Ecopetrol S.A.

Good morning. My name is Natalia and I will be your operator today. Welcome to Ecopetrol's earnings conference call in which we will discuss the main financial and operational results for the first half of 2024. There will be a questions and answers 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 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 on this conference call. The call will be led by Mr. Ricardo Roa, CEO of Ecopetrol, Rafael Guzman, Acting Executive Vice President of Hydrocarbons, Javier Cardenas, Acting CFO, and David Riaño, Executive Vice President of Transition Energies. Thank you for your attention. Mr. Roa, you may begin your conference.

Good morning, everyone. Welcome to Ecopetrol Group's operational and financial results call for the period ending June 2024. Thank you for your continued interest in participation in this space. This has been a period where operational metrics have continued their upward trend across all segments. We closed the first half of 2024 with a production of 750,000 bottles of oil equivalent per day, a figure not seen in eight years, transport volume of 1,135,000 bottles per day, and refining loads at a historic high of 426,000 barrels per day. I would like to highlight that in the Uchuva 2 well, whose drilling began this quarter, the extension of the gas discovery made in 2022 with the drilling of the Uchuva 1 well was confirmed. This wealth provides significant information for the development of this new frontier of natural gas production in the Colombian Caribbean and reaffirms the expected potential in the region. Also on production front, we highlight the contribution of the Permian, which achieved a monthly production record of 100,000 barrels of oil equivalent per day. In the transportation segment, we achieved a cumulative national evacuation by pipelines of 831,000 barrels per day, the highest semiannual average in the last five years in the pipeline system. In refining, we maintained loads at historical highs along with an operational availability of 96%. Let's move to the next slide, please. Despite consistent operational performance, our financial results were challenged by external factors such as the exchange rate and inflation. We closed the semester with revenues of 63.9 trillion pesos an EBITDA of 28.3 million pesos, and a net profit of 7.4 trillion pesos. Our EBITDA margin of 44% surpassed the industry average, showing a strong ability to maintain our profitability even amid high exposure to exogenous variables. Excluding externalities, we would have had a ROAS of 13% and a net profit of 10.7 trillion pesos, an increase of near 10% compared to the first half of 2023. In addition to external effects, net profit was affected by the increase in the estimated task surcharge, which rose from 10% the rise in the price of oil in dollars per barrel. Therefore, our strategy continues to focus on excellent operational performance with an emphasis on efficiencies and cost optimization to face the market factors to which we are exposed. This semester, we achieved efficiencies of 1.9 trillion pesos, materializing our optimization and competitiveness strategy with efforts across the entire production and commercialization chain. In June, we paid the second and final dividend installment to our minority shareholders, fulfilling our pillar of competitive returns for our investors. Finally, the account receivable from the Fuel Price Stabilization Fund FEPEC closed with a balance 61% lower than the same period last year. The balance in June 2023 was 30.9 trillion pesos versus the closing of June 2024. with 12.1 trillion pesos. It is also worth noting the lower monthly accrual, which in the January to June 2023 period was 12.9 trillion pesos compared to 4.5 trillion pesos in the first half of 2024. This allows us relief in cash flow and better condition for investment execution. Let's move on the next slide now. I would like to highlight significant progress we have made in TSG. In the field of science, technology and innovation, the launch of the Colombian Institute of Petroleum and Transition Energy stand out, with a project investment of 816 billion pesos until 2030. This institute positions Ecopetrol as the main actor of Colombia's energy future. The materialization of this initiative is carried out through high-impact projects such as biomass energy, hydrogen and CO2 capture, circular economy and renewable diesel production. These projects have the potential to transform the region by developing cutting-edge skills and strengthening the country's scientific capacity. In line with this investment in this area, capture benefits of 778 billion pesos improving EBITDA, ROACE, and cash flow. On the environmental front, we achieved a reduction of over 136,000 tons of CO2 equivalent in scope 1 and 2, and we excited our annual energy efficiency target, achieving an optimization of 1.21 petajoules, accumulating 12.07 petajoules, which is equivalent to the annual energy consumption of the Department of Bolívar in Colombia. In the social component, we connect 9,645 households to gas networks in the country in the first half of the year. Additionally, Jocol and the community of Canutal consolidate the first Compressing Heap energy community in the country in the Department of Sucre, certified by the Ministry of Mines and Energy. On the governance front, we have been adjusting the organizational structure to enable differentiated management in each of the three business lines and accelerate the achievement of the objectives of our 2040 strategy by aligning process and implementing a more agile and efficient group-focused structure in decision-making, execution capacity, and multidisciplinary teamwork with experts at the helm of the various vice presidents. All this enabled us to maintain the value proposition to investors and meet the expectations of stakeholders while driving prosperity in the country. To conclude, we highlight that for the first time, the return of investment in TSG is being measured. For 2023, this contributed positively to the group's net income and 1.25 trillion pesos to the regional GDP, demonstrating the financial value of sustainability for the company and society. I now hand it over to Rafael Guzman, who will speak about the hydrocarbons segment. Thank you, Ricardo.

