Colombian oil company Ecopetrol S.A. (NYSE:EC), has established an ambitious growth plan that will nearly double the company's production, by the end of the decade. This growth will be achieved mostly through exploration and development, in domestic oil and gas fields at home. (For related reading on oil, read What Determines Oil Prices.)
Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.


History
Ecopetrol used to be known as Empresa Colombiana de Petr├│leos and, until recently, was completely owned by the Government of Colombia. In 2006, Colombia started a transition to private ownership, with an authorization of a maximum 20% share by the private sector. Ecopetrol has conducted two share offerings since that time, lowering state ownership to approximately 88%.

Capital Budget
Ecopetrol recently approved an $80 billion oil and gas capital budget from 2012 to 2020, with 85% of the funds devoted to upstream exploration and development projects. Ninety percent of the capital will be concentrated on projects in the company's home country of Colombia. If the company's plan is successful, Ecopetrol expects to be producing 1.3 million barrels of oil equivalent (BOE) per day, by 2020. Ecopetrol expects production to average 750,000 BOE per day in 2012.

Exploration
Ecopetrol plans to drill 42 exploration wells across the company's portfolio in 2012, with 36 of these wells in Colombia. The other six wells will be drilled in Brazil and the deepwater Gulf of Mexico. Ecopetrol is also evaluating various shale and other unconventional resource plays in Colombia. These include coal bed methane, shale gas, tar sands and tight sands areas.

Current Fields
Ecopetrol also plans considerable investment in 2012 in currently producing oil fields in Colombia. The company has an interest in the Castilla field, which is the largest producing field in Colombia. Ecopetrol has budgeted to drill 60 wells here, in 2012.

In total, Ecopetrol plans to drill more than 400 wells at Castilla and several other producing oil fields in 2012. This development plan is an important component of the company's strategic plan, as production from existing fields is expected to be 65% of the 2020 production target.

Other Players
Other operators active in Colombia include Nexen (NYSE:NXY), which owns an interest in several blocks. The company is currently exploring shale gas potential on its acreage and plans to drill four exploration wells here, in 2012.

Occidental Petroleum (NYSE:OXY) is also active in Colombia and has interests in two onshore areas. The company is credited with the discovery of one of the country's largest oil and gas fields, back in the early 1980s. Some operators see better opportunities elsewhere. BP (NYSE:BP) sold the company's Colombian assets to Ecopetrol and Talisman Energy (NYSE:TLM) in early 2011, for $1.75 billion.

The Bottom Line
Ecopetrol is a relatively unknown oil and gas company, due in part to the small public float and resource concentration in Colombia. This low profile does seem at odds with the company's $85 billion market capitalization, and Ecopetrol should attempt to accelerate this privatization process, to attract more investors. (For additional reading, check out A Primer On Offshore Drilling.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Investing News

    Bank Stocks: Time to Buy or Avoid? (WFC, JPM, C)

    Bank stocks have been pounded. Is this the right time to buy or should they be avoided?
  2. Stock Analysis

    Why the Bullish Are Turning Bearish

    Banks are reducing their targets for the S&P 500 for 2016. Here's why.
  3. Stock Analysis

    How to Find Quality Stocks Amid the Wreckage

    Finding companies with good earnings and hitting on all cylinders in this environment, although possible, is not easy.
  4. Stock Analysis

    Glencore Vs. Noble Group

    Read about the differences between Glencore and Noble Group, two companies in the commodities business. Learn about accounting accusations facing Noble Group.
  5. Stock Analysis

    The Top 5 Platinum Penny Stocks for 2016 (PLG, XPL)

    Examine five penny stocks in the platinum mining business that investors may wish to consider adding to their investment portfolios for 2016.
  6. Chart Advisor

    Watch This ETF For Signs Of A Reversal (BCX)

    Trying to determine if the commodity markets are ready for a bounce? Take a look at the analysis of this ETF to find out if now is the time to buy.
  7. Investing News

    What You Can Learn from Carl Icahn's Mistakes

    Carl Icahn has been a stellar performer in the investment world for decades, but following his lead these days could be dangerous.
  8. Investing Basics

    The Importance of Commodity Pricing in Understanding Inflation

    Commodity prices are believed to be a leading indicator of inflation, but does it always hold?
  9. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  10. Fundamental Analysis

    4 Predictions for Oil in 2016

    Learn four predictions for oil markets in 2016 including where prices are heading and the key fundamental factors driving the market.
RELATED FAQS
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. How do mutual funds work in India?

    Mutual funds in India work in much the same way as mutual funds in the United States. Like their American counterparts, Indian ... Read Full Answer >>
  3. Do hedge funds invest in commodities?

    There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
  4. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  5. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  6. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center