Ecopetrol S.A. announced unaudited financial results, both consolidated and unconsolidated, for the fourth quarter and full year 2011, prepared and filed in Colombian Pesos and in accordance with the Public Accountancy Legal Framework of the Colombian General Accountancy Office in Colombian pesos (COP$).
Some figures in this report are presented in US dollars (USD) where indicated. Exhibits shown in the body of the report are rounded to one digit. Figures presented in COP$ billion are equivalent to COP$ one thousand million.
In the opinion of Javier Gutierrez, CEO of Ecopetrol: "The historically high results achieved in 2011, both operationally and financially, are clear evidence of the Company's commitment to its shareholders in fulfilling the value promise of our strategic plan.
In production, we continued attaining record levels driven by the higher extraction of heavy crude, and the 1P reserves replacement ratio of 164% is outstanding given the increase in production.
In exploration, it's worth to highlight the exploratory success rate in Colombia, mainly in the Cano Sur block in the Llanos Orientales, and internationally five discoveries by Savia in Peru as well as the discovery in one of the assets where we have interest on the U.S. Gulf Coast.
The transportation business kept growing as a consequence of the growing production of Ecopetrol as well as of the rest of the companies with operations in Colombia. In 2011 total capacity for crude transportation grew 13% and total capacity for product transportation increased by 27%.
The refining segment had significant activity with the modernization projects at the Cartagena and Barrancabermeja refineries, which will increase production of fuels and raw material for the petrochemical industry, as well as improving the return of this business segment.
Our outstanding financial results were the product of the abovementioned factors together with cost reduction initiatives and the very favorable environment in the international prices of crude oil and refined products.
In the midst of a difficult local and international market environment, in 2011 we reached important milestones such as the successful placement of 1.6% of the capital of the company in the second round equity offering in Colombia, which enlarged our shareholder base to 521 thousand shareholders and the financial closure of one of the most important projects of the corporate group such as the expansion and modernization of Reficar for US$3.5 billion. On the other hand, Ecopetrol was included in the Dow Jones Sustainability Index - World, and the investment grade rating by the risk rating agencies S&P and Fitch, adding to the investment grade rating granted by Moody's in 2009.
Additionally, during 2011 we also achieved significant progress in Corporate Responsibility as social investment grew 34% vs. 2010 reaching COP$214 billion, and also a considerable reduction in accidents of employees and contractors, reaching the minimum level ever.
2011 will be also be remembered due to the challenging situations produced by the severe weather conditions as a consequence of world's climate change, affecting the operations of the company and with unfortunate consequences to the community, and the loss of human lives. We were deeply touched by these very unfortunate incidents.
In spite of the difficulties, we are on track and demonstrating our total commitment to fulfill our goals, which in turn will produce further welfare for our investors, for the community and for the rest of our stakeholders. Our production goal for year 2020 is 1.3 million "clean" barrels of crude equivalent per day, with no incidents, no accidents, in harmony with our stakeholders and with profitable growth. The difficulties strengthen us to face even bigger challenges in the future."
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