Ecopetrol(EC) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2024, total revenues reached 133.3 trillion pesos, with an EBITDA of 54.1 trillion pesos and an EBITDA margin of 41% [10] - Net income was reported at 14.9 trillion pesos, which would have been 21 trillion pesos excluding external factors, marking a nearly 10% increase compared to 2023 [10][11] - The company invested over $6 billion in CapEx, including the acquisition of CPO-9, and achieved efficiencies of 5.3 trillion pesos, surpassing the annual target by 43% [11][12] Business Line Data and Key Metrics Changes - Hydrocarbon production averaged 746,000 barrels of oil equivalent per day, exceeding annual goals and representing the highest level in nine years [7][29] - The refining segment achieved an average throughput of 414,000 barrels per day with an operational availability of 94.5% despite challenges [9][33] - The transition energy segment produced 170.2 thousand barrels of oil equivalent per day of natural gas and LPG, generating an EBITDA of nearly 2.9 trillion pesos, which was 70% lower than in 2023 [42] Market Data and Key Metrics Changes - The reserve replacement ratio was 104%, with the addition of 260 million barrels of oil equivalent in proven reserves, doubling the addition from 2023 [6][17] - The average Brent price decreased by$ 3 per barrel compared to 2023, impacting profitability [17] - The gross refining margin decreased by $7.7 per barrel compared to 2023, primarily due to lower international fuel prices [34] Company Strategy and Development Direction - The company aims to enhance organic hydrocarbon production, maintain operational reliability, and focus on energy transition initiatives [67] - Investments for 2025 are projected between 24 and 28 trillion pesos, with 60% allocated to energy security and 40% to energy transition projects [61][62] - The company is committed to sustainability, with significant investments in renewable energy and energy efficiency projects [47][48] Management's Comments on Operating Environment and Future Outlook - Management acknowledged external factors such as exchange rates and inflation affecting performance but emphasized strong operational results [10][11] - The company plans to maintain a lifting cost target of$ 12 to $13 per barrel for 2025, focusing on cost efficiencies [64][110] - Future production is estimated between 740,000 and 750,000 barrels of oil equivalent per day, considering social unrest risks [31] Other Important Information - The company achieved the second-best global rating in the oil and gas industry in the Dow Jones Sustainability Index [13] - A dividend distribution proposal of 214 pesos per share was announced, pending approval at the shareholders meeting [12][55] - The company has made significant contributions to Colombia's GDP, amounting to over 1.33 trillion pesos [15] Q&A Session Summary Question: Can you explain the impairment terms of the refining segment? - The impairment was based on discounted cash flows and included factors such as price projections, local crude availability, and adjustments to discount rates [74][76][78] Question: Why is the EBITDA margin for 2025 projected to be lower than 2024? - The projected EBITDA margin of 39% reflects a lower Brent price projection for 2025 compared to 2024, but efficiency plans are expected to mitigate some impacts [78][80] Question: What is the status of the self-report generation regulation and potential asset acquisitions? - The company is assessing alternatives for acquiring assets like Aura to manage the PPEC balance, with ongoing discussions with the Ministry of the Treasury [82][84] Question: Can you provide details on the extension agreement with Oxy in the Permian Basin? - The extension includes the development of around 90 wells during 2025, maintaining ownership of the acreage and protection [96] Question: What is the company's stance on unconventional oil and gas opportunities in Colombia? - Current government policy restricts exploration of unconventional resources, and the company is focusing on existing projects within regulatory frameworks [92][93]