BOGOTÁ, Feb. 28, 2023 /PRNewswire/ -- Ecopetrol S.A. ((BVC: ECOPETROL, NYSE:EC) announced today the Ecopetrol Group's financial results for the fourth quarter and full year of 2022. The financial results were prepared in accordance with the International Financial Reporting Standards applicable in Colombia.

Table 1: Financial Summary Income Statement –Ecopetrol Group

Billion (COP)	4Q 2022	4Q 2021	∆ ($)	∆ (%)	12M 2022	12M 2021	∆ ($)	∆ (%)
Total sales	39,678	31,761	7,917	24.9 %	159,474	91,744	67,730	73.8 %
Depreciation and amortization	3,049	2,404	645	26.8 %	11,410	9,599	1,811	18.9 %
Variable cost	16,015	12,685	3,330	26.3 %	61,406	34,678	26,728	77.1 %
Fixed cost	4,943	4,043	900	22.3 %	16,642	11,305	5,337	47.2 %
Cost of sales	24,007	19,132	4,875	25.5 %	89,458	55,582	33,876	60.9 %
Gross income	15,671	12,629	3,042	24.1 %	70,016	36,162	33,854	93.6 %
Operating and exploratory expenses	3,655	2,206	1,449	65.7 %	9,635	6,568	3,067	46.7 %
Operating income	12,016	10,423	1,593	15.3 %	60,381	29,594	30,787	104.0 %
Financial income (loss), net	(1,469)	(1,518)	49	(3.2 %)	(6,835)	(3,698)	(3,137)	84.8 %
Share of profit of companies	112	201	(89)	(44.3 %)	768	426	342	80.3 %
Income before income tax	10,659	9,106	1,553	17.1 %	54,314	26,322	27,992	106.3 %
Income tax	(2,945)	(2,099)	(846)	40.3 %	(17,254)	(7,598)	(9,656)	127.1 %
Net income consolidated	7,714	7,007	707	10.1 %	37,060	18,724	18,336	97.9 %
Non-controlling interest	(844)	(930)	86	(9.2 %)	(3,630)	(2,031)	(1,599)	78.7 %
Net income attributable to owners of Ecopetrol before impairment	6,870	6,077	793	13.0 %	33,430	16,693	16,737	100.3 %
(Expense) recovery for impairment long-term assets	(282)	(35)	(247)	705.7 %	(288)	(33)	(255)	772.7 %
Deferred tax of impairment	263	35	228	651.4 %	264	35	229	654.3 %
Net income attributable to owners of Ecopetrol	6,851	6,077	774	12.7 %	33,406	16,695	16,711	100.1 %

EBITDA	15,996	13,981	2,015	14.4 %	75,244	41,967	33,277	79.3 %
EBITDA Margin	40.3 %	44.0 %	-	(3.7 %)	47.2 %	45.7 %	-	1.5 %

Financial information included in this report has been audited and is expressed in billion or trillions of Colombian pesos (COP) or US dollars (USD), or thousands of barrels of oil equivalent per day (mboed) or tons, as noted. For presentation purposes, certain figures in this report were rounded to the nearest decimal place.

In words of Felipe Bayón Pardo, CEO of Ecopetrol:

"During 2022, the Ecopetrol Group continued delivering record operating and financial results and above the targets set at the beginning of the year. This, together with environmental, social and governance actions consistent with best industry practices and standards, and in line with our commitment to generate sustainable value society and our shareholders. The above occurred within a reliable and safe operation that covers all Ecopetrol Group contractors and employees, which is reflected in a low accident rate, with a TRIF (Total Recordable Incidents Frequency) of 0.33, the lowest in Ecopetrol's history, placing us as an international reference.

Full year 2022 reported revenues of COP 159.5 trillion, a net income of COP 33.4 trillion, an EBITDA of COP 75.2 trillion, and an EBITDA margin of 47.2%. Furthermore, the gross debt/EBITDA ratio was 1.5 times and the return on capital employed (ROACE) was 18.8%. Investments for 2022 totaled USD 5,488 million (COP 23.4 trillion), figure that falls in the top of the range set for the year (USD 4.8 - 5.8 billion or COP 20.4 - 24.7 trillion) and reflects an increase of 26.1% versus 2021.

