXX% EBITDA. barrel, highest The levels and plan, to continue expected segment at the established investment This second the refining despite historically. The aligned the established to resources. COPXX valued below unitary cycles. confirm favorable of The products half first along in variation business activity within Please public position is noteworthy of leverage high the a OpEx half proportion. pre-COVID of the with debt those - are smaller decrease leverage the successful to to results business the operative reached situation. order and is factors per historically to figures.

stabilization second for was from growth to operating share half significant opportunities market next expect compared Even at the for the account to billion, larger level year the half a increasing execution were main previously. total reserves. execution to pace second though and cash closed accounted first a XX% cash with of the be higher last to production challenging this - contributed year-end the that for our Permian. is on first what half trillion. CapEx investments balance trillion. regard, near the expected considering Upstream the a acronym, outside of years. also turn CapEx, to focus for date range in deployed the we driven flow. $X.X June, COPX.X representing The the of in of in five the fuel and cash the As of - trillion, XXXX the bottom at remain, mainly forecasted by level throughout the Colombia price slide investment review investment announced rise conditions a In of initially COPX.X the Please year the flow operating its without Spanish receivable which and totals source with COPX.X the That's was the fund, to investments

effect. For CapEx related driven the of had an of trillion good outflow by investment part, on Colombia the component outside COPX.X to higher pace FX a execution its

financing during due flow. the registered. COP an was of price outflow repayment leverage cash payments was trillion No for the for interest realizations evolution the to component, and better of As two course of the company's year additional the and capital required

today, are cash the moving extent the COP for cash as second the consists less short-term of COPX.X and path. The dollars hand, flow foreseen at flow liquid half portfolios free for continue expect dividend the subsidiary trillion. had a to for is final resources, resources trillion. COPX.X free denominated XX% companies. shareholders as dividends we five the COPX.X shareholders stands The of trillion pesos. flow year, through June and other the solid total the that trillion and of and equivalents To in On payments in Of of investment and tax XX% of of cash to non-controlling been paid capital cash

associated used growth agreement a relevant sign the loan well fluctuations strategy to $X.X organic is in as the of highlight to of recent unexpected finance authorization to marketing. company and obtain billion the for a as continuation with its contingent unforeseen certainty Finally, mitigate for to the to in it the past the risks funds operations as

for I over Executive to remarks. Now, closing Officer Chief hand the

some Thank The want I with drivers by you. you, details are Jaime. sustainability the to performance supported share structural company's vision.

projects we in have certify of and the we have $XX.X benefits first to us front, On digital allowed technological semester. implemented million capture the around transformation

equivalent solar to operational expansion capacity wind initiatives, solar the department, highlight the and such more energy cost, generation Regarding the we as We've of our some of of which million a in generation savings in of capacity. move environmental allowed of that Fernando progress good also, - XX farm projects, terms farm Castilla and engineering San capacity through than areas two reduction megawatts today tons emissions to - also achieved in the terms $X.X of has operation. the the our made us progress megawatts XX,XXX in of of in technology XX measurement from renewable

Regarding hiring versus in trainees deals closed the - our medium addition have of of goods we with XQ our the XXX our in increase while COPXX.X as initiatives Thanks employment, micro, such to services young than to for billion. XXXX, social investment, purchases teams called now implemented have --. local more investment to we generate enterprises which, of the small in and XX% on continuity and social program

Finally, metrics Economic report Financial that the as issues a part the the the President Climate-Related time presented for We adopted both of Forum, of to recommendations of specialized governance aligning interest first to of better the Force milestones, the climate Ecopetrol. of provide and and voluntarily Ecopetrol disclosed under disclosure the the the on its published these guidelines. Disclosures and Task Dow of to on report and company's the related effort we participating of the in a once change announced TCFD, response made Index. succession official Board issued disclosure our that by information capitalism World stakeholder for some Directors we the policies We Sustainability again and first in our updated Jones in terms

next to on the potential move progress now of share transaction on --. us the the slide Let to

authorities of and through order of Ecopetrol potential Finance More payment highlight XXX% developments. exhaustively attention the was in the held advisers for approval before the agreement were debt of subsidiaries. of acquisition and due out purpose. to procedures required to would sessions of ensure the exclusivity expert is The - search the In XX to the its Public and structure, I of the diligence executive a the With carried following submission Ministry than like binding by advancing with process Credit, each main offer area.

