Ecopetrol informs about second quarter 2024 results

Rhea-AI Summary

Ecopetrol Group reported Q2 2024 results, facing challenges like peso revaluation and lower refined product prices. Key highlights:

- Revenue: COP 32.6 trillion
- EBITDA: COP 14.1 trillion
- Net income: COP 3.4 trillion
- EBITDA margin: 43%

Operational achievements include:
- Production: 758 kboed (+30.2)
- Transported volumes: 1,152 kbd (+54.7)
- Refinery throughputs: 424 kbd (-3.4)

The Uchuva-2 delineation well confirmed gas discovery in the Caribbean Offshore. FEPC balance decreased by 61% YoY. The company paid COP 10.6 trillion in dividends and reduced emissions by 136,408 tCO2e in H1 2024.

Positive

• Increased production to 758 kboed (+30.2)
• Higher transported volumes at 1,152 kbd (+54.7)
• Improved crude basket prices by USD 10.3/Bl compared to Q2 2023
• EUST subsidiary achieved USD 24 million EBITDA and USD 19 million net income in Q2
• Reduced FEPC balance by 61% compared to Q2 2023
• Achieved 1.21 petajoules energy optimization, exceeding 2024 target
• Reduced emissions by 136,408 tCO2e, 176% compliance with H1 plan

Negative

• Revenue decreased by 4.9% YoY to COP 32.6 trillion
• Net income declined by 17.4% YoY to COP 3.4 trillion
• EBITDA decreased by 3.7% YoY to COP 14.1 trillion
• Refinery throughputs slightly decreased to 424 kbd (-3.4)
• Faced challenges from peso revaluation and lower refined product prices

Insights

Financial Analyst

Ecopetrol's Q2 2024 results demonstrate resilience amid challenging market conditions. The company reported COP 32.6 trillion in revenue, COP 14.1 trillion EBITDA and COP 3.4 trillion net income. The 43% EBITDA margin is commendable, considering external pressures.

Key positives include a 30.2% increase in production to 758 kboed and a 61% reduction in the Fuel Price Stabilization Fund balance. However, the 4.9% year-over-year revenue decline and 17.4% drop in net income attributable to Ecopetrol owners are concerning.

The company's strategic focus on operational efficiency and cost control is evident. The improved crude oil spreads and successful commercial strategy, resulting in a USD 10.3 per barrel increase in crude basket prices, partially offset market challenges.

Energy Sector Analyst

Ecopetrol's Q2 results highlight its adaptability in a volatile energy market. The Uchuva-2 delineation well success is a game-changer, potentially opening a new production frontier in the Colombian Caribbean. This aligns with the global trend of offshore gas exploration and could significantly boost Ecopetrol's reserves.

The company's pivot towards energy transition is noteworthy. Achieving 1.21 petajoules of energy optimization, surpassing the 2024 target, demonstrates commitment to sustainability. The transformation of the Colombian Petroleum Institute into the Colombian Petroleum and Energy Transition Institute signals a strategic shift towards future energy landscapes.

However, the slight decrease in refinery throughput to 424 kbd warrants attention, as it could impact downstream operations. The company's ability to balance traditional oil & gas operations with energy transition initiatives will be important for long-term success.

Corporate Governance Expert

Ecopetrol's Q2 2024 report showcases strong governance practices and stakeholder engagement. The dividend payment of COP 10.6 trillion to shareholders demonstrates a commitment to investor returns. The company's first-place ranking in the Merco Talent survey and "Very Satisfactory" certification from Great Place to Work® underscore its focus on human capital management.

The allocation of COP 118,195 million for Sustainable Territorial Development in Q2 reflects a robust ESG strategy. The reduction of 136,408 tCO2e emissions, exceeding H1 targets, aligns with global sustainability trends.

The adoption of AI for IT Operations (AIOPS) with 95.5% availability for critical services showcases technological innovation in operations. This forward-thinking approach to digital transformation could enhance operational efficiency and competitive advantage in the long run.

BOGOTÁ, Colombia, Aug. 13, 2024 /PRNewswire/ -- During the Second Quarter of 2024 (2Q24), Ecopetrol Group confronted a challenging environment, which continues to be impacted by several external variables, including the revaluation of the Colombian peso, inflationary pressures, and a decrease in the prices of our refined products. We managed these challenges with resilience, maximizing operational savings, controlling costs, and improving the realization prices of our crude oil.

