(~~Expressed in~~In millions of Colombian pesos, except for the earnings ~~(loss)~~ per share, which are expressed in ~~full~~Colombian pesos)

Ecopetrol S.A. (“Ecopetrol”) is a mixed economy company, of a commercial nature, incorporated in 1948 in Bogotá -– Colombia, parent company of the Ecopetrol Business Group. Its corporate purpose is to conduct commercial or industrial activities related to the exploration, exploitation, production, refining, transportation, storage, distribution and commercialization of hydrocarbons and their derivatives and products, directly or through its subsidiaries (collectively referred to as ~~"Ecopetrol~~“Ecopetrol Business ~~Group"~~Group”).

11.51% of Ecopetrol shares are publicly traded on the Stock Exchanges of Colombia and New York. The remaining shares (88.49% of the total outstanding shares) are owned by the Colombian Ministry of Finance and Public Credit.

The address of the main office of Ecopetrol is Bogotá -– Colombia, Carrera 13 No. 36 -– 24.

~~These~~The consolidated financial statements of Ecopetrol and its subsidiaries as of December 31, ~~2017~~2018 and ~~2016~~2017 and for the years ended December 31, 2018, 2017 ~~2016~~ and ~~2015~~2016 have been prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

Accounting policies described in Note 4 have been applied consistently in all ~~periods.~~years presented.

These consolidated financial statements were approved and authorized for issuance by the Board of Directors of Ecopetrol on April ~~19, 2018.~~5, 2019.

The consolidated financial statements were prepared by consolidating all companies set out in Exhibit 1, which are those over which Ecopetrol exercises direct or indirect control. Control is achieved when the Ecopetrol Business Group:

Subsidiaries are consolidated from the date on which control is obtained until the date that such control ceases.

All ~~inter-company~~inter–company assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the Ecopetrol Business Group were eliminated on consolidation. Unrealized losses are also eliminated. ~~Non-controlling~~Non–controlling interest represents the proportion of profit, other comprehensive income and net assets in subsidiaries that are not attributable to Ecopetrol shareholders.

The consolidated financial statements have been prepared on a historical cost basis, except for financial assets and liabilities that are measured at fair value through profit or loss and/or changes in other comprehensive income at the end of each reporting period, as explained in the accounting policies included below.

Historical cost is generally based on fair value of the consideration given in exchange for goods and services.

The fair value is the price that would be received from selling an asset or that would be paid for transferring a liability among market participants, in an orderly transaction, on the date of measurement. When estimating the fair value, the Ecopetrol Business Group uses assumptions that market participants would use for pricing an asset or liability at current market conditions, including risk assumptions.

The consolidated financial statements are presented in Colombian Pesos, which is the Ecopetrol’s functional currency. For each Ecopetrol Business Group entity its functional currency is determined based of the main economic environment where it operates.

The statements of profit or loss and cash flows of subsidiaries with functional currencies different from Ecopetrol S.A.’s functional currency are translated at the exchange rates on the dates of the transaction or based on the monthly average exchange rate. Assets and liabilities are translated at the closing rate, and other equity items are translated at exchange rates at the time of the transaction. All resulting exchange differences are recognized in other comprehensive income. On disposal of all or significant part of a foreign operation, the cumulative translation adjustment related to the particular foreign operation is reclassified to profit or loss.

The financial statements are presented in Colombian pesos rounded up to the closest million unit (COP 000,000) except when otherwise indicated.

Transactions in foreign currencies are initially recorded by the Ecopetrol Business Group’s entities at their respective functional currency spot rates at the transactions date. Monetary items denominated in foreign currencies are translated at the functional currency spot rates prevailing at the reporting date. Differences arising on settlement or translation or monetary items are recognized in profit or loss, in financial results, net, except those resulting from the conversion of loans and borrowings designated as cash flow hedges or net investment in a foreign operation hedge, which are recognized in other comprehensive income within equity. When the hedged item affects the financial results, exchange differences accumulated in equity are reclassified to profit or loss as part of operating results.

~~Non-monetary~~Non–monetary items measured at fair value that are denominated in a foreign currency are translated using the exchange rates prevailing on the date when the fair value is determined. The gain or loss arising on translation of ~~non-monetary~~non–monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item.

The Ecopetrol Business Group presents assets and liabilities in the consolidated statement of financial position based on whether assets are classified as current or ~~non-current.~~non–current.

Deferred tax assets and liabilities are classified as ~~non-current~~non–current assets and liabilities.

Basic earnings ~~(loss)~~ per share is calculated by dividing the profit for the year attributable to equity holders of Ecopetrol S.A., the parent company, by the weighted average number of ordinary shares outstanding during the year. There is no potential dilution of shares.

As of December 31, 2017, the Group changed the presentation of deferred tax assets and liabilities balances by offsetting deferred tax balances levied by the same taxation authority. As a result, the Group reclassified the corresponding amounts as of December 31, 2016 to conform them to the current year's presentation, which had an immaterial impact in the deferred tax assets and deferred tax liabilities line items as of December 31, 2016. In addition, such reclassifications did not have an impact in the statements of cash flows, profit or loss and changes in equity for the year ended December 31, 2016. See additional details in Note 10 - Taxes.

The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, sales revenues, costs and commitments recognized in the financial statements and the accompanying disclosures. The Ecopetrol Business Group based its assumptions and estimates on parameters available when ~~the~~these consolidated financial statements were prepared. Uncertainty about these assumptions and estimates could result in outcomes that required a material adjustment to the carrying amount of assets or liabilities affected in future periods. Changes in estimates are adjusted prospectively in the period in which the estimate is revised.

In the process of applying the Ecopetrol Business Group’s accounting policies, management has made the following judgments and estimates which have the most significant impact on the amounts recognized in the consolidated financial statements:

Hydrocarbon reserves are estimates of the amount of hydrocarbons that can be economically and legally extracted from the Ecopetrol Business Group’s oil and gas properties.

The reserves estimation is ~~conducted~~performed annually as of December 31 in accordance with the United States Securities and Exchange Commission (SEC) definitions and rules set forth in Rule ~~4-10(a)~~4–10(a) of SEC Regulation ~~S-X~~S–X and the disclosure guidelines contained in the SEC final rule -– Modernization of Oil and Gas Reporting.

As required by current regulations, the future estimated date on which a field will no longer produce for economic reasons, is based on actual costs and average of crude prices (calculated as the arithmetical average of prices on the first day of the past 12 months). The estimated date for end of production will affect the amount of reserves, unless the prices have been defined by contractual agreements; therefore, if the prices and costs change from one year to the ~~other,~~next, the proved reserves estimate also changes. Generally, our proved reserves decrease as prices go down and increase when prices go up.

Reserves estimation is an inherently complex process and it involves professional judgments. Reserves estimations are prepared using geological, technical and economic factors, including projections of future production rates, oil prices, engineering data and duration and amount of future investments, and they imply a certain degree of uncertainty. These estimations reflect the regulatory and market conditions existing on the date of reporting, which could significantly differ from other conditions during the year or in future periods. Any changes in regulatory and/or market conditions and assumptions could materially affect the reserves estimation.

Changes to estimations for proven developed reserves may affect the carrying amounts of exploration and production assets, natural resources and environment, goodwill, liabilities for dismantling and depreciation, depletion and amortization. With all other variables remaining unchanged, a decrease in estimated proven reserves would increase, prospectively, depreciation, depletion and amortization costs, while an increase in reserves would reduce depreciation and amortization expenses, as depreciation, depletion and amortization charges are calculated using the units of production method.

Information about the carrying amounts of exploration and production assets and the amounts charged to income, including depreciation, depletion and amortization, is presented in Notes 1513 and ~~16.~~14.

Management uses its professional judgment in assessing the existence of evidence of an ~~expense for (recovery of)~~ impairment loss or reversal, based on internal and external factors.

When an indicator of impairment or reversal of a prior periods impairment exists, the Ecopetrol Business Group estimates the recoverable amount of the cash generating units (CGU), which is considered the greater of fair value less costs of disposal and the value in use.

The assessments require the use of estimates and assumptions, such as, among other factors: (1) estimation of the volumes and market value of oil and natural gas reserves; (2) production profiles for oilfields and the future production of refined and ~~chemical~~petrochemical products; (3) investments, taxes and future costs; (4) useful life of assets; (5) ~~long-term~~long–term prices; (6) the discount rate, which is revised annually and determined as the weighted average cost of capital (WACC); and (7) changes in environmental regulation. The recoverable amount is compared to the carrying amount of the asset, thus determining whether the asset is impaired or if the impairment recognized in prior periods should be reversed.

A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the assets or in the CGU’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of an asset or CGU, other than goodwill, does not exceed either its recoverable amount, or the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset or CGU in prior periods.

Future oil price assumptions are estimated at current market conditions. Expected production volumes, which comprise proven unproved, probable and ~~unproved~~possible reserves are used for impairment testing because management believes this to be the most appropriate indicator of expected future cash flows, which would also be considered by market participants. Reserves estimates are inherently imprecise and subject to risk and uncertainty. Furthermore, projections about unproved volumes are based on information that is necessarily less robust than what is available for mature reservoirs.

These estimates and assumptions are subject to risk and uncertainty. Therefore, there is a possibility that changes in circumstances will impact these projections, which may also impact the recoverable amount of assets and/or CGUs, hence, may also affect the recognition of an impairment loss or the reversal of prior period impairment amounts.

The application of the Ecopetrol Business Group’s accounting policy for exploration and evaluation costs requires judgment in order to determine whether future economic benefits are likely, either from future exploitation or sale, or whether activities have not reached a stage which permits a reasonable assessment of the existence of reserves. Certain exploration and evaluation costs are initially capitalized when it is expected that commercially viable reserves will result. The Ecopetrol Business Group uses its professional judgment of future events and circumstances and makes estimates in order to annually assess the generation of future economic benefits for extracting oil resources, as well as technical and commercial analyses to confirm its intention of continuing their development. Changes regarding available information, such as drilling success level or changes in the ~~project's~~project’s economics, production costs, and investment levels, as well as other factors, may result in capitalized exploration drilling costs being recognized in profit or loss for the period. The expenses for dry wells is included in operating activities in the consolidated statement of cash flows.

The allocation of assets in cash generating units requires significant judgment, as well as assessments regarding integration among assets, the existence of active markets, and similar exposure to market risk, shared infrastructure, and the way in which management monitors the operations. See Note 4.12 ~~- Impairment~~–impairment of ~~non-financial~~non–financial assets for more information.

According to environmental and oil regulations, the Ecopetrol Business Group is required to bear the costs for the abandonment of oil extraction and transportation facilities, which include the cost of plugging and abandoning wells, dismantling facilities, and environmental remediation in the affected areas.

Estimated abandonment and dismantling costs are recorded at the time of the installation of the assets and are reviewed annually.

The calculations for these estimations are complex and involve significant judgments by Management. The ultimate decommissioning costs are uncertain and cost estimates can vary in response to many factors, including changes to relevant legal requirements, the emergence of new restoration techniques or experience at other production sites. The expected timing, extent and amount of expenditure may also change, for example, in response to changes in internal cost projections, changes in reserve estimates, future inflation rates and discount rates. The Ecopetrol Business Group considers that the abandonment and dismantling costs are reasonable, based on the experience of the Ecopetrol Business Group and market conditions; nevertheless, significant variations in external factors used for the calculation of the estimation could significantly impact the amounts recorded in the financial statements.

The determination of expenses, liabilities and adjustments relating to pension plans and other defined retirement benefits makes it necessary for management to use its judgment in the application of actuarial assumptions made in the actuarial calculation. The actuarial assumptions include estimates regarding future mortality, retirement, changes in compensation and discount rate in order to reflect the time value of money, in addition to the rate of return on the ~~plan's~~plan’s assets. Due to the complexity in the valuation of these variables, as well as their ~~long term~~long-term nature, the estimated amounts are quite sensitive to any change in these assumptions.

These assumptions are reviewed on an annual basis and may differ materially from actual results due to changes in economic and market conditions, regulatory changes, judicial rulings, higher or lower retirement rates, or longer or shorter life expectancies among employees.

In December of each year, the Ecopetrol Business Group performs an annual impairment test on goodwill to assess if its carrying amount may be impaired.

The determination of the recoverable amount is described in ~~note~~Note 4.12, and its calculation requires assumptions and estimates. The Ecopetrol Business Group considers that the assumptions and estimations used are reasonable and supportable based on the current market conditions and are aligned to the risk profile of the related assets. However, if different assumptions and estimations are used, they could lead to different results. Valuation models used to determine fair value are sensitive to changes in the underlying assumptions. For example, sales volumes and prices that will be paid for the purchase of raw materials are assumptions that may vary in the future. Adverse changes in any of these assumptions could lead to the recognition of goodwill impairment.

The Ecopetrol Business Group is subject to claims relating to regulatory and arbitration proceedings, tax assessments and other claims arising in the normal course of business. Management evaluates these claims based on their nature, the likelihood that they materialize and the amounts involved, to decide on the amounts recognized and/or disclosed in the financial statements.

This analysis, which may require considerable judgment, includes the assessment of current legal proceedings brought against the Ecopetrol Business Group and claims not yet initiated. A provision is recognized when the Ecopetrol Business Group has a present obligation derived from a past event, it is likely that an outflow of resources of economic benefits will be required to settle the obligation, and a reliable estimate of the amount of such obligation can be made.

Calculation of the income tax provision requires interpretation of tax law in the jurisdictions where the Ecopetrol Business Group operates. Significant judgment is required to determine estimates for income tax on taxable profits and to evaluate the recoverability of deferred tax assets, which are based on the ability to generate sufficient taxable income during the periods in which such deferred taxes could be used or deduct.

To the extent that future cash flows and taxable income differ significantly from the estimates, the ~~Group's~~Ecopetrol Business Group’s ability to realize the deferred tax assets recorded could be affected.

Furthermore, changes in tax rules could limit the capacity of the Ecopetrol Business Group to obtain tax deductions in future years, as well as the recognition of new tax liabilities resulting from auditing conducted by the tax authorities.

Tax positions taken involve a thorough assessment by Management, and are reviewed and adjusted in response to situations such as expiration in the applicability of laws, closing of tax audits, additional disclosures caused by any legal issue or a court decision relevant to a particular tax issue. The Ecopetrol Business Group records provisions based on estimated potential liabilities that could be derived from a tax audit. The amount of these provisions depends on factors such as previous experience in tax audits and different interpretations of tax legislation. The actual results may differ from the estimates recorded.

The process of identifying hedging relationships between hedged items and the underlying instruments (derivative and ~~non-derivative~~non–derivative, such as ~~long-term~~long–term, foreign ~~currency-denominated~~currency–denominated debt), and their corresponding effectiveness, requires the use of judgment by management. The Ecopetrol Business Group periodically monitors the alignment between its hedge instruments and its risk management policy.

The accounting policies indicated below have been applied consistently for all the periods presented.

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

The classification of financial instruments depends on the nature and purpose for which the financial assets or liabilities were acquired and is determined at the time of initial recognition. Financial assets and financial liabilities are initially measured at their fair value.

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

All financial assets are initially recorded at fair value. Loans and trade receivables, other receivables and financial assets ~~held-to-maturity~~held–to–maturity are measured subsequently measured at amortized cost using the effective interest method.

Equity investments available for sale that do not have a market quotation price and for which fair value cannot be reliably measured are measured at cost less any impairment identified at the end of each reporting period.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place in the principal market of the asset or liability or in the absence of a principal market in the most advantageous market for the asset or liability.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are classified within the following scale, based on the lowest level input that is significant to the fair value measurement as a whole, as follows:

For derivative contracts for which a quoted market price is not available, fair value estimations are generally determined using models and other valuation methods, the key inputs for which include future prices, volatility estimates, price correlation, counterparty credit risk and market liquidity, as appropriate. For other assets and liabilities, fair value estimations are generally based on the net present value of expected future cash.

The effective interest rate method is a method of calculating the amortized cost of a financial instrument and accounting of income or financial cost over the relevant period. The effective interest rate is the discount rate that exactly discounts estimated future cash receipts or payments (including all fees, transaction costs and other premiums or discounts) through the expected life of the financial instrument (or, when appropriate, at a shorter period), to the net carrying amount on initial recognition.

The Ecopetrol Business Group evaluates ~~on each reporting date,~~ if there is objective evidence that a financial asset or group of financial assets are impaired. Financial assets are evaluated for the impairment indicators at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated future cash flows of the asset have been affected. For financial assets measured at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

Cash and cash equivalents include cash on hand, financial investments that are highly liquid, bank deposits and special funds with original maturity dates of ninety days or less which are subject to an insignificant risk of changes in value.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Ecopetrol Business Group has applied the practical expedient, the Ecopetrol Business Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Ecopetrol Business Group has applied the practical expedient are measured at the transaction price determined under IFRS 15.

The Ecopetrol Business Group classifies its financial assets in the following categories:

Financial assets at fair value through profit or loss are financial assets held for trading and financial assets designated at the time of the initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired to be sold or repurchased in the short term. They are recognized at their fair value and losses or profits arising at the time of re–measurement are recognized in the statement of profit or loss.

b) Financial assets measured at fair value with changes in other comprehensive income

These are equity instruments of other non–controlled and non–strategic companies not allowing for any type of control or significant influence thereon and where the Ecopetrol Business Group’s management does not intend to negotiate with them in the short term. These investments are recorded at their fair value and unrealized gains or losses are recognized in other comprehensive income and credited to the available for sale reserve until the investment is derecognized, at which time, the cumulative gain or loss is recognized in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the available to sale reserve to the statement of profit or loss.

Loans and receivables are non–derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables, including trade and other receivables, are measured initially at fair value and then at amortized cost using the effective interest rate method, less impairment.

Loans to employees are initially recorded using the present value of the future cash flows, discounted at the current market rate for similar loans. If the interest rate is less than the current market rate, fair value will be less than the amount of the loan. This difference is recorded as a benefit to employees.

This category is the most relevant to the Group. The Group measures financial assets at amortized cost if both of the following conditions are met:

Financial assets at amortized cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.

The Group’s financial assets at amortized cost includes trade receivables, other receivables, loan to an associate, and loan to employees. For loan to employees if the interest rate is less than the current market rate, fair value will be less than the amount of the loan. This difference is recorded as a benefit to employees.

The Ecopetrol Business Group derecognizes a financial asset only upon the expiration of the contractual rights to the cash flows of the asset or, when it has transferred its rights to receive such cash flows or has assumed the obligation to pay the cash flows received in full without material delay to a third party and (a) it has transferred substantially all the risks and benefits inherent in the ownership of the financial asset or (b) it has neither transferred nor retained substantially all the risks and benefits of the asset, but has transferred control of the asset.

When the Ecopetrol Business Group does neither transfer nor retain substantially all the risks and benefits of the asset or transfer control of the asset, the Ecopetrol Business Group continues to recognize the transferred asset, to the extent of its continuing participation, and it also recognizes the associated liability.

Financial assets at fair value through profit or loss are financial assets held for trading and financial assets designated at the time of the initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired to be sold or repurchased in the short term. They are recognized at their fair value and losses or profits arising at the time of re-measurement are recognized in the statement of profit or loss.

These are equity instruments of other non-controlled and non-strategic companies not allowing for any type of control or significant influence thereon and where the Group’s management does not intend to negotiate with them in the short-term. These investments are recorded at their fair value and unrealized gains or losses are recognized in other comprehensive income and credited to the available for sale reserve until the investment is derecognized, at which time, the cumulative gain or loss is recognized in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the available to sale reserve to the statement of profit or loss.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables, including trade and other receivables, are measured initially at fair value and then at amortized cost using the effective interest rate method, less impairment.

Financial liabilities correspond to the financing obtained by the Ecopetrol Business Group through bank credit facilities and bonds, accounts payable to suppliers and creditors.

Bank credit facilities and bonds (this is the category most relevant to the Group) are initially recognized at their fair value, net of directly attributable transactions cost. After initial recognition, ~~interest-bearing~~interest–bearing credit facilities and bonds are subsequently measured at amortized cost, using the effective interest rate (EIR) method. The effective interest method amortization is included as a financial expense in the statement of profit or loss. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit or loss.

Accounts payable to suppliers and creditors are ~~short-term~~short–term financial liabilities recorded at nominal value, since it does not significantly differ from fair value.

A financial liability is derecognized when the obligation specified in the ~~corresponding~~ contract is ~~paid~~discharged or ~~expired.~~cancelled or expires. When an existing financial liability has been replaced by another from the same lender, under substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the ~~de-recognition~~de–recognition of the original liability and recognized as a new liability. The difference between the respective carrying amounts is recognized in the statement of profit or loss.

Financial ~~derivative~~ instruments are initially recognized ~~in the statement of financial position as assets or liabilities and are measured~~ at fair value on the date on which ~~the~~a derivative contract is ~~recorded~~entered into and are subsequently ~~measured~~remeasured at fair value. Changes in the fair value of derivatives are recognized as gains or losses in the statement of profit or loss, except for the effective portion of cash flow hedges, which is recognized in other comprehensive income and later reclassified to profit or loss when the hedge item affects profit or loss.

Changes in fair value of derivative contracts, which do not qualify or are not designated as hedges, including forward contracts for the purchase and sale of commodities under negotiation for physical delivery or receipt of the commodity are recorded in profit or loss.

Derivatives embedded in the host contract are accounted for as separate derivatives at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the ~~and the~~ host contracts are not held for trading or designated at fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognized in profit or loss.

At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine whether they have been highly effective throughout the financial reporting periods for which they were designated.

At the inception of the hedging relationship, the Group formally designates and documents the hedge relationship between the hedging instrument and the hedged item, together with its risk management objectives and strategy to perform hedging transactions. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are; assessed on an ongoing basis to determine that they have been highly effective throughout the financial reporting periods for which they were designated.

The effective portion of the gain or loss ofon the hedging instrument is recognized in ~~other comprehensive income,~~Other Comprehensive Income (OCI) in the cash flow hedge reserve, while any ineffective portion is recognized immediately in the ~~consolidated~~ statement of profit or ~~loss, in the net financial results line item.~~loss.

The amounts ~~previously recognized~~accumulated in ~~other comprehensive income~~OCI are ~~transferred to profit or loss, when~~accounted for, depending on the nature of the underlying hedged transaction. If the hedged transaction ~~affects profit or loss. When~~subsequently results in the ~~hedged item is the cost~~recognition of a non-financial ~~asset~~item, the amount accumulated in equity is removed from the separate component of equity and included in the initial cost or ~~liability, the amounts previously recognized in~~ other ~~comprehensive income are transferred to the initial~~ carrying amount of the ~~non-financial~~hedged asset or liability.

If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognized in other comprehensive income remains separately in equity until the forecast transaction occurs is recognized in the consolidated statement of profit or loss. When it is no longer expected that the initially hedged transaction will occur.

Ecopetrol designates ~~long-term~~long–term loans as hedging instruments for its exposure to the exchange risk in future oil exports. See Note 3028 for further information.

~~Hedges~~ including a hedge of a monetary item that is accounted for as part of the net investment, ~~in a foreign operation~~ are accounted for in a way similar to ~~the~~ cash flow hedges.

Gains or losses on of the hedging instrument ~~related~~relating to the effective portion of the hedge are recognized ~~in other comprehensive income,~~as OCI while any gains or losses relating to the ineffective portion are recognized in the statement of profit or loss. ~~Cumulative~~On disposal of the foreign operation, the cumulative value of any such gains or losses recorded in equity is transferred to the ~~consolidated~~ statement of profit or ~~loss when the foreign operation is partially or totally disposed of.~~loss.

Ecopetrol allocates ~~long-term~~long–term loans as hedging instruments for its exposure to foreign exchange risk on its investment in subsidiaries whose functional currency is the U.S. dollar. See Note 3028 for further information.

Inventories mainly comprise crude oil, fuels and petrochemicals and consumable inventories (spares and supplies).

The cost required to bring ~~the~~a pipeline into working order, is treated as part of the related pipeline.

The cost of other inventories is determined based on the weighted average cost method, which includes acquisition costs (deducting commercial discounts, rebates and other similar items), transformation, and other costs incurred to bring inventory to their current location and condition, such as transportation costs.

Consumable inventories (spares and supplies) are recognized as inventory and then charged to expense, maintenance or project to the extent that such items are consumed.

Ecopetrol estimates the net realizable value of inventories at the end of the period. When the circumstances that previously caused inventories to be written down below cost no longer exist, or when there is clear evidence of an increase in the net realizable value because of a change in economic circumstances, the amount of the ~~write-down~~write–down is reversed. The reversal cannot be greater than the amount of the original ~~write-down,~~write–down, so that the new carrying amount will always be the lower of the cost and the revised net realizable value.

Related parties are considered those in which one party has the ability to control, or has joint control of the other, or exercises significant influence over the other party in making financial or operational decisions, or is a member of key management personnel (or close relative of a member). The Ecopetrol Business Group considers related parties to be associates, joint ventures, key management executives, entities managing resources for payment of employee ~~post-employment~~post–employment benefit plans and Colombian government entities for the purposes of certain relevant transactions, such as the purchase of hydrocarbons and the fuel price stabilization fund (see Note ~~4.16)~~29 – Related parties).

An associate is an entity over which the Ecopetrol Business Group has significant influence but not control. Significant influence is the power to participate in the financial and operational policy decisions of the investee, but it is not control or joint control over those policies. Generally, these entities are those in which the Ecopetrol Business Group holds an equity interest with voting rights of 20% to 50%. See Exhibit I - –Consolidated companies, associates and joint ventures for further ~~details.~~details.

Investments in associates are accounted for using the equity method. Under this method, the investment in an associate is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Ecopetrol Business Group’s share of net assets of the associate since the acquisition date. Goodwill related to the associate is included in the carrying amount of the investment and it is not tested for impairment separately.

The ~~Group's~~Ecopetrol Business Group’s share of the results of operations of the associate is recognized in the consolidated statement of profit or loss. Any change in other comprehensive income is recognized in other comprehensive income of the Ecopetrol Business Group.

After application of the equity method, the Ecopetrol Business Group determines if it is necessary to recognize an impairment on its investment in its associate. ~~At each reporting date, the~~The Ecopetrol Business Group determines whether there is objective evidence that the investment is impaired. If there is such evidence, the amount of the impairment is calculated as the difference between the recoverable amount and its carrying value, and then the impairment is recognized in the consolidated statement of profit or loss.

When necessary, the Ecopetrol Business Group makes adjustments to the accounting policies of associates to ensure consistency with the policies adopted by the Ecopetrol Business Group. Additionally, the equity method of these companies is measured on their most recent financial statements.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control exists only when decisions about the relevant activities require unanimous consent of the parties sharing such control. The accounting treatment for the recognition of joint ventures is the same as investments in associates.

A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the arrangement.

Joint operation contracts are entered into between Ecopetrol and third parties to share risk, secure capital, maximize operating efficiency and optimize the recovery of reserves. In these joint operations, one party is designated as the operator to execute the operations and report to partners according to their participating interests. Likewise, each party takes its share of the produced hydrocarbons (crude oil or gas), according to their share in production.

When Ecopetrol participates as a ~~non-operator~~non–operator partner, it records the assets, liabilities, sales revenues, cost of sales and expenses based on the operator’s report. When Ecopetrol is the direct operator of joint venture contracts, it records its percentage of assets, liabilities, sales revenues, costs and expenses, based on the participation of each partner in the items corresponding to assets, liabilities, sales revenues, costs and expenses.

When the Ecopetrol Business Group acquires or increases its participation in a joint operation in which the activity constitutes a business combination, such transaction is recorded applying the acquisition method in accordance with IFRS 3 -– Business combination. The acquisition cost is the sum of the consideration transferred, which corresponds to the fair value, on the date of acquisition of the assets transferred and the liabilities incurred. Any transaction cost related to the acquisition or increased share in the joint operation that constitutes a business combination is recognized in the consolidated statement of profit or loss.

The excess of the sum of the consideration transferred and the amount paid in the operation is recognized as goodwill. If the result is in an excess value of the net assets acquired over the amount paid in the operation, the difference is recognized as income in the consolidated statement of profit or loss on the date of recognition of the transaction.

~~Non-current~~Non–current assets are classified as held for sale if their carrying values will be recovered principally through a sale transaction rather than through continued use. ~~Non-current~~Non–current assets are classified as held for sale only when the sale is highly probable within one year from the classification date and the asset (or group of assets) is available for immediate sale in its present condition. These assets are measured at the lower of their carrying amount and fair value less related costs of disposal. ~~See Note 13 for further information.~~

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Tangible components related to natural and environmental resources are part of property, plant and equipment.

The initial cost of an assets comprises its purchase price or construction cost, including import duties and ~~non-refundable~~non–refundable purchase taxes, any costs directly attributable to bringing the asset into operation, costs of employee benefits arising directly from the construction or acquisition, borrowing costs incurred that are attributable to the acquisition and construction of qualifying assets and the initial estimate of the costs of dismantling and abandonment of the item.

Spare parts and servicing equipment are recorded as inventories and recognized as an expense as they are used. Major spare parts and ~~stand-by~~stand–by equipment that the entity expects to use during more than one period are recognized as property, plant and equipment.

Any gain or loss arising from the disposal of a property, plant and equipment is recognized in profit or loss of the period.

Subsequent disbursements correspond to all payments to be made on existing assets in order to increase or extend the initial expected useful life, increase productivity or productive efficiency, allow for significant reduction of operating costs, increase the level of reserves in exploration or production areas or replace a part or component of an asset that is considered critical for the operation.

The costs of repair, conservation and maintenance of a day to day nature are expensed as incurred. However, disbursements related to major maintenance are capitalized.

Property, plant and equipment is depreciated using the ~~straight-line~~straight–line method, except for those associated with exploration and production activities which are depreciated using the ~~units-of-production~~units–of–production method. Technical useful lives are updated annually considering factors such as: additions or improvements (due to parts replacement or critical components for the asset’s operation), technological advances, obsolescence and other factors; the effect of this change is recognized from the period in which it was executed. Depreciation of an asset starts when it is ready to be used.

Useful lives are determined based on the period over which an asset is expected to be available for use, physical exhaustion, technical or commercial obsolescence and legal limits or restrictions over the use of the asset.

Land is recorded separately from buildings and facilities and it is not subject to depreciation.

Depreciation methods and useful lives are reviewed annually and adjusted if appropriate.

Ecopetrol uses the successful efforts method to account for exploration and production of crude oil and gas activities, following the provisions of IFRS 6 – Exploration for the evaluation of mineral resources.

Acquisition and exploration costs are recorded as exploration and evaluation assets until the determination of whether the exploration drilling is successful or not; if determined to be unsuccessful, all costs incurred are recognized as expenses in the consolidated statement of profit or loss.

Exploration costs are those incurred with the objective of identifying areas that are considered to have prospects of containing oil and gas reserves, including geological and geophysical, seismic costs, viability, and others, which are recognized as expenses when incurred. Furthermore, disbursements associated with the drilling of exploratory wells and those related to stratigraphic wells of an exploratory nature are charged as assets until it is determined if they are commercially viable; otherwise, they are expensed in the consolidated statement of profit or loss as dry wells expense. Other expenditures are recognized as expenses when incurred.

An exploration and evaluation asset is no longer classified as such when the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. Exploration and evaluation assets are reclassified to the natural and environmental resources account after being assessed for impairment.

All capitalized costs are subjected to technical and commercial revisions at least once a year to confirm the evaluation and exploration efforts continue on the fields; otherwise, these costs are written off through to profit or loss.

Exploration costs are net of the revenues obtained from the sale of crude oil during the extensive testing period, net of cost of sales, since they are considered necessary to complete the asset.

Development costs correspond to those costs incurred to obtain access to proved reserves and to provide facilities for extracting, treating, gathering and storing. When a project is approved for development, the corresponding capitalized acquisition and exploration costs are classified as natural and environmental resources and costs subsequent to the exploration phase are capitalized as development costs of the properties that contain such natural resources. All development costs are capitalized, including drilling costs of unsuccessful development wells.

Production costs are those incurred to operate and maintain productive wells, and are part of the corresponding equipment and facilities. Production activity includes extraction of oil and gas to the surface, its gathering, treatment and processing as well as storage in the field. Production costs are expenses recorded in the consolidated statement of profit or loss as incurred unless they add oil and gas reserves, in which case they are capitalized.

Production and support equipment is recognized at cost and is part of property, plant and equipment subject to depreciation.

Capitalized costs also include decommissioning, dismantling, retiring and restoration costs, as well as the estimated cost of future environmental obligations. The estimation includes plugging and abandonment costs, facility dismantling and environmental recovery of areas and wells. Changes arising in new abandonment liability estimations and environmental remediation are capitalized in the carrying amount of the related asset.

Depletion of natural and environmental resources is determined using the ~~unit-of-production~~unit–of–production method per field, using proved developed reserves as a base, except in limited exceptional cases that require greater judgment by Management to determine a better amortization factor of future economic benefits over the useful life of the asset. Depreciation rates are reviewed annually, based on reserves reports and the impact of any changes is recognized prospectively in the financial statements.

Reserves are ~~audited~~independently estimated by internationally recognized external consultants and approved by ~~the Company’s~~Ecopetrol’s Board of Directors. Proved 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 estimation.

Assets associated to exploration, evaluation and production are subject to review for possible impairment in their carrying amount. See ~~notes~~Notes 3.2 – —Asset impairment (recovery) and 4.12 - —Impairment of ~~non-financial assets.~~non–financial assets.

Borrowing costs related to the acquisition, construction or production of a qualifying asset that requires a substantial period of time to get ready for its intended use are capitalized as part of the cost of such asset when it is probable that future economic benefits associated with the item will flow to the Ecopetrol Business Group and costs can be measured reliably. Other borrowing costs are recognized as finance costs. Projects that have been suspended but that the Ecopetrol Business Group intends to continue to pursue their development in the future, are not considered qualifying assets for the purpose of capitalization of borrowing costs.

Intangible assets with a defined useful life, are stated at cost less accumulated amortization and any impairment loss. Intangible assets are amortized under the ~~straight-line~~straight–line method, over their estimated useful lives. The estimated useful lives and amortization method are revised at the end of each reporting period; any change in estimates is recognized on a prospective basis.

Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognized for ~~non-controlling~~non–controlling interest and any previous interest held over the net identifiable assets acquired and liabilities assumed). After initial recognition goodwill is measured at cost less any accumulated impairment loss. Goodwill is not amortized but tested for impairment annually.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership. All other leases are classified as operating leases.

Assets held under finance leases, when Ecopetrol is the lessee, are recognized in the consolidated statement of financial position at an amount equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payment. These assets are depreciated over the ~~asset's~~asset’s useful life. When there is no reasonable certainty that the company will obtain ownership of the asset at the end of the contract, the leased assets are depreciated in the shortest period between the asset estimated useful life and the lease term.

The corresponding liability to the lessor is included in the consolidated statement of financial position as a finance lease obligation, in the loans and financing line item.

Lease payments are apportioned between financial charges and reduction of lease liabilities in order to achieve a constant rate of interest on the liability remaining balance. Interest expense is recognized in profit or loss.

Operating lease payments are recognized as an expense on a ~~straight-line~~straight–line basis over the lease term, except where another systematic prorating basis is more representative of the time pattern of economic benefits from the lease. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.

In order to evaluate if any tangible or intangible assets are impaired, Ecopetrol compares its carrying amount with its recoverable amount at the end of each reporting period or earlier, if there is any indicator that an asset may be impaired.

For purposes of impairment testing, the assets are grouped into cash generating units (CGU), provided that those assets individually considered do not generate cash inflows that, to a greater extent, are independent from those generated by other assets or CGUs. The ~~group~~grouping of assets in different CGUs requires the exercise of professional judgment and the consideration, among other parameters, of the business segments. In this sense, in the Exploration and Production segment, each CGU corresponds to each one of the different contractual areas commonly called ~~“fields”;~~“fields;” by exception, in those cases where the cash inflows generated by several fields are interdependent from each other, those fields are grouped into a single CGU. In the case of the Refining and Petrochemicals, ~~segment,~~ each CGUs corresponds to each one of the refineries and companies in this segment of the Ecopetrol Business Group and for the Transportation segment; each pipeline system is ~~taken as~~considered an independent CGU.

The recoverable amount of the asset is the higher amount of the fair value less costs of disposal or its value in use. If the recoverable amount of an asset (or of a CGU) is lower than its net carrying amount, such amount (or that of the CGU) is reduced to its recoverable amount, recognizing an impairment loss in ~~the statement of~~ profit or loss.

Fair value less costs of disposal is usually higher than the value in use for the asset’s in the production segment due to some significant restrictions in the estimation of future cash flows, such as: a) future capital expenses that improve the CGU performance, which could result in expected increase of net cash flows, and b) items before taxes that reflect specific business risks, resulting in a higher discount rate.

Fair value less costs of disposal is determined as the sum of the future discounted cash flows adjusted to the estimated risk. The estimations of expected future cash flows used in the assessment of impairment of the assets include estimates of futures commodity prices, supply and demand estimations, and the margins of the products.

Fair value less costs of disposal, as described above, is compared to valuation multiples and quoted prices of shares in companies comparable to Ecopetrol, in order to determine if it is reasonable.

When an impairment loss is recorded, future amortization expenses are calculated on the basis of the adjusted recoverable amount. Impairment losses may be recovered only if the recovery is related to a change in estimations used after impairment loss was recognized. These recoveries do not exceed the carrying amount of the assets net of depreciation or amortization that would have been determined if such impairment had not been recognized.

The carrying amount of ~~non-current~~non–current assets reclassified as assets ~~held-for-sale~~held–for–sale is compared to its fair value less costs of disposal. No other provision for depreciation, depletion or amortization is recorded if the fair value less costs of sale is lower than the carrying amount.

Provisions are recognized when the Ecopetrol Business Group has a current obligation (legal or ~~implied)~~constructive) as a result of a past event, it is probable that Ecopetrol will be required to settle the obligation, and a reliable estimation can be made of the amount of the obligation. Where applicable, they are recorded at present value, using a rate reflecting the ~~liability~~risk specific ~~risk.~~to the liability.

Future environmental decommissioning costs related to current or future operations, are accounted for as expenses or assets, as the case may be. Expenditures related to past operations that do not contribute to the obtaining of current or future benefits, are expensed as incurred.

The recognition of these provisions coincides with the identification of an obligation related to environmental remediation and Ecopetrol uses available information to determine a reasonable estimation of the related cost.

Provisions for which a negative outcome is assessed as possible are not recognized but are disclosed in the explanatory notes; including those for which the amount cannot be estimated.

If there is an expectation that the provision will be reimbursed, either in whole or in part, for example by virtue of an insurance contract, the amounts expected to be reimbursed are recognized as a separate asset only when such reimbursement is almost certain.

If the effect of the time value of money is significant, the provisions are discounted using the current market rate before taxes reflecting, as applicable, the liability specific risks. When recognizing the discount, the increase of the provision resulting from time elapsed is recognized as financial cost in the profit or loss statement.

Liabilities associated with the retirement of assets are recognized when there are current obligations, either legal or ~~implied,~~constructive, related to the abandonment and dismantling of wells, facilities, pipelines, buildings and equipment.

The obligation is usually recorded when the assets are installed or when the surface or the environment are altered at the operating sites. These liabilities are calculated using the discounted cash flow method, using a ~~pre-tax~~pre–tax rate reflecting current market conditions similar liabilities and considering the economic limits of the field or the useful life of the respective asset. When it is not possible to determine a reliable estimation in the period in which the obligation originates, a provision is recognized when there is ~~sufficient~~enough information available to make the best estimation.

The carrying amount of the provision is reviewed and adjusted annually considering changes in the assumptions used for its estimation, using a rate that reflects the ~~liability~~risk specific ~~risk.~~to the liability. Any change in the present value of the estimated expenditure is reflected as an adjustment to the provision and the corresponding property, plant and equipment and natural and environmental resources. When a decrease in the asset retirement obligation related to a producing asset exceeds the carrying amount of the asset, the excess is recognized in the consolidated statement of profit or loss. The ~~financial cost~~increase in the provision due to the passage of ~~updating these liabilities~~time is recognized in results for the period as a financial expense.

Income tax expense is comprised of income tax payable for the period (including, income tax and income tax for equality -– CREE, as appropriate) and the effect of deferred taxes in each period.

Current income taxes are recognized in income except when they relate to items recognized in other comprehensive income, in which case the corresponding tax effect is also recognized in other comprehensive income. Income tax assets and liabilities are presented separately in the consolidated statement of financial position, except where there is a right of ~~set-off~~setoff within fiscal jurisdictions and an intention to settle such balances on a net basis.

The Ecopetrol Business Group determines the provision for income tax based on the highest amount between taxable income and presumptive income (the minimum estimated amount of taxable profit on which the law expects to quantify and collect income taxes). Taxable income differs from profit before tax as reported in the consolidated statement of profit or loss, because of: items of income or expense that are taxable or deductible in other periods, special taxable deductions, tax losses and income and line items measured that, according to applicable tax laws in each jurisdiction, are considered nontaxable or nondeductible.

Deferred tax is provided using the liability method for temporary differences between the carrying amounts of existing assets and liabilities in the consolidated financial statements and their respective tax bases. A deferred tax liability is recognized for all taxable temporary differences. A deferred tax asset is recognized for all deductible temporary differences and for all accumulated tax losses, if there is a reasonable expectation that the Ecopetrol Business Group will generate future tax profits against which they will be used.

Deferred taxes on assets and liabilities are calculated based on the tax rates that are expected to apply during the years in which temporary differences between the carrying amounts and tax bases are expected to be reversed.

The carrying amount of a deferred tax asset is subject to review at the end of each reporting period, and it is reduced to the extent it is no longer probable that ~~there Group~~the corresponding legal entity will generate enough future taxable profit to realize such deferred tax asset.

In the statement of financial position, deferred tax assets are reflected net and as an offset against deferred tax liabilities, depending on the overall tax position in a particular jurisdiction and on the same taxable entity.

Deferred taxes are not recognized when they arise in the initial recognition of an asset or liability in a transaction (except in a business combination) and at the time of the transaction, ~~does~~do not affect the accounting or tax profit, or in respect of the taxes on the possible future distribution of accumulated profits of subsidiaries or investments accounted for by the equity method, if at the time of the distribution it may be controlled by Ecopetrol and it is probable that the retained earnings will be reinvested by the Ecopetrol Business Group companies and, therefore, will not be distributed to Ecopetrol.

The Ecopetrol Business Group recognizes in profit or loss the costs and expenses related to other taxes than the income tax, such as the wealth tax, which is determined based on the tax equity, the industry and commerce tax on income obtained in the municipalities for performance of commercial, industrial and service activities, and the transport tax on volumes loaded in the transport systems. Taxes are calculated in accordance with current tax regulations. For more details, see Note 10.

Salaries and benefits ~~for Ecopetrol staff~~of the Ecopetrol’s employees are governed by the Colombian Collective Labor (Agreement 01 of 1977), and, by the Colombian Substantive Labor Code. In addition to the ~~legally mandated~~ benefits determined by labour laws, employees are entitled to fringe benefits which are subject to the place of work, type of work, length of service, and basic salary. An annual interest of 12% is recognized on accumulated severance amounts for each employee, and the payment of compensation is provided for when special circumstances arise resulting in the ~~non-voluntary~~non–voluntary termination of the contract, without justified cause, and in periods other than the probationary period.

Ecopetrol belonged to the special pension regime under which pension liabilities are Ecopetrol’s responsibility and not pension fund’s responsibility. However, Law 797 of January 29, 2003 and Legislative Act 001 of 2005 determined that Ecopetrol will no longer belong to the said regime and that from that point on employees would be part of the General Pension Regime. Consequently, pension obligations related to employees pensioned until July 31, 2010 are still Ecopetrol’s responsibility. Employees are entitled to such pension bonus if they worked with Ecopetrol prior to January 29, 2003, but whose labor agreement expired without renewal before that date.

All labor benefits of employees who joined Ecopetrol before 1990 are Ecopetrol’s responsibility, without the involvement of any social security entity or institution. Service cost for the employee and his/her relatives registered with ~~the Group~~Ecopetrol is determined by means of a mortality table, prepared based on facts occurring during the year.

For employees who joined Ecopetrol after the Act 50 of 1990 went in effect, Ecopetrol makes periodic contributions for severance payments, pensions and labor risks to the respective funds.

In 2008, Ecopetrol partially ~~commuted~~settled the value corresponding to monthly pension payments from its pension liabilities, transferring such liabilities and their underlying amounts to autonomous pension funds (PAP, for its acronym in Spanish). The funds transferred, and returns on those funds, cannot be redirected, nor can they ~~can~~ be returned to the Ecopetrol Business Group, until all of the pension obligations have been fulfilled. The ~~commuted~~settled obligation covers allowances and pension bonds payments; while health and education ~~remains~~remained under ~~the labor liability in charge~~responsability of Ecopetrol.

~~Employee-benefits~~Employee benefits are divided into four groups comprised as follows:

Benefits to employees in the short term mainly correspond to those which payment will be made in the term of twelve months following the closing of the period in which the employees have rendered their services. These mainly include salaries, severance payments, vacation, bonuses and other benefits.

~~Post-employment~~Post–employment benefits of defined contributions plans correspond to the periodic payments for severance, pensions and labor risk payments that the Ecopetrol Business Group makes to the respective funds that assume these obligations in their entirety.

The above benefits are recognized as an expense with an associated liability after deducting any already paid amounts.

In the defined benefits plan, the Ecopetrol Business Group provides the benefits agreed to current and former employees and assumes the actuarial and investment risks.

The following benefits are classified as ~~long-term~~long–term defined benefit plans recognized in the financial statements according to the calculations of an independent actuary:

Liabilities recognized in the statement of financial position inwith respect ofto these benefit plans are determined base on the present value of the defined benefit obligation at the date of the statement of financial position less the fair value of plan assets.

The defined benefit obligation is calculated annually by independent actuaries using the projected credit unit method, which takes into account employees’ years of service and, for pensions, average or final pensionable remuneration. This obligation is discounted at its present value using interest rates of ~~high-quality~~high–quality government bonds denominated in the currency in which the benefits will be paid and of a duration consistent with the plan obligations.

These actuarial calculations involve several assumptions that could differ from the events that will effectively take place in the future. Said assumptions include the determination of ~~the~~a discount rate, future salary increases, mortality rates and future pension ~~increase.~~increases. Because of the complexity of the calculation, the underlying assumptions and ~~long-term~~long–term nature of these plans, the obligations for defined benefits are extremely sensitive to changes in assumptions. All key assumptions are revised at the end of the reported period.

In determining the appropriate discount rate, in absence of a broad high quality bond market, Management considers interest rates corresponding to the class B TES bonds issued by the Colombian Government as its best reference, at an appropriate discount rate with maturities extrapolated in line with the term expected for each benefit plan. The mortality rate is based on the particular country’s rate, ~~which~~the latest version of which is the RV08 mortality table published in resolution 1555 of October 2010. The future salary and pension increases are linked to the ~~country's~~country’s future inflation rates. Note 22 - –Provisions for employee benefits provides further details on key assumptions used.

The amounts recognized in the consolidated statement of profit or loss related to employees defined benefit plans are comprised mainly by service cost and the net financial expense. Service cost includes mainly the increase in present value of the benefit obligation during the period (current service cost) and the amount resulting from a new benefit plan. Plan amendments corresponds to changes in benefits and are usually recognized when all legal and regulatory approvals have been obtained and the effects have been conveyed to the employees involved. The net financial expense is calculated using the net liability for defined benefits as compared with the yield curve of the discount rate at the beginning of each year for each plan. The net defined benefit ~~liability~~obligation or asset resulting from actuarial profits and losses, the asset ceiling effect and the asset profitability, excluding the value of recognized in the consolidated statement of profit or loss, are recognized in other comprehensive income.

When the plan assets exceed the gross obligation, the recognized asset is limited to the lower of the surplus in the defined benefits plan and the ceiling of assets determined using a discount rate based on Colombian Government bonds.

~~Other long-term benefit is~~Others long–term benefits include the ~~five-year~~five–year term bonus which also considered in the actuarial calculation. This benefit is a cash bond that accumulates annually and is paid every five years to employees. The Ecopetrol Business Group recognizes in the consolidated statement of profit or loss the service cost, the net financial cost and the adjustment to the obligation of the defined benefit plan.

Termination benefits are recognized only when a detailed plan exists ~~for such process~~ and there is no possibility to withdraw the offer. The Ecopetrol Business Group recognizes a liability and an expense for termination benefits at the earliest date between the date when the offer of such benefits cannot be withdrawn and the date when the restructuring costs are recognized.

~~Sales~~The Ecopetrol Business Group’s business is based on three principal sources of revenue from contracts with customers: 1) sales of crude oil and natural gas, 2) services associated with the transport of hydrocarbons, and 3) sales of refined products, petrochemicals and biofuels. Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at amount that reflects the ~~time~~consideration that the Ecopetrol Business Group expects to be entitled in exchange for those goods or services.

Revenue from sales of crude oil and natural gas is recognized upon transfer of ~~title~~control to the buyer, ~~including risks~~this generally occurs when the product is physically transferred into a vessel, pipe or other delivery methods.

For some natural gas supply contracts with a replacement period, a distinction is made between quantities of gas consumed and ~~rewards~~not consumed in order to recognize the respective revenue or liability relating to quantities that will be requested in the future. Once the customer claims such natural gas, the revenue is recognized.

Revenue from transport services is recognized when the service is provided to the customer and there are no contractual conditions that prevent recognition of ~~ownership.~~ the revenue. Ecopetrol Business Group companies is the principal in providing these services.

Ship/ Take-or-Pay contracts for the sale of refined products, storage and transport specify minimum quantities of products or services for which a customer will pay, even if the latter does not receive them or use them (“deficient quantities”). Although the Ecopetrol Business Group expects customers to recover all deficient quantities to which they are contractually entitled, any load revenue received related to temporary shortfalls that will be offset in a future period will be deferred and that amount recognized as revenue in the event any of the following scenarios occurs:

b) The possibility is remote that the customer will exercise its right to deficient volumes or services.

In the case of refined products, petrochemicals and ~~petrochemical products, sales~~biofuels, such as fuel oil, asphalt, polyethylene, LPG and propane and gasoline, etc., revenue is recognized when the products are shipped and delivered by the ~~refinery and~~refinery; subsequently, they are adjusted ~~in accordance with~~for price changes, ~~when dealing~~in the case of products with regulated ~~price products, as explained bellow. Sales~~prices.

In other cases, Ecopetrol Business Group recognize revenue ~~from transportation services is recognized~~ when ~~products are transported and delivered~~satisfies the performance obligation, giving rise to the ~~buyer in accordance with contractual terms. In all other cases, sales revenue is recognized at the time it is earned and a true,~~certain, probable and quantifiable right to demand ~~its payment arises.~~payment.

Under current ~~regulations,~~local regulation, Ecopetrol ~~and Refinería de Cartagena S.A. sell~~sells regular gasoline and ~~mid-distillates~~ACPM in Colombia at a regulated price.

In accordance with Decree 1068 of 2015, the Ministry of Mines and Energy calculates semiannually and settles Ecopetrol’s net position to be stabilized for each fuel by the Fuel Price Stabilization Fund (FEPC, for its acronym in Spanish). The net position corresponds to the sum of the spreads throughout the semester, the result of which will be the amount in pesos in favor of the Company charged to ~~be settled is calculated as~~the resources of the FEPC. The differential corresponds to the product between the volume ~~sold during~~reported by the ~~corresponding period multiplied by~~Company at the time of sale and the difference between the ~~international~~ parity price and the reference price, ~~actually charged. The net position is calculated by adding all differentials throughout~~ the ~~six month period in Colombian pesos in favor~~parity price being that which corresponds to the daily prices of the ~~Group~~motor and ~~chargeable~~diesel gasoline observed during the month, expressed in pesos, referenced to the ~~FEPC. The international parity price is the daily price~~Gulf of ~~gasoline and diesel oil of the respective month in Colombian pesos, indexed to~~ the United States ~~of America Gulf~~ market, ~~price,~~ calculated ~~in accordance with~~by applying Resolution 18 0522 of ~~2010. The~~2010, and the reference price is the ~~price per gallon fixed~~Producer Income defined by the Ministry of Mines and Energy ~~and Mines, at which refiners or importers sell gasoline or diesel to the national market.~~for these purposes. Therefore, this ~~difference represents~~differential constitutes a ~~higher~~greater or ~~lower~~lesser value of sales ~~revenues~~revenue for Ecopetrol.

According to the risk profiles, the Ecopetrol Business Group manages advance payment systems for some of its contracts with customers.

Generally payments received from customers are short term. Using the practical expedient in IFRS 15, the Group does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be one year or less.

Upon fulfillment of the obligations set forth in agreements with customers, via delivery of the product or provision of the service, variable components of the transaction price may exist, such as the exchange rate for crude exports or international price fluctuations. In these cases, the Ecopetrol Business Group will make its best estimate of the transaction price that reflects the goods and services transferred to customers.

