Ecopetrol Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2024

There are 10 speakers on the call.

Operator

Good morning. My name is Natalia, 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 first half of twenty twenty four. There will be a question and answer session at the end of the presentation. Before we begin, it is important to mention that the comments in this call by Ecopetrol's senior management include projections of the company's future performance.

Operator

These projections do not constitute any commitment as to future results nor do they take into account risks or uncertainties that could materialize. As a result, Ecopetrol assumes no responsibility in the event that future results are different from the projections shared on this conference call. The call will be led by Mr. Ricardo Roa, CEO of Ecopetrol Rafael Guzman, Acting Executive Vice President of Hydrocarbons Javier Cardenas, Acting CFO and David Reanu, Executive Vice President of Transition Energies. Thank you for your attention.

Operator

Mr. Roa, you may begin your conference.

Speaker 1

Good morning, everyone. Welcome to Ecopetrol Group's operational and financial results call for the period ending Jan 2024. Thank you for your continued interest in participation in this space. This has been a period where operational metrics have continued their upward trend across all segments. We closed the first half of twenty twenty four with a production of 750,000 barrels of oil equivalent per day, a figure not seen in 8 years, transport volume of 1,135,000 barrels per day and refining loads at a historic high of 426,000 barrels per day.

Speaker 1

I would like to highlight that in the Uchubados well whose drilling began this quarter the extension of the gas discovery made in 2022 with the drilling of the Uchuba Uno well was confirmed. This well provides significant information for the development of this new frontier of natural gas production in the Colombia and Caribbean and reaffirms the expected potential in the region. Also on production front, we highlight the contribution of the Permian, which achieved a monthly production record of 100,000 barrels of oil equivalent per day. In the transportation segment, we achieved a cumulative national equation by pipelines of 831,000 barrels per day, the highest semi annual average in the last 5 years in the pipeline system. In refining, we maintained loads at historical highs along with an operational availability of 96%.

Speaker 1

Let's move to the next slide, please. Despite consistent operational performance, our financial results were challenged by external factors such as the exchange rate and inflation. We closed the semester with revenues of ARS63.9 trillion and EBITDA of ARS28.3 million and a net profit of ARS7.4 trillion. Our EBITDA margin of 44% surpassed the industry average, showing a strong ability to maintain our profitability even amid high exposure to exogenous variable. Excluding externalities, we would have had a ROACE of 13% and a net profit of ARS10.7 trillion, an increase of near 10% compared to the first half of twenty twenty three.

Speaker 1

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 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 ARS1.9 trillion, materializing our optimization and competitiveness strategy with the efforts across and commercialization chain. In June, we paid the 2nd and final dividend installment to our minority shareholders, fulfilling our pillar of competitive returns for our investors. Finally, the account receivable from the fuel price stabilization fund, FEpec closed with a balance 61% lower than the same period last year.

Speaker 1

The balance in June 2023 was ARS30.9 trillion versus the closing of June 2024 with ARS12.1 trillion. It is also worth noting the lower monthly accrual which in the January to Jan 2023 period was ARS12.9 trillion compared to ARS4.5 trillion in the first half of twenty twenty four. This allows us relief in cash flow and better condition for investment execution. Let's move on the next slide now. I would like to highlight significant progress we have made in TSG.

Speaker 1

In the field of science, technology and innovation, the launch of the Colombian Institute of Petroleum and Transition Energy stand out with a project investment of ARS816 billion until 2,030. This institute positions Ecopetrol as the main actor of Colombia's energy future. 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. 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 ARS778 1,000,000,000 improving EBITDA, ROACE and cash flow.

Speaker 1

On the environmental front, we achieved a reduction of over 136,000 tons of CO2 equivalent in scope 12 and we excited our annual energy efficiency target achieving an optimization of 1.21 petajoules accumulating 12.07 petajoules which is equivalent to the annual energy consumption of the Department of the Bolivar in Colombia. In the social component, we connected 9,645 households to gas networks in the country in the first half of the year. Additionally, Jocol and the community of Canutal consolidate the 1st compressing Heav Energy Committee in the country in the Department of Sucre certified by the Ministry of Mines and Energy. On the governance front, we have been adjusting the organizational structure to enable a differentiated management in each of the three business lines and accelerate the achievement of the objectives of our 2,040 strategy by aligning process and implementing a more agile and efficient group focused structure in decision making execution capacity and multidisciplinary teamwork with experts at the helm of the various Vice Presidents. All these enable us to maintain the value proposition to investors and meet the expectation of the stakeholders while driving prosperity in the country.

Speaker 1

To conclude, we highlight that for the first time the return of investment in TSE is being measured for 2023. This contributed positively to the group's net income and ARS1.25 trillion 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.

Speaker 2

Thank you, Ricardo. On the exploration front, I would like to highlight the results achieved in the offshore gas projects in Colombia, where we made positive announcements regarding the Unchuba II appraisal well. This well is located in the Tayrona block with a 55.6 percent Ecopetrol participation and operated by Petrobras. The well confirmed the extension of the gas discovery made in 2022 with the drilling of the Uchua-one well. This result reduces the uncertainty and allow us to progress on the project planning.

Speaker 2

We estimate 1st commercial gas by year 2029. We are also planning to drill 2 additional prospects with the Buenasuerta-one well located in the Tairona block and the Comodo-one well in the ultra deepwater Granco-one block. The Orca Norte-one well remains under evaluation. Once the results are incorporated with information from the 2 new reservoirs, a new development plan will be designed and its commercial viability will be determined. Regarding onshore exploration activity, we highlighted drilling of the Arantes-one well operated by Parex and the Florena N18 well operated by Ecopetrol in the Piedmont Janeiro region, both targeting gas and condensate.

