Good morning. My name is Camilla Wella, and I will be your operator here today. Welcome to Ecopetrol's Earnings Conference Call, in which we will discuss the main Financial and Operational Results for the First Quarter of 2023. There will be a question-and-answer session at the end of the presentation.

Before we begin, it is important to mention that the comments in this call by Ecopetrol's senior management include projections of the Company's future performance. These projections do not constitute any commitment as to future results, nor do they take into account risks or uncertainties that could materialize.

As a result, Ecopetrol assumes no responsibility in the event that future results are different from the projections shared on this conference call. The call will be led by Mr.

Ricardo Roa, CEO of Ecopetrol; Diana Escobar, Vice President of Sustainable Development, María Paula Camacho, Vice President of Legal Affairs and General Secretary, Yeimy Báez, Vice President of Low-emission Solutions, Alberto Consuegra, COO and Jaime Caballero, CFO [ph]. Thank you for your attention. Mr. Roa, you may begin your conference..

Good morning, everyone, and welcome to earnings conference call. It's my privilege to address you today to present the Ecopetrol Group's results for the first quarter of 2023. Before I began with the material that we have prepared for you.

I would like to express my sincere gratitude to all the members of this organization for their commitment and dedication to their work. Clearly, Ecopetrol employees are fully engaged and passionate about their work. It is an honor to lead such a talent and committed team.

Together, we will work to secure but Ecopetrol continues to be a reference within the energy sector with operational excellence and financial performance and a global leader for the energy transition.

I want to express my deep commitment to a strength on continue Ecopetrol’s groups 2040 strategy, which was announced at the beginning of last year fostering the group's consolidation as a leading energy group in the region.

The strategy energy that transforms, answer the current challenges associated with the energy transition in which society must be balanced simultaneously three energy priorities, availability, accessibility in terms of cost and efficiency and all of these environmentally responsible environment.

For the capital group, this is possible through our four strategic pillars, growing with the energy transition, generating value through ESG cutting-edge knowledge and capital returns. Our 2023 plan is a key milestone for the strategy, and we are committed to effectively and efficiently implement to achieve our goals.

GAAP is between COP 25.3 billion to COP 29.8 trillion to accelerate the path of transition and energy security, production between 720,000 and 725,000 barrels of oil equivalent per day that are key for the trade balance stability and energy supply transferred to the nation of over COP 40 trillion in 2023.

All this in addition to increase the impact of social investment and always seeking a close and open communication with society and communities with whom we work on a daily basis in our operations. Let's move on the next slide to present the main results and milestones for the first quarter of 2023.

I would like to start highlighting our resilience, as we move within a high change in market environment on the price side, as well as challenging local environment and security situations at the beginning of the year. Fiscal year [ph] position others 719,000 barrels of oil equivalent per day and increased 27,000 barrels versus fiscal year of 2022.

Growth was supported by the company's operational strength and higher production from key feeds such Caño Sur, Rubiales in Texas, United States. In the first quarter of the year, we registered revenues of COP 38.9 trillion EBITDA of COP 17.8 trillion and net income of COP 5.7 trillion.

These results were a consequence of expecting of the Brent prices translated into Colombian pesos given the devaluation of the currency. Operational strength in the hydrocarbon business with higher production and refinery to output as well as growth in transported crude and refined products.

Production is worth noting that the gas LPG business recorded an EBITDA margin of 59% in the quarter last. We also highlight the performance of the energy transmission and toll road segments due to the new projects and the adjustment in tariff Eco’s of indexation factors.

On the other hand, I would like to point out that the dividend payment approved by the shareholders' general meeting of COP 24.4 trillion, equivalent to COP 593 per share, the highest in the company's history. This value will represent a dividend yield of 25% and implies the dividend payout of 73% of the 2022 net income.

We also highlight our target to reduce methane emissions by 45% by 2025 and 55% by 2030 compared to the 2019 baseline in the direct operations of the production segment through the detection, measurement and fugitive elimination and the reduction of venting in tons and wells. Let's please move to the next slide.

The global economic environment for 2023 is challenging with low growth expectations and inflationary pressures that limit the possibility of a change in contractionary monetary policy.

In this context, the group has taken a strategic actions to ensure the completion of the business plan by closely monitoring the different market risks, which include not only those related to the price of crude oil and refinery products, but also macroeconomic variables, such as inflation, the exchange rate and the cost of debt among others.

Regarding the price of crude oil during the first quarter of the year, Brent crude oil fell from $84 per barrel to $79 per barrel between January and March.

The movement was explained by the resilience of Russian production, the building of crude inventories in the United States, Europe and Japan and the financial history observed in the second week of March with the bank increases that began in the United States.

During the quarter, we saw opportunities that we were able to take advantage of such as the recent OpEx close announcement to cut production starting in May, supporting the spreads of our crude oil baskets.

Likewise, the reactivation on demand in China represents an opportunity for our subsidiary in Singapore to materialize these market opportunities -- the Ecopetrol will continue to use different conceptual stems that include the delivery of crude oil and product marketed by the company at the customers' facilities.

In the Ecopetrol Group this business line is constantly looking for new efficiencies, which allow us to manage the impact of inflation and also alternatives that allow us to use technology and innovation to fulfill our business plan for an increasingly efficient use of results.

I now give the floor to Diana Escobar, Vice President of Sustainable Development, so that we can begin to review progress on the milestone of the TESG strategy..

Thank you, Ricardo. In 2023, we continue to generate significant social value. It is worth emphasizing that for this year, the investment plan within the Ecopetrol Group's sustainable development portfolio amounts to a record-breaking COP 773 billion, representing a 25% increase compared to 2022. Here are some relevant milestones.

During the first quarter, we made remarkable progress in our contribution to the goals of National Public Education, benefiting 31,000 students. In March, we selected 94 new students to grant them with scholarships through the Bachilleres Ecopetrol program to pursue higher education studies.

Furthermore, talented young women earned a place to participate in the program, She is an Astronaut, an initiative aimed at enhancing them skills, culminated in a transformative visit NASA Space Center in August, within the scope of the Ecopetrol Emprende program through technical business companionship, we successfully completed our support for 100 entrepreneurs, micro and small sized enterprises from Barranquilla in the Meta department.

As a result, they achieved an increase of 36% in sales and expanded their customer base by 52%, with the goal of narrowing the national gap in access to public services.

We achieved a significant milestone this quarter by connecting over 11,500 families to natural gas in the city of Barranquilla and in the municipalities of Arauquita, Arauca, Puerto Rondón and Cravo Norte in the department of Arauca.

