Ecopetrol (EC) 6-K Ecopetrol Business Group presents its Second Quarter and First Half 2017 Results

Exhibit 99.1

 

Ecopetrol Business Group presents its Second
Quarter and First Half 2017 Results

· Net income for the first semester of 2017 was COP 2.2 trillion, almost double than in the same period of last year and higher than the net income of the whole year 2016.

· The spread of our crude export basket versus Brent has narrowed due to our renewed commercial strategy. From a maximum of Brent minus USD 12/bl in 2015 it fell to Brent minus USD 6.6/bl in the second quarter of 2017.

· Group´s nominal debt decreased by 12.9% during the second quarter of 2017.

· Effective exploratory campaign with a success rate of 80% in the first semester.

Bogota, August 8, 2017. Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) today announced the Ecopetrol Business Group’s second-quarter and first half 2017 financial results, prepared and presented in billions of Colombian pesos (COP) according to International Financial Reporting Standards applicable in Colombia.

TABLE 1:
Consolidated Financial Results –
Ecopetrol Business Group

A	B			C			D		E			F			G			H		I
COP$ Billion	2Q 2017			2Q 2016			∆ ($)		∆ (%)			1H 2017			1H 2016			∆ ($)		∆ (%)
Total Sales		13,151			11,751			1,400		11.9	%		26,522			22,236			4,286		19.3	%
Operating Profit		3,268			2,481			787		31.7	%		6,567			4,080			2,487		61.0	%
Net Income Consolidated		1,483			989			494		49.9	%		2,556			1,600			956		59.8	%
Non-Controlling Interests		(178	)		(202	)		24		(11.9	)%		(365	)		(450	)		85		(18.9	)%
Net Income Attributable to Owners of Ecopetrol		1,305			787			518		65.8	%		2,191			1,150			1,041		90.5	%
EBITDA		5,612			4,522			1,090		24.1	%		11,425			8,659			2,766		31.9	%
EBITDA Margin		42.7	%		38.5	%							43.1	%		38.9	%

The figures included in this report are unaudited, expressed in billions of pesos (COP) or US dollars (USD), or in thousands of barrels of petroleum equivalent per day (mboed) or tons, as applicable. For presentation purposes, certain figures of this report were rounded to the nearest decimal place. 

43% EBITDA Margin	WARRIOR Exploratory Success	715MBOED Production	1,086KBD Transported Volume	13.9USD/Bl Margin Barrancabermeja	investors@ecopetrol.com.co Tel: +571 234 5190

 

In the opinion of Ecopetrol S.A. CEO Juan Carlos Echeverry G.:

“Ecopetrol is focusing on the next pillar of its 2020 strategy, “profitable growth.” Over the past two years we have embarked upon a profound transformation, and as a result have achieved financial soundness with ratios that are among the highest in the global industrial rankings.

The time has come to build on that financial soundness and discipline, and to concentrate our efforts on Ecopetrol’s profitable growth. Profitable growth is supported on four basic pillars: i) increased exploratory activity, ii) development of improved recovery pilots and infill projects, iii) exploring opportunities in Unconventionals, and iv) advancing in opportunities for inorganic growth.

Operational and financial performance in the first half of the year was outstanding. The EBITDA margin of 43% is one of the highest in the industry and we closed out the period with a solid cash position of COP 10.4 trillion. During the quarter we distributed COP 945 billion in dividends to our shareholders on 2016 earnings, and prepaid an international commercial banking loan of USD 1,925 million (approximately COP 6 trillion). The Ecopetrol Group’s nominal debt declined some 12.9% during the second quarter of 2017. The risk rating agencies have recognized our achievements and confirmed our investment-grade credit rating. For its part, S&P upgraded our stand-alone rating from BB to BB+.

Excellent commercial management and the global scarcity of heavy crude helped capture market opportunities in international sales. Ecopetrol’s export basket spread improved significantly, to -USD 6.6/bl in the second quarter.

In line with our commitment to profitable growth, we created the Project Maturity Center with a view to ensure that projects generate value, maintain the highest standards and are executed on time and within budget.

During the quarter, the exploratory campaign continued to show outstanding results. The Warrior-2 well, located in the Gulf of Mexico, was declared successful upon confirming the presence of light crude, making it the second discovery in that area in the past eight months. This discovery is consistent with Ecopetrol’s goal of positioning itself as a pan-American company. The Siluro well, in the Colombian offshore, did not yield the expected results with the presence of hydrocarbons. Thus, four discoveries were made in five wells, a success rate of 80% for the half-year period. In line with the search for growth opportunities, we participated in Round 2.1 in Mexico and were awarded two blocks in association with Pemex and Petronas.

In the second half of the year Ecopetrol will drill the Molusco well in the Colombian offshore, a milestone for the Company since it will be the first well of this kind operated directly by Ecopetrol. The second half’s exploratory campaign will focus more on the Colombian onshore, with the drilling of 10 wells.

The Business Group’s average production in the first half totaled 715 thousand barrels of oil equivalent per day, in line with the 2017 production goal. We succeeded in maintaining our production rate despite public security situations and operational events that have arisen. Pilot recovery programs are making satisfactory progress; by year-end we will have four recovery pilots that have completed the evaluation stage. One year after regaining control over the Rubiales and Cusiana fields, we have succeeded in maintaining stable and safe operations.

An important operational achievement has been sustaining stable bi-directional operation on the Bicentenario oil pipeline to extract crude from the Caño Limón field and thus, to a certain extent, mitigate the closure of the Cano Limón - Coveñas oil pipeline. Thanks to the bi-directional operation at Bicentenario, we have succeeded in performing major maintenance work on the Caño Limón oil pipeline without affecting production.

At Reficar we have completed performance testing on 28 plants, 82% of the refinery’s 34 units. The alkylation unit is already in operation after undergoing maintenance to correct problems of the cooling water system. The Barrancabermeja refinery has built a profitable and efficient operation, with a margin of USD 13.9/bl for the half-year period.

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In the Midstream we note the first shipment of heavy crude with viscosity greater than 500 centistokes (cst - viscosity measurement). This helped demonstrate the commercial viability of high-viscosity crude and encourages us to continue the transport testing of heavy crude at 600 cst, with a view to extending this capacity to other oil pipeline systems. During the quarter, crude pumping was initiated for operational stabilization of the San Fernando - Monterey system, and progress was made on commissioning and tests.

Structural savings for the half-year period totaled COP 516 billion, representing 70% of the year’s savings goal (COP 740 billion).

On May 31 Ecopetrol published its annual 20-F report for fiscal year 2016. By publishing the 20-F, the Company fulfilled its reporting obligation to the Securities and Exchange Commission (SEC), the New York Stock Exchange (NYSE), bondholders and other creditors. The joint work of the Board of Directors, the 2014-2015 period auditors, the 2016 auditors and Ecopetrol management successfully completed the due diligence process to publish the 20-F.

Ecopetrol as a Company is committed with the country’s development, the environment and generating value for its shareholders. Our commitment to financial soundness remains current and will leverage the focus on profitable growth needed to deliver outstanding results to the benefit of the Company’s sustainability.”

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I. Ecopetrol Business Group Financial and Operating Results

Net profit for the first half of 2017 was almost double the amount reported in the same period the previous year, and has already exceeded the figure for all of 2016. We have also succeeded in maintaining EBITDA margin at 43% for the year, equivalent to USD 30/Bl, vis-à-vis 38.9% and USD 23/bl in the first half of 2016. These positive results are largely due to: i) improved spreads in the crude exports pricing basket versus the Brent price (USD 6.6/bl in 2Q 2017 vs. USD 9/bl in 2Q 2016), ii) higher international petroleum prices compared to the previous year, and iii) lower product imports as a result of the beginning of operations of the Cartagena Refinery. These solid results are reflected in a cash position of COP 10.4 trillion at the close of the second quarter.

Table 2: Profit and Loss Statement – Ecopetrol Business Group

A	B			C			D			E			F			G			H			I
COP$ Billion	2Q 2017			2Q 2016			∆ ($)			∆ (%)			1H 2017			1H 2016			∆ ($)			∆ (%)
Local Sales		6,688			6,114			574			9.4	%		13,419			12,146			1,273			10.5	%
Export Sales		6,463			5,637			826			14.7	%		13,103			10,090			3,013			29.9	%
Total Sales		13,151			11,751			1,400			11.9	%		26,522			22,236			4,286			19.3	%
DD&A Costs		2,101			1,788			313			17.5	%		4,123			3,430			693			20.2	%
Variable Costs		5,232			5,047			185			3.7	%		10,634			9,353			1,281			13.7	%
Fixed Costs		1,893			1,512			381			25.2	%		3,614			3,010			604			20.1	%
Cost of Sales		9,226			8,347			879			10.5	%		18,371			15,793			2,578			16.3	%
Gross Profits		3,925			3,404			521			15.3	%		8,151			6,443			1,708			26.5	%
Operating Expenses		657			923			(266	)		(28.8	)%		1,584			2,363			(779	)		(33.0	)%
Operating Income		3,268			2,481			787			31.7	%		6,567			4,080			2,487			61.0	%
Financial Income (Loss)		(137	)		(366	)		229			(62.6	)%		(1,156	)		(502	)		(654	)		130.3	%
Share of Profit of Companies		24			(4	)		28			(700.0	)%		55			(31	)		86			(277.4	)%
Income Before Income Tax		3,155			2,111			1,044			49.5	%		5,466			3,547			1,919			54.1	%
Income tax		(1,672	)		(1,122	)		(550	)		49.0	%		(2,910	)		(1,947	)		(963	)		49.5	%
Net Income Consolidated		1,483			989			494			49.9	%		2,556			1,600			956			59.8	%
Non-Controlling Interests		(178	)		(202	)		24			(11.9	)%		(365	)		(450	)		85			(18.9	)%
Net Income (Attributable to Owners of Ecopetrol)		1,305			787			518			65.8	%		2,191			1,150			1,041			90.5	%
EBITDA		5,612			4,522			1,090			24.1	%		11,425			8,659			2,766			31.9	%
EBITDA Margin		42.7	%		38.5	%								43.1	%		38.9	%

1. Sales revenue

The higher sales revenue quarter over quarter is the combined result of:

a) Higher price of the average weighted basket for crude, gas and products, +USD 7/bl (+COP 1.89 trillion), largely reflecting the performance of the Brent crude reference prices and an improved spread against such reference prices.

The better spread between the first semester of 2016 and the same period of 2017 generated an estimated revenue of COP 503 billion.

b) A lower average exchange rate on revenue earned, which fell from COP 3,006/USD (Q2 2016) to COP 2,936/USD (Q2 2017), negatively impacting total revenue (-COP 353 billion).

c) Effect of change in sales volumes (+COP 47 billion).

d) Lower revenue from transport services (-COP 220 billion) because:

· In the second quarter of 2016 the Company posted revenue for the transportation services provided to Pacific E&P in the Rubiales field; since the contract reverted to the Company in July 2016, these services are no longer invoiced to third parties.

· Lower volume transported due to the decline in national production.

· Lower average exchange rate on fees charged in USD.

