Ecopetrol reported net income of roughly $923 million USD (2.6 trillion peso) for the first quarter of 2018, its best quarterly results in four years amid higher oil prices as the state-controlled oil company continues on its path of recovery.
These results were tempered slightly by pipeline attacks and local protests that led to lower output as well as a major oil spill that forced the closure of a well in Santander and significant resources devoted to managing both the environmental cleanup and reputational fallout.
This led to the Bogotá-based company averaging just 701,000 barrels per day of production in the quarter, a number below its goal for the year.
Despite the setback, in a statement accompanying the quarterly results, Ecopetrol S.A. CEO Felipe Bayón Pardo said that the company is maintaining its year-long target to average between 715,000 and 725,000 barrels per day.
By March, the company was able to partly make up for early losses and get its monthly average up to 712,000 barrels per day.
Ecopetrol averaged a 715,000 barrels of oil per day of production in 2017.
The company said on its earnings conference call that the problems of the first quarter have delayed investment plans and motivated it to fast-track work on two projects — one at its Apiay field and a water-injection plan at its Chichimene field — that were not slated to begin until 2019.
In terms of making improvements to the balance sheet, the overall 2.6 trillion pesos of income is nearly three times higher than the 886 billion pesos reported in the first quarter of 2017 — and this figure dwarfs the meager 363 billion pesos in income from the first quarter of 2016.
These positive results come from an EBITDA of 7.1 trillion pesos, which is up considerably from the 5.8 trillion and 4.1 trillion reported in the first quarters of 2017 and 2016, respectively.
“We are maintaining a solid cash position at 16.6 trillion pesos and a gross debt to EBITDA ratio of 1.7x, reflecting greater efficiency and cost reductions through the transformation plan, capital discipline, stabilization of the Cartagena refinery, and better crude prices and margins versus the Brent price,” stated Bayón.
In its exploration push to add reserves, Ecopetrol also drilled two wells during the first quarter, the Búfalo-1 well in the Middle Magdalena Basin and the Jaspe-6D well in the Llanos Orientales. It will continue drilling wells throughout 2018 as part of its planned investment of some $3.5 billion USD to $4.0 billion USD this year.
The oil giant also “experienced stable operations in our refineries system,” said Bayón, by averaging throughput of 360,000 barrels per day. The Cartagena refinery accounted for 144,000 barrels per day — up from a 136,000-barrel daily average in 2017 — while the Barrancabermeja refinery processed 215,000 barrels per day in the quarter.
During March, the Cartagena refinery hit a record-high monthly average with throughput of 160,000 barrels of oil per day.
The company also revealed that it spilled an estimated 15,550 barrels of crude from a well in the municipality of La Fortuna into two waterways — La Lizama and Caño Muerto — in Santander.
“Ecopetrol activated its contingency plan for containing the spill and permanently resolve this situation in accordance with its risk management and HSE protocols,” said Bayón. “As of March 30, flows from the Lisama-158 well had been controlled and a specialized snubbing unit equipment had been installed to record logs and identify the optimal means of permanently and safely shutting down the well.”
The chief executive added that the company would continue to work to mitigate the significant damage that the pollution has had on the local community and environment.
“Our priority and commitment has always been a safe operation to the people and the environment,” he said. “In view of this unfortunate incident, we are committed to this region of the country and will continue to work closely with the communities and authorities to restore the environmental and social conditions as soon as possible, and determine the causes of the incident.”