Ecopetrol S.A.

Good morning. My name is Hilda and I'll be your operator for today. Welcome to Ecopetrol's earnings conference call in which we will discuss the main financial and operational results for the third quarter 2020. All lines have been muted. There will be a Q&A session at the end of the presentation. Before we begin, it is important to mention that the comments in this call by Ecopetrol senior management include projections of the company's future performance. These projections do not constitute any commitment as to future results, nor do they take into account risks or uncertainties that could materialize. As a result, Ecopetrol assumes no responsibility in the event that future results are different from the projections shared in this conference call. The call will be led by Mr. Felipe Bayón, CEO of Ecopetrol, Alberto Consuegra, COO, and Jaime Caballero, CFO. Thank you for your attention. Mr. Bayon, you may begin your conference.

Good morning, everyone, and welcome to this conference call where we will discuss our operating and financial results for the third quarter of the year. We hope you and your families continue to be safe. Personal and social awareness continue to be key elements to overcome the health emergency that we have experienced during 2020. The third quarter of the year was characterized by a better operating and financial performance associated with a gradual increase in our operations and aligned with demand recovery. This ramp-up has been reflected in higher operational activity levels. For example, in Ecopetrol S.A., where we've had an increase of active drilling rigs from two rigs in April to 10 rigs by the end of September. Likewise, in order to preserve our employees' health and safety, our field personnel have progressively returned to their on-site work since June under strict biosafety protocols. To date, thanks to our digital transformation program, about 75% of our employees continue to work remotely. Although we will remain working remotely during 2020 to preserve social distancing measures, a pilot plan was launched in October that will allow us to be prepared for a safe and steady return of our office employees to the company's facilities in 2021 as part of our adaptation process to the new normal. This pilot considers a flexible scheme of staff and infrastructure, which will allow operational optimizations and will generate efficiencies to the Ecopetrol group. Within this process, we highlight the crucial role that an increased digitalized operation during the year has played through the use, amongst others, of artificial intelligence and the implementation of analytical and self-management tools. Regarding the health emergency caused by COVID-19, through our social investment program, Apoyo País, we have executed 59% of the approved investment in line with the Eco Patrol's group commitment to the well-being of Colombians, as well as the recovery and reactivation and strengthening of the local economies. Let's move on to the next slide to discuss market conditions. After coping with one of the most difficult quarters in recent years, It rose from $33 per barrel at the end of the second quarter to $43 per barrel by the end of the third quarter. Local demand for our main products improved when compared to the trend observed in the first half of the year, highlighting a recovery in sales volumes of around 110% by the end of September compared to the lowest levels observed in April. This demand recovery allowed us to return to the sales level observed in early March and is a consequence of the easing of lockdown restrictions that have resulted in reactivation of the economic activity. On the other hand, we also highlight the significant recovery to $38 per barrel of our crude sales basket compared to the second quarter when the basket stood around $20 per barrel. However, we still continue with price levels similar to those observed in the crisis of 2016. Let's move on to the next slide for a summary of our third quarter results. Our operating and financial results performed better when compared to the second quarter, in line with the recovery in prices and better demand conditions. Ecopetrol's group production reached 681,000 barrels of oil equivalent per day. That is 3,000 barrels more when compared to the second quarter. The higher production, along with price recovery, resulted in a 46% increase in revenues as compared to the second quarter of 2020. Despite some difficult security events that have impacted our operations during the year, Ecopedal reached an EBITDA of 5.3 trillion pesos and a net income of 855 billion pesos in the third quarter. And I'll give the floor to Alberto Consuegra, who will provide further details of our operational results for the quarter.

