Ecopetrol 6K Interim Unconsolidated Financial Statements | EC 9 Sep 14

Exhibit 99.1

Ecopetrol S. A.

Interim Unconsolidated Financial Statements

For the six-month periods ended June 30, 2014 and 2013

(unaudited) and the year ended December 31, 2013.

ECOPETROL S. A.

Unconsolidated Balance Sheets

As at June 30, 2014 (unaudited) and December 31, 2013

(Expressed in millions of Colombian pesos)

	June 30,			December 31,
	2014			2013
Assets

Current assets:
Cash and cash equivalents (notes 2 and 3)	$	3,952,429			3,901,277
Investments (notes 2 and 4)		3,910,192			1,469,255
Accounts and notes receivable, net (notes 2 and 5)		6,181,314			6,347,082
Inventories, net (note 6)		2,532,926			2,560,491
Advances and deposits (notes 2 and 7)		5,973,623			7,396,275
Prepaid expenses (note 8)		95,644			70,001
Total current assets		22,646,128			21,744,381

Long term assets:
Investments (notes 2 and 4)		37,903,965			35,218,103
Accounts and notes receivable, net (note 5)		1,622,517			1,594,709
Advances and deposits (notes 2 and 7)		378,950			398,788
Deposits held in trust (note 9)		322,061			314,395
Property, plant and equipment, net (note 10)		18,427,939			20,286,196
Natural and environmental resources, net (note 11)		21,073,298			18,650,690
Deferred charges (note 12)		1,943,218			2,387,512
Other assets (notes 2 and 13)		2,452,989			2,689,882
Valuations		10,772,882			10,756,572
Total assets	$	117,543,947			114,041,228

Liabilities and Shareholders' Equity

Current liabilities:
Financial obligations (notes 2 and 14)		315,704			342,410
Accounts payable and related parties (notes 2 and 15)		16,518,774			8,337,525
Taxes, contributions and duties payable (note 16)		3,838,962			7,934,093
Labor and pension liabilities (note 17)		247,304			226,658
Estimated liabilities and provisions (notes 2 and 18)		1,740,111			1,722,243
Total current liabilities		22,660,855			18,562,929

Long term liabilities:
Financial obligations (notes 2 and 14)		15,762,796			11,977,888
Labor and pension liabilities (note 17)		4,430,862			4,277,832
Estimated liabilities and provisions (note 18)		4,935,280			4,914,864
Other long-term liabilities (note 19)		2,373,638			2,513,190
Total liabilities		50,163,431			42,246,703

Shareholders' Equity
(Note 20 and see attached unconsolidated statement)		67,380,516			71,794,525
Total liabilities and Shareholders' Equity	$	117,543,947			114,041,228

Memorandum accounts (note 21) :
Debtors	$	149,866,076			132,941,485
Creditors	$	(100,909,559	)		(97,287,957	)

The accompanying notes are an integral part of the Unconsolidated Financial Statements

ECOPETROL S. A.

Unconsolidated Statements

of Financial, Economic, Social and Environmental Activities

For the six-month periods ended June 30, 2014 and 2013 (unaudited)

(Expressed in millions of Colombian pesos, except for net income per share

which is expressed in Colombian pesos)

	June			June
	2014			2013

Revenues (note 22):
Domestic sales	$	12,332,086			10,270,225
Foreign sales		18,386,210			19,824,291
Total revenues		30,718,296			30,094,516

Cost of sales (note 23)		19,870,592			18,159,318
Gross margin		10,847,704			11,935,198

Operating expenses (note 24):
Administration		321,977			325,111
Operation and projects		1,812,100			1,557,706
Operating income		8,713,627			10,052,381

Non-operating income (expenses):
Financial income, net (note 25)		35,153			67,238
Pension expenses (notes 17 and 26)		(275,420	)		(314,908	)
Other income, (note 27)		39,244			190,259
Results from subsidiaries, net (note 28)		757,638			433,188
Income before income tax		9,270,242			10,428,158

Income tax (note 16)
Income tax provision		3,196,568			3,678,669

Net income for the period	$	6,073,674			6,749,489

Net income per share	$	147.72			164.15

The accompanying notes are an integral part of the Unconsolidated Financial Statements

ECOPETROL S. A.

Unconsolidated Statement of Changes in Shareholders´ Equity

For the six-month periods ended June 30, 2014 and 2013 (unaudited)

(Expressed in million of Colombian pesos, except for the dividend per share which is expressed in Colombian pesos)

																Public
	Subscribed		Additional		Legal and			Incorporated		Equity						Accounting			Accumulated			Total
	and paid-in		paid-in		other			institutional		method			Valuation			regime			retained			shareholders'
	capital		capital		reserves			equity		surplus			surplus			effect			earnings			equity

Balance as at December 31, 2012	$	10,279,175		6,954,247		12,292,735			174,080		3,923,892			16,677,664			(16,231	)		14,972,950			65,258,512
Distribution of dividends ($291 per share)		-		-		-			-		-			-			-			(11,964,959	)		(11,964,959	)
Additional paid-in capital receivable		-		10		-			-		-			-			-			-			10
Valuation surplus		-		-		-			-		-			(6,408,320	)		-			-			(6,408,320	)
Appreciation of property, plant and equipment		-		-		-			-		-			-			1,141			-			1,141
Regulatory Decre 2336/95 reserve appropriation		-		-		215,407			-		-			-			-			(215,407	)		-
Release of the Regulatory Decree 2336/95 reserve for the previous year		-		-		(1,829,362	)		-		-			-			-			1,829,362			-
Corporate Group unrealized gain reserve appropriation		-		-		3,461,741			-		-			-			-			(3,461,741	)		-
New explorations reserve appropriation		-		-		2,595,112			-		-			-			-			(2,595,112	)		-
Investment projects implementation reserve appropriation		-		-		2,628,878			-		-			-			-			(2,628,878	)		-
Infill drilling campaign reserve appropriation		-		-		1,260,000			-		-			-			-			(1,260,000	)		-
Release of the Corporate Group´s reserves for unrealized gains from previous years		-		-		(2,595,112	)		-		-			-			-			2,595,112			-
Release of the transportation infrastructure integrity strengthening reserve		-		-		(605,135	)		-		-			-			-			605,135			-
Release of the Corporate Group´s reserves for unrealized gains		-		-		(2,123,538	)		-		-			-			-			2,123,538			-
Equity method surplus exchange rate adjustment		-		-		-			-		909,944			-			-			-			909,944
Foreign subsidiary conversion adjustment		-		-		-			-		5,930,751			-			-			-			5,930,751
Net income for the period		-		-		-			-		-			-			-			6,749,489			6,749,489
Balance as at June 30, 2013		10,279,175		6,954,257		15,300,726			174,080		10,764,587			10,269,344			(15,090	)		6,749,489			60,476,568

Balance as at December 31, 2013	$	10,279,175		6,954,374		15,300,726			174,307		14,991,252			10,756,572			(14,867	)		13,352,986			71,794,525
Distribution of dividends ($260 per share)		-		-		-			-		-			-			-			(10,690,342	)		(10,690,342	)
Additional paid-in capital receivable		-		39		-			-		-			-			-			-			39
Additional paid-in capital - called in guarantees		-		43		-			-		-			-			-			-			43
Valuation surplus		-		-		-			-		-			16,310			-			-			16,310
Property, plant and equipment revaluation		-		-		-			-		-			-			424			-			424
Release of Regulatory Decree 2336/95 reserves previous year		-		-		(215,407	)		-		-			-			-			215,407			-
Corporate Group unrealized reserves appropriation previous years		-		-		3,169,024			-		-			-			-			(3,169,024	)		-
Corporate Group unrealized reserves appropriation 2013 year		-		-		2,159,429			-		-			-			-			(2,159,429	)		-
Appropriation of reserves for new explorations		-		-		3,855,112			-		-			-			-			(3,855,112	)		-
Appropriation of reserves for future investments		-		-		3,619,229			-		-			-			-			(3,619,229	)		-
Regulatory Decre 2336/95 reserve appropriation		-		-		20,989			-		-			-			-			(20,989	)		-
Release for new explorations		-		-		(2,595,112	)		-		-			-			-			2,595,112			-
Release of reserve for investment projects		-		-		(2,628,878	)		-		-			-			-			2,628,878			-
Release of the Corporate Group´s unrealized reserves previous years		-		-		(3,461,741	)		-		-			-			-			3,461,741			-
Release for drilling infill campaign		-		-		(1,260,000	)		-		-			-			-			1,260,000			-
Equity method capital surplus exchange rate adjustment		-		-		-			-		(418,135	)		-			-			-			(418,135	)
Equity method capital surplus		-		-		-			-		603,978			-			-			-			603,978
Net income for the period		-		-		-			-		-			-			-			6,073,674			6,073,674
Balance as at June 30, 2014	$	10,279,175		6,954,456		17,963,371			174,307		15,177,095			10,772,882			(14,443	)		6,073,673			67,380,516

The accompanying notes are an integral part of the Unconsolidated Financial Statements

ECOPETROL S. A.

Unconsolidated Statements of Cash Flows

For the six-month periods ended June 30, 2014 and 2013 (unaudited)

(Expressed in millons of Colombian pesos)

	June			June
	2014			2013

Cash flows from operating activities:
Net income for the period	$	6,073,674			6,749,489
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax and CREE, net		-			65,863
Property, plant and equipment depreciation		649,869			650,829
Exchange (gain) loss		(195,502	)		(48,877	)
Amortizations		1,983,079			1,920,055
Allowances		300,272			408,955
Recovery of allowances		(107,313	)		(65,610	)
Property, plant and equipment write-off		-			11,450
Natural and environmental resource write-off		-			19,438
(Profit) loss in investments valuation		(1,164	)		5,530
(Profit) loss in equity method		(757,638	)		(433,189	)
Net changes in asset and liabilities:
Accounts and notes receivable		1,744,024			(1,760,955	)
Inventories		(31,128	)		15,927
Deferred charges and other assets		524,545			(106,660	)
Accounts payable and related parties		186,602			372,846
Taxes payable		(4,175,783	)		(3,419,931	)
Labor obligations		23,327			(153,784	)
Estimated liabilities and provisions		(134,970	)		171,861
Other long-term liabilities		(139,553	)		(67,001	)
Net cash provided by operating activities		5,942,341			4,336,236

Cash flows from investing activities:
Payment and advance for companies capitalization		(14,769	)		(121,223	)
Increase in investments		(6,456,443	)		(5,355,770	)
Redemption and sale of investments		1,594,427			7,918,723
Dividends received		670,381			48,820
Investment in natural and environmental resources		(2,880,410	)		(1,863,039	)
Additions to property, plant and equipment		(239,749	)		(997,722	)
Proceeds from sale of natural resources		-			100,790
Proceeds from sale of property, plant and equipment		-			2,000
Net cash used in investing activities		(7,326,563	)		(267,421	)

Cash flows from financing activities:
Financial obligations		4,015,610			234,240
Capitalizations		43			10
Dividends paid		(2,540,190	)		(6,872,346	)
Net cash used in financing activities		1,475,463			(6,638,096	)

Net increase (decrease) in cash and cash equivalents		91,241			(2,569,281	)
Exchange rate difference in cash and cash equivalents		(40,089	)		82,795
Cash and cash equivalents at the beginning of the year		3,901,277			5,260,111
Cash and cash equivalents at the end of the period	$	3,952,429			2,773,625

Additional cash flow information
Interest paid in the period		381,660			178,341
Income tax paid in the period		2,671,585			6,835,239

The accompanying notes are an integral part of the Unconsolidated Financial Statements

ECOPETROL S. A.

Notes to the Interim Unconsolidated Financial Statements

For the six-month periods ended June 30, 2014 and 2013 (unaudited) and the year ended December 31, 2013.

(Amounts are expressed in millions of Colombian pesos, except for amount stated in other currencies, exchange rates and earnings per share, which are expressed in Colombian pesos)

(1)

Economic Entity and Principal Accounting Policies and Practices

Reporting Entity

Ecopetrol S.A. (hereinafter Ecopetrol or the Company) was constituted by Act 165 of 1948 and transformed through Extraordinary Decree 1760 of 2003 (as well as Decree 409 of 2006) and Act 1118 of 2006 into a state-owned stock company and then into a mixed economy company of a commercial nature, at the national level, linked to the Ministry of Mines and Energy, with an indefinite life term. Ecopetrol’s corporate purpose is the development, in Colombia or abroad, of commercial or industrial activities arising from or related to the exploration, production, refining, transportation, storage, distribution, and selling of hydrocarbons, their by-products and associated products, as well as subsidiary operations, connected or complementary to these activities, in accordance with applicable regulations. Ecopetrol’s main domicile is Bogotá, Colombia, and it may establish subsidiaries, branches and agencies in Colombia or abroad.

Pursuant to Transformation Decree 1760 of 2003, all administration of the Colombian nation’s hydrocarbon reserves, as well as the administration of non-strategic assets represented by stocks and shares in companies, were separated from Ecopetrol. Furthermore, Ecopetrol’s basic structure was changed and two entities were created: a) theAgencia Nacional de Hidrocarburos (National Hydrocarbons Agency, hereinafter ANH) was created to issue and develop Colombian oil policy from that point forward (formerly the responsibility of Ecopetrol), and b)Sociedad Promotora de Energía de Colombia S.A., which received the non-strategic assets owned by Ecopetrol.

Act 1118 of December 27, 2006 changed the legal nature of Ecopetrol and authorized the Company to issue shares to be placed on the public market and acquired by Colombian individuals or legal entities. Once the shares corresponding to 10.1% of the authorized capital were issued and placed, at the end of 2007, the Company became a public-private entity of a commercial nature, at the national level, related to the Ministry of Mines and Energy.

Ecopetrol entered into a deposit agreement with JP Morgan Chase Bank, N.A., as depositary, for the issuance of ADSs evidenced by ADRs. Each of the ADSs represents 20 of Ecopetrol’s common shares or the right to receive 20 common shares of Ecopetrol.

On September 12, 2008, Ecopetrol submitted an application to the U.S. Securities and Exchange Commission (SEC) to register and list the Company’s ADSs evidenced by ADRs on the New York Stock Exchange (NYSE). The Company’s ADSs began trading on the NYSE under the “EC” symbol on September 18, 2008.

On December 3, 2009, the National Oversight Commission for Entities and Securities of Peru (from the SpanishComisión Nacional Supervisora de Empresas y Valores del Peru- CONASEV) approved the listing of Ecopetrol’s ADRs on the Lima Stock Exchange and the registration of such securities with the Public Registry of the Securities Market. The ADRs began trading on the Lima Stock Exchange on December 4, 2009 in the Peruvian market under the “EC” symbol.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

On August 13, 2010, Ecopetrol began trading its ADRs on the Toronto Stock Exchange - Canada. Thus, Ecopetrol became the first Colombian company to be listed on the Toronto Stock Exchange.

Between July 27 and August 17, 2011, Ecopetrol carried out the second placement of its public offering, authorized by Act 1118 of 2006. As a result of this process, 644,185,868 common shares were issued at a nominal price of $3,700 per share, for a total amount of $2,383,488. The common shares were registered with the National Registry of Securities and Issuers in accordance with Decree 2555 of 2010. Following this, the Colombian National Government’s equity participation in Ecopetrol was 88.49%.

Principal Accounting Policies and Practices

The Contaduría General de la Nación(National Accounting Office or CGN) adopted the Public Accounting Regime (RCP) in September 2007, defining its configuration, scope and application. Pursuant to CGN Communication No. 20079-101345 of September 28, 2007, the Colombian Government Entity Generally Accepted Accounting Principles (GAAP) went into effect for Ecopetrol on January 1, 2008.

(a)

Basis of Presentation

The unconsolidated financial statements were prepared in conformity with Colombian Government Entity GAAP standards and principles issued by the CGN and other legal provisions. These principles may differ in certain respects from those established by other standards and other control authorities and CGN concepts on specific matters prevail over other regulations.

