Ecopetrol S.A. Q2 FY2025 Earnings Call

Good morning. My name is Natalia, and I will be your operator today. Welcome to Ecopetrol's earnings conference call, in which we will discuss the main financial and operating results of the second quarter of 2025. There will be a question-and-answer session at the end of the presentation. Before we begin, it is important to mention that the comments in this call by Ecopetrol's senior management include projections of the company's future performance. These projections do not constitute any commitment as to future results nor do they take into account risks or uncertainties that could materialize. As a result, Ecopetrol assumes no responsibility in the event that future results are different from the projections shared on this conference call. The call will be led by Mr. Ricardo Roa, CEO of Ecopetrol; Rafael Guzmán, Executive Vice President of Hydrocarbons; Camilo Barco, CFO; and Bayron Triana, Executive Vice President of Transition Energies. Thank you for your attention. Mr. Roa, you may begin your conference.

Welcome to Ecopetrol Group's Second Quarter of 2025 Earnings Call. During the quarter, we maintained solid operations with improvements in upstream recovery in downstream and resilient results in the midstream segment, despite a challenging environment marked by high volatility and declining crude prices due to geopolitical tensions and third-party disruptions to the transportation system infrastructure. We reached a semester production of 751,000 barrels of oil equivalent per day, the highest level in a decade. This was driven by fields in Colombia such as Caño Sur and CPO-09, which contributed to the highest national crude production in four years as well as a strong performance in the Permian Basin in the United States. We declared the commercial viability of the Lorito discovery in Meta, the most significant in the past ten years following the recent acquisition of 45% of the CPO-09 block. Additionally, we began drilling the Papayuela well in the Caribbean offshore aimed at expanding the country's gas potential. In the midstream, volumes exceed one million barrels per day, supported by operational solutions that mitigate the impact of external events. We highlight the expansion of the Pozos Colorados terminal, including the completion of the country's largest tank with a capacity of 320,000 barrels and the unloading capacity increased to 550,000 barrels, enabling the reception of the largest vessels. In downstream, we reached 405,000 barrels per day in throughput with full operational recovery after completing major maintenance activities. We expect to capitalize on this with improved margins in the second half of the year. In the gas segment, we completed the first long-term commercialization of important natural gas in Colombia, securing national supply through five-year contracts. Finally, we signed the agreement to acquire Windpeshi, Ecopetrol's first wind project developed by our own located in La Guajira. This is a key step toward advancing decarbonization and reducing energy costs in our operations. In summary, Ecopetrol's operations have adapted swiftly to the environment, maintaining the positive trend seen in recent quarters. Let's move on to the next slide, please. The solid operational progress during the quarter was partially offset by the decline of the crude price. Brent fell by 22% compared to the second quarter of 2024, impacting both revenue and profits. On the commercial front, we achieved the best quarterly crude differential in the past four years, thanks to a diversified basket and an active marketing strategy that allows us to capture value even in a low price environment. We achieved efficiencies totaling COP 2.2 trillion, exceeding the semester's target by 27%, helping to mitigate the impact of lower prices. In terms of investments, we have committed our USD 2.5 billion so far this year, aligned with our long-term strategy. It is worth noting that we are maintaining our production target for 2025. During the quarter, we completed the full payment of dividends to our shareholders, delivering a 10% return, reaffirming our commitment to generating value and competitive returns. Regarding our optimization plan announced last quarter, we made 80% progress in reducing costs and expenses, strengthening our financial and cash position for the year. In conclusion, this was a quarter marked by strong operations underpinned by competitive commercial decisions and by efficiencies that supported the group's financial performance. Let's move on to the next slide, please. We continue to make steady progress on our TESG agenda. We expect to exceed the goal of 900 megawatts in renewable energy for sale generation by 2025, thanks to acquisitions made during the quarter, which will be detailed later in the presentation. In decarbonization, we continue to surpass our greenhouse gas emission reduction target with a reduction of 242,000 tons of CO2 equivalent comparable to the average annual energy consumption emission of 190,000 households. On the social front, through the Liu of Taxes mechanisms, we completed six initiatives representing an investment of COP 43 billion, benefiting approximately 350,000 people across various regions of the country. Additionally, we allocated more than COP 180 billion to our sustainable territorial development portfolio, which includes social, environmental, and community engagement investments. In water resource management, we used over 44 million cubic meters of it in our direct operations. This is equivalent to nearly twice the annual domestic consumption of approximately 500,000 residents of the entire Casanare department. In job creation, we facilitated over 66,000 labor engagements in the first semester through our contractor companies, reaffirming our commitment to economic development in the regions where we operate. With these achievements, we continue to strengthen our contribution to regional well-being and the country's sustainable development. I now hand over to Rafael Guzmán, who will present the results of the Hydrocarbons business line.

