Ecopetrol S.A. (NYSE:EC) Q1 2024 Earnings Call Transcript May 9, 2024
Ecopetrol S.A. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: 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 quarter 2024. There will be a questions-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 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. Ricardo Roa, CEO of Ecopetrol; Alberto Consuegra, COO, and Maria Catalina Escobar, acting CFO. Thank you for your attention. Mr. Roa, you may begin your conference.
Ricardo Roa Barragan: Good morning, everyone. Welcome to the first quarter of 2024 earnings call, a quarter in which we are moving forward on the path of growth. Thanks to the collected work and a part of all our employees and partners. The results show that we are still maximizing the opportunities in our traditional business. We continued to achieve excellent operational figures. We closed the first quarter with a production of 741,000 barrels of oil equivalent per day, a transported volume of 1,118,000 million barrels per day and refining loads of 428,000 barrels per day with an high operational availability of our refineries in 96%, reaching levels comparable with the best refineries in Latin America. During the quarter, we announced the commercial viability of the Arrecife gas field in the Cordoba department adding approximately 6.7 million cubic feet of gas and the signing of a gas exploration agreement in Piedmont Norte with Paris.
This milestone is trading our commitment to the country’s energy security. These achievements are complemented by the outstanding commercial strategy highlighting our subsidiary in Houston, Ecopetrol U.S. trading, which started operations in October 2023 with a commercialization of 16.7 million barrels of crude and products generating an EBITDA of $37.1 million and a net profit of $28.5 million in the first quarter of 2024, 185% above the plan for the period. We are able to face that El Nino phenomenon with resilience implementing, planning, optimization and saving strategies throughout the operations and the processes. Examples include the accelerated maintenance at Cupiagua diesel timely delivery to the power plants and an 80% water reuse rate in our operations.
Moving to the next slide. Our growing production translate into solid financial figures with competitive profitability showing an EBITDA margins in line with the average of the last eight years. In this way, revenues of COP 31.3 trillion, EBITDA of COP 14.2 trillion, net profit of COP 4.0 trillion, and ROCE of 11% in line with our annual target. The main impacts on the results compared to the first quarter of 2023 are mainly due to exogenous variables. Over the past year, the exchange rate dropped by COP 845 affecting the respiration of variables in pesos explaining 80% of the variation in EBITDA. When analyzing the figures in dollars for the quarter, we observed financial results at similar levels compared to the first quarter of 2023. Other variables affecting the results are increased costs due to the El Nino phenomenon, inflationary pressures and the fall in product differentials as a result of the market oversupply.
Efficient management of the accounts receivable with the Fuel Price Stabilization Fund accompanied by adjustment to gasoline prices allowed us to reduce the accumulation by 72% compared to the first quarter of 2023, ensuring lower working capital pressures for the company. Additional, on April 1st, we received the transfer of COP 7.80 trillion corresponding to the account for the first quarter of 2023 highlighting the nation’s commitment to FEPC payments. I want to highlight the successful closure of the legal process of the arbitration award of the Cartagena Refinery after seven years of work and effort in which we protect the interest and reputation of the company for which we have already received the corresponding compensation. I want to give a special recognition to the Cartagena Refinery and its entire team for their constant work and commitment to successfully completing this process.
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