BTN News: During the second quarter of 2024, Ecopetrol, Colombia’s leading oil and gas company, reported revenues of 32.6 trillion pesos, an EBITDA of 14.1 trillion pesos, and a net profit of 3.37 trillion pesos. Despite these substantial figures, the company faced a 17.4% drop in net income compared to the previous year, a clear indicator of the complex and challenging environment it had to navigate. Ricardo Roa, President of Ecopetrol, emphasized that the Group had to contend with a tough external environment, heavily influenced by factors such as the revaluation of the Colombian peso and ongoing inflationary pressures. However, Ecopetrol demonstrated resilience by optimizing savings across its operations, tightening cost controls, and improving the realization prices of its crude oil. These measures have been pivotal in helping the company mitigate some of the adverse effects and maintain a solid operational performance.
Ecopetrol’s second-quarter revenues reflected a 4.9% decline compared to the same period in 2023. This downturn was largely attributed to negative exchange rate effects, lower sales volumes, and a drop in service revenues, primarily due to the revaluation of the Colombian peso against other currencies in regions where its subsidiary, ISA, operates. However, Ecopetrol’s strategy to generate resilience, particularly through cost-saving measures and price optimizations, provided a crucial buffer against these challenges.
The company also benefitted from a higher average weighted sales price for its crude oil, driven by a rise in Brent crude prices and an improvement in the differential negotiated against Brent. While this helped offset some losses, the overall differential for refined products deteriorated, reflecting the ongoing volatility in global markets.
On the production front, Ecopetrol reported an output of 758,200 barrels of oil equivalent per day (boed) during the second quarter of the year. This represents a 4.1% increase compared to the same period in the previous year, primarily driven by growth in its subsidiaries, particularly in the Permian Basin due to developments in the Delaware sub-basin and new wells in the Brunson area. The increased output was further supported by enhanced secondary and tertiary recovery techniques, such as water injection, and incremental production from fields like Caño Sur, CPO-9, and Floreña. These efforts effectively counterbalanced the natural decline in some fields and the impact of the high-price clause, as well as reduced natural gas sales due to operational events in thermoelectric plants and decreased LPG demand.
Ecopetrol’s exploration activities in the second quarter were focused on drilling the Uchuva-2 well, which confirmed the extension of the gas discovery initially reported in 2022 with the drilling of Uchuva-1. The company also completed drilling the Toritos Norte-1 well in Meta, which is currently under evaluation. However, the Rocoto-1HZ well in Cesar did not yield commercially viable hydrocarbons. Nonetheless, Ecopetrol continued its exploration momentum by starting the drilling of the Guamal Profundo-1 well in Meta, Floreña N-18 in Casanare, and Toritos-2 in Meta. The company is also preparing to drill the offshore Komodo-1 and Buena Suerte-1 wells, expected to commence between late 2024 and early 2025.
Internationally, Ecopetrol began drilling the Pau Brasil-1 well, aimed at assessing the prospectivity of liquid hydrocarbons in the presalt play of the Santos Basin, located offshore Brazil. The drilling of this well is expected to be completed by the third quarter of 2024.
Ricardo Roa highlighted that these results are underpinned by effective commercial management, enabling the company to capture favorable margins and seize new market opportunities. This approach led to a significant strengthening of $10.3 per barrel in the average price of Ecopetrol’s crude basket compared to the same period in 2023.
Additionally, Roa praised the performance of Ecopetrol’s US-based trading office in Houston, Ecopetrol US Trading. During the quarter, this office successfully marketed 14 million barrels of crude oil and products, achieving an EBITDA of $24 million and a net profit of $19 million. This brought the total for the first half of 2024 to $61 million in EBITDA and $48 million in net profit, underscoring the company’s strategic focus on expanding its international footprint and optimizing its trading operations.
Overall, while Ecopetrol faced significant challenges in the second quarter of 2024, the company’s strategic adjustments and focus on operational efficiency allowed it to mitigate some of the negative impacts, maintain solid production levels, and continue its exploration efforts, both domestically and internationally. As the global energy landscape remains volatile, Ecopetrol’s ability to adapt and optimize its operations will be crucial in sustaining its performance in the coming quarters.