Speaker 2

We maintain our target of drilling 15 exploratory wells in 2024. As of end of June, we invested $195,000,000 in the exploration campaign with 4 wells drilled and 6 more wells that started drilling. Let's move to the next slide, please. In the first half of twenty twenty four, the Ecopetrol Group reached a production of 750,000 barrels of oil equivalent per day, an increase of 26,000 barrels of oil equivalent per day as 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 in Permian.

Speaker 2

The incremental investments in fields such as Tenozur, Rubiales and CP09 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. For example, the figure on the right shows the performance of the Chichimene field and the effect of the implementation of these technologies, which has allowed the recovery factor to increase from 9% to 17%. If the expansion of our tertiary recovery is successful, as shown by the current results on the pilots, the recovery factor could reach up to 43% with a potential to incorporate between 300,000,000 and 1200,000,000 barrels addition. On the other hand, we are progressing with a drilling plan with 240 development wells drilled and completed with an average of 23 active drilling rigs.

Speaker 2

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. Regarding our activities in the Permian Basin, 50 new wells were put on production during the semester for a total of 370 wells since 2019 and achieving a net production before royalties for Ecopetrol of 91,400 barrels of oil equivalent per day, representing 12% of Ecopetrol Group's total production. 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 $511,000,000 and 81% EBITDA margin.

Speaker 2

By year end, we estimate an average production between 8,486 1,000 barrels of oil equivalent per day before royalties and the drilling of more than 110 wells. Finally, the development of Ecopetrol's assets in the Permian Basin is carried out under 2 different associations with OPC as operate. We have 1 joint venture and 1 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. The JV for the Midland area could end during the Q1 of 2025 by unilateral decision of 1 of the partners.

Speaker 2

In that case, future development activities would continue not under the current JV, but through a new joint operating agreement in which Oxy would remain as operator and Ecopetrol would retain its 49% interest over production and areas. We are currently having discussions with Oxy to define the future of the JP for the Midland area. Please move to the next slide. In the transportation segment, volumes increased by approximately 41,400 barrels per day, mainly driven by the increase in crude oil production in the Llanos region, higher crude deliveries to the Barrancabermeja refinery and the normalization of transport operations in the Cano Limon Covenas pipeline as shown in the top left figure. The segment managed to maintain solid financial results, achieving the 2nd best historical results for the first half of the year, generating an EBITDA of MXN5.5 trillion, representing a contribution of 20% of the total EBITDA for the Ecopetrol Group.

Speaker 2

The EBITDA reduction compared to the first half of twenty twenty three is mainly explained by external effects such as exchange rates and inflation, partially offset by higher revenues and cost efficiencies as shown in the bottom right figure. Let's move to the next slide. In the first half of twenty twenty four, the refineries achieved historic throughputs of 426 1,000 barrels per day as shown in the top left figure, thanks to an operational availability of more than 96%. The timely execution of scheduled major maintenances, activities and the maximization of domestic crude loads and an outstanding performance in HSE. The gross refining margin stood at $12 per barrel, impacted by the weakening of global diesel, jet and gasoline spreads, the strengthening of the Brent differential and the decrease in domestic gasoline demand.

Speaker 2

Given the above, EBITDA stood at MXN1.9 trillion in the first half of twenty twenty four, 59% less than the same period of the previous year, mainly affected by the aforementioned external variables. In line with the NDA transition strategy, we highlight the approval of Phase 1 of the dedicated plant project for the production of sustainable aviation fuels at the Barrancabermeja refinery. Let's go to the next slide. During the first half of twenty twenty four, we remain focused on materializing our comprehensive efficiencies and competitiveness strategy, allowing us to leverage operating performance and partially offsetting the external effects of inflationary pressures, exchange rate revaluations, cost increases and energy tariffs. As of June of 2024, the Ecopetrol Group Incorporated efficiencies of COP1.9 trillion in our CapEx, OpEx and revenue levers, with an increase of 19% compared to the efficiencies obtained during the first half of the previous year.

Speaker 2

Cost efficiencies were focused on reducing electricity consumption, reliability and surface maintenances to reduce lifting costs, optimizing gas transportation tariff and capturing refining margins, which mitigated the increases in cost in refining. Finally, the lift in transportation and refining cash costs were impacted by exogenous factors related to exchange rate, inflation, gas price and El Nino phenomenon. However, when normalizing these effects in each of the indicators, cost levels are similar to those obtained in the first half of twenty twenty three. Now I will turn it over to David, who will discuss the main milestones of the energies for the transition business line.

Speaker 3

Thank you, Rafael. From the Ecopetrol Group, we reaffirm our commitment to the country's energy security, in line with the projected deficit of National Gas to meet the demand from the second half of twenty twenty five to 2029, ranging between 120,000,530,000,000 cubic feet per day. We are focused on executing our 2024,234 gas roadmap. This involves maximizing domestic, onshore and offshore production in the Caribbean, as well as exploring various alternatives related to regasification and energy imports. Among the alternatives under evaluation is gasification terminal, SPEC LNG, with a capacity of up to 530,000,000 cubic feet per day.

Speaker 3

Other regasification options with capacities of up to 10 30,000,000 cubic feet per day are being considered in projects located in various areas from Buenaventura to Laguerre. Regarding gas imports, Ecopetrol Group continues to support PDREZA Colombia Branch within the framework of the contract signed in 2,007, in the activities necessary to rehabilitate and to no recover gas pipeline, with the goal of importing gas in 2025, provided we have the approval of the U. S. Government through OPAC. The use of any of the alternatives present various challenges, including licensing, environmental permits, preorder consultations, implementation timelines, competitiveness of alternatives, regulatory flexibility for the commercialization of imported gas and transportation infrastructure, to name a few.

