Ecopetrol S.A.

Good morning. My name is Juan, 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 of 2022. All lines have been muted. There will be a question and answer session at the end of the presentation. Before we begin, it is important to mention that the comments in this call by Ecopetrol's 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 risk or uncertainties that could materialize. As a result, Ecopetrol assumes no responsibility in the event that future results are different from the projections shared on this conference call. This call will be led by Mr. Felipe Bayón, CEO of Ecopetrol, Jamie Baez, VP of Low Emission Solutions, Alberto Consuegra, COO, and Jaime Caballero, CFO. Thank you for your attention. Mr. Bayón, you may begin your conference.

Good morning and welcome to the third quarter 2022 earnings conference call. The Ecopetrol Group continues to deliver solid operating and strategic results that are joined up by a successful commercial strategy and a disciplined financial management in a year in which we have delivered historical results. Firstly, I want to thank the more than 18,000 direct employees of Ecopetrol and as well as our allies and contractors and partners who jointly look to make the impossible possible for the benefit of millions of Colombians and those in the areas in which we operate. In the first nine months of the year, we achieved a net income of 26.6 trillion pesos and an EBITDA of 59.2 trillion pesos, which equates to an EBITDA margin of 50%. The net income for these nine months is 59% higher than the whole 2021 net income and 150% higher than the one observed for the same period in the last year. From this quarter results, I would like to highlight the following milestones. The gas discoveries in the Caribbean, in the Gorgon II, in which we partnered with Shell and Shell as the operator, and the Uchua I well with Petrobras, the operator, both exploratory wells, and the announcement by our subsidiary, Jocolo, the successful drilling of the Foralino Uno well, proving the presence of gas in a structure close to the Arrecife discovery in the Department of Córdoba. All this to reiterate Colombia's potential for gas, the hydrocarbon of the energy transition. The growth path in our production levels in accordance with the strategy outlined and announced at the beginning of the year. The average production in 3Q was 720,000 barrels of oil equivalent per day. And so far this year, we have an average of 706,000 barrels of oil equivalent per day due to the increase of our execution capacity, which has improved the performance of the fields in Colombia and are growing unconventionals operations in the U.S. in the Permian. The increase in the capacity of more than 50,000 barrels per day at the Cartagena Refinery, thanks to the successful startup of the Interconnection of Crude Oil Plants project, taking a firm step to guarantee the supply of fuels and Colombia's energy sovereignty. Completion of the pilot test for the production of green hydrogen at the Cartagena Refinery. This project is part of Ecopetrol's Strategic Hydrogen Plan, within the framework of its low carbon emissions business portfolio, which we expect will contribute to our operations decarbonization goals as well as those of Colombia. Let's please turn to the next slide to address issues in line with our TESG strategy. During the first nine months of the year, we have made significant achievements in our TESG strategy. On the environmental front, I would like to highlight our progress in decarbonization, circular economy, and natural climate solutions reflected in the following. An 87% fulfillment of the annual emissions reduction goal, accumulating a reduction of 229,317 tons of CO2 equivalent so far in the year. The result of our energy efficiency program, which as of 3Q 2022, has led to a savings of 97 billion pesos and avoided the emission of 98,000 tons of CO2 equivalent. The inauguration, jointly with El Dorado Airport in Bogota, of the first road segment in Colombia paved with asphalt and recycled plastic, low-density polyethylene, in favor of the protection of the environment and waste reuse. On the social front, we continue to work for the sustainable development of the communities in the territories in which we operate. The ceremony where we awarded scholarships for university or higher education to 65 high schoolers through the Bachilleres Ecopetrol program, thanks to which we have now benefited more than 1,600 young Colombians from 32 departments in the country over the initial 36 years of the program's existence. The contracting of goods and services for 17.6 trillion pesos during 2022 by the Ecopetrol Group, contributing to the economic and social development in different regions. The results achieved in the ranking of the most diverse and inclusive companies of the National Consulting Center, where we obtained third place. On the corporate governance front, Ecopetrol was awarded with the Andesco Sustainability Award for having best practices in corporate governance 2022 environment. Additionally, I would like to highlight the balance of our second extraordinary general shareholders meeting in which we had 305 institutional and 85 retail shareholders. We reached 1096 connections in our live transmission and our shareholders elected the board of directors, which now is formed by two women and seven men and seven independent and two non-independent members. In strict compliance with the company's bylaws, the board is composed of one member nominated by the representatives of the minority shareholders who was reelected, three elected members who continue in office, one board member nominated by the hydrocarbon producing departments in which Ecopetrol has a presence and was elected, and four new board members. The members of the Board of Directors of Ecopetrol have extensive experience and broad technical, financial, and business knowledge, which supports their role as strategic advisor to the Ecopetrol Group. Finally, on the science, technology, and innovation front, as of 3Q 2022, we have been able to capture benefits for $136 million, mainly due to the results obtained by the business technologies and digital solutions implemented in Ecopetrol and Senit, amongst others. We advanced the first awarding phase of the Innovate 2022 contest, a program that allocated 720 million pesos to promote the energy transition and innovation in the country. We signed a joint declaration with the representation of the State of Bayern of Germany in South America to strengthen our bilateral cooperation focus on intensifying the bilateral exchange of knowledge, innovation, and technology for sustainable development and the energy transition. I want to now pass the floor to Jamie Baez, who will talk to you about the main advances in the business segment of low-emission solutions.

Thanks, Felipe. During this quarter, we reached important milestones in the portfolio of low-carbon solutions. On the natural gas side, a pilot project was started for the importation of liquefied natural gas on a small scale to the district of Buenaventura in order to test an alternative gas source to guarantee a reliable supply of this fuel to the city. Additionally, the Candeo project was ratified with 12 companies from the gas and financial sector. This project aims to finance the purchase of approximately 4,000 heavy-load vehicles powered by natural gas. Ecopetrol will join with an investment close to 60 billion pesos. It is expected that this project will spur demand for natural gas vehicles while eliminating more than 220,000 tons of CO2 per year. We reaffirm our social commitment with the agreement signed by Hochol and Gases de la Guajira to provide funding to connect 308 low socioeconomic households to the natural gas service by 2023. Additionally to what Felipe mentioned about the proof of concept to produce green hydrogen at the Cartagena refinery, We continue working on the decarbonization of the public and cargo transportation industry with the introduction of fuel cell vehicles. In this line of work, we made progress on the pilot for sustainable mobility in Bogota, where infrastructure will be created to recharge vehicles with hydrogen fuel cells. promoting use of low-carbon solutions within the Integrated Public Transportation System of Bogota, SITP in Spanish. The system will be live for approximately eight years, with the possibility of an extension for up to 10 years. Finally, I would like to highlight that the Ecopetrol group continues with the implementation of various low-carbon technologies to generate energy from non-conventional renewable sources such as solar, wind, biomass, geothermal, among others, in the areas of the country where the group operates. The operations that already have this renewable energy system have created cost savings close to 19 billion pesos and reductions of over 27,000 tons of CO2 per year. I will now give the floor to Alberto Consuegra, who will talk about the main operational milestones.

