Ecopetrol Secures $665 Million USD Contingent Line of Credit from Scotiabank, Mizuho Bank

State-controlled Colombian oil company Ecopetrol S.A. (NYSE: EC) (BVC: ECOPETROL) announced today that has secured a contingent line of credit for $665 million USD with Scotiabank and Mizuho Bank.

The Bogotá-based company said that it may draw upon the funds to strengthen its “liquidity position in the face of eventual growth opportunities” or mitigate an “unexpected” fall in crude prices. It may also use the credit to “reduce refinancing specific needs in the coming years.”

Some $430 million USD of the two-year “committed line of credit” facility comes from Canada-based Scotiabank, with Mizuho Bank of Tokyo accounting for the remaining $235 million USD.

“Under this type of facility, known as a committed line of credit, Scotiabank and Mizuho Bank agree to disburse funds as and when Ecopetrol requires them, under terms and conditions previously agreed between the parties,” said Ecopetrol in a statement. “This facility would increase the company’s indebtedness only when the disbursements are made.”

According to Ecopetrol, the contingent line of of credit has a two-year availability period for disbursements, subject to two conditions: “principal amortizable upon maturity after a five-year term as from the signing date of the agreement” and an “interest rate of six-month LIBOR + 125 basis points and an annual fee of 30 basis points on principal not disbursed during the availability period.”