Ecopetrol Activates Contingency Plans In Cedeño District

(Energy Analytics Institute, Piero Stewart, 11.Nov.2018) — Ecopetrol announced it has activated contingency plans after a new attack on the Caño Limón-Coveñas pipeline located in the Cedeño district, in the municipality of Toledo, Norte de Santander.

Image of affected area. Source: Ecopetrol

“At Ecopetrol, we reiterate our rejection to any type of activity that endangers the lives of people in any of the surrounding communities and threatens the environment and natural resources,” the state oil company announced in a twitter post on Nov. 11.

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New Attack On Colombia’s Caño Limón-Coveñas Pipeline

Colombia’s Cano Limon Pipeline Hit By New Bomb Attack

(Reuters, 10.Nov.2018) — Colombia’s state-run oil company Ecopetrol said on Saturday it was mounting another cleanup operation after a bomb attack on the Cano Limon pipeline.

The attack is the 78th this year on the 485-mile (780-km) pipeline, which has been out of service for much of 2018 because of bombings and illegal taps.

The pipeline, which can transport up to 210,000 barrels per day, was not functioning at the time of the attack. It was also bombed on Thursday.

The latest bombing took place in Toledo municipality in Norte de Santander province, Ecopetrol said on Twitter.

The company did not say who it held responsible, but military sources have blamed previous attacks on the pipeline on fighters from the National Liberation Army (ELN) rebel group.

The ELN, considered a terrorist group by the United States and the European Union, has about 1,500 combatants and opposes multinational companies that its leaders accuse of seizing natural resources without benefiting Colombians.

Colombian President Ivan Duque has demanded the group free all its hostages and cease criminal activities before he will consider restarting peace talks that began last year under his predecessor, Juan Manuel Santos.

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New Attack On Colombia’s Caño Limón-Coveñas Pipeline

(Energy Analytics Institute, Aaron Simonsky, 8.Nov.2018) — Colombia’s state oil company Ecopetrol revealed video coverage of the most recent attack on the company’s Caño Limón-Coveñas oil pipeline located in Boyacá.

No further details are available yet, but the company has initiated a contingency plan, announced Ecopetrol official Mauricio Tellez in a twitter posts. To-date in 2018, there have been 77 attacks on the pipeline, Tellez said in his twitter post.

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Frontera Energy Announces 3Q:18 Ops, Financial Results

(Frontera Energy, 7.Nov.2018) — Frontera Energy Corporation released its Interim Condensed Consolidated Financial Statements for the third quarter of 2018, together with its Management, Discussion and Analysis (MD&A).

These documents will be posted on the Company’s website at www.fronteraenergy.ca and SEDAR at www.sedar.com. All values in this news release and the Company’s financial disclosures are in United States dollars unless otherwise stated.

THIRD QUARTER 2018 OPERATIONAL AND FINANCIAL HIGHLIGHTS

— Cash provided by operating activities of $189.4 million in the third quarter generated $65.4 million of cash in excess of capital expenditures of $124.0 million and contributed to a total cash position of $786.5 million at quarter end. Cash and cash equivalents, unrestricted, increased 6% quarter-over-quarter to $586.6 million. Long term debt and obligations under finance lease were $352.3 million at quarter end.

— The Company has a significant cash position as well the opportunity to generate additional excess cash going forward. In addition to the existing normal course issuer bid (the “NCIB”) implemented by the Company during the third quarter, the Company will evaluate additional strategic initiatives designed to enhance shareholder returns.

— Oil and gas sales and other revenue in the quarter of $382.2 million were up 38% from the prior year period and down 9% from the prior quarter. Net sales of $300.0 million increased 12% compared to the prior year period and were 8% lower than the second quarter of 2018.

— Net income of $45.1 million ($0.45/share) compared with a net loss of $141.1 million ($1.41/share) in the prior year period, and a net loss of $184.4 million ($1.84/share) in the prior quarter. Operating EBITDA of $93.5 million was down 12% from prior year period and 25% from the prior quarter. Operating Netback of $23.81/boe was 12% lower than the second quarter of 2018 and 2% higher than the third quarter of 2017.

— Net production averaged 58,558 boe/d during the third quarter, down 18% and 9% from prior year period and prior quarter, respectively, reflecting a three-month suspension of production from Block 192 in Peru due to a force majeure event on the NorPeruano pipeline. This impacted quarterly production by approximately 5,700 bbl/d.

— Current net production is over 65,000 boe/d and is expected to grow throughout the fourth quarter. Production from Block 192, which restarted in early September, has consistently produced over 9,500 bbl/d since coming back on stream, reflecting the benefits of a work-over and well service program undertaken during the downtime. Production in Colombia is expected to increase in the fourth quarter, with the startup of the first phase of the water handling expansion project at Quifa SW on October 30, 2018, and the full 450,000 bbl/d increase in water handling capacity expected to be on stream by year end adding between 2,000 and 3,000 bbl/d of oil net to Frontera.

— The Company’s 2018 oil hedges, which capped the benefit of higher Brent oil prices through October 2018 (realized price after risk management contracts of $58.00/boe versus an average Brent oil benchmark price of $75.84/bbl during the third quarter), have now expired. The expiry of these hedge contracts is expected to have a positive impact on operating EBITDA and cash flow in the fourth quarter.

— General and administrative expenses of $23.0 million in the third quarter were 12% lower than the second quarter of 2018 and 14% lower than the third quarter of 2017 as the Company implements efficiency change projects throughout the organization.

— Substantial progress was achieved in managing long-term transportation costs during the quarter, with the termination of agreements representing a reduction in future commitments.

— The Company has maintained 2018 Operating EBITDA and transportation cost guidance while updating daily net production, capital expenditure, general and administrative expense and production cost guidance to reflect year to date results and expected results for the balance of the year.

Richard Herbert, Chief Executive Officer of Frontera, commented:

“Frontera performed well in the third quarter, generating significant cash flow and further strengthening our balance sheet, in spite of production interruptions. We also made good progress toward our 2018 and long-term goals for growth, efficiency and value creation. Going into the fourth quarter, I am encouraged by the resumption of production at Block 192 in Peru at higher levels, as a result of the service work we were able to accomplish during the pipeline suspension, and by growing production in Colombia from our drilling program as we ramp up activity and bring additional water handling capacity on-line.

We are also making progress securing Frontera’s growth with the discovery at Acorazado-1, our fourth exploration success in Colombia this year. Plans are well advanced to initiate a long-term test in the well before year-end. We have continued to accelerate our drilling activities within our existing portfolio. During the fourth quarter we expect to drill 36 wells, with 22 development wells at Quifa SW, seven water injection wells, two light and medium oil development wells on the Guatiquia block, two development wells at Zopilote Sur on the Cravo Viejo block and three exploration and appraisal wells.

We are excited by the opportunity of capturing higher oil prices after the expiration of our hedging contracts at the end of October. While a necessary risk management strategy during the Company’s restructuring in 2016, they have limited our ability to benefit from rising oil prices this year. Without a cap on our realized prices for the last two months of this year, we expect our exposure to Brent oil prices to increase by nearly $12 per barrel, based on recent prices, directly benefiting Frontera’s earnings and cash flow.

We are well positioned for 2019 with our strong cash position and balance sheet which will provide further opportunities for disciplined capital allocation into strategic growth projects and to enhance shareholder returns going forward.”

Gabriel de Alba, Chairman of the Board of Directors of the Company, said:

“The Frontera Board believes there are multiple opportunities to increase shareholder value. First, through a disciplined exploration and development investment plan together with initiatives to improve performance in order to support Frontera’s long-term free cash flow. Second, with Frontera trading at a significant discount to its asset value and relative to its peers, we are taking steps to close the valuation gap, including by enhancing trading liquidity. Last, we are actively evaluating additional strategic initiatives designed to enhance shareholder returns.”

Board of Directors Update:

The Company is announcing a number of changes to the composition of its Board of Directors. One of the Company’s Board members, Camilo Marulanda, has elected to resign from the Board as a result of increased demands since being named President of ISAGEN S.A. in Colombia. Mr. Marulanda will be replaced by Orlando Cabrales Segovia, a leader in the public and private energy sector in Colombia with over 30 years experience, including as Vice Minister of Energy of the Ministry of Mines and Energy in Colombia between 2013 and 2014 and as the President of the Agencia Nacional de Hidrocarburos (ANH) from 2011 to 2013. Mr. Cabrales held senior roles at BP in Latin America and has been on the Boards of numerous companies in Colombia including; ISAGEN S.A., Tuscany Drilling, Cenit Transporte y Logistica de Hidrocarburos S.A. (CENIT), and ISA. Mr. Cabrales earned an undergraduate degree in Law from Pontifical Javeriana University and a Masters degree in Philosophy from Boston College.

The Company is also pleased to announce the appointment of Veronique Giry to the Board of the Directors. With this appointment, the Company’s Board is back to seven members, all of whom are independent. Ms. Giry has an impressive track record in the global oil and gas industry and currently serves as Vice President and Chief Operating Officer of ISH Energy Limited in Calgary, Alberta, Canada. Ms. Giry’s 29 year career has included senior management roles at the Alberta Energy Regulator and Total Exploration & Production where she has held roles in Latin America, Canada, Asia, Europe and the UK. Ms. Giry earned a Masters in Engineering degree from Ecole Centrale de Paris, France, with a major in Mechanics and sits as a volunteer on the Board of Alliance Francaise of Calgary.

Mr. de Alba continued: “Frontera is excited to add Orlando’s and Veronique’s best-in-class regulatory and technical expertise to our Board of Directors. Their diverse operational knowledge and experience within the global upstream industry will be a significant benefit to the Company as we position for growth and cash flow generation. They will complement the skills of the other Board members. We would like to thank Camilo Marulanda for his valuable contribution to the Board over the past two years as we repositioned Frontera to be the leading publicly traded upstream oil and gas company in Latin America.”

The average Brent oil benchmark price increased by $0.87/bbl, or 1%, in the third quarter of 2018 to an average of $75.84/bbl, compared to $74.97/bbl in the second quarter of 2018. Brent oil benchmark price averaged $52.17/bbl in the third quarter of 2017. The Company’s realized oil price of $70.87/bbl in the third quarter of 2018 excludes the impact of $10.02/bbl of realized losses on risk management contracts. The Company had hedges in place for October 2018 on 1.2 million barrels of oil at an average Brent price of $59.22/bbl. The Company is unhedged in November and December 2018.

During the third quarter of 2018, net income attributable to equity holders of the Company was $45.1 million or $0.45/share, compared with a net loss of $184.4 million or $1.84/share, in the second quarter of 2018. Higher net income was mainly attributable to a reduction in fees paid on suspended pipeline capacity, a reversal of provision of high price clause, a reduction in depletion, depreciation and amortization, a reduction in general and administrative expenses, and the recognition of a deferred tax asset offset by an increase in oil and gas operating costs and impairments on assets and investments in associates.

For the third quarter of 2018, net sales of $300.0 million were 8% lower than $326.6 million in the second quarter of 2018 and 12% higher than $267.0 million the third quarter of 2017.

Cash provided by operating activities of $189.4 million for the third quarter was 75% higher than in the second quarter of 2018 as a result of strong operating netbacks combined with timing benefits within the cash management process. The Company generated $65.4 million of excess cash in the quarter as cash provided by operating activities of $189.4 million exceeded capital expenditures of $124.0 million.

Operating EBITDA of $93.5 million in the third quarter of 2018 was 25% lower in comparison with $124.7 million achieved in the second quarter of 2018, and 12% lower than $105.9 million in the third quarter of 2017, as a result of lower oil and gas sales volumes and higher oil and gas operating costs in the current period, partially driven by inflation linked to higher oil prices.

Frontera continues to focus on improving its cost structure and recently completed a project to increase organizational efficiency and reduce costs. This focus on cost helped the Company deliver lower general and administrative expenses of $23.0 million in the third quarter of 2018, a decrease of 12% from the second quarter of 2018, and a decrease of 14% from the third quarter of 2017. Going forward, the Company will look to further improve operational efficiency to drive additional cost savings.

Strong Balance Sheet:

The Company continued to build cash during the quarter, with a total cash position of $786.5 million, as of September 30, 2018, an increase of 8% and 31% from the end of the second quarter of 2018 and of the third quarter of 2017, respectively. Unrestricted cash increased to $586.6 million as at September 30, 2018, from $550.8 million as at June 30, 2018. The increase in unrestricted cash during the third quarter of 2018 was due to cash flow from operations in excess of capital expenditures, offset by an increase in restricted cash and share repurchases. In October 2018, $45 million of restricted cash became unrestricted following the satisfaction of terms relating to the sale of Petroelectrica de los Llanos.

Working capital, or current assets less current liabilities, increased 4% to $331.2 million during the third quarter of 2018, compared to $317.4 million at June 30, 2018.

The Company has hedged 1.9 million barrels of production between January 2019 and September 2019 using a Brent put price of $55/bbl, which protects the Company from lower oil prices while retaining the upside from potentially higher oil prices.

On October 4, 2018, S&P Global Ratings reaffirmed its ‘BB-’ global scale long-term issuer credit rating on the Company and its ‘BB-’ issue-level rating on the Company’s $350 million senior unsecured notes due 2023.

During the third quarter of 2018 the Toronto Stock Exchange (TSX) accepted the Company’s notice of intention to initiate a NCIB for its common shares. The notice provides that Frontera may purchase, during the twelve-month period commencing July 18, 2018 and ending July 17, 2019, up to 3,543,270 Common Shares, representing approximately 3.5% of the Company’s 100,011,664 issued and outstanding Common Shares as at July 9, 2018. Under the Company’s NCIB 315,512 shares were repurchased for cancellation at a cost of $4.5 million (C$18.68 per share) during the third quarter of 2018. Subsequent to September 30, 2018, a further 165,049 shares were repurchased at a cost of $2.2 million (C$17.49 per share).

The NCIB, in addition to the two for one stock split undertaken earlier in 2018 has helped improve the average daily trading volume in the Company’s equity by over three times compared to what it was at the beginning of 2018.

Update on Transportation Costs:

On July 13, 2018 the Company announced the successful settlement of the Ocensa transportation arbitration concerning the P-135 Project. As a result, the Company has reduced future transportation commitments in the Ocensa pipeline by over $178.3 million during the life of the contracts (June 2017 through June 2025). The Company also announced that it had terminated its contractual commitment with CENIT to transport oil through the Caño Limón-Coveñas pipeline (CLC) and its contractual commitment with Oleoducto Bicentenario de Colombia S.A.S. to transport oil through the Bicentenario pipeline (“BIC”). As a consequence of these terminations, the Company is no longer contractually committed to payments of ship-or-pay fees on these pipelines; these terminated contracts represented $1.36 billion in future transportation commitments through to October 2028.

During the third quarter of 2018, the Company realized $5.6 million of fees paid on suspended pipeline capacity, for the period between July 1 and July 12, 2018 before the contracts were terminated. These costs are excluded from the Company’s transportation costs, consistent with their historical reporting. A further third quarter charge of $15.6 million was taken for prepayments and standby letters of credit (“SBLCs”) on the BIC pipeline, representing (i) $5.3 million of SBLCs which were drawn by Bicentenario and (ii) a further $10.3 million of prepayments to Bicentenario and accounts receivables by the Company related to the Bicentenario transportation contracts. Under the Company’s unsecured letter of credit facility, a total of $64.4 million of SBLCs were issued relating to the Company’s transportation contract with Bicentenario. The remaining $59.1 million were drawn after the end of the third quarter and will be recognized as an expense in the fourth quarter of 2018. The Company has reimbursed issuing banks the full amount drawn under the Bicentenario SBLCs. The Company is of the view that the drawdown of the SBLCs was wrongful and is evaluating its remedies with respect thereto.

The Company has alternative transportation agreements in place which provide sufficient capacity for the evacuation and sale of its oil production in Colombia.

Current net production is over 65,000 boe/d and is expected to continue to increase during the fourth quarter as the Quifa SW water handling expansion project comes on stream. Net production in the third quarter of 2018 averaged 58,558 boe/d, a decrease of 9% compared with the second quarter of 2018. The decrease in quarterly net production was a result of a suspension of production from Block 192 in Peru due to the declaration of force majeure by Petroperu S.A. on the NorPeruano pipeline which transports crude oil from Block 192 to the export terminal at Bayovar. The pipeline was out of service between June 4, 2018 and August 30, 2018 when it was restarted. Since the pipeline was restarted, average net production has been approximately 9,500 bbl/d or 12% higher than before the force majeure event, reflecting benefits from work-over and other maintenance activities which were undertaken while production was suspended.

Production from Colombia decreased 4% during the third quarter of 2018 compared with the previous quarter, as a result of temporary water injection restrictions encountered on the Casimena block, and natural production declines in the Company’s natural gas assets in the country.

Sales volumes for the three months ended September 30, 2018, were lower than the comparable prior year period primarily due to lower production in Colombia and higher inventory in Peru, resulting in lower volumes available for sale. During the third quarter of 2018, the Company sold more barrels than it produced in Colombia, resulting in an overlift liability position of 809 Mbbl at the end of the quarter.

During the third quarter of 2018, total capital expenditures were $124.0 million, 43% higher than $86.8 million in the previous quarter and 155% higher in comparison with $48.6 million in the third quarter of 2017. The increase during the third quarter relates to drilling operations for the Acorazado-1 exploration well on the Llanos 25 block in Colombia, the drilling of the Delfin Sur-1 well offshore Peru on block Z-1, and the start up of construction of additional water handling facilities in the Quifa area. Increased facilities spending in the quarter also connected the Alligator discoveries in the Guatiquia block to the main crude oil and water processing facilities on the block.

A total of 39 wells were drilled in the third quarter of 2018, in line with 40 wells planned. Thirty-one heavy oil development wells and two water injection wells were drilled in the Quifa SW area in connection with the increased fluid handling capacity that is expected to come on stream in the fourth quarter. Three light oil development wells were drilled on the Guatiquia block, two at Avispa and one at Alligator. A second Alligator well, Alligator-5, encountered the edge of the field and was uneconomic. The Company also completed the drilling of two exploration wells, the Acorazado-1 well on the Llanos 25 block onshore Colombia and the Delfin Sur-1 well on block Z-1 offshore Peru, the results of which have been previously disclosed.

During the fourth quarter of 2018, the Company plans to drill 36 wells including 22 development wells in the Quifa SW area, four development wells in its light and medium oil areas, three exploration wells, five water injection wells at Orito and Neiva, and two water injection wells in the Quifa SW area. The Company will keep 10 rigs active throughout the fourth quarter.

Exploration and Development Update:

On October 30, 2018 the Company started the commissioning of the water handling expansion project at the Quifa SW block. The project is expected to add approximately 450,000 bbl/d of new water handling capacity or a 40% increase to the current capacity. The Company plans to start the project in phases throughout the fourth quarter with full capacity on stream by the end of the year. The increased water handling capacity is expected to be able to deliver between 2,000 and 3,000 bbl/d of incremental net production by year end.

During the fourth quarter of 2018, the Company plans to drill three exploration wells compared to the prior plan of five wells: the Coralillo-3 well on the Guatiquia block which follows on from the successful Coralillo-1 well drilled and completed earlier in the year; the Chaman-2D commitment well on the Sabanero block; and the Jaspe-7D well in the Jaspe field within the Quifa area, a follow up to the successful Jaspe-6D well drilled in January 2018. The Cocodrillo-1 and Jaspe-8D wells will now be drilled in the first half of 2019 as a result of permitting delays.

The Company will commence the expansion of the waterflood pressure maintenance project in the Neiva field by drilling six water injector wells in the fourth quarter. Upon completion of the drilling of the injector wells it is expected that pressure response and increased production will be encountered in the following six to twelve months. The expansion of the Neiva waterflood project will be the second pressure maintenance project to be implemented at Frontera post restructuring, following the pressure maintenance project at the Company’s Copa field in the Cubiro block.

The Company continues to drill additional development wells in various blocks identified by ongoing technical reviews of its assets. In June 2018, the ANH granted an extension of acreage to the Cravo Viejo block allowing the Company to capture additional acreage containing a mapped extension to the Zopilote field. This additional acreage has allowed the Company to commence the drilling of Zopilote Sur-1, to be followed by Zopilote Sur-2 subject to ANH approval. Additionally, the Company will drill two development wells on the Candelilla field in the Guatiquia block following the identification of separate Lower Sand-1 and Guadalupe formation opportunities which were previously thought not to be present. The Company was also recently successful in drilling a well in the Alligator field to more than 12,000 feet using only two casing strings. This new well design will now be used in certain future development wells, thereby contributing to a reduction in overall drilling costs.

The Company has received approval from its partner Ecopetrol to commence the long-term testing of the Jaspe-6D exploration well in the Quifa area that was initially drilled and tested in January 2018. The results of the test will provide the information required to evaluate the declaration of commerciality in 2019. The Company has secured approval from Ecopetrol to commence a cost cutting pilot drilling program in the Quifa field, which if successful will permit the drilling of the future horizontal development wells in a more cost-effective manner.

The Company is in advanced discussions with Ecopetrol in the Quifa SW block to implement a pilot multi-lateral horizontal development well program for 2019, with the expectation that, if successful, drilling costs will be lower with resulting increased production and recovery rates.

