Ecopetrol Misses Oil Output Target on Transport Constraints

Ecopetrol SA, Colombia’s largest oil company, missed its 2013 production target as protests by local communities and transport restrictions impeded higher growth. The shares fell.

Output reached a record 788,200 barrels of oil equivalent a day on average last year, rising from 754,000 in 2012, while missing a target of 798,000 barrels a day for 2013, the state-run company said yesterday after markets closed. The shares declined 3.1 percent to 3,430 pesos at the close today in Bogota, the biggest drop since Dec. 18.

Production increased despite “a challenging environment,” Chief Executive Officer Javier Gutierrez said in a statement.

Pipeline bombings surged last year as the Revolutionary Armed Forces of Colombia, or FARC, tries to damage an industry that President Juan Manuel Santos calls an engine of growth. The number of attacks jumped 72 percent from a year earlier to 259, Defense Ministry data show.

Ecopetrol reported fourth-quarter profit that slumped 33 percent, missing analysts’ estimates, after pipeline costs and pension payments rose.

Net income fell to 2.43 trillion pesos ($1.2 billion), from 3.62 trillion pesos a year earlier, the company said. Ecopetrol was forecast to post profit excluding some items of 3.7 trillion pesos, according to the mean of six estimates compiled by Bloomberg.

Proven reserves increased 5.1 percent from a year earlier to 1.97 billion barrels, the company said.

‘Weak Earnings’

The earnings and reported reserves were disappointing, Pedro Medeiros and Fernando Valle, analysts at Citigroup Inc. in Sao Paulo and Rio de Janeiro, wrote in a report today.

“The reserve report was positive, but shy of the growth rate needed to reach Ecopetrol’s guidance” of 6.2 billion barrels of oil equivalent reserve additions by 2020, Medeiros and Valle wrote. Ecopetrol’s earnings were “weak.”

Ecopetrol will propose a dividend of 260 pesos a share at a shareholders meeting on March 26, which includes an extraordinary dividend of 33 pesos a share, according to a separate statement yesterday.

The extraordinary dividend will provide “support” to the stock in coming months, Medeiros and Valle said.

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