Ecopetrol Q3 earnings in 2023

How is Ecopetrol doing?

Ecopetrol is one of the most important companies in Colombia, is the biggest oil extractor and producer in the country. With Ecopetrol, Grupo Aval are the main players for Colombian economy, one produces oil, the other financial services. Both are key players regarding the GDP and employment.

Ecopetrol just released their third quarter earnings, here is what is going on.

• Is interesting because operationally, they are having great results with producing barrels per day, same with the refinery located in Cartagena. The level that was achieved was up to 741 thousand barrels of oil equivalent per day, and for the refinery it exceeded the 400 thousand barrels per day.

• There is a significant discovery of gas in the Caribbean (Glaucus-1)

• Hydrocarbon annual target of exploratory wells was exceeded by 60%: 15 successful drills and 6 onshore new discoveries.

Now financial information:

• Net income had a decrease compared to previous year. From 4.2 trillion in Q3 2022 to 3.7 trillion current quarter (-12%).

• EBITDA for 3Q 2023 was COP 10.4 trillion, with an EBITDA margin of 45%, which is lower than the COP 11.5 trillion and 50% margin reported in 3Q 2022. This suggests a decline in profitability.

• They are sitting on 14.1 trillion in Cash.

• Debt is looking interesting with debt/EBIDTA of 1.7; and debt/equity of 1.05.

• The balance sheet debt amounted to COP 109.7 trillion, with an increase of COP +1.7 trillion compared to 2Q23

• A decrease in accounts receivable (COP -7.1 trillion) was mainly due to the offsetting of the balance of the Fuel Price Stabilization Fund account against the dividends to be paid to the Nation for COP 8.0 trillion, and a transfer of funds to the Refinería de Cartagena for COP 1.9 trillion.

• This fund has decreased due to the rising prices of gasoline

As Petro government stated that their position to crude and oil would be to stop extraction, I believe Ecopetrol is having a great operational outlook, but sales are going down due to COP depreciation, barrel prices, and ongoing tax reforms that are being harsher to companies.

For what it looks, Ecopetrol is and will be a great company that is facing challenges due to new government restrictions and unstable certainty about the future.

This is my brief analysis, if you have comments please contact me, share it so we can have a better idea about Ecopetrol.