Annual Guidance Update:

The Company is affirming 2018 Operating EBITDA guidance of $400 to $450 million, and transportation costs per boe, while updating its annual guidance for net production, capital expenditures and production costs to reflect year-to-date results. The midpoint of average annual daily net production guidance is lowered by 5% to 64,000 boe/d (from 67,500 boe/d) with a corresponding 5% decrease to the midpoint of capital expenditures guidance to $450 million (from $475 million). Production cost guidance is increased to a midpoint value of $14.25/boe (from $13.00/boe), to reflect lower daily production volumes and inflationary pressures due to higher oil prices. General and administrative cost guidance for the year was decreased by 5% to a midpoint of $100 million (from $105 million), to reflect the benefit of recent cost savings initiatives. The guidance reflects an assumed average annual oil price of $73/bbl Brent (4% increase) and a realized oil price differential of $5 bbl (5% decrease).

Third Quarter 2018 Conference Call Details:

As previously disclosed, a conference call for investors and analysts is scheduled for Thursday, November 8, 2018 at 8:00 a.m. (MST) and 10:00 a.m. (EST,GMT-5). Participants will include Gabriel de Alba, Chairman of the Board of Directors, Richard Herbert, Chief Executive Officer, David Dyck, Chief Financial Officer and select members of the senior management team.

A presentation and webcast link will be available on the Company’s website prior to the call, which can be accessed at www.fronteraenergy.ca.

Analysts and interested investors are invited to participate using the following dial-in numbers:

Participant Number (International/Local): (647) 427-7450
Participant Number (Toll free Colombia): 01-800-518-0661
Participant Number (Toll free North America): (888) 231-8191
Conference ID: 4789788
Webcast: www.fronteraenergy.ca

A replay of the conference call will be available until 11:59 p.m. (EST, GMT-5), Thursday, November 22, 2018 and can be accessed using the following dial-in numbers:

Encore Toll Free Dial-in Number: 1-855-859-2056
Local Dial-in-Number: (416)-849-0833
Encore ID: 4789788

The following table provides a complete reconciliation of net income (loss) to operating EBITDA:

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Ecopetrol Attends Oil Spill In Tibú River

(Energy Analytics Institute, Aaron Simonsky, 5.Nov.2018) — Colombia’s state oil company Ecopetrol installed a series of barriers in a rural area of the Tibú municipality (Norte de Santander) in an effort to contain an oil spill in the Tibú River.

The spill originated over the weekend when stolen crude oil that was being stored in a pool overflowed into the river, reported the daily newspaper El Tiempo. Armed groups in the area often illegally store stolen oil in pools, which they later used to process cocaine, according to the daily.

Ecopetrol personnel conducted a fly over of the affected area and verified the spill occurred near the village of Campo Seis, and to confirm the spill didn’t correspond to an criminal act directed against its infrastructure.

The environmental emergency was reported on Saturday Nov. 3 by communities officials from the Catatumbo region, according to the daily.

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Ecopetrol Cleans Spill After Bomb Attack On Cano Limon Pipeline

 

Ecopetrol Could Invest $3-3.5 Bln In 2019, Same As This Year

(Reuters, 1.Nov.2018) — Colombian state-run oil company Ecopetrol will likely invest between $3 billion and $3.5 billion in 2019, the same figure as forecast for this year, its chief executive officer said on Thursday.

The spending is the backbone of an ambitious plan to boost production and explore for more oil to replenish dwindling reserves. The company has said it will drill 620 wells and double the number of rigs in operation this year.

Ecopetrol still plans to reach $3 billion to $3.5 billion in investments this year, though it had spent just $1.79 billion through the third quarter, executives said on an investor call after the company released third-quarter results on Wednesday.

“We need to keep doing more work internally, but the idea is that we will be in that range of $3 to $3.5 billion for this year. It’s the range with which we’ll possibly enter next year and which in some way denotes stability in operations,” CEO Felipe Bayon said.

Ecopetrol’s board is still in the process of approving that investment for 2019, a spokesman said.

The company is working to lessen the effects of social protests, which temporarily shuttered three fields in February and kept the first-quarter investment to just over $400 million, Chief Financial Officer Jaime Caballero said on the call.

“We are implementing initiatives to quickly execute projects and to mitigate the impact of the social and environmental contingencies that materialized in the first half of the year,” Caballero said.

The company had cut its investment forecast for 2018 from $3.5 billion to $4 billion in August because of the protests and other spending delays.

Net profit jumped 177 percent to more than $866 million in the third quarter, while consolidated oil and gas production climbed to 724,000 barrels per day (bpd), just under the company’s 725,000-bpd goal for the year.

Output has so far not been affected by nearly continuous attacks on the Cano Limon-Covenas pipeline from leftist guerrilla group the National Liberation Army.

The pipeline, which can transport up to 210,000 bpd, has been offline for much of this year because of bombings and illegal taps.

Production from the Cano Limon field, operated by Occidental Petroleum Corp, has been routed through a second pipeline.

Ecopetrol has reserves equivalent to about seven years of production, well below the average of nearly 12 years for the world’s top oil and gas companies.

(Reporting by Julia Symmes Cobb and Nelson Bocanegra; Editing by Helen Murphy and Jeffrey Benkoe)

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Ecopetrol Boasts 67% Exploration Success Rate To-date In 2018

(Energy Analytics Institute, Piero Stewart, 1.Nov.2018) — Colombia’s state oil company Ecopetrol is boasting a 67% exploration success rate based on six completed wells thus far in 2018.

Of the six wells, two were abandoned and 4 were successful, reported the company in its third quarter results update. Three other wells are still under evaluation.

Ecopetrol aims to drill a 12 exploratory wells in 2018.

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Ecopetrol Profit Nearly Triples On Oil Price Boost

Ecopetrol Business Group Reports 3Q:18, Year-To-Date 2018 Results

(Ecopetrol S.A., 31.Oct.2018) — Ecopetrol S.A. announced the Business Group’s financial results for the third quarter and year-to-date 2018, prepared in accordance with International Financial Reporting Standards applicable in Colombia.

The figures included in this report are not audited. Financial information is expressed in billions of Colombian pesos (COP) or US dollars (USD), or thousands of barrels of oil equivalent per day (mboed) or tons, and is so indicated where applicable. For presentation purposes, certain figures in this report were rounded to the nearest decimal place. Further information on the Business Group’s financial figures may be consulted in Ecopetrol’s Consolidated Financial Statements, published on our website.

In words of Felipe Bayón Pardo, CEO of Ecopetrol:

“For the first nine months of the year, Ecopetrol is reporting the best financial results of the past four years. Net income attributable to owners of Ecopetrol rose to 8.9 trillion pesos, EBITDA totaled 23.8 trillion pesos and EBITDA margin was at 48%. These solid financial results were achieved due to the good operating performance of all segments, which brought about an increase in crude oil and gas production, lower crude oil imports for the Downstream segment as well as of refined products to supply the local market. In summary, we were able to capture the profit coming from the higher international oil prices.

The flexibility of the Group’s commercial strategy allowed us to take advantage from the higher demand for crude oil from refiners in Asia to create more value. In the third quarter of 2018, sales to Asia accounted for a 45% share of total crude exports, versus 25% during the same quarter in 2017. Thanks to this initiative, the discount price of the crude basket versus Brent remained at approximately 11%.

In the third quarter of 2018, Ecopetrol Group’s average production totaled 724,000 barrels of oil equivalent per day, the highest in the last 10 quarters. Year-to-date average production was 716,000 barrels of oil equivalent per day. The increased production for the quarter is in line with the target set for 2018 and it was possible due to the positive results from our drilling campaign and the greater demand for natural gas in the thermal power and industrial sectors. At the end of the quarter, we had drilled 421 development wells and had 41 rigs in operation.

This increase in activity is reflected in larger investments during the quarter, totaling 789 million dollars and representing 80% of what was invested in the first half of the year and more than 50% over the investment in the third quarter of 2017.

In the exploration segment Ecopetrol entered into one of the highest-potential oil basins in the world. The Pau-Brasil block, located in the central region of the Santos basin, in the Brazilian pre-salt, was awarded to the joint venture between BP Energy (50% – Operator), Ecopetrol (20%) and CNOOC Petroleum (30%). This milestone is consistent with our long-term growth strategy and demonstrates Ecopetrol’s ability to develop strategic alliances with leading companies in world-class industry opportunities.

During the third quarter, we drilled five exploratory wells, for a total of nine during the course of the year, and had an exploratory success rate of 44%. These results are in line with the goal of drilling 12 wells in 2018, and materialize our strategy of building a solid base of assets for the company’s future sustainability.

In the Midstream segment, we saw increased volumes of crude oil and refined products transported, primarily due to the optimization of certain systems, such as Galán – Bucaramanga and Coveñas – Cartagena and the beginning of operation of San Fernando-Apiay-Monterrey system along with the expansion of Ocensa P135. Moreover, it is important to highlight the transportation tests carried out at a higher viscosity of 700 centistokes (cSt — a measure of viscosity) with positive operating results, which are now under economic evaluation.

During the third quarter, the oil pipeline network continued to suffer from third-party disruptions, especially on the Caño Limón- Coveñas system; nevertheless, the Bicentenario oil pipeline was able to mitigate those impacts, resulting in five reversion cycles during the quarter. Year to date, 35 reversion cycles have been carried out on the Bicentenario oil pipeline. This flexible operation has prevented deferred production from Caño Limón field.

In the Downstream segment, the two refineries jointly achieved a new historic maximum of 380,000 barrels of stable throughput per day. The third quarter was the best of the year in terms of throughput and gross refining margin for each of our refineries.

In line with the optimization process, the Cartagena refinery continued to generate value by achieving an average throughput of 158,000 barrels per day for the quarter, with a throughput composition of 80% domestic and 20% imported crude. This result contributed significantly to the reduction of the Group’s cost of sales. In August, a record was attained at the refinery by using 100% local crudes during nine days, getting an average throughput of 164,000 barrels per day. Gross refining margin for the quarter was 12.1 dollars per barrel which represents a 17.5% increase vis-à-vis the third quarter of 2017.

Additionally, the Barrancabermeja refinery showed an 11% increase in throughput versus the third quarter of 2017. This outcome was primarily due to the stable operation of its units and the segregation of light and intermediate crudes. The average refining margin for the quarter was 13.9 dollars per barrel, largely impacted by the increase in the prices of the crude basket vs. Brent.

Ecopetrol continues to work on fuel quality. In line with this commitment, we have taken advantage of the greater synergies between the Cartagena and Barrancabermeja refineries, as well as operational adjustments in the transport and logistics systems, to produce cleaner fuels.

In September, diesel distributed in Colombia had an average sulfur content between 15 and 20 parts per million (ppm), below the maximum of 50 ppm of sulfur permitted by local regulation. Specifically, we delivered diesel with an average sulfur content between 12 and 14 ppm to the city of Medellin that complies with international reference markets standards as those in the United States (10 to 15 ppm sulfur content).

Our reducing cost strategy through efficiency measures allowed us to account for 1.8 trillion pesos of higher efficiencies across the Group during the first nine months of 2018, up 26% versus those reported during the same period of 2017. We remain committed with cost efficiency and capital discipline, which are now embedded in our corporate culture.

These accomplishments had enhanced the financial position of the Group. At the end of the third quarter, we increased our cash position from 15 trillion at the end of the second quarter, to 18 trillion pesos, despite the payment of the second installment of dividends to the Government for 1.6 trillion pesos and the prepayments of debt for a total amount of 637 million dollars. This financial strength is essential to support the profitable growth plans of the Group and secure long-term sustainability through crude oil price cycles.

In September, Ecopetrol completed the negotiation of a new Collective Bargaining Agreement that will apply for four and a half years and cover aspects such as education, health, food, loans and transport services, among other worker benefits. The New Collective Bargaining Agreement is aligned with the business strategy that seeks to maintain efficiency, capital discipline and collective labor in the new phase of Ecopetrol’s growth. We believe it will contribute positively to the workers wellbeing and the country’s development.

Talking about our ESG initiatives, year-to-date efforts have been focused on activities such as the recycling of 63.3 million cubic meters of water used in our operations. This amount represents an additional saving of 20% compared with the same period last year, enabling us to optimize the water requirement. On another front, we have advanced towards the incorporation of non-conventional renewable energy into the matrix of energy resources, with the announcement of the construction of a solar farm that will supply part of the energy consumption of Castilla field. This is in addition to the existing renewable energy supply from biomass.

Ecopetrol remains committed to generating value, and caring for environment, safe operations, ethics and transparency. Maintaining positive results and growing profitably will remain our focus as we continue to operate as a sustainable company that generates value for its shareholders.”

To review the full report please visit the following link:

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Ecopetrol Profit Nearly Triples On Oil Price Boost

(Reuters, Julia Symmes Cobb, 31.Oct.2018) — Ecopetrol, Colombia’s state-run oil company, said on Wednesday its third-quarter net profit rose to 2.77 trillion pesos ($866.5 million), up 177 percent from the same period last year, thanks to higher global crude prices and increased output.

The company plans to invest between $3 billion and $3.5 billion during 2018 to boost production and explore for more oil to replenish dwindling reserves, drilling 620 wells and doubling the number of rigs in operation from last year.

Consolidated oil and gas production in the third quarter rose to 724,000 barrels per day (bpd), Ecopetrol said in a regulatory filing. That is the highest figure of the last ten quarters.

Protests in the first quarter closed three fields and lowered production to 701,000 bpd, before it rebounded to 721,000 bpd in the second.

Ecopetrol is targeting output of 725,000 bpd of crude and gas equivalent by the end of 2018, up from 715,000 bpd last year.

Strong performance across the company “has allowed an increase in the production of crude and gas, a reduction in crude imports for our refinery sector and in products for the local market and additionally, allowed us to enjoy the benefits of higher international prices,” Chief Executive Felipe Bayon said in the statement.

The company spent $789 million in investment in the third quarter, the statement said, concentrating on exploration and production, where spending was up 57 percent over the same period in 2017.

It has spent $1.79 billion through September, meaning investment during the fourth quarter will need to be substantive to meet the predicted total spending for the year.

Colombia has struggled to attract investment and maintain oil output as bombings and protests have frequently interrupted operations.

Ecopetrol’s Cano Limon-Covenas pipeline, which can transport up to 210,000 bpd, has been off-line for much of this year because of bombings and illegal taps.

The company has reserves equivalent to about seven years of production, well below the average of nearly 12 years for the world’s top oil and gas companies.

Earnings before interest, taxes, depreciation and amortization for July to September increased by 36.7 percent compared with the same quarter in 2017, to 7.99 trillion pesos, Ecopetrol said.

Total sales in the third quarter were up 34.2 percent compared with the same period last year, to 17.87 trillion pesos. ($1 = 3,202.44 Colombian pesos)

(Reporting by Julia Symmes Cobb; editing by Helen Murphy and Rosalba O’Brien)

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Colombia Plans Mexico-Style Oil Hedge After Recent Volatility

(Bloomberg, Matthew Bristow, 31.Oct.2018) — Colombia is planning to hedge its oil exports to protect the government from the violent swings in revenue it suffered in recent years.

The financing bill to be presented to Congress Wednesday proposes the creation of a fund that can buy derivatives from “foreign entities specialized in operations of this type,” according to a copy of the bill seen by Bloomberg. The bill needs to be passed by Congress to become law, and would take effect on Jan. 1.

Oil is Colombia’s largest export accounting for about a third of the total. The crash in prices in 2014 and 2015 forced the government to raise value added tax to cover the hole in its fiscal accounts, and led in 2017 to the nation’s first rating downgrade in 15 years. Colombia produces about 860,000 bopd.

The fund can’t issue debt, and the nature of hedging operations means that losses are possible, according to the bill.

Mexico buys options which gives it the right to sell oil at a certain price, protecting the country from a sudden price drop. In 2015, Mexico pocketed a record payout of $6.4 billion after crude prices crashed. For next year, the country has already spent $1.2 billion on hedging.

The government of President Ivan Duque, which took office in August, has a strong alliance to get laws through Congress. At the same time, it’s not clear that lawmakers will grasp the benefits of a stabilization fund, said Camilo Perez, chief economist of Banco de Bogota.

In the past, Colombian governments have been deterred from operations of this kind for fear of being accused of causing losses to the nation, Perez said. Other measures in the bill, such as the extension of value added tax to food staples, are likely to face opposition.

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Colombia’s Ecopetrol Advances With Fracking Plans, Seeks License

(Energy Analytics Institute, Piero Stewart, 30.Oct.2018) — Colombia’s state oil company Ecopetrol has requested an environmental license over an area where it plans to begin a pilot project to explore crude oil in unconventional deposits with the hydraulic stimulation technique known as fracking.

If a permit from Colombia’s National Environmental Licenses Authority (Anla by its Spanish acronym) is approved, the pilot project would be carried out in coming months in the Magdalena Medio region where the La Luna and Tablazo geological formations converge, and which holds shale potential estimated between 2,000 and 7,000 million barrels of original oil in site, reported the daily newspaper El Tiempo, citing Ecopetrol President Felipe Bayón.

Colombia currently has oil reserves that total 1,782 million barrels of crude oil, the daily reported.

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Ecopetrol Seeks License To Start Fracking Tests In Colombia

(Reuters, Luis Jaime Acosta, 29.Oct.2018) — Colombia’s state oil company Ecopetrol has requested an environmental license to launch a pilot plan to explore for crude oil from unconventional deposits using fracking technology, its chief executive said.

Felipe Bayon told Reuters late on Friday the plan, which could triple Colombia’s proven reserves, would be supervised by local communities and environmentalists to ensure it meets safety standards.

Colombia does not currently carry out oil exploration or exploitation activities with fracking, but President Ivan Duque favors the technique, used to extract oil and gas from unconventional deposits in rock formations that do not allow the movement of fluid.

Hydraulic fracturing, or fracking, technology fractures rock formations with pressurized liquid. Its use is credited for booming oil and gas production in the United States, but environmental activist have blamed it for water pollution. Local communities and environmentalists in Colombia have opposed the technology.

If the permit is granted the pilot would begin in the coming months in Magdalena Medio, an area where the La Luna and Tablazo geological formations converge and which could have between 2 billion to 7 billion barrels of oil, Bayon said during a visit to the Barrancabermeja refinery in central Colombia.

This would triple the nation’s reserves. Colombia has 1.78 billion barrels of proven reserves of crude.

“The Magdalena Medio zone has a potential to be determined, but it could continue to help the country’s energy security and self-supply,” he said.

Bayon declined to say how much money would be invested in the pilot.

Colombia, which produced 854,121 barrels of oil per day in 2017, was hurt in recent years by the drop in international oil prices, hitting hard at the economy.

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Related stories:

Colombia’s Ecopetrol Advances With Fracking Plans, Seeks License

Caño Limón-Coveñas Has Suffered 1,470 Attacks In Ten-Plus Years

(Energy Analytics Institute, Piero Stewart, 27.Oct.2018) — Throughout its history, the Caño Limón-Coveñas pipeline in Colombia has suffered an estimated 1,470 attacks and has been out of operation the equivalent of more than 10 years, according to figures from Colombia’s state oil company Ecopetrol.

Attacks against the oil infrastructure have hurt the country in two ways through the following: 1) destruction of the environment and 2) undermining the country’s finances to the tune of about $277.5 million, reported the daily El Espectador.

Colombian terrorist groups such as ELN continue to use dynamite attacks along the country’s main oil pipeline as a manner to pressure dialogue between them and government leaders, the daily reported.

To date in 2018, Caño Limón-Coveñas has suffered 76 attacks, some 13 less than in the same year ago period.

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Related stories:

Ecopetrol Cleans Spill After Bomb Attack On Cano Limon Pipeline

Cano Limon-Covenas Pipeline Restarts After 180 Days

Ecopetrol Announces Timing Of 3Q:18 Earnings Report, Conference Call

(Ecopetrol, 25.Oct.2018) — Ecopetrol S.A. announces that on October 31st, 2018 after market close, it will release its financial and operating results for the third quarter of 2018.

On Thursday, November 01st, Ecopetrol’s senior management will host two conference calls to review the results. Please find below the timing, dial-in and links to access the conferences:

Spanish Conference Call English Conference Call
08:00 a.m. Col Time (09:00 a.m. NYC) 09:30 a.m. Col Time (10:30 a.m. NYC)
   
US Dial-in #: 1 (847) 585-4405 US Dial-in #: 1 (847) 585-4405
US Dial-in # (Toll Free): 1 (888) 771-4371 US Dial-in # (Toll Free): 1 (888) 771-4371
Local Colombia Dial-in #: 57 1 380 8041 Local Colombia Dial-in #: : 57 1 380 8041
Local Colombia Dial-in #

(Free Toll):  01 800 9 156 924

Local Colombia Dial-in #

(Free Toll):  01 800 9 156 924

Passcode: 47752172 Passcode: 47752183

Participants from different countries may look for different international numbers to the ones mentioned above by consulting the following link: http://web.meetme.net/r.aspx?p=12&a=UDWttmnRSqdRpg

The earnings release, slide presentation and live webcast of the conference calls will be available on Ecopetrol’s website: www.ecopetrol.com.co and at the following links:

http://event.onlineseminarsolutions.com/wcc/r/1860357-1/DC064C359529BAB504745883599DDE54 (Spanish)

http://event.onlineseminarsolutions.com/wcc/r/1860384-1/9677D33EF14DF374F0373FF46368B3AE (English)

Please verify in advance proper operation of the webcast in your browser. We recommend the usage of the latest versions of Internet Explorer, Google Chrome y Mozilla Firefox.

The replay of the calls will be available on Ecopetrol’s website (www.ecopetrol.com.co).

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Ecopetrol Cleans Spill After Bomb Attack On Cano Limon Pipeline

(Reuters, 25.Oct.2018) — Colombia’s state-run oil company Ecopetrol is carrying out a clean-up operation after a bomb attack on the Cano Limon pipeline spilled crude into a waterway, the company said in a statement on Thursday.