Thank you, Jamie. During this third quarter, we drilled four exploratory wells for a total of 13 wells drilled and six confirmed exploratory successes. Two offshore and four onshore so far this year. By the end of the year, we expect to drill 24 exploratory wells in line with the plan. The presence of gas has been confirmed in deep waters in the Southern Colombian Caribbean in the Gorgon II well operated by Shell, in which Ecopetrol has a 50% interest, confirming the extension of the discovery made back in 2017 with the Gorgon I well and confirming the existence of an offshore gas province where the Kronos and Purple Angel discoveries were also found in 2015 and 2017 respectively. This outcome will allow us to proceed with the evaluation of the findings, which, if developed, would increase Colombia's gas reserves. additionally during october the coralino one well located in the department of cordova and operated a hundred percent by our subsidiary hotel revealed the presence of gas in the siena de oro formation which is undergoing initial tests to determine its technical and commercial feasibilities Moving forward with the incorporation of reserves, the El Niño II discovery, located in the Department of Cundinamarca, progressed from its exploratory stage to the development and production stage. Ecopetrol has 50% interest, Perenco 30% as operator, and CNOOC 20%. Currently, the Ecopetrol Group has a robust and competitive exploration portfolio that drives the country's sovereignty. Gas opportunities offer an estimated potential of 17 TCF of gas identified in 46 prospects and eight discoveries under evaluation. Let's continue to the next slide, please. As Felipe mentioned, production continues to grow, reaching 720,400 barrels of oil equivalent per day by Q3 2022, the highest on record since Q2 2020 and placing us at the high end of the target range set for 2022. As compared to second quarter, production increased by 15,800 barrels of oil equivalent per day. We highlight the incremental production of our operations in the Permian and the Rubiales and Cañosur fields. Likewise, production recovered in the La Sida, Caño Limón, and Caricare fields after community events. Also, the contribution of production from the exploratory wells should be highlighted. It is important to note the increase in our execution capacity. So far this year, we have drilled and completed 407 development wells, 42% more than in the same period of last year, with an average use of 29 active rigs and 373 work covers. Finally, we highlight the entry into operation of the first facilities train in Cañosur, which will increase the production of the field by year end between 7,000 and 10,000 barrels of oil per day. Let's move on to the next slide, please. In the Permian Basin, our activities during this quarter reached an average production of 43,800 oil equivalent barrels net ecopetrol per day before royalties, 79.2 percent more than in the same period of 2021, with a record production of 50,200 borrows of oil equivalent per day in September. Gas production contributed about 16% to total production. We also highlight our solid financial results. So far this year, we have generated an EBITDA of $454.5 billion with an EBITDA margin of 88%. In line with our TESG strategy, we highlight the low emissions intensity of our Permian operations as a result of the Zero Routine Flaring Initiative and the use of fugitive emissions monitoring systems in the facilities. Likewise, as part of a patrol essay alliance with Accenture and to develop a digital solution for water management. A pilot project is currently being conducted in our premium assets. By year end, we expect another channel production between 36 to 38. thousand barrels of oil equivalent per day net for ecopetrol before royalties with approximately 93 wells drilled and 95 wells completed. Let's continue to the next slide, please. In the midstream segment, transported volume increased by 63,000 barrels per day versus three quarter of 2021, mainly due to the higher production of crude and local demand for refined products. It's worth noting that in the third quarter of this year, we reached an all-time high for product pipeline transport, exceeding 300,000 barrels per day. In order to strengthen the company's operation and contribute to the hydrocarbon transport business, two new tanks, each with a storage capacity of 100,000 barrels, came into operation at the Sebastopol station of the mid-Magdalena trunk line, increasing the storage capacity of this strategic asset of the pipeline system by 26%. Within the framework of our TESG strategy, we highlight the inauguration of the photovoltaic solar system in Tumaco, Nariño, together with the Pacific Technical Development Corporation, Corte Paz, which will supply the energy required for the cocoa drying process. This project will benefit 293 families and positively impact 90% of women in the region, promoting the closing of gender gaps in the cocoa activity. Let's go to the next slide please. In the downstream segment, operational integrity was maintained and exceptional financial results were achieved. We highlight quarterly historical throughput levels recorded in both refineries as well as an increase in value because of higher diesel and jet fuel production. During the third quarter, the segment registered the combined refining gross margin of $20.3 per barrel and an EBITDA of 2.2 trillion pesos. The Cartagena Refinery accounted for 36% of the segment's EBITDA during the quarter and 41% so far this year. These results were leveraged by an efficient planned shutdown execution strategy, ensuring the operational availability and reliability of the assets as well as cost control. On September 15th, the Cartagena Refinery increased its throughput capacity to 200,000 barrels per day, an amount that exceeds the previous operating capacity by 50,000 barrels, thanks to the successful startup of the original crude unit systems. This project involved the effort of more than 1,500 people with 93% of labor originated from Cartagena. No injuries, process safety events, and environmental incidents were reported. This expansion established the role of the Cartagena refinery as a strategic asset to guarantee Colombia's energy autonomy and will allow us to produce a greater volume of fuels that meet the highest international quality standards. On the other hand, the Barranca Bermeja refinery was recognized as the best in Latin America by the World Refining Association during the Latin American Refining Technology Conference. This award highlights the refiners' lead position in efficiency, energy transition, profitability, and implementation of new technologies. In line with our commitment to TESG at the Cartagena Refinery, a renewable diesel industrial trial will take place during this quarter in order to gain information for the business case and continue our progress in the energy transition process. During the fourth quarter, we expect to complete the refinery plant shutdown cycle as scheduled in Essentia, Progress continues in the expansion of one of the plant's capacity. Also, maintain the operational stability and availability of all our business units. Let's move on to the next slide, please. The domestic and international microeconomic situation has generated commercial, inflationary and logistical challenges for the group. As of September, there has been a significant increase in prices, mainly of raw materials and power. which has impacted the cost structure, representing a weighted increase of 13% versus the previous year. Within the Co-Petrol Group, we have been developing comprehensive strategies to mitigate the inflationary impact and protect our ability to execute the business plan. So far this year, we have captured deficiencies of approximately 1.8 trillion pesos, of which 0.6 trillion pesos have helped contain inflationary pressure and costs. In the absence of these efficiencies, we would have had a 16% cost increase. In addition to this efficiency program, we have worked to ensure the availability of inventories of materials required to operate by developing joint procurement strategies with our suppliers. The total unit cost for 3Q 2022 had a year-on-year increase of approximately $13 per barrels, primarily due to higher prices of purchases and imports of crude oil and products. The lifting cost increased by 9%. versus the third quarter of 2021 from $8.45 to $9.17 per barrel, mainly as a result of greater operational levels and the influence of inflationary pressure on the cost structure. Regarding the refining cash costs, We had a 16% reduction with respect to 3Q 2021, thanks to the higher throughput volume at the refineries. Finally, the cost per barrel transported also decreased due to the higher volume of crude oil and products transported. I now give the floor to Jaime Caballero, who will present the key financial results of the Ecopetrol Group.

