Earnings Call Transcript - EC Q1 2025

Operator, Operator

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 first 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 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 David Riano, Executive Vice President of Transition Energies. Thank you for your attention. Mr. Roa, you may begin your conference.

Ricardo Roa, CEO

Welcome to the first quarter results call of the Ecopetrol Group for 2025. The first months of the year were marked by high global uncertainty with notable volatility in Brent prices, driven by geopolitical tensions and increased supply from OPEC+. These factors required the activation of different plants to address lower price as synergies. At Ecopetrol, we have historically anticipated these challenges with a strong strategy, diversifying our customer base, enhancing our commercial management, and maintaining operational and capital discipline. This approach has enabled us to navigate the environment confidently and take advantage of the opportunities that emerged. At the hydrocarbons line, we closed the quarter with an average production of 745,000 barrels of oil equivalent per day, in line with our annual goals and maintaining a growing trend despite local events. We are moving ahead with our exploration campaign and have achieved important milestones in the Caribbean offshore and our operations in Brazil, reaffirming our commitment to growth and the sustainability of reserves. In transportation, we maintain our resilience controlling social events, preserving operational continuity while developing key infrastructure to reduce the time and cost of logistics for our crude oil and refined products. Regarding our refineries, as anticipated, throughput was temporarily affected by scheduled maintenance shutdowns according to plan, ensuring safe, reliable, and efficient operations. The refining margin decreased by $3.9 per barrel compared to the first quarter of the last year, explained by 53% due to product differentials, 30% due to the scheduled maintenance, 14% due to unplanned operational events, and 3% due to other events. Among these events, there were energy issues at the Cartagena Refinery, where we maintain our mitigation plan in progress. We firmly believe that natural gas is a key energy source for the energy transition and the electrification of the country. We continue contributing to national supply with significant progress in the development of fuel gas along with important milestones such as the signing of the regasification services contract on Colombia's Pacific Coast. This project has a potential of 60 Giga BTUD and is expected to begin operations in the second quarter of 2026. We are also advising the Caribbean regasification project, which will leverage Ecopetrol Group's assets to commercialize up to 250 Giga BTUD with an estimated starting in 2027. Our Executive Vice President for the Energy Transition will provide more details about these projects shortly. I want to highlight that Ecopetrol Group supplied approximately 68% of the country's natural gas demand during the first quarter, proving our critical role in Colombian energy security. In renewable energy, we remain committed to achieving 900 megawatts of self-generation capacity this year, actually expecting to surpass 1,000 megawatts. This will allow us to continue reducing energy costs in our operations and to maintain our position as the leading self-generator of renewable energy in the country. During the first quarter, our energy efficiency program generated savings of nearly COP 23 billion, reaching a total of 21 petajoules since the program began in 2018. Finally, we continue to manage environmental licenses and the complementary regulations required to legally enable our energy transition projects. Financially, this was a stable quarter despite lower Brent prices. I want to highlight several aspects. First, we continue to strengthen our efficiency program, optimizing cost and generating more value for every invested dollar as part of the company's future, which is reinforced to face current scenarios. Secondly, I want to highlight the progress of the investment plan for the year, which has reached near to 20% execution. This progress has been affected by external events in the Rubiales, Castilla, and Caño Sur fields. However, we have achieved important advances in efficiencies through new initiatives in drilling and completion in our operations in the Permian and through circular economic projects evolving material reuse. Thirdly, I want to mention that we received early payments from the Fuel Price Stabilization Fund by the government, covering the balances of the second, third, and fourth quarters in 2024. In addition, the lower accumulation during this quarter reflects both the government's commitment and Ecopetrol's effective management. And lastly, the payment of dividends to our shareholders demonstrates our financial strength. I now leave the floor to Rafael Guzman, who will present the results of the hydrocarbons business line.

Rafael Guzman, Executive Vice President of Hydrocarbons

Thank you, Ricardo. As of 2025, we have a 17% progress in our exploration investments with four wells finished and two more wells in drilling operations, out of 10 planned for the year. Key highlights for this investment include operations in the GUA-OFF-0 block with the successful completion of the initial formation testing of the Sirius-2 ST2 well. This allowed us to confirm the reservoir conditions and identify a production potential higher than initially estimated. Additionally, as part of the development environmental licensing process for the Sirius discovery, we have successfully completed the required consultation process with the 116 communities certified by the National Authority for prior consultation. Furthermore, drilling began on the Buena Suerte-1 well. This well, located 11 kilometers from the Sirius discovery, aims to test the presence of gas in an exploration concept different from that of the aforementioned discovery. As for the onshore activity, oil presence was confirmed in the Zorzal Este-2 well drilled in 2023 by Geopark in partnership with Hocol in the region. The well is currently undergoing full tests. Regarding the offshore assets in the South Caribbean, where Shell has been our operator partner in the COL-5 Purple Angel and Fuerte Sur blocks, we have been conducting a review since February 2025 to assess the best alternatives to continue executing the investments in light of a potential decision by the partner to divest its interest. These projects are a priority for Ecopetrol and have solid technical and economic viability. The next steps in the development of these discoveries include a continuation with the conceptual basic and detailed engineering for connecting the gas to the national transportation system as well as efforts with the Ministry of Mines and Energy and the Energy and Gas Regulatory Commission to enable gas evacuation to the national system along with any required adjustments to the tariff system. Ecopetrol has full capacity to ensure the continuity of operations. During the first quarter of 2025, the final investment decision for Gato do Mato was approved. This development is part of our strategy to geographically diversify the hydrocarbon portfolio and increase reserves. We expect partial reserves incorporation in 2025. This decision followed a reengineering process for the development and includes the installation of an FPSO designed to process up to 120,000 barrels of oil per day. It is the first development project in which Ecopetrol participates in the pre-salt area of the Santos Basin in Brazil. Gato do Mato has certified 112 million barrels of 2C contingent oil resources net to Ecopetrol before royalties. Production is expected to begin in 2029, reaching approximately 33,000 barrels of oil per day net to Ecopetrol. In midstream, the volumes transported decreased by 2% compared to the first quarter of 2024, primarily due to the scheduled maintenance of the Barrancabermeja refinery, which impacted both oil and refined product volumes. The midstream segment activated alternative logistics schemes to complement the necessary volumes and meet domestic production demand, maximizing the use of available infrastructure during such maintenances. Additionally, we successfully evacuated more than 3.7 million barrels from the Arauca fields through the Bicentenario pipeline, following the suspension of the Banadia-Ayacucho section of the Cano Limon-Covenas pipeline. Lastly, I would like to highlight the financial strength of the midstream segment, which continues to contribute to the stability of the group's financial results in times of volatility, with an 11% growth in EBITDA driven by certain factors and improved operational performance.