The attack on Wednesday, the seventy-sixth on the pipeline this year, had no immediate effect on exports or production at the Cano Limon field, operated by Occidental Petroleum, Ecopetrol said.

Though the pipeline was not functioning at the time of the attack, some oil spilled into a creek in the La Blanquita area of Boyaca province, the company said.

The 485-mile (780-km) pipeline, which can transport up to 210,000 barrels per day, has been off-line for much of this year because of bombings and illegal taps.

The company did not name the group responsible for the bombing, but the pipeline is a frequent target of National Liberation Army (ELN) rebels.

The ELN, considered a terrorist group by the United States and the European Union, has about 1,500 combatants and opposes multinational companies, claiming they seize natural resources without benefiting Colombians.

The ELN and the administration of former President Juan Manuel Santos began peace talks in February 2017, but current right-wing President Ivan Duque has said he will not continue dialogue until the group frees all its hostages and ceases criminal activities.

(Reporting by Julia Symmes Cobb; Editing by Helen Murphy and Bernadette Baum)

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Ecopetrol: Fracking Likely In Colombia, Business Prospects Are Positive

(Seeking Alpha, Dylan Quintilone, 14.Sep.2018) — Ecopetrol SA is a Colombian oil and gas company with headquarters in Bogotá, Colombia. The company is listed by Forbes as the 300th largest enterprise by profits and is the second oil company in South America behind Petrobras from Brazil.

Ecopetrol’s operations are divided between exploration and production; Refining, Petrochemical & Biofuels, Oil Transportation and Logistics. The company has around 8,500 kilometers of transportation pipelines which commercializes crude oil and all kinds of derivatives such as fuel oil, aviation gasoline, cracked naphtha, virgin naphtha, polypropylene resin, and masterbatches. The company offers refined and petrochemical products to multiple markets and has a large presence in Colombia.

The company has almost ten thousand employees and is experiencing a rising period of revenues due to the increase in oil prices in the first half of 2018. Ecopetrol has increased production in recent years and the company produces roughly 730 million barrels per year, which is an 83% production increase over 2010 levels. The company expects to surpass the billion barrel mark within the coming years because of additional discovery of oil reserves of the northern coast of Colombia and new exploration/extraction methods.

Fracking in Colombia? Most likely

Fracking in Colombia has been a big debate since the recently inaugurated president Ivan Duque was proposing the possibility during his election campaign. Upon securing the presidency, his fracking project is moving forward with a majority of the senators in the Colombian Congress who are collaborating with him for the proposal. The fracking issue has long been debated and now with the government reaching a consensus and backing the fracking industry, the approval for the controversial extraction method is likely.

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Ecopetrol Gets Approval for Contingent Credit Line for $665 Million

(Ecopetrol S.A., 10.Sep.2018) — Ecopetrol S.A. announced that as part of its integral debt management strategy, it will sign a contingent line of credit for $665 million with Scotiabank ($430 million) and Mizuho Bank ($235 million).

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. This facility would increase the Company’s indebtedness only when the disbursements are made.

The contingent line will have a two (2) year availability period for disbursements, subject to the following conditions: (i) principal amortizable upon maturity after a five-year term as from the signing date of the agreement, and (ii) an interest rate of 6-month LIBOR + 125 basis points and an annual fee of 30 basis points on principal not disbursed during the availability period.

Resources to be deployed under this contingent line may be used for general corporate purposes, among them to strengthen Ecopetrol’s liquidity position in the face of eventual growth opportunities, to mitigate risks associated to unexpected fluctuations in crude prices, as well as to reduce refinancing specific needs in the coming years, with flexibility and low financing costs.

To obtain the committed line of credit, the Company complied with all required internal and external procedures and approvals, including the corresponding Authorization Resolution by the Ministry of Finance and Public Credit

**.

The conditions obtained confirm the local international financial sector’s confidence in the Company.

** This administrative act can be subject to clarifications or changes, ex officio or at request of a party, in accordance with the legal mechanism that are applicable to the effect.

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Ecopetrol to Focus Spending on Drilling: CEO

(Reuters, Devika Krishna Kumar, 24.Aug.2018) — Colombia’s state-run oil company Ecopetrol SA will focus spending for the rest of the year on increased drilling activity and securing operational licenses, its chief executive said on Friday.

Spending delays earlier this year will make it harder for the company to achieve its 2018 $3 billion to $3.5 billion capital plan, CEO Felipe Bayon said in an interview at the New York Stock Exchange, where company officials observed the 10th anniversary of its NYSE listing.

“It’s a challenge” to hit spending targets, Bayon said, adding the company plans to have 41 working rigs at year end, up from 33 at the end of June. Acquiring drilling rights consumes “a lot of the capex we invest,” he said.

Last week, Ecopetrol said it will invest $3 billion to $3.5 billion during 2018, below the initial target of up to $4 billion because of spending delays and protests that closed three fields in the first quarter.

“It’s never going to be smooth sailing in this industry. There’s always uncertainty, there’s things that are going to hit you that you don’t know.”

Ecopetrol faced dozens of attacks on its Cano Limon-Covenas oil pipeline this year by the National Liberation Army (ELN) guerrilla group, military sources previously said.

The Cano Limon pipeline is operating now, Bayon said, adding that production impacts this year were marginal due to rerouting the Bicentenario pipeline which connects to the Cano Limon line.

Last year, the attacks and pipeline closure led to production losses of more than a million barrels, Bayon said.

The company aims to boost reserves through exploration, squeezing more oil from existing wells, drilling in unconventional basins and through acquisitions, he said. Colombia’s reserves are estimated at about 2 billion barrels.

Ecopetrol is seeking deals in areas where it already has operations, including Mexico, Brazil, Peru and the United States, he said.

“We have a very healthy cash position with 15.8 trillion pesos ($5.3 billion) at the end of the quarter,” Bayon said. “That gives us flexibility if we wanted to invest.”

Crude oil production in Colombia reached an average of 860,401 barrels per day (bpd) in July, the Mines and Energy Ministry said this week, up 0.5 percent from the same month a year ago.

The spending plans and higher rig counts come as oil prices have recovered since the company cut drilling and shuttered an oil field when it lost more $1 billion in 2015 after oil prices crashed.

This summer, oil prices climbed to the highest in 3 1/2 years.

“Four years ago we needed $65 per barrel to break even, today we need $35,” Bayon said.

Reporting by Devika Krishna Kumar in New York; Editing by Marguerita Choy, Susan Thomas and David Gregorio

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Ecopetrol Cuts Planned 2018 Spending To $3-$3.5 Bln

(Reuters, Nelson Bocanegra & Julia Symmes Cobb, 15.Aug.2018) – Colombia’s state-run oil company Ecopetrol said it will invest $3 billion to $3.5 billion during 2018, less than previously estimated, because of spending delays and protests which closed three fields during the first quarter.

Ecopetrol originally planned to invest $3.5 billion to $4 billion this year, mostly in exploration and production. The company spent $1 billion during the first half, it said in an earnings report on Tuesday.

“The reduction in the plan is due to the rescheduling of maintenance, the movement of some activities to next year, the impact of protests that caused the temporary closure of some fields in the first quarter and larger savings that reduce the need for investment,” Chief Executive Felipe Bayon said on a call with investors.

“That’s why we’re giving a capex guidance of between $3 and $3.5 billion,” he added.

Savings from “efficiencies” and “lower perforation costs” account for $260 million of the reduction, Jaime Caballero, Ecopetrol’s vice president of corporate finances specified, while $240 million in spending will be moved to 2019 because of maintenance rescheduling and to allow an extension of studies on some wells.

First-quarter investment was stymied by February protests at the Castilla, Chichimene and CPO-09 fields in Meta province which led to temporary closures, Caballero said, as well as the suspension of licenses for new exploration in the La Lizama area of Santander province because of an oil spill.

Second-quarter net profit rose to 3.5 trillion pesos (about $1.1 billion), Ecopetrol said in its earnings report on Tuesday, up 170 percent from the same period in 2017 thanks to higher crude prices.

The company has pledged to boost production and explore for more oil to replenish dwindling reserves this year, drilling 620 wells and doubling the number of rigs in operation from 2017.

Consolidated oil and gas production in the second quarter rose to 721,000 barrels per day (bpd), the company said. The first-quarter protests had lowered the figure to 701,000 bpd.

Ecopetrol is targeting output of 725,000 bpd of consolidated output by the end of the year, up from 715,000 bpd in 2017.

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.

Pumping through the Cano Limon-Covenas pipeline was stopped for six months this year due to repeated attacks by Marxist ELN rebels.

(Reporting by Julia Symmes Cobb and Nelson Bocanegra; Editing by Helen Murphy and Andrea Ricci)

***

Ecopetrol Announces 2Q:18 Earnings, Conference Call

(Ecopetrol, 9.Aug.2018) – Ecopetrol S.A. announced that on August 14, 2018 after market close, it will release its financial and operating results for the second quarter of 2018. On Wednesday, August 15th, Ecopetrol’s senior management will host two conference calls to review the results. Please find below the timing, dial-in and links to access the conferences:

Participants from different countries may look for different international numbers to the ones mentioned above by consulting the following link:

http://web.meetme.net/r.aspx?p=12&a=UXzQuWKCgSyMQL

The earnings release, slide presentation and live webcast of the conference calls will be available on Ecopetrol’s website: www.ecopetrol.com.co and at the following links:

http://event.onlineseminarsolutions.com/wcc/r/1806327-1/E934C8DEA7B6C6E444887579EE01B359 (Spanish)

http://event.onlineseminarsolutions.com/wcc/r/1806354-1/B163754F8BF385987B8E2BFC078C5A8F (English)

Please verify in advance proper operation of the webcast in your browser. We recommend the usage of the latest versions of Internet Explorer, Google Chrome and Mozilla Firefox.

The replay of the calls will be available on Ecopetrol’s website (www.ecopetrol.com.co).

***

Ecopetrol Names New Corporate VP of Finance

Jaime Caballero Uribe. Source: Ecopetrol

(Ecopetrol, 8.Aug.2018) – Ecopetrol S.A. announced appointment of Jaime Caballero Uribe as the new Corporate Vice President of Finance (Chief Financial Officer).

The appointment is effective as of August 7, 2018.

Mr. Caballero has more than 20 years of experience with companies in the oil and gas sector, both in Colombia and abroad. He has served as Ecopetrol’s CFO for the Downstream Segment since July 2017. During this period he has also represented Ecopetrol at the Board of Directors of Propilco and Gases del Caribe, among other companies.

His experience prior to Ecopetrol includes 17 years at BP plc, where he held leadership positions in Colombia, North America, Africa and Europe, most recently as CFO for the Brazil region (encompassing Brazil, Uruguay, Colombia and Venezuela).

Mr. Caballero is an attorney with a degree from the Universidad de los Andes (Colombia). He has an MBA in Energy Business from the Fundação Getulio Vargas (Brazil), and has carried out executive studies in advanced financial management at Duke University and Wharton School of Business (University of Pennsylvania).

Mr. Caballero will be the compliance agent for financial reporting to the Colombian Finance Superintendency and the international markets.

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Ecopetrol Reports Resignation of María Fernanda Suárez

(Energy Analytics Institute, Piero Stewart, 6.Aug.2018) – María Fernanda Suárez has resigned from Ecopetrol.

The state oil company announced in an official statement that the resignation was due to her appointment as the Republic of Colombia’s Minister of Mines and Energy, effective August 6, 2018.

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Frontera Announces Second Quarter 2018 Results

(Frontera Energy Corporation, 3.Aug.2018) – Frontera Energy Corporation released its Interim Condensed Consolidated Financial Statements for the second quarter of 2018, together with its Management, Discussion and Analysis (MD&A). These documents will be posted on the Company’s website at www.fronteraenergy.ca and SEDAR at www.sedar.com. All values in this news release and the Company’s financial disclosures are in United States dollars unless otherwise stated.

SECOND QUARTER 2018 AND OTHER OPERATIONAL HIGHLIGHTS

Exploration and Development Update

— Acorazado-1 exploration well in the Llanos 25 block has reached total depth of 15,470 feet, a week ahead of schedule and under budget. Wireline logging operations are ongoing and depending upon results, testing is expected to be completed by the end of August.

— Delfin Sur-1 exploration well offshore Peru on Block Z-1 started drilling on July 14, 2018, is currently drilling at 6,000 feet and is expected to reach total depth by the middle of August.

— Alligator-4 development well in the Guatiquia block is producing at 1,370 bbl/d of 19.5 degree API oil.

Strong Financial Position and Results

— In July 2018, the Company exercised its right to terminate the Caño Limón (“CLC”) and Bicentenario (“BIC”) pipeline transportation agreements. As a consequence of these terminations, the Company is no longer committed to payments of ship-or-pay fees on these pipelines. As at June 30, 2018, these terminated contracts represented $1.36 billion in future transportation commitments.

— Separately Frontera reduced future transportation commitments on the Ocensa pipeline by over $178.3 million as a result of the successful settlement agreement in an arbitration on tariffs concerning the P-135 Project.

— The Company’s total cash position, including restricted cash, increased 5% quarter-over-quarter to $730.1 million at the end of Q2 2018.

— Total sales (after realized loss on risk management contracts) of $350.1 million were 40% higher than Q1 2018 and 17% higher than Q2 2017.

— The Company generated cash flow provided by operating activities of $108.4 million, an excess of $21.6 million above capital expenditures of $86.8 million.

— Net loss of $184.4 million, or $1.84/share, which includes an impairment of $107.7 million relating to the carrying value of the investment in Bicentenario, as a result of the termination of the BIC pipeline ship-or-pay agreement. This compares to a net loss of $3.1 million or $0.03/share, in the first quarter of 2018 and a net loss of $51.5 million or $0.52/share in the second quarter of 2017.

— Operating EBITDA of $124.7 million was 45% higher than Q1 2018 and 44% higher than Q2 2017.

— Operating Netback of $26.76/boe was 10% higher than Q1 2018 and 32% higher than Q2 2017.

— Adjusted FFO of $121.3 million was 254% higher than Q1 2018 and 163% higher than Q2 2017.

— The Company successfully completed an offering of $350 million senior unsecured notes at a coupon rate of 9.7%, due 2023 (“Senior Unsecured Notes”). Proceeds of the offering were used to repurchase its $250 million senior secured 10.0% coupon notes due 2021 (“Senior Secured Notes”) and for general corporate purposes.

— Implemented a Normal Course Issuer Bid (“NCIB”) for the repurchase of approximately 3.5% of the Company’s issued and outstanding common shares of which 33,100 shares were repurchased in July 2018 at a cost of $0.4 million.

Production

— Net production decreased 3% quarter-over-quarter to 64,140 boe/d in Q2 2018 as a result of reduced production from Block 192 relating to a force majeure event on the NorPeruano pipeline in Peru and increased high-priced participation payment (“PAP”) royalty volumes at Quifa SW block in Colombia.

— The NorPeruano pipeline in Peru, which caused the force majeure event for production on Block 192 is expected to resume normal operations by the end of August.

— The Company completed the drilling of 24 development wells during Q2 2018, compared to 33 development wells and three exploration wells in Q1 2018.

— Total capital expenditure of $86.8 million during Q2 2018, were 10% higher than Q1 2018 as a result of spending related to exploration drilling of the Acorazado-1 exploration well on Llanos 25 block, preparation for the Delfin Sur-1 exploration well on Block Z-1 and the start of the water handling expansion project in the Quifa area.

Updated 2018 Guidance

— The Company is increasing annual Operating EBITDA guidance by 6% at the midpoint to $400 to $450 million from $375 to $425 million and reiterates annual guidance for production of between 65,000 boe/d and 70,000 boe/d. This is in the context of year to date production of 65,178 boe/d which has been negatively impacted by third party events which include the force majeure event on the NorPeruano pipeline in Peru, increased PAP royalties at Quifa SW, and a now resolved community dispute on the Cubiro block.

Richard Herbert, Chief Executive Officer of Frontera, commented:

“Frontera had a very strong quarter. The recent terminations of our ship-or-pay contracts on the Caño Limón and Bicentenario pipelines will significantly reduce our future commitments by $1.36 billion and eliminate fees paid on suspended pipeline capacity. In 2017, suspended pipeline capacity fees totalled $122.5 million in addition to total company transportation costs of $346.3 million.

We successfully refinanced our secured $250 million, 10% coupon senior exit notes due in 2021 with unsecured $350 million, 9.7% coupon senior notes due in 2023. The refinancing provides the Company with additional capital as well as the increased financial flexibility needed to execute and deliver on our strategy and plans for 2019 and beyond. This flexibility has already enabled Frontera to execute a normal course issuer bid for 3.5% of the outstanding shares of the Company.

I am also pleased to report that we delivered strong financial results in the second quarter which generated nearly $125 million of Operating EBITDA and cash flow from operations in excess of capital expenditures. We are optimistic that improved operating efficiencies combined with continued strong international Brent oil prices will enable the Company to deliver strong financial results for the second half of 2018, which is reflected in our revised Operating EBITDA guidance. At Guatiquia we have had continued success on the Alligator field with the Alligator-4 well currently producing in excess of 1,300 bbl/d, in addition to the Alligator-3 well which is producing at over 1,400 bbl/d. We have drilled the Acorazado-1 exploration well ahead of schedule and under budget. We have also begun drilling the Delfin Sur-1 exploration well offshore Peru with results expected towards the end of August.”

Net production in the second quarter of 2018 totalled 64,140 boe/d, a decrease of 3% compared with the first quarter of 2018. The decrease in the quarterly production was primarily a result of reduced production from Block 192 in Peru due to the declaration of force majeure by Petroperu S.A. (“Petroperu”) on the NorPeruano pipeline which transports crude oil from Block 192 to the export terminal at Bayovar. Prior to the force majeure event, which suspended operations on June 4, 2018, the block was producing approximately 8,600 bbl/d net to Frontera. Petroperu began repairing the pipeline in mid-June with repairs expected in August. Upon reactivation of the pipeline, Frontera will commence pumping crude oil from storage and ramp production back up to pre-force majeure levels.

Production from Colombia remained stable during the quarter, with increasing production in the light and medium oil business unit offsetting reduced production in heavy oil, a result of higher PAP royalty volumes at Quifa SW. Positive production impacts included the resumption of normal operations from the Cubiro block during the second quarter and production from new exploration discoveries at the Alligator and Coralillo wells on the Guatiquia block which were connected to production facilities during the quarter. In addition, an intensive work-over campaign was conducted in June which has provided for the recovery of deferred production volumes for the remainder of 2018. These gains helped offset the impact of approximately 700 bbl/d of volumes lost as a result of PAP royalty volumes at Quifa SW.

During the second quarter of 2018, total capital expenditures were $86.8 million, 10% higher than $78.8 million in the previous quarter and 130% higher in comparison with $37.8 million in the second quarter of 2017. The increase during the second quarter relates to the initiation of drilling operations for the Acorazado-1 exploration well on the Llanos 25 block in Colombia, preparation relating to the drilling of the Delfin Sur-1 well offshore Peru on Block Z-1 and the start up of construction of additional water handling facilities in the Quifa area. Increased facilities spending in the quarter also connected the Alligator discoveries in the Guatiquia block to the main crude oil and water processing facilities on the block.

A total of 24 development and appraisal wells were drilled in the second quarter of 2018, in line with 25 wells planned. A number of development wells at Quifa SW originally planned for the first half of 2018 have been deferred to the second half of 2018 to match the start up of the increased water handling capacity project in the fourth quarter of 2018. The Company currently has nine drilling rigs operating, five in our Quifa SW heavy oil area, two at our Guatiquia light oil block, one on the Llanos 25 block and one on Block Z-1 offshore Peru. The Company expects to see a significant ramp-up of development well drilling from August until the end of the year. During the third quarter of 2018 the Company plans to drill 39 development wells and one exploration well. Over 32 development wells and two water injector wells are targeted to be drilled in the Quifa SW area.

Exploration and Development Update:

On July 23, the Acorazado-1 exploration well on the Llanos 25 block in Colombia reached total depth of 15,470 feet, a week ahead of schedule and under budget. Wireline logging activity used to evaluate and analyze the reservoir section is ongoing.

During the second quarter, the Company continued to have good results in the Alligator development in the Guatiquia block. Alligator-3 was drilled to a depth of 12,416 feet and started production on May 10, 2018 with an electrical submersible pump. During June 2018, the well produced at an average rate of 1,691 bbl/d, of 17.6 degree API crude with a 42% water cut and an average bottomhole pressure of 2,692 psi from the Lower Sand-1A reservoir.

On June 18, 2018, the Company began drilling the Alligator-4 development well on the Guatiquia block. On July 15, 2018, the well reached a total depth of 12,800 feet (12,315.4 feet TVD), encountering 12 feet of net pay in the Lower Sand-1A formation. The well was completed in the Lower Sand-1A formation with an electrical submersible pump. The Lower Sand-1A formation has been flow tested for three days at an average rate of 1,370 bbl/d of 19.5 degree API oil with an average water cut of 21% at stabilized bottom-hole flowing pressure with an approximate 21% drawdown. The well has produced a total of 3,368 bbls of oil over two days of testing.

The Company has received approval from its partner, Ecopetrol S.A. (“Ecopetrol”) to commence the long-term testing of the Jaspe-6D exploration well in the Quifa area that was initially drilled and tested in January 2018. This test is expected to allow the Company to move ahead with the drilling of two additional appraisal wells in late 2018, with the potential for declaring commerciality in early 2019.

