Ecopetrol S.A 2026 Q2 Earnings Call

Welcome to Ecopetrol Group's second quarter 2026 earnings conference call. This is Juan Carlos Hurtado Parra, Acting Chief Executive Officer of Ecopetrol Group. During the second quarter, Ecopetrol Group successfully capitalized on a favorable international crude oil and fuels market environment, supported by the strength of our integrated business model, differentiated commercial strategy, and disciplined operational execution. We delivered COP 40.2 trillion in revenue, COP 17.7 trillion in EBITDA, and COP 6.1 trillion in net income, representing increases of 35%, 59%, and 235%, respectively, compared with the same period last year. These results reflect our ability to capture value across the entire value chain and were primarily driven by three factors. First, a favorable pricing environment, with Brent averaging $97 per barrel and a strong recovery in international refining margins.

Second, differentiated commercial management, which enabled us to improve our crude oil differentials by $3.67 per barrel compared to the first quarter, despite a challenging environment for heavy crude grades. Third, strong operational execution in transportation and refining, with the latter making a significant contribution to value creation during the quarter. Regarding investments, we continue advancing according to plan. As of June, we had executed $2.9 billion, maintaining our focus on production, energy security, strategic infrastructure, and energy transition projects that support the group's competitiveness and future growth. During the first half of the year, we complied with the dividend payment schedule approved by the general shareholders' meeting, reaffirming our commitment to the value creation for all shareholders.

With respect to the Fuel Price Stabilization Fund, during the quarter, we received COP 1 trillion statement corresponding to the accrual of the second quarter of 2025. Furthermore, higher international prices resulted in an accumulation of approximately COP 6 trillion during the first half of 2026, the management of which we will continue to pursue with the national government. Let us now move to the next slide to review the key operational highlights of this quarter. From an operational standpoint, we continue advancing our strategic priorities and strengthening the capabilities that support the Group's sustainable growth. In exploration, we drilled three wells during the quarter, bringing the total to eight wells during the first half of the year. We highlight the progress at Copoazu-1 at the offshore Caribbean, and following the quarter's close, the Sandia-1 discovery.

These milestones continue strengthening the region's gas potential and enhance the Group's resource incorporation outlook. On the inorganic growth front, we advanced with the process related to Brava Energia. Following the authorization granted by Securities and Exchange Commission, CVM of Brazil, to assume the public tender offer. We will communicate this to the market and the decisions in due course. In commercial activities, we continued strengthening our international platform through market expansion, the onboarding of new customers, and the development of trading capabilities. Initiatives such as the new petcoke's commercial strategy, the implementation of time charter schemes, and the diversification of port and destinations enabled us to capture higher margins and generate additional value for the Ecopetrol Group. In our gas and energy transition business, we continued contributing to the country's energy security.

As the Ecopetrol Group, we supply approximately 62% of Colombia's natural gas demand, while continuing to develop solutions to expand supply availability for the market. In 2026, we have offered 293 GBTUd of firm long-term natural gas. Meanwhile, the transmission and toll roads business maintained positive momentum, securing new contract awards totaling $428 million, strengthening the growth and value creation of ISA and its subsidiaries. In production, we reached 706,000 barrels of oil equivalent per day. These results reflected environmental and electrical disruptions affecting certain strategic and growth assets. The most significant was a 76-day blockade that impacted operations in fields located in the Meta department and delayed the execution of key projects aimed at expanding processing facility capacity. Looking ahead to the second half of the year, we are implementing specific actions to recover these volumes.

We also continue to closely monitor risks associated with the operational and weather conditions, including the potential impact of the El Niño phenomenon. In transportation, volumes transported increased by 4% compared with the same quarter last year, driven by the optimization of logistics corridors and higher deliveries of refined products. Finally, in refining, we achieved the highest quarterly throughput in our history, reaching 439,000 barrels per day, representing a 6% increase compared to the second quarter of 2025. Supported by high operational availability and a favorable margin environment, this segment consolidated its position as one of the Group's main value drivers during the quarter. With that, I will hand it over to Camilo Barco, who will provide further details on the financial results. Thank you, Juan Carlos. Our second quarter of 2026 results reflect the strength of Ecopetrol's integrated business model.

By the end of the first half of the year, we executed $2.9 billion in organic investments, in line with our plan. Investments were primarily allocated to Colombia, which accounted for 71%, followed by Brazil, 22%, and the U.S. and other countries, 7%. This level of execution reflects a disciplined capital allocation strategy focused on high-value projects, operational continuity, and profitable growth while preserving the Group's financial flexibility. By business segment, approximately 63% of investments were allocated to hydrocarbons, followed by transmission and toll roads with 29%, and energy transition initiatives, 8%. Efficiency gains continue to be a structural driver of value creation, contributing COP 2.6 trillion during the first half of 2026, the highest level recorded for this period. Of this amount, 63% positively impacted EBITDA, 20% CapEx, and the remaining 17% working capital. Let us now move to the next slide.

Second, tax-related factors impacted results by COP 1.2 trillion, mainly explained by the income tax surcharge, which increased from 0% in 2025 to 10% in 2026, in line with the Brent price outlook for this year, as well as the recognition of the new wealth tax. Third, financial and other factors had a net negative impact of COP 300 billion, primarily associated with a liquidity management transaction related to tax credits. During the second quarter of 2026, net income maintained its upward trend and reached COP 6.1 trillion, equivalent to 3.4 times the level reported in the same period of the previous year and the highest quarterly result recorded since the fourth quarter of 2022. Let us now move to the next slide.

As of June 2026, the Ecopetrol Group reported a consolidated cash position of COP 11.3 trillion, maintaining strong financial capacity to support operations, execute its investment plan, and meet its commitments to creditors and shareholders. During the first half of the year, operating cash flow reached COP 14.1 trillion, driven by the positive impact of the higher commodity prices, FEPC collections and working capital management through the offsetting of tax credits and inventory management initiatives. Cash flow from investment activities represented an outflow of COP 8.4 trillion, mainly associated with capital expenditures at Ecopetrol S.A., Brazil, ISA, and Permian Basin. As a result, the group generated COP 6 trillion in free cash flow, demonstrating the business ability to sustainably fund its growth. Among the main cash outflows during the period were COP 6 trillion in dividend payments, both to Ecopetrol shareholders and to non-controlling interests in subsidiaries.

Additionally, net cash flow from financing activities and other items amounted to COP 1.1 trillion, primarily related to debt service payments. Regarding the Fuel Price Stabilization Fund, FEPC, as of June 2026, the outstanding receivable stood at COP 8 trillion. This balance includes approximately COP 2 trillion corresponding to 2025 and an accrual of COP 6 trillion during 2026. By company, 79% of the balance corresponds to Ecopetrol and the remaining 21% to the Cartagena Refinery. By year-end 2026, we estimate that the FEPC receivable balance will range between COP 8 trillion and COP 12 trillion, subject primarily to the evolution of Brent prices and exchange rates. During the second quarter of 2026, we continued strengthening our financial position through active liquidity management.