Ecopetrol S.A. Q3 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. 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 Guzman, 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 Third Quarter 2025 Earnings Call. Over the last 9 months, we have been focusing our efforts on reinforcing our core business operation, maintaining strict financial discipline, and advising profitable strategic projects, driven by energy transition and security for the country. These pillars have enabled us to effectively navigate and successfully face volatility in the crude oil market, the fluctuations in exchange rates, mitigating external pressures, remaining strongly aligned toward achieving our 2025 strategy objectives. Let's move on to the next slide, please. From the operations side, we continue to demonstrate robust operational performance across all business segments, sustaining elevated production levels, consolidating the recovery in refining following first half maintenance, as well as delivering outstanding results in transportation. Over the last 9 months, the average production was 751,000 barrels per day, placing us near the top of our annual guidance range. This was driven by the strong contribution from strategic actions in Colombia, such as Cano Sur and CPO-09, as well as the Permian Basin in the U.S. and targeted actions to mitigate different production in Cano Limon oil fields. Exploration activity exceeded expectations with 10 wells drilled and 3 currently underway for the remainder of 2025 reinforcing Colombia's natural gas potential. In transportation, we have achieved an average throughput of 1,098,000 barrels per day as of September, supported by cutting-edge operational solutions to effectively mitigate external disruptions. Key strategic milestones include the Covenas-Barrancabermeja connection via the reversal of the Covenas-Ayacucho system and regulatory approvals from the Environmental Authority for LNG reception and regasification infrastructure in Covenas, hence advancing the country's energy security agenda as well as enabling profitable system adaptation. Refining operations rebounded strongly, reaching 413,000 barrels per day over the 9-month period following the completion of major maintenance programs. Finally, we launched a multimodal logistics initiative between Barrancabermeja and Cartagena to export solid asphalt monthly with projected annual benefits ranging from $1 million to $2 million. Let's move on to the next slide, please. Our solid operating performance and a disciplined cost management strategy drove a clear recovery versus the previous quarter with an 11% increase in EBITDA to a margin of 41% and a 42% growth in terms of net income. On the commercial side, we have sustained a highly competitive crude differential, enabled by a productive marketing strategy that captures value in a low price environment. Ecopetrol continues executing its efficiency and profitability agenda, which contributed COP 4.1 trillion by the end of the third quarter. These results reflect our ability to reduce and control costs, generate revenue, and ensure disciplined CapEx execution. Year-to-date, investment reached nearly $4.2 billion, representing 72% of our annual target, fully aligned with the strategic growth map communicated to the market. Let's move on to the next slide, please. We are making consistent progress on our sustainability agenda while positioning Ecopetrol as one of the best companies to work for in the energy sector. As part of our decarbonization strategy, we have successfully reduced greenhouse gas emissions by 379,000 tons of CO2 equivalent as of September, an impact comparable to the annual energy consumption of 300,000 Colombian households. Our renewable energy capacity has reached 234 megawatts, driven by the commissioning of the La Iguana Solar Farm at the Barrancabermeja refinery. This milestone strengthens the competitiveness and sustainability of our energy supply. To deliver these initiatives, we have invested over COP 321 billion in our sustainable territorial development portfolio, generating inclusive economic and social growth in the regions where we operate. Our commitment to sustainability has been recognized by the Global Compact Network Colombia, which highlights our best practices in sustainable development. Additionally, we obtained the ISO 37001 certification, reflecting Ecopetrol's dedication to ethical business conduct and compliance with international anti-bribery standards. We are also proud of the progress made in strengthening our organizational culture. The Great Place to Work institute rated us at a very satisfactory level, with our Workplace Environment Index improving from 60 to 68, reflecting our focus on employee well-being, sustainable growth, and long-term value creation. These achievements confirm our strategic commitment to energy transition, operational excellence, and value generation for our shareholders and stakeholders. Now, I give the floor to Rafael, who will talk to us about the Hydrocarbons line. First, I would like to thank him for his results during the 2 years as Executive Hydrocarbon Vice President. His contributions to reaching these achievements have been fundamental for the consolidation of our strategy. We wish him success in his new role within the Ecopetrol Group.

