Ecopetrol S.A. (EC) Q3 2013 Earnings Report, Transcript and Summary

Welcome to the Third Quarter 2013 Ecopetrol S.A. Earnings Conference Call. My name is Hilda, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Mr. Alejandro Giraldo, Investor Relations officer. Mr. Giraldo, you may begin.

Good morning, everyone, and welcome to Ecopetrol's third quarter 2013 earnings conference call and webcast. Before we begin, it is important to mention that the comments by Ecopetrol's senior management could 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 develop. As a result, Ecopetrol assumes no responsibility in the event that future results are different from the projections on the conference call. Today's call will be led by Mr. Gutierrez, CEO of Ecopetrol. And also participating will be Mr. Hector Manosalva, Executive VP of Exploration and Production; Mr. Pedro Rosales, Executive VP for Downstream; Adriana Echeverri, VP of Growth and Strategy; Diana Calixto, Interim CFO; Rafael Guzman, E&P Technical and Development Vice President; Enrique Velasquez, VP of Exploration; Alberto Vargas, Financial Controller; and Thomas Rueda, CFO of CENIT. I will now turn the call over to Mr. Gutierrez.

Thanks, Alejandro. Good morning to all the participants in today's conference call. Initially, we will present the milestones of the third quarter of 2013, followed by the highlights by business segment. Then we will review our financial results and the key internal consolidation initiatives. After that, we will present the outlook for the fourth quarter of 2013, followed by a Q&A session. So let's start to Slide 5, to review our milestones in the third quarter of 2013. Financial and operational results of the third quarter were very positive and were driven by the increase in production and positive effect of the devaluation of the Colombian peso versus the dollar. However, we continued facing a challenging environment, mainly due to the restrictions in transportation and blockades affecting the operation of some fields. I highlight the following results. In production, we achieved a new record, averaging 800,000 barrels equivalent per day, 7.7% higher than in the third quarter of 2012, mainly due to the growth in the Llanos region. Year-to-date production was 791,000 barrels per day. In exploration, we had 1 hydrocarbon discovery in the well Guainiz-1, the fifth in Colombia year-to-date. With this discovery, the exploratory success in Colombia of the corporate group is 83%. Regarding transport, we completed the line field of Oleoducto Bicentenario and continued working in increasing capacity of other pipelines. In refining, we advanced in the modernization projects of Cartagena and Barrancabermeja. The financial results were the best of the past 6 quarters with an increase in net income and EBITDA, driven by the rise in production and the devaluation of the exchange rate, along with stable hydrocarbon prices. Other important events were the bond offerings by which we raised close to COP 5.6 trillion. These offerings took place in the local and international markets in favorable terms and in spite of the volatility of the markets, I've remarked that others subscription and the 30-year tenures, both locally and abroad. Furthermore, for a third straight year, we have been included in the Dow Jones Sustainability World Index, and we are 1 of the top 10% companies, with the best sustainability performance in the index. To conclude, I want to emphasize my satisfaction with the results of the quarter and the commitment with our shareholders to carry out the strategic plan up to year 2020. Please move to Slide 7 to review our CapEx in the first 9 months of 2013. CapEx for the first 9 months of 2013 amounted to $4.96 billion. In production, resources were allocated mainly for drilling activities and work colors. In subsidiaries, funds were mainly allocated to the modernization project of the Cartagena refinery and in transport, primarily to the San Fernando-Monterrey pipeline. Now I turn conference to Enrique Velázquez, who will comment about the main results of our Exploration and Production segment.