Speaker 3

As part of our efforts, we closed the first half of twenty twenty four 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 ARS 1,500,000,000,000. On the energy transition front, we highlight significant advancements in energy efficiency by the end of the first half of twenty twenty four. 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 Ps. 73,000,000,000 in the Coppertal Group's operations, exceeding the annual internal target of 1.1 petajoules, thanks to significant contributions from OCCOL and the optimization projects of the gas injection system in Luciana, among other initiatives. The energy efficiency program has accumulated 12 0.07 petajoules since the beginning of measurement in 2018, equivalent to the annual energy consumption of the Department of Bolivar in Colombia.

Speaker 3

On the social front, we continue working on the sustainable development of the communities where we operate. 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. By the end of 2024, we will complete 70,000 connections and sign 10 new projects in La Guajira, Bolivar, Atlantico, Arauca, Hila, Santander, Norte Santander and Narinha. I now turn the word over to Javier, who will discuss our transmission and roads business line and the main financial milestones.

Speaker 4

Thank you, David. Now let's continue with the results of the Transmission, Roads and Telecommunication business line. In the first half of the year, the transmission and roads business maintained a solid financial performance despite the impact of the Colombian peso revaluation against currencies such as the U. S. Dollar, Chilean peso and Brazilian real.

Speaker 4

EBITDA decreased by approximately 12% compared to the first half of twenty twenty three, reaching ARS4.5 trillion. However, 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 maintained its participation in Ecopetrol Group's results, reaching 15.9% of the group's total EBITDA for the first half of twenty twenty four. Among the most relevant milestones for the Q2 of 2024 are: First, in Brazil, ISAZE TEPI was awarded 24 transmission network reforms, which together will add up to a CapEx of ARS 542 1,000,000,000. 2nd, in Colombia, is assigned 2 private contracts.

Speaker 4

The first one for the execution of the Atlantic Offor Towaltaiki Connection project, which aims to connect a bay at the Sabana Largas base station in the Department of Atlantic. The second to be developed through La Selc, consists of connecting the Valle Du Par 1, 2 and 3 solar projects in the Department of Cesar. The awarded projects add up to our reference CapEx of ARS 84,000,000,000. 3rd, the entry into operation of the following projects: 1 in Chile, the Ruta del Loa concession and 2 in Brazil, the team performance to the ESA Citepe network. CE continues to advance in the construction of 31 energy transmission projects in the countries where it has a presence.

Speaker 4

Once operational, they would have more than 5,380 kilometers of circuit to the network and generate approximate revenues of MXN 1,300,000,000,000 between 20 242030. Let's move on the next slide to detail the group's financial performance. The net income for the first half of twenty twenty four decreased by approximately ARS 2,300,000,000,000 compared to the first half of twenty twenty three. However, by normalizing the effect associated with external factors by ARS 3,300,000,000,000, we would have increased by 10%, leveraged by the operating results of all our business lines. 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 impacted EBITDA generation by ARS 5,300,000,000,000.

Speaker 4

Likewise, the net positive effect between the lower valuation of dollar denominated debt and taxes contributed by ARS 2,000,000,000,000. It is important to note that during the Q2 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, at the end of the first half of twenty twenty four, Ecopetrol Group's liquidity position was ARS 16,000,000,000,000. Operating cash flow generation of ARS 23,100,000,000,000 stands out, where we collected the receivable from the fuel price stabilization fund for approximately ARS 13,000,000,000,000. Likewise, the most significant cash outflows were due to CapEx of ARS 8,500,000,000,000 and net dividend payments of ARS 12 point 2,000,000,000,000, including payments from Ecopetrol S.

Speaker 4

A. Euronation and Mineritaries as well as payments from ESA, midstream subsidiaries and Invercolsa to their non controlling shareholders. During the first half of twenty twenty four, the total payment of dividends to minority shareholders of approximately ARS 1,500,000,000,000 was made and ARS 9,100,000,000,000 were credited to the payment of dividends to the nation, leaving off a balance to be paid in the second half of the year of ARS 2,200,000,000,000. Cash flow has had a positive impact of its working capital mainly due to two factors: higher collection from the prefect and the continued decrease in its accumulation due mainly to the increase in the price of gasoline. Of the accumulated balance in 2023, ARS 7,600,000,000,000 are still to be collected, which are expected to be collected on a quarterly basis for the rest of the 2024.

Speaker 4

With these collections and maintaining an average mortgage accumulation of less than ARS 1,000,000,000,000, we maintain our estimate of closing the year with a balance of the effect between ARS 8,000,000,000,000 and ARS 10,000,000,000, 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 3, we estimate that it will have a positive impact of cash of approximately ARS230,000,000,000 for the remainder of 2024. Likewise, any additional increase in the price of diesel directed to other consumers could contribute to further reducing the gap. Let's move to the next slide. In terms of EBITDA, the exploration, production, transportation and refining business line stood out for maintaining the largest share of the total at 85%.

Speaker 4

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. Regarding the management of debt maturities, we maintain a proactive dynamic in anticipating refinancing needs through debt management operation carry out in the first half of the year. The main maturities of 20242025 were successfully managed. Likewise, in July alone,

Speaker 5

of ARS

Speaker 4

1,000,000,000,000 was withdrawn. And in August, we initiated the refinancing of the 2026 maturities with the announcement of the prepayment of $250,000,000 of the bond. With this operation, which would be effective on September 5, we will reduce the maturity towers to around $2,100,000,000 and we continue to monitor the market to manage the remaining 2026 maturities. For 2024, no increase in debt levels in Ecopetrol S. A.