Thank you, Ricardo. During the third quarter, we achieved key milestones in exploration and production that strengthened the competitiveness of our portfolio. Among the main developments, we find the drilling of 10 exploratory wells, 8 funded by the Ecopetrol Group, and 2 drilled under a sole risk scheme by our partners, with 3 currently in progress. The declaration of commerciality of Toritos and Saltador discoveries in Llanos 123 block has enabled the incorporation of proved reserves and continued resources, achieving 4 commerciality declarations so far this year. The ANH approved a 4-year extension of the Piedemonte exploration and production agreement, allowing the drilling of a new exploratory well and opening opportunities in areas nearby existing infrastructure. Throughout the current year, the business case for the limitation phase of the discovery was successfully completed, marking a key milestone in the project's development. Regarding feasibility activities, the prior consultation process is underway with the 120 certified communities for the submarine pipeline and beach crossing. This process, led by the National Authority for Prior Consultations, DANCP, has reached 52% progress. On the production front, we reached a total accumulated production of 751,000 barrels of oil equivalent per day, in line with the target range of 740,000 to 750,000. This result reflects the strength of our diversified production portfolio with the highest levels of domestic crude production since 2021 and record international production. Domestic crude production contributed 519,000 barrels of oil per day, driven mainly by Caño Sur and CPO-09, which together added 24,000 additional barrels per day compared to the previous year. International production was supported by operations in the Permian, which reported an average annual net production of 106,000 barrels of oil equivalent per day before royalties. This represents 14% of the Ecopetrol Group's total production. Additionally, we achieved an accumulated EBITDA of $691 million, with a margin of 78% and capital savings of approximately 17% compared to the annual investment plan, thanks to mitigation strategies for deferred production in the Cano Limon field. We achieved an incremental production of 4,400 barrels of oil per day compared to the previous quarter. On the cash front, the Florena UP16 development well began production on October 19, reaching an estimated sales volume of 12 million cubic feet per day. Enhanced recovery continues to be a key component of Ecopetrol Group's current and future production, representing 41% of total output as of September with 308,000 barrels of oil equivalent per day. Technologies such as tertiary recovery through air injection in the Chichimene field have enabled the addition of approximately 915 million barrels of oil equivalent in gross contingent resources. Let's move to the next slide. For the third quarter of 2025, the midstream segment reaffirmed its operational recovery, supported by increased transported volumes and financial stability. We transported an average of 1,118,000 barrels per day, representing a 1% increase compared to the third quarter of 2024 and a 3% increase versus the second quarter of 2025. This performance reflects two key drivers: First, the normalization of operations in Llanos Norte; and second, the recovery of the deliveries from refineries following the first half maintenance. Financially, the business remains robust with a growing EBITDA trend and a stable net income throughout the year. Key achievements during this quarter include the strategic advances that maximize infrastructure utilization and enhance system efficiency and flexibility, such as the commissioning of the connection between Covenas and Barrancabermeja refinery through the reversal of the Covenas-Ayacucho system. This initial phase enables the import of 6,000 barrels of oil per day at a competitive tariff, expanding the crude basket available for refining and generating additional transported volumes for the segment. We recorded historic utilization levels in the Vasconia-Barrancabermeja refinery system and the Colombian oil pipeline, ODC. Finally, in the area of diversification and sustainability, the segment received environmental approval from ANLA to develop LNG receiving and reclassification infrastructure in Covenas. Continuing with the refining segment results, performance was strengthened by the successful completion of the scheduled maintenance, increased unit throughput, strong margins, and sustained improvements in operational efficiency. Consolidated throughput reached approximately 429,000 barrels of oil per day, making this the second highest quarterly level in the segment's history. This result reflects the positive impact of completed maintenance, efforts to increase throughput, profitability, and a reduction in fuel oil production. From January to September, the integrated gross refining margin grew by 22% compared to 2024, driven by increased throughput in a favorable price and demand environment. This performance also reflects a strategic focus on maximizing high-value products. EBITDA continued its upward trend, reflecting cost efficiency and greater operational stability. Notable achievements include the recovery of electric reliability in Cartagena with completion of 30% on key milestones, solid asphalt exports, and the launch of marine fuel blended with biodiesel, aligned with our sustainability strategy. Let's move to the next slide. The efficiency program has strengthened its role as a key driver of value creation in the Hydrocarbons business line. We have executed targeted actions that have been crucial in maintaining a competitive unit cost. As of September 2025, the total unit cost in the Hydrocarbons business line stood at $45.5 per barrel, reflecting a reduction of $1.8 compared to the same period last year. Lifting costs reached $11.8 per barrel, which is $0.44 lower than in 2024, successfully meeting the target announced to the market. Despite the impact of exchange rate fluctuations on dollar denominated costs, the trend in local currency confirms our operational control, financial discipline, and commitment to driving a structural shift in key performance indicators. In refining, the conversion index at the Barrancabermeja refinery continues its upward trend, demonstrating that operational efficiencies also positively contribute to business profitability. This progress has been enabled by initiatives such as reducing fuel oil output through diversification into products like asphalt and biodiesel, which have allowed us to redirect streams toward higher-value products such as diesel. Let's move to the next slide. The Exploration and Production segment indicators show tangible progress in key operational efficiency. In the upper left corner, the energy management chart illustrates a gradual and structural reduction in energy intensity per barrel of fluids produced, partially offsetting the increased demand associated with higher fluid volumes. Another key area has been efficient cost management in subsurface operations, where over the past 3 years we have reduced both the number of maintenance required and the cost per intervention. In dilution, we have identified more cost-effective substitutes for naphtha such as LPG and other additives. Additionally, even Brent price levels, the value of naphtha decreased by 13% compared to the same period last year. Regarding investment maximization, we have improved key drilling metrics, including cost per foot drilled and average execution times. Furthermore, synergies in infrastructure have allowed us to fully leverage existing facilities, optimizing resources and generating greater value. Now I will turn it over to Bayron, who will share the main milestones from the energy transition business line.