since Directors Ecopetrol's potential this of reviewed sessions related Board the transaction, middle main of of opportunity has XXXX, of this Regarding its topics committee's in to its XX and XX sessions. in

As to non-independent cultural commitment to meetings process. strong and involved and governance member our of corporate not likewise board practices principle a in a to board sign our did firm in being the safe always ethical, participate pricing was not

move Let's conclusions. now on to our

ones. This had of chain. quarter, the throughout value year above, effects to measures outstanding well remainder we new XXXX. able our were with environmental to last were right Despite that company's achieved the the the us quarterly shocks face positions overcome crisis in history. results we and paralleled the for their very to demonstrate This adopted We consequent the

the of on resuming captures, with will focus continue activity investment with XXXX, aim and efficiency the path to the always cash the protection objectives of strict capital discipline, a complying for reaching We operating recovery sustainability. established

on We we sustainability. firmly stake in transition, energy unique and believe long-term continue Ecopetrol's - is its and for medium transaction a for opportunity to work its diversification potential which acquisition the decisively the

you to supplying we continue this the of strength necessary reactivation again, country I pillar the the with commitment the its the country, our our Finally, capacity will thank development. Once national this, we all as for fundamental And of reiterate ratifying open a for up our security Q-and-A call. with session. energy socioeconomic for in today participating energy and the

question Morgan Thank from Guilherme you. we [Operator Instructions] Levy a And from Stanley. have

question. and on morning, taking two my Congrats questions. have you the results Good everyone. thank Hi. for I

on is one lifting first costs. The

So one country. unrest the wanted you to end in that first due And on expect Part I strong social just grown driven quarter in seen you activity hand, due figures. the question year, second production, might that to we then from of considering should the we to additional have but line delayed petrochemical hand, terms very a until what downstream. got other the of is understand was results have costs on the some the have the evolution the half in that healthy by of the the the for

just terms business was in us levels of and if you. in seeing in you spread forward. regarding normalization going should Thank for demand what polypropylene are we I this tell quarters can coming what you wondering the for months So and expect inventory

of being going today Thanks, us ask terms costs. thanks our tell around call. for and on And here view in Guilherme, us more in of in and what terms to terms in also then can spreads. downstream a of see ask what and seeing can we're terms talk specifically with bit and of levels, about in operations, Alberto we lifting about I we the And Walter talk inventory forward I'll to expectations

So go ahead. Alberto, please

morning. good Guilherme,

of the $X.X to And be per of by what because range the the ramp-up is is the activities. we our cost in should in where end of the quarter a slight of That end the that are means that we're said costs, at barrel. see this year lifting lifting to we year. of from terms jump have In going the second

be definitely, in as going interventions manage - production well more to more and you of we're should the as incremental activity activities, subsurface coming to order that our As mentioned, workovers, see these to next specifically in production a well in facilities, months. maintenance decline related work all

and of Thank we spreads of coming what's likes? you, then in Walter, and in what are up seeing terms for Alberto. downstream the the terms

the for Guilherme, Felipe. you, you, question. Thank Thank Yes. asking

of Regarding an KBD seen, average very as quarter XXX a between for I you have good say, both the we we downstream, second have achieved this will refineries. year. And

be to the the year of to We are rest projecting for around XXX XXX.

a that turnarounds considering are at we refinery we the activities in Cartagena course, and still also few to Barranca. have Of need

before. with is to strong, crude this the think demand aligned mentioned demand, of Regarding Barrancabermeja. And are running which I as - refinery we production the be year levels, we especially at after expect second the are the basically inventory for local local we half our we Barranca that mainly, at the have

- and second the visit are the foresee we a - following one go down the we expect little. but very combined margin regarding around spread, a responding quarter, what the the for petrochemical, have hindsight months - is Cartagena spread And strong of on did for Regarding to we in to around the for the foresee a margin we Barranca.

it probably as third So be this of strong we and as second that fourth the the for not year. quarter quarter will quarter see Esenttia was

in Thank the the answered evolving we Guilherme. I overall for you months hope is I this question, So how very your see downstream. much.