Moreover, I would like to emphasize our commitment to sustainability and the energy transition in a collaboration between Ecopetrol and Acentia, we proudly inaugurated the first sustainable wagon of Bogotá's mass transportation system, Transmilenio, which operates under environmental sustainability criteria.

To honor our commitment to be in close proximity to the country's communities. During this quarter, we conducted 9 social dialogues, engaging community action boards academy, entrepreneurs and local institutions.

On top of that, we actively participated in the 2023 National Popular Communal Assembly, where we had the opportunity to engage with 5,000 members gaining valuable insights from social leaders across the country on topics such as energy transition, dynamics of the hydrocarbon sector, popular economy and environmental protection.

In collaboration with Hocol, we coordinated the road map for prior consultations with the Alto Unuma Meta indigenous reserve of Puerto Gatan and the indigenous communities of Ortega and the department of Tolima. These consultations are crucial to modify Rubiales fields, environmental license and the drill an injector well project, respectively.

Last but not least, we volunteered in revitalizing public spaces, conducting pedagogical activities for the responsible use of plastic and installing a children's playground with 7 tons of recycled plastic. Now I pass the floor to Maria Paula Camacho, who will enlighten us on the accomplishments in corporate governance and responsibility..

Thank you, Diana. As part of our commitment to the energy transition and in line with the Ecopetrol Group's strategy and TESG plan, the meeting of the Ecopetrol General Shareholders' Meeting, which was attended by more than 3,500 people was the first carbon-neutral General Shareholders' Meeting of Ecopetrol.

In addition, we highlight the following facts. There was a three ton decrease in CO2 emissions in the 2023 shareholders' meeting compared to the 2022 meeting. Those emissions were offset through the purchase of bonds from REDD+ project, which prevented degradation and the forestation of native forest in Bajo Calima and Bahía Málaga in Buenaventura.

The proper disposal of the waste generated during the event was warranty to provide a second line to the different objects used in the meeting, the printing of stationary items and handouts decreased.

And finally, creating employment for mothers who are head of households through Palanus [ph] company, which oversaw the production of [indiscernible] as a gift to the shareholders. During the meeting, the following points among others were reviewed and approved.

First, the annual corporate governance report and the integrated management report for 2022. Through these reports, the structure adopted to respond to the challenges of the 2040 strategy was revealed to the stakeholders through the definition of three business lines; hydrocarbons, low emission solutions and transmission and toll roads.

Likewise, the results of the 2022 financial year and the advances in the TESG pillar were revealed. Second, the Board of Directors member election for the remainder of the 2021-2025 period. This Board has seven independent members Six Director who continue in office. And for the first time, we have three women in this executive body.

And finally, tax auditors election and fees allocation for the remainder of the period 2021-2025. It is also worth noting the appointment of Ricardo Roa Barragan as the new CEO of the company.

This selection and appointment process was carried out in accordance with the succession policy of the CEO of Ecopetrol and with the support of an international headhunter team.

Finally, we highlight after the approval of the 2023 annual human rights plan that Ecopetrol continues the survey of human rights risk associated with the business activity in the operational area. This exercise is carried out with a two-way perspective, and it involved employees, suppliers and community leaders in the first place.

I will now pass the floor to Yeimy Baez to elaborate on the milestones low emission solutions..

Thanks, María Paula. In the first quarter of 2023, we achieved significant milestones in our portfolio of low emissions energy solutions. The natural gas and LPG business reported an EBITDA of $267 million, representing a year-over-year increase of 7% with an EBITDA margin of 59%.

During the first quarter of 2023, we reached more than 160,000 equivalent barrels per day of gas and LPG production combined, attributed mainly to the growth in our US operations, maintaining a 22% share of gas and LPG in the group's production mix.

Alongside with the transportation companies, we achieved a historic milestone for Colombia by beginning -- by directionality of the gas pipeline in the Barrancabermeja by the inner section, thanks to the contractual management and the Cusiana field volumes, thus allowing us to connect our field with northern part of the country, which, in turn, increases the reliability, optionality and security of the natural gas supply in this area.

As part of our ongoing effort to improve community well-being, we continue growing our social gas program, benefiting during this quarter, 2,400 families from rural communities in Arauca.

Likewise, in the energy communities project portfolio program, more than 20 initiatives were highlighted and four of them were put forward to be developed in Putumayo, Meta, Nariño and La Guajira.

In renewable energy sources, the operation of our solar farms, [indiscernible] Sam Fernando and the small hydroelectric power plant Cantayús allows us to reduce 6,400 tons of CO2 equivalent emissions, making significant progress to our decarbonization goals, as well as reported savings of more than MXN6,600 million, increasing 127% versus first quarter 2022.

On the same topic as part of the group's decarbonization strategy and commitment to the energy transition, we signed an agreement with Total Eren in January of this year for deconstruction of a 100-megawatt solar farm in the Rubiales field, which will reduce more than 24,000 tons of CO2 emissions per year as per our continued commitment to incorporate new non-conventional renewable energy sources to the group's portfolio we formed an alliance with EDF, Colombia and Refocosta to build a forest biomass plant with a 25 megawatt capacity in the municipality of Villanueva, Casanare.

This energy will be supplied to the group through an agreement with our trade there Gecelca, reduction of 70,000 tons of CO2 emissions per year is expected, additional to the benefit of repressing an area of 13,600 acres.

Additionally, a memorandum of understanding was signed with Baker Hughes and the Central Hidroeléctrica de Caldas through study the feasibility of developing a geothermal well in the Nereidas Valley. This will enable short and medium-term possibilities for geothermal energy generation.

In terms of hydrogen, two projects have advanced to their final phase of maturity, in which it is expected to conclude the development studies alongside with world-class strategic alliance.

Once conclude, the project will add a capacity of 60 megawatts each of electrolysis with PEM, Proton Exchange Membrane technology, powered by renewable energy sources..

In addition, at the Caribbean Innovation and Technology Center in Cartagena the first vehicle powered by hydrogen with a Colombian license plate number in the country was introduced.

Japan and Brunei is operational, and the green hydrogen production, storage and recharging systems will be available for the innovation and entrepreneurship ecosystem in the fourth quarter of this year. I now turn the floor over to Alberto, who will speak about the main operational milestones..

Thank you, Jamie. 2023 started with two exploration successes in wells which were drilled at the end of 2022 and tested during this quarter. Arrecife Norte 100% operated by Hocol and located southeast of Monteria. Gas was evidenced in the Ciena Garoto [ph] formation extensive testing is expected to begin in fourth quarter of 2023.

The total on well operated by GeoPark in partnership with our subsidiary Hocol located in Villanueva Casanare confirmed the presence of 35 decrease API light crude oil in the middle on formation. At the end of the quarter, the initial tests were completed under well is currently undergoing extensive testing in order to evaluate its potential.