Please, let's move on the next slide, which summarizes the highlights of exploration. In the third quarter, we reported 1 hydrocarbon discovery at the Guainiz-1 well, located on Block CPO-10, in which Ecopetrol has 100% interest. This well is the third discovery in the CPO-10 block and Ecopetrol's fourth in Colombia in the year 2013. These 4 finds, plus the well Canario South 1 for Hocol brought Ecopetrol's group success rate of 83% in Colombia during the year 2015. In the third quarter, Ecopetrol drilled 2 wildcats, 5 strategy [ph] wells and 8 appraisal wells. At the end of the quarter, the exploratory well Goliad-1, and a extract test is [ph] 3 and a 1 on 1 [ph] well being drilled. Hocol drilled 2 extract tests and 1 appraisal well during the third quarter. In the U.S. Gulf of Mexico, the well odd job[ph] operated by E&I and in which Ecopetrol has a 20% of interest was completed and is under evaluation. On the other hand, by the end of the quarter, the following exploratory wells were being drilled, DipLansing [ph] operated by Anadarko, and Madagascar operate by Marathon Oil. Furthermore, in Peru, exploratory well Colan-2x was being drilled by Savia. Now, let's move to the next slide, which summarizes the highlights for production. In the third quarter of the year 2013, the corporate gross production reached a new record of 800,000 barrels of equivalent oil per day. This is a 7.7% increase compared with the same period of the year 2012. For the 9 first months of the year 2013, the corporate group achieved gross production of close to 791,000 barrels of oil equivalent per day. The production growth was led mainly by the increase in Chichimene and Apiay fields operated by Ecopetrol, as well as Rubiales and Quifa fields operated by partners. Now in the next slide, we will review the main results for the Midstream segment.

Thank you. In the third quarter of 2013, the transported volumes increased by 3.2% versus the same quarter in 2012, reaching 1,138,000 barrels per day. Oil pipeline transportation increased by 4% versus the same quarter in 2012, mainly due to volumes in the Ayacucho Coveñas system and the increased capacity in Oleoducto de Colombia from 195,000 to 236,000 barrels per day. Out of the total volumes transported, approximately 78% belong to Ecopetrol. Transportation of refined products remain stable versus the same period of last year. Out of the total volumes transported approximately 44% belong to Ecopetrol. Also, during the third quarter, the line field of Oleoducto Bicentenario was completed and this system is now ready to start operations. Additionally, in line with our growth plans, we highlight the capacity increase in Oleoducto Transandino by 25,000 barrels per day, which brings its total capacity to 85,000 barrels per day. Finally, we would like to mention the fact that since the third quarter, it is possible to move product from Pozos Colorados to Sevastopol, without the need to enter the Barrancabermeja refinery. With this, I hand over to Pedro Rosales who will comment on the downstream results.

Please go to Slide 11. In the third quarter of 2013, the throughput of Barrancabermeja refinery was 18,600 barrels per day less than in the same period of 2012. Around 10,000 barrels per day by lower availability of light crudes as a result of some restrictions in the pipeline network. Additionally, in September 16, beyond the revamp of crude unit 250, which reduces the throughput to 185,000 barrels per day during the time of the turnaround. The throughput of Cartagena refinery decreased by 17,600 barrels per day, 9,000 were due to lower availability of crude with the quality required by the refinery and the balance as a result of the maintenance of the crude unit made in August. In Barrancabermeja, refinery gross margin for the third quarter of 2013 was $3.7 per barrel lower than the figures for the same period of 2012 due to lower international stock spreads. Because of the higher amount of heavy crudes, the yields of gasoline and diesel were reduced. Gross margin of Cartagena refinery also declined $6.1 per barrel due to the shutdown of cracking and B's [ph] breaking units since August 30, in order to perform the revamp of the cracking unit, which will be part of the new refinery. Regarding our major projects at the end of the third quarter of 2013, the modernization of the Barrancabermeja refinery reached 17% progress. The National Environmental Licensing Authority approved the environmental plan for the project in September 18, which allows us to update the business case. In September 16, we began the revamp of the crude unit 250, and a scheduled turnaround plan for 84 days. Meanwhile, the Utilities Master Plan completed 75% progress. The expansion and modernization of Cartagena refinery reached 83% progress for the construction, which began on October 2011 has an…