Camilo Barco, CFO

Thank you, David. During the first quarter of 2025, important maintenance activities were carried out in our refineries. In Barrancabermeja, scheduled maintenance took place in the diesel hydro-treater and the aromatic plant. Additionally, major maintenance work began at the UOPII cracking unit, and it's progressing as planned. In Cartagena, an unscheduled total shutdown occurred from February 14 to 20 with no impact on refined product supply in Colombia. Followed by the commencement of scheduled maintenance on the hydrocracking unit. The consolidated refining throughput for the first quarter of the year was 396,000 barrels per day, representing nearly a 7% reduction compared to the same period in 2024 due to scheduled maintenances and the operational events mentioned earlier. The refining margin for the first quarter was $10.9 per barrel, which is $3.19 per barrel lower than the same period last year. 53% is associated with a reduction in international fuel price differentials, 30% with the scheduled maintenances, and 14% with unplanned operational events including the shutdown of the Cartagena Refinery. Similarly, during the first quarter of the year, there was a 67% decrease in EBITDA compared to the quarter of 2024, with 40% of the impact related to exogenous factors such as falling prices, exchange rate fluctuations, and refined product theft. 43% of the reduction was due to the operational expenses arising from the maintenance plan, inventory management, and higher gas costs. Compared to the fourth quarter of 2024, there was an increase in both refining margin and EBITDA, driven by better product differentials. To address the challenges of 2025, we have made progress in the following value levers. At the Cartagena Refinery, significant profit has been made in recovering electrical reliability with seven of the 16 plant milestones achieved to date. By June 2025, we expect to mitigate the risk from very high to mid. Regarding cost optimization, an 8% reduction in refining cash costs was achieved compared to the fourth quarter of 2024, primarily due to the reduction in unplanned maintenance to maximize value. First, the expansion of the coking capacity of the Cartagena unit, which is underway and is expected to be operational in 2027. Second, various initiatives aimed at increasing productivity at the Barrancabermeja petrochemical plant are being advanced. Lastly, in the strategic projects aimed at diversifying and exploring new markets, I would like to highlight the approval by the Board of Directors of the Project Fuel Quality Baseline in Barrancabermeja and the project implementation of improvements to the U-107 naphtha hydrotreater in Cartagena. These projects are intended to improve the EBITDA of the downstream segment by generating higher value products and the improvement of gasoline quality. They also contribute to reducing fuel imports for the country and improving air quality in Colombia. In the first quarter of the year, we made progress on the efficiency plan, and we are above expectations, achieving COP 0.7 trillion from the upstream, midstream, and downstream segments as well as from the corporate areas. These efficiencies higher than those of the first quarter of 2024 have allowed us to advance in cost control with reductions in lifting costs, transportation costs per barrel, and refining costs compared to the last quarter of 2024. In 2025, we continue with an asset profitability enhancement plan that will allow us to maintain lifting costs below $12 per barrel.

David Riano, Executive Vice President of Transition Energies

Thank you, Rafael. One of our strategic priorities is to move forward with projects that contribute to meeting natural gas demand under current supply conditions. In this context, we would like to share the progress on our regasification initiatives. On February 28, we signed a contract as a user of integrated regasification classification services on Colombia's Pacific Coast with Pio SAS, a company responsible for building, operating, and maintaining the facilities. Pio was selected after several negotiation rounds within a competitive process that included 18 companies. The project involves the use of a floating storage unit anchored in Buenaventura Bay and a regasification facility located in Buga. This new infrastructure will enable the receiving, storage, and regasification of LNG with an estimated capacity between 60 million to 100 million cubic feet per day and a storage capacity of up to 138,000 cubic meters. Operations are expected to begin in the second quarter of 2026. Additionally, the commercialization process will begin in July 2025, starting at 60 Gigabtu per day for five years, supported by key regulatory developments that opened the door for new players in the regasification and commercialization of imported gas. At the same time, we are evaluating the feasibility of regasification projects on the Caribbean Coast, leveraging the Ecopetrol Group's existing infrastructure in two fronts; by LNG using assets from the Guajira Association to deliver gas to the national transportation system from the transmission station through a floating storage and classification unit. Covenas LNG is using Cenit's assets and a floating storage and regasification unit connected to the Covenas port. This option will require infrastructure conversion to ensure connectivity along the whole Covenas segment, with an estimated transportation capacity of 130 million cubic feet per day by 2027 and up to 400 million cubic feet per day by 2029. This project will enable the commercialization of up to 250 Gigabtu per day with expected deliveries in 2027. Both initiatives reflect a comprehensive supply strategy, using existing infrastructure to expand supply capacity while ensuring greater flexibility to meet the country's demand.

Rafael Guzman, Executive Vice President of Hydrocarbons

Additionally, we are launching a new commercialization process for natural gas from our major fields, covering the period from December 2025 to November 2030. This cycle includes the sale of a 51 Gigabtu per day block over three years between 2027 and 2030, with volumes ranging from 9 to 41 Gigabtu per day. During the first quarter of 2025, the Ecopetrol Group supplied about 68% of the national natural gas demand and 83% of nonthermal power demand, supported by a production of 158,000 barrels of oil equivalent per day of gas and LPG, and EBITDA generation of COP 915 billion. Our energy efficiency program delivered 1.27 petajoules in the first quarter of the year, avoiding over 90,000 tons of CO2 equivalent emissions and generating nearly COP 23 billion in savings. Since its launch in 2018, the program has accumulated 21.18 petajoules, representing a 71% progress towards our 2030 target. In the first quarter of 2025, the incorporation of non-conventional renewable energy sources allows savings of over COP 10 billion. In addition, we reached more than COP 6 billion in wholesale energy purchases. Lastly, we are progressing on an inorganic growth portfolio that could add over 1,500 megawatts of installed capacity from non-conventional renewable energy sources between 2025 and 2028. This includes the signing of our framework investment agreement with ISA Colombia, which set the conditions for a potential 49% stake in the Jemeiwaa Ka'I wind cluster located in La Guajira, subject to the fulfillment of precedent conditions.

Camilo Barco, CFO

Thank you, David. During the first quarter of 2025, ISA continued delivering outstanding results and contributing to the diversification of the Ecopetrol Group. These achievements are due to the commissioning of new projects, the positive effect of contractual indexation, higher returns from road concessionaires, and an increase in revenues from the telecommunication business. ISA exhibited a comprehensive growth with an increase of 9% in revenues and 8% in EBITDA year-over-year. Its contribution within the Ecopetrol Group increased accounting for 13% of revenues and 18% of EBITDA, aligned with our long-term strategic diversification objective. Additionally, we highlight the dividend contribution from ISA to its majority shareholder, which for 2025 totaled COP 720 billion and its return on average equity of 16.8% for the first quarter of 2025. With the early achievement of key goals for the ISA 2030 strategy, the company is moving forward with its new 2040 strategy, energy that brings life to the transition. This strategy outlines a roadmap towards a future, more sustainable, innovative, and committed to Latin America's development.

