Welcome to Ecopetrol's earnings conference call, where we will review the key financial and operational results for the third quarter of 2021. Before we start, it is important to note that the comments from Ecopetrol's senior management will include forecasts regarding the company's future performance. These forecasts are not commitments regarding future results and do not account for risks or uncertainties that may arise. Consequently, Ecopetrol does not accept responsibility if future results differ from the projections discussed in this call. The call will be led by Mr. Felipe Bayon, CEO of Ecopetrol; Alberto Consuegra, COO; and Jaime Caballero, CFO. Thank you for your attention. Mr. Bayon, you may begin the conference.

Good morning, everyone, and welcome to our third quarter 2021 earnings conference call. During this quarter, we continued to deliver record results. As of September, we are now consolidating in the financial statement of ISA. We generated revenues of COP23.3 trillion and EBITDA of COP10.4 trillion, and net income of COP3.8 trillion. This result highlights our successful commercial strategy, which has allowed us to capture the favorable conditions of international crude oil prices. We achieved important progress in our strategic agenda with the accomplishment of milestones such as the closing of ISA's acquisition and the first consolidation of its financial results into the results of the Ecopetrol group, materializing this transformational step in our energy transition and decarbonization program. Our first liability management transaction for $2 billion through the issuance of 10-year notes and 30-year bonds to partially prepay the loan disbursed to finance ISA's acquisition. The authorization granted by the Superintendencia Financiera de Colombia to subscribe to the program for the issuance and placement of common stocks enabling Ecopetrol during 5 years to execute simultaneous issuance within the local and international markets, providing flexibility and opportunity in our capital structure strategy. And now more than 86% of our employees have completed their immunization against COVID-19. Let's move on to the next slide. Through the acquisition of the controlling stake in ISA, the Ecopetrol group turns into a leading company in the energy sector of the region, participating across the hydrocarbon value chain, energy transmission, renewable energy self-generation, and infrastructure. After the closing of the transaction, our efforts have been focused on ensuring compliance with legal and regulatory requirements related to accounting consolidation, reporting and financial planning. We have made progress in matters regarding corporate governance, such as the election of ISA's new Board of Directors, following its AGM held on October 22. The new composition of the Board will allow Ecopetrol to exercise as a controlling party over the company. Also, I would like to highlight that for market reporting purposes, ISA's financial results are now incorporated as a new business line in addition to the existing business segments. ISA will maintain its value promise and independence as we have done with the rest of our subsidiaries. ISA will bring to the table, experience and knowledge that will boost new growth opportunities. We are progressing in a gradual integration process led by the transition management office, a multidisciplinary team from both companies. This process involves neutral and detailed knowledge between both companies, understanding of both business models, and the construction of a shared vision. After having consolidated an orderly transition, we will pursue opportunities that allow accelerating the capture of value from our investments. We see potential synergies and opportunities such as energy and fuel storage, development of new and additional renewable energy projects, generation and commercialization of energy in other countries, and growth opportunities in the hydrocarbon business in geographies where ISA already operates. I will now pass on the floor to Alberto Consuegra, who will elaborate on the main operating results for this quarter.

