REPORT JANUARY - JUNE 2015
PROMIGAS
ECONOMIC ENVIRONMENT
Growth rates are continually decreasing in emerging economies, including Latin-American
countries, which, being dependent on exports of raw materials such as crude oil, gold,
copper and steel, have been affected by their falling prices.
Colombia’s economic growth has been decreasing mainly due to the unfavorable behavior
of international commodity prices, oil prices in particular, and the weak recovery of its
main trading partners. During the first quarter of this year, national economy grew by
2.8%. Domestic demand declined, but remains over 4% due to dynamic investment
activities. Nevertheless, net exports detracted from growth given the strong rise in
imports.
The Price Consumer Index (PCI) recorded a variation of 3.3% during the first six months of
2015 and a variation of 4.4% during the last 12 months, which is above the target range of
the Colombian Central Bank (2-4%).
The average price of the currency stood at 2,485 pesos per dollar, 526 pesos higher than
the first half of 2014, representing a variation of 27%.
INDUSTRY AND REGULATORY ASPECTS

Indicative Plan of Natural Gas Supply: The Mining and Energy Planning Unit (UPME)
published the Indicative Plan of Natural Gas Supply (PIAGN), which presents a prospect
for the next decade with different scenarios for the supply and demand of natural gas
and the infrastructure requirements to meet the demand and ensure the reliability of
supply.

Colombian National Energy Plan: Energy Prospects 2050: A document prepared by
the UPME which presents some ideas about the future development of the Colombian
energy industry that may serve as basis for designing and implementing a long-term
energy policy.

Trading of Natural Gas: Resolutions for implementing the trading scheme of the
supply and transportation of natural gas are continually issued. The definition of the
payment of compensations for variations in the delivery of gas is still pending and is
expected to be resolved during the second half of the year.
Transportation

Review of Rates for Serious Miscalculations: The Energy and Gas Regulatory
Commission (CREG) approved the adjustment to the transportation rates of several
pipelines of Promigas and its affiliate Transmetano, as it acknowledged having made a
mistake when measuring investments. The adjustment to the rates became effective
in May 2015.

Investments in Transmetano: The CREG approved the investments in the Malena
compressor station. Such investments will increase the transportation capacity as well
as the safety and continuity of the service in the Department of Antioquia.

Promioriente Compressor Station: The charges for the installation of a new
compressor station that will enable the injection of gas directly to the National
Transportation System (SNT) have been approved, thus ensuring a more reliable
operation and a proper remuneration of future investments.
Distribution

Methodology for Calculating WACC: The CREG issued Resolution 095/2015, whereby
the methodology for calculating the discount rate that will be applied to natural gas,
LPG and electric power activities is established. It also issued Resolution 096/2015 to
fix the values of the discount rate, based on the foregoing methodology, for the
activities of natural gas distribution for the 2015-2019 period, as follows:
Year
2015
2016
2017
2018
2019
Average

TD Real AI %
13.28
13.51
13.97
14.23
12.47
13.49 %
Rate Process of Natural Gas Distribution: With the publishing of the WACC began the
rate process for natural gas distributing companies, overdue since 2009. The rate
records according to the methodology stated in CREG Resolution 202/2013, will be
presented between August and September 2015,

Indexer for Gas Supply Agreements: The CREG issued Resolution 105/2015, which sets
out that the restatement factor for long-term contracts, until July 2015, may be agreed
between the parties. If no agreement is reached, and for new contracts, a formula
involving additional factors, such as WTI crude oil price behavior and the IPP of USA,
shall be applied.

Energy Distribution Methodology: The new rate methodology for this industry was
published for comments through Resolution 179/2014. The proposal includes
incentives for the replacement of assets using a depreciated replacement model and
the recognition of new investments in quality of service and power loss, among others.
A final methodology is expected in early 2016 to begin the rate process of energy
distributing companies.

