Ecopetrol SA (EC) 2009 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2009 Ecopetrol SA Earnings Conference Call.

My name is Marisol and I will be your operator for today.

At this time, all participants are in a listen-only mode.

We will be facilitating a question-and-answer session towards the end of the conference.

(Operator Instructions).

As a reminder, today's conference is being recorded.

I would now like to turn the presentation over to your host for today's call, Mr.

Alejandro Giraldo, Director of Investor Relations.

Please proceed, sir.

Okay, good afternoon to all of you and welcome to the conference call where we will review the operational and financial results for Ecopetrol for the fourth quarter 2009 and the full year.

Before we begin, it's important to mention that during this call, management's comments may include forward-looking statements relating to future performance.

Such statements do not constitute any guarantee of performance nor do they take into account any risks or uncertainties that may occur or materialize.

Consequently, Ecopetrol hereby declines any responsibility in the event that actual performance differs from comments made on this call.

Today's call will be hosted by Mr.

Javier Gutierrez, CEO of Ecopetrol.

He is joined by several members of the Company's senior management such as Adriana Echeverri, Chief Financial Officer, Nelson Navarrete, Executive Vice President of Exploration and Production, Pedro Rosales, Executive Vice President of Downstream, Camilio Marulanda, Executive Vice President for Growth and Strategy, Mauricio Echeverry, General Counsel, Hector Manosalva, Vice President for Production and Enrique Velasquez for exploration.

Now, I would like to turn the call to Mr.

Javier Gutierrez, CEO of Ecopetrol.

Good afternoon, everybody.

Let's go to slide five.

In 2009, we make an important progress towards a consolidation of our strategy which will allow us to achieve our goals in 2015.

Most important achievements are by the end of 2009, our 1P gross reserves amounted to 1.88 billion barrels of oil equivalent based on SEC prices and methodology, which represents a 30.5% increase when compared to 2008.

The reserves replacement ratio was 359%, historically high levels for Ecopetrol.

In exploration, we increased significantly our activity and reported success rate of 26% with evidence of hydrocarbons in five out of the 1,980 wells drilled.

Group oil and gas production grew 17%, the highest rate since we launched the [FOBD Plant].

The average yearly production reached 521,000 barrels of oil equivalent per day, including the production of Hocol and Savia, two companies that we acquired in the first semester of 2009.

Ecopetrol's production increased by 12% when compared to 2008, accounting to 500,000 barrels per day.

In the Downstream business, we continued to strengthen our corporate group through the reacquisition of [gencose] interests, 51% in [refineria de capahana] and that increased our interests in Ocensa.

We met the goal of delivering cleaner fuels with low sulfur content and international quality standards.

We continue to expand our transportation network by adding 501 kilometers of pipelines and by strengthening the transportation system for heavy crudes in the install region of the country.

Our sales volume increased 19%, led by a 40% growth in exports of crudes and products, including exports to new markets like Asia and Africa.

Our exports currently represents 46% of our total sales compared to 35% in 2008.

In 2009, we structured our financing program with two successful transactions in favorable financial terms.

First in May, the Company signed a loan agreement with local banks for COP2.2 trillion and second in July, we capped the international capital markets with a $1.5 billion bond issuance.

Additionally, we were rated Baa2 with investment grade by Moody's.

Fourth quarter's net income increased 42% as compared to the previous quarter due to the higher production in sales.

As of the third quarter, we complied with all provisions of Sarbanes-Oxley Act.

Finally, regarding organizational consolidation, it's important to highlight the five-year collective bargaining agreement we resolved with co-existing labor unions.

Slide six, set for the progress and execution of our investment plan.

During 2009, capital expenditures investment amounted to $6.3 billion of which $2.4 billion were allocated to acquisitions and $3.9 billion to organic investments.

In comparison, total capital expenditure investment amounted to $4.8 billion in 2008.

Out of the total investment, 38% was allocated to acquisitions, 42% was allocated to upstream projects, 18% to downstream projects and the remaining 2% to corporate internal initiatives.

Total CapEx investment for the fourth quarter of 2009, including acquisitions, reached $1.7 billion compared to $1.5 billion in the fourth quarter of 2008.

Slide seven shows the progress in our Exploration and Production.

Regarding Exploration, 19 exploratory wells were drilled during 2009 -- 16 in Colombia, two in the US Gulf Coast and one in Brazil.

Five wells exhibited preliminary evidence of hydrocarbons.

