Ecopetrol revises 2020 capital plan upwards on signs of oil market recovery
BOGOTA - Ecopetrol S.A. reports that the Board of Directors approved a new organic investment plan for the Ecopetrol Group (GE) with an estimated amount between US $3 – $3.4 billion by 2020. This level of organic investments is similar to the one executed in 2019 and higher than the investment plan announced in early May.
As a result of the solid financial results reported in 2019, in November of last year Ecopetrol announced higher levels of investment for 2020, in an amount between US $ 4.5 and US $ 5.5 billion (plan sanctioned with an average Brent price of US $ 57 per barrel). The unprecedented crisis observed during the first quarter of 2020, caused by the simultaneous shock on supply (price war) and demand (COVID-19), resulted in an initial adjustment in the level of investments to a range between US $ 2.5 and $ 3 billion (with an expectation of average Brent price between $ 30 and $ 40 per barrel). From a detailed review of the company's portfolio, the progress made in the interventions carried out, and the gradual recovery of economic activity, current prospects allow investment to be increased to a new level estimated between US $ 3 and US $ 3.4 billion by 2020.
The new plan ensures the sustainability of the business in an environment of low prices, prioritizing cash-generating opportunities and with better equilibrium prices, maintaining growth dynamics with a focus on the execution of development plans for strategic assets, and on preserving the value of assets through investments that provide reliability, integrity and continuity to the current operation in refineries, transportation systems and production fields.
The plan was built with a Brent price expectation of US $ 38 per barrel on average for 2020. Despite the current environment of low prices, this plan maintains its resilience and competitiveness with a cash balance (breakeven) price close to US $ 30.
80% of the investments will be focused on projects in Colombia and the remainder will be invested in the development of resources and reserves existing in the United States and Brazil, mainly.
In line with the strategic priorities of the GE, the plan is focused on the disciplined growth of the exploration and production segment, to which 78% of total investments will be allocated, which will allow organic production to be at levels close to 700 thousand barrels of oil equivalent per day (oil and gas) in 2020, with a focus on improved recovery technologies.
