BOGOTA, July 31 /PRNewswire-FirstCall/ -- Ecopetrol, S.A. (BVC: ECOPETROL; NYSE: EC), the Colombian integrated oil and natural gas company, announced today its unaudited consolidated(1) and unconsolidated financial results for the second quarter of 2009 and the first half of 2009. Financial statements were prepared and filed according to the Regimen de Contabilidad Publica (RCP or Colombian Government Entity GAAP) enacted by the Contaduria General de la Nacion de Colombia (Colombian General Accounting Department), in Colombian pesos (COP).
(Logo: http://www.newscom.com/cgi-bin/prnh/20090209/ARM001LOGO ) Below is a summary of Ecopetrol's unconsolidated financial results: (In billions of COP) Unconsolidated Unconsolidated 2Q09 2Q08 % 1st Half 09 1st Half 08 % Total Sales 6685.5 9424.8 -29.1% 11798.3 16647.2 -29.1% Operating Profit 2132.3 4384.8 -51.4% 3153.2 8150.5 -61.3% Net Income 762.0 3356.7 -77.3% 2371.3 5650.0 -58.0% Earnings per Share(COP) 18.83 82.94 -77.3% 58.59 139.60 -58.0% EBITDA 2807.6 4823.2 -41.8% 4436.9 9024.4 -51.8% EBITDA Margin 42% 51% 38% 54%
1 Pursuant to the RCP, Colombian companies only have the obligation to consolidate their financial statements at the end of each fiscal year. Therefore, figures in this report do not constitute a formal consolidation of Ecopetrol's financial statements. However, they do present an estimated consolidation of Ecopetrol's financial statements.
Commenting on the second quarter 2009 results, Javier Gutierrez, Ecopetrol's Chief Executive Officer, said "Ecopetrol achieved significant improvements in its operating performance on a sequential basis, more than doubling its operating profit compared to the previous quarter. Sequential improvements were driven by higher volumes and prices and increased hydrocarbon production and purchases, while there was a loss in our non- operating results, due to the effect of revaluation on portfolio investments. In annual terms, the 2009 financial results were below those of year 2008 due to lower crude oil and natural gas prices.
We continued to successfully implement our strategic plan, increasing production to 504.2 thousand BOE/D in June. This significant milestone toward our goal of producing the equivalent of one million barrels of oil by 2015 was achieved six months ahead of schedule. We strengthened our exploratory activities in the second quarter by increasing our portfolio of prospects in Colombia and expanding our international activity through strategic alliances.
All of the strategic acquisitions announced during the first quarter were completed and we began their integration in the second quarter. We recently entered the debt market, raising COP 2.2 trillion through a syndicated loan from Colombian banks and USD 1.5 billion through an international note offering which was six times oversubscribed. Those are the first steps to optimize our capital structure."
Market Environment
The second quarter was marked by the first signs of a global economic recovery, which impacted commodity prices and exchange rates in emerging countries as investors again took positions in those markets. The exchange rate appreciated by 15.7% during the quarter (from USD/COP 2,561 at the end of March to USD/COP 2,159 at the end of June), while the price of the WTI barrel rose from USD 49.7/barrel to USD 69.9/barrel (a 40.6% increase) from the end of March to the end of June.
Sales Volume Domestic Sales Volume 2Q09 2Q08 % (thousands BOE/D) Crude Oil 79.1 74.7 5.8% Natural Gas 69.1 63.3 9.2% Gasolines 59.1 61.9 -4.5% Medium Distillates 93.1 95.3 -2.3% LPG and Fueloil 19.3 20.5 -6.1% Industrial and Petrochemical Products 14.3 14.5 -1.6% Total Domestic Sales 333.9 330.2 1.1% Exports Volume (in thousand BOE/D) 2Q09 2Q08 % Crude Oil 216.7 142.1 52.5% Products 55.5 51.5 7.8% Natural Gas 26.4 19.5 35.5% Total Export Sales 298.6 213.1 40.1% Total Volume Sold 632.5 543.3 16.4% Domestic sales volume 1st Half 09 1st Half 08 % (in thousand BOE/D) Crude Oil 81.4 73.9 10.1% Natural Gas 66.0 65.6 0.7% Gasolines 59.7 62.3 -4.2% Medium Distillates 91.7 91.8 -0.2% LPG and Fuel oil 20.1 20.2 -0.7% Industrial and Petrochemical Products 14.1 16.2 -12.7% Total Domestic Sales 332.9 330.0 0.9% Exports Volume (in thousand BOE/D) 1st Half 09 1st Half 08 % Crude Oil 200.4 137.0 46.3% Products 56.0 47.9 16.9% Natural Gas 24.7 13.9 77.7% Total Export Sales 281.1 198.8 41.4% Total Volume Sold 614.0 528.8 16.1%
Total sales volume rose 16.4% during the second quarter of 2009 as compared to the same period in 2008 due to an 85.5 thousand BOE/D increase in exports. The largest increases were in Castilla crude exports (120%), and natural gas exports (35.5%). For the first half of 2009 as compared to the first half of 2008, there was a 16.1% increase due to a 41.4% increase in exports.
Domestic sales increased slightly by 3.7 thousand BOE/D from the second quarter of 2009 as compared to the second quarter of 2008 due mainly to a 5.8 thousand BOE/D rise in natural gas sales resulting from larger consumption in the thermal energy sector, and a 4.4 thousand BPCD increase in crude oil sales to the Cartagena Refinery, which helped offset the 5 thousand BPD decline in gasoline and medium distillate sales. For the first half of 2009 compared to the same period in 2008, there was a 0.9% increase in domestic sales resulting from greater sales of crude oil to the Cartagena Refinery.
The lower domestic consumption of refined products was due to an increase in the distribution of gasoline with 10% ethanol, greater restrictions on the use of vehicles in several Colombian cities, and the conversion of vehicles to natural gas as a result higher domestic gasoline prices as compared to natural gas prices for vehicles.
The availability of Ecopetrol crude oil and products included the following purchases and imported volumes:
Purchases(in thousand BOE/D) 2Q09 2Q08 % Crude Oil 165.4 137.9 19.9% Refined Products 9.8 6.5 50.9% Natural Gas 37.6 31.6 19.2% Total Purchases 212.8 175.9 20.9% Imports (in thousand B/D) 2Q09 2Q08 % Crude Oil 0 0 0% Products 37.5 28.1 33.5% Total imports 37.5 28.1 33.5% Purchases (in thousand BOE/D) 1st Half 09 1st Half 08 % Crude Oil 162.7 137.7 18.2% Refined Products 8.5 4.8 76.8% Natural Gas 36.0 31.5 14.4% Total Purchases 207.3 174.0 19.1% Imports (in thousand B/D) 1st Half 09 1st Half 08 % Crude Oils 0.0 0.4 -100% Products 35.5 23.7 49.8% Total Imports 35.5 24.1 47.1% Unconsolidated Financial Results Unconsolidated Profit and Loss Statement (In billions of COP) 2Q09 2Q08 % 1st Half 09 1st Half 08 % Domestic Sales 3438.6 5838.6 -41.1% 6592.4 10385.5 -36.5% Export Sales 3015.3 3360.3 -10.3% 4738.3 5821.6 -18.6% Services Sales 231.7 225.8 2.6% 467.6 440.1 6.2% Total Sales 6685.5 9424.8 -29.1% 11798.3 16647.2 -29.1% Variable Costs 2674.4 3473.5 -23.0% 5259.9 5690.3 -7.6% Fixed Costs 1326.2 1232.4 7.6% 2416.8 2159.0 11.9% Cost of Sales 4000.6 4705.8 -15.0% 7676.7 7849.2 -2.2% Gross Profit 2685.0 4718.9 -43.1% 4121.5 8798.0 -53.2% Operating Expenses 552.7 334.2 65.4% 968.3 647.5 49.6% Operating Profit 2132.3 4384.8 -51.4% 3153.2 8150.5 -61.3% Non-operating Profit (Loss) -1030.3 394.2 -361.4% 163.3 -242.9 167.2% Provision for Income Tax 340.0 1422.3 -76.1% 945.2 2257.6 -58.1% Net Income 762.0 3356.7 -77.3% 2371.3 5650.0 -58.0% Earnings per Share (COP) 18.83 82.94 -77.3% 58.59 139.60 -58% EBITDA 2807.6 4823.2 -41.8% 4436.9 9024.4 -50.8% EBITDA Margin 42% 51% 38% 54%
While international prices improved during the second quarter of 2009, they continued to be below those of the comparable period in 2008. This resulted in a decline in the average price of the crude oil export basket from USD 112.14/barrel in second quarter 2008 to USD53.66/barrel in second quarter 2009; and in the average refined export products basket, which fell from USD 88.86/barrel in second quarter 2008 to USD 52.22/barrel in second quarter 2009. During the first half of 2009, the average export crude oil basket was USD 42.7/barrel and the export products basket was USD 42.8/barrel, compared to an average of USD 98.4/barrel and USD 79/barrel, respectively, for the same period in 2008.