Agreements signed with customers do not include variable considerations like rebates, refunds or discounts.

Agreements signed in the Ecopetrol Business Group does not consider non-cash transactions.

These correspond to contractual obligations in which the Ecopetrol Business Group receives advances from customers. These advances by customers form part of the policies and risk assessment defined by the Business Group.

Costs and expenses are presented according to their nature; they are detailed in the related disclosures in cost of sales, and administrative, operating, projects and other associated expenses.

Finance income and expenses include mainly: a) borrowings costs on loans and financing, except for those that are capitalized on qualifying asset, b) gains and losses on changes in fair value of financial instruments measured at fair value through profit or loss, c) currency exchange differences of financial assets and liabilities, except for debt instruments designated as hedging instruments, d) interest expenses as a result of discounting ~~long-term~~long–term liabilities (abandonment costs and pension liabilities), e) dividends derived from equity instruments measured at fair value with changes in other comprehensive income.

Ecopetrol presents the ~~respective disclosures relative~~information related to its business segments in its consolidated financial statements in accordance with paragraph 4 of IFRS 8 -– Operation segments.

The ~~operation~~operations of the Ecopetrol Business Group isare performed through three business segments: 1) Exploration and Production, 2) Transport and Logistics and 3) Refining, Petrochemical and Biofuels. ~~This segmentation is~~Segments are determined based on management of objectives and corporate strategic ~~plan,~~plans, considering that these businesses: (a) are engaged in ~~differential~~different commercial activities, which generate sales revenue and incur costs and expenses; (b) the operational results are revised regularly by the ~~Group's~~Ecopetrol Business Group’s Governance that makes operational decisions to allocate resources to the various segments and assess their performance; and (c) there is differentiated financial information available. Internal transfers represent sales to ~~inter-company~~inter–company segments and are ~~registered~~recorded and presented at market prices.

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Ecopetrol Business Group’s financial statements are disclosed below. The Ecopetrol Business Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.

- IFRS 16 “Leases: was issued in January 2016 and replaces IAS 17“Leases”, IFRIC 4“Determining whether an Agreement contains a lease” SIC-15“Operational leases – Incentives” and SIC-27,“Evaluating the Substance of Transactions involving the Legal Form of a Lease”. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees - leases of “low value” assets (e.g., personal computers) and short-term leases (i.e., lease with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognize a liability to make lease payments (i.e., lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-to-use asset). Lessees will be required to separately recognize interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting under IFRS 16 is substantially unchanged from today’s accounting under IAS 17. Lessors shall continue to classify all leases using the same classification principle as in IAS 17 and distinguish between two types of leases: operating and financial leases.

IFRS 16, which is effective for annual periods beginning on or after January 1, 2019, requires lessees and lessors to make more extensive disclosures than under IAS 17.

Ecopetrol Business Group will adopt IFRS 16 as of January 1, 2019, using a modified retrospective approach on contracts previously identified as leases under IAS 17 and IFRIC 4.

The Ecopetrol Business Group will elect to use the exemptions proposed by the standard on lease contracts for which the lease terms ends within 12 months as of the date of initial application, and lease contracts for which the underlying asset is of low value (e.g., computers, mobile telephones, printers, photocopiers, etc.).

During 2018 the Ecopetrol Business Group has performed an assessment of the impact IFRS 16 upon initial application and concluded that it will not have a significant impact in its consolidated financial statements.

Ecopetrol Business Group will recognize right-of-use assets and a lease liability, currently accounted for as operating leases, primarily on the following leased assets:

Prior to the adoption of IFRS 16, Ecopetrol Business Group, recognized operating lease expenses on a straight-line basis during the lease term. Upon application of IFRS 16, Ecopetrol Business Group will instead recognize a depreciation charge on the right-of-use asset and a financial expense related to the lease liability.

Based on currently available information, upon application of IFRS 16, the Ecopetrol Business Group estimates it will recognize a right-to-use asset for approximately COP$430,000 as of January 1, 2019, and a lease liability for the same amount, which are not considered material. The actual impact upon adoption could be different.

When there is uncertainty regarding treatment of the capital gains tax, the Company must determine whether it considers each uncertain tax treatment separately or in combination with one or more other uncertain tax treatments based on the focus that best predicts resolution of the uncertainty. Ecopetrol will re-assess a decision or estimate required by this interpretation if the facts and circumstances on which the decision or estimate was based change, or as a result of new information affecting the decision or estimate.

Additionally, upon assessing whether and how an uncertain tax treatment affects determination of the tax gain (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, an entity will assume that a tax authority will inspect the amounts it is entitled to examine and have complete knowledge of all related information when those reviews are carried out.

~~Ecopetrol adopted for the first time the following amendments to the IFRS issued by the IASB, applicable for the period covered by this report:~~

~~The following accounting standards will become effective in future periods and are being implemented and /or assessed:~~

In relation to classification and measurement, the Group made and assessment on its financial assets and liabilities and concluded that: a) the valuation of financial assets and liabilities measured at amortized cost is consistent with the Group’s business model, which seeks to pay or receive cash flows at a certain moment; b) the amortized cost valuation method does not apply to short-term accounts payable and receivables, as they do not have an associated interest rate and their settlement is less than one year; and c) investment portfolios and financial derivatives continue to be measured at fair value with changes in fair value through profit or loss, in compliance with their function within the Group’s business model.

Based on the aforementioned evaluations, the current classification of the Group's financial instruments is consistent with its business model and no significant change to the current accounting is expected.

With respect to the impairment assessment model applied to financial assets valued at amortized cost, Management believes that the adoption of IFRS 9 will not result in any impact, taking into account processes executed to monitor credit risk, knowledge prior to the financial situation of the counterparties with which transactions are made, and the quality of the portfolio.

Finally, with respect to the hedging accounting model, as an accounting policy, the Group decided to continue applying the guidance of IAS 39 for existing operations. Should Ecopetrol decide to establish new hedges, the requirements of IFRS 9 will be assessed to establish the relationship of those hedges to and their alignment with risk management objectives, as well as the qualitative and quantitative components to be considered for effectiveness of the assessment.

IFRS 16 “Leases” was issued in January 2016 and replaces IAS 17 “Leases,” IFRIC 4 “Determination as to whether an agreement contains a lease contract,” SIC-15 “Operational leases – Incentives” and SIC-27 “Assessment of the share of transactions that legally involve a lease.”

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

The Ecopetrol Business Group will apply this standard on January 1, 2018, using the modified retrospective method, which allows adjusting the calculated impacts within equity, at the date of initial application, without adjusting the comparative years. Management estimates that the adoption of the new standard will not have a material effect; nevertheless, the adoption will required the implementation of new internal controls, changes in accounting procedures and policies to allow documentation on the adoption of the standard and its future application.

During the process of implementing IFRS 15, sources of ordinary income were assessed, considering the identification of contracts with customers, performance obligations, the determination of transaction prices, the association of prices with performance obligations, and the recognition of income when such obligations are fulfilled. The analysis included the following aspects by segment:

~~Exploration and production~~: Revenues in this segment correspond to the sale of oil and natural gas. The Group assessed the following: agreements with partners in joint operations, long-term contracts, over and underlifting, production, royalties, role of principal and agent, purchase and sale agreements, take-or-pay agreements and variable price components. No significant impacts were identified for the recognition, measurement or presentation of revenue in this segment.

The Group assessed whether the operating partner in a joint operation can have a contract with another non-operator partner to market and sell the non-operator product to a third party. The analysis included whether one of the parties acts as principal or agent in the agreement. The operator evaluates whether it records gross income based on total production or net income based on its net operating interest. The non-operator evaluates the moment of revenue recognition. The Ecopetrol Business Group does not maintain significant agreements with non-operating partners whereby it assumes the role of agent.

~~Transport and Logistics~~: Revenues in this segment correspond to the income from transport, storage and wholesale commercialization of crude or refined products derived from petroleum either by pipeline, rail, barge or truck. Pipelines and other transportation systems can be used to move crude oil from production sites to refineries and deliver the various refined products to fuel distributors. The main aspects evaluated are ship or pay and ship and pay contracts, variable price components and deposit agreements. The Ecopetrol Business Group has evaluated the performance obligations established in the provision of service, noting that there are no conditions with effects on the variable price related to volumetric adjustments or other contractual conditions that prevent recognition of income.

~~Take-or-pay contracts~~: Commodity sales contracts and some firm storage and transportation contracts can be structured as more complex purchase or minimum payment contracts, which specify minimum quantities of product that a customer will pay, even if they choose not to receive or use them. The quantities of products that a customer chooses not to take or use in the specified delivery period are called "deficient quantities."

~~No significant impacts were identified for recognition, measurement or reporting of revenue for this segment.~~

~~F-35~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~Refining, Petrochemicals and Biofuels~~: Revenues in these segments correspond to the refining of oil, the processing and purification of natural gas, and the production of petrochemicals and biofuels. The main aspects assessed are long-term contracts, variable price components, non-monetary agreements, discounts, financing components and refinery network deliveries. No significant impacts were identified for the recognition, measurement or reporting of revenue for this segment.

For each of these segments, income is recognized when the goods or services have been delivered to customers at the established delivery points (when the performance obligation is fulfilled), whereby the transfer of the goods takes place and the risks associated with the products have been accepted by customers.

Regarding the agent and principal structure, as part of the process of selling products or services, the Ecopetrol Business Group enters into contracts to acquire, on behalf of the customer, other products or provide services. Under these contracts, the Ecopetrol Business Group is considered as the entity responsible for fulfilling the specific performance obligation. In some cases an inventory risk is not maintained before or after having sold the good or rendered the service. The Ecopetrol Business Group has assessed the impact on recognition in both cases and does not expect significant effects in the adoption of the new standard.

As a result of the analysis of these segments, it was concluded that: a) for contracts with several performance obligations, the Group concluded that such contracts are interdependent; therefore, the prices assigned are not independent and the application of a pricing methodology was not required; b) the Ecopetrol Business Group acts as principal in its transactions where it controls assets before transferring them to a client; c) the Group recognizes variable considerations in transaction prices unless they cannot be reliably measured, in which case the recognition is deferred until the uncertainty is resolved; d) the product's method is used by the Group to recognize income from long-term contracts with partial deliveries of goods; e) no effects associated with contract costs were identified when they were recognized in the accounting period and capitalization of the costs is not required; and, f) non-monetary agreements are recognized at fair value.

IFRS 16 "Leases" provides a new model for a lessee's accounting, according to which all leases, other than those of short-term and with small amounts, will be recognized in the balance sheet, as an asset (right of use) and a liability (financial lease) and in the statement of profit or loss, the respective amortization of the right of use during the term of the lease. IFRS 16 will be effective for annual periods beginning on or after January 1, 2019, with limited possibilities for early implementation. IFRS 16 replaces the current IAS 17 "Leases" and IFRIC 4 "Determination of whether an agreement contains a lease".

IFRS 16 "Leases" contains a new model for the identification of leases and their treatment in the financial statements for lessees. As a result of its implementation, oil and gas companies could recognize more assets and liabilities, mainly derived from the rental of drilling equipment and offices.

Ecopetrol has completed its initial assessment and started an action plan for its implementation. The Group will continue to perform a more detailed analysis of the potential impact on the financial statements from the adoption of IFRS 16 and does not expect to adopt it in advance.

~~F-36~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~Amendments to IFRS 10 and IAS 28: Asset sale or contribution between an investor and its associate or joint venture.~~

The amendments address the conflict between IFRS 10 and IAS 28 as to the treatment of control loss of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the asset sale or contribution that constitutes a business, as defined in IFRS 3, between the investor and its associate or joint venture, is recognized in its entirety. However, any gain or loss resulting from an asset sale or contribution that is not a business, is recognized only up to the interests of investors who are not related to the associate or joint venture. The IASB has deferred the effective date of these amendments indefinitely, but an entity that early adopts it must apply them prospectively.

~~Annual Improvements to IFRS Standards 2014-2016 cycle: Modifications to the following standards:~~

IFRS 12: The interpretation clarifies the scope of the standard by specifying that disclosure requirements in the standard, except those listed in paragraphs B10 to B16, apply to the interests of an entity listed in paragraph 5 (subsidiaries, joint arrangements, associates and non-consolidated structured entities), which are classified as held for sale or discontinued operations in accordance with IFRS 5.

~~IFRIC 22 Transactions in foreign currency and early consideration: The interpretation deals with transactions in foreign currency where:~~

~~There is a consideration that is denominated in foreign currency;~~

~~The entity recognizes an asset for early payment or a deferred tax liability with respect to such consideration, before the recognition of the related asset, expense or income; and~~

~~The asset for said advance or deferred tax liability is not monetary.~~

~~The Interpretations Committee reached the following conclusions:~~

~~The date of the transaction, in order to determine the exchange rate, is the date of the initial recognition of the non-monetary advance or deferred tax liability.~~

~~If there are several payments received in advance, a transaction date is established for each payment.~~

~~These~~ new accounting policies are subject to change until the Ecopetrol Business Group presents its first financial statements ~~on the initial application date.~~

~~F-37~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed~~under IFRS 16 in ~~millions of Colombian pesos, unless otherwise stated)~~2019.

Cash and cash equivalents

Cash and cash equivalents details as of December 31, ~~2017~~2018 and ~~2016~~2017 is as follows:

	2017		2016		2018		2017
Banks		5,484,981		3,319,465		4,511,078		5,484,981
Short-term investments		2,459,438		5,090,048
Short–term investments						1,799,597		2,459,438
Cash		1,466		954		1,069		1,466
		7,945,885		8,410,467		6,311,744		7,945,885

As of December 31, ~~2017,~~2018, cash and cash equivalents balance included ~~COP $ 96,758~~COP$92,331 and ~~COP $ 114,206~~COP$96,758 as of December 31, ~~2016,~~2017, of restricted cash to be used exclusively for the payment of loans principal and interest obtained by Oleoducto Bicentenario and Oleoducto de los Llanos. The use of ~~short-term~~short–term financial investments depends on the liquidity needs of the Ecopetrol Business Group.

The fair value of cash and cash equivalents approximates their book value due to their ~~short-term~~short–term nature.

The return on cash and cash equivalents for the year ended December 31, ~~2017~~2018 was approximately 3% (2017 – 4.2% ~~(2016 - 3.5%~~).

The following table reflects the credit quality of issuers of investments included in cash and cash equivalents:

Rating	2017		2016		2018		2017
AAA		2,807,170		3,198,394		3,092,236		2,807,170
BBB						1,305,037		-
A1		2,922,714		1,466,015		907,453		2,922,714
BRC1 +		1,152,593		312,290
BRC1+						470,623		1,152,593
F1+						222,454		-
A-2						147,186		27,350
AA						107,520		-
F1		896,231		545,872		48,566		896,231
Aa3		99,029		-		-		99,029
Aa2		27,868		-		-		27,868
A-2		27,350		-
No rating available		12,750		67,185
F2		180		409,717		-		180
A1+		-		73,470
F1+		-		2,188,471
Prime-2		-		78,989
F3		-		37,172
Prime-3		-		32,748
B		-		144
Other						10,669		12,750
		7,945,885		8,410,467		6,311,744		7,945,885

See credit risk policy in Note ~~30.3.~~

28.2.2

~~F-38~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

Trade and other receivables, net

The balance of trade and other receivables, net of provision allowance for doubtful accounts, is comprised as follows as of December 31, ~~2017~~2018 and ~~2016:~~2017:

	2017		2016		2018		2017
Current
Customers
Foreign		2,052,829		1,366,322		2,404,531		2,052,829
Domestic		1,533,058		1,180,577		1,512,821		1,533,058
Fuel price stabilization fund (1)		2,256,312		1,203,811		3,828,691		2,256,312
Related parties (Note 31)		23,013		97,730
Industrial services		26,223		60,025		154,152		26,223
Accounts receivable from employees (2)		34,461		42,407
Accounts receivable from employees						78,459		34,461
Related parties (Note 29)						23,480		23,013
Other		173,022		261,829		192,109		173,022
		6,098,918		4,212,701		8,194,243		6,098,918

Non-current
Accounts receivable from employees (2)		484,504		425,468
Related parties (Note 31)		154,810		170,121
Fuel price stabilization fund (1)		77,510		77,510
Non–current
Accounts receivable from employees						470,609		484,504
Related parties (Note 29)						117,824		154,810
Other		60,308		56,311		167,141		137,818
		777,132		729,410		755,574		777,132

(1)

Accounts receivable from the Ministry of Finance and Public Credit, arising from the differences between the international parity price of regular motor gasoline and diesel and the prices charged by the Ecopetrol Business Group, in accordance with Resolution 180522 issued on March 29, 2010, as amended. The Ministry of Finance and Public Credit actually settles the payments.

~~(2)~~

Ecopetrol transferred the administration, management and control of loans granted to employees to Cavipetrol (“Corporación de los trabajadores de la Empresa Colombiana de Petróleos Ecopetrol S.A.").

The following shows the changes in the allowance for doubtful accounts for the year ended December 31, ~~2017~~2018 and ~~2016:~~2017:

	2017			2016			2018			2017			2016
Opening balance		144,329			160,406			170,016			144,329			160,406
Additions of allowances, net		35,229			19,438
Accounts receivable write-off and uses		(9,542	)		(35,515	)
Additions, net								107,725			35,229			19,438
Accounts receivable write–off and uses								(9,087	)		(9,542	)		(35,515	)
Closing balance		170,016			144,329			268,654			170,016			144,329

Inventories, net

The balance of inventories, net ~~of allowance~~allowances for losses, as of December 31, ~~2017~~2018 and ~~2016~~2017 is as follows:

	2017		2016		2018		2017
Crude oil		1,836,363		1,557,267		1,958,572		1,836,363
Fuels and petrochemicals		1,481,777		1,270,870		1,524,548		1,481,777
Materials for the production of goods		1,283,256		1,013,764		1,617,287		1,283,256
		4,601,396		3,841,901		5,100,407		4,601,396

The following is the changes of the allowances for losses for the years ended December 31, 2018 and 2017:

	2018			2017			2016
Opening balance		194,507			265,435			198,539
(Reversals) additions, net		(115,778	)		9,134			41,957
Foreign currency translation		9,717			(4,266	)		50,053
Uses		(1,508	)		(75,796	)		(25,114	)
Closing balance		86,938			194,507			265,435

~~F-39~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~The following is the changes of the allowance for losses, for the years ended December 31, 2017 and 2016:~~

2017 2016
Opening balance 265,435 198,539
Additions 9,134 41,957
Foreign currency translation (4,266 ) 50,053
Uses (75,796 ) (25,114 )
Closing balance 194,507 265,435

Other financial assets

The balance of other financial assets as of December 31, ~~2017~~2018 and ~~2016~~2017 is as follows:

	2017		2016
					2018		2017
Assets measured at fair value through profit or loss
Investment Portfolio - Local currency		3,310,338		2,519,311
Investment Portfolio - Foreign currency		3,194,287		4,116,987
Investment Portfolio – Local currency						3,389,869		3,310,338
Investment Portfolio – Foreign currency						4,754,369		3,194,287
		6,504,625		6,636,298		8,144,238		6,504,625
Assets measured at amortized cost		3,636		4,152		3,577		3,636
Hedging instruments		25,464		46,445		-		25,464
Total		6,533,725		6,686,895
						8,147,815		6,533,725

Current		2,967,878		5,315,537		5,321,098		2,967,878
Non-current		3,565,847		1,371,358
Non–current						2,826,717		3,565,847
		6,533,725		6,686,895		8,147,815		6,533,725

The average return of the investment portfolio in Colombian pesos and U.S. dollars was approximately 5.4% (2017 – 7.4% ~~(2016- 8.1%~~) and ~~1.1% (2016 - 0.8%~~approximately 2.1% (2017 – 1. 1%), respectively.

Changes in fair value are recognized in financial ~~result~~results (Note ~~29)~~27).

9.1

Restrictions

As of December 31, ~~2017~~2018 and ~~2016,~~2017, there were no ~~investment~~investments with a restricted use.

On November 6, 2016, through the Ministries of Mines and Energy and Finance and Public Credit, the termination of Ecopetrol's sequester status in the process of nullity and re-establishment of rights filed against the Comuneros de Santiago de las Atalayas was confirmed. In view of the foregoing, the restricted assets related to this case were released Ecopetrol (see Note 23.3 – Comuneros – Santiago de las Atalayas provisions, for further information).

9.2

Maturity

The following are the maturities of other financial assets as of December 31, ~~2017~~2018 and ~~2016:~~2017:

2017 2016
Up to 1 year 2,967,878 5,315,537
1-2 years 1,588,145 838,786
2-5 years 1,817,558 497,204
> 5 years 160,144 35,368
6,533,725 6,686,895

~~F-40~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

	2018		2017
Up to 1 year		5,321,098		2,967,878
1 – 2 years		1,847,241		1,588,145
2 – 5 years		823,425		1,817,558
> 5 years		156,051		160,144
		8,147,815		6,533,725

9.3

Fair value

The following is the balance of other financial assets by fair value hierarchy level as of December 31, ~~2017~~2018 and ~~2016:~~2017:

	2017		2016		2018		2017
Level 1		317,912		25,066		372,636		317,912
Level 2		6,186,713		6,611,232		7,771,602		6,186,713
		6,504,625		6,636,298		8,144,238		6,504,625

There were no transfers between hierarchy levels for the years ended December 31, ~~2017~~2018 and ~~2016.~~2017.

The securities comprising ~~Ecopetrol's~~Ecopetrol’s portfolio are valued on a daily basis according to the instructions issued by the Financial Superintendence of Colombia. To this end, the information provided by authorized entities is used, which includes data from active markets. For cases in which market data is not available, other directly or indirectly observable data is used.

For U.S. ~~dollar-denominated~~dollar–denominated investments, fair value is based on information released by Bloomberg, while for investments denominated in Colombian pesos, fair value is provided by Infovalmer, an entity authorized by the Financial Superintendence of Colombia to provide this service.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

Within the investment valuation hierarchy process, ~~in addition to the information used for the valuation,~~ other relevant aspects are taken into account, such as the issuer’s rating, investment rating and the risk analysis of the issuer performed by the Ecopetrol ~~which makes it possible to establish the appropriate hierarchy level for investments.~~Business Group.

9.4

Credit rating

The following table reflects the credit quality of the issuers of other financial assets measured at fair value through profit or loss:

Rating	2017		2016
					2018		2017
A1						3,148,043		1,149,606
AAA		3,175,727		1,858,665		3,105,894		3,175,727
A1		1,149,606		3,060,660
BRC1+						611,905		-
F1+						353,175		-
AA-						455,584		233,668
AA+		1,067,989		50,192		193,747		1,067,989
A+						161,160		175,767
A						80,334		300,179
AA						15,430		-
BBB+						18,731		-
BBB						-		21,835
BBB-		378,939		-		-		378,939
A		300,179		-
AA-		233,668		3,730
A+		175,767		-
BBB		21,835		-
AA		-		5,289
F1+		-		1,636,039
No rating available		915		21,723		235		915
		6,504,625		6,636,298		8,144,238		6,504,625

See credit risk policy in Note ~~30.3.~~

~~F-41~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~28.2.2

10.

Taxes

10.1

Current tax assets and liabilities

The balance of current tax assets and tax liabilities as of December 31, ~~2017~~2018 and ~~2016~~2017 is as follows:

	2018		2017
Current tax assets
Income tax⁽¹⁾		765,399		165,437
Credit tax balance⁽²⁾		54,350		234,410
Other taxes		211,558		225,527
		1,031,307		625,374
Current tax liabilities
Income tax⁽¹⁾		1,065,688		1,305,011
National tax and surcharge on gasoline		141,408		136,706
Carbon tax		48,520		51,383
Other taxes⁽³⁾		495,684		512,588
		1,751,300		2,005,688

2017 2016
Current tax assets
Income tax (1) 165,437 308,868
Credit tax balance (2) 234,410 598,140
Other taxes 225,527 222,090
Total 625,374 1,129,098

Current tax liabilities
Income tax (1) 1,305,011 1,478,294
National tax and surcharge on gasoline 136,706 324,402
Carbon tax 51,383 -
Other taxes (3) 512,588 328,244
Total 2,005,688 2,130,940

(1)

~~Corresponds to the resulting value after subtracting advanced tax payments, favorable balances and advance payments settled in the previous year's statement.~~ The main variation compared to the previous period corresponds to the favorable balance of the income tax that was generated by the anticipated voluntary payment made in November and December 2018 by Ecopetrol S.A., in accordance with the Decree 2146 of November 22, 2018 and the decrease in non-deductible ~~expenses, and the effects of the tax reform on issues such as depreciation and exchange difference.~~expenses.

(2)

Includes mainly the value added tax (VAT) receivable balance.

(3)

Mainly includes VAT payable balances, ~~and~~ industry and commerce ~~tax.~~

~~10.2~~

~~Income tax~~

~~In accordance with Law 1819/2016 (Tax Reform), the tax regulation applicable in Colombia for the 2017 taxable year and subsequent years is as follows:~~

~~The income~~ tax ~~rate will be 34% for the taxable year 2017~~ and ~~33% for the taxable year 2018~~royalties and ~~subsequently.~~

~~A surtax was established on income tax for 2017 and 2018, of 6% and 4%, respectively, which is applicable when taxable income exceeds COP$800 million.~~

Companies located in a free trade zone are taxed at a rate of 20%. If the Group located in a free trade zone has a Legal Stability Contract (hereinafter CEJ, for its acronym in Spanish), the income tax rate will continue to be 15% during the term of the said contract. This applies to Reficar, Bioenergy Zona Franca and Comai.

Presumptive income will be calculated by applying a 3.5% rate to the liquid equity balance of the immediately preceding year. For entities that have a CEJ, the stabilized rate for the calculation of presumptive income will continue to 3%, during the term of the contract.

For fiscal year 2017, the Ecopetrol Business Group has companies that are subject to a 40% income tax rate, companies in Free Trade Zones that are subject to a 15% income tax rate (which have CEJ) and 20% income tax rate, and other entities that are subject to statutory income tax rates in the country where they are incorporated.monetary compensations.

~~F-42~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

f)10.2

~~Aligns~~Income tax

In December 2016, the Colombian Congress adopted Law 1819, which introduced more changes to the Colombian tax system, applicable beginning in 2017 including the following aspects:

A unified income tax rate was set, which will be 34% for 2017 and 33% for 2018 and subsequently.

An income tax surtax for profits above COP$800 million is set which will be 6% for 2017 and 4% for 2018.

The income tax for tax free trade zone users will increase from 15% to 20% in 2017. The tax rate of companies located in a free trade zone with the ~~tax depreciation systems~~legal stability agreement is 15% during term of the said agreement.

The presumptive income rate will increase from 3% to ~~accounting depreciation and establishes a limit~~3.5% from 2017. Tax losses accumulated until December 31, 2016 that have not been compensated, are subject to may be carried forward in accordance to the formula provided in the article 290 of Law 1819/2016.

For fiscal year 2018, the Ecopetrol Business Group has subsidiaries that are subject to a 37% income tax rate, subsidiaries in free trade zones that are subject to a 15% or 20% income tax rate depending upon whether or not the comply with the CEJ rules, and other subsidiaries that are subject to statutory income tax rates in the country where they are incorporated in.

Depreciation and amortization methods and annual ~~depreciation deductible amount based on~~percentages are limited to the ~~table~~ established in the tax ~~reform. Tax amortization of oil~~rule and ~~gas investments is calculated based~~depends on the ~~technical production unit method which is aligned with accounting amortization.~~type of asset. For example, machinery and equipment depreciate at 10%, infrastructure (including pipelines) at 2.22% and vehicles and computers at 20%, among others.

The cost of acquisition of exploration rights, ~~G & G,~~geology and geophysic (G&G), exploratory drilling, etc., is capitalized for tax purposes until the technical and commercial feasibility of extracting the resource is achieved.

~~Accumulated tax loss balance generated starting January 1, 2017 can~~Tax losses may be offset ~~with the liquid~~against ordinary net income ~~generated over~~obtained in the following 12 ~~years (unlimited for those with CEJ).~~taxable years.

For the period January 1, 2013 through December 31, 2016, taxable income in Colombia was subject to a 25% income tax rate with an additional 9% related to the income tax for equality "CREE", excluding tax payers who, based on an express provision manage special rates, and 10% rate on income from occasional profits; 15% income tax rate for companies in the free trade zone pay, and those not generating net income or whose net taxable income or with net taxable income lower than the presumptive income at 3% rate on equity.

On December 23, 2014, through Law 1739, a surtax on income for equality - CREE was established for the years 2015, 2016, 2017 and 2018, which is applicable entities with taxable income above COP$800 million, at rates of 5%, 6%, 8% and 9% per year, respectively.

For taxable year 2016, the Ecopetrol Business Group had companies subject to a 40% income tax rate, companies in free trade zones subject to a 15% and 20% income tax rate, and other entities that were subject to statutory income tax rates in the country where they are incorporated, and some other entities that pay taxes under presumptive taxable income in Colombia.

~~As of December 31, 2017 and 2016,~~ Refinería de Cartagena, Bioenergy, ~~and~~ Ecopetrol Costa Afuera ~~S.A.S., subsidiaries,~~and Andean Chemicals Ltd have ~~accrued accumulated~~ tax losses ~~that can be offset with future taxable income of COP$4,288,957 and COP$ 3,352,216, respectively, originated~~generated between 2009 and ~~2017. As per current tax legislation, accumulated tax losses accrued starting fiscal year 2007 can be offset, or tax adjusted, at any time, against taxable income without prejudice~~2017 to carry forward, for a net value of ~~the periods in which the entity was subject to the presumptive income regime. Accumulated tax losses cannot be transferred to its shareholders. However, in accordance withArticle 290~~COP$4,292,418 as of ~~Law 1819~~December 2018 and COP$4,288,957 as of ~~2016, the unused accumulated tax losses through~~ December ~~31, 2016, can be offset based on a formula contained in that article.~~2017.

~~As of December 31, 2017,~~In 2018, tax losses without a deferred tax ~~assets related~~base expiration date amount to ~~unused accumulated~~COP$4,078,439 with a deferred tax ~~losses, which do not expire, amounted to~~of COP$~~611,766~~792,452, attributable to the Refinería de ~~Cartagena. Such deferred tax assets were calculated based on~~Cartagena, and COP$4,078,439 of accumulated income tax losses. The recognition of this deferred tax is based on the refinery's operational stability of the refinery presented in 2017, the projection of margins and the optimization of costs.

~~The assessment of the accumulated tax losses related~~47,803 attributable to ~~companies Ecopetrol Costa Afuera S.A.S., Bioenergy and Bioenergy Zona Franca with respect to deferred tax is mentioned in this note under the chapter titled "Deferred Income Tax".~~

In accordance with Article 290 of Law 1819 of 2016, the unused presumptive income surplus and minimal base surplus generated before 2017 on income tax and CREE can be used based on a formula contained in said Article and subject to the terms established in Article 189 of the Tax Code.Bioenergy.

~~F-43~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

Statute of limitations ofon review ~~for~~of tax returns

Tax returns may be reviewed by the tax authorities ~~within 5~~for 6 years following the filing date and/or amendment, if the returns reflected tax losses.

~~As of the year~~Starting 2017, the statute of limitations covering tax returns ~~will be~~is 3 years as of the date of expiration or as of the filing date, when these have been filed extemporaneously. With respect to transfer pricing, the statute of limitations ~~will be~~is 6 years.

With respect to tax returns with favorable balances, the statute of limitations will be 3 years as of the filing date of the request for ~~devolution~~refunds or offsetting.

With regard to tax returns in which tax losses are ~~offset,~~carried forward, these will be considered determined after 6 years counted as of their filing date. With respect to tax returns where tax losses are calculated, the statute of limitations will be 12 years and if the losses are ~~offset~~carried forward within the last 2 years of the ~~12-year~~12–year period, the statute of limitations will be extended up to 3 additional years from the year of offsetting.

Income tax expense

The following is a detail of the income tax recognized in profit or loss for the years ended December 31, 2018, 2017 ~~2016~~ and ~~2015:~~2016:

	2017			2016		2015			2018			2017		2016
Current income tax		5,144,962			4,517,336		3,510,546			7,539,093			5,108,549		4,376,706
Adjustments to prior years’ tax		(68,270	)		-		-
Deferred income tax		723,576			25,710		(2,800,193	)		783,136			472,772		25,710
Adjustments to prior years’ current and deferred tax										(63,744	)		218,947		140,630
Income tax expenses		5,800,268			4,543,046		710,353			8,258,485			5,800,268		4,543,046

Reconciliation of the income tax expenses

The reconciliation between the income tax expenses and the tax determined based on the ~~official~~statutory tax rate applicable to the Ecopetrol Business Group in Colombia is as follows:

	2017			2016				2015			2018			2017			2016
Net income (loss) before income tax		13,769,662			7,790,526				(5,578,626	)
Net income before income tax												20,613,875			13,769,662			7,790,526
Statutory rate		40	%		40	%			39	%		37	%		40	%		40	%
Income tax at statutory rate		5,507,865			3,116,210				(2,175,664	)		7,627,134			5,507,865			3,116,210

ETR reconciliation items:
Effect in changes in tax rates and tax base (CREE tax)		910			807,989				2,063,782
Non-deductible wealth tax		85,872			229,375				253,422
Foreign currency translation and exchange difference		(186,787	)		(234,316	)	-		310,657			751,210			(186,787	)		(234,316	)
Prior year taxes		274,777			140,630				(21,233	)
Non-deductible expenses		129,531			486,300				251,246
Valuation of investments		-			-				48,129
Non-taxable income		(11,900	)		(3,142	)			(19,986	)
Effect Leon well (Ecopetrol America Inc.)												281,912			–			–
Effect in changes in tax rates and tax base												172,352			186,588			807,989
Non–deductible expenses												56,061			211,042			486,300
Non–deductible wealth tax												–			85,872			229,375
Prior years’ current and deferred tax												(63,744	)		218,947			140,630
Non–taxable income												(78,303	)		(47,509	)		(3,142	)
Impairment of long–term assets												(128,461	)		(175,750	)		–
Effect of tax reform												(359,676	)		–			–
Income tax calculated		5,800,268			4,543,046				710,353			8,258,485			5,800,268			4,543,046

Current		5,076,692			4,517,336				3,510,546			7,416,038			5,076,692			4,517,336
Deferred		723,576			25,710				(2,800,193	)		842,447			723,576			25,710
		5,800,268			4,543,046				710,353			8,258,485			5,800,268			4,543,046

The effective tax rate as of December 31, 2018 is 40.1% (2017 - 42.1% and 2016 - 58.3%). The decrease compared to the previous year is mostly due to the following concepts: a) Decrease in the nominal rate 40% in 2017 to 37% in 2018; b) improvement of the results before taxes of the Ecopetrol Business Group; c) Effect for tax reform d) Adjustment for differential taxable bases; e) adjustment for differential tax rates of the Ecopetrol Business Group different from the nominal 37%, with a rate lower than the nominal rate; f) application of a lower rate for the long-term amortizable deferred tax asset; and g) elimination of wealth tax.

~~F-44~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

The effective tax rate (ETR) as of December 31, 2017 was 42.1% (2016 - 58.3%). The decrease compared to the previous year is mainly due to the following: a) Decrease in non-deductible expenses due to the effects of the transportation tax; b) Adjustment for differential of taxable bases; c) The adjustment for differential tax rates of the Group other than the nominal 40%, where the most significant item is the deferred tax asset to be amortized in the long term, with a rate lower than the nominal rate; and d) The adjustment of the wealth tax due to the effect of the rate, which is 0.4% for 2017, compared to 1% in 2016.

Income and supplementary tax returns for taxable years 2011, 2012, 2014, 2015, ~~and~~ 2016 and 2017 and CREE ~~returns for~~of the taxable years 2014, 2015 and 2016 of ~~the~~ Ecopetrol Business Group companies are subject to acceptance and review by the tax authorities. Management of the Ecopetrol Business Group companies considers that the amounts ~~accounted~~recognized as liability for ~~payable~~ taxes ~~are sufficient and~~payable are supported by ~~current~~the regulations, doctrine and case law applicable to any claim that could be eventually filed with respect to such years. The Ecopetrol Business Group's strategy is not making tax decisions based on aggressive or less-assured positions that could put into question its tax returns.

Deferred income tax

The following is the detail of the deferred tax balance ~~on gains~~ as of December 31, ~~2017~~2018 and ~~2016:~~2017:

	2017			2016
							2018			2017
Deferred tax assets		4,016,161			4,248,014			3,879,427			4,016,161
Deferred tax liabilities		(1,333,280	)		(1,639,703	)		(1,337,943	)		(1,333,280	)
Net deferred income tax		2,682,881			2,608,311			2,541,484			2,682,881

The deferred income tax assets and liabilities ~~are reported net in compliance with the requirements of international financial reporting standards (IAS 12). As~~as of December 31, ~~2017~~2018 and ~~2016, the deferred tax detail~~2017, is as follows:

	2017			2016			2018			2017
Deferred tax assets (liabilities)
Provisions ~~(3)~~(1)		1,840,988			1,875,965			1,994,762			1,840,988
Employee benefits (2)		1,373,561			656,997			1,161,860			1,373,561
Loss carry forwards(3)		611,766			477,808			1,002,062			611,766
Accounts payable		208,618			311,607			1,193,098			208,618
Accounts receivable		94,864			133,840			79,591			94,864
Property plant and equipment and Natural and environmental resources ~~(1)~~(4)		(1,006,299	)		(220,315	)		(2,304,140	)		(1,006,299	)
Goodwill		(408,932	)		(345,288	)		(404,394	)		(408,932	)
Borrowings and other financial liabilities		-			(113,497	)
Investments and derivative instruments								(170,960	)		(49,258	)
Others		(31,685	)		(168,806	)		(10,395	)		17,573
		2,682,881			2,608,311
								2,541,484			2,682,881
Deferred tax assets		4,016,161			4,248,014			3,879,427			4,016,161
Deferred tax liabilities		(1,333,280	)		(1,639,703	)		(1,337,943	)		(1,333,280	)
		2,682,881			2,608,311			2,541,484			2,682,881

(1)

The most representative item corresponds to the asset retirement obligation (ARO).

(2)

Actuarial calculations for health, retirement pensions, education, pension bonds and other benefits to long–term employees.

(3)

The increase is because of the tax reform that allows a greater recognition of deferred tax on tax losses and excess presumptive income in Refinería de Cartagena mainly.

(4)

For tax purposes, natural and environmental resources and property, plant and equipment have a useful life and a depreciation and amortization calculation methodology different from those determined as per international accounting ~~standards.~~standards, within this item occasional gains of 10% is included, corresponding to lands. The main variation corresponds to the tax rate reduction from 33% to 30%.

~~(2)~~

~~Actuarial calculations for health, retirement pensions, education, pension bonds and other benefits to long-term employees.~~

~~(3)~~

~~The most representative item corresponds to the provision for well abandonment.~~

~~F-45~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

The table above takes into consideration the offsetting of deferred tax assets and deferred tax liabilities within the same tax jurisdiction. The overall deferred tax position in a particular tax jurisdiction determines if a deferred tax balance is presented within deferred tax assets or deferred tax liabilities. Accordingly, certain deferred tax assets are presented within deferred tax liabilities, and certain deferred tax liabilities within deferred tax assets.

~~The~~ following is the detail of the deferred tax assets (liabilities), net for the years ended December 31, ~~2017~~2018 and ~~2016:~~2017:

	Property plant and equipment and Natural resources			Provisions			Employee benefits			Loss carry forwards			Accounts payable			Property plant and equipment and Natural resources			Provisions			Employee benefits			Loss carry forwards		Accounts payable
As of December 31, 2015		205,499			1,824,844			-			238,193			726,256
Recognized in profit or loss		(425,814	)		51,121			40,300			239,615			(414,649	)
Recognized in OCI		-			0			616,697			-			-
As of December 31, 2016		(220,315	)		1,875,965			656,997			477,808			311,607			(220,315	)		1,875,965			656,997			477,808		311,607
Recognized in profit or loss		(785,984	)		(34,977	)		(22,818	)		133,958			(102,989	)		(785,984	)		(34,977	)		(22,818	)		133,958		(102,989	)
Recognized in OCI		-			-			739,382			-			-			–			–			739,382			–		–
As of December 31, 2017		(1,006,299	)		1,840,988			1,373,561			611,766			208,618			(1,006,299	)		1,840,988			1,373,561			611,766		208,618

	Goodwill			Borrowings and other financial liabilities			Accounts receivable			Others			Total
As of December 31, 2015		(262,290	)		(540,811	)		17,927			3,804			2,213,422
Recognized in profit or loss		(82,998	)		427,314			115,913			23,488			(25,710	)		(1,297,841	)		153,774			(178,160	)		390,296		984,480
Recognized in OCI		-			-			-			(196,098	)		420,599			–			–			(33,541	)		–		–
As of December 31, 2016		(345,288	)		(113,497	)		133,840			(168,806	)		2,608,311
Recognized in profit or loss		(63,644	)		113,497			(38,976	)		78,357			(723,576	)
Recognized in OCI		-			-			-			58,764			798,146
As of December 31, 2017		(408,932	)		-			94,864			(31,685	)		2,682,881
As of December 31, 2018																	(2,304,140	)		1,994,762			1,161,860			1,002,062		1,193,098

	Goodwill			Borrowings and other financial liabilities			Accounts receivable			Investments and derivative instruments and Others			Total
As of December 31, 2016		(345,288	)		(113,497	)		133,840			(168,806	)		2,608,311
Recognized in profit or loss		(63,644	)		113,497			(38,976	)		78,357			(723,576	)
Recognized in OCI		–			–			–			58,764			798,146
As of December 31, 2017		(408,932	)		–			94,864			(31,685	)		2,682,881
Recognized in profit or loss		4,538			–			(15,273	)		(884,261	)		(842,447	)
Recognized in OCI		–			–			–			734,591			701,050
As of December 31, 2018		(404,394	)		–			79,591			(181,355	)		2,541,484

The Ecopetrol Business Group offsets assets and liabilities for deferred taxes only if it has a legally enforceable right to offset current tax liabilities and assets; and in the case of deferred tax on assets and liabilities, to the extent that they also correspond to income taxes required by the same tax jurisdiction and the same tax authority.

Pursuant to current tax law, losses generated in income and supplementary taxes and/or income tax for equality - CREE before 2017, must be offset with the net income obtained in 2017 and subsequent periods, taking into account the formula set forth in Section 5, Article 290 of Law 1819 of 2016. Tax losses determined must not be tax readjusted.

As of the tax year 2017, companies can offset tax losses obtained in the current period defined, with taxable income generated through the next 12 taxable periods, following the attainment of said tax losses, without prejudice of the period's presumptive income.

Deferred tax assets related to the tax losses generated by the subsidiaries Bioenergy S.A. Ecopetrol Costa Afuera and ~~Bioenergy Zona Franca in the~~Andean Chemicals Ltd for an amount of COP$~~(53,328),~~70,393, and excess presumptive income of ~~Refinería de Cartagena in the~~Bioenergy SA, Ecopetrol Costa Afuera, Hocol Petroleum Company, Andean for an amount of COP$~~(44,475)~~31,863 were ~~written off in 2016 because, even though they can be offset in the long term,~~not recognized, as Management ~~concluded that having a conservative position,~~believes it is not likely that ~~the~~these deferred tax assets ~~related to such tax losses and excess of presumptive income~~ would be recoverable in the short term.

IfDeferred tax assets have been recognized for an amount of COP$1,002,063 related to excesses of presumptive income and the ~~Group would have recognized the~~accumulated tax losses of Refinería de Cartagena amount to COP$948,671 and Bioenergy Zona Franca S.A.S. amount to COP$53,392, as management expects these amounts will be realized in future periods.

The recognition of this deferred tax ~~assets that were not recognized,~~asset is supported with the tax projections and the elimination of presumptive income ~~for~~from the ~~period ended on~~year 2021, contemplated in Law 1943/2018.

In accordance with the tax regulation applicable until December 31, 2016, excess presumptive income and minimum base excesses generated before 2017 ~~would have increased~~in income and supplementary taxes and in income tax for equality – (CREE, as its acronym in Spanish) respectively, they may be compensated with the ordinary taxable income obtained by ~~COP$ 97,803.~~each Company within the following five years, using for this purpose, the formula established the article 290 of law 1819/ 2016.

~~F-46~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

In accordance with tax provisions applicable until December 31, 2016, the surplus of presumptive income and the minimum base generated before 2017 in income and supplementary taxes and in the income tax for equality - CREE, respectively, can be offset with ordinary net income obtained by the Group in the next five years, using for such purpose the formula set forth in Section 6, Article 290 of Law 1819 of 2016.

The movements of deferred income tax for the years ended December 31, ~~2017~~2018 and ~~2016~~2017 are as follows:

	2017			2016			2018			2017			2016
Opening balance		2,608,311			2,213,422			2,682,881			2,608,311			2,213,422
Deferred tax recognized in profit or loss(a)		(723,576	)		(25,710	)		(842,447	)		(723,576	)		(25,710	)
Deferred tax recognized in other comprehensive income ~~(a)~~(b)		798,146			420,599			701,050			798,146			420,599
Closing balance		2,682,881			2,608,311			2,541,484			2,682,881			2,608,311

(a)

This amount includes deferred income tax and adjustments to prior years’.

(b)

The following is the ~~composition~~detail of the income tax recorded ~~against~~in other comprehensive income:

December 31, 2017	Pre-tax			Deferred Tax			After tax
December 31, 2018										Pre–tax			Deferred Tax			After tax
Actuarial valuation gains (losses)		2,251,656			(739,382	)		1,512,274			(29,250	)		33,540			4,290
Cash flow coverage for crude exports		80,896			(54,056	)		26,840			2,258,734			(701,231	)		1,557,503
Other		12,119			(4,708	)		7,411			–			(33,359	)		(33,359	)
		2,344,671			(798,146	)		1,546,525			2,229,484			(701,050	)		1,528,434

December 31, 2016	Pre-tax			Deferred tax			After tax
Actuarial valuation gains (losses)		1,770,139			(616,697	)		1,153,442
Cash flow hedging for future crude oil exports		(537,353	)		220,596			(316,757	)
Derivative financial instruments		(56,804	)		22,722			(34,082	)
Other		-			(47,220	)		(47,220	)
		1,175,982			(420,599	)		755,383

December 31, 2017	Pre–tax		Deferred Tax			After tax
Actuarial valuation gains (losses)		2,251,656		(739,382	)		1,512,274
Cash flow coverage for crude exports		80,896		(54,056	)		26,840
Other		12,119		(4,708	)		7,411
		2,344,671		(798,146	)		1,546,525

December 31, 2016	Pre-tax			Deferred tax			After tax
Actuarial valuation gains (losses)		1,770,139			(616,697	)		1,153,442
Cash flow hedging for future crude oil exports		(537,353	)		220,596			(316,757	)
Derivative financial instruments		(56,804	)		22,722			(34,082	)
Other		-			(47,220	)		(47,220	)
		1,175,982			(420,599	)		755,383

Deferred tax assets (liabilities) not recognized

As of December 31, ~~2017,~~2018, deferred tax assets ~~(liabilities)~~ are not recognized inon the difference between the accounting and tax ~~bases related to~~basis associated with the investments in ~~companies~~associates and joint ventures of Ecopetrol (Base: COP$2,981,901 million - Tax: COP$298,190 million), as the Ecopetrol Business Group ~~as there is no~~does not have any intention to sell any of these investments in the foreseeable future.

10.3

Other taxes

10.3.1

Tax on dividends

~~The new tax on dividends~~Dividends related to profits generated from the year ended December 31, 2017, will be ~~applicable~~subject to ~~foreign companies and entities on profits generated starting 2017.~~

~~The~~withholding at a rate of ~~this~~5%. Further, if the earnings against which the dividends are distributed were not subject to corporate tax, ~~will be 5%. Furthermore,~~said dividends are taxable by the income tax applicable during the distribution period (for 2018 the rate ~~for dividends will be~~is 35%). In this scenario, the 5% tax on dividends will ~~apply~~be applicable to the distributed amount, ~~of the tax distribution,~~ once it ~~has been~~is reduced with the 35% income ~~tax.~~tax rate.

~~For taxed individuals residing in Colombia, the tax on dividends will have a maximum 10% rate that will be applied on~~The non-taxed dividends that the Company will receive will not be subject to withholding tax due to the express provision of the regulation that establishes the dividends that are distributed within the business groups duly registered with the Chamber of Commerce and ~~35% with respect~~decentralized entities, they will not be subject to ~~taxed dividends distributed.~~the retention at the source for this concept.

There are no effects on income tax related to dividend payments made by the Company to its shareholders during 2018 and 2017.

~~F-47~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~There are no effects on income tax related to dividend payments made by the Group to its shareholders during 2017 and 2016.~~

10.3.2

Transfer prices

~~Income~~According to the Colombian tax ~~payers carrying out operations~~law, income taxpayers who enter into transactions with related parties ~~abroad~~ or related parties located in foreign jurisdictions and in free trade zones or ~~companies~~with residents located in ~~countries~~jurisdictions considered tax havens, ~~must~~are obliged to determine their ordinary and extraordinary ~~revenues,~~income for purposes of the income and supplementary tax, its costs and deductions, considering for these operations the arm's length ~~principle for such transactions.~~principle.

~~Such companies~~Ecopetrol submitted ~~their transfer-pricing information statement~~its transfer pricing informative return for the ~~2016 tax~~2017 taxable year and ~~their respective~~its corresponding supporting ~~documents.~~documentation, as well as the country by country notification for the years 2016 and 2017 and the master file for the year 2017, in accordance with current tax regulations.

For ~~the 2017 tax~~fiscal year 2018, the transactions performed with related parties ~~abroad,~~in foreign jurisdictions, as well as the business conditions ~~for such~~under which said operations were carried out and ~~their~~the general structure, did not vary significantly ~~as compared~~ with respect to the previous year. ~~Therefore,~~For this reason, it ~~can be inferred~~is possible to infer that ~~said~~these transactions were ~~performed~~carried out in accordance with the arm's length principle. It is estimated that ~~no adjustments~~there will be ~~required~~no need for adjustments derived from the analysis of transfer prices ~~in 2017,~~for 2018, which ~~entail amendments of~~imply changes in the income provision of the taxable year ~~2017.~~2018.

10.3.3

Value added tax (VAT)

~~As of tax year 2017, the general sales tax~~General VAT rate is 19%~~, with~~ and a differential rate of 5% ~~rate~~ for ~~some~~certain goods and services is ~~maintained in accordance with Articles 184 and 185 of Law 1819 of 2016.~~maintained. The modification on the general rate is effective from January 1st, 2017.

~~As of tax year 2017, the~~ VAT ~~was extended~~taxable event is expanded to ~~the sale of~~all goods ~~at large, the sale or concession of intangibles related~~in general, including intangible goods (related to ~~industrial~~intellectual property) and real estate property ~~and to the provision of services in Colombia, or from services abroad,~~(unless provided otherwise).

Fixed assets are still not levied with VAT, except for ~~express exclusions~~real estate property for residential use, automobile and other fixed assets sold on the ordinary course of business in the name and on behalf of third parties. For this purposes, real estate has been excluded unless the value of the ~~norm, pursuant to Article 173 of Law 1819 of 2016.~~first sale is higher than 26.800 tax value unit (“UVT” by its acronyms in Spanish), approximately COP $854 million, which will be taxed at a 5% rate.

~~Likewise, Article 194~~Unless expressly excluded, services rendered from abroad will be levied with VAT. The assignment of ~~this Law stipulated that the term~~rights is included as a form of service.

Periods for filing ~~requests for~~ VAT ~~deductions~~returns and payments will be 3only two, bimonthly and quarterly. The statute of limitations for the request of VAT credit tax balance is increased to three bimonthly periods ~~immediately~~ following the period of causation.

10.3.4

Wealth tax

Law 1739 of 2014 established the wealth tax for natural and ~~juridical~~legal persons whose possession as of ~~wealth at~~ January 1, 2015 exceeds COP$~~1,000 million.~~1,000. The taxable base for ~~companies~~legal persons is the value of the gross equity ~~value held~~owned as of January 1, 2015, 2016, and 2017 ~~less~~minus the ~~debts valid on~~current liabilities outstanding at the same dates.

The applicable rate will depend on the taxable base of each taxpayer and the value paid ~~value~~ will not be deductible or ~~discountable on~~deductible in the income tax and ~~supplementary taxes~~complementary or in the income tax for ~~equality~~equity - CREE, nor can they be ~~offset by~~compensated with these or ~~any~~with other taxes.

InFor the year 2018 and following, there is no wealth tax, in the case of domestic companies. During 2017, the tax on wealth ~~tax~~ paid by the Ecopetrol Business Group amounted to COP$226,778, which was recognized as an expense infor the ~~period (2016 - COP$569,756).~~year.

