Ecopetrol SA (ADR) (NYSE: EC) stock fell over 4.3% (As of 10:26 AM GMT-4 on 15th August, 2018; Source: Google finance)
The company in the second quarter of FY 18 has reported the 170 percent rise in the net profit rose to 3.5 trillion pesos ($1.17 billion) due to higher crude prices. The Consolidated oil and gas production in the second quarter increased to 721,000 barrels per day (bpd). On the other hand, during the first quarter, the protests had led to the temporary closure of some fields, that had lowered consolidated production to 701,000 bpd. EC is targeting output of 725,000 bpd of crude and gas equivalent by the end of 2018, up from 715,000 bpd last year. On the other hand, the pilot recovery programs are also advancing satisfactorily and currently 21 pilots are in operation, 16 of which are still in the expansion phase.
Moreover, during the first half, EC has spent $1 billion in investment, which is a 15 percent increase on the same period in 2017. The investment is concentrated on exploration and production, which were up 23 percent. The company plans to quicken investment in the second half and that the run-up to the country’s June elections slowed spending because anti-corruption laws make it difficult for public companies to open bidding for contracts during elections. Meanwhile, President Ivan Duque, who took office this month, has promised to invest in Ecopetrol’s refineries and crack down on guerrilla groups that attack pipelines. Colombia has struggled to attract investment and maintain output as bombings and protests have frequently interrupted operations.
Additionally, in the exploratory campaign, EC got a success during the second quarter by confirming the presence of dry gas and light crude at the Bufalo-1 well, in the Valle Medio del Magdalena basin. The company has also completed drilling of the Coyote-2 and Coyote-3 appraisal wells, located in the Valle Medio del Magdalena, as well as Capachos Sur-2, located in the Piedemonte. These three wells are undergoing assessment to determine their commercial feasibility. The company expect to drill at least 12 exploratory wells in 2018.
In addition, at the close of the second quarter, the company succeeded in maintaining a solid cash position of 15.8 trillion pesos, after paying out 2 trillion pesos as dividends on 2017 earnings. The risk rating agencies acknowledged the successes and have confirmed the investment-grade credit rating. Moody’s has upgraded the baseline credit assessment from ba3 to ba1.