Rafael Guzman, Executive Vice President of Hydrocarbons

Regarding the awarded and operational projects, several important achievements stand out. In Brazil, reinforcements were added to the electrical grid. In Chile, the new 220 kilowatts Las Palmas Centella flow control system project was awarded to Inter Chile. In the road segment, the implementation of the free flow system on the Ruta Maipú was agreed upon, facilitating traffic in the South access to Santiago. Additionally, the commissioning of the renovation of the Guatiguará and Tasajero substations in Santander, Colombia, and six additional reinforcements in Brazil, as well as the expansion of 21 projects in Peru are noteworthy.

Camilo Barco, CFO

The financial results for the first quarter of 2025 reflect our attempts to consolidate structural efficiencies and protect the company's profitability and liquidity. As Ricardo and Rafael mentioned before, the declining Brent reference prices and major maintenances in the downstream segment to guarantee the production of quality fuels and preserve the integrity of our operations impacted our results. Net income stood at COP 3.1 trillion, EBITDA COP 13.3 trillion, and EBITDA margin reached an outstanding 42%, proving our effective control and lower costs and expenses compared to the last quarter of 2024. The Transportation and Transmission segment contributed 42% to the EBITDA, effectively mitigating the impact of price volatility. The exploration and production segments contributed 54% to the EBITDA, while the refining segment accounted for the remaining 4%. We invested $1.2 billion, exceeding the average amount for the first quarter of the past five years. I would like to emphasize that within the hydrocarbons line, our main efforts were directed towards the exploration and production segment in fields such as CPO-09, Caño Sur, and Rubiales as well as in the Permian. These will follow by investments focused on ensuring operational continuity in the transportation and refining segment. Similarly, we made investments of approximately $136 million related to expanding the gas chain and supply. Our leverage indicators remain steady. The gross debt-to-EBITDA ratio remained at 2.2 times on a consolidated basis and 1.6 times, excluding ISA. We keep addressing and monitoring our cash levels, both stand-alone and on a consolidated basis with a proactive approach that has enabled us to optimize cash flow, ensure the availability of resources for key investments, and minimize financial risks. The Ecopetrol Group's cash balance closed at COP 17 trillion, generating a positive free cash flow of COP 1.4 trillion. Of the total cash, 42% was contributed by ISA, 27% by Ecopetrol, and the remaining 31% by the group's other subsidiaries. Additionally, our cash management during the quarter included the following transactions. As of March, we carried out a repo for approximately $500 million, backed by public debt securities called TES, receiving in 2024; Ecopetrol as part of the Fuel Prices Stabilization Fund payment generating a temporary increase in short-term gross debt. Depending on the market conditions, the unwind of this repo will be reviewed. The Ministry of Finance authorized an international loan facility of up to $500 million with Banco Santander. The proceeds from this transaction will be used to meet our operational cash requirements, thus compensating for the outflows caused by recent inorganic acquisitions. This aligns with our financing plan and maintains the growth debt-to-EBITDA target for the year.

Rafael Guzman, Executive Vice President of Hydrocarbons

A favorable milestone was the early collection of the total balance of the fuel price stabilization fund FEPC for 2024. At the end of March, the receivable of the first quarter of 2024 for around COP 2.2 trillion was paid through short-term public debt securities called TES, which were used to guarantee a repo transaction. In addition, at the end of April, we received COP 5.4 trillion in short-term call TES for the balance of the second, third, and fourth quarters of 2024. These were already sold, providing the necessary liquidity to complete the total dividend payment to our shareholders in the first half of this year.

Camilo Barco, CFO

Through our financial hedging policy, we executed hedging programs to mitigate the price volatility on diesel for 3.2 million barrels and the exchange rate for $615 million. Likewise, we continue to analyze other hedging strategies for Brent price for the second half of 2025 and 2026. These measures have strategically positioned us to address recent market dynamics and the increased fiscal obligations resulting from the interior commotion decree due to the Catatumbo crisis. We anticipate this will result in disbursement for the group of approximately COP 1.2 trillion this year. In addition to the impact of the value-added tax on fuel imports starting January 1, 2025, which will be detailed in the next slide. In December 2024, the National Tax Authority DIAN issued a ruling interpreting that value-added tax on fuel inputs must be paid at a rate of 19% on the customs value of the imported goods. This ruling has prospective effects starting on January 1, 2025. Since January, Ecopetrol has paid such value-added tax in accordance with DIAN's ruling. Estimates show that in 2025, this payment will reach approximately COP 3.6 trillion, recoverable at 93% through tax refund request. Regarding the period 2022 to 2024, Ecopetrol and the Cartagena refinery received three requests from DIAN, including a proposal of tax penalty and interest totaling COP 9.4 trillion related to the VAT payment on the declarations submitted during that period. Due to the differing interpretations of regulations and protecting the company's interests, Ecopetrol and the Cartagena refinery will respond to the special custom requests and challenge them through administrative and judicial channels using the resources and actions provided by the law. Ecopetrol and the Cartagena refinery are committed to fully complying with their customs and tax obligations and will respect the administrative and judicial decisions that resolve this dispute. Finally, market and company scenarios indicate that Brent prices for 2025 may fall below our financial projections. Therefore, we've implemented measures to enhance our ability to address these industry challenges, ensuring we achieve our operational and financial targets for this year. I now hand over to the President, who will detail the adopted plan to navigate the current environment of price volatility.