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Table 3: Volume Sales - Ecopetrol Business Group

A	B		C		D			E		F		G
Local Sales Volume (mboed)	2Q 2017		2Q 2016		∆ (%)			1H 2017		1H 2016		∆ (%)
Crude Oil		16.0		13.4		19.4	%		14.2		14.6		(2.7	)%
Natural Gas		70.3		71.0		(1.0	)%		73.4		78.9		(7.0	)%
Gasoline		112.0		108.0		3.7	%		110.6		107.2		3.2	%
Medium Distillates		151.2		140.1		7.9	%		148.8		139.9		6.4	%
LPG and Propane		17.6		16.3		8.0	%		17.8		16.5		7.9	%
Fuel Oil		8.0		5.3		50.9	%		8.2		6.1		34.4	%
Industrial and Petrochemical		17.6		18.4		(4.3	)%		18.5		18.8		(1.6	)%
Total Local Sales		392.7		372.5		5.4	%		391.5		382.0		2.5	%

Export Sales Volume (mboed)	2Q 2017		2Q 2016		∆ (%)			1H 2017		1H 2016		∆ (%)
Crude Oil		442.4		420.2		5.3	%		434.4		441.9		(1.7	)%
Products		107.3		152.8		(29.8	)%		109.9		142.1		(22.7	)%
Natural Gas		1.9		1.4		35.7	%		1.7		1.5		13.3	%
Total Export Sales		551.6		574.4		(4.0	)%		546.0		585.5		(6.7	)%
Total Sales Volume (mboed)		944.3		946.9		(0.3	)%		937.5		967.5		(3.1	)%

Market in Colombia (41.6% of sales):The increase in the second quarter of 2017 compared to the second quarter of 2016 was due largely to:

· Higher domestic sales of crude due to the increase in volumes under contract with Equion and under the new commercial agreement with Hidrocasanare.

· Higher diesel sales due to the increase in demand from the mining sector and resumption of oil services in the country, as well as an increase in gasoline sales due to the reduced ethanol mix, which fell from 8% to 6%.

· Higher sales of fuel oil given the new sale contracts for river fleet.

An important milestone was achieved with the ultra-low sulphur diesel produced by Reficar, which began to be sold in local markets, reducing the need for imports.

International market (58.4% of sales):The decrease in the second quarter of 2017 compared to the second quarter of 2016 was due primarily to:

· Higher crude exports due to greater availability of heavy crudes and exports of accumulated inventories from Hocol.

· Reduced fuel oil exports due to the use of bottoms to produce more valuable products at the Barrancabermeja refinery.

· Lower exports of refined products due to the commercial strategy focused on allocating greater volumes to the domestic market, in order to obtain better prices and reduce fuel imports.

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Table 4: Export Destinations - Ecopetrol Business Group

A	B		C		D			E		F		G
Crude (mbod)	2Q 2017		2Q 2016		∆ (%)			1H 2017		1H 2016		∆ (%)
Asia		101.6		52.5		23.0	%		101.6		65.2		23.4	%
U.S. Gulf Coast		163.3		166.2		36.9	%		145.1		186.9		33.4	%
U.S. West Coast		51.8		31.7		11.7	%		63.9		36.0		14.7	%
U.S. East Coast		3.9		27.4		0.9	%		17.7		26.6		4.1	%
Europe		18.6		59.4		4.2	%		19.7		59.6		4.5	%
Central America / Caribbean		83.2		54.0		18.8	%		66.1		41.6		15.2	%
South America		5.1		7.9		1.2	%		2.6		9.9		0.6	%
Other		14.9		21.1		3.4	%		17.7		16.1		4.1	%
Total		442.4		420.2		100.0	%		434.4		441.9		100.0	%

Products (mboed)	2Q 2017		2Q 2016		∆ (%)			1H 2017		1H 2016		∆ (%)
Asia		13.8		20.6		12.9	%		17.1		14.5		15.5	%
U.S. Gulf Coast		11.7		19.3		10.9	%		11.2		24.2		10.2	%
U.S. West Coast		2.4		0.0		2.2	%		1.2		0.0		1.1	%
U.S. East Coast		17.2		40.4		16.0	%		15.7		39.7		14.3	%
Europe		1.6		22.2		1.5	%		4.2		11.3		3.8	%
Central America / Caribbean		51.6		38.0		48.1	%		47.4		36.3		43.2	%
South America		8.3		9.0		7.8	%		12.7		7.6		11.6	%
Other		0.7		3.3		0.6	%		0.4		8.5		0.3	%
Total		107.3		152.8		100.0	%		109.9		142.1		100.0	%

Note: Information subject to change after the close of the quarter, as some destinations are reclassified according to the final export results.

Crude: Crude exports rose 5.3% versus the second quarter of 2016. The largest share continues to be the United States Gulf Coast because it has greater high conversion refining capacity. The Company’s sales strategy seeks to gain more profitable markets, as reflected in the significant increase in exports to Asia, supported by higher demand from independent refineries in China, with an increase in participation of 83.8% compared to the same period in 2016. Finally, Central America and the Caribbean represented the third-largest destination, with an increase of 46.4% versus the second quarter of 2016, since they are intermediate points of storage for other destinations. It also saw a larger share of exports to the markets in the United States East Coast due to better refining margins, that has compensated lower sales in Europe because of higher discount in the Maya crude observed in such destination.

Products: The principal export destination for products in the second quarter of 2017 was Central America and the Caribbean, which share grew 93.5% since they are intermediate points of storage for distant destinations like Asia. Exports to the United States declined from a 39.1% share to a 29.1%, due better opportunities found in other destinations.

Table 5: Average Benchmark Crude Prices

A	B		C		D			E		F		G
USD/Bl	2Q 2017		2Q 2016		∆ (%)			1H 2017		1H 2016		∆ (%)
Brent		50.8		47.0		8.1	%		52.7		41.2		27.9	%
WTI		48.2		45.6		5.7	%		50.0		39.8		25.6	%

Source: Platts y Bloomberg.

Table 6: Average Weighted Sales Price - Ecopetrol Business Group

A	B		C		D			E		F		G		H			I
USD/Bl	2Q 2017		2Q 2016		∆ (%)			Volume (mboed) 2Q 2017		1H 2017		1H 2016		∆ (%)			Volume (mboed) 1H 2017
Crude Oil Basket		44.2		38.1		16.0	%		458.4		45.2		30.7		47.2	%		448.6
Refined Products Basket		58.1		48.6		19.5	%		413.7		59.8		45.3		32.0	%		413.8
Natural Gas Basket		22.8		23.9		(4.6	)%		72.2		23.1		24.5		(5.7	)%		75.1
									944.3									937.5

Crude: In the second quarter of 2017, Ecopetrol saw better spreads versus the Brent price in sales of its heavy and intermediate crudes. The crude sales basket increased by USD 2.4/bl versus the results obtained in the second quarter of 2016 (Spread vs. the Brent price in the crude basket: 2Q 2017: -USD 6.6/bl vs. 2Q 2016: -USD 9.0/bl). This result was achieved by: i) a sales strategy focused on markets that generate greater value, ii) the effects of production cuts by OPEC and non-OPEC countries that reduced the availability of heavy and intermediate crudes, iii) higher Asian demand generating greater Chinese imports, and iv) lower supplies from Canada, Mexico, Venezuela and Russia.

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Products: The spread versus the Brent price in the products basket increased by +USD 5.7/bl versus the results obtained in the second quarter of 2016. This performance was supported by the recovery in the spread for distillates (diesel and jet fuel) due to higher industrial demand worldwide, a better realization of Reficar´s diesel in the local market and a better performance of the fuel oil attributed to temporary and structural factors, which have tightened the balance between supply and demand.

Natural Gas: Sales prices for natural gas are consistent with market structure and current contracts. A price reduction occurred compared to the second quarter of 2016 due to the presence of the El Niño phenomenon in 2016 which increased gas thermal generation with contracts under special regulation with the thermal sector.

2. Cost of Sales

Depreciation and amortization: Increase of 17.5% (+COP 313 billion), primarily because of:

a) Higher depreciation due to the beginning of operations of the Gunflint field since August 2016 at Ecopetrol America Inc.

b) A decrease in the incorporation of hydrocarbon proven reserves in 2016 versus 2015 and higher production volume.

c) Greater depreciation for capitalization of major maintenances in the transportation segment.

Variable costs: Increase of 3.7% (+COP 185 billion), primarily because of:

a) Lower costs for purchases of crude, gas and products (-COP 13 billion), the net effect of:

· An increase in the average price of domestic purchases and imports of crude and products (+COP 704 billion).

· A lower average exchange rate applicable to purchases in USD (-COP 164 billion), from COP 3,006/USD (second quarter of 2016) to COP 2,917/USD (second quarter of 2017).

· A decrease in the purchase volumes (-COP 553 billion) due primarily to: i) lower fuel imports, mainly diesel and gasoline, (-COP 707 billion, -45 mboed) at Reficar S.A. and Ecopetrol S.A. due to the commissioning of the new refinery, ii) higher crude imports (+COP 122 billion, +11 mbod) required at Reficar S.A. for its operations, and iii) smaller fluctuations in domestic crudes, diluents and petrochemicals (+30 billion, +5 mboed).

b) An increase in the cost related to inventories (+COP 103 billion), primarily due to: i) a decline in product inventories at Reficar as a result of the start of operations and ii) lesser accumulation of crude inventories given the use of contingent transportation alternatives in 2017.

c) Other costs (+COP 95 billion), primarily associated with processing materials and electricity (+COP 116 billion) related to the reversion of the Rubiales field (in 2Q 2016 it was not 100% part of Ecopetrol S.A.).

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Table 7: Local Purchases and Imports – Ecopetrol Business Group

A	B		C			D			E		F		G
Local Purchases (mboed)	2Q 2017		2Q 2016			∆ (%)			1H 2017		1H 2016		∆ (%)
Crude Oil		160.0		158.9			0.7	%		158.0		163.3		(3.2	)%
Natural Gas		4.1		2.7			51.9	%		3.0		2.7		11.1	%
Refined Products		3.3		5.8			(43.1	)%		3.4		5.5		(38.2	)%
Diluent		0.2		(1.0	)		(120.0	)%		1.5		0.3		400.0	%
Total		167.6		166.4			0.7	%		165.9		171.8		(3.4	)%

Imports (mboed)	2Q 2017		2Q 2016		∆ (%)			1H 2017		1H 2016		∆ (%)
Crude Oil		75.1		64.6		16.3	%		82.7		50.6		63.4	%
Refined Products		61.6		106.1		(41.9	)%		70.6		109.7		(35.6	)%
Diluent		52.8		49.3		7.1	%		54.7		55.6		(1.6	)%
Total		189.5		220.0		(13.9	)%		208.0		215.9		(3.7	)%

Fixed costs: Increase of 25.2% (+COP 381 billion) largely due to:

a) The restart of activity on E&P increased contracted services (+COP 140 billion), maintenance (+COP 86 billion) and operating supplies (+COP 52 billion) primarily in the Caño Sur, La Cira-Infantas, Castilla and Chichimene fields, and increases due to the reversion of the Rubiales field. Also scheduled maintenances at Reficar and subsidiaries in the Midstream segment.

b) Increased labor costs (+COP 64 billion) largely due to the higher headcount at the Rubiales field and higher payroll versus the previous year.

c) Other items (+COP 39 billion).

In the second quarter of 2017, our results were also negatively affected in the amount of COP 9 billion due to attacks on infrastructure. This includes repairs to transport systems, removal of illegal connections, restoration of oil pipeline operations and area decontamination.

3. Operating expenses

The decline inoperating expenses is mainly due to: i) increased rate of exploration success, which reduced spending on dry wells during the period, and ii) profit from the sale of minor assets corresponding to the Ronda Campos 2016.