The accrual method was applied for the accounting recognition of financial, economic, social and environmental activities.

A structure was established in accordance with the rules for the inspection, supervision, and/or control of Ecopetrol to define the accounting treatment of operations not covered by the CGN. The structure involves: i) Principal and permanent inspection, supervision, and control: Superintendence of Domiciliary Public Services; ii) residual control: Superintendence of Corporations; and iii) concurrent control: Superintendence of Finance, of the activities of the Company in its capacity as issuer in the stock market. International Financial Reporting Standards (IFRS) are applied to define regulatory differences, while accounting standards under Generally Accepted Accounting Principles in the United States (USGAAP) are applied for accounting issues related to crude oil and natural gas activities.

The basic unconsolidated financial statements defined by the CGN comprise the Balance Sheet, the Statement of Financial, Economic, Social and Environmental Activity, the Statement of Changes in Shareholders’ Equity and the Statement of Cash Flows. The notes to the basic unconsolidated financial statements are an integral part thereof.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

The accompanying unconsolidated financial statements do not consolidate assets, liabilities, equity or results of the subordinated companies. The investments recorded in these companies are recognized by the equity method. The annual unconsolidated financial statements are submitted to the General Assembly of Shareholders and are the basis for the distribution of dividends and other appropriations; however, pursuant to legal requirements, the Company must also submit consolidated financial statements to the General Shareholders’ Meeting for their approval every year.

(b)

Materiality Criterion

An economic fact is material whenever, due to its nature, amount and surrounding circumstances, the knowledge or ignorance of it, may significantly alter the economic decisions of users of such financial information.

As set forth by the RCP, the information disclosed in the financial statements and financial accounting reports must cover the main aspects of the Government Accounting entity in a way that must be significantly close to the truth, so that it is relevant and reliable for decision-making purposes or the required evaluations based on accounting information objectives. Materiality depends on the nature of the facts or the magnitude of the amounts disclosed or not revealed.

The unconsolidated financial statements include specific headings in accordance with legal requirements or for elements representing 5% or more of total assets, current assets, total liabilities, current liabilities, working capital, equity and income, as appropriate. In addition, lower amounts are shown when they are deemed to contribute to a better interpretation of financial information.

(c)

Use of Estimates

The preparation of unconsolidated financial statements requires that the Company’s management make estimates and assumptions that could affect the recorded amounts of assets, liabilities, results of activities and the attached notes. These estimates are carried out based on technical criteria, judgment and tenets pursuant to the regulations and legal provisions in effect. Actual results may differ from such estimates.

(d)

Foreign Currency Transactions

Foreign currency transactions are recognized in accordance with applicable regulations and recorded at the appropriate exchange rates on the transaction date. Balances denominated in foreign currency are expressed in Colombian pesos at representative market exchange rates at the end of each period.

The exchange difference resulting from asset adjustments is recorded in results; exchange differences from adjustments to liabilities are applied to the related assets until they are ready for use or sale; the adjustment is subsequently charged to results of operations.

In accordance with Decree 4918 of December 26, 2007 issued by the Ministerio de Comercio, Industria y Turismo (Ministry of Trade, Industry and Tourism), the exchange difference generated from variable income investments in subordinated companies abroad is recorded at the higher or lower value of the shareholders’ equity; when the investment is settled, this value is recorded in the results for the period.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

While performing its oil industry activities, the Company can freely deal in foreign currencies, provided that it complies with the provisions of the Colombian exchange rate regime.

(e)

Joint Venture Contracts

Joint venture contracts are entered into between Ecopetrol and third parties in order to share the risk, secure capital, maximize operating efficiency and optimize the recovery of reserves. In these joint ventures, one party is designated as the operator and each party takes its share of the hydrocarbons (crude oil or gas) produced according to its agreed participation. When Ecopetrol participates as a non-operator partner, it records the assets, liabilities, revenues, costs and expenses based on information reported by the operators. When Ecopetrol is the direct operator of the joint venture contract, it records 100% of the assets, liabilities, revenues, costs and expenses, and recognizes on a monthly basis the distribution according to the participation interests of each partner in the applicable line items corresponding to assets, liabilities, expenses, costs and revenues for the associate.

(f)

Cash and Cash Equivalents

Cash and cash equivalents are represented by negotiable investments with maturity dates within ninety (90) days following their acquisition, and are recorded as liquidity management investments.

Cash from joint operations in which the Company is the operating partner corresponds to advances from partners according to their contractually agreed participation percentages, and the funds are managed in a joint operation exclusive - use bank account.

(g)

Derivative Financial Instruments

The Company enters into hedging agreements to hedge international fluctuations in crude oil prices, product prices and exchange rates. The difference between the contract value and market value generated by hedging operations is recognized as financial income or expense in the statements of financial, economic, social and environmental activities. Ecopetrol does not use these financial instruments for speculative purposes.

(h)

Investments

The investments are classified as: i) Liquidity Management Investments, ii) Investments for Policy Purposes and iii) Equity Investments.

Liquidity management investments correspond to resources invested in debt and equity securities with the objective of obtaining profits through current price fluctuations. They are initially recorded at to their historical cost and they are subsequently recorded based on valuation methods issued by the Superintendence of Finance of Colombia.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

ii.

Investments for policy purposes are made up of national or foreign debt securities acquired in compliance with the macroeconomic or internal policies of the entity, which include investments held through their maturity date and those available for sale. The latter being those which are kept for at least one (1) year, as of the first day on which they were classified for the first time, or when they were reclassified.

Investments held to maturity are updated based on the internal rate of return (IRR) as set out in the methodology adopted by the Superintendence of Finance, and the investments for the purpose of macroeconomic policy and those available for sale must be updated based on the methodology adopted by the Superintendence of Finance of Colombia for tradable investments.

iii.

Equity investments are classified as being in controlled and non-controlled entities. Equity investments in controlled entities are recognized at their acquisition cost whenever it is lower than the intrinsic value; otherwise, they are recognized at the intrinsic value, and the difference between the purchase price and the intrinsic value corresponds to goodwill.

Their values are updated using the equity method, as established in CGN Resolution 145 of 2008.

Investments in associates in which Ecopetrol and/or its subsidiaries exert significant influence are recorded using the equity method.

Significant influence is defined as the power an entity has, whether or not the percentage of ownership is 50% or lower, to participate in setting and directing the financial and operational policies of another entity for the purpose of obtaining profits from that entity.

Significant influence may be present in one or more of the following ways:

Representation on the Board of Directors or equivalent governing body of the associate;

Participation in policy-making;

Significant transactions between the investor and the associated entity;

Secondment of officers; or

Supplying essential technical information.

Equity investments in non-controlled entities (Non - strategic see note 4) include shares with a low or minimum market, or shares not listed on any stock exchange. They do not enable any type of control or significant influence and are recognized at historical cost. Their change in value arises from periodically comparing the cost of the investment to its intrinsic value or its value on the stock market.

Equity variations originating in the adjustment for conversion of the controlled entity are recognized as a surplus by the equity method, notwithstanding that the subaccount may show a debit balance; the above is in compliance with Resolution 193 of July 27, 2010 issued by the National Accounting Office.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(i)

Accounts and Notes Receivable and Allowance for Doubtful Accounts

Accounts and notes receivable are stated at their original amount or at the value accepted by the debtor, subject to periodic updating according to legal provisions in force, or according to agreed-upon contract terms.

The allowance for doubtful accounts is reviewed and updated periodically based on the age of the balances and the recovery analysis of individual accounts. The Company carries out the necessary administrative and legal steps to recover overdue accounts receivable and to collect interest from clients who do not comply with payment policies.

Accounts and notes receivable are only written off against the allowance when there is reasonable legal or material certainty of the total or partial loss of the incorporated or represented right.

(j)

Related Parties

Assets, liabilities and transactions with companies belonging to the Ecopetrol Business Group are presented as Related Parties.

(k)

Inventories

Inventories include assets extracted, in production process, transformed or acquired for any reason, for the purpose of being sold, transformed and consumed in the production process, or as part of services delivered. The perpetual inventory system is used.

Inventories are stated at historical cost or at purchase price, including direct and indirect charges incurred to prepare the inventory for sale or production.

The value of inventories is measured using the weighted average cost method, taking into account the following parameters:

Inventories of oil produced by the Company, at average production cost;

Crude oil purchases, at acquisition costs, including transportation and delivery costs incurred;

Inventory of finished products, at total production costs;

Inventory of products in progress, at production costs; and

Inventory of raw materials, at weighted average cost.

Raw materials and supplies in joint ventures are controlled by the operator and reported in a joint account at the acquisition cost (recorded in the original currency at average costs). Inventory consumption is charged to the joint venture as cost, expense or investment, as appropriate.

Furthermore, inventories are valued at the lower value of market cost or average cost, and in-transit inventories are appraised at cost incurred. At the end of the fiscal year, allowances are calculated to take into account impairment, obsolescence, excess, slow movement or loss of market value.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(l)

Property, Plant and Equipment and Depreciation

Property, plant and equipment are stated at inflation-adjusted historical cost until 2001. This cost includes financial expenses and the exchange rate difference for foreign currency acquisition until commissioning of the asset, as well as financial revenues from the unused portion of financial obligations acquired to finance investment projects. When an asset is sold or disposed of, the adjusted cost and accumulated depreciation are written off and any gain or loss is recorded in the year’s results.

Depreciation is calculated on the total acquisition cost using the straight-line method, based on the assets’ useful life which is reviewed periodically. Annual depreciation rates are as follows:

	%
Buildings and pipelines		5
Plant and equipment		10
Transportation equipment		20
Computer equipment		33.3

Disbursements for maintenance and repairs are recorded as expenses. Significant disbursements that improve efficiency of an asset or extend its useful life are capitalized as an increase in the value of that asset.

The value of property, plant and equipment is subject to periodic revaluation by comparing the net book value with the value determined through technical appraisals. When the value of an asset’s technical appraisal is greater than its net book cost, the difference is recorded as an asset valuation and credited to the surplus account for equity valuation; otherwise, it is recorded as an allowance for devaluations and charged to income.

Up to 2007, a devaluation provision was accounted for in the revaluations surplus account according to accounting standards in force.

Upon termination of an association contract, Ecopetrol receives, at no cost, the property, plant and equipment and materials. These transactions do not affect Ecopetrol’s results. The results of the appraisal of property, plant and equipment are recognized as appraisals in the corresponding asset and equity accounts.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(m)

Natural and Environmental Resources

Ecopetrol follows the successful-efforts method of accounting for investments in exploration, and production or development. Geological and geophysical studies are recorded in expenses as they are incurred. Acquisition costs for proved and unproved properties are capitalized when incurred. Exploration costs are capitalized until it is determined whether the exploration drilling was successful or not. If they are not successful, all of the costs incurred are charged to expenses. When a project is approved for development, the accumulated value of the acquisition and exploration costs are classified in the oil investment account. Capitalized cost also includes asset retirement costs. Asset and liability balances related to asset retirement costs are updated every year. Production and support equipment is accounted for on a historical cost basis and is included in property, plant and equipment subject to depreciation.

Oil investments are amortized by applying the amortization factor based on technical units of production and proven developed reserves, net of royalties, based on a field basis, estimated as of December 31 of the immediately preceding year. The amortization charged to income is adjusted at the end of December, recalculating the DD&A (Depletion, Depreciation and Amortization) as of January 1 of the current year, based on the reserve study updated at the end of the current year.

In the same way that it receives property, plant and equipment upon termination of an association contract, Ecopetrol receives, at no cost, the associate’s amortizable oil investments.

Ecopetrol has established a corporate process for reserves led by the Reserves Directorate, which reports directly to the Vice President of Corporate Finance. The reserves are audited by internationally recognized external consultants and approved by the Company’s Reserves Committee. Proven reserves consist of the estimated quantities of crude oil and natural gas demonstrated with reasonable certainty by geological and engineering data to be recoverable in future years from known reserves under existing economic and operating conditions, that is, at the prices and costs that apply at the date of the estimate.

Estimating hydrocarbon reserves is subject to several uncertainties inherent in determining proven reserves, including the production recovery rates, the timeliness in making the investments to develop oilfields and the degree of maturity of fields.

When it is determined that a well located in the exploration zone does not have proven reserves, it is classified as dry or non-commercial, and the accumulated costs of such well are taken to expenses in the same year in which this is determined.

Since Ecopetrol became an issuer on the Colombian Stock Exchange (Bolsa de Valores de Colombia - BVC) and the New York Stock Exchange - NYSE, the Company has applied the methodology approved by the SEC (Securities Exchange Commission) for estimating reserves.

Pursuant to the provisions of Resolution 494 of December 22, 2009, issued by the ANH, Ecopetrol complies with the delivery of information to the ANH using the methodology of (SPE-PRMS) Oil Resource Administration System. The reserves shown in the reports are audited by three independent reservoir engineering firms.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(n)

Deferred Charges

Deferred charges include: i) Deferred income tax and deferred income tax for equality CREE resulting from the temporary differences between the basis for determining commercial gains and taxable net income at the end of each period. The deferred tax is amortized during the periods in which the temporary differences that originated it are reversed. ii) The net equity tax, which is amortized until 2014.

(o)

Other Assets

Other assets include goodwill, which corresponds to the difference between the purchase value of equity investments in controlled or joint-control entities, and their intrinsic value, which reflects the economic benefits expected to be achieved from the investment, created by brand name, specialized personnel, preferential credit reputation, prestige due to sale of better products and services, favorable location and the expectations of new business, among other things.

Goodwill is amortized using the straight-line method over the term for expected recovery of the investment, which is from 10 to 18 years. At the close of each accounting period, Ecopetrol must evaluate goodwill to determine whether the conditions for the generation of future economic benefits still exist; otherwise, the asset must be written off. If the book value of equity investment plus the book value of goodwill, which includes its historical cost and price adjustments and amortizations, is greater than the market value, the asset should, as a result of such difference, be written off in the related period, and charged to income, and the reasons for the said decision should be disclosed.

Intangible assets such as software, licenses and patents are recognized at acquisition, development or production cost. Intangible assets are amortized using the straight-line method over the periods during which the benefits arising from the incurred costs and expenses are expected to occur, or during the term of the legal or contractual coverage of the granted rights.

Goods acquired through financial leasing are subject to depreciation in order to recognize the loss of operational capacity by their utilization. In public accounting entities of the general government, the depreciation of goods acquired through financial leasing affects directly the equity, except for assets used in activities of production of goods and rendering of services that must be recognized as cost or expense.

Improvements and works performed on leasehold property or third party property different from those that can be recognized as property, plant and equipment will be amortized over the shortest period between the term of the contract covering the use of the property, and the estimated useful life of the assets, as a result of the additions or improvements made, only when the cost of the works and improvements made is not reimbursable. In the case of public accounting entities of the government, amortization affects equity, except for works and improvements in Property used in activities for the production of goods and rendering of services which must be recognized as a cost.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(p)

Valuations

Investments

Valuations correspond to differences between the net book value of the investments and their intrinsic value or quoted price on the Stock Exchange.

Property, plant and equipment

Valuations and the valuation surplus of property, plant and equipment correspond to the difference between the net book value and the market value for real estate or the Current Use Value (CUV) for plant and equipment, determined by specialists registered with the Colombian Real Estate Association or by suitable technical personnel, as appropriate.

The methodology used for valuation of plant and equipment is the Current Use Value (CUV) for running businesses, for the economic valuation of assets, taking into account the facilities’ current conditions and their useful life in terms of production capability and ability to generate income.

It is not mandatory to adjust the value of moveable property when its historical value, taken individually, is lower than 35 current minimum monthly legal wages, or of property, plant and equipment located in high risk zones.

(q)

Financial Obligations

Public credit operations correspond to any action or contract which, in compliance with legal regulations on public credit, are addressed to supply the Company with resources, goods and services under specific payment terms such as loans, issue and placement of bonds and public credit securities, and supplier’s credit.