Lower prices during the second quarter of 2009 led to a 29.1% decrease in total sales, from COP 9,424.8 billion in the second quarter of 2008 to COP 6,685.5 billion in the second quarter of 2009. For the first half the year, total sales were COP 11,798.3 billion, which is a 29.1% decrease from the same period in 2008 when total sales were COP 16,647.2 billion.
The differential between the crude oil basket and WTI improved from an average of USD 11.84/barrel in second quarter 2008 to an average of USD 5.96/barrel in second quarter 2009. For the first half of the year, the average differential was USD 8.62/barrel for 2009, compared to USD 12.57/barrel for 2008. Ecopetrol's heavy crude oil differential improved as a result of the reduction in other heavy crude oils from Mexico, Venezuela, and Canada in the U.S. market.
The export product basket differential with WTI also improved from an average of USD 35.12/barrel during second quarter 2008 to an average of USD 7.40/barrel in second quarter 2009. For the first half of the year, the differential was USD 8.54/barrel for 2009 compared to USD 31.91/barrel for the same period in 2008. This improvement is due to the higher price of Fuel Oil No. 3 (benchmark for Colombian fuel oil) in the international market.
Cost of sales decreased 15.0% in second quarter 2009 compared to the second quarter of 2008 due to a 23.0% decline in variable costs, which (partially) offset a 7.6% increase in fixed costs. For the first half of the year 2009, cost of sales decreased 2.2% as compared to the same period in 2008.
The decrease in variable costs was mainly due to the lower value of crude oil purchases, whose average price decreased from USD 98.50/barrel in the second quarter 2008 to USD 49.74/barrel in the second quarter 2009, and to the decline in the value of imports, whose average purchase price decreased from USD 185.9/barrel in the second quarter of 2008 to USD 68.06/barrel in the second quarter of 2009.
Fixed costs increased 7.6% in the second quarter of 2009 compared to the same period in 2008, mainly as a result of increases in operating maintenance costs, and well reconditioning costs, as well as higher hydrocarbon transport costs stemming from the increased use of trucks to transfer higher quantities of heavy crude oils from the Rubiales field.
The Company continued to implement its strategy of optimizing goods and decreasing services' supply costs, which prevented an estimated cost of COP 252.8 billion during the first half of 2009.
Gross profit was COP 2,685.0 billion during the second quarter of 2009, resulting in a 40.2% gross margin, compared to COP 4,718.9 billion and a corresponding 50% gross margin in the second quarter 2008. Gross profit was COP 4,121.5 billion in the first half of 2009, compared to COP 8,798.0 billion in the first half of 2008.
Operating expenses increased 65.4% in the second quarter of 2009 compared to the second quarter of 2008 as a result of the following two factors: (i) a 207.4% increase in exploration and project expenses due to the recognition of unsuccessful exploratory activities, mainly Gibraltar 3P, and geological and seismic study costs; and (ii) a 72.8% increase in administrative expenses primarily as a result of goodwill amortization related to the acquisitions of Propilco, Offshore International Group, Ocensa, and Hocol and, in line with the Company's expansion, an 11.5% increase in employee headcount from June 2008 to June 2009. For the first half of the year 2009, there was a 49.6% increase in operating expenses compared to the first half of 2008 due to greater costs associated with Ecopetrol's exploration activities.
The operating profit for the second quarter of 2009 decreased as compared to the operating profit of the second quarter of 2009, and was COP 2,132.3 billion in the second quarter of 2009 as compared to COP 4,384.8 billion in the comparable 2008 period. Nevertheless, operating profit increased 108.9% as compared to the first quarter of 2009 as a result of higher production levels.
Non-operating profit decreased 361.4% compared to the second quarter of 2008 due to a COP 1,030.3 billion loss in the second quarter of 2009 compared to a COP 394.2 billion profit in the same period last year. The loss is mainly the result of the impact of the peso revaluation against the dollar on the portfolio (63% denominated in US dollars) during the second quarter of 2009, which resulted in a currency exchange loss of COP 911.2 billion. By contrast, in the second quarter of 2008, the peso devalued against the dollar, resulting in a COP 399.3 billion currency exchange gain.
Net profit for the second quarter 2009 was COP 762.0 billion or COP 18.83 per share, a drop of 77.3% from the second quarter of 2008, when net profit was COP 3,356.7 billion or COP 82.94 per share. For the first half of 2009, net profit reached COP 2,371.3 billion or COP 58.59 per share, 58.0% less compared to the same period of 2008. For the first half of 2008, net profit was COP 5,650.0 billion or COP 139.60 per share.
EBITDA totaled COP 2,807.6 billion in the second quarter of 2009, resulting in a 42% EBITDA margin, compared to COP 4,823.2 billion and a corresponding 51% EBITDA margin in the same period of 2008. EBITDA for the first half of the year reached COP 4,436.9 billion in 2009, or a 38% EBITDA margin, compared to COP 9,024.4 billion, or a 54% EBITDA margin in 2008.
General Balance Sheet Unconsolidated General Balance Sheet As of June As of March In billions of COP 2009 2009 % Current Assets 14,053.5 18,497.0 -24.0% Long Term Assets 36,056.1 34,854.8 3.4% Total Assets 50,109.6 53,351.8 -6.1% Current Liabilities 12,728.5 18,016.0 -29.3% Long-Term Liabilities 9,204.1 7,604.1 21.0% Total Liabilities 21,932.6 25,620.1 -14.4% Shareholders' Equity 28,177.0 27,731.8 1.6% Total Liabilities and Shareholders' Equity 50,109.6 53,351.8 -6.1% Memorandum Accounts* 135,399.68 168,298.71
As of June 30, 2009, Ecopetrol had assets of COP 50,109.6 billion, compared to COP 53,351.8 billion at the end of the first quarter of 2009. This decline was attributable to the decline in current assets due to the liquidation of portfolio investments in order to pay dividends and acquire Hocol.
Liabilities at June 30, 2009 amounted to COP 21,932.6 billion, compared to COP 25,620.1 at the end of first quarter 2009. The decline was due to the first dividend payment of COP 3.027,3 billion in April, and the second and third installments of the 2008 income tax payment in the amount of COP 2,285.9 billion.
Shareholders' equity rose from COP 27,731.8 billion as of March 31, 2009 to COP 28,177.0 billion as of June 30, 2009 due to a COP 762.0 billion increase in net income and a COP 116 billion valuation surplus, which were [partially] offset by an exchange loss generated by USD equity investments in ODL Finance, Offshore International Group, Andean Chemicals Limited, Ecopetrol Transportation Company, and Ecopetrol del Peru in the amount of COP 428 billion.