Thank you, Rafael. Good morning, everyone. For the Ecopetrol Group, securing a reliable energy supply is critical to ensuring uninterrupted operations across our value chain. In the third quarter of 2025, our electricity demand increased by 11% compared to the same period in 2023, and by 6% versus 2024. Currently, we account for approximately 10% of the national electricity demand, and this figure is expected to continue growing over the coming years, particularly in the upstream segment. Our strategic focus is not only on warranting energy availability but also on doing so in a cost-effective and sustainable manner. This is essential to optimize production costs and accelerate progress toward our decarbonization targets. From a competitiveness standpoint, our demand coverage through self-generation and contracts from the electricity market reached 91% between January and September 2025, up from 80% in the same period of 2024. This higher coverage has contributed to stabilizing our unit cost of electricity supply, enhancing predictability for investment planning and operational decision-making. Notably, the cumulative unit cost of electricity supply as of September decreased by 5% compared to 2024. In terms of renewable self-generation, we commenced energization of the La Iguana solar project in September, adding 26 megawatts of installed capacity. This asset will support cost emission reductions at the Barrancabermeja refinery and thereby upstream periods. With this addition, Ecopetrol's total operation of renewable self-generation capacity now stands at 254 megawatts, delivering cumulative savings of approximately COP 42 billion year-to-date. Regarding the Windpeshi wind farm, we shared territorial engagement in July in collaboration with different institutional stakeholders towards strengthened community relations and monitoring compliance with the commitments established during the prior consultations. To date, we have completed the follow-up and received more than 50% of the agreements associated with the formalized prior consultations with the communities located in the project area of influence. Additionally, Ecopetrol has fully closed the acquisition of a portfolio of solar projects from Statkraft European Wind and Solar Holding. With this transaction, Ecopetrol becomes the sole owner of the acquired companies. This milestone reaffirms the group's commitment to the energy transition and the development of renewable solutions to strengthen its operations. Moving to the next slide. First, I'd like to highlight the announcement of the commercialization of natural gas from the offshore Sirius field by Ecopetrol and Petrobras, with volumes of up to 249 million cubic feet per day and an estimated production start in 2030. Sales contracts are scheduled to be signed no later than December 12, 2025. We're also advancing the gas supply optionality strategy in the Caribbean region through the Covenas LNG regasification project. This initiative includes the development of a natural gas hub featuring a flooring storage and regasification unit to receive and process imported LNG. Our midstream subsidiary, CENIT, will adapt existing infrastructure to enable efficient gas transportation to inland markets. The tender process for logistics and regasification services was launched on October 14 and is expected to conclude in January 2026. In October, we implemented a contingency plan to safeguard the national gas supply during scheduled maintenance at the SPEC regasification terminal located in the Caribbean. Measures included strategic demand-side management across upstream assets and refineries, as well as substitution with thermal energy sources. This enabled the release of 71 GBTUD to the market with average deliveries of 37 GBTUD between October 10 to 14 and 43 between October 15 and 16. We continue to strengthen Colombia's gas supply through commercialization of natural gas from the Florena field and LPG sourced from our refineries and production sites. Lastly, in August, we broke ground on the Coral hydrogen project, a key component of our low carbon strategy. As of today, the project has reached 55% completion. The green hydrogen produced will be integrated into the Cartagena refinery and will be used in the production of sustainable fuels. Commissioning is expected in Q2 2026. I now hand over to Camilo Barco, who will walk us through the financial performance for the period.