4. Financial (non-operational) and other results

The change infinancial results in the second quarter of 2017 as compared to the second quarter of 2016 is presented as the net result of:

a) An increase in income from exchange rate spreads (+COP 59 billion): A larger profit was posted (+COP 434 billion) in the second quarter of 2017 versus the same period the previous year (+COP 375 billion). This increase is due to the impact of the 5.7% devaluation of the Colombian peso against the dollar in the net asset position in dollars in the second quarter of 2017, compared to the impact of the 3.5% appreciation of the Colombian peso against the dollar in the net liability position during the same period the previous year.

b) A decrease in net interest spending (+COP 156 billion): i) higher financial returns given the Company’s cash position, ii) lower interest expense on local loans indexed to the CPI and iii) positive effect from the decline in the exchange rate on interest associated with foreign currency debt.

c) Other items (+COP 14 billion).

Income fromshares in related companies and joint business ventures posted an increase primarily due to better results at Equion.

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Theeffective tax ratefor the second quarter of 2017 was 53.0%, versus 53.2% posted for the same quarter the previous year.

Table 8: Financial statement – Ecopetrol Business Group

A	B		C		D			E
COP Billion	June 30, 2017		Marzo 31, 2017		∆ ($)			∆ (%)
Current Assets		19,009		25,417		(6,408	)		(25.2	)%
Non Current Assets		96,685		95,081		1,604			1.7	%
Total Assets		115,694		120,498		(4,804	)		(4.0	)%
Current Liabilities		14,513		17,081		(2,568	)		(15.0	)%
Non-Current Liabilities		54,203		58,000		(3,797	)		(6.5	)%
Total Liabilities		68,716		75,081		(6,365	)		(8.5	)%
Equity		46,978		45,417		1,561			3.4	%
Total Liabilities and Equity		115,694		120,498		(4,804	)		(4.0	)%

5. Assets

The decline inassets is presented as the net effect of:

a) A decrease inother financial assets (portfolio of cash surplus investments) andcash equivalents (-COP 7.08 trillion) due largely to the early payoff of an international commercial bank loan in the amount of USD 1,925 million.

b) An increase indeferred income tax asset (+COP 938 billion) generated primarily by differences in the calculation of the income provision between tax and book items.

c) An increase inproperty, plant and equipment,natural resources and intangibles (+COP 832 billion), primarily due to: i) capital investments made during the second quarter, ii) the positive effect due to the conversion of assets from subsidiaries with functional currencies other than the Colombian peso and iii) offset by depreciation and amortization posted during the quarter.

d) An increase incommercial accounts and other accounts receivable (+COP 794 billion), primarily due to the increase in accounts receivable from the price stabilization fund for gasoline and diesel, and foreign clients.

e) Changes in other assets (-COP 293 billion).

6. Liabilities and Equity

The decline in totalliabilities is presented as the effect of:

a) A decrease inloans and financing(-COP 4.3 trillion), primarily as a result of the early payoff of the USD 1,925 million loan with the international commercial banking, partially offset by the valuation of our foreign currency debt expressed in COP resulting from the peso’s devaluation against the dollar during the quarter.

In the second quarter, the group’s debt level fell from COP 50.4 to COP 46.1 trillion. Total debt decrease by COP 6.1 trillion compared with the balance as of December 31, 2016. 86% of the debit is denominated in foreign-currency and 14% is denominated in local currency. USD 8.6 billion of the total foreign-currency debt constitute a natural-hedge financial instrument whose mark to market valuation affects the company´s net worth.

9

b) A decrease intaxes payable(-COP 1.4 trillion), largely due to the second-quarter payment of the income tax and the wealth tax.

c) A decrease incommercial accounts payable (-COP 593 billion), primarily a result of the dividend over 2016 earnings distributed in April 2017, partially offset by an increase in accounts payable during the second quarter, due to a higher level of operations.

d) Other changes in liabilities (-COP 57 billion).

The increase inEquitycorresponds to the combined effect of: i) quarterly earnings, ii) the profit on the conversion of assets and liabilities of subsidiaries denominated in functional currencies other than the Colombian peso, iii) partially offset by the loss due to exchange rate fluctuations on cash flow and net investment hedges.

7. Results by business segment

Table 9: Profit and loss statement – 2Q by segment

A	B			C			D			E			F			G			H			I			J			K
	E&P						Refining&Petrochem.						Transport.& Logistics						Eliminations						Ecopetrol Consolidated
COP Billion	2Q 2017			2Q 2016			2Q 2017			2Q 2016			2Q 2017			2Q 2016			2Q 2017			2Q 2016			2Q 2017			2Q 2016
Local Sales		3,391			1,920			5,291			4,594			2,545			2,571			(4,539	)		(2,971	)		6,688			6,114
Export Sales		5,120			4,826			1,342			1,332			-			-			1			(521	)		6,463			5,637
Sales		8,511			6,746			6,633			5,926			2,545			2,571			(4,538	)		(3,492	)		13,151			11,751
DD&A Costs		1,566			1,241			259			313			276			234			-			-			2,101			1,788
Variable Costs		3,179			2,789			5,667			4,825			149			146			(3,763	)		(2,713	)		5,232			5,047
Fixed Costs		1,818			1,551			425			294			356			419			(706	)		(752	)		1,893			1,512
Cost of Sales		6,563			5,581			6,351			5,432			781			799			(4,469	)		(3,465	)		9,226			8,347
Gross profit		1,948			1,165			282			494			1,764			1,772			(69	)		(27	)		3,925			3,404
Operating Expenses		250			467			389			376			88			57			(70	)		23			657			923
Operating Profit (Loss)		1,698			698			(107	)		118			1,676			1,715			1			(50	)		3,268			2,481
Financial Income (Loss)		208			(132	)		(225	)		(316	)		(120	)		27			-			55			(137	)		(366	)
Share of profit of companies		35			(13	)		7			8			(18	)		1			-			-			24			(4	)
		1,941			553			(325	)		(190	)		1,538			1,743			1			5			3,155			2,111
Provision for Income Tax		(938	)		(202	)		(91	)		(157	)		(643	)		(762	)		-			(1	)		(1,672	)		(1,122	)
Net Income (Loss) Consolidated		1,003			351			(416	)		(347	)		895			981			1			4			1,483			989
Non-controlling interests		-			-			1			-			(179	)		(202	)		-			-			(178	)		(202	)
Net income (Loss) attributable to owners of Ecopetrol		1,003			351			(415	)		(347	)		716			779			1			4			1,305			787
EBITDA		3,377			1,986			272			625			1,961			1,963			2			(52	)		5,612			4,522
EBITDA Margin		39.7	%		29.4	%		4.1	%		10.5	%		77.1	%		76.4	%		0.0	%		1.5	%		42.7	%		38.5	%

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Table 10: Profit and loss statement – 1H by segment

A	B			C			D			E			F			G			H			I			J			K
	E&P						Refining & Petrochem.						Transportation & Logistics						Eliminations						Ecopetrol Consolidated
COP Billion	1H 2017			1H 2016			1H 2017			1H 2016			1H 2017			1H 2016			1H 2017			1H 2016			1H 2017			1H 2016
Local Sales		6,476			3,754			10,650			8,681			5,042			5,700			(8,749	)		(5,989	)		13,419			12,146
Export Sales		10,133			8,610			2,970			2,536			-			-			-			(1,056	)		13,103			10,090
Sales		16,609			12,364			13,620			11,217			5,042			5,700			(8,749	)		(7,045	)		26,522			22,236
DD&A Costs		3,053			2,457			523			495			547			478			-			-			4,123			3,430
Variable Costs		6,069			5,419			11,516			8,915			264			261			(7,215	)		(5,242	)		10,634			9,353
Fixed Costs		3,453			3,158			807			653			762			887			(1,408	)		(1,688	)		3,614			3,010
Cost of Sales		12,575			11,034			12,846			10,063			1,573			1,626			(8,623	)		(6,930	)		18,371			15,793
Gross profit		4,034			1,330			774			1,154			3,469			4,074			(126	)		(115	)		8,151			6,443
Operating Expenses		736			1,268			751			941			224			305			(127	)		(151	)		1,584			2,363
Operating Profit (Loss)		3,298			62			23			213			3,245			3,769			1			36			6,567			4,080
Financial Income (Loss)		(523	)		(8	)		(465	)		(337	)		(168	)		(108	)		-			(49	)		(1,156	)		(502	)
Share of profit of companies		62			(42	)		11			12			(18	)		(1	)		-			-			55			(31	)
		2,837			12			(431	)		(112	)		3,059			3,660			1			(13	)		5,466			3,547
Provision for Income Tax		(1,406	)		(53	)		(201	)		(368	)		(1,303	)		(1,525	)		-			(1	)		(2,910	)		(1,947	)
Net Income (Loss) Consolidated		1,431			(41	)		(632	)		(480	)		1,756			2,135			1			(14	)		2,556			1,600
Non-controlling interests		-			-			1			3			(366	)		(453	)		-			-			(365	)		(450	)
Net income (Loss) attributable to owners of Ecopetrol		1,431			(41	)		(631	)		(477	)		1,390			1,682			1			(14	)		2,191			1,150
EBITDA		6,699			2,957			829			1,205			3,896			4,462			1			35			11,425			8,659
EBITDA Margin		40.3	%		23.9	%		6.1	%		10.7	%		77.3	%		78.3	%		0.0	%		-0.5	%		43.1	%		38.9	%

A. Exploration and Production

Table 11: Profit and Loss Statement – Exploration and Production

A	B			C			D			E			F			G			H			I
COP Billion	2Q 2017			2Q 2016			Cambio $			Cambio %			1H 2017			1H 2016			Cambio $			Cambio %
Local Sales		3,391			1,920			1,471			76.6	%		6,476			3,754			2,722			72.5	%
Export Sales		5,120			4,826			294			6.1	%		10,133			8,610			1,523			17.7	%
Total Sales		8,511			6,746			1,765			26.2	%		16,609			12,364			4,245			34.3	%
DD&A Costs		1,566			1,241			325			26.2	%		3,053			2,457			596			24.3	%
Variable Costs		3,179			2,789			390			14.0	%		6,069			5,419			650			12.0	%
Fixed Costs		1,818			1,551			267			17.2	%		3,453			3,158			295			9.3	%
Cost of Sales		6,563			5,581			982			17.6	%		12,575			11,034			1,541			14.0	%
Gross Profits		1,948			1,165			783			67.2	%		4,034			1,330			2,704			203.3	%
Operating Expenses		250			467			(217	)		(46.5	)%		736			1,268			(532	)		(42.0	)%
Operating Income		1,698			698			1,000			143.3	%		3,298			62			3,236			5,219.4	%
Financial Income (Loss)		208			(132	)		340			>100%			(523	)		(8	)		(515	)		6,437.5	%
Share of Profit of Companies		35			(13	)		48			>100%			62			(42	)		104			>100%
Income Before Income Tax		1,941			553			1,388			251.0	%		2,837			12			2,825			23,541.7	%
Income tax		(938	)		(202	)		(736	)		364.4	%		(1,406	)		(53	)		(1,353	)		2,552.8	%
Net Income Consolidated		1,003			351			652			185.8	%		1,431			(41	)		1,472			(3,590.2	)%
Non-Controlling Interests		-			-			-			0			-			-			-			0
Net Income (Attributable to Owners of Ecopetrol)		1,003			351			652			185.8	%		1,431			(41	)		1,472			>100%
EBITDA		3,377			1,986			1,391			70.0	%		6,699			2,957			3,742			126.5	%
EBITDA Margin		39.7	%		29.4	%		10.2	%					40.3	%		23.9	%		16.4	%

Exploration

After the first quarter’s exploratory successes on Colombia’s offshore with the Purple Angel-1 and Gorgon-1 wells, the second quarter saw a continuation of the exploratory campaign with drilling of the Siluro-1 well. On May 19, drilling activities were completed for this well, located in exploratory block RC-11, 42 km offshore the Guajira Offshore basin. The well achieved a planned depth of 2,042 meters without finding hydrocarbons. The information collected in this drilling contributes to knowledge of the Guajira Offshore Basin. Ecopetrol holds a 50% interest in the block, which is operated by Repsol (50)%.

