Colombian oil company Ecopetrol expects to invest $3.5 to $4 billion in 2018, up 35% to 55% over the projected investment at year-end 2017.
After two years of a transformation plan focused on cost reduction and capital discipline, the 2018 plan approved by the board of directors is aimed at increasing reserves and hydrocarbon production, capturing earnings through an improved international environment for the sector, and advancing along the path of efficiency, the company said on Wednesday.
In addition, Ecopetrol is continuing to reduce its break-even price. In 2018, the company expects that it will have a positive net income at Brent prices up to $35 per barrel.
The plan provides that 85% of funds will be allocated to strategic investments in the exploration and production segments, with over $1 billion more invested in those segments than in 2017.
Highlights include drilling over 620 development wells and at least 12 exploratory wells, using 28 rigs and acquiring over 41,000 kilometers of seismic. This projected 2018 activity represents an increase of some 140 wells and the use of 16 additional rigs compared to 2017.
The 96% of the investment will be executed in Colombia, with the remainder allocated to the Ecopetrol Group’s projects in the United States (Gulf of Mexico), Mexico, Brazil and Peru.
The investments will allow the Ecopetrol Group to resume its path of production growth, leveraged on some 20 pilot projects to implement improved recovery technologies. The company’s 2018 production is projected at 715,000 to 725,000 barrels of petroleum-equivalent per day.
According to the company, the investment plan will be financed with internal cash generation, and currently does not anticipate having to access financing sources.
Ecopetrol’s cash position of $4,300 million and a gross debt / Ebitda level of 2.1 times at the end of the third quarter of 2017 confirm the financial flexibility for inorganic growth focused on the increase in reserves.