Thank you, Bayron. This third quarter reaffirms our resilience and discipline in a challenging environment, marked by a nearly 15% decline in Brent prices year-to-date. The Ecopetrol Group demonstrated its ability to adapt, seize opportunities, and maintain operational and financial stability. The quarter closed with an EBITDA of COP 12.3 trillion, an EBITDA margin of 41%, and a net income of COP 2.6 trillion, surpassing the performance of the previous quarter. This was driven by the recovery in the refining segment, strict cost control, and improved results from ISA, which offset the impact of exchange rate fluctuations and a low price environment. As of September 2025, cumulative EBITDA reached COP 36.7 trillion, reflecting our strong adaptability through a commercial strategy that leverages favorable product and crude differentials, solid productions, and a rigorous efficiency program. These strategies partially offset the material impact of price declines, inflationary pressures, operating expenses, and major refinery maintenance and nonrecurring tariffs adjustment in ISA Brazil. The Exploration and Production segment, which is highly sensitive to crude prices, accounted for 53% of EBITDA. Meanwhile, the Transportation, Transmission, and Toll Road segments naturally hedge against market volatility, contributing 42%. The remaining 5% came from the Refining segment, which began a recovery path, capturing improved margins in recent quarters. Transmission and Toll Roads contributed COP 2.5 trillion in EBITDA during the third quarter and COP 6.6 trillion year-to-date through September 2025. This was supported by the commissioning of new transmission projects generating revenue, the positive impact of contractual escalators, indexing contract income, and stronger performance in the road construction business. However, nonrecurring events affected year-over-year comparisons, mainly due to tariff reviews in ISA Brazil during 2024 and 2025, as well as provisions related to account receivables. Regarding our efficiency program, we have focused on four key levers throughout the year. First, crosscutting costs, where the optimized procurement of goods and services control demand and advance digitalization. Second, maintenance through material reuse, reliability improvements, and reductions in operating costs. Third, energy costs, where we promoted energy efficiency, substituted fuels, utilized gases, and incorporated self-generated renewable energy to reduce exposure to spot market energy prices. And fourth, the logistics team, optimizing crude lending, liquefied transport, and operations. Thanks to these efforts, we have achieved COP 4.1 trillion in efficiencies this year, 40% above our target for this period. Additionally, the measures announced in the first quarter show 84% progress in cost and expense reduction actions and 77% progress in investment optimization. These measures have a positive effect on lifting costs, cash flow, debt, and CapEx and will be an integral part of our 2026 strategic plan. Let's move on to the next slide. We continue to maintain healthy liquidity. As of the end of September, Ecopetrol Group's cash position stood at COP 14.1 trillion, reflecting an increase of COP 1 trillion compared to the previous quarter. This result was driven by operational activity and the sale of short-term debt securities, which enabled us to reduce short-term debt, meet debt service obligations, and finance investment plans. In this regard, the group's liquidity is secured until the year-end. On the tax front, it is worth noting that between January and September, Ecopetrol SA and the Cartagena refinery accumulated tax credits totaling COP 12.2 trillion. In parallel, COP 5.2 trillion of these credits have been offset against tax obligations throughout the year. From a cash perspective, the company is actively managing the working capital impact to mitigate their effects. Additionally, we can now affirm that the FEPC fuel price stabilization fund no longer represents a material impact on our working capital. Accumulations during the second and third quarters were below COP 1 trillion, reflecting the government's effort to reduce this account, as well as the influence of international prices and exchange rates on the balance. We