Thank you, Ricardo. During the first half of 2025, we achieved significant progress in the upstream segment, driving forward key discoveries towards their development phase to highlight the following milestones: the commerciality declaration of the Lorito discovery in June, to be covered in more detail in the next slide; the recognition by the Brazilian National Agency of Petroleum and Biofuels of the commerciality declaration for the development areas of Gato do Mato, now named Orca and South Orca on May 20, 2025. This fulfills a key milestone, enabling the start of proven reserves incorporation in 2025. In parallel, detailed engineering began for the floating production unit and processing facilities, along with safety analysis and the consolidation of project teams. The serious project progress towards its development phase. Work is currently underway on the contract model for the design, construction, and operation of the necessary service facilities for gas treatment. Moreover, ethnic, social, and environmental feasibility activities are being carried out after obtaining the program certificate for the beach crossing granted by the National Authority for prior consultation regarding the Southern Caribbean offshore assets on June 9, 2025, we submitted a request to the ANH to assign Shell's 50% interest in the block in favor of Ecopetrol. We continue advancing on the evaluation of alternatives for executing development. By the end of this semester, six out of ten planned exploratory wells had been drilled with $156 million of investment already executed. This includes the exploratory success of the Currucutu-1 well operated by GeoPark in partnership with Hocol in block Llanos-123. This well is located in the same Eastern Llanos Basin as the Toritos discovery, which reduces technical uncertainty in the block and expands its production potential to the north. The exploration campaign in block GUAOFF-0 continued with the drilling of Buena Suerte-1 well, such well did not show commercial hydrocarbon accumulation. However, the well provided valuable geological insight into plays different from the one of Sirius, with additional prospectivity to be matured based on the data obtained. Drilling began in Papayuela-1 well targeting a play similar to that of Sirius. Let's move on to the next slide. The declaration of commerciality for the Lorito discovery located in the municipality of Guamal, Meta marks the combination of successful exploration processes and reflects the strategic value of acquiring the 45% interest in block CPO-09 from Repsol. It represents the most significant discovery in terms of resource potential over the past decade with approximately 250 million barrels of oil in recoverable resources, including 109 million barrels classified as certified contingent resources. This commercial milestone enables the development of 13,584 acres of area a size comparable to the Chichimene field and incorporates into production two wells, Tejón-1 and Guamal Profundo-1 located near the Akacias field with a combined production potential of 1,450 barrels per day. As shown on the map, its proximity to existing production and transportation infrastructure as well as the potential continuity of the reservoir nearby fields such as Akacias and Chichimene facilitates commercial production technical deviation and enables capturing operational synergies. The development plan will be submitted to the ANH in the fourth quarter of the year. This plan will include the proposed activities, licensing requirements, and necessary investment for the future progression reserves. Let's move on to the next slide. During the first half of 2025, we reached total production of 751,000 barrels of oil equivalent per day, the highest level recorded since 2015, driven by the following factors: the contribution from domestic crude oil production that reached 57,000 barrels of oil per day, the highest level since 2021, driven primarily by field enhancements that added 10,000 barrels per day compared to the same period last year, and the acquisition of 45% interest in block CPO-09, which contributed an additional 11,000 barrels per day. Second, the drilling campaign in the Permian Basin reached a production of 106,000 barrels of oil equivalent per day for the semester, an increase of 14,000 barrels compared to the same period last year. This result reflects the optimization of completion designs and efficiency in bringing new wells online and an accelerated schedule, enabled by operational efficiencies in drilling and completions. As shown in the top right graph, in June, we were able to recover natural crude oil production that had been affected by external events related to operations mainly concentrated in April. This recovery was possible thanks to our experience in effective incident management and minimization of operational disruptions. During the semester, $1.4 billion were invested highlighting the expansion of water treatment capacity in Rubiales and Caño Sur, and the gradual commissioning of crude treatment capacity at the Orotoy Station, which by July had increased to 35,000 barrels. These facilities enable the operational continuity of the fields and supported production growth. Additionally, we executed 180 workovers, a 59% increase over the same period last year and 220 development wells reaching levels close to those of 2024. As part of the efficiency strategy and investment prioritization based on Brent price, total projected investment is $3.6 billion for production and $400 million for exploration for a total of $4 billion in the upstream segment. This optimization does not impact reserve incorporation or production levels; we maintain our established target of 740,000 to 750,000 barrels of oil equivalent per day for 2025. Let's move on to the next slide, please.

