Prepared remarks
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 2026. There will be a question-and-answer session at the end of the presentation. Before we begin, it is important to mention that the comments in this call by Ecopetrol's senior management include projections of the company's future performance. These projections do not constitute any commitment as to future results nor do they take into account risks or uncertainties that could materialize. As a result, Ecopetrol assumes no responsibility in the event that future results are different from the projections shared on this conference call. The call will be led by Mr. Juan Carlos Hurtado, Acting Chief Executive Officer of Ecopetrol; Camilo Barco, Chief Financial Officer; and Carlos Mauricio Avila, Acting Executive Vice President of Hydrocarbons. Thank you for your attention. Mr. Hurtado, you may begin your conference.
Welcome to Ecopetrol Group's Second Quarter 2026 Earnings Conference Call. This is Juan Carlos Hurtado Parra, Acting Chief Executive Officer of Ecopetrol Group. During the second quarter, Ecopetrol Group successfully capitalized on a favorable international crude oil and fuels market environment, supported by the strength of our integrated business model, differentiated commercial strategy and disciplined operational execution. As a result, we delivered COP 4.2 trillion in revenue, COP 17.7 trillion in EBITDA and COP 6.1 trillion in net income, representing increases of 35%, 59% and 235%, respectively, compared with the same period last year. These results reflect our ability to capture value across the entire value chain and were primarily driven by 3 factors: first, a favorable pricing environment with Brent averaging USD 97 per barrel and a strong recovery in international refining margins. Second, differentiated commercial management, which enabled us to improve our crude oil differentials by USD 3.67 per barrel compared to the first quarter despite a challenging environment for heavy crude grades. And third, strong operational execution in transportation and refining with the latter making a significant contribution to value creation during the quarter. Regarding investments, we continue advancing according to plan. As of June, we had executed USD 2.9 billion, maintaining our focus on production, energy security, strategic infrastructure and energy transition projects that support the group's competitiveness and future growth. Additionally, during the first half of the year, we complied with the dividend payment schedule approved by the General Shareholders' Meeting, reaffirming our commitment to value creation for all shareholders. With respect to the Fuel Price Stabilization Fund, during the quarter, we received COP 1 trillion payment corresponding to the accrual of the second quarter of 2025. Furthermore, higher international prices resulted in an accumulation of approximately COP 6 trillion during the first half of 2026, the management of which we will continue to pursue with the national government. Let us now move to the next slide to review the key operational highlights of this quarter. From an operational standpoint, we continue advancing our strategic priorities and strengthening the capabilities that support the group's sustainable growth. In exploration, we drilled 3 wells during the quarter, bringing the total to 8 wells during the first half of the year. We highlight the progress at Copa Sul-1 at the offshore Caribbean and following the quarter's close, the Sandia-1 discovery. These milestones continue strengthening the region's gas potential and enhance the group's resource incorporation outlook. On the inorganic growth front, we advanced with the process related to Brava Energia following the authorization granted by the Securities and Exchange Commission, CVM of Brazil, to assume the public tender offer. We will communicate this to the market and the decisions in due course. In commercial activities, we continued strengthening our international platform through market expansion, the onboarding of new customers and the development of trading capabilities. Initiatives such as the new pet coke commercial strategy, the implementation of time charter schemes and the diversification of ports and destinations enabled us to capture higher margins and generate additional value for the Ecopetrol Group. In our gas and energy transition business, we continued contributing to the country's energy security. As the Ecopetrol Group, we supply approximately 62% of Colombia's natural gas demand while continuing to develop solutions to expand supply availability for the market. In 2026, we have offered 293 GBtud of firm long-term natural gas. Meanwhile, the transmission and toll roads business maintained positive momentum, securing new contract awards totaling USD 428 million, strengthening the growth and value creation of ISA and its subsidiaries. In production, we reached 706,000 barrels of oil equivalent per day. These results reflected environmental and electrical disruptions affecting certain strategic and growth assets. The most significant was a 76-day blockade that impacted operations in fields located in the Meta department and delayed the execution of key projects aimed at expanding processing facility capacity. Looking ahead to the second half of the year, we are implementing specific actions to recover these volumes. We also continue to closely monitor risks associated with the operational and weather conditions, including the potential impact of the El Niño phenomenon. In transportation, volumes transported increased by 4% compared with the same quarter last year, driven by the optimization of logistics corridors and higher deliveries of refined products. Finally, in refining, we achieved the highest quarterly throughput in our history, reaching 439,000 barrels per day, representing a 6% increase compared to the second quarter of 2025. Supported by high operational availability and a favorable margin environment, this segment consolidated its position as one of the group's main value drivers during the quarter. With that, I will hand it over to Camilo Barco, who will provide further details on the financial results.