[La Curiara 1] and Tempranillo 1 was operated by Ecopetrol, and that Quifa-7, Quifa-8 and Quifa-9 were operated by Meta Petroleum.

The global exploratory success rate was 26% in 2009 compared to 33% in 2008.

Out of the 19 exploratory wells drilled in 2009, seven were drilled during the last quarter of the year, six in Colombia and one in Brazil as compared to the six exploratory wells drilled during the fourth quarter of 2008.

In 2009, Ecopetrol acquired 5,060 kilometers equivalent of seismic in Colombia and 4,810 kilometers a block.

Additionally, five blocks were granted in Colombia and 25 block which increased the exploration area in 3.5 million of [charts].

In production, the annual average growth equivalent production of crude oil and natural gas of the Group increased 17% in 2009 from an average of 447,000 barrels of oil equivalent per day in 2008 to 521,000 barrels of oil equivalent per day.

Production in 2009 includes 1,000 barrels from K2 field in the US Gulf Coast.

In December 2009, the gross average growth production reached 583,000 barrels of oil equivalent per day, an increase of 32% compared to the 440,000 barrels in December 2008.

This increase is driven by first, a 38% growth in the production of heavy crude, mainly in the central region Chichimene and Castilla fields.

Second, the success was water rejection projects in mature fields which led to an 11% increase.

Third, the growth in demand of natural gas which led to a 9% increase, and fourth, the production contributed by companies acquired in 2009.

Hocol contributed with its year average oil equivalent production per day of 15,000 barrels and Savia with 6,000.

These figures only include production starting on the date when these companies were acquired.

As mentioned in slide five, our reserves grew 35.5%, reaching 1.88 billion barrels of oil equivalent in December 2009.

Reserves to production ratio was 9.9 years.

The Company added a total of 682 million barrels of oil equivalent from crude reserves.

According to the SEC prices and methodology, that increase in flow reserves was a result of the following.

First, production re-evaluation, 572 million barrels, acquisitions, 108.5 billion barrels, wells discovered 63 billion, and price evaluation, a negative of 61 million barrels.

The largest reserve addition came from the central region, 37% mainly from the Castilla and Chichimene fields, both located in the Meta province and operated by Ecopetrol.

The northeast region was second largest in reserve addition, 29%, the main contributor of which was the Pauto field located in the Casanare province and operated by BP.

Slide eight presents a summary of our local and international exploration and production portfolio which includes 166 exploratory blocks, 53 of them in Colombia, 101 in the US Gulf Coast, seven in Brazil and five in Peru, plus Savia, 11 blocks in Peru and Hocol, nine blocks in Colombia.

Currently, 98.6% of growth production comes from Colombia.

Slide nine presents the progress in our Downstream strategy, as a result of the strategy undertaken by Ecopetrol in order to improve the quality of fuel.

In July 2009, sulfur content and diesel fuels was reduced from 1,000 to 500 parts per 1 million in Bogota and from 3,000 to 2,500 parts per 1 million in the rest of the country.

On January 2010, for Bogota in the mass transport system in [Caramanga, Pouea and Cali], we began delivering diesel fuels with less than 50 parts per 1 million of sulfur and the rest of the country with less than 500 parts per 1 billion, demonstrating our commitment to improve the quality of air in Colombia.

Regarding refining during 2009, Ecopetrol acquired 51% of Reficar which is key in the integration of our modernization projects for the Barrancabermeja and Cartagena refineries.

The modernization plan in both refineries will generate potential estimated configuration and construction savings of around $900 million.

As of December, the hydro treatment projects in the Barrancabermeja refinery was 94% completed and operations are expected to start during the first half of 2010.

Barrancabermeja refinery slow decrease 6.5% in 2009 versus -- compared to 2008 due to unfavorable market conditions.

As part of the technical development plan for Ecopetrol, the Barrancabermeja refinery increased formerly production capacity by 11,000 tons per year and 90% increase likewise properly delivered to Propilco increased by 32,000 tons per year, 36% increase.

In transportation, we achieved significant progress in the consolidation of the heavy crude transportation system in the [Gallo Soantaro], undertaking several projects to increase the transportation capacity which are detailed in these slides.

Likewise, the Poliducto de Oriente transportation system commenced operation on December of 2009, and the capacity of Pozos Colorados-Galan products line was increased to 45,000 barrels per day.

Furthermore, 50% of the [Canoli Monco] pipeline reversed back to Ecopetrol.

501 kilometers were added to Ecopetrol's pipeline, representing a 6% expansion of capacity.