Thank you, Felipe. I will start by highlighting the discovery of hydrocarbons after drilling the exploratory well Liria YW-12, which confirmed the presence of gas and 49 degrees API light oil in a new structure near the Cupiagua field, a milestone that sets the company's exploratory reactivation in Piedemonte, where Ecopetrol is an operator. We also highlight the commerciality of Boranda and Flamencos-1 discoveries, which are part of the near-field exploration strategy aimed at production and reserves in the short term. Discoveries are located in the Santander department and have produced about 94,000 barrels of crude oil for Ecopetrol's share during the testing stage between January and September of the current year. We continue our international exploratory strategy. During the 17th round of the Brazilian oil and gas agency, the consortium between Ecopetrol Brazil and Chill acquired the S-M-1709 block located in the Santos basin, expanding the portfolios among high potential areas with competitive break-evens close to $40 per barrel. Let's move on to the next slide, please. The quarterly production was 683,600 barrels of oil equivalent per day, which is 22,700 more than the volume achieved in the second quarter. Despite achieving the production stabilization of the fields affected by blockages and also increasing gas sales, milestones of the plan previously announced, there were two climate events during the quarter that limited additional recovery in our production growth. A growth, the hurricane season and the Gulf of Mexico caused the closure of wells, and in Colombia, the rainy season caused landslides, which affected the Promioriente gas pipeline as well as the flooding of the Caricare field, causing its temporary closure for 20 days. Although weather impacts related to increasing power outages, these events impacted production by around 10,000 barrels of oil equivalent per day. For the fourth quarter, we expect production around 700,000 barrels of oil equivalent per day, mainly leveraged in the drilling of between 110 and 130 wells, the reactivation of the Promioriente gas pipeline and the continuity of the operation of the NRE assets, which we received on November 4, after ending the association contract, adding an average of 7,500 barrels of oil equivalent per day. However, some risks associated with climate and public order issues remain and could affect production levels. Gas and LPG contributed 21% to total production, highlighting the signing of the De las Atalayas' gas exploitation and exploration agreement with the National Hydrocarbons Agency, which allows the beginning of pre-drilling activities in 2 new wells in the Piedemonte area. Given the facts about gas production due to maintenance and climatic events, a commercial strategy was developed to guarantee gas supply at nationwide, along with the Ministry of Mines and Energy and market agents through the signing of contingency contracts. On the social front, new gas and LPG connections have been made, allowing nearly 5,000 new families from Strata 1 and 2 to have this service and improve their quality of life between January and September. Let's move on to the next slide, please. 2021 has been a challenging year in terms of production due to all the factors that we have revealed throughout the year, which have mainly affected the basic curve. Resuming activity on our wells generated higher levels of water versus oil content with gradual stabilization. The pandemic and public order situations affected our projects in terms of supply chain, delivery deadlines, and execution. This has been partially offset by the implementation of initiatives such as anticipation of 2022 work fronts and strengthening of our commercial gas strategy, with which we expect to restore our growth path. Given all the above, projected production levels for 2021 would be around 680,000 barrels of oil equivalent per day. Let's move on to the next slide, please. On unconventionals, we highlight that on July 8, the first territorial dialogue was held for the lateral comprehensive research pilot project. And on October 29, an environmental impact study was filed, requesting approval of the license for the drilling of Kale. In parallel, progress is being made in the documentation of Platero's environmental study in synergy with what has been filed for Kale. In August, a public survey was carried out by the national consulting center in the area of influence of the pilots, evidencing a positive change in perception among communities regarding the industry and nonconventional pilots, with Ecopetrol being the oil company that generates the most confidence. In September, Ecopetrol started the operation of a mobile environmental laboratory for the Magdalena Medio region so that communities have a better knowledge of the environmental variables present in their surroundings and that will allow, once the pilot starts, to monitor their behavior. Abroad, Permian reached a gross production level for Ecopetrol of 24,400 barrels of oil equivalent per day in the third quarter, evidence in the ramp-up of conventional with a cumulative EBITDA margin of 83%. Let's move on to the next slide, please. The transported volume of refined products increased by 63,000 barrels per day compared to the third quarter of 2020, thanks to the recovery of local demand, mainly supplying large consumption areas of the country. On the other hand, the volume of crude oil transported decreased by 30,000 barrels per day compared to the same quarter of last year as a result of lower production, driven by the previously mentioned causes. In order to secure the evacuation of the Cano Limon field, 11 reversal cycles of the Bicentenario Pipeline were carried out. Finally, I want to mention that the consolidation agreement between Frontera, CENIT and Bicentenario was approved by the administrative tribunal of Cundinamarca to solve the existing disputes regarding the transportation of crude oil in Colombia. As a result of the conciliation, Frontera will recognize to send it as Bicentenario the outstanding obligations under their agreements as of December 31, 2019. Frontera has transferred to CENIT its 43.03% interest in Bicentenario and we will transfer to Bicentenario depending dividends, the funds deposited, and net trust has guaranteed for one of the disputes, the advanced payments from prior years under Bicentenario Pipeline, line fields that they have. As part of the agreement, Frontera will recognize to Bicentenario a portion of the Bicentenario syndicate loan in the amount of COP438 billion. Additionally, CENIT and Bicentenario signed new ship or pay agreements with Frontera, allowing them to receive additional revenues for the payment of obligations included in reconciliation for a value of up to $92 million, subject to adjustments as per the value of the line field. Likewise, OGL, a semi-subsidiary, obtained execution with Frontera of a new ship or pay agreement which shall allow OGL to receive additional income up to $55.5 million. The financial impacts of the transaction correspond to the total recovery of outstanding debt as of December 31, 2019, for a value of COP729 billion. The one-time impact on EBITDA will be approximately COP700 billion, which will be reflected in the figures for the fourth quarter of this year. Additionally, financial revenues for approximately COP41 billion will be received due to the effect of default interest and returns on trust funds. Let's move on to the next slide, please. We achieved an accumulated EBITDA record result as of September of COP2.35 trillion, thanks to the selling of inventories and benefits from market prices at Barrancabermeja Refinery, essential commercial strategies, and an increase in natural gas sales, which contribute to mitigate impacts derived from operational challenges and keeping the cash cost of the segment under control. Additionally, we are pleased to inform that we achieved the delivery of gasoline at 50 parts per million contemplated by regulation for January 2022. The integrated gross margin of the refineries remains at pre-pandemic levels despite having a more expensive diet because of the recovery of Brent price, a challenging scenario for the realization of valuable products, especially in the Cartagena refinery due to the discount on export diesel and the scheduled maintenance of the petrochemical train and the alkylation unit at Barrancabermeja refinery. The consolidated throughput in September was about 365,000 barrels per day, exceeding the throughput restrictions on the refineries affected by public order events at the Cano Limon Covenas wholly pipeline and electrical contingencies presented in August and corrective maintenance planned in the catalytic tracking unit at Cartagena's refinery. These events had an EBITDA impact of COP121 billion. A shutdown plan is being implemented to improve the reliability of the refineries, which will take the operational availability from 92.5% in 2019 to 94.2% in 2021 and up to international reference levels above 96% in 2024. Other scheduled maintenance for the flare in plants 1 and 2 in Essentia will be occurring. Let's move on to the next slide, please. At the end of the third quarter, we have delivered efficiencies close to COP1.8 trillion, highlighting a reduction of the dilution factor, energy efficiency, and savings obtained with renewable energies. The total unit cost accrued to September increased to $10.3 per barrel as compared to the same period in 2020, mainly due to higher purchase and import costs associated with higher Brent prices. On the other hand, the cumulative lifting cost to September increased by $0.87 per barrel as compared to the same period in 2020, reaching $8 per barrel. Such anticipated increase is due to greater numbers of well interventions, the execution of process safety and integrity work included in the plan as well as increasing costs of oil services due to industry inflation. By the end of the year, we expect to have a lifting cost in the order of $8.50 per barrel. The cost per barrel transported showed a slight decrease as compared to the same period in 2020, reaching $2.90 per barrel, thanks to the control of variable costs given the lower volumes transported. The refining cash cost accumulated to September showed a downward trend as compared to previous years correlated to gas composition and its supply chain. I will open the floor to Jaime Caballero, who will talk to you about the main financial results of the Ecopetrol Group.