Cash Position
As of June 30, 2009, Ecopetrol held, unconsolidated, COP 5,711.4 billion in cash, cash equivalents, and investments, including investments in portfolios at maturity totaling COP 268.9 billion, and had long-term financial debt of COP 1,764.7 billion as a result of the syndicated loan entered into with a syndicate of local banks. Net cash used for operating activities in the second quarter of 2009 was COP 2,319.9 billion, compared to COP 2,061.9 billion in the second quarter of 2008.
Results by Segment Quarterly Results by Segment In billions of COP E&P Refining 2Q09 1Q09 2Q09 1Q09 Domestic Sales 2512.0 1812.9 2614.2 2366.9 Exports 1579.2 551.3 526.7 395.5 Total Sales 4091.2 2364.3 3140.9 2762.4 Operating Profit 1995.2 925.3 -98.5 17.3 Net Income 1421.3 755.3 -77.7 188.8 Quarterly Results by Segment In billions of COP Transportation Marketing and Sales 2Q09 1Q09 2Q09 1Q09 Domestic Sales 519.1 488.6 1054.1 944.9 Exports 0 0 909.4 776.2 Total Sales 519.1 488.6 1963.5 1721.1 Operating Profit 137.7 164.5 148.5 -77.6 Net Income 87.9 137.1 140.1 -51.7 Quarterly Results by Segment In billion COP E&P Corporate TOTAL ECP 2Q09 1Q09 2Q09 1Q09 Domestic Sales -3029.2 -2223.6 3670.1 3389.7 Exports 0 0 3015.3 1723.1 Total Sales -3029.2 -2223.6 6685.3 5112.8 Operating Profit -50.6 -8.6 2132.3 1020.9 Net Income -809.6 579.7 762.0 1609.3 Accumulated Results by Segment Billions of COPs E&P Refining Transportation As of June As of June As of June 2009 2009 2009 Domestic Sales 4325.0 4981.0 1007.6 Export Sales 2130.5 922.2 0 Total Sales 6455.5 5903.3 1007.6 Operating Profit 2920.5 -81.2 302.2 Net Income 2176.7 111.0 225.0 Accumulated Results by Segment Billions of COPs Marketing & Sales Corporate TOTAL ECP As of June As of June As of June 2009 2009 2009 Domestic Sales 1999.0 -5252.8 7059.7 Export Sales 1685.7 0 4738.4 Total Sales 3684.6 -5252.8 11798.1 Operating Profit 70.9 -59.2 3153.2 Net Income 88.5 -229.9 2371.3
The segment report is calculated on the basis of transfer prices among business units, using export parity prices as reference. In addition, the methodology assigns fixed discounts for crude oil that the Marketing and Sales segment provides to the Barrancabermeja refinery.
The Exploration and Production segment contributed 91.8% to accumulated net profit in the amount of COP 2,177.0 billion, resulting from increased production of heavy crude oils for the export market.
The Refining segment accumulated a COP 111.0 billion net profit for the first half of the year, but reported a loss of COP 77.7 billion for the second quarter as a result of low levels of crack spread, which since March 2009 has been maintained at values below the 2004 minimum. Additionally, crude oil used to load the refineries has become relatively more expensive due to higher prices of heavy crudes in the export market.
The Transportation segment recorded an accumulated net profit of COP 225.0 billion resulting from higher volumes transported during the first half of 2009 compared to the same period in 2008, which increased from 730.4 thousand BPCD to 760.6 thousand BPCD, respectively.
The Marketing and Sales segment had an accumulated net profit of COP 88.5 billion as a result of an improvement in the hydrocarbon sales margin during the second quarter of 2009.
The Corporate segment reported an accumulated net loss of COP 229.9 billion due mainly to other non-operating expenses, particularly taxes on net worth and retirement expenses.
Consolidated Financial Results
Pursuant to the RCP, Colombian companies only have the obligation to consolidate their financial statements at the end of each fiscal year. Therefore, figures in this report do not constitute a formal consolidation of Ecopetrol's financial statements. However, they do present an estimated consolidation of Ecopetrol's financial statements.
For purposes of the estimated consolidation of Ecopetrol's financial statements for second quarter and first half 2009, in addition to Ecopetrol S.A. results, the following companies were included:
In the Upstream Area: Ecopetrol Oleo e Gas Do Brasil, Ecopetrol America Inc, Ecopetrol del Peru S.A., and Hocol.
In the Downstream area: Bioenergy S.A., Andean Chemicals Limited, ECP Global Energy, Propilco S.A., Comai, ODL Finance S.A., Ecopetrol Transportation Company, Oleoducto de Colombia, Ocensa S.A., and Refineria de Cartagena (as of May 2009); and Black Gold Re Ltd.
For the second quarter and the first half of 2008, the following companies were included: Ecopetrol S.A. Black Gold Re Ltd, Ecopetrol Oleo e Gas Do Brasil, Ecopetrol America Inc, Ecopetrol del Peru S.A., Andean Chemicals Ltd, Propilco, and Comai.
Consolidated Profit and Loss Statement with Subsidiaries* In billion COP 2Q09 2Q08 % 1st Half 09 1st Half 08 % Domestic Sales 3500.3 6031.7 -42.0% 6687.5 10578.6 -36.8% Export Sales 3544.5 3484.5 1.7% 5361.6 5950.0 -9.9% Services Sales 231.7 225.8 2.6% 467.6 440.1 6.2% Total Sales 7276.5 9742.0 -25.3% 12516.6 16968.7 -26.2% Variable Costs 2742.5 3755.6 -27.0% 5329.8 5690.3 -6.3% Fixed Costs 1942.3 1232.4 57.6% 3112.9 2441.8 27.5% Cost of Sales 4684.8 4988.0 -6.1% 8442.7 8132.0 3.8% Gross Profit 2591.7 4754.0 -45.5% 4073.9 8836.7 -53.9% Operating Expenses 490.8 350.5 40.0% 910.4 663.8 37.1% Operating Profit 2101.0 4403.5 -52.3% 3163.5 8172.9 -61.3% Non-Operating Profit (Loss) -1067.3 394.3 -370.7% 105.3 -246.5 -142.7% Provision for Income Tax 348.7 1426.2 -75.6% 975.3 2261.5 -56.9% Minority Interest 7.2 0.0 0.0% -7.2 0.0 0.0% Net Income 692.3 3371.6 -79.5% 2300.7 5664.9 -59.4% EBITDA 3134.1 4841.9 -35.3% 4,889.7 9,046.8 -46.0% EBITDA Margin 43% 50% 39% 53% * These values are included for reference purposes only
With respect to total sales for second quarter 2009, the greatest contributions by individual subsidiaries (without taking into account the effect of deletions) came from Refineria de Cartagena with COP 1,394.0 billion, Hocol with COP 732.6 billion, Propilco S.A. with COP 502.2 billion, and Ocensa S.A. with COP 345.2 billion.
Consolidated net profit was COP 692.3 billion for second quarter 2009, representing a 79.5% decrease from the same period in 2008 when consolidated net profit was COP 3,371.6 billion. For the first half of 2009, consolidated net profit totaled COP 2,300.7 billion.
Among subsidiaries, the greatest net profits came from Hocol with COP 33.3 billion, Invercolsa with COP 12.5 billion, Ecopetrol del Peru S.A. with COP 14.7 billion, and Andean Chemicals Limited with COP 10.6 billion. Through the equity method, Offshore International Group contributed COP$22.1 billion and Invercolsa COP$13.5 billion. Refineria de Cartagena showed a loss of COP 49.6 billion.