With respect to loans, public credit operations must be recorded for the actual disbursed amount, while bonds and securities placed are recorded at their nominal value. Placement costs are carried directly to expenses.

(r)

Income Tax

The income tax provision as of June 2014 was calculated by applying to the accounting profit before taxes, the effective taxation rate calculated for December 2013. This rate includes both the income tax and the income tax for equality CREE.

The effect of temporary differences that imply the payment of a lower or higher income tax in the current year, is accounted for as deferred tax asset or liability, both for the income tax and for the income tax for equality CREE, as applicable, provided that there is a reasonable expectation that such differences will be reversed in the case of the deferred tax asset, or sufficient taxable income is generated to recover the tax in respect to the deferred tax liability. The deferred tax is calculated at the rate of 34% (25% ordinary income tax and 9% income tax for equality CREE) or of 33% (25% ordinary income tax and 8% income tax for equality CREE) as applicable.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(s)

Labor and Pension Liabilities

Salaries and benefits for Ecopetrol staff are governed by the Collective Labor Agreement 01 of 1977, and in their absence, by the Substantive Labor Code. In addition to the legally mandated benefits, employees are entitled to fringe benefits, which are subject to the place of work, type of work, length of service, and basic salary. Annual interest of 12% is recognized on accumulated severance amounts for each employee, and the payment of indemnities is provided for when special circumstances arise that result in the non-voluntary termination of the contract, without just cause, and in periods other than the probationary period.

The actuarial calculation includes active employees, as described in the paragraphs below, with indefinite term contracts, pensioners and heirs, for pension, health care and education plans; similarly, it includes pension bonds for temporary employees, active employees and voluntary retirements. Health care and education obligations do not comprise pension liabilities; they are part of benefit obligations.

All social benefits of employees who joined the Company before 1990 are the responsibility of Ecopetrol, without the involvement of any social security entity or institution. The cost of health services for the employee and his/her relatives registered with the Company is determined by means of the mortality table, prepared based on facts occurring during the year. Similarly, Ecopetrol calculates educational allowances according to experience, based on the annual average cost of each business, subdivided in accordance with the type of studies: Pre-school, elementary, high school and university.

For employees who joined the Company subsequent to the entry into effect of Act 50 of 1990, the Company makes periodic contributions for severance payments, pensions and occupational injuries to the funds created for these respective obligations. Similarly, Act 797 of January 29, 2003 determined that Ecopetrol employees who joined the Company as of that date would be subject to the provisions of the General Pension Regime.

Pursuant to Legislative Act 01 of 2005, enacted by the Colombian Congress, the pension regimes, excludes the General Social Security System in Colombia expired on July 31, 2010. In accordance with the provisions therein, the Ministry of Social Protection’s judicial pronouncement on the matter and the analysis conducted by Ecopetrol’s labor advisers, it was concluded that those workers who had met the age and continuous or discontinuous service time requirements of the law, the Collective Bargaining Agreement in effect and/or Agreement 01 of 1977, prior to August 1, 2010, had consolidated their right to their pension. It was, however, mandatory for other workers, who were not covered, to join the General Pension System. The pension administrator chosen by the worker (either Colpensiones or Private Pension Fund or whichever may correspond) would be responsible for recognizing and paying the respective pension.

As set out in Decree 941 of 2002, upon approval of the actuarial calculation by the Ministry of Finance in October 2008, and upon approval of the mechanism by the Ministry of Social Protection through the Administration Act of December 29, 2008, the Company partially switched over the value corresponding to monthly pension payments from its pension liabilities, transferring the said liabilities and their underlying amounts to pension-related autonomous equities (PAP, per its acronym in Spanish). The funds transferred, and returns on those funds, cannot be redirected nor can they be returned to the Company until all of the pension obligations have been fulfilled.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

The transferred liability corresponds only to pension allowances and pension bonds. The portion relating to health care and education services remains within Ecopetrol’s labor liabilities.

At each period end, Ecopetrol must review the amount reported by the PAP with respect to the value of the pension liability updated based on the latest actuarial computation. In the event that the equity yields are insufficient to cover 100% of the liability, the Company must recognize an allowance for the difference, which must be funded should the contingency materialize. Ecopetrol remains materially responsible for payment of the pension liabilities.

Through Resolution 1555 of July 30, 2010, the Superintendence of Finance replaced the mortality tables used to prepare actuarial computations and stipulated that the effects of the change could be recognized gradually. Subsequently, Decree 4565 of December 7, 2010 modified the accounting standards for amortization of the actuarial calculation in effect up to that date. Pursuant to the new decree, the companies that had amortized 100% of their actuarial calculation at December 31, 2009 could gradually amortize the increase in the actuarial calculation for 2010 using the new mortality tables, up to 2029.

Given the above, in 2010 Ecopetrol modified its accounting policy for amortization of the actuarial calculation of monthly pension payments, pension quotas and bonds (transferred liabilities) and health bonds, and adopted a five-year term starting in 2010, to amortize the increase in the 2010 actuarial computation. Until 2009, the yearly increase in the actuarial calculation was recorded as expenses for the period, given that the actuarial calculation was 100% amortized.

Resolution 717 of December 2012 amended the Manual de Procedimiento del Régimen de Contabilidad Pública (Regime of Public Accounting Procedure Manual) with regard to the Accounting Procedure for recognizing and disclosing the pension liability, the underlying financial reserve, and related expenses, at items 5 and 44. With regard to item 5, the indications in the previous paragraph lead to the conclusion that this item has no impact on the Company’s activities within its amortization plan.

With regard to item 44, its only impact is to disclose the fact that the Reserve Funds are common funds that are also under the administration of Colpensiones. There are no further implications for Ecopetrol.

(t)

Advances Received from Ecogas to cover BOMT (Build, Operate, Maintain and Transfer Obligations)

Pursuant to the sale of Ecogas by the National Government, and following specific instructions from CGN, the net present value of the future payment scheme in connection with Ecopetrol’s debt toward BOMT contractors was recognized as deferred income. These liabilities are due in 2017, the year when the contract obligations will be fulfilled.

(u)

Hydrocarbon Purchases

Ecopetrol purchases hydrocarbons that the ANH receives from all production in Colombia, at prices established according to section four of Act 756 of 2002 and Resolution 18-1709 of 2003 issued by the Ministry of Mines and Energy, taking into account international reference prices.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

Ecopetrol also purchases hydrocarbons from partners and other producers in Colombia and abroad to meet the Company’s needs and operating plans.

(v)

Revenue Recognition

Revenue from crude oil and natural gas sales is recognized at the time of transfer of title to the buyer, including risks and rewards. In the case of refined and petrochemical products, revenue is recognized when products are shipped by the refinery and subsequently adjusted in accordance with the volumes actually delivered. Revenue from transportation services is recognized when products are transported and delivered to the buyer in accordance with sale terms. In other cases, revenue is recognized at the time it is earned and a true, probable and quantifiable right to demand its payment arises.

Under current regulations, Ecopetrol sells regular gasoline and diesel at a regulated price, and the National Government recognizes for these businesses the amount of the subsidy on regular gasoline and diesel granted to local consumers, which is generated by adding the difference, for every day of the month, between the producer's regulated revenues and the daily price equivalent to the U.S. Gulf Coast reference price, calculated according to origin and multiplied by the volumes sold daily. Resolution 182439 and Decree 4839 of December 2008 establish the procedure for recognizing subsidies in the event they are negative (negative value between parity and regulated prices).

In March 2010, the Ministry of Mines and Energy issued Resolution No. 180522, which revoked provisions that were contrary to Resolutions 181496 of September, 2008, 182439 of December 30, 2008 and 180219 of February 13, 2009 and modified the formula for computing the international reference prices for gasoline and diesel.

Resolution 91658 was issued in October 2012, which modifies Resolution 180522 with regard to the subsidy procedure for refiners and importers of regular gasoline and diesel (ACPM).

(w)

Cost of Sales and Expenses

Costs are recognized at their historic value both for goods purchased for sale and for the accumulated production costs of goods produced and services rendered. Costs are disclosed according to the operation generating them.

Expenses correspond to the amounts required for the operation of ordinary activities and include those related to activities caused by extraordinary events. Expenses are disclosed in accordance with their nature and the occurrence of extraordinary events.

Costs and expenses are recognized upon receipt of goods or services or when there is certainty that the economic event will occur. Fuel shortages and losses due to theft and explosions are recorded as non-operating expenses.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(x)

Abandonment of Fields

The Company recognizes an estimated liability for future environmental obligations, and its corresponding entry as a higher asset value for natural resources and environmental assets. The estimate includes the cost of plugging and abandoning wells, dismantling facilities and the environmental recovery of areas and wells. Amortization is recorded as production costs, using the technical-units-of-production method, based on remaining proven developed reserves. Changes resulting from new estimates of the liability for abandonment and environmental restoration are accounted for under the corresponding asset.

Depending on the scope of certain association contracts, field abandonment costs are taken on by partners according to the same participation percentages set out in each contract. Ecopetrol has not allocated funds to cover these obligations, with the exception of association contracts Casanare, Orocue, Garcero, Estero, Corocora, Monas, Guajira, Tisquirama, Cravo Norte, and Opon; however, as activities linked to field abandonment take place, they will be funded by the Company.

(y)

Accounting for Contingencies

On the date of issuance of these unconsolidated financial statements, conditions might exist that could result in losses for the Company that will only be known if specific future circumstances arise. The nature and probability of such situations, as well as the amounts involved are evaluated by Management, the Vice President of Legal Affairs, and legal consultants, so that decisions can be made regarding changes to amounts provisioned and/or disclosed. This analysis includes current legal suits against the Company.

The methodology used to assess legal proceedings and any contingent obligations is based on the Nation’s credit system used by the Ministry of Internal Affairs and Justice.

Ecopetrol, through Instructions GSJ-I-004 for computing contingencies for legal proceedings and reconciliations, defined the way in which Ecopetrol estimated the contingent asset and liability from litigation activities. Paragraph 4.1 of the said instructions establishes the methodology for assessing contingencies for claims and arbitrations brought against Ecopetrol S. A.

A provision is recorded for legal proceedings when there is a conviction at trial court or when the risk assessment outcome is “likely to lose”.

(z)

Memorandum Accounts

Creditor and debtor memorandum accounts represent the estimated value of facts or circumstances that could affect the Company’s financial, economic, social and environmental situation. They also disclose the value of the goods, rights and obligations that require control, and also include differences between accounting information and the information used for tax purposes.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(aa)

Net Income per Share

Net income per share is calculated based on net earnings for the period, divided by the subscribed outstanding shares.

The Company does not have share-based employee incentive plans.

(bb)

Convergence to International Financial Reporting Standards

On December 29, 2012 the Ministry of Commerce, Industry and Tourism issued the Decree 2784, by which it was regulated the Act 1314 of 2009 on the technical framework for preparers of financial information for group 1: Issuers of securities, public interest entities and entities that meet the parameters set out in this provision.

This technical framework was developed based on International Financial Reporting Standards, - IFRS - International Accounting Standards - IAS, SICS interpretations, IFRIC interpretations and conceptual framework for financial reporting, issued in Spanish on January 1, 2012, by the International Accounting Standards Board (IASB).

Pursuant to the schedule of implementation, 2013 has been a period of preparation and training with the initial obligation to present an implementation plan approved by the Board, including people responsible and targets for monitoring and control. 2014 will be the transition period and 2015 will be period of full implementation of the new regulatory framework.

Pursuant to Decree 2784 of 2012, amended by Decree 3024 of 2013, it is required to prepare an opening statement of financial position as of January 1, 2014 under the new standards, so that during 2014 the transition takes place, with the simultaneous application of existing and new accounting standards.

Resolution 743 of December 17, 2013 issued by the National Accounting Office (Contaduría General de la Nación - CGN) includes the schedule of the regulatory framework attached to the National Decree 2784 of 2012 and defines the implementation period as being from January 1 to December 31, 2015. During this period, the accounting will be carried out, for all purposes under the new regulatory framework.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(2)

Assets and Liabilities Denominated in Foreign Currency

Transactions and balances in foreign currency are converted at the market representative exchange rate certified by the Superintendence of Finance of Colombia.

As of June 30, 2014 and December 31, 2013, the unconsolidated financial statements include the following assets and liabilities denominated in foreign currency (converted to Colombian pesos at the closing exchange rates of $1,881.19 and $1,926.83 per US$1 respectively).

	As of June 30, 2014				As of December 31, 2013
	Thousands of US$		Equivalent Millions of pesos		Thousands of US$		Equivalent Millions of pesos
Assets
Cash and cash equivalents		1,142,699		2,149,635		658,634		1,269,077
Investments		10,743,433		20,210,438		8,416,074		16,216,345
Accounts and notes receivable		1,624,628		3,056,234		1,356,014		2,612,809
Advances and deposits		122,756		230,927		82,852		159,642
Other assets		20,886		39,290		427,851		824,395
		13,654,402		25,686,524		10,941,425		21,082,268
Liabilities
Financial obligations		6,538,910		12,300,933		4,383,056		8,445,403
Estimated liabilities and Provisions		91,948		172,972		86,256		166,200
Accounts payable and related parties		1,046,124		1,967,957		1,126,604		2,170,774
Other liabilities		174,282		327,858		242,039		466,369
		7,851,264		14,769,720		5,837,955		11,248,746
Net asset position		5,803,138		10,916,804		5,103,470		9,833,522

(3)

Cash and Cash Equivalents

The balance of cash and cash equivalents is comprised as follows:

	As of June 30,		As of December 31,
	2014		2013
Banks and corporations (1)		2,719,069		2,866,625
Special funds (2)		300,451		1,034,316
Investments on demand (3)		932,712		-
Cash		197		336
		3,952,429		3,901,277

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(1)

Corresponds to advances made by partners of Ecopetrol S. A. for the exclusive use of the joint venture, in the amount of $74,011 (2013 - $95,916)and Ecopetrol’s own resources in the amount of $2,645,058 (2013 - $2,770,709).

(2)

Corresponds to savings in special funds in pesos in the amount of $34,922 (2013 - $73,741)and in foreign currency in the amount of $265,529 (2013 - $960,575).

(3)

Corresponds to bonds issued by entities abroad in the amount of $498,463 and Investments on Term Deposit Certificates in the amount of $434,249; in effect less than 90 days.