Thank you, Rafael. It is a privilege to address you in the first earnings call as Executive Vice President of Transition Energies. I thank the Ecopetrol Group for the trust placed in me to lead this business line and to continue driving its growth. By the end of the second quarter of 2025, we are pleased to report the successful execution of the commercialization process for major gas fuels and classified natural gas in the Colombian Pacific region. Through this process, we secured a sale of 58 gigabtu per day on average of gas from major fields over the next four years with full allocation of the offer volume prioritizing essential demand. Moreover, for the first time in our history, we assigned 60 gigabtu per day of imported gas by the Colombian Pacific Coast under a five-year long-term contract subject to present conditions. This entire volume was allocated among 18 market agents with deliveries scheduled to begin in the second semester of 2026. These achievements reinforce our commitment to strengthening the country's energy security and position Ecopetrol as a key player in supplying the fuel for the Energy Transition. In parallel, we continue to explore alternatives to use existing infrastructure in the Caribbean region. Our objective is to develop facilities for the reception, storage, and gasification of liquefied national gas with operations projected to be between 2026 and 2027, subject to technical and contractual requirements. Let's move on to the next slide, please. In the Energy segment, the Ecopetrol Group consumed 23.3 gigawatt-hour per day of electricity equivalent to 11% of the demand of the national interconnected system. This demand was met 58% through self-generation and 42% through purchases from the wholesale energy market. Of this purchase, 70% were made under contracts, meaning that nearly 88% of our demand was protected against market price volatility. This storage represents an improvement compared to the same period in 2024 when coverage stood at 81%, resulting in stability in the unit cost of electricity supply. Regarding our generation from renewable sources, during the second half of this year, this accounted for 5.6% of the group's total demand, compared to just 0.6% five years ago. This means we are using nine times more renewable tonnage. By the end of the semester, the Ecopetrol Group accumulated 630 megawatts in its renewable energy portfolio, in which 208 are operational, 228 corresponds to purchases in the wholesale energy market, 95 are under construction, and 99 are in execution. We are on track to meet the goal of 900 megawatts by year-end. In this way, we continue to improve the diversification of the group's energy metrics and reduce supply costs. By the end of the semester, we had accumulated savings of over COP 70 billion, reflecting the impact of our renewable energy stage. Additionally, we signed the framework investment agreement with AES for a power purchase agreement with Statkraft and acquired 100% of the Windpeshi project, all of which will further support the integration of renewable sources in the coming months. Next slide, please. Equally important, we continue to deliver positive results in energy efficiency in the first half of 2025; we achieved a cumulative optimization of 2.42 million gigajoules, driven by initiatives such as the replacement of turbo compressors in the region, optimization of gas injection systems, and enhanced operational comfort in energy-intensive assets. The energy reduction achieved because of these efficiency measures is equivalent to electricity and natural gas consumption of more than 1.1 million households in Colombia. Additionally, resulted in savings of over COP 53 billion and a reduction of approximately 171,000 tons of CO2 equivalent. In terms of social gas initiatives, we connected more than ten new low-income households reaffirming our commitment to Universal Energy Access and improving the quality of life for Colombian farmers. Finally, we closed the semester with a production of 161,000 barrels of oil equivalent per day of gas and LPG and an EBITDA of COP 1.5 trillion, 4.5% higher than the same period last year. With these results, we continue to demonstrate that the Ecopetrol Group's energy transition is not only possible but also profitable, sustainable, and socially inclusive. I'll now pass the floor to Camilo who will present results of the transmission and road infrastructure line and the key financial milestones.

