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Ecopetrol to invest $600 million
in U.S. Permian Basin


Ecopetrol and partner Oxy to drill 90 wells in 2021

- Also anticipates 2025 start to Brazil production
Overall crude production slides 3.9% in 2020

By Chris Kraul/Platts

Petroleumworld 02 26 2021

Colombia's state-controlled Ecopetrol plans to triple its investment in the US' Permian Basin this year to $600 million, in a sign of its increasing focus on foreign projects given stagnant domestic growth.

CEO Felipe Bayon said Feb. 24 that the company's Texas joint venture with Occidental Petroleum will see production to Ecopetrol rise to as much as 14,000 b/d by the end of 2021 from an exit output of 4,500 b/d in 2020.

Its output share there could reach 20,000 b/d by 2023, he said on a conference call with analysts.

The company has already booked 160 million barrels in additional proved reserves since its 49% partnership interest was sealed in 2019.

Ecopetrol and Oxy plan to drill a total of 90 wells in the Permian this year, financed in part by the Colombian company's $600 million investment, which would be up from $193 million last year. The company's total 2021 capex budget is slated at $3.5 billion-$4 billion at a $45/b Brent benchmark, but going as high as $5 billion if crude prices continue to rise.

The company also has high hopes for its Gato do Mato offshore project in Brazil, in which it is a 30% partner with Shell. The company said it expects to book at least 100 million barrels of reserves there by 2022, with the project turning commercial by 2025. Ecopetrol expects its share of output would start at 20,000 b/d.

2020 net income down 87%

The call was to discuss Ecopetrol's full year 2020 and fourth quarter financial performance. The company reported full year net income of Colombian Pesos 1.69 trillion (about $469 million), which was down 87% from the Pesos 13.25 trillion profit in 2019. Revenue for the year was Pesos 50.03 trillion (about $13.89 billion), down 29.4% from 2019 revenue of Pesos 70.84 trillion in 2019.

The state-controlled oil company reported a decline in full year 2020 production to 696,800 b/d of oil equivalent, down 3.9% from the 724,800 boe/d produced in 2019.

Of the total, crude oil accounted for 554,600 b/d, down 6.2% from 591,400 b/d pumped in 2019. Natural gas production was equal to 142,200 boe/d, or 6.6% more than the 133,400 boe/d produced in 2019.

The company attributed the increase in gas output not to new finds but to the acquisition of Shell's interest in mutually owned gas fields in the Guajira peninsula in northern Colombia. The company has had no major oil or gas discoveries that have been commercially viable fields since the 1990s.

Exports for the year averaged 418,500 b/d of crude, up 3.3% from the average 405,400 b/d shipped abroad in 2019.

For the second straight year, Asian countries, mainly China, were the biggest destinations for Colombian crude, taking 205,700 b/d, up 9.6% from 187,700 b/d of oil shipped there in 2019.

US Gulf Coast refineries were the second leading destination, taking 172,200 b/d, up 15.6% from 149,000 b/d in 2019.

During the fourth quarter, crude exports averaged 401,600 b/d, down 3.2% from 414,900 b/d in Q4 2019. Asian refineries' share of the exports jumped to 243,200 b/d or 61%, and up 8.8% from 223,500 b/d bought by China and other Asian countries in Q4 2019. US Gulf Coast refineries' share was 127,100 b/d, down 13.9% from 147,600 b/d in Q4 2019.

The company ended 2020 on a down note, pumping an average 539,100 b/d during the fourth quarter, down 8.6% from the 589,800 b/d produced in the same quarter in 2019. Natural gas output in the most recent quarter was 155,300 boe/d, up 10.9% from 140,000 boe/d a year earlier.

Fourth-quarter net income was Pesos 675 billion (about $187 million), down 83% Q4 2019. Revenue for the quarter was Pesos 14.19 trillion (about $3.94 billion), down 23.6% from Q4 2019.


By Cris Kraul from S&P Global Platts
02 24 2021



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