(4)

Investments

The balance of investments is comprised as follows:

	As of June 30,		As of December 31,
	2014		2013
Current
Fixed yield
Bonds and securities of private or foreign entities		1,279,538		260,990
Term deposits		2,276,730		954,704
Specific purpose fund - Legal Contingencies (1)		98,879		110,426
Bonds issued by the Colombian Government		90,907		143,135
Treasury securities – TES		164,138		-
Total current		3,910,192		1,469,255
Long Term
Variable yield - Shares (2)		37,295,210		34,856,546
Fixed yield
Bonds and securities of foreign entities		84,504		13,981
Bonds issued by the Colombian Government		11,081		86,616
Treasury securities – TES		138,557		-
Term deposits		24,175		-
Specific purpose fund - Legal Contingencies (1)		350,438		260,960
Total fixed yield		608,755		361,557
Total long term		37,903,965		35,218,103

(1)

Corresponds to restricted resources made up of fixed-yield investments entered into based on the court rulings linked to the Derecho Comuneros - Santiago de las Atalayas and Pueblo Viejo de Cusiana proceedings, corresponding to the attachment and seizure of the royalty payments that Ecopetrol, was to have paid pursuant to Royalty Contracts No. 15, 15A, 16 and 16A, declared null by statute in the State Council ruling of September 13, 1999.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(2)

The following is the detail of variable-yield investments represented in shares:

	As of June 30,			As of December 31,
	2014			2013
Companies :
Controlled		36,153,930			33,698,739
Significant Influence		917,283			933,807
Non-strategic		224,009			224,009
Less - Allowance for investments		(12	)		(9	)
Total		37,295,210			34,856,546

Controlled investments recognized under the equity method as of June 30, 2014, are as follows:

Equity Share	Number of Shares and/or Quotas		Participation Percentage		Valuation Date	Historical Cost		Book Value		Equity Method Effect
Controlled
Andean Chemicals Limited		645,707,273		100.00	June		3,777,002		3,777,943		941
Black Gold Re Limited		120,000		100.00	June		184,079		305,009		120,930
CENIT Transporte y Logística de Hidrocarburos S.A.S.		183,242,912		85.14	June		7,800,205		17,575,887		9,775,682
Ecopetrol Capital AG		1,151,000		100.00	June		227,487		338,649		111,162
Ecopetrol Global Capital		3,100		100.00	June		8		8		-
Ecopetrol Global Energy S.L.U.		70,151,927		100.00	June		4,267,620		2,059,170		(2,208,450	)
Ecopetrol Pipeline International Limited		40,439,547		100.00	June		870,169		3,974,620		3,104,451
Equión Energía Limited		114,836,072		51.00	June		436,053		1,535,597		1,099,544
Hocol Petroleum Limited		12,000		100.00	June		1,020,378		3,512,083		2,491,705
Polipropileno del Caribe S. A.		206,910,325		49.90	June		259,699		341,957		82,258
Sociedad Refinería de Cartagena S. A.		1,870,000		46.58	June		1,858,484		2,733,007		874,523
Total							20,701,184		36,153,930		15,452,746

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

Controlled investments recognized under the equity method as of December 31, 2013, are as follows:

Equity Share	Number of Shares and/or Quotas		Participation Percentage		Valuation Date	Historical Cost		Book Value		Equity Method Effect
Controlled
Andean Chemicals Limited		645,707,273		100.00	December		2,934,109		3,068,730		134,621
Black Gold Re Limited		120,000		100.00	December		184,079		300,774		116,695
CENIT Transporte y Logística de Hidrocarburos S.A.S.		156,004,892		85.14	December		7,800,205		17,099,558		9,299,353
Ecopetrol Capital AG		1,151,000		100.00	December		227,486		320,990		93,504
Ecopetrol Global Capital		3,100		100.00	December		8		8		-
Ecopetrol Global Energy S.L.U.		70,151,927		100.00	December		3,602,823		1,872,809		(1,730,014	)
Ecopetrol Pipeline International Limited		40,439,547		100.00	December		870,169		3,809,800		2,939,631
Equión Energía Limited		114,836,072		51.00	December		436,053		1,433,171		997,118
Hocol Petroleum Limited		12,000		100.00	December		1,020,378		3,320,444		2,300,066
Polipropileno del Caribe S. A.		206,910,325		49.90	December		259,699		346,342		86,643
Sociedad Refinería de Cartagena S. A.		1,870,000		46.58	December		1,156,413		2,126,113		969,700
Total							18,491,422		33,698,739		15,207,317

Significant influence investments recognized under the equity method as of June 30, 2014, are as follows:

Equity Share	Number of Shares and/or Quotas		Participation Percentage		Valuation Date	Historical Cost		Book Value		Equity Method Effect
Significant influence
Ecodiesel Colombia S. A.		10,500,000,000		50.00	May		10,500		34,251		23,751
Invercolsa S. A.		1,213,801,146		43.35	May		61,671		219,920		158,249
Offshore International Group		250		50.00	May		408,517		663,112		254,595
Total							480,688		917,283		436,595

Significant influence investments recognized under the equity method as at December 31, 2013, are as follows:

Equity Share	Number of Shares and/or Quotas		Participation Percentage		Valuation Date	Historical Cost		Book Value		Equity Method Effect
Significant influence
Ecodiesel Colombia S. A.		10,500,000,000		50.00	December		10,500		26,677		16,177
Invercolsa S. A.		1,213,801,146		43.35	December		61,671		269,342		207,671
Offshore International Group		250		50.00	December		408,517		637,788		229,271
Total							480,688		933,807		453,119

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

Investments recognized under the cost method as of June 30, 2014, are as follows:

	Number of							Market/
	Shares		Participation		Valuation			Intrinsic		Appreciation/
Equity Share	and/or Quotas		Percentage		Date	Cost		Value		(Depreciation)
Non-strategic
Empresa de Energía de Bogotá		631,098,000		6.87	June		154,376		1,003,446		849,070
Interconexión Eléctrica S. A.		58,925,480		5.32	June		69,549		540,347		470,798
Concentra Inteligencia en Energía S.A.S.		84,000		4.76	May		84		72		(12	)
Total							224,009		1,543,865		1,319,856

Investments recognized under the cost method as of December 31, 2013, are as follows:

	Number of							Market/
	Shares		Participation		Valuation			Intrinsic		Appreciation/
Equity Share	and/or Quotas		Percentage		Date	Cost		Value		(Depreciation)
Non-strategic
Empresa de Energía de Bogotá		631,098,000		6.87	December		154,376		968,736		814,360
Interconexión Eléctrica S. A.		58,925,480		5.32	December		69,549		536,222		466,673
Concentra Inteligencia en Energía S.A.S.		84,000		4.76	November		84		75		(9	)
Total							224,009		1,505,033		1,281,024

With regards to the investments held by Ecopetrol in: Bioenergy S.A., Bioenergy Zona Franca S.A.S., Compounding and Masterbatching Industry Ltd. Ecopetrol Germany, Serviport S.A., Colombia Pipelines Limited., Ecopetrol América Inc., Ecopetrol del Perú S.A., Ecopetrol Oleo e Gas do Brasil Ltda., Hocol S.A., ODL Finance S.A., Oleoducto Bicentenario de Colombia S.A.S., Oleoducto Central S.A. and Oleoducto de Colombia S.A., Oleoducto de los Llanos Orientales S.A., and Santiago Oil Company, the equity method is not applied since Ecopetrol does not have a direct participation in these companies. The participation is held through other subsidiaries, which are the ones that account for these companies using the equity method.

Restrictions on Long-term Investments - Variable Income:

As of June 30, 2014, regarding the legal proceedings of Invercolsa S.A.: The cessation appeal filed by AFIB S.A. and Fernando Londoño Hoyos against the judgment passed by the 28th Civil Court of the Circuit on February 8, 2007, that was confirmed by the Superior Court of the District of Bogota - Civil Court, on January 11, 2011 is currently in process. On October 22, 2012, the term for the cessation appellant AFIB S.A. to support the corresponding appealed expired, which was done in time and the term for the appellant cessation Fernando Londoño Hoyos to support his started to run, which was also done in time. Therefore, on December 5, 2012, the Court Clerk’s Office indicated that having notified the appellants, the corresponding actions were filed in due time and are included in the case file, a report that was delivered to the court that same day. The notification of the complaint to the Company is pending.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

The appeal sentence of January 11, 2011 ordered: i) That the purchase of 145 million shares of Invercolsa by Fernando Londoño Hoyos are to be cancelled; ii) that the cancellation of the said transaction is to be recorded in the shareholders’ book, including the pledge in favor of the Pacífico Colombia y Panamá banks, as well as the payment in kind of the shares of Arrendadora Financiera Internacional Bolivariana S.A.; iii) that Fernando Londoño Hoyos and AFIB are forced to return the Invercolsa dividends, along with the new shares received as profit and/or revaluations; iv) to declare that Fernando Londoño Hoyos did not acquire or possess in good faith the 145 million Invercolsa shares; and v) that Invercolsa is to adjust its operation and the Shareholders’ Meeting to the declarations made in the sentence.

The economic activities for the entities in which Ecopetrol has investments accounted for under the equity method is as follows:

Company		Economic Activity
Hocol Petroleum Limited		Investment in vehicle owner by Hocol S.A. hydrocarbons exploration and production company.

Cenit Transporte y Logística de Hidrocarburos S.A.S		Transportation and/or storage of hydrocarbons, hydrocarbon by-products, and similar products, through its own or third party transportation and/or storage systems in Colombia or abroad.

Ecopetrol Pipelines International Limited		Investment vehicle.

Andean Chemicals Limited		Investment vehicle.

Sociedad Refinería de Cartagena S. A.		Refining, commercialization and distribution of hydrocarbons.

Ecopetrol Global Energy S.L.U.		Investment vehicle in Spain

Equión Energía Limited		Exploration and production of hydrocarbons.

Polipropileno del Caribe S. A.		Production and commercialization of polypropylene resin.

Ecopetrol Capital AG		Financing, liquidation of financing of group corporations or any type of company and every activity related to it.

Black Gold Re Ltd.		Reinsurer of Ecopetrol and its subsidiaries.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

Company		Economic Activity

Ecopetrol Global Capital		Investment vehicle.

Invercolsa S. A.		Investments in companies in the energy sector including activities related to the industry and commercialization of hydrocarbons and mining.

Ecodiesel Colombia S. A.		Production, commercialization and distribution of biofuels and oleo chemicals

Offshore International Group		Exploration, development, production and processing of hydrocarbons.

Affiliates (entities in which the Company owns over 50% interests), as of June 30, 2014, show the following balances:

							Results of
Company	Assets		Liabilities		Equity		the Period
CENIT Transporte y Logística de Hidrocarburos S.A.S.		22,391,617		1,747,029		20,644,588		940,735
Ecopetrol Pipelines International Limited		3,974,629		9		3,974,620		140,040
Andean Chemical Limited		3,777,944		-		3,777,944		(134,901	)
Equión Energía Limited		4,244,918		1,233,944		3,010,974		268,078
Hocol Petroleum Limited		3,512,083		-		3,512,083		223,487
Ecopetrol Global Energy S.L.U.		2,059,206		37		2,059,169		(422,692	)
Ecopetrol Capital AG		1,871,328		1,532,679		338,649		26,344
Black Gold Re Limited		490,026		185,017		305,009		11,744
Ecopetrol Global Capital		8		-		8		-

Affiliates (entities in which the Company owns over 50% interests), as of December 31, 2013, show the following balances:

							Results of
Company	Assets		Liabilities		Equity		the year
CENIT Transporte y Logística de Hidrocarburos S.A.S.		21,352,070		1,266,977		20,085,093		956,896
Ecopetrol Pipelines International Limited		3,809,810		10		3,809,800		279,475
Andean Chemical Limited		3,071,632		2,902		3,068,730		(131,652	)
Equión Energía Limited		3,831,733		1,021,594		2,810,139		520,511
Hocol Petroleum Limited		3,320,444		-		3,320,444		227,536
Ecopetrol Global Energy S.L.U.		1,872,821		12		1,872,809		(587,919	)
Ecopetrol Capital AG		2,061,796		1,740,806		320,990		29,201
Black Gold Re Limited		367,297		66,523		300,774		22,841
Ecopetrol Global Capital		8		-		8		-

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

Maturity of Fixed-yield Investments - Long term

A summary of the maturity of long term fixed-yield investments as at June 30, 2014, is as follows:

Maturity	>1 - 3 Years		3 - 5 Years		> 5 Years		Total
Bonds and other foreign securities		84,504		-		-		84,504
Bonds and other government securities		11,081		-		-		11,081
Treasury securities - TES		138,557		-		-		138,557
Specific destination fund		287,383		17,773		45,282		350,438
Term deposits		24,175		-		-		24,175
		545,700		17,773		45,282		608,755

A summary of the maturity of long term fixed-yield investments as of December 31, 2013, is as follows:

Maturity	>1 - 3 Years		3 - 5 Years		> 5 Years		Total
Bonds and other foreign securities		8,251		5,730		-		13,981
Bonds and other government securities		-		86,616		-		86,616
Specific destination fund		217,011		1,994		41,955		260,960
		225,262		94,340		41,955		361,557

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(5)

Accounts and Notes Receivable, Net

The balance of accounts and notes receivable, net is comprised as follows:

	As of			As of
	June 30,			December 31,
	2014			2013
Current
Customers
Domestic		1,555,344			586,747
Foreign		1,384,057			2,269,221
Related parties (see note 15)		2,012,953			2,222,719
Price differential to be received from the Ministry of Mines and Energy (1)		864,400			845,093
Miscellaneous debtors		206,168			354,423
Reimbursements and yields on investment		92,888			440
Accounts receivable from employees		2,679			5,258
Cavipetrol - loans to employees (3)		50,844			50,844
Industrial service clients		11,981			12,337
Total current		6,181,314			6,347,082
Long term
Loans to related parties (2) (see note 15)		1,109,626			1,109,626
Cavipetrol - loans to employees (3)		398,465			372,796
Price differential to be received from the Ministry of Mines and Energy (1)		77,510			77,510
Credit accounts receivable		9,875			10,227
Doubtful accounts		226,420			227,372
Other		27,041			24,550
Total		1,848,937			1,822,081
Less - Allowance for doubtful accounts		(226,420	)		(227,372	)
Total long term		1,622,517			1,594,709

The following shows the movement in the allowance for doubtful accounts:

	As of			As of
	June 30,			December 31,
	2014			2013
Opening Balance		227,372			197,484
Additions		24			29,224
Recovery of allowances		(139	)		(2,247	)
Use of allowances and adjustments for exchange Difference		(837	)		2,911
Closing Balance		226,420			227,372

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

In December 2013 Ecopetrol recognized an allowance for doubtful accounts in the amount of $1,230 corresponding to 18 loans that are in legal collection.

(1)

Accounts receivable from the Ministry of Finance and Public Credit, arising from the calculation of the regular motor gasoline and diesel price differential pursuant to Resolution 180522 issued on March 29, 2010.

(2)

On November 2010, a subordinated borrowing contract No. CE2010-01 was subscribed between Ecopetrol and Refinería de Cartagena S.A. for maximum financing of US$1,000 million, of which up to May 2011 Ecopetrol had disbursed the sum of $1,109,626, equivalent to approximately US$588 million.

On August 18, 2011, a modification to this contract was executed whereby the maximum amount to be disbursed was changed to US$600 million calculated at the market’s representative exchange rate on the date of Resolution No. 3587 of 2010, issued by the Ministry of Finance and Public Credit, by which the initial loan contract was authorized.

On December 30, 2013, there was a second modification to this contract (in SpanishOtrosí No. 2) by which it was established to accrue yielding interests as from January 1, 2013 at a rate equal to FTD (anticipated quarterly rate - T.A. (per its acronym in Spanish)) in effect as of December 31 of the year immediately preceding the initiation of each of the installment payment periods, added in a margin of 3.06% T.A. (FTD T.A.+3.06%). Yielding interests will be converted to its equivalent semester in arrears.

Once all obligations in respect to the Senior Debt have been extinguished, the amortization of principal will be over three (3) years commencing as of the date of its total payment. Notwithstanding the above, the maximum term is twenty (20) years. Amortization of principal will be made in six (6) consecutive, equal, bi-annual payments.

(3)

By means of contracts Leg 058-80 of 1980 and 4008928 of 2006, the administration, management and control of loans granted to employees by the Company were transferred to Cavipetrol. In its capacity as administrator, Cavipetrol monitors, in its database and financial system, the details per employee of the said loans and their respective conditions.