Thank you, Juan Carlos. Our second quarter of 2026 results reflect the strength of Ecopetrol's integrated business model, our ability to maximize value in a favorable price environment and the flexibility of our assets, all of this underpinned by rigorous financial and capital discipline. During the quarter, the Ecopetrol Group generated EBITDA of COP 17.7 trillion, representing a 59% increase compared to the second quarter of 2025 with an EBITDA margin of 44%, approximately 6 percentage points higher than the same period last year. This performance was driven by the outstanding contribution from the refining segment, which delivered record margins and throughput levels for the second quarter. In addition, higher transportation volumes and effective commercial management enabled us to capture market opportunities more effectively. As a result, we continued strengthening our financial position. The gross debt-to-EBITDA ratio closed at 2x at the group level and 1.3x, excluding ISA's debt, while interest coverage maintained its favorable trend relative to the previous quarter. By the end of the first half of the year, we executed USD 2.9 billion in organic investments, in line with our plan. Investments were primarily allocated to Colombia, which accounted for 71%, followed by Brazil, 22% and the United States and other countries, 7% — this level of execution reflects a disciplined capital allocation strategy focused on high-value projects, operational continuity and profitable growth while preserving the group's financial flexibility. By business segment, approximately 63% of investments were allocated to hydrocarbons, followed by transmission and toll roads with 29% and energy transition initiatives, 8%. Efficiency gains continue to be a structural driver of value creation, contributing COP 2.6 trillion during the first half of 2026, the highest level recorded for this period. Of this amount, 63% positively impacted EBITDA, 20% CapEx and the remaining 17% working capital. Let us now move to the next slide. As of the end of the first half of 2026, the Ecopetrol Group reported net income of COP 9 trillion, matching in just 6 months the net income generated during all of 2025. The year-over-year variation in net income is primarily explained by 3 factors. First, market-related factors contributed a positive net effect of COP 5.6 trillion, supported by effective commercial execution that allowed us to capture the benefits of this favorable price environment. The increase in the average Brent price from USD 71 to USD 88 per barrel, together with the net effect of crude and product differentials contributed a combined positive impact of COP 7.6 trillion. This effect was partially offset by the impact of a lower exchange rate and inflationary pressures on costs and expenses, which accounted for COP 2 trillion. Second, tax-related factors impacted results by COP 1.2 trillion, mainly explained by the income tax surcharge, which increased from 0% in 2025 to 10% in 2026, in line with the Brent price outlook for this year as well as the recognition of the new wealth tax. Third, financial and other factors had a net negative impact of COP 300 billion, primarily associated with the liquidity management transaction related to tax credits. During the second quarter of 2026, net income maintained its upward trend and reached COP 6.1 trillion, equivalent to 3.4x the level reported in the same period of the previous year and the highest quarterly result recorded since the fourth quarter of 2022. Let us now move to the next slide. As of June 2026, the Ecopetrol Group reported a consolidated cash position of COP 11.3 trillion, maintaining strong financial capacity to support operations, execute its investment plan and meet its commitments to creditors and shareholders. During the first half of the year, operating cash flow reached COP 14.1 trillion, driven by the positive impact of the higher commodity prices, FEPC collections and working capital management through the offsetting of tax credits and inventory management initiatives. Cash flow from investment activities represented an outflow of COP 8.4 trillion, mainly associated with capital expenditures at Ecopetrol SA, Brazil, ISA and Permian Basin. As a result, the group generated COP 6 trillion in free cash flow, demonstrating the business ability to sustainably fund its growth. Among the main cash outflows during the period were COP 6 trillion in dividend payments, both to Ecopetrol shareholders and to noncontrolling interest in subsidiaries. Additionally, net cash flow from financing activities and other items amounted to COP 1.1 trillion, primarily related to debt service payments. Regarding the Fuel Price Stabilization Fund, FEPC, as of June 2026, the outstanding receivable stood at COP 8 trillion. This balance includes approximately COP 2 trillion corresponding to 2025 and an accrual of COP 6 trillion during 2026. By company, 79% of the balance corresponds to Ecopetrol and the remaining 21% to the Cartagena Refinery. By year-end 2026, we estimate that the FEPC receivable balance will range between COP 8 trillion and COP 12 trillion, subject primarily to the evolution of Brent prices and exchange rates. During the second quarter of 2026, we continued strengthening our financial position through active liquidity management. This included the offsetting of tax credits totaling COP 3.3 trillion and the movement of funds within the group amounting to USD 716 million, initiatives that contributed to optimizing liquidity and enhancing the company's financial flexibility. Let us now move to the next slide.