Thanks, Alberto. During the third quarter of the year, The group continued to deliver exceptional financial results, supported by strong operating and commercial performance that has allowed distinctive capture of positive market conditions. EBITDA per barrel of the hydrocarbons business, which does not include EASA's contribution, increased $27.1 per barrel. compared to the first nine months of 2021, reaching $67.3 per barrel, explained by higher realization prices of the basket of fruits and products, incorporation of ESAP, and the increase in sales volumes. Net income break-even was $20.3 per barrel, decreasing $14.5 per barrel as compared to the first nine months of 2021, mainly as a result of higher sales volumes and improved crude and product spreads. In the energy transmission and toll roads business, ESAS ebbed the margin, excluding the construction business, closed at 83.6%. mainly explained by the positive effect of macroeconomic variables in Colombia, Chile, and Peru, and the entry into operation of new projects since 4Q21 in all of the company's geographies. ESA's ROE for the nine months of 2022 was 13.2%, in line with the strategy of generating sustainable value. In terms of the Ecopetrol Group's consolidated results, the following stand out. EBITDA margin stood at 49.5%, driven by higher realization prices of the crude and product basket, the incorporation of ESA, and the strong performance of the Permian, Acid, and the Cartagena refinery. Roachie continued to increase and stood at 19.1% during the first nine months of the year, compared to 10.8% in the same period of 2021, explained by higher operating income in line with the previously mentioned factors. It is important to highlight the increase in EBITDA in all of the group segments, particularly in the downstream, which tripled its contribution compared to the previous year due to its operating stability Likewise, the energy transmission and road segment contributed stability to the group's revenues and operating cash flow. The gross debt-to-EBITDA ratio was 1.5 times below June's level, explained by a better EBITDA result. It is important to highlight that the increase in the debt balance observed in the quarter is explained by the foreign exchange restatement, which is mainly recognized, in equity due to the use of hedge accounting and not by an increase in debt operations. In line with what was discussed in previous calls, the Copetrol Group continues to manage debt maturities for the third quarter of 2023, seeking to ensure the most competitive conditions in this volatile market environment. Please let's go to the next slide. Regarding CapEx performance, during the first nine months of the year, $5.5 billion were executed, 74% more than in the same period of 2021. out of which $4.8 billion correspond to the hydrocarbon business. With this, the Ecopetrol Group returned to the investment execution levels recorded prior to the pandemic. On the other hand, investments executed by ESA amounted to $0.7 billion, mainly focused on the transmission business. With the above, we maintained the investment target in the initial range of the plan. This quarter marks the one year anniversary of the consolidation of ESA within the group's results. So I would like to highlight some relevant milestones regarding the investment made in this company. Regarding the financing of the acquisition, during 2021 and 2022, we carried out two liability management operations for a total of $3.2 billion, which allowed us to improve the maturity profile and reduce expiries in 2023. Thus, the balance of the international loan taken for the acquisition of ESA amounts to $472 million, which will be refinanced over the coming months. In terms of the contribution to the group's results, ESA has exceeded expectations in terms of revenue, EBITDA, and net income generation, when compared against original budgets. As of September, revenues were 16% higher than the budget estimate, profit generation was 50% higher, and evidence generation was 30% higher. This continues to confirm the added value from ESA to the Ecopetrol Group, to the generation of stable cash flows without reducing our exposure to Brent as a group. Please let's go to the next slide. At the end of the third quarter of 2022, the Ecopetrol Group recorded a cash position of 15.9 trillion pesos, where the following items stand out. An operating cash flow generation of 14.9 trillion pesos, mainly associated to the good performance of the business segments, the favorable price environment, and the collection during the months of July and August of 6.5 trillion pesos from the Fuel Price Stabilization Fund, FIPEC for its Spanish acronym. The account receivable from the fund amounts to 20.4 trillion pesos as of end September, corresponding to the accumulated amount since April. Regarding FEPEC, it is important to note that the general budget of the Colombian nation for 2023 included an explicit item of 19 trillion pesos to partially pay off the accumulated balances since April to date. In addition to empowering the Ministry to offset such payments, against eventual dividends decreed in its favor and or use uncommitted budget surpluses for additional payments to the fund. Also, it is important to highlight that the new government initiated a gasoline price adjustment path, which is critical to slow down the speed of such accumulation and to close the gap of local versus international reference prices. The resources generated by the operation were used for organic capital investment for 5.5 trillion pesos, as well as for the outflow of 7.3 trillion pesos in cash flow, of which 2.1 trillion pesos correspond to debt service and 5.2 trillion pesos to dividends paid to the company shareholders and to the minority shareholders of the subsidiaries in the transportation segment. I now turn the floor over to Felipe for his closing remarks.