In the first quarter, we advanced 32% on the 2023 drilling campaign, we finished drilling eight exploratory wells out of a plan of 25, six located in the Eastern Plains, Llanos Orientales and two wells located in the Piedmont Foothills.

Regarding offshore exploration activity in Colombia, we continue to advance with the valuation and the facial plan of the Uchuva and Gorgon discoveries in the Colombian Caribbean. In addition, contracting is underway to start drilling the Orca Norte-1 appraisal well estimated for the end of this year.

In order to identify prospects and mature new opportunities, Ecopetrol acquired 312 square kilometers of seismic data with the Flamenco 3D program located in the municipalities of Puerto Wilches and Sabana de Torres in Santander and the Middle Magdalena Valley Basin. This program generated more than 1,100 direct and indirect jobs.

Please let's move on to the next slide. On the production front, we reached 719,000 barrels of oil equivalent per day during the first quarter of the year, maintaining robust results despite security situations in some regions.

We highlight the incremental production of Cano Sur and our Permian subsidiary and also the improved performance of Rubiales, supported mainly by the pressure support project with reuse of production water, which allowed us to grow sustainably and contribute to the weather neutrality goal.

Additionally, during the period, production was mainly affected by security issues with an impact of 6,800 barrels of oil equivalent per day due to the closure of the capacity field from January 21st to April 15th and the shutdown of the Gibraltar gas plant during March.

Also because of blockages by third-parties in the Quifa, Cano Sur and Rubiales fields, with an impact of 2,600 barrels of oil equivalent per day and also because of lower gas demand from external customers compared to estimates.

It should be noted that exploration and production segment contributed with 48.6% of the group's EBITDA with an EBITDA margin of 42% being a profitable and sustainable segment that leverages the energy transition.

By the end of the year, production is expected to be leveraged mainly in the Permian, Cano Sur, Rubiales, Piedemonte, Quifa, and Arauca assets. There are also external factors that could affect production, such as the El Nino phenomenon and environmental and public order situations that are constantly being monitored.

Let's go to the next slide, please. In the Transportation segment for the first quarter of the year, we obtained exceptional financial and operating results.

Volumes transported during the first quarter of the year increased by more than 49,000 barrels per day compared to the same period of the previous year, mainly due to higher crude oil production in the Janus area and the increase of transported volume of refined products.

In addition, for the third consecutive quarter, we achieved record multipurpose pipeline transported volume of approximately 36,300 barrels per day. On the financial front, we highlight the historical quarterly result of the segment with an EBITDA of COP3.2 trillion.

In order to ensure the evacuation of production from the Caño Limón field after the Caño Limón-Coveñas pipeline was affected, three regression cycles of the Bicentenario pipeline were carried out with an evaporated volume of approximately 662,000 barrels.

On the other hand, due to the contingency registered in the southwest of the country after the natural disaster that blocked a part of the Pan American highway, which are on its effects generated fuel shortages, the Ecopetrol Group acted immediately in order to enable new routes to meet the demand for products in this area of the country, developing, among others, a plan for patch from the Buenaventura Maritime terminal to the Tumaco terminal.

This included the construction of facilities in the Buenaventura station. Thanks to the implementation of these adjustments, the flow increased to 2,000 barrels per hour, reducing time per loading times to 22 effective hours.

Under this strategy, during this quarter, 11 vessels have been loaded, which have allowed the supply of approximately 279,000 barrels of gasoline and diesel by the Ecopetrol Group.

During the first quarter, Cenit completed the construction and start-up of the Yumbo TK-8000 storage tank with a nominal capacity of 60,000 barrels, which is expected to reduce stoppages due to high and low inventories, eliminate the payment of time truck freight and allow the capture of growing demand for fuels. Let's go to the next slide, please.

In the downstream segment, we obtained a historical quarterly record in consolidated throughput of 412,000 barrels per day as well as in the production of diesel, gasoline and jet for domestic supply, complying with Resolution 40103, that establishes the quality limits for fuels in Colombia.

Likewise, the second highest quarter was achieved both in Integrated Refining gross margin of $24.6 per barrel and the segment's EBITDA of COP3.2 trillion was the contribution of the Cartagena refinery of COP1.76 trillion stands out, leveraged mainly by the entry of the Cartagena crude oil plant interconnection project from the third quarter of 2022.

In the first quarter of 2023, we continue to make progress in TESG highlighting, the progress in the development and moderation of such projects as green hydrogen in both refineries, fuel quality baseline in Barrancabermeja and improvements in the Naphtha Hydrotreater Unit in Cartagena, the Barrancabermeja and Cartagena refinery.

So the contribution of Ecopetrol certification of the first mining energy company in Latin America to verify its water footprint with econtech, in the ESG study Medical [ph] Response August 2022, sector rankings, Accenture rank 12 in the industrial sector in Colombia.

Based on the growth and diversification study developed by ECODIESEL, it was approved to start the maturation of the expansion project to double Biodiesel capacity. Let's move on to the next slide, please.

During the first quarter of the year, efficiencies of COP5.4 billion were achieved within the framework of an integral strategy focused on mitigating the inflationary effects that the global economy continues to experience.

Lifting cost was $8.78 per barrel, increasing by $0.12 per barrel versus the first quarter of 2022, mainly due to inflationary effects on energy tariffs and operational support services with a lower impact due to efficiencies achieved of $0.2 per barrel.

The cumulative average cost per transported barrel as of March 2023 was $2.58 per barrel, decreasing by $0.19 per barrel versus the one recorded at the end of the first quarter 2022, mainly explained by higher average devaluation of the peso against the dollar and the effect of the additional volume transported.

The refining cash cost indicator was $3.69 per barrel, showing a decrease of 18% compared to the one evidence in 1Q 2022, mainly due to the exchange rate effect. Additionally, in the first quarter of the year, the total unit cost decreased by 7.4% in versus the same period of the previous year.

This is mainly explained by a higher exchange rate and an increase in traded volumes. This demonstrates the effectiveness of the company's policies to face the inflationary pressures in the sector.

I will pass the floor to Jaime Caballero, who will talk about the main milestones of the Transmission and Toll Roads business line and the financial results of the Ecopetrol Group..

Thanks, Alberto. In the Transmission and Toll Roads business many, ISA delivered positive operating and financial results, mainly leverage on the sustained growth of the energy business in Brazil. This was reflected in a 10% contribution of the business line to the group's revenues, 15% to EBITDA and 4% to net income at the end of the first quarter.

The following milestones stand out in the quarter. Firstly, the award of 13 extensions in Brazil and eight connections, five in Brazil, two in Colombia and one through which together will add 334 kilometers of circuit to the network. Secondly, the entry into operation on reinforcement and 15 improvements in ISA CTEEP.