On the exploration front, I would like to highlight the results achieved in the offshore gas projects in Colombia, where we made positive announcements regarding the Utruba II appraisal well. This well is located in the Tairona block with a 55.6% ecopetrol participation and operated by Petrobras. The well confirmed the extension of the gas discovery made in 2022 with the drilling of the Utrúa I well. This result reduces the uncertainty and allows us to progress on the project planning. We estimate first commercial gas by year 2029. We are also planning to build two additional prospects with the Buena Suerte One Well located in the Tayrona Block and the Comodo One Well in the Ultra Deep Water Grand Cod One Block. The Orca Norte One Well remains under evaluation. Once the results are incorporated with information from the two new reservoirs, a new development plan will be designed and its commercial viability will be determined. Regarding onshore exploration activity, we highlight the drilling of the Arantes I well operated by PAREX and the Floreña N-18 well operated by Ecopetrol in the Piedmont-Llanero region, both targeting gas and condensate. We maintain our target of drilling 15 exploratory wells in 2024. As of end of June, we invested $195 million in the exploration campaign with four wells drilled and six more wells that started drilling. Let's move to the next slide, please. In the first half of 2024, the Ecopetrol Group reached a production of 750,000 barrels of oil equivalent per day. an increase of 26,000 barrels of oil equivalent per day as compared to the same period last year. As seen in the left figure, these results were obtained thanks to the growth in production in the subsidiaries, mainly in Permian, the incremental investments in fields such as Cañosur, Rubiales and CP09, and the contribution of recovery technologies that largely mitigated the natural decline of the fields. These recovery techniques now account for 41% of Ecopetrol Group's total production. For example, the figure on the right shows the performance of the Chichimene field and the effect of the implementation of these technologies, which has allowed the recovery factor to increase from 9% to 17%. If the expansion of our tertiary recovery is successful, as shown by the current results on the pilots, the recovery factor could reach up to 43%, with the potential to incorporate between 300 and 1,200 million barrels addition. On the other hand, we are progressing with the drilling plan, with 240 development wells drilled and completed with an average of 23 active drilling rigs. EBITDA per barrel increased by 15%, reaching $30.6 per barrel, mainly explained by higher production levels, better prices in our crude basket, and cost efficiencies. Let's move to the next slide, please. Regarding our activities in the Permian Basin, 50 new wells were put on production during the semester. for a total of 370 wells since 2019, and achieving a net production before royalties for Ecopetrol of 91,400 barrels of oil equivalent per day, representing 12% of Ecopetrol Group's total production. We also highlight the strong financial results of Ecopetrol Birmingham. At the end of the first half of the year, we generated an EBITDA of $511 million and an 81% EBITDA margin. By year-end, we estimate an average production between 84,000 and 86,000 barrels of oil equivalent per day before royalties and the drilling of more than 110 wells. Finally, the development of Ecopetrol's assets in the Permian Basin is carried out under two different associations with Oxy as operator. We have one joint venture and one joint operating agreement. The joint venture began in 2019 for the assets located in the Midland area and the joint operating agreement started in 2022 in the Delaware area. The JV for the Midland area could end during the first quarter of 2025 by unilateral decision of one of the partners. In that case, future development activities would continue not under the current JV, but through a new joint operating agreement in which Oxy would remain as operator and the capital would retain its 49% interest over production and areas. We are currently having discussions with Oxy to define the future of the JV for the Midland area. Please move to the next slide. In the transportation segment, volumes increased by approximately 41,400 barrels per day, mainly driven by the increase in crude oil production in the Llanos region, higher crude deliveries to the Barranca Bermeja binary, and the normalization of transport operations in the Caño Limón-Coveñas pipeline, as shown in the top left figure. The segment managed to maintain solid financial results, achieving the second best historical results for the first half of the year, generating an EBITDA of 5.5 trillion pesos, representing a contribution of 20% of the total EBITDA for the Ecopetrol Group. The EBITDA reduction compared to the first half of 2023 is mainly explained by external effects such as exchange rates and inflation. partially offset by higher revenues and cost efficiencies, as shown in the bottom right figure. Let's move to the next slide. In the first half of 2024, the refineries achieved historic throughputs of 426,000 barrels per day, as shown in the top left figure, thanks to an operational availability of more than 96%, the timely execution of scheduled major maintenance activities, and the maximization of domestic crude loads, and an outstanding performance in HSE. The gross refining margin stood at $12 per barrel, impacted by the weakening of global diesel, jet, and gasoline spreads, the strengthening of the Brent differential, and the decrease in domestic gasoline demand. Given the above, EBITDA stood at 1.9 trillion pesos in the first half of 2024, 59% less than the same period of the previous year, mainly affected by the aforementioned external variables. In light with the energy transition strategy, we highlighted the approval of phase one of the dedicated grant project for the production of sustainable aviation fuels at the Barranca Bermeja refinery. Let's go to the next slide. During the first half of 2024, we remain focused on materializing our comprehensive efficiencies and competitiveness strategy, allowing us to leverage operating performance and partially offsetting the external effects of inflationary pressures, exchange rate revaluations, cost increases, and energy tariffs. As of June of 2024, the Ecopetrol Group incorporated efficiencies of 1.9 trillion pesos in our CAPEX, OPEX, and revenue levels, with an increase of 19% compared to the efficiencies obtained during the first half of the previous year. Cost efficiencies were focused on reducing electricity consumption, reliability, and surface maintenance to reduce lifting costs, optimizing gas transportation tariffs and capturing refining margins, which mitigated the increases in costs in refining. Finally, the lifting, transportation, and refining cash costs were impacted by exogenous factors related to exchange rate, inflation, gas price, and El Niño phenomenon. However, when normalizing these effects in each of the indicators, cost levels are similar to those obtained in the first half of 2023. Now, I will turn it over to David. We'll discuss the main milestones of the energies for the transition business line.