Speaker 4

Is expected associated with the organic activities of the portfolio, given the current level of available liquidity. For its part, the gross debt to EBITDA ratio closed in June at 2x. This level remains in line with our long term guideline, whereas we seek to maintain our level below 2.5x. Regarding investments, a dynamic of equity execution in line with the annual financial plan maintained, reaching 2,660 $1,000,000 for the 1st semester. 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 4

The allocation of CapEx, the hydrocarbon business line maintains the largest contribution to execution, representing 68% of the globe's total investment. For exploration and production activities of the hydrocarbon line, 81 of the resources were allocated, mainly in the Reales Castilla Cano Sur and CPO 9, fields and internationally in Peru. In the refining segment, 11% of the total hydrocarbon CapEx was allocated to guarantee the continuous operation of the refineries. The transmission business, the remaining 8% was executed in maintenance and repair activities. In the Energy for Transition line, approximately 12% of the group's total investments were allocated.

Speaker 4

Of this percentage, resources were used primarily for the growth of the gas chain, with an 85% share in the Telenav block located of Colombia Caribbean Offshore, the Casanare Department and Permian. In the same business line, 15% of CapEx was allocated to energy efficiency and renewable energy products. Finally, in the transmission and roadside investment, we all improved 20% of the group's total investments we made. Most of the investments were focused on the energy transmission business with 83% share in Brazil, Peru and Chile and Colombia, followed by the roads business with 15% and finally, telecommunications with 2%. Let me turn the word over to Ricardo for the closing remarks.

Speaker 1

Thank you, Javier. I would like to close this results call by highlighting that despite the challenges external factors at present, our results reflect the commitment to executing the business plan. The production and transportation figures are above the set target, while the drilled and drilling wells and refinery loads remain within the expected range. Regarding financial targets, we highlight CapEx with a 47% achievement of the annual target and we The second half of the year will be intensive investment and our exploration activity. We will continue to advance in the development of offshore gas, the management of the gas deficit for 2025, 2026 and the acceleration of energy transition projects such as the completion of the solar project in La Cira in 2 projects associated with Energy Justice with social impact for 1800 people.

Speaker 1

All these with a focus on cost control and maximization of efficiencies seeking to maintain sustainable financial management over time. 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 and A session.

Speaker 6

Thank you. Now we will begin the Q and A session. We will begin firstly with the questions in Spanish and then we'll have a space for those in English. We recommend asking only 3 questions so everybody can participate. Catherine Ortiz, Pampers of Davivienda is online with the question.

Speaker 6

The floor is yours. Good morning, everyone. Can you hear me? Yes, we do. Perfect.

Speaker 6

Thank you for your presentation. I have a question that relates to gas. 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 of this fuel in the refineries to generate a surplus of gas in the system. I would like to know in that sense more details about this.

Speaker 6

I mean, how much are we talking about? 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 Refinitiation and in Ecopetrol. And when you adopt this measure, what it really mean as to a benefit for the company? That's my question.

Speaker 6

Thank you. Good morning. Thank you for your question. 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.

Speaker 6

Now we found that we can seek an efficiency of 24 cubic meters, gigabytes. And this has been done now. So for the future, we can reach 14 in addition. How do we do this? Throughout the chain, downstream as you've mentioned, but also in other stages, we can reach it through by substituting with other energy fuels, for instance, in some cases, taking more electric energy from the network.

Speaker 6

Undoubtedly, the decision to optimize energy consumption goes through the capital management because it has to be feasible economically for the group. The next question is from Daniel Guardiola from Petroshek. Mr. Guardiola, the floor is yours. Hello, good morning, everyone.

Speaker 6

I have a couple of questions about the operation of Ecopetrol and Premium. The first question, can you share with us why did Ecopetrol disregard the business of buying Crown Rock? And can you also provide details of the merits that the company signed that transaction? And which were the pushbacks that won when you disregarded this business with Crown Rock? That's my first question.

Speaker 6

2nd question is also related to this business. I understand that you are dealing with Oxy since March and this is the result that you have a JV with Rodale, which gave you the option to enter anti agreement that Oxy had in Midlac. So my question is, if you disregard this, why don't you go through that call option to defend it in the market and go through that option? And my third question, the current operation that you have in Delaware, is it something that the company see as something strategic on a long term basis? Or eventually, do you think after the JV ends in the Q1 of 'twenty five, you start to dismantling this operation in the States?

Speaker 6

These are my three questions. Thank you, Daniel. I am the CEO of Grupo Epco Petrol. Firstly, I'd like to highlight that one of the reasons why after we went through all of the proceedings of analyzing and evaluating internally with our corporate governance, we have to keep in mind that Ecopetrol is one of the companies that has a very high level of debt. By the end of July, dollars 27 700,000,000 and that's about 115 1,000,000,000,000,000 Colombian pesos.

Speaker 6

And this high level of debt is setting us in a ratio of the EBITDA debt that's high and the idea in our policy is not to exceed an indicator of debt that's above 2.5. So with this transaction now $3,600,000,000 for 20 5, 20 6. We are exceeding this matrix. Keep it also in mind that there is a lower price of oil that could even impact us more this indicator. 2nd, from the result of the evaluation of the business we had with Oxy to close this transaction, An element took place that's less relevant and it's we had to redevelop the ending of this because we needed the approval from the Ministry of Treasury to look at this public debt, which was 100% that we had to leverage financially for this eventual transaction.

Speaker 6

And with the survey that we've made with the government with this entity, 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. And with that also, we would be exposed to have to pay a sanction that's established at $270,000,000 and that's why we made the decision to not take this asset 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 NanoCROC. So those are the reasons why we made the decision to not advance to close this deal.

Speaker 6

As to your second question, 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 made by the entire Board of Directors and the internal evaluation committees of the company. So that was very interesting with figures in all those fronts. But we also had to keep in mind that for no one, it was a surprise that the current policy of the government exploration and exploitation of nonconventional resources is no longer a priority. So right now we are focusing on the exploration exploitation of resources offshore in the country.

Speaker 6

And it's a priority also here to see more production and incorporation of reserves from our owned wells and fields. And it's also of interest to develop projects related to energy transition, decarbonization, energy efficiency, clean energies, renewable energies. These are projects that are part of our investments plan in 2024. Now let's get the floor to Nicolas who can answer your 4th and 5th questions. Daniel, good morning.