And thirdly, the entry into partial commercial operation of IE Itaúnas with the right to 66% of its annual regulated revenue equivalent to $8 million.

ISA, we advanced in the construction of 31 energy transmission projects, which represent more than 4,840 kilometers of additional circuits to the network and which will generate revenues exceeding $260 million when they come into operation.

The construction stage of Rutas del Loa continues with an extension of 136 kilometers, which is expected to come into operation in 2024. Let's please move to the next slide to see the main financial indicators.

During the first quarter of 2023, the Ecopetrol Group continued to deliver outstanding indicators amidst a more challenging price scenario compared to that observed in 2022.

Royalty was 17.8% underpinned by the last 12 months of operating income, which have benefited from a favorable Brent-peso environment, strong operating performance and solid results in all business units. That result partially offset higher taxes and the increase in capital employed.

EBITDA margin was 45.9%, mainly explained by the good operating performance across our business lines and solid product realization prices, which offset the increase in operating costs and expenses associated mainly with higher exchange rates and higher inflation.

Regarding EBITDA by business line, the higher contribution of transmission and low emission solution stands out in line with the Ecopetrol Group's Strategy for 2040. It aims at an EBITDA participation of these businesses of between 30% and 50% of the group sold. The gross debt to EBITDA indicator stood at 1.5 times below the 2023 target of 2.1 times.

The debt to equity ratio increased to 1.2 times, mainly due to the 16% decrease in equity associated with the recognition of the dividends declared at the general shareholders' meeting, while debt increased by only 1.1%. The net income breakeven closed at $32 per barrel, mainly explained by higher sales volumes and better product spreads.

Please let's move on to the next slide.

At the end of the first quarter of 2023, the Ecopetrol Group recorded a consolidated cash position of COP 17.7 trillion, explained by, first, an operating cash flow generation of COP 2.1 trillion, including an increase in working capital due to the account receivable associated to the fuel price stabilization fund effect for the IPCC for its Spanish acronym and payments of accounts payables and current taxes during the period.

The above was partially offset by the decrease in inventories in Transit given their deliveries during the quarter. Secondly, the outflow of investment resources for organic activities for a total of COP 5.3 trillion, mainly associated to Ecopetrol Asia, Permian and ISA.

And thirdly, the inflow of financing resources as well as principal and interest payments that generated a debt service of COP 2.2 trillion. The final cash balance is composed cash and cash equivalents for COP 15.5 trillion and a portfolio of short and long-term investments for COP 2.2 trillion.

Regarding the management of debt maturities for 2023, the Ecopetrol Group continues to advance in its strategy to refinance the outstanding balance of $1.6 billion through tools such as spreading operations with local international banks and bond issuances in the tidal markets.

Regarding the CapEx balance, the account receivable at the end of the first quarter closed at COP 34.2 trillion, reflecting an accumulation of COP 7.9 trillion during the quarter.

The Ecopetrol Group's collection expectations assume the offsetting of the dividend approved for the majority shareholder of around COP 21.6 million at the General Shareholders' Meeting against the balance of the CapEx debt for the second, third and part of the fourth quarter of 2022 with Ecopetrol S.A.

Once progress is made with the Ministry of Finance and the respective resolutions are issued. The Ecopetrol Group continues working with the Ministry of Finance and Public credit to define further mechanisms that allow settling the outstanding amount for 2022 of approximately COP 4.8 trillion once the dividend compensation is made.

Finally, in the first quarter of the year, the Ecopetrol Group's organic investments amounted to COP 6 billion. The hydrocarbon business line accounted for 65% of that amount throughout the integrated chain, both in Colombia and in the United States of Brazil.

In the low emission solutions business line, investments totaled COP 27 trillion, including investments in renewable energy to underpin self-generation, hydrogen and energy efficiency projects as well as investments associated with the exploration and development of gas.

Investments in the transmission and toll roads business money amounted to COP 1.4 trillion and correspond to the project executed by ISA in Energy Transmission, toll roads and telecommunications.

These investments allowed progress in the construction of electric circuits and improvements aimed at increasing the reliability of the existing net as well as in the Ruta de los, Ruta de la Araucanía and Ruta del Maipo road projects EG. Let's move on to the next slide, please.

Today, we can start to see how progress in the Ecopetrol Group's TESG agenda leverages value generation in the long term.

In the first quarter, through science, technology and innovation, an accelerator of TESG, we achieved a value of $177 million through highly relevant technological initiatives such as the launch into space in partnership with the Colombian Air force of the FACSAT-2 Chibiriquete satellite which helps monitor greenhouse gas emissions over the Colombian geography and allows for a better interpretation of data and images to define the country's carbon zinc capacity, in line with the net zero aspiration, the group announced a new target of reducing methane emissions by 45% by 2025 and 55% by 2030.

Also, during the first quarter, we achieved emissions reductions due to operational efficiencies that bring us close to 1 million tonnes released. For the water neutrality target by 2045, we have identified a 66% reduction in fresh water withdrawal for industrial use. Zero discharges to fresh water bodies and to compensate the remainder by 2045.

During the first quarter of 2023, progress was made in reducing water withdrawal by 651,000 barrels per day and initiatives continue to mature to reduce discharges, mainly new projects like Espia, [ph] Hapyay [ph] and Suzi [ph], which will mature in the 2025 to 2030 period.

This not only contributes to the water neutrality target but also brings us closer to being less dependent on this resource, which is fundamental for the sustainability of the business over time.

In local development, more than 6,000 new non-oil related jobs were three, which puts us on track towards gaining the target of 25,000 new non-oil-related jobs by 2024.

This is in addition to the progress made in local social impact in the regions where we operate, previously covered by Diana Escobar In corporate governance, Ecopetrol Group continues to make progress in transparency and sustainability reporting exercises, substantially improving its rating in the Dow Jones Sustainability Index and the CDP, formerly the Carbon Disclosure Project on climate change, positioning the group as a global leader in these two recognized standards.

Finally, to leverage the group's strategy, the Corporate Vice Presidency of Finance has been transformed into the Corporate Vice Presidency of Finance and Sustainable Value, which will allow all the more effective and efficient financial support to the Ecopetrol Group's profitable and sustainable growth in the energy transition, which ensures capital discipline, cost efficiency and cash protection underpinning the continuity of competitive value generation throughout the group.

I now turn the floor over to Ricardo, for his closing remarks..

Thanks, Jaime. To close, I would like to highlight that we have achieved a strong start of the year with 2023 plan that is still on track. Good progress in the energy transition front and in line with the pillars of the 2040 strategy.