Thank you, Bayron. During the first half of the year, the Transmission and Roads business maintained solid operational performance. The company made firm progress towards its strategic objectives and strengthened its management through the awarding and commissioning of the following projects: ISA Energía Brasil, which was awarded seven reinforcement and improvement projects with a reference CapEx of approximately COP 187 billion, seven reinforcement and improvements in ISA Energía Brasil network entered operation with an estimated investment of COP 232 billion. The Água Vermelha project began commercial operation with an investment of COP 70 billion facilitating the integration of a new solar project in São Paulo and the Triângulo Mineiro in Colombia. We completed the renewal of the Bolivar Sabanalarga and Bolivar Termocartagena transmission lines with an investment of COP 16 billion. On the financial front, two events partially impacted the results for the period. The first was related to the adjustments made in June to the formula for calculating the financial components of assets in Brazil's existing system basic network known as RBSE. This decision responded to the market request and had a wide industry impact. This one-time effect had the following impacts on ISA and the group's financial results: a reduction in EBITDA of approximately COP 0.6 trillion, a decrease in net income of around COP 0.1 trillion, and the lower cash collections between July 2025 and July 2028. The second event to mention in regards to the provision for outstanding receivables from INTERCOLOMBIANA and Transelka, which resulted in a COP 0.2 trillion impact on EBITDA and COP 0.1 trillion on net income. ISA closes the semester with solid operating results, making progress on its investment plan and remaining committed to meeting its 2025 financial targets. In addition, it continues to execute the ISA 2040 strategy with discipline, focusing on strengthening its presence across Latin America. Moreover, it continues to be a key pillar within the group's diversification strategy contributing about 17% to consolidated EBITDA. Let's move on to the next slide to review the group's financial performance in detail. The results during the first half of the year reflected the group's ongoing commitment to capturing structural efficiencies across revenues, costs, expenses, and CapEx. This has enabled us to maintain competitive profitability within the industry and safeguard the financial and investment targets for the year. As of June 2025, we recorded a net income of COP 4.9 trillion, representing a year-over-year decline of COP 2.5 trillion, represented mainly by the following external factors: market factors accounted for approximately 78% of the impact or COP 2.1 trillion, including the net effect of a $12 drop in Brent prices compared to the first half of 2024, partially offset by improved negotiated differentials and a positive impact from a higher exchange rate compared to the same period last year. Local environment included increases in blockades in fields and disruptions to transportation infrastructure, resulting in a negative impact of COP 0.3 trillion. New taxes related to the state of emergency decree and nondeductible value-added tax on fuel imports totaled an impact of COP 0.2 trillion, adjustment to ISA's remuneration previously discussed with an impact of COP 0.1 trillion. Other net positive events contributed COP 0.2 trillion, including benefits from higher crude production increases services at ISA, lower income surtax, and higher depreciation. During the same period, COP 24.4 trillion were generated, reflecting a variation of COP 3.9 trillion compared to the first half of 2024. This variation is explained by 72% due to the previously mentioned market factors, followed by 15% attributed to the RBSE adjustment effect and 10% from external events. The EBITDA margin remained strong at 40%, exceeding the annual target of 39%. In terms of EBITDA by segment, the exploration and production business line continues to contribute 54% of total EBITDA, including the transportation and refining segment, the contribution rises to 83%. The remaining 17% corresponds to ISA's contribution, reaffirming its relevance to the group's diversification strategy. On another front, thanks to the group's financial flexibility, we promptly activated the cash management company to ensure liquidity and support operational and financial targets without incurring incremental long-term debt even in a current price environment below the levels projected in the plan. As of June, we achieved 80% progress in the cost and expense reduction actions announced in the first quarter and defined within the committee framework with positive effects on EBITDA, cash flow, debt, and CapEx. Aligned with this focus on efficiency, we reached COP 2.2 trillion in savings in the first half of 2025, of which 66% directly benefited OpEx and revenues. In the Hydrocarbon segment, we achieved COP 1.5 trillion in optimizations reflected in improvements such as reduced lifting costs, energy consumption per barrel, and cost per foot drilled as detailed by Rafael Guzmán. We will maintain our target to reduce lifting costs this year with a special focus on energy, maintenance, and contracted services expenses, aiming to consistently stay below $12 per barrel. At the corporate level, we achieved COP 0.4 trillion in efficiencies through digitalization initiatives and demand controlling operations, while commercial management contributed COP 0.2 trillion in optimization. For the remainder of the year, we will continue advancing cost and expense reduction measures to reach the COP 1 trillion target while also pursuing efficiencies exceeding COP 5 trillion to mitigate the impact of external value. It is worth noting that the airports we are implementing this year will be reflected in the 2026 planning, which is projected in a challenging price environment.