Our contribution to the country was outstanding: in 2022 around COP 42.4 trillion were provided to the Republic of Colombia in the form of dividends, royalties, and taxes, compared to COP 16.8 trillion in 2021. Likewise, COP 2.1 trillion were delivered to our minority shareholders.

During 2022, Ecopetrol Group was consolidated in three business lines, which we will further explain, that will continue to position us as a diversified energy Group in the region.

In the Low Emission Solutions line, in 2022 the contribution of gas and its derivatives to the consolidated production was 24%. With the exploratory and development activity in the Piedemonte, in the continental Caribbean and offshore, we are contributing to the country's energy safety, leveraging the competitive supply of gas, which is a critical energy source for local industry and residential consumption. Additionally, on the social gas front, during this year, we installed 13,447 new connections, an increase of 119% compared to 2021, confirming our commitment to expand gas access to more Colombian families.

On the hydrogen front, in 2022 Ecopetrol strengthened its position as a leader in the development of this new energy source, becoming the first company in Colombia to carry out a pilot test to produce green hydrogen under industrial conditions. In addition, we made significant advances to positively identify white hydrogen resources in Colombia, following the completion of surface and subsoil sampling in three of our basins, finding positive results. In 2022, USD 7.5 million (COP 31.9 billion) were invested in this endeavor, which confirms Ecopetrol's commitment to the development of low-emissions hydrogen.

Finally, during the fourth quarter, we incorporated 95 MW of non-conventional renewable energy sources into our energy matrix through: i) the entry into operation of the Brisas solar eco-park with an installed capacity of 26 MW, ii) the execution of a long-term energy contract for a solar photovoltaic source with a capacity of 65 MW; and, iii) the acquisition of the Cantayús Small Hydroelectric Plant, the first hydroelectric generation asset acquired by the Ecopetrol Group, with a capacity of 4.3 MW. In 2022, we reached an operation of 208 MW, in addition to 102 MW under construction, bringing Ecopetrol closer to its target of between 400 - 450 MW by 2024.

In the Hydrocarbons line, the Ecopetrol Group achieved a Reserve Replacement Ratio of 104% in 2022, incorporating 249 MBOE, due to the management of development fields, reflected in the optimal and timely maturation of new projects, better execution capacity and implementation of expansion projects with enhanced recovery. Of the total balance of reserves, 75% were liquids and 25% were gas, while the average life of reserves is 8.4 years.

We highlight the positive performance of the production, which closed 2022 at 709.5 mboed, exceeding the annual target of 700 to 705 mboed, an increase of 4.5% compared to 2021. We also highlight December's production exit rate, which reached 734 mboed, the highest recorded since February 2020. Among the main factors contributing to the increase in production were the following: i) production growth in Permian and Caño Sur, and ii) the increase in gas and white products volumes due to the commercial strategy and the recovery after the public order situation in 2021.

On the exploration front, during 2022, we recorded seven successful wells (four more wells than in 2021), which allowed progressing more than 50% of the prospective volumes drilled to discovered resources. Those wells are located in basins of significant interest to Ecopetrol in the country, including wells in the Colombian off-shore (Uchuva-1, Gorgon-2), Upper Magdalena Valley (El Niño-2 and Ibamaca-2ST), Middle Magdalena Valley (Morito-1), Llanos Orientales (Tejón-1) and in the Lower Magdalena Valley (Coralino-1), which will contribute to the country's energy safety.

The downstream segment recorded a consolidated throughput of 357.5 mbd (an increase of 1.1% over the 2021 throughput, and a figure that falls in the upper bracket of the annual target set of 340 to 360 mbd), the highest in the last three years, as well as a historical annual gross margin of 21 USD/Bl. The segment's results were supported by operational and commercial strategies that resulted in: i) adjustments in the execution of the maintenances strategy aimed at capturing the benefits from market conditions and operational stability in the refinery units and petrochemical plants, and ii) a comprehensive logistic chain plan for maximizing the consumption of domestic crude oil in the refineries. The entry into operation of the Cartagena Crude Plant Interconnection Project (IPCC for its Spanish acronym) in September 2022 is also worth noting, allowing the Cartagena refinery to increase its production capacity by 50 mbd, thus reaching 200 mbd. This expansion allows the Ecopetrol S.A to meet the country's growing demand for fuels and contributes to Colombia's energy safety.