Energy Trade Methodology: Resolution 180/2014 established new bases for
calculating trading rate. The modifications recognize the portfolio risk, an operating
margin and the financial cost of delays in the transfer of subsidies by the Ministry of
Mines and Energy (MME).
RESULTS OF STRATEGIC BUSINESS GROUPS (GEN)
GEN TRANSPORTATION
Transportation of Natural Gas
By the end of the first half of the year, the length of Promigas’s pipeline system reached
2,373 km, with a maximum transportation capacity estimated at 610.3 MMSCFD. The
volume of transported gas was 340.6 MMSCFD for the period, 17.7% lower than in 2014.
The average consumption by sector decreased, mainly in the industrial sector, as a result
of low consumptions by cement companies due to the loss of competitiveness of gas
against some substitutes and the availability of carbon. Also, the Cartagena Refinery
reduced consumption as part of the preparation programs for the beginning of its
expansion project.
As for the thermoelectric industry, hydrological contributions were not as low as
expected, which, together with other technical issues relative to the maintenance of some
thermal power plants and their low dispatch levels, produced a 5% volume contraction
compared to the same period last year.
Transported Volume per
Sector (MMSCFD)
Thermoelectric
Industrial
Domestic
VCNG
TOTAL
January-June
2014
214,54
94,16
42,43
15,73
366,86
January-June
2015
204,61
78,50
42,87
14,58
340,56
Variation
(%)
(5)
(17)
1
(7)
(7,17)
Transmetano increased its contracted capacity by 4% compared to the same period last
year, for a contracted total of 87% of the capacity of the transportation system. The CREG
approved the investment in the Malena compressor station, with the abovementioned
advantages.
The CREG approved charges for Promioriente to remunerate the investment of a
compressor station that will allow injecting gas directly to the SNT, ensuring a more
reliable operation.
In Transoccidente the transported volume increased by 3% compared to the same period
in 2014.
INTEGRATED SOLUTIONS FOR THE INDUSTRY AND POWER GENERATION
Promisol entered into a 5-year BOMT agreement with Canacol for a treatment plant with
a 100-MMSCFD gas capacity from Jobo. As for the construction unit, Promisol has
executed 97% of the coating works of 21 km of the Promigas pipeline. In addition, it
entered into an agreement with Promigas under the joint venture scheme with Montecz
(50%-50%) for the construction of the 190 km long San Mateo - Mamonal pipeline, an
investment estimated at US $45 million.
The affiliates Transmetano, Promioriente, Transoccidente and Promisol have ICONTEC
certification for their quality and environmental management and occupational safety and
health systems, thus confirming their commitment to quality and safe operations.
NATURAL GAS REGASIFICATION PLANT
Sociedad Portuaria El Cayao (SPEC)
This company is in charge of the construction project of the first liquefied natural gas
(LNG) regasification plant in Colombia. In the period under review, the floating storage
and regasification unit Grace was launched, and the cornerstone laying ceremony was
performed in the plot located in Baru, which started the construction of the ground
infrastructure. Additionally, as part of this event, the Port Concession agreement was
executed with the National infrastructure Agency (ANI). The plant is expected to begin
operating in December 2016.
GEN DISTRIBUTION
Natural Gas Distribution
Colombia
Related companies are still committed to the pursuit of sustainable growth, allowing them
to remain positioned as leaders in the region’s energy industry. Despite the maturity levels
of the markets where they operate, they continue joining forces to benefit more
Colombians with the natural gas services.
This was how between January and June 2015, they connected 65,2010 new users to the
natural gas service, reaching three million served users in over 620 populations in
Colombia.
Gases del Caribe began offering in June natural gas services to 44 populations in
Magdalena. Thus, over 250,000 low-income families will benefit from the availability of
this fuel thanks to the commissioning of a new pipeline, the construction of which was
completed during the second quarter of the current year with an investment of over US
$50 million.
Non-bank Financing
Brilla continued its accelerated growth as at June 2015, with $1.3 trillion in approved
loans, a portfolio of $365,237 million and over 1.4 million benefited families through the
five distributors affiliated to this inclusive business model.
Peru
Calidda is still seeking to increase coverage of the natural gas service by connecting 44,785
new users during the first half of 2015, reaching a total of 299,790 beneficiaries with
access to the natural gas service.
The Peruvian government remains committed to the expansion of the natural gas service.
It recently allocated US $65MM to the Energy Social Inclusion Fund (FISE) to cover the
connection costs of low-income users. It also approved over US $12MM intended to boost
the VNG segment.
Furthermore, Gases del Pacifico (GdP) continues preparing the launch of the service on
the new date set with the government: August 2016. The delay in the commissioning is
due to a delay in supply, a factor external to GdP’s management.
Distribution and Trade of Electrical Energy