Thank you, Jaime. In the context of the long-term strategy, Energy That Transforms, presented at the beginning of the year, we set different goals not only in terms of our operations and financial indicators, but also around the steps required to move decisively and responsibly towards the energy transition. Several short, medium, and long-term commitments on the environment, social, and governance fronts are part of the roadmap for our various efforts in the areas of water reuse, cumulative reduction of greenhouse effect emissions, reduction of fugitive emissions, increasing the installed capacity of renewable energies, sustainability in terms of transfers to the nation, impact generation through social environment investment, the constant search of the highest safety standards in our operations. In line with the performance evidence in this and other fronts in our TESG strategy, We will continue to disclose in a transparent and timely manner such information to our different stakeholders, highlighting the following. In 3Q 2022, we presented our second specialized report on climate change management from the perspectives of governance, strategy, risks, targets, and metrics for 2021, following the recommendations of the Task Force on Climate-Related Financial Disclosures, TCFD, and International Best Practices. We obtained 77 points in the Dow Jones Sustainability Index measurement, where more than 10,000 companies worldwide participate in such evaluation, and as such is one of the most recognized international benchmarks for good corporate practices. Let's now go on to the next slide. So far this year, the Ecopetrol Group has been delivering solid financial and operating results that have been accompanied by milestones in each of the pillars of our 2040 strategy, energy that transform. This has allowed us to move forward in an organized manner towards the energy transition, strengthening our commitment to the country and the energy security. The new board of directors has expressed its support for the continuity of the 2040 strategy, which seeks to promote renewable and low emission energies while continuing with exploration and exploitation of oil and gas. The new challenges we face as an industry demand activating levers that allow us to adapt promptly and to continue to work on generating value for our stakeholders, taking advantage of the opportunities that align with our 2040 strategy and within the framework of the decarbonization objectives. Let's now go to the next slide for our closing remarks. To conclude, we continue to deliver solid results to our shareholders and stakeholders, even above the goals we set for ourselves in the year. We have made concrete progress in each of the pillars of our strategy. Particularly noteworthy are the results that allow us to ensure supply and guarantee of the energy sovereignty for Colombia. We remain committed to creating value for our shareholders while working with the government to contribute proactively to the design of the country's energy policy and to define different commitments within the frame of a gradual, responsible, and just energy transition. Once again, thanks to all of you who are participating today in this earnings call. Thanks for your time. Thanks for your interest in Ecopetrol. And I will now open the floor for questions and answers.

Thank you. We will now begin the question and answer session. If you have a question, please press 01 on your touchstone phone. If you wish to be removed from the queue, please press 02. If you're using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press 01 on your touch-tone phone. At the moment, we have a question from Bruno Montanari from Morgan Stanley. Please, Bruno, go ahead.

Good afternoon, everyone. Thanks for taking my questions. I have a question about production and a question about taxes. On production, even if we look at the top end of the guidance, it means that in the fourth quarter there would be a decline, right? So can you walk us through what would be the drivers of production now through the end of the year, and if there could be a possibility that you actually surpass the top end of the guidance in 2022? And then on the tax rate, if I understood correctly from the Spanish call, the company sounded less concerned, it seemed, about the amount of... a new incremental taxes that would flow through. But, I mean, on our numbers, looking at the potential 15% extra points on tax, it's a meaningful impact over cash flow. So, I was wondering if that interpretation is correct. And finally, still on the taxes, Can you give us an idea of the impact of the non-deductibility of royalties part and perhaps walk us through how that would be measured? It seems a little bit complex involving what is in kind royalties, royalties in cash, being cost-based, among other items, so any visibility on that specific point would be greatly appreciated. Thank you very much.

Thank you, Bruno. Good morning and thanks for being here today. I'm going to ask Alberto to take us through a bit more detail on production for 4Q and next year. And then I'm going to ask Jaime to talk about tax reform and the impact. So Alberto, you can go ahead.

Bruno, good morning. Thanks for your question. With regards to production in 4Q, as you mentioned, there will be a decline. And because of the plant maintenance of the Kushiana gas plant, which was executed during the month of October. So what we are seeing is in October, with production because of that, with an average of about a little bit under 700,000 barrels of oil. But then we expect a strong comeback in November and December so that at the end of the year, we should be in the higher side of the range that we provided to you, between 700 and 705,000 barrels. So that's 2022. With regards to 2023, we expect to have to maintain, you know, a higher production in the range of 720 to 725,000 barrels per oil per day. Mostly, this will be, if you look at what are the sources for the upside, it would be a strong production coming from our mature fields, Viales, Chichime, and Castilla. New production coming from Caño Sur, and then also the additional production that we are seeing coming from Permian. So 2023 looks very exciting, and 2022, as I mentioned, very much in line with what we told you before.

Jaime? Hi, Bruno. I hope you're doing well. With regards to the tax reform, we basically see that we're fundamentally talking about two effects, the first one and probably the most meaningful is the surcharge on corporate tax that's going to be linked to the price environment. Basically, the way that the reform has been proposed, it triggers three levels of incremental surcharge associated to historical price averages in the oil sector. We've been looking at it in a lot of detail, and we actually believe that the methodology that has been proposed in the reform is robust, and it's one that acknowledges the realities of the price environment in the sector. To that extent, we believe that this 5%, 10%, or 15% surcharge that is linked to prices, it's going to be closely related to the incremental cash flow that the companies are going to have. To the extent that those prices materialize, we're going to have a significant effect or not. In lower price environments, the impact is minimal. In higher price environments, there is going to be a cash effect, but you need to consider that versus the incremental cash flows that the companies are going to receive anyway associated to the increased earnings associated to that price environment. So, that's the way we look at it. The other effect, which is royalties, we think it's relatively marginal. It's relatively marginal. Effectively, what is going to occur is that cost of production, which are currently being deducted from the tax baseline, from the earnings baseline, are no longer going to be able to be deducted. It's not the commercial cost that is associated to these volumes. It's certainly not the total earnings that the government gets from it, as in earlier versions of the reform, it's only the cost of production. So we believe that probably it's not going to be as material as initially estimated. I'm going to go ahead and give you some estimates that I shared in the previous call that we did in Spanish for the benefit of the audience and to make sure that everybody has the same information. Ultimately, when you take this to a tax effective rate, the way that we're looking at it is that currently in the co-petrol group, we have a tax effective rate that it's at around 33%. If we think in terms of ranges, you can think about a nominal tax rate of 35%, right? So when you think about a world under this tax reform, In a high price environment, we're going to have a surcharge of up to 15%. So that's going to take that 33%, 35% to 48%, 50% on the basis of the surcharge. And on top of that, we think that the change in the methodology around royalties may add somewhere between 2% to 5% of additional points to that tax effective rate. That's how we think about it, and that's how we're modeling it at this stage. I do want to emphasize again that this is closely related to what price environment you are believing, right? You know, what price environment you are believing. Clearly, in the near term, when we think about 2023, we continue to see a robust price environment for our commodities. But when you think about it in the long-term, you know, in mid-term and long-term, we don't believe that. And therefore, we don't believe that these tax reform fundamentally changes our valuation of long-term projects. So I hope, you know, I hope this addresses kind of the, you know, the broader angle around your questions.