We have continued to expand into new geographic regions and strengthened our relationships with our investor and business burners. We are excited about the future with many opportunities that have leveraged by the strong corporate governance. We will continue to work hard to create value for our shareholders, employees and communities.

Thanks to everyone who is participating in this in today for your time. And with this, I open the question-and-answer session..

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Before we begin, I will give the floor to Ecopetrol's CEO, Ricardo Roa..

Good morning, everybody, and thank you again. Before we start the question-and-answer section, I would like to thank you again for being here. As all of you know, I joined Ecopetrol two weeks ago. This is my first conference call. This is a complex industry.

During the past weeks, I have been working hard with the team on getting acquainted with the details of its business lines. I must mention that I have found a deep technical experience and enthusiastic team.

I will happy answer your questions regarding my general vision for the company's strategy, our priorities and how we will work with the national government, always within the national framework to continue generation value for all our shareholders.

I will, of course, rely on the team to provide the detail information about other topics and recent performance. I also would like to share with you a little bit more about myself. I am technical and electromechanical. I'm a mechanical engineer from the University of National of Colombia and hold a specialization in management engineering systems.

I have the privilege of over 30 years of professional experience, mainly in the energy sector. During the last 20 years, I have high-level positions in energy and gas companies in Colombia, Peru, Guatemala and Honduras.

Throughout my career, I have led studies and initiatives on projects about energy generation and majorly efficiency and lead the strategic transformation in the company's I worked with.

My experience includes the CEO role in the Grupo Energía de Bogotá, President of Transportadora de Gas Internacional, TGI and General Manager of Empresa Energía de Honduras.

I also was the manager of the Electrificadora de Santander, an electricity distribution company and the manager of the energy and ethanol business in a sugar mill and refinery company in the [indiscernible].

Regarding my vision to Ecopetrol, I want to bring all of this experience in the gas and power sector to the company to strengthen the implementation of the 2040 Strategy. My first message for all of you is my entire endorsement of this strategy.

We will remain focused on growing the hydrocarbon business line and permanently monitor the market conditions for the needed adjustments for value generation.

At the same time, we will continue working to take advantage of the energy transition opportunities and contribute to adjust well balanced and responsible energy transition in Colombia and the regions in which we have operations. I value a capital positive impact in the communities closer to our assets.

I hope to see that our strategy does not lose psycho contribution to poverty reduction and well incremental in those regions where we operate. This is fundamental for Colombia's environmental, social and fiscal performance in the long-term.

Finally, I want to share with you that we continue working closely with the national government to look for structural solutions for the CapEx deficit, which are sustainable from a fiscal perspective and maintain Ecopetrol's value proposition to all shareholders.

In addition, internally, we are going to work using technology to create more agile processes, bringing higher international standards. Let's continue with the question and answer session, please..

Good afternoon, everyone. Thanks for taking my question. And Ricardo, very welcome to Ecopetrol and here's to hoping that the company continues to follow and deliver its strategy. So I have three questions. The first one it seems very clear that the company is accelerating and really focus seen on energy transition.

So I wanted to compare that with hydrocarbons, right? So the recent news flow in the country seems to indicate that the new exploration activities and even regular drilling activities will be much more limited going forward.

With that on with the fracking ban how comfortable is Ecopetrol that it can sustain its production level in the coming years? With the mature in April of its oil fields, isn't there a risk that only in the secondary and nursery recall is not enough to offset the natural production becoming -- ? The second question is about your commitment to the shale JV in the US and how with the philosophy, if you will, of not being involved with fracking activities.

And then the third and last question is about the evolution of effect in the quarter. For us, it sounded like the COP 2 billion freeze looked a bit surprising, taking into consideration the behavior of international oil prices and the domestic prices in Colombia.

So I was wondering, if you could help us reconcile the balance increased that much in the quarter? And then how the company sees the funding or the settlement of the funds on top of the COP 21.6 trillion that is already on the budget. So you still have about the three-year COP trillion from the 2022 values and another almost COP 8 trillion from 2023.

So wondering if you have visibility on how that gets worked out. Thank you very much..

Good morning, Bruno. This is Alberto Consuegra. Thanks for the questions. I will take questions one and two. With regards to exploration, as you might recall, we have said that our 2040 strategy is based in growing our production beyond 2030. This is supported in existing E&P contracts where we have about 265 exploration opportunities.

Our 2023, 2025 plan includes quite a bit of investment in exploration taking advantage of those opportunities. And particularly in 2023, we have 25 exploration wells, out of which 8 already have been drilled. So we continue seeing exploration in our portfolio as vital. And part of our resources will come from exploration in the future.

If we need to have a conversation with the government about future exploration contracts will have particularly if we see that we need to replace oil production beyond '23, '24 to maintain the throughput that our refineries need. So that's in relation with exploration. When we talk about EOR, what I can tell you is that this is still very important.

It represents about 38% to 40% of our total production. And when we look at our reserve portfolio, as well as our contingent resources, most of them will come from EOR, particularly from the Castilla and Chichimene areas, where we see water injection and as well as air injection projects.

We are beginning pressure support, water pressure support projects also in Rubiales. And we continue to inject gas to support pressure in our Piedemonte Foothill portfolio. So, EOR becomes quite important, and we will still have a good share of our production in the future years.

With regard to Permian and unconventionals, we recognize that we will have to practically to suspend any activity in terms of unconventionals in Colombia, but Permian is quite important, continues to be a strategic asset. It's one of the most profitable assets that we have in our portfolio.

From the environmental standpoint, it's particularly very good. It exceeds the environmental standards that we have and we continue increasing our presence there. As you might remind, last year, we acquired a position in the Delaware Basin, and we increased our share in the Midland Basin.

When you talk about results, $142 million EBITDA for this quarter, we're talking about 80% and above 80% EBITDA margin in this business and is one of the future assets that will represent the cash flow that the business, the energy transition will require in the future.

So, very strategic, very fundamental in terms of what it represents in importance for the strategy in Ecopetrol..

Bruno, this is Jaime. Good to hear you. I'm going to take the third question around OPEC and how it has progressed over the last -- over the last quarter. And I'll quote you on your question, it seems to me that you had a lesser expectation around the balance. In our case, we actually -- we were not surprised.

I think, we need to remember that there are different -- there are several elements to the formula. You have an element that is the international price -- the reference price. But you also have what is happening, of course, domestically and what is happening with the foreign exchange rate.

And that's what might explain the surprise that you got on your end. Directionally, what I would tell you is, what we had on one hand, we had a positive momentum in terms of the balance in that there were -- there have been a number of adjustments being made on gasoline prices by the by the government. They're actually quite material.

