With a net profit of 6.62 trillion Colombian pesos ($2.3 billion USD) in 2017, state-controlled oil giant Ecopetrol (BVC: ECOPETROL; NYSE: EC) recorded its best financial results in four years. The profit is also more than four times greater than the Bogotá-based company’s 2016 figure.
The increased profitability was based upon a higher crude prices and improved efficiency in recovering oil from the ground, leading to a 23.1 trillion peso EBITDA, a jump of 28.1% over 2016. Total sales hit more than 55.2 trillion pesos, up 15.7% over the 47.7 trillion pesos the prior year.
“The 2017 year’s cash position allowed us to prepay debt totaling $2.4 billion USD, which is reflected in a 17% reduction in the Ecopetrol Group’s nominal debt.” – CEO Felipe Bayon Pardo
At the same time, Ecopetrol expanded its reserves to 1.659 billion barrels of oil equivalent and extended its reserve life to 7.1 years while increasing its average production to 715,000 barrels of oil equivalent per day.
The company’s financial results, which were approved the by the company’s board and sent to Colombian regulators today, were particularly encouraging in the fourth quarter. Ecopetrol company brought in 3.4 trillion pesos in net profit in the final three months of the year compared to less than 200 billion pesos in the same period of 2016.
Ecopetrol closed the year with a cash position of around $4.8 billion USD, or 14.5 trillion pesos. “The 2017 year’s cash position allowed us to prepay debt totaling $2.4 billion USD, which is reflected in a 17% reduction in the Ecopetrol Group’s nominal debt, strengthening its capital structure,” said Felipe Bayon Pardo, chief executive officer of Ecopetrol S.A.
In praising the improved results, which include a debt-to-EDITBA ratio of 1.9x in 2017 compared to 2.9x in 2016, Bayon cited the company’s technical capabilities to hit output goals despite a year full of pipeline attacks by armed ELN guerrillas, ongoing operational discipline, and “resilience by emerging stronger from the crisis of low oil prices.”
The company will now continue to move forward with a lower-leveraged position as it looks to further grow reserves with a significantly increased exploration investment of up to $4 billion USD, said the top executive.
In looking toward further exploration, the company also highlighted its ability to find new offshore sources in 2017. In addition to the new blocks the company was awarded in the Gulf of Mexico and interests in U.S. waters, Ecopetrol drilled its first offshore well, Molusco-1.
“2017 was a year of intense exploratory activity, as we worked hard to build the foundations for the company’s future growth,” stated Bayon. “We ended the year with a total of 21 wells drilled. Through this deployment of activity we succeeded in incorporating more than 250 million barrels of oil equivalent in contingent resources, leveraging the future increase in the business group’s reserves.”
Along with hitting a production goal of up to 725,000 barrels per day next year, Ecopetrol plans to drill at least 620 development wells and 12 exploratory wells. Some 20 pilot projects will also be initiated in an attempt to further improve recovery, said Bayon.