Ecopetrol S.A. has announced Ecopetrol Group's financial results for the first quarter of 2015, prepared and filed in Colombian pesos (COP$) and on the basis of International Financial Reporting Standards (IFRS).
“Despite the decline in oil prices, in the first quarter of 2015 the Group reached a positive financial result due to the good performance of its different segments and favourable environment conditions for the operation,” said Ecopetrol S.A.'s CEO, Juan Carlos Echeverry.
“Thus, operating and financial results of the group on the first quarter of 2015 were better than those of the fourth quarter of 2014. Particularly, March was the best month of the first quarter of 2015.
“With respect to our exploration activities, the first geological success for the year was reported at the Bullerengue-1 well, drilled by Hocol, located in the Sinu-San Jacinto basin, which is expected to support the natural gas supply on the Atlantic Coast region. In addition, we advanced in the drilling activities in the offshore wells Kronos and Calasu, located in the southern Caribbean Sea in partnership with Anadarko as operator (50% - 50%).
“Our production activities have recorded four consecutive quarters of growth, reaching 773.4 million boed (barrels of oil equivalent per day) in the first quarter 2015, a 1% increase as compared to the first and last quarters of 2014. This increase was the result of the start up of new facilities and wells in the Castilla and Chichimene fields, both of which set production records of 124 million bpd and 85 million bpd of oil, respectively.
“Our affiliated companies increased their production to a total 51.4 million boed, a 5.8% rise as compared to the first quarter of 2014. Highlighting Ecopetrol America's production alone reached 6.4 million boed.
“Amid this low crude oil prices scenario, our refining margin has continued to improve, reaching 18.2 US$/bbl in the first quarter of 2015, a 12% gain as compared to the first quarter of 2014 (16.3 US$/bbl) and a 15% gain as compared to the fourth quarter of 2014 (15.8 US$/bbl). The main contributing factors to this result were the operating stability of units and the improvements designed to give value to residual streams.
“In transportation, total volumes moved during the first quarter of 2015 were 1,273.5 million bpd, a 6% increase compared to 1,200.1 bpd transported during the first quarter of 2014, and 3.3% more compared to the fourth quarter of 2014. This result was primarily due to higher volumes transported in the Cano Limon-Covenas and Oleoducto Transandino systems resulting from the decreased number of attacks on transport infrastructure, which went from 35 attacks on the first quarter of 2014 to 2 attacks in the first quarter of 2015.
“International crude oil prices reached its lower level in six years during the first quarter of 2015 (Brent 46.6 US$/bbl on 13 January). As a result, our revenues were deeply affected, decreasing from COP$18 trillion to COP$12.3 trillion in the first quarter of 2015, a COP$5.7 trillion decrease (31.6%). The effect of lower sales oil prices (from 101 US$/bbl to 56 US$/bbl between the first quarter of 2014 and the first quarter of 2015) caused a decreased of COP$8.2 trillion in our revenue, that was partially offset for the positive exchange rate effect, representing a higher income of COP$2 trillion, COP$200 billion in higher sales volumes and COP$250 billion in higher income from transportation services to third parties due to the effect of the devaluation on the tariffs.
“Our cost of sales declined to COP$8.5 trillion in the first quarter of 2015, a 21% decrease as compared to COP$10.8 trillion in the first quarter of 2014. This result was primarily due to the effect of lower oil prices on our purchase costs of crude, gas and refined products, as well as lower fixed costs due to the optimisation of maintenance plans and contracted services achieved during the first quarter of 2015.
“Operating costs increased by 53% during the first quarter of 2015 as compared to the first quarter of 2014, primarily as a consequence of the recording of the wealth tax applicable for year 2015.
“The Colombian peso/US dollar exchange rate had significant effects on the group's financial expenses. The impact of the depreciation of the Colombian peso over our net liability position resulted in an expense of COP$1.4 trillion during the first quarter of 2015.
“Income before taxes for the first quarter of 2015 was COP$828 billion. With the income tax provision of COP$472 billion (57%) resulted in a consolidated net income of COP$160 billion. Considering the current scenario of low oil prices, we are focused on making our operations more efficient. Our operations will continue focusing on safety, profitability and delivering positive results for our shareholders," Echeverry concluded.
Adapted from press release by Rosalie Starling