They are actually higher than what they had budgeted before. So I think that speaks a lot about their commitment to the balance. But on the other hand, some of that gets actually offset by the foreign exchange movements. So you need to take that into consideration when you do those numbers.

Now the bigger message that I would tell you is that when you see the behavior of the accumulation of FEPC, it is decreasing. Last year, there were -- there was a moment in time when we were actually accruing a balance of about COP3.6 trillion per month, our accrual rate now is at around 2%. So it's significantly less than it was before.

But going forward, that will move depending again on those three variables. I think on the diesel end, there is some pressure because diesel prices continue to be very robust, so there is some pressure on FEPC on the diesel end. On the gasoline end, there is a lot of relief.

And there is a lot of relief on one end because international prices have softened a bit, but on the other hand, particularly because of the interventions that the government has made on domestic pricing. And beyond that, we're going to have fluctuations around the FX. So that's kind of my attempt to reconcile the behavior in 1Q.

With regards to what can we expect going forward on the settlement, the big element on the settlement of the balance is the exchange, if you will, between the dividends and the government's dividend share versus the balance, that's COP21.6 trillion, right? And that will leave a balance spending for 2022 of about COP5 trillion.

That's the remaining balance, it is not a big number. There are two or three mechanisms to deal with that. One, and probably like -- the most likely mechanism is going to be around budget surpluses that the national government has, the law allows them to use budget surpluses that you have on other areas towards FEPC.

So that's -- I would say that's the base case. And there's two alternatives to that. One is that you actually create a new budget allocation to that. That is a little bit complicated, because it actually needs to go to Congress and all that kind of stuff.

And the second one is extraordinary dividends, which again are going to be subject to the performance of the company, the cash availability that we have and obviously, our commitment to deliver on the existing plan. So that's the outlook that we're seeing. I hope this is helpful Thank you..

Super. Thank you..

The next question comes from Badr of Barclays. Mr. Badr, you may ask..

Thank you so much for taking my question. Congratulations on the earnings and congratulations, Mr. Roa for the nomination as a CEO. I have a few questions. Some of them were partially answered by Mr. Caballero on the previous question. So the first one is to Mr.

Roa, if you can let us know if you've had any recent discussions with Hacienda about some of the recent topics that were mentioned. The first one is the setback. So, obviously, as Mr. Caballero said earlier, there is still a balance pending with Hacienda around COP5 trillion, if I recall.

Obviously, there are surpluses, but the decision of the payment of this balance will really play a massive role on Ecopetrol funding.

So have you had any discussions about with the new Minister of Finance about the potential payment in terms of cash for this factory and deficit? And my second related question with agenda is that, have you also had any discussions with the Ministry of Finance about, the announcements about the changes in diesel and gasoline prices.

So we understand from now that the Ministry of Energy and Mines has little power over Ecopetrol, but just wondering, if you are in agreement about the future of diesel and gasoline prices with the Ministry of Finance? My second question is related to CapEx. So this was also partially answered about the focus on E&P.

But I was just wondering if you could break down the CapEx for 2023 and 2024 with -- just to see between upstream, midstream, downstream, ESA Energy Transition, just to see how we're thinking about it. So we still think about CapEx ran for $6.5 billion, mostly geared toward upstream? And then, how are you going to finance the CapEx growth this year.

Is that going to be with new debt? And my last question is regarding your healthy cash levels. So obviously, you've you have a decent cash balance at the moment.

And I was just wondering if you had any plans of using part of the cash to repurchase some of the low cash price bonds on the market right now with some of the long-dated bonds trading around $0.63, $0.64 on a dollar before potential issuance, or are you planning to use part of the cash for potential M&A. Thank you so much for taking my questions..

Thank you, Badr. Petrol is part of the working group with the national government Ministry of Mines and the -- and Ministry of Finances to support the definition of initiatives at the regulatory, commercial, financial and operational levels and mitigate the impact that it currently generates for the company.

The following stand out of valuation of technological tools, for the targeting up subsidies, different tariff prices for Industrial Concession segments and broader control becoming over the use and destination of volumes with regulated prices among others..

Badr, this is Jaime here. And to complement Ricardo's kind of policy statement, I guess, around this is we are in an active discussion with the government on this. Actually, President, Ricardo and myself, are actually meeting the Minister of Finance this afternoon. We have a meeting precisely to talk about this.

And you have heard, and I'm sure you have seen the public statements about, the Minister made this last Monday which is basically a very clear statement around the requirement to have a competitive compensation framework for producers, to make sure that there are the right incentives to produce in Colombia and to make sure that the fiscal balance is unaltered in any move that's made.

So basically, our expectation on this general expectation is a fuel prices will continue to increase. Minister Boni has been very clear about that. That's something that we expect. I think that the track record that we have seen over the last nine months of President Petro's government is very clear that they are committed to those price increases.

So we are expecting them to continue. That's the first thing that I'd say. And I think the other element that we're seeing and in line with what Ricardo just mentioned, is a very aggressive agenda to implement measures that without affecting the compensation to the producer, reduce the rate of accrual of the balance.

That's where, for instance, focalization of subsidies comes in, right? We actually have done international studies on this regard.

This has been done elsewhere and philosophically where we are, and we share this view with the government is that the totality of society doesn't need to benefit from these subsidies, only certain parts do, and that's where the subsidies need to be going towards.

So in any case, directionally, that's what we're seeing, and we're happy to share kind of that alignment with the government. With regards to CapEx, I think you heard President Roa in his introductory presentation being very clear about the commitment towards the 2040 strategy and the plan.

This year's plan has a target of being anywhere between $5.6 billion to $6.6 billion. That is unchanged. About 65% of that is in hydrocarbons. I'd say, in our historical hydrocarbon business with an aim to grow production, which is our target. It's our aim and it's our target to the end of the decade.

And the remainder of that is going into the new business lines. The business lines associated to transmission and to lower emissions. There are no changes to that. 2024 is very similar to that. The general composition of CapEx breakdown is not changing in 2024 either.

I think what we are, the conversation that President Roa has invited us to join is a conversation about can we be more efficient in the deployment of capital both in the hydrocarbon business and in the lower emission business in a way that we can do more with the same amount. That is the challenge that he's placed to us.

I believe that we are going to recalibrate our efficiency program, and we're going to establish probably newer targets around that. And we are going to find ways when we look at the portfolio of a lower emissions and hydrocarbons to make sure that both businesses can grow in an efficient way.

But we are not seeing headline numbers changing at this time, nor are we seeing the capital allocation between the businesses changing at this time. Thank you..

The next question comes from Luis Carvalho….