Thank you, Camilo. Let us now continue with the Hydrocarbons segment. In exploration, we continue to execute our activities in line with the plan. Today, we are pleased to share very positive news for Colombia regarding the Sandia-1 well located in the Colombian Caribbean offshore. By the end of the first half of the year, we had drilled 8 exploratory wells, resulting in 2 successful discoveries. In March, we announced the discovery of the Copa Sul-1 well located in the Guajira Offshore 0 block. Today, we can confirm that during initial testing, the well reached a maximum rate of 35 million cubic feet per day, constrained by the maximum capacity of the testing facilities. Bisbita Sur-1ST2 located in the Llanos 123 E&P contract and operated by GeoPark with a 50% interest in partnership with our subsidiary, Hocol, which holds the remaining 50% was rapidly brought into production after being incorporated into the commercial area of the Saltador discovery. As I mentioned at the beginning, together with our partner, Petrobras, we have announced the discovery of the Sandia-1 well located at the Guajira Offshore Zero block. This discovery further expands the area's gas resource potential. Regarding the Sirius project, contracts were signed with our subsidiary, Hocol, for the engineering and permitting of the gas processing facilities in Baena. We also made significant progress in the prior consultation process with 1,203 communities. These milestones allow us to maintain the planned schedule for filing the environmental impact assessment during the first quarter of 2027. In the Llanos Foothills, we completed the drilling of Florena N18YST1, reaching the target depth in June. We are now evaluating the zones of interest to assess that potential. During the quarter, we also filed environmental impact assessments for the Tinamu, Magnus and Quimera discoveries located in the CPO-9 block as we continue advancing these resources towards potential further development phases. Let us go to the next slide, please. Going into further detail, together with Petrobras, we confirmed the new natural gas discovery with the drilling of the Sandia-1 well in the Guajira Offshore Zero block, located 42 kilometers off the Colombian coast and reaching a total depth of 5,440 meters. Located 18 kilometers from Sirius and 9 kilometers from Copa Sul, this discovery confirms the gas potential of the Colombian offshore and strengthens the prospects of adding resources that could contribute to energy security in Colombia and the region. Following the completion of drilling and after reaching the target depth on the 29th of July 2026, we are now evaluating the gas-bearing intervals to characterize the discovery and estimate its resource potential. Next slide, please. In production, I would like to highlight the strong profitability of our portfolio with EBITDA margins above 40%, up 9 percentage points compared to the same quarter last year, driven by favorable realized prices and the sale of crude oil cargoes in transit, which helped offset lower production volumes. During the first half of the year, production averaged 715,000 barrels of oil equivalent per day. This result was mainly impacted by external events, including disruptions to surface operations in the Meta department and power supply events at strategic growth assets such as CPO-09, Chichimene, Castilla and Rubiales. In particular, temporary restrictions at CPO-09, Castilla and Chichimene resulted in deferred production of up to 23,000 barrels per day. Operations are currently progressing toward a gradual stabilization. Our gas business and international production performed in line with expectations, providing stability and diversification to our portfolio. Looking ahead to the second half of the year, we are implementing concrete actions to restore production growth and strengthen value generation. These actions include: one, accelerating activity in the Permian with an additional 7-well campaign in the Delaware Basin expected to contribute between 4,000 and 5,000 barrels per day of incremental production from late 2026 through 2027. two, bringing the Llanos-10 development well in the Llanos Foothills into production while maintaining production levels at Gibraltar; three, implementing a comprehensive production assurance plan focused on enhanced recovery, additional drilling campaigns, particularly in Cano Sur, increased workover activity and the expansion of production facilities at Castilla; four, evaluating inorganic opportunities that complement our growth strategy and strengthen the long-term sustainability of the portfolio. While we continue to monitor external factors, including weather conditions associated with the El Niño phenomenon and other elements of the operating environment, the actions underway support our outlook for a gradual production recovery and strong cash generation through the second half of the year. Next slide, please. In refining, we delivered one of our strongest quarters in recent years, achieving a record integrated throughput of 439,000 barrels per day and a refining gross margin of USD 29.8 per barrel compared with USD 12.5 per barrel in the same period last year. This performance demonstrates our ability to capture favorable conditions through outstanding operational execution, high plant availability and operational flexibility. These factors enabled us to strengthen Colombia's energy supply while reducing import requirements. At the Barrancabermeja Refinery, we achieved record throughput and refining gross margins. Meanwhile, the Cartagena Refinery increased throughput compared with the previous quarter and reached a record gross margin of USD 31.6 per barrel, supported by greater operational stability and the completion of major maintenance activities in key units. We also continue to expand our sources of value creation by developing new markets for coke and sulfur. In petrochemicals, performance was supported by higher polypropylene sales and favorable commercial conditions across strategic markets. Looking ahead, we remain focused on the disciplined execution of major maintenance activities, preserving asset reliability and prioritizing initiatives that strengthen competitiveness, efficiency and sustainable cash flow generation. Turning now to the Midstream segment. It continued to reinforce its role as a key enabler of our integrated business model, transporting more than 1.1 million barrels per day, an increase of 3.8% compared to the same quarter last year, supported by our commercial and operational flexibility, which enabled us to incorporate new volumes of imported crude and optimize logistics corridors and inventories, thereby offsetting lower domestic production. These results reflect the segment's ability to maximize the utilization of existing infrastructure and respond quickly to the system's requirements. Key achievements included the optimization of strategic routes and enhanced logistics capabilities to supply our refineries and Colombia's domestic fuel market. Overall, the segment demonstrated strong operational resilience and efficient execution, contributing to the continuity of the integrated business, value capture across the chain and the competitiveness