Thanks, Alberto. During the 9 months ended in September 2021, Ecopetrol's net income reached COP10.6 trillion, exceeding more than 9 times the results obtained during the same period of the previous year. This increase is mainly explained by a higher EBITDA generation of COP15.5 trillion, where the following factors stand out: a positive net effect of COP13 trillion due to realization prices, higher crude oil spreads and foreign exchange increases for purchases and sales, a positive valuation of inventories for COP4.2 trillion, related to market prices and increasing shipments in transit to India and the U.S., given the new delivery at place commercial strategy and the consolidation of 100% of ISA's EBITDA, COP4.7 trillion corresponding to 1 month of operation after closing the acquisition. The above was partially offset by lower volume purchases and sales for COP1.5 trillion affected by scheduled and corrective maintenance activities within the refineries, higher operating activity costs for COP600 billion, mainly associated with maintenance and higher materials consumption as a result of the economic reactivation and other effects in the EBITDA for COP400 billion, mainly related to the increase in exploratory expenses, recognition of public work provisions, and environmental provisions, among other aspects. Likewise, the year-to-date includes the impact of 3 non-operational items: the nonrecurring positive effect of COP400 billion recognized in January for the divestment of Savia Peru, a negative variation from other non-cash items for COP1.8 trillion, including foreign exchange effects, depreciation, taxes, financial expenses, and ISA's non-controlling interest for COP700 billion and COP1 trillion in other subsidiaries. An increase in income tax provision as a result of higher financial results and related to deferred tax restatement for COP36 billion. After implementing the new rates established by the tax reform in Colombia from 30% to 35%. These results show a clear continuity of the favorable trend in the company's financial results. Please turn to the next slide to see ISA's main financial results. For the third quarter and the 9 months ended on September 2021, ISA's EBITDA continues its growth trend, increasing 5.8% and 5.2%, respectively, as compared to the same periods in 2020. Net income decreased, affected by nonrecurring events, such as costs associated with a liability management transaction, which also included the unwind of debt hedging for a total of COP273 billion and higher deferred tax expense of COP146 billion due to the application of the rates from the tax reform in Colombia. In the absence of these impacts, ISA's net income for the quarter would have been COP541 billion and COP1.6 trillion year-to-date. ISA's consolidation in the Ecopetrol group is carried out through a business combination of control businesses as defined in IFRS 3. A new segment has been established to incorporate ISA's stand-alone results starting September and the expenses related to the debt raised to complete the acquisition. ISA's contribution is material for the Ecopetrol group, and it will be progressively incorporated over the next accounting period. When normalizing the consolidation for the 9 months ended in September, ISA's contribution to the EBITDA would have been COP5.3 trillion, representing about 19% of the total. The net income contribution would have been COP600 billion and COP800 billion excluding the nonrecurring events mentioned above. After consolidation, assets and liabilities of the Ecopetrol group increased by COP82 trillion and COP55 trillion respectively. Total equity increased by COP27 trillion, reflecting the concept of non-controlling interest associated with ISA. The values of assets, liabilities, and non-controlling interest as well as goodwill are preliminary and will be updated to final announcement by the end of the year. Please turn to the next slide to see the main financial KPIs. Cumulative financial indicators year-to-date reaffirm Ecopetrol's ability to capture the favorable price environment as well as the initial benefits from ISA after consolidating the first month of its operations since the acquisition. In the oil and gas business, it's worth highlighting the EBITDA per barrel that reached record levels of $40.2 per barrel. And quarterly results of $40.1 per barrel. These levels compare very favorably with other industry peers. The net income breakeven continues to improve as compared to the end of 2020 and the same period of the previous year, reaching $34.8 per barrel, thanks to the recovery of product spreads and higher throughput from the refineries. Regarding ISA's results, it is worth highlighting the EBITDA margin, excluding construction, that was 77.7%, aligned with 2020. ISA's return on equity for the quarter was affected by the liability management transaction effect that did not impact the group results to the extent that it corresponds to an event related to the acquisition, and therefore, it was registered as a one-time item. Year-to-date, EBITDA margin for the Ecopetrol group was 46.7%, among the historically highest, surpassing pre-pandemic levels. The leverage ratio of Ecopetrol group is similar to 2020 levels when incorporating ISA's debt and 1 month EBITDA. Normalizing ISA's EBITDA for the last 12 months greater would have been 2.4x. Please turn to the following slide to see the main highlights of the commercial strategy and its contribution to the financial results. The commercial strategy has been fundamental to the successful capture of value in the current environment. Stable quality of our brands, supply reliability, and contractual flexibility are fundamental to the corporate strategy. As of September 2021, the realization price of our crude oil basket increased from representing 76% to 94% as compared to the average Brent price for the same period in 2020. It is worth highlighting the increase in barrels delivered to destinations such as South Korea, India, Brunet, Sweden, and the U.S. Gulf of Mexico, going from 17% in 3Q 2020 to 37.5% in 3Q 2021 in volume metric tons. This strategy has allowed a higher commercial margin as compared to shipments sold and delivered at the Covenas port. Likewise, we continue to maximize the value of crude-owned products through asset-backed trading strategies with an incremental benefit of $47 million by the end of September, almost twice the amount achieved during the full year 2020. We estimate that so far this year, the commercial effort has contributed around $339 million, equivalent to $1.19 per barrel to the Ecopetrol's group EBITDA as a result of export strategies, purchase of new crudes by the refineries, benefits from using our crudes, and savings from energy efficiencies, among others. Sales of gas and LPG, a key element of the strategy contributed almost $15 per barrel to the EBITDA, proving the relevance of this product within the company's results. Let's turn to the next slide, please. Organic investment as of the end of 3Q amounted to nearly $2.2 billion, showing an important recovery versus the previous year despite global supply chain disruptions, public unrest in certain areas of our operation, and longer regulatory permitting lead times. The upstream segment accounted for 77% of total organic CapEx with a focus on increasing production and reserves, while 23% went to the midstream, downstream, and corporate segments. By the end of the year, we expect to invest between $3.3 and $3.5 billion. CapEx execution for the fourth quarter will be focused on an increase in drilling rigs, directly operated by Ecopetrol and securing the arrival of materials with supply delays, boosting activity in Permian, Ecopetrol America, and Ocala, and an increase in activity in the refineries. As for ESS CapEx, its cumulative execution as of September was $946 million, mainly allocated to the progress in the construction of energy transmission projects in the countries where the company operates. ISA estimates a year-end execution of approximately $1.2 billion. Please turn to the next slide to review the company's cash flow. Cash balance for the third quarter was COP13.1 trillion, with the operating cash flow adding COP11.5 trillion. ISA contributed COP6 trillion to the cash balance and COP500 billion to the operating cash flow respectively. The investment component for the year presented an outflow of COP8.8 trillion related to CapEx. The financing component, excluding ISA acquisition, registered an outflow of COP2.8 trillion for principal and interest payments. During 2021, dividends for COP1.4 trillion have been paid to Ecopetrol shareholders and to non-controlling shareholders of its subsidiaries. Final cash balance considers cash and cash equivalents for COP10.1 trillion and a short-term investment portfolio of COP3 trillion. Ecopetrol's group cash composition is 64% dollar-based and 36% Colombian peso-based. This cash balance does not include the account receivable from the full price debilitation fund, the PEC for its Spanish acronym, which at the end of the 3Q, amounts to COP7.2 trillion. It is worth mentioning that the recently approved general budget of the Republic of Colombia includes a specific provision of COP2.7 trillion for the recognition of this item as well as additional budgetary mechanisms to address the remaining amounts. Please turn to the next slide. Finally, we would like to highlight the completion of our first external liability management transaction for $2 billion, by which we partially refinanced the $3.7 billion loan associated with the ISA acquisition. This transaction optimizes the debt maturity profile of the Ecopetrol group with market rates at historically low levels since 2014. The transaction had a robust demand from around 270 investors from different geographies globally, with individual bids of up to $470 million, evidencing the confidence in Ecopetrol's financial strength. This transaction, in addition to the approval of the program to issue common stock in Columbia by the superintendency of finance provides flexibility and access to different sources of debt and equity financing with the objective to continue optimizing the maturity profile and to fund the energy transition strategy of the company. Now I hand over to the CEO for closing remarks.