have also made 80% progress toward our internal working capital management goal set in March, thanks to coordination with subsidiaries, optimization of financial expenses, and the gradual unwinding of repos on securities received as payment from FEPC. Regarding exchange rate management, we continued executing FX hedging strategies that protected between 11% and 15% of dollar-denominated revenues during the third quarter. We also initiated coverage for the period from May to December 2026. This active management allows us to partially mitigate market risk associated with the Colombian peso's appreciation. Now let's move on to the next slide. Our financing strategy is built on three basic pillars. First, the prepayment of short-term obligations, including treasury loans and repos with a commitment to close the year without incremental debt associated with the organic plan. Second, the renegotiation of all bank debt currently underway, aiming to reduce dollar-denominated debt cost by up to 105 basis points and local debt cost by 85 basis points. This operation has been already approved by the Ministry of Finance and Public Credit, reaffirming the financial system's confidence in Ecopetrol's strength. Third, new facilities such as the committed COP 700 billion credit line announced with Davivienda, which will serve as a liquidity backstop in a challenging environment. We are also advancing the restructuring of financial schemes for the inorganic opportunities in renewable energy, aiming to reduce the group's energy cost. This comprehensive management allows us to maintain healthy debt levels. As of September, the gross debt-to-EBITDA ratio stood at 2.4x. Excluding ISA's debt and the debt related to its acquisition, the ratio was 1.7x, below the industry median. A key highlight is the reaffirmation of our credit rating by Fitch Ratings, which emphasizes Ecopetrol's strategic importance to the country, our financial strength, and operational stability. The global credit rating was maintained at BB+ and the stand-alone credit profile at BBB-. Let's now move on to the next slide. The third quarter showed strong investment momentum, with cumulative CapEx reaching $4.179 billion, representing 72% of the annual plan. Investments were distributed as follows: 62% in Hydrocarbons, primarily in Exploration and Production, strategic refinery projects such as emissions control and fuel quality improvements, and ensuring continuity of refinery and transportation network operations; 13% in Energies for the Transition, focused on strengthening the gas value chain in the Caribbean and Piedemonte regions; and 25% in Transmission and Toll Roads, with over $1 billion invested. Of this, 91% went to energy transmission in Brazil, Peru, and Colombia, 8% to road infrastructure in Panama and Chile, and 1% to the telecommunications sector in Colombia. 62% of investments were executed in Colombia, followed by Brazil with 21%, the United States with 12%, and other countries with 5%. Growth investments accounted for 75% of the total, with the remainder allocated to maintenance needs. In terms of capital discipline, we have achieved 77% progress on measures aimed at capturing CapEx flexibility with a target of $500 million to safeguard production for the remainder of the year. It is important to highlight that our investment plan is designed around the price range that allows us to adapt to various scenarios, maintaining capital discipline and ensuring competitive returns. Looking ahead to 2026, we anticipate a more challenging price environment. Our focus will be on strengthening the group's resilience and competitiveness. We are committed to keeping the lifting cost low at $12 per barrel, ensuring an efficient and sustainable cost structure. We will maintain strict capital discipline and healthy debt metrics, prioritizing cash preservation to ensure liquidity in adverse scenarios. Additionally, we will incorporate efficiency initiatives to maximize value and deliver attractive returns to our shareholders. The Ecopetrol Group continues to demonstrate that even amid volatility, it is possible to maintain solid operations, disciplined financial management, and clear strategic vision. Now I will turn it over to the President, who will present the conclusions.