Thank you, Camilo. I would like to close by highlighting that the Ecopetrol Group continues to execute key investments and strategies aligned with its long-term vision aimed at strengthening operations and ensuring sustainability over time. This quarter's results show improvement across our main business lines compared to previous periods even in the context of high volatility on prices and security challenges in our operations. Efficiency management has exceeded expectations, particularly in initiatives to reduce energy consumption and expand self-generation from renewable sources in line with our strategy to diversify energy metrics. Operational results, efficiencies, and commercial management helped mitigate part of the impact of the price environment on revenues. We also maintained a clear strategy for cash management and sustainable debt levels. The group will continue to enhance its operational and strategic flexibility with constant monitoring of prices, markets, and international developments, allowing us to adapt swiftly when needed. We will keep working hand in hand with the regions, advancing our social and environmental commitments and contributing to the development of the territories where we operate. We remain firmly committed to protecting our cash position, maintaining capital discipline, and ensuring financial resilience and flexibility as announced during our first quarter earnings call. We continue to closely monitor market conditions to activate the necessary protocols to preserve the company's strength and to keep generating sustainable value for our shareholders and for the country. With that, we now open the floor for questions.

Good morning, and thank you for receiving my two short questions. One is on production, and the other has to do with the nation. The production question is, could you please explain a bit how you reached that peak of production and your expectations for the rest of the year? The second question is related to the nation. This morning, I heard the presentation made for journalists, and you spoke about the milestones in terms of dividends and royalties of the company. So could you please repeat here these figures showing the dividends and royalties? And when it comes to taxes, specifying how much is common and the others? I referred to last year and the expected amounts this year.

Good morning, Juan Carlos, I am the acting VP of Hydrocarbons. When it comes to your question on the Permian, this has to do with anticipation of the activity and the better performance of the drills regarding processes and their designs, this managed us to have a peak in the semester of 165 barrels per day, and this is based on the performance of these types of fields. That shows a high peak. That's why our expectation by the end of the year with the activities that we've made so far, we expect an average production of 90 to 190 barrels per day.

Andres, good morning. I am Camilo Barco, the CFO. Let me take your second question about the milestones. Indeed, yesterday with the journalists, we spoke about the transfer made to the government known as government takes. Fundamentally, these consist of the three items that you mentioned, which are dividends, taxes, and royalties. Of these three items, the most important is taxes, which represents 50% of these transfers approximately. Of course, every year has its particularities; the royalty is 25%, and dividends, 25%. So let me take the figure of 2024 to give you figures for this particular case. In dividends, we paid COP 11 billion, and royalties a bit more than COP 9 billion, and taxes about COP 20 billion. This is for a total of COP 40.4 billion transferred to the nation last year. This year, we expect to have the same proportion, 50% in taxes, which we can say as of June 2025, we paid about COP 6 billion in income tax, specifically COP 3 billion in self-withholdings and 3 in income. As of June, in terms of transfers to the nation, we have a total of COP 23 billion, and what we estimate for the rest of the year is a total amount of COP 35 billion to COP 40 billion, closer to the mean of that range of COP 38 billion.

