During the first quarter of 2009, the total sales volume increased by 16.2% compared to the first quarter of 2008, mainly due to the 78.8 thoand barrels of oil equivalent per day (MBOED) growth in exports. The products that increased its exported volume were natural gas to Venezuela and heavy crude oils.
Regarding heavy crude oils, Castilla Blend rose from an export volume of 82.8 thoand barrels of oil per day (MBOD) in the first quarter of 2008 to 160.6 MBOD during the first quarter of 2009, offsetting the reduction in Vasconia oil exports which decreased from 30.1 MBOD in the first quarter of 2008 to 3.9 MBOD in the same quarter of 2009.
Domestic sales grew by four MBOED, mainly due to a 10.5 MBOD increase in crude oil sales to Sociedad Refineria de Cartagena S.A., which helped offset the 2.3 MBOD decline in gasoline sales. Such reduction was due to the beginning of the distribution in the supply plants of the country’s southwestern region of the 10% ethanol mix as of March 1, 2009, the lower consumption of liquid fuels resulting from the restrictions of the e of vehicles during the execution of infrastructure works in Bogota, as well as the growing e of natural gas vehicles (ngv) driven by high gasoline prices within the domestic market.
Market environment
The first quarter of 2009 was marked by a worsening of the world’s economic recession, with a strong impact on the fundamentals of commodities that phed down their prices.
The Colombian economy grew at a lower rate, and the balance of payments’ current account fell sharply as a result of low commodity prices and less trade operations with Ecuador, the United States, and Venezuela. The persistent crisis in the United States’ financial sector and the risk aversion phed investors to seek shelter in lower-risk assets, which contributed to the devaluation of the exchange rate in Colombia.
These trends began to revert towards the end of the quarter with the beginning of the recovery of the WTI price – which reached a maximum quotation of $ 54,34/Bl by the end of March 2009, and with the revaluation of the exchange rate, which went down from an average of 2,512.34 COP/ $ in February 2009 to 2,469.43 COP/$ in March 2009.
‘During the first quarter of 2009, Ecopetrol successfully implemented on its investment plan. In terms of operations, we increased our production and our sales volumes. As a result, we had a positive operating margin, despite a sharp decline in crude oil and natural gas prices,’ said Javier G. Gutierrez, Ecopetrol president.
‘Furthermore, the strength of our balance sheet allowed making significant acquisitions that are key to the achievement of our strategic goals. These transactions, together with our competitive capacity to obtain blocks in national and international rounds, have increased the scope of our operations and helped strengthen our long-term growth,’ added Gutierrez.
The net income for the first quarter of 2009 reached COP1,609.26 billion, 29.8% lower than the COP2,293.34 billion reported in the first quarter of 2008.
The income per share for the first quarter of 2009 was COP39.76, 29.8% lower compared to COP56.66 in the first quarter of 2008.
During the first quarter of 2009, international prices fell sharply ($/bl 43.1 average WTI as of March 2009, compared to $/Bl 97.9 as of March 2008), which resulted in a 63.9% drop in the price of the crude oil basket, and a 51.5% decline in the product export basket.
Differentials of crude oils and oil products exported by Ecopetrol with reference to the WTI improved during the first quarter of 2009, when the average differential for crude oils was $13.93/Bl compared to $14.60/Bl in the first quarter of 2008.
Exports, however, went from a price equivalent to 78% of the WTI during the first quarter of 2008 to a price equivalent to 70% of the WTI in the first quarter of 2009, due to the fact that the percentage share of the heavy crude oils in Ecopetrol’s export basket – which have larger discounts for quality – grew from 62.8% in the first quarter of 2008 to 87.5% during the first quarter of 2009.
In the first quarter of 2009, domestic prices for regular gasoline and diesel were above the international parity prices, due to the Government’s decision to capitalize a price stabilization fund.
In the case of regular gasoline, the regulated price was of an average COP3,831/gallon, as compared to an international parity price of COP2,596/gallon. The regulated price of diesel was COP3,793/gallon, as compared to an international parity price of COP3,503/gallon.
The difference between domestic prices and international parity prices are registered monthly as a payable or receivable account to Ministry of Energy and Mines for the Price Stabilization Fund (Fondo de Estabilizacion de Precios). Each quarter the Ministry of Mines and Energy calculates the net difference for each product and refiner or importer. Depending on the results of this calculation, the Fund mt recognize the subsidy to the agents, or vice versa.
Therefore, while total volumes sold increased, the impact of the above mentioned factors resulted in total sales for the first quarter of 2009 – which reached COP5,112.75 billion – being 29.2% lower than those registered during the same quarter of 2008.
The cost of sales increased 16.9% during the first quarter of 2009 compared to the levels registered in the first quarter of 2008, as a result of 16.6% and 17.7% increases in variable costs and fixed costs, respectively.
