Oil and gas

The Company

Ecopetrol is the largest company in Colombia. It plays a key role in the economy, in which oil is the main export product. With more than 60 years of operational experience, Ecopetrol is one of the 50 largest oil and gas companies in the world. It is ranked by Petroleum Intelligence Weekly as the 43rd largest oil company. Its controlling shareholder is the Colombian government with an 88.5% stake.

The company participates in all areas of the hydrocarbons chain. It has operations in Colombia, Brazil, Peru and the Gulf of Mexico, and is involved in the process of exploration, production, transportation and refining of oil and gas.

Ecopetrol’s 2013 net reserves reached 1.97bn barrels of oil equivalent per day (boepd), with a reserve-replacement ratio of 139% and reserve lifespan of eight years. Its oil and gas production accounted for 57% of the total oil and gas volume produced in Colombia in 2013, or 788,200 boepd.

Along with its subsidiaries, the company reported revenues of COP62.5trn ($31.25bn) in 2013, 5% higher than in 2012, while its net income dropped 11.3% to COP13.3trn ($6.65bn), and EBITDA profitability remained stable at COP28.5trn ($14.25bn), the same level that it registered in 2012.

Most noticeably, the company saw a 70.3% growth rate in sales during the period between 2010 and 2013, despite an adverse global economic backdrop and high volatility in international markets.

In terms of exploration, Ecopetrol and Hocol, one of its subsidiaries since 2009, participated in 16 of the 115 exploratory wells drilled in Colombia during 2013. The other 99 wells were drilled by foreign companies. Most of the wells drilled by Ecopetrol (69%) are located in the Llanos Orientales Basin, the region that is expected to be the main source of hydrocarbons in the country for the next five years.

Ecopetrol’s stock accounts for about 17.7% of the Colcap Index as of May 2014, and it has the largest weight in local indices. As with most stock markets in emerging economies, the Colombian market fell in 2013. Correspondingly, Ecopetrol’s share price decreased by 37% during the same year, while its ADR price also declined by 38%. In 2013 it issued $2.5bn of debt in the external market.

Development Strategy

Ecopetrol continues to work on increasing its proven reserves via investments in exploration and production of oil and gas. In 2013 it made eight discoveries with an exploratory success rate of 44%. It also continued to expand the capacity of two of its refinery plants in Colombia and to develop its technological update programme.

Moreover, the company has focused on diversifying its global customer base. In 2013 it increased its participation in the Asian and European markets. Notably, the East Asian share of sales increased from 20% to 38% in that same year.

The company’s long-term business plan includes investing more than $68bn between 2014 and 2020. Of this, 81% will be invested in exploration and production operations, 10% in downstream and modernising programmes, and 9% in strengthening the national transportation network. The company’s plan for 2014 is to invest $10.6bn, of which $6.5bn ( nearly 61%) will be invested directly in Ecopetrol SA, and $4.1bn in subsidiary projects.

In May 2014 the company sold $2bn worth of 31-year bonds in the international capital markets (five times oversubscribed). The cash raised will help to cover its dollar funding needs for 2014, mainly associated with its investment plan.

According to Ecopetrol, its goal for 2014 is to drill approximately 20 wells in Colombia to produce 819,000 boepd, and to increase oil transport capacity by 40m boepd and the transport capacity of other products by 70m boepd.

In mid-July 2014 Ecopetrol announced a crude discovery in the US Gulf of Mexico. The Rydberg Well is located 120 km offshore in the Mississippi Canyon Block 525 and is expected to yield 100m boepd.