The Company is in advanced discussions with its partner Ecopetrol in the Quifa SW block to implement a pilot multi-lateral horizontal development well program for 2019, with the expectation, that if successful drilling costs will be lower with resulting increased production and recovery rates.

In our offshore Peru operations in Block Z-1, mobilization of the Petrex-10 drilling rig was completed and the drilling of the Delfin Sur-1 exploration well began on July 14, 2018. The well is currently drilling at over 6,000 feet and is planned to be drilled to a total depth of 9,750 feet by the middle of August 2018.

The average Brent oil benchmark price increased by $7.74/bbl, or 12%, in the second quarter of 2018 to an average of $74.97/bbl, compared to $67.23/bbl in the first quarter of 2018. Brent oil benchmark price averaged $50.79/bbl in the second quarter of 2017. The Company’s realized oil price of $70.44/bbl in the second quarter of 2018 excludes the impact of $11.12/bbl of realized losses on risk management contracts. The Company remains hedged on approximately 60% of net daily production volumes until the end of October 2018 at an average ceiling price of $60.05/bbl compared to an average ceiling price received of $55.60/bbl in the first half of 2018. The Company is unhedged in November and December 2018.

For the second quarter of 2018, total sales after realized risk management contracts, increased 40% to $350.1 million compared to $249.5 million in the first quarter of 2018 and increased 17% from $299.5 million in the second quarter of 2017. Sales volumes were 6% higher than net production volumes as result of the 500,000 barrel benefit (approximately 5,500 bbl/d) from the oil cargo that was sold with crude oil inventory that had built up from prior periods. Sales in Peru decreased $24.3 million compared to the first quarter of 2018 as a cargo scheduled to load in June was not loaded until July. Oil sales in Peru continue despite the interrupted production on Block 192 as a result of a force majeure event. Historically, sales volumes trend between 3% and 5% below production volumes as a result of internal consumption.

During the second quarter of 2018, net loss attributable to equity holders of the Company was $184.4 million or $1.84/share, compared with a net loss of $3.1 million or $0.03/share, in the first quarter of 2018. The majority of the loss was attributable to an impairment of $107.7 million the Company recorded on its investment in Bicentenario, as a result of the termination of the BIC pipeline ship-or-pay agreement. In addition, other non-recurring losses included increased losses on realized risk management contracts of $26.2 million, a loss from the extinguishment of debt of $25.6 million and the reclassification of a currency translation adjustment relating to the sale of Petroelectrica de los Llanos of $50.8 million.

Operating EBITDA of $124.7 million or $1.25/share for the second quarter of 2018, was 45% higher in comparison with $86.0 million or $0.87/share achieved in the first quarter of 2018, and 44% higher than the second quarter of 2017, as a result of higher realized oil prices and higher sales volumes as noted above.

Adjusted FFO totalled $121.3 million or $1.21/share for the second quarter of 2018, an increase of 254% compared to $34.3 million or $0.34/share achieved in the first quarter of 2018, and 163% higher than the second quarter of 2017. The $87.0 million increase in adjusted FFO in the second quarter of 2018 was attributed to higher Operating EBITDA of $38.7 million and $48.4 million of dividends received from investments in associates ($0.0 million in the first quarter of 2018).

Strong Balance Sheet:

The Company continued to build cash during the quarter, with a total cash position of $730.1 million, as at June 30, 2018, an increase of 5% and 35% from the previous quarter and the second quarter of 2017, respectively. Unrestricted cash increased to $550.8 million as at June 30, 2018, from $515.8 million as at March 31, 2018. The increase in cash during the second quarter of 2018 was due to cash flow from operations in excess of capital expenditures and the refinancing of the Senior Secured Notes with Senior Unsecured Notes.

Working capital decreased 8% to $317.4 million during the second quarter of 2018, compared to $343.2 million at March 31, 2018.

The Company has reduced future transportation commitments in the Ocensa pipeline by over $178.3 million as a result of the successful settlement agreement in an arbitration on tariffs concerning the P-135 Project. Furthermore, the Company exercised its rights to terminate the CLC and BIC pipeline transportation agreements. As a consequence of these terminations, the Company is no longer contractually committed to payments of ship-or-pay fees on these pipelines. As at June 30, 2018, these terminated contracts represented $1.36 billion in future commitments.

The Company is hedged on approximately 60% of production between July and October 2018 with ceiling prices between $58.31/bbl and $61.83/bbl. Starting in November, the Company will be unhedged on 100% of production with current forward strip Brent oil prices in excess of $72/bbl.

In June 2018, as part of the refinancing of the Company’s Senior Secured Notes, Fitch Ratings Inc. assigned an initial rating of “B+/RR4” to the Company’s Senior Unsecured Notes, and maintained the “B+/Stable” Long Term Foreign Currency IRD. Standard & Poor’s assigned an initial rating of “BB-” to the Senior Unsecured Notes along with a reaffirmed Corporate Credit Rating of “BB-/Stable”.

The Company implemented an NCIB for the repurchase of approximately 3.5% of the Company’s issued and outstanding common shares of which 30,100 shares were repurchased in July 2018 at a cost of $0.4 million.

Annual Guidance Update:

The Company has increased its annual Operating EBITDA guidance by 6% at the midpoint to $400 to $450 million from $375 to $425 million as a result of increasing the Brent oil price assumption from $63/bbl to $70/bbl. As a result of the recent arbitration settlement on the P-135 Project pipeline tariffs combined with year to date results, the Company is narrowing the estimated range of transportation costs to $12.50/bbl to $13.50/bbl from $12.50/bbl to $14.50/bbl. Original 2018 Operating EBITDA guidance assumed uptime on the BIC pipeline of 50% in the first half of 2018 and the implementation of a revised ship or pay agreement in the second half of 2018. Guidance metrics for net production, production costs, general and administrative expenses and capital expenditures remain unchanged.

Frontera Energy Corporation is a Canadian public company and a leading explorer and producer of crude oil and natural gas, with operations focused in Latin America. The Company has a diversified portfolio of assets with interests in more than 30 exploration and production blocks in Colombia and Peru. The Company’s strategy is focused on sustainable growth in production and reserves.

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Ecopetrol Announces Changes to Management Structure

(Ecopetrol, 31.Jul.2018) – Ecopetrol S.A. reports that at its session on July 27, 2018, Ecopetrol’s Board of Directors approved adjustments to the company’s management structure in addition to those announced last July 4, in response to the Ecopetrol Group’s needs relating to growth, competitiveness and transformation.

The Offices of the Corporate Vice President for Finance, the Corporate Vice President for Strategy and New Business, and the Vice Presidents for Digital Affairs, Human Talent and Transformation will report directly to the Office of the President. The Office of the Executive Vice President for Strategy and Finance has been eliminated under this new structure.

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Colombia Must Boost Investments 55% to Maintain Output

Oil field in Colombia. Source: Ecopetrol

(Energy Analytics Institute, Piero Stewart, 27.Jul.2018) – The South American country needs to boost investments from an projected $4.5 billion in 2018 to a level of $7 billion over the next four years in order to maintain oil production and also increase proven reserves.

The investments are needed in order for Colombia’s oil sector to continue to play a leading role in terms of national finance contributions, reported the daily newspaper El Tiempo.

Additionally, conditions must be met to produce a sustained upturn in investment in exploration and production activities, which will assist the country maintain its current production level of some 860,000 barrels per day, reported the daily, citing Colombian Petroleum Association (ACP) President Francisco José Lloreda.

The increased investments will also allow Colombia to increase its proven crude oil reserves — which amounted to 1.782 billion barrels in 2017 — by an additional 2 billion barrels, and sustain revenues to guarantee macroeconomic stability and meet the goals of the Medium-Term Fiscal Framework.

Lloreda estimates that between 2018 and 2022 that the hydrocarbon sector could generate around 100 trillion pesos in tax revenues for the country through contractual economic rights, dividends and royalties, which would leverage initiatives to continue generating progress and improve the quality of life of Colombians.

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Moody’s Upgrades Ecopetrol Rating

(Energy Analytics Institute, Piero Stewart, 18.Jul.2018) – The risk-rating agency Moody’s increased the baseline credit assessment (BCA) two notches, to ba1 from ba3 for Colombia’s state oil company.

The agency said the higher BCA was primarily due to Ecopetrol’s “solid metrics and progress in its strategy of growth and adding to reserves, with a reserves replacement index of 126% at the end of 2017,” reported Ecopetrol in an official statement, citing a Moody’s press release.

In the release, Moody’s highlighted Ecopetrol’s four areas of growth:

1. Implementation of improved recovery and infill projects,

2. Exploration,

3. Assessment of opportunities in non-conventional deposits, and

4. Inorganic growth leveraged on its strong cash position.

Moody’s also stressed “Ecopetrol’s solid liquidity and the management team’s commitment to protecting credit metrics.”

The agency maintained Ecopetrol’s rating at Baa3 with a stable outlook.

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Duque Names Maria Fernanda Suarez Energy Minister

(Reuters, 18.Jul.2018) – Colombia’s President-elect Ivan Duque on Wednesday named Maria Fernanda Suarez as mining and energy minister when he takes office in August, a role that will require her to bolster oil production to help weak economic growth and settle messy mining disputes.

Suarez, 44, is currently executive vice president at state oil company Ecopetrol. She served as director of public credit at the finance ministry and as vice president of investments for the Porvenir pension fund. She has also held senior positions at Citibank, ABN AMRO and Bank of America.

Suarez has a Masters degree in public policy from Georgetown University. She will replace German Arce.

“She has a brilliant resume in the public and private sectors,” Duque said in a statement.

As mines and energy minister, Suarez faces a difficult task as Colombia struggles to increase oil production to help increase revenue and bolster the weak economy after years of weak international oil prices.

“With her, we will promote greater diversification of national energy, efficiency and competitiveness in the sector, provide energy security for Colombia, and social and environmental responsibility in all energy mining production sectors,” Duque said.

At current rates of production, Colombia has less than six years worth of oil reserves, the energy ministry says, and urgent investment in exploration is needed to replace reserves.

Duque’s solution to dwindling oil reserves is to encourage investment in exploration, which he says could provide years more oil production, and give tax relief to the sector.

He has also pledged additional investment at state-run Ecopetrol’s refineries to allow exports of more higher-value derivatives.

Still, with the economy growing at an expected pace of just 2.7 percent this year and a budget deficit that needs to be reduced, funding such expenditure may be tough.

The Colombian Petroleum Association (ACP), says the industry needs to spend up to $7 billion a year just to keep output between 800,000 and 860,000 barrels per day.

Oil companies are already grappling with security concerns as well as local referendums – on whether to allow mining in certain areas – and environmental court rulings that have stymied major mining projects in Latin America’s fourth-largest economy.

A recent paper by the ACP, which represents private crude producers, warned that planned referendums put one-fifth of oil production at risk.

Private oil companies plan to invest up to $4.9 billion this year, ACP said, while Ecopetrol plans to spend up to $4 billion.

(Reporting by Helen Murphy Editing by Nick Zieminski)

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Colombia Names New Mining Minister

Colombia new Mining Minister. Source: Mining Ministry.

(Energy Analytics Institute, Piero Stewart, 18.Jul.2018) – Colombia’s President elect Iván Duque named Ecopetrol Executive Vice President María Fernanda Suárez as the country’s new mining minister, according to reports in the daily newspaper La Republica.

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Cano Limon-Covenas Pipeline Restarts After 180 Days

(Reuters, 17.Jul.2018) – Pumping through the Colombia’s Cano Limon-Covenas oil pipeline restarted after a 180-day stoppage due to repeated attacks by Marxist ELN rebels, military and industry sources said on Tuesday.

The 485-mile (780-km) pipeline has been attacked 58 times this year by the National Liberation Army (ELN), the country’s largest active guerrilla group, according to military sources.

Apart from bombing damage, 41 illegal valves used to steal crude were found on the pipeline, said state-owned Ecopetrol SA, which owns the pipeline via its subsidiary Cenit.

Although this is one of the most extensive paralyses since the pipeline opened in the mid-1980s, activity in the Cano Limon field, operated by Occidental Petroleum Corp and located in the northern Arauca province, has not been affected.

Crude from the field had been transported using a smaller pipeline, which is still at risk of attack, sources said.

Ecopetrol which produces around 60 percent of Colombia’s 866,000 barrels a day of oil.

The ELN, considered a terrorist group by the United States and European Union, has about 1,500 combatants and opposes multinational companies, claiming they seize natural resources without benefiting Colombians.

Outgoing President Juan Manuel Santos and the ELN launched peace negotiations in 2017 but the talks, which shifted from Ecuador to Cuba in May, have been fraught. The guerrillas stepped up their attacks after the end of a bilateral ceasefire in January.

President-elect Ivan Duque, who was voted in last month, has said he will halt the talks unless the ELN declares a unilateral ceasefire and concentrates its forces into a single area.

Cano Limon has been bombed more than 1,400 times during its 32-year history. The attacks have kept it offline for the equivalent of 11 years and spilled about 2 million barrels of crude.

Writing by Helen Murphy

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Colombia’s Cano Limon Pipeline Restarts

(Seeking Alpha, Carl Surran, 17.Jul.2018) – Colombia’s Cano Limon-Covenas pipeline has resumed pumping oil after a 180-day stoppage due to repeated attacks by Marxist ELN rebels, according to loval military and industry sources.

Apart from bombing damage, 41 illegal valves used to steal crude were found on the pipeline, says Ecopetrol (NYSE:EC), which owns the pipeline.

While this was one of the most extensive stoppages ever for the 485-mile pipeline, activity in the Cano Limon field, operated by Occidental Petroleum (NYSE:OXY), reportedly has not been affected, as crude from the field had been transported using a smaller pipeline, which is still at risk of attack.

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Ecopetrol to Operate Dina Gas Plant

(Energy Analytics Institute, Piero Stewart, 8.Jul.2018) – The gas plant has treatment capacity of 10 million cubic feet per day (MMcf/d) of natural gas.

Ecopetrol initiated direct operation of Dina gas treatment plant (PTGD by its Spanish acronym), located in Huila, which since April 2010 has been operated by Masa Storkdesde.

The latter company was responsible for its construction, operation and maintenance, announced Ecopetrol in an official company statement.

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Ecopetrol to Prepay Loan of COP$ 1.4 Tln

(Energy Analytics Institute, Piero Stewart, 6.Jul.2018) – Colombia’s state oil company Ecopetrol will prepay the entire syndicated loan it entered into in 2013 with local banks.

The loan was scheduled to be amortized up to 2025, announced Ecopetrol in an official statement.

As stipulated in the loan agreement, Ecopetrol can at any time pay off all the principal voluntarily, with no penalty whatsoever, subject to at least 30 calendar days’ advance notice to the lenders. Pursuant thereto, the prepayment will be made August 6, 2018 in the total amount of COP$1,430,333,333,333, which includes principal and interest.

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Ecopetrol Finds New Oil in Cundinamarca

(Energy Analytics Institute, Piero Stewart, 5.Jul.2018) – A find at the Búfalo-1 well confirmed the presence of oil in the Valle Medio del Magdalena, located near the town of Guaduas, Department of Cundinamarca.

The well is the first discovery in the VMM32 Exploration Contract and is located very close to Ecopetrol’s transport infrastructure, which could facilitate its commercial production stage, the company announced in an official statement

The finding recorded a depth of 1,153 meters, in the Middle Magdalena Valley basin, where the presence of dry gas and light crudes was evident in the Grupo Honda.

Ecopetrol holds a 51% interest in the Bufalo-1 well and is the operator. Its partner, CPVEN E&P Corp, holds the remaining 49% interest.

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Pipeline Releases 125 Bbls into Magdalena River

(Energy Analytics Institute, Ian Silverman, 30.Jun.2018) – Ecopetrol announced an oil spill of 125 barrels into the Magdalena River.

The spill occurred while repair activities were being conducted to an underwater pipeline that transports crude from the auxiliary station of the municipality of Cantagallo (Bolívar) to the Isla 6 station located in the town of Puerto Wilches (Santander). The incident, which occurred on June 13, 2018, caused oil to spill into the Magdalena River, reported the daily newspaper El Tiempo.

The estimates, of the barrel amounts, were made utilizing hydraulic simulation computer tools, data about the length and altitude of the pipeline, pressure, the observed failure area of the pipeline, fluid characteristics, water cut of the transported fluid, the time at which the event started, as well as filling volume during commissioning.

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Ecopetrol Director to Divest of Shares

(Energy Analytics Institute, Ian Silverman, 28.Jun.2018) – Authorization has been granted to a director to sell shares of Ecopetrol S.A.

The Board of Directors of the Ecopetrol has unanimously authorized company Director Dr. Héctor Manosalva Rojas to sell 49,380 of his shares in Ecopetrol.

The transaction was authorized under Article 404 of the Colombian Commercial Code (Código de Comercio), reported the state oil company in an official statement.

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S&P Affirms Ecopetrol Rating

(Energy Analytics Institute, Ian Silverman, 28.Jun.2018) – The rating agency affirmed the investment rating for Ecopetrol, S.A.

Standard & Poor’s kept Ecopetrol’s long-term international rating at BBB-, with stable outlook, and stand-alone credit rating at bb+, reported Ecopetrol in an official statement.

In a recent report, the agency highlighted Ecopetrol’s solid financial results, with strengthened credit metrics, thanks to the capital discipline and efficiencies it has implemented, according to Ecopetrol. The rating agency noted the positive performance of the downstream and midstream segments, emphasizing the Cartagena refinery’s operating results during its stabilization stage. S&P also recognized Ecopetrol’s focus on increasing reserves, with the positive results posted on the 2017 balance sheet.

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Ecopetrol Files Collective Labor Claim

(Energy Analytics Institute, Ian Silverman, 28.Jun.2018) – Colombia’s state oil company has filed a collective labor agreement claim with the Ministry of Labor.

As prescribed by law, signatories of collective labor agreements are authorized to state their intentions to amend them through a claim and, if petitions are filed by the unions, the company, in this case Ecopetrol, and the union organizations would have to initiate negotiations for a new collective labor agreement, reported the company in an official statement.

The collective labor agreement between Ecopetrol and its direct employees is for a four (4) year period that began in 2014 and expires on June 30, 2018. Therefore, as explained in the paragraph above, the purpose of the claim filed by Ecopetrol is to state its intention to modify certain provisions of the agreement, consistent with the company’s growth and future prospects.

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Ecopetrol to Prepay $156 Mln in Loans

(Energy Analytics Institute, Ian Silverman, 20.Jun.2018) – Colombia’s state oil company Ecopetrol S.A. announced it will prepay all loans entered into in 2013 with international banks and guaranteed by the US Export-Import Bank, which had been subject to a payment schedule to 2023.

The loan agreements allow Ecopetrol to prepay without penalty all principal on the interest payment dates, which are scheduled for July 6 and 25, 2018. Total principal plus accrued interest owed is $155,979,564, the company announced in an official statement.

Ecopetrol said it is able to make this prepayment due to its cash position of COP 16.6 billion as of the first quarter of 2018. The Colombian company expects this cash position will remain strong and thus allow it to better confront crude price volatility scenarios and be prepared to seize opportunities that might arise for inorganic growth.

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Colombia Produced 865,987 B/D in May 2018

(Finance Colombia, Jared Wade, 14.Jun.2018) –Colombia produced an average of 865,987 barrels of oil per day in May, an uptick of 1.6% over May 2017 according to government figures.
This level also represents a 0.1% increase from April, and the slight increase marks the third straight month of rising production, according to the Ministry of Mines and Energy.

After five months, the annual average for the country now stands at 854,190 barrels of oil per day. This is almost exactly in line with the 2017 average of 854,121 barrels of oil per day yet still below the 885,000-barrel daily average of 2016.

The annual figure, however, still exceeds the Ministry of Mines’ previously released “medium-term” estimate of 840,000 barrels of oil per day.

The vast majority of the oil in Colombia is produced by state-controlled oil company Ecopetrol. The Bogotá-based company has set a goal of 725,000 barrels of petroleum-equivalent per day for 2018 and expects to drill at least 620 development wells and 12 exploration wells during the year to help replace falling reserves.

Frontera Energy, formerly known as Pacific Rubiales, produced an average of 52,195 barrels of oil per day in Colombia the first quarter of 2018. This was a slight decrease from the 56,593 it produced in the country compared to the first quarter of 2017.
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Ecopetrol to Invest COL$94.5 Bln on Infrastructure

(Energy Analytics Institute, Jared Yamin, 28.May.2018) ‐- Ecopetrol plans to invest a total of COL$94.5 billion Colombian pesos on infrastructure and education.

The funds for the seven projects will come from taxes, and will be destined for six Colombian departments, announced the state oil company in a Twitter post.

Department —- Type ————- Amount $COL Bln —– Area

Putumayo —— 1 Infrastructure —- $13.0 ——————- Puerto Caicedo
Caquetá ——– 1 Infrastructure —- $35.7 ——————- El Paujil, Cartagena del Chairá
Arauca ——— 1 Infrastructure —- $27.9 ——————- Arauca, Arauquita, Tame
Cesar ———– 1Infrastucture —– $4.7 ——————— La Gloria
Meta ———– 1 Infrastucture —– $2.6 ——————— San Martín
Nariño ——— 2 Education ——– $10.6 ——————- Barbacoas, Tumaco

Source: Ecopetrol
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Ecopetrol Says Tibú Field Affected by Continued Sabotage

(Energy Analytics Institute, Jared Yamin, 27.May.2018) ‐- Thefts of elements from producing wells coupled with infrastructure sabotage at the Tibú field in the municipality by the same name in Northern Santander continue to harm the environment and neighboring communities.