Thank you, Jaime. We continue to move forward on each of the pillars of our ESG strategy. On the environmental side, we particularly highlight achievements in our renewable energy projects. With the entry into operation of the San Fernando Solar Park that is located in the Meta department, we have now an additional installed capacity of 61 megawatts that will supply part of the energy demand for both Ecopetrol and CENIT operations. It will also help us to avoid emissions of more than 508,000 tons of CO2 equivalent during the next 15 years and will contribute to the group's decarbonization plan. All this in addition to over 21,000 tons of CO2 emissions that have already been avoided by the Castilla solar farm in its two years of operations since October 2019. During this period, we have also saved with the Castilla Solar farm, approximately $2 million in operational costs. With San Fernando, the group's current capacity in renewable energy stands at 112 megawatts. Likewise, Ecopetrol also inaugurated the gas-based self-generation plant in Chichimene that will avoid emissions of some 44,000 tons of CO2 each year and will supply part of the energy required by the Chichimene API, CPO 9, and Castilla fields, all located in the Meta department. In terms of hydrogen, we highlight the active participation of Ecopetrol as one of the key players in the construction of Colombia's hydrogen roadmap aimed at developing this energy source for the country. On the other hand, we recently joined the group of the taskforce on nature-related financial disclosures, TNFD, to help develop a reporting framework for nature-related risks and opportunities as well as mitigating negative impacts on the environment. Last week, we participated in COP26 in Glasgow as one of the organizations representing Colombia. In addition to discussing actions that allow to mitigate climate change impact, we met with different leading organizations to explore potential alliances in the development of several opportunities on our road to net zero and energy transition roadmaps. Regarding technology, I want to highlight the capture of approximately $36 million year-to-date of benefits from our digital transformation agenda. Also, the award of the sustainable development goals, good practices led by the global compact of the U.N. to our open innovation program of 100x 100. In the social dimension, Ecopetrol achieved the Equipares Silver Seal, a certification with a 98.47% score, which gives us now 5 companies in the group that have favorable processes for gender equality. Let's move on now to the conclusions. During the quarter, we achieved significant progress towards energy transition, such as the closing of the ISA acquisition, setting a milestone in the history of the country and for both companies, providing the opportunity to consolidate the Ecopetrol group as a new leading energy company with greater capacity to continue generating sustainable value. We continue delivering strong financial results to our shareholders and our groups of interest. We will keep consolidating our integrated strategy, maintaining the focus on the core business while moving forward in the pillars of energy transition. Thanks to everyone for participating today on the call. And now I will open up for the Q&A session.