Consolidated EBITDA totaled COP 3,134.1 billion for the second quarter of 2009, or a 43.1% EBITDA margin, compared to COP 4,841.9 billion and a corresponding 50% EBITDA margin for the same period in 2008.
Accumulated EBITDA was COP 4,889.7 billion as of June 30, 2009, of which 90.7% was contributed by Ecopetrol, 4.4% by Hocol, 3.3% by Ocensa, and 1.6% by the remaining subsidiaries.
Significant Aspects of the Strategic Plan financing
To support the development of the Strategic Plan, the Company announced an estimated financing requirement of up to USD 8.0 billion for the 2009-2011 period, of which up to USD 3.7 billion would be needed in 2009, based on an average WTI of USD 50 /barrel.
In May 2009, Ecopetrol obtained a syndicated loan from local banks in the amount of COP 2.2 trillion. The term of the loan is seven (7) years, including a grace period of two (2) years, and has an interest rate of DTF (fixed term deposit) + 4% (the anticipated quarterly rate).
Additionally, on July 23 the Company raised USD 1.5 billion through a Rule 144A/Regulation S international 10-year, 7.625% bond issue, with registration rights with the Securities and Exchange Commission.
Ecopetrol's corporate debt was rated BB+ with a stable outlook by the risk-rating agencies Standard & Poor's and Fitch, while Moody's rated the Company's corporate credit risk in local currency Baa2 with a stable outlook, which placed Ecopetrol in the investment grade category.
Exploration
In the second quarter, as part of its internationalization and risk diversification strategy, Ecopetrol, through its affiliate Ecopetrol Oleo E Gas do Brasil LTD, in partnership with Anadarko Exploracao e Producao de Petroleo e Gas Natural Ltd, entered into agreements to explore the BMC-29 block in Brazil, located offshore the Campos Basin. Ecopetrol also obtained, through its subsidiary Ecopetrol del Peru S.A., in partnership with Talisman (Peru) Ltd, authorization to enter into a License Agreement for Hydrocarbon Exploration and Production in Block 158 in Peru.
Ecopetrol continued its expansion activities in the U.S. Gulf of Mexico, gaining a total area of 46,701 hectares during the bidding round of Lease 208, achieving participation in 26 blocks, of which 15 are fully owned by Ecopetrol and the remaining 11 are shared with Repsol, which business was ratified on June 18, 2009.
As of June 30, 2009, Ecopetrol had drilled five exploratory wells, directly and through joint ventures, four in Colombia and one in the U.S. Gulf of Mexico, which is currently under evaluation. One of the wells drilled in Colombia, Quriyana-1 (located in Putumayo), confirmed the presence of oil and is under extensive testing to determine its potential. The exploratory success index of Ecopetrol was 25% for the first half of 2009.
During the first half of 2009, the Company acquired in 1,250 equivalent kilometers of seismic in Colombia, directly and through joint ventures, and its partners acquired 490 equivalent kilometers, for a total of 1,740 kilometers, compared to 1,136 equivalent kilometers of seismic acquired during the first half of 2008, of which 745 equivalent kilometers corresponded to Ecopetrol and 391 equivalent kilometers corresponded to its partners. At the international level, 248 kilometers of seismic were acquired in Brazil.
Production
In line with its goals of increasing crude oil and natural gas production, Ecopetrol achieved a monthly average gross production of 504.2 thousand BOE/D in June, a 9.1% increase compared to average production in March of 2009.
For the second quarter of 2009, the three-month average gross production of oil and equivalent gas increased 9.7% from 445.4 thousand BOE/D (80.7% of crude oil and 19.3% of natural gas) in the second quarter of 2008 to 488.5 thousand BOE/D (80.9% of crude oil and 19.1% of natural gas) in the second quarter 2009.
This growth was marked by a higher gross production of heavy crude oils in the Llanos Orientales region, and in the mature fields of the Magdalena Medio zone.
For the first half of the year, gross production increased 7.1%, from 441.5 thousand BOE/D in 2008 (356.7 thousand BPD of crude oil and 84.8 BOE/D of natural gas) to 472.9 thousand BOE/D (385.3 thousand BPD of crude oil and 87.7 thousand BOE/D of natural gas) in the same period in 2009.
In terms of its acquisition strategy, on May 27 Ecopetrol completed the purchase of Hocol. The transaction, in the amount of USD 580 million plus USD 162 million in working capital, included all assets under production and development in Colombia, as well as some exploratory blocks and shares in the pipelines Oleoducto Alto Magdalena (36.12%) and Oleoducto Colombia (21.72%).
Hocol contributed average gross production of 23.91 thousand BOE/D in June, while Offshore International Group contributed a 6.24 thousand BOE/D production for the first half of 2009. These production amounts are not included in Ecopetrol's above-mentioned gross production.
Production results were supported by the drilling management of development wells. The Company took part in the drilling of 142 development wells during the second quarter of 2009, compared to 139 development wells in the second quarter of 2008.
Ecopetrol drilled 34 development wells during the second quarter of 2009 on its own, while the other 108 were drilled by its partners, compared to 34 wells drilled on its own and 105 through arrangements with its partners in the second quarter of 2008.
Lifting costs were USD 5.77/barrel for the first half of 2009, compared to USD 6.84/barrel in the first half of 2008. This decline was the result of higher production levels and the positive impact on costs of a higher exchange rate in first half of 2009, compared to the exchange rate for first half of 2008. Such improvements [partially] offset higher maintenance service costs for expansion of production facilities, and associated operating services resulting from Ecopetrol's greater participation in association agreements.
Refining
Subsequent to the acquisition of the remaining 51.0% of Refineria de Cartagena from Glencore on May 27, 2009 for USD 549 million, the Company is evaluating the potential synergies relating to the modernization projects of the Cartagena and Barrancabermeja refineries.
The hydrotreatment project in Barrancabermeja, which will enable improved fuel quality, is now 82% complete.
In the second quarter of 2009, 213.7 thousand BD of crude oil were loaded in the Barrancabermeja refinery, compared to 233.2 thousand BD refined in the second quarter of 2008. The lower load was due to scheduled maintenance works in May 2009. In the first half of 2009, the load for the Barrancabermeja refinery was of 213.5 thousand BD, compared to 229.1 thousand BD in the first half of 2008.
The gross margin of refined products for the Barrancabermeja refinery was USD 3.40/barrel in the first half of 2009, compared to USD 7.96/barrel during the first half of 2008. The decline was due to the lower average price of the sold products basket in 2009, and the fact that it fell proportionally more than the average basket for raw material purchases.
The refining cash cost for the Barrancabermeja refinery was USD 4.49/load barrel in the first half of 2009, compared to USD 5.92/barrel for the first half of 2008. This improvement was due to lower cost of natural gas, material, and maintenance costs, and to the positive impact on costs of a higher exchange rate during the first quarter of 2009 compared to the first quarter of 2008.
Transportation
The expansion of infrastructure systems is required in order to transport higher production of heavy crude oil from the Llanos Orientales [field]. The new Apiay-Porvenir pipeline began operating at full capacity in the second quarter of 2009, with a total capacity of 160 thousand BCD, which will allow transportation of heavy crude oils from the Meta province to the Vasconia station, from where it can be transferred for export.
The transportation cost for the first half of 2009 was COP 8.1 /barrel/kilometer (USD 0.37 cents/barrel/kilometer), compared to COP 7.1/barrel/kilometer (USD 0.33 cents/barrel-kilometer) in the first half of 2008. This increase in cost is mainly due to higher variable costs, contracted services, and maintenance associated with increasing volumes of transported crude oil.
Investments
Capitalized total investments for the second quarter of 2009, including acquisitions, were COP 4,633 billion, compared to COP 2,524 billion in the second quarter of 2008.
