Colombia's Ecopetrol Sees Q4 Earnings Fall

The Colombian state oil company Ecopetrol has reported net consolidated profits of 1.721 trillion pesos (US$889 million) in the fourth quarter of 2009, and 5.132 trillion pesos for full-year 2009. The lower profits can be attributed to lower average international oil prices for the year as a whole: West Texas Intermediate (WTI) crude averaged US$61.8/b in 2009, 38% lower than the US$99.67/b average price seen in 2008. However, oil prices have seen some recovery over the course of the year and this combined with higher output has meant that although net profits in the fourth quarter were lower year-on-year, they were higher than in the previous quarter. A 19.2% increase in operating costs resulting from acquisitions, along with unsuccessful exploration activities, may also have contributed to the fall in profits for the full year. The company drilled a total of 19 exploratory wells in 2009, of which just five were successful.

On a brighter note, Ecopetrol said that its gross oil and gas production averaged 520,600 boe/d (of which 426,040 boe/d was crude oil and 94,600 boe/d was natural gas) in 2009, up by 17% from 2008. Meanwhile, its production in the fourth quarter of 2009 was up 26.4% at 575,900 boe/d, compared to the same period of the previous year The company had set itself a goal for 2009 of average production up to 457,000 boe/d and output of 500,000 boe/d by the end of 2009 – both of which it has exceeded.

The company also said that its capital expenditure (capex) investment in 2009 totalled 13.58 trillion pesos of which 5.087 trillion pesos were allocated to acquisitions. These acquisitions include the French independent firm Maurel & Prom's Colombian subsidiary HOCOL, a stake in the Cartagena refinery, and Canadian firm Enbridge Inc.'s 24.7% stake in the Ocensa pipeline.

Outlook and Implications

The fourth-quarter and full-year 2009 results will come as a particular disappointment following the 124.5% increase in profits posted by Ecopetrol for full-year 2008 (see Colombia: 19 February 2009: Ecopetrol Sees Profits Soar). Nonetheless they are consistent with other companies in the industry that have also experienced a slump in their income due to lower oil prices.