Thanks, Pedro. Please, let's turn to Slide 14. The financial results of the third quarter were the best of the past 6 quarters. Our total revenues rose 14% when compared with the third quarter of 2012, mainly due to a higher sales volume and a positive effect of the devaluation of the exchange rate. Sales price remained relatively stable, with a slight drop in the Avelas [ph] crude oil basket price as a result of a higher volume sold in the local market, linked to fuel oil index that weakened in the third quarter. Now, let's turn to Slide 15 to review the main financial results in the third quarter of 2013. As you can see, our operational income, net income and EBITDA increased compared with the second quarter of this year and the third quarter of 2012, as a result of a solid growth in revenues and stabilization in the growth of the cost of sales. In spite of these, there was a reduction in our returns, owing to: first, the increase in cash coming from the bond placement that will support future investments; and the second, the growth in the equity due to a higher surplus registered under the equity method on CENIT investment. Now, let's turn to the next slide to review in detail the profit and loss statement of Ecopetrol. As previously mentioned, our revenues grew 14% during the third quarter, thanks to a larger volume sold and a favorable impact of the devaluation of the exchange rate on exports. Regarding costs, variable costs rose by 19% compared with the same quarter of 2012, mainly due to: first, the implementation of the new profit model in the Transportation segment; second, increasing trucked volumes of diluent and heavy crude; third, greater imports of fuels to supply the…

Thank you. Please go to the next slide. The accident frequency rate in the third quarter of 2013 was 0.50 accidents per million working hours, 23% lower than in the same quarter of last year and unaccumulated of 0.75. Despite this reduction, we sadly record the death on August 30 of Mr. Tobias Franco, a worker at Cartagena refinery. Finally, during the third quarter of 2013, we received 2 patents for refining process, 1 in Colombia and 1 in China, and a total of 7 patents in the year 2013. Now we will present the outlook for the fourth quarter of 2013. Please go to the next slide. In exploration, 14 exploratory wells will be drilled, 8 from Ecopetrol and 4 from Hocol, all of them in Colombia, and 2 in the U.S. Gulf of Mexico, as well as 5 strat tests. We also expect to announce the commerciality in the Caño Sur and Akacias blocks. Regarding production, we will have additional treatment facilities in Castilla and Chichimene fields and we'll receive the approval of the environmental management plan in Mid-Magdalena. Furthermore, we will start testing polymers injection at the San Francisco field and will begin the construction of facilities and receive first deliveries of equipment for the air injection pilot at the Chichimene field. In refining, we expect to achieve approximately 70% progress in the construction phase of the modernization project of Cartagena and complete the revamping of the U-250 unit crude in the Barrancabermeja refinery. Regarding Transportation, the capacity of the Apiay-Monterrey pipeline will increase by 60,000 barrels per day. Additionally, we will launch an integrity program for Caño Limon-Coveñas pipeline in order to enhance its operational reliability. In summary, in spite of difficulties, we expect to move forward at a good pace in order to accomplish the goals of this year. Now I open the session to questions from our participants.

[Operator Instructions] The first question comes from Frank McGann from Bank of America.

Just 2 questions, one on the Transportation, the costs, I was wondering if you had trucking in the -- more trucking I guess in the third quarter with the OBC pipeline coming onstream, should that lead to potentially a reduction in your overall costs in the fourth quarter and through 2014? And then looking out in terms of production for 2014 and '15, I was wondering if you could go through the key areas that you think will be driving production growth there and help you get to the goals that you set?

Good morning, Frank. Can you repeat the first question please?

Yes, in terms of -- just with the OBC pipeline coming onstream, I was just wondering, would it have any -- help you to reduce costs versus what you were seeing in the third quarter or earlier as a result of potentially lower-cost pipeline capacity versus trucking?

Okay. Yes, thank you. Thomas, is taking the answer. Thomas from CENIT. Please, Thomas.

Good morning. That's a very good question. The outlook in the short term is that costs are not going to go down as a result of additional capacity. Bicentenario, as you know, the landfill has been completed. However, we're facing some challenges -- operational challenges to start up the operation. In the longer-term, the trend will be to use more of our transportation systems and less of the trucking, which is one of the things we're trying to achieve. This is going to take a while as different users of capacity start using our systems, and start using less of the trucking capacity in the country.