In the first half of 2009, capitalized total investments were COP 8,217 billion, of which COP 5,082 billion corresponded to acquisitions and COP 3,135 billion corresponded to organic investments, compared to capitalized total investments of COP 3,077 billion for the first half of 2008, which included COP 1,821 billion in organic investments and COP 1,256 billion related to the acquisition of Propilco.
Of total investments in the first half of 2009, including acquisitions, 25.9% was allocated to upstream activities (mainly mature and heavy crude oil fields), 12.3% to downstream activities, and the remaining 61.8% to acquisitions, mainly the acquisitions of Offshore International Group, Ocensa S.A., and Refineria de Cartagena S.A.
Corporate Social Responsibility Negotiation of the Collective Bargaining Agreement
Upon the filing of claims by the coexisting unions in Ecopetrol S.A. - namely, USO, ADECO, and SINDISPETROL - and under the terms of the respective Guarantee Acts, direct negotiation talks with these unions began on July 14. Exercising its legal powers, the Company filed a partial claim against the Collective Bargaining Agreement.
This process, whose aim is to establish the conditions governing labor contracts while in force, is of the utmost importance to Ecopetrol S.A. and its workers because the agreements reached will strengthen the relationship of trust with unions and contribute to the achievement of the Company's corporate goals.
Environment
Ecopetrol takes a leading role in several Colombian efforts to preserve the environment. In the first half of 2009, these efforts included the agreement among Ecopetrol, the Municipality of Barrancabermeja and Fundacion Ecopetrol for the Development of Magdalena Medio (Fundesmag) to invest COP 5.2 billion in the recovery and maintenance of the most relevant water bodies and green areas of this municipality. Additionally, the Company is supporting the creation of an air monitoring network within the Barrancabermeja refinery.
Additionally, and jointly with the Ministry of Environment, Housing and Land Development, Ecopetrol launched the Biodiversity National Call, which is focused on promoting know-how and conservation projects, biodiversity management and use of the High Andean wetlands, Orinoquia and Magdalena Medio, as well as of the ecosystems present in certain districts within the Company's area of influence. The Company made a COP 2.5 billion contribution to this Biodiversity National Call.
Presentation of results
On August 4th, Ecopetrol's senior management will offer two online presentations of its results for the second quarter of 2009:
In Spanish In English 8:00 a.m. Bogota 10:00 a.m. Bogota (9:00 a.m. New York) (11:00 a.m. New York)
The webcast will be available at Ecopetrol's web page: http://www.ecopetrol.com.co/., and in the following links:
http://phx.corporate-ir.net/playerlink.zhtml?c=218606&s=wm&e=2317454 (English) http://phx.corporate-ir.net/playerlink.zhtml?c=218606&s=wm&e=2330943 (Spanish)
Please access the website 10 minutes earlier in order to download the required software. A copy of the webcast will be available for one year after the live event.
About Ecopetrol S.A.
Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) is the largest Colombian company as measured by revenues, profit, assets, and stockholder's equity. Ecopetrol is also Colombia's only vertically integrated crude oil and natural gas company with operations in Colombia, Brazil, Peru and the U.S. Mexican Gulf Coast. Its subsidiaries include Colombia's largest petrochemical producer, Propilco, as well as Black Gold Re Ltda., Ecopetrol Oleo e Gas do Brazil Ltda., Ecopetrol America Inc., Ecopetrol del Peru S.A., Hocol, Andean Chemicals Limited, COMAI, Bioenergy S.A., ODL Finance S.A., ECP Global Energy, Ecopetrol Transportation Company, Ocensa S.A., and Refineria de Cartagena. Ecopetrol is one of the largest 40 oil companies in the world and one of the four largest oil companies in Latin America. It is majority owned by the Republic of Colombia, and its shares are traded on the Bolsa de Valores de Colombia S.A. (BVC) under the ticker ECOPETROL and on the New York Stock Exchange (NYSE) through its ADR under the ticker EC. The company divides its operations into five business segments, which include exploration and production, transportation, refining, marketing, and sales of crude oil, natural gas, and refined products, as well as a corporate center.
For further information on Ecopetrol, visit its website at http://www.ecopetrol.com.co/.
Forward-looking statements
This release contains forward-looking statements related to business prospects, operating and financial results estimates, and Ecopetrol's growth prospects. These are mere projections, and, as such, are solely based on top management expectations regarding the future of the Company and its ongoing access to capital to finance the Company's business plan. Such forward-looking statements depend, basically, on variations in market conditions, government regulations, pressure from competition, the performance of the Colombian economy and the industrial sector, among other factors; therefore they are subject to change without prior notice.
ECOPETROL: Investor Relations Director Alejandro Giraldo Phone: +571-234-5190 Fax: +571-234-5628 E-mail: investors@ecopetrol.com.co Media Relations (Colombia) Jorge Mauricio Tellez Phone: + 571-234-4329 Fax: +571-234-4480 ECOPETROL S.A. Unaudited Profit and Loss Statement In millions of Colombian Pesos 2Q-09 2Q-08 % 1Q-09 Revenues Domestic Sales 3438557 5838609 -41% 3153804 Foreign Sales 3015286 3360343 -10% 1723061 Service Sales 231666 225800 3% 235888 Total Revenues 6685509 9424752 -29% 5112753 Cost of Sales Variable Costs: Purchases from ANH and Third Parties 1716256 2337881 -27% 1399973 Amortization and Depletion 429339 263542 63% 394519 Imported Products 424803 843107 -50% 544050 Inventory Changes -191597 53659 -457% 240005 Others 295549 -24730 1295% 7006 Fixed Costs: Depreciation 162104 157171 3% 151630 Contracted Services Association and Ecopetrol 301072 302317 0% 374210 Maintenance 235232 206853 14% 64946 Labor Costs 176530 157079 12% 190129 Hydrocarbon Transportation Services 201207 162068 24% 159581 Others 250064 246886 1% 150122 Total Cost of Sales 4000559 4705833 -15% 3676171 Gross Profit 2684950 4718919 -43% 1436582 Operating Expenses Administrative 123044 71198 73% 94028 Selling Expenses 185763 183650 1% 223722 Exploration and Project Expenses 243862 79318 207% 97922 Operating Profit 2132281 4384753 -51% 1020910 Non-operating Income (expenses): Financial Income 1430584 2115656 -32% 3147425 Financial Expenses -2147555 -1371097 -57% -1822388 Non-Financial Income 117871 381385 -69% 202683 Non-Financial Expenses -431197 -731785 41% -334152 Profit before Income Tax 1101984 4778912 -77% 2214478 Provision for Income Tax 339975 1422260 -76% 605217 Minority Interest Net Income for the Quarter 762009 3356652 -77% 1609261 EBITDA 2807640 4823221 -42% 1629228 EBITDA MARGIN 42% 51% 32% EARNINGS PER SHARE 18.83 82.94 39.76 Unaudited Profit and Loss Statement ECOPETROL S.A. As of June 30, As of June 30, 2009 2008 % In million Colombian Pesos Revenues Domestic Sales 6592361 10385540 -37% Foreign Sales 4738347 5821592 -19% Services Sales 467554 440054 6% Total Revenues 11798262 16647186 -29% Cost of Sales Variable Costs: Purchases from ANH and Third Parties 3116229 4251549 -27% Amortization and Depletion 823858 518271 59% Imported Products 968853 1269744 -24% Inventory Changes 48408 -357410 114% Others 302555 8107 3632% Fixed Costs: Depreciation 313734 325754 -4% Contracted Services Association and Ecopetrol 675282 587966 15% Maintenance 300178 260906 15% Labor Costs 366659 308515 19% Hydrocarbon Transportation Services 360788 273913 32% Others 400186 401901 0% Total Cost of Sales 7676730 7849216 -2% Gross Profit 4121532 8797970 -53% Operating Expenses Administrative 217072 144439 50% Selling Expenses 409485 363272 0% Exploration and Projects Expenses 341784 139754 145% Operating Profit 3153191 8150505 -61% Non-operating Income (expenses): Financial Income 4578009 3630971 26% Financial Expenses -3969943 -3163514 25% Non-Financial Income 320554 509446 -37% Non-Financial Expenses -765349 -1219785 -37% Profit before Income Tax 3316462 7907623 -58% Provision for Income Tax 945192 2257626 -58% Minority Interest Net Income for the Quarter 2371270 5649997 -58% EBITDA 4436868 9024438 -51% EBITDA MARGIN 38% 54% EARNINGS PER SHARE 58.59 139.6 Unaudited Profit and Loss Statement* Ecopetrol S.A. and Subsidiaries* In millions of Colombian Pesos 2Q-09 2Q-08 % Revenues Domestic Sales 3500327 6031706 -42% Foreign Sales 3544496 3484447 2% Services Sales 231666 225800 3% Total Revenues 7276489 9741953 -25% Cost of Sales Variable Costs: Purchases to the ANH and Third Parties 1716256 2337881 -27% Amortization and Depletion 499277 263542 89% Imported Products 424803 843107 -50% Inventory Changes -191597 53659 -457% Other 293749 257448 14% Fixed Costs: Depreciation 339643 157171 116% Contracted Services Association and Ecopetrol 301072 302317 0% Maintenance 235232 206853 14% Labor Costs 176530 157079 12% Hydrocarbons Transportation Services 201207 162068 24% Other 688589 246886 179% Total Cost of Sales 4684761 4988011 -6% Gross Profit 2591728 4753942 -45% Operating Expenses Administrative 186084 75468 147% Selling Expenses 44570 195710 -77% Exploration and Project Expenses 260131 79318 228% Operating Profit 2100943 4403446 -52% Non-Operating Income (Expenses): Financial Income 6981821 2120726 229% Financial Expenses -7757423 -1378823 -463% Non-financial Income 149617 418686 -64% Non-financial Expenses -441267 -766332 42% Profit before Income Tax 1033691 4797703 -78% Provision for Income Tax 348656 1426159 -76% Minority Interest 7241 Net Income for the Quarter 692276 3371544 -79% EBITDA 3134115 4841914 -35% EBITDA MARGIN 43% 50% Notes
* According to the Public Accounting Framework, Colombian companies only have the obligation to consolidate their financial statements at the end of each fiscal year, wherefore the figures in this report do not constitute a formal consolidation of Ecopetrol's financial statement, though they do adjust to the methodology defined for this purpose. These values are included for illustrative purposes only.
For the estimated consolidation of Ecopetrol's financial statements for second quarter and first half 2009, in addition to Ecopetrol S.A. results, the following companies were included: In the Upstream Area: Ecopetrol Oleo e Gas Do Brasil, Ecopetrol America Inc, Ecopetrol del Peru S.A., and Hocol.
In the Downstream area: Bioenergy S.A., Andean Chemicals Limited, ECP Global Energy, Propilco S.A., Comai, ODL Finance S.A., Ecopetrol Transportation Company, Oleoducto de Colombia, Ocensa S.A., and Refineria de Cartagena (as of May 2009); and Black Gold Re Ltd.
For the second quarter and the first half of 2008, the following companies were included: Ecopetrol S.A. Black Gold Re Ltd, Ecopetrol Oleo e Gas Do Brasil, Ecopetrol America Inc, Ecopetrol del Peru S.A., Andean Chemicals Ltd, Propilco, and Comai.
Unaudited Profit and Loss Statement* Ecopetrol S.A. and Subsidiaries* As of June As of June Millions of Colombian Pesos 30,2009 30, 2008 % Revenues Domestic Sales 6687482 10578637 -37% Foreign Sales 5361572 5950040 -10% Services Sales 467554 440054 6% Total Revenues 12516608 16968731 -26% Cost of Sales Variable Costs: Purchases to the ANH and Third Parties 3116229 4251549 -27% Amortization and Depletion 893796 518271 72% Imported Products 968853 1269744 -24% Inventory Changes 48408 -357410 114% Other 302555 8107 3632% Fixed Costs: Depreciation 562223 343129 64% Contracted Services Association and Ecopetrol 675282 587966 15% Maintenance 300178 260906 15% Labor Costs 366659 308515 0% Hydrocarbons Transportation Services 360788 273913 0% Other 847731 667338 27% Total Cost of Sales 8442702 8132028 4% Gross Profit 4073906 8836703 -54% Operating Expenses Administrative 286512 148750 93% Selling Expenses 281827 375332 0% Exploration and Projects Expenses 342073 139754 145% Operating profit 3163494 8172867 -61% Non-operating Income (Expenses): Financial Income 10182748 3632372 180% Financial Expenses -9632256 -3171240 204% Non-financial Income 352627 546747 -36% Non-financial Expenses -797783 -1254332 -36% Profit before Income Tax 3268830 7926414 -59% Provision for Income Tax 975311 2261525 -57% Minority Interest -7191 0 0% Net income for the Quarter 2300710 5664889 -59% EBITDA 4889666 9046800 -46% EBITDA MARGIN 39% 53% Notes
* According to the Public Accounting Framework, Colombian companies only have the obligation to consolidate their financial statements at the end of each fiscal year, wherefore the figures in this report do not constitute a formal consolidation of Ecopetrol's financial statement, though they do adjust to the methodology defined for this purpose. These values are included for illustrative purposes only.
For the estimated consolidation of Ecopetrol's financial statements for second quarter and first half 2009, in addition to Ecopetrol S.A. results, the following companies were included: In the Upstream Area: Ecopetrol Oleo e Gas Do Brasil, Ecopetrol America Inc, Ecopetrol del Peru S.A., and Hocol.
In the Downstream area: Bioenergy S.A., Andean Chemicals Limited, ECP Global Energy, Propilco S.A., Comai, ODL Finance S.A., Ecopetrol Transportation Company, Oleoducto de Colombia, Ocensa S.A., and Refineria de Cartagena (as of May 2009); and Black Gold Re Ltd.
For the second quarter and the first half of 2008, the following companies were included: Ecopetrol S.A. Black Gold Re Ltd, Ecopetrol Oleo e Gas Do Brasil, Ecopetrol America Inc, Ecopetrol del Peru S.A., Andean Chemicals Ltd, Propilco, and Comai.
