Ecopetrol’s Growth Strategy

Via The Financial Times, an interesting article on a recent purchase by Colombia’s Ecopetrol.  As the reports notes:

“…Ecopetrol has been rummaging around the sale bins for a few years now as part of an aggressive growth strategy aimed at ramping up oil production to 1m bpd by 2015.

In 2009, Colombia’s majority state-owned oil company pulled a real gem out of the bargain bin – Hocol, a subsidiary of Etablissements Maurel Et Prom of France, for $580m, adding 15,000 bpd and 60m barrels in proven reserves, according to Celfin Capital.

Tuesday’s $1.9bn all-cash deal with partner Talisman Energy of Canada to buy BP’s Colombian assets is not the same kind of steal, adding 24,000 bpd and 60m barrels of proven reserves. But it is perfectly aligned with Ecopetrol’s growth strategy, and gives Ecopetrol greater access to some of the most promising exploration fields in the country, all of which sent the stock to a record high.

Ecopetrol has already significantly improved production of known reserves and its growth strategy depends heavily on two key factors: exploration in areas that until recently were still under the control of warring leftist Revolutionary Armed Forces guerrillas and right-wing militias; and acquisitions outside of Colombia, such as its $900m joint purchase with Korea National Oil Corporation of Offshore International Group in Peru.

It’s also worth noting that the BP purchase comes amid a wave of bullishness for Colombian investments as the Andean nation prepares to welcome a new president, Juan Manuel Santos, on August 7, after eight years under Álvaro Uribe.

While not even president Uribe would argue that the war against the Farc is won, or that the country does not still face considerable security challenges, many analysts are buoyant. That includes RBS, which recently published a note entitled “Buy anything Colombian” in which it said: “There is no parallel in recent history where a technocrat (former Finance Minister) [Mr Santos] has become President with an overwhelming 75% mandate in congress.”

This entry was posted on Thursday, August 5th, 2010 at 5:22 am and is filed under Colombia, Ecopetrol.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.