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Ecopetrol Business Group presents fourth quarter and full-year 2018 Results

BOGOTÁ, Colombia, Feb. 26, 2019 /PRNewswire/ -- Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) announced today the Business Group's 2018 fourth quarter and full-year financial results, prepared in accordance with International Financial Reporting Standards (IFRS) applicable in Colombia.

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COP Billion

 4Q 2018 

 4Q 2017 

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Total Sales









Operating Profit before impairment









Net Income Consolidated before impairment









Non-Controlling Interests









Net Income Attributable to Shareholders of Ecopetrol before impairment









Net Income Attributable to Shareholders of Ecopetrol

























The figures included in this report were extracted from the audited financial statements. The financial information is expressed in billions of Colombian pesos (COP) or US dollars (USD), or thousands of barrels of oil equivalent per day (mboed) or tons, and are so noted as applicable. For presentation purposes, certain figures of this report have been rounded to the nearest decimal place.

In words of Felipe Bayón Pardo, CEO of Ecopetrol:

"2018 was an outstanding year for Ecopetrol, both operationally and financially. Today, we are a more efficient and disciplined company, with better technical capacity, constantly seeking integrity and operational safety.

The year's net profit totaled COP 11.6 trillion, the highest of the past five years and almost double the figure posted in 2017. Additionally, the Business Group's EBITDA totaled COP 30.8 trillion, the highest in its history.

Capital discipline and efficiencies are fundamental pillars of our strategy, and are in line with our business culture, which are creating new and solid dynamics in all the company's processes. This is evidenced by the results of the operational and commercial strategies we have applied during the year.

First, we note the better balance of reserves and fulfillment of our production goals, fundamental pillars of the company's growth.

In 2018 we added 307 million barrels of oil equivalent in proven reserves, continuing the positive trend of increasing reserves that began in 2017. At the close of the year, the Ecopetrol Group's net proven reserves totaled 1.727 billion barrels of oil equivalent. The reserve replacement ratio was 129%, the highest of the past four years. Average reserve life totaled 7.2 years, noting the increase in reserve life for crude from 5.8 to 6.3 years.

We note our record of increasing proven reserves associated with the results of the recovery factor enhancement program (129 MMboe), in which the largest gains occurred at fields such as Chichimene, Castilla and Teca.

We satisfactorily met the annual production goal by achieving 720,000 barrels of oil equivalent per day, despite some operational events and public security difficulties in the first quarter. The production increase was due to the successful drilling campaign and the use of technology in the enhanced recovery program.

It is significant that in the fourth quarter we achieved average production of 733,000 barrels of oil equivalent per day, up 2.2% over the same period the previous year, and the basis for meeting our 2019 goal.

We ended the year with a solid cash position of COP 14.5 trillion. The year's liquidity position allowed us to prepay the equivalent of USD 2.5 billion in debt, resulting in a lower leverage ratio, which dropped from 37% in 2017 to 28% in 2018, strengthening our capital structure. The Gross Debt/ EBITDA ratio was 1.2x for 2018, versus 1.9x in 2017, the lowest of the past five years.

Total investment for the year rose to USD 2.9 billion, up 32% over 2017. Eighty-one percent of investment was concentrated in Upstream, in line with our 2021 business plan. Ninety-four percent of investments were executed in Colombia and 6% in the Gulf of Mexico, Brazil, Mexico and Peru.

We achieved our goal of having a proactive and dynamic commercial management, which expand our presence in markets that create greater value for our products. Sales to Asia in 2018 represented 41% of crude exports, versus 25% the previous year. Through this initiative, our crude basket's price discount versus Brent declined to 11.9%, compared to 12.7% in 2017. Our affiliate Ecopetrol Energía SAS ESP was commissioned in 2018, with the goal of administering installed generation capacity and optimizing the Business Group's energy needs.

Exploration saw major achievements in line with our growth strategy. We drilled 17 wells in Colombia, exceeding the goal of 12 wells for 2018, with a geological success rate of 46%. Through this deployment of activity, we succeeded in adding over 250 MMBOE in discovered resources for appraisal.

On the international front, we posted significant progress by expanding our presence in Brazil and the US Gulf of Mexico. In the award of the Pau-Brasil block in Brazil, we joined forces with well-known companies of global size in the Santos basin, assuming a 20% stake in the joint venture with BP Energy (50% - Operator) and CNOOC Petroleum (30%). In December 2018 we acquired a 10% stake in the Saturno block, together with Shell (45% - Operator) and Chevron (45%). This deal is pending approval by the Brazilian National Oil, Natural Gas and Biofuels Agency.

Ecopetrol América Inc. won the Green Canyon 404, 405, 448 and 492 blocks located in the US Gulf of Mexico, during the GOM - Lease Sale 251 round. This increasing level of activity is in line with our goals of competitiveness and future profitability.

