Ecopetrol S.A.: STRONG OPERATIONAL AND FINANCIAL GOAL ACHIEVEMENT IN 2024

Ecopetrol S.A. (EC), Colombia's leading integrated energy company, reported robust operational and financial performance for the year 2024, demonstrating its commitment to sustainable growth and value creation for shareholders. The company's strong performance was driven by strategic initiatives, operational excellence, and a focus on energy transition, as outlined in its "Energy that Transforms" strategy.



Key operational highlights for 2024 include:

* Record production level of 746 kboed, a 1.2% year-over-year increase, marking the highest level in nine years.
* A 104% reserve replacement ratio, adding 260 MBPE of new reserves, ensuring the company's long-term sustainability.
* Successful completion of the acquisition of Repsol's CPO-09 field stake, adding 32 MBPE to reserves and strengthening Ecopetrol's upstream portfolio.
* Midstream operations exceeded targets with transported volumes of 1,119 kbd, representing a 5.8% increase.
* Downstream refining throughput decreased by 5.8% to 414 kbd, planned and managed through scheduled maintenance activities, with high operational availability of 94.5%.

Ecopetrol's 2024 financial results demonstrate robust performance across key metrics:

* Revenues of COP 133.3 trillion, a 5.45% decrease from 2023, reflecting lower prices and inflationary pressures.
* Net income of COP 14.9 trillion, a 25.62% decrease from 2023, driven by lower prices and higher operating costs.
* EBITDA of COP 54.1 trillion, with a 41% margin, indicating strong operational efficiency and cost management.
* Gross debt/EBITDA ratio of 2.2x, well within manageable levels for an integrated energy company, demonstrating Ecopetrol's capital discipline.
* Return on capital employed (ROACE) of 10.2%, indicating efficient use of invested capital and effective capital allocation.

Ecopetrol's impressive EBITDA margin of 41% in 2024 can be attributed to several specific initiatives and strategies:

1. Efficiency Program: ecopetrol implemented an efficiency program that generated optimizations worth COP 5.3 trillion across EBITDA, capex, and working capital, demonstrating management's commitment to operational excellence and cost reduction.
2. Geographic Diversification and Enhanced Trading Capabilities: Ecopetrol's successful commercial strategy execution through geographic diversification and enhanced trading capabilities led to an improved crude oil basket differential of USD 6.5/bl versus USD 8.7/bl in 2023, directly benefiting the bottom line by capturing higher realized prices compared to benchmark crude.
3. Strategic Acquisitions and Investments: Ecopetrol's strategic acquisitions, such as the full ownership of the CPO-09 field from Repsol, added 32 MBPE to its reserves. Additionally, the extension of the Joint Venture in the Permian contributed to the company's growth and improved financial performance.
4. Energy Transition Initiatives: Ecopetrol's strategic moves into energy transition initiatives, such as the approval of Phase III of the Coral project for green hydrogen production and energy optimization, contribute to long-term sustainability and cost savings.

Ecopetrol's capital discipline, as evidenced by its gross debt/EBITDA ratio of 2.2x, impacts its long-term growth prospects and shareholder value by:

1. Providing financial flexibility to invest in growth opportunities, such as exploration, production, and energy transition initiatives.
2. Mitigating risks associated with fluctuations in commodity prices and economic cycles.
3. Enabling access to capital markets at lower costs, allowing Ecopetrol to raise funds for strategic investments and expansion projects.
4. Generating significant shareholder returns, with Ecopetrol contributing COP 42 trillion to the country through total transfers to its shareholders in 2024.

In conclusion, Ecopetrol S.A.'s strong operational and financial performance in 2024 demonstrates the company's commitment to sustainable growth, operational excellence, and energy transition. With solid financial metrics, successful efficiency initiatives, and strategic investments across traditional and transitional energy sectors, Ecopetrol is well-positioned to create sustainable shareholder value despite industry headwinds.