October 30, 2012 3:24 am

Ecopetrol profit falls for a second quarter

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State-run Colombian energy company Ecopetrol reported a 22.3 per cent fall in net profit in the third quarter, its second straight quarterly profit decline.

The company, the country’s largest energy producer by volume and market capitalisation, said late on Monday that net profit in the three months to September slumped to 3.2bn pesos ($1.7bn) compared with 4.2bn pesos in the same quarter of 2011. It blamed legal provisions and the impact of an adjustment in the cost of depreciation and investments in its Chichimene field.

Despite the drop in profit, Ecopetrol remains one of the best-performing energy groups in Latin America, along with Brazil’s Petrobras, Venezuela’s Pdvsa, and Mexico’s Pemex. The company’s market value has risen more than fourfold since its initial public offering in Colombia in 2007, and earlier this year briefly surpassed that of Petrobras. The Colombian government still holds an 88.5 per cent stake in the company.

Net profit for the first nine months of the year was 11.3bn pesos, up 2.3 per cent from the same period a year earlier, the company said. “We are still very strong; shareholders should be happy,” Javier Gutiérrez, chief executive, told the Financial Times.

Production in the first nine months rose 4.7 per cent to 750,100 barrels of oil equivalent per day from 716,400 boe/d a year earlier. Driven by an ambitious $80bn investment programme, Ecopetrol plans to boost that to 1.3 boe/d in the next eight years, said Mr Gutiérrez.

Since 2008, Ecopetrol has increased production at a rate of 16 per cent a year, mostly by tapping fields discovered decades ago but which were inaccessible at the height of a long-running armed conflict between Marxist guerrillas, rightwing warlords, drug kingpins and Colombia’s military.

After an uptick in the first eight months of the year, mostly directed at oil infrastructure, violence has cooled since the government announced the start of peace talks with the Farc rebels last month. Negotiations officially started in Oslo on Oct 18.

Ecopetrol currently contributes more than 70 per cent of the Andean country’s oil production. With proven reserves of 2.3bn barrels, Colombia is South America’s fourth-largest oil producer and aims to increase production from the current 956,312 boe/d to 1m boe/d by the end of the year.

As part of a push to attract more investment and open up the oil sector, Colombia earlier this month auctioned off 115 blocks, more than two dozen of which included unconventional shale resources. Ecopetrol was among the winners.

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