EC — Ecopetrol S.A.

Summary of Ecopetrol Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Net Income: COP 9 trillion, close to target despite a 15% decline in Brent prices, averaging $68 per barrel.
• EBITDA: COP 46.7 trillion, with a stable EBITDA margin of 39%.
• Production: Average production reached 745,000 barrels per day, consistent with 2024 levels.
• Dividends: Proposed dividend of COP 110 per share, representing 50% of net income, with a total transfer of COP 35 trillion to the nation in dividends, taxes, and royalties.
• Cash Position: Consolidated cash of COP 12.7 trillion and free cash flow of COP 11 trillion.
• Debt Metrics: Gross debt-to-EBITDA ratio of 2.3x, indicating a healthy leverage level.

2. Strategic Updates and Business Highlights

• Exploration Success: Drilled 16 wells, exceeding the target of 10, with a 44% success rate over three years.
• Reserves Replacement Ratio: Achieved 121%, the highest in four years, with total 1P reserves reaching 1.944 billion barrels of oil equivalent.
• Renewable Energy Capacity: Surpassed the 2030 goal by reaching 951 megawatts, with significant projects in wind and solar energy.
• Efficiency Program: Generated COP 6.6 trillion in efficiencies, exceeding targets and contributing to a reduction in unit costs.
• Transportation Segment: Achieved record EBITDA and net income, with transportation volumes exceeding 1.1 million barrels per day.

3. Forward Guidance and Outlook

• 2026 Investment Plan: Projected between $5.4 billion and $6.7 billion, focusing on hydrocarbons and energy transition projects.
• Production Targets: Expected production between 730,000 and 740,000 barrels per day, with plans to drill 380 to 430 development wells.
• Breakeven Point: Anticipated breakeven close to $47 per barrel, with a tax component of $9 to $10 per barrel.

4. Bad News, Challenges, or Points of Concern

• Brent Price Decline: The average Brent price fell from $80 in 2024 to $68 in 2025, impacting revenues.
• Inflationary Pressures: Increased operational costs due to inflation and currency fluctuations.
• Regulatory Risks: Ongoing disputes with the Colombian tax authority (DIAN) regarding VAT on fuel imports, with potential financial implications.
• Production Challenges: Weather-related disruptions and blockades affected production levels, particularly in key fields like Rubiales and Caño Sur.

5. Notable Q&A Insights

• Production in Permian: Sequential production decline attributed to drilling intensity and market conditions, with plans to drill 38 to 40 wells in 2026.
• Dividend Payments: Dividend distribution is subject to cash flow conditions and discussions with the Ministry of Treasury regarding tax obligations.
• Reserves Accounting Changes: Incorporation of royalties in cash rather than physical barrels, which may affect lifting costs but allows for better control over production.
• Geopolitical Impact: The ongoing conflict in the Middle East may influence oil prices and margins, with potential benefits for Colombian oil demand.
• M&A Activity: Ecopetrol is evaluating inorganic growth opportunities, particularly in Brazil, but specifics remain confidential.

This summary encapsulates the essential financial metrics, strategic initiatives, future outlook, and challenges faced by Ecopetrol as discussed during the Q4 2025 earnings call.