11

Shortly after the end of the second quarter, on July 9, drilling of the Brama-1 prospect began, located in the Tayrona block, and it is estimated to be completed by the end of September. This well, operated by Petrobras (40)% in association with Ecopetrol (30)%, Repsol (20)% and Statoil (10)%, could confirm the commercial viability of the play proved by the discovery of the Orca well in 2014. In the second quarter of 2017 (August), it’s worth mentioning the initiation of drilling of the Molusco-1 well, located in block RC-9, being the first offshore well operated by Ecopetrol S.A. through its subsidiary Ecopetrol Costa Afuera ECAS (50)% and in partnership with ONGC (50)%.

In the Colombian onshore, after the announcement of the discovery of the Boranda well in March, we continue working on the maturing of projects to be drilled. We highlight progress in environmental viability management, as well as on the civil works and pre-drilling activities for the Lorito-1 and Trogón-1 wells (block CPO-9), in order to confirming the hydrocarbon potential of the Akacias (2013) and Nueva Esperanza (2014) discoveries in the same block.

Towards the end of July, Ecopetrol S.A. through its subsidiary Hocol S.A. began the drilling of the Bonifacio-1 well located on block Lla-65. In August we expected to initiate the drilling of the Lunera-1 well located on block VSM-9 and the seismic activities 2D in SN8 and SN18 blocks.

On the other side, in the area of Green Canyon (US Gulf of Mexico), on July 10 drilling was completed of the Warrior-2 well, operated by Anadarko (70)%, in association with Ecopetrol (30)%. This well confirmed the presence of hydrocarbons, the volume of which is being assessed.

Finally, as a result of Round 2.1 completed in June in Mexico, Ecopetrol, in a non-operating position, obtained blocks 6 and 8 located in the country’s southeast basins in association with Petronas and Pemex, respectively. Ecopetrol’s share of the two blocks corresponds to 50%. This negotiation is part of the strategy to diversify and improve the exploratory portfolio. It is believed that the contracts resulting from these deals will be signed in third quarter of 2017.

Production

Table 12: Gross Production* - Ecopetrol Business Group

A	B		C		D			E		F		G
mboed	2Q 2017		2Q 2016		∆ (%)			1H 2017		1H 2016		∆ (%)
Crude Oil		547.1		535.8		2.1	%		545.1		550.6		(1.0	)%
Natural Gas		108.8		110.8		(1.8	)%		110.2		117.7		(6.4	)%
Total Ecopetrol S.A.		655.9		646.6		1.4	%		655.3		668.3		(1.9	)%
Crude Oil		22.2		18.7		18.7	%		22.1		17.4		27.0	%
Natural Gas		5.4		0.6		800.0	%		5.1		0.6		750.0	%
Total Hocol		27.6		19.3		43.0	%		27.2		18.0		51.1	%
Crude Oil		11.2		12.6		(11.1	)%		11.4		12.6		(9.5	)%
Natural Gas		4.6		8.2		(43.9	)%		4.5		8.4		(46.4	)%
Total Equion**		15.8		20.8		(24.0	)%		15.9		21.0		(24.3	)%
Crude Oil		3.9		4.1		(4.9	)%		3.9		4.2		(7.1	)%
Natural Gas		1.1		1.2		(8.3	)%		1.0		1.2		(16.7	)%
Total Savia**		5.0		5.3		(5.7	)%		4.9		5.4		(9.3	)%
Crude Oil		10.0		2.6		284.6	%		9.3		2.7		244.4	%
Natural Gas		2.2		0.4		450.0	%		2.1		0.6		250.0	%
Total Ecopetrol America		12.2		3.0		306.7	%		11.4		3.3		245.5	%
Crude Oil		594.4		573.8		3.6	%		591.8		587.5		0.7	%
Natural Gas		122.1		121.2		0.7	%		122.9		128.5		(4.4	)%
Total Group's Production		717		695		3.1	%		715		716		(0.2	)%

* Gross production includes royalties and is prorated for Ecopetrol’s share in each company.

** Equión and Savia are included through the equity method.

Note: gas production includes liquids

12

In the second quarter, Ecopetrol S.A.’s production totaled 655.9 mboed, a 1.4% increase over the same period in 2016. These results are largely explained by the reception of the Rubiales and Cusiana fields, where we have succeeded in maintaining stable and safe operations since the third quarter of 2016, as well as by the resumption of investment in development and production that have offset the effect of the decline in some of the major fields, such as La Cira Infantas, Chichimene, Castilla and Rubiales. There is also a positive impact explained by the reopening of operations at Caño Sur and CPO 9, which were suspended in the second quarter of 2016, and the triggering of the high-price clauses at La Cira Infantas.

It is worth highlighting the Chichimene field, in which by managing the current production either with oil dilution schemes and maintenance of wells, we have been able to mitigate the production declining to just 2.4% in comparison to the second quarter of last year, in spite of the low investments.

In addition, to moderate the effect of the events restricting transport capacity on production, we have worked successfully to implement shipping alternatives and operational schemes such as the bi-directional operation of the Bicentenario pipeline.

In terms of the results of our production in subsidiaries and joint ventures, second-quarter 2017 production was 60.6 mboed, up 25% over the same period in 2016, explained largely by increases at Hocol and Ecopetrol America.

In Hocol, the increase was primarily due to the commissioning of the gas treatment plant for the Bonga-Mamey fields and the assignment of interests in fields such as Espinal, Rio Saldaña and Pulí by Ecopetrol S.A., in favor of Hocol, in 2017. For Ecopetrol America, the increase is due to the incorporation of Gunflint in the second half of 2016. This increase was partially offset by the production declines of Savia and Equión, which in turn were primarily due to the natural decline of the fields; particularly for Equión mainly upon completion of the Tauramena contract at Cusiana in July 2016 in favor of Ecopetrol S.A.

13

Projects to increase the Recovery Factor:

In the second quarter of 2017 we made progress in assessing the 12 recovery pilot projects currently in operation, achieving a total cumulative injection of 51 million barrels of water and 11 million barrels of enhanced water. As a result of these pilot projects, a cumulative total of 2.9 million barrels of oil were produced between 2014 and 2017. At Chichimene field we are continuing to execute the work to initiate air injection at the end of this year.

We also advanced in executing the expansion of the tertiary recovery project with cross-polymer technology in the Dina K field, managing the detail engineering, the purchasing and contracting processes and the required environmental and archeological permits. We currently expect to initiate well drilling in the fourth quarter of this year.

The Company has created a Project Maturing Center that will contribute to structuring and maturing projects. Priority has been given to the maturing of six expansion projects that seek to convert potential volumes into reserves: five water injection projects in the Chichimene, Llanito, Provincia, Nutria and Apiay-Suria fields, and one enhanced water injection project in the Yariguí field.

Table 13: Lifting cost - Ecopetrol Business Group

A	B		C		D			E	F		G		H			I	J
USD/Bl	2Q 2017		2Q 2016		% Var			Explanation	1H 2017		1H 2016		% Var			Explanation	% USD
Lifting cost		7.31		5.36		36.4	%	•Volume (-USD 0.19/Bl): Higher production of Hocol and Ecopetrol America • Cost (+USD 1.96/Bl): Higher cost of Ecopetrol, Hocol and Ecopetrol America.		6.99		5.10		37.1	%	• Volume (+USD 0.10/Bl): Lower production levels of Ecopetrol. • Cost (+USD 1.34/Bl):Higher cost of Ecopetrol, Hocol and Ecopetrol America.		16.0	%
TRM		2,919.6		2,994.7		-2.5	%	• Exchange rate (+USD 0.18/Bl): Lower  exchange rate of COP 75.12/USD.		2,921.0		3,121.9		-6.4	%	• Exchange rate (+USD 0.45/Bl): Lower exchange rate of COP 200.86 /USD.

The increase observed in the lifting cost between 2016 and 2017 is mainly explained by:

a) The execution of the total costs of the Rubiales field, owned 100% by Ecopetrol since the third quarter of 2016, in combination with a lower production property of Ecopetrol due to the increase in the percentage of royalties of the basic production from 20% to 32% once the association contract expired.

b) Resumption of activity in the main fields (higher number of interventions and well services) to maintain production levels.

c) Stabilization of costs’ execution with lower seasonality on a quarterly basis in 2017.

Financial Results for the E&P Segment

The production segment’s revenue in the second quarter of 2017 increased as compared to the second quarter of 2016 primarily due to the effect of the increase in crude basket prices favored by a better price spread, followed by higher sales volumes of crude and gas as a result of the increase in production, partially offset by the effect associated with the decline in the COP/USD average exchange rate had on exports.

The segment’s cost of sales rose as a result of: i) higher costs of crude purchases and naphtha imports due to the price increase, ii) higher cost of maintenance, processing materials, electricity and contracted services due to the receipt of the Rubiales and Cusiana fields starting in the third quarter of 2016, as well as the resumption of activity in several fields, iii) higher depreciation and amortization at Ecopetrol America Inc. due to the commissioning of the Gunflint field starting in August 2016 and at Ecopetrol S.A. due to lower proven reserves incorporated in 2016 versus 2015, and iv) higher transport costs due to the implementation of alternate shipping schemes as a result of restrictions in the Caño Limón pipeline. The above increases were partially offset by the accumulation of inventory at Ecopetrol S.A. due to limitations on extraction by oil pipeline.

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In terms of operating expenses, there was a reduction, mainly in exploratory expenses, as a result of lower recognition for dry wells and profit on the sale of minor fields associated with the 2016 Ronda Campos. The segment had an operating margin of 20.0%, versus a margin of 10.3% in 2016.

Net financial results posted a recovery explained largely by: i) profit on the COP/USD exchange rate given the segment’s asset position in dollars, ii) lower interest expense on loans, due to a decrease in the interest rate on local debt indexed to the CPI, iii) effect of the decline in the COP/USD exchange rate on interest associated with the foreign currency debt, and iv) higher financial returns on the segment’s cash position.

