Page 19 - LatAmOil Week 19 2020

LatAmOil
NEWS IN BRIEF
LatAmOil
Ecopetrol announces Q1-2020 results
Ecopetrol announced today the Ecopetrol Group’s financial results for the first quarter of 2020, prepared in accordance with International Financial Reporting Standards (IFRS) applicable in Colombia.
In words of Felipe Bayón Pardo, CEO of Eco- petrol: “2020 began as a year with growth pros- pects and a defined path. However, by the end of the first quarter, we confronted challenging and unexpected market conditions, reflected in a Brent price decline over 65% in comparison to year-end 2019. This change was triggered by external shocks, such as the substantial increase in oil supply, and the COVID-19 pandemic, which has generated a significant contraction of the demand for crude oil and products.
“The group is in a stronger operational and financial position, with a competitive invest- ment portfolio from an industry standpoint, and a level of leverage that provide the flexibility to navigate through this environment. Although this scenario demands a quick response and major adjustments in the short-term, our focus on capital discipline, cash protection, produc- tion and reserves growth remain as pillars of the Company’s sustainable value promise in the mid and long-term.
“From a financial standpoint, Ecopetrol has set an intervention plan that includes opti- misation and austerity measures in order to timely align the capital efficiency and costs to a volatile market, preserving the company’s long term value. On March 17, 2020, we announced the first stage of this plan that includes a set of actions in four fronts: i) An increase in reve- nues; ii) A COP 2 trillion reduction in costs and
expenses in order to strengthen the Company’s competitiveness; iii) A $ 1.2bn decrease in the 2020 investment plan, and iv) Ensure financing and cash protection.
“We have successfully completed the first stage, achieving optimisations in costs and expenses of COP3.5tn. Furthermore, we have raised around $3.1bn equivalent in financing through the disbursement of the contingent line of credit, short-term facilities and a bond within international markets. With these actions, we have strengthened our cash position and antic- ipate any liquidity requirements caused by the deterioration of market conditions. These inter- ventions will be reflected during the following quarter results.
“During the first quarter of the year, Ecopet- rol Group achieved a consolidated net income, including impairment effect, of COP133bn and a consolidated EBITDA of COP5.3tn. These results are mainly explained by the decrease in the international Brent price, which declined from $64 per barrel in Q1-2019 to $51 per barrel in Q1-2020, and a weakening of crude oil and product basket.
“The strenghtening of our commercial strat- egy has allowed us to promptly respond and quickly adapt to the new market conditions. We have been able to anticipate the sale of export crude, diversify end customers and execute tac- tical hedges.
“On the exploratory campaign, the Group and its partners completed the drilling of three wells in Colombia. In the international front, it is worth highlighting the Gato do Mato-4 appraisal well, located offshore in the Santos basin in Bra- zil’s Pre-salt. Currently, Ecopetrol and Shell con- tinue to move forward with the COL-5, Purple Angel and Fuerte Sur project, and negotiations for the joint operating agreement (JOA) are
underway as scheduled.
“During the first quarter, Ecopetrol Group’s
average production reached 735mn boepd, 7.1mn boepd more than in the first quarter of 2019, despite public order events and the dete- rioration of market conditions. Two important milestones stand out: i) on March 1st, Ecopet- rol recovered the operation of the Pauto Sur and Floreña fields, with the termination of the Piedemonte association contract that Equion operated for 9 years, and ii) on April 7 the Super- intendence of Industry and Commerce approved the agreement signed between Hocol, subsidiary of the Ecopetrol Group, and Chevron Petroleum Company to acquire the participation of the lat- ter in the Chuchupa and Ballena fields, located in the Department of La Guajira. We continue to move forward with our energy transition strat- egy and increase our natural gas portfolio. Ecopetrol, May 11 2020
Petrobras reaches oil export record in April
Petrobras exported 1mn bpd of oil in April. This represents a new oil export record and contrib- utes to strengthening the company’s cash flow. The previous record was 771,000 bpd, set in December 2019.
The result occurs in a challenging period of the world economy, with high reduction of global oil and oil products demand, caused by the outbreak of new coronavirus (COVID-19). Due to the strong contraction of the national market, Petrobras is directing efforts to export its crude production, after meeting domestic demand.
“We are attentive to international movements and accessing all markets. Our oil, which is low sulphur, maintains its value in the international market due to the specifications of IMO 2020,” informs Anelise Lara, Chief Refining and Natu- ral Gas Officer at Petrobras.
The volume exported in April is 145% higher than that sold internationally in April 2019. The growth follos the trend observed in the first quar- ter of 2020, when there was an increase of 25% in relation to the previous quarter (Q4-2019).
In the first four months of 2020, China was the main destination for sales, absorbing 60% of the oil exported. Besides the Asian giant, Petro- bras usually sells oil to the US, Europe, India and other Asian markets.
“We are directing our efforts to export oil and oil products through a series of logistical actions, which allow us to expand our capacity. We expect to continue with a good performance of our exports, due to the resumption of demand from China together with actions to develop new markets for our products,” said Lara.
Petrobras, May 10 2020
Week 19 14•May•2020
w w w . N E W S B A S E . c o m
P19