Speaker 6

I'm Nicolas, VP of the Strategies and New Businesses, and thank you for your questions. With regards to the question, if we are dealing with Oxy since March and the option and to monetize that option. I'd like to give 2 comments. 1, we sat down with Oxy since December when they announced. So I think it's worth to precise that to the market and that we were with Oxy since December talking.

Speaker 6

And second, the agreement that we have with Oxy 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 have the obligation to provide it to the other party. The spirit of that agreement is between Oxy and Ecopetrol. It's not thought that through for us to exercise that option if we determine to do so. So going to the other question, our long term strategy and how we see the operation in 25. Remember, we still have two areas of activities right now in premium with Oxy, Midland and Delaware.

Speaker 6

The joint venture that we have with Midland ends in 2025. But it's important to remember one thing that we have the joint venture, the other is that we still independent 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. And as I said, we have the ownership of those lands. So we have the option in any case.

Speaker 6

And I think with that, we answer your 2 other questions. Thank you. We also have with us Alejandra Andrade from JP Morgan. Mr. Andrade?

Speaker 6

Ms. Andrade, hello. My question is also related to Oxy. And you're talking about the debt, 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 6

That's even without 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 surpassing the 2.5 times? Thank you. Hello, Alejandra. Good morning and thank you for your question.

Speaker 6

Our projections that we saw align with our plans approved and how we could incorporate the $3,700,000,000 estimated of additional debt led us to increases of the indicator by 25% and 26%, slightly above 2.5%. Here it's important to keep in mind that these projections are at prices relatively close to what we're seeing today in the market and incorporated a big pressure on us if there was a drop or a change of the prices in the market. So in our calculations and projections when we incorporated this in the Marriott models, we did exceed slightly in 25, 26, our goal to not exceed 2.5 times the debt indicator. Perfect. Thank you for your answer.

Speaker 6

Stefania Mosqueda from Credicorp Capital has a question for us. The floor is yours. Thank you for your presentation. I'd like to ask more on the medium term basis. Do you have any update or do you plan to make an update on your CapEx plan and production plan?

Speaker 7

To

Speaker 6

place your audio in Spanish so we can hear you. Can you hear me? Now we can. Please repeat your question. Yes, my question is more focused on a medium term basis.

Speaker 6

I'd like to ask, are you making an are you going to have an update of CapEx and

Speaker 7

production?

Speaker 6

Thank you, Stefania. I am the CEO. For now, we do not have any changes among what we've announced from the Q1 call that we made in production. And in terms of CapEx, we're still going to be making investments up to $6,000,000,000 at the top that we have as reference with a good development as of June. And in production, we have what we have, we've done what we've announced with a goal of 730 1,000,000 barrels a day.

Speaker 6

If the conditions allow us, especially in terms of prices and production that we've been recording in these months to keep the idea is to keep with that path of production, but we're still committed to what we have announced in the Q1. Next question from Andres Duarte from Corficolobiana. Mr. Duarte, the floor is yours. Mr.

Speaker 6

Duarte, please to Spanish on your interpretation icon. Also, we have Ricardo Sandoval from Bancolombia. Mr. Sandoval, the floor is yours. Good morning and thank you for this call.

Speaker 6

I'd like to ask you about Reficar. We've read in the press that this refinery could 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 if this main if this overhaul takes place?

Speaker 6

2nd, a follow-up question really. Could you please tell us more what it would mean to end or what are the consequences of ending the joint venture with Oxy and to see Ecopetrol with its keeping the ownership. Could you give us more information about the consequences of ending this if it takes place? Thank you. Good morning.

Speaker 6

This is Walter Canova, VP of Refinery and Industrial Processes. I would like to talk about your first question. Indeed, as we've said, we had a first half of the year with high refinery burdens with record levels and an operational availability above 96%. As you've heard in the media, in the month of July basically, a part of August, we are programming not only in the refinery of Barrancabermeja where we intervene one of the plants of oil and that overhaul, it will take 40 days and it's we've already finished this and Barranca is already at its high production levels. And we think it will remain at those levels and for the rest of the year.

Speaker 6

When it comes to Replicar, we had foreseen to make the overhaul of Hydro Cocker, which is one of the units that's most important of this refinery. This overhaul is foreseen to be made in 50 days and we're in day 30 now. It's underway. So we're doing very well with that and we foresee to end it on time. At Hydrocar Cartagena, there's been no impact on the oil.

Speaker 6

The refinery remains at its capacity of 200,000 barrels a day. And we believe that it will stay like that, thanks to the thanks of the gas oils that we make. Undoubtedly, for Cartagena, there will be an impact on the margin because since the plant stopped, we lose conversion levels. What we see is that by the end of the year, we will add 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 of 420, 430,000 barrels day by the end of the year after stopping Barranquebirmeja, as I mentioned, which we already did and advancing very well with Replicar and Cartagena.

Speaker 6

So I hope that this answered your questions. Ricardo, good morning. Nicolas Esuna, VP of Strategy and New Businesses. So let me discuss your second question with regards of what happens in 2025 with the end of the joint venture with Oxy. And basically, there are 4 alternatives here.

Speaker 6

The first, and we're working on it, is to expand the joint venture. The second option is to continue operations with OpSI, but through a joint development agreement. And we can I could talk about these differences? The third option is that Ecopetrol will assume the role as an operator and its part. And next is to sell our part there.

Speaker 6

Those are the 4 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 is that we have development plans and capital investment plans with a horizon that's longer. And that under the other agreement, joint agreement, wouldn't take place. But remember, that is a common practice for the development of that basin.

Speaker 6

So these are the 4 alternatives that we have. And I think that with that, I answer your questions. Thank you. Clearly, thank you so much for your answer. Let's continue with the session.