Thank you. Thank you. Our next question comes from Barbara Halberstad from JP Morgan. Please go ahead.

Hi. Good morning. Thank you for the opportunity of the question. So I wanted to also follow up from a comment made earlier on the Spanish call in terms of the refinancing options for 2023. Definitely where bonds are trading currently would be a much higher cost of that for the company. So if I understood correctly, currently the main source of funding could be bank lines. So if that's the case, just wanted to confirm if you're looking more into local sources or local plus international and to confirm if that's the case as well. And also in terms of the FIPAC balance, I think we had an expectation that it could end the year around 27 trillion Colombian pesos. Just wanted to have an update if you continue to think that's more or less where you end the year in terms of the outstanding balance for the PIPAC. And if you already have an estimate for 2023, considering the modest increases in the domestic prices that have been applied for gasoline at least, that would be for me. Thank you.

Thanks, Barbara. This is Felipe. Good to have you here. And I'm going to ask Jaime to give us more details on both refining and status of FEPEC as we see it at the year end and next year. Jaime? Hi, Barbara.

Yes, so effectively what we were sharing in the call in Spanish is that I think there's three key messages. The first one is that the ISA acquisition loan has been refinanced. to a very large degree. Out of the 3.7 billion of the acquisition, basically 3.2 have already been refinanced at a cost of debt that is very comparable to the initial acquisition credit. We have remaining balances for the fourth quarter of next year, or September, October of next year, of about 3.5 billion or so of credits that we need to refinance. And we're actively working on those. Our bias is towards bank loans on this. We are looking at all sources, both local and international. To the extent that there is a remaining balance that we don't think it's cost competitive to deal through loans, we will be looking at other options. But I think those are things that are going to sort themselves over time. At this stage, we have a very high degree of confidence that we can refinance this in the short term through the mechanisms available. With regards to your second question around the FEPEC and, you know, the stabilization fund balance, so as we mentioned in our report, our balance at 3Q closing was of 20.4 trillion pesos. That will continue to accrue over the next few months. We believe that the year-end a balance is going to be somewhere between 29 and 32 trillion pesos. I cannot give you a certain number because it depends on how international prices evolve. It also depends around how the exchange rate evolves. With regards to 2023, we have been working on some internal projections and we are sharing those with the Ministry of Mines and with the Ministry of Finance to inform their decision making around adjustments at a local level. What we've seen so far is that the Ministry of Finance has a clear interest in accelerating those adjustments over the coming year with a view to reduce the the differential that we have between the international price and the local price. I think it's too early to give you a view around projections for next year, since they're going to be heavily dependent on the pace in which the ministry makes those adjustments and how international prices and exchange rate evolves. Thank you. Thanks, Jaime. Thanks, Barbara.

Thank you. Our next question comes from Luis Carvalho from UBS. Please go ahead.

And thanks for taking the questions. I have basically two questions here. The first one is trying to come back on the connection between this attack and the tax reform. I think that we discussed this in a call, you know, a couple weeks ago. But just trying to understand, I mean, when you think that it has some impact in mining and oil, There were some impacts, you know, increasing varieties with A&H. Also, if you could comment on the free zones, particularly on Reticar, and how, you know, also the impact reform, you know, is correlated to the, I don't know, to the FIPAC policy. situation right uh the second question is about some contract renewals or reactivation um there is some talks about potentially reactivating some you know some contracts and some export for years so just trying to understand how this can you know bring some you know impact either the topics or production uh to the company looking forward thank you

Hi, Luis. Good to hear you and hope you're doing well. So I'm going to take the first question, and Alberto is going to take your second question around the contracts outlook. And, you know, basically what you're asking is how has the tax reform evolved? And I think we need to recognize that this latest version that was approved by the chambers of Congress last week It is a very different version from the ones that were previously discussed. I think directionally you can almost speak about this is version 3.0 and there was a kind of version 1.0 and a version 2.0. Version 1.0 spoke about things like export taxes and export levies and things like that. Version 2.0 spoke about a very aggressive, if you will, taxation or treatment to royalties, right? All of that has gone away. All of that has gone away. And what we have now that is relevant to the oil and gas sector is fundamentally three effects, three fundamental effects. The first one is this a surcharge that is linked to prices. There's some bands. And basically, if you are below 60, I don't have the exact numbers here with me, but I think it's $63 or so. You have the same corporate tax that everybody else has. Above 63 and going from 63 to 72, and I'm going to give you the exact numbers in a moment, you basically have a 5%. Then from 72 to 83, you have a 10%, and 83 and above, we have 15%. And when you look at those tax bands, they actually quite reflect our understanding of the international price environment. We can agree, if you think about it, our planned prices, they do reflect when you are in a positive price environment, when you are in an exceptional price environment. And that's how this has been designed. The other component, which is around royalties, effectively the change is that the cost of production, which has been a deductible item in the Colombian tax regime will no longer become a deductible item. So, and I think that's in the discretion of the tax authority and what this reform is doing is essentially taking a stand where this cost of production is no longer going to be tax deductible. In the context of the overall reform, the impact of that is not that significant. We believe it represents somewhere between two to five points of incremental taxation for the industry. But in the end of the day, we don't believe that's a deal breaker in terms of the economics of a given project. The third big topic of conversation throughout this whole tax reform debate was around the continuity of duty-free zones. And version 1.0 and version 2.0, again, had a very strong stance around the continuity of them. They were going to go away in some shape or form. Basically, the project that is in place right now, and that was already approved by the chambers, basically maintains the tax status of the existing duty-free zones that the Ecopetrol group has in place. So therefore, there is not going to be any negative impact associated to that. That's kind of where we are on this list. Over to Alberto.

Hi, it's good morning. What are we hearing from the government? First, both the Minister of Mines and the Minister of Finance have been very vocal in stating that contracts already signed will be home. The Minister of Mines also have said that together with ANH and UPMI are evaluating the need of signing new contracts. So we received this news with us positive messages, and this reduce certainly the uncertainty that we have in the future. With regards to reactivation of suspended contracts, I have to tell you that some of them have been suspended for social unrest, forced migration. Others will need to have agreement in terms, in commercial and technical terms. If those causes for suspension are resolved these options will have to compete with other options that we have in our portfolio if they are competitive enough then they will have to go through the maturation process and then at the end probably will mean that we will have exploratory options exploratory tooling associated with this uh assets thanks alberto thanks luis thank you

Our next question comes from Andrew McCarty from Credit Card. Please go ahead.