To date in 2018, Colombia’s state oil company Ecopetrol has registered 428 offenses, of which 246 include illegal valve connections that have led to the loss of an estimated 30,447 barrels of petroleum, announced the company in a post on its website. This compares to 202 illegal connections detected in the same period in 2017.

In terms of the environment, an estimated 98 incidents have been reported in 2018, which affected more than 11,700 square meters of ground cover and 5,700 square meters of different bodies of water.

Ecopetrol announced that some 127 offenses related to the operation of 59 producing and injector wells have been detected, including thefts of equipment such as solar panels, pipes, transformers, cables, and electric systems, among other materials.

Besides the cost aspect, these actions continue to produce negative environmental impacts and/or increase the possibility of incidents that could result in injuries or loss of life to people in/and around the area, Ecopetrol concluded.

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Ecopetrol to Initiate Drilling of 19 Wells in Akacías

(Energy Analytics Institute, Ian Silverman, 24.May.2018) – Ecopetrol and Talisman Colombia Oil & Gas (TCOG), a company of Repsol group, plan to initiate drilling of new production wells in late May 2018 at the Akacías field, located in the Acacías municipality in Meta.

Activities slated for the Akacías field development stage in 2018 consist of drilling a total of 19 wells, Ecopetrol announced in an official statement.

Currently, 9 active wells at the Akacías field produce an average 6,300 barrels per day of petroleum.
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Ecopetrol Plans Social Investments of 1.3 Bln Pesos in Meta

(Energy Analytics Institute, Ian Silverman, 24.May.2018) – Colombia’s state oil company Ecopetrol announced plans to make social investments of 1.3 billion Colombian pesos in Meta department, where the company and its partner Talisman Colombia Oil & Gas (TCOG) operate in the Acacías municipality.

Investments will be directed to the immediate area of influence and include activities at La Esmeralda, Loma de Tigre, Montelíbano, in Acacías and Santa Ana in Guamal, the state entity reported in an official statement.

Other related projects to receive assistance include: programs related to musical education and sports; improving education centers; boosting productive projects; finding solutions for potable water in villages; improving sports and health programs; among others.
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Fire at Barrancabermeja HDT Plant Controlled

(Energy Analytics Institute, Aaron Simonsky, 21.May.2018) – Colombia’s state oil company Ecopetrol announced that it has controlled a fire at the HDT plant of the Barrancabermeja refinery.
No injuries were reported and the refinery is operating normally, according to Ecopetrol.

Ecopetrol workers brought the fire — which occurred at the fuel hydrotreating unit that is out of service for programmed maintenance — under control, according to an Ecopetrol information sheet about the incident.

No injuries were reported and the refinery is operating normally, according to Ecopetrol.
***

Ecopetrol Profit Rises Nearly 200% in First Quarter

(Reuters, 4.May.2018) – Ecopetrol, Colombia’s state-run oil company, said on Thursday that its first quarter net profit rose to 2.6 trillion pesos ($923.3 million), up 195 percent from the same period in 2017, thanks to improved efficiencies and higher crude prices.

The results were the best first quarter showing in four years, the company said in a regulatory filing.

Ecopetrol plans to invest between $3.5 billion and $4 billion during 2018, as it reboots production and exploration after being battered by the global fall in crude prices.

Consolidated oil and gas production in the first quarter fell to 701,000 barrels per day (bpd) because of February protests that led to blocked roads and the temporary closure of some fields, the company said.

Despite the output fall, Ecopetrol said it would not change its production goal for the year.

“We’re keeping our yearly production goal at between 715,000 and 725,000 barrels per day,” chief executive Felipe Bayon said in the statement.

Ecopetrol produced an average of 715,000 bpd in 2017.

Earnings before interest, taxes, depreciation and amortization in January to March increased by 23 percent compared with the same quarter in 2017, to 7.15 trillion pesos, the company said.

Total sales in the first quarter were up 9.5 percent compared with the same period last year, to 14.6 trillion pesos.

The company will hold a call with investors about the results on Friday.
***

Ecopetrol Provides Update on Emergency in Tumaco

In Tumaco. Source: Ecopetrol

(Energy Analytics Institute, Jared Yamin, 2.May.2018) – Colombia’s Ecopetrol published a brief update on emergency operations in Tumaco. In the area there are more than 100 workers, 9 control points (La Espriella, La Cortina, La Chorrera, El Muerto, La Brava, Pueblo Nuevo, Tangarial 1, Dos Quebrados, and Boca de Caunapí), 17 contention points and more than 1,000 meters of barrier to contain and then gather crude oil, according to an Ecopetrol graphic visual with information or info graphic published via Twitter.

Additionally, there are 6 tankers assigned to transport the gathered crude oil. In terms of attention to affected citizens in the area, Ecopetrol is providing some assistance and has distributed 45,000 liters of portable water to communities in La Espriella and Pueblo Nuevo.
***

Ecopetrol Reports Highest Net Income in Last 4 Years

(Energy Analytics Institute, Jared Yamin, 15.Apr.2018) ‐- During the first three months of 2018, Ecopetrol reported its highest quarterly net income in the last four years.

Colombia’s state oil company Ecopetrol announced its net income rose 195% in the first quarter of 2018 to COL$2,625 billion Colombian pesos compared to COL$886 billion in the first quarter of 2017, the company reported in a Twitter post.

The company reported quarterly net income of COL$363 billion in the same period in 2016 and COL$160 billion in the same period in 2015.

***

Colombia’s Attorney General to Investigate Ecopetrol Oil Spill

(Reuters, 3.Apr.2018) – Colombia’s attorney general’s office on Monday launched an investigation to determine whether officials from state-run oil company Ecopetrol could be held criminally responsible for a oil spill of 550 barrels in Santander province.

The Lisama 158 well, which was in the process of being shut down because of low production, leaked crude into a ravine over a three-week period, contaminating the water and affecting animal and plant life.

“The investigation will seek to establish if individual officials from Ecopetrol were responsible and could be penalized,” an official from the attorney general’s office told Reuters.

The country’s procurator general – which has the power to remove officials from their jobs – and the environmental licensing agency are also conducting investigations into the leak.

Ecopetrol Chief Executive Officer Felipe Bayon Pardo told journalists late on Monday the company will cooperate fully with all three investigations.

“We will do everything necessary to re-establish environmental and social conditions in the area. It’s our commitment and we will invest the human, financial and technological resources which are required,” said Bayon.
***

Expert Urges Faster Global Transition to Clean Energy

(Efe, 23.Mar.2018) – The world must accelerate its transition from a carbon-based to a clean energy-based economy to put the brakes on a climate catastrophe that already causes 4.8 million deaths annually, the director of an organization that aims to facilitate understanding of global climate change said Friday at a conference in this northern Colombian city.

Klimaforum Latinoamerica Network Director Manuel Guzman Hennessey made his remarks during a panel discussion on the final day of a Colombian Natural Gas Association (Naturgas) conference in Cartagena.

He said that when the current fossil-fuels-based energy model was developed “no was thinking about creating an economy that would kill people.”

But the pollution and climate change stemming from greenhouse gas emissions have caused a catastrophic situation, according to the expert.

“The problem with this economy is that it causes 4.8 million deaths each year worldwide,” Guzman Hennessey said at Congreso Naturgas 2018, citing World Bank figures.

He added that the situation would grow more severe, with a much worse financial and human toll, if effective measures are not taken.

Guzman Hennessey said the world must devote 1.7 percent of global gross domestic product to address climate change-triggered catastrophes.

He added that at the present pace by 2030 climate change-induced disasters will cause agricultural damage, flooding and other phenomena that plunge some 100 million people into poverty.

“If we as a civilization are not able to stop this, before 2030 we’ll need to invest 3.2 percent of global GDP in dealing no longer with 4.8 million deaths but between 6.5 and 7 million deaths each year,” Guzman Hennessey said, referring to World Bank projections.

Congreso Naturgas 2018 concludes Friday after three days of debates on the use of natural gas as a transition fuel between oil and coal, the most contaminating energy sources, and clean energy sources such as solar and wind.

***

Venezuela Output to Fall 100-150 Mb/d in 2017

(Energy Analytics Institute, Piero Stewart, 26.Mar.2017) – An inability to boost foreign and domestic investments in Venezuela’s oil sector in 2017 will result in further declines in the Caribbean nation’s production of crude oil, according to IESA Professor Richard Obuchi.

Producing petroleum requires investments, and if they do not materialize, oil production is expected to fall an additional 100,000 to 150,000 barrels per day, announced Obuchi during the conference titled “Economic Perspectives 2017” held at the Instituto de Estudios Superiores de Administración (IESA) in Caracas. “Economic activity is expected to fall between 4 and 6 percent of GDP,” he added.

“PDVSA’s capacity to maintain production fell in 2016 due to, [but not limited to], a lack of investments and obligations related to financial debts,” said the Full Professor of Political Economy and Governance at the IESA Business and Public Policy School Michael Penfold during the conference. As a result, in 2016, PDVSA experienced a 12 percent decline in production, he said.

“When someone compares PDVSA’s investments levels with other state oil companies such as Pemex and Ecopetrol they will see the companies have been reducing investments. PDVSA has reduced investments much more than Pemex, Ecopetrol and even Rosneft, and we’re talking about investment reductions at PDVSA that not only prevents it from maintaining production but fundamentally explains why production has been declining so much in recent years,” concluded Penfold.

***

Ecopetrol’s Annual General Shareholders’ Meeting

(Ecopetrol, 27.Feb.2017) – The Chief Executive Officer of Ecopetrol S.A. announced details of the Annual General Shareholders’ Meeting held on March 31, 2017 at the International Center of Business and Exhibitions (Centro Internacional de Negocios y Exposiciones, Corferias), Bogotá, Colombia.

The agenda for the meeting included:

— Safety guidelines

— Quorum Verification

— Opening by the Chief Executive Officer

— Approval of the Agenda

— Appointment of the Meeting’s President

— Appointment of the Commission in charge of scrutinizing elections and polling

— Appointment of the Commission in charge of reviewing and approving the minutes of the meeting

— Presentation of the report concerning the Board of Directors’ activities, the Board’s evaluation of the Chief Executive Officer’s performance, as well as the company’s compliance with the corporate governance code

— Presentation of 2016 performance report by the Board of Directors and by the Chief Executive Officer

— Review and consideration of financial statements and consolidated financial statements as of December 31, 2016

— Review of the External Auditor’s Report

— Approval of reports presented by the Management, and the External Auditor and approval of Financial Statements

— Approval of proposal for dividend distribution

— Election of the External Auditor and assignment of remuneration

— Election of the Board of Directors

— Propositions and miscellaneous

As from March 8, 2017, shareholders will exercise the right to inspect the books and documents that the Colombian Commercial Code refers to. This information may be consulted at the company’s main offices (Cra. 7 No. 37-69 Bogota, Colombia), in a time schedule from 7:30 a.m. to 4:00 p.m. 2015 performance report may be consulted on Ecopetrol web site.

***

Ecopetrol Auction Related to EEB Declared Void

(Ecopetrol S.A., 15.Feb.2017) – Ecopetrol S.A. reported results of the fourth auction corresponding to Stage Two of the Program to Transfer and Award its 28,465,035 shares of Empresa de Energía de Bogotá S.A. E.S.P. The bidding session was declared void.

***

Ecopetrol Notice for Empresa de Energía de Bogota

(Ecopetrol S.A., 8.Feb.2017) – Ecopetrol S.A. announced on February 8, 2017, as established in the Offering Notice of Second Stage, the company published the offering notice regarding the fourth auction for the second stage of Ecopetrol’s equity divestment plan for its shares in Empresa de Energía de Bogota S.A. E.S.P. (EEB) in a newspaper widely circulated in Colombia.

The fourth auction is part of the second stage of the equity divestment plan and the purpose is to offer publicly, in Colombia and/or abroad, the shares that were not acquired during the first, second and third auctions.

The public offering will be conducted prior to the start of common stock trading in the Colombian Stock Exchange on February 15, 2017, in accordance with the provisions set forth in the Divestment Regulation and the applicable addenda.

Ecopetrol’s equity divestment plan, including the second stage, was approved by the National Government of Colombia through Decree 2305 of November 13, 2014, with an extension to December 31, 2017 through Decree 2110 of December 22, 2016.

***

Fitch Improves Ecopetrol’s Rating Outlook

(Fitch, 1.Jan.2017) – Ecopetrol S.A. reported that on March 14, 2017, rating agency Fitch Ratings improved the outlook for the company’s rating from a negative to a stable outlook. At the same time it maintained the local and foreign currency long-term risk rating at BBB.

According to Fitch, the improved outlook for the rating of Ecopetrol incorporates the improvement to stable of the rating of the Republic of Colombia.

***

Fitch Reaffirms Ecopetrol Investment Grade

(Ecopetrol, 12.Dec.2016) – Ecopetrol S.A. reported the risk rating agency Fitch Ratings kept the company at investment grade, with an international rating of BBB.

Fitch notes the important link between the company and the Republic of Colombia’s rating, and the Ecopetrol business group’s strategic relevance to the country.

The agency further reported that Ecopetrol’s individual rating is also investment grade with a rating of BBB; and including the government’s support this rating raises to BBB. The aspects the rating agency took into account in issuing its rating included: the company’s solid financial profile, a downward-trending debt/EBITDA ratio, solid liquidity and a schedule of moderate debt maturities in coming years.

The agency also noted Ecopetrol’s operational metrics and the decline in extraction costs in recent years.

Finally, it maintained the company’s negative perspective, consistent with the Republic of Colombia’s outlook.

***

Ecopetrol Notice Regarding ISA Divestment Plan

(Ecopetrol, 10.Dec.2016) – Ecopetrol S.A. announced that on December 10, 2016, as established in the Offering Notice of Second Stage, the company published the offering notice regarding the fourth auction for the second stage of Ecopetrol’s equity divestment plan for its shares in Interconexión Eléctrica S.A. E.S.P (ISA) in a newspaper widely circulated in Colombia.

The fourth auction is part of the second stage of the equity divestment plan and the purpose is to offer publicly, in Colombia and/or abroad, the shares that were not acquired during the first, second and third auctions.

The public offering will be conducted prior to the beginning of common stock trading in the Colombian Stock Exchange on December 14, 2016, in accordance with the provisions set forth in the Divestment Regulation and the applicable addenda.

Ecopetrol’s equity divestment plan, including the second stage, was approved by the National Government of Colombia through Decree 1800 of September 09, 2015.

***

Venezuela to Soon Initiate Gas Shipments to Colombia

(Energy Analytics Institute, Piero Stewart, 4.Jul.2016) – Venezuela plans to soon initiate shipments of natural gas to Colombia, reported Venezuela’s new agency AVN, citing the country’s Oil Minister Eulogio Del Pino.

The gas will come from the Perla field offshore, which is part of the Cardon IV project.

“We are producing 600 million cubic feet per day of natural gas, sufficient to export and satisfy domestic needs,” said Del Pino, who also serves as the president of the state oil company PDVSA.

***

Ecopetrol Offers 20 Production Assets

(Ecopetrol S.A., 24.Jun.2016) – Ecopetrol S.A. announced that it launched ‘Ronda Campos 2016,’ a public and competitive bidding process, the objective of which is to offer to oil and gas companies Ecopetrol’s stake and interests in 20 production assets located in the regions of Catatumbo, the Magdalena Middle and Upper Valley, Llanos and Putumayo.

‘Ronda Campos 2016’ is part of Ecopetrol’s new strategy for 2015-2020, which is based on creating sustainable value and more efficient operation of assets. One of the objectives of the ‘Ronda Campos 2016’ is the rotation of Ecopetrol’s portfolio in search of the greatest profitability for its shareholders.

The business opportunities offered have development potential in primary recovery and improved recovery. The fields are located near logistical facilities, which are an added attraction for small- and medium-sized oil and gas companies.

The process, which was presented to industry representatives, is a public bidding process addressed to national and international companies that would like to strengthen their position in Colombia or that seek to expand their operations in the country.

***

Ecopetrol Successfully Prices Int’l Bond for $500 Mln

(Ecopetrol S.A. 10.Jun.2016) – Ecopetrol S.A. reports that, on June 8, 2016, based on the authorization granted by the Ministry of Finance and Public Credit (Resolution 1657 of June 7, 2016) to subscribe, issue and place External Public Debt Bonds in the international capital markets, it reopened its 2023 Bond for $500 million.

The offering had an order book of $1.7 billion or 3.4 times the amount offered and participation of more than 130 institutional investors from the U.S.A., Europe, Asia and Latin America. This transaction ratifies investors’ confidence in the decisions that have been made to face the pricing environment and Ecopetrol’s future.

The resources obtained will be used for general corporate purposes, including the company’s investment plan for the current year. With this operation, the company has achieved financing for 2016 in an amount totaling approximately $1.27 billion, covers most of the company’s projected financing needs for 2016.

This offering was made pursuant to a shelf registration statement on Form F-3 that was filed with and declared effective by the Securities and Exchange Commission (SEC).

***

Fitch Rates Reopening of Ecopetrol Notes

(Fitch Ratings, 8.Jun.2018) – Fitch Ratings rates the $500 million reopening of Ecopetrol S.A.’s 5.875% notes due in 2023 ‘BBB’.

The company expects to use the proceeds from the proposed reopening for general corporate purposes, including capital expenditures.

Fitch’s Foreign and Local Currency Issuer Default Ratings (IDRs) for Ecopetrol are ‘BBB’ and ‘BBB+’, respectively, with a Stable Outlook. The company’s ratings reflect the close linkage with the Republic of Colombia (FC/LC IDRs ‘BBB’/’BBB+’), which currently owns 88.5 percent of the company.

Ecopetrol’s ratings also reflect its strong financial profile and improving production levels. Ecopetrol’s recently revised growth strategy and associated CAPEX plan are considered adequate for the company’s credit quality and cash flow generation ability. Ecopetrol is expected to maintain a financial and credit profile consistent with the assigned rating.

***

Ecopetrol Continues Hedge Accounting Policy

(Ecopetrol S.A., 7.Jun.2016) – Ecopetrol S.A. announced that its Board of Directors, in a session held on June 6, 2016, approved the implementation of “Hedge of a net investment in a foreign operation” accounting as established under the International Accounting Standard IAS 39 (paragraph 102) and Decrees 2420 and 2496 of 2015 regarding International Financial Reporting Standards (IFRS). The decision seeks to reduce the volatility within the nonoperational results of the company due to the effects of fluctuations in foreign exchange rates.

The net investment hedge will apply to a portion of the foreign currency investments that the Company owns and whose functional currency is the U.S. dollar, with the hedging instrument being the portion of our dollar denominated debt that generated a net liability position by the end of May.

As from the adoption of net investment hedge accounting, the effect of fluctuations in the foreign exchange rate on the hedged instrument will be recognized as Other Comprehensive Income (OCI) in Equity, where currently the foreign exchange effect on subsidiaries which have the U.S. dollar as their functional currency is recorded when accounted under the equity method. This policy is subject to a test of effectiveness and the ineffective portion will be recognized in profit or loss.

The amounts recognized in OCI will be taken into profit and loss only if and at such time the investments designated for purposes of the net investment hedge are sold. In the meantime such fluctuations will remain in Equity, even after debt payments are made.

The net investment hedge will be applied prospectively from June 7, 2016. This accounting change will be treated alike for both Colombian IFRS and IFRS as issued by the IASB.

***

Company Profile: Oleoducto Central S.A. (Ocensa)

(Moody’s, 4.Jun.2016) – Oleoducto Central S.A. (Ocensa) is the largest crude oil pipeline and the only public-use pipeline in Colombia. Its pipeline is ~845 km in length with 745,000 b/d of capacity starting in mid-2016. Ocensa connects the country’s largest crude producing fields in the Llanos Basin at El Porvenir to export facilities at Covenas on the Caribbean coast.

The company is owned 72.65 percent by Ecopetrol through its wholly-owned midstream subsidiary, Cenit SAS. The remaining stakes are owned 22.35 percent by Advent International and 5 percent by Darby Overseas (a subsidiary of Franklin Templeton), both private equity firms. Advent purchased its stake in December 2013 from long-time owner/shippers Total SA, Repsol Oil & Gas Canada Inc. formerly Talisman Energy Inc., and CEPSA, a Spanish refining subsidiary of IPIC, an investment fund of the government of Abu Dhabi.

***

Ecopetrol Equity Divestment Plan for EEB Shares

(Ecopetrol S.A. 2.Jun.2016) – Ecopetrol S.A. announced that on June 1, 2016, through the X-STREAM trading system of the Colombian Stock Exchange (Bolsa de Valores de Colombia S.A.), the second auction was held for the second stage of the program to divest and sell 278,225,586 of Ecopetrol’s shares of the company Empresa de Energía de Bogotá S.A. E.S.P. (EEB).

The equity divestment plan was approved by the National Government of Colombia through Decree 2305 of 2014. As all of the shares offered in the second auction were purchased, Ecopetrol has the option of holding up to two additional auctions for the remaining number of shares, 86,585,888, in the time and manner indicated in the offering notice.

***

Colombia Needs Investments of $7 Bln

(Energy Analytics Institute, Jared Yamin, 1.Jun.2016) – Colombia needs to invest an estimated $7 billion per year over a ten-year period or under to remain self-sufficient in the production of petroleum.

The outlook for Colombia’s petroleum sector in terms of self-sufficient is ‘reserved,’ reported the daily newspaper El Tiempo, citing Colombia’s Petroleum Association (ACP by its Spanish acronym) President Francisco José Lloreda.