In the midstream segment, the total transported volume for 2022 amounted to 1,070.7 mbd, and exceeded the year's target of one million barrels per day. This represents an increase of 6.3% compared to 2021, mainly explained by the 5.8% increase in crude oil transported, which primarily resulted from higher production from the Llanos operations.

As part of our decarbonization strategy roadmap and in line with our commitment to achieve net zero carbon emissions by 2050, we sold four shipments of 4.0 million barrels of carbon-compensated Castilla Blend® to the United States, India and Spain. Additionally, by year-end 2022, we began selling carbon-compensated extra gasoline to wholesale distributors, thus contributing to climate change mitigation in Latin America and the region. We also conducted tests on the application of asphalt modified with recycled plastic on roads in Bogotá and Medellín, thus making concrete progress in our circular economy projects.

In the Transmission and Toll Roads line, during 2022 ISA developed projects aimed at promoting a cleaner energy matrix in the region, with the entry into operation of seven energy transmission projects, one battery project and 76 reinforcements, as well as improvements to the CTEEP network. These achievements complement the solid financial results, maintaining the growth path and guaranteeing the segment's growth and profitability. Net income amounted to COP 2.2 trillion, an increase of 32% compared to 2021, while EBITDA stood at COP 8.6 trillion, 11% higher than in 2021.

On the commercial front, the Ecopetrol Group's strategy continues to focus on diversifying markets and destinations, supported by stable blend qualities and a reliable supply chain. The above drove local sales volumes to increase by 11.4% in 2022 versus 2021, and exports by 2.5% during the same period. Furthermore, Ecopetrol Trading Asia (ECPTA), our subsidiary in Singapore, started operations in March 2022, and has allowed us to consolidate our crude oil exports and strengthen new relationships with customers in the Asian market. Finally, given the performance of gasoline and diesel price spreads in the local market versus the international benchmark price, the account receivable from the Fuel Price Stabilization Fund (FEPC for its Spanish acronym), which corresponds to a cumulative balance between 2Q22 and 4Q22 for Ecopetrol and 4Q22 for Reficar, amounts to COP 26.3 trillion as of year-end 2022.

Regarding the TESG result, the following is worth highlighting:

On the environmental front, by year-end 2022 we exceeded the annual emissions reduction target (262,761 tCO₂e) recording total emission reductions of 416,672 tCO₂e which exceeds the year-end target by 59%. Also, in 2022, a carbon credit trading desk was created to manage the Group's needs at a national and global level. In terms of water management, we reported positive results, with an annual reuse rate of 77.5%, compared to the total water required to operate. Finally, in 4Q22 Ecopetrol became the first company in Latin America's hydrocarbon sector to verify its water footprint, thus reinforcing our commitment and progress towards achieving our water-neutrality target by 2045.

On the social front, we continued to positively impact the regions, in line with our commitment to improve Colombians' quality of life and the generation of value in the territory, with contributions focused on closing inequality gaps. In that sense, this year we allocated COP 615 billion in resources for sustainable development projects and initiatives. Some of our most significant investments in education included the remodeling of nine educational institutions in the Department of Casanare, improvements to the Luis Carlos López School in Cartagena (Bolívar), and improvements and modifications to four Schools in San Vicente de Chucurí (Santander). Additionally, through the "Works in Lieu of Taxes" mechanism, the Group has delivered 38 of the 59 projects assigned for a total of COP 348 billion. The assigned projects will benefit more than 1.6 million Colombians in 73 municipalities across the country, employing initiatives that seek to address the needs of the most vulnerable population by accelerating the energy transition, closing gaps in road infrastructure, supporting public education, and improving access to drinking water and basic sanitation. Since the creation of the program, the Ecopetrol Group has accumulated a total allocation of COP 558 billion.