Rafael Guzman, Executive Vice President of Hydrocarbons

Thank you, Camilo. To close this evening's call, I would like to share key messages about the actions we have been implementing in response to the high uncertainty environment we are currently navigating. It's important to emphasize that Ecopetrol is a diversified group with core business in hydrocarbon transportation and energy transmission which has proven to be essential during times of volatility and now contributed over 40% of our EBITDA. On top of that, we have a competitive commercial strategy that has allowed us to maintain single-digit sales, maximizing the value of our products. This is not the first period of a strong volatility we have faced as a company, and we have both the experience and preparation needed to respond effectively. Our investment plan is built around a price range that allows us to adapt to different market scenarios while maintaining capital discipline to ensure competitive returns. Based on these fundamentals, we have implemented concrete measures to strengthen the group's position. For transportation, we have implemented an additional robust program of efficiencies and cost and expense savings amounting to approximately COP 1 trillion, along with strong working capital management of around COP 2 trillion combined with the early PEC payments and available credit lines. This reinforces our liquidity. Additionally, our plans include flexibility in terms of CapEx intervention of $500 million aiming to protect our production for the year. For resilience and financial flexibility, we maintain a controlled debt level, declining production costs, and are generating synergies between segments and subsidiaries that continue to strengthen our competitiveness. It is worth mentioning the current situation; we updated our lifting cost target, aiming to level below $12 per barrel. We continuously monitor the market conditions and have well-defined protocols in place to adjust commercial actions, optimize costs to renegotiate contracts, manage debt and activate financial hedges where necessary. These pillars allow us to look ahead with confidence. We have clear protocols to respond to any further deterioration in market conditions and are ready to activate additional levers if required. Ecopetrol is well prepared to continue generating sustainable value for our shareholders and for the country, even in the face of global volatility. With that, we now open the floor for questions.

Operator, Operator

Thank you. Let's start the question-and-answer session. The next question is from Katherine Ortiz from Corredores Davivienda.

Katherine Ortiz, Analyst

Good morning everyone. Can you hear me?

Operator, Operator

Katherine, good morning. We can hear you loud and clear.

Katherine Ortiz, Analyst

Thank you for your presentation. Let me summarize my three questions. One is related to the last topic that you mentioned, Ricardo, related to the effect that the fall of oil prices can have and how Ecopetrol has been preparing. So, I have several questions with that. First, could you please confirm the figures that you mentioned in other settings related to the impact of the fall of the price of oil? On the EBITDA and the revenue per dollar of the drop of the price of oil, you said that it's COP 0.75 billion per dollar. Please confirm that figure. And, with your last slide, I have a question, because the breakeven then you mentioned 99% with production EBITDA of $54, I'd like to compare it also with the breakeven of your revenue, because in the figures that you showed at the end of the year, the breakeven of EBITDA at the end of the year was $40 overall. But, the revenue was $49, and that's because of the context of the very high taxes that we have in Colombia. So I'd like to know that figure of 99% of production and revenue to understand better the impact that we can see on production because of this effect. And, also, although it's true, especially the premium, we know that the breakeven that zone is at $50 now, but, when you look at the WTI, it's below $60. So, could you please tell us if, in the production segment in the U.S., there is a contingency related to the effect that this could have with the fall of the oil price? That's my first question. Do you want to hear the other two? Or do you want to answer this first one? Maybe my first question was quite extensive.

Rafael Guzman, Executive Vice President of Hydrocarbons

Thank you. Let's begin by answering your first question. And then we can cover the other two. Our CEO would like to talk about the effect that you're asking regarding the decrease of each dollar with the Brent barrel. Then I can complement.

Ricardo Roa, CEO

Good morning everyone. Katherine, good morning and thank you for your questions. I am Ricardo Roa, the CEO of Ecopetrol. Yes, I'd like to confirm your figures and the exercises made so far. Remember, we have a price of reference of Brent in our plan, in investments and in operations. Based on this, we have evaluated. And, for every dollar that the Brent changes in the market, we will have impacts on the revenue, EBITDA, and net profit. The impact of each dollar that changes upwards or downwards with the price of Brent in the market and EBITDA is COP 0.74 billion a year. On the net profit COP 0.37 billion, and counteracting those effects, we would need, in terms of the exchange rate, COP 200 more per dollar. So, the effect can counteract the impact of the fall of the Brent price. We have been monitoring constantly the conditions, particular conditions of price of the oil in the market, Brent and WTI, which is of the state. So on those aspects, we've also been monitoring our operations, profits, and what we've seen, we've announced that as of today and under the current conditions, we don't have to make decisions on the interruption of the production of several of our wells. But there may be decisions ahead, especially with the wells underway. And there we will have to be making evaluations and making decisions. So now let's give the floor to Rafael.

Rafael Guzman, Executive Vice President of Hydrocarbons

Thank you, Ricardo and Katherine, for your question. I'd like to refer briefly to the Permian. The current Permian is showing good performance now. Remember, we're talking about the year of having production from 90 to 95. We have completed 35 new wells to date with a plan close to 90 that we have with the Permian. In terms of the breakeven, the production of the Permian is below $50 of WTI. We do have, with our partner some strategies to suspend the investment in new wells, if for a long period of months, we see low prices of WTI. One of the advantages with this is that these suspensions can be made quickly and they can be also reactivated quickly, and that gives us high flexibility. To date, we haven't had discussions with our partner for the suspension, and we continue with our plans. Anyways, most of the production that we expect for the year is with the wells that are already underway, not with the production that comes from new wells. So for now and the flexibility of CapEx that we have, we don't see the need of cutting back on CapEx or production.

Camilo Barco, CFO

Rafael, thank you. And if you allow me Katherine, Camilo Barco speaking. I'd like to complement the answers given by our CEO and Rafael. And I'd like to highlight the breakevens. Typically, this is an indicator that is displayed in companies of E&P, pure E&P and they're related to the production costs. As Rafael said, it's very important to keep in mind that at Ecopetrol, more than 99% of our wells are capable of operating with breakevens below $55. But we cannot lose sight that today, Ecopetrol, as we emphasized in our presentation, this is a group that has different energy. So it not only has upstream, but also other segments in hydrocarbon streams and downstream but it also today incorporates lines, the business lines of energy transmission and roads and energies for transition.

Katherine Ortiz, Analyst

Thank you for the detailed answers. I would like to follow up with my second question regarding the requirement from DIAN. Recently, you outlined the steps you plan to take in this matter. Among those steps, before reconsideration, you mentioned closing the case. I would like to know when exactly Ecopetrol should reserve the COP 9.4 billion in case DIAN or the tax authority does not change its ruling. Should Ecopetrol make that payment immediately? Additionally, how long do you estimate it will take to finalize this? Will it be in three months, six months, or a year? I just need an idea in that regard. Also, I want to clarify whether, under the new interpretation, Ecopetrol will have to continue spending approximately COP 3.6 billion annually, as you previously mentioned. Is it true that regardless of DIAN's past rulings, Ecopetrol will have to keep paying that amount in the future? Furthermore, you noted in a report that this year's expenses would be offset by recoverable balances. Is it typical to have such balances to recover, or is this payment a one-time occurrence? After 2025, will this figure increase to an additional COP 4 million? That's my second question.