Thanks very much. Good morning, everyone. Thank you, Felipe, Jaime, Alberto, and Joni for the presentation and the opportunity to ask questions. My first question was on fracking in Colombia. You know, just seeing on local media at the moment quite a lot of news flow on that, so just wondering, Is it the case that the formal decision has been taken to desist from moving forward with the Calais and Platero projects? And if so, what are the key sort of steps to unwind all the sort of key contracts behind that that are in place? Would there be any sort of cost or financial cost implications there for the ecopatrol group? So that's question number one. Question number two. And apologies if this has already been covered in the presentation or in the questions. I couldn't quite hear. But just wondering about whether the door has now been opened, in fact, for the possibility of signing new exploration contracts in Colombia. Any comment you could share on that? And then my third and final question, just if you could provide any updates on the Invercolsa, Divestiture, where that is. That's indeed still moving ahead. And then just generally on any other sort of asset rotation initiatives that you might be looking at to, you know, optimize the portfolio. That's it for me for now. Many thanks.

Thanks, Andrew. And I'll take the first one. And if there's anything, Alberto, you want to add on that. And on Invercolsa, I'm going to ask Nicolás Azcuénega to give us a bit of color on that question. So in terms of fracking, and you were mentioning some of the media coverage that we've seen over the last few days, what we've said as a company is if at the end of the day the government, and in particular Congress, takes the decision formally that there won't be fracking in Colombia, we won't do fracking in Colombia. So I think that's very clear. ANH formally for a suspension, a 90-day suspension of the contract that we have as operator. We've done this. Remember, there's Calais and Platero, as you were mentioning. And remember, we do have a formal environmental license on one of our projects, on Calais. So what we've said is we're discussing with our partner, with ExxonMobil, on how to... go back and undo some of the commercial agreements that we had with them, and then we'll take this forward. And each company will return to the ownership, the original ownership of the areas in case of Calais and Platero. So that's where we are. I would say that we will, as Secobetrol, remain with the ownership of the acreage, you know, long term. We'll see where that goes. In terms of cost implications, we've spent money on preparing for the environmental submission, the application of a license. We've done social investment in the area, and we'll manage that accordingly. We don't see an issue with that. So right now, I think in terms of key steps is awaiting for a response from ANH. And they're taking it from there and obviously in constant and continuous communication with our partner, ExxonMobil. On your second point on new exploration contracts, I would say that we've been in conversations with the Ministry of Mines and the Ministry of Finance on looking at the potential of the already signed contracts. And both of them have been very vocal in terms of honoring the existing contracts. And I think that's important. We've mentioned that we foresee eventually some 10 years of activity going forward in those areas where not only shooting new seismic, drilling wells, we had good success as you've seen from exploration, but we're also reinterpreting seismic, which has proven to be quite useful. You know, we can do, as an example, if we do 2,000 square kilometers per year of new seismic surveys, we can reinterpret 12,000 to 15,000 square kilometers. So it gives us a lot of new or the ability to have a new view of the subsurface with data that we already had collected. And the recent or the most recent conversations, Andrew, have been around the possibility of looking at additional exploration potential beyond the contracts that have already been signed. And that means, I mean, we've been talking to both ministries, we've sat down our technical teams with them, looking at what that would entice, you know, how would that look in terms of what's the potential, what are the options, just sharing data and information and having open conversations around our view, our view of what the subsurface potential could be. In terms of Invercolsa, Nicolás, if you can help us with, where we are in the process. Go ahead.

Yes, Felipe. Andrew, thanks for your question. First, in terms of our approach to divestments in general. So on that regard, our approach remains unchanged. That is basically to constantly review our portfolio to secure that we have the best set of assets in line of our strategy and the current market conditions. specifically on Invercolsa, which is a company dedicated to transport distribution and commercialization of natural gas in Colombia, where we hold a 51.8% stake. Our decision to divest our equity remains unchanged, as announced earlier this year in May. And in due course, we will take this decision to review with the new government. As you know, this process of divestment of assets that have participation of Colombians nation in its equity, it's ruled by law 226 in Colombia. which includes the revision or the stage at which the government needs to provide a green light to proceed. So if and when we obtain this green light, we envision a process that will take around nine months to complete. Thanks again for your question, Andrew.

Thanks, Nicolas. Thanks, Andrew. Next, we have a question from Frank McGann from Bank of America. Please go ahead.

Thank you very much. Just a couple questions, if I could. One, could you just confirm, you mentioned in the tax discussion about the ability to deduct production costs. And I just didn't know if you meant total production costs or royalties only. And then in terms of cost inflation, what you seem to be doing or making a lot of efforts to, where are you seeing the biggest effects? And are you seeing any, you know, acceleration in cost inflation as you look out over the next six to 12 months? And then your diluent volume seemed to be, you know, much lower. And I'm just wondering, what are the expectations for diluent usage as you go forward here? And how will that maybe affect your overall cost structure? Thank you.

Hello, Frank. Hope you're doing well. This is Jaime. So with regards to your first question, just to clarify, it's the cost of production associated to those specific royalties. So that's what currently the tax regime allows you to deduct, and should the reform proceed as as it has been approved in the two chambers, that will no longer be a deductible item. With regards to your second question about inflation, I'm going to make an overarching comment, and then I'm going to pass it over to Alberto for some of the specifics. And generally what we're seeing so far is that we have seen an effect of around 12% to 13% in our cost base associated to inflation, We have been able to mitigate probably some four or five points of that, you know, with the existing contract strategy and through demand management and through long-term pricing and the like. As we look into next year's planning and certainly to the next two, three-year horizon, we are seeing an increasing pressure in that regard, probably that, you know, 12% to 13% is going to become something along the lines of 16%, 17% simply due to the fact of indexes kicking in. Now, of course, we're not standing still. We are looking again at value chain opportunities and contract opportunities and the like. But directionally, we are seeing an increased pressure. I'm going to pass it over to Alberto so that he can give you some further color. Hi, Frank.