Furthermore, we highlight the work of the Ecopetrol Group's companies, which in 2022 procured goods and services for COP 32.6 trillion, of which COP 5 trillion came from local suppliers, and generated more than 130 thousand jobs, including over 28 thousand jobs for people with disabilities, ethnic groups, victims of the armed conflict, and individuals for whom this is their first job. This is evidence of the Ecopetrol Group's contribution and importance to the local economy and its commitment to inclusion and business development in Colombia.

During 2022 the Company's Science, Technology and Innovation agenda secured USD 595.7 million in benefits, which represents an increase of 71% over the USD 347.4 million certified in 2021. In December 2022 at the Caribbean Innovation Center, an agreement was signed with the Ministry of Commerce, Industry and Tourism, the Ministry of Mines and Energy, Grupo de Energía de Bogotá, Promigas, Siemens Energy, the Colombian Embassy in Germany and LATAM, to seek financing mechanisms for the development of renewable energy and green hydrogen projects in the country, reinforcing Ecopetrol's commitment to the energy transition.

We would like to finish by highlighting the awards and recognitions received by Ecopetrol and some of its subsidiaries, including: i) the Business Merit Award granted by the Simón Bolívar University in the social responsibility and shared value category, for the implementation of the "Social Gas" program in Barranquilla (Atlántico), ii) the recognition of our commitment to the promotion of gender equality granted by the "She Is Foundation" within the framework of 2022 She Is Global Forum: Women of The Future, held in Cartagena (Bolívar), iii) recognition of the result (A-) and leadership in the Climate Change program by CDP (Disclosure Insight Action), exceeding the average performance of the industry (B) and the regional and global performance (C), and iv) recognition of the Ecoreserves by the UN (Global Compact Network Colombia - Best Practices SDG 15).

As we look ahead to 2023, we remain steadfast in our aim to contribute to the country's energy safety, the transition to low-emission energy, and to generate sustainable value for both society and our shareholders, within a solid corporate governance and robust institutional framework.".

Felipe Bayón

CEO Ecopetrol S.A.

Ecopetrol is the largest company in Colombia and one of the main integrated energy companies in the American continent, with more than 18,000 employees. In Colombia, it is responsible for more than 60% of the hydrocarbon production of most transportation, logistics, and hydrocarbon refining systems, and it holds leading positions in the petrochemicals and gas distribution segments. With the acquisition of 51.4% of ISA's shares, the company participates in energy transmission, the management of real-time systems (XM), and the Barranquilla - Cartagena coastal highway concession. At the international level, Ecopetrol has a stake in strategic basins in the American continent, with Drilling and Exploration operations in the United States (Permian basin and the Gulf of Mexico), Brazil, and Mexico, and, through ISA and its subsidiaries, Ecopetrol holds leading positions in the power transmission business in Brazil, Chile, Peru, and Bolivia, road concessions in Chile, and the telecommunications sector. This press release contains business prospect statements, operating and financial result estimates, and statements related to Ecopetrol's growth prospects. These are all projections and, as such, they are based solely on the expectations of the managers regarding the future of the company and their continued access to capital to finance the company's business plan. The realization of said estimates in the future depends on the behavior of market conditions, regulations, competition, and the performance of the Colombian economy and the industry, among other factors, and are consequently subject to change without prior notice.

This release contains statements that may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. All forward-looking statements, whether made in this release or in future filings or press releases, or orally, address matters that involve risks and uncertainties, including in respect of the Company's prospects for growth and its ongoing access to capital to fund the Company's business plan, among others. Consequently, changes in the following factors, among others, could cause actual results to differ materially from those included in the forward-looking statements: market prices of oil & gas, our exploration, and production activities, market conditions, applicable regulations, the exchange rate, the Company's competitiveness and the performance of Colombia's economy and industry, to mention a few. We do not intend and do not assume any obligation to update these forward-looking statements.

For more information, please contact:

Head of Capital Markets (A)

María Catalina Escobar

Email: investors@ecopetrol.com.co

Head of Corporate Communications

Juan Guillermo Londoño

Email: juan.londono@ecopetrol.com.co

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SOURCE Ecopetrol S.A.

The Ecopetrol Group Announces Fourth Quarter and Full Year 2022 Results