of the group. Next slide, please. What do we have in terms of profitability and costs. During the first half of 2026, the Hydrocarbons segment continued to improve its profitability through the disciplined execution of operational efficiency and optimization initiatives, consolidating a more competitive and resilient cost structure. This performance resulted in EBITDA of COP 25.7 trillion, representing a 23% increase compared to the first half of 2025, while the EBITDA margin expanded from 38% to 45%. These results further consolidate the positive shift in our cost performance that began to emerge in 2025. During the period, we delivered COP 1.3 trillion in efficiency gains through operational optimization, energy management, water management and enhanced recovery and new technology. Moreover, when excluding the foreign exchange effect, our cost indicators show even greater improvements. This confirms that the progress achieved reflects structural efficiency measures rather than short-term factors. In terms of costs, compared with the first half of the year, lifting costs and refining cash costs decreased by 3% and 4% in Colombian peso terms, respectively. Meanwhile, the transportation cost per barrel increased by 8%, mainly due to the additional requirements related to emergency response and external operating conditions. Overall, these results demonstrate the ability of the Hydrocarbons segment to absorb inflationary pressures and partially offset the impacts of lower production caused by external events as well as higher labor costs. This was achieved through structural efficiency measures that support margin expansion and the long-term sustainability of our results. I will now hand it over to Juan Carlos, who will discuss the key highlights of the energies and transition segment.
Thank you, Carlos Mauricio. During the second quarter of 2026, the Ecopetrol Group reaffirmed its role as a key contributor to Colombia's energy security. We currently supply approximately 62% of the country's natural gas demand. And year-to-date, we have offered 293 BTu/d of long-term firm gas supply, consolidating our position as the market's leading supplier. At the same time, we maintain an LPG supply equivalent to 38% of the national demand and continued advancing strategic projects that will strengthen the competitiveness and growth of our gas business. On the Pacific Coast, the Buenaventura regasification project reached 73% completion as of June, and it is expected to begin operations in the fourth quarter of 2026 with a capacity of 60 GBtu/d. In parallel, we continue progressing through the competitive process to contract LNG supply supporting the long-term marketing of imported gas. On the Caribbean Coast, we signed the charter agreement for the floating storage and regasification unit at Puerto Bahia with an operational capacity of up to 500 million cubic feet per day. The commercialization process for the domestic market is underway and start-up is expected in the first quarter of 2027. Next slide, please. As part of our commitment to securing Colombia's natural gas supply during the contingency associated with the SPEC's maintenance outage, Ecopetrol implemented coordinated and planned actions across the group that enabled us to deliver an additional 97 TBtu to the market, helping meet essential demand and support the thermal power generation sector. Next slide, please. We maintain a reliable energy matrix and an increasingly robust renewable energy portfolio. During the quarter, we covered approximately 90% of the group's energy demand through self-generation and power supply contracts, maintaining competitive costs and generating significant efficiencies for the business. We continued strengthening our self-generation capacity through the start-up of Termocoa and the restoration of the Termocusiana generation system. In addition, we consolidated our position as the country's largest renewable energy self-generator, reaching a portfolio of 951 megawatts. Among the quarter's main achievements were the start-up of the Quifa solar farm, continued progress on the Windpeshi wind project and the acquisition of a 49% stake in the JK1 and JK2 wind projects. These initiatives strengthen our long-term growth portfolio and support a responsible energy transition. In terms of energy efficiency, the quarter delivered 1.6 petajoules towards the annual target of 3.14 petajoules, bringing cumulative savings since 2018 to 26.4 petajoules. These initiatives generated efficiencies of approximately COP 48.5 billion, reducing consumption, lowering exposure to spot market prices and freeing up additional gas to the market. Next slide. Given the high probability of an El Niño weather event during the second half of the year, we have implemented a comprehensive plan aimed at strengthening the group's operational resilience and contributing to the country's energy security. This plan includes increasing the availability of gas and fuels to support national demand, leveraging nearly 2 gigawatts of self-generation and renewable energy capacity, advancing energy efficiency initiatives and ensuring responsible water resource management. It also incorporates preventive measures to mitigate risk associated with wildfires and other climate-related events that could affect our operations. Through these actions, we continue strengthening the reliability of the national energy system while reaffirming our commitment to sustainable value creation for our shareholders and to a responsible energy transition. Next slide for our closing remarks. During the second quarter, we demonstrated the Ecopetrol Group's ability to translate exceptional market conditions into outstanding results. The combination of favorable prices, differentiated commercial approach and disciplined operational execution enabled us to deliver one of our strongest financial performances in recent years. Refining was one of the key value drivers in this quarter. We achieved record throughput and margins, supported by our operational availability and our ability to capture opportunities arising from the international fuels market. Looking ahead, we remain focused on recovering the production volumes affected during the first half of the year, maintaining discipline in the execution of our investment plan and further strengthening the competitiveness of our businesses. We have a solid financial position and integrated platform that has demonstrated resilience and a portfolio of opportunities that positions us well to deliver on our 2026 objectives. Finally, I would like to highlight that these results were made possible by the commitment and talent of our people. We are proud that the latest workplace climate assessment conducted under the international standard of the Great Place to Work Institute reflected significant progress with our score improving from 68 to 77 points in 2026 and our rating rising from very satisfactory to outstanding. For the second consecutive year, we reached the target set by the Great Place to Work Institute, a recognition that reflects a culture built on trust, respect, fairness and pride in belonging to Ecopetrol. With that, we will now open the floor to the queue for the Q&A session.
