alberto tovar durate's presentation slides from the 2010 world national oil companies congress
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Ecopetrol: An evolving NOC, mitigating Ecopetrol: An evolving NOC, mitigating risks and managing costsrisks and managing costs
World NOCs CongressJune 2010, London UK
Alberto Tovar DuarteE&P New Business Manager
DISCLAIMER
This document was prepared by Ecopetrol S.A. with the purpose of providing certain information about the Company.
This document may include strategy discussions and forward-looking statements regarding the probable development of Ecopetrol’s Business. Said projections and statements include references to Company estimates or expectations relative to its future and operational results. Potential investors and the market in general should be aware that the information provided herein does not constitute any guarantee of its performance, risks or uncertainties that may occur or materialize. Actual results may fluctuate and differ from those provided herein due to several factors beyond the control of the Company. Neither Ecopetrol nor its advisors, officers, employees, directors or agents, make any representation nor shall they assume any responsibility in the event that the actual performance of the company differs from what is provided herein. Moreover, Ecopetrol, its advisors, officers, employees, directors or agents shall not have any obligation whatsoever to update, correct, amend or adjust this presentation based on information attained or events occurred after its disclosure.
This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed solely in conjunction with the oral briefing provided by Ecopetrol. Neither this presentation, nor any of its contents may be used for any other purpose without the prior written consent of Ecopetrol. 2
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Ecopetrol an evolving NOC
Long term planning and diversification
Consolidation Strategy
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Ecopetrol an evolving NOC
Long term planning and diversification
Consolidation Strategy
Fourth in Latin America, 38th in the
world, according to PIW
12% production growth in 2010
Refining capacity of 330 Mbopd
Solid transport infrastructure
Sound financial indicators*
• Revenues: $8.7 billion
• EBITDA: $4.1 billion
PeruBrazil
Golfo de Mexico
Medium Magdalena
Northeast
Sur
CentralColombia
Ecopetrol Presence
Cartagena Refinery
Barrancabermeja Refinery
5*Data of march 2010
Largest company in Colombia with strong operational performance and healthy financial metrics
Key highlights Location
In recent years, Ecopetrol has undergone a permanent transformation motivated by the hydrocarbon sector reform in Colombia by 2003
2003 200620052004 2007 2008
Internal Transformation
2003 Decree 1760/03: Industry Transformation Process
Competitive sector
Creation of Hydrocarbon National Agency (ANH)
Management System
Operational Excellence
Corporate Governance standards
2006 Law 1118/06 delivering Administrative and Strategic Autonomy- Capitalization Authorization
2007: Initial Public Offer (10.1%) US$2.8bn
New corporate image
2008 : ADR, NYSE listing
2006-2008: Ecopetrol ventures in Peru , USA Gulf of Mexico and Brasil
2008: Acquisition of Propilco (Polypropylene 400 Kton/year)
2009: Acquisitions in Colombia and Peru (Hocol, Reficar, Ocensa, OIG-Savia)
Transformation Process
2009
Milestone
Domestic and International expansion
For ECOPETROL, the IPO and strategic and operational autonomies, were key drivers to define a long term business plan and consolidation strategies.
source: PFC, Energy, Evolution of successful NOCs, 2010, modified by ECP
EcopetrolEcopetrol
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Ecopetrol an evolving NOC
Long term planning and diversification
Consolidation Strategy
Today, Ecopetrol is a conglomerate with an clear business plan and specific goals for each one of its business lines and companies.
TO PRODUCE ONE MILLION BARRELS OF OIL EQUIVALENT
PER DAY
CONSOLIDATE A BUSINESS MODEL MANAGEMENT TO LEVERAGE OUR
GROWTH STRATEGY
Ecopetrol has Corporate governance bylaws and provisions with clear rules for decision making process and to develop sustainable relationships with stakeholders.