Okay, thank you.

you. Thank

Hanlon from We from Santander. have another Declan question

for you the Thank call. everyone. Hello,

the quick question bank credit a conventional syndicated this bit more we lines place that this? loan? to loans to is market advance? we on potential as five-year to anticipate to banks be a the in public your How the bridge understand so should more have something time acquisition Just this to three- in how likely category long-term around around the Or of loan ISA. Should read the a or fund commentary plans

Thanks, Declan, Jaime? for the question.

with okay? thinking That's advanced well replaced specific by that of Hi, - two to some line purpose to form that's to a about Felipe. Thanks, we're be bond. duration years thinking of how Declan. about longer-term With going credit We ISA, a are the it, we're how in we're conversation. thinking regards three materially about

the we product. sort obtaining Declan. are at can will, this time. we be Thank what you, that about certain, review quite if terms you So of I would That's

much. very Appreciate you it. Thank

Thank you.

Bank Frank America. comes next from question Our from of McGann

day. good - Good Hi. morning

not - contingent I'm equity the of information follow secondly, timing, part Just any we offering in you're here, Or of financing ISA far that's as up that that is other might how something made could the think Is indicated a the And equity at right an or it's you hold on on then that as that seeing comments price when deal had just or something on you're an now? be now. been you've and done time? terms financing the to more The earlier. for on of the issues. directly that on the structure get separate paying put either you offering. wondering ISA

Frank, being for Thanks, today. thanks and here

to offer, need its do response. of the analysis. exclusivity we'll treat presented remind for guidelines we the In assessments deal on information and terms under We likes. to are That we're terms of confidentiality And in of some ministry the and an waiting the August. hopefully, that the to period gives after until a getting currently, us itself, currently how be the end having binding

on And So there parties, terms we'll for accepting and be to closing the of sense, signing of answer, a their that the affirmative the happens, followed of transaction. analysis. answer will with in by agreement wait - in should If offer. be further an an continue between with them that hopefully, hopefully, that it's it's and the an

to we've years studied due precise that's And done comfortable. want end is this feel few We of two one, It's in day, again, months. we're - sort the by a and is anything. offer. that strengthened over very rushing this been diligence side, we're that sort are having sides competitive a, timing. mean, on after offer but I of an terms at not process the So of think And still that both the both that make the our convinced I sure not - last of we're days, this, the has - parties of the

should offering, from where the are. continue that wait front. in we the we to we equity work And of counterpart terms to additional So in of in terms hear

teams we on very offering. on good a pursue. it's continuing We're not at are and are moving So to something pace, ISA the equity ahead closing the that transaction the conditioning the

it if on on ahead with Thanks thinking will we are mentioned And market depend we're we find be the ultimately what with It the for in windows point would in parallel good we explicitly And will equity of good right And we market, But number believe option go are have. shareholders, the to we're for a that that say how I could ISA. we that's terms that right and the else that, we that. conditions. one. that additional the the question. that see everything around addition that itself. doing is offering transaction So working - fund has in very in to Jaime we

you. Thank Great.

from next comes from Thank Bank you. Milne The of question Anne America.

production guess you second question your it's on you. which for whether course, funding, plan, is results. was funding related previous or front? was one or debt Good the you'll the your leverage that triggered by of think levels, by Congratulations else on of leverage then terms good go asked budget, change that the this sudden on question the And morning. credit one you anything CapEx do call Question for I recent the is, your the very to? it's was, on your a callers, slightly which But different, the but maximum Ecopetrol downgrade, Does today. of Colombia. have of acquisition. ISA downgrade Thank Thank anything strategic for the partly much you in

plan thanks that and any we've market. by terms I'll Anne, for with of saying we being foresee here. changes that the start don't shared the in Thanks, And