Thank you, Felipe. During the third quarter, we saw a gradual recovery of our operating results aligned with domestic demand recovery and higher price levels. On exploration, we drilled three wells, totaling 10 wells over the year. We expect to exceed our 2020 target with 17 wells drilled, four more than originally planned due to the inclusion of three wells through joint operating agreements and the appraisal of the Chacha 3 well. An extensive field test was carried out in the Arrecife I sidetracked well, a gas discovery drilled by Jokoll in 2018. Sales began on October 1st with a production of 3.5 million cubic feet of gas per day. I would like to highlight the commercial agreements achieved by Jokoll and Lewis Energy for the exploration of natural gas in a frontier play in the Perdiz's block located in the Department of Currently, the assignment of Foucault's interest to Lewis Energy is subject to the ANH approval. Abroad, we continue our progress in completing the appraisal phase of the Gato-Domato project. Ecopetrol Group's production reached the cumulative average of 698,000 barrels of oil equivalent per day. We expect the production near to 700,000 barrels of oil equivalent per day by year end, line up with our target for the year. Additionally, the Ecopetrol Group launched Ronda Campus 2020, an initiative to offer its entire stake in nine development and production assets. six of them owned by Hochul and three by Ecopetrol. This asset divestment process is part of the company's portfolio turnover and supports Ecopetrol's group's strategic pillars. During the quarter, we tested transporting heavy crude of 650 centistoles in some of our main pipeline systems, which will allow us to have greater dilution efficiencies. Currently, we are analyzing the economic feasibility of the scheme, The downstream segment presented operational stability along its business units. The refineries reached the combined gross margin of $7.4 per barrel and a consolidated throughput of 324,000 barrels per day. Looking into these figures, it is worth noting that as of September, the refineries reported a 50% recovery of their throughput levels versus April, our most critical month in 2020. For year end, we expect the consolidated throughput within the range set for 2020 between 300 and 320,000 barrels per day. The Cartagena Refinery achieved two monthly records during this quarter. A full capacity throughput exclusively with domestic fruits in September and an average distillate yield of over 65% in July. In our petrochemical business, Essentia continues to exhibit a remarkable operational performance. During the quarter, it reported historical polypropylene production highs and sales volume records. Please continue to the next slide to review our gas initiatives. Our gas operations posted an EBITDA margin of 55% and contributed close to 34% of the upstream segments EBITDA. Gas and NGL production reached 141,000 barrels of oil equivalent, an increase when compared to the same period of the previous year, mainly due to the effect of the acquisition of Chevron's interest in the Guajira fields and the commercial management for gas surpluses due to the decrease in demand. Ecopetrol maintains its social investment in natural gas, aiming to connect at least 18,000 new users by 2024. Through this initiative, 692 new users have connected as of September this year. During the third quarter, we completed the 2020 natural gas commercialization process from Mayor Fields. Our commercial strategy allowed us to contract 100% of the client's needs in contracts with a duration ranging from one to seven years. Please, let's move on to the next slide. In Colombia, The regulatory framework to develop the comprehensive research pilot projects is in place, so we may move forward with the ANH contractor selection process for the assignment of the Special Research Projects Contracts, CEPI. If we are awarded with a contract, we would begin the process of obtaining environmental licensing before the authorities. Regarding our business in the Permian Basin in Texas, as you may recall, we resume activities in late July with two rigs currently in operation together with our partner, Oxy. During the third quarter, we drill five new wells. By the end of 2020, we expect to have 22 wells in production 22 wells drilled to be completed during the first quarter of 2021, and an estimated average net production for Ecopetrol in a range of 5,000 to 5,500 barrels of equivalent per day before rollout. Let's move on to the next slide in order to discuss our efforts in terms of costs. For 2020, we have incorporated 3.5 trillion pesos in savings into our annual plan. which have been gradually reflected in the company's financial results. During the third quarter, the total unit cost was $24.5 per barrel, a significant decrease compared to the same period in 2019. This is explained by a 28% reduction in costs, mainly in purchases and inputs, as well as a 10% reduction in fixed costs. The lifting cost was 7.1 per barrel for the year, a decrease of 19% versus the same period of the previous year, explained mainly by the renegotiation of tariffs, decrease and shift of activities, and the exchange rate effect. For the fourth quarter, we foresee an increase in costs associated with the reopening of wells, which will enable profitable production. Notwithstanding the above, I wish to reiterate our commitment to achieving greater efficiencies in order to reach a more profitable and sustainable operation over time. I now give the floor to Jaime Caballero, who will share information on the group's financial results.