Ecopetrol's Q3 2025: Contradictions Emerge on Permian Divestment, DIAN Embargo Impact, and Financial Strategy

Date of Call: November 14, 2025

Financials Results

• Operating Margin: EBITDA margin COP 12.3 trillion (41%), an 11% increase versus prior quarter; net income COP 2.6 trillion, up 42% versus prior quarter

Guidance:

• 2026 expected to face a more challenging oil price environment; focus on resilience and competitiveness.
• Maintain lifting cost target of ~$12 per barrel and continue efficiency programs to reduce costs.
• Preserve cash and exercise strict capital discipline with CapEx flexibility and project prioritization.
• Coral green hydrogen commissioning expected in Q2 2026.
• Sirius gas: production estimated by 2030; sales contracts to be signed by Dec 12, 2025.
• Covenas LNG/regasification tender to conclude in Jan 2026.

Business Commentary:

* Operational Performance and Production: - Ecopetrol reported an average production of 751,000 barrels per day for the first nine months, which places them near the top of their annual guidance range. - This was driven by strong contributions from strategic actions in Colombia and the Permian Basin in the U.S.

• Refining and Midstream Segment Improvements:
• Refining operations rebounded strongly, reaching 413,000 barrels per day over the nine-month period following major maintenance programs.
• Midstream segment performance improved with a 1% increase in transported volumes compared to the previous year and a 3% increase compared to Q2 2025.

* Sustainability and Decarbonization Efforts: - Ecopetrol has successfully reduced greenhouse gas emissions by 379,000 tons of Tier 2 equivalent, contributing to a significant reduction in environmental impact. - This was achieved through initiatives such as the commissioning of renewable energy projects like the La Iguana Solar Farm.

• Efficiency and Financial Performance:
• The company achieved an EBITDA margin of 41%, reflecting an 11% increase compared to the previous quarter.
• This improvement was driven by a disciplined cost management strategy and a 40% increase in efficiency savings, totaling COP 4.1 trillion.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted operational recovery and discipline: "EBITDA of COP 12.3 trillion, EBITDA margin of 41% and a net income of COP 2.6 trillion"; "11% increase in EBITDA and 42% growth in net income"; emphasized efficiency savings of COP 4.1 trillion YTD and 72% of CapEx executed, indicating operational and financial resilience.

Q&A:

• Question from Daniel Guardiola (Banco BTG Pactual S.A., Research Division): Given public discussion about a possible sale of the Permian asset, is there a formal instruction or government expectation to sell it; are you considering or agreeing to sell; was a value creation/destruction analysis performed? Also, if a senior management member is placed on an OFAC list, has the company evaluated the risk and impact on financing, markets and vendor relationships?
  Response: Ecopetrol and shareholders are not interested in divesting the Permian; any portfolio decision will undergo Board review. On sanctions risk, compliance continuously monitors scenarios and the company has mitigation plans to protect access to capital and ensure compliance.

• Question from Andres Duarte (Corporacion Financiera Colombiana S.A., Research Division): What is the impact of exchange rate changes on results (sensitivity assumed COP100 ≈ COP700 billion), and what assistance is the national government providing to advance the Sirius project and meet consultation timelines by 2026?
  Response: Exchange-rate sensitivity is ~COP700bn per COP100; YTD FX movements and hedges produced positive contributions (~COP600bn to net profit, COP1.1tr to EBITDA) and hedging mitigates income-statement volatility; Sirius is led by Petrobras with active government coordination and consultations progressing toward the July 2026 timetable.

• Question from Ricardo Andres Sandoval Carrera (Bancolombia S.A., Research Division): If DIAN were to issue an embargo, would that trigger bond defaults or have clauses affecting prospects/bond covenants?
  Response: DIAN has officially discarded an embargo in this controversy; Ecopetrol and Reficar have taken legal measures and tutela filings; the company is meeting financial obligations and maintains contingency cash planning to cover any unforeseen measures.

• Question from Luisa Belin (Morgan Stanley): Production has been flat YoY and QoQ—what is the 4Q'25 production outlook and 2026 growth profile amid oil-price volatility? Also, are current refining margins normalized and what steps will sustain them?
  Response: Expect year-end production at the higher end of the 740–750 kboe/d guidance; 2026 plan is being prepared but aims to remain similar under price uncertainty. Refining margin recovery is driven by higher availability and utilization, increased throughput and product mix maximization plus cost reductions.

• Question from Nicolas Barros (BofA Securities, Research Division): (on Permian/JV and expected production) what's the outlook for Permian investment structure and production next year?
  Response: Permian will continue under JV/JOA arrangements with Oxy; expected Permian production next year around ~90,000 boe/d, contingent on partner agreements and JV/JOA decisions.

• Question from Guilherme Costa Martins (Goldman Sachs Group, Inc., Research Division): On capital allocation—what assets might be divested next year versus assets to acquire (given solar acquisition)? And for upstream, what drove EBITDA upside despite flat prices and production?
  Response: Capital will be allocated to highest-return assets; non-priority fields may be monetized via partner deals to free capital (ongoing partner transactions). Upstream EBITDA improvement driven by cost efficiencies (lifting cost control), better infrastructure utilization and portfolio optimization.

