Ecopetrol Profits Fall, Despite Increased Production in Colombia

According to the latest financial report from Ecopetrol, during the third quarter of 2023, the profits of the Colombian oil giant fell despite a significant increase in production. Ecopetrol’s revenues reached 35.1 trillion while profits fell to 5.1 trillion pesos, a figure 46.5% lower than the same period last year when the state company achieved revenues of 43.4 trillion and net profits of 9.5 trillion pesos.

Why are profits falling?

The decline in profits is attributed in part to the higher taxes for Ecopetrol as a result of Colombia’s tax reform, the volatility in the international Brent price, currently below $100 per barrel as well as the dollar’s decreased value against the Colombian peso.

The president of Ecopetrol, Ricardo Roa, clarified to the economic newspaper La República that “the effect of the tax reform on the company’s net profit is 3.6 trillion, while the effect of the fall in the price of Brent represents 14.49 trillion difference between the results of the previous year and those achieved this quarter.”

In his analysis, Roa insisted on defending the government’s fiscal reform, approved at the end of last year, clarifying that it had a very minor impact on the value of the company’s profits. “What we have seen is that the Ebitda (financial indicator to calculate gross profits) before September 2022 was 59.25 trillion. If we compare the results of that Ebitda with today’s prices, Ecopetrol’s Ebitda for 2022 accumulated in the third quarter would have been 48.53 trillion, compared to the Ebitda we are having in September 2023, it is practically the same figure,” emphasized the president of Ecopetrol.

Significant revenues for Colombia

However, Ecopetrol expects to make transfers to the State totaling more than 53 trillion by the end of 2023.

“In royalties, taxes, and dividends, we break all historical records of transfers to the state that have been made in the history of Ecopetrol. In tax matters, as a result of the tax reform, we have gone from 10.5 trillion at the end of 2022 to 15.92 trillion in taxes in the third quarter of the year,” explained Ricardo Roa, president of the company.

Colombia scored increase in oil production

The positive data in the third-quarter shows the highest quarterly production since the fourth quarter of 2015, equaling the oil production for that period of 741,000 barrels per day. When compared with the same period in 2022, when production reached 720,400 barrels per day, there was a significant increase of 20,000 barrels.

In the hydrocarbons line, at the end of September, 15 exploratory wells were drilled, advancing 60% compared to the goal set for the year. In the third quarter, in addition to the discovery of gas in the Glaucus-1 well, 5 discoveries were announced within the country’s jurisdiction. With these 6 findings, and the recent discovery of Magnus-1 in October, a total of 10 exploratory successes announced in 2023 have been completed.

The president of Ecopetrol asserted that the record production figure was achieved thanks to “…the investments we have been making in increased production, the improvements in the conditions we have determined in those investments to achieve better enhanced recovery, (and) the centralization of resources in the Piedemonte and in the Magdalena Medio.”