Camilo Barco, CFO

Okay, Katherine. Again, thank you. This is Camilo Barco. And this question with the scope that you're giving us will allow us to clarify several things to everyone that's joining us in this call today and that are really wondering about this. So let me expand going back to what you've asked. Indeed, in December 2024, on December 20, the DIAN issued an opinion in which there's a change of a doctrine to consider that as of January 1, 2025 fuels are subject— imported fuels are subject to 19% VAT. This opinion has effects on two perspectives. One ahead, like you mentioned in your question and the other back, and it relates to the procedure that we will have to follow from here on. Regarding the procedures ahead as of January, and following this guideline, Ecopetrol has been meeting its responsibility and its tax obligation following what the DIAN has required and has been paying the VAT for importing fuels, gasoline, and diesel mainly with 90%. Also, you mentioned another figure and indicates an effort of Ecopetrol of COP 3.6 billion in the year 2025. Of these COP 3.6 billion, the expectation is that we can recover about 93% of that sum, meaning COP 3.3 billion through the recoveries and crisis balances in favor of tax returns from previous years. Going ahead, it's possible that the balance of taxes in favor of Ecopetrol will not only persist but will increase. Why? Because this tariff of 19% means that we have to pay that percentage over the imports. While the formula of the prices of fuels in Colombia allows us only to recover 5%. So that difference between 5% and 19%, meaning 14% will increase the balance of taxes paid in the future. So surely ahead, we will have to make an effort that can be crossed in real time with the balances of the tax returns or taxes in our favor. Now again, let me refer to the second perspective, and it's the impact on previous periods, specifically 2022, 2024, which are the statements that have not been confirmed. So on that claim, first calculation has been made. We've received special requirements, customs in Reficar and Ecopetrol, which add up today to COP 9.4 billion. Within that sum, COP 7 billion are the taxes that we haven't paid; COP 1.6 billion of Ecopetrol, COP 1 billion of Reficar, and the other COP 2.4 billion have to do with interest transactions. This official liquidation is an administrative act. And as such, it is subject to all legal actions foreseen in the law. So once we have this ruling from the DIAN, we will determine what path we shall continue, which can include the reconsideration that we're asking for, along with legal actions, as if required, we can have the reposition resources presented, and we can even go directly to present a demand before the State Council. So this is a digital process that can take time from two to five years before anything goes through. And let me talk about the importance of the reserves. When it comes to reserves and payments, they will, of course, depend on how the process develops and the need for the final ruling. And the payment has to be given by the state council if necessary. Our consideration today, it's worth saying, and based on the opinions given by attorneys, the possibility that we will be given a green light with this is high. Why? Because the eventual provision will be with the requirement of the external auditor and that provision or reserve will depend on the development of the process, and the possibility of success in defending the arguments by Ecopetrol. So to end, we're in a very preliminary stage. We only received the requirement to pay, especially 2022 and 2024. And first, we have to go through the administrative path and the legal path. So we hope that the effects on accounting and responded several of your questions related to the payment of that VAT.

Daniel Guardiola, Analyst

Hello, good morning, Ricardo, Camilo, Rafael, I have two brief questions. So my other colleagues have time to ask questions. First, what's the sensibility for the production of Ecopetrol keeping in mind if the company executes a CapEx reduction of $500 million that you have with your austerity plan? And second question, Camilo, could you please share with us what's the Brent cash breakeven of the upstream business considering, of course, the CapEx that you expect to assign to this business this year? These are my 2 questions. Thank you.

Rafael Guzman, Executive Vice President of Hydrocarbons

Daniel, good morning, this is Rafael Guzman, and thank you for your question. As Camilo said, 99% of the production has a breakeven of $55 per barrel. Now in terms of investment, we— in the— with the flexibility of CapEx we've announced, we will give priority to the CapEx, especially for those investments that create new production. And so far, we haven't seen having to cut back on our CapEx or production. We'd also like to give an example related to the prior question with the Permian, which we expect will be 90,000 to 95,000 barrels a day. And with those new wells that we have, it's close to 8% -8%, 9% of the production. And we also mentioned that we have drilled wells this year. So this example also illustrates our effort to maintain capital in the projects that remain in production.

Camilo Barco, CFO

Okay, Daniel. And with regards to the financial question, I think it was covered by Rafael when we discussed the breakeven. It's important to mention that the expectations of the investments plan related to CapEx; we announced to the market an investment plan that was approved at the end of 2024 and for this 2025 from $6 billion to $6.8 billion. Of this $6.8 billion, there's a chance or the flexibility better of $500 million. And over that, perhaps we should emphasize that we will give priorities to investments that protect production and reserves firstly. And secondly, we will give priority to those investments on projects that can contribute the internal generation right away, meaning project preferably. In operation stages, brownfield projects that have positive EBITDA and increase the generation, the internal generation of the company. And depending on this CapEx level, if possible, to stay in this range without ruling out the chance, depending on the performance prices, we will have even a more drastic plan of that CapEx depending on the final EBITDA that we'll have. But as Rafael said, the breakeven of EBITDA is below $55 a barrel.

Tasso Vasconcellos, Analyst

Hi everyone. Thanks for taking my question. Two follow-ups here on this breakeven discussion. The first one, at what point would Ecopetrol start reviewing its strategy? We just discussed it quite a lot about the $55 Brent breakeven. But for how long would it need to remain below such levels for Ecopetrol to change the strategy? I assume, of course, it would not be like a week or a month. But I think the question is exactly how is the company's evaluation process to change the strategy or the approach here? A second question, actually a follow-up on this first one. Where do you view all the opportunities to reduce CapEx and costs if Brent remains lower for longer? Is the $500 million in the upstream business that you just mentioned on the slides the full potential? Or could there be other opportunities? And which business would you prioritize the most and which other business do you also see potential to reduce CapEx or expenses if required? Those are the two questions. Thank you.

Camilo Barco, CFO

Okay. Tasso, thank you for your questions. Let's refer again. This is Camilo Barco, the CFO. I'd like to begin by quickly referring to the ranges of reviewing the strategy, as you've mentioned. And especially, I'll talk about the eventual revision of the financial plan for 2025 and the three subsequent years. The most important thing, I'd like to highlight here is that we constantly monitor the performance of the market. And there is a range determined from $60 to $65 of a barrel Brent, which leads us to take measures like the ones we've announced. These ranges are not specific ranges. It's not that the price of Brent on some determined days will touch this level. Instead, we're talking about average ranges for the year, the full year based on this first quarter and the forecast that we have for the rest of the year. So while we reach the average ranges for the full year closer to $60 in addition to the measures we've mentioned, there could be a chance or we can evaluate the chance of resanctioning or changing the budget of 2025. When we see that the deviations are material enough to not meet the goals established for this year. So again, beyond the discussion of the breakeven, when it comes to planning and budget policy of the company, the range of $60 per barrel average of Brent for next year gives us the chance of evaluating the re-sanction of the financial plan for 2025. And now let's give the floor to Rafael on the opportunities of investment that you mentioned.