~~F-48~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~11.~~10.4

~~Equity instruments measured at fair value~~Tax reform

AsThe Government issued the Law 1943/2018, which makes numerous changes to the Colombian tax rules. The Tax Reform reduces the corporate income tax (CIT) rate from 33% in 2018 to 32% for 2020, 31% for 2021 and 30% for 2022 and onwards.

The presumptive income tax rate (i.e., an alternative tax based on a percentage of the net equity of the last year) is reduced from 3.5% to 1.5% in 2019 and 2020 and 0% for 2021 and onwards.

The thin capitalization rule ratio is modified from 3:1 (which includes all debt that generates interest with local and foreign entities, related or unrelated) to a 2:1 ratio that only considers debt transactions involving related local and foreign parties (including back-to-back transactions involving foreign third parties).

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

Dividend tax

The Tax Reform increases the dividend tax on distributions to foreign nonresident entities and individuals from 5% to 7.5%. In addition, the Tax Reform establishes a 7.5% dividend tax on distributions between Colombian companies. The tax will be charged only on the first distribution of dividends between Colombian entities and may be credited against the dividend tax due once the ultimate Colombian company makes a distribution to its shareholders (nonresident shareholders (entities or individuals) or to Colombian individual residents). The dividend tax on local distributions does not apply if the Colombian companies are part of a registered economic group, or the distribution is to a Colombian entity qualifying for the new Colombian holding company (CHC) regime.

Normalization tax

The Tax Reform establishes a tax amnesty to “normalize” (i) unreported assets; or (ii) nonexistent liabilities that were included on a tax return. The amnesty will apply only for 2019 (25 September 2019 is the due date for filing the normalization tax). The applicable tax rate is 13% of the value of the unreported assets or nonexistent liabilities. For money that is repatriated to Colombia before December 31, ~~2016, Equity instruments measured at fair value mainly included~~2019, and kept in the ~~shares that Ecopetrol owned~~country for two years, the tax rate is reduced to 6.5%. The normalization tax has a far-reaching scope and applies to assets in ~~Empresa de Energía de Bogotá S.A.E.S.P, which were sold~~private foundations, assets in trusts, insurance with savings components, investment funds and other fiduciary business activities.

Value Added Tax (VAT)

Concerning VAT, changes have been made to the list of goods and services excluded from VAT as ~~part~~set forth in Articles 424, 426 and 476 of the ~~shareholding sales plan, authorized~~Tax Code, adding Article 437 to the Tax Code, with regard to guidelines on compliance with formal duties concerning VAT by service providers abroad, and it has been noted that VAT withholding may be up to 50% of the tax amount, subject to regulation by the National ~~Government through Decree 2305~~Government. The VAT rate remains at 19%.

Tax procedure

With regards to procedure, changes have been made: (i) declarations for withholding at source which, that being inefficient, will be enforceable, (ii) electronic notification of ~~November 13, 2014. During~~administrative actions; (iii) payment of the ~~2017, Ecopetrol completed~~entire amount covered by a statement of objections to avoid delinquent interest at the current rate plus two points; and (iv) elimination of the extension of enforcement to three (3) additional years to offset tax losses.

Additionally, an audit benefit was included for fiscal years 2019 to 2020. Under this benefit, private settlement by taxpayers of income tax and supplements that increase net income tax by a minimum of at least 30% or 20% over the net income tax of the immediately preceding year shall be considered firm for six (6) or twelve (12) months, respectively after the date of presentation if not notified of a deadline for correction or special requirement, or a special deadline or provisional settlement, provided that the return is filed timely and the payment is made within the established deadlines.

The above benefit does not apply to: (i) taxpayers who enjoy tax benefits due to their location in a specified geographic region; (ii) if it is demonstrated that declared withholdings at source are non-existent; (iii) if the net income tax is less than 71 UVT (COP$2,433,170). The deadline stipulated in this law does not extend to declarations of withholdings at source nor to the sales tax, which shall be established by the general regulation.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of ~~shares under the sales plan with the following:~~Colombian pesos, unless otherwise stated)

~~On July 29, 2017, the sale of 10,999,163 shares took place, at a selling price of COP$2,000 pesos per share. This sale amounted to COP$21,998.~~

~~On October 19, 2017, the shareholding sales plan was completed, with the sale of the remaining 17,465,872 shares at a price of COP$2,000 pesos per share. This sale amounted to COP$34,932.~~

~~The movement of equity instruments measured at fair value as of December 31, 2017 and 2016 is as follows:~~

2017 2016
Opening balance 51,610 913,488
Fair value adjustments (7,828 ) 126,205
Proceeds from sale of shares (56,930 ) (966,715 )
Profit (loss) on sale of shares 13,236 (21,368 )
Transfers (88 ) -
Closing balance - 51,610

~~12.~~11.

Other assets

The balance as of December 31, ~~2017~~2018 and ~~2016~~2017 of other assets is ~~comprised~~ as follows:

	2017		2016		2018		2017
Current
Partners in joint operations (1)		583,656		735,032		519,460		583,656
Advanced payments to contractors and suppliers						221,767		103,762
Prepaid expenses		115,866		140,606		191,168		115,866
Advanced payments to contractors and suppliers		103,762		151,871
Related parties (Note 31)		7,716		7,135
Related parties (Note 29)						19,214		7,716
Other assets		69,425		988		68,819		69,425
		880,425		1,035,632		1,020,428		880,425
Non-current
Non–current
Abandonment and pension funds (2)		323,621		312,423		392,084		323,621
Employee benefits		202,012		187,969		213,645		202,012
Trust funds						147,471		32,748
Advanced payments and deposits		74,225		63,402		61,556		74,225
Judicial deposits and attachments		43,248		140,338		43,137		43,248
Trust funds		32,748		87,602
Other assets		5,155		35,002		2,837		5,155
		681,009		826,736		860,730		681,009

(1)

Corresponds to the net ~~value~~amount of cash calls and cutbacks generated in relation to the operations carried out with partners through Exploration and Production (E&P) contracts, Technical Evaluations (TEA) contracts and agreements entered in to with the National Hydrocarbons Agency (ANH), as well as through association contracts and other types of contracts.

(2)

Corresponds to Ecopetrol’s share in trusts established to support costs of abandonment of wells and dismantling of facilities, as well as the payment of future retirement pensions in some association contracts.

~~F-49~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~13.~~12.

~~Assets held for sale and their related liabilities~~

~~The balance as of December 31, 2017 and 2016 of assets held for sale and their related liabilities, which do not correspond to discontinued operations, included:~~

2017 2016
Assets held for sale
Surplus project materials (1) 56,049 65,703
Property, plant and equipment (2) 48,091 36,902
Oil fields (3) - 29,611
104,140 132,216
Liabilities related to assets held for sale
Oil fields (3) - 40,128
- 40,128

~~(1)~~

Mainly includes assets remaining from the expansion project of the oil pipeline for transport of extra heavy crude conducted by Oleoducto Central SA - Ocensa. In 2017, the Group sold part of these assets, generating a loss of COP$2,337 and expects to continue selling the remainder of these assets during 2018 depending on market conditions.

~~(2)~~

Includes buildings and land belonging to Ecopetrol and Andean Chemicals Ltd., the latter related to Louisiana Green Fuels (ethanol plant, water plant and harvesters). The Group recorded an impairment loss on these assets of COP$11,292 and continues with its plan to sell these assets depending on market conditions.

~~(3)~~

Corresponds mainly to the Sogamoso, Rio Zulia, Rio de Oro and Puerto Barco, Santana, Nancy Maxine Burdine and Valdivia Almagro oil fields, awarded through an auction in November 2016. During the second and third quarter of 2017, Ecopetrol obtained the approval of the assignment of rights of these areas by the ANH, with the transfer of the assets and the corresponding sale being formalized. These operations generated a net profit of COP $ 168,726. The liabilities associated with these assets corresponded to the dismantling and abandonment of the Group’s obligations.

~~F-50~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~14.~~

Investments in associates and joint ventures

The details on the participations, economic activity, address, area of operations and financial information of the investments in joint ventures and associates can be found in Exhibit 1.

~~14.1~~12.1

Composition and movements

	2018			2017
Investment in joint ventures
Equion Energy Limited		1,364,933			1,057,466
Offshore International Group		727,194			845,325
Ecodiesel Colombia SA		41,304			38,383
		2,133,431			1,941,174
Less impairment:
Equion Energy Limited		(187,636	)		(296,427	)
Offshore International Group		(346,121	)		(539,465	)
		1,599,674			1,105,282
Investments in associates
Invercolsa S.A.		243,294			223,963
Serviport S.A.		11,212			9,905
Sociedad Portuaria de Oleofinas y Derivados S.A.		1,368			1,214
		255,874			235,082
Less impairment: Serviport S.A.		(11,212	)		(9,904	)
		244,662			225,178
		1,844,336			1,330,460

~~The balance as~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of ~~December 31, 2017 and 2016 of investments in associates and joint ventures, is as follows:~~Colombian pesos, unless otherwise stated)

2017 2016
Investment in joint ventures
Equion Energy Limited 1,057,466 1,156,430
Offshore International Group 845,325 937,938
Ecodiesel Colombia SA 38,383 39,525
1,941,174 2,133,893
Less impairment:
Equion Energy Limited (296,427 ) (253,683 )
Offshore International Group (539,465 ) (577,053 )
1,105,282 1,303,157
Investments in associates
Invercolsa SA 223,963 243,156
Serviport SA 9,905 5,255
Olefinas Port Society 1,214 1,126
235,082 249,537
Less impairment: Serviport SA (9,904 ) -
225,178 249,537
1,330,460 1,552,694

The following is the movement of investments in ~~companies:~~associates and joint ventures:

For the year ended December 31, 2018:

	Associates			Joint ventures			Total
Opening balance		225,178			1,105,282			1,330,460
Effects of equity method through:
Profit or loss		105,908			59,928			165,836
Other comprehensive income		1,731			135,831			137,562
Dividends declared		(86,847	)		(3,503	)		(90,350	)
Impairment (Note 16.1.2)		(1,308	)		302,136			300,828
Closing balance		244,662			1,599,674			1,844,336

For the year ended December 31, 2017:

	Associates			Joint ventures			Total			Associates			Joint ventures			Total
Opening balance		249,537			1,303,157			1,552,694			249,537			1,303,157			1,552,694
Effects of equity method through:
Profit or loss		46,669			46,869			93,538			46,669			46,869			93,538
Other comprehensive income		-			(14,752	)		(14,752	)		–			(14,752	)		(14,752	)
Dividends declared		(61,124	)		(224,837	)		(285,961	)		(61,124	)		(224,837	)		(285,961	)
Impairment (Note 18.1.2)		(9,904	)		(5,155	)		(15,059	)
Impairment (Note 16.1.2)											(9,904	)		(5,155	)		(15,059	)
Closing balance		225,178			1,105,282			1,330,460			225,178			1,105,282			1,330,460

For the year ended December 31, 2016:

	Associates			Joint ventures			Total			Associates			Joint ventures			Total
Opening balance		69,516			1,862,418			1,931,934			69,516			1,862,418			1,931,934
Effects of equity method through:
Profit or loss		48,299			13,046			61,345			48,299			13,046			61,345
Other comprehensive income		173,772			(49,127	)		124,645			173,772			(49,127	)		124,645
Dividends declared		(42,050	)		(384,787	)		(426,837	)		(42,050	)		(384,787	)		(426,837	)
Impairment (Note 18.1.2)		-			(127,858	)		(127,858	)
Impairment (Note 16.1.2)											-			(127,858	)		(127,858	)
Reclassifications		-			(10,535	)		(10,535	)		-			(10,535	)		(10,535	)
Closing balance		249,537			1,303,157			1,552,694			249,537			1,303,157			1,552,694

12.2

Restrictions on investments

Regarding the legal process related to the shares of Inversiones de Gases de Colombia S.A. acquired by Fernando Londoño in 1997, Ecopetrol as of the date of this report exercises rights over 11.59% (of the 20.11% that was acquired by Fernando Londoño) and Arrendadora Financiera Internacional Bolivariana (AFIB) exercises them over 8.52%, participation that was protected by the Constitutional Court through an action for the protection of a fundamental right and that are in judicial discussion in the ordinary process, at the place of cassation.

~~F-51~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~14.2~~

~~Restrictions on investments~~

The number of shares held by Ecopetrol in Invercolsa S.A. has been subject to a legal dispute with another shareholder of this company. The courts decided in favor of Ecopetrol through a ruling IN 2011, whereby it was determined that 324 million shares, equivalent to 11.58% of Invercolsa S.A.’s share capital should be returned to Ecopetrol. Ecopetrol’s equity share in said company is 43.35%. The dividends paid in relation to the shares returned to Ecopetrol are also subject to controversy. As of December 31, 2017, the settlement of these claims is still pending.

~~14.3~~12.3

Additional information about associates and joint ventures

The following is the breakdown of assets, liabilities and results of the two main investments in associates and joint ventures, Equion Energy Limited and the Offshore International Group, as of December 31, ~~2017~~2018 and ~~2016 is as follows:~~2017:

	2017				2016				2018				2017
	Equion Energy Limited		Offshore International Group		Equion Energy Limited		Offshore International Group		Equion Energy Limited		Offshore International Group		Equion Energy Limited		Offshore International Group
Statement of financial position
Current assets		909,927		289,618		712,078		317,700		2,083,614		354,959		909,927		289,618
Non-current assets		955,849		1,568,395		1,406,510		1,693,947
Non–current assets										484,336		1,523,549		955,849		1,568,395
Total assets		1,865,776		1,858,013		2,118,588		2,011,647		2,567,950		1,878,508		1,865,776		1,858,013
Current liabilities		430,130		192,513		417,203		147,090		550,933		221,606		430,130		192,513
Non-current liabilities		98,835		657,746		170,527		671,577
Non–current liabilities										77,331		885,410		98,835		657,746
Total liabilities		528,965		850,259		587,730		818,667		628,264		1,107,016		528,965		850,259
Equity		1,336,811		1,007,754		1,530,858		1,192,980		1,939,686		771,492		1,336,811		1,007,754

Other complementary information
Cash and cash equivalents		170,618		32,490		300,689		22,224		185,762		96,592		170,618		32,490
Current financial liabilities		336,352		97,960		328,497		21,408		3,176		95,633		2,256		97,960
Non-current financial liabilities		2,921		214,259		309		356,353
Non–current financial liabilities										–		137,708		2,921		214,259

2017 2016 2015
Equion
Energy
Limited Offshore
International
Group Equion
Energy
Limited Offshore
International
Group Equion
Energy
Limited Offshore
International
Group
Statement of profit or loss
Sales revenue 1,213,692 393,210 1,204,301 379,811 1,218,796 463,660
Costs (793,999 ) (508,461 ) (969,318 ) (502,107 ) (958,467 ) (654,095 )
Administrative expenses and others 12,188 (103,340 ) (44,810 ) (221,238 ) (74,258 ) (128,895 )
Financial income (expenses) 2,373 (20,264 ) 59,143 (12,010 ) 37,970 (8,528 )
Income tax (180,546 ) 60,575 30,199 107,507 (209,221 ) 90,294
Financial year results 253,708 (178,280 ) 279,515 (248,037 ) 14,820 (237,564 )
Other comprehensive results 913,728 - 935,847 - 1,024,423 -

Other complementary information
Dividends paid to the Ecopetrol
Business Group 217,075 - 375,035 - 284,984 -
Depreciation and amortization 557,970 232,953 678,488 228,250 642,369 229,317

~~F-52~~

	2018						2017						2016
	Equion Energy Limited			Offshore International Group			Equion Energy Limited			Offshore International Group			Equion Energy Limited			Offshore International Group
Statement of profit or loss
Sales revenue		1,490,177			653,054			1,213,692			393,210			1,204,301			379,811
Costs		(755,656	)		(585,192	)		(793,999	)		(508,461	)		(969,318	)		(502,107	)
Administrative expenses and others		29,136			(353,010	)		12,188			(103,340	)		(44,810	)		(221,238	)
Financial income (expenses)		(3,659	)		(21,227	)		2,373			(20,264	)		59,143			(12,010	)
Income tax		(338,487	)		(16,594	)		(180,546	)		60,575			30,199			107,507
Financial year results		421,511			(322,969	)		253,708			(178,280	)		279,515			(248,037	)
Other comprehensive results		1,095,090			–			913,728			–			935,847			–
Other complementary information
Dividends paid to the Ecopetrol Business Group		–			–			217,075			–			375,035			–
Depreciation and amortization		511,615			243,601			557,970			232,953			678,488			228,250

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~Included below, there~~This is a reconciliation of equity ~~between~~of the ~~most~~ significant ~~participations~~investments and the carrying amount of investments as of December ~~31, 2017 and 2016:~~31:

	2017						2016						2018						2017
	Equion Energy Limited			Offshore International Group			Equion Energy Limited			Offshore International Group			Equion Energy Limited			Offshore International Group			Equion Energy Limited			Offshore International Group
Equity of the associate		1,336,811			1,007,754			1,530,858			1,192,980
Equity of the joint venture														1,939,686			771,492			1,336,811			1,007,754
% of Ecopetrol’s ownership		51	%		50	%		51	%		50	%		51	%		50	%		51	%		50	%
Ecopetrol’s ownership		681,773			503,877			780,738			596,490			989,240			385,746			681,773			503,877
Additional value of the investment		375,693			341,448			375,693			341,448			375,693			341,448			375,693			341,448
Impairment		(296,427	)		(539,465	)		(253,684	)		(577,053	)		(187,636	)		(346,121	)		(296,427	)		(539,465	)
Carrying amount of the investment		761,039			305,860			902,747			360,885			1,177,297			381,073			761,039			305,860

~~F-53~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~15.~~13.

Property, plant and equipment

The following shows a breakdown of the changes in property, plant and equipment and depreciation and impairment for the years ended December 31, ~~2017~~2018 and ~~2016:~~2017:

	Plant and equipment			Pipelines, networks and lines			Work in progress (1)			Buildings			Lands			Other			Total			Plant and equipment				Pipelines, networks and lines			Work in progress(1)			Buildings			Lands			Other			Total
Cost
Balance as of December 31, 2016		42,608,276			29,087,782			4,874,406			6,911,757			3,894,220			3,482,439			90,858,880
Balance as of December 31, 2017																							42,561,894				32,000,049			3,866,318			7,618,586			3,839,355			2,806,696			92,692,898
Additions/capitalizations		904,854			876,940			(102	)		363,836			14,631			203,124			2,363,283			1,196,520				944,797			993,817			147,005			14,909			5,881			3,302,929
Increase in abandonment costs		51,619			105,097			-			-			-			-			156,716			85,580				209,028			-			-			-			-			294,608
Capitalized financial interests(2)		38,847			33,875			8,501			6,941			1,027			20,113			109,304			48,351				34,399			14,853			14,350			6,703			5,316			123,972
Exchange differences capitalized		2,636			2,299			577			471			70			672			6,725			4,107				2,922			1,262			1,219			569			451			10,530
Disposals		(67,326	)		(56,147	)		(26,991	)		(6,539	)		(23	)		(2,727	)		(159,753	)		(135,468	)			(112,171	)		(14,723	)		(11,997	)		(9,763	)		(56,734	)		(340,856	)
Foreign currency translation		(136,501	)		(49,800	)		(13,302	)		(4,904	)		(7,850	)		(3,394	)		(215,751	)		2,324,744				849,868			32,585			100,091			124,903			55,983			3,488,174
Transfers (2)		(840,511	)		2,000,003			(976,771	)		347,024			(62,720	)		(893,531	)		(426,506	)
Balance as of December 31, 2017		42,561,894			32,000,049			3,866,318			7,618,586			3,839,355			2,806,696			92,692,898
Transfers (3)																							388,641				420,391			(269,409	)		(16,976	)		7,900			28,209			558,756
Balance as of December 31, 2018																							46,474,369				34,349,283			4,624,703			7,852,278			3,984,576			2,845,802			100,131,011

Accumulated depreciation and impairment losses
Balance as of December 31, 2016		(15,511,995	)		(9,965,554	)		(262,597	)		(2,088,478	)		(26,852	)		(674,902	)		(28,530,378	)
Balance as of December 31, 2017																							(14,779,973	)			(12,461,626	)		(553,420	)		(2,668,562	)		(39,522	)		(785,421	)		(31,288,524	)
Depreciation expense		(1,996,614	)		(1,479,792	)		-			(416,698	)		-			(106,878	)		(3,999,982	)		(2,008,348	)			(1,465,429	)		-			(347,510	)		-			(123,792	)		(3,945,079	)
Recovery (losses) for impairment (Note 18)		1,014,613			316,360			(372,804	)		11,538			(7,794	)		16,006			977,919
(Losses) recoveries of impairment (Nota 16)																							(752,534	)			(311,080	)		55,979			(64,279	)		5,220			(16,591	)		(1,083,285	)
Disposals		54,244			13,464			-			807			-			2,583			71,098			116,225		��		84,217			-			8,996			-			40,957			250,395
Foreign currency translation		15,166			32,729			-			3,929			-			3,802			55,626			(677,901	)			(313,311	)		-			(27,782	)		-			(23,804	)		(1,042,798	)
Transfers (2)		1,644,613			(1,378,833	)		81,981			(179,660	)		(4,876	)		(26,032	)		137,193
Balance as of December 31, 2017		(14,779,973	)		(12,461,626	)		(553,420	)		(2,668,562	)		(39,522	)		(785,421	)		(31,288,524	)
Transfers (3)																							117,115				(310,561	)		-			(23,386	)		-			(4,905	)		(221,737	)
Balance as of December 31, 2018																							(17,985,416	)			(14,777,790	)		(497,441	)		(3,122,523	)		(34,302	)		(913,556	)		(37,331,028	)

Net balance as of December 31, 2016		27,096,281			19,122,228			4,611,809			4,823,279			3,867,368			2,807,537			62,328,502
Net balance as of December 31, 2017		27,781,921			19,538,423			3,312,898			4,950,024			3,799,833			2,021,275			61,404,374			27,781,921				19,538,423			3,312,898			4,950,024			3,799,833			2,021,275			61,404,374
Net balance as of December 31, 2018																							28,488,953				19,571,493			4,127,262			4,729,755			3,950,274			1,932,246			62,799,983

(1)

The balance of work in progress as of December 31, 2018, mainly includes the works executed in production by facilities of the Castilla field, facilities in Cupiagua, air injection pilot facilities in the Chichimene field and secondary recovery of Yarigui, and in refining by the modernization project of Barrancabermeja.

(2)

Financial interests are capitalized based on the weighted average rate of borrowing costs. See Note 18 - Loans and financing.

(3)

Transfers corresponds mainly to: i) recognition of financial leasing contracts, ii) transfers from natural resources and the environment.

Guarantees

The Esperanza 1 and 2 farms were pledged as guarantee for the loan obtained by Bioenergy S.A.S. for the financing of the project (see Note 18.6 – Guarantees and covenants).

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

	Plant and equipment			Pipelines, networks and lines			Work in progress⁽¹⁾			Buildings			Lands			Other			Total
Cost
Balance as of December 31, 2016		42,608,276			29,087,782			4,874,406			6,911,757			3,894,220			3,482,439			90,858,880
Additions/capitalizations		904,854			876,940			(102	)		363,836			14,631			203,124			2,363,283
Increase in abandonment costs		51,619			105,097			–			–			–			–			156,716
Capitalized financial interests		38,847			33,875			8,501			6,941			1,027			20,113			109,304
Exchange differences capitalized		2,636			2,299			577			471			70			672			6,725
Disposals		(67,326	)		(56,147	)		(26,991	)		(6,539	)		(23	)		(2,727	)		(159,753	)
Foreign currency translation		(136,501	)		(49,800	)		(13,302	)		(4,904	)		(7,850	)		(3,394	)		(215,751	)
Transfers⁽²⁾		(840,511	)		2,000,003			(976,771	)		347,024			(62,720	)		(893,531	)		(426,506	)
Balance as of December 31, 2017		42,561,894			32,000,049			3,866,318			7,618,586			3,839,355			2,806,696			92,692,898
Accumulated depreciation and impairment losses
Balance as of December 31, 2016		(15,511,995	)		(9,965,554	)		(262,597	)		(2,088,478	)		(26,852	)		(674,902	)		(28,530,378	)
Depreciation expense		(1,996,614	)		(1,479,792	)		–			(416,698	)		–			(106,878	)		(3,999,982	)
Recovery (losses) for impairment (Note 16)		1,014,613			316,360			(372,804	)		11,538			(7,794	)		16,006			977,919
Disposals		54,244			13,464			–			807			–			2,583			71,098
Foreign currency translation		15,166			32,729			–			3,929			–			3,802			55,626
Transfers⁽²⁾		1,644,613			(1,378,833	)		81,981			(179,660	)		(4,876	)		(26,032	)		137,193
Balance as of December 31, 2017		(14,779,973	)		(12,461,626	)		(553,420	)		(2,668,562	)		(39,522	)		(785,421	)		(31,288,524	)
Net balance as of December 31, 2016		27,096,281			19,122,228			4,611,809			4,823,279			3,867,368			2,807,537			62,328,502
Net balance as of December 31, 2017		27,781,921			19,538,423			3,312,898			4,950,024			3,799,833			2,021,275			61,404,374

(1)

The balance of work in progress as of December 31, 2017, mainly includes investments in production at the Castilla field, the integral plan of electrical energy and secondary recovery of Yarigui and the modernization project of the Barrancabermeja refinery.

(2)

~~Transfers correspond~~Correspond mainly to transfers to: a) inventory of project materials for use in the operation for COP$250,239, b) classification of the intangible part of projects to natural resources for COP$7,222 and c) others for COP$31,852.

~~F-54~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

Plant and
equipment Pipelines,
networks
and lines
Work in
progress (1)
Buildings Lands Other Total

Cost
Balance as of December 31, 2015 37,360,222 26,856,085 11,015,010 6,479,356 4,068,951 3,653,798 89,433,422
Additions/capitalizations 1,457,547 1,383,352 (107,181 ) 360,596 41,202 511,413 3,646,929
(Decrease) increase in abandonment costs (84,780 ) (78,712 ) - - - 6,137 (157,355 )
Capitalized interest - - 205,662 - - 37,116 242,778
Exchange differences capitalized - - 8,639 - - - 8,639
Disposals (158,193 ) (21,814 ) (16,031 ) (12,540 ) 713 (15,455 ) (223,320 )
Foreign currency translation (42,870 ) (298,750 ) (1,629,613 ) (9,832 ) (69,878 ) 12,416 (2,038,527 )
Other (reclassifications) (2) 4,076,350 1,247,621 (4,602,080 ) 94,177 (146,768 ) (722,986 ) (53,686 )
Balance as of December 31, 2016 42,608,276 29,087,782 4,874,406 6,911,757 3,894,220 3,482,439 90,858,880

Accumulated depreciation and impairment
Balance as of December 31, 2015 (13,469,749 ) (8,572,373 ) (19,566 ) (1,698,791 ) (13,689 ) (554,181 ) (24,328,349 )
Depreciation expense (1,869,604 ) (1,426,659 ) - (392,294 ) - (102,621 ) (3,791,178 )
Impairment (Note 17) (659,223 ) 33,048 (3,270 ) 57,157 24,067 (13,517 ) (561,738 )
Disposals 121,382 14,022 - 7,021 15 11,524 153,964
Foreign currency translation 272,582 138,611 38,904 12,658 - 8,007 470,762
Other (reclassifications) (2) 92,617 (152,203 ) (278,665 ) (74,229 ) (37,245 ) (24,114 ) (473,839 )
Balance as of December 31, 2016 (15,511,995 ) (9,965,554 ) (262,597 ) (2,088,478 ) (26,852 ) (674,902 ) (28,530,378 )

Net balance as of December 31, 2016 27,096,281 19,122,228 4,611,809 4,823,279 3,867,368 2,807,537 62,328,502

~~(1)~~

The balance of work in progress as of December 31, 2016, mainly includes investments made in the development projects of the Castilla y Chichimene fields, integral energy plan (PIEEL for its acronym in Spanish), primary and secondary development of the Tibú-Socuabo project and modernization of the Refinería de Barrancabermeja.

~~(2)~~

Corresponds mainly to transfers to: a) inventory of project materials for use in the operation for COP$(712,967) mainly Ecopetrol and Reficar, b) opening of the intangible part of projects to natural resources for COP$68,750 and c) other COP$116,692.

~~F-55~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~16.~~14.

Natural and environmental resources

The following is the movement of natural resources and amortization and impairment for the years ended December 31, ~~2017~~2018 and ~~2016:~~2017:

	Oil investments			Asset retirement cost			Exploration and evaluation (1)			Total			Oil investments			Asset retirement cost			Exploration and evaluation⁽¹⁾			Total
Cost
Balance as of December 31, 2016		47,079,096			2,304,915			4,818,124			54,202,135
Balance as of December 31, 2017														50,183,858			2,215,263			4,508,808			56,907,929
Additions/capitalizations		2,422,203			59,345			944,857			3,426,405			3,579,982			(27,839	)		1,499,685			5,051,828
Acquisition of interests in joint operations (Note 32.3)		141,950			-			-			141,950
Adjustment to fair value of participation in joint operations (Note 32.3)		451,095			-			-			451,095
Increase (decrease) in abandonment costs		224			(143,241	)		25,935			(117,082	)
Acquisition of interests in joint operations (2)														(12,065	)		-			-			(12,065	)
Increase in abandonment costs														-			733,609			34,063			767,672
Disposals		(38,072	)		(629	)		(214,850	)		(253,551	)		(79	)		(2,080	)		(87,953	)		(90,112	)
Dry wells (2)		-			-			(898,264	)		(898,264	)
Capitalized financial interests		72,395			-			9,952			82,347
Dry wells (3)														(1,563	)		-			(897,361	)		(898,924	)
Capitalized financial interests (4)														70,186			-			6,675			76,861
Exchange differences capitalized		4,913			-			675			5,588			5,961			-			567			6,528
Foreign currency translation		(62,446	)		(573	)		(14,504	)		(77,523	)		773,678			24,574			75,203			873,455
Transfers (3)		112,500			(4,554	)		(163,117	)		(55,171	)
Balance as of December 31, 2017		50,183,858			2,215,263			4,508,808			56,907,929
Transfers														(663,917	)		(24,381	)		(333,687	)		(1,021,985	)
Balance as of December 31, 2018														53,936,041			2,919,146			4,806,000			61,661,187

Accumulated amortization and impairment losses
Balance as of December 31, 2016		(30,470,415	)		(1,390,673	)		-			(31,861,088	)
Balance as of December 31, 2017														(34,014,963	)		(1,584,701	)		-			(35,599,664	)
Depletion expense		(3,979,179	)		(194,140	)		-			(4,173,319	)		(3,471,803	)		(196,286	)		-			(3,668,089	)
Recovery (losses) for impairment (Note 18)		376,934			-			-			376,934
Recovery (losses) for impairment (Nota 16)														414,208			(106	)		-			414,102
Disposals		37,808			290			-			38,098			79			-			-			79
Foreign currency translation		42,114			245			-			42,359			(563,229	)		(19,080	)		-			(582,309	)
Transfers (3)		(22,225	)		(423	)		-			(22,648	)
Balance as of December 31, 2017		(34,014,963	)		(1,584,701	)		-			(35,599,664	)

Net balance as of December 31, 2016		16,608,681			914,242			4,818,124			22,341,047
Transfers														829,041			21,103			-			850,144
Balance as of December 31, 2018														(36,806,667	)		(1,779,070	)		-			(38,585,737	)
Net balance as of December 31, 2017		16,168,895			630,562			4,508,808			21,308,265			16,168,895			630,562			4,508,808			21,308,265
Net balance as of December 31, 2018														17,129,374			1,140,076			4,806,000			23,075,450

(1)

The balance of oil investments in progress includes mainly investments made in the Purple Angel, Tayrona and unconventional hydrocarbons projects. In the developing fields, the most representative correspond to Castilla, Chichimene pilot and CPO09 re sanction.

(2)

Adjustment in the acquisition value of the participation of MCX Exploration USA LLC (see note 30.3).

(3)

Includes dry wells: 1) Ecopetrol America Inc: Leon 2) Hocol: Payero, Bonifacio, Pegaso-1 and Ocelote.

(4)

Borrowing costs are capitalized at the weighted average rate of borrowing costs. See Note 18 - Loans and financing.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

	Oil investments			Asset retirement cost			Exploration and evaluation⁽¹⁾			Total
Cost
Balance as of December 31, 2016		47,079,096			2,304,915			4,818,124			54,202,135
Additions/capitalizations		2,422,203			59,345			944,857			3,426,405
Acquisition of interests in joint operations (Note 30.3)		141,950			–			–			141,950
Adjustment to fair value of participation in joint operations(Note 30.3)		451,095			–			–			451,095
Increase (decrease) in abandonment costs		224			(143,241	)		25,935			(117,082	)
Disposals		(38,072	)		(629	)		(214,850	)		(253,551	)
Dry wells⁽²⁾		–			–			(898,264	)		(898,264	)
Capitalized financial interests		72,395			–			9,952			82,347
Exchange differences capitalized		4,913			–			675			5,588
Foreign currency translation		(62,446	)		(573	)		(14,504	)		(77,523	)
Transfers⁽³⁾		112,500			(4,554	)		(163,117	)		(55,171	)
Balance as of December 31, 2017		50,183,858			2,215,263			4,508,808			56,907,929
Accumulated amortization and impairment losses
Balance as of December 31, 2016		(30,470,415	)		(1,390,673	)		–			(31,861,088	)
Depletion expense		(3,979,179	)		(194,140	)		–			(4,173,319	)
Recovery (losses) for impairment (Note 16)		376,934			–			–			376,934
Disposals		37,808			290			–			38,098
Foreign currency translation		42,114			245			–			42,359
Transfers⁽³⁾		(22,225	)		(423	)		–			(22,648	)
Balance as of December 31, 2017		(34,014,963	)		(1,584,701	)		–			(35,599,664	)
Net balance as of December 31, 2016		16,608,681			914,242			4,818,124			22,341,047
Net balance as of December 31, 2017		16,168,895			630,562			4,508,808			21,308,265

(1)

The balance of exploration and evaluation includes mainly investments made in the Purple Angel, Tayrona and unconventional hydrocarbons projects and in the developing fields, Piedemonte, Castilla y Tibú.

(2)

Includes mainly dry wells in operation of: 1) Ecopetrol S.A. for (COP$450,524): Kronos, Brama, Catfish and Venus, among others, 2) Ecopetrol America Inc for (COP$312,684): Warrior # 2 and Parmer and 3) Ecopetrol Costa Afuera for (COP$57,877): Molusco.

(3)

Corresponds mainly to transfers to property, plant and equipment.

Accounting for suspended exploratory wells

The following table shows the classification by age, from the completion date, of the exploratory wells that are suspended as of December 31, 2018, 2017 and 2016:

	2018		2017		2016
Between 1 and 3 years^(a)		496,871		600,767		1,300,874
Between 3 and 5 years^(b)		375,371		791,261		197,997
More than 5 years^(c)		273,764		250,219		153,552
Total suspended exploratory wells		1,146,006		1,642,247		1,652,423
Number of projects exceeding 1 year		24		24		24
Wells under 1 year of suspension		9,511		2,480		528,313

~~F-56~~(a)

As of December 2018, suspended exploratory wells correspond mainly to Ecopetrol: Purple Angel, Caronte and discovery wells of Ecopetrol America Inc: Warrior 1. As of December 31, 2017 suspended exploratory wells correspond mainly to discovery wells of Ecopetrol America Inc: Leon 2 and Warrior 1, which were under evaluation.

(b)

For 2018, the balance corresponds mainly to wells of Ecopetrol S.A.: Orca 1, Tiribita 1A and Tiribita 3, which are under evaluation.

(c)

Correspond mainly to i) Ecopetrol S.A.: Quifa, Purple Angel-1 and Gordon-1, which are under evaluation; and ii) Offshore International Group, temporarily abandoned for future production plans.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

Oil investments Asset retirement
cost Exploration and
evaluation (1) Total
Cost
Balance as of December 31, 2015 44,148,353 1,762,374 6,189,142 52,099,869
Additions/capitalizations 3,045,474 10,391 (934,570 ) 2,121,295
Increase (decrease) in abandonment costs - 566,213 (4,062 ) 562,151
Disposals (26,548 ) (37,942 ) (121,032 ) (185,522 )
Dry wells (2) - - (342,691 ) (342,691 )
Capitalized financial interests - - 98,431 98,431
Exchange differences capitalized - - 7,259 7,259
Foreign currency translation (352,766 ) (8,049 ) (103,728 ) (464,543 )
Other 264,583 11,928 29,375 305,886
Balance as of December 31, 2016 47,079,096 2,304,915 4,818,124 54,202,135

Accumulated depreciation and impairment loss
Balance as of December 31, 2015 (26,874,774 ) (1,181,798 ) - (28,056,572 )
Depletion expense (3,496,998 ) (208,769 ) - (3,705,767 )
Impairment (Note 18) (239,151 ) - - (239,151 )
Disposals 26,320 37,942 - 64,262
Foreign currency translation 218,898 5,171 - 224,069
Other (104,710 ) (43,219 ) - (147,929 )
Balance as of December 31, 2016 (30,470,415 ) (1,390,673 ) - (31,861,088 )

Net balance as of December 31, 2015 17,273,579 580,576 6,189,142 24,043,297
Net balance as of December 31, 2016 16,608,681 914,242 4,818,124 22,341,047

15.

Intangible assets

The following is the movement of intangibles and their amortization and impairment for the years ended December 31, 2018 and 2017:

	Licenses and software			Other intangibles⁽¹⁾			Total
Cost
Balance as of December 31, 2017		960,556			168,552			1,129,108
Acquisitions		69,442			36,227			105,669
Disposals		(46,007	)		(5,643	)		(51,650	)
Foreign currency translation		25,339			2,955			28,294
Transfers		6,390			(4,808	)		1,582
Balance as of December 31, 2018		1,015,720			197,283			1,213,003
Accumulated amortization
Balance as of December 31, 2017		(665,415	)		(83,467	)		(748,882	)
Amortization of the period		(75,818	)		(15,864	)		(91,682	)
Disposals		46,004			5,546			51,550
Foreign currency translation		(20,501	)		(184	)		(20,685	)
Transfers		3,401			4,042			7,443
Balance as of December 31, 2018		(712,329	)		(89,927	)		(802,256	)
Net balance as of December 31, 2017		295,141			85,085			380,226
Net balance as of December 31, 2018		303,391			107,356			410,747
Useful life		<5 years			<7 years

	Licenses and software			Other intangibles⁽¹⁾			Total
Cost
Balance as of December 31, 2016		784,320			138,982			923,302
Acquisitions		169,545			6,323			175,868
Disposals		(9,469	)		–			(9,469	)
Foreign currency translation		(1,414	)		(92	)		(1,506	)
Transfers		17,574			23,339			40,913
Balance as of December 31, 2017		960,556			168,552			1,129,108
Accumulated amortization
Balance as of December 31, 2016		(583,680	)		(67,490	)		(651,170	)
Amortization of the period		(89,216	)		(18,830	)		(108,046	)
Disposals		8,744			–			8,744
Foreign currency translation		979			–			979
Transfers		(2,242	)		2,853			611
Balance as of December 31, 2017		(665,415	)		(83,467	)		(748,882	)
Net balance as of December 31, 2016		200,640			71,492			272,132
Net balance as of December 31, 2017		295,141			85,085			380,226
Useful life		<5 years			<7 years

(1)

The balance of exploration and evaluation mainly includes investments in production projects of direct operation in Castilla, Chichimene and Piedemonte. Additionally, it includes offshore exploration projects: Fuerte Sur, Kronos and Tayrona and Onshore: Caño Sur block, CPO 10 and non-conventional hydrocarbons program.

~~(2)~~

Includes dry wells in operation of: 1) Ecopetrol for COP$302,965; 2) ECP Oil and Gas Germany GmbH for COP$26,273; 3) Ecopetrol America Inc. for COP$5,032; 4) Hocol S.A. for COP$5,049 and 5) Ecopetrol Brasil for COP$3,372.

~~(3)~~

Corresponds mainly ~~of transfers to: a) non-current assets held for sale for COP$244,387 and b) property, plant and equipment for COP$(68,898) and c) other COP$(17,532).~~to easements.

~~F-57~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~Accounting for suspended exploratory wells~~

~~The following table shows the classification by ages, from the completion date, of the exploratory wells that are suspended as of December 31, 2017, 2016 and 2015:~~

2017 2016 2015
Between 1 and 3 years (a) 600,767 1,300,874 490,184
Between 3 and 5 years (b) 791,261 197,997 100,316
More than 5 years (c) 250,219 153,552 161,392
Total suspended exploratory wells 1,642,247 1,652,423 751,892
No. of projects exceeding 1 year 24 24 59
Wells under 1 year of suspended 2,480 528,313 280,801

~~(a)~~

~~Corresponds mainly to discovery wells of Ecopetrol America Inc: Leon 2 and Warrior # 1, which are under evaluation.~~

~~(b)~~

~~The balance corresponds mainly to discovery wells of Ecopetrol America Inc: Leon 1, which are under evaluation and Rydberg which is currently working on the development plan and feasibility studies.~~

~~(c)~~

~~Corresponds mainly to wells of Offshore International Group, which are temporarily abandoned.~~

~~F-58~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~17.~~16.

~~Intangible assets~~

~~The following is the movement of intangibles and their amortization and impairment for the years ended December 31, 2017 and 2016:~~

Licenses and
software Other
intangibles (1) Total
Cost
Balance as of December 31, 2016 784,320 138,982 923,302
Acquisitions 169,545 6,323 175,868
Disposals (9,469 ) - (9,469 )
Foreign currency translation (1,414 ) (92 ) (1,506 )
Transfers 17,574 23,339 40,913
Balance as of December 31, 2017 960,556 168,552 1,129,108
Accumulated amortization
Balance as of December 31, 2016 (583,680 ) (67,490 ) (651,170 )
Amortization of the period (89,216 ) (18,830 ) (108,046 )
Disposals 8,744 - 8,744
Foreign currency translation 979 - 979
Transfers (2,242 ) 2,853 611
Balance as of December 31, 2017 (665,415 ) (83,467 ) (748,882 )

Net balance as of December 31, 2016 200,640 71,492 272,132
Net balance as of December 31, 2017 295,141 85,085 380,226
Useful life < 5 years < 7 years

Licenses
and software Other
intangibles (1) Total
Cost
Balance as of December 31, 2015 733,115 244,063 977,178
Additions 63,560 5,693 69,253
Disposals (29,099 ) - (29,099 )
Foreign currency translation (9,359 ) (149 ) (9,508 )
Reclassifications 26,103 (110,625 ) (84,522 )
Balance as of December 31, 2016 784,320 138,982 923,302
Accumulated amortization
Balance as of December 31, 2015 (533,784 ) (55,343 ) (589,127 )
Amortization expense (81,913 ) (28,142 ) (110,055 )
Disposals 29,097 - 29,097
Foreign currency translation 8,527 1 8,528
Reclassifications (5,607 ) 15,994 10,387
Balance as of December 31, 2016 (583,680 ) (67,490 ) (651,170 )

Balance as of December 31, 2015 199,331 188,720 388,051
Balance as of December 31, 2016 200,640 71,492 272,132
Useful life < 5 years < 7 years

~~(1)~~

~~Corresponds mainly to easements.~~

~~F-59~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~18.~~

Impairment of ~~long-term~~non-financial assets

As mentioned in Note 4.12, each year the Ecopetrol Business Group assesses whether there ~~are indications of~~is an indication that an asset or cash–generating unit may be impaired or if impairment ~~of its assets or cash-generating units or whether an impairment loss~~losses recognized in previous periods ~~may~~should be ~~reversed.~~reversed (except for goodwill impairment losses).

The impairment of ~~our non-current~~non–financial assets includes ~~expenses (or recovery) of impairment of~~ property, plant and equipment and natural resources, investments in companies, goodwill and other ~~non-current~~non–current assets. The Ecopetrol Business Group is exposed to future risks derived mainly from variations in: (i) the estimate of future oil prices, ~~outlook,~~ (ii) refining margins and profitability, (iii) cost profile, (iv) investments and maintenance expenses, (v) amounts of recoverable reserves, (vi) market and country risk assessments reflected in the discount rate and (vii) changes in domestic and international regulations, among others.

Any ~~change~~changes in the ~~foregoing variables~~above estimates used to calculate the recoverable amount of a ~~non-current~~non–current asset can have a material ~~effect~~impact on the recognition ~~or either~~impairment losses or ~~recovery of~~reversals (other than goodwill impairment ~~charges~~ losses)in the profit or ~~loss statement. In our~~loss. Highly sensitive significant estimates affecting each business segments, ~~highly sensitive variables can include,~~ among ~~others:~~others include: (i) in the exploration and production segment, variations of ~~the~~recoverable hydrocarbon estimates, changes in projected realization prices ~~outlook;~~and discount rate; (ii) in the refining segment, changes in ~~product~~finished products and crude oil prices, discount rate, refining margins, changes in environmental regulations, cost structure and the level of capital expenditures; and (iii) in the transport and logistics segment, changes in regulated tariffs ~~regulation~~ and ~~volumes transported.~~

~~Expense (recovery) for impairment~~transported volumes.

Based on the impairment tests conducted by the Ecopetrol Business Group, the following ~~(recoveries) losses for~~are the impairment ~~of long term assets~~(losses) or reversals for the years ended on December 31, 2018, 2017 ~~2016~~ and ~~2015~~2016 are presented:

Expense (recovery of) impairment by segment 2017 2016 2015
Production and exploration (183,718 ) 196,448 4,504,495
Refining and Petrochemicals (1,067,965 ) 773,361 3,278,993
Transport and Logistics �� (59,455 ) (41,062 ) 81,387
(1,311,138 ) 928,747 7,864,875

Recognized in:
Property, plant and equipment (Note 15) (977,919 ) 561,738 4,144,754
Natural resources (Note 16) (376,934 ) 239,151 2,865,076
Investment in joint ventures and associates (Note 14) 15,059 127,858 588,144
Other non-current assets 28,656 - -
Goodwill - - 266,901
(1,311,138 ) 928,747 7,864,875

(Impairment loss) reversal of impairment by segment	2018			2017			2016
Exploration and Production		785,940			183,718			(196,448	)
Refining and Petrochemicals		(984,704	)		1,067,965			(773,361	)
Transport and Logistics		(169,870	)		59,455			41,062
		(368,634	)		1,311,138			(928,747	)

Recognized in:
Property, plant and equipment (Note 13)		(1,083,285	)		977,919			(561,738	)
Natural resources (Note 14)		414,102			376,934			(239,151	)
Investment in joint ventures and associates (Note 12)		300,828			(15,059	)		(127,858	)
Other non–current assets		(279	)		(28,656	)		–
		(368,634	)		1,311,138			(928,747	)

~~18.1~~16.1

Exploration and production ~~segment~~

The ~~expenses for (recovery of) asset~~ impairment (loss) reversal of assets of the Exploration and Production segmentfor the years ended December 31 of 2018, 2017 ~~2016~~ and ~~2015~~2016 is as follows:

2017 2016 2015
Oilfields (188,873 ) 68,590 3,649,451
Investment in joint ventures and associates (Note 14) 5,155 127,858 588,144
Goodwill - - 266,900
(183,718 ) 196,448 4,504,495

~~F-60~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

	2018		2017			2016
Oilfields		483,803		188,873			(68,590	)
Investment in joint ventures (Note 12)		302,136		(5,155	)		(127,858	)
Other		1		–			–
		785,940		183,718			(196,448	)

~~18.1.1~~16.1.1

Oilfields

In 2018, based on new market variables, incorporation of new reserves, Ecopetrol’s crude oil basket price discounts as compared to the ICE Brent crude price, available technical and operational information, there was a partial reversal of an impairment recognized in previous years for the oil fields that operate in Colombia Casabe, Provincia, Underriver, Tisquirama and Orito and in fields operated abroad Gunflint and K2, and an impairment mainly in Tibú and Dina Norte fields.

In 2017, based on new market variables, incorporation of new reserves, Ecopetrol’s crude oil basket price discounts as compared to the ICE Brent crude price, available technical and operational information, there was a partial reversal of animpairment recognized in previous years for the oil fields that operate in ColombiaCPO09, Casabe and Oripaya and in fields operated abroad Gunflint Dalmatian and K2, and an impairment in the Tibú, Underriver, Provincia and Orito ~~fields.~~fields, mainly.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

In 2016, as a result of the revision of prospective oil prices in the long term, it was identified that some impairments recognized in previous years for oil fields could be recovered due to an improved future price scenarios. The main fields on which there was a recovery of impairment were Chichimene, Caño Sur, Apiay and Llanito. Similarly, the new technical information and operational aspects that gave rise to changes in investment levels caused an impairment in the Casabe, Tibú, Gunflint and Niscota ~~fields.~~fields, mainly.

The following is the breakdown of ~~the expenses for (recovery of)~~oilfields impairment ~~of fields~~losses or reversals for the years ended December 31, 2018, 2017 ~~2016~~ and ~~2015 includes:~~2016:

~~2017~~2018

Cash generating units
Carrying amount Recoverable
amount Expense for
(recovery of)
impairment
Oil fields in Colombia
Expense 2,172,747 1,588,207 584,540
Recovery 13,229,212 23,906,828 (298,210 )
Fields operated abroad
Recovery 748,510 1,324,010 (475,203 )
(188,873 )

Cash generating units	Carrying amount		Recoverable amount		(Impairment loss) reversal
Oil fields in Colombia
Reversal		19,156,326		50,462,080		689,665
Loss		764,808		405,421		(359,387	)
Fields operated abroad
Reversal		1,810,618		2,719,086		157,709
Loss		184,375		180,191		(4,184	)
						483,803

~~2016~~2017

Cash generating units
Carrying amount Recoverable
amount Expense for
(recovery of)
impairment
Oil fields in Colombia
Expense 5,258,265 4,902,943 1,117,020
Recovery 17,502,391 36,704,807 (1,090,434 )
Fields operated abroad
Expense 688,895 647,272 42,004
68,590

Cash generating units	Carrying amount		Recoverable amount		(Impairment loss) reversal
Oil fields in Colombia
Loss		2,172,747		1,588,207		(584,540	)
Reversal		13,229,212		23,906,828		298,210
Fields operated abroad
Reversal		748,510		1,324,010		475,203
						188,873

~~2015~~2016

Cash generating units	Carrying amount		Recoverable amount		(Impairment loss) reversal
Oil fields in Colombia
Loss		5,258,265		4,902,943		(1,117,020	)
Reversal		17,502,391		36,704,807		1,090,434
Fields operated abroad
Loss		688,895		647,272		(42,004	)
						(68,590	)

The grouping of assets to determine the CGUs is consistent as compared to the prior periods.

Cash generating units Carrying amount Recoverable
amount Expense for
(recovery of)
impairment
Oil fields in Colombia 10,323,500 7,645,665 2,430,923
Fields operated abroad 1,242,979 24,451 1,218,528
3,649,451

~~F-61~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

The assumptions used ~~in the model~~ to determine the recoverable amount ~~include:~~include the following:

-–

The fair value less costs of disposal of the Exploration and Production segment assets was determined based on cash flows after tax derived from the business plans approved by ~~Group's~~Group’s management, which are developed based on ~~long-term~~long–term macroeconomic policies and fundamental assumptions of supply and demand. The fair value ~~category~~hierarchy is ~~level~~ 3.

-–

Balance of oil and gas reserves, in addition to proven ~~reserves included in Note 34;~~reserves; probable and possible reserves were also considered, adjusted by different risk factors.

-–

The real discount rate determined as the average weighted cost of capital ~~of market participants~~ (WACC) ~~established for each company in the segment with rates ranging between 7.9%~~ and ~~8.9% (2016~~it corresponds to 7.46% (2017–8.17% and 2016 – 7.9% and 8.9%).

-–

Oil price -– Brent: ~~The~~the forecasts include US$81.4/barrel for the first year, US$67.6/barrel for the medium term and US$71.4/barrel for the long term. In 2017, the assumptions taken US$52.9/barrel for 2018, US$72.5/barrel average for the next six years and US$81.9/barrel as of 2030. In 2016, the assumptions made used a price of US$56.8/barrel in 2017, ~~US $67.9/~~US$67.9/barrel average for the medium term and US$80/barrel in the long term. International oil price projections were carried out by an independent agency specializing in oil and gas, ~~which takes~~taking into account the current scenarios of oil quota agreements of the OPEC (Organization of Petroleum Exporting Countries) and the impact of the changes in specifications issued by the international agreement to prevent pollution by ships (Marpol) as of the year 2020 on crude and fuels with high sulfur content.