Future collection of accounts receivable from Cavipetrol as of June 30, 2014 are estimated as follows:

Term	Value
Less 1 Year		50,844
Between 1and 2 years		50,640
Between 2and 3 years		49,866
More than 3 years		297,959
		449,309

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(6)

Inventories, Net

The balance of inventories, net, is comprised as follows:

	As of			As of
	June 30,			December 31,
	2014			2013
Finished products
Crude oil		729,527			928,344
Fuels		994,919			764,023
Petrochemicals		11,077			9,323
Purchased products
Fuels		68,924			65,574
Crude oil		305,780			241,949
Petrochemicals		17,036			13,421
Raw materials
Crude oil		113,339			150,042
Product in process
Fuels		257,856			363,871
Petrochemicals		9,465			5,790
Materials for the production of goods		8,139			6,259
Materials in transit		22,763			16,478
Total		2,538,825			2,565,074
Less - Allowance for inventories		(5,899	)		(4,583	)
Total		2,532,926			2,560,491

The movement in the allowance for inventories is as follows:

	As of		As of
	June 30,		December 31,
	2014		2013
Opening Balance		4,583		2,586
Additions		1,316		1,997
Closing Balance		5,899		4,583

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(7)

Advances and Deposits

The balance of advances and deposits is comprised as follows:

	As of		As of
	June 30,		December 31,
	2014		2013
Current
Official entities (1)		5,280,284		6,923,345
Partners in joint ventures (2)		455,903		359,281
Customs agents		65,620		57,347
Related parties (see Note 15)		60,783		34,293
Agreements (3)		18,000		19,593
Advances to employees		2,408		262
Advances to suppliers		90,625		2,154
Total Current		5,973,623		7,396,275
Long Term
Related parties (see Note 15)		269,423		224,406
Advances, prepayments and deposits		109,527		174,382
Total		6,352,573		7,795,063

(1)

Corresponds to the National Tax and Customs Direction (from the Spanish Dirección de Impuestos y Aduanas Nacionales - DIAN) on the concept of advances for income tax taxable year 2014 in the amount of $2,912,685 (2013 - $4,135,586), income tax self-withholdings and CREE in the amount of $961,853, (2013 - $1,579,975) VAT credit balance in the amount of $1,261,646, (2013 - $1,068,148) VAT paid on imports of heavy machinery in the amount of $29,545, (2013 - $70,522) and others in the amount of $114,555, ( 2013 - $69,114).

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(2)

The detail of advances and deposits with partners in joint operations is comprised as follows:

	As of		As of
	June 30,		December 31,
	2014		2013
Contracts in which Ecopetrol is not the operator
Occidental de Colombia Inc.		72,170		26,907
Chevron Petroleum Company		30,678		2,698
Perenco Colombia Limited		29,560		10,101
Occidental Andina Llc		26,299		5,559
Anadarko Colombia Company		25,126		15,245
Petrobras Colombia Limited		12,232		21,770
Otras operaciones		8,942		6,193
Meta Petroleum Ltd.		7,845		39,787
Petróleos Del Norte S.A.		5,049		3,822
Mansarovar Energy Colombia Ltd.		4,044		6,744
Petrosantander Colombia Inc.		4,006		4,182
Emerald Energy PLC Suc Colombia		1,811		13,375
Repsol Exploración Colombia S.A.		1,614		15,717
CEPSA Colombia S. A.		754		4,484
Contracts in which Ecopetrol is the Operator:
Bloque CPO-9		85,664		89,962
La Cira		44,683		23,712
Crudos Pesados Bloque CPE-4		30,659		19,137
Oleoducto Caño Limón		16,252		16,360
Bloque VMM- 32		13,440		2,333
Acuerdo operación TLU-3		11,463		10,028
Crudos Pesados Bloque CPE-2		8,918		8,816
Acuerdo Master TLU-1		6,541		5,817
Otras operaciones		4,328		2,694
JOA Caño Sur		3,825		3,838
Total		455,903		359,281

(3)

Represents the resources transferred to employees as an advance for the education plan.

(8)

Prepaid Expenses

The balance of prepaid expenses is as follows:

	As of		As of
	June 30,		December 31,
	2014		2013
Insurance (1)		31,158		69,404
Other (2)		64,486		597
Total		95,644		70,001

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(1)

Insurance contracts are in effect until April 30, 2015, at a cost of $232,714 (2013 - $232,385) and amortization of $201,556 as at June 30, 2014 (2013 - $162,981).

(2)

Resources for the comprehensive safety plan in critical areas with the national army.

(9)

Deposits Held in Trust

The balance of deposits held in trust is comprised as follows:

	As of		As of
	June 30,		December 31,
	2014		2013
Abandonment Funds		661		-
Pension Funds		321,168		314,114
Other		232		281
Total		322,061		314,395

(10)

Property, Plant and Equipment, Net

The balance of property, plant and equipment, net is comprised as follows:

	As of			As of
	June 30,			December 31,
	2014			2013
Plant and equipment		13,717,034			13,492,911
Construction in progress (1)		5,473,552			7,790,655
Pipelines, networks and lines		6,805,167			6,392,108
Buildings		3,633,258			3,357,525
Equipment on deposit and in transit		1,673,510			1,657,344
Computer equipment		310,162			305,141
Transportation equipment and other assets		509,664			507,314
Land		428,768			430,073
Total		32,551,115			33,933,071
Accumulated depreciation		(13,743,500	)		(13,258,705	)
Allowance for property, plant and equipment depreciation (2)		(379,676	)		(388,170	)
Total		18,427,939			20,286,196

The depreciation charged to income as at June 30, 2014 amounted to $649,869 (June 30, 2013 - $ 650,829).

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(1)

Principally includes the following: (i) Investments made in development projects at Castilla and Chichimene; operations linked to development projects at Piedemonte, Rubiales, Cira and Quifa; as well as modernization projects for Barrancabermeja Refinery, the Master Plan for Industrial Services and the Master Plan for Refinery Integration. ii) Capitalized interest of $85,789. As from June 30, 2014, the Company is presenting separately the construction in progress corresponding to properties, plant and equipment and exploration in progress, which represent partially the variance in the accounts. Until that date, explorations in progress were presented grouped with construction in progress.

(2)

The following details the movement in the allowance for property, plant and equipment depreciation:

	As of			As of
	June 30,			December 31,
	2014			2013
Opening Balance		388,170			385,356
Additions to new allowances		12,318			68,310
Use of allowances		(499	)		(276	)
Depreciation of assets prior to 2006		(424	)		(1,364	)
Recovery		(19,889	)		(63,856	)
Closing Balance		379,676			388,170

Summary of property, plant and equipment as of June 30, 2014:

	Adjusted		Accumulated								Net Plus
Type of Asset	Cost		Depreciation			Valuation		Allowance			Valuation
Plant and equipment		13,717,034		(9,108,067	)		3,694,122		(28,557	)		8,274,532
Pipelines, networks and lines		6,805,167		(2,862,845	)		1,700,244		(64,199	)		5,578,367
Construction in progress		5,473,552		-			-		-			5,473,552
Buildings		3,633,258		(1,308,747	)		1,645,681		(192,122	)		3,778,070
Equipment on deposit and in transit		1,673,510		-			-		-			1,673,510
Computer equipment		310,162		(179,375	)		32,606		(5,298	)		158,095
Transportation equipment and other assets		509,664		(284,466	)		102,527		(82,101	)		245,624
Land		428,768		-			2,277,834		(7,399	)		2,699,203
Total		32,551,115		(13,743,500	)		9,453,014		(379,676	)		27,880,953

Summary of property, plant and equipment as at December 31, 2013:

	Adjusted		Accumulated								Net Plus
Type of Asset	Cost		Depreciation			Valuation		Allowances			Valuation
Plant and equipment		13,492,911		(8,804,567	)		3,701,009		(29,431	)		8,359,922
Pipelines, networks and lines		6,392,108		(2,729,226	)		1,702,953		(64,473	)		5,301,362
Construction in progress		7,790,655		-			-		-			7,790,655
Buildings		3,357,525		(1,268,486	)		1,656,859		(193,330	)		3,552,568
Equipment on deposit and in transit		1,657,344		-			-		-			1,657,344
Computer equipment		305,141		(175,890	)		33,138		(5,352	)		157,037
Transportation equipment and other assets		507,314		(280,536	)		104,104		(88,185	)		242,697
Land		430,073		-			2,277,476		(7,399	)		2,700,150
Total		33,933,071		(13,258,705	)		9,475,539		(388,170	)		29,761,735

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

There are no restrictions or pledges on assets, nor have they been offered as security.

Technical appraisals of fixed assets take place every three years in accordance with the provisions of the Regime of Public Accounting. At the close of 2013 the last technical appraisal of assets for Barrancabermeja refinery was conducted by T.F. Auditores & Asesores firm.

(11)

Natural and Environmental Resources, Net

The balance of natural and environmental resources, net is comprised as follows:

	As of			As of
	June 30,			December 31,
	2014			2013
Amortizable oil investments (1)		32,730,195			30,927,800
Less: Accumulated amortization of oil investments (2)		(18,062,594	)		(16,524,234	)
		14,667,601			14,403,566
Plugging and abandonment, facility dismantling and environmental recovery costs (3)		4,823,651			4,823,072
Less: Accumulated amortization for facility abandonment (2)		(2,545,607	)		(2,280,630	)
		2,278,044			2,542,442
Reservoirs and appraisals (4)		701,590			701,590
Less: Accumulated depletion (2)		(647,514	)		(642,299	)
		54,076			59,291
Exploration in progress (5)		4,073,577			1,645,391
Total		21,073,298			18,650,690

(1)

As at June 30, 2014, capital expenditures for natural resources amounted to $ 2,880,410 (2013 - $4,125,655) mainly in the following fields: Casabe, Pauto, Castilla, Rubiales, Cusiana, Quifa Suroeste, Castilla Norte, Infantas and Floreña. Beginning in 2014, the investments made in order to obtain incremental production in the Casabe field are presented as an increase in amortizable oil investments. The balance at December 31, 2013 was reclassified for comparability purposes from deferred charges account.

(2)

Amortization expense charged to results for natural resources and abandonment of facilities as of June 30, 2014 amounted to $1,543,621 and $264,977 respectively (December 2013 - $2,584,097 and $ 283,947).

(3)

Corresponds to the cost of abandonment of production areas, updated in December 2013.

(4)

The appraisal of reserves is represented by the reservoirs received through the reverting of concession contracts in the amount of $490,525 administered by Gerencia Magdalena Medio, $184,208 Gerencia Sur and $26,857 Gerencia Catatumbo Orinoquía.

(5)

See explanation of variation in note 10.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(12)

Deferred Charges

The balance of deferred charges is comprised as follows:

	As of		As of
	June 30,		December 31,
	2014		2013
Deferred income tax		1,378,616		1,368,246
Deferred tax on CREE		502,143		502,143
Equity tax and surtax		-		476,494
Other deferred charges, net		62,459		40,629
		1,943,218		2,387,512

(13)

Other Assets

The detail of other assets is comprised as follows:

	As of		As of
	June 30,		December 31,
	2014		2013
Goodwill (1)		2,056,796		2,174,184
Intangible assets, net (brands, licenses, patents and software)		145,776		234,297
Goods acquired through financial leasing		82,343		88,542
Other assets (4)		19,175		47,691
Trust funds (2)		59,213		61,748
National Royalties Fund (from the SpanishFondo Nacional de Regalías) (3)		72,249		73,469
Deposits given in trust		17,437		9,951
Total		2,452,989		2,689,882

(1)

As at June 30, 2014 goodwill is comprised as follows:

									Amortization
	Acquisition	Goodwill		Amortized			Pending		Period
Company	Date	Amount		Amount			Amortization		(Years)
Propilco S.A.	07/04/2008		176,507		(73,912	)		102,595	17.8
Andean Chemicals	07/04/2008		205,541		(87,959	)		117,582	17.8
IPL Enterprises	17/03/2009		880,127		(230,245	)		649,882	15
Offshore International	06/02/2009		535,503		(211,993	)		323,510	14
Hocol Petroleum Limited	27/05/2009		742,345		(228,291	)		514,054	16
Equión Energía Limited	24/01/2011		629,375		(280,202	)		349,173	10
Total			3,169,398		(1,112,602	)		2,056,796

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

As at December 31, 2013 goodwill is comprised as follows:

	Acquisition	Goodwill		Amortized			Pending		Amortization Period
Company	Date	Amount		Amount			Amortization		(Years)
Propilco S.A.	07/04/2008		176,507		(68,370	)		108,137	17.8
Andean Chemicals	07/04/2008		205,541		(77,729	)		127,812	17.8
IPL Enterprises	17/03/2009		880,127		(196,631	)		683,496	15
Offshore International	06/02/2009		536,079		(194,631	)		341,448	14
Hocol Petroleum Limited	27/05/2009		742,345		(204,747	)		537,598	16
Equión Energía Limited	24/01/2011		629,375		(253,682	)		375,693	10
Total			3,169,974		(995,790	)		2,174,184

(2)

Corresponds to: i) $49,955 (2013 - $52,421) for contributions and shares in the National Hydrocarbons Fund (from the SpanishFondo Nacional de Hidrocarburos) created to support future hydrocarbon investment, exploration and production contracts in smaller fields for projects administered by the Colombia Hydrocarbons Private Capital Fund (from the SpanishFondo de Capital Privado de Hidrocarburos de Colombia); and ii) $9,258 (2013 - $9,327) from Colpet, Cóndor and Sagoc Fund to deal with potential contingencies in the liquidation of these former subsidiaries.

(3)

Corresponds to deposits to the Oil Savings and Stabilization Fund (from the SpanishFondo de Ahorro y Estabilización Petrolera - FAEP) in Ecopetrol’s favor to address the remainder of the National Royalties Fund. Its sole purpose is the payment debts and finance development programs and projects in hydrocarbon producing and non-producing municipalities and departments. Ecopetrol disburses amounts after the Ministry of Finance issues the corresponding approvals.

(4)

Mainly includes: i) Restricted funds in the amount of $8,300, represented by judicial deposits for labor, civil and tax litigations, y ii) third party property improvements on assets received through concessions for the Colorados and Tumaco wells in the amount of $10,875 (2013 - $47,691).

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(14)

Financial Obligations

The balance of financial obligations is comprised as follows:

	As of		As of
	June 30,		December 31,
	2014		2013
Current
Interest payable		239,082		219,732
BOMT contracts - Infrastructure (1)		5,547		11,331
International Bank Loans (2)		71,075		111,347
Total Current		315,704		342,410

Long term
Foreign loans – Bonds (3)		11,287,140		7,707,320
National bank loans (5)		1,839,000		1,839,000
International bank loans (2)		651,410		444,254
Public credit operations - Issued bonds and securities (4)		1,900,000		1,900,000
BOMT contracts - Infrastructure (1)		85,246		87,314
Total long term		15,762,796		11,977,888

(1)

They correspond to the contract signed on September 19, 2008 between Ecopetrol and Unión Temporal Gas Gibraltar (Montecz S.A., Conequipos ING Ltda., Gasmocan S.A. and Twister BV), whose purpose is focused on financing, design, equipment purchase, supplies, construction, tests, operation and maintenance for a 15-year period of the surface facilities for the treatment of gas from the Gibraltar field owned by Ecopetrol.

(2)

The US Congress approved the granting of guarantees by the U.S. Exim bank to Ecopetrol S.A, through its Long Term Guarantee Programs (LTG) and Medium Term (MTG). To have access to these programs, the Company selected 4 International banks as lenders in the LTG and 2 for the MTG.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

Terms and conditions of the guarantee programs are as follows:

Financing Contract:	Long term (LTG)	Medium Term (CGF)

Amount USD million:	Up to 426.6	Up to 420.6
Term:	Up to 10 years	Between 2 and 7 years
Rate of Interest:	Libor of 6 months + 0.90%	Libor of 6 months + 0.65%
Commission:	0.15% E.A. R Share 0.40% Paid in each disbursement Exposure: 7.28% Paid in each disbursement	0.15% E.A. R Share 0.35% Paid in each disbursement Exposure between 1.83% and 5.28% Paid in each disbursement
Guarantee:	Guarantee US Exim Bank on political and trading risk

Amortizations:	Equal every six months

As at December 31, 2013, the Company completed the disbursements under the LTG in the amount of US$245 million. As of June 30, 2014 US$151 million was received, under the CGF program. During 2014 only resources under CGF program will be received.