We have a question from Guilherme Levy from Morgan Stanley.

I have two questions. The first one is the lifting cost. So I just wanted to understand your expectations for lifting costs going forward when we consider both recovering production and higher oil prices that are expected to remain into the next quarters. Should we continue to expect lifting costs close to the $8 per barrel range? And if the company is already seeing some level of industry cost inflation? And then the second question is on the production expectations for 2022. I just wanted to picture them and try to understand what sort of projects can be anticipated in the current oil price environment? And also, how much the seeming JV in the U.S. could contribute to the group in this strong oil price environment.

Guilherme, thanks for participating today in the conference call. So I'll give you some context, and then I'll ask Alberto to provide more detail, first around the lifting costs and then around the production. So the first thing around lifting costs. If you look at where we are at the end of Q3, around $8 per barrel, we are signaling that the year should end at around $8.50 per barrel. For next year, it should be around $9.5 to $10 per barrel. So that's sort of the expectation. Clearly, we see there will be an increment or an increase in terms of the lifting cost. Alberto will provide details around levels of activity and also some of the pressures we're seeing from some of the early increases in terms of sector inflation, particularly around some materials and the likes. So he'll talk about that. In terms of production, I'll share my view with you, and then again Alberto will provide some detail. Looking at what has happened this year, we started at Q1 with production of 676 million barrels, decreased to 661 million in Q2 and increased to 684 million in Q3. So there is a recovery. We're seeing recovery from some of the operational issues we've had, especially with the production of water and some other issues in the country. We expect that in Q4, we will be at around 700,000 barrels. The way I would describe it is that we are seeing a recovery; there is a clear path of recovery, but it's taking longer than what we had anticipated. That's the primary message. We're currently working on the numbers for 2022. We don't have a number yet in terms of what we expect to land the range for production. In terms of the Permian, this year, we have 91 wells in production, reaching about 50,000 barrels equivalent of production. We're very pleased with 4 rigs operating in the Permian. Directionally, next year, we're going from some 90 wells to 110 wells in terms of drilling. So there will be an increase in the number of rigs, and we will keep at least the 4 rigs running next year, but we are in conversations with our partners regarding budgets and activity levels. We're very pleased with the Permian and how it's contributing, not only in terms of barrels but also in terms of EBITDA as well. So let's move on to more detail around lifting costs and production.