Thank you, Camilo. The results delivered this quarter put us in a strong position to meet our operational and financial objectives for 2025. Finally, we are advancing in the transformation of our infrastructure to support new energy sources and the ongoing integration of nonconventional renewable energy, reinforcing our ability to contribute profitably to Colombians' energy security. We will continue to prioritize cost optimization, business enhancement, operational agility, and monitoring of market dynamics and global developments. These actions have enabled us to reverse adverse trends across all key performance indicators while aligning the growth work for our 2026 financial plan, which will be announced shortly. We appreciate your participation and invite you to continue with the Q&A session.

Daniel Guardiola from BTG is online with a question.

I have a couple of questions. One relates to the Permian. Given the public discussion about a possible sale of this asset, could the administration clarify if there is a formal instruction, a political request, or a government expectation to sell this asset? If so, are you considering selling it, and does management agree to this? Can you provide the rationale behind this? Has there been an analysis that reviews the potential creation or destruction of value if this Permian asset is sold? My second question is regarding the possibility of a senior management member of Ecopetrol being on the OFAC list. Given the recent political climate, has the company assessed the risk of having a management member on this list? What impact do you think this would have on Ecopetrol concerning financing, market access, defaults, and relationships with vendors? Those are my two questions.

Daniel, this is Julian Lemos. Let me address the first question. As we stated recently, regarding the requirements set by local governments, Ecopetrol and its shareholders are not planning to divest from Permian. Nonetheless, any decision related to Ecopetrol's portfolio will be thoroughly analyzed and discussed within the Board of Directors, which is responsible for these decisions.

Daniel, good morning. This is Rodolfo Garcia. Ecopetrol has a strong and effective corporate governance and compliance system. Within this framework, we continuously monitor our environment and assess various scenarios based on risk. We identify different scenarios and mitigations to ensure the company's operations and adherence to regulations. Therefore, in a situation like the one you mentioned, we must analyze the specific program that requires our attention, keeping in mind the motivation, scope, and measures involved.

Camilo Barco. To add to Rodolfo's response regarding the OFAC, I want to highlight that we have developed a mitigation plan, considering various scenarios and the potential impact of future sanctions. This plan includes specific actions aimed at minimizing or eliminating any risks associated with accessing capital markets while ensuring strict adherence to all our financial obligations.

The next question is from Andres Duarte from Corficolombiana.

My first question relates to the exchange rate. Can you provide more details on the impact it has on the revaluation that you hadn't anticipated in your recent plans? I understand there is a sensitivity of COP 0.7 billion in operating earnings regarding devaluation or revaluation. So, how does the exchange rate really affect this? My other question is about Sirius. Specifically, what support is the national government providing to advance this project? Is this strategic project being prioritized for the country, or are you operating like any other large company? I would like to know what assistance and facilitation we have received from the government to ensure that all consultations are completed by 2026.

This is Camilo Barco again. To address your first question about the exchange rate, our revenues are primarily in dollars, which significantly influences our financial results. Regarding sensitivity analysis, a COP 100 change in the exchange rate could impact our net profit by COP 700 billion over the year. Reflecting on the first nine months of this year compared to last year, we are experiencing a positive effect. Last year, the average exchange rate was COP 3,970, while currently it stands at COP 4,132, leading to a positive contribution of COP 600 billion related to EBITDA this year, and a total positive impact of COP 1.1 trillion. In response to your comment about the last quarter, we are taking additional measures. Our financial plan for 2025 was initially based on a projected exchange rate of COP 4,150, but it is currently closer to COP 3,950, which will necessitate further adjustments to address this external factor. We have a coverage program in place that has effectively mitigated the impact of the exchange rate fluctuations. Importantly, we are seeing favorable outcomes from our hedge accounts that will help stabilize our equity and neutralize effects on our income statement. This covers everything related to your question about the exchange rate.

I am Rafael Guzmán, the Corporate VP of Hydrocarbons, and I would like to address your question about Sirius. First, I want to remind you that Petrobras is the operator and leads all activities for this development. At Ecopetrol, we provide assistance through close follow-up to ensure the program is executed as planned. Regarding the government, we are having ongoing discussions with the ACP and have a specific timetable in place. We consistently collaborate with them, and I would like to take this moment to thank the DANCP for their efforts in making this project, as per the established program, a success. Currently, we are concluding consultations that are set to finish by July 2026, after which we will begin discussions for the connection to the Ballena station in La Guajira. With these activities in place, we clearly understand how to proceed and adhere to the timetable for gas delivery as mentioned.

We also have Ricardo Sandoval from Bancolombia.

I have a question about the process with the DIAN. If you have an embargo on everything you have, would it lead to a default of the bonds? Are there clauses in the bond prospects regarding the effects of this embargo? Could you please clarify this?