~~The aggregation of assets to identify the CGUs is consistent as compared to the previous period.~~

~~18.1.2~~16.1.2

~~Investment~~Investments in ~~associates and~~ joint ventures ~~from Exploration and Production segment~~

Investments in ~~associated companies and~~ joint ventures in the Exploration and Production segment are recorded ~~through~~using the equity ~~method.~~method of accounting. Ecopetrol evaluates if there is ~~any~~ objective evidence ~~to determine if~~that indicate that the fair value of such investments has deteriorated in the period, especially those ~~Companies that were acquired with goodwill.~~for which goodwill has been recorded.

As a result, Ecopetrol recognized an ~~expense for (recovery of) impairment in~~(impairment loss) or reversal on the carrying value ~~of its investments in companies~~ as of December 31, as follows:

	2017			2016		2015		2018		2017			2016
Equion Energy Limited		42,744			81,155		172,528		108,791		(42,744	)		(81,155	)
Offshore International Group		(37,589	)		46,703		415,616		193,345		37,589			(46,703	)
Total		5,155			127,858		588,144
									302,136		(5,155	)		(127,858	)

The significant assumptions used to determine the recoverable amount of ~~the companies assessed~~these investments are consistent with those described in ~~Note 18.1.1,~~the previous section, except for the use of a discount rate in real terms in ~~2017 for Equion Energía Limited of 8.2% (2016 - 8.9%) and~~2018 for Offshore International Group of ~~8.6% (2016 -~~8.92% (2017 – 8.61% and 2016 – 8.0%).

~~F-62~~

~~Ecopetrol S.A.~~

~~Notes~~In 2018, the market showed an improvement in the crude oil and gas production forecast. Operational performance and technical evolution have contributed to strengthening future cash flows that, in turn, contributed to the ~~consolidated financial statements~~

~~(Figures expressed~~reversal of the impairment charged recognized in ~~millions of Colombian pesos, unless otherwise stated)~~previous years for Offshore International Group and Equion Energy.

In 2017, because of new market variables, new reserves, price differentials against reference indicators and available technical and operational information, there was a recovery of animpairment recognized in previous years for Offshore International Group and Equion ~~Energy~~.Energy.

For 2016, in spite of better forecasts of oil prices in the long term, there was an additional impairment in the investment in the Offshore International Group for the reversion to local authorities of some low-prospective success exploration blocks, high geological risk, and low economic viability with respect to a new price scenario.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~18.2~~16.2

Refining and Petrochemical ~~segment~~

The Cash Generating Units with an ~~expense for (recovery of)~~(expense for) recovery of impairment in the Refining and Petrochemical ~~segment~~Segment for the years ended December 31, of2018, 2017 ~~2016~~ and ~~2015~~2016 include:

~~2017~~2018

Cash generating units	Carrying amount		Recoverable amount		(Recovery) expense for impairment
Cash–generating units								Carrying amount		Recoverable amount		(Impairment loss) reversal
Refinería de Cartagena		20,578,412		22,012,710		(1,434,298	)		23,411,058		22,640,761		(770,297	)
Refinería de Barrancabermeja (projects)		1,172,773		898,786		273,987
Bioenergy		757,741		665,395		92,346			774,343		560,882		(213,461	)
Other									946		–		(946	)
		22,508,926		23,576,891		(1,067,965	)						(984,704	)

~~2016~~2017

Cash generating units	Carrying amount		Recoverable amount		Expenses for impairment
Cash–generating units							Carrying amount		Recoverable amount		(Impairment loss) reversal
Refinería de Cartagena		21,672,367		21,206,515		465,852		20,578,412		22,012,710		1,434,298
Refinería de Barrancabermeja (projects)								1,172,773		898,786		(273,987	)
Bioenergy		925,955		618,446		307,509		757,741		665,395		(92,346	)
		22,598,322		21,824,961		773,361						1,067,965

~~2015~~2016

Cash generating units	Carrying amount		Recoverable amount		Expenses for impairment
Cash–generating units							Carrying amount		Recoverable amount		Impairment loss
Refinería de Cartagena		26,561,335		23,335,096		3,226,240		21,672,367		21,206,515		(465,852	)
Bioenergy		642,139		589,386		52,753		925,955		618,446		(307,509	)
		27,203,474		23,924,482		3,278,993						(773,361	)

The ~~aggregation~~grouping of assets ~~for identifying~~to determine the CGUs is consistent ~~across these~~with prior periods.

~~18.2.1~~16.2.1

Refinería de Cartagena

The recoverable amount of the Refinería de Cartagena was calculated based on ~~the~~its fair value less costs of disposal, which is higher than its value in continued use. The fair value less costs of disposal of the Refinería de Cartagena was determined based on cash flows after taxes that are derived from business plans approved by the ~~Group's~~Ecopetrol Business Group’s management, which are developed based on market prices provided by a ~~third party~~third-party expert, which considers ~~long-term~~long–term macroeconomic variables and fundamental supply and demand assumptions for crude oil and refined products. The fair value ~~category~~hierarchy is ~~level~~ 3.

The significant assumptions to determine the recoverable amount included: a)(i) a gross refining margin determined by crude oil feedstock and products price outlook provided by an independent ~~third party~~third-party expert; b)(ii) an actual discount rate of ~~6.0% (2016 - 6.3%~~6.48% (2017 – 6.00%) determined under WACC methodology; c)(iii) current conditions or benefits, or similar, as an industrial user of goods and services of the free trade zone and during the validity of the license; d)(iv) level of costs and ~~long-term~~long–term operating expenses in line with international refinery standards of similar configuration and conversion ~~capacity, e)~~capacity; (v) refinery throughput and ~~production,~~production; and f)(vi) level of continued investment.

~~F-63~~

It is important to mention that the refining business is highly sensitive to the volatility of the margins and the macroeconomic variables implicit in the determination of the discount rate, therefore, any change in these assumptions could potentially result in significant variations in the determination of impairment losses or reversal amounts.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

The impairment recorded for 2018 is explained by: i) an adjustment in market expectations in relation to the impact that the implementation of the MARPOL regulation will have on margins of refined products, ii) the differential of light and heavy crudes that serve as raw material; and iii) fundamental macroeconomic changes that increased the discount rate used for the valuation of Reficar's assets, mainly associated with the increase in the risk-free rate and higher market risk premiums. Improvements in operational and commercial inputs associated to the refinery optimization as well as the tax effects of the “Financing Law” (tax reform) partially offset the effects of the macroeconomic variables.

In 2017, we recorded a partial reversal of the impairment recorded in previous periods primarily as a result of: a)(a) an improved outlook in refining margins due to the ratification of the implementation of the International Convention for the Prevention of Pollution from Ships (Marpol) starting in 2020; b)(b) a lower discount rate resulting from the application of WACC methodology; and c)(c) operational and financial optimizations identified as part of the stabilization of the refinery.

In 2016, we recorded an impairment caused mostly by adjustment of operational variables based on what was ~~that~~ observed during the stabilization period, partially offset by a lower discount rate and better refining margins.

~~18.2.2~~16.2.2

Bioenergy

The recoverable amount of Bioenergy was calculated based on the fair value less the costs of disposal level, which is greater than the value in use and corresponds to the future cash flows discounted after taxes on profit. The fair value hierarchy is 3.

The significant assumptions used to determine the recoverable amount included: (a) forecast of ethanol prices based on projections made by Group specialists; (b) expected agricultural and operational yields; and (c) a 6.97% discount rate in real terms (2017 – 6.23%) determined under the WACC methodology.

In 2018, impairment is presented due to: i) a lower prospect of short-term ethanol prices, associated with imports from abroad in an environment of global over-supply of ethanol, ii) updating of agricultural variables in the short term, iii) an increase in the discount rate used for the valuation in line with fundamentals of the market. These impacts were partially offset by the updating of operating variables associated with the stabilization and tax effects of the "Financing Law".

In 2017 and 2016, we recorded an impairment loss mainly due to the updating the dates of start of operations of the project, the stabilization process of the industrial plant and the changes in the operational variables and ethanol prices.

16.2.3

Refinería de Barrancabermeja

~~In compliance with the provisions of IAS 36 - Impairment of the value of assets, during 2017~~During 2018, the Refinería de Barrancabermeja ~~recognized~~Modernization Project, which is currently suspended, was evaluated and there were no indications that implied the recognition of additional impairment.

During 2017, an impairment loss of COP$273,987 ~~for impairment,~~was recognized on the Refinería de Barrancabermeja, mainly related to the write off of certain management and financial capitalized balances associated with the ~~suspended~~suspension of the modernization project of the Refinery. This suspension is in response to capital discipline criteria implemented to ensure the growth and financial sustainability of Ecopetrol S.A. and the Ecopetrol Business Group in the adverse context that the hydrocarbons sector experienced in previous years. This project is being assessed within the Ecopetrol Business Group’s strategic ~~plan; and when the project is reactivated,~~plan therefore any impairment loss recognized in previous years may be subject to recovery.

~~18.2.3~~16.3

~~Bioenergy~~Transport and Logistics

The recoverable amount of ~~Bioenergy~~these assets was ~~calculated~~determined based on its fair value with costs of disposal, which corresponds to discounted cash flows based on the hydrocarbon production curves and refined products transport curves. The fair value ~~less the costs of disposal level with value~~ hierarchy ~~3, which~~ is ~~greater than the value in continued use and corresponds to the future cash flows discounted after taxes on profit.~~3.

The assumptions used in the model to determine the recoverable ~~amount~~value included: ~~a) forecast~~i) the tariffs regulated by the Ministry of ~~ethanol prices~~Mines and Energy and the Energy and Gas Regulation Commission - CREG, ii) the actual discount rate used in the valuation was 5.60% (2017 - 5.00%) and iii) transport volume projections based on ~~projections made by~~ the end of year results for 2018 and the long-term volumetric transport program from 2019 onwards.

Ecopetrol ~~specialists based on independent third party sources; and b) a 6.2% discount rate~~S.A.

Notes to the consolidated financial statements

(Figures expressed in ~~real terms (2016 – 6.7% in real terms) determined under the WACC methodology.~~millions of Colombian pesos, unless otherwise stated)

In ~~2017 and 2016, we~~2018, the main impairment recorded ~~an impairment mainly due~~was COP$167,917, corresponding to ~~updating~~the systems of the ~~dates of entry into operation~~Southern Cash Generating Unit (CGU), composed of the ~~project,~~Tumaco Port and the ~~stabilization process~~TransAndino Pipeline (OTA) and its afferent pipelines, the Mansoyá - Orito Pipeline (OMO), San Miguel - Orito (OSO), and Churuyaco- Orito (OCHO). This value was generated mainly by a decrease in the volume projections for the southern systems, and an increase in the need for maintenance capex to reduce the operational risk of the ~~industrial plant, and the updating of operational variables.~~transport systems.

~~18.3~~

~~Transport and Logistics segment~~

In 2017, there was a recovery of an impairment for the Transportation and Logistics segment for COP$59,455, mainly in Oleoducto del Sur, which includes, among others, the Trans Andino Pipeline. The recovery was due to the inclusion of the Port of Tumaco in that generating unit.

The recovery of COP$41,062 in 2016 was caused mainly by the incorporation of ~~flows~~crude oil throughput associated with the San Fernando -– Apiay system, ~~project,~~ which affects the recoverable amount of Los Llanos transport line, but was offset by the impairment of the ~~Sur transport line.~~

The recoverable amount of these assets was determined based on its fair value with costs of disposal with value hierarchy 3, which corresponds to discounted cash flows based on the hydrocarbon production curves and tariffs regulated by the Ministry of Mines and Energy and the Energy and Gas Regulating Commission - CREG. The real discount rate used in the valuation was 5.0% (2016 -4.98%).

~~F-64~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~Oleoducto del Sur.

~~19.~~17.

Goodwill

The balance as of December 31, ~~2017~~2018 and ~~2016~~2017 of goodwill in acquisitions of subsidiaries ~~is as follows:~~was:

	2017			2016			2018			2017
Transport and Logistics
Oleoducto Central S.A.		683,496			683,496			683,496			683,496
Exploration and Production
Hocol Petroleum Ltd.		537,598			537,598			537,598			537,598
Refining and Petrochemicals
Andean Chemical Ltd		127,812			127,812			127,812			127,812
Propilco S.A		108,137			108,137
Propilco S.A.								108,137			108,137
		1,457,043			1,457,043			1,457,043			1,457,043
Less impairment Hocol Petroleum Ltd.		(297,121	)		(297,121	)		(297,121	)		(297,121	)
		1,159,922			1,159,922			1,159,922			1,159,922

As of December 31, 2018 and 2017, ~~and 2016,~~ the Ecopetrol Business Group assessed the recoverability of the carrying value of goodwill generated in the acquisition of subsidiaries. The recoverable amount was determined based on the realization value less costs of disposal using the present value of future cash flows for each of the companies acquired with goodwill. The source of information used the financial projections of each company derived from the business plans approved by management, which were developed based on ~~long term macro-economic~~long-term macroeconomic factors such as price curves and margins and fundamental assumptions of supply and demand. As a result of the analysis, the Ecopetrol Business Group did not recognize any goodwill impairment.

~~F-65~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~20.~~18.

Loans and borrowings

Exhibit 2 details the main conditions of the most significant loans of the Business Group.

~~20.1~~18.1

Composition of loans and borrowings

The balances of the loans and financing, which are recorded at amortized cost, as of December 31, ~~2017~~2018 and ~~2016 are:~~2017:

	Weighted average effective interest rate as of December 31						2017		2016		Weighted average effective interest rate as of December 31		2018		2017
	2017			2016							2018	2017
Local currency
Bonds		8.9	%		8.6	%		1,692,471		2,008,203	8.0%	8.9%		1,568,034		1,692,471
Syndicated loan		8.7	%		9.5	%		3,307,950		3,828,329	7.9%	8.7%		1,439,590		3,307,950
Other (1)		7.7	%		9.1	%		978,795		905,266	7.6%	7.7%		1,041,151		978,795
								5,979,216		6,741,798				4,048,775		5,979,216

Foreign currency
Bonds		6.1	%		6.1	%		29,166,594		29,310,165	5.7%	6.1%		25,599,996		29,166,594
Commercial loans – Refinería de Cartagena		4.3	%		4.1	%		7,401,781		7,988,678
Commercial loans – Refinería de Cartagena (2)											4.4%	4.3%		7,352,002		7,401,781
Commercial loans		4.3	%		2.9	%		528,815		7,945,693	-	4.3%		-		528,815
Loans from related parties (Note 29)											2.5%	1.5%		855,135		259,760
Other (1)								471,429		235,693	3.1%	-		206,737		211,669
								37,568,619		45,480,229				34,013,870		37,568,619
								43,547,835		52,222,027				38,062,645		43,547,835
Current ~~(2)~~								5,144,504		4,126,203				4,019,927		5,144,504
Non-current								38,403,331		48,095,824
Non–current														34,042,718		38,403,331
								43,547,835		52,222,027				38,062,645		43,547,835

(1)

Includes financial leasing and debt in connection with build, ~~operate,~~operation, maintenance and transfer (BOMT) contracts.

(2)

~~The increase in the current portion is mainly due~~Corresponds to the ~~expiration of: i) the first tranche of local bonds issued~~commercial credits that Refinería de Cartagena S.A. and which were assumed by Ecopetrol ~~S.A. in 2013, and ii)~~through voluntary assumption of the ~~5-year series of international bonds issued in 2013 by Ecopetrol S.A.. These bonds mature in August and September 2018, respectively.~~debt, transaction made on December 13, 2017.

~~20.2~~18.2

Main movements ~~of loans and borrowings~~

~~Bonds - foreign~~Local currency

On August 6, 2018, Ecopetrol made the advance payment of the total syndicated loan held in 2013 with local banks, whose amortization was expected until the year 2025. The total amount to be paid is COP$1,430,333 million, for the concept of capital plus interests.

On August 27, 2018, the local 5 year series bond issued in 2013 became due. The total nominal amount paid was COP$120,950.

Foreign currency

§-

On ~~June 8, 2016,~~April 13, 2018, Ecopetrol ~~reopened its bonds due~~S.A. paid in ~~September 2023 for US$ 500~~advance the entire international bond issued in 2013 with a maturity of 5 years; the value paid was USD$354 million, ~~with payment of principal at maturity and interest payable semiannually at a coupon fixed rate of 5.875%. The current total amount of the bond in force is US$ 1,800 million.~~including interest.

~~Foreign currency commercial loans~~

§-

On ~~June 30, 2017,~~July 6 and 25, 2018, Ecopetrol ~~prepaid~~S.A. made the advance payment of all the loans entered into in 2013 with international banks, guaranteed by the Export-Import Bank of ~~its international syndicated loan,~~the United States, and whose amortization was foreseen until the year 2023. The total nominal ~~value~~amount paid was ~~US$ 1,925~~USD$156 million ~~and original maturity in February 2020. This loan was a hedging instrument~~ for ~~future oil exports.~~capital, plus the interest caused.

§-

On ~~December 15, 2017,~~September 20, 2018, Ecopetrol ~~prepaid~~S.A. subscribed a committed line of credit for USD$665 million, with Scotiabank (USD$430 million) and Mizuho Bank (USD$235 million). Under this type of credit, banks commit to disburse resources when Ecopetrol S.A. require it, under the ~~loan entered into in January 2016~~terms and conditions previously agreed between the parties. The committed line of credit has two (2) years of availability for disbursements, with ~~The Bank of Tokyo-Mitsubushi UFJ, Ltd. (BTMU), for~~the following conditions: (i) amortized capital at maturity within a ~~nominal value of US$ 175 million, which had an original term~~period of 5 years ~~amortizable with 2.5 years~~from the date of ~~grace~~subscription of the contract and (ii) a rate of Libor interest (6M) + 125 basis points and a commission of 30 basis points per year on ~~principal repayments and interest payable semiannually~~capital not paid during the period of availability. This facility would only increase the Ecopetrol Business Group's level of indebtedness at the ~~Libor 6M rate (6 months) + 145 basis points.~~time disbursements are made.

~~F-66~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

§-

On December ~~15, 2017,~~27, 2018, Ecopetrol ~~prepaid~~S.A. paid in advance the ~~loan acquired~~entire 10-year international bond issued in ~~May 2016 with Export Development Canada (EDC), for a nominal~~2009, the value ~~of US$ 300~~paid was USD$1,587 million, ~~which had an original term of 5 years, with principal payable at maturity and interest payable semiannually at the Libor 6M rate (6 months) + 140 basis points.~~

~~Local currency commercial loans~~

On February 23, 2016, Ecopetrol entered into a bilateral commercial credit agreement with Bancolombia SA for COP$990,000, which was prepaid in October 2016. This loan had a term of 8 years, amortizable with 2 years of grace on principal repayments, with interest payable semiannually at a DTF TA + 560 basis points.including interest.

On August 14, 2017, Ecopetrol entered into an agreement for a committed credit line with Bancolombia S.A. for COP$990,000 as a contingent financing mechanism, has available for 2 years, with the following conditions: 10-year term from the date of the first disbursement, 2 years of grace on principal repayments, interest rate of IBR, at six months + 300 basis points and a commission of availability of 7.2 basis points per year on the amount not disbursed during the availability period. Under this facility, Bancolombia SA undertakes to disburse the resources when required by Ecopetrol as per the terms and conditions previously agreed between the parties. As of December 31, 2017, the use of resources from this credit line has not been required.

~~20.3~~18.3

Maturity of loans and borrowings

The following are the maturities of loans and borrowing as of December 31, ~~2017:~~2018:

	Up to 1 year (1)		1-5 years		5-10 years		> 10 years		Total		Up to 1 year (1)		1 - 5 years		5-10 years		> 10 years		Total
Local Currency
Local currency
Bonds		253,172		742,512		322,956		373,831		1,692,471		116,693		842,514		362,446		246,381		1,568,034
Syndicated loan		739,348		2,009,420		559,182		-		3,307,950		406,582		1,033,008		-		-		1,439,590
Other		98,729		415,599		308,121		156,346		978,795
Commercial loans and other												120,069		491,781		270,920		158,381		1,041,151
		1,091,249		3,167,531		1,190,259		530,177		5,979,216		643,344		2,367,303		633,366		404,762		4,048,775
Foreign currency
Bonds		2,651,174		9,948,238		12,018,813		4,548,369		29,166,594		1,374,390		10,605,708		8,664,732		4,955,166		25,599,996
Commercial loans – Refinería de Cartagena		958,918		3,635,848		2,807,015		-		7,401,781		1,116,370		4,061,541		2,174,091		-		7,352,002
Commercial loans		153,873		315,849		59,093		-		528,815
Other		289,290		119,014		63,125		-		471,429		885,823		136,574		39,475		-		1,061,872
		4,053,255		14,018,949		14,948,046		4,548,369		37,568,619		3,376,583		14,803,823		10,878,298		4,955,166		34,013,870
		5,144,504		17,186,480		16,138,305		5,078,546		43,547,835		4,019,927		17,171,126		11,511,664		5,359,928		38,062,645

(1)

Includes ~~short-term~~short–term credit and the current portion of ~~long-term~~long–term debt, as applicable.

The following are the maturities of loans and borrowing as of December 31, 2017:

	Up to 1 year (1)		1–5 years		5–10 years		> 10 years		Total
Local currency
Bonds		253,172		742,512		322,956		373,831		1,692,471
Syndicated loan		739,348		2,009,420		559,182		–		3,307,950
Other		98,729		415,599		308,121		156,346		978,795
		1,091,249		3,167,531		1,190,259		530,177		5,979,216
Foreign currency
Bonds		2,651,174		9,948,238		12,018,813		4,548,369		29,166,594
Commercial loans – Refinería de Cartagena		958,918		3,635,848		2,807,015		–		7,401,781
Commercial loans		153,873		315,849		59,093		–		528,815
Other		289,290		119,014		63,125		–		471,429
		4,053,255		14,018,949		14,948,046		4,548,369		37,568,619
		5,144,504		17,186,480		16,138,305		5,078,546		43,547,835

~~F-67~~(1)

Includes short–term credit and the current portion of long–term debt, as applicable.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~The following are the maturities of loans and borrowing as of December 31, 2016:~~

Up to 1
year (1) 1 - 5 years 5-10 years > 10 years Total
Local currency
Bonds 312,207 955,204 357,015 383,777 2,008,203
Commercial loans 793,743 2,375,023 659,563 - 3,828,329
Others 58,952 333,372 339,009 173,933 905,266
Total local currency 1,164,902 3,663,599 1,355,587 557,710 6,741,798

Foreign currency
Bonds 1,648,707 10,956,507 12,133,576 4,571,375 29,310,165
Commercial loan Refinería de Cartagena 875,734 3,549,216 3,472,379 91,349 7,988,678
Other commercial loans 371,804 7,450,587 123,302 - 7,945,693
Other 65,056 114,226 56,411 - 235,693
Total foreign currency 2,961,301 22,070,536 15,785,668 4,662,724 45,480,229
4,126,203 25,734,135 17,141,255 5,220,434 52,222,027

~~(1) Includes short-term credit and the current portion of long-term debt, as applicable.~~

~~20.4~~18.4

Breakdown by type of interest rate and currency

The following is the breakdown of loans and borrowing by type of interest rate as of December 31, ~~2017~~2018 and ~~2016:~~2017:

	2017		2016		2018		2017
Local currency
Fixed rate		143,156		299,472		252,224		143,156
Floating rate		5,836,060		6,442,326		3,796,551		5,836,060
		5,979,216		6,741,798		4,048,775		5,979,216
Foreign currency
Fixed rate		35,062,742		35,719,486		31,432,667		35,062,742
Floating rate		2,505,877		9,760,743		2,581,203		2,505,877
		37,568,619		45,480,229		34,013,870		37,568,619
		43,547,835		52,222,027		38,062,645		43,547,835

The ~~floating rate loans~~interest on the bonds in ~~local~~national currency ~~are~~is indexed ~~mainly~~ to the CPI (Consumer Price Index) and bank loans and variable rate leasing in Colombian pesos are indexed to the DTF (Fixed Term Deposits); and ~~those~~IBR (Banking Reference Indicator), plus a differential. Interest on loans in foreign currency ~~loans at~~is calculated based on the LIBOR rate plus a ~~spread.~~spread and the interests of the other types of debt are at a fixed rate.

~~20.5~~18.5

Loans designated as hedging instrument

As of December 31, ~~2017, the Group~~2018, Ecopetrol S.A. designated US$~~8,532~~6,500 million ~~(2016 -~~(2017 – US$~~10,512~~8,532 million) of foreign currency debt as a hedging instrument, of which US$5,200 million is used to hedge the net investment in foreign operations with the US dollar as their functional currency, and US$~~3,332~~1,300 million is used to hedge the cash flows of future crude oil exports. See Note ~~30 -~~ 28 –Risk management ~~for further information.~~.

~~20.6~~18.6

Guarantees and covenants

Financing obtained directly by Ecopetrol S.A. in capital markets has no guarantees granted or financial covenant ~~restrictions, due to the support of the Colombian Government through the Ministry of Finance and Public Credit.~~

~~F-68~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~restrictions.

Until December 13, 2017, ~~when Ecopetrol voluntarily assumed~~product of the voluntary assumption of international ~~loan~~credit held by ~~Reficar,~~Refinería de Cartagena S.A. on the part of Ecopetrol SA, in its capacity as sponsor, ~~the following~~ restrictions applied in relation to ~~Reficar:~~financial commitments to maintain a minimum ~~debt~~ service coverage ~~ratio~~rate of 1.35:1; 1 debt at certain points in the life of the loan by Refinería de Cartagena SA, as well as the obligation to ~~maintain~~have a commercial trust and a depositary ~~agreement for receiving~~and security contract to receive the resources of the new refinery to fulfill specific purposes such as operating expenses, interest and others.

The following is a summary of certain restrictions contained in certain other loan instruments of Ecopetrol’s subsidiaries:

-–

The loan entered into by Oleoducto de los Llanos is guaranteed with the economic rights of the ~~ship-or-pay~~ship–or–pay transportation agreements with ~~Meta Petroleum~~Frontera Energy Corp and also includes certain restrictions regarding capital contributions and asset disposal.

-–

The syndicated loan entered into by Oleoducto Bicentenario requires that this subsidiary maintain an established relationship of leverage and solvency and cash flow / service to the debt.

-–

The loan entered into by Bioenergy with Bancolombia is guaranteed with the La Esperanza 1 and 2 ~~fields in the amount of COP$6,343~~farms and there are certain restrictions on the variation of direct or indirect ownership by Ecopetrol S.A. in this subsidiary.

Ecopetrol ~~and its subsidiaries were~~S.A.

Notes to the consolidated financial statements

(Figures expressed in ~~compliance with these restrictions as~~millions of ~~December 31, 2017 and 2016.~~Colombian pesos, unless otherwise stated)

~~20.7~~18.7

Fair value of loans

The fair value of loans and borrowings is COP$~~45,781,317~~38,305,674 and COP$~~52,109,438~~45,781,317 as of December 31, ~~2017~~2018 and ~~2016,~~2017, respectively.

For fair value measurement, local currency bonds were valued using Infovalmer reference prices, while bonds in U.S. dollars were valued using Bloomberg. With regard to the other financial obligations for which there is no market benchmark, a discount to present value technique was used. These rates incorporate market risk through some benchmarks (Libor, ~~DTF)~~FTD) and the Ecopetrol Business Group’s credit risk (spread).

~~F-69~~18.8

Movement of net financial debt

The following is the movement of net financial debt as of December 31, 2018, 2017 and 2016:

	Cash and equivalents			Other financial assets			Loans and borrowings			Net financial debt
Balance as of December 31, 2016		8,410,467			6,686,895			(52,222,027	)		(37,124,665	)
Cash flow		(174,272	)		(564,755	)		11,259,492			10,520,465
Exchange difference:
Recognized in profit or loss		(290,310	)		208,394			147,993			66,077
Recognized in other comprehensive income		–			–			70,958			70,958
Financial cost registered to projects		–			–			(203,964	)		(203,964	)
Financial income (expense) recognized in profit or loss		–			104,706			(2,385,994	)		(2,281,288	)
Foreign currency translation		–			39,628			(76,171	)		(36,543	)
Other movements that do not generate cash flow		–			58,857			(138,122	)		(79,265	)
Balance as of December 31, 2017		7,945,885			6,533,725			(43,547,835	)		(29,068,225	)
Cash flow		(2,040,387	)		843,612			11,363,077			10,166,302
Exchange difference:
Recognized in profit or loss		406,246			920,609			(816,840	)		510,015
Recognized in other comprehensive income		–			-			(2,165,569	)		(2,165,569	)
Financial cost registered to projects		–			-			(217,891	)		(217,891	)
Financial income (expense) recognized in profit or loss		–			92,906			(2,399,414	)		(2,306,508	)
Foreign currency translation		–			(245,958	)		(203,446	)		(449,404	)
Other movements that do not generate cash flow		–			2,921			(74,727	)		(71,806	)
Balance as of December 31, 2018		6,311,744			8,147,815			(38,062,645	)		(23,603,086	)

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~20.8~~

~~Movement of net financial debt~~

~~The following is the movement of net financial debt as of December 31, 2017, 2016 and 2015:~~

Cash and
equivalents Other financial
assets (1) Loans and
borrowings Net financial
debt
Balance as of December 31, 2015 6,550,450 1,585,379 (53,223,338 ) (45,087,509 )
Cash flow 2,086,350 5,446,507 1,050,723 8,583,580
Exchange difference:
Recognized in profit or loss (226,333 ) (12,837 ) 1,252,420 1,013,250
Recognized in other comprehensive income - - 612,983 612,983
Financial cost registered to projects - - (357,107 ) (357,107 )
Financial income (expense) recognized in profit or loss - 59,593 (2,765,024 ) (2,705,431 )
Foreign currency translation - (6,462 ) 593,384 586,922
Other movements not generating cash flow (2) - (385,285 ) 613,932 228,647
Balance as of December 31, 2016 8,410,467 6,686,895 (52,222,027 ) (37,124,665 )
Cash flow (174,272 ) (564,755 ) 11,259,492 10,520,465
Exchange difference:
Recognized in profit or loss (290,310 ) 208,394 147,993 66,077
Recognized in other comprehensive income - - 70,958 70,958
Financial cost registered to projects - - (203,964 ) (203,964 )
Financial income (expense) recognized in profit or loss - 104,706 (2,385,994 ) (2,281,288 )
Foreign currency translation - 39,628 (76,171 ) (36,543 )
Other movements that do not generate cash flow - 58,857 (138,122 ) (79,265 )
Balance as of December 31, 2017 7,945,885 6,533,725 (43,547,835 ) (29,068,225 )

~~(1)~~

~~The balance of other financial assets as of December 31, 2015 includes the value of the securities related to Santiago de las Atalayas for COP$699,832, which at that date were restricted.~~

~~(2)~~

~~Corresponds to operations with remittances financed in dollars with domestic banks for the payment of imports.~~

~~21.~~19.

Trade and other payables

The balance of trade and other payables, as of December 31, ~~2017~~2018 and ~~2016,~~2017, is comprised as ~~follows:~~follows:

	2017		2016
					2018		2017
Suppliers		5,088,957		4,687,353		6,878,510		5,088,957
Partners’ advances		880,420		864,971		874,010		880,420
Withholding tax		376,169		379,194		246,867		376,169
Related parties		129,520		114,420
Related parties (Note 29)						116,418		129,520
Insurance and reinsurance		121,555		110,530		211,883		121,555
Agreements in transport contracts (1)		91,324		111,899		210,196		91,324
Deposits received from third parties		25,523		209,570		49,158		25,523
Dividends payable (2)		3,723		11,193
Dividends payable						84,657		3,723
Various creditors		280,485		389,126		304,613		280,485
		6,997,676		6,878,256		8,976,312		6,997,676
Current						8,945,790		6,968,207
Non–current						30,522		29,469
						8,976,312		6,997,676
Current		6,968,207		6,854,363
Non-current		29,469		23,893
		6,997,676		6,878,256

(1)

Corresponds to the value of debt from agreements in transport contracts of oil pipelines and poliducts, impacted by volumetric adjustments, compensation for quality and other inventory management agreements.

~~(2)~~

~~Dividends declared at the General Shareholders' Meeting on 2016 profits, amounting to COP$945,684, were paid in April 2017.~~

The carrying amount of trade accounts and other accounts payable approximates their fair value due to their ~~short-term~~short–term nature.

~~F-70~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~22.~~20.

Provisions for ~~employees~~employees’ benefits

The following are the balances of provisions for employee benefits as of December 31, ~~2017~~2018 and ~~2016:~~2017:

	2017		2016		2018		2017
Post-employment benefits
Post–employment benefits
Healthcare		5,367,005		4,475,540		5,507,784		5,367,005
Pension		1,327,859		76,695		1,452,322		1,327,859
Education		502,260		333,379		479,945		502,260
Bonds		348,442		263,563		331,064		348,442
Other plans		77,636		67,945		82,576		77,636
Termination benefits - Voluntary retirement plan		155,286		161,796
Termination benefits – Voluntary retirement plan						137,859		155,286
		7,778,488		5,378,918		7,991,550		7,778,488
Social benefits and salaries		485,939		423,360		521,802		485,939
Other employee benefits		67,867		73,300		93,199		67,867
		8,332,294		5,875,578		8,606,551		8,332,294
Current		1,829,819		1,974,496		1,816,882		1,829,819
Non-current		6,502,475		3,901,082
Non–current						6,789,669		6,502,475
		8,332,294		5,875,578		8,606,551		8,332,294

~~F-71~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~22.1~~20.1

~~Post-employment~~Post–employment benefits liability (asset)

The following table shows the movement in liabilities and assets, net of post-employment benefits and termination benefits, as of December 31, ~~2017~~2018 and ~~2016:~~2017:

	Pension and bonds (1)						Other						Total						Pension and bonds (1)						Other						Total
	2017			2016			2017			2016			2017			2016			2018			2017			2018			2017			2018			2017
Liabilities for employee benefits
Opening balance		12,463,433			10,435,546			5,041,133			4,170,047			17,504,566			14,605,593			14,147,464			12,463,433			6,105,432			5,041,133			20,252,896			17,504,566
Current service cost		-			-			52,164			53,771			52,164			53,771			–			–			77,373			52,164			77,373			52,164
Past service cost		-			-			-			164,271			-			164,271			–			–			50,489			–			50,489			–
Interest expense		872,524			876,076			350,060			333,894			1,222,584			1,209,970			888,583			872,524			377,923			350,060			1,266,506			1,222,584
Actuarial losses (gains)		1,621,184			1,915,767			1,012,205			616,834			2,633,389			2,532,601
Actuarial (gains) losses																				(56,655	)		1,621,184			(27,651	)		1,012,205			(84,306	)		2,633,389
Benefits paid		(809,677	)		(763,956	)		(350,130	)		(297,684	)		(1,159,807	)		(1,061,640	)		(847,449	)		(809,677	)		(371,448	)		(350,130	)		(1,218,897	)		(1,159,807	)
Closing balance		14,147,464			12,463,433			6,105,432			5,041,133			20,252,896			17,504,566			14,131,943			14,147,464			6,212,118			6,105,432			20,344,061			20,252,896

Plan assets
Opening balance		12,123,175			11,181,604			2,473			-			12,125,648			11,181,604			12,471,163			12,123,175			3,245			2,473			12,474,408			12,125,648
Return on assets		848,677			950,704			385			-			849,062			950,704			780,494			848,677			170			385			780,664			849,062
Contributions to funds		-			-			22,465			-			22,465			-			–			–			21,971			22,465			21,971			22,465
Variation in the ceiling of assets		-			379,884			-			-			-			379,884
Benefits paid		(809,677	)		(771,528	)		(22,078	)		2,406			(831,755	)		(769,122	)		(847,449	)		(809,677	)		(21,526	)		(22,078	)		(868,975	)		(831,755	)
Actuarial gains (losses)		308,988			382,511			-			67			308,988			382,578
Actuarial (losses) gains																				(55,651	)		308,988			94			–			(55,557	)		308,988
Closing balance		12,471,163			12,123,175			3,245			2,473			12,474,408			12,125,648			12,348,557			12,471,163			3,954			3,245			12,352,511			12,474,408
Net post-employment benefits liability		1,676,301			340,258			6,102,187			5,038,660			7,778,488			5,378,918
Net post–employment benefits liability																				1,783,386			1,676,301			6,208,164			6,102,187			7,991,550			7,778,488

(1)

There is no cost for the pension and pension plans service, due to the fact that the beneficiaries were retired as of July 31, 2010.

~~F-72~~

The following table shows the movement in profit and loss and in other comprehensive income as of December 31, 2018, 2017 and 2016:

	2018			2017			2016
Recognized in profit or loss
Interest expense, net		485,842			373,522			259,266
Current service cost		77,373			52,164			53,771
Past service cost		50,489			–			164,271
Remedies		503			13,889			–
		614,207			439,575			477,308
Recognized in other comprehensive income
Education and severance		45,509			(203,779	)		175,259
Pension and pension bonds		1,003			(1,312,195	)		(1,533,256	)
Termination benefits – Voluntary retirement plan		93			(3	)		67
Healthcare		(17,356	)		(794,535	)		(792,093	)
Change in the effect of asset ceiling		–			–			379,884
		29,249			(2,310,512	)	��	(1,770,139	)
Deferred tax		(33,539	)		762,469			616,697
		(4,290	)		(1,548,043	)		(1,153,442	)

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~The following table shows the movement in profit and loss and in other comprehensive income as of December 31, 2017 and 2016:~~

2017 2016
Recognized in profit or loss
Current service cost 52,164 53,771
Past service cost - 164,271
Interest expense, net 373,522 259,266
Remedies 13,889 -
439,575 477,308
Recognized in other comprehensive income
Healthcare (794,535 ) (792,093 )
Pension and pension bonds (1,312,195 ) (1,533,256 )
Education and severance (203,779 ) 175,259
Termination benefits - Voluntary retirement plan (3 ) 67
Change in the effect of the asset ceiling - 379,884
(2,310,512 ) (1,770,139 )
Deferred tax 762,469 616,697
Other comprehensive income, net of taxes (1,548,043 ) (1,153,442 )

~~22.2~~20.2

Plan assets

Plan assets are resources held by pension trusts for payment of pension obligations. Payments for health and education ~~post-employment~~post–employment benefits is Ecopetrol’s responsibility. The destination of trust resources and its yields cannot be changed or returned to the Ecopetrol Business Group until all pension obligations have been fulfilled.

The following is the composition of the plan assets of pension and pension bonds by type of investment as of December 31, ~~2017~~2018 and ~~2016:~~2017:

	2017		2016		2018		2017
Bonds issued by the national government		4,349,400		4,410,326		4,307,972		4,349,400
Bonds of private entities		2,967,030		2,880,958		2,910,071		2,967,030
Other local currency		2,337,580		2,910,083		2,219,634		2,340,825
Other public bonds		1,149,200		693,061		1,014,663		1,149,200
Variable yield		605,380		305,052		653,828		605,380
Bonds of foreign entities		558,920		622,817		554,685		558,920
Other foreign currency		503,653		300,878		691,658		503,653
		12,471,163		12,123,175		12,352,511		12,474,408

~~46.0%~~47.4% of plan assets are classified as level 1 in the fair value hierarchy where prices for the assets are directly observable on actively traded markets, and ~~54.0%~~52.6% are classified as level 2.2 (46.0% and 54.0% for 2017, respectively).

The fair value of level 2 plan assets is calculated using prices quoted in the assets’ market. The Ecopetrol Business Group obtains these prices through reliable financial data providers recognized in Colombia or abroad depending on the investment.

For the securities issued in local currency, the fair value of plan assets is calculated using information published by Infovalmer, a price supplier authorized by the Financial Superintendence of Colombia. According to its methodology, prices are calculated based on market information on the valuation date or estimated from historical inputs according to the criteria established for the calculation of each of the prices.

The average price is calculated based on the most representative market of the transactions carried out through electronic platforms approved and supervised by the regulator.

~~F-73~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

On the other hand, the estimated price is calculated for investments that do not reflect enough information to estimate an average market price, replicating the quoted prices for similar assets or prices obtained through quotes from brokers. This estimated price is also given by Infovalmer as a result of the application of robust methodologies approved by the financial regulator and widely used by the financial sector.

The following table reflects the credit quality of the issuers and counterparties in assets held by the autonomous pension funds:

Rating	2017		2016
					2018		2017

AAA		4,870,932		4,467,642		4,683,190		4,870,932
Nation		4,471,274		4,610,251		4,364,188		4,471,274
AA+		690,391		470,944		860,905		690,391
BBB-						426,743		192,636
BAA3						310,788		45,699
F1+						249,361		230,321
BBB						193,579		246,795
BRC1+						89,211		118,008
BBB+						86,040		159,103
A						62,754		39,048
AA-						60,382		18,770
AA						28,367		58,234
BAA1						21,395		5,296
A3						17,075		29,098
BAA2		371,972		141,940		-		371,972
BBB		246,795		150,808
F1+		230,321		416,439
BBB-		192,636		23,237
BBB+		159,103		193,835
BRC 1+		118,008		309,282
AA		58,234		79,750
BAA3		45,699		131,993
A		39,048		4,175
A3		29,098		61,325
AA3		27,051		14,385
AA-		18,770		34,197
VRR1 +		14,112		55,821
BAA1		5,296		5,274
Other qualifications		9,621		66,470		55,768		50,784
No rating available		872,802		885,407		842,765		876,047
		12,471,163		12,123,175		12,352,511		12,474,408

See credit risk policy in Note ~~30.3.~~28.2.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~22.3~~20.3

Actuarial assumptions

The following are the actuarial assumptions used in determining the present value of defined employee benefit obligations used for the actuarial calculations as of December 31, ~~2017~~2018 and ~~2016:~~2017:

2017	Pension		Bonds		Health		Education		Other benefits (1)
2018										Pension			Bonds			Health			Education			Other benefits⁽¹⁾
Discount rate		6.50%		6.25%		6.50%		5.50%	5.51%		6.75	%		6.50	%		7.00	%		6.75	%		5.87	%
Salary growth rate		N/A		N/A		N/A		N/A	4.75% / 4.25%		N/A			N/A			N/A			N/A			5.10% / 4.70	%
Expected inflation rate		3.00%		3.00%		3.00%		3.00%	3.00%		3.00	%		3.00	%		3.00	%		3.00	%		3.00	%
Pension growth rate		3.00%		N/A		N/A		N/A	N/A		3.00	%		N/A			N/A			N/A			N/A
Cost trend
Short-term rate		N/A		N/A		6.00%		4.00%	N/A
Long-term rate		N/A		N/A		4.00%		4.00%	N/A
Short–term rate											N/A			N/A			7.00	%		4.00	%		N/A
Long–term rate											N/A			N/A			4.00	%		4.00	%		N/A

2016	Pension		Bonds		Health		Education		Other benefits (1)
2017										Pension			Bonds			Health			Education			Other benefits⁽¹⁾
Discount rate		7.25%		7.00%		7.25%		6.50%	6.67%		6.50	%		6.25	%		6.50	%		5.50	%		5.51	%
Salary growth rate		N/A		N/A		N/A		N/A	4.25%		N/A			N/A			N/A			N/A			4.75% / 4.25	%
Expected inflation rate		3.00%		3.00%		3.00%		3.00%	3.00%		3.00	%		3.00	%		3.00	%		3.00	%		3.00	%
Pension growth rate		3.00%		N/A		N/A		N/A	N/A		3.00	%		N/A			N/A			N/A			N/A
Cost trend
Short-term rate		N/A		N/A		3.00%		4.00%	N/A
Long term rate		N/A		N/A		4.00%		4.00%	N/A
Short–term rate											N/A			N/A			6.00	%		4.00	%		N/A
Long–term rate											N/A			N/A			4.00	%		4.00	%		N/A

N/A: Not applicable for this benefit.

(1)

Weighted average discount rate.

~~F-74~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

The cost trend is the projected increase for the initial year, which includes the expected inflation rate.

The mortality table used for the calculations was that of ‘Valid Annuitant’ for men and women based on the experience gained for the period ~~2005-2008~~2005–2008 of the Colombian Social Security Institute.

~~22.4~~20.4

Maturity of benefit obligation

The cash flows required for payment of ~~post-employment~~post–employment obligations are the following:

Period	Pension and bonds		Other benefits		Total		Pension and bonds		Other benefits		Total
2018		880,298		374,315		1,254,613
2019		877,165		355,241		1,232,406		914,959		366,866		1,281,825
2020		899,128		358,292		1,257,420		939,158		373,953		1,313,111
2021		921,333		361,655		1,282,988		962,651		381,734		1,344,385
2022		952,531		362,998		1,315,529		973,491		387,940		1,361,431
2023-2026		5,201,619		1,824,756		7,026,375
2023								996,864		397,555		1,394,419
2024 - 2028								5,434,882		2,104,259		7,539,141

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~22.5~~20.5

Sensitivity analysis

The following sensitivity analysis shows the effect of such possible changes on the obligation for defined benefits, while keeping the other assumptions constant, as of December 31, ~~2017:~~2018:

Pension Bonds Health Education Other
benefits
Discount rate
-50 basis points 13,948,863 1,032,967 5,775,492 527,839 242,117
+50 basis points 12,440,607 948,129 4,962,688 480,224 230,501
Inflation rate
-50 basis points 12,386,975 946,675 N/A N/A 156,021
+50 basis points 14,003,214 1,033,715 N/A N/A 161,094
Salary growth rate
-50 basis points N/A N/A N/A N/A 76,336
+50 basis points N/A N/A N/A N/A 79,150
Cost trend
-50 basis points N/A N/A 4,982,874 479,829 N/A
+50 basis points N/A N/A 5,797,753 528,104 N/A

Pension

Bonds

Health

Education

Other benefits

Discount rate

–50 basis points

13,896,668

1,030,073

5,907,754

500,234

229,859

+50 basis points

12,449,997

956,984

5,152,929

461,725

219,178

Inflation rate

–50 basis points

12,395,671

955,640

N/A

139,854

+50 basis points

13,951,861

1,031,197

N/A

143,807

Salary growth rate

–50 basis points

N/A

78,849

+50 basis points

N/A

86,509

Cost trend

–50 basis points

N/A

5,155,141

461,296

N/A

+50 basis points

N/A

5,902,319

500,566

N/A

~~22.6~~20.6

Voluntary retirement plan

In August 2016, the Ecopetrol Business Group offered a voluntary retirement plan to 200 employees who met certain criteria. As of December 31, 2018, 2017 and 2016, 137 employees were part of the plan, with a corresponding cost of COP$137,859 (2017 – COP$155,286 ~~(2016 -~~and 2016 – COP$161,796). This plan includes benefits such as monthly income, education and health benefits until the date on which the employee is granted their retirement pension.

~~F-75~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~23.~~21.

Accrued liabilities and provisions

Below is the breakdown of the changes in the different categories of provisions and contingencies as of December 31, ~~2017~~2018 and ~~2016:~~2017:

	Asset retirement obligation			Litigation			Environmental contingencies and others			Total			Asset retirement obligation			Litigation			Environmental contingencies and others			Total
Balance as of December 31, 2016		5,064,660			209,932			643,278			5,917,870

Balance as of December 31, 2017														5,527,324			182,966			827,159			6,537,449
Increase in abandonment costs		39,634			-			-			39,634			1,062,280			-			-			1,062,280
Additions (recoveries)		110,587			(19,185	)		106,532			197,934
Additions														71,015			61,851			174,780			307,646
Uses		(66,469	)		(7,742	)		(19,613	)		(93,824	)		(182,130	)		(114,647	)		(100,215	)		(396,992	)
Financial costs		379,891			-			(367	)		379,524			186,518			-			-			186,518
Foreign currency translation		(979	)		(39	)		718			(300	)		54,610			(2,368	)		10,983			63,225
Transfers (1)		-			-			96,611			96,611
Balance as of December 31, 2017		5,527,324			182,966			827,159			6,537,449

Transfers														(342	)		143			(5,915	)		(6,114	)
Balance as of December 31, 2018														6,719,275			127,945			906,792			7,754,012
Current		199,824			159,881			199,123			558,828			549,678			88,623			176,108			814,409
Non-current		5,327,500			23,085			628,036			5,978,621			6,169,597			39,322			730,684			6,939,603
		5,527,324			182,966			827,159			6,537,449			6,719,275			127,945			906,792			7,754,012

	Asset retirement obligation			Litigation			Comuneros provision			Environmental contingencies and others			Total			Asset retirement obligation			Litigation			Environmental contingencies and others			Total
Balance as of December 31, 2015		4,452,369			99,798			702,486			822,694			6,077,347
Balance as of December 31, 2016																	5,064,660			209,932			643,278			5,917,870
Increase in abandonment costs		404,797			-			-			-			404,797			39,634			–			–			39,634
Additions (recoveries)		18,285			44,120			(702,486	)		(74,312	)		(714,393	)
Additions (reversals)																	110,587			(19,185	)		106,532			197,934
Uses		(68,460	)		(4,585	)		-			(31,218	)		(104,263	)		(66,469	)		(7,742	)		(19,613	)		(93,824	)
Financial costs		317,448			-			-			(173	)		317,275			379,891			–			(367	)		379,524
Foreign currency translation		(14,703	)		(355	)		-			(2,759	)		(17,817	)		(979	)		(39	)		718			(300	)
Transfers (1)		(45,076	)		70,954			-			(70,954	)		(45,076	)		–			–			96,611			96,611
Balance as of December 31, 2016		5,064,660			209,932			-			643,278			5,917,870
Balance as of December 31, 2017																	5,527,324			182,966			827,159			6,537,449
Current																	199,824			159,881			199,123			558,828
Non–current																	5,327,500			23,085			628,036			5,978,621
																	5,527,324			182,966			827,159			6,537,449
Current		330,057			146,767			-			345,130			821,954
Non-current		4,734,603			63,165			-			298,148			5,095,916
		5,064,660			209,932			-			643,278			5,917,870

(1)

Mainly includes transfers to liabilities associated with assets held for sale.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

	Asset retirement obligation			Litigation			Comuneros provision			Environmental contingencies and others			Total
Balance as of December 31, 2015		4,452,369			99,798			702,486			822,694			6,077,347
Increase in abandonment costs		404,797			-			-			-			404,797
Additions (reversals)		18,285			44,120			(702,486	)		(74,312	)		(714,393	)
Uses		(68,460	)		(4,585	)		-			(31,218	)		(104,263	)
Financial costs		317,448			-			-			(173	)		317,275
Foreign currency translation		(14,703	)		(355	)		-			(2,759	)		(17,817	)
Transfers (1)		(45,076	)		70,954			-			(70,954	)		(45,076	)
Balance as of December 31, 2016		5,064,660			209,932			-			643,278			5,917,870
Current		330,057			146,767			-			345,130			821,954
Non-current		4,734,603			63,165			-			298,148			5,095,916
		5,064,660			209,932			-			643,278			5,917,870

(1)

Mainly includes transfers to liabilities associated with assets held for sale.

~~23.1~~21.1

Asset retirement obligation

The estimated liability for asset retirement obligation costs corresponds to the future obligation that the Ecopetrol Business Group to restore environmental conditions to a level similar to that existing before the start of projects or activities, as described in Note 3.5 -– Abandonment and dismantling costs of fields and other facilities. As these relate to ~~long-term~~long–term obligations, this liability is estimated by projecting the expected future payments and discounting at present value with a rate indexed to the ~~Group's~~Ecopetrol Business Group’s financial obligations, taking into account the ~~temporality~~temporariness and risks of this obligation. The discount rates used in the estimate of the obligation as of December 31, ~~2017~~2018 were: Exploration and Production ~~6.93% (2016 - 7.93%)~~3.54%, Transportation and Logistics ~~7.02% (2016 - 8.20%)~~3.69% and Refining and Petrochemicals ~~7.37% (2016 - 8.99%)~~3.84%.

~~F-76~~

~~Ecopetrol S.A.~~

~~Notes to~~ For 2017, the ~~consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~equivalent real discount rates were: Production 3.34%, Transportation 3.43% and Refining 3.77%.