Regarding biofuels, first in Ecodiesel, the commissioning of the structure for the refining and biodiesel plants continue with significant progress in civil waters.

The commercial operation will begin in the first half of 2010.

And second, the energy acquired land for the first phase of agricultural development projects and the development of the basic seed bed, 100 hectare was completed.

In addition, three great [songs, saddles] which will lead to material tax benefits.

Slide 10 presents more details on the main refining, petrochemicals and transportation projects which allowed us to create value from our production growth, materializing the synergies of our vertical integration model.

Slide 11 sets forth the most important progress is organizational consolidation during 2009.

We signed a new five-year collective bargaining agreement with Ecopetrol's co-existing labor unions, enabling improvement in labor harmony, key in achieving our goals.

The combined frequency of accidents decreased 28% due to the various initiatives which improved the security and reliability of our operations.

Ecopetrol's budget for total projects in 2009 amounted to COP136 billion compared to COP120 billion in 2008, and was earmarked to track development impressions to second social investment projects for science and technology for retraining in five local suppliers development.

Regarding environmental conservation and communities relations, 10 projects were selected to benefit from COP2.5 billion grant from Ecopetrol national biodiversity program, in partnership with the Ministry of Housing Territory Development and the Environment.

For the second year in a row, Ecopetrol was ranked number one in the MERCO Corporate Reputation Survey, which evaluates the corporate integrational ability efforts and results of Colombia's largest corporations.

First one, to [unappreciate] strategy in the supply chain, we generated savings for COP600 billion and we avoided costs for COP200 billion.

Let's review our financial results in 2009.

On slide 13, we present the financial results of Ecopetrol which had a positive trend throughout the year with quarterly growth in total sales, operating profits and EBITDA.

Let's comment on the key figures.

Revenues, in fourth quarter of 2009, higher oil prices that increased in export volumes generated a 39% increase in total sales which compare to the same quarter of 2008.

The Company had sustained sales growth in every quarter.

Revenue grew 15% when compared to the third quarter of 2009.

Nonetheless, when compared to 2008, 2009 full year revenue decreased 15% as a result of lower crude oil and products price.

Net income, net income for the fourth quarter of 2009 amounted to COP1.7 trillion, a 42% growth when compared to the third quarter of 2009.

Nonetheless, net income decreased by 80% compared to the net income reported for the fourth quarter of 2008, mainly due to non-operating losses.

Full year net income amounted to COP5.3 trillion or COP129.87 per share, a 65% decrease when compared to the same period in 2008 mainly due the decreases in BTI price.

Higher EBITDA margin compared to the fourth quarter of 2008 was due to the higher crude production, as well as the cost savings initiatives made to decrease operating costs.

Costs in the fourth quarter of 2009, variable costs increased by 9% when compared to 2008, mainly due to the higher average prices for purchases of crude oil, and higher volumes of low sulfur diesel imports in order to meet the low sulfur requirements.

Fixed costs, fixed costs increased by 7.3% in the fourth quarter of 2009 when compared -- mainly due to the higher maintenance and construction services required to support increasing production levels as well as higher labor costs.

For full year 2009, operating expenses increased by 19% when compared to 2008 due to higher expenses resulting from unsuccessful exploratory activities and the amortization of goodwill from companies acquired in 2009.

Non-operating profits, non-operating loss in the fourth quarter of 2009 was primarily due to the impact of the Colombian peso revaluation during the fourth quarter of 2009 on the dollar denominated investment in the company's financial portfolio, which generated a book net loss, full year exchange rate related loss was [COP23.4 billion], again due to the Colombian peso revaluation.

It is worth mentioning that exchange rate raising dollar denominated assets has been partially offset by the dollar denominated debt raised in 2009.

Slide 14 presents our lifting, refining and transportation costs.

Average lifting costs for the year 2009 was $7.22 per barrel compared to $8.32 per barrel in 2008.

The company's cost reduction was due to higher production.

Refining costs in 2009 amounted to $5.95 per barrel, $0.80 higher than in 2008 mainly due to higher demand, higher prices of the catalyst, higher labor costs and a load reduction.

Transportation costs in 2009 in peso terms decreased 6% due to higher transported volume.

Nevertheless, the reduction was offset by the peso revaluation.

Now slide 15, returns on assets as equity of Ecopetrol has been fairly stable since the second quarter of 2009, both of them below 2008, a year of unusual high oil prices.