B. Midstream

Table 14: Profit and Loss Statement – Midstream

A	B			C			D			E			F			G			H			I
COP Billion	2Q 2017			2Q 2016			∆ ($)			∆ (%)			1H 2017			1H 2016			∆ ($)			∆ (%)
Local Sales		2,545			2,571			(26	)		(1.0	)%		5,042			5,700			(658	)		(11.5	)%
Export Sales		-			-			-			0.0	%		-			-			-			0.0	%
Sales		2,545			2,571			(26	)		(1.0	)%		5,042			5,700			(658	)		(11.5	)%
DD&A Costs		276			234			42			17.9	%		547			478			69			14.4	%
Variable Costs		149			146			3			2.1	%		264			261			3			1.1	%
Fixed Costs		356			419			(63	)		(15.0	)%		762			887			(125	)		(14.1	)%
Cost of Sales		781			799			(18	)		(2.3	)%		1,573			1,626			(53	)		(3.3	)%
Gross Profits		1,764			1,772			(8	)		(0.5	)%		3,469			4,074			(605	)		(14.9	)%
Operating Expenses		88			57			31			54.4	%		224			305			(81	)		(26.6	)%
Operating Income		1,676			1,715			(39	)		(2.3	)%		3,245			3,769			(524	)		(13.9	)%
Financial Income (Loss)		(120	)		27			(147	)		>100%			(168	)		(108	)		(60	)		55.6	%
Share of Profit of Companies		(18	)		1			(19	)		>100%			(18	)		(1	)		(17	)		1,700.0	%
Income Before Income Tax		1,538			1,743			(205	)		(11.8	)%		3,059			3,660			(601	)		(16.4	)%
Income tax		(643	)		(762	)		119			(15.6	)%		(1,303	)		(1,525	)		222			(14.6	)%
Net Income Consolidated		895			981			(86	)		(8.8	)%		1,756			2,135			(379	)		(17.8	)%
Non-Controlling Interests		(179	)		(202	)		23			(11.4	)%		(366	)		(453	)		87			(19.2	)%
Net Income (Attributable to Owners of Ecopetrol)		716			779			(63	)		(8.1	)%		1,390			1,682			(292	)		(17.4	)%
EBITDA		1,961			1,963			(2	)		(0.1	)%		3,896			4,462			(566	)		(12.7	)%
EBITDA Margin		77.1	%		76.4	%		0.7	%					77.3	%		78.3	%		(1.0	)%

Progress on key projects:

San Fernando – Monterrey: Crude pumping and extended tests for operational stabilization were initiated from the San Fernando station. Progress was made on the commissioning and it is estimated to begin tests for the stabilization of the diluent system. System operations are expected to start up in the third quarter of 2017.

Transportation of higher viscosity crudes: The transport of extra heavy crudes was initiated through the oil pipeline system from Apiay to Coveñas and the first shipments of heavy crude with viscosity greater than 500 Cst was achieved. Also, the installation of the dilution facilities at Coveñas was completed, which will allow us to deliver crudes under client’s density and viscosity specifications.

Table 15: Transported Volumes – Ecopetrol Business Group

A	B		C		D			E		F		G
mbod	2Q 2017		2Q 2016		∆ (%)			1H 2017		1H 2016		∆ (%)
Crude		828.3		868.7		(4.7	)%		816.8		910.1		(10.3	)%
Refined Products		273.4		257.9		6.0	%		269.6		260.2		3.6	%
Total		1,101.7		1,126.6		(2.2	)%		1,086.4		1,170.3		(7.2	)%

Crude transport by pipeline fell in the second quarter of 2017 primarily due to lower client inventories to be transported by the Transandino Oil Pipeline and restrictions in the Caño Limón system. Of the total transported by oil pipeline, approximately 66% corresponded to crude owned by Ecopetrol.

15

A leak in the system due to an illicit valve in the Caño Limón pipeline, forced to advance on a work plan. During the execution of these tasks, the Caño Limón system experimented other damages (illicit valves and attacks) which had to be attended and caused an extension of the work plan to an estimated period of two months. Despite the before mentioned, to ensure crude transportation from the Caño Limón field, since the second quarter a contingent plan was implemented by reversing the operating direction of the Bicentenario pipeline, pumping crude in the Banadía - Araguaney way, to move crude through Ocensa and/or Oleoducto de Colombia to the Coveñas port. This reversal allowed for the extraction of more than 1,600,000 barrels of crude from Caño Limón field.

On the other side, volumes transported by multi-product pipeline in the second quarter of 2017 increased primarily due to the elimination of some operating restrictions on the Pozos Colorados - Galán multi-product pipeline, raising its capacity from 110 mbd to 119 mbd. Approximately 18% of volumes transported by multi-product pipeline corresponded to products owned by Ecopetrol.

Table 16: Cost per Barrel Transported - Ecopetrol Business Group

A	B		C		D			E	F		G		H			I	J
USD/Bl	2Q 2017		2Q 2016		% Var			Explanation	1H 2017		1H 2016		% Var			Explanation	% USD
Transportation cost		3.46		3.85		-10.1	%	• Volume (+USD 0.48/Bl): Lower volumes transported due to lower production levels. • Cost (-USD 0.96/Bl):Lower operational maitenance costs .		3.52		3.63		-3.0	%	• Volume (+USD 0.41/Bl): Lower volumes transported due to lower production levels. • Cost (-USD 0.75/Bl): Lower operational maitenance costs.		8.0	%
TRM		2,919.6		2,994.7		-2.5	%	• Exchange rate (+USD 0.09/Bl): Lower exchange rate of COP 75.12/USD.		2,921.0		3,121.9		-6.4	%	• Exchange rate (+USD 0.23/Bl): Higher cost due to lower exchange rate of COP 200.86/USD.

Financial results for the Midstream segment

The midstream segment’s revenue for the second quarter of 2017 declined as compared to the second quarter of 2016 primarily due to the lower volumes transported in oil pipelines and the effect of the appreciation of the COP/USD average exchange rate on dollar fees.

The midstream segment’s cost of sales declined as a consequence of the ongoing program to optimize operating and maintenance costs, partially offsetting the increase in variable costs of processing materials and energy for the second quarter of 2017 associated with the start of transport of heavier crudes, and depreciation for the capitalization of major maintenance events.

Net financial income posted higher expenses compared to the same period the year before, primarily due to results associated with hedging transactions involving exchange rate derivatives and lower revenue from exchange rate spreads due to the decline in the segment’s net asset position.

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C. Downstream

Table 17: Profit and Loss Statement – Downstream

A	B			C			D			E			F			G			H			I
COP Billion	2Q 2017			2Q 2016			∆ ($)			∆ (%)			1H 2017			1H 2016			∆ ($)			∆ (%)
Local Sales		5,291			4,594			697			15.2	%		10,650			8,681			1,969			22.7	%
Export Sales		1,342			1,332			10			0.8	%		2,970			2,536			434			17.1	%
Total Sales		6,633			5,926			707			11.9	%		13,620			11,217			2,403			21.4	%
DD&A Costs		259			313			(54	)		(17.3	)%		523			495			28			5.7	%
Variable Costs		5,667			4,825			842			17.5	%		11,516			8,915			2,601			29.2	%
Fixed Costs		425			294			131			44.6	%		807			653			154			23.6	%
Cost of Sales		6,351			5,432			919			16.9	%		12,846			10,063			2,783			27.7	%
Gross Profits		282			494			(212	)		(42.9	)%		774			1,154			(380	)		(32.9	)%
Operating Expenses		389			376			13			3.5	%		751			941			(190	)		(20.2	)%
Operating Income		(107	)		118			(225	)		(190.7	)%		23			213			(190	)		(89.2	)%
Financial Income (Loss)		(225	)		(316	)		91			(28.8	)%		(465	)		(337	)		(128	)		38.0	%
Share of Profit of Companies		7			8			(1	)		(12.5	)%		11			12			(1	)		(8.3	)%
Income Before Income Tax		(325	)		(190	)		(135	)		71.1	%		(431	)		(112	)		(319	)		284.8	%
Income tax		(91	)		(157	)		66			(42.0	)%		(201	)		(368	)		167			(45.4	)%
Net Income Consolidated		(416	)		(347	)		(69	)		19.9	%		(632	)		(480	)		(152	)		31.7	%
Non-Controlling Interests		1			-			1			0			1			3			(2	)		(66.7	)%
Net Income (Attributable to Owners of Ecopetrol)		(415	)		(347	)		(68	)		19.6	%		(631	)		(477	)		(154	)		32.3	%
EBITDA		272			625			(353	)		(56.5	)%		829			1,205			(376	)		(31.2	)%
EBITDA Margin		4.1	%		10.5	%		(6.4	)%					6.1	%		10.7	%		(4.7	)%

Cartagena Refinery

Reficar achieved a total sales volume of 140 mbd at the close of the first half, 72 mbd of which correspond to domestic sales and the remaining 67 mbd to exports. Sales represented revenue of USD 634 million in the first quarter of the year and USD$ 722 million in the second quarter, an increase of 67% and 46%, respectively, over the same periods in 2016.

During June 2017 the largest load of the crude unit year to date was achieved, with 143.4 mbd, achieving a year-to-date average of 130 mbd, a 19% increase over the accumulated load for first half of 2016 (109 mbd).

In terms of the gross refining margin, Reficar experienced an increase of 12% between the first and second quarters of 2017, from USD 6.8 /Bl to USD 7.7 /Bl. The improvement is largely explained by progress in the process of stabilizing the refinery, which has increased its load, from 123 mbd in the first quarter of 2017 to 136 mbd in the second quarter of 2017, and consequently its utilization factor.

Year to date, gross margin was up 181% versus the same period in 2016, from USD 2.6 /Bl to USD 7.3 /Bl.

During the second quarter it was necessary to suspend the service of the alkylation and hydrocracking units, for the first unit in order to fix the failures found in some of the process’s equipment, and in the Hydrocracking unit to resolve an operational event. The alkylation unit resumed operations on July 22 and the hydrocracking unit is expected to resume activity in August.

At the close of the first half of the year, 28 tests were performed out of the 34 planned, representing progress of 82%. The stabilization process will be completed in the second half, as well as the individual tests and the global performance test pending.

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Barrancabermeja refinery

Table 18: Load, Utilization Factor and Production – Barrancabermeja Refinery

A	B			C			D			E			F			G
	2Q 2017			2Q 2016			∆ (%)			1H 2017			1H 2016			∆ (%)
Refinery runs* (mbod)		202.7			216.4			(6.3	)%		208.6			215.2			(3.1	)%
Utilization factor (%)		70.3	%		71.7	%		(1.9	)%		74.2	%		76.0	%		(2.3	)%
Production (mboed)		204.3			217.4			(6.0	)%		210.3			216.4			(2.8	)%

* Corresponds to volumes actually loaded, not those received.

Load, utilization factor and production declined in the second quarter of 2017 versus the same quarter of 2016, due to lesser availability of light and intermediate crudes and the general shutdown scheduled for the heavy oil train during June 2017.

Table 19: Refining Margin – Barrancabermeja Refinery

A

B

C

D

E

F

G

USD/Bl

2Q 2017

2Q 2016

∆ (%)

1H 2017

1H 2016

∆ (%)

Refining Margin

13.1

13.5

(2.8

)%

13.9

13.8

0.7

%

The refining margin declined between the second quarter of 2017 and the same period of 2016, primarily because of the higher price of the feedstock, in line with international crude prices; this impact was partially offset by a higher yield on diesel, resulting from the sustainability of operational changes that have given greater value to various refinery flows, such as light cycle oil (ALC) and fuel oil.

Table 20: Refining cash cost (not including Reficar) – Ecopetrol Business Group

A	B		C		D			E	F		G		H			I	J
USD/Bl	2Q 2017		2Q 2016		% Var			Explanation	1H 2017		1H 2016		% Var			Explanation	% USD
Refining operating cash cost		4.89		4.33		12.9	%	• Volume (+USD 0.31/Bl): Lower through-put in Barrancabermeja Refinery. • Cost (+USD 0.13/Bl): Higher operational costs due to different crude through-put.		4.69		3.92		19.6	%	• Volume (+USD 0.20/Bl): Lower through-put in Barrancabermeja refinery and Propilco. • Cost (+USD 0.27/Bl): Higher maintenance and operational costs due to a heavier crude oil diet.		19.0	%
TRM		2,919.6		2,994.7		-2.5	%	• Exchange rate (+USD 0.12/Bl): Lower exchange rate of COP 75.12/USD.		2,921.0		3,121.9		-6.4	%	• Exchange rate (+USD 0.30/Bl): Lower exchange rate of COP 200.86 /USD.