I did remind that you’re forcefully -- sorry, just wait a second. I didn't cover the question around cash, but I think we have like four questions in there. Sorry, Badr. What can we expect in cash? No change to our cash management basically.

We have a very healthy operational cash generation at this time, and that cash is being fundamentally directed towards the increased capital intensity of the business where we want to grow production. That's where it's going. In terms of debt we are refinancing the balance that we had for this year, $1.6 billion. That's well on track.

I spoke about that in my general remarks. We're not seeing changes on cash. That's the headline message. Thank you.

The next question comes from Luis Carvalho of UBS. Mr. Carvalho, go ahead..

Hi, Ricardo Hi, Jaime and all the executives. Please for – taking the question. If I may allow to, I don't know, three questions here.

The first one to Ricardo – Ricardo, you recently joined the company, Ecopetrol, it's a super important company to, of course, to Colombia and to Colombians, right? So just trying to get a sense in terms of what would be you'd say, your main goals looking three, four years ahead? What will be the main achievements that you would like to -- I don't know, to potentially be proud of in -- I don't know, two or three years horizon.

The second question is about, of course, capital allocation, and I would like to come back to maybe Jaime’s answer -- this is, I don't know, depending on how we look, right? I mean, of course, the oil price in Juan [ph], there are some limitations about what can be done, right? If you penalize for example, the company too much on the fuel prices, as a consequence, there will be, I would say, lower capability from the company to pay dividends, which it's also important to the Colombian government as a controlling shareholder.

So in the end of the day, and of course, will be some limitations on the investment as well, right? So I'm just trying to get a sense in terms of what would be the capital allocation priorities among these three lines, right? Let's say, the potential, I would say, I wouldn't put subsidies, but you’d say the subsidies for the population on the fuel prices/investments/dividends to the government, right? And the last question, it's about, you'd say, the potential discussion back a couple -- maybe a couple of years ago the Congress of the country basically approve the government to actually to sell 8% of the stake in the company, right? Is that a discussion that you think that would have some room in order to be back on the table right now? And what would be your thoughts on this? Thank you..

Thank you, Mr. Carvalho. About the first question, the current strategy is solid and robust and responds directionally to the challenges of the energy transition if adjustments are required along the way, this will be carried out within the framework of the company's strong corporate governance.

We will evaluate opportunities to accelerate new business associated with the energy transition, but always in accordance with the capital discipline, cost efficiency and sustainable competitive returns for all the shareholders. No changes are expected in the 2023 investment plan announced in November of the last year..

Luis, hi. Good to hear you. Jaime, here. I'm going to take your second question and possibly your third question. And your question around CapEx allocation. Basically, our CapEx allocation priorities reflect the degree of the plan, right? That's the way to think about it.

We will do whatever it takes to deliver on the existing plan, that hasn't changed, right? So, in that line, the first thing that we want to finance is the investment program, which is between -- around $6 billion. That's the way I can think about it, you know that it's a range.

But as we have discussed this with the Board of Directors, there is a total consensus around the company and with the government that investment is required to sustain the shareholder value in the short, medium, and long-term. That is well understood. There is full support to that at every level of government and with the Board.

So, under that light, the first element of how we think about this is we need to sustain the growth programs that we have and that we have announced. And of course, in that context of growth, there is a big element of new opportunities in the energy transition that we have already declared and talked about. So, that's the first priority.

The second priority then, once we cover that, once we cover -- making sure that CapEx is funded, the second priority is a robust debt management. The strategy to 2040 has a capital structure. We have said that we will not surpass a leverage ratio of 2.5 times debt to EBITDA. That is at low prices and we remain committed to that.

We have discussed extensively with the Board, and that includes the new members and President Roa, the leverage component that we have. I would say that the general guideline on this is that absolute debt levels in Ecopetrol are in a good place.

Leverage ratios are competitive with the rest of the industry, but we need to be very, very thoughtful about incremental debt going forward. There is room for incremental debt. There is some room for that. Our performance is allowing us to do that and we will evaluate that as circumstances arise in that structure of priorities.

And then the third component, of course, once you cover investing in the future and making sure that, of course, we have a safe and reliable operation, which is part of what we do in CapEx. And once we cover our debt service, the third priority is, of course, dividend distributions. And as you are aware, we have a dividend policy.

When we have extraordinary performance, we have extraordinary dividends, and we will consider that as our performance and our cash availability allows to do that. At this time, we already have declared what is going to be our dividend payment for this year. There are no plans to change that anytime soon, but this is dynamic.

And as things change in time, we will continue to review that. I would say those are the general elements to that. You mentioned in your question, the FEPC role on this and the FEPC role -- the way that we think about FEPC is FEPC is a constraint that we need to deal with, and that's what we're doing, right? FEPC is not a risk. CapEx is not a surprise.

CapEx is part of our operating envelope like anything else is. And as long as we are aligned with the government on this, we shouldn't be concerned, and that's what we're seeing. What we're seeing is a government that has been very consistent about delivering on its commitments on CapEx.

With regards to your last question about an eventual float of the company, and the regulation, the authorization that we obtained in that regard, originally in 2021 was for five years.

So that goes to 2026 that is an option that we have in our capital structure that is simply part of the toolkit and it's something to be reviewed as and when market conditions allow for that. There are no plans in the near term to activate something like that. But if that changes, we will let you know. Thank you very much..

Thank you, Jaime, and good to talk to you as well and Ricardo good luck. Thank you..

The next question comes from German Cristancho of Davivienda Corredores. Mr. Cristancho, you may ask..

Hi. Good morning, and thank you for this call. I have three questions. One is regarding oil prices. Oil prices have come down this year and Brent reference is close to 76% a barrel.

I would like to know what oil price assumption are you using for the annual budget and if you're planning to change this number for 2023? The second one is maybe for Ricardo and is because the National Hydrocarbons Agency will release the reserves reported during May.

And this information will be very relevant for the energy transition strategy of the country and pending decisions on this matter. What should this report reveal to change your mind in favor of signing or allocating new exploration contracts in Colombia.

And third one and the last one is, could you please give us an update about the Caribbean Sea operation.

When do you expect the gas potential to be incorporated into the reserves of the company?.

Hi, German, how are you? This is Jaime. I'm going to start with your question about oil prices and then Ricardo Roa is going to take your questions around -- sorry, I think I missed a question there, but I'm going to cover oil prices. What assumption are you using for the annual budget? So we are working on an assumption of $81 per barrel.

That's what we're using. That's our plan assumption this year and actually for the next three years. We haven't changed that actually. That's what we used for back in November, the sanctioned the plan for this year. And there are no plans to change it at this time.

And the color that I would give you is that we've looked at the balance between differentials, behavior on one end, as in price realizations versus volatility. And what we see is that if you look at the oil price year-to-date, it seems to be very much near what we planned. So no plans to change it..