Expected investments of $3.82 billion on exploration and production activities may not materialize, announced the official, adding that no seismic has been shot in 2016.

“If the tendency does not change, by the year 2022 production could fall below an average of 400,000 barrels per day,” said Lloreda. “This would be when that it would be necessary to import crude for the Cartagena and Barrancabermeja refineries.”

We require a competitive fiscal regime, said Lloreda, referring to what is needed to attract investments.

***

Moody’s Confirms Ecopetrol Investment Rating

(Ecopetrol S.A. 10.May.206) – Ecopetrol S.A. announced that Moody’s Investors Service has maintained Ecopetrol’s credit rating at Baa3.

This confirmation means that the company will retain its investment grade rating, which had been assigned to it by Moody’s on January 18, 2016, and concludes the ratings review initiated on January 16, 2016.

In its report, Moody’s highlighted the company’s adjustment to its investment plan to protect its liquidity, the increase in refining capacity due to the start-up of the Cartagena Refinery, and favorable results in the midstream segment. It also noted the efficiency program, which has enabled Ecopetrol to successfully face the challenging low crude oil price environment.

Moody’s also established the company’s outlook as negative, due to the impact that low international crude oil prices may have on the exploration and production segments.

***

Moody’s Affirms Ocensa’s Baa3 Ratings

(Moody’s, 4.May.2016) – Moody’s affirmed Oleoducto Central, S.A.’s (Ocensa) Baa3 senior unsecured ratings. The rating outlook was changed to negative from positive.

Ratings Rationale

“The equalization of Ocensa’s ratings and outlook to those of Ecopetrol, S.A. (Ecopetrol, Baa3 negative) reflects Moody’s view that Ocensa is not insulated from the credit quality of its main shareholder and controlling entity,” said Nymia Almeida, a Senior Credit Officer in Moody’s. “The change in outlook to negative from positive also incorporates the negative oil production growth trend in Colombia, offset by our expectation that Ocensa will remain the transportation of choice in the country.”

Ocensa’s Baa3 rating reflects its leading industry position in Colombia and strategic importance to Ecopetrol as well as favorable industry dynamics in Colombia in terms of transportation demand for pipelines.

The company’s ratings also incorporate its tariff and contract structure that supports solid margins and predictable cash flow as well as a moderate financial leverage profile. These factors help offset its exposure as a single-asset pipeline, its relatively small scale within the midstream peer group, and a high dividend payout policy.

The company is close to completing its latest major growth project, which will increase its transportation capacity to 745,000 b/d from 610,000 b/d. In addition, the last tariff revision, in late 2015 and valid for the next four years, kept the prevailing tariffs unchanged. Both events will increase Ocensa’s cash generation, which will further strengthen its credit metrics starting in mid2016.

Although political and guerilla risk in Colombia is a lingering concern, Ocensa has not directly experienced any problems in recent years and its 100 percent underground pipeline system gives the company a competitive advantage.

Ocensa has adequate liquidity, with operating cash needs of about $50 million versus the company’s policies to maintain a minimum of $100 million in cash at all times as a cushion. Starting this year, CAPEX will be small and limited to maintenance only. In addition, the company’s next major debt payment is due in 2021. However, Ocensa pays out 100 percent of net profit in dividends, which is detrimental to bondholders. The company has no committed bank facilities but has close relations with Colombian banks.

Although Moody’s expects that Ocensa’s credit profile and cash flow generation will remain strong given its predictable tariff structure and high capacity utilization, the negative outlook reflects Ocensa’s strong ties with Ecopetrol, its controlling shareholder and main off-taker.

Large projects or acquisitions that increase financial leverage could trigger a negative rating action, although Moody’s believes that Ocensa’s management and Ecopetrol are aligned in a desire to maintain modest leverage at the pipeline. A downgrade of Ecopetrol’s or Colombia’s sovereign rating could result in a rating downgrade for Ocensa.

For Moody’s to consider a ratings upgrade, Ocensa would have to sustain current credit metrics but show lower vulnerability to Ecopetrol’s financial profile and have a dividend policy more aligned with the interests of bondholders. An upgrade of Ecopetrol could also result in a upgrade of Ocensa’s ratings. A rating upgrade of Colombia’s sovereign rating would not necessarily trigger a rating upgrade of Ocensa.

***

Ecopetrol Announces Results for 1Q:16

(By Ecopetrol S.A. 3.May.2016) – Ecopetrol S.A. announced Ecopetrol Group’s financial results for the first quarter of 2016, prepared and filed in Colombian pesos (COP$) and under International Financial Reporting Standards (IFRS) applicable in Colombia.

— Amid the lowest Brent price of the last 12 years, in the first quarter of 2016 the Group achieved a net income attributable to shareholders of Ecopetrol of COP$363 billion.

— Net income attributable to shareholders of Ecopetrol, increased 127 percent as compared to the first quarter of 2015.

— Solid cash flow generation with an Ebitda margin of 39.5 percent, resulting in an Ebitda of COP$4.1 trillion for the first quarter of 2016.

— Group’s savings amounted COP$421 billion during the first quarter of 2016. The company continues to demonstrate its capacity to adapt under an adverse price scenario.

Ecopetrol S.A. President Juan Carlos Echeverry G. commented on the results:

“The price environment in the first quarter of 2016 continued to defy the oil industry, which saw the value of crude reach $28/barrel, a 12 year record low. Ecopetrol, however, managed to generate profits amid this challenging environment, focusing its efforts on reducing costs, increasing efficiency, producing profitable barrels and prioritizing cash generation.

During the first quarter of 2016 the price of Ecopetrol’s crude basket fell 43 percent and its refining margin fell 24 percent in comparison to those of the same period of 2015. The actions undertaken to operate more efficiently and with lower costs, coupled with the positive impact of the devaluation of the exchange rate over our revenues and the recording of a lower financial net loss allowed to register a growth of 127 percent in net profit attributable to shareholders and to improve the EBITDA margin compared to those of the first quarter of 2015. Additionally, the company maintained its operating margins and EBITDA at approximately COP$4,000 billion compared to the same quarter.

Savings in costs and expenses contributed to the obtained results, these amounted to COP$421 billion in the first quarter of the year, against a target of COP$1,600 billion for all 2016. The efficiencies are mainly due to the optimization of purchasing and contracting plans, better procurement strategies and renegotiation of contracts.

The reduction of the lifting cost, cash cost of refining and transportation costs, reported in the first quarter of 2016, compared to the same period last year, are a result of the progress made by the company pursuant to the Transformation Plan, the devaluation of the COP/USD exchange rate and austerity and activity reduction measures implemented in all business segments. Ecopetrol is working so that the obtained efficiencies become structural even in an environment of increasing prices in order to ensure profitable operations and financial sustainability.

The adjustments in CAPEX and OPEX implemented since 2015, in line with lower oil prices and the strategic prioritization of value over volume led to programmed lower activity and lower production in the first quarter of 2016, which came to 737 thousand barrels equivalent per day, compared to 773 thousand in the first quarter of 2015. This fall also reflects the natural decline and the temporary closure of some fields caused by low profitability or judicial decisions. Once market conditions and cash availability improve, the company expects to increase levels of investment in exploration and production and give way to investments that have been postponed in this low crude oil price environment.

In exploration, the deep water appraisal well Leon 2 in the Gulf of Mexico of the United States was completed. This one is operated by Repsol, which holds a 60 percent stake. The remaining 40 percent belongs to Ecopetrol America Inc. The company is awaiting the results of the evaluation of the information provided by the well, located in one of the regions with the greatest potential for hydrocarbons in deep waters in the world.

Between the first quarter of 2015 and 2016 the gross margin of the refining segment decreased by $4.5 per barrel mainly as a result of market conditions marked by lower spreads between prices of middle distillates and the price of oil.

The Cartagena refinery continued its boot and stabilization process, obtaining a regular operation of the delayed coking, catalytic cracking and diesel hydro-treaters units. As of March 31, 28 units of a total of 34 were operational. It is expected that all units in the complex will be in full operation by the second half of 2016. Additionally, loads of crude up to 140 thousand barrels of oil a day have been achieved.

Test of high viscosity crude transportation were started in February 2016. Satisfactory results were obtained moving oil with a viscosity of 405 centistokes (cSt). This project, along with the expansion of capacity in Ocensa (P-135) will reduce the cost of dilution which is key to the production of heavy crudes, which today represent about 58 percent of the total production of the Group.

In December 2015 the company imposed a significant cut on its 2016 investments compared to the levels of previous years with the approval of a budget of $4,800 million. The need to preserve the financial sustainability of the company with the low oil prices environment prompted a further cut in the investment plan for 2016, which now will range between $3,000 and $3,400 million. The expected production was adjusted to this new reality from 755 thousand barrels per day to approximately 715 thousand barrels of oil equivalent per day.

2016 is a transition year for the Ecopetrol Group during which the cycle of investments in Midstream and Downstream will conclude with some transport projects and the startup of the Cartagena refinery. From 2017 on the company will devote a greater proportion of its investments to Upstream.

Financing needs for this year are in the $1,500 – $1,900 million range, without taking into account the resources that may be obtained from the company’s divestment plan. To date, $475 million has already been obtained through credit facilities with local and international banks.

Cash flow was also leveraged by the results of the auction of Ecopetrol´s stake in ISA held in April 2016, which allowed allotting shares in the amount of COP$377 billion.

Shareholders also contributed to the financial strengthening of the company with the decision not to distribute dividends in 2016, which was made during the last general meeting of shareholders.

Operational excellence, focus on capital discipline, rationalization of investments and rotation of the portfolio of assets to generate cash flow have enabled Ecopetrol to successfully navigate the current price environment.

Ecopetrol continues to position itself for the future by strengthening its portfolio of exploration and production in order to seize opportunities that may be generated in the next cycle of higher crude oil prices. In this way we can ensure growth in the long term, financial sustainability and value creation for Ecopetrol.”

***

Ecopetrol Adjusts its 2016 Investment Plan

(Ecopetrol S.A., 27.Apr.2016) – Ecopetrol S.A. announced that in light of the current low crude oil price environment, and with the aim of protecting the company’s cash flow and financial sustainability, its Board of Directors approved an adjustment to the 2016 Investment Plan, from $4.8 billion, as approved on December 2015, to a range between $3 and $3.4 billion.

2016 is a year of transition for the Ecopetrol Group, during which investments will be made to finish transportation projects and complete the start up the new Cartagena Refinery. Starting in 2017, the company will dedicate a larger portion of its investments to the exploration and production segments.

In exploration and production, resources will be allocated to the development of principal fields and the assessment of exploratory findings. 93 percent of funds will be invested in Colombia and the rest overseas.

The resources required for the investment plan will be obtained from internal cash generation, divestment of non-strategic assets and financing. Financing needs for 2016 remain within the range of $1.5 billion and $1.9 billion for the Ecopetrol Group.

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Ecopetrol Oks Creation of New Subsidiary

(Ecopetrol S.A., 19.Aug.2015) – The Board of Directors of Ecopetrol S.A., in its meeting held on 14.Aug.2015, authorized the creation of a Colombian company indirectly wholly owned by Ecopetrol.

The creation of the new subsidiary seeks to develop offshore activities in Colombia, which the company currently carries out as operator and nonoperator, and take advantage of the benefits of Decree 2682/14, “pursuant to which the conditions and requirements are established for declaring the existence of Permanent Offshore Free Trade Zones.”     Once the new company is created, the ANH’s approval will be sought in order to assign Ecopetrol’s contractual rights under the exploration and production contracts of the offshore blocks in which it is operator and non-operator.

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Ecopetrol Extraordinary Shareholder’s Meeting

(Ecopetrol S.A., 14.Aug.2015) – Due to the resignation of Mr. Gonzalo Restrepo Lopez and the election of his replacement, the CEO of Ecopetrol S.A. hereby calls on Shareholders to attend the extraordinary shareholders’ meeting to be held on 4.Sep.2015, starting at 7:30 a.m. at Ecopetrol’s auditorium located in Cra.13 No. 36 – 24, Bogota, Colombia.

The agenda of the meeting will be: – Safety guidelines, – Quorum verification, – Opening by the CEO of Ecopetrol, – Approval of the agenda, – Appointment of the President for the meeting, – Appointment of the Commission in charge of scrutinizing elections and polling, – Appointment of the Commission in charge of reviewing and approving the minutes of the meeting, and – Election of the Board of Directors (originated in the vacant position due to the resignation of Mr. Gonzalo Restrepo Lopez as director of the Board).     The resumes of the current directors and the candidate nominated by the majority shareholder to fill the vacant position are available on Ecopetrol’s Web site.

Shareholders that are not able to attend the Shareholders’ Meeting may be represented through a proxy, granted in writing, pursuant to the requirements provided for under Colombian Corporate Law. In order to facilitate the fulfillment of these requirements, shareholders are allowed to download from the website, various proxy models that have been designed for each relevant case.

Except for the cases of legal representation, officers and employees of Ecopetrol shall not be entitled to represent shares other than their own, while in exercise of their posts, nor shall be allowed to substitute the powers of attorney conferred upon them.

In all events, shareholders’ representation shall be subject to the rules set forth under Colombian Corporate Law and Securities Regulations, concerning illegal, unauthorized and unsafe practices by the issuers of securities.

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Ecopetrol Announces 2Q:15, 1H:15 Results

(Ecopetrol S.A., 5.Aug.2015) – Ecopetrol announced Ecopetrol Corporate Group’s financial results for the 2Q:15 and the 1H:15, prepared and filed in Colombian pesos (COP$) and on the basis of International Financial Reporting Standards (IFRS).

According to Article 3 of Decree 2784 of 28.Dec.2012 , the application date of the new technical framework is 31.Dec.2015 , therefore, the financial information presented prior to this date is subject to adjustments.     As indicated in paragraphs 9 and 18 of International Accounting Standard 27 “Consolidated and Separated Financial Statements,” Ecopetrol and its Corporate Group must present their financial information on a consolidated basis, combining the financial statements of the parent company and its subsidiaries line by line, adding assets, liabilities, shareholder’s equity, revenues and expenses of a similar nature, removing the reciprocal items between the Corporate Group and recognizing the non-controlling interest.

The financial results in this report are not comparable line by line with the previously issued financial results for the 2Q:14, which were prepared in accordance with the Public Accounting Regime (Regimen de Contabilidad Publica) as adopted by the Colombian National Accounting Office. For the sake of comparison, the financial results that were already reported in the 2Q:14 are presented in this report under IFRS.

Some figures in this release are presented in U.S. dollars (US$) as indicated (Editor’s Note: Tables Not Available in this edition). The exhibits in the main body of this report have been rounded to one decimal. Figures expressed in billions of COP$ are equal to COP$1 thousand mln.

In the opinion of Ecopetrol’s CEO Juan Carlos Echeverry G.:

“Ecopetrol is disciplined with its costs adjustment program, aimed to gain efficiencies in different areas. Thus, we have already obtained savings of COP$0.6 tln. These savings are mainly the result of renegotiations with our contractors. We have solidified our long term relationship; our allies understand that the current circumstances call for extraordinary actions, and the mutual commitment to mitigate the effects of this scenario of low oil prices.

The Barrancabermeja refinery is now more efficient, thanks to the operation of the new turbo gas unit, which will translate into efficiencies in the energy generation cycle and a lower emission of greenhouse effect gases of 200 thousand tons equivalent per year. We also improved the cost of drilling by lowering the average number of days required by well, in Castilla and Chichimene fields, from 34 days in 2014 to 28 in 2015.

Facing a challenging oil price scenario, the company is adopting the adjustments required, based on its recently announced strategy, to continue searching for efficient and profitable barrels.

In our transformation plan we identified 630 initiatives throughout the company, aiming at savings of COP$ 1.4 tln in 2015. We are promoting ethic and transparency in our purchase and contracting processes, and investment projects.

We continue to prioritize the lives of people and workers, the well-being of the communities in which we operate and the environment. The accident frequency index in Ecopetrol was reduced by 38% between the 2Q:14 and the 2Q:15, from 0.77 to 0.49 accidents/million hours of labor, reflecting improved labor conditions.

On another front, Ecopetrol was subject of an irrational wave of attacks against our transportation infrastructure in June, in some provinces located next to Venezuela and Ecuador’s borders. The company demonstrated, once again, its capacity to face the crisis by deploying 500 workers to stop the leakage in the Mira River and do all the cleaning tasks necessary to mitigate the damage caused.

In the finance area, this quarter was better than the previous due to the growth trend shown by crude and product prices, while the exchange rate, which holds a negative correlation to these, reversed part of the trend toward devaluation shown in the first quarter. This was achieved despite the deterioration in environment conditions around Jun.2015, stemming from attacks on transport infrastructure, which as we have repeatedly said, not only affected operations but caused irreparable damages to the environment and surrounding communities.

Production in the 2Q:15 reached 768 Mboe/d, in line with the goal of 760 Mboe/d, announced for 2015, representing an increase of 5% compared to production in the 2Q:14. This was the result of the opening of new facilities and the new drilling campaigns in the fields Castilla and Chichimene, as well as the normal operation of Cano Limon field throughout most of the quarter.

In exploration, drilling continued on the well Kronos, located offshore in the southern Caribbean (operated 50-50 by Anadarko in partnership with Ecopetrol), and drilling began on the well Sea Eagle in the U.S. Gulf of Mexico (operated by Murphy, WI 35%; Petrovietnam, WI 15%; and Ecopetrol America Inc, WI 50%).

In Jul.2015, Kronos well confirmed the presence of gas in ultra-deep waters. The discovery proves the geological model proposed for an unexplored area, with high hydrocarbon potential.

The refining margin of the Barrancabermeja refinery was $17.20/bbl in the 2Q:15, 58% more than in the 2Q:14 ($10.9/bbl). This was the result of better prices of refined products compared to crude and the higher yield of medium distillates.

The volume of crude transported in the 2Q:15 declined by 4% compared to the 1Q:15, due to the increased number of attacks on transport infrastructure, with 2 in the 1Q:15 and 44 in the 2Q:15, 36 of these in the month of June. Compared to the 2Q:14, volume transported increased by 7.8%.

In our commercial activity, in line with our strategy of diversifying the destination of our products, we exported to South Korea and the U.S. East coast. Also, with the purpose of increasing our footprint in the Asian market, we announced our first shipment of crude to Japan, following the conclusion of negotiations with the company JX Nippon, which bought 2 MMbbls of Castilla crude to supply its refining systems.

The improved financial result in the 2Q:15 compared to the 1Q:15 is the outcome of better crude realization prices, which increased from $43/bbl in the 1Q:15 to $53/bbl in the 2Q:15. Although cost of sales showed an increase of 10% compared to the 1Q:15, given the higher costs of maintenance, purchases and product imports, when compared to the 1Q:14 we had a reduction of 11%, reflecting the cost optimization strategies that are gradually beginning to materialize. In line with this, we achieved a $2.32/bbl reduction of our lifting cost, as a result of optimizations, between the 2Q:15 and the 2Q:14.

Our operating expenditures continued under control. Although in the 1Q:15 we recorded the applicable wealth tax for year 2015, in the 2Q:15 financial expenses were also reduced due to a lower impact of the exchange rate difference.

Thus, in the 2Q:15, the Corporate Group’s net revenue, attributable to Ecopetrol shareholders, was COP$1.5 tln pesos, compared to COP$0.16 tln in the 1Q:15 and COP$2.6 tln in the 2Q:14.

On another note, this past 26.May.2015, we announced to the market our new 2015-2020 strategy, aimed at profitable growth in exploration and production and maximization of efficiencies in transport and refining.

The strategy prioritizes value over volume, with emphasis on financial discipline, streamlining investments and divestment of non-strategic assets. The plan also foresees profound transformations within the organization, both in the business segments as well as in project management, technology, environment relations and investment portfolio management.

One month after launching our strategy, we successfully placed bonds in the international market for $1.5 bln , with an 11-year term and 3 times oversubscribed. The issue demonstrated, once again, the appetite and confidence of institutional investors in our company.

Also during the quarter, the risk rating agencies Fitch Ratings, Standard & Poor’s Ratings Services and Moody’s Investors Service, confirmed Ecopetrol’s ratings of BBB, BBB and Baa2, respectively, all with stable outlook, providing us the support needed to continue with our strategic plans as an investment grade issuer in the international capital market.”

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Ecopetrol Announces Caribbean Deepwater Find

(Ecopetrol S.A., 28.Jul.2015) – Ecopetrol informs that at a depth of 3720 meters, the Kronos-1 well verified the presence of hydrocarbons in ultra-deepwater of Colombian south Caribbean area. This discovery proves the geological model proposed for an unexplored area with high hydrocarbon potential.

Kronos-1 is located in block Fuerte Sur, 53 kilometers (33 miles) offshore, where partners Anadarko, operator, and Ecopetrol, each hold 50% interest.

“This discovery adds to the one accomplished in December at the Orca-1 well, located in the deep water of Tayrona block offshore Guajira, where we are partners with Petrobras, Repsol and Statoil,” reported Ecopetrol, citing company president Juan Carlos Echeverry. “These results are very important and confirm the potential of the Colombian Caribbean petroleum system in a vast area and are aligned with Ecopetrol´s new strategy, in which one of the key areas is the exploration on high potential marine basins.”

According to operator’s quarterly operations report, after drilling at a water depth of 1,584 meters (5,195 ft), the well reached total depth of 3,720 meters (12,200 ft) and encountered a net pay thickness between 40 to 70 meters (130-230 ft) of gas bearing sandstones.