Rafael Guzman, Executive Vice President of Hydrocarbons

No. This is Rafael Guzman again. This $500 million that we mentioned in CapEx is not only for the upstream business; it also impacts the mid and downstream and the other Ecopetrol businesses, even at the corporate level. And I'd like to mention also something about that 1% of production that has a breakeven above 55%. We've talked about the 99% a lot. But let's talk about that 1% because there we have important actions. Part of the new role that we have in efficiencies, which is another COP 1 billion, is for higher efficiencies included in these fields with more breakeven also in these fields. We have investment commitments for our partners, not Ecopetrol, but made by the partner, which will increase the production of these fields and therefore decrease the breakeven. And we're not only looking at fields entirely, but also the production specific to wells and certain facilities to maintain our production levels throughout the year, including improvements in maintenance and optimizations.

Camilo Barco, CFO

Rafael, thank you. In the first quarter, we had a cost below $12. It's specifically $11.25. That's what we're announcing that we will keep it below $12 for the entire year. Most of this also comes with the increase of the efficiency goal of COP1 billion. So the mechanism to reduce the maintenance of subsoil, increasing the period in which you have to change the subsoil equipment. Second, efficiencies and energy, which we have been achieving using less energy and having lower rates of energy, thanks to the commercial management made. When it comes to—we have really different engines that we're placing in the pumps of the subsoil in the wells. We also have renegotiations of maintenance contracts, reusing materials to make maintenance at the facilities on the surface.

Rafael Guzman, Executive Vice President of Hydrocarbons

When it comes to your question regarding payment form through treasury bond. Through the treasury bond, it’s saying that the budget of the nation allows the government to make the payments through debt but through pricing dividends or direct payments. So really, the Ministry of Treasury of the nation determines how payments are made. As part of the first, the nation recently the end of April paid to Ecopetrol fully the obligations of in 2024, meaning we received the first payment of COP 2.2 billion and a second payment of 5.4 billion, reaching COP 7.6 billion of the obligations of 2024. These were paid and fully received by Ecopetrol. With regards to the market through banking—with the remaining payment of COP 2.2 billion, some of these titles are part of the simultaneous transaction made and are used as collateral for the liquidity credits obtained for this year 2025. Given the circumstances of prices, our expectation is that the causation of FX will drop substantially. Although last year, we had COP 7.6 billion, our projections with current prices are that this year will cost BRL 3 billion to BRL 4 billion approximately in favor of Ecopetrol closer. We will have to wait for what option of payment is determined.

Tasso Vasconcellos, Analyst

Liquid instruments, right, as you just explained. I just want to confirm my understanding that you kind of liquidated those already and having cash in hand, right, where you can not only on the upstream segment, but also on downstream and so on. But I would like to get a sense on what is the impact of production, assuming you would or you would cut investments in the upstream division.

Camilo Barco, CFO

Good day. Thank you for your question. This is Camilo Barco to answer your question about CapEx and to confirm that indeed the payment of PEC received COP 5.4 billion was liquidated already, the titles were placed in the market. And today, it's part of our cash flow and the liquidity of the Ecopetrol Group. And with regard to your second question, I can anticipate that there is no impact on production. But let's listen to Rafael to complement this.

Rafael Guzman, Executive Vice President of Hydrocarbons

Yes, you are right, Camilo. This is—I'm Rafael Guzman; when it comes to the $500 million that we have in CapEx, we still have the same production goal. Keep that in mind.

Ricardo Carrera, Analyst

Good morning everyone. Thank you for your time. I have several questions. First, Camilo, regarding the topic of the DIAN, I would like to understand the net effect on the company's cash flow for this first year, noting that working capital is at 3.6 and reverts to 3.3. How does this translate into a net effect on cash flow? Will there be an impact on working capital of COP 1 billion? I would appreciate insights on these net effects for better understanding. My second question concerns the fund for stabilizing oil prices. In your last presentation, Ricardo mentioned a method to protect cash flow, suggesting there would be 2 billion for working capital. However, given the requirement of paying Ecopetrol, where will this COP 2 billion in working capital come from? Lastly, I would like to request more information about the six times leverage. With the recent decline in the stand-alone rating of Ecopetrol, a debt ratio of 2.2 is quite high. How do you plan to communicate with the rating firms regarding this, especially since it indicates a higher leverage level compared to other oil companies? Please clarify your strategy in discussions with rating firms about maintaining that six times leverage.

Camilo Barco, CFO

Ricardo. Thank you. This is Camilo Barco again. With regard to your first question related to the DIAN, the tax authority you have summarized it perfectly. This year, indeed, the payment of the tax from January to December means an effort made by us of 3.6 billion, although we have balances in favor of us of the VAT close to 5 billion today. And it's possible to cross these in the next months, practically in the next 60 days, we've been able to cross the taxes in charge of that. By the end of 2025, as you said, of those 3.6 billion, we expect to recover 3.3 billion, which would imply a total effort of Ecopetrol in the cash of COP 500 million. And ahead, if this keeps some happening, and we know this will happen given the difference of rates to pay the VAT versus the difference of rate to collect the VAT, it is sure that we will have balances of taxes in our favor significant ones. So in the next 60 days, we will have to pay the VAT with balance of taxes in our favor. So that covers your first question. Your second question is related to managing working capital in the 2 billion that our CEO referred to, fundamentally has to do with part of our contingency plan under the protection of our cash flow and ensuring our liquidity. This fundamentally has to do with central—an efficient centralization of the groups, has to do with paying the dividends of the affiliates, several payments of Ecopetrol to its subsidiaries, capitalizations of subsidiaries, which are deferred in time and will be more adjusted to the timetables required in our investment plans. The management of inventories, accounts payable, and receivable are measures to increase the efficiency of working capital. Our expectation is that here we can increase it by COP 2 billion that total this year the amount of the cash available. And now your third question related to the debt; your question is very pertinent. One of our main working goals is that today, yes, the rating firms are still applying a criteria, which in our opinion, every time seems to be less technical because indeed, as a group, we incorporate ISA, which is a group that contributes the most proportion or most of the debt. And since ISA is regulated, it can leverage those investments four times its EBITDA. This implies a reading that's not precise when it comes to the indicator of debt to EBITDA of the Ecopetrol Group. And as you said, within the indicator of the industry, 2.2 times looks high, yes. But when you exclude the part, of the debt of ISA to a lower range of debt. This is an ongoing conversation that we have with the rating firms. And what they've said is that while the contribution of companies like ISA and Cenit, which is about 42% of the EBITDA. Surely, this discussion can be given more and more. Our expectation is to adjust the methodology used by the rating firms so they keep in mind these factors and allow us to have a depth space of a group that has energy with oil.