Speaker 6

In English, we recommend to all of the analysts to choose an interpretation the language in which you will be answering. We have Luis Carvalho from GPS. Mr. Carvalho, ask your question, please.

Speaker 7

Yes. Can you hear me well? Okay. So thanks for taking the questions. I have 2 here.

Speaker 7

So you made some comments about why you gave up about Crownrock transaction because of the debt level. So just trying to actually to think on the opposite way. 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 the country needs and for both reserves and production growth ahead. So that's the first one. The second one is mostly with regards to the, let's say, the challenges that the company has in terms of increasing reserves and also the country in terms of the natural gas demand.

Speaker 7

So how the management is seeing investing more in renewables or cognizant about the decline on the production and taking the risk of having to import more. So what's the balance here between, you'd say, within the capital allocation strategy? And lastly, if you can provide a bit more details on the FEBEC. This quarter, we saw somehow a decrease, but what is the expectation towards, let's say, the second half of the year? Thank you.

Speaker 6

Good morning, Ricardo Roa, and thank you for your several questions. I'm going to try to answer your questions. Firstly, the window of opportunity that we had between the acquisition of inorganic assets in Permian with Oxy was not incorporated in our investments plan for 2024 or in the triannual plan 2024, 2026 that we announced at the end of the year to the market close to $20,000,000,000 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 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. 2nd, as a result of that higher production, we have more volumes transported by our assets.

Speaker 6

And 3rd, there's a big burden in our everything has to do with our refinery. So what's the target of our investments plan that was at $5,600,000 to $6,600,000,000 which was our expectation for this year. It's focused on an increasing production and incorporating resorts of 600,000,000 dollars are destined with our allies to develop exploratory activities in different perforations that we'll be doing this year. There are major resources there and also they're focused on incorporating within our matrix projects of energy efficiency that we are signing now to be using green hydrogen in refineries and to incorporate clean energy projects, wind and solar in La Guajira. So these projects are underway.

Speaker 6

They're incorporated in this year's plan, 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, Colombia has since 2017, Colombia has been demanding a lot of gas. And to make an import of liquefied gas in a market that's open and free, 21% of the LNG market was made by the US, which is the highest of all the suppliers of gas under this condition of liquefied natural gas. And that's why through an infrastructure that we made in Cartagena, we have been importing amounts, significant amounts of this liquefied. So in past months also, we've been having these infrastructures.

Speaker 6

And this is what we have already immediately when we decide to import the liquefied natural gas with the deficit that we've announced. 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 7

No, that was very clear. Thank you. Thank you very much.

Speaker 6

Next question is from Carlos Moraes from Morgan Stanley. Mr. Moraes, the floor is yours.

Speaker 8

Hi, everyone.

Speaker 6

Thanks for

Speaker 8

taking my questions. I have 2. 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 raw production to stand above the top end of the range presented in the operational preview?

Speaker 6

Good morning, Carlos. I have Rafael Guzman, VP of Hydrocarbons. Thank you for your questions. As to costs of elevation, there are two quick answers. First, indeed, we've seen an increase since the 1st semester of last year to this year of $2.7 per barrel, which sets us today at $12.1 per barrel.

Speaker 6

This 12.7 increase is 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. We also had increases in operations that were compensated mainly inefficiencies and more production. And there's where we have our focus to have more efficiencies and to produce more with the same wells that we have today. So with this, as we said before, we will have our elevation costs from $12 to $13 this year.

Speaker 6

And shortly, they will be closer to 12 than 13 this in terms of the elevation cost. When it comes to Permian, we also have a lot of we already provided many details today. We have good investments, but also very good results. We've reached a production close to 90,000 barrels per day. And for the year, we expect 84 to 86, 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.

Speaker 6

Thank you for your

Speaker 7

questions.

Speaker 6

We also have Rodrigo Mera from Banco Santander, Mr. Almeida.

Speaker 5

Hi, can you hear me? Okay. So I have a couple of questions here. First one, it's regarding capital structure. So I think it would be nice if you could give us a number of more or less what I know that's not in the strategic plan that you released, but what's your minimum cash position?

Speaker 5

I think that the reasoning behind my question here is that today you have around $4,000,000,000 in cash. And then if we adjust that to the expectation of reducing the FEPAC fund, This could potentially go up to around $7,000,000,000 which would be a cash position similar to your bigger 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 if you're looking at going above 2.5 times gross debt and we maintain the current gross debt, you're using a MXN 40,000,000,000,000 EBITDA.

Speaker 5

Is that it? And also, if you could help us understand the if you include in the calculation of your gross debt to EBITDA, the debt that you repaid in July also. And then finally here, just from a strategic standpoint, when you're analyzing these sort of decisions, 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, it seems very okay to us.

Speaker 5

So I wanted to understand if you incorporate the other metrics as well and analyze this sort of M and As. Thank you.

Speaker 6

Carlos, good morning, and thank you for your questions. Indeed, we are, in June in a position of cash flow of Ps. 6,000,000,000. And I think it's worth telling you where the

Speaker 9

the

Speaker 6

7,000,000,000 are at ESA. And I think that it's important to mention this because not all of that flow cash is in Colombia. We also have in Chile, Brazil and Peru. And that cash flow is what ESA needs to operate and meet its projects assigned. So when you look at that cash available for hydrocarbons, you have to keep in mind that.

Speaker 6

The rest is in the midstream and in some company corporate companies. So it's good to give you that color. With regards to the possibility to increase the goal of 2.5 debt EBITDA. This is the goal that we have incorporated in our strategy. And when we look at the balance and the possible fluctuations of prices in the other times and the levels of diversification of the company.