(3)

Issuance of International Bond 2009

On July 23, 2009, the Company issued unsecured and unsubordinated debt bonds (notes) with the right to register them with the SEC, maturing in 2019, for the amount of US$1,500 million. The registration took place on October 6, 2009. The notes were initially issued under Rule 144A/Regulation, and contained the following terms and conditions:

Redemption Term:	10 years
Maturity date:	July 23, 2019
Amount (US$ million)	1,500
Coupon interests:	7.625%
Make Whole Call (pbs):	50

Interest payment dates are:

July 23 and January 23

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

Issuance of International Bond 2013

On September 18, 2013, the Company issued unsecured and unsubordinated debt bonds (notes) in the amount of US$2,500 million and registered with the SEC. The notes are divided into three tranches with the following terms and conditions:

Redemption Term:	5 years			10 years			30 years
Date of Maturity:	Sept 18, 2018			Sept 18, 2023			Sept 18, 2043
Amount (US$ million):		350			1,300			850
Coupon:		4.250	%		5.875	%		7.375	%
Make Whole Call (pbs):		40			45			50
Payment of interests:		March 18 and September 18

Issuance of International Bond 2014

On May 28, 2014, the Company issued unsecured and unsubordinated debt bonds (notes) in the amount of US$2,000 million and registered with the SEC with the following terms and conditions:

Redemption Term:	31 years
Date of Maturity:	May 28, 2045
Amount (US$ million):		2,000
Coupon:		5.875	%
Make Whole Call (pbs):		40

Payment of interests:

May 28 and November 28, starting from November 28, 2014

In accordance with the definitions contained in the issuance documents for 2009, 2013 and 2014, the Company has complied with the various standard commitments (covenants) including the due and timely payment of interest and principal; no creation of collateral pledges by Ecopetrol and its subsidiaries, except for authorized pledges; and the offer to purchase the bonds in the event of repurchasing for control change.

(4)

Issuance of Local Bond 2010

Through Resolution No. 3150 of October 20, 2010, Ecopetrol was authorized by the Ministry of Finance and Public Credit to issue, subscribe and place internal public debt bonds for an amount of up to one billion Colombian pesos, to finance Ecopetrol´s 2010 investment plan. Subsequently, through Resolution No. 2176 of November 11, 2010, the Company obtained the authorization of the Superintendence of Finance to register its internal public debt bonds at the National Register of Securities and Issuing Agencies, and to place them through public offering.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

The terms of the issuance and placement of the internal public debt bonds are as follows:

Amount placed:	$1,000,000 million pesos
Issuance date:	December 1, 2010
Amortization:	At maturity
Series A:	Bonds denominated in pesos at a variable rate based on the consumer price index (CPI)

Redemption Term:

5 years

7 years

10 years

30 years

Rate:

CPI + 2.80%

CPI + 3.30%

CPI + 3.94%

CPI + 4.90%

Amount (millions)

97,100

138,700

479,900

284,300

Issuance of local Bond 2013

With Resolution No. 2462 of July 30, 2013, issued by the Ministry of Finance and Public Credit, Ecopetrol was authorized to issue, subscribe and place Bonds and Trading Securities at the Public Securities Market of Colombia amounting up to $3 billion pesos ($3,000.000,000,000) through public offering.

Subsequently, the Superintendence of Finance approved the registration of Bonds and Trading Securities under the Program, at the National Registry of Securities and Issuers, and authorized their public offer by Resolution No. 1470 of August 2, 2013.

The following was the result of the first issuance and placement of internal public debt bonds under the program:

Amount placed:	$900,000 millions
Issuance date:	August 27, 2013
Amortization:	At maturity
Payment of interests:	Every six months
Series C:	Bonds denominated in Colombian pesos at a variable rate on the CPI

Redemption Term:

5 years

10 years

15 years

30 years

Rate:

CPI + 3.79%

CPI + 4.60%

CPI + 4.90%

CPI + 5.15%

Amount (millions)

120,950

168,600

347,500

262,950

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(5)

Corresponds to the financing operation in local currency with seven Colombian Banks, with the following conditions:

Disbursement date:	May 27, 2013
Term:	12 years with a 3-year grace period
Payment of interests:	As of November 2013
Rate:	FTD + 2.5% (anticipated quarterly rate)
Amortization:	Every Six Months
Guarantee:	No guarantees were required for the new loan.

The detail of the amortization payments of long-term principal is as follows:

2016			102,167
2017			204,333
2018			204,334
2019			204,333
2020			204,333
2021			204,333
2022			204,334
2023			204,333
2024			204,333
2025			102,167
			1,839,000

Currently, Ecopetrol does not anticipate any situation that may represent noncompliance of its obligations in the near future.

(15)

Accounts Payable and Related Parties

The balance of accounts payable and transactions with related parties is comprised as follows:

	As of		As of
	June 30,		December 31,
	2014		2013
Dividends payable (1)		9,463,748		1,313,596
Suppliers		4,766,943		4,263,731
Related parties (2)		450,158		382,318
National Hydrocarbons Agency		385,636		385,636
Partners advances		768,007		822,325
Deposits received from third parties		255,299		579,868
Miscellaneous creditors		168,833		216,479
Tax withholding		238,520		350,414
Reimbursement of exploratory costs		21,630		23,158
Total		16,518,774		8,337,525

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(1)

Represented by dividends payable as decreed at the Shareholders' General Meeting in the amount of $9,460,044 (2013 - $1,309,852). Also, dividends payable to shareholders who are in arrears in the payment of quotas generated by the purchasing of shares in the amount of $3,704 (2013 - $3,744), and to whom economic and political rights have been suspended pursuant to Article 397 of the Code of Commerce. Such payments will be reinstated once the payments are up to date.

(2)

The most significant balances with related parties as at June 30, 2014 and December 31, 2013, in which Ecopetrol holds investments or direct interests, are included in accounts receivable, advances receivable and accounts payable as follows:

	Accounts		Advances		Accounts
	Receivable		Receivable		Payable
Current
Refinería de Cartagena S. A.		223,886		-		266
Compounding and Masterbatching (COMAI)		13,633		-		-
Oleoducto de los Llanos Orientales - ODL		1,113		-		32,985
Hocol S.A.		329,953		9,683		49,638
Equión Energía Limited		313,326		51,100		104,059
Ocensa S. A.		1,982		-		143,672
Oleoducto de Colombia S. A.		1,407		-		11,892
Oleoducto Bicentenario de Colombia		2,686		-		34,528
Cenit S.A.		1,119,730		-		63,977
Polipropileno del Caribe S.A.		5,177		-		-
Ecopetrol América Inc.		43		-		9,141
Ecopetrol Oleo é Gás do Brasil Ltda.		15		-		-
Andean Chemical Ltd		2		-		-
Total current:		2,012,953		60,783		450,158
Long Term:
Refinería de Cartagena S. A.		1,109,626		-		-
Oleoducto Bicentenario de Colombia		-		269,423		-
Total long term:		1,109,626		269,423		-
Balance as of June 30, 2014		3,122,579		330,206		450,158

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

	Accounts Receivable		Advances Receivable		Accounts Payable
Current:
Refinería de Cartagena S. A.		538,187		-		314
Compounding and Masterbatching (COMAI)		9,524		-		-
Oleoducto de los Llanos Orientales - ODL		2,760		-		6,928
Hocol S.A.		246,346		18,735		27,714
Equión Energía Limited		161,672		15,558		97,699
Ocensa S. A.		2,616		-		140,247
Oleoducto de Colombia S. A.		1,425		-		35,355
Oleoducto Bicentenario de Colombia		6,401		-		-
Cenit S.A.		1,035,855		-		21,337
Black Gold Re Limited (*)		25		-		-
Ecopetrol Capital AG.		217,882		-		-
Ecopetrol América Inc.		-		-		50,402
Santiago Oil Company		-		-		2,322
Ecopetrol del Perú		26		-		-
Total current:		2,222,719		34,293		382,318
Long Term:
Refinería de Cartagena S. A. (long term)		1,109,626		-		-
Oleoducto Bicentenario de Colombia		-		224,406		-
Total long term:		1,109,626		224,406		-
Total as of December 31, 2013		3,332,345		258,699		382,318

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

The main transactions with related parties for the six-month periods ended as at June 30, 2014 and 2013 are as follows:

	Sales & Services		Rent		Other
Revenues:
Bioenergy S.A.		168		-		-
Black Gold Re Limited		90		-		1
Cénit Logística y Transporte		685,726		-		1,155
Compounding and Masterbatching (COMAI)		95,690		-		-
Ecopetrol America Inc.		37		-		418
Ecopetrol Capital AG.		-		-		13,276
Ecopetrol del Perú		1		-		1
Ecopetrol Oleo é Gás do Brasil Ltda.		13		-		-
Equión Energía Limited		530,269		-		262
Hocol S.A.		794,844		-		1,859
Andean Chemical Ltd		2		-		-
Ocensa S.A.		8,822		1		1,892
Oleoducto Bicentenario de Colombia S.A.		5,832		-		1,856
Oleoducto de Colombia S.A.		5,306		-		476
Oleoducto de los Llanos Orientales S.A.		9,145		-		36
Refinería de Cartagena S.A.		768,126		-		31,962
Santiago Oil Company		524		-		39
Total for the six-month period ended June 30, 2014		2,904,595		1		53,233

	Sales & Services		Rent		Other
Revenues:
Refinería de Cartagena S.A.		2,600,305		-		32,305
Compounding and Masterbatching (COMAI)		64,249		-		602
Hocol S.A.		5,907		-		-
Oleoducto de los Llanos Orientales S.A.		11,729		-		1
Ocensa S.A.		12,682		227		56
Homcol Caimán		102		-		-
Black Gold Re Limited		83		-		24
Oleoducto de Colombia S.A.		4,614		-		-
Equión Energía Limited		6,910		-		5
Santiago Oil Company		218		-		184
Bioenergy S.A.		168		-		-
Oleoducto Bicentenario de Colombia S.A.		9,169		-		4
Cénit Logística y Transporte		303,665		-		-
Ecopetrol del Perú		8		-		-
Total for the six-month period ended June 30, 2013		3,019,809		227		33,181

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

	Purchase of Products		Transportation Cost		Other
Cost of sales:
Refinería de Cartagena S. A.		14,945		-		160
Hocol Petroleum Ltd.		-		6,757		-
Equión Energía Limited		11,587		8,256		2,955
Santiago Oil Company		2,807		-
Ocensa S. A.		-		884,427		8,633
Oleoducto de los Llanos Orientales S.A.		-		218,327		2,027
Oleoducto Bicentenario de Colombia S.A.		-		208,676		-
Oleoducto de Colombia S. A.		-		80,992		-
Cénit Logística y Transporte		-		668,458		112,422
Compounding and Masterbatching (COMAI)		-		-		431
Ecopetrol América Inc.		-		-		3,877
Total for the six-month period ended June 30, 2014		29,339		2,075,893		130,505

	Purchase of Products		Transportation Cost		Other
Cost of sales:
Refinería de Cartagena S. A.		323,534		-		113
Hocol Petroleum Ltd.		80,526		5,114		56
Equión Energía Limited		12,245		1,393		2,127
Ocensa S. A.		-		728,257		-
Oleoducto de los Llanos Orientales S.A.		-		232,138		180
Oleoducto de Colombia S. A.		-		81,397		-
Cénit Logística y Transporte		-		310,636		-
Ecopetrol América Inc.		826		-		773
Total for the six-month period ended June 30, 2013		417,131		1,358,935		3,249

There are no special price conditions or exceptions to market values with related parties.

No member of the Board of Directors, Legal Representative or Administrator of the Company is the actual beneficiary of 10% or more of Ecopetrol’s outstanding shares.

In 2013, non-material purchase and/or sale transactions of Ecopetrol shares were made by the following administrators of the Company. Such transactions were duly authorized and disclosed to the market on a timely basis. As of June 30, 2014, no such transactions were made.

Official		Operation		Authorization Minutes
Chairman of the Board of Directors		Sale of 20,311 Shares		N° 172, March 15, 2013

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(16)

Taxes, Contributions and Duties Payable

The detail of taxes, contributions and duties payable is comprised as follows:

	As of June 30,			As of December 31,
	2014			2013
Taxes:
Income tax		2,556,246			5,210,836
Income tax for equality - CREE		864,918			1,875,901
National tax on gasoline and gasoline surtax		136,566			224,694
Sales tax payable		(126,250	)		21,189
Tax on Equity (1)		238,246			476,494
Industry and Commerce (Municipal) tax and other minor taxes		140,236			37,056
Audit fee		29,000			87,923
Total Taxes		3,838,962			7,934,093

(1)

The last two installments of the tax on equity will be paid in 2014.

The balance of deferred income tax assets, liabilities and income tax for equality CREE is as follows:

	As of June 30,		As of December 31,
	2014		2013
Deferred tax asset
Beginning balance - Income tax		1,870,389		1,507,035
Movement of the year - Income tax		10,370		(138,789	)
Movement of the year – CREE		-		502,143
Ending balance		1,880,759		1,870,389
Deferred tax liability
Beginning balance - Income tax		1,474,062		1,657,613
Beginning balance CREE		530,661		-
Movement of the year - Income tax		-		(183,551	)
Movement of the year – CREE		-		530,661
Ending balance		2,004,723		2,004,723

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

Composition of income tax, capital gains tax, and income tax for equality - CREE expense

The expense on account of income tax, occasional gains tax and income tax for equality (CREE) is comprised as follows:

	As of June 30,			As of June 30,
	2014			2013
Current income tax		2,340,590			2,573,730
Current income tax – CREE		864,918			955,891
Income tax of previous periods		(10,434	)		(2,727	)
Income tax of previous periods – CREE		1,494			-
Deferred Income tax assets		-			351,429
Deferred Income tax assets - CREE		-			(408,024	)
Deferred income tax liabilities		-			(285,566	)
Deferred income tax liabilities CREE		-			493,936
Total		3,196,568			3,678,669

The income tax provision as at June 30, 2014 was calculated by applying the effective tax rate for 2013 of 34.48% to the accounting profit before tax. This rate includes 25.14% for income tax and 9.35% for tax for equality CREE.

The effects of temporary differences that imply the payment of a lower or higher income tax in the current year, are accounted for as a deferred tax asset or liability, both for the income tax and for the income tax for equality - CREE as applicable, provided there is a reasonable expectation that such differences will revert, liability in case of the deferred tax assets or sufficient taxable income will be generated to recover the deferred tax. The deferred tax is calculated at either 34% ( 25% income tax and 9% tax for equality - CREE) or 33% (25% income tax and 8% tax for equality - CREE) rate, as applicable.

The determination of the tax able basis for both income tax and income tax for equality CREE is the result of the application of the regulations in force in each case.

Income tax

Current tax provisions applicable to Ecopetrol S.A. establish the following:

(a)

As from January 1, 2013, taxable income in Colombia will be subject to a 25% income tax rate subject to special rates pursuant to explicit disposition.

(b)

The basis for determining income tax may not be below 3% of its net equity on the last day of the immediately preceding fiscal year.

(c)

As from taxable year 2007, the inflation adjustments system was eliminated for tax purposes, and the tax on capital gains was reactivated. Article 109 of Act 1607 of December 2012 established a new tax rate on occasional gains for companies and is to be applied as from 2013; such rate is equivalent to 10%

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(d)

At June 30, 2014, Ecopetrol S.A. has no balances for tax losses or excesses of presumptive tax over ordinary income.

(e)

Income tax returns can be reviewed by the tax authorities for up two years following their filling. To date, the 2012 and 2013 income taxes return are open for review.

Income Tax for Equality (CREE)

Current tax provisions applicable to Ecopetrol S.A. establish the following:

(a)

Act 1607 of December 2012 introduced the income tax for equality - CREE, effective as from January 1, 2013, as the contribution of companies, legal persons and assimilated income tax payers in order to benefit workers, employment generation and investment in social matters. Non-for-profit entities, individuals and companies classified as free trade zones are subject to the 15% tax rate are not subject to the income tax for equality - CREE.

(b)

The basis for determining the income tax for equality - CREE may not be lower than 3% of tax payer’s net equity on the last day of the immediately preceding taxable period.

(c)

The rate for the income tax for equality - CREE for 2013, 2014 and 2015 is 9%; as from taxable year 2016, such rate will be 8%.