Can I just ask what types of operational issues you encountered?

We're having more than operational issues, I rephrase that, it's security reasons that we're facing right now. The pipeline, the Bicentenario pipeline as such is ready to start. The landfill is ready. All the project deliver -- deliverables that should be in place, are now in place. However, we're having -- we're facing some issues regarding the connection to the Caño Limón Covenas line. We're working at the highest levels with the government in order to ensure that we're going to get all the support to fix that. But, of course, that's something that is the highest priority in our agenda right now.

I would like to complement, Thomas' comments about the whole strategy we are going to -- we are trying to structurally, not only, including the security aspects, but different strategies trying to particularly assure the reliability of the Caño Limón-Coveñas pipeline, trying to reduce the impacts of the attacks to the infrastructure. It's our first priority, but as Thomas mentioned, we are not only working with the authorities, the army force, but also how different things in the social also in terms of the communications, in terms of the relations, in terms of other conditions that create like a special environment to have the best conditions for the operations of the Caño Limón-Coveñas pipeline. This is what we can comment in relation with the Bicentenario and its connection with the Caño Limón-Coveñas.

The main drivers to the production 2015, Rafael Guzman is taking the answer, Frank.

Yes, good morning, Frank. We have several options to increase our production from now until 2015. The most important ones are Castilla and Chichimene. Castilla, we plan to take that from our current level of production of 120,000 to 170,000, 200,000 barrels per day. Chichimene, which is currently close to 60,000 will go up to 100,000 by 2015. In addition to that, we have up to 25 enhanced water recovery projects, which are mostly water injection with polymers also. And to give you a number, we have 7 pilots that will be completed this year. In addition to that, we also have 2 fields that will go into commerciality. We're currently reviewing that commerciality. We will have development also for 2015, which are Caño Sur and Akacias. An additional field, which is operated by a partner is Quifa that again will see significant production increase in that field. So those are the main key options to increase our production.

Have you determined what the potential peak production could potentially be at Akacias and Caño Sur?

No, that's something we're currently reviewing. We'll be deciding in the commerciality and development plan. But both fields will be close to 25,000 barrels each of production.

Our next question comes from Paula Kovarsky from Itau. Paula Kovarsky - Itaú Corretora de Valores S.A., Research Division: I have 2 questions. The first one, we read in the local press that there was a debate about the structure for the full prices passed-through whereby the executive will no longer be responsible for that and it would -- the policy, or the decision, the process will all be transferred to Congress. Could you perhaps comment on what's going on? And if there's any issue regarding delays in pass-through or anything that could offer any risk to Ecopetrol? So this would be my first question. And the second question about the -- if you could perhaps give us some view on the recovery project. How much do you expect, for example, the injection pilot in San Francisco to add in terms of production? And most importantly, out of the guidance that you mentioned for production growth in Chichimene, how much of this is primary and how much of this is secondary production? Secondary recovery, sorry.

Okay, thank you, Paula. In relation with fuel's policy, Pedro Rosales is going to refer to the issue.

Okay. Paula, currently, there is a project in the Congress that establishes a new initiatives to define the price policy. As you know, that policy is ruled by the government, and what is currently in discussion is that the project that says that the fuel prices shall depend on production costs without taking into account the cost opportunity for Ecopetrol to sale -- to sell that volumes of crude or refined products. The current cost of gasoline and diesel production here in Ecopetrol, with the available infrastructure in refineries, is very similar to the price that Ecopetrol receives from the policy, from the current price policy, that is export parity, applying a production cost methodology to establish that price. Ecopetrol will now have incentive to develop initiatives for having a more efficient refining business. But at the respect, the government has a position to maintain the actual policies and Ecopetrol has been providing information and analysis to the national government for the purpose of building a better understanding of the subject, and a better assessment of impacts not only in Ecopetrol, but to the nation. Then we expect that this debate goes in the Congress, but our expectation is that the actual policy is maintained in the future. Paula Kovarsky - Itaú Corretora de Valores S.A., Research Division: And what about the approval process? I mean is there any change? I mean for the mechanism that you have today, is there a risk that the mechanism also has to be -- every quarter be approved? Or any such change in -- any risk in that change in the process itself, assuming the policy is maintained?

