Colombia's oil and gas company Ecopetrol S.A. (EC) announced a sharp fall in second quarter profit on huge non-operating loss resulting from revaluation of portfolio investments, lower domestic sales and reduced crude oil and natural gas prices, notwithstanding higher production.
The company posted a 77.3% decline in unconsolidated net profit to COP$ 762 billion or COP$ 18.82 per share from COP$ 3.357 trillion or COP$ 82.94 per share last year.
For the quarter, the company recorded a non-operating loss of COP$ 1.067 trillion compared to a non-operating profit of COP$ 394 billion in the same period last year. The non-operating loss reflects the impact of the Peso revaluation against US dollar that resulted in a currency exchange loss of COP$ 911.2 billion.
Total sales for the quarter declined 29.1% to COP$ 6.686 trillion from COP$ 9.425 trillion a year ago. Domestic sales were down 42% at COP$ 3.5 trillion compared to COP$ 6.03 trillion in the prior year. The company noted that an increase in the distribution of gasoline with 10% ethanol, greater restrictions on the use of vehicles in several Colombian cities, and the conversion of vehicles to natural gas, as a result of higher domestic gasoline prices as compared to natural gas prices for vehicles impacted the domestic sales.
Total volume sold increased 16.45% to 633 thousand BOE/d from 543 thousand BOE/d. Total domestic sales volume were 334 thousand BOE/d, up 1.1% from 330 thousand BOE/d last year. Exports recorded 85.5 thousand BOE/d increase year-over-year.
The company noted that international prices continued to be lower than the prior year rates and average price of crude oil export basket plunged to US$53.66 per barrel from US$112.14 per barrel a year ago. Cost of sales was down 15% from the comparable quarter, primarily on 23% decline in variable costs owing to lower value of crude oil purchases. Operating expenses increased 65.4%.
For the first half, net income was down 58% at COP$ 2.371 trillion or COP$ 58.59 per share compared to COP$ 5.650 trillion or COP$ 139.60 per share in the prior year.
Total sales for the six-month period declined to COP$ 11.798 trillion from 16.647 trillion in the previous year. Domestic sales dropped 36.8% to COP$ 6.687 trillion from COP$ 10.578 trillion last year.
For the period, total volume sold increased 16.1% to 614 BOE/d from 528 BOE/d in the previous year. The company said lower crude oil and natural gas prices dented its first half results.
Commenting on the results, Javier Gutierrez, Ecopetrol's Chief Executive Officer, said "Ecopetrol achieved significant improvements in its operating performance on a sequential basis, more than doubling its operating profit compared to the previous quarter. Sequential improvements were driven by higher volumes and prices and increased hydrocarbon production and purchases, while there was a loss in our non- operating results, due to the effect of revaluation on portfolio investments."
EC finished Friday's regular trading at $27.80, up $0.42 or 1.53% on a volume of 23K shares.
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