During 2Q24, Ecopetrol generated revenues of COP 32.6 trillion, an EBITDA of COP 14.1 trillion, a net income of COP 3.4 trillion, and an EBITDA margin of 43%. It is worth highlighting, the dividend payment as of June, of COP 1.5 trillion to our minority shareholders and COP 9.1 trillion to the majority shareholder, rewarding their trust in this company.

Regarding the Fuel Price Stabilization Fund (FEPC), we emphasize the sustained reduction of the outstanding account balance, which totaled COP 12.1 trillion at the end of June, a 61% decrease compared to the same period in 2023.

In the Hydrocarbons business line, for the second quarter of the year, we highlight the strength of our traditional business, closing with a production of 758 kboed (+30.2), transported volumes of 1,152 kbd (+54.7), and refinery throughputs of 424 kbd (-3.4). It is also noteworthy, the Uchuva-2 delineation well, which confirms the extension of the gas discovery in the Caribbean Offshore, providing significant information for the development of this new production frontier in the Colombian Caribbean, and supports the gas potential that has been foreseen in the region.

These results, along with a high-quality commercial strategy, allowed us to capture margins and new market opportunities, strengthening the prices of the crude basket by USD 10.3 USD/Bl, compared to the same period of 2023. The strong performance of our Houston subsidiary, EUST, is remarkable, selling 14 million barrels of crude and products in 2Q24, achieving an EBITDA of USD 24 million and a net income of USD 19 million, totaling an EBITDA of USD 61 million for the 1H24 and USD 48 million in net income.

In the Energies for the Transition business line, as of June, we achieved an accumulated energy optimization of 1.21 petajoules, anticipating the 1.1 petajoules target for 2024. With this result, we contribute to the reduction of Greenhouse Gases with 104,312 tons of CO2 equivalent greenhouse gases, with estimated savings of over COP 72 billion.

Finally, in the Transmission and Toll Roads business line, during 2Q24, ISA was awarded two private contracts in Colombia: the first for the execution of the Atlántico photovoltaic connection project, and the second, through Transelca, to develop the connection to the Valledupar I, II, and III photovoltaic plant in the department of Cesar.

Concerning our technology, environment, social and governance (TESG) strategy, we would like to highlight the following achievements for the quarter:

On July 31st, the Colombian Petroleum Institute (ICP) transformed into the Colombian Petroleum and Energy Transition Institute (Icpet) which will have the mission of driving the energy transition in the country.

By the end of 2Q24, we reduced emissions by 136,408 tCO2e on the environmental front, a 176% compliance level versus the plan for the first half of the year.

In the social dimension, we highlight that the Ecopetrol Group allocated resources for the execution of the Sustainable Territorial Development Portfolio for COP 118,195 million in 2Q24 and a total of COP 183,988 million so far this year, which includes social, environmental, and strategic relationship investment as mandatory.

On the Governance front, during 2Q24, we secured first place in the Merco Talent ranking for the third consecutive year, which identifies the 100 companies with the best capacity to attract and retain talent in Colombia. Additionally, in the Great Place to Work® workplace environment study, we received the "Very Satisfactory" certification, reflecting our excellent work for our employees.

Regarding the Innovation and Technology agenda, Ecopetrol's efforts for safe and intelligent operations stand out, through the adoption of Artificial Intelligence for IT Operations - AIOPS. This technology has ensured an availability of over 95.5% for critical technological services and optimized operational and information technology functions within the organization.

We will continue strengthening relationships with all our stakeholders, focusing on generating sustainable value while advancing towards the energy transition.

Ricardo Roa Barragán

President, Ecopetrol

In 2Q24, the Ecopetrol Group reported a net income of COP 3.4 trillion and an EBITDA of COP 14.1 trillion, achieving an EBITDA margin of 43%. These results were driven by exceptional operational performance, demonstrated by increased production and transportation volumes along with stable refinery throughputs. The quarter benefited from improved crude oil spreads and higher Brent prices. However, the results were impacted by external factors in market variables.