As Felipe mentioned, for the lifting cost for the fourth quarter, by year-end, we should be having an average of $8.50 per barrel. But that will mean that for Q4 2021, we will experience an increase in costs, mainly derived from inflation. We are going to have a lot of interventions, around 160 in volume. In addition to that, work associated with the integrity of our infrastructure, but also, as we mentioned, we are experiencing the impact of industry inflation, which is reflected in the rising costs mainly due to restrictions in raw materials and increased prices, for example, in steel, where there's been an increase of 30-40% compared to previous averages. We have also seen higher prices on copper, aluminum, and those also affect the supply chain and the timing for deliveries. Additionally, we are experiencing an increase in the cost of well services. This indicates that for 2022 and beyond, we are optimally working on a plan to understand how we can manage industry inflation. However, in terms of guidance, we should be looking at a rising cost of $9.5 to $10 per barrel for 2022. Also, the lifting costs in detail will depend on our success in increasing production volumes. In terms of production, we are evaluating how to focus on areas where we have the most activity and identify where we can target increases in our capacity to treat water in mature fields. If we can successfully accomplish that, then we expect to see production increases streamlining. That's kind of the scenario that we see, still too early to anticipate a range, but we're working on the different variables and understanding the impact of high inflation that could also delay the supply chain. So we will share more information with you at the end of the year.

Our next question comes from Anne Milne from Bank of America.

And congratulations on the ISA consolidation. So my questions are a little similar to the last one, and I think you answered some of them, but I wanted to know what the main areas of cost inflation are. I think you mentioned steel and aluminum. Are there other areas there as well? Is there any way that you can hedge them or enter into long-term contracts, maybe electricity, maybe freight, or some other ones? And then my second question is also on the 2022 outlook. I understand you're not prepared to discuss production. But do you have a range of CapEx for next year? I think you said it would be higher. And do you have any plans on what your debt and leverage levels would be one year from now to the end of 2022?

Let's start with the second question regarding CapEx. So compared to this year, we've indicated that there will be an increase. As for the specific numbers, we haven't finalized them, but I can provide directional information that organic CapEx for Ecopetrol, excluding ISA, will be in the range of $4 billion to $5 billion. So it's an increase. As we were just discussing and Alberto was mentioning, this exercise of determining and defining the CapEx incorporates our views on the impacts discussed on the supply chain and increases in commodities prices. On the first question regarding the areas of cost inflation, Alberto has already described where we foresee our lifting costs moving going forward. Again, we expect to end this year at $8.50 per barrel, with a movement to somewhere between $9.5 to $10 per barrel. We do expect an impact due to electricity costs. Approximately two-thirds of the electricity that we use comes from our own generated power, providing us some independence from external price fluctuations. The Castilla Solar Park that we started operations with two years ago has permitted us to save around $2 million in operational costs. Therefore, it’s crucial to control expenses as we anticipate increases in raw material prices and other industry costs. As for long-term agreements and alliances, we have several providers for our drilling materials and equipment, so we're looking at how we can control costs while maintaining operations in these areas. Our approach is to implement smart budgeting and standardization in operations, which has allowed us to manage our costs effectively. If there's anything else Alberto would like to add on that front.

I just add as an example regarding financing distribution costs. We understand the pressure, but also we have solutions. For example, we can increase the viscosity in all of our pipelines to manage the approved projects that we are also implementing, which is increasing the LPG mix in our programs. That is going to be critical and will represent an important reduction in the cost of NAFTA that we purchase abroad. So that's an example in which, for example, the dilution factor was around $16 per barrel. Now it's going to be in the ranges of $13 to $14 per barrel. So you are seeing a reduction in that sense.

Felipe, on my end, I just want to make a good note, and it's with regards to ISA, it's important to highlight that ISA's business model is fundamentally indexed to inflation. So any inflation that you have in the sector is actually not translating into loss of revenue or loss of margin. That's quite important to highlight. There's no deterioration in the ISA business model asset dynamics.

Very important.

Our next question comes from Matthew Enfield from UBS.

If we could start with the downstream, looking in particular at margins. The company saw some quarter-on-quarter pressure, mainly in dollar terms, particularly in the Cartagena refinery. We were just trying to understand a bit how much of that is a one-off and only in this quarter and should you expect a quick rebound or if this is something that should linger a bit into 2022? And then my second question is on the ISA acquisition. If you could provide a bit of the pathway for the integration of the companies moving forward now that you have begun to consolidate results. What milestones or KPIs the market could be looking for, particularly regarding potential synergies between both businesses? And just to elaborate a bit on that as well. If you're seeing that potential investments in energy and electricity should focus mainly from ISA or if Ecopetrol will also continue to invest this in the core business?