Good morning for all of you, and thank you for this space. I'd like to ask you. Yesterday, we saw in the media that you spoke about the disinvestment of assets. Could you please expand on this topic? And if it relates also to President Petro's statement that Ecopetrol should sell its assets in the U.S.? If these assets are part of these investments that you plan? And if not, could you please expand on the strategy of the disinvestments that Ecopetrol has?

Katherine, good morning. I am the Vice President of new businesses. Let me begin by saying that yesterday, our CEO talked about assets in Colombia, but also our company constantly and periodically evaluates all of its portfolios when it comes to assets and affiliates, and it evaluates the performance and the strategic reserves it has. Given the case that we will make this investment, we will be specifically mentioning these to the market. When it comes to your question in Colombia, what we are seeing partly is how we can replicate positive experiences like the one of Barrick's of last year, still seeing different assets in the fields of Colombia, and the country side of Colombia to increase investments and the activity in hydrocarbon sectors in some assets, which do not compete in our portfolio. Because of confidentiality, I cannot mention to you the assets that we're evaluating now, but I can say that we are looking at processes underway, and we have private companies involved in Colombia, and once the processes of approval within Ecopetrol take place, we will be sharing the information with you.

Thank you, Ricardo and Camilo for your presentation. I have two questions. First, considering the decrease in Brent price and the efficiency initiatives you have implemented, where do you expect the cash flow and breakeven EBITDA to be for the upstream business? My second question pertains to the minimum gas production over the past decade. Is this decline a result of the natural decrease in field output or is it due to less exploration activity?

Hello, Juan Jose. Let me give you a brief introduction to the reality of what's happening in oil and gas in the market. Our production continues having the highest declining rates; that's a big reality. The second reality is we have been reducing significantly our gas consumption in our processes, substituting this with clean energy in the wholesale market. That is important to keep in mind that we reduce our consumption to close to 50 cubic kiloliters per day, and also there are gas manufacturers that have had problems reaching their nominal productions. And this is why we have lower nomination of gas. Still, we are looking at the development of infrastructure for the imports and exports that we have mentioned, especially with the Buenaventura project. We are still evaluating the projects of Natural Gas Ballena and Natural Gas Coveñas for imports and exports. We are also evaluating with our allies the possibility to connect more volumes of gas in the Arrecifes field quickly. There are projects in which we are looking at productions, but they are not connected to the system.

Thank you, President. Good morning, Juan Jose. With regards to your question, there is a natural decline of the fields of gas, yes, but it's not throughout the entire territory because, as we have said, there are volumes that we are expecting from the SixTerra project. We will have more supplies of gas for the country. In parallel to develop activities for mitigation, we have made several initiatives. There's a project that stands out to reduce the Cupiagua's decline that began last year, and we increased the production of gas there by 14%. There's another initiative in fields where we can apply exploration and development activities.

Two questions on my side. I understand you mentioned your breakeven level is around $50 per barrel. So if we start to see oil prices going to that level, what would be management's plan? Would you adjust the CapEx? And what would you do with the dividend? In that case, would you lower the payout closer to the 40% level, or would the company consider changing the range of the dividend distribution? And then on downstream, looking at the chart you presented, do you expect the exogenous external and operating factors that pressured EBITDA in the first half of the year to be fully resolved now in the second half of 2025?

Bruno, good morning. This is Camilo Barco, the CFO, and thank you for your two questions. Let me begin by answering your question related to the measures that we plan to take if there is a situation where the prices of crude oil are below the breakeven levels. As I said before, what's important here is that the premise of Ecopetrol is to preserve the production and reserves. The additional measures taken will try to affect them as least as possible, especially production reserves. But as it is natural, it is true that if we have a lower price range, we will have to take additional measures. When it comes to flexiblizing our investments, but most importantly, our focus is on managing higher efficiencies. And with this, I'd like to announce that we have not expected, and even we have announced that our protection measure is to manage our cash flow and the measures have been taken for our efficiencies. This year, our purpose is to go beyond COP 5 trillion in efficiencies.

