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Ecopetrol SA , Colombia's state-run oil company, said production will increase 27 percent next year, when the company may sell shares to fund investment.

Output will rise to 871,000 barrels of oil and natural gas a day at the end of 2011 from 685,000 barrels at the end of this year, Ecopetrol said on its website . The company may sell a 9.9 percent stake in 2011 to help fund spending, Chief Executive Officer Javier Gutierrez said today on a conference call.

Ecopetrol plans to invest $80 billion through 2020 to more than double production to 1.3 million barrels of oil per day. The company is scouting for crude in Brazil, the U.S. Gulf of Mexico, Peru and Colombia, where this year it won rights in a government auction to explore new blocks.

“They need to find new reserves to keep output rising after 2015,” said Estefania Leon, an analyst at Bogota-based brokerage Correval SA, in a telephone interview July 26. She doesn't own shares of Ecopetrol.

Ecopetrol, based in Bogota, is boosting production in Colombia, South America's third-largest crude producer after Venezuela and Brazil. Overall production in Colombia will rise to a record 1 million barrels a day by next year, according to the nation's Mines and Energy Ministry.

Ecopetrol's second-quarter profit more than doubled to 1.8 trillion pesos ($976 million) from 692 billion pesos in the year-earlier period as output increased and oil prices rose, the company said yesterday. Oil and gas production climbed 15 percent from the prior-year period to 594,000 barrels a day.

International Investors

Colombia's President-elect Juan Manuel Santos, who takes office Aug. 7, has pledged to maintain security policies that have drawn international investment to the nation's oil fields and coal and gold mines from companies including Brazil's OGX Petroleo & Gas Participacoes SA and AngloGold Ashanti Ltd.

Ecopetrol's investment plans include new oil wells and spending on pipelines, refineries and ports that will be funded in part by borrowing $23 billion through 2020, Ecopetrol said yesterday. Even so, Ecopetrol said it may be able to fund its 2010 investments without tapping debt markets if oil prices remain at current levels.

U.S. oil futures in New York have gained 24 percent in the past 12 months. Crude oil for September delivery gained $1.37 to settle at $78.36 a barrel on the New York Mercantile Exchange.

Ecopetrol slid 40 pesos , or 1.3 percent, to close at 3,095 pesos in Bogota as of 3 p.m. The stock has climbed 25 percent this year, outpacing a 14 percent gain by Colombia's benchmark Colcap index.

Story by Heather Walsh from Bloomberg
Bloomberg 07/29/2010

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Ecopetrol output to surge 27% by 2011