Ecopetrol(EC) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The first quarter of 2025 saw stable financial performance despite lower Brent prices, with net income at COP 3.1 trillion and EBITDA at COP 13.3 trillion, resulting in an EBITDA margin of 42% [38] - The refining margin decreased by $3.9 per barrel compared to the same period last year, attributed to various factors including product differentials and scheduled maintenance [22][23] - The company executed investments of$1.2 billion, exceeding the average for the first quarter over the past five years [39] Business Line Data and Key Metrics Changes - In the hydrocarbons line, average production reached 745,000 barrels of oil equivalent per day, marking the highest crude oil production in Colombia in the last five years [17] - The midstream segment experienced a 2% decrease in transported volumes compared to the first quarter of 2024, primarily due to scheduled maintenance [19] - The refining throughput for the first quarter was 396,000 barrels per day, representing a nearly 7% reduction compared to the same period in 2024 [21] Market Data and Key Metrics Changes - Ecopetrol supplied approximately 68% of Colombia's natural gas demand during the first quarter, reaffirming its critical role in national energy security [7][32] - The company reported a significant contribution from the energy efficiency program, generating savings of nearly COP 23 billion and avoiding over 90,000 tons of CO2 equivalent emissions [8][32] Company Strategy and Development Direction - The company is focused on diversifying its customer base and enhancing commercial management to navigate global uncertainties and price volatility [4] - Ecopetrol is committed to increasing its renewable energy capacity, aiming for over 1,000 megawatts of cell generation capacity this year [8] - The company is advancing projects in natural gas and renewable energy, including a regasification project expected to begin operations in Q2 2026 [6][28] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of maintaining operational and capital discipline in response to geopolitical tensions and OPEC supply increases [4] - The company anticipates challenges due to potential declines in Brent prices but has implemented measures to enhance resilience and financial flexibility [45][48] - Management expressed confidence in the company's ability to generate sustainable value despite market volatility [49] Other Important Information - The company has made significant progress in its efficiency program, achieving COP 700 billion in savings across various segments [26] - Ecopetrol's cash balance closed at COP 17 trillion, generating a positive free cash flow of COP 1.4 trillion [40] - The company is actively managing its debt levels, with a gross debt to EBITDA ratio remaining steady at 2.2 times [40] Q&A Session Summary Question: Impact of falling oil prices on EBITDA and revenue - Management confirmed that each dollar change in Brent impacts EBITDA by COP 740 million and net profit by COP 370 million, with a breakeven for production at $55 per barrel [51][56] Question: VAT implications and future payments - Management explained that the new VAT ruling requires ongoing payments, with expectations to recover 93$55 per barrel, and priority will be given to investments that create new production [74][75]