Camilo Barco again. Thank you for your question. First, I'd like to highlight that recently, the Tax Authority of Colombia stated officially that there is no embargo in this controversy regarding Ecopetrol. Additionally, in the stage of co-active charges, Ecopetrol and Reficar have taken measures to protect their rights. We have seen tutelas presented that will help us avoid any potential measures that we believe are inapplicable in this case. Alongside this tutela, we have requested advanced interventions from the control agencies that are currently supervising activities to ensure that nothing affects the normal operation of Ecopetrol. These entities will assist in protecting operations. Furthermore, I want to emphasize that Ecopetrol has been meeting all its financial obligations on time. We are vigilant in safeguarding our capacity to fulfill these obligations. Therefore, we continue to adhere to our schedule regarding timing and amounts. Additionally, we have prepared for any contingencies related to cash flow. Of course, any situation will depend on the determined amount. We trust, based on the DIAN's statement, that this will not proceed, but depending on the amount, different protections and decisions will be made to ensure timely compliance with our obligations in the financial market.

The questions next will be made in English. Luisa Belin from Morgan Stanley.

So my first question is regarding production. That remains sort of flat both year-on-year and quarter-on-quarter basis. So what would be the perspective in terms of Q4 '25 production? And how do you envision the production growth profile for 2026 amid the oil price volatility scenario, even if results so far are within the guidance from the company? And my second question is regarding refining margins, which posted a sequential improvement. But what do you believe is a normalized level of refining EBITDA per barrel, and what would be the steps going forward to reach these levels?

Luisa, good morning. This is Rafael Guzmán, Corporate VP of Hydrocarbons. I will address your first question regarding production, while Felipe Trujillo will handle the second. As you noted, our current production stands at 751 barrels per day equivalent. We anticipate that by year-end, we will be within our projected range of 740 to 750, likely leaning towards the higher end. We are actively working on our investment plan for 2026, so we haven't set a production estimate for next year yet. We need to consider the decline in oil prices we've experienced this quarter, which we also expect to continue into next year. However, we aim to maintain production levels that align with our targets for 2025 as we progress into 2026.

This is Felipe Trujillo, the VP of Refining and Production. After implementing numerous overhauls and scheduled stops, we have concentrated on five key elements that have enabled us to enhance EBITDA and refinery yields. These elements include operating availability, utilization factor, sustained load increases at each refinery, maximizing valuable products, and ensuring reduced costs. This is our objective for the remainder of the year. For 2026, this strategy should help us achieve good yields in a favorable differential scenario similar to what we experienced in the second half of this year and the first half of 2026.

The next question comes from Nicolas Barros of Bank of America.

The next question comes from Nicolas Barros of Bank of America.

Nicolas, this is Rafael Guzmán, Corporate VP of Hydrocarbons, again. Currently, we have a joint venture that will last until mid-next year with planned investment activities. This joint venture may be extended, or we will continue our work in the Permian, particularly in Texas, under the signed JOA, allowing for investments in the joint venture with the possibility of extension or investments via the JOA. We are evaluating what is most beneficial for Ecopetrol and will present this to Oxy at the appropriate time. Regarding the expected production for Permian next year, we anticipate it will be similar to our target for this year, which is around 90,000 barrels per day. However, as you mentioned, this will rely on the agreements reached with our partner, Oxy, whether through the joint venture or JOA after the first half of next year.

We continue with Guilherme Costa from Goldman Sachs.

I have two quick ones. The first one on capital allocation. We have been seeing some news flow indicating that Ecopetrol could be seeking to divest from specific assets like the Permian. While on the other hand, we saw yesterday the announcement of the acquisition of solar assets. I just would like to pick your thoughts here on what main assets the company would be seeking to divest from next year. And conversely, which assets do you think would make sense to acquire a stake in? My second question is on EBITDA, specifically for the upstream segment, which came in above what we were expecting. Could you please help us better understand what were the main drivers for the enhancement in profitability for the upstream segment?