Regarding our subsidiary's results, Reficar generated the highest revenues to the group, with COP3.9 trillion during 2009, while Hocol had the highest depreciation COP0.5 trillion in net income, COP0.3 trillion.

Slide 16 shows the summary of the Ecopetrol segment reports.

The exploration and production segment reported a COP1.9 trillion to the group's net income in the fourth quarter of 2009 at COP5.7 trillion for full year 2009, mainly driven by the increase in the production of heavy crude oil for export.

The refining in petrochemical segment accumulated net multiples of COP104 billion during the fourth quarter and the COP489 billion for full year 2009.

Their losses were reduced to the narrowing of the crack spreads, which decreased the refining margin.

The hydrocarbon transportation segment generated net income for the fourth quarter of 2009 of COP291 billion, mainly due to the revenues from higher transported volumes.

The marketing and sales segment has net income of COP132 billion, as a result of the improvement of the hydrocarbon sales margins in export during the fourth quarter of 2009.

The corporate segment reported an accumulated net loss of COP385 billion in 2009, mainly due to other non-operating expenses, such as interest payments, network tax and gradually expenses.

Starting 2010, our segment reported methodology will be modified.

The primary modification refers to the changes for the reporting of the sales and marketing segment, as we will no longer take the replical ownership of crudes and products from the exploration and production and refining in petrochemicals segment.

In summary, revenues, costs and expenses related to capitalization and delivery to end-clients, exports or refined, will be allocated to their respective segments.

Under the current methodology, these items are allocated to sales and marketing segment.

Additionally, corporate sales costs will be gradually allocated among other segments and we anticipate that in the future, this segment will be eliminated and will no longer be included in the report.

Slide 17 presents a summary of Ecopetrol's balance sheet and cash flow.

Our balance sheet remains solid.

It is low, definite in its level, which provides flexibility to fund a veteran plan.

As of December 31st, 2009, assets amounted to COP53.1 trillion and liabilities to COP20.4 trillion.

Financial obligations amount to COP5.4 trillion, which includes a local syndicated loan and the international bonds for the company's continued to have strong cash generation.

Its starting cash balance as of January 1st, 2009 amounted to COP12.1 trillion, cash generated from operating activities during 2009 amounted to COP32 trillion, while cash generated from financing activities amounted to COP5.4 trillion.

These sources were sufficient to fund the following.

First, operations for COP22.8 trillion.

Second, capital expenditures were COP7.6 billion.

Third, acquisitions for COP0.2 trillion for dividend payments, for COP8.9 trillion.

Let's now review our goals and highlights for 2010.

Please turn to slide 19.

Slide 19 summarizes the investment plan, which was presented in December 2009, amounting to $6.9 billion for 2010.

65% has resulted from earmarked extreme business and more than 90% of investments will be carried out in Colombia.

The CapEx plan for 2010 is 11% higher than the plan executed in 2009.

Nevertheless, acquisitions are not included in the $6.9 billion budget.

In 2010, the Board of Directors will recognize each business opportunity individually and, if approved, required bonds will be allocated for the transaction.

The investment plan is based on the price for the WPI of $56 per barrel.

However, this price and scenario, the financing needs for the year 2010 could reach no more than $3.5 billion.

The sources of tons are ton issuance, issuances, local or international, loan facilities with commercial banks, exiting our multi-lateral loans and the divestments of non-strategic assets.

Subsidiary companies will have additional financial needs for up to $2.3 billion.

Such results should be raised by each subsidiary.

Finally, slide 20 presents the summary of our outlook and goals for 2010.

In the Upstream segment, in line with our strategic plans, we'll expect a 12% growth in the production of Ecopetrol and a 15% in growth of group's production.

In the Downstream segment, we plan to increase the profitability of the refined business by improvement of investor administration and optimized -- optimization of the -- of processes among other initiatives.

We expect to conclude the design and engineering piece of the Barrancabermeja refinery, as well to increase Propilco's capacity and to launch Ecopetrol's petrochemical plant.

Regarding the master plan for oil transportation, we have scheduled important projects such as the expansion of the Ocensa and [Paulo Lubito Gano] pipeline that increasing the capacity to receive crudes from third parties in [PI Portaguille] and [Arawarel] and the expansion of the Companion Sport and the completion of the [Corpus Collaral Calamps] project, among others.

Financially, according to the investment plan, financial needs will amount to a maximum of $3.5 billion.

Regarding Ecopetrol's internal consolidation in 2010, we will continue to with our initiatives to reduce accidents and environmental incidents.