~~23.2~~21.2

Litigation

The following is a summary of the main legal proceedings recognized in the consolidated statement of financial position, ~~whose amount exceeds COP$13,000 million,~~ where the expectation of loss is probable and could imply an outflow of resources as of December 31, ~~2017~~2018 and ~~2016:~~2017:

Proceeding 2017 2016

Provision for the payment of the 2016 legal stability contract premium with the Ministry of Finance and Public Credit regarding investment in Reficar 64,104 59,528
Litigation with Schrader Camargo, supplier of Reficar 17,003 17,003
Settlement before the Procuraduría General de la Nación with the firms Acciona Infraestructura S.A. and Mantenimiento y Montajes S.A., August 18, 2016. In 2017, it was ruled in favor of the Group and the provision was reversed. - 44,986

Proceedings	2018		2017

Controversy for breach of contract with the firms Consulting Group and Industrial Consulting S.A.S., with Refinería de Cartagena.		15,541		-
Damages to third parties due to hydrocarbon easement in a property close to Refinería de Cartagena.		11,019		11,019
Lawsuit filed by a group of people who claim to be victims of the incident in Machuca, Municipality of Segovia - Antioquia against Oleoducto Central S.A. - Ocensa		9,410		9,410
Provision for the payment of the 2016 legal stability contract premium with the Ministry of Finance and Public Credit, in Refinería de Cartagena – Payment made in 2018		-		64,104
Litigation with Schrader Camargo, supplier of Refinería de Cartagena. In 2018, a payment agreement was reached.		-		17,003

~~23.3~~

~~Comuneros - Santiago de las Atalayas provisions~~

~~On November 8, 2016, the Ministry of Mines and Energy concluded that the resources that were restricted in relation to this process were not royalties and, therefore, were not due to the Comuneros.~~

In accordance with the foregoing, the resources held by Ecopetrol are its property, without any claim or discussion to date regarding ownership title thereof. On November 8, 2016, the amount claimed reached COP$688,664, originated mostly from the valuation and financial yield of the fund where the resources were deposited. The recovery of this provision was recognized in the net financial results of the period ending December 31, 2016.

~~23.4~~21.3

Environmental contingencies and others

These ~~corresponds~~correspond to contingencies for environmental incidents and obligations related to environmental compensation and mandatory investment of 1% for the use of, exploitation of or effect on natural resources imposed by national, regional and local environmental authorities. Mandatory investment of 1% is based on the use of water taken directly from natural sources in accordance with the provisions of Law 99 of 1993, Article 43, Decree 1900 of 2006, Decree 2099 of 2017 and 075 and 1120 of 2018 in relation to the projects that Ecopetrol develops in Colombia.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

The Colombian Government through the Ministry of Environment and Sustainable Development, issued in December 2016 and in January 2017 the Decrees 2099 and 075, which modify the Single Regulatory Decree of the environment and sustainable development sector, Decree 1076 of 2015, related to the mandatory investment for the use of water taken directly from natural sources.

The main changes established by these decrees were related to the areas and lines of investment and the basis for settlement of the obligations. Similarly, June 30, 2018 was declared the maximum date to modify investment plans that were underway.

On June 30, 2017, Ecopetrol filed with the National Environmental Licensing Authority (ANLA) certain investment plans to meet the 1% mandatory investment based on the new decrees, relative to investment lines, maintaining the settlement base of Decree 1900.

As of December 31, ~~2017,~~2018, the provision for the 1% mandatory investment for the use of water was estimated based on the parameters established in Decree 1076 of 2015. The Ecopetrol Business Group is in the process of analyzing the impact of the applicability of the changes set out in the aforementioned decrees.

~~F-77~~21.4

Contingencies

Oleoducto Central S.A. - Ocensa

In 2017, Oleoducto Central Ocensa. S.A. (Ocensa) recognized a provision to address a probable loss from the potential outcome of the arbitration process filed by Frontera Energy Colombia Corp., Colombia Branch (Frontera); this arbitration process concluded on July 12, 2018 as a result of the Arbitral Court’s approval of the reconciliation agreement achieved by the parties, pursuant to which the standard transport rate was revised along with the monetary conditions of the transport agreements entered into July 29, 2014 for expanded capacity resulting from the P135 Project, in turn extending its effects from July 1, 2017 (effective date of the transport agreements). On July 12, 2018, the parties entered into the corresponding addenda to the current transport agreements, reflecting the changes contained in the approved reconciliation agreement.

Similarly, for Project P135 carriers that accepted the binding offer extended by Ocensa with regard to the principles of Resolution No. 72146 of 2014, a transaction agreement has been entered into along with the respective additional provisions amending the transport agreements, under identical or equivalent conditions as those contained in the reconciliation agreement and addenda with Frontera. Concerning the arbitral proceeding convened by Vitol Colombia C.I. S.A.S., the parties have requested, by mutual consent, that the Arbitral Court terminate the proceeding as a result of the settlement agreement reached on July 23, 2018. This request was accepted by the Court at the hearing of August 8, 2018, thus concluding the arbitral process.

The reconciliation and settlement agreements entered into established the obligation of the carriers to cease their current administrative or legal actions and refrain from filing new claims in the future.

As a result, Ocensa reconciled and adjusted the accounts receivable and payable that were held between the parties and the credit notes were issued to reflect the balances in favor of the senders. This recognition in the financial statements generated a movement of the provision and its corresponding effect on other operating income of COP COP$56,122, in addition to the decrease in income from ordinary activities as of June 30th because of the issued credit notes.

Oleoducto Bicentenario de Colombia S.A.S.

During July 2018 the carriers Frontera Energy Colombia Corp. (“Frontera”), Canacol Energy Colombia S.A.S. (“Canacol”) and Vetra Exploración y Producción Colombia S.A.S. (“Vetra” and, together with Frontera and Canacol, the “Carriers”) sent letters to Oleoducto Bicentenario de Colombia S.A.S. (“Bicentenario”) alleging they were early termination rights under the Ship-or-Pay Transport Agreements entered by each of them and Bicentenario in 2012 (the “Transport Agreements”). Bicentenario has rejected the terms of the letters, noting that there is no option for early termination and reiterating to the Carriers that the Transport Agreements are current and therefore the Carriers must fullfill their obligations under the Transport Agreements in a timely fashion.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

Under Bicentenario’s understanding that the Transport Agreements remain current and that the Carriers are in violation of their obligations under such agreements, Bicentenario declared the Carriers delinquent because of their failure to pay for transport service under the aforementioned agreements. Consequently, Bicentenario executed the standby letters of credit posted as guarantee for the Transport Agreements.

On October 19, 2018, Bicentenario notified Frontera of the existence of a “Dispute” pursuant to Clause 20 of the respective Transport Agreement and moved to the party dispute settlement stage as provided for in such clause. Such discussions ended without an agreement on December 19, 2018. On January 28, 2019, Bicentenario filed an Arbitration Claim against Frontera in accordance with the arbitration clause of the Transportation Agreement to claim any compensation, indemnification or other restitution deriving from the alleged early termination of said agreements.

Similarly, on November 1, 2018, Bicentenario notified Vetra and Canacol of the existence of a “Dispute” pursuant to Clause 20 of the respective Transport Agreement and moved to the party dispute settlement stage as provided for in each such respective clause. Such discussions ended without agreement on March, 2019.

As of the date of these financial statements, Bicentenario continues evaluating its options under the Transport Agreements and the Shareholders Agreement (Acuerdo Marco de Inversión) in order to guarantee compliance and claim any compensation, indemnification or other restitution deriving from the alleged early termination of said agreements and any other contractual breaches by the Carriers.

~~Ocensa~~Cenit Transporte y Logística de Hidrocarburos S.A.S.

~~Some requests~~During July 2018, the carriers Frontera, Vetra and Canacol (“carriers”) sent notifications to Cenit Transporte y Logística de Hidrocarburos SAS (“Cenit”) alleging they were exercising their early termination right under the Ship-or-Pay Crude Oil Transport Agreements (SoP agreements) entered among each of them and Cenit for ~~arbitration were filed by some of Ocensa’s shippers in connection with the tariff and monetary conditions established in~~ the transportation ~~contracts~~of crude oil through the Caño Limón – Coveñas pipeline (owned by Cenit).

In response to the alleged termination of SoP Agreements, CENIT issued letters stating that the alleged event which would have given the carriers early termination rights had not occurred as provided for ~~the use of the increased capacity of the pipeline resulting from the P-135 project. Similar claims could be brought by~~in Clause 13.3 and other ~~shippers~~clauses of the aforementioned ~~project.~~SoP agreements. In the same letters, CENIT stated that it would continue invoicing and charging for the transport services as stipulated in the SoP agreements, since they remain in force, and therefore, Carriers must fulfill their contractual obligations.

In November, 2018, CENIT filed an arbitration demand against Frontera Energy ~~Colombia Corp. Sucursal Colombia entered into a memorandum of understanding for a comprehensive settlement agreement~~Group pleadging that SoP Agreements are in full force and effect, that Frontera is ~~pending~~obliged to comply its terms and conditions and, therefore, is obliged to pay transportation tariffs as agreed in the ~~approval by Frontera’s~~SoP agreements. In similar terms an arbitration ~~panel. If~~demand was also filed against Vetra and the ~~arbitration panel approves the settlement agreement, it~~same will ~~resolve any pending proceedings and controversies among the parties, and both parties will execute the amendments~~occur against Canacol.

Ecopetrol S.A.

Notes to the ~~Agreements.~~consolidated financial statements

~~The recognized provision is based on the risk assessment carried out by Ocensa and its advisors, without implying the recognition~~(Figures expressed in millions of ~~the validity of the claims of the shippers.~~Colombian pesos, unless otherwise stated)

~~23.5~~21.5

Legal proceedings not provided for

The following is a summary of the main contingent liabilities that have not been recognized in the statement of financial position as, according to the evaluations made by internal and external advisors of the Ecopetrol Business Group, the expectation of loss is not probable as atof December 31, ~~2017~~2018 and ~~2016:~~2017:

Proceedings 2017 2016

Environmental damage caused by a terrorist attack in 2015 against the Transandino pipeline. 209,220 -
Breaking of the economic and financial balance with contractor for the construction of the transport system. 110,266 -
On March 14, 2016, a lawsuit was filed for default settling the contract between Konidol and Ecopetrol, which caused Ecopetrol incurred excess costs in the maintenance contract in 2016. 62,131 62,131
Salary readjustments to the amounts established by Ecopetrol for personnel, related to a contract with a third party for the commissioning and construction of surface facilities for production and exploration projects. 60,313 -
Compensation to third parties for damage caused by hydrocarbon spills during a tanker truck accident on the Villeta - Guaduas road oil spills. 43,333 43,333
Contractual imbalance with a third party in relation to road connection works. 31,679 -
Settlement of differences with a supplier under a contract whose purpose was the engineering, procurement and construction management of project P135. Although the parties reached a preliminary settlement agreement, the Comptroller General's Office did not approve it and the process continues in the evidentiary stage. The result of these processes is subject to the decision of the arbitrator. 30,027 -
Contractual controversy with a third party in relation with seismic acquisition services and seismic program processing. 30,000 -
Recalculation of legal and non-legal social benefits on sums paid for the benefit of saving incentives. 16,562 16,562
Controversy regarding income tax returns for taxable years 2010 and 2011 of Hocol, related to deductions in exploration fixed assets. In September 2017, Hocol paid taxes on the tax revenue processes of taxable years 2010 and 2011 of $ 89,271 - 344,915

Proceedings	2018		2017

Administrative and patrimonial responsibility for terrorist attack perpetuated in 2015 against the TransAndino Pipeline.		500,000		-
Action of group that claim damages derived from the pollution caused by the attack on the TransAndino pipeline in 2015.		358,201		-
Environmental damages for terrorist attack perpetuated in 2015 against the Transandino pipeline.		209,220		209,220
Breaking of the economic and financial balance with contractor for the construction of transport system.		110,266		110,266
Breach of contract and recognition of salary readjustments and other claims related to an engineering service provider.		85,198		-
On March 14, 2016, a claim was filed for breach in the settlement of the contract between Konidol and Ecopetrol, which generated cost overruns in the maintenance contract.		62,131		62,131
Salary readjustments to the values established by Ecopetrol for personnel related to a contract signed with a third party for the assembly and construction of surface facilities for production and exploration projects.		60,313		60,313
Contractual imbalance with a technical maintenance provider.		51,429		-
Contractual imbalance with a third party that provides assembly and construction services for surface facilities for exploration and production projects.		35,741		-
Contractual imbalance with a third party in connection with road connection works.		31,679		31,679
Breach of certain obligations agreed in contract with supplier for the construction and assembly of tanks.		31,213		-
Contractual controversial with a third party in relation to seismic program acquisition and processing service.		30,000		30,000

~~F-78~~21.6

Details of contingent assets

The following is a breakdown of the Ecopetrol Business Group’s principal contingent assets, where the associated contingent gain is likely, but not certain:

Proceedings	2018		2017

Claim by Ecopetrol for differences in the settlement of additional income due to high prices.		286,331		-
Disagreement regarding the interpretation and application of the staggered production clause.		98,031		-
Non-compliance with the association contract in relation to reimbursement of administrative costs and other claims.		43,007		40,711
In 2015, the administrator of the Agreements signed with a Corporation filed a criminal complaint for the alleged falsification of a document. Ecopetrol is a victim in the process.		32,000		32,000
Failure to comply with the pipe purchase order, the physical characteristics of the coating do not correspond to those contracted.		21,232		21,232
Contractual controversy by others for the maintenance of some production fields.		13,449		-

Refinería de Cartagena S.A.

In March 2016, Reficar filed a Request for Arbitration before the International Chamber of Commerce (the “ICC”), against Chicago Bridge & Iron Company N.V., CB&I (UK) Limited, and CBI Colombiana S.A. (jointly, “CB&I”) concerning a dispute related to the Engineering, Procurement, and Construction Agreements entered into by and between Reficar and CB&I for the expansion of the Cartagena Refinery in Cartagena, Colombia. Reficar is the Claimant in the ICC arbitration and seeks no less than US$2 billion in damages plus lost profits.

On May 25, 2016, CB&I filed its Answer to the Request for Arbitration and Counterclaim for approximately US$106 million and COP$324,052 million. On June 27, 2016, Reficar filed its reply to CB&I’s counterclaim denying and disputing the declarations and relief requested by CB&I. On April 28, 2017, CB&I submitted its Statement of Counterclaim increasing its claims to approximately US$116 million and COP$387,558 million. On March 16, 2018, CB&I submitted its Exhaustive Statement of Counterclaim further increasing its claims to approximately US$129 million and COP$432,303 million (including in each case interest).

The date for the filing of the Third Written Submission is to be set by the Arbitral Tribunal and the oral hearing is scheduled to begin in April 2020. After the hearing, the Tribunal will analyze the parties’ arguments to render its final decision on Reficar’s and CB&I’s claims. Until then, the outcome of this arbitration is unknown.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~23.6~~21.7

~~Details~~Investigations of ~~contingent assets~~control entities

~~The following is a breakdown~~

Reficar

The Office of the Comptroller General’s investigations and proceedings

1.1

Because of the modifications of the schedule and budget related to Reficar’s expansion and modernization project (the “Project”), the Office of the Comptroller General initiated a special audit investigation of the Project in 2016 and delivered a final report to Reficar on December 5, 2016. The report made 36 findings most of which were related to increased costs compared to budget for services, labor and materials. As required, on January 18, 2017, Reficar submitted an action plan exposing and addressing the 36 findings in the following areas: (i) contract management, (ii) supervision of engineering standards contracted with third parties, and (iii) documentation of the control, reporting and monitoring mechanisms of subcontracts.

1.2

As a result of the findings described above, on March 10, 2017, the Office of the Comptroller General opened actions for financial responsibility (proceso de responsabilidad fiscal) against 36 individuals and the six companies involved in the Project, including former members of Ecopetrol’s Board of Directors, former members of Reficar’s Board of Directors, former employees of Ecopetrol, and former employees of Reficar, as well as Chicago Bridge & Iron Company N.V., CBI - Chicago Bridge & Iron company (CB&I) Americas Ltd., Chicago Bridge & Iron Company CB&I UK Limited, CBI Colombiana S.A., Foster Wheeler USA Corporation and Process Consultants Inc.

These actions were initiated based on the Office of the ~~Group’s principal contingent assets, where~~Comptroller General’s theory that lower than expected profitability at Reficar could have been caused by (i) modifications to the ~~associated contingent gain is likely, but not certain as~~schedule and, (ii) the increase of ~~December 31, 2017 and 2016:~~

Proceedings 2017 2016

Ocensa claim that seeks the payment of the negative balance by Equion Energia Limited and Santiago Oil Group, which are reflected in Ocensa's volumetric balances. 112,735 -
Claim for reimbursement based on a disagreement with Ecopetrol corresponding to investment in facilities in the Guaduas field of the "Rio Seco" association contract. 40,711 40,746
Environmental incident in 2011, in the Caño Limón Coveñas Pipeline. 35,000 -
Criminal claim filed by Ecopetrol against the administrator of agreements with a corporation for alleged document falsification. 32,000 -
Breach of a pipe purchase order because the physical characteristics of the coating do not match what was contracted. 21,232 21,232
Nullity of administrative act issued by the DIAN, which ordered a special contribution for public works contracts. 13,214 13,214
Claim against Metapetroleum for damage suffered due to the late delivery of crude volumes under the Quifa association contract. - 25,421

~~Refinería de Cartagena~~the budget for the Project.

On ~~March 8, 2016,~~June 5, 2018, the Office of the Comptroller General split the initial proceeding in two. The first one is related to the increase of the Project’s budget and the second one is related to the modifications in the Project’s schedule.

Regarding the first proceeding, on June 5, 2018, the Office of the Comptroller General issued charges for financial responsibility (proceso de responsabilidad fiscal) against (i) 15 individuals, which include former members of Reficar’s Board of Directors, a current employee of Ecopetrol, and former employees of Reficar, ~~presented a request for Arbitration before the International Chamber of Commerce~~as well as against (ii) Chicago Bridge & Iron ~~Group NV,~~Company N.V., CBI - Chicago Bridge & Iron company (CB&I) Americas Ltd., Chicago Bridge & Iron Company CB&I ~~(UK)~~UK Limited, ~~and~~ CBI Colombiana S.A. ~~(collectively, "CB&I") related~~, Foster Wheeler USA Corporation and Process Consultants Inc, and the following insurance companies, Compañía Aseguradora de Fianzas S.A, CHUBB de Colombia, Compañía de Seguros S.A., Mapfre Seguros, as third parties with joint liability.

As for the other 21 individuals initially investigated in 2017, the Office of the Comptroller General closed the investigations. Therefore, as of the date of these financial statements, no current or former member of Ecopetrol’s Board of Directors was charged in the first proceeding relating to the ~~contract for the construction, procurement and engineering entered into by Reficar and CB&I for the expansion of Refinería de Cartagena, in Cartagena, Colombia. Reficar is the claimant~~increase in the ~~arbitration process~~Project’s budget.

As of the ~~CCIO and requests at least US$2 billion from CB&I. On May 25, 2016, CB&I filed a counterclaim~~date of approximately US$213 million. On June 27, 2016, Reficar filed its reply to CB&I’s counterclaim denying and disputing the declarations and the relief requested by CB&I. On April 28, 2017, Reficar submitted its Non-Exhaustive Statement of Claim and CB&I submitted its Statement of Counterclaim. According to the latest modification of the procedural calendar, the arbitral tribunal will hold the hearing in 2019 and will likely issue the final awardthese financial statements, no charges have been issued in the second ~~half of 2019.~~proceeding relating to the modifications in the Project’s schedule.

~~In relation to this matter, as of December 31, 2017, there is an amount of approximately US$122 million, in invoices paid by Reficar to CB&I, under~~While the ~~PIP~~content and ~~MOA agreements,~~status of the ~~EPC contract. The proof~~proceedings remains confidential, we can report that Reficar and several of its employees have cooperated with and provided the information required by the department of the ~~sources for~~Office of the Comptroller General in charge of leading the proceedings.

As of the date of these ~~invoices, delivered by CB&I, have not been accepted by of AMEC Foster Wheeler - PCIB.~~financial statements, Reficar has no liability under these proceedings.

~~F-79~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~23.7~~1.3

~~Investigations of control entities~~

~~As part of~~In January 2017, the investigations carried out by various control entities of the modernization and expansion project (the “Project”) of Refinería de Cartagena, Reficar has been officially informed of the following investigations and proceedings:

Office of the Comptroller General ~~(Contralorí~~initiated a special audit in Reficar and delivered a final report to Reficar on July 12, 2017. In this report the Office of the Comptroller General ~~de la República)~~concluded that, in their opinion, Reficar’s 2016 Financial Statements do not reasonably represent, in all important aspects, the entity’s financial position as of December 31, 2016.

~~Because~~On February 2, 2018, the Legal Accounts Commission of the ~~modifications~~National House of Representatives of the ~~schedule~~Republic of Colombia informed Reficar that the House of Representatives decided, through Resolution No. 2713, that it would not close the General Budget and ~~budget related to~~Treasury Account and the ~~Project,~~National Balance Sheet for the 2016 fiscal year, since the 2016 Financial Statements of several state entities, among them Reficar, had received a negative opinion from the Office of the Comptroller ~~General initiated a special audit investigation~~General. Pursuant to Resolution No. 2713, Colombian control entities were ordered to initiate the corresponding disciplinary, fiscal and/or criminal investigations.

1.4

In December 2017, the Office of the Comptroller General initiated a special audit in Reficar and submitted a final report to Reficar on May 18, 2018. In this report the Office of the Comptroller General concluded that, in their opinion, Reficar’s 2017 Financial Statements do not reasonably represent, in all important aspects, the entity’s financial position as of December 31, 2017.

On February 6, 2019, the Legal Accounts Commission of the ~~Project in 2016 and delivered a final report to Reficar on December 5, 2016. The report made 36 findings most~~National House of ~~which were related to increased costs compared to budget for services, labor and materials.~~

~~As a result~~Representatives of the ~~findings described above,~~Republic of Colombia informed Reficar that the House of Representatives decided, through Resolution No. 3135, that it would not close the General Budget and Treasury Account and the National Balance Sheet for the 2017 fiscal year, since the 2017 Financial Statements of several state entities, among them Reficar, had received a negative opinion from the Office of the Comptroller ~~General opened actions for financial responsibility (proceso de responsabilidad fiscal) against 36 individuals and~~General. Pursuant to Resolution No. 3135, Colombian control entities were ordered to initiate the six companies involved in the Project, including current and former members of Ecopetrol’s Board of Directors; former members of Reficar’s Board of Directors; current and former employees of Ecopetrol; and former employees of Reficar, as well as Chicago Bridge & Iron Group N.V., CBI - Chicago Bridge & Iron company (CB&I) Americas Ltd., Chicago Bridge & Iron Group CB&I UK Limited, CBI Colombiana S.A., Foster Wheeler USA Corporation and Process Consultants Inc.corresponding disciplinary, fiscal and/or criminal investigations.

~~One current member~~

In respect of ~~Ecopetrol’s Board~~the special audits mentioned in sections 1.3 and 1.4 above, as of ~~Directors being investigated in~~the date of these ~~proceedings.~~financial statements, Reficar has no knowledge of any procedural action carried out by any of the Colombian control entities regarding the disciplinary, fiscal and/or criminal investigations ordered neither by the Resolution No. 2713 nor by the Resolution No. 3135.

~~In January 2017, the Office of the Comptroller General initiated another special audit in Reficar and delivered a final report to Reficar~~

1.5

In January 2019, the Office of the Comptroller General initiated a financial audit in Reficar. The final report is expected to be submitted on May 2019.

Reficar’s external auditors issued an unqualified opinion on ~~July 12, 2017. In this report the Office of the Comptroller General concluded that, in their opinion,~~ Reficar’s ~~2016 Financial Statements do not reasonably represent, in all material aspects, the entity’s~~ financial position as of December 31, ~~2016.~~2016, 2017 and 2018. As of the date of these financial statements, such auditors have not informed Reficar that there has been any change to their opinion.

As of the date of these financial statements, to the best of Ecopetrol’s knowledge, the financial statements continue to fairly represent the financial and operational condition of the Company in all material aspects and its internal controls remain effective.

b)2.

The Attorney General’s Office ~~(Procuraduría General de la Nación)~~investigations:

Reficar has been officially informed that the Attorney General’s Office currently has ~~one~~five ongoing investigation ~~relating~~related to the Project. ~~The investigation initiated in 2012 against members of Reficar’s Board of Directors at the time, as well as certain current and former officers of Reficar.~~

OnRegarding one of these five investigations, on September 12, 2017, the Attorney General’s Office issued a list of charges against certain former members of Reficar’s Board of Directors, as well as certain former officers of Reficar. The charges were related to the failure to fulfill some of their duties as administrators and/or for acting “ultra vires” in the exercise of their functions against: (i) Javier Genaro Gutiérrez (Ecopetrol CEO, 2007-2015),; (ii) Felipe Laverde (Reficar General Counsel, 2009-March 2017),; (iii) Pedro Rosales (Ecopetrol Downstream Executive Vice President, 2008-2015),; (iv) Diana Constanza Calixto (Ecopetrol Head of the Corporate Finance Unit, 2009-2014) and ~~(vi)~~(v) Reyes Reinoso Yañez (Reficar CEO, 2012-2016)

. The Attorney General’s Office closed the case against the rest of the members of Reficar’s Board of Directors and the rest of the ~~current and~~ former officers of Reficar.

~~Prosecutor’s Office (Fiscalía General de la Nación)~~

The ~~Prosecutor’s Office is conducting an investigation. In connection therewith, between July 25~~specific content and ~~August 2, 2017~~status of the Prosecutor’s Office indicted the following individuals with charges, the majority of which are related to offenses against the public administration and illegal interest in the execution of agreements:remaining four ongoing investigations remains confidential.

(i) Orlando José Cabrales Martínez (Reficar CEO, 2009-2012); (ii) Reyes Reinoso Yañez (Reficar CEO, 2012-2016); (iii) Felipe Laverde Concha (Reficar General Counsel, 2009-March 2017); (iv) Pedro Alfonso Rosales Navarro (Ecopetrol Downstream Executive Vice President, 2008-2015); (v) Masoud Deidehban (CBI Executive Project Director); (vi) Phillip Asherman (CBI CEO) and (vii) Carlos Lloreda (Reficar’s statutory auditor from 2013-2015).

~~F-80~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

The Prosecutor’s Office investigations:

The Prosecutor’s Office has been conducting the following legal proceedings:

3.1

Between July 25 and August 2, 2017, the Prosecutor’s Office indicted the following individuals with charges, the majority of which are related to offenses against the public administration and illegal interest in the execution of agreements: (i) Orlando José Cabrales Martínez (Reficar CEO, 2009-2012); (ii) Reyes Reinoso Yañez (Reficar CEO, 2012-2016); (iii) Felipe Laverde Concha (Reficar General Counsel, 2009-March 2017); (iv) Pedro Alfonso Rosales Navarro (Ecopetrol Downstream Executive Vice President, 2008-2015); (v) Masoud Deidehban (CBI Executive Project Director); (vi) Phillip Asherman (CBI CEO) and (vii) Carlos Lloreda (Reficar’s statutory auditor from 2013-2015.) The arraignment hearing began on May 30, 2018, and as of the date of these financial statements has not yet concluded.

The Prosecutor’s Office has already made public the factual basis for such charges, which is ~~scheduled~~based on the theory that: (i) executing a cost reimbursable engineering, procurement and construction contract (EPC) and not a lump sum agreement favored CBI interests, and (ii) executing special invoicing procedures (MOA –Memorandum of Agreement and PIP –Project Invoicing Procedure) with CBI allowed the payments of unreasonable amounts not duly verified by Foster Wheeler USA Corporation. The defense attorneys have not yet had an opportunity to ~~take place on May 30, 2018.~~present their case against such facts in a court of law.

~~Ecopetrol is~~

On May 9, 2017, Ecopetrol’s Audit and Risk Committee retained a U.S.-based outside law firm to commence a third-party investigation into the matters set forth in the Prosecutor’s Office announcement. The results were presented in December 2017 to Ecopetrol’s Audit and Risk Committee. This investigation concluded that to date there has been no evidence of possible unlawful acts that affect Ecopetrol’s internal control over the financial reporting of the Company, on the allegations made by the Prosecutor’s Office.

3.2

On October 22 and 23, 2018, the Prosecutor’s Office indicted the following individuals with charges related to improper management and obtaining false public documents: Javier Genaro Gutiérrez Pemberthy (Ecopetrol CEO, 2007-2015), Reyes Reinoso Yánez (Reficar CEO, 2012-2016), Pedro Alfonso Rosales Navarro (Ecopetrol Downstream Executive Vice President, 2008-2015), and Diana Constanza Calixto Hernández (Ecopetrol Head of the Corporate Finance Unit, 2009-2014). As of the date of these financial statements, the arrangement hearing has not yet taken place.

3.3

On March 18, 2019, the Prosecutor’s Office issued a public statement in which it announced that on April 25, 2019 it was going to indict the following individuals, in an indictment hearing that has not yet taken place, with charges related to entering into agreements without compliance with legal requirements: Orlando José Cabrales Martínez (Reficar CEO, 2009-2012) and Felipe Castilla (Reficar CEO, 2009).

Considering the current stage of these legal proceedings, we are not in a position to ~~forecast~~predict the ~~results~~outcome of the Prosecutor’s Office’s investigation or the disposition of any of the charges brought by the Prosecutor’s Office.

Ecopetrol and Reficar have cooperated closely and extensively with the control entities in furthering their investigations and will continue to monitor the status and development of these investigations; nor is it possible to evaluate the probability of any consequence that may impact the financial statements, such as additional provisions, fines or ignorance of tax deductions that affect the amounts of deferred tax assets.

As of the date of this report, the financial statements continue to adequately disclose the financial and operational situation of Ecopetrol in all material aspects and its internal controls remain in force.investigations.

~~24.~~22.

Equity

The main components of equity are detailed below:

~~24.1~~22.1

Subscribed and ~~paid-in~~paid–in capital

Ecopetrol’s authorized capital amounts to $36,540,000, and is comprised of 60,000,000,000 ordinary shares, of which 41,116,694,690 ~~have been subscribed,~~are outstanding, and 11.51% ~~(4,731,905,873~~(4,731,906,273 shares) are held privately and 88.49% ~~(36,384,788,817~~(36,384,788,417 shares) are held by the Colombian Government. The value of the reserve shares amounts to $11,499,933 comprised of 18,883,305,310 shares. As of December 31, ~~2017~~2018 and ~~2016,~~2017, subscribed and ~~paid-in~~paid–in capital amounts to $25,040,067. There are no potentially dilutive shares.

~~24.2~~22.2

Additional ~~paid-in~~paid–in capital

Additional ~~paid-in~~paid–in capital mainly corresponds to: (i) share premium from the Ecopetrol Business Group’s capitalization in 2007, for COP$4,457,997, (ii) COP$31,377 share premium from the placement of shares on the secondary market, arising from the calling of guarantees from debtors in arrears, according to the provisions of Article 397 of the Code of Commerce, (iii) share premium from the sale of shares awarded in the second capitalization, which took place in September 2011, of COP$2,118,468, and (iv) additional ~~paid-in~~paid–in capital receivables for COP$~~(142)~~(143).

~~24.3~~

~~Equity reserves~~

~~The following is the composition of the Group’s reserves as of December 31, 2017 and 2016:~~

2017 2016
Legal reserve 1,426,151 1,269,680
Fiscal and statutory reserves 512,632 289,164
Occasional reserves 239,086 -
Total 2,177,869 1,558,844

~~The movement of equity reserves is the following for the years ended December 31, 2017 and 2016:~~

2017 2016
Opening balance 1,558,844 5,546,570
Release of reserves (289,164 ) (406,983 )
Allocation to reserves 908,189 289,164
Legal reserve used to offset previous year loss (Note 24.4) - (3,869,907 )
Closing balance 2,177,869 1,558,844

~~F-81~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~Legal reserve~~

22.3

Equity reserves

The ~~Colombian Code of Commerce establishes that 10% of net income~~following is ~~allocated to legal reserves until their balance reaches 50% of subscribed capital. The legal reserve can be used to offset losses or distributed in~~ the ~~event~~composition of the ~~Company’s liquidation.~~Ecopetrol Business Group’s reserves as of December 31, 2018 and 2017:

	2018		2017
Legal reserve		2,088,192		1,426,151
Fiscal and statutory reserves		509,081		512,632
Occasional reserves⁽¹⁾		2,541,622		239,086
		5,138,895		2,177,869

~~Occasional~~

The movement of equity reserves is the following for the years ended December 31, 2018 and 2017:

	2018			2017
Opening balance		2,177,869			1,558,844
Release of reserves		(751,718	)		(289,164	)
Allocation to reserves		3,712,744			908,189
Closing balance		5,138,895			2,177,869

⁽¹⁾

Occasional reserves

As of December 31, 2018, occasional reserves correspond to allocation of net income as approved atby the shareholders at the Stockholders’ ~~meeting~~Meeting to carry out new ~~explorations. On March~~explorations and strategic growth. As of December 31, 2017, ~~the Stockholders’ Meeting approved~~ the appropriation of occasional reserves ~~for~~correspond to the establishment of a reserve for new ~~explorations for the amount of COP $ 239,086.~~

~~Tax and mandatory reserves~~

The Colombian tax regime allows for the allocation of up to 70% of the period’s net income to a reserve when the value of the depreciation expense recorded in the financial statements. This reserve may be released in future periods to the extent that depreciation expenses exceeds the amount deducted for income tax purposes or the assets that generated the higher value deducted are sold.

~~In addition, Decree 2336 of 1995 set out the obligation to establish a reserve for the changes in valuation of investments. Unrealized fair value gains are allocated to a reserve.~~

explorations.

~~24.4~~22.4

Retained earnings and dividends

The ~~following is~~Ecopetrol Business Group distributes dividends based on its separate annual financial statements, prepared under International Financial Reporting Standards accepted in Colombia (NCIF, by its acronym in Spanish).

The Ordinary General Shareholders’ Meeting, held on March 29, 2019, approved the ~~balance~~profit distribution for 2018 and ~~movement~~set the distribution of ~~retained earnings as of December 31,~~dividends at COP$9,251,256.

The Ordinary General Shareholders’ Meeting, held on March 23, 2018, approved the profit distribution for 2017 and ~~2016:~~

2017 2016
Opening balance (402,462 ) (6,814,432 )
Profit attributable to owners of Ecopetrol’s shareholders 7,178,539 2,447,881
Release of reserves 289,164 406,983
Allocation to reserves (908,189 ) (289,164 )
Dividends declared (1) (945,684 ) -
Legal reserve used to offset previous year loss (2) - 3,869,907
Other movements (1,066 ) (23,637 )
Closing balance 5,210,302 (402,462 )

~~(1)~~

The Company distributes dividends based on its separate annual financial statements, prepared under International Financial Reporting Standards accepted in Colombia (NCIF, by its acronym in Spanish). The Ordinary General Shareholders' Meeting, held on March 31, 2017, approved the proposal for profit distribution proposal for 2016 and set the distribution of dividends of COP$945,684.

set the distribution of dividends at COP$3,659,386. Dividends paid in ~~2017~~2018 attributable to the shareholders of Ecopetrol S.A. amounted to COP$~~945,661 (2016~~3,659,373 (2017 - COP$~~690,177)~~945,661) and those of the non-controlling interest ~~of subsidiary companies~~ to ~~COP $ 558,986 (2016 -~~ COP$~~1,022,121)~~768,328 (2017 – COP$558,986).

~~(2)~~22.5

~~The Ordinary General Meeting~~Other comprehensive income attributable to owners of Shareholders, held on March 31, 2016, approved the proposal for profit distribution, which established that there would be no distribution for the year 2015, given the net loss occurred in that year; in addition, the shareholders voted to use the legal reserve to offset this loss, as permitted by the Article 456 of the Colombian Code of Commerce. The amount of losses offset by releases from the legal reserve after tax and mandatory allocations amounted to COP$3,869,907.parent

The following is the composition of the other comprehensive income attributable to the shareholders of the parent, Ecopetrol S.A., net of tax:

	2018			2017			2016
Foreign currency translation		10,412,499			7,883,231			8,138,382
Cash flow hedge with derivative instruments		(30,962	)		6,942			(19,042	)
Cash flow hedges for future exports (Note 28.1.2)		(374,079	)		159,295			244,131
Actuarial gain on defined benefit plans		(557,381	)		(553,091	)		994,953
Hedge of a net investment in a foreign operation (Note 28.1.3)		(1,069,316	)		(97,362	)		(155,359	)
Gain on equity instruments measured at fair value		–			–			7,828
Others		–			–			11,817
		8,380,761			7,399,015			9,222,710

~~F-82~~22.6

Earnings per share

	2018		2017		2016
Profit attributable to Ecopetrol’s shareholders		11,381,386		7,178,539		2,447,881
Weighted average number of outstanding shares		41,116,694,690		41,116,694,690		41,116,694,690
Net basic earnings per share (Colombian pesos)	COP$	276.8	COP$	174.6	COP$	59.5

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~24.5~~23.

~~Other comprehensive income attributable to owners of parent~~Sales revenue from contracts with customers

The following is the ~~composition~~breakdown of sales revenue for the ~~other comprehensive income attributable to the shareholders of the parent company, Ecopetrol S.A., net tax as of~~years ended December 31, 2018, 2017 and ~~2016~~:2016:

2017 2016
Actuarial gain on defined benefit plans (553,091 ) 994,953
Gain (loss) on equity instruments measured at fair value (1) - 7,828
Cash flow hedges for future exports (Note 30.2.2) 159,295 244,131
Hedge of a net investment in a foreign operation (Note 30.2.3) (97,362 ) (155,359 )
Cash flow hedge with derivative instruments 6,942 (19,042 )
Others - 11,817
Foreign currency translation 7,883,231 8,138,382
7,399,015 9,222,710

	2018		2017		2016
National sales
Mid–distillates		11,586,192		9,590,326		8,553,503
Gasoline and turbo fuels		7,952,852		6,990,187		6,092,739
Transport services		3,531,404		3,589,553		3,817,991
Natural gas		1,885,846		1,815,754		1,988,336
Plastic and rubber		822,367		833,982		724,708
LPG and propane		574,639		509,619		405,869
Crude oil		550,479		909,871		553,666
Fuel oil		509,482		354,058		148,248
Asphalts		335,426		275,803		340,400
Aromatics		282,545		217,418		186,228
Polyethylene		270,887		167,348		203,959
Services		239,410		283,799		225,293
Other income gas contracts		156,031		188,195		271,337
Other products		489,507		280,226		184,873
		29,187,067		26,006,139		23,697,150
Recognition of price differential (1)		3,835,533		2,229,953		1,048,022
		33,022,600		28,236,092		24,745,172
Foreign sales
Crude oil		26,898,737		21,479,063		17,278,579
Diesel		3,050,839		1,213,740		1,604,498
Fuel oil		2,053,594		1,982,408		2,158,539
Gasoline and turbo fuels		1,782,194		1,223,994		1,046,758
Plastic and rubber		1,268,582		1,169,101		1,171,342
Natural gas		27,899		32,303		58,809
LPG and propane		20,212		15,631		8,568
Cash flow hedge for future exports – Reclassification to profit or loss (Note 28.1.2)		128,404		160,772		33,074
Other products		350,811		441,124		380,222
		35,581,272		27,718,136		23,740,389
		68,603,872		55,954,228		48,485,561

(1)

~~During 2016 the Group reclassified~~Corresponds to the ~~statement~~application of ~~profit~~Decree 1068 of 2015, which establishes the procedure to recognize the subsidy for refiners and importers of current motor gasoline and ACPM, and the methodology for calculating the net position (value generated between the parity price and the regulated price, which can be positive or ~~loss COP$68,497 (2015 - COP$19,405) arising~~negative). See Note 4.16 – Sales revenue recognition from ~~the realization of accumulated fair value gains on equity of assets available for sale - Empresa de Energía de Bogotá and Interconexión Eléctrica S.A.~~contracts with customers.

~~24.6~~

~~Earnings (loss) per share~~

2017 2016 2015
Profit (loss) attributable to Ecopetrol’s shareholders 7,178,539 2,447,881 (7,193,859 )
Weighted average number of outstanding shares 41,116,694,690 41,116,694,690 41,116,694,690
Net basic earnings (loss) per share (Colombian pesos) 174.6 59.5 (175.0 )

~~F-83~~

Sales by geographic areas

The following are the sales revenue by geographic area for the years ended December 31, 2018, 2017 and 2016:

	2018		%			2017		%			2016		%
Colombia		33,022,600		48.1	%		28,236,092		50.5	%		24,745,172		51.0	%
United States		14,765,674		21.5	%		12,532,932		22.4	%		11,956,967		24.7	%
Asia		12,271,225		17.9	%		6,136,796		11.0	%		2,717,414		5.6	%
Central America and the Caribbean		4,449,033		6.5	%		6,070,565		10.8	%		3,551,894		7.3	%
South America and others		2,968,038		4.3	%		1,947,226		3.5	%		2,568,163		5.3	%
Europe		1,127,302		1.6	%		1,030,617		1.8	%		2,945,951		6.1	%
		68,603,872		100	%		55,954,228		100	%		48,485,561		100	%

Concentration of customers

During 2018, Organización Terpel S.A. represented 14.0% of sales revenue for the period (2017 – 14.3% and 2016 – 14.4%); no other customer represented more than 10% of total sales. There is no risk of the Ecopetrol Business Group's financial situation being affected by a potential loss of the client. The commercial relationship with this customer is for the sale of refined products and transportation services.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~25.~~

~~Sales revenue~~

~~The following is the breakdown of sales revenue for the years ended December 31, 2017, 2016 and 2015:~~

2017 2016 2015
National sales
Mid-distillates 9,590,326 8,553,503 10,215,224
Gasoline 6,990,187 6,092,739 6,128,208
Services 3,873,352 4,043,284 4,435,274
Natural gas 1,815,754 1,988,336 1,845,345
Crude oil 909,871 553,666 491,279
Plastic and rubber 833,982 724,708 724,392
LPG and propane 509,619 405,869 335,494
Asphalts 275,803 340,400 461,188
Other products 1,207,245 994,645 988,346
26,006,139 23,697,150 25,624,750
Recognition of price differential (1) 2,229,953 1,048,022 441,871
28,236,092 24,745,172 26,066,621
Foreign sales
Crude oil 21,479,063 17,278,579 21,181,265
Fuel oil 1,982,408 2,158,539 2,166,469
Gasoline and turbo fuels 1,223,994 1,046,758 93,125
Diesel 1,213,740 1,604,498 81,982
Plastic and rubber 1,169,101 1,171,342 1,096,730
Natural gas 32,303 58,809 182,950
LPG and propane 15,631 8,568 -
Trading of crude - - 1,309,196
Cash flow hedge for future exports – Reclassification to profit or loss (Note 30.2.2) 160,772 33,074 7,646
Other 441,124 380,222 161,287
27,718,136 23,740,389 26,280,650
55,954,228 48,485,561 52,347,271

~~(1)~~

Corresponds to the application of Decree 1880 of September 2014 and Resolution 180522 of 2010, which defined the procedure for price differentials (value generated by the difference between the parity price and the regulated price, which can be positive or negative). See Note 4.16 – Sales revenue recognition, for more details.

~~Sales by geographic areas~~

~~The following are the sales revenue by geographic area for the years ended December 31, 2017, 2016 and 2015:~~

2017 % 2016 % 2015 %
Colombia 28,236,092 50.5 % 24,745,172 51.0 % 26,066,621 49.8 %
United States 12,532,932 22.4 % 11,956,967 24.7 % 11,921,720 22.8 %
Asia 6,136,796 11.0 % 2,717,414 5.6 % 6,123,593 11.7 %
Central America and the Caribbean 6,070,565 10.8 % 3,551,894 7.3 % 3,366,978 6.4 %
South America and others 1,947,226 3.5 % 2,568,163 5.3 % 886,433 1.7 %
Europe 1,030,617 1.8 % 2,945,951 6.1 % 3,981,926 7.6 %
55,954,228 100 % 48,485,561 100 % 52,347,271 100 %

~~F-84~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~Concentration of customers~~

During 2017, Organización Terpel S.A. represented 14.3% of sales revenue for the period (2016 - 14.4% and 2015 - 14.4%); no other customer represented more than 10% of our sales. The commercial relationship with this customer is for the sale of refined products and transportation services. Sales to this customer are recognized in the Refining and Petrochemical and Transport and Logistics segments. Organización Terpel is the leader in these areas thanks to its network of gas stations and its strategy of sales to the industrial and the aviation segments.

~~26.~~24.

Cost of sales

~~The following is the cost of sales breakdown by function for the years ended December 31, 2017, 2016 and 2015:~~

	2017			2016			2015			2018			2017			2016
Variable costs
Imported products (1)		11,637,419			12,049,477			12,935,878			11,809,529			11,637,419			12,049,477
Purchases of hydrocarbons – ANH (2)											5,667,567			4,338,576			3,178,199
Depreciation, amortization and depletion		5,765,186			5,333,245			5,166,455			5,064,518			5,765,186			5,333,245
Purchases of hydrocarbons - ANH (2)		4,338,576			3,178,199			3,741,010
Purchases of crude in association and concession		2,240,704			1,517,829			1,928,938			3,820,746			2,240,704			1,517,829
Process materials		889,122			608,535			366,454			968,884			889,122			608,535
Hydrocarbon transport services		665,714			783,307			1,380,733			696,964			665,714			783,307
Electric energy		561,424			618,675			424,920			662,297			561,424			618,675
Purchases of other products and gas		488,056			519,884			703,163			632,509			488,056			519,884
Taxes and contributions (3)		449,959			478,332			481,029			441,207			449,959			478,332
Services contracted in associations		195,689			305,326			563,032			260,207			195,689			305,326
Others (4)		(663,916	)		(432,694	)		(322,547	)		(186,087	)		(663,916	)		(432,694	)
		26,567,933			24,960,115			27,369,065			29,838,341			26,567,933			24,960,115
Fixed costs
Depreciation and amortization		2,366,849			2,050,739			1,433,263			2,555,176			2,366,849			2,050,739
Maintenance		2,038,970			1,998,128			2,334,130			2,260,984			2,038,970			1,998,128
Labor costs		1,815,213			1,571,511			1,542,701			2,105,803			1,815,213			1,571,511
Services contracted		1,414,056			1,083,176			1,301,094			1,796,354			1,414,056			1,083,176
Services contracted in associations		1,008,336			1,260,470			1,415,422			1,040,221			1,008,336			1,260,470
Materials and operating supplies											565,601			468,205			333,258
Taxes and contributions (3)											393,690			343,505			391,032
Hydrocarbon transport services											261,237			333,671			157,463
General costs		510,128			383,842			461,994			366,972			551,587			445,531
Materials and operating supplies		468,205			333,258			435,238
Taxes and contributions		343,505			391,032			461,624
Hydrocarbon transport services		333,671			157,463			147,733
Non-capitalized costs of projects		41,459			61,689			92,252
		10,340,392			9,291,308			9,625,451			11,346,038			10,340,392			9,291,308
		36,908,325			34,251,423			36,994,516			41,184,379			36,908,325			34,251,423

(1)

Imported products correspond mainly to diesel fuel and diluent to facilitate the transport of heavy crude oil.

(2)

Corresponds to purchases of crude oil by Ecopetrol from the National Hydrocarbons Agency (ANH) derived from national production, both of the Ecopetrol Business Group in direct operation and of third parties.

(3)

Includes gas royalties paid and carbon tax.

(4)

Corresponds to the capitalization of ~~production costs to inventory.~~the inventory, product of the costing and valuation process, since the concepts that make up the cost of sales are recognized for the entire amount incurred.

~~F-85~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~27.~~25.

Administrative, operations and project expenses

The following is the detail of administration, operation and project expenses, according to their function, for the years ended December 31, 2018, 2017 ~~2016~~ and ~~2015:~~2016:

	2017		2016		2015		2018		2017		2016
Administrative expenses
General expenses		723,341		556,563		393,971		911,645		723,341		556,563
Labor expenses		624,424		657,051		491,748		662,258		624,424		657,051
Taxes (1)		362,963		663,889		730,841		39,117		362,963		663,889
Depreciation and amortization		53,796		45,765		84,425		40,838		53,796		45,765
		1,764,524		1,923,268		1,700,985		1,653,858		1,764,524		1,923,268
Operations and project expenses
Exploration costs		1,341,940		728,590		1,584,249		1,387,379		1,341,940		728,590
Taxes (1)								433,506		324,223		286,331
Commissions, fees, freights and services		471,657		568,513		878,259		466,862		471,657		568,513
Taxes		324,223		286,331		348,871
Labor expenses		310,947		278,383		309,021		316,386		310,947		278,383
Fee for regulatory entities								98,794		63,470		87,325
Depreciation and amortization								44,318		95,516		177,252
Maintenance		122,273		147,197		181,630		50,846		122,273		147,197
Depreciation and amortization		95,516		177,252		86,215
Fee for regulatory entities		63,470		87,325		77,909
Corporate projects		29,702		301,854		456,159
Others		166,337		176,242		111,955		105,041		196,039		478,096
		2,926,065		2,751,687		4,034,268		2,903,132		2,926,065		2,751,687

(1)

~~Mainly~~For 2017 and 2016, mainly corresponds to the recognition of the wealth tax. See Note 10 -– Taxes.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~28.~~26.

Other operating (expenses) income, net

The following is the detail of other operating income or expenses for the years ended December 31, 2018, 2017 ~~2016~~ and ~~2015:~~2016:

2017 2016 2015
(Expense) recovery of provisions for litigations (72,408 ) 112,999 205,879
Expense for gas pipeline availability BOMT contracts (1) (72,318 ) (125,077 ) (124,957 )
Impairment expense of short-term assets (68,800 ) (98,739 ) (2,858 )
Profit (loss) on sale of assets 40,227 (82,200 ) 6,744
Gain on acquisition of interests in joint operation (Note 32.3) 451,095 - -
Compensation received - 17,790 29,848
Deferred income BOMT contract’s (2) - 211,768 193,197
Other income 227,607 237,571 70,685
505,403 274,112 378,538

	2018			2017			2016
(Expense) reversal of provisions for litigations		(68,398	)		(72,408	)		112,999
Expense for gas pipeline availability BOMT contracts⁽¹⁾		-			(72,318	)		(125,077	)
Impairment loss of short–term assets		(105,692	)		(68,800	)		(98,739	)
(Loss) profit on sale of assets		(93,601	)		40,227			(82,200	)
(Loss) gain on acquisition of interests in joint operation (Note 30.3)		(12,065	)		451,095			–
Compensation received		–			–			17,790
Deferred income BOMT contracts⁽²⁾		–			–			211,768
Other income		244,301			227,607			237,571
		(35,455	)		505,403			274,112

(1)

Corresponds to the services rendered in connection with the BOMT contracts for the construction, operation, maintenance and transfer of gas pipelines with Transgas. This contract terminated in August 2017.

(2)

Corresponds to the amortization of the deferred income recognized by Ecopetrol in 2007 for the advance payment made by the Ministry of Finance and Public Credit of the obligations by Ecogas, in relation to the BOMT contracts for the construction, operation, maintenance and transfer of gas pipelines, signed between Ecopetrol and Transgas de Occidente, Centragas and Gases de Boyacá and Santander S.A. in 1997. The amortization of this deferred income ended in December 2016.

~~F-86~~27.

Financial result, net

The following is the detail of financial results for the years ended December 31, 2018, 2017 and 2016:

	2018			2017			2016
Finance income
Results from financial assets and others		745,571			739,148			136,715
Yields and interests		383,624			405,562			386,001
Gain on sale of equity instruments		–			13,236			47,129
Resources from Santiago de las Atalayas⁽¹⁾		–			–			688,664
Other financial income		368			1,410			53,234
		1,129,563			1,159,356			1,311,743
Finance expenses
Interest⁽²⁾		(2,399,414	)		(2,385,994	)		(2,765,024	)
Financial cost of other liabilities⁽³⁾		(668,782	)		(753,047	)		(580,491	)
Results from financial assets		(381,445	)		(481,308	)		(48,997	)
Other financial expenses		(62,520	)		(40,252	)		(69,028	)
		(3,512,161	)		(3,660,601	)		(3,463,540	)
Foreign exchange gain (loss), net		372,223			5,514			976,430
Financial result, net		(2,010,375	)		(2,495,731	)		(1,175,367	)

(1)

On November 8, 2016, the Ministry of Mines and Energy concluded that the resources that were restricted in relation to this process were not royalties and, therefore, were not due to the Comuneros. In accordance with the foregoing, the resources held by Ecopetrol are its property, without any claim or discussion to date regarding ownership title thereof. On November 8, 2016, the amount claimed reached COP$688,664, originated mostly from the valuation and financial yield of the fund where the resources were deposited. The recovery of this provision was recognized in the net financial results of the period ending December 31, 2016.

(2)

As of December 31, 2018, borrowing costs for the financing of developing natural resources and property, plant and equipment of COP$200,833 (2017 – COP$191,651 and 2016 – COP$341,209) were capitalized.

(3)

Includes the financial expense of the asset retirement obligation and the liabilities for post–employment benefits.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~29.~~28.

~~Financial result, net~~Risk management

28.1

Exchange rate risk

The Ecopetrol Business Group operates mainly in Colombia and makes sales in the local and international markets, for that reason, it is exposed to exchange rate risk, which arises from various foreign currency exposures due to commercial transactions and assets and liabilities denominated in foreign currency. The impact of exchange rate fluctuations, especially the Colombian peso/U.S. dollar exchange rate, has been material in previous years. To mitigate this risk, the Ecopetrol Business Group’s risk management strategy involves the use of non–derivative financial instruments related to cash flow hedges for future exports and net investment of foreign operations to minimize exchange rate risk exposure.