Andrés Cardona, Analyst

Good morning, everyone. I have three questions. First, recently, we saw the company making several acquisitions in the renewables segment, and I understand to be sold. So tell us about the appetite for more inorganic growth with an oil price at $60, and you got a barrel of $73 per barrel also with the effect of liability and DIAN? First question. Second question, could you clarify how many barrels are consolidated in Acacias in the first quarter, because of the higher participation? And third, the media is saying that Shell could potentially leave the offshore project. Are you capable to face the development of this project alone? And what permits, environmental permits are pending, so that the project can move to a next stage, and how feasible is it to have those permits because of the recent—the Ministry of the environment, etc.? So these are my three questions. Thank you for taking them.

Julián Lemos, Corporate President of Strategy

Andrés, thank you for your question. This is Julián Lemos. I'm the Corporate President of Strategy. Firstly, as Ecopetrol, we have an investment plan built as you've said with a Brent of $73. Yes, and all the inorganic investments we've evaluated and we've constantly evaluated have to meet working discipline criteria. There is no doubt, right now, we review those opportunities that we're seeing. But we are also convinced that, just as we have hydrocarbons and other projects. And renewable energies we have to review them and find a way to make progress because they contribute to the financial sustainability of the Group. And, of course, we cannot just leave them suddenly. Surely, the setting will make us be more strict with our criteria, and we're creative with the mechanisms that we can have to carry out these transactions. I mean, cash generation, structuring, debt, or the rotation of our portfolio.

Rafael Guzman, Executive Vice President of Hydrocarbons

For the next two questions, let's hear from Rafael Guzman. Comparing the last quarter of last year with the first quarter of this year, we saw an increase of 16,000 barrels of crude oil for the Ecopetrol Group. Of this total, 10,600 barrels, or 45%, were due to our acquisition of Repsol. I want to emphasize the Acacias field, where we have achieved 100% of the synergies with this field and others, resulting in an additional 200,000 barrels. Therefore, this increase is not just a result but also thanks to these synergies. The rise in crude oil production in Colombia primarily comes from Caño Sur. Regarding the development and discoveries of KGG in the Caribbean, Shell will transfer its share to Ecopetrol. We are fully capable of managing the operation independently. The development is largely related to engineering, the National Transportation System, and the processes with the Ministry of Mines and CREG to establish this connection. For environmental permits, I will let Elsa Jeanneth address that.

Elsa Jeanneth, Environmental Representative

Thank you, Rafael. Good morning. Andrés, with regards to the environmental permits pending, right now we are underway with the exploration permit and also the environmental authorization to connect the cast offshore with the National Transportation System. Within this big process, which is the study of the environmental license, the first part has to do with giving disclosures to the communities that are nearby. So right now we're designing the connection to the oil duct, the pipeline, and managing with the A&CP, the certification of the communities that will be impacted to proceed with the prior consultation. Once we have agreements with the communities, we will present the request for the environmental permits. And if it's feasible to have them, yes, it is. And we've been working on this.

Julián Lemos, Corporate President of Strategy

As I mentioned, the appetite is there, yes. We have strategic goals to incorporate reserves inorganic and megawatts and constantly seek opportunities for diversification to enhance our portfolio. And again, what we want to do is to be much more strict with the criteria. We have—we use and we have to be very creative. So again, we will—we are evaluating options. We are aware of the moment now, but we're also aware of the needs and the strategic goals of the organization, and how the M&A is very important to that.

Camilo Barco, CFO

Let me complement, Andrés, related to the eventual contingency of the DIAN. It's important to say that the future perspective of paying VAT doesn't really have a big impact on our cash flow. And remember, it was COP 300,000 million in 2025. But when it comes to the controversy rising from the interpretation of the opinion given by DIAN, the effects that could take place eventually, again, will be seen on a long-term basis once the rulings are made and the judicial process takes place. So we will be taking the actions and using the resources foreseen in the law, and this will take no less than two years.

Santiago Torres, Analyst

Good morning. Thank you for receiving my questions. I have one with what you mentioned that on February 28, Ecopetrol entered into a contract for re-gasification. Could you please give us more details about that contract beyond its capability, how much will cost—the annual cost for Ecopetrol. And for how long will you have the service contracted?

David Riano, Executive Vice President of Transition Energies

This is David Riano, the Executive VP of Energy for Transition. Thank you, Santiago, for your question. As we've announced before, this is a contract in which Ecopetrol acquired services of regasification. And this decision was taken keeping in mind all of our working capital requirements. When it comes to this particular case, first, it's about acquiring the regasification rights, which has been announced later. And as we've said also in several sectorial settings, we will proceed to acquire the molecule, the LNG that will be placed at the facilities of regasification and long-term contracts under the best price conditions. And domestically, that amount of gas will be sold. That way, the group expects to generate value obviously, through this transaction, specifically on the duration. This contract has a commitment for five years, counted from the moment when the facility is commissioned. The detail of the price of the regasification is confidential; however, our CEO recently said that this year, we will begin the commercialization process publicly, so everybody can participate.

Alejandra Andrade, Analyst

Hello. Thank you for taking my question. I'd like to understand the potential of acquiring new debt, you said for M&A, and also the possibility of going to traditional markets that currently cost much more expensive at different. And I understand that you will be more cautious with M&A, but I’d like to understand if there is chance of going out to international markets to issue debt? Or do you want to remain more cautious or if there's—if it's off the table to go outside?

Camilo Barco, CFO

Thank you, Alejandra. This is Camilo Barco, the CFO. Regarding additional debt, I'd like to remind you that our investment plan organic does not have an increased debt. In the inorganic component, we have confirmed even under the circumstances that every opportunity for inorganic investment is being evaluated very, very closely and with the caution that you have mentioned. This means that we prioritize the investments, which today have the capability to contribute and generate enough to leverage the investment itself, meaning projects that are under operation and have a positive EBITDA enough to service the debt. We work in each of these opportunities, looking at finance, looking at the evaluation of everything. On this, it's also worth mentioning that this year, we have formalized transactions, closed transactions, which are financed also, we referred in the presentation to the financing of $500 million, which fundamentally is part of the cash of the group but we'll cover part of the investment made in the CPO-09 asset. And in the future, what we foresee is that we will try to see financing options that are structured more in banks. We monitor the market. Only if there are conditions and levels of rates that will allow us to go out to the market this year, we will be evaluating those possibilities. But right now, we don't see them. And really, we're focused if we have to finance inorganic opportunities, this will be structured by finance specific operations mainly using banking—bank-related financing.