Financial results for the Downstream Segment

The downstream segment’s revenue for the second quarter of 2017 as compared to the second quarter of 2016 increased primarily due to better product sale prices, in line with international price performance, and higher yields on high-value products (principally diesel and gasoline) at the Barrancabermeja and Cartagena refineries.

The segment’s cost of sales increased as a result of increases in costs related to operating and process materials, maintenance and contracted services associated with shutdowns at refining units due to the Cartagena Refinery stabilization process. In addition, costs of sales increased due to the higher prices of raw materials.

The segment’s operating expenses increased primarily due to lower recovery of provisions, which was partially offset by a decline in expenses involving startup studies and stabilization of projects from the effect of the commissioning and stabilization of the Cartagena Refinery.

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The segment’s net financial income posted a recovery explained largely by: i) profit from the exchange rate spread given the devaluation occurring during the period, and ii) lower interest expense from the effect of the decline in the average exchange rate on interest associated with the foreign-currency debt.

8. Cost and Expense Reduction Initiatives

As a result of the implementation of the identified actions, in the first half of the year the Ecopetrol Business Group accumulated structural efficiencies totaling COP 516 billion, representing some 70% of the annual goal of COP 740 billion. This goal is leveraged primarily on the efforts related to Upstream, Downstream, Midstream, Commercial Management and Supplies and Services.

During the second quarter savings for COP 366 billion were obtained, explained by:

Table 21: 2017 Main Structural Saving Initiatives

A	B
COP Billion	2Q 2017
Higher revenues and margins at refineries		87
Optimization of drilling and maintenance cost of wells		69
Improved commercial strategy		56
Heavy crude oil dilution		52
Lower O&M cost in Midstream companies		36
Energy efficiency  (energy surplus sales and electric reliability)		16
Savings on staff areas, maintenance of facilities  and other		50
Total		366

9. Investments

Accumulated investments in the first half of 2017 for the Ecopetrol Business Group totaled USD 875 million (71% at Ecopetrol S.A. and 29% at affiliates and subsidiaries).

Table 22: Investments by segment - Ecopetrol Business Group

A	B		C		D		E
1H 2017 - USD million	Ecopetrol S.A.		Affiliates and Subsidiaries		Total		Share
Production		505.6		46.7		552.3		63.1	%
Refining, Petrochemicals and Biofuels		10.1		70.5		80.6		9.2	%
Exploration		101.8		55.5		157.3		18.0	%
Transportation		1.0		83.3		84.3		9.6	%
Corporate		0.8		0.0		0.8		0.1	%
Total		619.3		256.0		875.3		100.0	%

Production: The investment in the Castilla field is noteworthy, since during the quarter it had additional drilling equipment reaching 5 drills.

Exploration: Execution corresponds to activities in the Colombian offshore (Gorgón-1, Purple Angel-1, Siluro-1 and Brama-1 wells). Additionally, pre-drilling activities also made significant progress, particularly with respect to social viability in the Colombian onshore. Hocol saw significant progress in two of its seismic programs located in the Lower Magdalena Valley.

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Downstream, Petrochemicals and Bio-fuels and Midstream:Progress was made on operational continuity investments and the Ocensa P135 project closure.

The execution of 2017 investments is estimated at a range between USD 2.6 and USD 2.9 billion, largely due to the renegotiation of obligations with the National Hydrocarbons Agency (ANH), which will not be carried out this year, and for a larger period of time necessary for the maturity of certain production projects.

II. Organizational Consolidation and Corporate Responsibility (Ecopetrol S.A.)

1. Organizational Consolidation

Table 23: HSE (Health, Safety and Environmental) Performance

A	B		C		D		E
HSE Index*	2Q 2017		2Q 2016		1H 2017		1H 2016
Accident Frequency Index (accidents per million labor hours)		0.65		0.60		0.85		0.86
Environmental Incidents		4		1		8		1

*The results of the indicators are subject to change after the close of the quarter as some accidents and incidents are reclassified

according to the final result of the investigations.

Significant milestones:

· Synergies were achieved between Ecopetrol S.A. and its subsidiaries in order to share and standardize HSE practices and improve the Group’s HSE performance.

· Fulfillment of the pre-audit process for certification on Industrial Safety, Occupational Health and Environmental Management Systems (OHSAS 18001 and ISO 14001).

2. Corporate Responsibility

Social Investment:

In the second quarter of 2017 funds were invested for social investment projects valued at COP 2,033 million, versus COP 1,242 million in the same period of 2016. 2017 funds were allocated to Education and Culture and Institutional Development programs. Spending on social projects during the first half of 2017 totaled COP 4,617 million.

III. Presentation on Quarterly Results

Ecopetrol management will offer two online presentations to review the results for the second quarter of 2017:

Spanish	English
August 9, 2017	August 9, 2017
8:30 a.m. Bogotá	10:00 a.m. Bogotá
9:30 a.m. New York	11:00 a.m. New York

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The Internet broadcast will be available on the Ecopetrol website:www.ecopetrol.com.co

Please check that your browser allows for normal display of the online presentation. We recommend the latest versions of Internet Explorer, Google Chrome and Mozilla Firefox.

Statements on future projections

This press release may contain statements on future projections related to Ecopetrol’s business prospects, estimates of operating and financial results, and growth. These are projections, and as such, are based solely on management’s expectations of the company’s future and its continuous access to capital to finance the company’s business plan. These statement on the future basically depend upon changes in market conditions, government regulations, competitive pressures, the performance of the Colombian economy and industry, and other factors; therefore, they are subject to change without prior notice.

Contact Information:

Head of Capital Markets

María Catalina Escobar

Telephone: +571-234-5190 - Email:investors@ecopetrol.com.co

Media Relations (Colombia)

Jorge Mauricio Tellez

Telephone: + 571-234-4329 - Email:mauricio.tellez@ecopetrol.com.co

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IV. Ecopetrol Business Group Annexes

Table 1: Gross Production by Region – Ecopetrol Business Group Net Share

A	B		C		D			E		F		G
mboed	2Q 2017		2Q 2016		∆ (%)			1H 2017		1H 2016		∆ (%)
La Cira-Infantas		20.9		18.6		12.4	%		21.7		18.9		14.8	%
Casabe		16.3		18.5		(11.9	)%		16.4		18.9		(13.2	)%
Yarigui		15.4		17.7		(13.0	)%		15.6		18.1		(13.8	)%
Other		30.7		32.5		(5.5	)%		30.9		34.1		(9.4	)%
Total Central Region		83.3		87.3		(4.6	)%		84.6		90.0		(6.0	)%
Castilla		115.4		123.2		(6.3	)%		114.6		125.8		(8.9	)%
Chichimene		72.4		74.2		(2.4	)%		70.7		76.1		(7.1	)%
Cupiagua		35.3		40.2		(12.2	)%		38.2		42.6		(10.3	)%
Cusiana (2)		36.1		0.0		N/A			35.6		0.0		N/A
Other (3)		19.6		15.1		29.8	%		18.5		17.2		7.6	%
Total Orinoquía Region		278.8		252.7		10.3	%		277.6		261.7		6.1	%
Huila Area (4)		3.2		8.1		(60.5	)%		3.2		8.4		(61.9	)%
San Francisco Area		6.3		6.7		(6.0	)%		6.4		6.9		(7.2	)%
Tello Area		4.2		4.9		(14.3	)%		4.3		4.9		(12.2	)%
Other		11.9		8.8		35.2	%		12.4		9.2		34.8	%
Total South Region		25.6		28.5		(10.2	)%		26.3		29.4		(10.5	)%
Rubiales (1)		115.0		0.0		N/A			116.8		0.0		N/A
Caño Sur (3)		1.3		0.0		N/A			1.3		0.0		N/A
Total East Region		116.3		0.0		N/A			118.1		0.0		N/A
Rubiales (1)		0.0		79.9		(100.0	)%		0.0		83.2		(100.0	)%
Cusiana (2)		0.0		29.9		(100.0	)%		0.0		30.1		(100.0	)%
Guajira		27.5		32.3		(14.9	)%		27.1		35.9		(24.5	)%
Caño Limón		25.1		26.9		(6.7	)%		21.5		27.1		(20.7	)%
Piedemonte		29.3		30.4		(3.6	)%		29.0		30.7		(5.5	)%
Quifa		19.1		20.7		(7.7	)%		19.2		21.2		(9.4	)%
Nare		13.4		16.2		(17.3	)%		13.8		16.6		(16.9	)%
Other		37.5		41.8		(10.3	)%		38.1		42.4		(10.1	)%
Total Associated Operations		151.9		278.1		(45.4	)%		148.7		287.2		(48.2	)%
Total Ecopetrol S.A.		655.9		646.6		1.4	%		655.3		668.3		(1.9	)%
Direct Operation		506.5		368.5		37.4	%		509.4		384.3		32.6	%
Associated Operation		149.3		278.1		(46.3	)%		145.9		283.9		(48.6	)%
Ocelote (**)		13.9		11.5		20.9	%		14.1		10.7		31.8	%
Other		13.7		7.8		75.6	%		13.1		7.3		79.5	%
Total Hocol		27.6		19.3		43.0	%		27.2		18.0		51.1	%
Piedemonte		14.9		15.5		(3.9	)%		14.7		15.5		(5.2	)%
Tauramena/Rio Chitamena		0.2		4.1		(95.1	)%		0.2		4.2		(95.2	)%
Other		0.7		1.2		(41.7	)%		1.0		1.3		(23.1	)%
Total Equión*		15.8		20.8		(24.0	)%		15.9		21.0		(24.3	)%
Lobitos		2.3		2.2		4.5	%		2.3		2.2		4.5	%
Peña Negra		1.7		2.0		(15.0	)%		1.6		2.1		(23.8	)%
Other		1.0		1.1		(9.1	)%		1.0		1.1		(9.1	)%
Total Savia*		5.0		5.3		(5.7	)%		4.9		5.4		(9.3	)%
Dalmatian		1.4		1.5		(6.7	)%		1.3		1.7		(23.5	)%
K2		2.5		1.5		66.7	%		2.4		1.6		50.0	%
Gunflint		8.3		0.0		N/A			7.7		0.0		N/A
Total Ecopetrol America Inc.		12.2		3.0		306.7	%		11.4		3.3		245.5	%
Total Affiliates		60.6		48.4		25.2	%		59.4		47.7		24.5	%
Total Group's Production		716.5		695.0		3.1	%		714.7		716.0		(0.2	)%

*Equión and Savia do not consolidate within the Ecopetrol Business Group

** Ocelote: Since Q1 2017, the production contract Guarrojo includes, in addition to Ocelote, the Pintado and Guarrojo fields.

(1) Rubiales: Up to the close of the first half of 2016, this field belonged to the Vice-presidency of Assets with Partners. As of July 1, it has belonged to the new Eastern Region Vice-presidency.

(2) Cusiana: Cusiana: Up to the close of the first half of 2016, this field belonged to the Vice-presidency of Assets with Partners. As of July 1, it has belonged to the Orinoquia Region Vice-presidency.

(3) Caño Sur: Up to the close of the first half of 2016, this field belonged to the Orinoquia Region Vice-presidency. As of July 1, it has belonged to the new Eastern Region Vice-presidency.

(4) Huila: Some assets were reclassified and are reported under Other Fields for the Southern Region.