Compañia Energetica de Occidente has kept the level of losses under 17%, fully complying
with the contractual requirement of 22.4%. It is also continuing efforts to standardize
clients and to reduce the portfolio. The half year concludes with 327,529 users served in
the towns that are currently provided with the service in Cauca.
As for regulatory issues in the sector, the new trading methodology issued and in effect
since early 2015 recognizes the portfolio risk, an operating margin and the financial cost of
delays in the transfer of subsidies by MME. Currently, the company is awaiting approval of
the new charges. In turn, the new distribution methodology, which includes incentives for
loss reduction, investments in new technologies and improvements in quality of service
and replacement of assets, was published for comments.
FINANCIAL STATEMENTS
Pursuant to the standards and guidelines issued by the competent bodies, Promigas made
the transition to the International Financial Reporting Standards (IFRS), promptly
complying with every monitoring milestone set out (ESFA 2013, re expression 2014 and
total implementation 2015). Under these standards, the results are as follows:
Balance Sheet
(Figures in millions of pesos)
ASSETS
Current Assets
Net Fixed Asset
Assets Under Concession
Financial Assets
Other Assets
TOTAL ASSETS
Dec-14
288,199
219,551
615,740
1,367,588
1,568,123
4,059,200
Jun-15
284,672
195,653
634,302
1,428,051
1,758,499
4,301,178
%
-1.2
-10.9
3.0
4.4
12.1
6.0
LIABILITIES
Current Liabilities
Long-term
TOTAL LIABILITIES
282,672
1,612,259
1,894,932
192,327
1,878,400
2,070,726
-32.0
16.5
9.3
TOTAL EQUITY
LIABILITIES + EQUITY
2,164.268
4,059.200
2,230,452
4,301,178
3.1
6.0
Total assets increased by 65, mainly due to the increase of other assets, 12.1%, and
financial assets, 4.4%.
The increase in other assets was due to loans for $176,149.5 million to related companies
as a result of the enhancement in the use of resources received in the issue of bonds for
$400 billion in March. In addition, investments increased due to the capitalization of the
prepayment for future capitalizations made to Gases del Pacifico for US $6.3 MM and
because there were prepayments for future capitalizations from Sociedad Portuaria El
Cayao (SPEC) for $57,131 million and from Promisol for $8,085 million. This growth was
offset by lower profits by the equity method in Surtigas and Gases de Occidente, caused
by the decrease in the variation between the balances of financial assets, with respect to
the contractual nature of their concessions, in both years. Furthermore, the loans granted
to related companies decreased due to the repayment of Gases del Pacifico of US $11.5
MM.
The value of fixed assets decreased particularly due to the decision of terminating the
construction agreement of the LNG micro-plant entered into with the supplier Sener, for
which reason the reimbursement of the prepayment made in dollars for 11,645.7 million,
plus the exchange difference, was received. This account also decreased due to the
monthly depreciation of fixed assets.
Assets under concession increased by 3% compared to 2014. During the first half of 2015,
important investments were made in projects such as the Loop Sincelejo-Mamonal, the
Sincelejo Variant, changes in the pipeline’s coating and Hub Cartagena, among others.
Financial assets generated by the transportation concession reflect the semester
adjustment corresponding to the accrual of interest income over these assets.
The behavior of current liabilities, which decreased by 32%, was due to the completion of
the first stage of the agreement entered into with Gases del Caribe for the construction of
pipelines in Magdalena and Cesar, as the balance of anticipated revenues received from
the distribution, worth $10,036 million, was carried to the Income Statement. Therefore,
accounts payable for $36,334 million decreased as a result of the liquidation of the first
stage of the partnership agreement entered into with Montecz, based on which Promigas
executed a shared risk agreement to carry out the construction of the Gases del Caribe
pipelines. In addition, the income tax decreased as a result of the payment of the portion
corresponding to 2014.
Long-term liabilities increased as a result of the bond issue made in March 2015 worth
$400 billion. Such resources were used to repay bank debts for $130 billion and to fund
investment projects included in the work plans for 2015 and part of 2016.
Income Statement Summary
(Figures in millions of pesos)
Operating Revenues
Financial Assets Revenues
Construction Revenues
Costs and Expenses
Construction Costs
EBITDA
Operating Income
Other Income
Other Expenses
Net Income
Dec-14
234,329
41,301
71,835
119,942
71,835
182,059
155,688
154,253
48,463
212,976
Jun-15
248,013
60,463
26,289
107,630
26,289
232,531
200,846
151,934
73,453
240,217
%
5.8
46.4
-63.4
-10.3
-63.4
27.7
29.0
-1.5
51.6
12.8
During the period under review, there were higher transportation revenues as a result of a
higher exchange rate in 2015, which affects transportation revenues with rates in dollars.
In addition, the CREG authorized an increase in transportation rates from May 22, 2015,
due to a serious miscalculation by the CREG in the valuation of investments.
Financial assets relative to the transportation concession increased due to the monthly
adjustments to this account and also due to the regulatory procedures of calculation,