Table 1: Financial Summary Income Statement –Ecopetrol Group

Billion (COP)		2Q 2024	2Q 2023	∆ ($)	∆ (%)		6M 2024	6M 2023	∆ ($)	∆ (%)
Total sales		32,627	34,300	(1,673)	(4.9 %)		63,929	73,154	(9,225)	(12.6 %)
Depreciation and amortization		3,594	3,239	355	11.0 %		7,046	6,248	798	12.8 %
Variable cost		12,020	13,718	(1,698)	(12.4 %)		22,841	29,065	(6,224)	(21.4 %)
Fixed cost		4,966	4,530	436	9.6 %		9,757	8,952	805	9.0 %
Cost of sales		20,580	21,487	(907)	(4.2 %)		39,644	44,265	(4,621)	(10.4 %)
Gross income		12,047	12,813	(766)	(6.0 %)		24,285	28,889	(4,604)	(15.9 %)
Operating and exploratory expenses		2,512	2,314	198	8.6 %		4,948	4,670	278	6.0 %
Operating income		9,535	10,499	(964)	(9.2 %)		19,337	24,219	(4,882)	(20.2 %)
Financial income (loss), net		(2,090)	(2,044)	(46)	2.3 %		(4,092)	(3,549)	(543)	15.3 %
Share of profit of companies		189	155	34	21.9 %		386	497	(111)	(22.3 %)
Income before income tax		7,634	8,610	(976)	(11.3 %)		15,631	21,167	(5,536)	(26.2 %)
Income tax		(3,234)	(3,336)	102	(3.1 %)		(6,154)	(8,929)	2,775	(31.1 %)
Net income consolidated		4,400	5,274	(874)	(16.6 %)		9,477	12,238	(2,761)	(22.6 %)
Non-controlling interest		(1,024)	(1,187)	163	(13.7 %)		(2,090)	(2,490)	400	(16.1 %)
Net income attributable to owners of Ecopetrol		3,376	4,087	(711)	(17.4 %)		7,387	9,748	(2,361)	(24.2 %)
EBITDA		14,052	14,585	(533)	(3.7 %)		28,291	32,427	(4,136)	(12.8 %)
EBITDA Margin		43.1 %	42.5 %	-	0.6 %		44.3 %	44.3 %	-	0.0 %

 

The financial information included in this report has not yet been audited. It is expressed in billions or trillions of Colombian pesos (COP) or US dollars (USD), or thousands of barrels of oil equivalent per day (kboed) or tons, as noted. Certain figures in this report were rounded to the nearest decimal place for presentation purposes.

Forward-looking statements: This release contains statements that may be considered forward-looking statements concerning Ecopetrol's business, operational and financial results, and prospects for growth. These are forward-looking statements and, as such, are based solely on management's expectations regarding Ecopetrol's future and its ongoing access to capital to fund Ecopetrol's business plan. Such forward-looking statements depend primarily on changes in market conditions, government regulations, competitive pressures, and the performance of the Colombian economy and the industry, to mention a few. Therefore, they are subject to change without notice.

For more information, please contact:

Head of Capital Markets (a)
Lina María Contreras Mora
Email: investors@ecopetrol.com.co 

Head of Corporate Communications
Marcela Ulloa
Email: marcela.ulloa@ecopetrol.com.co 

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SOURCE Ecopetrol S.A.

FAQ

What was Ecopetrol's (EC) revenue in Q2 2024?

Ecopetrol's revenue in Q2 2024 was COP 32.6 trillion.

How much did Ecopetrol's (EC) net income change in Q2 2024 compared to Q2 2023?

Ecopetrol's net income decreased by 17.4% year-over-year to COP 3.4 trillion in Q2 2024.

What was Ecopetrol's (EC) oil production in Q2 2024?

Ecopetrol's oil production in Q2 2024 was 758 kboed, an increase of 30.2 kboed.

How much did Ecopetrol (EC) pay in dividends in Q2 2024?

Ecopetrol paid COP 10.6 trillion in dividends in Q2 2024, with COP 1.5 trillion to minority shareholders and COP 9.1 trillion to the majority shareholder.

What was the status of Ecopetrol's (EC) Fuel Price Stabilization Fund (FEPC) in Q2 2024?

The FEPC balance totaled COP 12.1 trillion at the end of June 2024, a 61% decrease compared to the same period in 2023.