Speaker 6

For now, we have not thought about incorporating a new goal above 2.5 times. Now, with regards to the base or the elements used when we decide to enter an investment, In addition to the cash flow at the levels of the debt, EBITDA, we keep in mind the strategic lines, the risk profiles, returns, 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. So the debt is very important to take care of the position of cash flow also.

Speaker 6

But there are other elements like those that I mentioned.

Speaker 5

Okay. So I have a couple of follow ups here. When we look so 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? If you could help us, I think that would be helpful. Thank you.

Speaker 6

Especially at Ecopetroliz, we seek to be within a range between MXN 2,000,000,000 and MXN 2,500,000,000 of cash flow. We believe that the MXN 16,000,000,000 dollars and if you look at it historically, they compare very well. But it's not a position of cash flow that allows us. And I don't know if that's really your question, to incorporate acquisitions entirely with our own cash flow. In any case, and looking at the levels of the possible transaction that we're reviewing, it wasn't possible to make the mix significantly, so that's why we always reviewed the need of debt.

Speaker 6

We also have with us Guillermo Martes from Goldman Sachs. Mr. Martens?

Speaker 9

Hi, thanks for taking my questions. I have 2 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 all in all, that implies a sequential decline in average output for the second half of the year.

Speaker 9

We are trying to understand what will be the reasons behind this implied sequential decline. And secondly, on CapEx, we are wondering if you could provide more details on what is the company foreseeing for the balance for the end of the year? Any guidance on schedule for future receipts from the government or what's the company foreseeing for future accumulation from now at the end of the year would be really helpful. Thank you.

Speaker 6

Good morning. Thank you for your questions. I'm Rafael Guzman. Yes, we are aware that the current production level is way above the range of 730, 735. We have to keep in mind, however, two things.

Speaker 6

The production of Permian 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, 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 2nd semester. We have several entrances of new productions that could be delayed and uncertainty also in actions in Colombia as we've seen in early in the year because of third parties that limit the production of several fields. So that's why we keep our range that I've described before despite the production levels.

Speaker 6

But to end, I'd like to mention that undoubtedly, we worked hard to maximize the production of all of our fields. And that's the result that we've had to date. Good morning, Javier Cadenas. With regards to FedBak, let me say several things. We're ending the semester with an accounts receivable of ARS12.4 billion.

Speaker 6

The collection in these 1st 6 months is close to ARS13 1,000,000,000 exactly ARS12.6 billion. So we have to charge in the 3rd Q4 of 2023, which is ASR12.4 billion and we expect to collect this in September December of this year. And with regards to the projection, we project a range of accounts receivable at the end of the year of ARS 8,000,000,000 to ARS 10,000,000,000. This assumes and will be subject to the exchange rate levels and international prices, but the projection does not incorporated any additional increase in DCs. So if there's an increase, the figure would be lower than what I'm saying.

Speaker 6

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. Could you please tell us about the increased share of Cao Cao and ODC when it comes to the strategic fit and the value of the EBITDA?

Speaker 6

Good morning, Alexander Cadena, President of Senate. As you mentioned in June, we mentioned that Senate purchased 100 percent Abducto de Colombia, which stocks of 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. The terms of the transaction, however, are confidential. But when it comes to Ocensa's issuance of bonds, these were presented to the rating firms, which perceived that the transaction was positive.

Speaker 6

Alejandro Sanchez from Alianza asked 2 questions. 1, why we have the Refinition margins degraded? Do you expect to have higher levels in the next quarter? Good morning, Alejandro, Walter Canova, BP of Refinery and Industrial Processes. Speaking.

Speaker 6

Yes, undoubtedly, when you look at 2024, we have a Q1 in which the reformation margins were $15 per barrel, stronger than what we foresaw in our budget plan. But in the Q2, as you indicated, there was a fall to $9 per barrel. So in average, the 1st semester is practically at $12 per barrel, which is aligned with what we foreseen for 2024 and which we considered was that going to be as strong as 2022 and 2023, which were historically high years for refinery. The fall in 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 produced obviously had a substantial drop and that hit directly the gross margin in the second quarter.

Speaker 6

And in the 3rd Q4, we see margins more normal, below 2 digits between $10 $12 per barrel. And that's where we think with that we will end the year 2024 with the projections that we have today. Next question from Alejandro Sanchez of Allianza is, in past quarters, we've seen more loads and delivery updates. Why do you why is this taking place? Because it's much more expensive than other options.

Speaker 6

Will we see more of these types of deliveries? Thank you. Good morning and thank you for your question. This is Felipe Trujillo, VP of Commerce and Marketing. The FOP, sales made in the Colombian ports 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.

Speaker 6

S. When we make that sales, we're talking about cap capturing $0.50 to $0.80 per barrel more. So the question is, yes, while we find more value with sales DAP, we will capture those opportunities because the freight and logistics is very important to capture value within the commercial strategy of Ecopetrol. Hernan Gui Coche from Latin Finance says, When it comes to the financing plans, what does Ecopetrol plan for the rest of the year? We've seen the Company made an issuance of bonds and making loans.

Speaker 6

Does Ecopetrol plan to issue more bonds Edna, good morning, Javier Pardonerz. 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 in our investments plan. 2nd, we are focused on reducing the risk of refinancing. Remember, we have an important tower in 2026, therefore, we've announced the anticipated payment of $250,000,000 of the bond with that maturity.

Speaker 6

With regards to possible issuances, Ecopetrol constantly reviews its options in the local and international market. And we're always monitoring the market and seeking the best conditions. It's important to mention that we are anticipating and again looking to refinance the Tower 2026, seeking the best conditions and the best moments to make them. Ecopetrol is really does have the financial position to think about inorganic growth. Herman, good morning.

Speaker 6

Javier Cardenas again. Ecopetrol is ending the semester with a cash flow position that's robust of Ps. 16,000,000,000. So that's first. 2nd, Ecopetrol constantly is looking at alternatives within its portfolio to have an organic growth and seeking different alternatives in its portfolio organic as well.