Questions and answers
At this time, you may ask your question.
I wanted to take advantage of the recent presidential election in Colombia and the new President potentially with a different view for the oil and gas sector. I would like to ask a broader question to management in three parts. First, looking at Ecopetrol in the past 3 to 4 years, what would you highlight as the main deliveries, the main projects that you enjoyed delivering? Second, which projects have you found the biggest challenge in either moving forward or even approving and not being able to evolve? And third, looking forward, what would you like to have as the key priorities for the company, the main projects, the main subsectors to focus on? Those are the parts of the question.
This is Juan Carlos Hurtado. I am the Acting President. One of the main successes we have is the exploration results we have achieved in the last few years. This is exemplified by the announcements we have made in the first half of the year with the discoveries of Copa Sul and Sandia-1. That, of course, adds to the diversification of our energy matrix related to more self-generation systems. We can point to solar plants such as Quifa, which are delivering energy to our premises; Lajuana, which is supplying energy to Barrancabermeja and the Casabe fields; and La Cira, which supplies the Cira-Infantas fields and contributes 130 megawatts. Another is Portón de Sol operating La Dorada, 128 megawatts that are remotely operated. These achievements help mitigate the natural decline of our fields and allow us to advance in improving the recovery factor through secondary recovery and tertiary recovery projects with improved water injection and other technologies. In second place, one of the biggest challenges we face is the environmental permitting and the associated processes for environmental compliance. For exploratory projects, in Sirius we have been advancing prior consultations to be able to finalize the environmental assessment study and file it in the first quarter of 2027 and, if approved, to execute at the end of 2027. Other challenges are environmental and technical to continue operations, improve efficiencies, reduce costs and optimize operations. Looking to the future, we have a 2040 strategy. At this point, we are focusing on the traditional businesses—exploration, production, refining and transportation—leveraged by projects that diversify our energy matrix and increase energy efficiency. There are opportunities in light crude and potential nonconventional resources, and we have pilot projects that were suspended depending on regulatory and environmental considerations. We will continue working on exploration blocks and the potential revealed by the Sandia-1 discovery, the gas capacity on the northern coast, development of heavy crudes in the east of the country in the Meta department, light crude in the Middle Magdalena area, and advancing exploratory projects in the foothills to mitigate natural decline in gas production fields.
Two on my side as well, one on production and one on the FEPC. On production, can you help us bridge the second half of 2026 outlook on the back of the challenges we saw in the second quarter? How should we think about the second half of the year for the company to meet the full year guidance? Do you still expect and are you comfortable with the prior production target? Within that, do you expect to see any challenges or difficulties related to El Niño with the generation of electricity and other disruptions? And then on the FEPC, you mentioned you see a potential COP 8 trillion to COP 12 trillion accumulation by the end of the year. Looking into next year and within the new government, do you have any expectation to collect those funds maybe quicker than what we were seeing in the past few years? And a quick follow-up on that: when you talk about the COP 8 trillion to COP 12 trillion by the end of the year, what type of Brent and FX rate are you assuming to come up with that range?