Not any change, this is the initiative that comes from the Congress. But not necessarily mean that it's going to be approved or to imply changes. Up to now, we haven't had any changes. Paula Kovarsky - Itaú Corretora de Valores S.A., Research Division: Okay, perfect.

Rafael Guzman is going to refer to the recovery project. Please?

Yes, for the year 2015, we plan to add that 34,000 barrels of oil equivalent, due to enhanced recovery project. For the specific case of Chichimene, we're currently developing our pilot. We have initiated construction of facilities to the pilot. However, for 2015, the project will not contribute to production increase. The production increase will come mostly from water injection and vapor injection. The main fields for which we have increase is Casabe, around 10,000 barrels; La Cira-Infantas, another 5,000; and Provincia[ph] , these 2 fields in the Mid-Magdalena valley will have another 5,000. In specific, the 1 in San Francisco, the polymer project, will add close to 3,000 barrels per day. The remaining 11,000 barrels per day to reach our 34,000 goal will come from vapor injection in the middle Magdalena Valley in several fields we have. Paula Kovarsky - Itaú Corretora de Valores S.A., Research Division: Okay, and do you include any gain from [ph] Star in your 2015 target? Or if you could perhaps comment on -- if -- how do you see the debate about the implementation of that technology in the Rubiales field, regarding eventual negotiations that you might be having with the operator?

Okay, there's several points. We're currently doing the pilot project in [ph] Star in the Quifa field. We do not expect significant production in 2015 from this pilot either. Production from air injection, both in Chichimene and possibly Quifa are far down the road, 2017, 2018. Now the status of the Quifa Star [ph] project, we're currently deciding together with our partner, how long will it take for us to gather sufficient data to make analysis and make a decision on it. And no decision has been made at the moment. The same for Rubiales at the moment, there is no decision on any EOR project for Rubiales.

Our next question comes from Colin Smith from VTB Capital.

I've got 2. If you look at the disclosed segment reporting, the E&P earnings actually fell sequentially, despite about a 3% increase in production. And a pretty significant increase in the oil price, and I wondered if you could just comment on that and what that may mean for the sort of margin structure going forward. And my second question is just on the CapEx numbers. At the start of the year, you had a CapEx plan of just over $9.5 billion, and you spent just under $5 billion at the nine-month stage. So you're a long way short of the CapEx plan. And I just wondered if you could comment about why that's been happening and what the realistic year end number might look like?

Okay. Colin, in relation with the Exploration and Production earnings, and segment information, Alberto Vargas will take the answer.

Hello, Colin. Thanks for the question. Yes, indeed, despite a production increase, we experimented fairly[ph] in earnings, 3%. And that's -- 2 factors, mainly led to these results. First, we got increase in maintenance costs, and this is related to our integrity program. And the second, the tax reform hit us in terms of the VAT. Let's recall that now, the VAT that is paid when producing gasoline and oil products are not longer deductible, and that is causing us that hit, mainly.

And does the VAT probably actually manifest itself back in the E&P division, I thought that was something that affects refining and petrochemicals?

All the products. Not only gasolines, but all the petrochemicals, most of them. The VAT paid is not longer deductible now.

But that wouldn't affect crude sales, would it? Or does it?

Crude sales? No, not affecting crude sales, but increasing cost.

Okay. I mean it sounds like that's going to be sort of ongoing pressure on the margin, is that fair?

That's fairly common, yes. Sure.

Okay, and on the CapEx question?