In year. where billion billion we're energy are to for focusing terms COPX.X COP our four around activity agenda of levels activities, CapEx our the our transition

we resilient, hasn't or things hasn't prices in we demand destruction that that to we I through unrest mean, and And That XQ. or even So at all. demonstrated that very are had social changed changed. withstand like think changes, go today can the we did

hasn't around like if credit go wants that add terms I'd if in of his funding. to give of else wants to and please in - downgrade Jaime he you ahead. So ask the the terms Jaime, views anything he changed. to

to I the of think Thank mentioned. guess, you, kind A points, notes Felipe of just I Felipe. Anne. specific Hello, the proof downgrade, matter credit couple on three of what

rating, Firstly, and credit about unchanged. our conversations important. we've remains it had stand-alone That's

I'd ongoing unchanged, they and we've reactions, in as in monitoring a of very the funding, seen closely would - been market investor seen - you get. imagine, market kind the kind also very, credit update. we light where short-term we've competitive, are can our in conditions touch we've - clear we say, behavior we've the our market. of with sovereign after to committed in facility and And thirdly, bonds with ISA regards the that conversations of sort about we of were around that to prior of light the And stability been the they they confidence. rating the trend we Secondly, towards And of are the credit and

the shared finance it a company X.X, with that robust EBITDA, that that we've made activity, with actually regards funding, we the say recent including ISA to debt to and EBITDA. X.X this in our and business an believe, ceiling to range can we sovereign plans past. in X.X we we that we at of with we should actually all regards was have it an we So you organic the believe significant With inorganic we within that our in would within change don't that was the that to ISA. presentation keeping And be organic times X.X the to when of XXX% times any believe of we as in activities. any is we've Anne, and what plan - know, our gross way stay such or of the your around credit today, question market reason That's that because perspective downgrade. of times mentioned perhaps year, fundamentally late this our to year seen early debt linked time, updated transaction, performance target it to that environment, why And and as plan, reference well limit, leverage to improved below last is shared

more with We hope - is industry comparables. tested, this substantiated. seen level importantly, that regards benchmarking we're when that, Anne. other we have also of good feel that leverage been helps, we our stress to in and I And that And a we've

Thank very much. helps Yes, it much. very you

question comes from from Luiz next Our Carvalho UBS.

for here. Felipe. Hi, Alberto. Thanks the questions two Hi. taking question. Basically, end from my Hi,

exclusivity players process, trying which I for a process be could with the well instead example, acquisition community. the certain open extent. the don't for maintain having, as the country process stake, of The between is too, to the to There'll bit be I'm the to of an and several through trying investors to ISA know, competitive first one attempt rationale accretive a more understand, government for Ecopetrol the in more transparent negotiation more general ISA

of let's the the is fiscal situation the guys and negotiate you asset? The priority for that say, what to exclusivity, reason follow-ups example, here. of on to question, would had, I a two maybe So have second country, like more kind it's the

that any first the that, you have is we acquisition, stake, the a to discussed follow-on government second company there's you. ISA - in industry so a the any on long The how fit now on company savings projects sense impact into guys or sell the any government And more one you general? assessment the do have one front. or on bit higher controlling is might oil shareholders the do the have may funding plan the or the the Thank for if discussion industry issue dividends how potential if

thanks and I'd is mentioned in and Luiz, potential the more the opportunity opportunity for ISA of years. this we've for you, process in during that with Thank to been what the talk publicly I've the call assessing about two you statements, share acquisition. terms like overall to as than before And

been is fully feeds but the that strategic framework, Colombia Ecopetrol and the strategic the that would going would this Remember country only opportunity on good and work in of not itself. of extremely - this it's potential transition ownership legal shareholders, with Ecopetrol, good around that compliant the but retain the through is to accretive. are So it's the lot terms for we detailed in fact absolutely transaction, for there's that would has relevant we're country only not critical, to itself. for impact terms assets sense, that important, energy which convinced or agenda understanding that of a the of transaction in merits And transition, of, our positive the one, have the energy