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Table 2: Gross Production - Ecopetrol Business Group (by crude type)

A	B		C		D			E		F		G
mbod	2Q 2017		2Q 2016		∆ (%)			1H 2017		1H 2016		∆ (%)
Light		67.6		63.0		7.3	%		67.2		64.2		4.7	%
Medium		176.3		186.1		(5.3	)%		174.7		188.0		(7.1	)%
Heavy		350.5		324.7		7.9	%		349.9		335.3		4.4	%
Total		594.4		573.8		3.6	%		591.8		587.5		0.7	%

Table 3: Net Production* - Ecopetrol Business Group**

A	B		C		D			E		F		G
mboed	2Q 2017		2Q 2016		∆ (%)			1H 2017		1H 2016		∆ (%)
Crude Oil		504.9		495.0		2.0	%		501.0		506.6		(1.1	)%
Natural Gas***		104.1		102.9		1.2	%		104.7		109.1		(4.0	)%
Total		609.0		597.9		1.9	%		605.7		615.7		(1.6	)%

* Net production does not include royalties and is prorated for Ecopetrol’s equity interest in each company.

** Equión and Savia are incorporated through the equity method.

*** Gas production includes liquids.

23

Table 4: Profit and Loss Statement – Ecopetrol Business Group

A	B			C			D			E
COP Billion	2Q 2017			2Q 2016			1S 2017			1S 2016
Revenue
Local Sales		6,688			6,114			13,419			12,146
Export Sales		6,463			5,637			13,103			10,090
Total Revenue		13,151			11,751			26,522			22,236
Cost of Sales
Depreciation, Amortization and Depletion		2,101			1,788			4,123			3,430
Variable cost DD&A		1,530			1,208			2,982			2,397
Fixed cost depreciation		571			580			1,141			1,033
Variable Costs		5,232			5,047			10,634			9,353
Imported products		2,796			3,099			6,325			5,649
Purchase of Hydrocarbons		1,571			1,281			3,263			2,213
Hydrocarbon Transportation Services		199			216			363			450
Inventories and others		666			451			683			1,041
Fixed Costs		1,893			1,512			3,614			3,010
Contracted Services		609			469			1,124			1,054
Maintenance		504			418			956			726
Labor Costs		441			377			856			659
Other		339			248			678			571
Total Cost of Sales		9,226			8,347			18,371			15,793
Gross Income		3,925			3,404			8,151			6,443
Operating Expenses		657			923			1,584			2,363
Administration expenses		580			666			1,480			2,022
Exploration and Projects expenses		77			257			104			341
Operating Income		3,268			2,481			6,567			4,080
Finance result, net		(137	)		(366	)		(1,156	)		(502	)
Foreign exchange, net		434			375			(15	)		1,000
Interest, net		(393	)		(549	)		(928	)		(1,147	)
Financial Income/Loss		(178	)		(192	)		(213	)		(355	)
Share of profit of companies		24			(4	)		55			(31	)
Income before income tax		3,155			2,111			5,466			3,547
Income Tax		(1,672	)		(1,122	)		(2,910	)		(1,947	)
Net Income Consolidated		1,483			989			2,556			1,600
Non-controlling interest		(178	)		(202	)		(365	)		(450	)
Net income attributable to Owners of Ecopetrol		1,305			787			2,191			1,150

24

Table 5: Financial Statement / Balance Sheet – Ecopetrol Business Group

A	B		C		D
COP Billion	June 30, 2017		Marzo 31, 2017		∆ (%)
Current assets
Cash and cash equivalents		6,246		8,165		(23.5	)%
Trade and other receivables		4,638		3,880		19.5	%
Inventories		4,269		4,330		(1.4	)%
Current tax assets		777		840		(7.5	)%
Financial assets held for sale		56		52		7.7	%
Other financial assets		1,885		7,009		(73.1	)%
Other assets		1,043		1,025		1.8	%
		18,914		25,301		(25.2	)%
Non-current assets held for sale		95		116		(18.1	)%
Total current assets		19,009		25,417		(25.2	)%
Non-current assets
Investments in associates and joint ventures		1,326		1,476		(10.2	)%
Trade and other receivables		781		745		4.8	%
Property, plant and equipment		61,274		60,467		1.3	%
Natural and environmental resources		21,562		21,521		0.2	%
Intangibles		253		269		(5.9	)%
Deferred tax assets		7,458		6,520		14.4	%
Other financial assets		2,330		2,362		(1.4	)%
Other non-current assets		1,701		1,721		(1.2	)%
Total non-current assets		96,685		95,081		1.7	%
Total assets		115,694		120,498		(4.0	)%
Liabilities
Current liabilities
Loans and borrowings		3,920		4,095		(4.3	)%
Trade and other payables		6,184		6,799		(9.0	)%
Provision for employees benefits		1,867		1,994		(6.4	)%
Current tax liabilities		1,497		2,915		(48.6	)%
Accrued liabilities and provisions		706		817		(13.6	)%
Other liabilities		339		421		(19.5	)%
		14,513		17,041		(14.8	)%
Liabilities related to non-current assets held for sale		-		40		(100.0	)%
Total current liabilities		14,513		17,081		(15.0	)%
Non-current liabilities
Loans and borrowings		42,194		46,316		(8.9	)%
Trade and other payables		44		22		100.0	%
Provision for employees benefits		3,650		3,790		(3.7	)%
Deferred tax liabilities		2,616		2,410		8.5	%
Accrued liabilities and provisions		5,259		5,187		1.4	%
Other long-term liabilities		440		275		60.0	%
Total non-current liabilities		54,203		58,000		(6.5	)%
Total liabilities		68,716		75,081		(8.5	)%
Equity
Equity attributable to owners of the Company		45,133		43,793		3.1	%
Non-controlling interests		1,845		1,624		13.6	%
Total Equity		46,978		45,417		3.4	%
Total liabilities and equity		115,694		120,498		(4.0	)%

25

Table 6: Comprehensive Income Statement – Ecopetrol Business Group

A	B			C			D			E
COP Billion	2Q 2017			2Q 2016			1S 2017			1S 2016
Net income consolidated		1,483			989			2,556			1,600
Components of other comprehensive income, net of taxes
Accumulated foreign currency translation		952			(676	)		189			(1,679	)
Cash flow hedges for future exports		(437	)		591			2			1,102
Hedge of a net investment in foreign operation		(570	)		207			(174	)		207
Measurement of defined benefit obligation		113			354			194			229
Others		23			(28	)		21			137
Total other comprehensive income		81			448			232			(4	)
Total Comprehensive income		1,564			1,437			2,788			1,596
Attributable to:
Shareholders		1,345			1,237			2,408			1,184
Non-controlling interests		219			200			380			412
Total Comprehensive income		1,564			1,437			2,788			1,596

26

Table 7: Cash Flow Statement – Ecopetrol Business Group

A	B			C			D			E
COP Billion	2Q 2017			2Q 2016			1S 2017			1S 2016
Cash flow provided by operating activities:
Net income attributable to Owners of Ecopetrol S.A.		1,305			787			2,191			1,150
Adjustments to reconcile net income to cash provided by operating activities:
Non-controlling interests		178			202			365			450
Income tax		1,672			1,122			2,910			1,947
Depreciation, depletion and amortization		2,136			1,863			4,199			3,576
Foreign exchange (gain) loss		(434	)		(375	)		15			(1,000	)
Finance costs recognised in profit or loss		659			801			1,483			1,614
Dry wells		30			76			33			154
Loss (gain) on disponsal of non-current assets		48			7			33			30
Impairment of assets		(3	)		(47	)		54			45
Fair value (gain) on financial assets valuation		(249	)		(19	)		(102	)		7
Loss (gain) on  assets for sale		(167	)		12			(167	)		13
(Gain) loss on share of profit of associates and joint ventures		(24	)		4			(55	)		31
Realized foreign exchange cash flow hedges		119			265			253			399
Net changes in operating assets and liabilities		(727	)		(889	)		(1,539	)		(450	)
Income tax paid		(3,048	)		(3,036	)		(3,722	)		(3,390	)
Cash provided by operating activities		1,495			773			5,951			4,576
Cash flows from investing activities:
Investment in property, plant and equipment		(625	)		(611	)		(909	)		(1,454	)
Investment in natural and environmental resources		(1,100	)		(318	)		(1,477	)		(965	)
Payments for intangibles		(7	)		(26	)		(29	)		(36	)
Proceeds from sales of equity instruments measured at fair value		-			725			-			725
Proceeds from sales of assets held for sale		154			-			155			-
(Purchases) sales of other financial assets		5,836			(1,130	)		2,894			(1,177	)
Interest received		86			95			192			164
Dividends received		249			31			249			31
Proceeds from sales of assets		9			2			37			87
Net cash provided (used) in investing activities		4,602			(1,232	)		1,112			(2,625	)
Cash flows from financing activities:
Proceeds (repayment of) from borrowings		(6,492	)		1,626			(6,584	)		2,414
Interest paid		(718	)		(647	)		(1,431	)		(1,243	)
Dividends paid		(1,023	)		(47	)		(1,137	)		(1,105	)
Net cash used  (provided) in financing activities		(8,233	)		932			(9,152	)		66
Exchange difference in cash and cash equivalents		217			(191	)		(75	)		(649	)
Net (decrease) increase in cash and cash equivalents		(1,919	)		282			(2,164	)		1,368
Cash and cash equivalents at the beginning of the period		8,165			7,636			8,410			6,550
Cash and cash equivalents at the end of the period		6,246			7,918			6,246			7,918

27

Table 8: EBITDA Reconciliation – Ecopetrol Business Group

A	B		C		D		E
COP Billion	2Q 2017		2Q 2016		1H 2017		1H 2016
RECONCILIATION NET INCOME TO EBITDA
Net income attributable to Ecopetrol's owners		1,305		787		2,191		1,150
+ Depreciation, depletion and amortization		2,136		1,863		4,199		3,576
+/- Impairment of non-current assets		5		3		9		59
+/- Finance results, net		137		366		1,156		502
+ Income tax		1,672		1,122		2,910		1,947
+ Other taxes		179		179		595		975
+/-Non-controlling interest		178		202		365		450
CONSOLIDATED EBITDA		5,612		4,522		11,425		8,659

Table 9: EBITDA Reconciliation by Segment – (2Q 2017)

A	B			C			D		E		F
COP Billion	E&P			Refining & Petrochemicals			Transportation and Logistics		Eliminations		Consolidated
RECONCILIATION NET INCOME TO EBITDA
Net income attributable to Ecopetrol's owners		1,003			(415	)		716		1		1,305
+ Depreciation, depletion and amortization		1,572			285			278		1		2,136
+/- Impairment of non-current assets		-			4			1		-		5
+/- Finance results, net		(208	)		225			120		-		137
+ Income tax		938			91			643		-		1,672
+ Other taxes		72			83			24		-		179
+/-Non-controlling interest		-			(1	)		179		-		178
CONSOLIDATED EBITDA		3,377			272			1,961		2		5,612

Table 10: EBITDA Reconciliation by Segment (2Q 2016)

A	B			C			D			E			F
COP Billion	E&P			Refining & Petrochemicals			Transportation and Logistics			Eliminations			Consolidated
RECONCILIATION NET INCOME TO EBITDA
Net income attributable to Ecopetrol's owners		351			(347	)		779			4			787
+ Depreciation, depletion and amortization		1,254			375			236			(2	)		1,863
+/- Impairment of non-current assets		(1	)		4			-			-			3
+/- Finance results, net		132			316			(27	)		(55	)		366
+ Income tax		202			157			762			1			1,122
+ Other taxes		48			120			11			-			179
+/-Non-controlling interest		-			-			202			-			202
CONSOLIDATED EBITDA		1,986			625			1,963			(52	)		4,522