Regarding your question about our expectations for the refineries, the major overhauls were completed in late April and early May, which is reflected in the EBITDA for those months and July. We do not anticipate major interventions for the second half of the year. In Cartagena, we previously discussed 18 actions aimed at improving the refinery's risk assessment, allowing it to progress from a high-risk to a moderate-risk level by September, thanks to these interventions. External risks primarily concern the supply of light oil and crude oil, but the major overhauls were successfully executed in the first half of the year.

My first question, I think, was answered before, which was on plans and incentives to stimulate natural gas either imports or production in Colombia. My second question is regarding the current situation of gasoline and diesel prices in Colombia at the moment and how this is expected to affect the FEPC balance going forward? And are there any changes expected?

Good morning Anne. Thank you for your question. For the rest of the year, we do not expect adjustments in prices of gasoline and diesel. So far this year, we have made actions at the production price. Here, we saw an increase in gasoline of COP 132 per gallon and gas as well. In addition, remember, these are regulated prices, and adjustments have been made by wholesalers specifically for industrial burners. So this elevated the price. At the end of the day, what this has done is to decrease our FEPC balances because of those adjustments today. There are discussions to increase diesel for high-end vehicles. We're looking at this, but remember, we're talking about regulated prices, and probably these actions will take place early 2026.

And our expectation, when it comes to stabilization of the fields by the end of the first semester, we are at COP 2.5 billion. Please remember that the nation has the FEPC payments 100% of the company, and that the expectation at the end of the year, as our CFO mentioned, is COP 5 billion of FEPC.

Hello, good morning, and thank you for your presentation. I have two questions. The first is on the EBITDA margin because in the last two semesters, it has dropped to 38.5%. And we're going to 39% for 2025. So I'd like to ask, do you see a second semester 2025 that's more profitable compared to the first semester of 2024 to keep this guide of 39%? Or have you considered reducing the guide of the EBITDA margin this year? I'd also like to know if you could shed some light on the profitabilities that you are showing for 2026.

Good morning, Ricardo. This is Camilo Barco, CFO. Thank you for your questions. Let's look at your question related to the EBITDA margin 2025. Specifically, the last periods or the last days of this quarter. Indeed, we have an impact, a strong impact on the EBITDA margin, especially compared to the historicals displayed close to 6.7%. As you said, 9%. What we should say on this matter is that in the presentation, we saw how there are several elements that have an influence on the performance of that EBITDA margin, one, which seems to stay in time, especially with what we're projecting for the rest of the year, and it's the most important related to prices. So a decrease of price that we saw 22% of course hurts significantly the EBITDA margin, and possibly this is something that will penalize us in the second semester. The second element has to do with surroundings, especially in the first semester. In the second semester, the group of Ecopetrol has been making significant measures to preserve its infrastructure and its operation.

Good morning, Ricardo. This is Juan Carlos Hurtado. When it comes to your question, regarding Lorito and Orca projects, Orca is a project that was sanctioned in the first quarter by the company, and later we carried out the milestone of the approval of the Brazilian authorities for the commercial component. This gave the commercial strength or drive to this. So this allowed us to make progression to reach the reserves we need and with the specifications that we will receive at the end of the year.

Thank you, Ricardo. It is a privilege to address you in this first earnings call as Executive Vice President of Transition Energies. I thank the Ecopetrol Group for the trust placed in me to lead this business line and to continue driving its growth. By the end of the second quarter of 2025, we are pleased to report the successful execution of the commercialization process for major gas fuels and classified natural gas in the Colombian Pacific region.

Thank you, all of you that have joined us today and that participated in this call. We will continue working constantly to consolidate our fundamentals, the traditional business of hydrocarbons, and our purpose to move on to clean energies and efficient energies. We are committed to our promise to create value for all of our stakeholders committed to our efficiencies, so we can compensate up to where it's possible the challenging setting of market prices and to be able to stabilize and counteract the costs, the lifting costs, and operational costs in terms of efficiency and competitiveness.