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Although only until the next few days, or at the beginning of May, Ecopetrol will reveal to the market and the country the results corresponding to the first quarter of the year, the company’s expectations are down, not only due to the pandemic of the new coronavirus, but by the effects of the reduction in oil prices, which began in February.
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This Friday, as part of the authorization given by the Ministry of Finance to the company to issue and place external public debt bonds in the international capital market for up to 2,000 million dollars, The company did a crude x-ray of what it expects for the first quarter.
I mean
In a market report, the oil company indicated that the oil war and the drastic drop in demand for crude oil and its derivatives worldwide as a result of the pandemic led to its estimates of its consolidated gross profit falling between 32 and 36 percent between January and March, while its consolidated operating income would drop between 43 and 47 percent compared to a year ago. For net profit, the forecast is for a contraction between 52 percent and 65 percent.
This would lead to the company’s profit during the first quarter is between 960,000 million pesos and 1.31 trillion pesos, compared to a profit of 2.74 trillion pesos achieved in the same period of 2019, which at the time rose 5 percent annually compared to 2018.
Various factors
According to Ecopetrol, not only the fall in the price of crude oil influenced its result, since it was affected by higher operating costs as a result of the increase in exploration and production activity before the implementation of the optimization measures announced in March 2020, the impact of the soaring dollar on its foreign currency debts and volatility in the capital markets that reduce the market valuation to its financial portfolio.
For example, to date it is calculated that the results of the first quarter will reflect an increase in the impairment of non-current assets in the range of 1.15 and 1.25 trillion pesos before income tax, mainly driven by the expected short-term decrease in the cash flow of such non-current assets given the environment of the oil price.
As it is not possible to forecast the duration of the effects of covid-19 on the business that Ecopetrol develops or when international prices for crude oil and refined products will stabilize, the company could make further downward adjustments to our 2020 investment plan, as well as to the production target for 2020, between 745 and 760 thousand barrels of oil equivalent per day, “he added.
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