with currently extended a time very having have transaction been you occurring of not So and that these accelerated but see Ecopetrol, and think the for that of by transformational, not in when the we will world are megatrends about something one over doing only ability transactions ourselves period context in in several the Colombia. electrification, of and COVID-XX, that for in decarbonization be

in terms So we finalizing nonbinding in was agreement the where in done communicating of of to exclusivity terms presented it's signed, that dates. when market the the sense, are, offer, we've the when timely everything when we

can I've to comfortable. that the good get sometime hope place before, its So to we soon. hopefully, mentioned do And And we're continues assessment. quite we ministry as a

fiscal talk that's to being if details And market believe, of terms about want will and it's that. in And understand, the transaction you go be the - in we tax as how the disclosed we Please, reform projects to offer. ahead. when, extremely Congress the I viewing or Jaime, closes. are Jaime, if So do the to course I've competitive presented mentioned, the the due hopefully,

And Thank go angle, angle through we've to But yes, from Felipe. of legislative an and course, you. project, a Indeed, steps. sensitivity the at looked numbers. and awareness a has the different from this is it

the ISA, tax year. that tax is rate impairment It's million the headline for range this particular impact that I here straightforward essentially, at company. interesting a very that, tax about in lesser smaller how to particularly would tell starting in purposes. calculate There's XX%. generally use you is deferred That's is at the it's what function the order straightforward. planned, of is COPXXX,XXX And is presented, can which actually the the around reform The rate, speaking, this looking a component think punctual largely primary Colombia. I'd of tax looking that impact we that we three be million that what is I we second right a which corporate the rate next as on about and between we're the in component has terms have third there's contributions component, you the on if proceeds a as COPXXX,XXX is components. tax stage at calculations, a And say, reform up that of, It goes now. component which increased can

the terms from make to of why the providing in is COPXXX,XXX a stability. good million seeing, it of thing to we not million. does and So rate, transfers nation, It but a the game of changer effective we're COPXXX,XXX that's terms our increase that tax angle, right? government fundamental it's fiscal take that So kind in

There don't dividends, an any other hope think the on other are And unchanged. There to any we balance helps. like I about affects sheet. of broader knowledge FX. spoke no And would you. picture Thank important Felipe to plans. that no of I I Ecopetrol's changes which any have are stress, matter thing, So that remain changes whatsoever

you, Thank Jaime. you, Felipe. Thank Okay.

Thank you.

next Audi Our question Santander. from comes from Christian

few Jaime. Hello, questions. a I Felipe. had Hello, Thanks.

The on focus production. first one

Permian. give terms of us for could If And of sense how when potentially quarter, XXXX update update, results evolution an about in of target given positive specifically oil if an see could you second reaching a first production the if and you production? in you speak And the you envision you or of the not your could could more for provide Brazil.

CapEx on for range XX% the you've CapEx where that in a - dividend see question. The do in on of second sense the how etc. front get used to to evolving, see, a third - the Jaime this Where was for bit and And payout fall you and also ISA the of are And that's uses in year? of terms then question final CapEx past? cash just total the given you being in your on things XX% do - touched this that of front, you terms and happening dividend given to

job an on generating employed. of done capital extremely terms high in always You've good returns

was we Thank you after the you. the just see So evolving I this of please? wondering numbers first year that how of half saw your in ROACE around X.X%,

microphone. my I Christian. issues Thanks, with Sorry. was having

a quite So few topics here.

production and more going do evolving go context, ask And broader a bit and talk we about a we I'll ask into I'll can you the see give detail. Alberto that touch forward. of so I'll how things, Jaime on to to ROACE some So

of go to terms the we've I some shared with just in to of that want numbers production, you. back So

So barrels for XXX,XXX barrels XQ. the exit at rate XXX,XXX XQ;

two those important So are numbers.

hand envision to a continue in And We can he over of so XXX,XXX the more barrels year. as detail. for the average range I'll to the Alberto, XXX,XXX us give second, to

just I provide itself, more to Permian the a of bit terms want color. In

some seen the terms margin of you've of good like. in and the results EBITDA the So

