Ecopetrol S.A. EC, Colombia’s majority state-owned oil company, has provided an update regarding itsinvestment budget for 2025. The company’s board of directors has announced that the budget will range between 24 trillion pesos and 28 trillion pesos. Of the total approved budget, more than 50% has been allotted for the exploration and production of crude oil and gas.
Approximately 76%, totaling 20.3 trillion pesos, is expected to be dedicated to maintaining production in the range of740,000-745,000 barrels of oil equivalent per day (boe/d). Additionally, the company is targeting an average refinery load in the band of 415,000- 420,000 barrels per day (bpd) and daily transportation volumes between 1,130,000 bpd and 1,170,000 bpd.
The company has earmarked more than 50% of the 2025 investment budget for the exploration and production of hydrocarbons. For 2025, the exploration and production segment is expected to receive approximately 17.2 trillion pesos.
EC is expected to allot nearly 52% of this budget for production of crude oil, and 12% for gas-related investments. These investments are aimed at sustaining organic production in the 740,000-745,000 boe/d range, of which 78% is expected to be crude oil, 17% gas and the remaining white products.
Additionally, a part of this budget will be dedicated to deploying advanced recovery technologies, which should help the company utilize its resources efficiently and maintain its production levels. Colombia plans to expand the production of crude oil to offset the natural decline of the country's gas fields.
Ecopetrol’s drilling strategy in 2025 involves drilling 455-465 development wells. The majority of these wells (approximately 79%) will be drilled in Colombia, while the remaining will be drilled in the United States. Additionally, it plans to drill 10 exploratory wells in 2025. These wells are anticipated to be drilled mainly in the Llanos Basin and offshore Caribbean of Colombia.
The approved budget for 2025 also includes gas investments that are estimated to be in the range of 3.1-3.3 trillion pesos. This amount will be primarily utilized in the Piedemonte Llanero and offshore Caribbean regions for the production of Caribbean Colombia gas. This should help the country increase its gas production and offset the shortage of natural gas reserves. Furthermore, the gas produced is expected to add around 123,000 barrels of oil equivalent per day to the total production, of which 85% will contribute toward gas supply for the Caribbean nation.
EC expects approximately 6% of the total investment budget, totaling 1.6 trillion pesos, to be allocated to the refining segment. The investments will cater to its Barrancabermeja and Cartagena refineries. The amount shall be utilized to uphold the reliability and sustainability of operations in the refineries. The investments will also be utilized to develop programs aimed at reducing product imports and producing better fuels. Additionally, EC plans to advance renewable fuel projects such as Sustainable Aviation Fuel (“SAF”).
Ecopetrol has earmarked a part of its budget toward renewable energy and energy efficiency projects while also working on decarbonizing its operations. The company’s financial strategy for 2025 involves delivering a competitive return based on an average Brent price of $73/barrel. It is targeting an EBITDA margin of approximately 39%.
EC’s Zacks Rank and Key Picks
Currently, EC carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the energy sector are Smart Sand, Inc. SND, FuelCell Energy FCEL and Nine Energy Service NINE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Smart Sand is a low-cost producer of high-quality Northern White frac sand, an ideal proppant for hydraulic fracturing and various industrial applications. The company provides proppant and other logistics services for several companies in the oil and gas industry. With sustained oil and gas market demand, SND is expected to see growing demand for its services, providing a positive outlook.
FuelCell Energy is a clean energy company offering low-carbon energy solutions. It produces power using flexible fuel sources such as biogas, natural gas and hydrogen. The company designs fuel cells that generate electricity through an electrochemical process that combines fuel with air, reducing carbon emissions and minimizing the environmental impact of power generation. As such, FCEL is anticipated to play a crucial role in the energy transition by enabling industries and communities to shift from traditional fossil fuels to low-carbon alternatives.
Nine Energy Service provides onshore completion and production services for unconventional oil and gas resource development. The company operates across key prolific basins in the United States, including the Permian, Eagle Ford, MidCon, Barnett, Bakken, Rockies, Marcellus and Utica, as well as throughout Canada. With a sustained demand for oil and gas in the future, the need for NINE’s services is anticipated to increase, which should position the company for growth in the long run.
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