Thanks, Jaime. When you look at our refining and transportation costs are very much in line with the plan. And this is because we have, in the case of transportation, actually transported more volumes. So we keep the indicator under control. Where we are seeing an impact is in terms of lifting costs. jumping in about 15% compared to the second quarter of this year. So right now we have it in the lines of 9.15% cost per barrel. But when you look at what those areas in which we need to focus, I would say energy cost, that's number one. The second one has to be with the cost of raw materials, particularly steel. And the third one is about the cost of well services. This is subsurface well services, intervention, well intervention costs that are going higher, particularly because of what Jaime mentioned. This is about introducing the indexes in line with the inflation that we are seeing for these services.

Thanks, Alberto. Thanks, Jaime.

Thank you. Our next question comes from Hernan from Latin Finance. Please go ahead. Hello?

Can you hear? Hello? Yes, we can hear you, Hernan. Yes. Okay, great. I just wanted to make sure. So thank you so much for taking my question. So I wanted to follow up a little bit on the financing options that is related to the refinancing of the loan that was used for the ESA acquisition. You mentioned that they will be looking at other options, and I remember earlier this year that there was a mention that there was a possible sustainable bond sale either later this this year, at the end of this year, is there still the possibility of going to the international markets as an option to finance to pay off the loan?

Hi, Ivan, how are you? This is Jaime. Yes, so, you know, with regards to refinancing, I think there's two different buckets to speak about. The first one is the ESA acquisition loan in and by itself. And then there's like everything else, which is basically some maturities that we have at the back end of 2023. With regards to the ESA acquisition loan, which was a loan of about 3.7 billion, 3.2 billion of that has already been refinanced on one end. a bond that we issued late last year, and more recently, we used a committed line that we had for $1.2 billion. So that has already been refinanced, and there's a balance, if you will, a remaining balance of $450, $470 million to go, which we're working on. With regards to 2023 maturities, When you add this, you know, the balance of visa, the $470 million plus other maturities that we had at the back end of next year, we have a total balance of about 3.5 billion. We are working, you know, with the financial system on different avenues to refinance that. A preference at this stage is through bank loans, which we're working on. These are bank loans with a variety of time horizons, but we believe that they actually give us some pretty competitive cost of debt associated to them with some very interesting extensions in terms of time horizons, which are linked to our business plan. That is our preference, I'd say. There are other options. Bonds are always an option, right? Ecopetrol has a long-standing presence in the bond market, and we are cognizant of that, and we keep that option as a possibility. I think as we monitor the credit markets at this stage and circumstances around Colombia and international macroeconomic factors, we continue to review that. I would say that's a secondary option at this stage, but it's certainly something that we do not rule out at any moment in time. Thank you. Thanks, Jaime.

Thank you. Our next question comes from Oriana Coval from Balance. Please go ahead.

Good afternoon. Thanks for taking my question. This is Soriana Cobalt with Balance. I had one follow-up with regards to the FEPC receivable. Just I understand that you're in conversations on what would be the necessary adjustments for next year to prevent the further acceleration, but if you have any ballpark estimates or view on where do you see the needed adjustments in gasoline and diesel prices as to prevent an accelerated accumulation of the receivable? That would be the first question. And the second question would be more on the CapEx side. Looking at your CapEx figures for the quarter, if you can further elaborate on the inflationary pressures that account for the increase in USD terms, specifically for the exploration CapEx, which I noticed that you did the same number of exploration wealth, but the figure was substantially above quarter over quarter, and same goes for midstream business. Thank you.

Hello, Oriana. This is Jaime. With regards to your first question around FEPEC, basically, you know, the balance of FEPEC has been accruing at a rate of around 2.5 to 4 billion pesos per month, depending on the month. There's actually two or three key factors that are associated to that. You have on one end how product differentials internationally evolve. On the other end, you have how the exchange rate evolves. And thirdly, as a major item, of course, you have the interventions that the government is making around domestic prices. I actually would argue that there's a fourth element, which is some methodological adjustments that go into a lot of detail, but they actually also influence the rate of accrual. The extent of adjustments that need to be made will vary depending on these other factors. So you actually need to look at all the factors in unison in order to close, if you will, the gap, right, to close the gap. I'd say directionally, I'd say that the adjustments that the government has announced certainly go in the right direction. And if they are maintained and implemented on a monthly basis, we believe that the gap is going to be narrowed in a significant way by the end of next year. But again, there's always the uncertainty around how these other factors evolve. With regards to your second question around inflationary pressures in capex, I'd firstly say that the capex execution that you saw in 3Q is by and large and by a massive amount dictated by activity execution. It is by no means a result of inflation. I think the inflation that we have seen in our capex outlay so far has been minimum. What you're seeing is basically the result of an increased activity set where we have more rigs, we have more work over units, we have more a cruise in the ground, and that is actually translating into more production. So that's really the headline. Now, as we look into next year, as we look into next year and more longer term CAPEX deployment, inflation does become a factor, you know, does become a factor, you know, as we sign new contracts associated to those capital projects, inflation will be a factor. And I'd say that Depending on the specific commodity subsector or service subsector, those effects can be anywhere between 10% to 20%, anywhere in that range. I think you would have to go into the specifics of each project to see to what extent they are mitigated or not. I would say as a gross average, I would say that... you know, a capex effect next year of between, you know, 13 to 15% is a reasonable estimate. I hope this helps, Oriana. Thank you. Thanks, Jaime.

Thank you. Our next question comes from Bader El Motawakil from Barclays.

Please go ahead. Yes, thank you so much and congrats on your earnings. Two quick questions for me. First one is, are you expecting to receive any FAPAC payments from any excess cash from Hacienda by year-end? I think that we read on the news that Ecopetrol could potentially receive something around, you know, 7 trillion pesos in year-end in addition of the 19 trillion pesos that Jaime, you mentioned earlier on the call, so just curious if you have any updates in some of that. And my second question is regarding your gross debt level for 2023. So are you thinking about keeping the gross debt stable around $24 billion? I'm just asking because if I look at the company right now in 2022, full year picture, and I just try to do like a quick parallel in 2023, this new government is going to increase taxes, let's say, by $5 trillion COP on Ecopetrol or so, depending on the assumptions. And so the increase in terms of taxes and obviously on the upstream, based on our model, is not going to offset the pressure from the FEPC. And even if we increase local prices by, let's call it, you know, 20 percent, we don't have the FAPEC, you know, balance and the working capital balance upsetting these taxes. So just curious if you can give us, you know, some your view in terms of gross debt in 2023 and then potentially with the risk of funding, you know, any dividends or potentially these higher taxes with gross debt or you don't think so. You think that, you know, you can fund it extensively with cash. Thank you so much.