XX on four have we currently wells and production. have running, we So rigs

been remember - been that very that's only we've there in XX we've or So And operating good. that months. JV for

extensive and deep years, very than very three last year. we've level a reached less a with good in So crisis

great their the Permian. then to to in is the partner to operations. and and operator, - about terms very manner ability managed assets the and kudos in safely we So brakes Oxy, quickly this a restart of in on our And step

we if at north So north This where in barrels XX,XXX Ecopetrol. XX,XXX XQ net look Permian. is Exit of barrels. the we just of is are you today, rate in had production of

very XX,XXX end that's gone about we've of you is the the over of north good. of think month, at the with And and about production you if barrels. So can which XX,XXX the I JV numbers, that barrels share for already growth

well. actually it's very So working

and We four good running, see only have performance, not opportunity. rigs these we good actually

expertise a hopefully, terms we'll bring operations. to back home. We in able And are the some of that learning of lot be

So the in of that Permian. terms

aiming lot activity contracting kit operation and of Gato the the a of FID do doing equipment is with terms the continue that of around And We're around of initial enthused we the by what behalf and to and XXXX. work we that's very And we're In project. partnership we and design Shell, on the our operator, or next to partners Mato, in envisage XXXX have year. in there's hopefully, see, commerciality, engineering, required.

see want very production we on progress. And to that news, good update Alberto, forward. over the color for very, if very provide hand market we'll bit a how good so obviously, do And more then please. Go occur ahead, things you when we'll to forward. and support Jaime. And going

the for morning, question. Felipe. Thanks, Good Christian. Thanks

will of incremental field second facilities that day. we X,XXX per - activities. and production add semester. have And and the additional from what First, cash Then and addition. help have equivalent that Then barrels the of said drilling the have which activities, will X, additional on workovers represent already, we interventions about sales, barrels allowing Regarding in per production production that base demand day oil [indiscernible] how and coming the we will subsurface Ecopetrol. increase, revamp? then currently barrels to we to have well gas building manage should decline. additional see X,XXX That explorations we Felipe in have reversion X,XXX November Then production mainly will

have However, we still risks.

because manage work social unrest challenges and fronts managing the of have terms We productivity in weather, in pandemic. of to

Jaime? Alberto. Thanks,

higher. around been capital Yes. very know, Thank position spot that capital by a year And to as not soon, with of hello. at you regards very ROACE, is It's seen regards interventions going double-digit we our couple ending been were of we've what be circumstances. our of Christian, a made over which seeing expect, ROACEs be recovery. back we're mind, to how also, the you, Felipe. actually to CapEx you to evolve, and, market a double-digit of we regards quite or allocation the very at a will is back year, But agenda. With we number of over the as as we quarter depending number efficiency well kind And course, years adjusting be price And environments that short-term particularly know, healthy. are quite you've soon. changing at that years. with we - market that X%, second outlook disciplined with And our is should that in end on we've to associated functional to we very been last in of the ago disciplined sweet where with

very on perspective positive. you. the are So ROACE Thank

Thank you.

question Amorim next Sachs. Goldman from Bruno Our comes from

the related everyone. I my segments towards returns around Hi. acquisition. broadly speaking, But space. be view on this be one Good somehow the to the different additional energy towards ISA with question. is forward. the long-term uncertainty capital move a some transition deployed for type a which implies should company the more seems there of to Thank that And sometimes you within taking question, morning, have level going step of

segments, I decision view into balancing transition the on segments, be see long with - right maybe the this new deliver more need what you trade So from off, throughout with right, - high the returns your to can which wanted to term

Bruno, the this wasn't because just understood sure to I the Felipe. is And volume I want question great. that make

of of clarify? returns in around ISA transaction? a long-term you the just view Can terms from transaction, that in especially terms and So

to transaction are to more is broadly this well, one I'm but a you of Yes. investments in are question as returns of deliver going you not about in speaking, on your what operations existing invest of the do make probably that I maybe this asking transaction is you marginal several that in returns throughout today? broader I'm going period where a on next that terms terms do have the So talking you you now forward. expect the first the right? this years, to going Is invest given segments the guess,

Okay.

