Ecopetrol SA (ECOPETL), Colombia’s largest oil company, said attacks on its installations have declined ahead of the first talks in a decade between the government and rebels scheduled for next month.
“This month we had only three attacks, which is nothing compared to the historical numbers,” Chief Financial Officer Adriana Echeverri said today in an interview in London. “They are dropping.”
Raids have declined since the Revolutionary Armed Forces of Colombia, or FARC, and the government agreed to meet in Oslo in an attempt to end Latin America’s longest-running armed conflict, Echeverri said. The rebels had stepped up attacks on energy infrastructure earlier this year to deprive the government of oil revenue.
Ecopetrol forecast a full-year output loss of about 9,000 barrels a day. The Bogota-based company has lost about 3,000 barrels of oil a day of production this month because of guerrilla attacks on pipelines and fields, Echeverri said. Ecopetrol expects to pump 780,000 barrels of oil and gas a day this year, Chief Executive Officer Javier Gutierrez said to reporters in London today.
Fewer attacks would help Ecopetrol meet that target, which it cut in July from 800,000 barrels a day, said Omar Escorcia, an analyst at Medellin-based brokerage Asesores en Valores SA. Attacks on pipelines in Colombia more than quadrupled to 88 in the first seven months of the year from in the year-earlier period, according to estimates by the Defense Ministry.
“If there’s less of that activity you can ensure oil- pipeline transport,” Escorcia said today in a phone interview. “As attacks go down reliability goes up. That ends up reflected in production figures.”
Shares of Ecopetrol rose 1.1 percent to 5,280 pesos at the close in Bogota. Gran Tierra Energy Inc. (GTE), which said in July that sabotage had cut output, rose 3.1 percent to C$5.04 in Toronto.
The market value of Colombia’s state-owned producer has risen more than fourfold since 2008 and more than 276,000 retail investors in Colombia rely on dividend payments that account for 70 percent of earnings, Echeverri said. The government invited a non-executive director from Ecopetrol to join the peace talks with FARC, she said.
“Our stakeholders, common people, individual shareholders” at general meetings “push so hard to have that 70 percent,” Echeverri said. “The company has lots of potential.” Ecopetrol will maintain the dividend “as long as it is feasible in terms of the finance.”
The company is investing $80 billion in projects through 2020 to increase production to 1.3 million barrels of oil equivalent a day. It expects to fund 9 percent of the expansion in equity and 16 percent in debt with the rest from cash flow. The company doesn’t have any immediate plans to sell shares or bonds, the CFO said.
The company has requested permission from a Bogota-based financial regulator to sell debt, though no sale is imminent and no amount for an issuance has been set, an official who can’t be identified because of company policy said Sept. 25 in an e-mail. Ecopetrol requested permission to sell 3 trillion pesos ($1.67 billion) in bonds and notes, according to the regulator’s website.
Ecopetrol plans to participate in the exploration licensing tender to be held by the government next month, Gutierrez said. More than 80 companies are interested in bidding for more than 110 permits, of which about 30 will be for unconventional resources. The company also expects to finish building the first phase of its Bicentennial pipeline project in the first quarter, he said.
The explorer expects to pump 50,000 barrels of oil equivalent a day, mostly gas, from so-called unconventional fields in 2020, he said. First production is expected in 2016.