In Midstream, we are continuing to show solid results. I note our stable extraction of heavy crude with viscosities greater than 600 centistokes (cst – a measure of viscosity). This past year saw the commissioning of the San Fernando – Apiay system, and we expanded the P135 to make the system more robust.

During the year, the Bicentenario oil pipeline reversal strategy saw the completion of 53 reversal cycles, allowing us to reduce the impact of the attacks and the illegal valves installed on the Caño Limón-Coveñas oil pipeline.

In 2018, thanks to the stable operations and process optimization, the Downstream witnessed outstanding operating performance, achieving stable throughput of 373,000 barrels per day for the two refineries.

At the new Cartagena refinery, average throughput for the year totaled 151,300 barrels per day, 11.5% more than the previous year. Throughput composition was 77% domestic crude and 23% imported, versus 50% domestic and 50% imported in 2017. The results of the refinery optimization process were positive, as reflected in gross refining margin of USD 11 per barrel, up 15.4% over 2017.

The execution of initiatives to separate light and intermediate crude oils contributed to the Barrancabermeja refinery's profitable and efficient production of 221,600 barrels per day, up 5.6% over the previous year. Bioenergy also continued the stabilization phase of its agricultural and industrial operations, achieving production of 47.1 million liters of ethanol in 2018, compared to 36 million liters in 2017.

Operational synergies between the two refineries, as well as operating adjustments among the different segments, allowed us to offer the country cleaner fuels. In December, b2 diesel distributed in Colombia averaged 16 parts per million (ppm) of sulfur, with 108 ppm in gasoline, lower than the current Colombian standards of 50 ppm for diesel and 300 for gasoline. We fulfill our commitment to supply b2 diesel with a maximum 25 ppm of sulfur in the city of Medellín and the area of influence of the Aburrá Valley (and levels as low as 14 ppm in December).

We remain committed to our plan for operational and financial efficiencies. In 2018 we achieved cumulative savings of COP 2.7 trillion in the Business Group, some 6% more than in 2017. Our goal is to continue to improve the cost efficiencies and capital discipline we have adopted in our corporate culture.

In developing ESG (Environment, Social and Governance) initiatives, with a commitment to prioritizing safety as a pillar of our operations, we have strengthened the "Crisis Management Model," applying discipline to reports, analyses and the valuation of actual and potential crises. We have also met the annual audit requirements for recertification in the ISO 14001 and OHSAS 18001 standards, which will allow us to continue the certifications in 2019.

In 2018 Ecopetrol S.A. joined the "Climate and Clean Air Coalition (CCAC)," a voluntary association that seeks to improve air quality and protect climate through actions to reduce climate pollutants such as methane, black carbon and greenhouse gases. Through this measure, Ecopetrol S.A. joins ten other global oil companies that have signed this commitment.

Having achieved major operational and financial successes as defined in our 2016 – 2020 Business Plan, strengthening the company both operationally and financially, we are prepared for new goals. We have updated our 2019 – 2021 Business Plan, in which the priorities remain the same: focus on reserve and production growth, under capital discipline and cash efficiency principles. We updated the plan with the objective of maximizing the value for our shareholders, taking advantage of our integrated operation, and under new profitability, competitiveness, and sustainability criteria.

Among the most relevant operational and financial goals towards 2021 are: i) reach levels of organic production between 750 - 770 mboed, ii) increase of total reserves maintaining the organic reserve replacement ratio above 100% without price effect, iii) enabling optimal throughput of refining integrating system between 370 – 400 mbpd,  iv) increase transport volume in line with country production, v) invest between 12 to 15 billion dollars that reflect a return over capital above 11% at business plan price and vi) maintain a strong cash position and an optimal leverage the preserves the company´s investment grade.

In 2019 our priorities will be excellence and safety as pillars of our operations, care for our workers and the environment; a commitment to ethics and transparency; and maintaining outstanding results that will allow us to continue to grow sustainably, creating added value for our shareholders"

To review the full report please visit the following link:

Ecopetrol is Colombia's largest firm and is an integrated oil company that is among the 50 largest in the world and the four largest in Latin America. In addition to Colombia, where it generates over 60% of the country's production, it is active in exploration and production in Brazil, Peru and the United States (Gulf of Mexico). Ecopetrol operates the largest refinery in Colombia, most of the country's oil-pipeline and polyduct network, and is significantly increasing its share of bio-fuels.

This press release contains statements relating to business prospects, estimates of operating and financial results, and Ecopetrol's growth prospects. All are projections, and therefore are based solely on management's expectations of the company's future and its continuous access to capital to finance the company's sales plan. Achieving these estimates in the future depends on its performance under given market conditions, regulations, competition, performance of the Colombian economy and industry, among other factors; therefore, they are subject to change without prior notice.

For further information, contact:

Capital Markets Manager
María Catalina Escobar
Telephone: +571-234-5190 - Email: investors@ecopetrol.com.co

Media Relations (Colombia
Jorge Mauricio Tellez 
Telephone: +571-234-4329 - Email: mauricio.tellez@ecopetrol.com.co 


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