Unaudited General Balance Sheet Ecopetrol S.A. As of June As of March** Millions of Colombian Pesos 30, 2009 31,2009 % Assets Current Assets: Cash and Cash Equivalents 3896740 4905199 -21% Investments 1140016 4056917 -72% Accounts and Notes Receivable 5443632 5823977 -7% Other 3573116 3710937 -4% Total Current Assets 14053504 18497030 -24% Non Current Assets Investments 8417755 9803942 -14% Accounts Receivable 1375948 204772 572% Property, Plant and Equipment, Net 9102311 8205783 11% Natural and Environmental Resources, Net 7019129 6908475 2% Resources Delivered under Management 0 0 Others 10140914 9731838 4% Total Non-current Assets 36056057 34854810 3% Total Assets 50109561 53351840 -6% Liabilities and Shareholders' Equity Current Liabilities: Financial Liabilities 21328 0 Accounts Payable and Related Parties 10199989 12969595 -21% Estimated Liabilities and Provisions 643986 661771 -3% Others 1863240 4384631 -58% Total current liabilities 12728543 18015997 -29% Long-term liabilities Long Term Labor Liabilities 2316441 2247638 3% Estimated Liabilities and Provisions 2729043 2832880 -4% Others 4158574 2523543 65% Total Long-Term Liabilities 9204058 7604061 21% Total Liabilities 21932601 25620058 -14% Minority Interest Shareholders' Equity 28176960 27731782 2% Total Liabilities and Shareholders' Equity 50109561 53351840 -6% Memorandum Accounts 135399679 168298711
** After the presentation of First Quarter 2009 Earnings Report, and following a recommendation from its auditors, Ecopetrol S.A. made the decision to reclassify contributions to pension fund and abandon fund to non current assets from current assets, as those funds correspond to long-term funds
Unaudited General Balance Sheet Ecopetrol S.A. and Subsidiaries* As of June As of March** 30, 2009 31, 2009 % Millions of Colombian Pesos Assets Current Assets: Cash and Cash Equivalents 5301604 5340424 -1% Investments 1585977 4308734 -63% Accounts and Notes Receivable 5945625 6345547 -6% Others 4268444 4044325 6% Total Current Assets 17101650 20039030 -15% Non-current Assets Investments 2025875 5333076 -62% Accounts and Notes Receivable 215407 161609 33% Property, Plant & Equipment, Net 13742146 10760563 28% Natural and Environmental Resources, Net 8924336 8425236 6% Resources Delivered under Management 0 0 Others 10302129 9814356 5% Total Non-current Assets 35209893 34494840 2% Total Assets 52311543 54533870 -4% Liabilities and Shareholders' Equity Current Liabilities: Financial Liabilities 187184 170080 10% Accounts Payable and Related Parties 3118050 12859069 -76% Estimated Liabilities and Provisions 824027 717446 15% Others 7942303 4464972 78% Total Current Liabilities 12071564 18211567 -34% Long Term Liabilities Long Term Labor Liabilities 2352369 2247638 5% Estimated Liabilities and Provisions 2820608 2867197 -2% Others 6003109 2558403 135% Total Long Term Liabilities 11176086 7673238 46% Total Liabilities 23247650 25884805 -10% Minority Interest 0 918109 4% Shareholders' Equity 28106398 27730956 1% Total Liabilities and Shareholders' Equity 52311543 54533870 -4% Memorandum Accounts*** 136651843 168549091 Notes
* According to the Public Accounting Framework, Colombian companies only have the obligation to consolidate their financial statements at the end of each fiscal year, wherefore the figures in this report do not constitute a formal consolidation of Ecopetrol's financial statement, though they do adjust to the methodology defined for this purpose. These values are included for illustrative purposes only.
For the estimated consolidation of Ecopetrol's financial statements for second quarter and first half 2009, in addition to Ecopetrol S.A. results, the following companies were included: In the Upstream Area: Ecopetrol Oleo e Gas Do Brasil, Ecopetrol America Inc, Ecopetrol del Peru S.A., and Hocol.
In the Downstream area: Bioenergy S.A., Andean Chemicals Limited, ECP Global Energy, Propilco S.A., Comai, ODL Finance S.A., Ecopetrol Transportation Company, Oleoducto de Colombia, Ocensa S.A., and Refineria de Cartagena (as of May 2009); and Black Gold Re Ltd.
For the second quarter and the first half of 2008, the following companies were included: Ecopetrol S.A. Black Gold Re Ltd, Ecopetrol Oleo e Gas Do Brasil, Ecopetrol America Inc, Ecopetrol del Peru S.A., Andean Chemicals Ltd, Propilco, and Comai.
** After the presentation of First Quarter 2009 Earnings Report, and following a recommendation from its auditors, Ecopetrol S.A. made the decision to reclassify contributions to pension fund and abandon fund to non current assets from current assets, as those funds correspond to long-term funds
***Under Colombian GAAP, Ecopetrol must maintain in its accounting the recording of financial information and transactions not reflected in financial statements
Unaudited Cash Flow Statement Ecopetrol S.A. Millions of Colombian Pesos 2Q-09 2Q-08 % 1Q-09 BEGINNING BALANCE 4905199 5114615 -4% 1870246 OPERATING ACTIVITIES Cash from Clients 6566615 7231803 -9% 4931556 Cash from Financial Interest 288492 365995 -21% 208144 Income from Reimbursements from FAEP and Other 0 0 0 0 Other Payments 0 0 0 0 Cash from Acquired Affiliates 0 0 0 0 Financial Interest Payments 0 -184 100% 0 Cash Paid to Suppliers and Contractors -5955380 -1362334 -337% -473100 Payments for Hydrocarbon Purchases -402532 -2610110 85% -798838 Payment of Income, Sales and Equity, Taxes -2486032 -1242830 -100% -571795 Payment of Salaries, Social Benefits and Social Security -331020 -225534 -47% -227797 Payment of Retirement Pensions and Transfer to Funds 0 -94924 100% 0 Net Cash from Operating Activities -2319857 2061882 -213% 3068170 INVESTMENT ACTIVITIES Net Decrease (Increase) in investments 4290176 -1573130 373% 1238306 Investments in Property, Plant Equipment and Natural Resources -1716984 -1440599 -19% -1281444 Net Cash Used in Investment Activities 2573192 -3013729 185% -43138 FINANCING ACTIVITIES Dividends Payment -3026185 -1163585 -160% 0 Received from Partners - Capitalization -4522 176359 -103% 9921 Increase (Decrease)of Financial Obligations 1768913 0 Cash Generated by (Used in) Financing Activities -1261794 -987226 -28% 9921 CASH VARIATION -1008459 -1939073 48% 3034953 END BALANCE 3896740 3175542 23% 4905199 ECOPETROL S.A. Unaudited Cash Flow Statement As of June 30, As of June 30, In million Colombian Pesos 2009 2008 % BEGINNING BALANCE 1870246 3466184 -46% OPERATING ACTIVITIES Cash from Clients 11498171 13448057 -14% Cash from Financial Interest 496636 691493 -28% Income from Reimbursements from FAEP and Other 0 0 0% Cash from Acquired Affiliates 0 0 0% Other Payments 0 0 0% Financial Interest Payments 0 -339 100% Cash Paid to Suppliers and Contractors -6428481 -2963495 -117% Payment for Hydrocarbon Purchases -1201370 -3175850 62% Payment of Income, Sales, and Equity Taxes -3057827 -1965420 -56% Payment of Salaries, Social Benefits, and Social Security -558817 -397713 -41% Payment of Retirement Pensions and Transfer to Funds 0 -244572 100% Net Cash from Operating Activities 748312 5392161 -86% INVESTMENT ACTIVITIES Net Decrease (Increase) in Investments 5528483 -3268203 269% Investments in Property, Plant and Equipment, and Natural Resources -2998428 -1743767 -72% Net Cash Used in Investment Activities 2530055 -5011970 150% FINANCING ACTIVITIES Distribution of Profit -3026185 -1163585 -160% Received from Partners - Capitalization 5399 496321 -99% Increase (Decrease) in Financial Liabilities 1768913 -3569 49663% Cash Generated by (Used in) Financing Activities -1251873 -670833 -87% CASH VARIATION 2026494 -290642 797% END BALANCE 3896740 3175542 23% Unaudited Cash Flow Statement Ecopetrol S.A. and Subsidiaries * Millions of Colombian Pesos 2Q-09 2Q-08 % BEGINNING BALANCE 5340425 5386758 OPERATING ACTIVITIES Cash from Clients 9657739 7229960 34% Cash from Financial Interest 290919 365855 -20% Income from Reimbursements from FAEP and Other 0 0 Other Payments 0 0 Cash from Acquired Affiliates 191736 0 100% Financial Interest Payment 0 -184 100% Cash Paid to Suppliers and Contractors -8191103 -1432439 -472% Payment for Hydrocarbon Purchases -314361 -2610110 88% Payment of Income, Sales and Equity Taxes -2510134 -1242830 -102% Payment of Salaries, Social Benefits and Social Security -342477 -225496 -52% Payment of Retirement Pensions and Transfer to Funds 0 -94924 100% Net Cash from Operating Activities -1217681 1989832 -161% INVESTMENT ACTIVITIES Net Decrease (Increase) in Investments 5262934 -1546038 440% Investment in Property, Plant, Equipment and Natural Resources -3279747 -1425727 -130% Net Cash Used in Investment Activities 1983187 -2971765 -167% FINANCING ACTIVITIES Dividends Payment -3042626 -1163585 -161% Received from Partners - Capitalization -4522 176359 -103% Increase (Decrease) of Financial Obligations 2242821 0 Cash Generated by (Used in) Financing Activities -804327 -987226 19% CASH VARIATION -38821 -1969159 98% END BALANCE 5301604 3417599 55% Notes
* According to the Public Accounting Framework, Colombian companies only have the obligation to consolidate their financial statements at the end of each fiscal year, wherefore the figures in this report do not constitute a formal consolidation of Ecopetrol's financial statement, though they do adjust to the methodology defined for this purpose. These values are included for illustrative purposes only.