Andrés Duarte, Analyst

Good morning, everyone. And thank you for taking my questions. And for your presentations. I have three follow-up questions. First, since Ricardo Roa, the CEO, just remembered, the sensibility not only comes from the prices but also from the devaluation. I would like to know what exchange rate you are assuming for the breakeven of $55 per barrel. Second question, please explain again in case you did, I didn't understand it well. The component of the 2.2 billion used as collateral related to what you talked about the FEPC. Please explain it what that consists of. And third and last has to do with M&As, but more focused not on oil and gas. Could you specifically refer to Monómeros, electrical generators, Ironexa? And I'm asking because IRSA yesterday said that it had discussions with that company and Monómeros, I don't know if that was an initiative of the company itself, I guess not. But could you please refer to possible acquisitions like those? Thank you.

Camilo Barco, CFO

Okay. Andrés, thank you for your questions. This is Camilo Barco again. The exchange rate used that we— in our investment plan is COP 4,150 a dollar. And the sensibility over the variabilities indeed is made using this rate, this exchange rate. As far as your second question, we're talking about simultaneous operations. And in other words, these are operations of short-term financing with collateral in this case, short-term tests and long-term that we have in position to guarantee the payment of the short-term operation, meaning this is a credit line from the treasury guaranteed with collateral for which we give the short-term tests. So there, we can still identify the position. We're talking about the payments of FPEC, the COP 2.2 billion first billion pesos that we received in March to pay the first FPEC payment is used as collateral for the test credit with the drop of the exchange rates with our Central Bank. Surely, this transaction will be liquidated—will be made liquid, like we did with the other test titles. So these are the two questions that I have addressed for you.

Julián Lemos, Corporate President of Strategy

So let me talk about three aspects for you. First, M&A is of a confidential nature for us. But let me talk with you about what I can address firstly. Ecopetrol has not announced that it will buy electrical companies. There are two potential businesses for remote self-generation to cover the needs of electrical energy of Ecopetrol itself. So with that, we will continue with two projects that are subject to the precedent conditions to carry them out. And just as we have strategic goals to incorporate reserves, we also have strategic goals to incorporate megawatts that are renewable for our own consumption. With regards to other topics, I'd say that at Ecopetrol we constantly evaluate options throughout the oil chain, including petrochemicals and fertilizers. Throughout the analysis made recurrently, regularly, we monitor the opportunities out there and the opportunities that are not out there. And I'm not talking about one company specifically here, but I'd like to underscore that our company and our process really does evaluate the options to diversify and capture value throughout the entire chain.

Unidentified Analyst, Analyst

Thank you so much for your answers.

Operator, Operator

There are no more questions. So now let's read the questions from the chat. Peter asks, can you share an update on the discussions made on importing LNG?

David Riano, Executive Vice President of Transition Energies

Again, this is David Riano. In addition to what we've mentioned in this call on the contracting regasification, in the Pacific, and as we've also mentioned in the sector, there are two additional initiatives in the Caribbean that seek to make use of facilities of Ecopetrol. One is called Ballena LNG, which would connect on loading unit for regasification to the Chuchupa platform, which already is connected to Ballena and to the national grid of gas that's managed by TGI, as well as Promigas. And the second project in the Caribbean is called Coveñas LNG, which will use the facilities of CENIT in that area of the country and will connect to the gas system through the conversion of the group with Jobo Vasconia. This is advancing, yes. We already have conceptual designs. And we'll make the consultations before the environmental authorities and sea authorities to obtain permits quickly and to have this regasification of one or both by 2027. In parallel, we've begun this year the requirements for the LNG in the international market. We already have non-binding offers from LNG providers overseas. And while we can obtain the permits, we can get the molecule.

Alejandro Sanchez, Analyst

Do you plan to incorporate reserves this year for the Gato do Mato project? Are these approved, probable, or possible accounting-wise? Could you give us more details about the situation of Barrancabermeja refinery because the charge dropped 8% year, but the plants began only three days of Gato do Mato?

Rafael Guzman, Executive Vice President of Hydrocarbons

This is Rafael Guzman. Let me answer the first question of Gato do Mato. Indeed, we are going to incorporate proven reserves this year, given the decision of investment on the project. Last year, we had certified 112 million barrels of oil for contingency; the contingency was the approval of the development plan from partners, which did take place this quarter. Most of these resources will go to proven reserves and that other part to non-proven reserves.

Felipe BP, Industrial Processes

The decrease of 8% in the charge of the refinery at Barrancabermeja in the first quarter is due to three things: one, the scheduled stop of the oil and the hydro treatment which stopped the operation. The second is the lower availability of light crude oil, especially in Caño Limón, the maintenance of the UAP2, which began at the end of the quarter, days before the operations were adjusted, and this affected the availability but it's important to keep in mind that this is a 74-day overhaul stoppage. It's part of the timetable or the schedule. And we expect with the UAP2 a contribution very, very important after the second semester.

Alejandra Andrade, Analyst

On the midstream business, is there any relevant update on the tariffs that should take place for the 2023-2027 period? What's the impact expected from ANLA and Rubiales? It's been a year since the resolution was issued, and the agents, producers, and transportation companies provided their comments, which were submitted on time to the Ministry of Mining. Technical meetings are currently taking place to review the impact on the tariffs, but there is no estimated date for the final resolution. It's important to clarify that we are applying the tariffs that are currently in effect. On August 26, the Ministry published Resolution 285, which introduced an annual tariff based on the prior methodology. This was implemented as a streamlining measure compared to the first quarter of last year.

David Riano, Executive Vice President of Transition Energies

Good morning on the question regarding the environmental licenses against Tefrontera Energy and Ecopetrol; it's important to highlight that the procedure just began. ANLA has not charged the expenses on the investments that are growing, but to renew some concessions.

Camilo Barco, CFO

Allow me to end this call. Thank you, thanking all of for joining us with the following messages. Ecopetrol firmly bets on its investment plan with the flexibility announced, enhancing the fundamentals of the business of hydrocarbons even in the middle of the complexities that we're seeing. Second, we will remain—the idea of growing our business, we have disciplined with our working capital and the idea is always to benefit society and our shareholders, and we will continue measuring, monitoring, sensibility, and evaluating every element that can hurt the liquidity and the leverage of growth that can hit or hurt the company, which has to do with COP 1 billion that we will reach in savings at the end of the year. And all this, so together, we can build in making our big—make this company—the company of all. Thank you.

Operator, Operator

Thank you all. And with this, we end this earnings call for the first quarter of 2025. Thank you for joining us. You can leave now.