Bruno, my name is Carlos Mauricio Avila. I am the Executive Vice President of Hydrocarbons. I am going to answer the first question about production. In the first half of the year, we had an average of 715,000 barrels of oil equivalent per day. The difference between that and our guidance is associated with the environmental events we experienced, especially in the fields with the largest production in the Meta department. These events included work stoppages and a blockade that halted 16 workover teams for more than 70 days, which affected production by around 23,000 barrels per day. The blockades were lifted last month, and we are continuing production and recovering in these fields that contribute most to national production and to the group's output. We feel very comfortable maintaining the production target between 730,000 and 740,000 barrels per day. We have deployed actions to recover the affected production, including managing well maintenance and increasing production activity. We are also working on improving electrical reliability, which has affected us recently. It is worth mentioning that towards the last days of June, we were achieving almost 730,000 barrels per day, which is good news, and we believe we will continue on that trajectory. Regarding the El Niño phenomenon, we have estimates of potential impacts on production and are mitigating them through actions to guarantee electricity supply and energy availability where reduced hydropower could affect the grid. We continue to communicate to the market that we are maintaining our production levels.
This is Camilo Barco, CFO. I will address the FEPC question and provide some context on how the Fuel Price Stabilization Fund works for fuel prices in Colombia. First, regarding the probability of recovery and the payment schedule, payments have been made on time and the dynamics of these payments typically occur on a quarterly or annual basis depending on the obligations. To give you an example, last year we had COP 3 trillion paid in three installments: the first one for COP 1.6 trillion, the second for COP 1.0 trillion and the third for COP 0.4 trillion. For the last quarter, we reached a payment agreement in December, and we expect to collect that payment in line with the other installments. These are short-term titles and the payments have been made consistently. Regarding the accrual range of COP 8 trillion to COP 12 trillion by year-end, this will depend on Brent and the TRM as well as crack spreads, especially diesel and gasoline, which have the largest impact on the FEPC accrual. Our calculations for this year are based on a 2026 Brent projection in a range between USD 84 and USD 90 per barrel and a TRM between COP 3,200 and COP 3,500 per dollar for 2027. We will await guidance from the new government for policy decisions. We understand the new government considers closing the subsidy gap for fuels a priority. Alternatives include increasing retail fuel prices or adjusting the IPP formula used to recognize value to producers. These decisions will determine the collection dynamics for the FEPC. For 2027, we are working with a Brent projection around USD 72 per barrel and an exchange rate forecast between COP 3,200 and COP 3,600 per dollar, which implies an estimated FEPC accrual between COP 1 trillion and COP 3 trillion for 2027. These estimations are subject to volatility in crack spreads, diesel and gasoline differentials, and any policy changes the government may enact regarding fuel prices or the calculation formula.
Thank you very much for this Q&A session. You mentioned that you had a conversation with the new government about fuel prices. I would like to explore more about these interactions you have had with the newly elected government. Could you share what could be the most significant changes both for Ecopetrol and for the sector at large that you have perceived from this new government?
This is Camilo Barco. It is worth clarifying that we have not had substantive dialogue directly with the new government yet. We recognize the public statements they have made about fuel price policy and the need to close the subsidy gap, particularly for diesel. We are expecting to receive guidelines and definitions of new policies once the government assumes office. We have explored different alternatives internally and have maintained conversations with the Ministry of Mines and Energy and the Ministry of Finance. Those discussions predate the new government and relate to FEPC management and collection. We look forward to opening direct channels with the new administration.
Andres, this is Juan Carlos Hurtado. We are ready to provide information to the new government as they require. Regarding projections and opportunities, we would like to continue working on exploration, improving recovery factors, and developing secondary and tertiary recovery supported by new technologies, whether on-site combustion or improved water injection. We will continue developing heavy crude opportunities in the foothills, light crude options including nonconventional pilot projects—subject to environmental and regulatory conditions and capital discipline—and advancing exploratory projects in the foothills to support production and mitigate decline. We will provide whatever information the new government requests.
My question has to do with the future of the Permian. What is the projection you expect for the next quarters and years? I know you announced a drilling campaign for this year. Do you see declines in production given the deterioration of productivity or is any change due to the current drilling plan? If it's due to the drilling plan, will there be a review for this year or next year?
Thank you for your question. I am Julian Lemos, Vice President of Corporate Strategy and New Businesses. Regarding Permian performance, this responds to the joint venture agreement we have with Occidental and the planning we carried out last year. Given the price environment and industry conditions at that time, we agreed to reduce the number of drilling rigs, which reduced production relative to prior years. Currently, production is above our forecast for the year. Looking ahead, we are monitoring market conditions and price scenarios regularly. We agreed with Occidental to accelerate activity and include seven additional wells that were not part of the 2026 plan. We are continuously evaluating options based on the price outlook for 2027 and will determine the appropriate level of activity and equipment in discussion with our partner.
I have two questions. First, regarding knowledge transfer from your Permian operations with Occidental: how much of what you have learned is applicable to the development of nonconventional fields in Colombia, for example in the Middle Magdalena area? Second, there was a reduction in operating cash flow compared to the second quarter of 2025. Is that due to FEPC and taxes, or is there another reason for the cash flow reduction?