Ecopetrol and Anadarko’s integrated technical teams are continuing to evaluate the Kronos discovery results. Nowadays the drilling operation continues, aiming to reach a deeper target to determine possible additional results.

In 2012, the Ecopetrol – Anadarko partnership undertook exploration in the South Caribbean in blocks Fuerte Norte , Fuerte Sur , COL5, URA4 and Purple Angel.

Our partner, Anadarko, is one of the most recognized companies worldwide for its experience in deepwater and ultra-deepwater exploration, project management and execution. Currently Anadarko is executing the biggest seismic acquisition campaign in the history of the Colombian Caribbean with an extension of more than 16,000 square kilometers.

Once activities at Kronos-1 are concluded, the drillship Bolette Dolphin, employed in this operation, will move to Fuerte Norte Block to continue drilling Calasu-1 well, located 145 kilometers or approximately 100 miles north east of Kronos-1.

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Ecopetrol Updates on BOD Decision

(Ecopetrol S.A., 19.Jul.2015) – Ecopetrol reports that, at the Board of Directors’ meeting on July 17, 2015, the Board of Directors decided as follows:

— To accept the resignation of Mr. Gonzalo Restrepo Lopez as member and chairman of the Board of Directors.

The Board of Directors gave special recognition to Mr. Restrepo’s work as chairman, in which he placed his unique human, managerial and leadership qualities at Ecopetrol’s service. The Board of Directors wishes him success in his new endeavor as a member of the government’s negotiating team in the peace process in Havana.

— To appoint Mr. Luis Fernando Ramirez, an independent Director, as the new chairman of the Board of Directors.

— To appoint the engineer Hector Manosalva Rojas, currently Ecopetrol’s Vice President of Development and Production, as the second alternate to Ecopetrol’s President.

— To appoint Ms. Juliana Alban as Corporate Vice President of Compliance, who will also act as the company’s Compliance Officer.

The Corporate Vice Presidency of Compliance is a unit that was recently approved within Ecopetrol’s organizational structure with the purpose of ensuring the highest standards of compliance and internal controls on the management of the company.

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S&P Maintains Ecopetrol Credit Rating

(Ecopetrol S.A., 1.Jul.2015) – Ecopetrol S.A. reported that the credit rating agency Standard & Poor’s has maintained Ecopetrol’s long term corporate credit rating at BBB with a stable outlook.

S&P’s mentioned that the new strategy presented by the company is in line with the current oil market conditions and prioritizes efficient barrels and shareholder returns. The rating decision also considers, among other things, the very important role of Ecopetrol in the Colombian economy.

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Moody’s Maintains Ecopetrol Rating at Baa2

(Ecopetrol S.A., 25.Jun.2015) – Ecopetrol S.A. reported that the credit rating agency Moody’s Investors Service has maintained Ecopetrol’s long term international rating at Baa2 with a stable outlook.

Moody’s mentioned that “the rating affirmation was based on Ecopetrol’s solid business strategy, now focused on expanding exploration activities to increase reserves as well as on improving production recovery and operating efficiencies across the board, which will help the company protect its credit quality through the current cycle of lower oil prices.”

The rating decision also considered, among other factors, Ecopetrol’s leading position in Colombia and the size of its operations.

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Ecopetrol Presents Details of Distribution Proposal

(Ecopetrol S.A., 24.Jun.2015) – Ecopetrol S.A. at the direction of the Finance Superintendence, hereby publishes the earnings distribution proposal that was approved by the Shareholders Assembly of 26.Mar.2015.

Accordingly, regarding the capitalization of the occasional reserve by means of an increase in the nominal value of each of our shares from COP$250 to COP$609, which was approved by 99.9942882% of the shares represented at the meeting on March 26, 2015 , Ecopetrol reports that of the total capitalized amount of COP$14,760,894,745,774, 13.1%, or COP$1,938,434,206,789, corresponds to earnings for the year 2014 that were allocated within the 2014 Earnings Distribution Proposal for the building up of occasional reserves, and 86.9%, or COP$12,822,460,538,985, correspond to reserves of prior fiscal.

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Moody’s Affirms Ecopetrol Rating

(Moody’s, 23.Jun.2015) – Moody’s affirmed Ecopetrol S.A.’s Baa2 ratings and assigned a Baa2 rating to the company’s up to $1.5 billion in proposed notes due 2026.

The proposed securities are senior unsecured and pari passu with Ecopetrol’s other senior foreign currency debt, which is also rated Baa2. Proceeds from the notes issuance will be used primarily to fund capital expenditures. The rating outlook is stable.

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Fitch Affirms Ecopetrol Ratings

(Ecopetrol S.A., 22.Jun.2015) – Fitch Ratings affirmed Ecopetrol S.A.’s foreign and local currency Issuer Default Ratings at ‘BBB’ and ‘BBB+’, respectively.

Concurrently, Fitch has affirmed the company’s national scale short and long-term ratings of ‘F1+(col) and ‘AAA(col). The Rating Outlook for all ratings is Stable.

According to Fitch, “Ecopetrol’s ratings reflect its strong financial profile and improving production levels. Ecopetrol’s recently revised growth strategy and associated capex plan are considered adequate for the company’s credit quality and cash flow generation ability. Ecopetrol is expected to maintain a financial and credit profile consistent with the assigned rating.”

In the report, Fitch mentioned that, “Ecopetrol’s relatively sizable reserves, stable production levels and dominant domestic market share allow the company to generate consistently strong cash flows from operations and meet its obligations in a timely manner.”

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Colombia’s Ecopetrol Reinvents Itself

(Ecopetrol, 26.May.2015) – Ecopetrol S.A.’s Board of Directors approved a new corporate strategy aimed at guaranteeing the company’s long-term sustainability, in which value generation based on efficient barrels and shareholder return become a priority.

Within a complex international price environment, the new strategy defines that Ecopetrol will be focused on oil and gas exploration and production, while seeking operational excellence in transportation, refining and petrochemical areas. The strategy also pursues the achievement of structural efficiencies, to allow the Group to increase its competitive levels in order to reach the best international standards.

In exploration, the Ecopetrol Group will build a portfolio that is robust and diversified, focused on high potential basins in Colombia and abroad, which is designed to increase significantly the Group’s contingent resources and reserves. In addition, the exploratory team based in Houston and Bogota will be strengthened by the addition of world-class human talent with proven track record.

In production, Ecopetrol will be focused on efficient barrels production, in major profitable fields, while carrying out a comprehensive program to increase the recovery factor. It will seek to increase average annual production between 1% and 2%, reaching a total of approximately 870 thousand barrels of oil equivalent per day by 2020, with an EBITDA target of more than $30/bbl in a price scenario for Brent crude of between $70/bbl and $80/bbl.

As for the company’s reserves, the objective is to increase proved reserves by 1,700 million barrels of oil equivalent by 2020.       In the transportation segment, the company will dedicate its efforts to increase efficiency in order to achieve international operating standards. The plan includes Cenit´s consolidation, the affiliate that will ensure the transportation of national crude, with a special focus on heavy crudes, as well as transportation of refined products for the Colombian market.

In refining and petrochemical, the strategy contemplates the start-up of the new Cartagena refinery during the 4Q:15, execution of an ambitious efficiency plan that will improve the competitiveness of existing assets and the promotion of the necessary regulatory conditions to ensure the business’s profitability within a framework of financial selfsustainability.

Ecopetrol will focus on profitable investments, at an average estimated level of $6,000 million per year through 2020, oriented toward high value projects that contribute to the execution of the new strategy.

The company will prioritize the protection of available cash for its operations, maintaining its access to local and international capital markets in competitive conditions. The preservation of business and finance metrics that credit rating agencies consider will be a priority to maintain our current credit rating.

The company will continue its program to divest non-strategic assets, as announced with regard its stake in EEB and ISA, among others, as well as nonstrategic exploration and production assets.

The strategy is based on producing efficient, clean and profitable barrels, which generate returns for our shareholders, interested groups and Colombians. The perspective toward 2020 will be to attempt to double the 2014 return on capital employed.

To support its strategy, in the beginning of 2015, Ecopetrol initiated a transformation plan that provides structural efficiencies to obtain annual savings close to $1,000 million in the period 20152020. This plan contemplates fundamental changes within the company, including its business, project management and technology segments as well as relationship with local communities and active portfolio management.

The plan also provides a cultural transformation that encourages and promotes the attainment of results and is based on the principles of integrity, collaboration and creativity.

Ecopetrol will prioritize innovation and knowledge generation. In the new strategy, technology and information systems will be focused on leveraging key business projects, especially in exploration and production.

The Ecopetrol Group is committed to production with zero accidents and environmental incidents, with a solid regional presence, prompt decisionmaking, with satisfied and committed employees, and a harmonious, mutually beneficial relationship with local communities.

Ecopetrol’s new strategy and the transformation plan that supports it, have as their goal the company’s reinvention in order to successfully compete in a challenging international environment.

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Ecopetrol Announces 1Q:15 Results

(Ecopetrol, 12.May.2015) – Ecopetrol S.A. reports the Group’s financial results for the 1Q:15, prepared and filed in Colombian pesos (COP$) and on the basis of International Financial Reporting Standards (IFRS).

According with the article 3 of the Decree 2784 of 28.Dec.2012, the application date of the new technical framework is 31.Dec.2015, so the financial information presented prior to this date is subject to adjustments.

As indicated in paragraphs 9 and 18 of the International Accounting Standard 27 “Consolidated and Separated Financial Statements” Ecopetrol and its Corporate Group must present their financial information on a consolidated basis as if they were a single entity, combining the financial statements of the parent company and its subsidiaries line by line, adding assets, liabilities, shareholder´s equity, revenues and expenses of similar nature, removing the reciprocal items between the Corporate Group and recognizing the non-controlling interest.

In the opinion of Ecopetrol’s CEO, Juan Carlos Echeverry:

“Despite the decline in oil prices, in the 1Q:15 the Group reached a positive financial result due to the good performance of its different segments and favorable environment conditions for the operation. Thus, operating and financial results of the Group on the 1Q:15 were better than those of the 4Q:14. Particularly, March was the best month of the 1Q:15.

With respect to our exploration activities, the first geological success for the year was reported at the Bullerengue-1 well, drilled by Hocol, located in the Sinu-San Jacinto basin, which is expected to support the natural gas supply on the Atlantic Coast region. In addition, we advanced in the drilling activities in the offshore wells Kronos and Calasu, located in the southern Caribbean Sea in partnership with Anadarko as operator (50% – 50%).

Our production activities have recorded four consecutive quarters of growth, reaching 773.4 Mboe/d in the 1Q:15, a 1% increase as compared to the first and last quarters of 2014. This increase was the result of the start-up of new facilities and wells in the Castilla and Chichimene fields, both of which set production records of 124 Mbo/d and 85 Mbo/d, respectively.

Our affiliated companies increased their production to a total 51.4 Mboe/d, a 5.8% rise as compared to the 1Q:14. Highlighting Ecopetrol America’s production alone reached 6.4 Mboe/d.

Amid this low crude oil prices scenario, our refining margin has continued to improve, reaching $18.2/bbl in the 1Q:15, a 12% gain as compared to the 1Q:14 ($16.3/bbl) and a 15% gain as compared to the 4Q:14 ($15.8/bbl).

The main contributing factors to this result were the operating stability of units and the improvements designed to give value to residual streams.

In transportation, total volumes moved during the 1Q:15 were 1,273.5 Mb/d, a 6% increase compared to 1,200.1 Mb/d transported during the 1Q:14, and 3.3% more compared to the 4Q:14. This result was primarily due to higher volumes transported in the Cano Limon-Covenas and Oleoducto Transandino systems resulting from the decreased number of attacks on transport infrastructure, which went from 35 attacks on the 1Q:14 to 2 attacks in the 1Q:15.

International crude oil prices reached its lower level in 6 years during the 1Q:15 (Brent $46.6/bbl on 13.Jan.2015). As a result, our revenues were deeply affected, decreasing from COP$18 trillion to COP$12.3 trillion in the 1Q:15, a COP$5.7 trillion decrease (31.6%). The effect of lower sales oil prices (from $101/bbl to $56/bbl between the 1Q:14 and the 1Q:15) caused a decreased of COP$8.2 trillion in our revenue, that was partially offset for the positive exchange rate effect, representing a higher income of COP$2 trillion, COP$200 billion in higher sales volumes and COP$250 billion in higher income from transportation services to third parties due to the effect of the devaluation on the tariffs.

Our cost of sales declined to COP$8.5 trillion in the 1Q:15, a 21% decrease as compared to COP$10.8 trillion in the 1Q:14. This result was primarily due to the effect of lower oil prices on our purchase costs of crude, gas and refined products, as well as lower fixed costs due to the optimization of maintenance plans and contracted services achieved during the 1Q:15.

Operating costs increased by 53% during the 1Q:15 as compared to the 1Q:14, primarily as a consequence of the recording of the wealth tax applicable for year 2015.

The Colombian peso-U.S. dollar exchange rate had significant effects on the Group’s financial expenses. The impact of the depreciation of the Colombian peso over our net liability position resulted in an expense of COP$1.4 trillion during the 1Q:15.

Income before taxes for the 1Q:15 was COP$828 billion. With the income tax provision of COP$472 billion (57%) resulted in a consolidated net income of COP$160 billion.

Considering the current scenario of low oil prices, we are focused on making our operations more efficient. Our operations will continue focusing on safety, profitability and delivering positive results for our shareholders.”

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Opinion Favors Sale of Ecopetrol Stake in Eléctrica

(Ecopetrol S.A., 14.Apr.2015) – Ecopetrol S.A. announced that pursuant to the procedures required by Law 226 of 1995, the Council of Ministers has issued an opinion in favor of the planned sale of Ecopetrol’s equity stake in Interconexión Eléctrica S.A. E.S.P. which was approved by Ecopetrol’s Board of Directors.

Ecopetrol’s equity stake in Interconexión Eléctrica amounts to 58,925,480 shares of common stock (equivalent to 5.32% of the subscribed and paid-up shares). The proceeds from the planned sale will be used for financing Ecopetrol’s investment plan.

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Ecopetrol Reports on Authorization from Ministry

(Ecopetrol S.A., 14.Apr.2015) – Ecopetrol S.A., as part of the procedures required for keeping available debt alternatives to finance its investment plan, has obtained authorization from the Ministry of Finance and Public Credit, pursuant to Resolution 0928 of 10.Apr.2015, to arrange for debt issuances in international capital markets in an aggregate amount of up to $3.175 billion.

This authorization in itself does not constitute an issuance of securities or a financing operation. Therefore, Ecopetrol must complete in due course all of the necessary approval procedures with the Ministry of Finance and Public Credit, as well as Ecopetrol’s own Board of Directors, before any debt issuance may be covered by this authorization.

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Ecopetrol Amends Rules, Procedures

(Ecopetrol S.A., 28.Mar.2015) – Ecopetrol S.A. hereby reports that, at the shareholders’ meeting held on March 26, 2015 , the following amendments to the rules and procedures governing our shareholders’ meetings were approved in order to implement the corporate governance practices recommended by the Superintendence of Finance in the New Code of Corporate Best Practices of Colombia.

The approved amendments are the following:

Voting on amendments to the bylaws: a new paragraph has been adopted providing that, in the event of a proposed amendment to the bylaws, there shall be a separate vote on any specific article being amended whenever such a vote is requested by a shareholder or group of shareholders representing at least 5% of the share capital during a shareholders’ meeting (Article 3, paragraph 1).

Increase of the advance notice time for convening ordinary and extraordinary meetings: the required advance notice for convening ordinary meetings has been increased from twenty (20) business days to thirty (30) calendar days and the required advance notice for convening extraordinary meetings has been increased from eight (8) calendar days to fifteen (15) calendar days (Article 4).

Dispensing with advanced submission of proxies: repeal of Article 7 section 4, which related to the previous proxy review stage.

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Terrorist Acts Affect Ecopetrol in 2014

(Energy Analytics Institute, Piero Stewart, 26.Mar.2015) – External issues deprived Ecopetrol of the ability to produce 64,000 barrels per day (b/d) in 2014 as follows:

An estimated 28,000 b/d was not produced due to community protests; 13,000 b/d was not produced due to terrorist acts on oil installations while 9,000 b/d was not produced due lack of or delays obtaining environmental permits, reported the daily newspaper El Espectador.

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Ecopetrol Amends Bylaws at Assembly

(Ecopetrol S.A., 26.Mar.2015) – Ecopetrol S.A. hereby reports that, at the Shareholders’ General Assembly held on March 26, 2015, the following changes were made to its bylaws:

  1. The following corporate governance practices recommended by the Superintendence of Finance in the New Code of Corporate Best Practices of Colombia have been adopted:

— Extension of the deadline for convening ordinary and extraordinary meetings (amendment to Articles 19 and 20).

— Majority of the Board of Directors to be comprised of independent directors (amendment to paragraph 1, Article 23).

— Possibility of carrying out different types of evaluations of the Board of Directors (amendment to paragraph 5, Article 23).

— Reference to guidelines regulating the appointment and duties of the President of the Board of Directors and the Secretary of the Board of Directors (new paragraph 6, Article 23).

— Modification in the name of the Audit Committee of the Board of Directors in order to make explicit its risk management role (amendment to Paragraph 27.1 of Article 27).

— Obligation to comply with voluntarily adopted corporate governance practices (new Article 52).

  1. The company’s reserves accounts amounting to COP$14.76 trillion were capitalized by increasing the nominal value of shares from COP$250 to COP$609 per share. This capitalization demonstrates the confidence of investors in the Company and boosts its long term financial sustainability.

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Ecopetrol Still a Solid Company, President Says

(Energy Analytics Institute, Ian Silverman, 26.Mar.2015) – Ecopetrol continues to be a solid company with many growth opportunities in its different business segments, said Ecopetrol’s outgoing president Javier Genaro Gutiérrez said during his presentation of the company’s financial and operational results

“We have made adjustments on all fronts to overcome the drop in international prices and maintain production levels. We are also strengthening our exploration and production portfolio,” he added.

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Ecopetrol to Pay Dividend to Shareholders

(Energy Analytics Institute, Piero Stewart, 25.Mar.2015) – Ecopetrol’s shareholder assembly approved a dividend equivalent to 70 percent of the 7.81 billion peso profit obtained in 2014.

The total dividend was for 5.47 billion or 133 pesos per share, of which 4.8 billion was destined for the government and 0.670 billion pesos was destined for minority shareholders, reported the daily newspaper El Tiempo.

In comparison to 2013, the 397,122 minority shareholders at 31 December 2014, the 2014 dividend was 0.560 billion pesos or 45.5 percent lower than the prior year.

At 31 December 2013, Ecopetrol had 425,840 shareholders. However, by 31 December 2014, an estimated 28,700 Ecopetrol shareholders had sold their shares, leaving 397,122 shareholders.

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Ecopetrol Output Around 725 Mb/d

(Energy Analytics Institute, Piero Stewart, 25.Mar.2015) – During the first two months of 2015 Ecopetrol’s production remained around 725 Mb/d primarily due to record production at the Castilla and Chichimene fields located in El Meta, and in the La Cira Infantas field located in Middle Magdalena Medio.

This average represents an increase of 20 Mb/d compared to the average of 705 Mb/d registered in the first two months of 2014, reported the daily newspaper El Espectador.

Ecopetrol announced its production averaged 726 Mb/d in January 2015 and 725 Mb/d in February 2015. The volumes in both months surpassed the goal of 710 Mb/d set by the company.

Of the average production in the first two months of 2015:

– 36% came from the Orinoquía region, which includes the Meta and Casanare fields;

– 14% came from the Central Region which includes the Middle Magdalena and Catatumbo fields;

– 5% came from the South Region which includes the Huila, Tolima and Putumayo fields; and

– the remaining 45% came from partner fields that include assets operated by other companies whereby Ecopetrol has a participation.

Record production from the Castilla field, operate directly by Ecopetrol, surpassed 124 Mb/d in February 2015 while activities in the La Cira Infantas field (a contract between Oxy and Ecopetrol), helped production reach 40.6 Mb/d on March 5, a production figure that was last reached in 1945.

Another factor influencing results was the increase in production at the Chichemene field also operated directly by Ecopetrol and whereby production reached a record 85 Mb/d in January and was averaging close to 80 Mb/d in February.

Other increases in production were also reported at the Cantagallo and Casabe fields in the Middle Magdalena. Combined the two fields reported a production increase of 1.3 Mb/d.

***

Pacific Rubiales, Ecopetrol Extend Contract

(Pacific Rubiales Energy Corp, 14.Mar.2015) – Pacific Rubiales Energy Corp. and Ecopetrol, S.A. have agreed not to extend the Rubiales and Pirirí Field Association Contracts, expiring in June 2016 . Ecopetrol will evaluate different alternatives for the operation of the Rubiales Field. Meanwhile, Pacific Rubiales will consider submitting a new proposal to operate the field after the contract expiry. The companies have expressed interest in developing further business opportunities for the benefit of both parties and the country.

Pacific Rubiales, a Canadian company and producer of natural gas and crude oil, owns 100% of Meta Petroleum Corp., which operates the Rubiales, Piriri and Quifa heavy oil fields in the Llanos Basin, and 100% of Pacific Stratus Energy Colombia Corp., which operates the La Creciente natural gas field in the northwestern area of Colombia. Pacific Rubiales also previously acquired 100% of Petrominerales Ltd., which owns light and heavy oil assets in Colombia and oil and gas assets in Peru , and 100% of C&C Energia Ltd., which own light oil assets in the Llanos Basin. In addition, the company has a diversified portfolio of assets beyond Colombia , which includes producing and exploration assets in Peru, Guatemala, Brazil, Guyana and Papua New Guinea.