Yes, and about the CapEx, Adriana, please, your comments. Adriana Marcela Echeverri Gutiérrez: Thank you, Colin. The thing is that we have certain cyclicality in our CapEx execution every year. You take a look to Q3, you will find that the first quarters of the year are let's say a little bit lower than the late -- the latest 2 every year. Particularly in the fourth quarter, you see all the concentration of CapEx execution. However, as you can see on Slide 7 of the presentation, there's been kind of a gain of speak [ph] in terms of execution for us with respect to what happened in the previous years. It is important to note anyway that you're comparing the number, and maybe that are not in the correct way, because the base for the CapEx expenditures is $8 billion, which is a portion corresponding to Ecopetrol, not over the $9.5 billion that include all the corporate group, which is a different number.

Okay, so the CapEx breakdown is just for Ecopetrol S.A., its not for the consolidated group? Adriana Marcela Echeverri Gutiérrez: Correct. The one that you find over there on Slide #7, it's only Ecopetrol.

And the figures of Ecopetrol, it is also important to mention that it includes our own investments in our own projects, but also our contributions to the projects of the affiliates, for example, maybe the most important is our contribution to the Cartagena modernization project, developed by Reficar. That is really significant.

Our next question comes from Gustavo Gattass from BTG.

I had a couple of questions. The first one is, would it be possible to talk a little bit about how you're seeing the possibility of having the Akacias and Caño Sur declaration of commerciality this year? From some of the things that were said during this call, I got the impression that, that was being revised in some way, just wanted to make sure that there is a chance to have it in 2013 still? The second thing that I would love to hear a little bit more on is, is it possible for you to talk about how the start up of Bicentenario might impact the EBITDA generation of the logistics business? Just give us a little bit of a ballpark figure of what the rate there implies for EBITDA in your own mindset?

Thank you, Gustavo. In relation with the commercialities of Akacias and Caño Sur, Enrique Velasquez is going to refer to the issue, please?

Gustavo, good morning. Regarding the Akacias and Caño Sur commercialities, the plan is ongoing, and we plan to declare commerciality for both fields by the -- maybe in the next 3 weeks. So we are in pretty good shape. We feel pretty comfortable with the numbers, and so we are in completing our internal reviews, but are for sure, both will be declared this year.

Okay. As you expect, we are in the process to complete all the documents for the approval of the commercialities. [ph] Thomas, is going to refer to the EBITDA and the Bicentenario impact.

Gustavo, thank you for your question. As of -- the impact of the Bicentenario, there are certain things we can comment about. First thing is, it's going to be an impact on a positive way for Ecopetrol, as it provides additional capacity to the group. It's going to be 120,000 barrels and Ecopetrol has an important stake of that. As you know and I said -- we said before, we're facing some issues regarding the connection of the system to the Caño Limón-Coveñas system. We are connected operationally, we're fine, but we're facing some security issues that we're working on and it's very high up in our agenda. As for your question regarding EBITDA, I would prefer not to go into details in terms of what impact it's going to have in 2013, and that relates to the previous point I made where we're facing vast uncertainties regarding start up of that project. It's going to be income for Cenit, and that income is going to be distributed back to Ecopetrol as an affiliate, 100% affiliate ownership in Cenit. Again, it is an important EBITDA generator. The reason why I'm not commenting on any numbers because uncertainty is so high. The system is ready to operate, and it's very high up in our numbers for 2014, and the expectation is very high. I hope that answers your question.

Yes, Thomas, if it's not uncomfortable for you guys, or if it's not strategic, would it be possible to give us an idea of how much that asset can produce just on a 12-month basis, independent on when it starts or not? If it was running for full year, how much it would be? If I could just ask a follow-up as well, for Enrique. If you submit the documents in 3 weeks, can you still make them into reserves for your year end, or is that too late? That will be just the 2 follow ups, sorry about that, guys.

That's fine, Gustavo. The impact is on a full year basis. You could say that for the Transportation segment, has an impact of 6% on the EBITDA. It goes from 34% to 40% if this project was to run the entire year. So it is important and hence, why we're having it so up in our agenda.

Gustavo, on your question, yes, we will add reserves coming from Akacias and Caño Sur commerciality, by the way in our forecast for next year, as we are already accounting on the numbers, okay?