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Refining
Petrochemical
Biofuels
Transport and Logistics
Gas
Deep conversion, clean fuels production and increased capacity
Increase participation on the national an regional petrochemical
Ecopetrol will be the leading producer of biofuels in Colombia
Guarantee the logistics to make oil, gas, derivative and biofuel production viable
Consolidate natural gas as a profitable business for Ecopetrol
Objective Goal 2015Capacity
650 MBOED
Production2700 Mtons/yr
Production450 Mtons/yr
RevenuesUS$128/yr
Sales1,100 GBTU
An integrated company diversifying with different kind of businesses such as Oil & Gas, Petrochemical and Biofuels.
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Ecopetrol Business Group supporting the development of the strategy
Exploration and Production
Refining and Petrochemical
Oil and Multi-purpose Pipeline
Transport
Biofuels
2007 2008 2009
49% 100%
35%
50%
80%50%
65%
60%
OLEODUCTO DE COLOMBIA S.A.
65,75% 85%
USA-Gulf of Mexico 2009: 130 blocks
4 wells
BrazilExploration 2009: 7 blocks
1 well
Perú2009: 5 blocks / 6 TEAS
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Diversification of national and international exploration portfolio
Long Term> 2013
Medium Term2011 – 2013
Short Term2009 – 2011
Caribbean Sea
Pacific Ocean
Ecuador
Venezuela
Perú
Brazil
Panama
Colombia International
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Diversification with different partners
5 blocks
PeruBrazil
United states
Brazil
¹ Other shareholders: Eni 13,4%, Conoco Phillips 12,4%, Mitsubishi Corporation 11,6%, Nippon Oil Corporation 11,6%
Gulf of Mexico
Perú
1 production Block - K2Production Ecopetrol: 1.2 KBPED Anadarko (operator) 41,8%¹Ecopetrol America Inc. 9,2%
Savia – (Petro-Tech)Ecopetrol’s proven reserves (P1): 42.5mmboe²Ecopetrol’s production: 6 KBDCEcopetrol 50%Korea National Oil Corporation – Knoc: 50%
² Estimated by Ecopetrol
7 blocks
103 Exploratory
blocks
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100% PERU
(Petro Tech)50%
US GOM9,2%
ColombiaInternational
Our strategy balances organic and inorganic growth
E&P ACQUISITIONS
2008
K2
2009 2009
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Integrated
International
Energy diversified
Partnerships
Organic & inorganic growth
Ecopetrol a global energy company
Diversification helps to mitigate business risks.
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Ecopetrol an evolving NOC
Long term planning and diversification
Consolidation Strategy
Organizational Consolidation
Generate conditions to guarantee results and leverage growth
Main strategic goals 2015
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Human talent
Operational Excellence
Project Management
Supply Management
Financial Excellence
Have the skilled Human Talent required to achieve the strategy
Take the company to international standards as regards performance
and efficiency in HSE and operation
Guarantee effective project management by implementing the best practices
Add value by means of the reliability of the Supply Chain leveraged in competitive
Suppliers
Create value for shareholders by guaranteeing the availability of funds to
execute the strategy
Objective Goal 2015Top 10 companies
to work for in Colombia
Accident Rate 1.13Environmental Incidents: 32
IPA1er Quintile
Debt / EBITDA Rate ≤ 2.0X
Cost Optimization 6%
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Technology, Knowledge and Information
Corporate social responsibility
Strengthen technological development and innovation by guaranteeing
knowledge and information
Ecopetrol will continue to work observing excellence levels in corporate reputation
on the domestic and international scenarios
Objective Goal 2015
Technological Advantages
developed 15
Be part of the Dow Jones (2011)
Sustainability indices and in the
Gold Category (2015)
All of these areas are key factors to excel in managing costs.
As a result of these strategies, Ecopetrol has gotten an important growth in the production level…
SAVIAECOPETROL HOCOL K2
15%
12%
…and good financial performance due to operative results.
ROE
Revenue 24% - Ebitda 27% Op. Profit 36% - Net Profit 53%
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For restricted use of Ecopetrol. All rights reserved. No part of this presentation may be reproduced or used in any form or by any means without explicit permission from Ecopetrol.
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ENERGY FOR THE FUTUREENERGY FOR THE FUTURE