Guilherme, this is Rafael Guzmán, Corporate VP of Hydrocarbons. I would like to address the topic of CapEx allocation before asking Julian Lemos to discuss these investments. We always allocate capital by investing in the most profitable assets, which is the approach we are taking for next year. Additionally, we have options, including partnerships that allow us to provide capital to Ecopetrol's assets not prioritized in our portfolio. We have an alliance with Parex in Putumayo to invest COP 350 million in projects in that area where we do not plan to invest directly. This year, we also expect to finalize another negotiation with a different partner to provide capital for other Ecopetrol assets. This strategy enables us to maximize our portfolio's value by using our own capital for the most profitable assets and through partnerships.

Guilherme, this is Julian Lemos, VP of Strategy and New Businesses. Following what Rafael mentioned, we are exploring various options in Colombia through different partners to engage in activities in areas with potential. However, we currently do not have capital allocated for these activities. This has been an ongoing process throughout the year. We will announce any agreements reached to the market as they occur. We plan to continue this approach next year, as long as we can enhance profit and production by incorporating partners in specific assets.

We continue with Joao Barichello.

Regarding dividends, year-to-date net income is down by 32% year-over-year, which implies lower dividends considering the current policy. That said, do you expect payout to remain at the higher bound of guidance? And given lower oil prices, is there any discussion on potential changes to the policy? And my second one, do you see room for a reduction of lifting costs looking forward? Could we see a return to the $11 per barrel level at some point? And what will be the main triggers for that? That's it.

This is Camilo Barco. Regarding dividends, it's important to note that Ecopetrol has a clear policy of distributing dividends between 40% and 60% of distributable profit. For the next year, we expect to maintain the same approach as this year, aligning with our majority shareholder's expectations within this policy range. Therefore, it is likely that we will stick to this practice. Our proposed dividend distribution for next year will be around the medium range of that policy. However, the final decision on the dividends to be distributed will be made at the shareholders' meeting.

Joao, this is Rafael Guzmán. Let me address your second question. Yes, we are dedicated to further reducing lifting costs. We have various initiatives in place for this. We'll carry on with our efficiency plan, as we've demonstrated in recent years and this year. Additionally, we aim to take action regarding less profitable assets that have high lifting costs. This includes portfolio turnover related to the divestment of these assets, as well as increasing production from other assets, including partnerships that provide capital and help us lower lifting costs. Therefore, we are focused on both reducing costs and boosting production from these high lifting cost assets.

Thank you. We have no more live questions. We will now address others. Hernan Goicochea of LatinFinance asks about your financing plans and whether you intend to issue bonds in the global and local bond markets.

Again, this is Camilo Barco. It's important to emphasize that Ecopetrol is currently developing its financial plan for 2026. Within this plan, we will have projections and expectations regarding market price performance, as well as efficiencies and savings we are targeting, which will inform us about the cash flow available for investments. Additionally, we will assess the financing requirements needed, aiming to lower our current financial costs. To achieve this, we are exploring various management opportunities to enhance the profile, conditions, and costs associated with financing.

Could you provide more details on the new 5-year loan facility, including the interest rate? Is it a revolving credit line or a traditional loan? Will this facility be secured by specific assets or the entire company?

Give me a second, please. I don't have the name. Regarding the committed line, it is a revolving credit line of COP 700 billion with a rate of IBR plus 2.65. Those are the conditions of that line. We will only utilize it as needed, but the important point is that it is currently available.

Jose Ortiz from Bancolombia asks how the suspension of operations in Tibu could be impacting the gas service and how long this suspension will last.

Jose, we have indeed halted operations in the northern part of the Tibu field, but not the entire field. The gas production from this area makes up less than 1% of our total gas output in Colombia. However, it is a significant source for Norte de Santander. As you noted, we are collaborating closely with the authorities in Norte de Santander, including the Army and the police, to restore operations as quickly as we can. We have been able to source gas from other supplies, but we are focused on bringing this operation back online as soon as possible.

Thank you. We have no more questions. Let's hear from Mr. Ricardo Roa, the President of Ecopetrol, for final remarks.

Okay. It seems that we have technical issues, but we would like to extend our special thanks for joining us today and for your engaging questions. We will continue to work towards Ecopetrol's strategic goals to ensure Colombia's energy safety and to advance the country's energy transition. Thank you once again. We wish you a very good day.

Thank you all. With this, we end our talk of the Third Quarter of 2025. Thank you for attending. You may hang up.