Andres, this is Juan Carlos Hurtado. Regarding the joint venture with Occidental, we had personnel working together and continue to have staff collaborating with Occidental to capture the learning experience. We have professionals in reservoir and production roles who are being prepared to lead potential nonconventional developments in Colombia when conditions and regulations permit. We are building internal capacity through that partnership.
Thank you for the question, Andres. Regarding the variation in cash flow this quarter, it is substantially related to FEPC payments. Specifically, we had a COP 1.6 trillion payment where we reached a payment agreement with the Ministry of Finance and that payment was postponed to December; this postponement affected cash flow for the quarter. Second, taxes had an impact: the wealth tax accrual was COP 1.2 trillion, which directly affected cash flow, and the income tax surcharge increased to 10% given the higher market prices, which also affected accrued taxes for the year. Despite these effects, free cash flow remains healthy: we have accumulated almost COP 6 trillion year-to-date, generating COP 2.8 trillion in the second quarter. It is worth noting that historically the second quarter is a strong quarter for cash flow due to timing of debt amortizations and tax payments. We also paid COP 6 trillion in dividends this year to shareholders and noncontrolling interests, which impacted cash availability. For the rest of the year, we expect stable cash flow above forecasted minimums and do not foresee the need for new financing to meet obligations and our investment commitments.
Thank you for the presentation. I have two questions. First, a follow-up on guidance, especially volumes. You mentioned maintaining production volumes upstream. Could you comment on midstream transport guidance and downstream throughput guidance, given both were above guidance in the first half? Would you expect to maintain guidance in these sectors, or expect declines in transported and refined volumes? Second, could you give a schedule for what will happen after the Brava public offer—if successful—when would we expect to see consolidation of that transaction?
Thank you. This is Juan Carlos Hurtado. Regarding your first question, our forecast is to maintain the previously communicated guidance across the three segments of the traditional business. We are maximizing throughput to capture better margins depending on market conditions, optimizing our transport system including oil and multiproduct pipelines to maximize value, and we expect to maintain the volumes we estimated for 2026.
Juan Felipe, this is Julian Lemos. Regarding Brava Energia timing: on June 15 we received authorization from the Brazilian regulator CVM for our subsidiary to proceed with the public tender offer. With that approval and the green lights received from bondholders and Brava's Board, we are in a position to launch the tender offer. Subject to the timing of the tender and the satisfaction of closing conditions, if the tender is successful we would aim to complete liquidation and payment to sellers quickly. If all proceeds as expected, Ecopetrol would acquire 51% and we would expect to consolidate Brava's results into Ecopetrol Group financials in the third quarter of 2026.
My question is regarding the offshore assets. Are there any pending environmental or regulatory approvals that could affect the development schedule of the blocks?
This is Carlos Mauricio Avila. In terms of reducing upstream costs and preserving guidance, we are working strongly on our efficiency program targeting the core costs that matter most for the segment. Key initiatives include optimizing energy consumption and tariffs, where energy can account for 26% to 30% of costs, improving water management to reduce fluid handling and energy consumption, implementing new technologies to increase recovery factor such as improved water and other enhanced recovery techniques, and reducing costs associated with contracted services measured in dollar per barrel. Regarding environmental and regulatory approvals that could affect development schedules, we are actively working with the relevant government institutions to obtain the necessary permits in the planned time frames. We have improved relationships with environmental authorities and believe we can optimize permitting timelines. Project-specific circumstances vary depending on the location in the country, but we are confident that by working with the authorities we can meet our development goals without major delays from permitting.
I have two questions. First, regarding financing for Brava: is the acquisition being financed with a bridge loan and will you refinance from international markets later? How is the transaction structured? Second, are you analyzing possibilities to conduct a liability management exercise alongside the Brava financing?
Thank you for your questions. Regarding Brava financing, we plan a typical structure: a short-term bridge loan to finance the acquisition and then a takeout before year-end either with long-term bank financing or via a capital markets transaction. Regarding liability management, our strategic approach is to optimize financing costs and extend average maturities. We have seen positive market dynamics for sovereign and corporate debt, including Ecopetrol margins, and we expect favorable conditions in the second half of the year. We continue to monitor both banking and capital markets and will assess opportunities to reduce financial costs and prolong maturities through liability management when it makes sense.
Could you expand on the liquidity operation on tax credits? What is the magnitude of those balances, and should we expect this type of liquidity operation in following periods? Finally, how are you moving forward with the VAT litigations related to fuels that occurred in 2025?