Table 11: EBITDA Reconciliation by Segment – (1H 2017)

A	B		C			D		E		F
COP Billion	E&P		Refining & Petrochemicals			Transportation and Logistics		Eliminations		Consolidated
RECONCILIATION NET INCOME TO EBITDA
Net income attributable to Ecopetrol's owners		1,431		(631	)		1,390		1		2,191
+ Depreciation, depletion and amortization		3,065		581			553		-		4,199
+/- Impairment of non-current assets		1		7			1		-		9
+/- Finance results, net		524		464			168		-		1,156
+ Income tax		1,406		201			1,303		-		2,910
+ Other taxes		272		208			115		-		595
+/-Non-controlling interest		-		(1	)		366		-		365
CONSOLIDATED EBITDA		6,699		829			3,896		1		11,425

28

Table 12: EBITDA Reconciliation by Segment (1H 2016)

A	B			C			D		E			F
COP Billion	E&P			Refining & Petrochemicals			Transportation and Logistics		Eliminations			Consolidated
RECONCILIATION NET INCOME TO EBITDA
Net income attributable to Ecopetrol's owners		(41	)		(477	)		1,682		(14	)		1,150
+ Depreciation, depletion and amortization		2,471			622			483		-			3,576
+/- Impairment of non-current assets		(2	)		61			-		-			59
+/- Finance results, net		9			337			108		48			502
+ Income tax		53			368			1,525		1			1,947
+ Other taxes		467			297			211		-			975
+/-Non-controlling interest		-			(3	)		453		-			450
CONSOLIDATED EBITDA		2,957			1,205			4,462		35			8,659

Table 13: Long-Term Debt – Ecopetrol Business Group*

A	B		C		D
Company	Denominated in U.S. Dollars		Denominated in Colombian Pesos**		Total
Ecopetrol		9,884		1,131		11,015
Reficar		2,666		-		2,666
Bicentenario		-		481		481
ODL		-		228		228
Bioenergy		-		153		153
Ocensa		500		-		500
Total		13,050		1,993		15,043

*Nominal value of the debt as of June 30, 2017, not including accrued interest.

**Figures expressed in millions of dollar-equivalents with the exchange rate as of June 30, 2017.

V. Ecopetrol S.A. and principal companies consolidating within the Ecopetrol Business Group Annexes

Following are the Income Statement and Financial Statement for Ecopetrol S.A. (not consolidated) and the most representative subsidiaries in each segment.

29

1. Ecopetrol S.A:

Table 14: Profit and Loss Statement

A	B			C			D			E
COP Billion	2Q 2017			2Q 2016			1H 2017			1H 2016
Local Sales		5,766			4,335			11,384			8,634
Export Sales		5,174			5,172			10,256			9,025
Total Sales		10,940			9,507			21,640			17,659
Variable Costs		6,343			5,685			12,489			10,904
Fixed Costs		2,254			1,980			4,314			4,071
Cost of Sales		8,597			7,665			16,803			14,975
Gross Profits		2,343			1,842			4,837			2,684
Operating Expenses		351			561			926			1,400
Operating Income		1,992			1,281			3,911			1,284
Financial Income (Loss)		159			(279	)		(766	)		(211	)
Share of profit of companies		165			216			535			540
Income before income tax		2,316			1,218			3,680			1,613
Income Tax		(1,011	)		(431	)		(1,489	)		(463	)
Net Income		1,305			787			2,191			1,150
EBITDA		3,525			2,676			7,138			4,435
EBITDA Margin		32.2	%		28.1	%		33.0	%		25.1	%

30

Table 15: Financial Statement - Balance Sheet

A	B		C		D
COP Billion	June 30, 2017		Marzo 31, 2017		∆ (%)
Current assets
Cash and cash equivalents		3,660		4,721		(22.5	)%
Trade and other receivables		4,836		4,123		17.3	%
Inventories		2,750		2,694		2.1	%
Current tax assets		334		366		(8.7	)%
Financial assets held for sale		56		52		7.7	%
Other financial assets		5,441		10,249		(46.9	)%
Other assets		715		760		(5.9	)%
		17,792		22,965		(22.5	)%
Non-current assets held for sale		8		30		(73.3	)%
Total current assets		17,800		22,995		(22.6	)%
Non-current assets
Investments in associates and joint ventures		29,336		27,887		5.2	%
Trade and other receivables		3,152		3,121		1.0	%
Property, plant and equipment		20,458		20,817		(1.7	)%
Natural and environmental resources		17,781		17,786		(0.0	)%
Intangibles		153		165		(7.3	)%
Deferred tax assets		4,744		3,900		21.6	%
Other financial assets		1,982		2,010		(1.4	)%
Other non-current assets		1,833		1,828		0.3	%
Total non-current assets		79,439		77,514		2.5	%
Total assets		97,239		100,509		(3.3	)%
Liabilities
Current liabilities
Loans and borrowings		2,447		2,567		(4.7	)%
Trade and other payables		4,749		5,387		(11.8	)%
Provision for employees benefits		1,839		1,964		(6.4	)%
Current tax liabilities		1,085		938		15.7	%
Accrued liabilities and provisions		591		611		(3.3	)%
Other liabilities		-		-		0
		10,711		11,467		(6.6	)%
Liabilities related to non-current assets held for sale		-		40		(100.0	)%
Total current liabilities		10,711		11,507		(6.9	)%
Non-current liabilities
Loans and borrowings		31,612		35,637		(11.3	)%
Trade and other payables		-		-		0
Provision for employees benefits		3,650		3,790		(3.7	)%
Deferred tax liabilities		1,674		1,445		15.8	%
Accrued liabilities and provisions		4,357		4,288		1.6	%
Other long-term liabilities		102		50		104.0	%
Total non-current liabilities		41,395		45,210		(8.4	)%
Total liabilities		52,106		56,717		(8.1	)%
Equity
Equity attributable to owners of the Company		45,133		43,792		3.1	%
Non-controlling interests		-		-		0
Total Equity		45,133		43,792		3.1	%
Total liabilities and equity		97,239		100,509		(3.3	)%

31

2. Principal companies consolidating within the Ecopetrol Business Group

Table 16: Essentia (Propilco) – Sales Volumes

A	B		C		D		E
Sales Volume (tons)	2Q 2017		2Q 2016		1H 2017		1H 2016
Polypropylene		102,936		107,651		211,609		118,856
Masterbatch		2,522		3,473		5,240		4,427
Polyethylene		8,124		6,406		15,858		6,026
Total		113,582		117,530		232,707		129,309

Table 17: Reficar – Sales Volumes

A	B		C		D		E
Sales Volume (mboed)	2Q 2017		2Q 2016		1H 2017		1H 2016
Local		88.6		48.5		72.5		47.9
International		61.7		85.1		67.4		75.7
Total		150.3		133.5		139.9		123.6

32

Table 18: Financial Statement - Profit and Loss Statement

A	B			C			D			E			F			G			H			I			J			K			L			M			N			O			P			Q			R			S			T			U
	HOCOL												AMERICA INC												PROPILCO												REFICAR												CENIT
COP Billion	2Q 2017			2Q 2016			1H 2017			1H 2016			2Q 2017			2Q 2016			1H 2017			1H 2016			2Q 2017			2Q 2016			1H 2017			1H 2016			2Q 2017			2Q 2016			1H 2017			1H 2016			2Q 2017			2Q 2016			1H 2017			1H 2016
Local Sales		120			65			228			158			14			46			26			77			221			163			397			359			1,442			708			2,341			1,374			990			982			2,005			2,079
Export Sales		213			119			401			280			138			24			249			49			235			282			528			600			683			768			1,644			1,342			-			-			-			-
Total Sales		333			184			629			438			152			70			275			126			456			445			925			959			2,125			1,476			3,985			2,716			990			982			2,005			2,079
Variable Costs		154			56			275			250			205			46			367			103			374			309			743			665			1,978			1,510			3,571			2,700			65			68			115			95
Fixed Costs		73			68			151			135			48			8			78			21			28			24			58			50			284			198			573			332			339			444			726			793
Cost of Sales		227			124			426			385			253			54			445			124			402			333			801			715			2,262			1,708			4,144			3,032			404			512			841			888
Gross Profits		106			60			203			53			(101	)		16			(170	)		2			54			112			124			244			(137	)		(232	)		(159	)		(316	)		586			470			1,164			1,191
Operating Expenses		35			48			52			76			22			33			43			65			40			38			81			82			222			212			422			501			11			25			92			167
Operating Income		71			12			151			(23	)		(123	)		(17	)		(213	)		(63	)		14			74			43			162			(359	)		(444	)		(581	)		(817	)		575			445			1,072			1,024
Financial Income (Loss)		(2	)		10			(2	)		16			(4	)		(1	)		(7	)		(2	)		(4	)		-			(3	)		(1	)		(202	)		(149	)		(324	)		(261	)		24			37			8			2
Share of profit of companies		11			14			23			31			-			-			-			-			19			26			50			45			-			-			-			-			384			409			798			941
Income before income tax		80			36			172			24			(127	)		(18	)		(220	)		(65	)		29			100			90			206			(561	)		(593	)		(905	)		(1,078	)		983			891			1,878			1,967
Income Tax		(27	)		17			(79	)		6			-			-			-			-			(5	)		(31	)		(24	)		(64	)		24			45			33			63			(257	)		(202	)		(465	)		(404	)
Net Income		53			53			93			30			(127	)		(18	)		(220	)		(65	)		24			69			66			142			(537	)		(548	)		(872	)		(1,015	)		726			689			1,413			1,563
EBITDA		176			104			363			151			83			11			157			(6	)		28			81			72			182			(187	)		(175	)		(186	)		(350	)		697			548			1,360			1,337
EBITDA Margin		52.9	%		56.5	%		57.7	%		34.5	%		54.6	%		15.7	%		57.1	%		(4.8	)%		6.1	%		18.2	%		7.8	%		19.0	%		(8.8	)%		(11.9	)%		(4.7	)%		(12.9	)%		70.4	%		55.8	%		67.8	%		64.3	%

Table 19: Financial Statement - Balance Sheet

A	B		C		D		E		F		G		H		I		J		K
	HOCOL				AMERICA INC				PROPILCO				REFICAR				CENIT
COP Billion	June 30, 2017		March 31, 2017		June 30, 2017		March 31, 2017		June 30, 2017		March 31, 2017		June 30, 2017		March 31, 2017		June 30, 2017		March 31, 2017
Current Assets		878		837		435		343		885		994		2,157		2,092		1,280		1,459
Non Current Assets		2,226		2,143		2,494		2,474		929		870		23,320		22,329		12,512		12,051
Total Assets		3,104		2,980		2,929		2,817		1,814		1,864		25,477		24,421		13,792		13,510
Current Liabilities		928		912		287		189		268		411		3,340		2,995		793		1,446
Non-Current Liabilities		319		318		192		180		98		96		14,196		13,861		835		738
Total Liabilities		1,247		1,230		479		369		366		507		17,536		16,856		1,628		2,184
Equity		1,857		1,750		2,450		2,448		1,448		1,357		7,941		7,565		12,164		11,326
Total Liabilities and Equity		3,104		2,980		2,929		2,817		1,814		1,864		25,477		24,421		13,792		13,510

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