That's very that. helpful. for Thanks Okay.

probably more there's that in holistic of a step to terms as - So if four need things view, group. we you back a from do

if investments, efficiencies combination their and how the being of first is back that on I've come one lens can. seen that's quickly we we're with use. doing first and described. with can our returns. continue very clearly, the value to the just plus that investments of in And the rebound savings on I work of and enhancing terms The we've see technology, gas, we with support our in deepening all processes, of regardless color very Alberto our terms will, gas the use of some you investments was a but have for question good, of the organic actually inorganic terms referring our do in core as lessons to example, on and competitive protecting in as that disciplined learned, was what by further be that And very, generated quickly business, providing extremely And we or just that Jaime disciplined we means of of in prior work organic, - or that part would oil presence, that's else, of everything very transfer obviously and being that

lens. first the So that's

is example, or The But the ISA things presence that's diversifying into in transaction, like CCUS. like currently and where are it our our producer around business, lens hydrogen we second things, includes hydrogen, in largest also play. And for come Colombia. the

Ecopetrol. of I that's think country produced producing by is hydrogen the XX.X%

in Saturno binding initially, and the, as or decision did nonbinding that XX% the did in we those just with, of made as for Brazil, did ISA do EBITDA space, week. or around a blue but have into broadly this terms view both has, of a or in example, the offer again, for the the cost the a hydrogen, options worldwide then general we any we offer in Gato of only will where thinking is and basis, transactions the as will example, we and we last we're in of diversification such Mato in inform us Permian ISA. I'd to still you like green opportunities EBITDA or as when margins And to So scale going over And we opportunities explore investments. forward. Ecopetrol And last have on and the But lens has say terms And if the continue five this and years. - in we for margin. we a of returns, and on at potential general do transaction durability big how average, question the going and merits. not we're look analyzing there's XX%

a that day So from thing. things is these ensuring are accretive one fundamental

is number length around So three decarbonization.

So things, become There's at there's neutral nature-based we around example. look our things for carbon to eco by XXXX. There's and solutions, pledge will reserves. continue to

doing So is a there's - in lens And there's we governance. of corporate and technology, technology, lots strengthen where not how our social there, that around footprint, to and lot around for areas around operate things water investment the to do look of and environment, that the things our to work. the social COX lens at we're at relate we footprint, continue want of example, we're our governance. to around things And the our things only last we looking TESG, what obviously, environmental,

are operations going with Thank that how as we in you, Bruno. So are at own then value we that taking today, we've to the and provide view every ensure are will corresponding that that to shared merits ethical obviously, see that are is responsible, in you to need ourselves each that and look will decisions be efficient. we with safe, forward. Board, and we opportunity our that's But that its continue Obviously, and make the recommendations sense.

The Badr question from you. next Thank comes Barclays. from Alami

earnings. so you this Thank Yes. my question. Congrats much on for XQ taking

end. So my quick questions on

guys get of prices especially question It's issuance. pay higher. the you government oil much we can fund? before. do pump cash is, how stability update receivables, wanted the in fuel you on account to expecting are one second of And go the I on an first And The in back you terms So and prices also understand to especially to when answered partially the price my expect just outflow bond second if and part that? was about potentially the year, were

also, understanding that give expire? COPX.X of the you about plan 'XX facility this have planning then issuance. for about Or same the potential of with to at replace the the COPX.X sense are much. you Thank approval time to billion guys spoke first both that 'XX? the going the you Can when you are at hacienda plus facility the a my all, billion? thinking credit maturing year? bond look with next over - And so bond, is refinance 'XX the us So with you you Is to by potential ISA, refinancing the how in is XXXX, approved the credit

ask and some issuance. you And for potential update Jaime. on the receivables FX Thanks, question. ahead, then both Please Jaime, if Jaime. the and go Badar, want I'll bond provide to

the Badr, accounts cover receivable. you, let's Thank so Felipe.