I'll start with ISA, and then I'll hand off to Alberto to talk about the downstream. So in terms of ISA, I want to provide some context. We have something called the TMO, the transition management office, which is comprised of some 80 people, roughly half and half from each organization, that has been working for some months now. Over the last 2.5 months since we closed the deal on August 20, a dedicated team has been working on various streams of work, including legal, regulatory, and financial consolidations. We're now working on budget and finance planning. So there is a lot happening, and that's actually progressing well. In terms of innovation and technology, there are plenty of synergies we can obtain along with discussions on energy storage and additional renewable power generation projects in the countries where both companies operate. I would say we're enthusiastic about the opportunities being presented. Also, in Colombia, regulations may limit some operations, but there are numerous investments across diverse geographies in energy generation and storage solutions where we can thrive following the inclusion of ISA. So what follows now is a continual update as we progress in these opportunities and keep you informed. On the downstream side, let's discuss margins and what we foresee going forward.

Thank you, Felipe. Thank you, Matthew, for your question about the downstream business. I will mention that, as you saw on the slide, it was covered by Alberto, that as of September, we have accumulated a record EBITDA of COP2.3 billion for the segment. This is mainly coming from excellent results from the second quarter. Regarding the third quarter, it is important to mention that starting in July and August, we had planned maintenance activities at the Barrancabermeja refinery, mainly in the alkylation unit and the petrochemical business. Those activities at Barrancabermeja will continue. While we are progressing on the major maintenance at one of the crude units and on the FCC unit, in the case of Cartagena, the results for the third quarter were impacted by the blackout event we had in August, as well as maintenance needed on the FCC unit in August, completing in mid-September. Therefore, the Cartagena refinery experienced one-off events, both of which are now resolved, and it is operating close to full capacity. We expect this performance to continue into the fourth quarter without any planned turnaround or maintenance events that would affect margins. So overall, for the refining sector, we see stable margins for the fourth quarter, similar to those in Q3. Regarding our projections for this year, we are aiming for throughput of around 345 to 365 KBD by the end of the year, and margins for 2021 are projected to be at the upper side of one digit, close to $10 per barrel. Regarding 2022, we anticipate margins to improve while considering that the first half will include planned maintenance activities at both refineries, so we'll experience some ups and downs depending on maintenance schedules. However, overall margins from 2022 are expected to be in the low double digits for the refining business. I hope, Matthew, that I have addressed your question clearly.

Our next question comes from Vicente Falanga from Bradesco.

My first question is regarding Brazil. When do you expect the drilling of the first well there? And what are the next key milestones? My second question is regarding unconventional. Do you feel that after we get the licenses for Kale and Platero, that for other future potential areas, these licenses could come up quicker? And if I may just follow up on the previous question. Do you still see risks for the quarter in the Cano Limon pipeline that could again affect the refineries?

In terms of Brazil, we are currently in the planning phase to drill our second well in the Saturno block, which we expect to drill in late 2022 or early 2023, and that will depend very much on our conversations with our partners, in this case, Shell and Chevron. Also, the development side is going well, and we have several milestones to complete in the next few months. The first one is the award of the FPSO, a floating production storage and offloading facility, followed by initiating publication of the FPSO. We also need to award the subsea facilities contract. Depending on the advancement of those activities, we are targeting to achieve EBITDA at the end of 2025 to early 2026. In terms of unconventional development, we are progressing with obtaining the licenses for Kale and Platero. We have already submitted the environmental assessment study for Kale and are trying to do so for Platero. So regarding the potential for accelerating licensing for new areas, we should be conservative regarding timelines as the focus should be on the two current pilot areas. Success in producing wells will determine whether we can explore further opportunities in new regions.

I want to emphasize that our focus with the unconventional pilots in Colombia is about doing it well rather than doing it quickly. We have timelines in the report that detail our target of bringing wells into production by 2023, but we will continuously work to see if we can accelerate that into 2022. Keep in mind that after we gather results and data, there will be an independent commission assessing the outcomes of these pilots to determine success based on regulatory objectives. Nevertheless, we are actively exploring additional areas and potential opportunities with the expertise we've gained from Permian to support our efforts.

Regarding the Cano Limon pipeline, we need to recognize the pressure from social unrest in both the Catatumbo and Arauca regions. Therefore, the risk is present. However, we have contingency measures to manage the production impact. If the Cano Limon pipeline is affected, we have the alternative route of the Desenzano pipeline. If working as intended during Q3, where we had 11 reversal cycles, we should not expect major impact on the operations of the refineries, particularly in Maracay.

Our next question comes from Frank McGann from Bank of America.