We expect to be listed on the Dow Jones Sustainability Index and ranked as one of the top 20 prepared companies to work for in Colombia.

In conclusion, we have made significant progress towards our goals in the initial two years of our work segment.

We have built the foundation to keep growing as a profitable company, as well as to keep generating value for our shareholders and investors in 2010.

Now, we open to questions from our participants.

Thank you so much.

Thank you.

(Operator Instructions).

And our first question comes from the line of Frank McGann from Bank of America.

Please proceed.

Yes, hi.

Good afternoon.

If I could just ask, perhaps, two questions.

One is in terms of the upstream business, lifting costs, they seem to have risen quite a bit in the fourth quarter, related -- if you take the full-year number compared to the nine-month number.

I was just wondering if you could perhaps explain what reasons were for that?

And then, secondly, if I look at the EBITDA number versus the operating income number on the unconsolidated version of the income statement, I would get a difference of like COP257 billion.

But if I look at the depreciation number and the cash flow number, it's, I believe, COP1.3 billion -- COP1.237 billion.

I was wondering if you could explain, has there been an adjustment that's in the fourth quarter when you go from operating income to EBITDA?

Or is it perhaps I'm just missing something?

Okay, Frank.

Thank you.

We're going with the first issue.

Yes, in relation with the difference in the lifting front, between the fourth quarter in comparison, yes, with the amount?

Yes.

Nelson Navarrete is going to take the answer.

Okay.

Hello, Frank.

I would say that in general, the full-year, the 2009 costs -- 2009 was reduced from 2008 and it was from [8.3 to 2.2 dollars].

But that was the balance and mainly the reason is because we had a higher production in 2009.

Of course, if you look individually inside the costs, without some issues regarding that the -- because we produced more oil and more crude, so we have to treat them more on the money, payments and the work core that is donated fields to increase that production to -- those costs are an increase, if you compare 2008.

But in general, the lifting cost per barrel decreased to [72.32] per barrels.

I don't know if that helps.

The fourth quarter, the fourth quarter increase versus what you would have seen in earlier quarters was due to higher costs for treatment as well as work-over?

Or that's what would -- probably have driven that?

Yes, actually, what is happening in the last quarter, due, actually, I mean, that's why it usually happened.

Most calls that are there are associated to, what I said, to the final plants that are developing in that quarter.

So, it's kind of --

One of these higher things, and in certain ways also related to the, I don't know how does it call it, as the liquidation and the communication, yes?

(spoken in Spanish).

Account, yes.

That are adjusted during the last quarter of the year, okay?

Oh, okay.

Okay.

That's clear.

Okay.

Frank, Adriana and Javier are checking in relation with your question about the EBITDA.

But can you repeat please?

Yes, sure.

If you take the income statement and you take your EBITDA number, which was COP2,963,597 versus operating income, which was 3 -- no, sorry, COP2,706,122, the difference, I believe, is COP257 billion.

So, when I look at the unconsolidated, that's unconsolidated.

If I look at the unconsolidated cash flow statement, the depreciation, depletion and amortization is COP1,237,729.

So, there's obviously a big difference and I'm just wondering perhaps there's an adjustment in the quarter when you -- or perhaps I'm just missing some other adjustment that you include in terms of your EBITDA calculation?

What we can do, Frank, is to reconsolidate the numbers that then (inaudible) exchange.

Yes.

Okay.

I'm going to review the details and to published after, yes, available to all the people that listen to our interest, okay?

Okay, great.

Thank you.

Our next question comes from the line of Natalia Agudelo from Interbolsa.

[Adelante].

Hello to everyone and again, Mr.

Gutierrez.

I would like to know what was the net effect of realizing volume of [quatro] for the quarter?

And what expectations do you have regarding as to what will be the contribution of Fluvialis for the next year, as they have announced a goal of production by September 2010 of 225,000 barrels?

Okay.

Yes.

Nelson and Pedro are going to take this, the explanation.

Oh, Natalia --

Hello?

Okay.

As to [reality] sales, we are going to reach like 110,000 barrels per day at the end of this year.

And of course, there are some plants that are -- we are restructuring right now and trying to increase production by [Juaristino way decided] to reach that 120,000 barrels per day by the end of the year.

And that will be an average?

What were you using for your numbers?

No, it's going to be at the end of the year.

Right now, we are in 115,000 -- between 100,000 and 135,000?

Yes, 120,000, yes.

The year is going 170,000.