The U.S. dollar/Colombian peso exchange rate has fluctuated over the last few years. As of December 31, 2018, the Colombian peso depreciated 8.9%. The closing rates were COP$3,249.75, COP$2,984.00 and COP$3,000.71 for 2018, 2017 and 2016, respectively.

When the Colombian peso appreciates in relation to the U.S. dollar, export sales revenue decreases when converted to Colombian pesos; by contrast, imported goods, operating costs and interest on foreign debt denominated in U.S. dollars become less expensive. Conversely, when the Colombian peso depreciates, export revenues, when translated to Colombian pesos, increase and imports and servicing of the external debt become more expensive.

The following table sets out the carrying amount for financial assets and liabilities with exchange exposure denominated as of December 31, 2018 and 2017:

(in US$Million)	2018			2017
Cash and cash equivalents		514			1,203
Other financial assets		2,138			1,072
Trade receivables and payables, net		(202	)		(7	)
Loans and borrowings		(9,689	)		(12,590	)
Other assets and liabilities, net		63			-
Net liability position		(7,176	)		(10,322	)

Of the total net liability position, US$(335) million correspond to net liabilitiesin dollars with exchange exposure of companies with Colombian peso as functional currency and a net amount of US$(341) million correspond to monetary assets and liabilities with exchange exposure of companies whose functional currency is different from Colombian peso; for both cases valuation is recognized in profit or loss. The balance of loans and borrowings includes non-derivative hedging instruments of Ecopetrol for US$(6,500), for which valuation is recognized in other comprehensive income, within the equity.

28.1.1

Sensitivity analysis for exchange rate risk

The Ecopetrol Business Group’s risk management strategy involves the use of non-derivative financial instruments related to cash flow hedges for future exports and hedges of a net investment in a foreign operation in order to minimize exposure to currency rate risk, which is detailed below.

The following is the effect of a change of 1% and 5% in the exchange rate of the Colombian peso as compared with the U.S. dollar, on the balance of financial assets and liabilities denominated in foreign currency as of December 31, 2018:

Scenario / Variation in the exchange rate		Effect on income before taxes (+/–)			Effect on other comprehensive income (+/–)
1	%		(10,887	)		222,315
5	%		(54,433	)		1,111,577

The sensitivity analysis only includes financial assets and liabilities in foreign currency at the closing date.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

28.1.2

Cash flow hedge for future exports

Ecopetrol is exposed to foreign exchange risk given that a significant percentage of its income from crude oil exports is denominated in U.S. dollars. In recent years, the Ecopetrol Business Group has acquired long–term debt for investment activities in the same currency in which it expects to receive the cash flow of its export sales revenues. This situation creates a natural hedge relationship due to the fact that the risks generated by the foreign exchange difference of export sales revenues when booked in Ecopetrol’s functional currency (Colombian pesos) are naturally hedged with the foreign exchange variances of the long–term debt, in line with the Ecopetrol Business Group’s risk management strategy.

With the objective of presenting in the financial statements, the effect of the existing natural hedge between exports and debt, understanding that the exchange rate risk materializes when the exports are made, on October 1, 2015, the Board of Directors designated the sum of US$5,440 million of Ecopetrol’s foreign currency debt as a hedge instrument of future revenue from crude oil exports, for the period 2015–2023, in accordance with IAS 39 – Financial instruments.

The following is the movement of foreign currency debt designated as a non–derivative hedging instrument for the years ended December 31, 2018 and 2017:

(US$Million)	2018			2017
Hedging instrument at the beginning of the period		3,332			5,312
Reassignment of hedging instruments		3,366			1,803
Realization of exports		(3,366	)		(1,803	)
Capital payments⁽¹⁾		(2,032	)		(1,980	)
Hedging instrument at the end of the period		1,300			3,332

(1)

On December 27, 2018, Ecopetrol S.A. paid in advance the entire 10-year international bond issued in 2009, whose nominal value was USD$1,500 million. Equally, on June 30, 2017, Ecopetrol prepaid the entire outstanding balance of the international syndicated loan whose nominal value was US$1,925 million and original maturity date was in February 2020.

The following is the ~~detail~~movement of ~~financial results~~accumulated foreign currency gains and losses in respect of the cash flow hedge recognized in other comprehensive income for the years ended December 31, 2018, 2017 ~~2016~~ and ~~2015:~~2016:

2017 2016 2015
Finance income
Results from financial assets and others 739,148 136,715 164,615
Yields and interests 405,562 386,001 293,506
Gain on sale of equity instruments 13,236 47,129 72,339
Resources from Santiago de las Atalayas (1) - 688,664 -
Other financial income 1,410 53,234 91,464
1,159,356 1,311,743 621,924
Finance expenses
Interest (2) (2,385,994 ) (2,765,024 ) (1,768,618 )
Financial cost of other liabilities (3) (753,047 ) (580,491 ) (627,827 )
Results from financial assets (481,308 ) (48,997 ) (167,869 )
Other financial expenses (40,252 ) (69,028 ) (154,100 )
(3,660,601 ) (3,463,540 ) (2,718,414 )
Foreign exchange gain (loss), net 5,514 976,430 (5,566,614 )
Financial result, net (2,495,731 ) (1,175,367 ) (7,663,104 )

	2018			2017			2016
Opening balance		(159,295	)		(244,131	)		217,291
Exchange difference		704,871			15,933			(724,395	)
Reclassification to profit or loss		128,404			160,772			(33,074	)
Ineffectiveness		(35,617	)		(9,247	)		–
Deferred income tax		(264,284	)		(82,622	)		296,047
Closing balance		374,079			(159,295	)		(244,131	)

The expected reclassification of the cumulative exchange rate difference in other comprehensive income to the profit or loss statement, is as follows:

Year		Before taxes			Taxes		After taxes
	2019		(375,261	)		123,836		(251,425	)
	2020		(45,940	)		15,160		(30,780	)
	2021		(48,203	)		15,907		(32,296	)
	2022		(48,203	)		15,907		(32,296	)
	2023		(34,878	)		7,596		(27,282	)
			(552,485	)		178,406		(374,079	)

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~(1)~~28.1.3

~~Corresponds to the recovery~~Hedge of the provision “Comuneros – Santiago de las Atalayas”. Its balance consisted mainly from the valuation and financial gains generated while the cash that was subject to the reserve (see Note 23.3 for more information).a net investment in a foreign operation

The Board of Directors approved the application of net investment hedge accounting from June 8, 2016. The measure is intended to reduce the volatility of non–operating income due to exchange rate variations. The net investment hedge will be applied on a portion of the Ecopetrol Business Group’s investments in foreign operations, in this case on investments in subsidiaries which have the U.S. dollar as their functional currency, using a portion of the Ecopetrol Business Group’s U.S. dollar denominated debt as the hedging instrument.

Ecopetrol S.A. has designated its net investments in Ocensa, Ecopetrol America Inc., Hocol Petroleum Ltd. (HPL) and Reficar as hedged items and as a hedging instrument and US$5,200 million of the Ecopetrol Business Group’s U.S. dollar debt as a hedging instrument.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

The following is the movement of accumulated foreign currency gains and losses in respect of the net investment hedge recognized in other comprehensive income for the years ended December 31, 2018, 2017 and 2016:

	2018			2017			2016
Opening balance		97,362			155,359			–
Exchange difference		1,381,900			(86,892	)		231,879
Ineffectiveness		378			329			–
Deferred income tax		(410,324	)		28,566			(76,520	)
Closing balance		1,069,316			97,362			155,359

~~(2)~~28.1.4

As of December 31, 2017, borrowing costs for the financing of developing natural resources and property, plant and equipment of COP$191,651 (2016 - COP$341,209 and 2015 - COP$744,426) were capitalized.Hedging with derivatives to minimize currency risk

The Ecopetrol Business Group carries out forward hedging operations using the non–delivery modality, for mitigating the volatility of the exchange rate in the cash flow required for operations of its subsidiary, Ocensa, whose functional currency is the US dollar. The forward hedging instruments are used to enable setting sales prices in U.S. dollars, mitigating the foreign exchange variation given Ocensa’s obligations relative to operational cost and tax payments are payable in Colombian pesos. The accounting policy applicable to this operation is described in the Note 4.1.5.1.

As of December 31, 2018, there are forward contracts with a net short position for US$332 million (2017 – US$325 million) with maturities between January and December 2019.

The impact on the statement of profit or loss for the settlement of these hedges amounted to COP$80,636 (2017 – COP$99,971) and the amount recognized in the other comprehensive income was a loss of COP$(52,174) (2017 COP$35,768 and 2016 COP$33,869).

~~(3)~~

~~Includes the financial expense of the asset retirement obligation and the liabilities for post-employment benefits.~~

~~30.~~

~~Risk management~~

~~30.1~~28.1.5

Commodity price risk

Ecopetrol’s business is significantly impacted by international prices for crude oil and refined products. The prices for these products are volatile and drastic changes could adversely affect the Ecopetrol Business Group business prospects and results of operations.

A large proportion of Ecopetrol’s sales revenues come from sales of crude oil, natural gas and refined products. These products are indexed to international reference prices such as the Brent index. Consequently, fluctuations in those international indexes have a direct effect on the financial condition and Group’s results of operations.

Prices of crude oil, natural gas and refined products have historically fluctuated as a result of a variety of factors including, among others, competition within the oil and natural gas industry; changes in international prices of natural gas and refined products; long-term changes in the demand for crude oil, natural gas and refined products; regulatory changes; changes in the cost of capital; adverse economic conditions; transactions in derivative financial instruments related to oil and gas and development or availability of alternative fuels.

The Ecopetrol Business Group has a policy approved by the Board of Directors that allows it to use derivative financial instruments in the organized over the counter (OTC) market to cover itself from the risk of price fluctuations of crude oil and refined products associated with physical transactions. The Ecopetrol Business Group has established appropriate processes to handle risk which include constant monitoring of physical and financial markets to identify risks in order to subsequently prepare and execute hedging strategies.

~~F-87~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

Ecopetrol does not regularly use derivative instruments to hedge exposures to sales or purchase price risks. The impact of the settlement of the price hedges made in 2016 ~~and 2015~~ was not material and was made as hedging instruments to mitigate risk at different price indices to the benchmark of the Ecopetrol Business Group's international trade strategy on exports of crude and imports of products.

In 2018 and 2017, hedging transactions were not carried out with derivative instruments. In 2016, ~~and 2015,~~ then outstanding price hedges were settled in full, with an impact on the result of the period of COP$~~3,181 and COP$4,141, respectively.~~

~~30.2~~

~~Exchange rate risk~~

The Ecopetrol Business Group operates mainly in Colombia makes sales in the local and international markets. It is exposed to exchange rate risk, which arises from various foreign currency exposures due to commercial transactions and assets and liabilities denominated in foreign currency. The impact of exchange rate fluctuations, especially the Colombian peso/U.S. dollar exchange rate, has been material in previous years. To mitigate this risk, the Group's risk management strategy involves the use of non-derivative financial instruments related to cash flow hedges for future exports and net investment of foreign operations to minimize exchange rate risk exposure.

The U.S. dollar/Colombian peso exchange rate has fluctuated over the last few years. The Colombian peso appreciated on average by 3.3% in 2017. During 2016 and 2015, the Colombian peso depreciated by 11.2% and 37.3%, respectively. The closing exchange rates were COP$2,984.00 COP $3,000.71 and COP $3,149.47 to US$1.00 for 2017, 2016 and 2015, respectively.

When the Colombian peso appreciates in relation to the U.S. dollar, export sales revenue decreases when converted to Colombian pesos; however, imported goods, oil services and interest on foreign debt denominated in U.S. dollars become less expensive. Conversely, when the Colombian peso depreciates, export revenues, when translated to Colombian pesos, increases, and imports and servicing of the external debt become more expensive.

~~The following table sets out the carrying amount for financial assets and liabilities denominated in foreign currency as of December 31, 2017 and 2016:~~

(in US$ Million) 2017 2016
Cash and cash equivalents 1,203 1,916
Other financial assets 1,072 1,367
Trade receivables and payables, net (7 ) (282 )
Loans and borrowings (12,590 ) (15,172 )
Net liability position (10,322 ) (12,171 )

Of the total net liability position, US$8,532 million relates to financial liabilities designated as non-derivative hedging instruments of Ecopetrol, on which unrealized foreign exchange gains and losses are recognized in other comprehensive income, within equity. Likewise, US$ 1,699 million corresponds to the net liability position in U.S. dollars of Ecopetrol Business Group companies whose functional currency is the U.S. dollar, without affecting profit or loss and US$91 million correspond to the net liability position in U.S dollars of Ecopetrol Business Group companies whose functional currency is Colombian pesos with foreign exchange affects the profit or loss.

3,181.

~~F-88~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~30.2.1~~

~~Sensitivity analysis for exchange rate risk~~

The Group’s risk management strategy involves the use of non-derivative financial instruments related to cash flow hedges for future exports and hedges of a net investment in a foreign operation in order to minimize exposure to currency rate risk, which is detailed below. The following is the effect of a change of 1% and 5% in the exchange rate of the Colombian peso as compared with the U.S. dollar, on the balance of financial assets and liabilities denominated in foreign currency as of December 31, 2017:

Scenario / Variation in
the exchange rate Effect on income
before taxes (+/-) Effect on other
comprehensive income (+/-)
1 % 2,715 305,293
5 % 13,577 1,526,465

~~The sensitivity analysis only includes financial assets and liabilities in foreign currency at the closing date.~~

~~30.2.2~~

~~Cash flow hedge for future exports~~

Ecopetrol is exposed to foreign exchange risk given that a significant percentage of its income from crude oil exports is denominated in U.S. dollars. In recent years, the Group has acquired long-term debt for investment activities in the same currency in which it expects to receive the cash flow of its export sales revenues. This situation creates a natural hedge relationship due to the fact that the risks generated by the foreign exchange difference of export sales revenues when booked in Ecopetrol’s functional currency (Colombian pesos) are naturally hedged with the foreign exchange variances of the long-term debt, in line with the Group's risk management strategy.

With the objective of presenting in the financial statements the effect of the existing natural hedge between exports and debt, understanding that the exchange rate risk materializes when the exports are made, on October 1, 2015, the Board of Directors designated the sum of US$5,440 million of Ecopetrol's foreign currency debt as a hedge instrument of future revenue from crude oil exports, for the period 2015-2023, in accordance with IAS 39 - Financial instruments: Recognition and Measurement.

Hedge accounting records the impact on the statement of profit or loss at the time of realization of the hedged risk. For this to happen, every month when foreign currency debt is converted to Colombian pesos based on the closing rate for the period, the effects for exchange difference are recognized in other comprehensive income, within equity and, as crude oil exports take place and the hedge occurs and sales revenue is recognized, cumulative exchange differences held within other comprehensive income are reclassified to profit or loss statement, impacting operating income.

~~The following is the movement of foreign currency debt designated as a non-derivative hedging instrument for the years ended December 31, 2017 and 2016:~~

(US$ Million) 2017 2016
Hedging instrument at the beginning of the period 5,312 5,376
Reassignment of hedging instruments 1,803 870
Realization of exports (1,803 ) (870 )
Capital payments (1) (1,980 ) (64 )
Hedging instrument at the end of the period 3,332 5,312

~~(1)~~

~~On June 30, 2017, Ecopetrol prepaid the entire outstanding balance of the international syndicated loan whose nominal value was US$ 1,925 million and original maturity date was in February 2020.~~

~~F-89~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

The following is the movement of accumulated foreign currency gains and losses in respect of the cash flow hedge recognized in other comprehensive income for the years ended December 31, 2017 and 2016:

2017 2016
Opening balance (244,131 ) 217,291
Exchange difference 15,934 (724,395 )
Reclassification to profit or loss 160,772 (33,074 )
Ineffectiveness (9,247 ) -
Deferred income tax (82,622 ) 296,047
Closing balance (159,294 ) (244,131 )

~~The expected reclassification of the cumulative exchange rate difference in other comprehensive income to the profit or loss statement, taking an exchange rate of COP$2,984 per US$1.00 is as follows:~~

Year Before
taxes Taxes After taxes
2018 95,462 (33,439 ) 62,023
2019 66,039 (23,132 ) 42,907
2020 23,804 (8,338 ) 15,466
2021 21,541 (7,545 ) 13,996
2022 21,541 (7,545 ) 13,996
2023 16,786 (5,880 ) 10,906
245,173 (85,879 ) 159,294

~~30.2.3~~

~~Hedge of a net investment in a foreign operation~~

The Board of Directors approved the application of net investment hedge accounting from June 8, 2016. The measure is intended to reduce the volatility of non-operating income due to exchange rate variations. The net investment hedge will be applied on a portion of Group’s investments in foreign operations, in this case on investments in subsidiaries which have the US dollar as their functional currency, using a portion of the Group’s US dollar denominated debt as the hedging instrument.

Ecopetrol designated the net investments in Ocensa, Ecopetrol America Inc., Hocol Petroleum Ltd. (HPL) and Reficar and as hedged items and as a hedging instrument and US$5,200 million of the Group’s US dollar debt as the hedging instrument.

2017 2016
Opening balance 155,359 -
Exchange difference (86,892 ) 231,879
Ineffectiveness 329 -
Deferred income tax 28,566 (76,520 )
Closing balance 97,362 155,359

~~F-90~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~30.2.4~~

~~Hedging with derivatives to minimize currency risk~~

The Group carries out forwards hedging operations using the Non-Delivery modality, for mitigating the volatility of the exchange rate in the cash flow required for operations of its subsidiary, Ocensa, whose functional currency is the US dollar. The forward hedging instruments used enable setting sales prices in US dollars, mitigating the foreign exchange variation given Ocensa’s obligations relative to operational cost and tax payments are payable in Colombian pesos. The accounting policy applicable to this operation is described in the Note 4.1.5.1.

~~As of December 31, 2017, there are forward contracts with a net short position for US$325 million (2016 - US$323 million) with maturities between January and December 2018.~~

The impact on the statement of profit or loss for the settlement of these hedges amounted to COP$99,971 (2016- COP$42,865 of profit) and the amount recognized in the other comprehensive income was a gain of COP$35,769 (2016 gain of COP$33,869).

~~30.3~~28.2

Credit risk

Credit risk is the risk that the Ecopetrol Business Group may suffer financial losses as a consequence of default of: a)(a) payments by its clients for the sale of crude oil, gas, products or services; b)(b) financial institutions in which it keeps investments, or c)(c) by counterparties with which it has contracted financial instruments.

~~30.3.1~~28.2.1

Credit risk for customers

In the selling process of crude oil, gas, refined products and petrochemicals, and transport services, the Ecopetrol Business Group may be exposed to credit risk in the event that customers fail to fulfill their payment obligations. The Ecopetrol Business Group’s risk management strategy has designed mechanisms and procedures that aim to minimize such events, thus safeguarding the ~~Group's~~Ecopetrol Business Group’s cash flow.

The Ecopetrol Business Group performs a continuous analysis of the financial strength of its counterparties, by classifying them according to their risk level and financial guarantees in the event of a default of payments. Similarly, the Ecopetrol Business Group continuously monitors national and international market conditions for early alerts of major changes that may have an impact on the timely payment of obligations from customers of the Ecopetrol Business Group.

Allowances for loan losses are set by individual analysis of each customer’s situation. The Ecopetrol Business Group performs administrative and legal actions required to recover amounts past due and charges interest from customers that fail to comply with payment policies.

Ecopetrol does not have a significant concentration of credit risk. An aging analysis of the accounts receivable portfolio in arrears, but not impaired, as of December 31, ~~2017~~2018 and ~~2016~~2017 is as follows:

2017 2016
Less than 3-month overdue 65,354 179,008
Between 3- and 6-month overdue 1,131 14,275
More than 6-month overdue 79,688 103,574
146,173 296,857

	2018		2017
Less than 3 months overdue		157,608		65,354
Between 3 and 6 months overdue		41,263		1,131
More than 6 months overdue		93,657		79,688
		292,528		146,173

~~F-91~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~30.3.2~~28.2.2

Credit quality of resources in financial assets

Following the promulgation of Decree 1525 of 2008, which provides general rules on investments for public entities, Ecopetrol’s management established guidelines for our investment portfolios. These guidelines determine that investments in Ecopetrol’s U.S. dollar portfolio are generally limited to investments of our excess cash in ~~fixed-income~~fixed–income securities issued by entities rated A or higher in the long term and A1/P1/F1 or higher in the short term (international scale) by Standard & Poor’s Ratings Services, Moody’s Investors Service or Fitch Ratings.

In addition, Ecopetrol S.A. may also invest in securities issued or guaranteed by the U.S. government or Colombian government, without regard to the ratings assigned to such securities. In Ecopetrol’s Colombian Peso portfolio, it must invest our excess cash in ~~fixed-income~~fixed–income securities of issuers rated AAA in the long term, and F1+/BRC1+ in the short term (local scale) by Fitch Ratings Colombia or BRC Standard & Poor’s. In addition, Ecopetrol may also invest in securities issued or guaranteed by the Colombian government without rating restrictions.

In order to diversify risk in our Colombian Peso portfolio, Ecopetrol does not invest more than 10% of the excess of cash in one specific issuer. In the case of our U.S. dollar portfolio, it does not invest more than 5% of the excess of cash in one specific issuer in the short term (up to one year), or 1% in the long term. The Ecopetrol Business Group has complied with this policy.

Ecopetrol’s investment portfolio in U.S. dollars is segmented into four tranches, each one matching our liquidity needs. The working capital tranche is calculated taking into account our cash flow needs for the next 60 days. The liquidity tranche is calculated as the contingent cash flow needs over the working capital, taking into account the development of capital expenditures related to projects. The asset liability tranche is built to match our long-term debt. The investment tranche includes the remaining amount of the total portfolio after deducting the amounts pertaining to the above mentioned tranches and after subtracting the Colombian Peso portfolio.

Ecopetrol’s investment portfolio in Colombian Pesos is segmented in two tranches, each one matching our liquidity needs. The first tranche is calculated taking into account our cash flow needs for the next 30 days, and the second tranche is built for investment purposes.

The credit rating of issuers and counterparties in transactions involving financial instruments is disclosed in Note 6 -– Cash and cash equivalents, Note ~~7 -~~9 – Other financial assets and Note ~~21 -~~20 – Provisions for ~~employee~~employees’ benefits.

~~30.4~~28.3

Interest rate risk

Interest rate risk arises from Ecopetrol’s exposure to changes in interest rates because the Ecopetrol Business Group has investments in fixed and ~~floating-rate~~floating–rate instruments and has issued floating rate debt linked to LIBOR, DTF and ~~IPC~~CPI interest rates. Thus, interest rate volatility may affect the fair value and cash flows of the ~~Group's~~Ecopetrol Business Group’s investments and the financial expense of floating rate loans and financing.

As of December 31, ~~2017,~~2018, 17% (2017, 19% ~~(2016,~~and 2016, 31%) of the Ecopetrol Business Group’s indebtedness is linked to floating interest rates. As a result, if market interest rates rise, financing expenses will increase, which could have an adverse effect on the results of operations.

Ecopetrol controls the exposure to interest rate risk by establishing limits to exposure duration, Value at Risk -– VAR andtracking error.

Autonomous equities linked to Ecopetrol’s pension obligations are also exposed to changes in interest rates, as they include fixed and floating rate instruments that are marked to market. Colombian regulation for pension funds, as stipulated in the Decree 941 of 2002 and Decree 1861 of 2012, indicates that they have to follow the same regime as the regular obligatory pension funds in their moderate portfolio.

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

The following table provides information about the sensitivity of the Ecopetrol Business Group’s results and other comprehensive income for the next 12 months to variations in interest rate of 100 basis points:

	Effect on profit or loss (+/–)						Effect on Other Comprehensive Income (+/–)
	Financial assets			Financial Liabilities			Plan assets
+100 basis points		(71,123	)		240,711			(513,699	)
–100 basis points		71,123			(94,062	)		527,058

A sensitivity analysis of discount rates on pension plan assets and liabilities is disclosed in Note 20 – Provisions for employees’ benefits.

~~F-92~~

F-88

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~The following table provides information about the sensitivity of Group’s results and other comprehensive income for the next 12 months to variations in interest rate of 100 basis points:~~

Effect on profit or loss (+/-) Effect on Other
Comprehensive Income (+/-)
Financial
assets Financial
Liabilities Plan assets
+100 basis points (66,120 ) 112,383 (171,031 )
-100 basis points 66,120 (112,282 ) 183,988

~~A sensitivity analysis of discount rates on pension plan assets and liabilities is disclosed in Note 22 – Provisions for employee benefits.~~

~~30.5~~28.4

Liquidity risk

The ability to access capital necessary to finance the Ecopetrol Business Group’s investment plans on acceptable terms can be limited due to deterioration in market conditions. A ~~new~~global financial crisis could worsen risk perception in emerging markets.

Events impacting the political and regional environment of Colombia, could make it difficult for our subsidiaries to access capital markets. These conditions, together with potential significant losses in the financial services sector and changes in credit risk assessments, may make it difficult to obtain financing on favorable terms. As a result, the Ecopetrol Business Group may be forced to review the opportunity and scope of its investment plans as necessary, or access financial markets under less favorable terms, thereby negatively affecting the Ecopetrol Business Group’s results of operations and financial position.

Liquidity risk is managed in accordance with the Ecopetrol Business Group’s policies aimed at ensuring that there are sufficient net funds to meet the ~~Group's~~Ecopetrol Business Group’s financial commitments within its maturity schedules with no additional costs. The main method for the measurement and monitoring of liquidity is cash flow forecasting.

During ~~2017,~~2018, the Ecopetrol Business Group used US$2,446 million equivalents (2017 – US$2,400 ~~million~~million) as part of its liquidity surpluses to prepay part of its ~~foreign currency~~ debts ~~that had~~with original maturities between ~~2020~~2019 and ~~2021.~~2025. The details of these movements are described in Note ~~20 -~~18 – Loans and borrowings.

The following is a summary of the maturity of financial liabilities as of December 31, ~~2017.~~2018. The amounts disclosed in the table are the contractual undiscounted cash flows. The payments in foreign currency were restated taking a constant exchange rate of COP$~~2,984.00~~3,249.75 per USU.S. dollar. Consequently, these amounts may not reconcile with the amounts disclosed on the consolidated statement of financial position:

Up to 1 year 1-5 years 5-10 years > 10 years Total
Loans (payment of principal and interest) 5,040,130 28,151,892 18,873,280 15,484,650 67,549,952
Trade and other payables 6,968,207 134,815 - - 7,103,022
Total 12,008,337 28,286,707 18,873,280 15,484,650 74,652,974

~~F-93~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

	Up to 1 year		1–5 years		5–10 years		> 10 years		Total
Loans (payment of principal and interest)		3,570,843		16,093,120		20,942,328		19,300,708		59,906,999
Trade and other payables		8,945,790		30,522		–		–		8,976,312
Total		12,516,633		16,123,642		20,942,328		19,300,708		68,883,311

~~30.6~~28.5

Capital management

The main objective of the capital management of the Ecopetrol Business Group is to ensure a financial structure that optimizes the cost of capital, maximizes the rate of return to its shareholders and allows access to financial markets at a competitive cost to cover financing needs that support an investment grade credit rating profile.

Net financial debt is calculated by taking ~~short-term~~short–term and ~~long-term~~long–term loans and borrowings less cash and cash equivalents and investments in securities as of December 31 of each year. The level of leverage is calculated as the ratio between net financial debt and the sum of equity and net financial debt. The following is the information of these indicators as of December 31, ~~2017~~2018 and ~~2016:~~2017:

	2017			2016			2018			2017
Loans and borrowings (Note 20)		43,547,835			52,222,027
Loans and borrowings (Note 18)								38,062,645			43,547,835
Cash and cash equivalents (Note 6)		(7,945,885	)		(8,410,467	)		(6,311,744	)		(7,945,885	)
Other financial assets (Note 9)		(6,533,725	)		(6,686,895	)		(8,147,815	)		(6,533,725	)
Net financial debt		29,068,225			37,124,665			23,603,086			29,068,225
Equity (Note 24)		48,215,699			43,560,501
Equity (Note 22)								57,107,780			48,215,699
Leverage		37.61	%		46.01	%		29.24	%		37.61	%

The movement of the net financial debt is detailed in Note ~~20.8.~~18.8.

~~F-94~~

F-89

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~31.~~29.

Related parties

Balances with associates and joint ventures as of December 31, ~~2017~~2018 and ~~2016~~2017 are as follows:

	Accounts receivable		Accounts receivable - Loans		Other assets		Accounts payable		Loans		Other liabilities		Accounts receivable		Accounts receivable – Loans		Other assets		Accounts payable		Loans		Other liabilities
Joint Ventures
Equion Energy Limited (1)		4,010		-		7,716		101,472		259,760		7		22,958		–		19,214		87,079		855,135		67
Ecodiesel Colombia S.A.		362		-		-		22,228		-		-		522		–		–		23,857		–		1
Offshore International Group Inc.⁽²⁾														–		117,824		–		–		–		–
Associates
Invercolsa S.A.		18,641		-		-		-		-		-
Offshore International Group Inc. (2)		-		154,810		-		-		-		-
Serviport S.A.		-		-		-		5,820		-		-		–		–		–		5,482		–		–
Balance as of December 31, 2017		23,013		154,810		7,716		129,520		259,760		7
Balance as of December 31, 2018														23,480		117,824		19,214		116,418		855,135		68
Current		23,013		-		7,716		129,520		259,760		7		23,480		–		19,214		116,418		855,135		68
Non-current		-		154,810		-		-		-		-
Non–current														–		117,824		–		–		–		–
		23,013		154,810		7,716		129,520		259,760		7		23,480		117,824		19,214		116,418		855,135		68
														(Note 7)		(Note 7)		(Note 11)		(Note 19)		(Note 18)

Accounts
receivable Accounts
receivable -
Loans Other assets Accounts
payable Loans
Joint Ventures
Equion Energy Limited 97,601 - 7,135 89,666 30,644
Ecodiesel Colombia SA 129 - - 20,765 -
Offshore International Group (2) - 170,121 - - -
Associates
Serviport SA - - - 3,989 -
Balance as of December 31, 2016 97,730 170,121 7,135 114,420 30,644
Current 97,730 - 7,135 114,420 30,644
Non-current - 170,121 - - -
97,730 170,121 7,135 114,420 30,644

Accounts
receivable

Accounts
receivable
– Loans

Other
assets

Accounts
payable

Loans

Other
liabilities

Joint Ventures

Equion Energy Limited⁽¹⁾

4,010

–

7,716

101,472

259,760

Ecodiesel Colombia S.A.

362

–

22,228

–

Offshore International Group Inc.⁽²⁾

–

154,810

–

Associates

Invercolsa S.A.

18,641

–

Serviport S.A.

–

5,820

–

Balance as of December 31, 2017

23,013

154,810

7,716

129,520

259,760

Current

23,013

–

7,716

129,520

259,760

Non–current

–

154,810

–

23,013

154,810

7,716

129,520

259,760

(Note 7)

(Note 11)

(Note 19)

(Note 18)

Loans with related parties:

(1)

Deposits held by Equion in Capital AG for a nominal value of ~~US$~~ USD$263 million (2017 – USD$77 ~~million~~millon), with ~~maturity in January 2018 and~~ a ~~weighted average~~three-month Libor rate of+ 1.92% (2017 - 1.44%).

(2)

Loan granted by Ecopetrol SAS.A. to Savia Perú SAS.A. (subsidiary of Offshore International Group) for US$57 million in 2016, with an interest rate of 4.99% payable semiannually from 2017 and maturating in 2021. The balance in nominal value of this loan as of December 31, ~~2017~~2018 is ~~US$~~USD$35 million (2017 – USD$49 ~~million.~~million).

The amounts outstanding are not guaranteed and will be settled in cash. No expense has been recognized in the current period or in previous periods with respect to uncollectible or doubtful accounts related to the amounts owed by related parties.

~~F-95~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

The main transactions with related parties for years ended December 31, 2018, 2017 ~~2016~~ and ~~2015~~2016 are detailed as follows:

2017 2016 2015
Sales and
services Purchases
and others Sales and
services Purchases
and others Sales and
services Purchases
and others
Joint Ventures
Equion Energy Limited 425,881 598,636 491,698 418,618 515,968 190,158
Ecodiesel Colombia SA 6,583 259,269 5,744 265,584 7,245 267,647
Offshore International Group 15,188 - 6,285 - - -
Associates
Serviport SA - - - 24,572 - -
Total 447,652 857,905 503,727 708,774 523,213 457,805

~~The dividends received from these Companies are related in note 14 - Investments in associates and joint ventures.~~

	2018				2017				2016
	Sales and services		Purchases and others		Sales and services		Purchases and others		Sales and services		Purchases and others
Joint Ventures
Equion Energy Limited		67,002		846,284		425,881		598,636		491,698		418,618
Ecodiesel Colombia S.A		6,860		267,498		6,583		259,269		5,744		265,584
Offshore International Group		2,386		–		15,188		–		6,285		–
Associates
Serviport S.A.		–		–		–		–		–		24,572
		76,248		1,113,782		447,652		857,905		503,727		708,774

~~31.1~~29.1

~~Key executives~~Directors and key management personnel

In accordance with the approval given by the shareholders’ meeting in 2012, compensation paid to directors for attending the meetings of the Board of Directors ~~and /~~ and/or committees increased from four to six minimum legal monthly salaries in force, or approximately to COP$4,687,000 for 2018, from COP$4,426,000 for 2017 ~~from~~and COP$4,140,000 for ~~2016 and COP$3,870,000 for 2015.~~2016. For ~~non-face-to-face~~non–face–to–face sessions, 50% of the quota for ~~face-to-face~~face–to–face meetings is set. The members of the Board of Directors do not have any kind of variable remuneration. The amount paid in ~~2017~~2018 for compensation to members of the Board of Directors amounted to COP$2,152 (2017 – COP$1,877 ~~(2016 -~~and 2016 – COP$1,253).

The total compensation paid to Directors as of December 31, ~~2017~~2018, amounted to COP$21,580 (2017 – COP$20,669 ~~(2016 -~~and 2016 – COP$13,901). Directors are not eligible to receive pension and retirement benefits. The total amount reserved as of December 31, ~~2017~~2018, to provide pension and retirement benefits to our eligible executive officers amounted to COP$5,491 (2017 – COP$5,401 ~~(2016 -~~and 2016 – COP$4,674).

As of December 31, ~~2017, the following~~2018, key management officers owned less than 1% of the outstanding shares of Ecopetrol S.A. as follows:

Key management personnel		% Shares
Felipe Bayón		<1% outstanding shares
~~Mauricio Cárdenas Santamaría~~Jaime Caballero		<1% outstanding shares
~~Héctor Manosalva Rojas~~Jorge Calvache		<1% outstanding shares
Rafael Espinosa Rozo		<1% outstanding shares

~~31.2~~29.2

~~Post-employment~~Post–employment benefit plans

The administration and management of resources for payment of ~~Ecopetrol's~~Ecopetrol’s pension obligations are managed by autonomous pension funds (PAPs, by its acronym in Spanish) which serve as guarantee and payment sources. ~~These funds were established in compliance with~~In 2008, Ecopetrol S.A. received the ~~provisions of Decree 2153 of 1999 which authorized, as of December 31, 2008 partial commutation of~~authorization to partially commute the value corresponding to monthly payments, ~~bonuses~~bonds and ~~contributions,~~quotas, transferring said obligations and ~~money supporting~~the monies that support them to autonomous patrimonies ~~for pensions.~~of a pension nature, in accordance with the requirements of Decree 1833 of 2016.

~~As of December 31, 2017 and~~Since November 2016, the entities ~~managing these~~that administer the resources ~~were:~~are: Fiduciaria Bancolombia, Fiduciaria de Occidente and Consorcio Ecopetrol ~~PAAC (comprised of~~PACC (formed by Fiduciaria La Previsora, Fiduciaria Bancoldex, ~~Fiduciaria Agraria~~Fiduagraria and Fiduciaria Central).

These ~~entities~~fiduciaries will manage the pension resources for a ~~five-year term (2016 - 2021)~~period of five years (2016-2021) and as ~~consideration~~compensation they receive a remuneration with fixed and variable components, ~~which is calculated~~the latter are settled on the gross ~~yield~~yields of the portfolios and ~~are~~ charged to ~~manage resources.~~the resources administered.

~~F-96~~

F-91

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~31.3~~29.3

Government related parties

The Colombian Government controls Ecopetrol with a stock ownership of 88.49%. The most significant transactions with governmental entities are comprised as follows:

a)(a)

Purchase of oil from the National Hydrocarbons Agency -– ANH

~~The~~By nature of the business, the Ecopetrol Business Group has a direct relationship with ANH, an entity which operates under the rules of the Ministry of Mines and Energy, whose objective is to manage the oil and gas reserves and resources owned by the Colombian Nation.

Ecopetrol purchases the crude oil that the ANH receives from ~~all~~ producers in Colombia at the prices set in accordance with a jointly established formula, which reflects the export sale prices (crude oils and products), adjusted for API gravity quality, sulfur content, transportation rates from the wellhead to the ports of Coveñas and Tumaco, refining process cost and a commercialization rate. This contract was extended to ~~June 30, 2018.~~January 31, 2020.

From December 2013 the Ecopetrol Business Group commercialized, on behalf of the ANH, the natural gas received by the latter in kind from producers. Since January 2014, ANH has received royalties in cash for the production of natural gas.

The purchase value of oil and gas from ANH is detailed in Note ~~26 -~~24 – Cost of sales.

Additionally Ecopetrol, like other oil companies, takes part in ~~"rounds"~~“rounds” for the allocation of exploration blocks in Colombia without implying special treatment for Ecopetrol on account of it being an entity whose majority shareholder is the Colombian Government.

b)(b)

Price differential

Regular gasoline and diesel sale prices are regulated by the National Government. In this case, there are differentials between the volume reported by the Colombian companies at the time of the sale and the difference between the international parity price and the regulated price actually charged, where the parity price is the daily price of gasoline and diesel oil of the respective month in Colombian pesos, indexed to the United States of America Gulf market, calculated in accordance with Resolution 18 0522 of 2010 and the Producer Price reference defined by the Ministry of Mines and Energy. These differentials may be in favor or against the producers. The value of this differential is detailed in Note ~~25 -~~23 – Sales revenue from contracts with customers and Note 7 – Trade and other receivables, net.

c)(c)

National Tax and Customs Direction

Ecopetrol, just like any other company in Colombia, has tax obligations that it must comply with and does not have any other kind of association or commercial relationship with the National Tax and Customs Direction. For more information see Note 10 – Taxes.

d)(d)

Comptroller General of the Republic

Ecopetrol, just like any other state entity in Colombia, is obliged to comply with the requirements set out by the Comptroller General of the Republic and make an annual payment to this entity on account of a maintenance fee. Ecopetrol does not have any other kind of association or commercial relationship with this entity.

~~F-97~~

F-92

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~32.~~30.

Joint operations

The Ecopetrol Business Group carries out exploration and production operations through Exploration and Production (E&P) Contracts, Technical Evaluation (TEA) Contracts and Agreements signed with the National Hydrocarbons Agency or ANH, as well as through Partnership Contracts and other types of contracts. The main joint operations in ~~2017~~2018 are as follows:

~~32.1~~30.1

Contracts in which Ecopetrol is not the operator

Partners		Contract	Type		% Participation	Geographic area of operations
Occidental Andina LLC		Chipirón Harvest Cravo Norte Rondón	Production	~~30-40%~~	30–40% 30% 50% 50%	Colombia
~~Harvest~~	~~30%~~
~~Cravo Norte~~	~~50%~~
~~Rondón~~	~~50%~~
Chevron Petroleum Group		Guajira	Production		57%	Colombia
Mansarovar Energy Colombia Ltd		Nare	Production		50%	Colombia
~~Meta Petroleum~~Frontera Energy Colombia Corp		Quifa	Production		40%	Colombia
Equion Energy Limited		Piedemonte	Production		50%	Colombia
Perenco Colombia Limited		Casanare Corocora Estero Garcero Orocúe	Production		64% 56% 89% 76% 63%	Colombia
~~Corocora~~	~~56%~~
~~Estero~~	~~89%~~
~~Garcero~~	~~76%~~
~~Orocúe~~	~~63%~~
ONGC Videsh Limited	~~RC-10~~	RC–10 Caribbean Round	Exploration		50%	North Caribbean Offshore
Petrobras, Repsol & Statoil		Tayrona	Exploration		30%	North Caribbean Offshore
Repsol & Statoil		TEA GUA ~~OFF-1~~OFF–1	Exploration		50%	North Caribbean Offshore
Anadarko		Fuerte Norte	Exploration		50%	North Caribbean Offshore
Shell		Deep Rydberg/Aleatico	Exploration		29%	Gulf of Mexico
Repsol -– Leon	~~Lion~~	Leon	Exploration		40%	Gulf of Mexico
Noble Energy		Gunflint	Production		32%	Gulf of Mexico
Murphy Oil		Dalmatian	Production		30%	Gulf of Mexico
Anadarko		K2	Production		21%	Gulf of Mexico
Equion Energia Limited		Niscota	Production		20%	Colombia
CNOOC – British Petroleum		Pau Brasil	Exploration		20%	Brazil
Chevron	~~CE-M-715_R11~~	CE–M–715_R11	Exploration		50%	Brazil
PC Carigali Mexico Operations S.A. de C.V. (Petronas)		CNH-R02-L01-A6.CS/2017	Exploration		50%	Mexico
Petroleos Mexicanos (PEMEX)		CNH-R02-L01-A8.CS/2017	Exploration and production		50%	Mexico

~~F-98~~

F-93

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~32.2~~30.2

Contracts in which Ecopetrol is the operator

Partners		Contract		Type		% Participation		Geographic area of operations
ExxonMobil Exploration Colombia		VMM29 CR2 C62		Exploration		50%		Colombia
~~CR2~~
~~C62~~
Talisman Colombia Oil		CPO9		Exploration		55%		Colombia
ONGC Videsh Limited Colombia Branch		RC9		Exploration		50%		Colombia
CPVEN Sucursal Colombia		VMM32		Exploration		51%		Colombia
Shell Exploration and Production		CR4		Exploration		50%	~~Colombia~~
~~Hocol S.A.~~	~~AMA4~~	~~Exploration~~	~~100%~~	Colombia
SK Innovation Co Ltd.		San Jacinto		Exploration		70%		Colombia
Repsol Exploración Colombia S.A.		Catleya		Exploration		50%		Colombia
Emerald Energy PLC Suc. Colombia		Cardon		Exploration		50%		Colombia
~~Gas~~Talismán Colombia oil and gas Ltd.		CPO9 -– Akacias		Production		55%		Colombia
Occidental Andina LLC		La Cira Infantas Teca		Production	~~58%~~	~~Colombia~~
~~Teca~~62.1% 82%	~~86%~~	Colombia Colombia
Ramshorn International Limited		Guariquies I		Production		50%		Colombia
Equion Energy Limited		Cusiana		Production		98%		Colombia
Perenco Oil And Gas		San Jacinto Rio Paez		Production		18%		Colombia
Cepsa Colombia		San Jacinto Rio Paez		Production		18%		Colombia
Total Colombia		Mundo Nuevo		Exploration		15%		Colombia
Talisman Oil & Gas		Mundo Nuevo		Exploration		15%		Colombia
Lewis		Clarinero		Exploration		50%		Colombia
Maurel & Prom Suramerica		CPO17		Exploration		50%		Colombia
Equion Energia Limited		Alto Magdalena Pipeline		OAM		45%		Colombia
Emerald Energy		Alto Magdalena Pipeline		OAM		45%		Colombia
Frontera Energy		Alto Magdalena Pipeline		OAM		45%		Colombia
ONGC Videsh Limited		Block ~~RC-9 Contract-~~RC–9 Contract– Caribbean Round No. ~~37-2007~~37–2007		Exploration		50%	~~Gulf of Mexico~~	Colombia
JX Nippon	~~FAZ-M-320_R11~~	FAZ–M–320_R11		Exploration		70%		Brazil
~~JX Nippon~~Ecopetrol	~~POT-M-567_R11~~	Potiguar		Exploration		100%		Brazil

~~F-99~~

F-94

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~32.3~~30.3

Relevant operations during the period

During ~~2017~~2018 and ~~2016,~~2017, the following significant events occurred in respect of our joint operations contracts:

a)(a)

Agreement to acquire 10% of the Saturno Block

In December 2018, the Ecopetrol Business Group entered into an agreement with Shell and Chevron for a 10% interest in the Saturno block, located in the central region of the Santos basin, which was allocated to Shell and Chevron on September 28, 2018 in the Fifth Pre-Salt Round held by the Brazilian National Oil, Natural Gas and Biofuels Agency (ANP).

This deal is subject to approval by the Brazilian Ministry of Mines and Energy and the ANP. Once the respective approvals are forthcoming, the partners’ shares of the block will be the following: Ecopetrol 10%, Shell (operating partner) 45% and Chevron 45%.

(b)

Acquisition of interests in joint operations

On December 11, 2017, Ecopetrol América Inc. acquired the 11.6% interest in the K2 oil field in the Gulf of Mexico MCX Exploration USA LLC (“MCX”), increasing its share from 9.2% to 20.8%.

The acquisition of MCX’s interest was recognized in accordance with policy 4.4 Joint Operations. To determine the fair value of the assets acquired and liabilities assumed, the income approach model was used, using the discounted cash flow and market data to determine the fair values of oil and gas properties. This model incorporated future commodity prices, estimated volumes of oil and gas reserves, future developments, operating costs, future abandonment and packing costs and a risk adjusted discount rate.

The fair value of the consideration transferred in the operation was US$47.6 million (COP$141,950), the fair value of the net assets acquired was US$198.4 million before deferred taxes (US$146 million net of deferred taxes) with recognition of a gain of US$150.8 million before deferred taxes (US$98 million after deferred taxes) in the period’s statement of profit or loss (equivalent to COP$451,095 before deferred taxes), mainly due to the transaction price being fixed before the closing date of the transaction and the fair value of the net identifiable assets acquired having increased during the interim period.

Transaction costs incurred in the operation amounted to ~~US $~~ US$0.2 million, recognized in profit or loss for ~~the year.~~2017.

~~Termination of the Rubiales and Pirirí field contracts~~

~~On July 1, 2016, Ecopetrol took over~~During 2018, the ~~direct operation~~Final Settlement Statement was made for COP$12,065 (US COP$4.2 million) recognized as an adjustment to the fair value of the Rubiales and Pirirí fields, which up to that date had been operated by Pacific Rubiales Energy. Upon termination of the contract Ecopetrol gained control over the assets and the obligations associated with the BOMT contracts for US$46 million.

~~Termination of the Tauramena association agreement~~

~~On July 3, 2016, the Tauramena Association Agreement was terminated and for this reason, Ecopetrol began to operate directly the Cusiana field, Casanare. Since its commercialization~~interests in ~~1993, it was operated first by BP and then by Equion. Cusiana represents for Ecopetrol a 98% participation in the Unified Exploitation Plan (PEU) of the field, while Equion and Emerald maintain 2%.~~joint operations.

~~F-100~~

F-95

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~33.~~31.

Information by segments

A description of the Ecopetrol Business Group’s business segments is in Note 4.19 – Information by business segment.

~~33.1~~31.1

Statement of profit or loss

The following segment information is reported based on the information used by the Board of Directors as the top body to make strategic and operational decisions of these business segments. The performance of the segments are based primarily on an analysis of income, costs, expenses and results for the period generated by each segment which are regularly monitored.

The information disclosed in each segment is presented net of transactions between the Ecopetrol Business Group companies.