Hi, Vader. How are you? So, let me address your different questions. I'd say, firstly, let's start with expectations around FEPEC payments. So, this year. So, there are no further FEPEC payments budgeted in Haciendas, in the Ministry of Finance budget for this year. However, there is the flexibility, the legal flexibility to apply excess budget surpluses to FEPEC. The extent to which those budget surpluses are going to occur or not is yet being defined in our conversations with the Ministry of Finance, We've discussed that as a possibility, but it is yet an uncertain one. So I would say that the base case is no further FEPG payments this year, but there is an upside that occurs, and that's something that we are actively working with the Ministry of Finance. With regards to your second question around gross debt levels, basically, You know, we close with a healthy gross debt to EBITDA ratio in the third quarter, and that's going to continue to be reduced over the next few months. And the outlook is a positive one for next year. I think the extent to which we're going to incur an incremental debt or not next year is going to depend on the assessment of the timing in which the FEPEC payments are going to come in, you know, And at the same time, how capital markets evolve. I think it's going to be all those factors are going to have to be considered. All those factors are going to have to be considered. I think it's still premature to give you a view on that. We're going to be discussing with the board over the coming weeks. What is our view on the investment plan for next year? What is the optionality that we see around that investment plan? You know, what are the trade-offs associated to the investment plan with regards to cash, with regards to potential dividend payments? And, you know, decisions are going to be made on that basis. But what I would say is that we do have a very strong inclination to protect the investment plan. We have a strong inclination to protect the debt levels that we have at this stage. But we are keeping our flexibility. We are keeping our flexibility because things are dynamic. And what is going to be the best combination to protect value for the company is something that is yet to be determined. With regards to your third question around working capital balance, you know, and how to offset the pressure of FEPED. You know, clearly, I'd say two things. The first thing is that we are approaching this conversation from a, from a healthy place. I mentioned in the call in Spanish that our free cash flow in 3Q is the best free cash flow in the company's history, the first free cash flow in the company's history ever. And it's obviously a combination of multiple factors, but it is accumulating as opposed to alleviating. So it's more rather than less. And that helps a lot now. To what extent that can fully offset an accumulating FEPG indefinitely? I'd say the answer is no, it can't. No, it cannot. It will not fully offset the FEPG effect. And that's why 19 trillion pesos were included in the national budget. And that's why we are in discussions with the government to increase that amount. I think that is something that is going to evolve over the coming months, and probably in our next call, we can give you a better view of that. That's where we are. Thank you. Thanks, Jaime.

Thank you. Coming up next, we have a question from Andres Cardona from Citibank. Please go ahead.

Hi, good morning, and thanks for the presentation. I have two questions. The first is that you have point to $4 to $5 billion per year incremental cost due to the tax reform. Can you let us know what are the key assumptions you are using there in terms of oil prices? And if you can explain that cause between the and the non-deductibility of the royalties. And the last question is if you can give us an update on how many development were targeted in 2022.

Hello, Andres. I'm going to take the first one, you know, or your question is related to tax reform. So we haven't given an estimate around what is the tax reform impact for the company. And I can assure you that it's not $4 to $5 billion. I think we need to look at the basics. And the basics are we have a tax effective rate of 35%. currently, you know, or about 35%, depending on whether you're looking at a group level or a separate level. And depending on your price outlook, you need to add either 5%, 10%, or 15% to that. In the highest possible case, which is in a scenario where we end up over the 83 or so dollar per barrel kind of threshold that kicks in the 15%, a surcharge, that tax effective rate is going to go to about 50%, right? And it's 50% on our total net income in pesos. So that's the way that you need to calculate it. The split of what is associated to the surcharge or the sobretasa and the royalties is that 90 to 95% of the effect is associated to the surcharge, and the marginal amount is associated to royalties. The new treatment of royalties is not a substantial amount as compared to the effect of the surcharge on corporate tax. I hope this addresses your question. Over to Alberto.

Hi, Andres. What we have said is that for this year will be around 580 wells, and for next year, around 600 wells, development wells.

Thanks, Alberto. Thank you. Our next question comes from Andres Duarte from Corfi Colombiana.

Hello. Thank you. I have one question. Can you please brief me, sorry, brief us on the carbon shadow prices you're using to price your projects today. And please remind us if the current tax reform includes a carbon tax component. Thank you.

Hi Andrés, how are you? So with regards to carbon taxes, the approach in the company has been around employing what we call a carbon shadow price. Basically, what that is, is it's a theoretical level of a carbon impact that is included in the valuation of a forward economics in projects that we are reviewing. Basically, the way that it has been implemented is that we, if you will, we punish the the projects that we're evaluating with an incremental cost associated to the ton of carbon that the unitary ton of carbon that a project produces. Basically, the way that we have been modeling that out is that we use $20 per ton for the next five years, then it goes up to, $30 per ton and eventually goes up to $40 per ton. It is a theoretical economic impact. This has no cash impact whatsoever. But what it does is that it allows us to prioritize projects and to measure projects in terms of their carbon footprint competitiveness. What this will do is that it will – and what this actually does is that it actually – In a way, rewards projects that have a low carbon footprint in that they don't have to reflect that cost burden, and it punishes projects with a high carbon footprint through an incremental cost. Again, it's theoretical, right? It's not this... these amounts do not go to a purse, they do not go to a fund or anything like that, and they don't have any cash implication as of now. As we look into the future, we are looking at mechanisms to see whether eventually this could actually translate into a real fund whereby what we accumulate in the fund is used to fund energy transition projects, right? But again, this is something that is still on paper and that we are debating as a best practice in the industry. With regards to the carbon tax as such, in Colombia, there is an existing carbon tax that it has different mechanisms of the measure, but it ultimately translates into the equivalent of $4 per ton of emitted carbon to the system. What the tax reform does is that it takes that $4 per ton and it takes it on average to about $20 per ton, right? On average, this depends on the specific product and it depends on the place in the value chain where you're actually at, right? Within the Ecopetrol Group, Ecopetrol S.A. and Refinería de Cartagena are responsible for this tax. They either pay it directly or indirectly, but it does have an effect on them. In the context of the total tax reform numbers that we have been discussing, it is not a material item. Thank you, Andrés. Thanks, Jaime.

At this moment, we have no further questions. Mr. Bayón, do you have any final remarks?

Well, thanks. And I just want to thank everyone for taking part in today's conference call. Thanks for the interest in Ecopetrol. Thanks for the questions. I hope to see you sometime soon. And please stay safe. Have a great day. Thank you, everyone. You may disconnect now.