About the second question, currently, in Colombia, Ecopetrol Group which include the company's Ecopetrol and Hocol has 48 exploration contracts signed and 30 exploitation contracts with near field exploration options.

These contracts provide an estimated range between 8 and 10 years of exploratory activity depending on the results of obtaining the environmental licenses and the ability of executing the projects.

The 2040 strategy is supported by base producing and recovery from our current fields the contribution from Permian and exploration and the development of prospects identified in areas already provided by Ecopetrol both in the Colombia and Caribbean and within the country among which are -- Lorito in meta Arrecife, Cupiagua XD45, in the Piedemonte and Gorgón and Uchuva in the offshore to more details, Yeimy please..

So, just – hi, German good morning, and thanks for the question. Just to complement what Ricardo has said, let me remind you that when we look at our strategy, what we have said is that we're going to grow our production beyond 2030, and that's very much supported in our current portfolio.

Since we are not going to have the watch of the un-conventionals in Colombia, we will probably need to replace those molecules in the future beyond 2030, specifically to support the refining throughput. So that's -- but that will depend very much on the outcome of our current exploration portfolio.

So that's kind of the question, they response to that question, and I will take the next one regarding the Caribbean Sea operation. What we have said is that, our current business plan, 2023 to 2025, we're going to be doing 7 offshore wells beginning at the end of this year with our commitment well in Arauca.

Then we will follow with activity in both Uchuva and Gorgón and provided that we are successful in these three fronts, we are going to expect to see resources coming into reserves beyond 2026, because we will have to mature, progress FID sanction these projects in order to become reserves.

So that's kind of the plan that we have currently in our portfolio. And a very good point in terms of how we taking the operation, we have created a vice presidency an offshore vice presidency to ensure that we fulfill and comply with the level of activity needed in the current strategy..

Thank you..

The next question comes from Andrés Duarte of Corficolombiana. Mr. Duarte, go ahead..

Hello. Thank you for taking my questions. I have three short questions. First of all, the best of luck to Mr. Roa and the rest of the team for the year. Okay. So two other questions might be taking as a follow-up from German Cristancho questions. The first one is related to gas.

I wanted to know what's the required average local gas price in order for the offshore gas reserves to become economically viable? That's the first question. The second one is related to hydrogen.

So in terms of hydrogen volume, what's your production expectation or forecast currently for the next couple of years? And finally, the question -- the third question is related to reserves group oil and gas reserves for Ecopetrol. So -- and those reserves related to EOR, enhanced oil recovery.

So for 2022, the oil addition related to EOR was pretty low when compared to the previous years. And this happened despite that around 40% of the current production comes from fields that apply these methods.

So I wanted to know what's your expectation or what do you expect in the near future for next year, maybe in terms of reserves addition coming from EOR. Thank you very much..

Thanks, Andreas for your questions. This is Jamie. I will start with the first question related with gas. It is important to highlight that the local gas prices so the wellhead sales under the current regulations in Colombia are freely set. So they are not tied to any international references or benchmarks.

Our view is that our resources in the offshore Caribbean basin are competitive versus other domestic sources as well as import gas. They are also quite material, and we consider them a potential game changer for Ecopetrol and the country. The price level that is required to make those resources is viable.

Well, it is in line with the current natural gas prices in Colombia.

So this outlook of competitiveness will allow us to develop these investments in Ecopetrol for natural gas, and therefore, of course, the long-term contracts with fixed local prices which is pretty much the status quo that we have today in our business will generate stability and profitability of our investments.

Finally, we maintain all the efforts to materialize more synergies to be as efficient as possible by the means of as Alberto mentioned, we have a dedicated team for these projects, we are protecting the capital that has been allocated for these projects in the three years plan.

We are working very close with our world-class partners, Shell and Petrobras. And of course, we are also working in the use of existing infrastructure to process transfer and transport these gas volumes to the Colombian market. For the second question related with our outlook for hydrogen production.

So today, our production of hydrogen from the methane reformers is about 130,000 tonnes per year. Remember, 90% of that hydrogen is gray and 10% is blue since we are capturing part of the CO2 in Barrancabermeja to be sold to local industry.

With the proof of concept that we have delivered, so remember, these are projects that we have today in operations, one located in the Esenttia facilities. The second one in Bogotá, and the last one in Cartagena, we will produce about 35,000 kilograms per year.

It is important to highlight as well that in 2024, we will start the construction of two projects at an industrial scale that have progress to their final phasing maturity in March 2023. So once we conclude those two projects, we will have a capacity of 60 megawatts of electrolysis each of them.

This is a production of 18,000 tons of green hydrogen per year. The first molecule is expected to be produced at the end of 2025 or beginning 2026. And finally, we have our target for the long term. It remains the same, which is 1 million tons per year. And this is almost seven times the capacity that we have today.

I hope to give you with a more detailed context about our hydrogen production outlook and of course, the competitiveness of the offshore gas volumes..

Hi Andres, with regards to the third question, what I have to say is that, we always have in the plan to replace 100% of our reserves every year. And when we look specifically at EOR, this is quite important, not only in this year, but in the years to come.

And it will represent 40% of our production base and also about 40% of our reserve replacement portfolio. And also have to add that most of our contingent resources, existing contingent resources come from EOR. So you will see that a lot of the CapEx deployed for the next years will be related to increasing our EOR state..

Okay. Thank you..

The next question comes from the chatweb. Annie Lee from Bank of America is asking.

What are your expectations for your refining business for the remainder of 2023, given declining global refining margins?.

Hello, Annie. Thank you for your question, regarding the downstream business. As you were able to see, we did have a very strong first quarter with record crude rate, a very good level of EBITDA and refining margins.

So when we see the following quarter for this year, we see also -- although the refining margins, looks to be going down, they still look strong between $15 per barrel plus or minus, so we see in terms of refining margins closing a very good year, probably not as high as the previous year, but still very strong.

Our crude rate, we finished with record levels, but we still see the following months between COP400 billion to COP420 billion in our refining business, so probably on the high side of this range. Although we do have planned turnaround at the Barrancabermeja refinery in July, this will be only for 30 to 40 days.

So then a crude rate will come back to maximum levels. So in overall, we see a very good rest of the year 2023. A lot of focus on safety in our business, high operational availability, a lot of focus on OpEx performance, and in general, very strong 2023 for the rest of the year so far. So I hope, I was able to answer your question, Annie..

Thank you, Mr. Roa. There are no further questions at this time. Thanks to everyone. This concludes our first quarter 2023 earnings conference call. Thank you for your participation. You may disconnect right now..