(d)

According to Article 25 of Act 1607 of December 2012, effective as from July 1, 2013, legal persons and assimilated income tax payers, are exempted from paying payroll taxes (National Training Service - SENA and Colombian Institute for Family Welfare - ICBF). Corresponding to workers individually earning up to ten (10) minimum monthly salaries in force. This exemption does not apply to taxpayers not subject to the income tax for equality - CREE.

(e)

The taxable basis of the income tax for equality - CREE will be established by subtracting returns, rebates and discounts from the gross income that may have increased equity during the taxable year and subsequently subtracting from the resulting amount the values corresponding to revenues not considered taxable income as defined in the Tax Code. From the net income so obtained, the total costs and deductions applicable to this tax will be deducted, in accordance with the provisions of Articles 107 and 108 of the Tax Code. Exempt income, as expressly determined by Article 22 of Act 1607 of 2012, will then be allowed to be deducted from that amount.

Tax on Equity

For taxable year 2011, the equity tax was established for income tax payers under Act 1370 of 2009. Therefore, taxpayers owning net equity exceeding $5,000 million should pay a 4.8% rate, and those owning net equity between $3,000 million and $5,000 million should pay a 2.4% rate on such equity.

A new rate for taxpayers required to pay such tax was included by means of Emergency Decree Number 4825 of December 2010. Such rates are: 1% for net equity between $1,000 and $2,000 million, and 1.4% for equity between $2,000 and $3,000 million.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

In addition, a surcharge of 25% was established by such Decree on this tax, which is only applicable to equity taxpayers under Act 1370 of 2009.

Based on the above, and in accordance with accounting management decrees, Ecopetrol recognized the value of the equity tax payable, and the corresponding charge to income, for the proportional value corresponding to 2011, 2012 and 2013. The pending balance payable was registered as a deferred asset amortizable during 2014.

Transfer Pricing

Since 2004, income taxpayers who had entered into transactions with related parties abroad, and/or with residents of countries considered to be tax havens, are under the obligation of determining, for income tax purposes, their ordinary and extraordinary income, costs and deductions, and assets and liabilities, taking into account the denominated market prices and profit margins for these transactions (Arm’s length principles). Based on the opinion of the Company’s advisor, no significant changes are expected for taxable year 2013 related to the compliance with the principle of full jurisdiction set out in Article 260-1 of the Colombian Tax Code, and there are no foreseen adjustments to the determination of income tax expenses for the said year.

To date, Ecopetrol has not completed the 2013 study; however, based on the results from the 2012 study, no adjustments to the income tax provision derived from the 2013 price analysis, affecting the results of the period, are required.

(17)

Labor and Pension Liabilities

The balance of labor and pension liabilities is comprised as follows:

	As of June 30,		As of December 31,
	2014		2013
Current
Vacations		91,274		84,210
Premiums, bonuses and allowances		111,996		75,125
Severance payments		29,743		50,626
Salaries and pensions payable		5,431		5,126
Interests on severance		2,766		5,753
Other		6,094		5,818
Total current		247,304		226,658

Long term
Actuarial liability for health and education (1)		4,364,318		4,211,288
Retirement pensions, joint ventures		66,544		66,544
Total long term		4,430,862		4,277,832
Total		4,678,166		4,504,490

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(1)

The actuarial computations for health and education for Ecopetrol S.A., were prepared by applying The Mortality Tables updated in 2010 and using a technical interest rate of 4.8%. In 2013 to estimate the value of future health and education payments, an increase of 5.992% was applied (inflation + Health Growth Rate). Based on the results provided by our actuary in 2013 and in order to update our reserve during 2014 the accumulated IPC (Colombia´s equivalent to the consumer price index in the United States) (1.94%) from the preceding year was used.

The following is the detail of the actuarial liability amortized from 2010, based on the policy applied related to changes in mortality rates:

	As of June 30,			As of December 31,
Concept	2014			2013
Actuarial calculation of health liabilities		4,093,187			4,053,865
Less - Actuarial calculation pending amortization		(113,708	)		(227,416	)
Amortized actuarial liability		3,979,479			3,826,449

The amortized actuarial liability is as follows:

	As of June 30,		As of December 31,
	2014		2013
Health
Active Personnel		538,809		518,089
Retirees		3,440,670		3,308,360
Education
Active Personnel		48,081		48,081
Retirees		336,758		336,758
Total		4,364,318		4,211,288

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(18)

Estimated Liabilities and Provisions

The balance of estimated liabilities and provisions is comprised as follows:

	As of June 30,		As of December 31,
	2014		2013
Current
Provision for legal proceedings (1) (see Note 30)		526,731		516,446
Provision for pension obligations (2)		-		500
Provision for abandonment, facility dismantling and environmental recovery costs (3)		58,241		90,162
Other provisions		192,633		196,156
Provisions for contingencies (4)		962,506		918,979
Total current		1,740,111		1,722,243
Long term
Provision for abandonment, facility dismantling and environmental recovery costs (5)		4,484,665		4,469,500
Provisions for community members (6)		450,615		445,364
Total long term		4,935,280		4,914,864
Total		6,675,391		6,637,107

(1)

The movement in the provision for legal proceedings as at June 30, 2014, is as follows:

	Number of Proceedings			Provision Amounts
Opening Balance December 31, 2013		287			516,446
Additions, new provisions		133			33,739
Recovery from transfer of proceedings		(84	)		(21,495	)
Uses		-			(1,959	)
Closing Balance at June 30, 2014		336			526,731

The movement in the provision for legal proceedings as at December 31, 2013 is as follows:

	Number of Proceedings			Provision Amounts
Opening Balance		673			770,922
Additions, new provisions		229			96,267
Recovery from transfer of proceedings		(615	)		(307,113	)
Uses		-			(43,630	)
Closing Balance December, 2013		287			516,446

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(2)

Corresponds to the estimated pension amounts, pending payment, for people who joined Ecopetrol after January 29, 2003 (Act 797 of 2003) and until the first quarter of 2004, who are covered by the General Pension Scheme (from the SpanishRégimen General de Pensiones).

(3)

The decrease corresponds to $ 31,921 mainly used in the following fields: La Cira – Infantas, Lisama, Casabe, Provincia, Rubiales, Doima, Yarigui y San Francisco.

The following shows the movements in the provisions for current abandonment, facility dismantling and environmental recovery costs:

	As of June 30,			As of December 31,
	2014			2013
Opening Balance		90,162			40,167
Additions, updates - (decreases)		-			(4,060	)
Reclassification to short term		-			147,605
Withdrawals and use		(31,921	)		(93,550	)
Closing Balance		58,241			90,162

(4)

Represented by: (i) $833,998 (2013 - $804,358) to comply with payment of pension liability (Note 21 No 3). (ii) $27,693 (2013 - $28,364) for potential PDVSA claims for payment of work to clean up and decontaminate Lake Maracaibo in Venezuela, (iii) $100,659 (2013 - $86,101) for situations with environmental implications; and (iv) $156, (2013 - $156) corresponding to the success-based fees for the representative in the litigation against Ecopetrol initiated by Industrias Crizasa.

(5)

The movements of the provision for long-term abandonment, facility dismantling and economic recovery costs is as follows:

	As of June 30,		As of December 31,
	2014		2013
Opening Balance		4,469,500		3,802,841
Additions, updates - (decreases)		15,165		881,003
Reclassification to short term		-		(147,605	)
Withdrawals and use		-		(66,739	)
Closing Balance		4,484,665		4,469,500

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(6)

Includes the interim relief ordered by the Council of State in its decree of June 24, 1994 in the invalidity action brought by the Ministry of Mines and Energy against Comuneros (community members) of Santiago de las Atalayas and Pueblo Viejo de Cusiana, corresponding to the attachment and seizure of the payments to be made by Ecopetrol for royalties, based on Royalty contracts No. 15, 15A, 16 and 16A, declared null and void by the Council of State in its ruling of September 13, 1999, in which it was ordered that such interim relief should be cancelled and that the attached and seized amounts should be handed over to the State - the Ministry of Mines. Ecopetrol has capacity as receiver. Of said amount, $90,752 corresponds to the value initially recognized by Ecopetrol, as well as the valuation of the fund containing the resources and $359,863 corresponds to generated interest. In a ruling on December 12, 2012, notified by edict on January 21, 2013, the Council of State declared that the special plea for reconsideration filed by the Comuneros was dismissed.

(19)

Other Long-term Liabilities

The balance of other long-term liabilities is comprised as follows:

	As of June 30,		As of December 31,
	2014		2013
Deferred income tax liability		2,004,723		2,004,723
Advances received from Ecogas for BOMT’s		327,602		402,660
Other liabilities		41,313		105,807
Total		2,373,638		2,513,190

(20)

Shareholders’ Equity

Subscribed and Paid-in Capital

Ecopetrol’s authorized capital amounts to $15,000,000, and is comprised by 60,000,000,000 ordinary nominative shares at a $250 pesos par value each. 41,116,698,456 of such shares have been subscribed represented by 11.51% of non-controlling interest and 88.49% held of shareholders from Government entities. The value of the reserve shares amounts to $4,720,825 comprised by 18,883,301,544 shares.

Additional Paid-in Capital

Mainly corresponds to: (i) the surplus with regards to its par value derived from the sale of shares upon capitalization in 2007 in the amount of $4,700,963; (ii) $31,225 corresponding to the value generated by placing shares on the secondary market, arising from the execution of guarantees from debtors in arrears in accordance with the stipulations of Article 397 of the Code of Commerce; and (iii) to the surplus over the par value arising from the sale of shares awarded in the second round, which took place in September 2011, in the amount of $2,222,443.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

The Detail of the additional paid-in capital is comprised as follows:

	As of June 30,			As of December 31,
	2014			2013
Additional paid-in capital shares		6,954,674			6,954,631
Additional paid-in capital receivable		(218	)		(257	)
Total		6,954,456			6,954,374

Summary of Valuations and Surplus from Valuations

	As of June 30,		As of December 31,
Property, plant and equipment (i)	2014		2013
Plant and equipment		3,694,122		3,701,009
Buildings		1,645,681		1,656,859
Land		2,277,834		2,277,476
Pipelines and lines		1,700,244		1,702,953
Transportation equipment and other assets		102,527		104,104
Computer Equipment		32,606		33,138
		9,453,014		9,475,539

	As of June 30,		As of December 31,
Variable yield Investments	2014		2013
Investments in mixed economy companies		849,070		814,360
Investment in Government entities		470,798		466,673
		1,319,868		1,281,033
Total		10,772,882		10,756,572

Equity Reserves

The legal reserve is made up of 10% of net income and can be used to offset losses or to distribute in the event of liquidating the Company.

On March 26, 2014, the results for 2013 were considered by the General Assembly of Shareholders, at which it was decided not to increase the legal reserve since it currently represents 50% of the subscribed capital.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

The detail of reserves is comprised as follows:

	As of June 30,		As of December 31,
	2014		2013
Legal reserve		5,139,587		5,139,587
Occasional reserves for investment programs (See statement of Changes in Shareholders’ equity)		12,802,795		9,945,733
Regulatory Decree 2336 of 1995 (See statement of Changes in Shareholders’ equity)		20,989		215,406
Total		17,963,371		15,300,726

Incorporated Institutional Equity

Corresponds to the product of commercial activity mainly linked to the following associates contracts: Nare; Matambo; Garcero; Corocora; Estero; Caracara, for the Sardinas 6, Remache Norte 3, Abejas 3, Jaguar T5 and T6 wells, Orocué; the Guarilaque 7 well; Campo Rico for the Candalay, Jordán 5, Remache Norte 2 and 5, Abejas 2 and Vigia wells, and the incorporation of the Cocorná materials warehouse.

Effect of Applying the Government Accounting Regime-RCP (from the SpanishRégimen de Contabilidad Pública)

Corresponds to the transfer of negative balances derived from devaluations of property, plant and equipment, as established by the Public Accounting Regime as from 2008.

This heading also shows the responsibilities pending decision arising from proceedings on loss of materials, through enforcement of the process established in the above - mentioned standard.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(21)

Memorandum Accounts

The detail of memorandum accounts is comprised as follows:

	As of June 30,		As of December 31,
	2014		2013
Debtor
Exploitation rights - Decree 727 of 2007 (1)		59,571,490		61,016,768
Other contingent rights and debtor accounts (2)		51,247,308		35,532,747
Costs and expenses (Deductible and non-deductible)		21,936,138		22,890,984
Pension-related autonomous equity (3)		11,580,339		11,449,876
Securities given in custody and guarantee		4,155,707		1,249,286
Implementation of Investment projects		12,421		21,953
Legal proceedings		1,362,673		779,871
Total		149,866,076		132,941,485

	As of June30,		As of December 31,
Creditor	2014		2013
Legal proceedings		29,213,034		28,804,122
Goods received in custody (4)		19,511,728		20,047,535
Contractual guarantees (5)		13,693,311		14,002,731
Pension-related autonomous equity (6)		12,414,337		12,254,234
Non-tax liabilities		15,467,593		10,660,393
Work Contracts		2,282,448		3,267,904
Other contingent liabilities		1,074		5,179
Potential liabilities - pension liabilities (6)		236,699		405,769
Non-taxed income		5,716,715		5,567,612
Mandate agreements (7)		1,087,019		1,279,886
Administration funds - Decrees 1939 of 2001, and 2652 of 2002		973,564		973,564
Future BOMT´s payments		312,037		19,028
Total		100,909,559		97,287,957

(1)

Reserves valued as of December 31, 2013 based on the volumes in the audited reserves study and applying the average price set by SEC-approved regulations.

On March 7, 2007, Decree 727 was issued, establishingthat the value of hydrocarbon exploration and production rights owned at the closing date of the financial statements, must be recorded in accordance with provisions of the National Accounts Office (CGN); however, the memorandum accounts are not part of the Company´s balance sheet.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(2)

The balance corresponds mainly to the following: (i) the balance of tax memorandum accounts in the amount of $42,400,803 (2013 - $30,224,255), which reflect the differences between the values of both equity and income statement accounts taken from the 2013 tax return, and the accounting balances. The differences are derived from concepts such as valuations, allowance not accepted for tax purposes, the difference in the amortization method for oil investments, which is done by using the units of production method for accounting purposes, and by using the straight-line method for tax purposes, and the effect of the adjustment for inflation, amongst other and (ii) securities in custody in the amount of $8,846,505 (2013 - $5,308,492).

(3)

Reflects the contingent right (debtor account) on resources placed in the pension-related autonomous trust, to pay transferred pension liabilities, in order to control the existence of liquid resources in the autonomous equity fund. The value transferred as of December 31, 2008, was $10,092,528), corresponds to the pension liability for monthly pension payments, shares and pension bonds; the amounts tied to health and education are within Ecopetrol’s pension liability. The transferred resources, and their yields, cannot change destination or be returned to the Company until all pension liabilities have been fulfilled.

The Detail of pension-related autonomous pension trust funds is comprised as follows:

	As of June 30, 2014		As of December 31, 2013

Consorcio Ecopensiones 2011		3,038,353		3,007,450
Porvenir S.A		2,555,764		2,525,046
Consorcio Pensiones Ecopetrol 2011		1,762,850		2,058,602
Unión temporal Skandia - HSBC		2,001,085		1,813,095
Consorcio Bogotá-Colpatria-Occidente		2,222,287		2,045,683
Total		11,580,339		11,449,876

(4)

Includes, the value of royalties corresponding to the balance of Ecopetrol reserves, in the amount of $19,273,036 (2013 - $19,740,624), calculated according to SEC-approved regulations. This heading also includes the inventories of products sold and materials pending delivery to clients in the amount of $47,022 (2013 - $43,453) and investments of Black Gold administered by Ecopetrol for $191,669 (2013 - $194,658).Goods in custody for concessions Coveñas (2013 - $41,660) Pozos Colorados (2013 - $21,058), Tumaco (2013 - $6,082).