Our next question comes from Caio Carvalhal from JP Morgan. Caio M. Carvalhal - JP Morgan Chase & Co, Research Division: I have 2 questions here. One of them is on your first exploration. We can see that there was 2 exploratory wells built this quarter, in which you can see year-to-date, it's 6 on Ecopetrol with additional 2 in Hocol, total 8. It seems to me, it kind of lead to an exploration activity. My question of that sense would be, what are the reasoning parry [ph] in more aggressive drilling campaign? Are they to be related to environmental permits or is it related to lack of [ph] confirmed prospects, where the well decision has already been taken? The second question would be on the alluded to the Bicentenario again. I think we've already approached this topic, but I would like to understand how was the level of attack this quarter in the Caño Limón, and is there any threat to the company can do to avoid having the same problems in the OBC pipeline? And that's more qualitative side question, I'm sorry if you already answered that today.

In the exploration, Enrique, please?

You're right. The total number of wells drilled so far, actually is 9 not 8, 2 are from Hocol, 6 from Ecopetrol S.A., 1 from Ecopetrol America Inc. Also as you are aware, we have already 5 discoveries in the year. It's already a delay in drilling is from a couple of factors. One is, as you are aware in the Llanos area, there is a seasonal component. I mean we drilled during the summertime and is why we expect to drill in the fourth quarter another 15 wells in order to complete a total of 24 wells in the year. On the other hand, some environmental license were awarded, but we can now be able to drill the wells with those license. But in general, you're right. We are, let's say, a little delay, a little behind. Our goals having in mind, that the goal for the year was 33, and we will complete 24. Do you need more information, Caio? Caio M. Carvalhal - JP Morgan Chase & Co, Research Division: So just -- the main reason for the delay are the permits or any type of operational issues with treatment or something?

No, no. As I mentioned, at the beginning of the year, we were waiting for some environmental license, but we got them already. But anyway, this delayed a little, other factors as I mentioned before is because seasonal activities in the Llanos mainly, and we have to drill during the summertime, which is right now is starting. So we feel comfortable to drill at least 50 wells as a group in the rest of the year.

In terms of the Bicentenario, your question regarding Bicentenario pipeline and the number of attacks and finally, how we are mitigating this impact, I would like to comment that the number this year has been quite high. The -- we calculated around 58 attacks on the Cano Limon system. What we are doing about it? We have as Dr. Gutierrez was saying before, an entire strategy, which covers the army and all social aspects that we can think about that will help us mitigate this impact. On the other side, we also have several operational options that looking at that we had on the table before starting operations of Bicentenario, because certainly we knew that it was not going to be an easy task. Those operational options are several. We have the option of going, using different routes, of course it's not the optimal thing to do, but we're not going to have -- keep our hands in our pockets and we will develop as time goes by more and more options. Finally, the option to very quickly try to recover production is also something we are focusing on. So all these things put together are minimizing as much as we can the impact of these attacks.

And additionally, maybe what is maybe more important to understand is if you observe how much has been up to now the impact in the production of the attacks to the Caño Limón-Coveñas is around 8,300 barrels per day. If you compare with our total production, 802,000 barrels per day is represents 1%. It is basically the impact that we have been having in terms of the production. And additionally, it is important to mention that in terms of the Bicentenario pipeline itself, as part of our experience, we have implemented several mechanisms in terms of the construction, in terms of the security of the pipeline, trying to avoid and make more difficult the impact of the attacks to the infrastructure. And additionally in terms of the tranche of Caño Limón-Coveñas through the Aroka [ph] and Katutubo region, as we mentioned before and also Thomas referred, we are implementing several strategies with the army force, with the government, with the authorities, including several aspects and we are reliable that those strategies would allow us to give a good level of reliability in terms of their operations of the Caño Limón-Coveñas.

At this moment, we will close our question-and-answer session. I would like to turn the meeting back over to Mr. Giraldo for any closing remarks.

Okay, well, thank you, all, for your participation. For any follow-up calls, you can contact us at Investor Relations, and have good day. Bye.

Ladies and gentlemen, this concludes today's conference. We thank you for participating. You may now disconnect.