Speaker 6

There are spaces for financing. Undoubtedly now for the transaction with Oxy, the levels were substantially high. 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, and that's where we would have the option.

Speaker 6

Simon Diaz from Proteccion asked 2 things. First, could you provide us an update of the wells that are being analyzed to be closed and to continue? Yes. Rafael Guzman, Simon, your question. At the end of the semester, we had a perforation of 4 wells, exploratory wells, Milonga, Machig, Territos Norte and Rocoto.

Speaker 6

3 of these wells will be closed, Milonga, Machi and Rocota. Doritos Norte is being evaluated, and these are results as of the Q1 of the year. 2nd question from Simon Diaz from Protection is, could you provide an update of the processes with SICK and the potential class actions made by international investors? Thank you for your question. Simon, I am the CEO of Grupo Ecopetrol.

Speaker 6

Indeed, we have been talking with the superintendents of trade technical halls or teams looking at these processes with this control entity, especially approaching the process of hiring air transportation for the company's work. We've offered a program of guarantees to ensure the competition and equal conditions for the availability of helicopters that can provide the service and to handle the timetable of the process. We would have a space for another participant. Today, we are evaluating the offers we've received. We invited 11 participants, national and international.

Speaker 6

We're evaluating them all and we're monitoring the process constantly along with the preventive monitoring made by the Procurelurium, which we practically have included in every phase of the process. This is why we are waiting for the results of the SEC, the guarantees program that we've presented to guarantee an open process that's competitive for this process. With regards to the class action, so far, we have been notified by any control body of any class actions. Declan asked 3 questions from Santander. Do you internally you already have the 2.5 times of EBITDA.

Speaker 6

So but when it comes to the lower productions that you have, if Oxy is involved? As I've mentioned initially in our investments plan, we are working on exploratory activities and an alliance that we announced with Parex to have more exploitation and a higher incorporation of organic reserves of the country of oil and gas. And we continue working hard and constantly to be able to have this exploratory phase to be able to ensure again in the future the provision of both resources. We haven't thought 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 that were suspended.

Speaker 6

We've advanced to that with NH and we've identified what they've mentioned, several assets 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 their more assurance to meet the goal because every 3 years we have to ensure 100% of the reserves that are needed. Understanding that more production makes us exceed what's planned, but still we look for opportunities and to make mergers and acquisitions. That's constantly part of our plan and we have a map that includes also some disinvestments, but also we seek to consolidate the chance to acquire projects as we've announced or to have share a share with some allies that are also interested in any of that making evaluations. That's a goal that Ecopetrol has to seek a business opportunity that may take place. How can we finance this?

Speaker 6

By issuing debt bonds, seeking resources on a short term basis with banks and also keeping ahead an expectation at a with a good level of liquidity and cash flow to leverage surely with the investments plan that we have established all these investments that we keep in mind. Andres Duarte from Corficoloriana has three questions. 1st, could you please tell us if there are facilities of liquefaction in Permian to bring gas from there? How much does it cost to bring gas to Colombia? Thank you.

Speaker 6

This is David Daniel, Executive VP of Energies for Transition. The first thing that we have to underscore here, and as it was mentioned by our CEO, 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 in that market, we have the chance to access to amounts that the country may need. Secondly, to look at that molecule and for the transportation of that in Colombia, we have to access to regasification facilities, but Colombia and Colombia currently has some in Cartagena through the spec plant that has a capacity now to use that service. There the conditions to access will be determined by those that have the right to So in short, as a country, we do have access to LNG.

Speaker 6

The largest market in the world is close to Colombia in the U. S, and the country has a facility to gasify it, regasify it. The second question from Andres Duarte is, could you please clarify what is your expectation of EBITDA for 2025 and 2026 keeping in mind that the it's that if you continue with Oslo, it would have been higher. Andres, good morning, Javier Cardenas. Usually, we do not provide expectations so far ahead.

Speaker 6

But we do see levels of prices, Brent especially, that are lower than those that we saw we've seen in 2024. And it's a consequence of the levels of the supply of oil that are projected and levels of liberation or increased production and over offers in countries worldwide. So the expectation of EBITDA is related to CE prices lower. I cannot provide you the data as you can understand, but it is in that trend, in that path. Lastly, Andres Duarte asks, could you please update us on your Thank you.

Speaker 6

Again, David, your VP of Energy's for the transition. When it comes to hydrogen, we have advanced to develop a strategy in the group to begin to produce low emission hydrogen. And in that line, we're developing now a project to produce green hydrogen industrially in Cartagena. And we expect this to be in operation in the year 2026. In addition, we are evaluating the visibility of an additional project at Barrancabermeja.

Speaker 6

With regards to the chance of exporting with the analysis that we made within the company, we see that in the market, especially in Europe, there could be a decade of 30 and there the cost of any offer, including Columbia could be $4.5 per kilogram of green hydrogen placed in Europe. And we believe with the figures analyzed that Colombia does have the potential of a competitive renewable energy to reach those price levels and therefore to be a relevant player in that market when it develops. Thank you. There are no further questions. Now let's listen to the closing remarks of the CEO.

Speaker 6

We would like to thank you for joining us. I'd like to congratulate our great team, our executives and our thousands of workers who constantly work hard so that we can have these excellent results. Again, we are committed at Grupo Ecopetrol to be firm, to protect our traditional business and to execute our investment plans. And we bet on meeting the goals and to create wealth that we've shown in recent years for the country, for our shareholders, and of course, so that Ecopetrol can still be a great energy asset that Colombia requires to leverage its projects for energy transition. Thank you very much for joining us today.

Speaker 6

Thank you all. With this, we end our call of the results of the first half of twenty twenty four. Now you can hang up.

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Earnings Conference Call
Ecopetrol Q2 2024
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