Below are the consolidated statements of profit or loss by segment for the years ended December 31, 2018, 2017 ~~2016~~ and ~~2015:~~2016:

	For the year ended on December 31, 2017															For the year ended on December 31, 2018
	Exploration and Production			Refining and Petrochemicals			Transport and Logistics			Eliminations			Total			Exploration and Production			Refining and Petrochemicals			Transport and Logistics			Eliminations			Total
Third-party sales		25,004,320			27,343,359			3,606,549			-			55,954,228
Inter-segment sales		11,490,614			1,300,657			6,991,515			(19,782,786	)		-
Third–party sales																	30,112,900			34,947,948			3,543,024			-			68,603,872
Inter–segment sales																	20,259,864			2,063,425			7,811,143			(30,134,432	)		-
Total sales revenue		36,494,934			28,644,016			10,598,064			(19,782,786	)		55,954,228			50,372,764			37,011,373			11,354,167			(30,134,432	)		68,603,872
Fixed costs		8,055,925			2,886,745			2,637,604			(3,239,880	)		10,340,394			(8,871,709	)		(3,204,791	)		(2,805,516	)		3,535,979			(11,346,037	)
Variable costs		18,254,159			23,968,650			634,231			(16,289,109	)		26,567,931			(23,367,475	)		(32,453,962	)		(596,571	)		26,579,666			(29,838,342	)
Cost of sales		26,310,084			26,855,395			3,271,835			(19,528,989	)		36,908,325			(32,239,184	)		(35,658,753	)		(3,402,087	)		30,115,645			(41,184,379	)
Gross profit		10,184,850			1,788,621			7,326,229			(253,797	)		19,045,903			18,133,580			1,352,620			7,952,080			(18,787	)		27,419,493

Administrative expenses		781,386			516,501			466,669			(32	)		1,764,524			(889,293	)		(443,880	)		(320,498	)		(187	)		(1,653,858	)
Operation and project expenses		2,070,916			965,457			142,847			(253,155	)		2,926,065			(1,993,054	)		(668,177	)		(263,104	)		21,203			(2,903,132	)
Impairment of non-current assets		(183,718	)		(1,067,965	)		(59,455	)		-			(1,311,138	)
Impairment of non–current assets																	785,940			(984,704	)		(169,870	)		-			(368,634	)
Other operating income and expenses, net		(545,218	)		11,694			28,121			-			(505,403	)		(137,836	)		(13,652	)		118,905			(2,872	)		(35,455	)
Operating income		8,061,484			1,362,934			6,748,047			(610	)		16,171,855
Operating income (expenses)																	15,899,337			(757,793	)		7,317,513			(643	)		22,458,414
Financial result, net
Financial income		1,062,393			164,006			106,659			(173,702	)		1,159,356			1,099,893			147,689			110,898			(228,917	)		1,129,563
Financial expenses		(2,288,576	)		(1,110,874	)		(434,664	)		173,513			(3,660,601	)		(2,038,312	)		(1,295,528	)		(407,589	)		229,268			(3,512,161	)
Foreign exchange gain (loss), net		(101,030	)		163,992			(57,448	)		-			5,514			868,479			(517,410	)		21,154			-			372,223
		(1,327,213	)		(782,876	)		(385,453	)		(189	)		(2,495,731	)		(69,940	)		(1,665,249	)		(275,537	)		351			(2,010,375	)
Share of profits of associates		120,786			15,245			(42,493	)		-			93,538
Share of profits of associates and joint ventures																	135,265			27,730			2,841			-			165,836
Income before tax		6,855,057			595,303			6,320,101			(799	)		13,769,662			15,964,662			(2,395,312	)		7,044,817			(292	)		20,613,875
Income tax		(3,034,556	)		(238,625	)		(2,527,087	)		-			(5,800,268	)		(6,096,591	)		420,224			(2,582,118	)		-			(8,258,485	)
Net profit (loss) for the period		3,820,501			356,678			3,793,014			(799	)		7,969,394			9,868,071			(1,975,088	)		4,462,699			(292	)		12,355,390
Profit (loss) attributable to:
Group owners of parent		3,820,501			358,859			2,999,978			(799	)		7,178,539			9,930,519			(1,973,075	)		3,424,234			(292	)		11,381,386
Non-controlling interest		-			(2,181	)		793,036			-			790,855
Non–controlling interest																	(62,448	)		(2,013	)		1,038,465			-			974,004
		3,820,501			356,678			3,793,014			(799	)		7,969,394			9,868,071			(1,975,088	)		4,462,699			(292	)		12,355,390
Supplementary information
Depreciation, depletion and amortization		5,981,294			1,188,871			1,111,182			-			8,281,347			5,248,364			1,307,216			1,149,270			–			7,704,850

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

	For the year ended on December 31, 2017
	Exploration and Production			Refining and Petrochemicals			Transport and Logistics			Eliminations			Total
Third–party sales		25,004,320			27,343,359			3,606,549			–			55,954,228
Inter–segment sales		11,490,614			1,300,657			6,991,515			(19,782,786	)		–
Total sales revenue		36,494,934			28,644,016			10,598,064			(19,782,786	)		55,954,228
Fixed costs		8,055,925			2,886,745			2,637,604			(3,239,880	)		10,340,394
Variable costs		18,254,159			23,968,650			634,231			(16,289,109	)		26,567,931
Cost of sales		26,310,084			26,855,395			3,271,835			(19,528,989	)		36,908,325
Gross profit		10,184,850			1,788,621			7,326,229			(253,797	)		19,045,903
Administrative expenses		781,386			516,501			466,669			(32	)		1,764,524
Operation and project expenses		2,070,916			965,457			142,847			(253,155	)		2,926,065
Impairment of non–current assets		(183,718	)		(1,067,965	)		(59,455	)		–			(1,311,138	)
Other operating income and expenses, net		(545,218	)		11,694			28,121			–			(505,403	)
Operating income (expenses)		8,061,484			1,362,934			6,748,047			(610	)		16,171,855
Financial result, net
Financial income		1,062,393			164,006			106,659			(173,702	)		1,159,356
Financial expenses		(2,288,576	)		(1,110,874	)		(434,664	)		173,513			(3,660,601	)
Foreign exchange gain (loss), net		(101,030	)		163,992			(57,448	)		–			5,514
		(1,327,213	)		(782,876	)		(385,453	)		(189	)		(2,495,731	)
Share of profits of associates and joint ventures		120,786			15,245			(42,493	)		–			93,538
Income before tax		6,855,057			595,303			6,320,101			(799	)		13,769,662
Income tax		(3,034,556	)		(238,625	)		(2,527,087	)		–			(5,800,268	)
Net profit (loss) for the period		3,820,501			356,678			3,793,014			(799	)		7,969,394
Profit (loss) attributable to:
Group owners of parent		3,820,501			358,859			2,999,978			(799	)		7,178,539
Non–controlling interest		–			(2,181	)		793,036			–			790,855
		3,820,501			356,678			3,793,014			(799	)		7,969,394
Supplementary information
Depreciation, depletion and amortization		5,981,294			1,188,871			1,111,182			–			8,281,347

	For the year ended December 31, 2016
	Exploration and Production			Refining and Petrochemicals			Transportation and Logistics			Eliminations			Total
Third–party sales		20,527,332			24,194,024			3,764,205			–			48,485,561
Inter–segment sales		7,693,878			629,690			6,884,571			(15,208,139	)		–
Total sales revenue		28,221,210			24,823,714			10,648,776			(15,208,139	)		48,485,561
Fixed cost		6,940,074			2,458,745			2,861,269			(2,968,780	)		9,291,308
Variable cost		16,032,574			20,385,242			488,522			(11,946,223	)		24,960,115
Cost of sales		22,972,648			22,843,987			3,349,791			(14,915,003	)		34,251,423
Gross profit		5,248,562			1,979,727			7,298,985			(293,136	)		14,234,138
Administrative expenses		832,266			574,413			516,884			(295	)		1,923,268
Operation and projects expenses		1,656,960			1,206,718			180,353			(292,344	)		2,751,687
Impairment of non–current assets		196,448			773,361			(41,062	)		–			928,747
Other operating income and expenses, net		(349,419	)		20,947			53,559			801			(274,112	)
Operating income (expenses)		2,912,307			(595,712	)		6,589,251			(1,298	)		8,904,548
Financial result, net
Financial income		983,472			46,469			61,373			220,429			1,311,743
Financial expenses		(2,017,641	)		(952,006	)		(262,844	)		(231,049	)		(3,463,540	)
Foreign exchange gain (loss), net		923,573			94,715			(41,858	)		–			976,430
		(110,596	)		(810,822	)		(243,329	)		(10,620	)		(1,175,367	)
Share of profit of associates and joint ventures		39,397			22,785			(837	)		–			61,345
Income before tax		2,841,108			(1,383,749	)		6,345,085			(11,918	)		7,790,526
Income tax		(1,518,738	)		(446,595	)		(2,577,713	)		–			(4,543,046	)
Net profit (loss) for the period		1,322,370			(1,830,344	)		3,767,372			(11,918	)		3,247,480
Income attributable to:
Group owners of parent		1,322,370			(1,823,020	)		2,960,449			(11,918	)		2,447,881
Non–controlling interest		–			(7,324	)		806,923			–			799,599
		1,322,370			(1,830,344	)		3,767,372			(11,918	)		3,247,480
Supplementary information
Depreciation, depletion and amortization		5,482,827			1,145,780			978,393			–			7,607,000

~~F-101~~

F-97

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

For the year ended December 31, 2016
Exploration and
Production Refining and
Petrochemicals Transportation
and Logistics Eliminations Total
Third-party sales 20,527,332 24,194,024 3,764,205 - 48,485,561
Inter-segment sales 7,693,878 629,690 6,884,571 (15,208,139 ) -
Total sales revenue 28,221,210 24,823,714 10,648,776 (15,208,139 ) 48,485,561
Fixed cost 6,940,074 2,458,745 2,861,269 (2,968,780 ) 9,291,308
Variable cost 16,032,574 20,385,242 488,522 (11,946,223 ) 24,960,115
Cost of sales 22,972,648 22,843,987 3,349,791 (14,915,003 ) 34,251,423
Gross profit 5,248,562 1,979,727 7,298,985 (293,136 ) 14,234,138
Administrative expenses 832,266 574,413 516,884 (295 ) 1,923,268
Operation and projects expenses 1,656,960 1,206,718 180,353 (292,344 ) 2,751,687
Impairment of non-current assets 196,448 773,361 (41,062 ) - 928,747
Other operating income and expenses, net (349,419 ) 20,947 53,559 801 (274,112 )
Operating income 2,912,307 (595,712 ) 6,589,251 (1,298 ) 8,904,548
Financial result, net
Financial income 983,472 46,469 61,373 220,429 1,311,743
Financial expenses (2,017,641 ) (952,006 ) (262,844 ) (231,049 ) (3,463,540 )
Foreign exchange gain (loss), net 923,573 94,715 (41,858 ) - 976,430
(110,596 ) (810,822 ) (243,329 ) (10,620 ) (1,175,367 )
Share of profit of associates 39,397 22,785 (837 ) - 61,345
Income before tax 2,841,108 (1,383,749 ) 6,345,085 (11,918 ) 7,790,526
Income tax (1,518,738 ) (446,595 ) (2,577,713 ) - (4,543,046 )
Net income for the period 1,322,370 (1,830,344 ) 3,767,372 (11,918 ) 3,247,480
Income attributable to:
Group owners of parent 1,322,370 (1,823,020 ) 2,960,449 (11,918 ) 2,447,881
Non-controlling interest - (7,324 ) 806,923 - 799,599
1,322,370 (1,830,344 ) 3,767,372 (11,918 ) 3,247,480
Supplementary information
Depreciation, depletion and amortization 5,482,827 1,145,780 978,394 - 7,607,001

For the year ended December 31, 2015
Exploration and
Production Refining and
Petrochemicals Transportation
and Logistics Eliminations Total
Third-party sales 25,669,213 22,456,866 4,221,192 - 52,347,271
Inter-segment sales 6,063,398 788,810 6,623,358 (13,475,566 ) -
Total Revenue 31,732,611 23,245,676 10,844,550 (13,475,566 ) 52,347,271
Fixed costs 7,208,632 1,902,797 3,304,815 (2,790,793 ) 9,625,451
Variable costs 18,500,240 18,856,011 439,607 (10,426,793 ) 27,369,065
Cost of sales 25,708,872 20,758,808 3,744,422 (13,217,586 ) 36,994,516
Gross income 6,023,739 2,486,868 7,100,128 (257,980 ) 15,352,755
Administrative expenses 731,626 451,250 518,109 - 1,700,985
Operation and projects expenses 2,969,723 1,155,301 157,596 (248,352 ) 4,034,268
Impairment of non-current assets 4,504,497 3,278,993 81,388 - 7,864,878
Other operating income and expenses, net (399,954 ) 122,595 (101,182 ) - (378,541 )
Operating income (1,782,153 ) (2,521,271 ) 6,444,217 (9,628 ) 2,131,165
Finance results, net
Financial income 536,121 135,622 86,568 (136,387 ) 621,924
Financial expenses (1,774,090 ) (451,906 ) (492,485 ) 67 (2,718,414 )
Foreign exchange gain (loss), net (4,798,741 ) (949,176 ) 181,303 - (5,566,614 )
(6,036,710 ) (1,265,460 ) (224,614 ) (136,320 ) (7,663,104 )
Share of profit of companies (70,407 ) 23,187 533 - (46,687 )
Income before tax (7,889,270 ) (3,763,544 ) 6,220,136 (145,948 ) (5,578,626 )
Income tax 2,037,650 (257,256 ) (2,490,747 ) - (710,353 )
Net income (loss) for the period (5,851,620 ) (4,020,800 ) 3,729,389 (145,948 ) (6,288,979 )
Income attributable to:
Group owners of parent (5,851,620 ) (4,016,050 ) 2,819,759 (145,948 ) (7,193,859 )
Non-controlling interest - (4,750 ) 909,630 - 904,880
(5,851,620 ) (4,020,800 ) 3,729,389 (145,948 ) (6,288,979 )

Supplementary information
Depreciation, depletion and amortization 5,318,587 570,033 881,738 - 6,770,358

31.2

Sales by product

The sales by product for each segment are detailed below for the years ended December 31, 2018, 2017 and 2016:

	For the year ended on December 31, 2018
	Exploration and Production		Refining and Petrochemicals		Transport and Logistics		Eliminations			Total
Local sales
Mid–distillates		725		11,662,476		-		(77,009	)		11,586,192
Gasoline and turbo fuel		-		9,690,113		-		(1,737,261	)		7,952,852
Transport service		37,279		36,321		11,089,012		(7,631,208	)		3,531,404
Natural gas		2,535,658		-		-		(649,812	)		1,885,846
Plastic and rubber		-		822,367		-		-			822,367
Crude		20,142,527		-		-		(19,592,048	)		550,479
LPG and propane		245,875		329,569		-		(805	)		574,639
Fuel oil		20,391		489,091		-		-			509,482
Asphats		26,406		309,020		-		-			335,426
Aromatics		-		282,545		-		-			282,545
Polyethylene		-		270,887		-		-			270,887
Services		103,522		190,612		265,059		(319,783	)		239,410
Other income gas contracts		156,031		-		-		-			156,031
Other products		11,484		604,530		-		(126,507	)		489,507
		23,279,898		24,687,531		11,354,071		(30,134,433	)		29,187,067
Recognition of price differential		-		3,835,533		-		-			3,835,533
		23,279,898		28,523,064		11,354,071		(30,134,433	)		33,022,600
Foreign sales
Crude		26,898,737		-		-		-			26,898,737
Diesel		-		3,050,839		-		-			3,050,839
Fuel oil		-		2,053,594		-		-			2,053,594
Gasoline and turbo fuels		-		1,782,194		-		-			1,782,194
Plastic and rubber		-		1,268,582		-		-			1,268,582
Natural gas		27,899		-		-		-			27,899
LPG and propane		20,212		-		-		-			20,212
Cash flow hedge for future exports – Reclassification to profit or loss		128,404		-		-		-			128,404
Other products		17,614		333,101		96		-			350,811
		27,092,866		8,488,310		96		-			35,581,272
		50,372,764		37,011,374		11,354,167		(30,134,433	)		68,603,872

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

	For the year ended on December 31, 2017
	Exploration and Production		Refining and Petrochemicals		Transport and Logistics		Eliminations			Total
Local sales
Mid–distillates		1,334		9,588,992		-		-			9,590,326
Gasoline and turbo fuel		-		8,052,289		-		(1,062,102	)		6,990,187
Transport service		41,157		41,998		10,277,921		(6,771,523	)		3,589,553
Natural gas		2,540,233		4		-		(724,483	)		1,815,754
Plastic and rubber		-		833,982		-		-			833,982
Crude		11,668,529		-		-		(10,758,658	)		909,871
LPG and propane		199,796		309,823		-		-			509,619
Fuel oil		14,758		339,300		-		-			354,058
Asphats		34,834		240,969		-		-			275,803
Aromatics		-		217,418		-		-			217,418
Polyethylene		-		167,348		-		-			167,348
Services		140,227		179,912		319,776		(356,116	)		283,799
Other income gas contracts		188,195		-		-		-			188,195
Other products		11,107		379,023		-		(109,904	)		280,226
		14,840,170		20,351,058		10,597,697		(19,782,786	)		26,006,139
Recognition of price differential		-		2,229,953		-		-			2,229,953
		14,840,170		22,581,011		10,597,697		(19,782,786	)		28,236,092
Foreign sales
Crude		21,426,666		52,397		-		-			21,479,063
Diesel		-		1,213,740		-		-			1,213,740
Fuel oil		-		1,982,408		-		-			1,982,408
Gasoline and turbo fuels		-		1,223,994		-		-			1,223,994
Plastic and rubber		-		1,169,101		-		-			1,169,101
Natural gas		32,303		-		-		-			32,303
LPG and propane		15,631		-		-		-			15,631
Cash flow hedge for future exports – Reclassification to profit or loss		160,772		-		-		-			160,772
Other products		19,392		421,365		367		-			441,124
		21,654,764		6,063,005		367		-			27,718,136
		36,494,934		28,644,016		10,598,064		(19,782,786	)		55,954,228

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

	For the year ended on December 31, 2016
	Exploration and Production		Refining and Petrochemicals		Transport and Logistics		Eliminations			Total
Local sales
Mid–distillates		-		8,553,503		-		-			8,553,503
Gasoline and turbo fuel		-		6,465,939		-		(373,200	)		6,092,739
Transport service		73,247		41,736		10,283,338		(6,580,330	)		3,817,991
Natural gas		2,383,323		11,763		-		(406,750	)		1,988,336
Plastic and rubber		-		724,708		-		-			724,708
Crude		5,284,554		-		-		(4,730,888	)		553,666
LPG and propane		90,783		319,643		-		(4,557	)		405,869
Fuel oil		1,382		146,866		-		-			148,248
Asphats		31,277		309,123		-		-			340,400
Aromatics		-		186,228		-		-			186,228
Polyethylene		20		203,939		-		-			203,959
Services		133,429		152,028		301,088		(361,252	)		225,293
Other income gas contracts		271,337		-		-		-			271,337
Other products		20,165		313,603		63,537		(212,432	)		184,873
		8,289,517		17,429,079		10,647,963		(12,669,409	)		23,697,150
Recognition of price differential		-		1,048,022		-		-			1,048,022
		8,289,517		18,477,101		10,647,963		(12,669,409	)		24,745,172
Foreign sales
Crude		17,266,094		-		-		12,485			17,278,579
Diesel		-		1,604,498		-		-			1,604,498
Fuel oil		-		2,158,539		-		-			2,158,539
Gasoline and turbo fuels		-		1,046,758		-		-			1,046,758
Plastic and rubber		-		1,171,342		-		-			1,171,342
Natural gas		58,809		-		-		-			58,809
LPG and propane		6,343		2,225		-		-			8,568
Cash flow hedge for future exports – Reclassification to profit or loss		33,074		-		-		-			33,074
Other products		2,567,372		363,252		813		(2,551,215	)		380,222
		19,931,692		6,346,614		813		(2,538,730	)		23,740,389
		28,221,209		24,823,715		10,648,776		(15,208,139	)		48,485,561

~~F-102~~31.3

Capital expenditures by segments

The following are the investments amounts made by each segment for the years ended December 31, 2018, 2017 and 2016:

2018	Exploration and Production		Refining and Petrochemicals		Transport and Logistics		Total
Property, plant and equipment		2,071,604		702,247		529,078		3,302,929
Natural and environmental resources		5,051,828		-		-		5,051,828
Intangibles		56,755		20,203		28,711		105,669
		7,180,187		722,450		557,789		8,460,426

2017	Exploration and Production		Refining and Petrochemicals		Transport and Logistics		Total
Property, plant and equipment		927,282		606,749		829,252		2,363,283
Natural and environmental resources		3,568,355		–		–		3,568,355
Intangibles		154,155		4,941		16,772		175,868
		4,649,792		611,690		846,024		6,107,506

2016	Exploration and Production		Refining and Petrochemicals		Transport and Logistics		Total
Property, plant and equipment		1,208,464		1,099,850		1,338,615		3,646,929
Natural and environmental resources		2,121,295		–		–		2,121,295
Intangibles		53,774		10,274		5,205		69,253
		3,383,533		1,110,124		1,343,820		5,837,477

F-100

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~33.2~~32.

~~Sales by product~~

~~The sales by product for each segment are detailed below for the years ended December 31, 2017, 2016 and 2015:~~

For the year ended on December 31, 2017
Exploration
and Production Refining and
Petrochemicals Transport and
Logistics Eliminations Total
Local sales
Mid-distillates 1,334 9,588,992 - - 9,590,326
Gasoline - 8,052,289 - (1,062,102 ) 6,990,187
Services 181,384 221,910 10,597,698 (7,127,640 ) 3,873,352
Natural gas 2,540,233 4 - (724,483 ) 1,815,754
Crude oil 11,668,529 - - (10,758,658 ) 909,871
Plastic and rubber - 833,982 - - 833,982
LPG and propane 199,796 309,823 - - 509,619
Asphalts 34,834 240,969 - - 275,803
Other products 214,059 1,103,089 - (109,903 ) 1,207,245
14,840,169 20,351,058 10,597,698 (19,782,786 ) 26,006,139
Recognition of price differential - 2,229,953 - - 2,229,953
14,840,169 22,581,011 10,597,698 (19,782,786 ) 28,236,092
Foreign sales
Crude oil 21,426,665 52,398 - - 21,479,063
Fuel oil - 1,982,408 - - 1,982,408
Gasoline and turbo fuels - 1,223,994 - - 1,223,994
Diesel - 1,213,740 - - 1,213,740
Plastic and rubber - 1,169,101 - - 1,169,101
Natural gas 32,303 - - - 32,303
LPG and propane 15,631 - - - 15,631
Cash flow hedge for future exports – Reclassification to profit or loss 160,772 - - - 160,772
Other 19,393 421,364 367 - 441,124
21,654,764 6,063,005 367 - 27,718,136
36,494,933 28,644,016 10,598,065 (19,782,786 ) 55,954,228

For the year ended December 31, 2016
Exploration
and Production Refining and
Petrochemicals Transportation
and Logistics Eliminations Total

Local sales
Med-distillates - 8,553,503 - - 8,553,503
Gasoline and turbo fuel - 6,465,939 - (373,200 ) 6,092,739
Services 73,247 41,736 10,572,170 (6,643,869 ) 4,043,284
Natural gas 2,383,323 11,763 - (406,750 ) 1,988,336
Plastic and rubber - 724,708 - - 724,708
L.P.G. and propane 90,783 319,644 - (4,558 ) 405,869
Crude oil 5,284,554 - - (4,730,888 ) 553,666
Asphalts 31,277 309,123 - - 340,400
Aromatics - 186,228 - - 186,228
Oil fuel 1,382 146,866 - - 148,248
Other products 424,952 669,568 75,793 (510,144 ) 660,169
8,289,518 17,429,078 10,647,963 (12,669,409 ) 23,697,150
Recognition of price differential - 1,048,022 - - 1,048,022
8,289,518 18,477,100 10,647,963 (12,669,409 ) 24,745,172

Foreign sales
Crude 19,516,197 - - (2,237,618 ) 17,278,579
Oil fuel - 2,158,539 - - 2,158,539
Med-distillates - 1,594,945 - - 1,594,945
Plastic and rubber - 1,171,342 - - 1,171,342
Gasoline and turbo fuel - 1,046,758 - - 1,046,758
Natural gas 350,685 - - (291,875 ) 58,810
L.P.G. and propane 6,342 2,225 - - 8,567
Cash flow hedging – Reclassification to profit or loss 33,074 - - - 33,074
Other products 25,395 363,250 814 316 389,775
19,931,693 6,337,059 814 (2,529,177 ) 23,740,389
Total sales revenue 28,221,211 24,814,159 10,648,777 (15,198,586 ) 48,485,561

~~F-103~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

For the year ended December 31, 2015
Exploration and
Production Refining and
Petrochemicals Transportation
and Logistics Eliminations Total
Local sales
Med-distillates 25,782 10,206,599 - (17,157 ) 10,215,224
Gasoline - 6,464,661 - (336,453 ) 6,128,208
Services 118,812 198,369 10,822,078 (6,703,985 ) 4,435,274
Natural gas 2,198,284 - - (352,939 ) 1,845,345
Crude oil 5,847,368 - - (5,356,089 ) 491,279
Diesel and asphalts 49,583 411,605 - - 461,188
Plastic and rubber - 724,392 - - 724,392
L.P.G. and propane 154,201 190,346 - (9,053 ) 335,494
Other products 262,906 1,070,725 22,472 (367,757 ) 988,346
8,656,936 19,266,697 10,844,550 (13,143,433 ) 25,624,750
Recognition of price differential - 441,871 - - 441,871
8,656,936 19,708,568 10,844,550 (13,143,433 ) 26,066,621
Foreign sales
Crude 21,495,762 - - (314,497 ) 21,181,265
Fuel oil - 2,166,469 - - 2,166,469
Trading of crude 1,309,196 1,309,196
Natural gas 233,500 - - (50,550 ) 182,950
Gasoline and turbo fuel 27,756 65,369 - - 93,125
Diesel - 81,982 - - 81,982
Plastic and rubber - 1,096,730 - - 1,096,730
Cash flow hedging – Reclassification to profit or loss 7,646 - - - 7,646
Other products and services 1,815 126,558 - 32,914 161,287
23,075,675 3,537,108 - (332,133 ) 26,280,650
Total revenue 31,732,611 23,245,676 10,844,550 (13,475,566 ) 52,347,271

~~33.3~~

~~Capital expenditures by segments~~

~~The following are the investments amounts made by each segment for the years ended December 31, 2017, 2016 and 2015:~~

2017 Exploration
and Production Refining and
Petrochemicals Transport and
Logistics Total
Property, plant and equipment 927,282 606,749 829,252 2,363,283
Natural and environmental resources 3,568,355 - - 3,568,355
Intangibles 154,155 4,941 16,772 175,868
4,649,792 611,690 846,024 6,107,506

2016 Exploration
and Production Refining and
Petrochemicals Transport and
Logistics Total
Property, plant and equipment 1,208,464 1,099,850 1,338,615 3,646,929
Natural and environmental resources 2,121,295 - - 2,121,295
Intangibles 53,774 10,274 5,205 69,253
3,383,533 1,110,124 1,343,820 5,837,477

2015 Exploration
and Production Refining and
Petrochemicals Transport and
Logistics Total
Property, plant and equipment 2,460,975 3,590,279 2,497,679 8,548,933
Natural and environmental resources 6,856,761 - - 6,856,761
Intangibles 69,126 18,494 24,635 112,255
9,386,862 3,608,773 2,522,314 15,517,949

~~F-104~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~34.~~

~~Contractual obligations~~

The Group has several commitments and contractual obligations that may require future disbursement of funds. The main commitments are related to a) payments of loans and borrowings, which are disclosed in Note 30.5, b) payment of benefits post-employment, the amounts of which in the next 5 years are disclosed in Note 22.4 c) future payment commitments in service contracts, operational leasing, gas and energy supplies, purchase of assets and others, and d) commitments of exploration activities and others with the National Hydrocarbons Agency in current contracts.

~~The details of the commitments and contractual obligations can be found in section 4.8 Financial Review - Financial Indebtedness and Other Contractual Obligations.~~

~~35.~~

Subsequent events

~~On April 13, 2018, Ecopetrol redeemed all of its outstanding 4.250% notes due September 18, 2018 in an aggregate principal amount of US$350 million. The notes were issued in September 2013.~~

No events subsequent to the date of approval of these Consolidated Financial Statements have been presented.

-33.

On March 14, 2018, Ecopetrol formed the subsidiary Ecopetrol Energía SAS E.S.P., domiciled in Colombia, whose corporate purpose is the commercialization of electric energy for the Ecopetrol Business Group. Ecopetrol has a direct participation of 99% in the capitalization of the new subsidiary,Supplemental information on oil and ~~indirect participation in the remaining 1% interest through Andean Chemicals Ltd.~~gas producing activities (unaudited)

On March 2, 2018, a seepage of water and traces of crude oil occurred near the Lisama 158 well, located in the village of La Fortuna, in the Middle Magdalena Valley of Colombia. Ecopetrol activated its contingency plan to contain the spill. It is estimated that 550 barrels of crude, mixed with mud and rainwater, seeped into the streams of La Lisama and Caño Muerto. As of March 30, 2018, the Lisama 158 well was sealed and stopped flowing. Ecopetrol has ordered an investigation to determine the cause of the seepage. As of the date of this annual report, the National Environmental Licenses Agency (ANLA) has opened an investigation into the incident and the Prosecutor’s Office and other control entities may also open investigations. Besides the notice of seven constitutional actions for protection of fundamental rights. Ecopetrol is not aware of any other third party claims in connection with this incident, it cannot offer any assurance as to whether or not there will be third party actions in the future.

As part of the investigations carried out by various control entities of the modernization and expansion project of Reficar the following developments in the investigations and proceedings have occurred:

Office of the Comptroller General (Contraloría General de la República): On February 2, 2018, the Legal Accounts Commission of the National House of Representatives of the Republic of Colombia informed Reficar that the House of Representatives decided, through Resolution No. 2713, that it would not close the General Budget, Treasury Account or the National Balance Sheet for the 2016 fiscal year, since the 2016 Financial Statements of several state entities, among them Reficar, had received a negative opinion from the Office of the Comptroller General. Pursuant to Resolution No. 2713, Colombian control entities have been ordered to initiate disciplinary, fiscal and/or penal investigations.

Ecopetrol is not in a position to forecast the results of these investigations; nor is it possible to evaluate the probability of any consequence that may impact the financial statements, such as additional provisions, fines or ignorance of tax deductions that affect the amounts of deferred tax assets.

~~F-105~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~Supplemental information on oil and gas producing activities (unaudited)~~

The information in this note is referred to as “unaudited” as a means of clarifying that it is not covered by the audit opinion of the independent registered public accounting firm that has audited and reported on the “Consolidated Financial ~~Statements”.~~Statements.”

In accordance with the requirements of the United States Securities and Exchange Commission (SEC), Rule ~~4-10(a)~~4–10(a) of Regulation ~~S-X,~~S–X, Release ~~33-8879,~~33–8879, Accounting Standards Codification 932 and the ~~ASU- 2010-03~~ASU– 2010–03 “Oil and Gas reserve Estimation and Disclosures” rule, this section provides supplemental information on oil and gas exploration and producing activities of the Ecopetrol Business Group. The information included in sections a)(a) to c)(c) provides historical cost information pertaining to costs incurred in exploration, property acquisitions and development, capitalized costs and results of operations. The information included in sections d)(d) and e)(e) presents information on Ecopetrol’s estimated net proved reserve quantities, standardized measure of estimated discounted future net cash flows related to proved reserves and changes in estimated discounted future net cash flows.

The following information corresponds to Ecopetrol’s oil and gas producing activities as of December 31 2018, 2017 ~~2016~~ and ~~2015,~~2016, and includes information related to the Ecopetrol Business Group’s consolidated subsidiaries, as well as its investments the joint ventures Equion Energía Limited and Offshore International Group. The oil and gas exploration and production activities of these two joint ventures are immaterial, as such the corresponding information has not been disclosed separately.

Under the SEC final rule optional disclosure of possible and probable reserves is allowed but, the Ecopetrol Business Group opted not to do so. Ecopetrol estimated its reserves without considering ~~non-traditional~~non–traditional resources.

~~(a)~~33.1

Capitalized costs relating to oil and gas exploration and production activities

	2017			2016			2015			2018			2017			2016
Natural and environmental properties		48,129,595			47,097,475			45,789,713			53,752,436			48,129,595			47,097,475
Wells, equipment and facilities - property, plant and equipment		30,405,565			29,931,039			21,822,897
Wells, equipment and facilities – property, plant and equipment											29,416,081			30,405,565			29,931,039
Exploration and production projects		6,632,812			6,855,832			9,145,198			8,463,584			6,632,812			6,855,832
Accumulated depreciation, depletion and amortization		(51,791,897	)		(49,714,944	)		(39,743,147	)		(55,689,222	)		(51,791,897	)		(49,714,944	)
Net capitalized cost		33,376,075			34,169,402			37,014,661			35,942,879			33,376,075			34,169,402

It includes information of the Exploration and Production segment ~~subsidiaries.~~subsidiaries and joint ventures.

In accordance with IAS 37, costs capitalized to natural and environmental properties include provisions for asset retirement obligations of COP$1,076,116, COP$598,125 and COP$766,909 during 2018, 2017 and ~~COP$580,575 during 2017,~~ 2016, ~~and 2015,~~ respectively.

~~(b)~~33.2

Costs incurred in oil and gas exploration and developed activities

Costs incurred are summarized below and include both amounts expensed and capitalized in the corresponding period.

	2017		2016		2015		2018		2017		2016
Acquisition of proved properties (1)		591,875		-		-		–		591,875		–
Acquisition of unproved properties (2)		164,180		-		357,772		81,295		164,180		–
Exploration costs		1,095,588		852,097		1,012,264		1,197,946		1,095,588		852,097
Development costs		3,599,385		2,190,426		8,018,131		6,346,276		3,599,385		2,190,426
		5,451,028		3,042,523		9,388,167		7,625,517		5,451,028		3,042,523

(1)

On December 11, 2017, Ecopetrol América Inc. acquired the 11.6% interest in the K2 oil field in the Gulf of Mexico from MCX; increasing its share from 9.2% to 20.8%.

(2)

~~Corresponds~~On September 2018, Ecopetrol Oleo e Gas do Brasil acquired the 20% interest in the Pau Brasil oil field in the Basin of Santos. As of December 2017, the investments were mainly ~~to investments~~ made by Ecopetrol América ~~Inc~~Inc. in offshore exploration projects of the Warrior and Rydberg wells. ~~For 2015, relates to drilling for the Leon 2 exploratory project, operated by Repsol as well as acquisition of the lease sales 235 and 246 (unproven lands).~~

~~F-106~~

F-101

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

~~(c)~~33.3

Results of operations for oil and gas exploration and production activities

The Ecopetrol Business Group’s results of operations from oil and gas exploration and production activities for the years ended December 31, 2018, 2017 ~~2016~~ and ~~2015~~2016 are as follows:

	2017			2016			2015			2018			2017			2016
Net revenues
Sales		29,823,565			21,322,662			26,039,708			39,633,866			29,823,565			21,322,662
Transfers		7,518,216			7,734,195			5,692,902			11,794,014			7,518,216			7,734,195
		37,341,781			29,056,857			31,732,610			51,427,880			37,341,781			29,056,857
Production costs (1)		6,535,794			5,785,950			6,006,563			8,337,413			6,535,794			5,785,950
Depreciation, depletion and amortization (2)		6,349,382			5,927,466			6,234,190			5,591,774			6,349,382			5,927,466
Other production costs (3)		14,066,593			12,370,540			14,457,836			18,918,275			14,066,593			12,370,540
Exploration expenses (4)		1,342,952			730,393			1,586,940			1,387,463			1,342,952			730,393
Other expenses (5)		882,743			1,684,590			6,364,414			1,036,983			882,743			1,684,590
		29,177,464			26,498,939			34,649,943			35,271,908			29,177,464			26,498,939
Income before income tax expense		8,164,317			2,557,918			(2,917,333	)		16,155,972			8,164,317			2,557,918
Income tax expense		(3,678,955	)		(1,367,357	)		(371,376	)		(6,303,251	)		(3,678,955	)		(1,367,357	)
Results of operations for exploration and production activities		4,485,362			1,190,561			(3,288,709	)		9,852,721			4,485,362			1,190,561

(1)

Production costs are lifting costs incurred to operate and maintain productive wells and related equipment and facilities including costs such as operating labor, materials, supplies, and fuel consumed in operations and the costs of operating natural gas liquids plants. In addition, they include expenses related to the asset retirement obligations that were recognized during 2018, 2017 ~~2016~~ and ~~2015~~2016 of COP$187,340, COP$380,810 ~~COP$305,653~~ and COP$~~206,570,~~305,653, respectively.

(2)

In accordance with IAS 37 the expense related to asset retirement obligations that were recognized during 2018, 2017 ~~2016~~ and ~~2015~~2016 in depreciation, depletion and amortization, were COP$180,193, COP$179,601 ~~COP$188,370~~ and COP$~~294,849,~~188,370, respectively.

(3)

Corresponds to transportation costs and naphtha that are not part of the Ecopetrol Business Group’s lifting cost.

(4)

Exploration expenses include the costs of geological and geophysical activities, as well as the ~~non-productive~~non–productive exploratory wells.

(5)

Corresponds to administration and marketing expenses.

During 2018, 2017 and 2016, ~~and 2015,~~ the Ecopetrol Business Group transferred approximately ~~20.1%~~22.9%, ~~17.7%~~20.1% and ~~17.9%~~17.7%, respectively, of its crude oil and gas production; (percentages based on the value sales in Colombian pesos) to intercompany business units. Those transfers were ~~48.4%~~51.8%, ~~46.1%~~48.4% and ~~37.4%~~46.1%, respectively, of crude oil and gas production volume (including Reficar).

The intercompany transfers were realized at market prices.

~~F-107~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~(d)~~33.4

Reserve information

The Ecopetrol Business Group follows international standards for estimating, classifying and reporting reserves framed under SEC definitions. ~~The process is led by~~Corporate Reserve Management of Ecopetrol, Upstream Management and the ~~Reserves Department which submits~~Vice-Presidency of Development and Production, present the ~~report~~reserves balance to the Board of Directors for approval.

The reserves were ~~audited~~estimated at a level of 99% by 2 specialized ~~auditing companies:~~firms: DeGolyer and MacNaughton and Ryder Scott ~~Group.~~Company, Gaffney Cline & Associates and Sproule International Limited. According to these certifications the reserves report complies with the content and guidelines set forth in Rule ~~4-10~~4–10 of Regulation ~~S-X~~S–X issued by the United States SEC.

The following information relates to the net proven reserves owned by the Ecopetrol Business Group in 2018, 2017 ~~2016~~ and ~~2015,~~2016, and corresponds to the official reserves statements prepared by the Ecopetrol Business Group:

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

	2017									2016									2015									2018									2017									2016
	Oil			Gas			Total			Oil			Gas			Total			Oil			Gas			Total			Oil			Gas			Total			Oil			Gas			Total			Oil			Gas			Total
	(Mbls)			(Gpc)			(Mbe)			(Mbls)			(Gpc)			(Mbe)			(Mbls)			(Gpc)			(Mbe)			(Mbls)			(Gpc)			(Mbe)			(Mbls)			(Gpc)			(Mbe)			(Mbls)			(Gpc)			(Mbe)
Proved reserves:
Opening balance		1,033			3,218			1,598			1,239			3,479			1,849			1,465			3,529			2,084			1,088			3,254			1,659			1,033			3,218			1,598			1,239			3,479			1,849
Revisions of previous estimates (1)		124			294			175			(50	)		(23	)		(54	)		(64	)		225			(25	)		121			(4	)		121			124			294			175			(50	)		(23	)		(54	)
Improved recovery		72			4			73			11			1			11			16			3			17			128			4			129			72			4			73			11			1			11
Purchases		3			2			4			-			-			-			-			-			-			-			-			-			3			2			4			–			–			–
Extensions and discoveries		44			-			43			22			25			27			24			-			24			54			18			57			44			–			43			22			25			27
Production		(188	)		(264	)		(234	)		(189	)		(264	)		(235	)		(202	)		(278	)		(251	)		(191	)		(270	)		(239	)		(188	)		(264	)		(234	)		(189	)		(264	)		(235	)
Closing balance		1,088			3,254			1,659			1,033			3,218			1,598			1,239			3,479			1,849			1,200			3,002			1,727			1,088			3,254			1,659			1,033			3,218			1,598
Proved developed reserves:
Opening balance		779			3,131			1,329			913			3,176			1,470			1,042			3,284			1,618			818			3,158			1,372			779			3,131			1,329			913			3,176			1,470
Closing balance		818			3,158			1,372			779			3,131			1,329			913			3,176			1,470			883			2,882			1,389			818			3,158			1,372			779			3,131			1,329
Proved undeveloped reserves:
Opening balance		254			87			269			326			303			379			423			245			466			270			96			287			254			87			269			326			303			379
Closing balance		270			96			287			254			87			269			326			303			379			317			119			338			270			96			287			254			87			269

(1)

Represents changes in previous proved reserves, upward or downward, resulting from new information (except for an increase in proved area), usually obtained from development drilling and production history or result from changes in economic factors.

For additional information about the changes in Proved Reserves and the process for estimating reserves, see section 3.4.3 -– Business Overview -– Exploration and Production -– Reserves.

~~F-108~~

~~Ecopetrol S.A.~~

~~Notes to the consolidated financial statements~~

~~(Figures expressed in millions of Colombian pesos, unless otherwise stated)~~

~~(e)~~33.5

Standardized measure of discounted future net cash flows relating to proved oil and gas quantities and changes therein

The standardized measure of discounted future net cash flows related to the above proved crude oil and natural gas reserves is calculated in accordance with the requirements of ASU ~~2010-03.~~2010–03. Estimated future cash inflows from production under SEC requirements are computed by applying unweighted arithmetic average of the ~~first-day-of-the-month~~first–day–of–the–month for oil and gas price to ~~year-end~~year–end quantities of estimated net proved reserves, with cost factors based on those at the end of each year, currently enacted tax rates and a 10% annual discount factor. In our view, the information so calculated does not provide a reliable measure of future cash flows from proved reserves, nor does it permit a realistic comparison to be made of one entity with another because the assumptions used cannot reflect the varying circumstances within each entity. In addition, a substantial but unknown proportion of future real cash flows from oil and gas production activities is expected to derive from reserves which have already been discovered, but which cannot yet be regarded as proved.

	2017			2016			2015			2018			2017			2016
Future cash inflows		182,114,282			140,458,230			176,865,586			275,046,421			182,114,282			140,458,230
Future costs
Production		(70,159,534	)		(60,705,779	)		(76,363,169	)		(90,176,326	)		(70,159,534	)		(60,705,779	)
Development		(14,860,992	)		(12,005,835	)		(16,498,118	)		(21,945,453	)		(14,860,992	)		(12,005,835	)
Income taxes		(23,660,328	)		(15,400,000	)		(30,052,830	)		(41,102,015	)		(23,660,328	)		(15,400,000	)
Future net cash flow		73,433,428			52,346,616			53,951,469			121,822,627			73,433,428			52,346,616
10% discount factor		(22,216,583	)		(18,221,004	)		(19,117,422	)		(35,518,187	)		(22,216,583	)		(18,221,004	)
Standardized measure of discounted net cash flows		51,216,845			34,125,612			34,834,047			86,304,440			51,216,845			34,125,612

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

The following are the principal sources of change in the standardized measure of discounted net cash flows in 2018, 2017 ~~2016~~ and ~~2015:~~2016:

	2017			2016			2015
										2018			2017			2016
Net change in sales and transfer prices and in production cost (lifting) related to future production		26,918,170			3,603,876			(50,472,025	)		79,632,263			26,918,170			3,603,876
Changes in estimated future development costs		(1,978,913	)		(4,767,340	)		592,529			(13,141,340	)		(1,978,913	)		(4,767,340	)
Sales and transfer of oil and gas produced, net of production costs		(30,805,987	)		(23,270,907	)		(25,726,047	)		(43,090,467	)		(30,805,987	)		(23,270,907	)
Net change due to extension discoveries		284,374			154,352			(93,190	)
Net change due to extensions, discoveries and improved recovery ⁽¹⁾											8,496,249			3,226,852			326,854
Net change due to purchase and sales of minerals in place		211,777			(83,450	)		-			-			211,777			(83,450	)
Net change due to revisions in quantity estimates		9,090,882			(2,570,103	)		(985,217	)		10,163,131			9,090,882			(2,570,103	)
Previously estimated development costs incurred during the period		3,482,570			5,042,697			10,769,369			12,505,421			3,482,570			5,042,697
Accretion of discount		4,416,512			5,423,781			11,321,221			6,771,897			4,416,512			5,423,781
Timing and other		11,934,458			6,394,404			(4,381,037	)
Timing and other ⁽¹⁾											(13,633,228	)		8,991,981			6,221,902
Net change in income taxes		(6,462,611	)		9,364,255			18,775,304			(12,616,331	)		(6,462,611	)		9,364,255
Aggregate change in the standardized measure of discounted future net cash flows for the year		17,091,232			(708,435	)		(40,199,093	)		35,087,595			17,091,233			(708,435	)

⁽¹⁾For comparative purposes, figures as of December 2017 and 2016 were reclassified.

~~F-109~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

Exhibit 1.1 – Consolidated subsidiaries, associates and joint ventures

Consolidated subsidiary companies (1/2)

Group Functional
currency Ownership
interest
Ecopetrol Activity Country/Domicile Geographic
area of
operations Equity, net Profit
(loss) of the
year Total
assets Total
liabilities
Ecopetrol Global Energy SLU U.S. Dollar 100 % Investment vehicle Spain Spain 3,056,580 102,120 3,056,719 139
Ecopetrol Oleo é Gas do Brasil Ltda. Real 100 % Exploration and exploitation of hydrocarbons Brazil Brazil 36,385 (54,591 ) 50,933 14,548
Ecopetrol del Perú S.A. U.S. Dollar 100 % Exploration and exploitation of hydrocarbons Peru Peru 48,969 (2,271 ) 51,792 2,823
Ecopetrol America Inc. U.S. Dollar 100 % Exploration and exploitation of hydrocarbons United States United States 2,964,718 163,529 3,368,997 404,279
Black Gold Re Ltd. U.S. Dollar 100 % Reinsurer of Ecopetrol and its subordinates Bermuda Bermuda 607,199 28,135 729,125 121,926
Ecopetrol Germany Gmbh U.S. Dollar 100 % Exploration and exploitation of hydrocarbons Germany Angola 2,345 (118 ) 2,773 428
Hocol Petroleum Limited U.S. Dollar 100 % Investment vehicle Bermuda Bermuda 2,223,406 (135,261 ) 2,223,464 58
Hocol S.A. U.S. Dollar 100 % Exploration, exploitation and production of hydrocarbons Cayman Islands Colombia 1,529,052 (60,103 ) 2,747,950 1,218,898
Andean Chemicals Ltd. U.S. Dollar 100 % Investment vehicle Bermuda Bermuda 5,168,133 (526,869 ) 5,169,911 1,778
Refinería de Cartagena S.A * U.S. Dollar 100 % Refining, commercialization and distribution of hydrocarbons Colombia Colombia 17,008,913 39,195 25,805,231 8,796,318
Propileno del Caribe Propilco S.A. U.S. Dollar 100 % Production and commercialization of polypropylene resin Colombia Colombia 1,414,530 225,175 1,927,883 513,353
COMAI - Compounding and Masterbatching Industry Colombian Peso 100 % Manufacture of polypropylene compounds and masterbatches Colombia Colombia 141,580 114,241 202,879 61,299

* Information taken from the audited financial statements.

Company	Functional currency	Ownership interest Ecopetrol		Activity	Country/ Domicile	Geographic area of operations	Equity		Profit (loss) of the year			Total assets		Total liabilities
Refinería de Cartagena S.A.S.	U.S. dollar	100	%	Refining of hydrocarbons, commercialization and distribution of products	Colombia	Colombia		17,075,400		(1,479,448	)		26,251,879		9,176,479
Cenit Transporte y Logística S.A.S.	Colombian peso	100	%	Storage and transport by pipelines of hydrocarbons	Colombia	Colombia		14,566,611		3,566,742			16,343,576		1,776,965
Oleoducto Central S. A. - Ocensa	U.S. dollar	72.65	%	Transportation by crude oil pipelines	Colombia	Colombia		3,431,369		1,976,554			6,550,710		3,119,341
Ecopetrol Global Energy S.L.U	U.S. dollar	100	%	Investment vehicle	Spain	Spain		2,777,401		(757,450	)		2,777,806		405
Hocol Petroleum Limited - HPL	U.S. dollar	100	%	Investment vehicle	Bermuda	Bermuda		2,602,760		210,443			2,602,852		92
Ecopetrol América Inc.	U.S. dollar	100	%	Exploration and exploitation of hydrocarbons	United States	United States		2,571,983		(603,957	)		3,015,656		443,673
Hocol S.A.	U.S. dollar	100	%	Exploration, exploitation and production of hydrocarbons	Cayman Islands	Colombia		1,843,876		208,026			2,709,974		866,098
Propilco S.A.	U.S. dollar	100	%	Production and commercialization of polypropylene resin	Colombia	Colombia		1,515,393		165,670			2,024,401		509,008
Ecopetrol Capital AG	U.S. dollar	100	%	Collection of surpluses from, and providing funds to, companies of the Ecopetrol Business Group.	Switzerland	Switzerland		1,493,572		129,343			6,544,222		5,050,650
Andean Chemicals Ltd.	U.S. dollar	100	%	Investment vehicle	Bermuda	Bermuda		1,183,536		(376,664	)		1,184,667		1,131
Oleoducto Bicentenario de Colombia S.A.S.	Colombian peso	55.97	%	Transportation by crude oil pipelines	Colombia	Colombia		1,243,689		495,107			3,464,898		2,221,209
Oleoducto de los Llanos Orientales S. A. - ODL	Colombian peso	65	%	Transportation by crude oil pipelines	Panama	Colombia		1,083,479		416,347			1,887,076		803,597

~~F-110~~

F-105

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

Consolidated subsidiaries (2/2)

Group Functional
currency Ownership
interest
Ecopetrol Activity Country/Domicile Geographic
area of
operations Equity, net Profit (loss)
of the year Total
assets Total
liabilities
Bioenergy S.A. Colombian Peso 99,04 % Production of biofuels Colombia Colombia 335,858 (237,846 ) 433,582 97,724
Bioenergy Zona Franca SAS Colombian Peso 99,04 % Production of biofuels Colombia Colombia 246,866 (197,949 ) 702,627 455,761
Amandine Holdings Corp. Colombian Peso 99,04 % On sale Panama Panama 6,657 - 6,657 -
The Arces Group Corp. Colombian Peso 99,04 % On sale Panama Panama 5,100 - 5,100 -
Cenit SAS Colombian Peso 100 % Storage and transportation by hydrocarbon pipelines Colombia Colombia 13,801,943 3,014,820 15,243,690 1,441,747
Oleoducto Central SA - Ocensa U.S. Dollar 72,65 % Transportation by crude oil pipelines Colombia Colombia 3,014,831 1,667,219 6,205,436 3,190,605
Oleoducto de los Llanos Colombian Peso 65 % Transportation by crude oil pipelines Panama Colombia 1,106,571 321,792 1,919,509 812,938
Oleoducto de Colombia SA - ODC Colombian Peso 73 % Transportation by crude oil pipelines Colombia Colombia 351,308 202,432 555,250 203,942
Bicentenario de Colombia SAS Colombian Peso 55,97 % Transportation activity by crude oil pipelines Colombia Colombia 1,069,490 385,500 3,205,369 2,135,879
Ecopetrol Capital AG U.S. Dollar 100 % Financing, liquidation of financing of group companies or any type of company Switzerland Switzerland 1,240,473 145,970 5,806,746 4,566,273
Ecopetrol Global Capital SLU Euro 100 % Investment vehicle Spain Spain 20 (51 ) 39 19
Esenttia Resinas del Perú U.S. Dollar 100 % Marketing polypropylene resins and masterbatches Peru Peru 3,866 (84 ) 15,981 12,115
Ecopetrol Costa Afuera SAS Colombian Peso 100 % Offshore Caribbean exploration Colombia Colombia 15,671 (69,242 ) 139,192 123,521
ECP Hidrocarburos de México SA de CV U.S. Dollar 100 % Offshore Caribbean exploration Mexico Mexico 4,100 (3,653 ) 5,851 1,751

Company	Functional currency	Ownership interest Ecopetrol		Activity	Country/ Domicile	Geographic area of operations	Equity		Profit (loss) of the year			Total assets		Total liabilities
Black Gold Re Ltd.	U.S. dollar	100	%	Reinsurer for companies of the Ecopetrol Business Group	Bermuda	Bermuda		691,710		28,303			905,207		213,497
Oleoducto de Colombia S.A. – ODC	Colombian peso	73	%	Transportation by crude oil pipelines	Colombia	Colombia		382,937		265,460			593,387		210,450
Bioenergy S.A.	Colombian peso	99.35	%	Production of biofuels	Colombia	Colombia		170,227		(308,331	)		249,155		78,928
COMAI - Compounding and Masterbatching Industry	Colombian peso	100	%	Manufacture of polypropylene compounds and masterbatches	Colombia	Colombia		149,876		122,537			202,175		52,299
Ecopetrol Oleo é Gas do Brasil Ltda.	Brazilian real	100	%	Exploration and exploitation of hydrocarbons	Brazil	Brazil		125,745		(70,052	)		140,372		14,627
Bioenergy Zona Franca S.AS.	Colombian peso	99.35	%	Production of biofuels	Colombia	Colombia		100,297		(202,061	)		530,651		430,354
Ecopetrol del Perú S.A.	U.S. dollar	100	%	Exploration and exploitation of hydrocarbons	Peru	Peru		51,888		(1,353	)		55,715		3,827
ECP Hidrocarburos de México S.A. de CV	U.S. dollar	100	%	Offshore exploration	Mexico	Mexico		25,836		(80,845	)		42,907		17,071
Ecopetrol Costa Afuera S.A.S.	Colombian peso	100	%	Offshore exploration	Colombia	Colombia		12,505		(4,427	)		31,520		19,015
Esenttia Resinas del Perú SAC	U.S. dollar	100	%	Commercialization polypropylene resins and masterbatches	Peru	Peru		4,694		404			26,517		21,823
Ecopetrol Energía S.A.S E.S.P.	Colombian peso	100	%	Energy supply service	Colombia	Colombia		3,414		414			45,953		42,539
Ecopetrol Germany Gmbh (***)	U.S. dollar	100	%	Exploration and exploitation of hydrocarbons	Germany	Angola		2,277		(254	)		2,632		355

*** Company in liquidation process.

~~F-111~~

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

Associated companies and joint ventures

Group Functional
currency Ownership
interest
Ecopetrol Activity Country/Domicile Geographic
area of
operations Equity,
net Profit
(loss) of
the year Total
assets Total
liabilities
Associates
Invercolsa SA (*) Colombian Peso 43 % Holding with investments in transport and distribution of natural gas and LPG Colombia Colombia 516,640 84,628 560,368 43,728
Serviport SA (*) Colombian Peso 49 % Services for the support of loading and unloading of oil ships, supply of equipment, technical inspections and load measurements Colombia Colombia 20,212 2,031 70,966 50,754
Sociedad Portuaria Olefinas y Derivados S.A. (*) Colombian Peso 50 % Construction, use, maintenance and administration of port facilities, ports, private docks. Colombia Colombia 2,847 178 3,189 342
Joint Ventures
Equion Energy Limited U.S. Dollar 51 % Exploration, exploitation and production of hydrocarbons United Kingdom Colombia 1,336,811 253,709 1,865,776 528,965
Ecodiesel Colombia SA (*) Colombian Peso 50 % Production, marketing and distribution of biofuels and oleo chemicals Colombia Colombia 76,766 13,236 128,420 51,654
Offshore International Group (*) U.S. Dollar 50 % Exploration, development, production and processing of hydrocarbons United States Peru 1,007,754 (178,280 ) 1,858,013 850,259

Company	Functional currency	Ownership interest Ecopetrol		Activity	Country/ Domicile	Geographic area of operations	Equity		Profit (loss) of the year			Total assets		Total liabilities
Associates
Invercolsa S.A. (1)	Colombian peso	43	%	Holding with investments in transportation and distribution companies of natural gas and LPG in Colombia	Colombia	Colombia		510,116		240,949			560,536		50,420
Serviport S.A. (2)	Colombian peso	49	%	Services for the support of loading and unloading of oil ships, supply of equipment, technical inspections and load measurements	Colombia	Colombia		22,882		2,862			67,222		44,340
Sociedad Portuaria Olefinas y Derivados S.A. (1)	Colombian peso	50	%	Construction, use, maintenance and administration of port facilities, ports, private docks	Colombia	Colombia		3,173		308			6,145		2,972

Joint ventures
Equion Energía Limited	U.S. dollar	51	%	Exploration, exploitation and production of hydrocarbons	United Kingdom	Colombia		1,939,686		421,511			2,567,950		628,264
Offshore International Group	U.S. dollar	50	%	Exploration, exploitation and production of hydrocarbons	United States	Peru		771,492		(322,969	)		1,878,508		1,107,016
Ecodiesel Colombia S.A.	Colombian peso	50	%	Production, commercialization and distribution of biofuels and oleochemicals	Colombia	Colombia		82,608		12,846			119,991		37,383

(1)

Information available as of November 30, 2018.