Thank you. Regarding tax credits and liquidity operations, in the first quarter we structured the sale of a package of receivable obligations that generated USD 500 million of financing and led to a cash inflow of approximately COP 2 trillion from the Colombian government. The financial cost of that operation reflects the discount applied to the forward sale of those receivables. This operation can be an attractive liquidity lever and remains an alternative depending on cash flow needs; the costs are competitive and close to our average financing costs. Regarding the VAT litigation, we have eight processes in progress—six related to the Barrancabermeja refinery and two related to Ecopetrol SA. We have filed appeals and requested procedural measures where appropriate. Recently, Law 2586, the customs charter, introduced Article 113 which provides an alternative mechanism to resolve controversies with the tax authority. We are assessing this alternative because it may offer favorable conditions to resolve VAT disputes, and while we evaluate it we will continue pursuing litigation in the relevant instances.
A question in the chat asks: Considering the cooperation with Petrobras in developing the offshore gas resources, is Ecopetrol assessing extending this model of alliance to other offshore exploration activities?
This is Juan Carlos Hurtado. Given our recent announcements and the Sandia-1 discovery, we see the capacity to develop significant offshore gas volumes. We are working with Petrobras to develop exploration and appraisal activities to materialize identified resources and to explore additional prospects in the shared area. We also hold the KGG block at 100% and continue maturing it internally, but we see alternatives to involve strategic partners such as Petrobras to accelerate development. We are also validating environmental aspects in other areas, such as Arauca, to continue developing exploration projects.
Regarding the gross margin: you reported USD 29.8 per barrel and record USD 31.6 per barrel in Cartagena and USD 28.4 in other comparisons. Depending on crack spreads and given market disruptions, what refining margin are you assuming for the second half of 2026 if crack is compressed, and how much of the record was structural versus cyclical? How much of the record margin was structural given synergies and optimization?
I'm Julio Herrera, Commercial Vice President, and I will address commercial and refining aspects. It is true that refineries in the second quarter benefited from an exceptionally favorable environment, especially with strong diesel cracks. For example, the diesel crack for the second quarter was approximately USD 57.60 per barrel, and at times diesel was trading significantly higher. We are not providing a specific margin guidance for the second half, but I can say that part of the record performance has structural components. The record was supported by higher throughputs—Barrancabermeja at 240,000 barrels per day and strong performance in Cartagena—operational integration between sites, yield improvements and disciplined commercial decisions to prioritize more valuable products. External market margins will determine realized refiners' returns going forward, but our operational improvements and integration have created sustainable structural benefits that should allow us to capture more value than in prior cycles, even if market margins normalize.
Are you planning any adjustments to corporate governance regarding the Board of Directors? In the last four years there were changes that impacted the election of some members. Are you planning an extraordinary assembly in the short term?
This is Cristina Toro, Legal Vice President and General Secretary. According to applicable legislation and Ecopetrol's bylaws, the General Shareholders' Assembly is the competent body to elect and remove members of the Board of Directors. Given recent resignations, the Board can continue to deliberate validly with its remaining members. If an assembly is required to elect replacements, the process will depend on specific circumstances and the need to verify candidate qualifications and requirements. Once those verifications are completed, an assembly can be convened with the appropriate notice and timetable.
When do you expect to consolidate the results of Brava Energia in the accounts of the Ecopetrol Group if the tender offer is successful? And how much production would Brava contribute in barrels of oil equivalent per day?
Thank you, Harold. If the tender offer is successful and all closing conditions are satisfied, we expect to consolidate Brava's results into Ecopetrol's financials in the third quarter of 2026. We expect Brava to contribute approximately 42,000 barrels of oil equivalent per day on a consolidated basis consistent with Ecopetrol's 51% ownership.
Could you please tell us what is the group's daily energy demand in megawatts, and how much of this demand is covered by self-generation from renewable energy sources (i.e., without market purchases)?
This is Ernesto Gomez, Vice President for Energy. Ecopetrol's consumption is 24 gigawatt-hours per day, which corresponds to approximately 9% of national consumption. Of that consumption, around 54% is covered through self-generation sources. Within self-generation, approximately 49% is conventional self-generation and 5% is from renewable sources. We also have a growing renewables portfolio, including around 440 megawatts of solar capacity in development.
Have you considered an asset rotation strategy to reduce the level of total debt of the Ecopetrol Group? If so, could you provide more information?
This is Julian Lemos. The group's debt levels are healthy. As Camilo mentioned, even including the acquisition of Brava, we expect to remain within previously reported leverage limits. Portfolio rotation is a permanent strategic consideration and we continuously assess alternatives for asset rotations when they support the company's strategic and financial objectives. We will inform the market when we execute any portfolio rotation or are close to execution.
We conclude this Q&A session. We now give the floor to the Acting President of Ecopetrol for final remarks.
Thank you very much. I would like to thank all of you for participating and for your interest in the results of the second quarter and the outlook for 2026. Thank you to the team for your dedication and execution that produced these results. Have a great day. Thank you.
Thank you, everyone. With this, we conclude our results call for the second quarter of 2026. Thank you for your participation, and the call will end now. Thank you. Statements in English on this transcript were spoken by an interpreter present on the live call.