(5)

Includes contracts pending for execution, in pesos, dollars and Euros, updated at the Representative Market Exchange Rate in the amount of $12,917,756; and standby letters of credit guaranteeing contracts signed by Ecopetrol S.A. in the amount of $775,555 (2013 - $1,084,975).

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

The financial closing for awarding two contingent guarantees to Refinería de Cartagena S.A.- Reficar, by Ecopetrol was carried out on December 30, 2011. Such guarantees are part of the financial support granted by a group of Export Credit Agencies and by commercial banks for the project of expansion and modernization of Reficar. The financing structure is of the Finance Project type with a maximum repayment term of 14 years, counted as of the six months following the date of the project completion. For the project financing purposes, Ecopetrol granted to Reficar: i) contingent guarantee for the resources necessary to complete the project (US$1,447 million equivalent to $ 2,843,818 (2013 - 2,788,123)); and ii) a contingent guarantee for the payment of eventual amounts that could be needed by Reficar for the debt service between December 2013 and December 2014 (US$249 million equivalent to $489,365 (2013 - $479,781)).

(6)

Made up of the value of the actuarial calculation of monthly pension payments, shares and bonds as of December 31, 2013 plus the percentage of amortization of the 2010 reserve that arose from the update of mortality tables and from the change in the accounting principle for amortization.

As of June 30, 2014 the update was made based on the estimation provided by the actuary at the cutoff date.

The balance of the amortized actuarial liability is as follows:

	As of June 30,			As of December 31,
Concept	2014			2013
Actuarial calculation of the liability for monthly pension payments and pension bonds		12,651,036			12,660,003
Less - Actuarial calculation pending amortization		(236,699	)		(405,769	)
Amortized actuarial liability		12,414,337			12,254,234

The balance of pension-related autonomous trust funds, the value of the actuarial reserve, and the amortized value of the pension liability for monthly payments are included in memorandum accounts.

As of December 31, 2013, 13,106 people were covered in the actuarial calculation, and 13,885 were covered in pension bonds.

(7)

Includes the value of assets received in custody from Refinería de Cartagena S.A. in fulfillment of obligations acquired under the contract of mandate signed between Ecopetrol and that Company to operate the refinery, as follows: product inventories in the amount of $186,475 (2013 - $358,351); and property, plant and equipment in the amount of $900,544 (2013 - $921,355).

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(22)

Revenues

The following is the detail of revenues for the six-month period ended:

	June		June
	2014		2013
Domestic sales
Mid-distillates		4,955,632		4,620,116
Gasoline		2,661,860		2,538,772
Services		854,916		785,067
Natural gas		653,014		525,827
Other products		530,464		621,439
L.P.G. and propane		231,833		175,621
Asphalts		233,859		173,485
Crude		1,566,237		592,040
		11,687,815		10,032,367
Recognition of price differential (1)		644,271		237,858
		12,332,086		10,270,225
Foreign sales
Crude		16,148,015		17,705,749
Fuel oil		1,887,065		1,711,402
Natural Gas		236,876		297,631
Propylene		95,690		64,520
Other products		17,893		13,228
Gasoline and turbo fuel		671		8,530
Diesel		-		23,231
		18,386,210		19,824,291
Total Revenues		30,718,296		30,094,516

(1)

Corresponds to the application of Decree 4839 of December 2008 and Resolutions 180522 of March 24, 2010 and 90183 of March 14, 2013, which defined the procedure for price differentials (value generated by the difference between parity price and regulated price which can be positive or negative).

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(23)

Cost of Sales

The following is the detail of cost of sales for the six-month period ended:

	June		June
	2014		2013
Variable costs:
Hydrocarbon purchases - ANH (1)		3,626,840		3,875,875
Imported products (2)		4,746,219		3,764,757
Purchase of crude in association and concession Contracts		1,731,226		1,784,082
Gas royalties in cash (5)		189,457		-
Amortization and depletion		1,808,598		1,732,738
Hydrocarbon transportation services (3)		2,781,995		1,967,793
Services contracted in association (4)		306,079		321,132
Purchases of other products and gas		504,304		494,564
Processing materials		122,113		124,568
Electric power		95,122		111,035
Volume adjustments and other allocations		4,651		102,923
Initial inventory less final inventory		18,225		115,348
Variable Costs		15,934,829		14,394,815
Fixed costs:
Services contracted in association		775,598		724,122
Depreciation		641,815		643,184
Maintenance		776,547		663,100
Labor costs		659,535		579,273
Contracted services		641,946		564,501
Taxes and contributions		185,812		217,577
Materials and operating supplies		118,514		151,022
Non-capitalized project costs		46,914		141,543
Amortization of deferred charges, intangible assets and insurance policies		49,657		38,925
General costs		22,560		22,292
Amortization of the actuarial calculation for health and Education		16,865		18,964
Fixed Costs		3,935,763		3,764,503
Total		19,870,592		18,159,318

(1)

Corresponds to Ecopetrol’s crude oil and gas purchases from the ANH derived from domestic production, both by the Company in direct operations and by third parties.

(2)

Corresponds mainly to purchases of very low sulfur diesel oil and diluent agents to facilitate the transportation of heavy crude oil.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(3)

Includes the effect of applying the new benefit center business model with rates from the Ministry of Mines and Energy for the transportation in pipelines in ODC and Ocensa as of February of 2013 and starting Cenit’s operations as of April 1, 2013 and Bicentenario; operations as of November 1^st.

(4)

Corresponds to energy costs, fluid transportation in tanker – trucks and process materials for Rubiales, Quifa, Caracara, Cravo Norte, Chipirón, Cosecha and Rondón contracts, which were identified and reclassified from fixed costs to variable.

(5)

Corresponds to accrued costs in favor of the ANH from money collected in cash from the exploitation of natural gas, pursuant to Resolution 877 effective from January 01, 2014.

(24)

Operating Expenses

The following is the detail of operating expenses for the six-month period ended:

	June			June
	2014			2013
Administration:
Amortizations (1)		124,824			148,392
Labor expenses		131,569			117,130
General expenses		56,043			50,335
Depreciation		8,054			7,645
Amortization of the actuarial calculation for health and education		1,173			1,225
Rentals and leases		288			285
Taxes		21			99
Maintenance		5			-
		321,977			325,111
Operation and projects:
Taxes		655,009			659,340
Exploration expenses		407,895			141,095
General expenses		224,704			113,944
Labor expenses		138,322			124,114
Customs operation		117,296			60,170
Transportation via gas pipeline and freight		113,535			12,626
Contributions and donations		87,034			26,294
Operation provisions, net (2)		42,611			148,290
Audit installment		29,000			26,566
Previous periods		21,360			(18,795	)
Fuel loss		15,401			20,589
Agreements for support of public security		8,309			156,723
Maintenance		30			6,753
Projects expenses		(48,406	)		79,997
		1,812,100			1,557,706
Total Operating Expenses		2,134,077			1,882,817

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(1)

Includes the amortization of goodwill of the following companies: Polipropileno del Caribe S. A., Oleoducto Central S.A., Hocol S.A., Andean Chemicals Ltd., Offshore International Group and Equión Energía Limited in the amount of $116,812 (June 30, 2013 in amount of $137,163).

(2)

The detail of the operating provisions, for six-month period is the following:

	June		June
	2014		2013
Transfer of pensions (See Note 21 No 3)		80,664		157,686
Debtors		24		26,656
Litigations		55,599		24,981
Inventories - products and materials		1,315		3,382
Property, plant and equipment		12,318		1,182
Investments		3		13
		149,923		213,900

The detail of operating provisions recovery for the six-month period is the following:

	June		June
	2014		2013
Property, plant and equipment		19,889		37,554
Abandonment Costs		-		3,872
Debtors		77		1,974
Litigations		20,947		1,381
Other		15,377		20,829
Transfer of pensions (See Note 21 No. 3)		51,022		-
		107,312		65,610
Net		42,611		148,290

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

(25)

Financial Income (Expenses), Net

The following is the detail of financial income (expenses) net, for the six-month period ended:

	June		June
	2014		2013
Income:
Foreign exchange gain		2,058,503		1,354,358
Yields and interest		114,044		117,314
Dividends in cash		53,202		66,576
Profit from appraisal of investment portfolio		10,754		48,540
Hedging operations		1,104		916
		2,237,607		1,587,704
Expense:
Foreign exchange loss		1,863,001		1,305,481
Interest		315,104		190,583
Other minor expenses		23,716		22,735
Hedging operations		633		1,667
		2,202,454		1,520,466
Net		35,153		67,238

(26)

Pension Expenses

The following is the detail of pension expenses for the six-month period ended:

	June		June
	2014		2013
Amortization of actuarial calculation and pensions (See Note 17)		132,310		174,866
Health care services		112,769		109,012
Education services		30,341		31,030
		275,420		314,908

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

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Other Income (expenses) net

The following is the detail of other income (expenses) net, for the six-month period ended:

	June		June
	2014		2013
Other Income
Profit on sale of materials and property, plant and equipment		2,975		184,143
Deferred BOMT income		68,205		64,165
Recovery of expenses		19,933		34,536
Other minor revenues		5,922		3,758
Compensation received		2,325		2,910
Income from services		1,936		1,744
Recovery of payroll expenses		728		987
		102,024		292,243
Other Expenses
Gas pipeline availability under BOMT contracts		50,717		52,155
Inter-administrative agreements and social investment		10,747		22,564
Loss in fixed assets and natural resources write-off		1		20,143
Other minor expenses		1,315		7,122
		62,780		101,984
		39,244		190,259

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Results from Subsidiaries, Net

The application of the equity method in the subsidiary companies or with significant influence showed the following results for the six-month period ended:

	June			June
	2014			2013
Cenit - Transporte y Logistica de hidrocarburos		800,900			386,353
Hocol Petroleum Company		223,487			134,294
Ecopetrol Pipelines International Limited		141,003			182,642
Equión Energía Limited		136,720			124,296
Offshore International Group (1)		41,911			6,138
Ecopetrol Capital AG		26,344			15,659
Invercolsa		21,394			23,805
Black Gold Re Limited		11,744			6,651
Ecodiesel Colombia S.A.		5,570			5,495
Polipropileno del Caribe S.A.		1,339			(2,547	)
Ecopetrol Global Capital		-			-
Refinería de Cartagena S.A.		(95,168	)		(87,601	)
Andean Chemicals Ltd.		(134,912	)		(90,299	)
Ecopetrol Global Energy S.L.U		(422,694	)		(271,698	)
Net Result		757,638			433,188

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

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Contingencies

The following is a summary of the most significant legal proceedings with claims above $10,000 million pesos, for which allowances have been recognized, in accordance with the evaluations of the Company’s internal and external advisors, as of June 30, 2014 and December 31, 2013:

Proceeding	Suit	Allowance Amount as of June, 2014		Allowance Amount as of December, 2013
Municipality of Arauca	Class action suit. Contributions to the solidarity and electric-power-generation revenues redistribution fund, pursuant to Act 142 of 1994.		283,010		283,010

Garcero Association contract	Class action suit from Luis Enrique Olivera Petro against Ecopetrol, the Nation, the Ministry of Mines and others, on the extension of the Garcero association contract.		155,184		155,184

Offshore Exploration and Production, LLC	International Arbitration Court - In the framework of the purchase of Offshore International Group, the Seller (Offshore Exploration and Production LLC) filed a lawsuit to the Buyers (Ecopetrol and KNOC) in an international arbitration court before the International Center of Dispute Resolution, seeking to establish the liability limits acquired and established in the Purchase Agreement, in order to reject the claims and compensation requirements that Ecopetrol and KNOC have submitted to the Seller. Ecopetrol and KNOC filed a counterclaim lawsuit.		22,574		23,122

Claims Salary Impact - Saving Stimulus Suit	Apply the salary impact to the amounts paid under the saving stimulus scheme and consequently reassess fringe benefit payments (legal and extralegal) and monthly pension payments, from the date at which Ecopetrol began recognizing it.		4,719		18,689

As of June 30, 2014, the balance of the allowance for legal proceedings amounts to $526,731 (December 31, 2013 - $516,446)

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

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Commitments

Gas Supply Contracts

In addition to existing contracts, the Company has entered into new gas sale or supply contracts with third parties, such as, Gases de Occidente S.A. E.S.P, Gas Natural S.A. E.S.P. and Gecelca S.A.

Ship or Pay Contracts

Ecopetrol and ODL Finance S.A. have signed the following Ship or Pay contracts: i) the first contract is an agreement that supports the five-year debt obligation (Financial Tariff) with Grupo Aval. All payments are collected in a trust, from which the debt amortization payments are made. This contract was replaced by a new one, subscribed in May 2010, for a seven-year term, to reflect the new terms agreed with Grupo Aval, and ii) the second contract backs a securitization process (securities-related autonomous trust) for a seven-year term. The securities are administered from their issuance date by an autonomous trust fund structured for that purpose, to which the rights for invoicing, collecting and paying the securities holders have been assigned.

Under the first ship or pay contract, ODL Finance S.A. is committed to transporting 75,000 barrels of crude per day during the two-year grace period for the facility, and 90,000 barrels of crude oil per day during the subsequent five years. Under the second contract, ODL Finance S.A. is committed to transporting 19,500 barrels of crude during the first phase of the construction project (which began operations in September 2009) and 39,000 barrels of crude oil per day from the beginning of the second phase, which took place in the first quarter of 2010.

Bicentenario Ship or Pay Contract for Crude Oil Transportation

In order to finance the construction Stages 0 and 1 of the Bicentenario oil pipeline, crude oil transportation contracts were signed, creating the obligation on the part of the respective shareholder or affiliate to ship crude oil under its ownership: (i) from the Araguaney station to Coveñas, (ii) under the ‘ship or pay’ modality, and (iii) up to the capacity of the shareholder, determined by its share in Bicentenario, which will depend on the contracted capacity of all Bicentenario’s shareholders and/or affiliates, and which shall not be less than 110,000 bpcd.

In exchange for the shipping service, the shareholder or its affiliate must pay a fixed monthly fee, even if no barrels at all are shipped, from one of the following dates, whichever comes first: (i) The date at which the oil pipeline begins operation or (ii) 12 months from the date of the first disbursement of the syndicated loan, namely July 5, 2013. The right to receive the fee under the ship or pay modality was assigned to an autonomous trust created for the purpose of administrating and making payments.

The contracts will initially be in effect from the date of the first payment of the fee, or the date of the beginning of service, whichever takes place first, and will end on either (a) 12 years after the beginning of the period, or (b) the day on which all of the obligations under the contract have been discharged, whichever comes last. Once the above period has been completed, the contract will be in effect for an additional period of 20 years.

ECOPETROL S.A.

Notes to the Unconsolidated Financial Statements

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Subsequent Events

Ecopetrol and its subsidiary, Hocol S.A, submitted bids for 5 blocks in Ronda Colombia 2014 performed by the Agencia Nacional de Hidrocarburos (ANH) (National Hydrocarbons Agency) in July, 2014.

The following is the summary of the bids:

Block

Basin

Company

Participation
production ANH
(%)

Additional
Investment
(USD million)

Type of Block

Sin Off 7

Caribe Offshore

Shell-Ecopetrol

1 E&P Offshore

YDSN1

Sinú San Jacinto

Hocol

2,2

1 E&P Conventional

SN8

Sinú San Jacinto

Hocol

1,1

1 E&P Conventional

SN15

Sinú San Jacinto

Hocol

1,1

1 E&P Conventional

SN18

Sinú San Jacinto

Hocol

1,1

1 E&P Conventional

The ANH plans to make the award and the contract subscriptions as of August 12, 2014.

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Presentation

Some figures of the financial statements as of December 31, 2013 and June 30, 2013 were reclassified in order to make the presentation of such financial statements comparable to that of the financial statements as of June 30, 2014, as described in the notes.

Ecopetrol (EC) 6-KInterim Unconsolidated Financial Statements