• Question from Joao Barichello (UBS): Given YTD net income down ~32% YoY, do you expect payouts to remain at the higher bound of the dividend policy; any discussion to change policy? And is there room to reduce lifting costs toward $11/boe?
  Response: Dividend policy remains 40–60% of distributable profit and management expects next year's proposal within that range (likely near the midpoint); lifting-cost reductions are targeted via efficiency programs, portfolio turnover and production mix improvements to continue lowering costs.

• Question from Hernan Goicochea (LatinFinance): Regarding financing plans, do you plan to issue bonds in global or local markets?
  Response: No definitive decision yet; 2026 financing plan is being prepared with focus on reducing financial costs; management is monitoring markets and prioritizing bank/structured financing short-term while evaluating capital-market options.

• Question from Juan Pablo Ramirez (Banco Davivienda): Can you provide developments on the possible acquisition of Camacol?
  Response: No comment due to confidentiality.

• Question from Jose Ortiz (Bancolombia): With suspension of operations in Tibu, how will gas service be affected and how long will suspension last?
  Response: Operations suspended in part of Tibu representing under 1% of national gas; authorities and security forces are engaged to restore operations; supply has been replaced from other sources and work is ongoing to reestablish service promptly.

Contradiction Point 1

Divestment of Permian Asset

It involves a change in the company's stated position regarding the potential divestment of the Permian asset, which could impact strategic and financial decisions.

Is there a formal or political request to sell the Permian asset, and would Ecopetrol consider it? Have you analyzed the rationale and potential value impact of selling the Permian asset? - Daniel Guardiola(Banco BTG Pactual S.A.)

2025Q3: As we've said, Ecopetrol and its shareholders are not interested in the divestment of Permian. - Julian Lemos Valero(CSO)

What is Ecopetrol's M&A appetite considering current oil prices and DIAN liabilities? What were the consolidated barrels in Acacias during Q1? - Andrés Cardona (Citibank)

2025Q1: Ecopetrol is evaluating all the opportunities we have in terms of portfolio optimization, which means, you know, divestments of assets that are not strategic for us, and investments in strategic assets. - Julian Lemos Valero(CSO)

Contradiction Point 2

Impact of DIAN Embargo

It involves differing statements on the potential financial impact and operational implications of a possible DIAN embargo, which could affect the company's financial and operational planning.

Has Ecopetrol taken measures to mitigate potential DIAN embargoes and what is the impact on bond defaults and financial obligations? - Ricardo Andres Sandoval Carrera (Bancolombia S.A.)

2025Q3: DIAN has officially stated no embargo on Ecopetrol. We've taken measures to protect rights and operations. Ecopetrol meets financial obligations timely, and any contingency plans are in place to ensure compliance. - Alfonso Camilo Munoz(CFO)

What are DIAN's requirements and must Ecopetrol reserve COP9.4 billion if DIAN does not reconsider its ruling? Will Ecopetrol have to pay COP3.6 billion annually under the recent tax ruling? - Katherine Ortiz (Corredores Davivienda)

2025Q1: This has a net effort on cash flow for Ecopetrol of COP 9 billion in the first quarter. - Camilo Barco(CFO)

Contradiction Point 3

Refining Margin Normalization and Operational Stability

It highlights differences in the expected timeline and strategies for achieving refining margin normalization, impacting operational efficiency and profitability.

What is the expected 2026 production profile amid oil price volatility, and how to normalize refining margins? - Luisa Belin

2025Q3: For refineries, we focus on operational availability, utilization, increased loads, and reduced costs. Efficiency improvements should sustain improved refining margins into 2026. - Rafael Guzmán(COO)

What are your expectations for the refining segment in the second half of the year? - Anne Jean Milne(BofA Securities)

2025Q2: For refining, major overhauls are completed, and no significant stoppages are expected in the second half of the year, which should allow for better operational stability. - Camilo Barco(CFO)

Contradiction Point 4

Ecopetrol's Leverage and Financial Strategy

It involves differing statements on Ecopetrol's debt and financing strategy, impacting investor perceptions of the company's financial health.

How does the exchange rate affect revaluation, and what compensation measures have been implemented? - Daniel Guardiola(Banco BTG Pactual S.A.)

2025Q3: Ecopetrol's cash flow management aims to serve financial obligations, and our financial plan accounts for this, including hedging to neutralize the impact on the income statement. - Alfonso Camilo Munoz(CFO)

Can you explain the tax reimbursement on Q2 cash flow? How do you plan to manage acquisitions and dividends given leverage constraints? - Alejandra Andrade Carrillo(JPMorgan Chase & Co)

2025Q2: The company maintains a strong cash position and flexible financing capacity to support growth without increasing debt levels. The focus remains on maintaining a debt level below 2.5x of EBITDA. - Camilo Barco(CFO)

Contradiction Point 5

Cost Management and Efficiency

It addresses Ecopetrol's ability to manage costs and maintain efficiency, which is crucial for operational profitability and competitiveness.

Are there opportunities to reduce costs further, and do you expect to return to the $11 per barrel level? - Joao Barichello

2025Q3: We aim for additional lifting cost reductions through efficiency plans and asset portfolio optimization, involving disinvestments and increased production with partners. - Ralph Guzmán(COO)

Why are 2024 lifting costs higher than previous years? What are future cost expectations? - Camilo Barco(CFO)

2024Q1: Lifting costs are expected to remain stable in 2025, with efficiency measures aimed at reducing costs. - Camilo Barco(CFO)