Just maybe stepping back to a little bit of a bigger picture in terms of how you're seeing the CapEx potential in upstream. After the last 4 or 5 years, you’ve gone from having a lot of opportunities and being very aggressive to pulling back, which was rightfully so to restore the balance sheet and not overreach in terms of spending, given the unclear environment, especially over the last 18, 24 months. I'm just wondering now how you're thinking about upstream. You must have, I would assume, a lot of low-hanging fruit that you could potentially exploit. I would think you could increase CapEx quite a bit and profitably if you wanted to. But I'm just wondering how big that portfolio is potentially, one? And secondly, are you tempted to get more aggressive over the next couple of years, given the very favorable environment and what I think in fairly short payback periods that you have for a lot of those investments.

I'll provide some views and then Jaime can also add. Your introduction to the question is spot on regarding careful management of the balance sheet and opportunities. We've ramped up CapEx over the years from $2.2 billion in 2017, $2.9 billion in 2018, to $3.5 billion in 2019, and this year it will be in that range as well. We see ourselves ending this year in an organic CapEx range of $4 to $5 billion, with upstream representing the majority as per historical distribution. We're focused on exploration and have identified several prospects that enhance our portfolio, illustrating that our exploration view is paying off. On average, we expect overall exploration-related activity to rise significantly, particularly with the Permian, which is producing not just barrels but also healthy EBITDA figures. A good number of activities will be in country, coupled with the optimization planning and advancements in production efficiencies across our operations. Our identified opportunities remain substantial. Each opportunity has been scrutinized, and we have a robust taxonomy indicating our work's priority. Thus, while we can increase investment, our approach is disciplined and strategic.

Thank you, Felipe. I can expand on that. Broad group numbers provide context for this discussion. We aim to refresh our plan for 2022-2024 in a higher price environment, leading to our strategic focus on increased production. As per evaluations conducted, we have a stronger portfolio with more prospects, thus creating more value. To give you an indication, our plan this year is projecting approximately 1.5 billion barrels of 3P resources, substantially up compared to 1.1 billion barrels from 8 months ago. Additionally, the portfolio's value has improved, now almost $9 billion in NPV as we focus on increasing activity. Directionally, we’re looking at around 540 wells next year, exploration efforts, and further seismic exploration in our portfolio. Consequently, CapEx for upstream represents a significant portion of our projected $4 to $5 billion, totaling around $10 to $12 billion over the next three years. This sets a solid basis for our decision-making moving forward, paving the way for growth.

Finally, in terms of portfolio diversification, we are now focusing on exploration in both offshore and light oil and gas reserves. This shift emphasizes the potential available in new regions and types of resources that we didn’t initially prioritize. It indicates our proactive nature in diversifying our resources and acting on tailwinds to generate more growth opportunities.

Our next question comes from Christian Audi from Santander.

I wanted to get your views on a couple of points. First, capital allocation and then on return on capital employed. In terms of capital allocation, you've already touched on CapEx. I was wondering if you could also touch on deleveraging and dividend payments, how you prioritize those, given the very strong results and cash flow generation that you're having? And also touch on the potential need for an equity offering and whether that equity offering, if needed, would be more to supply ISA with capital to pursue inorganic growth? Or is it more driven to just strengthen the overall Ecopetrol financial position? And then in terms of the return on capital employed, which is an area where the company always stood out relative to your peers with the addition of ISA, which has great margins and excellent return on capital employed. I was just wondering if you could talk a little bit about where you see this roughly going into 2022, please.

In terms of capital allocation and return on capital employed, I will first highlight how we view the price environment moving forward. The fundamentals support a more optimistic price outlook. For this year, our price assumption was around $45 per barrel. Next year, it’s projected to be around $50 per barrel. We are currently refining those assumptions to align with our projections of $63 per barrel in 2022. This optimistic backdrop positions us to retain capital discipline while not leaving opportunities untouched. Our leverage of 2.5x gross debt to EBITDA continues to appear reasonable, allowing us flexibility for investments going forward, particularly to support ISA, whose growth depends on leverage. We acknowledge that ISA’s pipeline is very attractive, and we don’t want its growth constrained by capital. Consequently, while we have a range of 2.5x gross debt, it remains a comfortable level of leverage for us. Pertaining to dividend payments, our policy remains intact; 40% to 60% of net income is typical. In years of positive outcomes, we can expect to be on the higher side of that range. Regarding an equity offering, it implies optionality. While our spending is robust, the equity offering provides us the chance to increase CapEx spending or bolster our balance sheet as opportunities arise. Currently, it would be more about reinforcing the balance sheet. Lastly, regarding ROCE, we posted a solid Q3 result of 10.8%, indicating great health compared to peers. By the end of the year, we expect it to rise above 12%, reflecting positively on our operational efficiency.

In closing, thank you for joining the call today, and we appreciate your continued interest in Ecopetrol. We look forward to your follow-up inquiries and engaging further. Stay safe and take care.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.