Bloomberg News

Ecopetrol Profit Rising 64% Beats Estimates as Output Gains

February 17, 2012

Feb. 16 (Bloomberg) -- Ecopetrol SA, Colombia’s largest oil company, said fourth-quarter profit jumped 64 percent, beating analysts’ estimates, as crude production climbed.

Net income rose to 4.44 trillion pesos ($2.47 billion) from 2.70 trillion pesos a year earlier, the Bogota-based company said yesterday in a statement. Profit exceeded the 4.36-trillion pesos average estimate of five analysts surveyed by Bloomberg.

Production rose to 741,700 barrels of oil and natural gas a day in the quarter, from 651,300 barrels a year earlier, the company said after the close of regular trading.

Ecopetrol is investing $80 billion through 2020 to increase production to 1.3 million barrels a day. The government- controlled company will stay on track for that goal as long as it discovers new oil fields, Santiago Melo, an analyst at brokerage Alianza Valores SA, said by telephone from Bogota.

“They’re on their way,” Melo, who doesn’t own Ecopetrol stock, said after the report was published. “There are still challenges with building reserves.”

Rising profit at Ecopetrol may prompt the government to postpone selling a stake in the company, Nicolas Bernal, an analyst at brokerage Ultrabursatiles SA, said Feb. 14 in a telephone interview from Bogota. The government is in “no rush” to sell its stake in Ecopetrol, Finance Minister Juan Carlos Echeverry told analysts Feb. 8. The government owns 88.5 percent.

$11 Billion Investment

Shares of Ecopetrol may rise because 2011 profit of 15.5 trillion pesos increases dividend yields, Melo said. Alianza has a “buy” rating on Ecopetrol.

Ecopetrol yesterday rose 0.5 percent to close at 4,810 pesos in Bogota. Shares have climbed 14 percent this year, compared with a 6.7 percent gain in Colombia’s benchmark Colcap stock index.

Ecopetrol plans to invest $11 billion this year on exploration, production, pipelines and refineries. The company last month agreed to buy a 30 percent stake in an exploration block in the Peruvian Amazon from a unit of Repsol YPF SA.

Ecopetrol’s second-largest refinery this month will begin tapping a $2.8 billion loan from the U.S. Export-Import Bank as it more than doubles capacity within two years, the refinery’s Chief Executive Orlando Cabrales said in a Feb. 2 interview. Reficar, as the Cartagena, Colombia-based refinery is known, will spend more than $4 billion by 2014 to expand.

Colombia is South America’s third-largest crude producer after Venezuela and Brazil. The nation’s output has risen as improved security draws investors including billionaires Carlos Slim and Eike Batista.

Colombia expects about $10 billion in international spending in crude, mining and energy projects this year, similar to last year’s foreign investments, Mines Minister Mauricio Cardenas said in interview last month.

--Editors: Dale Crofts, Jonathan Roeder

To contact the reporter on this story: Heather Walsh in Bogota at hlwalsh@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net


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