which involves variables such as the WACC and the present value of the corresponding
cash flows.
Construction revenues and costs, recorded for the same amount under current standards,
reflect a reduction given the greater investments in the Loop Sincelejo-Mamonal during
the second half of 2014.
Costs and expenses decreased by 10.3% as a result of greater costs in 2014 for the
services provided to Gases del Caribe under the network construction agreement ($20,235
MM), compared to 2015 ($4,160 MM)
EBITDA and operating income increased by 27.7% and 29%, respectively, compared to the
previous year, a behavior consistent with the reasons stated above.
Other non-operating income shows a lower value due to lower profits by the equity
method in Surtigas and Gases de Occidente. This decrease is offset by the Calidda
dividends of the first half of 2015, worth $31,375 million, and the higher financial
revenues from the loans granted to related companies for $176,149 million.
In turn, other expenses increased by 51.6% as a result of the increase in financial expenses
in 2015 generated by the bond issue made in March worth $400 billion and by the higher
CPI of the current year, which affects the obligations linked with this indicator.
According to the events explained above, net income as at June 2015 was $240,217
million, which represents an increase of 12.8%, compared to the immediately preceding
semester, and a fulfillment of 178% above our budget.
Consolidated Financial Statements
Given its relevance within the new system of accounting reports imposed by the IFRS, we
consider it necessary to present the consolidated income statement, i.e., taking into
account the involvement of Promigas as shareholder in several related companies:
Consolidated Balance Sheet
(Figures in millions of pesos)
ASSETS
Current Assets
Net Fixed Asset
Assets Under Concession
Financial Assets
Other Assets
TOTAL ASSETS
Dec-14
874,540
1,180,606
1,336,925
1,738,599
1,198,220
6,328,890
Jun-15
938,782
1,160,631
1,388,763
1,815,145
1,158,631
6,461,954
%
7.3
-1.7
3.9
4.4
-3.3
2.1
LIABILITIES
Current Liabilities
Long-term
TOTAL LIABILITIES
605,662
3,307,200
3,912,862
678,327
3,265,769
3,944,096
12.0
-1.3
0.8
TOTAL EQUITY
LIABILITIES + EQUITY
2.416.028
6,328,890
2.517.858
6,461,954
4.2
2.1
Assets increased by 2.1%, mainly due to the semester adjustment corresponding to the
financial entry record associated with assets under concession, as well as to the
investments in projects made by Promigas and Gases del Pacifico.
The largest amount of liability is generated by the issue of bonds made by Promigas, the
resources of which were used for the payment of obligations and for loans to related
companies.
Consolidated Income Statement Summary
(Figures in millions of pesos)
Operating Revenues
Financial Assets Revenues
Costs and Expenses
EBITDA
Operating Income
Other Income
Other Expenses
Net Income
Dec-14
Jun-15
%
1,169,579
1,190,871
1.8
-11.5
86,445
76,547
896,555
883,113
-1.5
384,178
443,568
15.5
359,469
384,304
6.9
96,662
82,196
-15.0
97,946
131,660
34.4
234,472
232,536
-0.8
The increased operating revenues were the result of increased billing for gas distribution,
mainly in Gases de Occidente, and a higher average exchange rate during the first half of
2015, which positively affected revenues from gas transportation.
Revenues from financial assets were lower due to the adjustment to the discount rates
between 2014 and 2015, after the update of market variables used for the calculation.
Other revenues decreased due to lower dividends, while other expenses increased due to
financial expenses incurred by Promigas, higher as a result of the bond issue.
As for the comparative results between the individual and consolidated profit and loss
statements, net income of the former increased by 12.8%, while net income in the latter
decreased by 0.8%. This behavior was caused by the difference in how the companies in
the portfolio in which Promigas has a shareholding interest between 20% and 50% present
their reports, as the individual financial statements record the dividends effectively paid,
while the consolidated financial statement records the dividends using the equity method,
i.e., considering as income the shareholding interest over net income, regardless of the
corresponding dividend allocation.
FINANCIAL INFORMATION DISCLOSURE AND CONTROL SYSTEMS
The monitoring mechanisms established by Promigas in its internal control system ensure
as reasonably practicable that no internal control deficiencies in the course of the first half
of 2015 prevented the adequate recording, processing, summarizing and reporting of the
financial information. Neither had there been any knowledge of frauds, misstatements or
manipulations in the management reports or the financial statements.
ACKNOWLEDGMENTS
We thank our shareholders for their trust and continued support. And we appreciate the
people in Promigas for their commitment and professionalism.
RULES ON INTELLECTUAL PROPERTY, COPYRIGHT AND FREE MOVEMENT OF INVOICES
Promigas guarantees the use of duly licensed software in all its processes. It also complies
with all provisions related to copyright.
Pursuant to the provisions of article 87 of Act 1676/2013, Promigas certifies that the free
movement of invoices issued by vendors or suppliers was not hindered.
Antonio Celia Martínez-Aparicio
CEO