By the end of the year, but I think on average, what we're expecting to have in that facility at 130,000 for 2010 as an average production.

But Natalia, it's important to mention that we have some plans under analysis.

Maybe they have some changes in concerns of that.

Production planning during the year, okay?

Okay.

With (inaudible - technical difficulty), there is approved up to now.

But maybe it is possible to introduce some changes during the year, okay?

Okay.

And do we have -- did I get already that the net number of the contribution for this quarter, I didn't listen or -- ?

There's never a contribution.

For the quarter?

For the fourth quarter.

For the fourth quarter?

In volume?

Yes, in volume for the quarter?

Okay.

We don't have that number here, but we can --

I can't say I know with the volume for the -- for example, the last quarter of 2009, is that okay?

Yes.

Okay.

We'll send you that information.

Okay.

Thank you very much.

Maybe -- simply as a reference, we can't remember that.

Ecopetrol participation is average around [2% to 8%].

Our participation is 58%.

Okay.

Yes?

Okay.

Yes.

Okay.

Thank you very much.

(Operator Instructions)

And I show no questions at this time.

Oh, I'm sorry.

We do have a question.

It comes from the line of Sergio Torres from JP Morgan.

Hello, again, everybody.

I was just wondering if you could elaborate a little bit, I think your presentation does a great job at disclosing what your potential source of financing you have for your CapEx on the very conservative oil price assumptions.

But my question has to do with the potential time line of an equity offering that would increase the float of the shares.

I think the energy minister has made some public statements about that and I wonder if you see that happening in 2010 or it would be something more in 2011?

And what would be the deciding factors behind that?

Thanks.

Okay, Sergio.

Basically, our financial factors, looking at the structure of the company, in terms of the capital debt basically, is going to depend on the evolution of our investment plan.

Basically, it's important to mention that we are referring to the 9.9% that we still have in accordance to the approval of the lower [11 18] in 2000 -- at the end of 2006 by the Colombian Congress.

We launched to the market 10.1% in August 2007.

Now, we have pending 9.9% in accordance to the evolution of the investment plan, as the minister mentioned, maybe a new issuance to the bank -- to the markets could be around 2011.

Okay, great.

A couple of follow-up questions if I may.

Thank you, Mr.

Gutierrez.

One would be if there is any covenant in terms of leverage with your existing debt instruments?

And if so, I would like to -- if you could share that with us.

And second is regarding acquisitions.

There are several potential targets of -- in Brazil, in offshore Brazil, where you've been active for awhile and it fits well with your strategy of you're selling your portfolio into offshore exploration.

And I wonder if you could explain to us what in general are the principles or the features that you look in an asset to be acquired?

Is this more of producing an asset or you are also 100% exploration and -- because there are -- there is -- in the assets that are coming on the block in Brazil, it's all the rage.

Adriana is going to take the explanation in relation with leverage.

Please, Adriana.

Yes.

Thank you.

We just started last year the leverage of the company.

For the future and for this year, of course, it depends on how the prices are going to be in the market, but second, we have to depending in the future or the -- having an eye on what the indexes are in terms of keeping our indebtedness rate ratio.

Yes, in the main (inaudible - technical difficulty).

Yes.

Specification.

Ready.

Right.

So, it means that, for us, it's that rating that we already have.

We had to -- our total debt has to be no more than 2 times EBITDA that turnover for the indebtedness line and every time we make our projections, we are observing that ratio.

Okay.

In terms -- currently, the total indebtedness is around [$2.02 billion or something], which is not much compared to EPG or to assets.

Then, what we have already announced is that we expect for this year, with of course the conservative price, assumptions that we already mentioned that we could reach as much -- get as much as $3.5 billion in new debt.

However, if oil prices are much more than that, they're going to be less of course.

Understood.

Thank you.

Thank you, Adriana.

And in relation with acquisitions, part of our strategy, you have a goal of 80 million barrels annually, but really nothing in particular.

We are just looking.

We are always analyzing, looking at the markets, but nothing in particular, Sergio.

Understood.

Thank you, Mr.

Gutierrez.

Thank you all.

This concludes the question-and-answer session for today's program.

I will now like to turn the call over to management for any closing remarks.

Okay.

So, we want to thank you all for joining the call.

The presentations, remarks and webcast are available in our website.

For any additional questions, contact us at the Investor Relations department and a good afternoon to all of you.

Thank you very much.

Thank you for your participation in today's conference.

This concludes the presentation.

You may now disconnect and have a great day.