Ecopetrol’s 2024 Earnings: Record Production & Sustainability

Ecopetrol ((EC)) has held its Q4 earnings call. Read on for the main highlights of the call.

Ecopetrol’s 2024 Earnings Call: A Strong Year Amid Challenges

Ecopetrol’s recent earnings call painted a picture of robust operational and financial performance in 2024. The company celebrated record production levels and significant reserve additions, alongside notable achievements in environmental sustainability. Despite facing external challenges that impacted EBITDA and refining margins, Ecopetrol maintained a solid financial footing and made commendable strides in energy transition initiatives.

Record High Production Levels

Ecopetrol achieved an impressive average production of 746,000 barrels of oil equivalent per day, marking the highest level in nine years and surpassing its annual goals. This milestone underscores the company’s operational efficiency and strategic focus on maximizing production.

Strong Financial Performance

The company reported total revenues of 133.3 trillion pesos, with an EBITDA of 54.1 trillion pesos and an EBITDA margin of 41%. Ecopetrol’s net income reached 14.9 trillion pesos, highlighting its strong financial health despite external economic pressures.

Reserve Replacement Success

Ecopetrol achieved a reserve replacement ratio of 104%, adding 260 million barrels of oil equivalent to its reserves. This achievement doubled the reserve additions from the previous year, reflecting the company’s successful exploration and development strategies.

Significant Environmental Achievements

The company made strides in sustainability by reducing greenhouse gas emissions by over 462,000 tons of CO2 equivalent since 2020 and achieving an 81% water reuse rate in its operations, demonstrating its commitment to environmental responsibility.

Notable Investments and Acquisitions

Ecopetrol invested over $6 billion in capital expenditures, including acquiring a 45% stake in the CPO-9 block from Repsol and renewing agreements with Oxy in the Permian Basin, signaling its strategic expansion and investment in future growth.

Dow Jones Sustainability Index Ranking

Ecopetrol secured the second-best global rating in the oil and gas industry on the Dow Jones Sustainability Index, underscoring its leadership in sustainable practices within the sector.

Successful Midstream Transport

The company exceeded its annual transportation goals, moving an average of 1,119,000 barrels per day, which highlights its efficiency and reliability in midstream operations.

Expansion in Energy Transition Initiatives

Ecopetrol made significant investments in renewable energy and energy efficiency, progressing towards its energy transition goals and reinforcing its commitment to a sustainable future.

Refining Segment Challenges

The refining segment faced challenges with a decrease in gross refining margin by $7.7 per barrel compared to 2023, mainly due to declines in international fuel prices and operational events.

EBITDA Impact from External Factors

The company’s EBITDA decreased by approximately 6.6 trillion pesos compared to the previous year, affected by external factors such as price decreases and inflation, reflecting the broader economic environment’s impact.

Challenges in Gas and LPG Production

Ecopetrol’s gas and LPG production EBITDA was 70% lower than in 2023, attributed to lower availability and exchange rate variations, indicating areas for potential improvement.

Operational Setbacks in Refining

The company faced electrical reliability challenges and operational disruptions at the Cartagena refinery, impacting its refining operations and highlighting areas for operational enhancement.

Forward-Looking Guidance

Looking ahead, Ecopetrol provided guidance for 2025, planning to invest between 24 and 28 trillion pesos with a focus on energy security and transition. The company aims to continue its efficiency gains and has proposed a dividend distribution of 214 pesos per share. Ecopetrol remains committed to sustainability, with ongoing efforts to reduce greenhouse gas emissions and improve water reuse.

In conclusion, Ecopetrol’s 2024 earnings call highlighted a year of strong operational achievements and financial performance, despite facing external challenges. The company’s commitment to sustainability and energy transition, coupled with strategic investments and successful reserve replacements, positions it well for future growth and resilience in the evolving energy landscape.