For the estimated consolidation of Ecopetrol's financial statements for second quarter and first half 2009, in addition to Ecopetrol S.A. results, the following companies were included: In the Upstream Area: Ecopetrol Oleo e Gas Do Brasil, Ecopetrol America Inc, Ecopetrol del Peru S.A., and Hocol.
In the Downstream area: Bioenergy S.A., Andean Chemicals Limited, ECP Global Energy, Propilco S.A., Comai, ODL Finance S.A., Ecopetrol Transportation Company, Oleoducto de Colombia, Ocensa S.A., and Refineria de Cartagena (as of May 2009); and Black Gold Re Ltd.
For the second quarter and the first half of 2008, the following companies were included: Ecopetrol S.A. Black Gold Re Ltd, Ecopetrol Oleo e Gas Do Brasil, Ecopetrol America Inc, Ecopetrol del Peru S.A., Andean Chemicals Ltd, Propilco, and Comai.
Unaudited Cash Flow Statement ECOPETROL S.A. and Subsidiaries* As of June 30, As of June 30, In millions of Colombian Pesos 2009 2008 % BEGINNING BALANCE 2113803 3749899 OPERATING ACTIVITIES Cash from Clients 14605590 13467414 8% Cash from Financial Interest 499824 691493 -28% Income from Reimbursements from FAEP and Other 0 0 0% Cash from Acquired Affiliates 486369 0 100% Other Payments 0 0 Financial Interest Payments 0 -339 100% Cash Paid to Suppliers and Contractors -8589569 -3094659 -178% Payments for Hydrocarbon Purchases -1201361 -3175850 62% Payment of Income, Sales, and Equity Taxes -3081929 -1965420 -57% Payment of Salaries, Social Benefits, and Social Security -571592 -397713 -44% Payment of Retirement Pensions and Transfer to Funds 0 -244572 100% Net Cash from Operating Activities 2147332 5280354 -59% INVESTMENT ACTIVITIES Net Decrease (Increase) of Investments 6510174 -3167484 306% Investments in Property, Plant and Equipment, and Natural Resources -4612557 -1774337 -160% Net Cash Used in Investment Activities 1897617 -4941821 138% FINANCING ACTIVITIES Distribution of Profit -3042626 -1163585 -161% Received from Partners - Capitalization 5399 496321 -99% Increase (Decrease) of Financial Liabilities 2180079 -3569 61184% Cash Generated by (Used in) Financing Activities -857148 -670833 -28% CASH VARIATION 3187801 -332300 1059% END BALANCE 5301604 3417599 55% Notes
* According to the Public Accounting Framework, Colombian companies only have the obligation to consolidate their financial statements at the end of each fiscal year, wherefore the figures in this report do not constitute a formal consolidation of Ecopetrol's financial statement, though they do adjust to the methodology defined for this purpose. These values are included for illustrative purposes only.
For the estimated consolidation of Ecopetrol's financial statements for second quarter and first half 2009, in addition to Ecopetrol S.A. results, the following companies were included: In the Upstream Area: Ecopetrol Oleo e Gas Do Brasil, Ecopetrol America Inc, Ecopetrol del Peru S.A., and Hocol.
In the Downstream area: Bioenergy S.A., Andean Chemicals Limited, ECP Global Energy, Propilco S.A., Comai, ODL Finance S.A., Ecopetrol Transportation Company, Oleoducto de Colombia, Ocensa S.A., and Refineria de Cartagena (as of May 2009); and Black Gold Re Ltd.
For the second quarter and the first half of 2008, the following companies were included: Ecopetrol S.A. Black Gold Re Ltd, Ecopetrol Oleo e Gas Do Brasil, Ecopetrol America Inc, Ecopetrol del Peru S.A., Andean Chemicals Ltd, Propilco, and Comai.
PROFIT AND LOSS U.S. GAAP ECOPETROL S.A. Consolidated Statements of income (*) USGAAP (In million Colombian pesos) JUNE 2009 (Unaudited) Revenue: Local sales 7,399,310 Foreign sales 5,361,572 Total revenue 12,760,882 Cost of sales 8,052,483 Gross Profit 4,708,399 Operating expenses: Administration 1,363,980 Selling 613,444 Operating income 2,730,975 Non-operating, net 1,748,067 Income before income tax and minority interest 4,479,042 Income tax: 727,063 Income before minority interest 3,751,979 Minority interest 7,191 Net Income 3,759,170 Earnings per share 92.88
(*) During the second quarter of 2009, Ecopetrol made acquisitions of new companies, the financial statements don't include these effects, the company is including estimates for pension plans, impairments of fixed assets, ARO, under USGAAP, and for those reasons the statements don't reflect a full USGAAP reconciliation.
ECOPETROL S.A. Consolidated Balance Sheet (*) USGAAP (In million Colombian pesos) Assets Current assets: Cash and cash equivalents 6,014,825 Investments 884,950 Accounts and notes receivable, net 5,649,429 Inventories 1,921,970 Deferred income taxes 278,664 Other 2,306,301 Total current assets 17,056,139 Non current assets Investments 3,041,718 Accounts and notes receivable, net 215,406 Property, plant and equipment, net 12,730,898 Natural and environmental resources, net 7,325,825 Advances and deposits 231,269 Deferred income taxes 2,064,144 Other 3,884,362 Total Non current assets 29,493,622 Total Assets $46,549,761 Liabilities and shareholders' equity Current liabilities: Financial obligations 187,185 Accounts payable and related parties 8,885,853 Estimated liabilities and provisions 637,673 Other 2,323,077 Total current liabilities 12,033,788 Long term Liabilities Financial obligations, long-term 3,485,791 Pension plan obligation and other labor obligations, long-term 2,374,977 Deferred income tax, long-term 1,255,972 Estimated liabilities and provisions 2,095,955 Other 1,393,341 Total Long term liabilities 10,606,036 Total liabilities 22,639,824 Minority interest 957,495 Shareholders' equity 22,952,442 Total liabilities and shareholders' equity 46,549,761
(*) During the second quarter of 2009, Ecopetrol made acquisitions of new companies, the financial statements don't include these effects, the company is including estimates for pension plans, impairments of fixed assets, ARO, under USGAAP, and for those reasons the statements don't reflect a full USGAAP reconciliation.
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Ecopetrol S.A.
CONTACT: Alejandro Giraldo, Investor Relations Director, +571-234-5190,
or Fax: +571-234-5628, investors@ecopetrol.com.co, or Media Relations
(Colombia), Jorge Mauricio Tellez, + 571-234-4329, Fax: +571-234-4480
Web site: http://www.ecopetrol.com.co/