The company’s common shares trade on the Toronto Stock Exchange and La Bolsa de Valores de Colombia and as Brazilian Depositary Receipts on Brazil’s Bolsa de Valores Mercadorias e Futuros under the ticker symbols PRE, PREC, and PREB, respectively.

***

Ecopetrol Board Appoints Echeverry as CEO

(Ecopetrol, 6.Mar.2015) – Ecopetrol announces that its Board of Directors appointed Mr. Juan Carlos Echeverry as the new CEO of the company, effective April 6, 2015.

With extensive knowledge of economics, the ability to lead processes of change, experience in public administration and prior experience as member of the Board of the company, Mr. Echeverry meets all the conditions to carry out the reforms that the current price environment demands and execute the institutional strategy re-alignment in which the company has been engaged in recent months.

Juan Carlos Echeverry , born in 1962, is an economist from the Universidad de los Andes, and holds degrees in International Economy from the Kiel Institute for the World Economy and a PhD in Economics from New York University. He was Dean of the faculty of Economy at Universidad de los Andes and Head of the National Planning Department as well as Ministry of Finance and Public Credit. He has also been a consultant and commentator in economics and has advised several governments and companies. Until a few months ago he was Executive Director for Colombia and Ecuador at the Inter-American Development Bank.

The process of selection and appointment of the new CEO took place in three stages. The first involved the identification by a prominent international executive search firm of candidates who fulfill the conditions consistent with the profile defined by the Board. The second stage was the selection by the firm of a small number of candidates, two of whom the Board decided to interview and the third stage included the election of the new CEO, who counted on the affirmative vote of six out of the nine members of the Board.

Following the decision, the Board endorsed the appointment by consensus and instructed the management of Ecopetrol to carry out the corresponding splicing at the earliest.

The Board of Directors also appointed Camilo Marulanda as Executive Vice President. Born in 1978, Mr. Marulanda is an economist from the Universidad de los Andes, with Marketing studies and a MBA from this university. Prior to join to Ecopetrol´s Group in 2003, he worked at International Investment Intelligence and Procter Gamble.

Ecopetrol’s Board of Directors is comprised by the Ministry of Finance and Public Credit, the Ministry of Mines and Energy, the Head of the National Planning Department and six independent members of which one is appointed by the producing regions in Colombia and other by the minority shareholders.

***

Ecopetrol Releases 4Q:14, YE:14 Results

(Ecopetrol S.A., 2.Mar.2015) – Ecopetrol announces its results for the fourth quarter of 2014 and the full year 2014.

– Net proven reserves of crude oil, condensate and natural gas owned by the company, including its interest in affiliates and subsidiaries, as of December 31, 2014, were 2,084 million barrels of oil equivalent (mmboe), a 5.7% increase compared to 1,972 mmboe in 2013. The reserve replacement ratio in 2014 was 146%, up from the 139% reported in 2013. The reserves/production ratio increased to 8.6 years.

– In the fourth quarter of 2014, the production recovery trend was reinforced, with growth of 1.4% compared to the third quarter 2014, reaching 765.1 mboed, thanks to improved environment conditions and continued development of projects at the Castilla and Chichimene fields. For the full year 2014, average production was 755.4 mboed, a decline of 4.2% versus 2013, due to environment, public order and operating issues that were particularly challenging in the second quarter.

– Net income in 2014 was COP$7,813 billion, 41% below that of 2013, primarily the result of the drop in sale prices, lower volumes sold and the cost increase.

Ecopetrol S.A. announced its audited financial results, both consolidated and unconsolidated, for the fourth quarter and full year 2014, prepared and filed in Colombian pesos (COP$) in accordance with the Public Accountancy Legal Framework (Regimen de Contabilidad Publica, RCP) of Colombia’s General Accounting Office.     Some figures in this release are presented in U.S. dollars (US$), as indicated. The financial results in the main body of this report have been rounded to one decimal place. Figures presented in COP$ billion are equivalent to COP$1 thousand million (COP$1,000,000,000). Additionally, some 2013 figures have been reclassified to be comparable to those of 2014.

In the opinion of Ecopetrol’s CEO, Javier Gutierrez:

“In 2014, we obtained important achievements, such as the discoveries in offshore exploratory blocks; the strengthening of the transportation segment, which continues the optimizations needed to achieve competitive margins at the level of the best in the industry; and the generation of positive EBITDA in the refining segment as we enter the final phase of the Cartagena Refinery project.     Affiliates of the Corporate Group contributed to the positive results. Ecopetrol America Inc. reached a production of 7.7 mboed in the fourth quarter of 2014, thereby beginning to generate revenues that will allow its future sustainability. As far as petrochemicals, Propilco significantly increased its earnings, benefiting from better international prices of raw material and higher volumes of propylene supply from the Barrancabermeja refinery.

The Corporate Group’s average yearly production was 755.4 mboed, 33 mboed below that of the previous year, due to operating environment situations (-22 mboed), attacks (-5 mboed), environmental constraints (-9.5 mboed), offset by the increase in production of affiliates and subsidiaries (+3.5 mboed).

The average sales price of the basket of Ecopetrol crude, gas and products was US$10.6 per barrel lower than in 2013, which, coupled with a 7% devaluation of the average exchange rate, had a significant impact on our financial results.     It is important to mention that the exchange rate has two effects on the company’s financial results: regarding operations, a higher exchange rate has a positive effect given that 60% of our sales are dollar denominated, although some of our purchases are also dollar denominated, but in a lower share; on the other hand, devaluation has a negative impact on non-operational results due to the Colombian peso valuation of the dollar denominated debt.

Our net income in 2014 was COP$7,813 billion, 41% below that of 2013. This decline is explained by several factors, starting with the 7% drop in our revenues, in line with the decrease in production volumes and prices. Cost of sales, specifically variable costs, decreased 2% as a result of lower purchase price of crude, gas and products, offset by higher purchase volumes of naphtha as crude diluent. As for fixed costs, there was an increase of 18%, the result basically of the inclusion of transportation costs based on the Ship or Pay (SoP) fee as part of the implementation of the new transportation model beginning with the start-up of Cenit in April of 2013 (total fixed costs increased COP$1.7 trillion, of which COP$1.23 trillion correspond to the SoP fee). It should be noted that these additional costs generated by the new transportation business model are offset by the operating income of our affiliate Cenit. As a result of all of the above factors and variables, gross income decreased 23%.

Operating income for the year decreased 30%, affected additionally by higher exploratory expenditures resulting from an extended campaign, which in total had a higher cost of COP$646 billion more than the prior year. Furthermore, in a downward price situation as seen since mid-2014, it was necessary to revise the value of assets, inventories and oil investments. This analysis reflected adjustments in operating expenditures from oil investments and decline in the valuation of assets for a total of COP$571 billion.

Non-operating variables also affected results negatively, due mainly to higher expenditures derived from U.S. dollar-denominated debt interest and higher expenditures because of the difference in exchange rate on the outstanding debt balance.

Taking into account the above, pre-tax net income fell 36%, which, combined with a higher effective tax rate at 40.48% levels (compared to 34.48% in 2013), resulted in net income for the period of COP$7,813 billion, a decrease of 41% compared to that of 2013. EBITDA margin was 39%, a very competitive level compared to other companies in the industry.

In the fourth quarter of 2014, there were several important highlights among which I will mention the following:

In production, the field Chichimene set a record in production of 80 thousand barrels a day, and we began 8 secondary improved recovery pilots, bringing the total pilots underway for the year to 13.

In exploration, we announced two discoveries: 1) the well Orca in offshore waters of Colombia, offering a promising perspective for this basin; and 2) the well Nueva Esperanza-1, confirming the potential of the CPO-09 block in Meta province. These two discoveries add to others announced in 2014 in Colombia (Tibirita, Golosa and Cacica) and the U.S. Gulf Coast (Leon and Rydberg).

In transportation, we completed the expansion of the Ocensa Delta Project and began the operation of 23,500 additional barrels per day in the SantiagoPorvenir system.

In refining, we obtained 96.3% completion of the Cartagena refinery modernization project.

In December, we announced our investment plan for 2015 of US$7.86 billion, in accordance with the current price situation and in line with the strategy of value generation and emphasis on production.

Ecopetrol is a company that responds swiftly to challenging situations. For this reason, we have initiated a cost and expenditure optimization plan in pursuit of structural savings and economies of scale that allow us to operate in a cost-effective manner, within a context of low prices, which will continue to affect financial results in 2015, but without compromising the strength and sustainability.

Regarding the claims of possible illegal payments on behalf of third parties to former employees of Ecopetrol, we want to emphasize that we have a zero tolerance corruption policy and therefore we have filed a complaint to the authorities, we have collaborated on a timely basis with the judicial system in order to clarify such events and so that those responsible be convicted, as well as imposing internal sanctions and penalties. During the last years Ecopetrol has strengthened its internal control system, of which the Ethics and Compliance office is part of, in order to prevent, detect and penalize inappropriate behaviors that affect our ethics and Corporate Governance. The Board of Directors, the senior management, and all of the employees are committed in this anticorruption crusade.”

***

LatAmNRG: Heard on the Street 3Q:13

(Energy Analytics Institute, 30.Sep.2013) – Information in this section, provided by Energy Analytics Institute editors and reporters, is hearsay and thus should be treated as such.

The names of our many sources have been withheld to protect their identities and family members in Venezuela.

COMBUSTIBLES
  • A number of gasoline stations along VenezuelaColombia border remain closed due to a lack of supply. [El Universal]
CORPORATE SUITE
  • Venezuelan Oil Minister and PDVSA President Rafael Ramirez was named as Venezuela’s Economic Vice President by President Nicolas Maduro. [EAI]
CROSS BORDER DEALS
  • T&T and Venezuela signed a cross border natural gas deal. Deal signed by Venezuelan Oil Minister Rafael Ramirez and Trinidad Energy Minister Kevin Ramnarine. [EAI]
  • Trinidad Energy Minister Kevin Ramnarine was been under pressure in Trinidad for recent agreements reached with Venezuela regarding cross-border commercialization deals for the Loran-Manatee gas fields. [EAI]
  • Central American energy connection could reduce prices from Guatemala to Panama. [El Espectador]
DISCOVERIES
  • Colombia’s state oil company Ecopetrol announces new oil discovery at Guainiez-1 well in Guaroa. [EAI]
DIVESTMENTS
  • Chile’s ENAP sells 49% interest in Primax Peru and Primax Ecuador for $312 mln. [El Universo]
ELECTRIC SECTOR
  • YPFB Corp. completed 23,141 domestic gas connections in May.2013. [La Razon]
  • Interconexión Eléctrica S.A (ISA) wins bid for design, financing, construction, operation and maintenance of Encuentro-Lagunas project in Chile. [Portafolio.co]
  • Peru’s Energy and Mining Ministry has identified hydrocarbon and electric sector projects worth $26,530 mln thru YE:20. [El Comercio.pe]
  • Electric consumption in Uruguay reaches 1,808 MW on Jun.20.2013 up from record of 1,745 MW achieved on Jul.4.2011. [El Pais]
EXPLORATION & PRODUCTION
  • Bolivian officials search for hydrocarbon investments and technology at Russian Gas Forum [La Razon]
  • Gas output in Bolivia reached 57.08 MMcm/d in the 1Q:13, up 24.2% compared with 45.94 MMcm/d in the 1Q:12. [La Razon]
  • Bolivia’s average production was 56.2 MMcm/d in the first five months of 2013. [El Espectador]
  • YPFB plans investments of $8,406 mln during 2013-2016. [La Razon]
  • YPFB Petroandina SAM President Jaime Arancibia announced the Lliquimuni block could contain 1 Tcf. [La Razon]
  • France’s Total announced plans to develop the 3 Tcf Incahuasi field in Bolivia, after drilling the ICS-2 exploration well. [La Razon]
  • Russia’s Rosneft is interested in investing in exploration and development activities in Bolivia. [La Razon]
  • Repsol’s oil production in Bolivia rose to 3,400 b/d from 2,600 b/d. [La Razon]
  • Ecuador’s Hydrocarbon Secretariat expects oil production to average 518,503 b/d in 2013, up from 503,610 b/d in 2012. [EAI]
  • Ecuador’s Hydrocarbon Secretariat expects the country’s petroleum sector will realize investments of $3.6 bln in 2013, up from $2 bln in 2012. [EAI]
  • Extraction of oil in the Yasuni National Park will utilize new technologies, Wilson Pastor said on state television. [EAI]
  • Ecuador gov’t cancels $34.5 mln committed by Germany for the protection of the Yasuni National Park. [EAI]
  • Mexico’s state oil company Pemex creates company to search for oil deep offshore and shale gas in the USA.
  • Venezuela’s Oil Minister Rafael Ramirez said during an interview on Venezuelan state television or VTV that the decision to stop sending oil to the US had to be taken by Venezuelan President Nicolas Maduro. [EAI]
ENERGY REFORMS
  • Mexico’s left is betting on more autonomy for Pemex without changing the constitution.
EXPORT-IMPORT
  • Venezuela is looking for additional partner(s) for the Mariscal Sucre gas project offshore, Venezuelan Oil Minister Rafael Ramirez says. [EAI]
  • Spanish gov’t requests legal security and respect for the rules of the game in Argentina. [La Nacion]
  • Venezuelan imports of electricity from Colombia continue to increase. [El Universal]
  • Gas imported by Argentina and Brazil up 56.95% and 20.26%, respectively, in the 1Q:13 compared with the 1Q:12 [La Razon]
  • Argentina imported 14.63 MMcm/d from Bolivia in the 1Q:13 compared with 9.32 MMcm/d in the 1Q:12 [La Razon]
  • Brazil imported 32.01 MMcm/d from Bolivia in the 1Q:13 compared with 26.62 MMcm/d in the 1Q:12 [La Razon]
  • Bolivia exported an average 14.1 MMcm/d of gas to Argentina in the first five months of 2013. [El Espectador]
  • Bolivia exported an average 31.3 MMcm/d of gas to Brazil in the first five months of 2013. [El Espectador]
  • Enarsa owes YPFB $180 mln for gas deliveries made in Mar.2013 [La Razon]
  • PDVSA currently exports 330,000 b/d to India but plans to increase this figure to 400,000 b/d, PDVSA President Rafael Ramirez said. The official said PDVSA is also exporting 630,000 b/d to China. [EAI]
  • PDVSA owed $270 mln by Paraguay’s Petropar according to Paraguayan News Portal. [EAI]
FINANCE / EQUITY AND DEBT OFFERINGS

Colombia:

  • Ecopetrol $900 mln bond issue was oversubscribed by 3.1 times. [El Espectador]
  • Ecopetrol road show was led by Bank of America and visited fixed income investors in Singapore, London, Hong Kong, Chile and Peru. [El Espectador]
  • Ecopetrol road show led by Bank of America visited the following US cities: New York, Chicago, Los Angeles and Boston. [El Espectador]

Venezuela:

  • Venezuela’s Central Bank (BCV) holds auction for $330mm with PDVSA bonds.

Venezuelan Debt to China:

  • China has loaned Venezuela nearly $40 bln to date, excluding new agreements signed recently between the countries, of which $20 bln has been paid back. [EAI]
  • Venezuela currently owes $20 bln to China, which represents almost 2.4 months of PDVSA’s revenues assuming oil prices above $100/bbl. [EAI]
  • Assuming China were to lend Venezuela another $44 bln, the country would owe the Chinese nearly $64 bln, which is about 6 months of PDVSA revenue with oil prices above $100/bbl. [EAI]
  • Venezuelan debt of $64 bln to China would represent almost 7.7 months of PDVSA’s revenues assuming oil prices above $100/bbl. [EAI]

Peru:

  • Investments in energy projects in Peru to fall 50% by YE:20. [El Comercio.pe]

Ecuador:

  • China’s Industrial and Commercial Bank (ICBC) could finance 70% of Pacific Coast refinery project. [El Comercio]
GENERAL
  • Colombia’s National Hydrocarbon Agency (ANH) said the country’s oil reserves were 2,377 MMbbls at YE:12. [Portafolio.co]
  • S&P and Fitch raise rating on Emgesa ISA to BBB from BBB-. [Portafolio.co]
  • Chinese executives with LinYi Cake Trade Co. visited Bolivia to inspect the construction process and advances at a pilot lithium battery plant in La Palca in Potosi. [La Razon]
HEAVY OIL
  • Peru to prioritize $1,500 mln in investments for the integration of heavy oil lots in the northern amazon region [El Comercio.pe]
  • PDVSA has 15,000 workers in the Orinoco Heavy Oil Belt of Faja but plans to increase this figure to 40,000, PDVSA President Rafael Ramirez says. [EAI]
  • PDVSA, Cupet (Cuba) and Sonangol (Angola) agree to create JV to produce 20,000 b/d in the Faja. [El Nacional]
  • PDVSA reports in 10.Oct.2013 press release that it has a 71% interest in PetroCarabobo 1 Faja project, meaning the company assumed Petronas’ 11% interest. Partners in the PetroCarabobo 1 project now include PDVSA (WI 71%), OVL (WI 11%), OIL (WI 3.5%), OIC (WI 3.5%) and Repsol (WI 11%). [EAI]
  • Rising drilling costs in the Faja are just one of many issues companies are confronting today. [EAI]
  • Russia’s Lukoil announced plans to exit the Junin Block 6 project in the Faja.

EDITOR’S NOTE: Smaller Russian companies are starting to exit the Faja, ceding more control to Rosneft or other Russian entities; a signal that something could definitely be wrong in Venezuela and the Faja. [EAI]

  • PDVSA announced during the HOLA 2013 conference that it was looking to utilize its heavy oil techniques in Mexico. [EAI]
LAWSUITS
  • Repsol turns down $5,000 mln offer from Argentine gov’t regarding 51% interest expropriated in 2012. [La Nacion]
  • Ecuador’s President Rafael Correa says on Ecuadorian state television that US-based Chevron Corp. is an enemy of Ecuador. [EAI]
LNG
  • By 2015 Uruguay’s ANCAP expects to be exporting 5 MMcm/d of gas from the Puntos de Sayago regasification plant in Uruguay to Argentina’s YPF. [LaRed21]
PETROCHEMICALS
  • Peru to prioritize $3,500 mln in investments for the petrochemical industry. [El Comercio.pe]
PIPELINES
  • Peru to prioritize $3,500 mln in investments for the southern gas pipeline. [El Comercio.pe]
PROTESTS / STRIKES
  • About 50 workers with Petrocedeno JV in Venezuela demand that PDVSA respect their benefits [El Universal]
REFINERIES
  • Peru to prioritize $3,514 mln in investments for the modernization of the Talara refinery. [El Comercio.pe]

Venezuela:

PDVSA’s participation in Abreu e Lima Refinery in Brazil:

  • PDVSA President Rafael Ramirez says co. and Petrobras officials continue to discuss JV prospects regarding the Abreu e Lima refinery. [EAI]
  • From an operational and strategic business plan point of view, PDVSA’s participation in the Abreu e Lima refinery does not make sense. [EAI]
  • Abreu e Lima refinery in Pernambuco could easily source sufficient oil from the Brazil’s offshore pre-salt region w/o having to look to Venezuela for heavy oil. [EAI]
  • Any decision PDVSA President Rafael Ramirez takes regarding the company’s participation in Abreu e Lima refinery w/Petrobras will be politically based. [EAI]

Comments regarding Amuay Refinery explosion on 25.Aug.2012:

  • PDVSA President Rafael Ramirez says explosion at Amuay refinery was sabotage. Amuay refinery explosion was caused by gas leak at Block B23. As a result of the explosion, 42 persons were killed, 5 are still missing, 150+ were seriously injured. published by the Energy Orientation Center (COENER). [EAI]
  • Amuay refinery explosion to cost PDVSA an estimated $1.8 bln, according to COENER. The refinery is processing 645,000 b/d nearly 10 months after major explosion. [Ultimas Noticias]
  • PDVSA to spend an estimated $585 mln on maintenance activities at the Amuay and Cardon refineries, PDVSA President Rafael Ramirez says. [EAI]
SOCIAL
  • CITGO Corp. donates 625,000 energy saving light bulbs to families in 21 cities in the USA [PDVSA

***

Q&A with Chevron LatAm’s Susana Brugada

(Energy Analytics Institute, Pietro D. Pitts, 7.Aug.2013) – Chevron Latin America Business Unit Public Affairs and Communications Coordinator Susana Brugada spoke with Energy Analytics Institute in a brief interview from Caracas, Venezuela.

What follows are excerpts from the brief interview.

EAI: Is Chevron continuing to export gas to Venezuela from Colombia?

Brugada: Ecopetrol and Chevron continue to export gas to Venezuela. The gas contract expires in 2014.

EAI: Will PDVSA be able to export gas to Colombia in 2014?

Brugada: It is uncertain whether PDVSA will have the capacity and actual gas to export to Colombia in 2014 as its officials have proclaimed.

EAI: Does Chevron have any issues getting paid by PDVSA for gas exported from Colombia?

Brugada: It has been rumored that Ecopetrol has had issues, but for Chevron this is a “non-issue”.

EAI: Is there a large demand for Venezuelan gas in Colombia?

Brugada: To my knowledge Colombia has no real desire to import gas so it would be interesting to know what PDVSA’s plans are for these projected future gas exports to Colombia. Maybe PDVSA has plans to export this gas to Panama or elsewhere?

***