That’s where we are. Thank you.
Badr El Moutawakil: Thanks, Yeimy.
Operator: Thank you. Coming up the next we have a question from Andres Cardona from Citibank. Please go ahead.
Andres Cardona: Hi. Good morning. Thanks for the presentation. I have two questions. The first is as you have $4 billion to $5 billion per year incremental cost due to the tax reform. Can you let us know what are the key assumptions you are using there in terms of oil prices? If you kind of, split that cost between the surcharge and non-deductibility of the royalties? And the last question is if you can give us an update on how many development wells are you targeting to drill in 2022?
Jaime Caballero: Hi, Andres, I’m going to take the first one, your question is related to the tax refund. So we haven’t given an estimate around what is the tax reform impact for the company. And I can assure you that it’s not $4 billion to $5 billion. I think we need to look at the basics and the basics are we have a tax effective rate of 35% currently or about 35% depending on whether you’re looking at a group level Ecopetrol Asia separate level. And depending on your price outlook, you need to add either 5%, 10% or 15% to that. In the highest possible case which is in a scenario where we end up over the $83-or-so per barrel kind of threshold that kicks in the 15% surcharge that tax effective rate is going to go to about 50%, right?
And it’s 50% on our total net income in pesos. So that’s the way that you need to calculate it. The split of what is associated to the surcharge and and the royalties is that 90% to 95% of the effect is associated to the surcharge and the marginal amount is associated to royalties. Royalties the new treatment of royalties is not a substantial amount as compared to the effect of the surcharge on corporate tax. And I hope this addresses your question. Over to Alberto.
Alberto Consuegra: Hi, Andres what we have said is that for this year will be around 580 wells and for next year around 600 wells development wells.
Andres Cardona: Thanks, Alberto.
Operator: Thank you. Our next question comes from Andres Duarte from Corficolombiana.
Andres Duarte: Hello. Thank you. I have one question. Can you please brief me €“ sorry, brief us on the carbon shadow prices you’re using to price your projects today. And please remind us if the current tax reform includes a carbon tax component? Thank you.
Jaime Caballero: Hi, Andres. How are you? So with regards to carbon taxes the approach in the company has been around employing what we call carbon shadow price. Basically what that is, is it’s a theoretical level of a carbon impact that is included in the valuation of forward economics in projects that we are reviewing. Basically the way that it has been implemented is that we — if you will we punish the projects that we’re evaluating with an incremental cost associated to the ton of carbon that the unitary ton of carbon that a project produces. Basically the way that we have been modeling that out is that we use a $20 per ton for the next five years then it goes up to $30 per ton and eventually it goes up to $40 per ton. It is a theoretical economic impact.