particularly think is this COPX.X I bonds, balance of FX have be considered grew at balance think accounts or months of the the kind growing of the end That balance timing is with bit. balances that kind receivable years, and surprised you does as time. it the general say, eight the right? rate. recognition best, growing six the on FX can of half year, this process, grown it it billion the expect, worst, the a up, That's entities indicated it been - that our the we When of At get its the What this of we've that's range. that be occur of the about the of as over background months' So function first we of mind has coming conversation two growth into will expect kind could that the if we whether the - with planned first will, to operate is could COPX.X cash wouldn't the window. of increasing a exchange impeccable. if end can need around at of We And of when having recognized. window that the grow end has delta will, this track say billion the right? the prices a that we of line, believe where year the that the At could matter the that months because you Therefore, That you I'd headline fund whether because at that. account COPX.X and governmental worked here is we've of number recognized we right? think operate and over But those receivable that down is on continue it's the day, to to payment, and each kind to conservative balance prices because XX has been in balance the expect things The is of in end international look the billion. are pump, in This sort locally. that certain, manage it's as record over occurred, thing all we if by we of prices, record. other. or consistently in flow, fluctuate stability, some track on the we a price between and its you that

expecting going not balance mind, do the been and how cash regard. that we've an year is are that's We balance. And expect in remainder in with in that of perhaps this component some planning our So this the that to important inflows recognized XXXX. any be cash we associated year to

Ministry have or balance the a and and a us of - can do that we Ministry time, we with these take working when are decisions to Mines on the expect of regards to two have things, lot Finance bond With gives in And consideration of going issuance, to into very issuance, of we're occur. evolves. payments regards with we to the confidence matter, the around that this other this course, do and right, closely of to how regards a to things. bond couple with dividends make matters three We

three alignment in what our number that It's want we we like I blanket update business in that just to do wait. make have from to a It's years, of seen kind here like approval organic for and to of we billion service that financing already. linked need the We we kind pre-emptive the you reach view on news there's been the plan. the COPX.X mentioned every approvals. always from And approval remind - to right? X.X try with like got first for of our the resolution approvals the all of want We regulatory Finance. Colombia, kind to of of a important. that is this to a regard. place. do that strong regulation plans, in do because sure get That's outflows the kind market, our to Ministry that You've And It's that a you the a of of one Ministry approval of is Finance.

nothing in particular we And of plan. is of because always, any perhaps market, terms now, right interest amount we immediate in has longer that have getting organic This with getting course, our that, and our refinancing actually we to ISA. don't Of as have environment. this terms and even to terms need now. because right, do think that service open any the in So the any it is serve to debt of would tap to about of the have do of better that have short-term right? do right we but way remain it the market We don't that, we do flexible plans plans don't to some

that Our is, credit second news was a contingent contingent - may It the facility. committed it line - facility. indicate around you saw the as

be to used there just that's us do. something if it's circumstances So to require

that kind line, it some ISA, be should to and okay? purpose it of it, in, will X.X do about there are of want it's for tap the first, at I with transaction of our regards the to ISA. to that's would do will, it eye to as is moment. we're our the at you expect, of priority you But do flexible the financing. if you our nothing heartland, time, going gives the comfort very to continue plans business, our is but ongoing the has to that say have I then that. And specific continues So organic which With much. very has what to think and That's conditions us don't we nothing purposes. contingent timing around intend and I change. to for secure ISA So Thank and to do operation, would the And that be that close to X.X that. with is this It be we market where

Thank you so much, guys.

And to would Bayón at I moment, to this like you. for Mr. remarks. final back turn call the Thank

Thanks your us our have. interest everybody and Thanks as as do else questions sometime your issues your for stays following participating everybody question. XXXX hope second everyone, And of your again, that co-workers you, Ecopetrol, safe help in hope our soon call how to of and some stay see thanks in I loved that safe. that of calls. Thanks hopefully, conference clarity of the for sometimes And I've your improve and the around today's terms communicate feedback. for you. I before. quarter ones specifics in conference to be terms we you around we'll the some able results. one said well. of next in Thank Thanks because around continue we for

day. So, a and great have thanks again,

and Thank concludes for gentlemen. today's you, you conference. participating. ladies Thank This

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