~~(*) Information available as of November 30, 2017~~

(2)

Information available as of September 30, 2018.

~~F-112~~

F-107

Ecopetrol S.A.

Notes to the consolidated financial statements

(Figures expressed in millions of Colombian pesos, unless otherwise stated)

Exhibit 2 -– Conditions of the most significant loans

Class of
credit Group Initial Date Expiry Date Currency Original/nominal
value in original
currency Outstanding
balance
Dec 31, 2017 Outstanding
balance
Dec 31, 2016 Type of
interest Amortization
of the
principal Payment of
interest
Dec-10 Dec-20 COP 479,900 479,900 479,900 Floating Bullet Half-yearly
Dec-10 Dec-40 COP 284,300 284,300 284,300 Floating Bullet Half-yearly
Banks, Aug-13 Aug-18 COP 120,950 120,950 120,950 Floating Bullet Half-yearly
domestic Ecopetrol S.A. Aug-13 Aug-23 COP 168,600 168,600 168,600 Floating Bullet Half-yearly
currency Aug-13 Aug-28 COP 347,500 347,500 347,500 Floating Bullet Half-yearly
Aug-13 Aug-43 COP 262,950 262,950 262,950 Floating Bullet Half-yearly
Local Ecopetrol S.A. May-13 May-25 COP 1,839,000 1,532,500 1,736,833 Floating Half-yearly Half-yearly
Currency Bicentenario SAS Jul-12 Jul-24 COP 2,100,000 1,373,750 1,549,625 Floating Quarterly Quarterly
syndicated loan ODL Finance SA Aug-13 Aug-20 COP 800,000 352,000 480,000 Floating Quarterly Quarterly
Jul-09 Jul-19 USD 1,500 ** 1,500 1,500 Fixed Bullet Half-yearly
Sept-13 Sept-18 USD 350 ** 350 350 Fixed Bullet Half-yearly
Sept-13 Sept-23 USD 1,300 ** 1,300 1,300 Fixed Bullet Half-yearly
Sept-13 Sept-43 USD 850 850 850 Fixed Bullet Half-yearly
Bonds, foreign Ecopetrol S.A. May-14 May-45 USD 2,000 ** 2,000 2,000 Fixed Bullet Half-yearly
currency Sept-14 May-25 USD 1,200 ** 1,200 1,200 Fixed Bullet Half-yearly
June-15 June-26 USD 1,500 ** 1,500 1,500 Fixed Bullet Half-yearly
June-16 Sept-23 USD 500 ** 500 500 Fixed Bullet Half-yearly
Oleoducto Central S.A. May-14 May-21 USD 500 500 500 Fixed Bullet Half-yearly
Feb-15 Feb-20 USD 1,925 ** - 1,925 Floating Bullet Half-yearly
Jul-13 Jul-23 USD 245 ** 147 171 Floating Half-yearly Half-yearly
International Ecopetrol S.A. Jul-13 Jul-19 USD 151 ** 35 66 Floating Half-yearly Half-yearly
commercial May-16 May-21 USD 300 ** - 300 Floating Bullet Half-yearly
credits Feb-16 Feb-21 USD 175 - 175 Floating Half-yearly Half-yearly
Dec-11 Dec-27 USD 2,747 2,012 2,177 Fixed Half-yearly Half-yearly
Ecopetrol S.A. Dec-11 Dec-27 USD 310 227 246 Floating Half-yearly Half-yearly
Dec-11 Dec-25 USD 440 344 374 Floating Half-yearly Half-yearly

Class of credit

Company

Initial date

Expiry date

Currency

Disbursement

Outstanding
balance
Dec 31, 2018

Outstanding
balance
Dec 31, 2017

Typo de
interest

Amortization of
the principal

Payment of
interest

dec-10

dec-20

COP

479,900

Floating

Bullet

Half-yearly

dec-10

dec-40

COP

284,300

Floating

Bullet

Half-yearly

Bonds, domestic

Ecopetrol S.A.

aug-13

aug-23

COP

168,600

Floating

Bullet

Half-yearly

currency

aug -13

aug-28

COP

347,500

Floating

Bullet

Half-yearly

aug -13

aug-43

COP

262,950

Floating

Bullet

Half-yearly

Local currency
syndicated

Oleoducto Bicentenario
ODL - Oleoducto de los

jul-12

jul-24

COP

2,100,000

1,191,050

1,373,750

Floating

Quarterly

loan

Llanos Orientales S.A.

aug -13

aug-20

COP

800,000

224,000

352,000

Floating

Quarterly

sep-13

sep-23

USD

1,300

Fixed

Bullet

Half-yearly

sep-13

sep-43

USD

850

Fixed

Bullet

Half-yearly

Bonds, foreign

Ecopetrol S.A.

may-14

may-45

USD

2,000

Fixed

Bullet

Half-yearly

currency

sep-14

may-25

USD

1,200

Fixed

Bullet

Half-yearly

jun-15

jun-26

USD

1,500

Fixed

Bullet

Half-yearly

jun-16

sep-23

USD

500

Fixed

Bullet

Half-yearly

Oleoducto Central S.A.

may-14

may-21

USD

500

Fixed

Bullet

Half-yearly

International

dec-17

dec-27

USD

2,001

1,742

1,941

Fixed

Half-yearly

commercial credits -

dec-17

dec-27

USD

Floating

Half-yearly

Refinería de

Ecopetrol S.A.

dec-17

dec-27

USD

Fixed

Half-yearly

Cartagena

dec-17

dec-27

USD

159

138

154

Floating

Half-yearly

dec-17

dec-25

USD

359

321

344

Floating

Half-yearly

**Financial debt designated as hedging instrument ~~(See~~(see Note ~~30.2)~~28.1).

~~F-113~~

Signature Page

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Ecopetrol S.A.

~~By:~~	~~/s/ María Fernanda Suárez~~
	~~Name:~~	~~María Fernanda Suárez~~
	~~Title:~~	~~Chief Financial Officer~~

By:	/s/ Felipe Bayón Pardo
	Name:	Felipe Bayón Pardo
	Title:	Chief Executive Officer

By:	/s/ Jaime Caballero Uribe
	Name:	Jaime Caballero Uribe
	Title:	Chief Financial Officer

Dated: April ~~19, 2018~~5, 2019

~~153~~

10.

Exhibits

Exhibit No.		Description
1.1		Amended and Restated Bylaws of Ecopetrol S.A., dated March ~~23, 2018~~29, 2019 (English Translation).
4.1		Transportation Agreement between Ecopetrol S.A. and Oleoducto Central S.A., dated March 31, 1995 (incorporated by reference to Exhibit 4.1 on Form 20-F filed with the U.S. Securities and Exchange Commission on September 12, 2008 (File No. 001-34175)) (English Translation).
4.2		Supplementary Agreement to Transportation Agreement between Ecopetrol S.A. and Oleoducto Central S.A., dated January 17, 2013 (incorporated by reference to Exhibit 4.2 on Form 20-F filed with the U.S. Securities and Exchange Commission on April 29, 2013 (File No. 001-34175)) (English Translation).
4.3		Natural Gas Transportation Agreement between Ecopetrol S.A. and Transportadora de Gas del Interior S.A. ESP, dated October 1, 2008 (incorporated by reference to Exhibit 4.3 on Form 20-F filed with the U.S. Securities and Exchange Commission on April 29, 2013 (File No. 001-34175)) (English Translation).
4.4		Supplementary Agreement No. 1, dated December 5, 2008, to the Natural Gas Transportation Agreement between Ecopetrol S.A. and Transportadora de Gas del Interior S.A. ESP, dated October 1, 2008 (incorporated by reference to Exhibit 4.4 on Form 20-F filed with the U.S. Securities and Exchange Commission on April 29, 2013 (File No. 001-34175)) (English Translation).
4.5		Supplementary Agreement No. 2, dated April 11, 2012, to the Natural Gas Transportation Agreement between Ecopetrol S.A. and Transportadora de Gas Internacional S.A. E.S.P., dated October 1, 2008 (incorporated by reference to Exhibit 4.5 on Form 20-F filed with the U.S. Securities and Exchange Commission on April 29, 2013 (File No. 001-34175)) (English Translation).
4.6		Crude Oil Transportation Services Agreement between Ecopetrol S.A. and Cenit Transporte y Logística de Hidrocarburos S.A.S., dated April 1, 2013 (incorporated by reference to Exhibit 4.6 on Form 20-F filed with the U.S. Securities and Exchange Commission on April 29, 2013 (File No. 001-34175)) (English Translation).
4.7		Refined Products Transportation Services Agreement between Ecopetrol S.A. and Cenit Transporte y Logística de Hidrocarburos S.A.S., dated April 1, 2013 (incorporated by reference to Exhibit 4.7 on Form 20-F filed with the U.S. Securities and Exchange Commission on April 29, 2013 (File No. 001-34175)) (English Translation).
4.8		Indenture, dated as of July 23, 2009, between the Company and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.2 to the Company’s Form F-4 filed with the U.S. Securities and Exchange Commission on July 31, 2009 (File No. 333-160965)).
4.9		Bicentenario Transport Contract between Oleoducto Bicentenario de Colombia S.A.S. and Ecopetrol S.A., dated June 20, 2012 ~~(incorporated~~incorporated by reference to Exhibit 4.9 on Form 20-F filed with the U.S. Securities and Exchange Commission on April 25, 2014 (File No. 001-34175)) (English Translation)).
4.10		Amendment No. 1 to the Indenture, dated as of June 26, 2015, between the Company and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.10 on Form 6-K of the Company furnished to the U.S. Securities and Exchange Commission on June 25, 2015 (File No. 001-34175)).
4.11		Supplementary Agreement No. 2, dated March 28, 2014, to the Bicentenario Transport Contract between Oleoducto Bicentenario de Colombia S.A.S. and Ecopetrol S.A., dated June 20, 2012 (incorporated by reference to Exhibit 4.11 on Form 20-F filed with the U.S. Securities and Exchange Commission on April 28, 2016 (File No. 001-34175)) (English Translation).
4.12		Supplementary Agreement No. 4, dated April 6, 2015, to the Bicentenario Transport Contract between Oleoducto Bicentenario de Colombia S.A.S. and Ecopetrol S.A., dated June 20, 2012 (incorporated by reference to Exhibit 4.12 on Form 20-F filed with the U.S. Securities and Exchange Commission on April 28,2016 (File No. 001-34175)) (English Translation).
4.13		Amendment No. 6, dated April 25, 2016, to the Crude Oil Transportation Services Agreement between Ecopetrol S.A. and Cenit Transporte y Logística de Hidrocarburos S.A.S., dated April 1, 2013 ~~(incorporated by reference to Exhibit 4.13 on Form 20-F filed with the U.S. Securities and Exchange Commission on May 31, 2017 (File No. 001-34175))~~ (English Translation).

~~154~~

4.14		Amendment No. 7, dated December 28, 2016, to the Crude Oil Transportation Services Agreement between Ecopetrol S.A. and Cenit Transporte y Logística de Hidrocarburos S.A.S., dated April 1, 2013 ~~(incorporated by reference to Exhibit 4.14 on Form 20-F filed with the U.S. Securities and Exchange Commission on May 31, 2017 (File No. 001-34175))~~ (English Translation).
8.1		List of subsidiaries of Ecopetrol S.A.
12.1		Section 302 Certification of the Chief Executive Officer.

12.2		Section 302 Certification of the Chief Financial Officer.
13.1		Section 906 Officer Certification.
23.1		Consent of Ernst & Young Audit S.A.S.
23.2		Consent of Ryder Scott LP.
23.3		Consent of Sproule International Limited.
23.4		Consent of DeGolyer and MacNaughton.
23.5		Consent of Gaffney, Cline & Associates.
99.1		Third-Party Reserve Report of Ryder Scott Company, L.P.
99.2		Third-Party Reserve Report of Sproule International Limited.
99.3		Third-Party Reserve Report of DeGolyer and MacNaughton.
101*99.4		~~The following materials from the Ecopetrol S.A. Annual~~Third-Party Reserve Report ~~on Form 20-F for the year ended December 31, 2017 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements~~ of Financial Position, (ii) the Consolidated Statements of Profit or Loss, (iii) the Consolidated Statements of Other Comprehensive Income, (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows and (vi) related notes to the Consolidated Financial Statements.Gaffney, Cline & Associates.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL 101.DEF 101.LAB		XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Definition Linkbase Document XBRL Taxonomy Extension Labels Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

* To be filed by amendment.

11.

Cross-reference to Form 20-F

		Sections
Item 1.	Identity of Directors, Senior Management and Advisers	N/A
Item 2.	Offer Statistics and Expected Timetable	N/A
Item 3.	Key Information
	A. Selected Financial Data	1.3
	B. Capitalization and Indebtedness	N/A
	C. Reasons for the Offer and Use of Proceeds	N/A
	D. Risk Factors	5.1
Item 4.	Information on the Company	Note 1 to the consolidated financial statements
	A. History and Development of the Company	2.1; 3.1; Note 1 to the consolidated financial statements
	B. Business Overview	2; 3.3 – 3.9; 4.5.1
	C. Organizational Structure	3.2
	D. Property, Plants and Equipment	3.4 – 3.6; 4.6.2; Notes ~~15, 16~~13, 14 and 1715 to the consolidated financial statements
	E. Oil and Gas Disclosures	3.3 – 3.6; Notes ~~15, 16~~13, 14 and Supplemental information on Oil and Gas producing activities (unaudited by EY) to the consolidated financial statements
Item 4A.	Unresolved Staff Comments	None
Item 5.	Operating and Financial Review and Prospects
	A. Operating Results	3.8; 4; 5.1; 5.2
	B. Liquidity and Capital Resources	2.1; 4.6; 4.8; Consolidated statements of cash flow and Notes 9, ~~20, 29~~18, 27 and ~~30.6~~28.5 to the consolidated financial statements
	C. Research and development, Patents and Licenses, etc.	3.7; Note 1715 to the consolidated financial statements
	D. Trend Information	4.10
	E. Off-Balance Sheet Arrangements	4.9
	F. Tabular Disclosure of Contractual Obligations	4.8
	G. Safe Harbor	1.2

Item 6.		Directors, Senior Management and Employees
		A. Directors and Senior Management		7.3; 7.5

~~155~~

	B. Compensation	7.6; Notes 4, 2220 and 3129 to the consolidated financial statements
	C. Board Practices	7.3
	D. Employees	3.12
	E. Share Ownership	7.7
Item 7.	Major Shareholders and Related Party Transactions
	A. Major Shareholders	6.3; 6.8; 7.7
	B. Related Party Transactions	3.10; Note 3129 to the consolidated financial statements
	C. Interests of Experts and Counsel	N/A
Item 8.	Financial Information
	A. Consolidated Statements and Other Financial Information	4; 5.3; 6.2; 8
	B. Significant Changes	7.8; Note 35 to the consolidated financial statements
Item 9.	The Offer and Listing
	A. Offer and Listing Details	6.3
	B. Plan of Distribution	N/A
	C. Markets	6.3
	D. Selling Shareholders	N/A
	E. Dilution	N/A
	F. Expenses of the Issue	N/A
Item 10.	Additional Information
	A. Share Capital	N/A
	B. Memorandum and Articles of Association	7.1
	C. Material Contracts	3.4.4; 4.8; Exhibits 4.1 – ~~4.12~~4.14
	D. Exchange Controls	5.1.4; 6.6
	E. Taxation	4.2.1; 6.5; Note 10 to the consolidated financial statements
	F. Dividends and Paying Agents	N/A
	G. Statements by Experts	N/A
	H. Documents On Display	1.1
	I. Subsidiary Information	N/A
Item 11.	Quantitative and Qualitative Disclosures About Market Risk	4.10; 5.1.1; 5.2.1; 5.2.3; Note 3028 to the consolidated financial statements
Item 12.	Description of Securities Other than Equity Securities
	A. Debt Securities	N/A
	B. Warrants and Rights	N/A
	C. Other Securities	N/A
	D. American Depositary Shares	6.4
Item 13.	Defaults, Dividend Arrearages and Delinquencies	None
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	None
Item 15.	Controls and Procedures	5.2; 7.8
Item 16A.	Audit Committee Financial Expert	7.3.2
Item 16B.	Code of Ethics	7.2; 7.4
Item 16C.	Principal Accountant Fees and Services	7.8
Item 16D.	Exemptions from the Listing Standards for Audit Committees	N/A
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchases	N/A
Item 16F.	Changes in Registrant’s Certifying Accountant	7.8
Item 16G.	Corporate Governance	7.4
Item 16H.	Mine Safety Disclosure	N/A
Item 17.	Financial Statements	N/A
Item 18.	Financial Statements	8
Item 19.	Exhibits	10

~~156~~

Title of each class		Name of each exchange on which registered:
American Depository Shares (as evidenced by American Depository Receipts), each representing 20 common shares par value COP$609 per share		New York Stock Exchange
Ecopetrol common shares par value COP$609 per share		New York Stock Exchange (for listing purposes only)

Title of each class		Name of each exchange on which ~~registered:~~
~~7.625% Notes due 2019~~		~~New York Stock Exchange~~registered
5.875% Notes due 2023		New York Stock Exchange
4.125% Notes due 2025		New York Stock Exchange
5.375% Notes due 2026		New York Stock Exchange
7.375% Notes due 2043		New York Stock Exchange
5.875% Notes due 2045		New York Stock Exchange

1.	Introduction					1

	1.1	About This Report				1

	1.2	Forward-looking Statements				1

	1.3	Selected Financial and Operating Data				2

2.	Strategy and Market Overview					4

	2.1	Our Corporate Strategy				5

3.	Business Overview					7

	3.1	Our History				7

	3.2	Our Corporate Structure				7

	3.3	Our Business				8

	3.4	Exploration and Production				9

		3.4.1	Exploration Activities			9

			3.4.1.1	Exploration Activities in Colombia		9

			3.4.1.2	Exploration Activities Outside of Colombia		11

		3.4.2	Production Activities			13

			3.4.2.1	Production Activities in Colombia		13

				3.4.2.1.1	Ecopetrol S.A.’s Production Activities in Colombia	13

				3.4.2.1.2	Ecopetrol S.A.’s Affiliates and Subsidiaries’ Production Activities in Colombia	19

			3.4.2.2	Production Activities Outside Colombia		21

			3.4.2.3	Marketing of Crude Oil, Natural Gas and Refined Products		22

		3.4.3	Reserves			24

		3.4.4	Joint Venture and Other Contractual Arrangements			30

	3.5	Transportation and Logistics				34

			3.5.1.1	Transportation Activities		34

			3.5.1.2	Pipelines		36

			3.5.1.3	Export and Import Facilities		37

1.	Introduction				1

	1.1	About This Report			1

	1.2	Forward-looking Statements			1

	1.3	Selected Financial and Operating Data			2

2.	Strategy and Market Overview				4

	2.1	Our Corporate Strategy			5

		2.1.1	Business Plan		5

		2.1.2	2019 Investment Plan		6

3.	Business Overview				7

	3.1	Our History			7

	3.2	Our Corporate Structure			8

	3.3	Our Business			9

	3.4	Exploration and Production			9

		3.4.1	Exploration Activities		9

			3.4.1.1	Exploration Activities in Colombia	10

			3.4.1.2	Exploration Activities Outside Colombia	12

		3.4.2	Production Activities		14

			3.4.2.1	Production Activities in Colombia	14

			3.4.2.2	Production Activities Outside Colombia	21

			3.4.2.3	Marketing of Crude Oil and Natural Gas	23

		3.4.3	Reserves		25

		3.4.4	Joint Venture and Other Contractual Arrangements		30

	3.5	Transportation and Logistics			33

		3.5.1	Transportation Activities		33

			3.5.1.1	Pipelines	36

			3.5.1.2	Export and Import Facilities	38

		3.5.2	Other Transportation Facilities		38

	3.5.2	Other Transportation Facilities			38

	3.5.3	Marketing of Transportation Services			38

3.6	Refining and Petrochemicals				38

	3.6.1	Refining			38

		3.6.1.1	Barrancabermeja Refinery		39

		3.6.1.2	Reficar		40

		3.6.1.3	Polipropileno del Caribe S.A.		42

		3.6.1.4	Biofuels		42

	3.6.2	Marketing and Supply of Refined Products			42

3.7	Research and Development; Intellectual Property				42

3.8	Applicable Laws and Regulations				43

	3.8.1	Regulation of Exploration and Production Activities			43

		3.8.1.1	Business Regulation		43

			3.8.1.1.1	Environmental Licensing and Prior Consultation	44

			3.8.1.1.2	Royalties	45

	3.8.2	Regulation of Transportation Activities			46

	3.8.3	Regulation of Refining and Petrochemical Activities			47

		3.8.3.1	Regulation of Liquefied Petroleum Gas (LPG) and Liquid Fuels		48

		3.8.3.2	Regulation Concerning Production and Prices		48

		3.8.3.3	Regulation of Biofuel and Related Activities		50

	3.8.4	Regulation of the Natural Gas Market			50

3.9	Sustainability Initiatives				52

	3.9.1	HSE			52

		3.9.1.1	Ecopetrol S.A.		52

		3.9.1.2	Cenit		55

		3.9.1.3	Refinería de Cartagena		55

	3.9.2	Human Rights			56

	3.9.3	Environmental Sustainability			56

			3.9.3.1	Environmental Practices	56

		3.9.4	Energy Initiatives		57

	3.10	Related Party and Intercompany Transactions			57

	3.11	Insurance			62

	3.12	Human Resources/Labor Relations			64

		3.12.1	Employees		64

		3.12.2	Collective Bargaining Arrangements		65

4.	Financial Review				66

	4.1	Factors Affecting Our Operating Results			67

	4.2	Effect of Taxes, Exchange Rate Variation, Inflation and the Price of Oil on our Results			68

		4.2.1	Taxes		68

		4.2.2	Exchange Rate Variation		70

		4.2.3	Effects of Inflation		71

		4.2.4	Effects of the Price of Oil		71

	4.3	Accounting Policies			72

	4.4	Critical Accounting Judgments and Estimates			72

	4.5	Operating Results			73

		4.5.1	Consolidated Results of Operations		73

			4.5.1.1	Total Revenues	73

			4.5.1.2	Cost of Sales	74

			4.5.1.3	Operating Expenses before impairment of non-current assets effects	75

			4.5.1.4	Impairment of non-current assets	76

			4.5.1.5	Finance Results, Net	77

			4.5.1.6	Income Tax	78

			4.5.1.7	Net Income (Loss) Attributable to Owners of Ecopetrol	78

			4.5.1.8	Segment Performance and Analysis	79

			4.5.1.9	Exploration and Production Segment Results	80

			4.5.1.10	Transportation and Logistics Segment Results	83

			4.5.1.11	Refining and Petrochemicals Segment Results	84

	4.6	Liquidity and Capital Resources			85

		4.6.1	Review of Cash Flows		86

		4.6.2	Capital Expenditures		87		4.6.2	Capital Expenditures	92

		4.6.3	Dividends		87		4.6.3	Dividends	92

	4.7	Summary of Differences between Internal Reporting (Colombian IFRS and IFRS)			87	4.7	Summary of Differences between Internal Reporting (Colombian IFRS and IFRS)		92

	4.8	Financial Indebtedness and Other Contractual Obligations			89	4.8	Financial Indebtedness and Other Contractual Obligations		94

	4.9	Off Balance Sheet Arrangements			90	4.9	Off Balance Sheet Arrangements		96

	4.10	Trend Analysis and Sensitivity Analysis			91	4.10	Trend Analysis and Sensitivity Analysis		96

5.	Risk Review				93	Risk Review			98

	5.1	Risk Factors			93	5.1	Risk Factors		98

		5.1.1	Risks Related to Our Business		93		5.1.1	Risks Related to Our Business	98

		5.1.2	Risks Related to Colombia’s Political and Regional Environment		104		5.1.2	Risks Related to Colombia’s Political and Regional Environment	108

		5.1.3	Legal and Regulatory Risks		107		This section discusses potential risks related to our extensive operations in Colombia.		108

		5.1.4	Risks Related to Our ADSs		109		5.1.3	Legal and Regulatory Risks	111

		5.1.5	Risks Related to State Ownership		111		5.1.4	Risks Related to Our ADSs	113

	5.2	Risk Management			111		5.1.5	Risks Related to the Controlling Shareholder	115

		5.2.1	Managing Risk through Our Internal Control System		111	5.2	Risk Management		116

		5.2.2	Managing Information Security and Cybersecurity		113		5.2.1	Managing Risk through Our Internal Control System	116

		5.2.3	Managing Financial Risk		113		5.2.2	Managing Information Security and Cybersecurity	117

	5.3	Legal Proceedings and Related Matters			115		5.2.3	Managing Financial Risk	118

						5.3	Legal Proceedings and Related Matters		120

6.	Shareholder Information				120	Shareholder Information			126

	6.1	Shareholders’ General Assembly			120	6.1	Shareholders’ General Assembly		126

	6.2	Dividend Policy			121	6.2	Dividend Policy		127

	6.3	Market and Market Prices			121	6.3	Market and Market Prices		127

	6.4	Ecopetrol ADR Program Fees			124	6.4	Ecopetrol ADR Program Fees		128

	6.5	Taxation			125	6.5	Taxation		130

		6.5.1	Colombian Tax Considerations		125		6.5.1	Colombian Tax Considerations	130

							6.5.2	U.S. Federal Income Tax Consequences	134

						6.6	Exchange Controls and Limitations		137

Operating Information	2017			2016			2015			2014			2013			2018			2017			2016			2015			2014
Oil and gas production (mboed)		715.1			717.9			760.7			755.4			788.2			720.4			715.1			717.9			760.7			755.4
Proved oil and gas reserves (Mmboe)⁽¹⁾		1,659			1,598			1,849			2,084			1,972			1,727			1,659			1,598			1,849			2,084
Exploratory Wells⁽²⁾		20			6			5			28			22			17			20			6			5			28
Refinery Through-put (bpd)⁽³⁾		347,483			332,751			234,861			240,484			283,362			375,666			347,483			332,751			234,861			240,484
1P Reserves replacement ratio		126	%		(7	)%		6	%		146	%		139	%		129	%		126	%		(7	)%		6	%		146	%

Business Segment	*Millions of US$*⁽¹⁾		%*Percentage*⁽²⁾
Exploration		~~400 - 450~~430-490		12	%
Production		2,385-2,725		68	%
Midstream		240-275		7	%
Downstream		365-420		11	%
~~Production~~Others		~~2,580 – 2,950~~80-90		74	%
~~Transportation and Logistics~~		~~270 - 300~~		8	%
~~Refining, Petrochemicals, and Biofuels~~		~~220 - 250~~		6	%
~~Others~~		~~30 - 50~~		12	%
TOTAL		~~3,500- 4,000~~3,500-4,000		100	%

	For the year ended December 31,																		For the year ended December 31,
	2017						2016						2015						2018						2017						2016
	Oil		Gas⁽¹⁾		Total		Oil		Gas⁽¹⁾		Total		Oil		Gas⁽¹⁾		Total		Oil		Gas⁽¹⁾		Total		Oil		Gas⁽¹⁾		Total		Oil		Gas⁽¹⁾		Total
	(thousand boepd)																			(thousand boepd)
Total production in Colombia⁽²⁾		577.3		121.6		698.9		582.5		123.3		705.8		619.2		130.4		749.6		578.4		125		703.4		577.3		121.6		698.9		582.5		123.3		705.8
Total International production⁽³⁾		13.6		2.6		16.2		9.6		2.5		12.1		7.3		3.8		11.1		14.1		2.9		17.0		13.6		2.6		16.2		9.6		2.5		12.1
Total production of Ecopetrol Group		590.9		124.2		715.1		592.1		125.8		717.9		626.5		134.2		760.7		592.5		127.9		720.4		590.9		124.2		715.1		592.1		125.8		717.9

	2017 (mbod)		Year-on-Year ∆(%)			2016 (mbod)		Year-on-Year ∆(%)			2015 (mbod)
Light		42.4		(4.9	)%		44.6		(0.0	)%		44.6
Medium		151.6		(6.1	)%		161.5		(13.7	)%		187.1
Heavy		351.0		1.4	%		346.0		(2.4	)%		354.5
Total		545.0		(1.3	)%		552.1		(5.8	)%		586.2

	2018 (mbod)		Year-on- Year ∆(%)			2017 (mbod)		Year-on- Year ∆(%)			2016 (mbod)
Light		40.7		(4.0	)%		42.4		(4.9	)%		44.6
Medium		154.4		1.8	%		151.6		(6.1	)%		161.5
Heavy		353.6		0.7	%		351.0		1.4	%		346.0
Total		548.7					545.0					552.1

	As of December 31, 2017 (number of wells)								As of December 31, 2018 (number of wells)
	Crude Oil⁽¹⁾				Natural Gas⁽²⁾				Crude Oil⁽¹⁾				Natural Gas⁽²⁾
	Gross		Net		Gross		Net		Gross		Net⁽³⁾		Gross		Net⁽³⁾
COLOMBIA
Ecopetrol S.A.
Central region		2,301		1,813		6		6		2,244		1,767		9		9
Orinoquía region		978		972		17		17		1,086		1,077		22		18
Southern region		578		513		11		11		589		534		13		13
Eastern Region		804		804		0		0		693		693		-		-
Region of Associated Operations		2,987		1,499		25		9		2,602		1,260		16		7
Total (Ecopetrol S.A.)(4)		7,648		5,601		59		43		7,214		5,331		60		47

	Production acreage as of December 31, 2017								Production acreage as of December 31, 2018
	Developed				Undeveloped				Developed				Undeveloped
	Gross		Net		Gross		Net		Gross		Net		Gross		Net
	(in acres)								(in acres)
Hocol		20,892		12,726		627		528		17,845		15,930		675		666
Equion		16,300		4,024		54,666		12,162		16,300		4,104		54,666		12,162
Total (Subsidiaries in Colombia)		37,192		16,750		55,293		12,690		34,145		20,034		55,341		12,828

	For the year ended December 31, 2017								For the year ended December 31, 2018
	Crude Oil				Natural Gas				Crude Oil				Natural Gas
	Gross		Net		Gross		Net		Gross		Net		Gross		Net
	(number of wells)								(number of wells)
Hocol		286		222		7		5.5		281		241.9		20		18.5
Equion		15		8		15		8		15		8		15		8
Total (Subsidiaries in Colombia)		301		230		22		13.5		296		249.9		35		26.5

Net Proved Developed Reserves	Colombia		North America		South America excluding Colombia		Total		Colombia		North America		South America excluding Colombia		Total
Net Proved Developed oil reserves in million barrels oil equivalent
At December 31, 2015		849		3		6		858
At December 31, 2016		710		6		7		723		710		6		7		723
At December 31, 2017		747		10		6		763		747		10		6		763
At December 31, 2018										814		13		5		832
Net Proved Developed NGL reserves in million barrels oil equivalent
At December 31, 2015		54		0		1		55
At December 31, 2016		55		0		1		56		55		-		1		56
At December 31, 2017		54.6		0		0.8		55.4		54.6		-		0.8		55.4
At December 31, 2018										50.5		-		0.6		51.1
Net Proved Developed gas reserves in billion standard cubic feet
At December 31, 2015		3,156		16		5		3,176
At December 31, 2016		3,114		9		8		3,131		3,114		9		8		3,131
At December 31, 2017		3,143		10		5		3,158		3,143		10		5		3,158
At December 31, 2018										2,865.5		10		7		2,882
Net Proved Developed oil, NGL and gas reserves in million barrels oil equivalent
At December 31, 2015		1,457		5		7		1,470
At December 31, 2016		1,311		8		10		1,329		1,311		8		10		1,329
At December 31, 2017		1,353		11		8		1,372		1,353		11		8		1,372
At December 31, 2018										1,368		14		7		1,389

Reserves Category	Oil (million barrels)		NGL (million barrels)		Natural Gas (bcf)		Total Oil and Gas (Mmboe)		Oil (million barrels)		NGL (million barrels)		Natural Gas (bcf)		Total Oil and Gas (Mmboe)
PROVED DEVELOPED RESERVES
Total (Colombia)		747		54.6		3,143		1,353		814		50.5		2,866		1,368
International:
North America		10		0		10		11		13		-		10		14
South America		6		0.8		5		8		5		0.5		7		7
TOTAL PROVED DEVELOPED RESERVES		763		55.4		3,158		1,372		832		51		2,883		1,389
PROVED UNDEVELOPED RESERVES
Total (Colombia)		247		19		93		282		285		22		113		327
International:
North America		4		0		3		5		10		-		6		11
South America		0		0		0		0		-		-		-		-
TOTAL PROVED UNDEVELOPED RESERVES		251		19		96		287		295		22		119		338
TOTAL PROVED RESERVES		1,014		74		3,253		1,659		1,127		73		3,002		1,727

	As of December 31,
	2017			2016			2015
Consolidated Company (million barrels oil equivalent)
Revisions of previous estimates		174			(54	)		(25	)
Improved Recovery		73			11			16
Extensions and discoveries		44			27			24
Purchases		4			-			-
Total reserves additions		295			(16	)		16
Production		(234	)		(235	)		(251	)
Net change in proved reserves		61			(251	)		(235	)

Proved Reserves as of December 31,	Oil		NGL		Gas		Total		Oil		NGL		Gas		Total
	Mmbls		Mmbls		Bcf		Mmboe		Mmbls		Mmbls		Bcf		Mmboe
2018 proved reserves
Developed										832		51		2,882		1,389
Undeveloped										295		23		119		338
2017 proved reserves
Developed		763		55		3,158		1,372		763		55		3,158		1,372
Undeveloped		251		19		96		287		251		19		96		287
2016 proved reserves
Developed		723		56		3,131		1,329		723		56		3,131		1,329
Undeveloped		241		13		87		269		241		13		87		269
2015 proved reserves
Developed		858		55		3,176		1,470
Undeveloped		308		18		303		379

Consolidated ~~Companies(million~~Companies (million barrels oil equivalent)
Revisions of previous estimates	928.4
Improved recovery	3667.1
Extensions and discoveries	2539.9
Proved Undeveloped converted to Proved Developed	(5383.7	)
Net change in unproved reserves	1751.7

Consolidated companies	Colombia			North America			South America excluding Colombia			Total
	Net proved oil, NGL and gas reserves in Mmboe
At December 31, 2015		1,821			14			14			1,849
Revisions		(51	)		(0.7	)		(2.5	)		(54	)
Improved Recovery		11			0			0			11
Extensions and discoveries		27			0			0			27
Production		(231	)		(2.3	)		(1.7	)		(235	)
At December 31, 2016		1,577			11			10			1,598
Revisions		170			4.6			(0.3	)		174
Improved Recovery		73			0			0			73
Extensions and discoveries		44			0			0			44
Purchases		0			4			0			4
Production		(229	)		(4	)		(1.5	)		(234	)
At December 31, 2017		1635			16			8			1659

Pipeline	Kilometers		Capacity (mbd)			Product Transported	Origin	Destination	Indirect Ownership Percentage			Kilometers		Capacity (mbd)			Product Transported	Origin	Destination	Indirect Ownership Percentage
Caño Limón-Coveñas		771		250		Crude Oil	Caño Limón	Coveñas		100.00	%		771		250		Crude Oil	Caño Limón	Coveñas		100.00	%
Oleoducto de Alto Magdalena (OAM)		391		110		Crude Oil	Tenay	Vasconia		87.29	%		391		110		Crude Oil	Tenay	Vasconia		95.8	%
Oleoducto de Colombia (ODC)		483		236		Crude Oil	Vasconia	Coveñas		73.00	%		483		236		Crude Oil	Vasconia	Coveñas		73.00	%
Oleoducto Central –Ocensa (*Segment 2)		848		745		Crude Oil	Cupiagua	Coveñas		72.65	%
Oleoducto Central –Ocensa⁽¹⁾													848		745		Crude Oil	Cupiagua	Coveñas		72.65	%
Oleoducto de los Llanos (ODL)		260		314	⁽¹⁾	Crude Oil	East fields	Monterrey Cusiana		65.00	%		260		314	⁽²⁾	Crude Oil	East fields	Monterrey Cusiana		65.00	%
Oleoducto Bicentenario de Colombia		230		110	⁽²⁾	Crude Oil	Araguaney	Banadia		55.97	%		230		110	⁽³⁾	Crude Oil	Araguaney	Banadia		55.97	%

	For the year ended December 31,⁽¹⁾						For the year ended December 31,
	2017		2016		2015		2018		2017		2016
	(bpd)						(bpd)
LPG, Propylene and Butane		6,791		6,080		0		4,227		6,791		6,080
Gasoline Fuels and Naphta		43,728		35,012		1,558		51,703		43,728		35,012
Diesel		60,467		40,950		2,282		76,833		60,467		40,950
Jet Fuel and Kerosene		6,700		5,768		1,202		8,057		6,700		5,768
Fuel Oil		10,150		24,602		2,826		4,671		10,150		24,602
Sulfur		446		241		0		581		446		241
Total		128,282		112,653		7,868		146,072		128,282		112,653
Difference between Inventory of Intermediate Products		3,916		911		2,476		39		3,916		911
Total Production⁽²⁾⁽¹⁾		132,198		113,564		10,344		146,111		132,198		113,564
Petcoke (Metric tons)		704,073		601,163		0		984,558		704,073		601,163

METRIC	2017		2016		2015⁽¹⁾		2018		2017		2016
Man-hours		7,495,531		10,351,896		32,944,698		6.779.729		7.495.531		10.351.896
Recordable accidents		9		29		57		12		9		29
Total recordable cases (TRIF)*		1.2		2.80		1.73		1,77		1,2		2,80
Environmental Incidents (EI)		0		0		0		0		0		0
Process Safety Incidents (ISP)*		0.13		0.19		0.03		0		0,13		0,19

Income Statement	For the Years ended December 31,									% Change
(Colombian Pesos in millions)	2017			2016			2015			2017/2016			2016/2015
Revenue		55,954,228			48,485,561			52,347,271			15.4			(7.4	)
Cost of sales		36,908,325			34,251,423			36,994,516			7.8			(7.4	)
Gross Profit		19,045,903			14,234,138			15,352,755			33.8			(7.3	)
Operating expenses		4,185,186			4,400,843			5,356,715			(4.9	)		(17.8	)
Impairment of non-current assets		(1,311,138	)		928,747			7,864,875			(241.2	)		(88.2	)
Operating Income		16,171,855			8,904,548			2,131,165			81.6			317.8
Finance results, net		(2,495,731	)		(1,175,367	)		(7,663,104	)		112.3			(84.7	)
Share of profit of companies		93,538			61,345			(46,687	)		52.5			(231.4	)
Income before income tax		13,769,662			7,790,526			(5,578,626	)		76.7			(239.6	)
Income tax		(5,800,268	)		(4,543,046	)		(710,353	)		27.7			539.5
Net Income (loss)		7,969,394			3,247,480			(6,288,979	)		145.4			(151.6	)
Net income (loss) attributable to:
Company’s shareholders		7,178,539			2,447,881			(7,193,859	)		193.3			(134.0	)
Non-controlling interest		790,855			799,599			904,880			(1.1	)		(11.6	)
Net Income (loss)		7,969,394			3,247,480			(6,288,979	)		145.4			(151.6	)

*Income Statement*	For the Years ended December 31,									% Change
(Colombian Pesos in millions)	2018			2017			2016			2018/2017			2017/2016
Revenue		68,603,872			55,954,228			48,485,561			22.6			15.4
Cost of sales		41,184,379			36,908,325			34,251,423			11.6			7.8
Gross Profit		27,419,493			19,045,903			14,234,138			44.0			33.8
Operating expenses		4,592,445			4,185,186			4,400,843			9.7			(4.9	)
Impairment of non-current assets		368,634			(1,311,138	)		928,747			(128.1	)		(241.2	)
Operating Income		22,458,414			16,171,855			8,904,548			38.9			81.6
Finance results, net		(2,010,375	)		(2,495,731	)		(1,175,367	)		(19.4	)		112.3
Share of profit of companies		165,836			93,538			61,345			77.3			52.5
Income before income tax		20,613,875			13,769,662			7,790,526			49.7			76.7
Income tax		(8,258,485	)		(5,800,268	)		(4,543,046	)		42.4			27.7
Net Income (loss)		12,355,390			7,969,394			3,247,480			55.0			145.4
Net income (loss) attributable to:
Company’s shareholders		11,381,386			7,178,539			2,447,881			58.5			193.3
Non-controlling interest		974,004			790,855			799,599			23.2			(1.1	)
Net Income (loss)		12,355,390			7,969,394			3,247,480			55.0			145.4

	Year ended December 31,									% Change						Year ended December 31,									% Change
	2017			2016			2015			2017/2016			2016/2015			2018			2017			2016			2018/2017			2017/2016
	(Colombian Pesos in millions)															(Colombian Pesos in millions)
Exploration and Production		36,494,934			28,221,210			31,732,611			29.3			(11.1	)		50,372,764			36,494,934			28,221,210			38.0			29.3
Third parties		25,004,320			20,527,332			25,669,213			21.8			(20.0	)		30,112,900			25,004,320			20,527,332			20.4			21.8
Local crude oil		909,871			553,666			491,279			64.3			12.7			550,479			909,871			553,666			(39.5	)		64.3
Foreign crude oil		21,426,666			17,278,579			21,181,265			24.0			(18.4	)		26,898,737			21,426,666			17,278,579			25.5			24.0
Trading of crude oil		-			-			1,309,196			-			(100.0	)
Natural gas local		1,815,754			1,988,336			1,845,345			(8.7	)		7.7			1,885,846			1,815,754			1,988,336			3.9			(8.7	)
Foreign natural gas		32,303			58,809			182,950			(45.1	)		(67.9	)		27,899			32,303			58,809			(13.6	)		(45.1	)
Other income		819,726			647,942			659,178			26.5			(1.7	)		749,939			819,726			647,942			(8.5	)		26.5
Inter-segment net operating revenues		11,490,614			7,693,878			6,063,398			49.3			26.9			20,259,864			11,490,614			7,693,878			76.3			49.3
Refining and Petrochemicals		28,644,016			24,823,714			23,245,676			15.4			6.8			37,011,373			28,644,016			24,823,714			29.2			15.4
Third parties		27,343,359			24,194,024			22,456,866			13.0			7.7			34,947,948			27,343,359			24,194,024			27.8			13.0
Local refined products		21,187,091			17,771,166			18,806,063			19.2			(5.5	)		26,354,549			21,187,091			17,771,166			24.4			19.2
Foreign refined products		6,005,556			6,330,648			3,535,666			(5.1	)		79.1			8,485,932			6,005,556			6,330,648			41.3			(5.1	)
Foreign crude oil		52,397			-			-			-			-			-			52,397			-			(100.0	)		-
Other income		98,315			92,210			115,137			6.6			(19.9	)		107,467			98,315			92,210			9.3			6.6
Inter-segment net operating revenues		1,300,657			629,690			788,810			106.6			(20.2	)		2,063,425			1,300,657			629,690			58.6			106.6
Transportation and Logistics		10,598,064			10,648,776			10,844,550			(0.5	)		(1.8	)		11,354,167			10,598,064			10,648,776			7.1			(0.5	)
Third parties		3,606,549			3,764,205			4,221,192			(4.2	)		(10.8	)		3,543,024			3,606,549			3,764,205			(1.8	)		(4.2	)
Inter-segment net operating revenues		6,991,515			6,884,571			6,623,358			1.6			3.9			7,811,143			6,991,515			6,884,571			11.7			1.6
Eliminations of consolidations		(19,782,786	)		(15,208,139	)		(13,475,566	)		30.1			12.9			(30,134,432	)		(19,782,786	)		(15,208,139	)		52.3			30.1
Total revenues		55,954,228			48,485,561			52,347,271			15.4			(7.4	)		68,603,872			55,954,228			48,485,561			22.6			15.4

COP$ in millions	Payments due by period										Payments due by period
Contractual obligations	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years		Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years
Employee Benefit Plan		28,005,753		1,254,613		2,489,826		2,598,517		21,662,797		30,269,275		1,281,826		2,657,497		2,755,849		23,574,103
Contract Service Obligations		5,306,166		2,374,015		1,586,881		427,820		917,450		3,951,217		1,453,298		1,609,737		412,396		475,786
Operating Lease Obligations		252,178		198,456		53,722		0		0		407,664		96,976		116,620		86,154		107,914
Natural Gas Supply Agreements		2,413,949		255,394		558,876		359,997		1,239,681		363,735		109,927		99,440		0		154,368
Purchase Obligations		2,949,525		607,012		2,302,193		-		40,320		1,653,507		80,698		1,525,351		8,092		39,366
Energy Supply Agreements		694,965		146,648		185,221		57,502		305,594		848,790		153,205		172,200		70,347		453,038
Capital Expenditures		885,000		679,966		198,099		6,935		-		556,157		397,522		130,214		28,421		0
Build, Operate, Maintain and Transfer Contracts (BOMT)		687,721		80,105		119,422		124,594		363,601		665,759		64,748		123,481		129,283		348,247
Capital (Finance) Lease Obligations		581,810		25,762		84,375		92,768		378,905		454,631		55,087		80,812		63,353		255,379
Financial Sector Debt		10,553,695		1,357,133		2,808,557		2,479,877		3,908,127		10,071,534		1,576,597		2,906,067		2,886,955		2,701,915
Bonds		27,433,741		1,105,598		4,747,385		1,367,000		20,213,757		25,986,306		64,995		3,542,961		5,388,600		16,989,750
Total		79,764,503		8,084,702		15,134,557		7,515,010		49,030,232		72,228,575		5,334,879		12,964,380		11,829,450		45,099,866

	Oil and NGL (million barrels)			Natural Gas (bcf)			Total Oil and Gas (Mmboe)			Oil and NGL (million barrels)			Natural Gas (bcf)			Total Oil and Gas (Mmboe)
Reserves as of December 31, 2017		1,088			3,253			1,659
Reserves as of December 31, 2018											1,200			3,002			1,727
Sensitivity Scenario		1,143			3,267			1,716			1,155			2,958			1,674
Difference (million barrels)		55			14			57			(45	)		(44	)		(53	)
Difference (%)		5.1	%		0.4	%		3.4	%		(4	)%		(1	)%		(3	)%

	Income Statement 2017			Income Statement Case ICE Brent⁽¹⁾+ US$1			Difference Between Real 2017 and Case ICE Brent			Income Statement Case TRM⁽²⁾- 1%			Difference Between Real 2017 and Case TRM			Income Statement 2018			Income Statement Case ICE Brent⁽¹⁾+ US$1			Difference Between Real 2018 and Case ICE Brent			Income Statement Case TRM⁽²⁾- 1%			Difference Between Real 2018 and Case TRM
	(COP$ in billions)															(COP$ in billions)
Revenue		55,954.23			56,929.63			975.40			56,519.30			565.07			68,603.87			69,602.13			998.26			69,324.68			720.81
Cost of sales		(36,908.33	)		(37,279.43	)		(371.11	)		(37,175.09	)		(266.76	)		41,184.38			41,560.55			376.17			41,514.49			330.11
Gross Income		19,045.90			19,650.20			604.29			19,344.21			298.31			24,419.49			28,041.58			622.09			27,810.19			390.70
Operating expenses		(4,185.19	)		(4,185.19	)		-			(4,185.19	)		-			4,592.45			4,592.45			-			4,592.45			-
Impairment of non-current assets		1,311.14			1,311.14			-			1,311.14			-			368.63			368.63			-			368.63			-
Operating income		16,171.86			16,776.15			604.29			16,470.16			298.31			22,458.41			23,080.50			622.09			22,849.11			390.70
Finance results, net		(2,495.73	)		(2,495.73	)		-			(2,495.73	)		-			(2,010.38	)		(2,010.38	)		-			(2,010.38	)		-
Share of profit of associates and joint ventures		93.54			93.54			-			93.54			-			165.84			165.84			-			165.84			-
Income before income tax		13,769.66			14,373.96			604.29			14,067.97			298.31			20,613.87			21,235.96			622.09			21,004.57			390.70
Income Tax		(5,800.27	)		(6,054.82	)		(254.55	)		(5,925.92	)		(125.65	)		(8,258.49	)		(8,507.71	)		(249.23	)		(8,415.01	)		(156.52	)
Net Income		7,969.39			8,319.14			349.74			8,142.05			172.66			12,355.38			12,728.25			372.86			12,589.56			234.18

VARIATION ON ICE BRENT REFERENCE PRICE		VARIATION ON AVERAGE EXCHANGE RATE REVENUE
	~~REVENUE~~

Sales of crude oil		Sales of crude oil
Sales of refined products		Sales of refined products
Sales of natural gas		Sales of natural gas
		COST OF SALES
Local purchases from business partners		Local purchases from business partners
Local purchases of hydrocarbons from the ANH		Local purchases of hydrocarbons from the ANH
Local purchases of natural gas		Local purchases of natural gas
Imports of products		Imports of products

	Shares Traded on the BVC
	Colombian Pesos per share				U.S. dollars per share⁽¹⁾				Average number of shares traded
	High		Low		High		Low		Per day
2013		5,710		3,695		3.2091		1.8992		7,018,859
2014		4,030		1,815		2.0556		0.7546		8,222,596
2015		2,305		1,090		0.8402		0.3973		10,109,301
2016		1,465		881		0.4802		0.2888		13,077,105
2017		1,480		1,290		0.7492		0.4373		11,420,810
Most recent quarters
First quarter 2016		1,425		881		0.4386		0.2712		17,971,092
Second quarter 2016		1,465		1,220		0.4892		0.4074		14,267,136
Third quarter 2016		1,410		1,170		0.4786		0.3971		10,403,945
Fourth quarter 2016		1,385		1,240		0.4593		0.4112		9,760,236
First quarter 2017		1,415		1,290		0.4842		0.4414		10,004,466
Second quarter 2017		1,480		1,325		0.5067		0.4537		14,076,659
Third quarter 2017		1,405		1,350		0.4727		0.4542		8,247,688
Fourth quarter 2017		2,210		1,395		0.7406		0.4675		13,447,615
First quarter 2018		2,800		2,210		0.9800		0.7735		19,795,943
Most recent six months
November 2017		1,820		1,700		0.6045		0.5646		14,409,722
December 2017		2,210		1,775		0.7391		0.5936		9,771,858
January 2018		2,800		2,210		0.9777		0.7717		21,066,624
February 2018		2,770		2,335		0.9680		0.8160		21,606,463
March 2018		2,775		2,450		0.9749		0.8607		17,676,641
April 2018 (through April 16, 2018)		2,980		2,615		1.0801		0.9478		14,416,613

	ADSs Traded on NYSE
	U.S. dollars per ADS⁽¹⁾				Average number of ADSs Traded
	High		Low		per day
2013		63.80		37.93		464,193
2014		41.16		14.77		603,083
2015		19.80		6.50		960,193
2016		10.04		5.40		1,160,901
2017		14.63		8.60		1,008,056
Most recent quarters
First quarter 2016		9.22		5.40		1,559,605
Second quarter 2016		10.04		7.89		1,257,883
Third quarter 2016		9.80		7.83		914,424
Fourth quarter 2016		9.37		7.85		926,722
First quarter 2017		9.67		8.60		986,373
Second quarter 2017		10.24		8.70		1,182,807
Third quarter 2017		9.59		8.78		756,630
Fourth quarter 2017		14.63		9.44		1,139,727
First quarter 2018		20.05		14.63		1,695,397
Most recent six months
November 2017		12.04		11.22		1,458,409
December 2017		14.63		11.74		893,424
January 2018		20.05		14.63		1,943,724
February 2018		19.78		16.26		1,800,215
March 2018		19.82		17.11		1,352,395
April 2018 (through April 16, 2018)		21.98		19.30		1,599,547

	Exchange Rates
	High		Low		Average		Period-End
2013		1,952.11		1,758.45		1,868.90		1,926.83
2014		2,446.35		1,846.12		2,000.68		2,392.46
2015		3,356.00		2,360.58		2,746.47		3,149.47
2016		3,434.89		2,833.78		3,053.42		3,000.71
2017		3,092.81		2,839.02		2,951.15		2,984.00
Most recent six months
November 2017		3,056.70		2,977.18		3,010.87		3,043.11
December 2017		3,028.82		2,957.75		2,990.14		2,938.87
January 2018		2,986.84		2,790.50		2,863.74		2,986.84
February 2018		2,941.77		2,790.77		2,861.60		2,863.78
March 2018		2,879.77		2,781.93		2,846.38		2,795.02
April 2018 (through April 16, 2018)		2,795.02		2,704.78		2,759.10		2,725.20

	At March 31, 2018				At March 31, 2019
Shareholders	Number of shares		% Ownership		Number of shares		% Ownership
Nation⁽¹⁾ – Ministry of Finance and Public Credit		36,384,788,417		88.49		36,384,788,417		88.49
Public float		4,731,906,273		11.51		4,731,906,273		11.51
Total		41,116,694,690		100.00		41,116,694,690		100.00