Ecopetrol S.A. (EC): history, ownership, mission, how it works & makes money

A Brief History of Ecopetrol S.A. (EC)

Foundation and Early Years

Ecopetrol S.A. was founded in 1951 under the name "Ecopetrol" with a focus on the exploration, production, refining, and transportation of oil and gas. The initial exploration activities were concentrated in the eastern part of Colombia, specifically in the regions of Arauca and Casanare.

Public Company and Stock Market Listing

In 2000, Ecopetrol was transformed into a public company, which allowed it to diversify its operations. The company was officially listed on the Colombian Stock Exchange (BVC) in 2007. By 2010, Ecopetrol had expanded its international presence, acquiring stakes in various oil fields abroad.

Financial Performance and Key Milestones

As of 2022, Ecopetrol reported revenues of approximately $24.6 billion and a net income of $5 billion. The company’s total assets were valued at $56.8 billion.

International Expansion

In 2013, Ecopetrol made a significant acquisition of 100% stake in the Canadian company "Petroamazonas" for $378 million, marking a substantial investment in international oil production.

Strategic Goals and Sustainability

Ecopetrol aims to reduce its greenhouse gas emissions by 25% by 2030 as part of its sustainability strategy. The company has invested over $2 billion in renewable energy projects since 2018.

Recent Developments

As of the first quarter of 2023, Ecopetrol reported a production level of 724,000 barrels of oil per day (bpd), an increase from the previous year. The company maintains a significant market share in Colombia, covering approximately 72% of its oil production.

Corporate Governance

Ecopetrol’s board is composed of 9 members, with the majority being independent directors, ensuring a balanced governance structure. The company places emphasis on transparency and consistency in its operations.

A Who Owns Ecopetrol S.A. (EC)

Ownership Structure

The ownership structure of Ecopetrol S.A. is predominantly characterized by a mix of public and private stakeholders. As of 2023, the Colombian government, through the Colombian Ministry of Finance, holds a significant stake in the company.

Shareholder Composition

Within the minority shareholders, the ownership includes various institutional investors and individual shareholders. The following details summarize the shareholder composition:

Stock Market Listing

Ecopetrol S.A. is listed on the Colombian Stock Exchange (BVC) and also trades on the New York Stock Exchange (NYSE) under the ticker symbol "ECP." As of October 2023, the market capitalization of Ecopetrol is approximately USD 38 billion.

Recent Financial Performance

For the fiscal year 2022, Ecopetrol reported the following financial metrics:

Government Policies and Impact

The Colombian government's policies significantly influence Ecopetrol's operations. The company is tasked with enabling national energy security and promoting economic stability. According to the latest data in 2023, Ecopetrol contributes approximately 20% to Colombia's GDP, highlighting its critical role in the economy.

Future Outlook and Strategic Initiatives

Looking ahead, Ecopetrol aims to diversify its portfolio by increasing investments in renewable energy sources, targeting an investment amount of USD 3 billion over the next five years. This strategy is pivotal in maintaining its competitive position amidst global energy transition trends.

Ecopetrol S.A. (EC) Mission Statement

Overview of Ecopetrol S.A.

Ecopetrol S.A., based in Bogotá, Colombia, is the largest petroleum company in the country and one of the largest in Latin America. It is involved in the exploration, production, refining, and transportation of oil and gas.

Mission Statement

The mission of Ecopetrol S.A. is to provide energy solutions responsibly, fostering the sustainable development of the regions in which it operates while maximizing value for its shareholders, employees, and the communities it serves.

Core Values

• Integrity: Commitment to ethical practices.
• Excellence: Striving for high-quality performance.
• Safety: Prioritizing the safety and health of employees and communities.
• Innovation: Encouraging creativity and technological advancement.
• Sustainability: Promoting environmental stewardship and social responsibility.

Financial Overview

As of the second quarter of 2023, Ecopetrol reported a revenue of approximately $13.56 billion, with a net income of around $2.43 billion.

Operational Highlights

In 2022, Ecopetrol’s average daily oil production reached 700,000 barrels, while natural gas production was about 1.2 billion cubic feet per day.

Sustainability Initiatives

Ecopetrol has committed to achieving carbon neutrality by 2050, with a goal of reducing its greenhouse gas emissions by 25% by 2030. The company has invested approximately $1.2 billion in renewable energy projects as part of this strategy.

Investment and Growth

For the year 2023, Ecopetrol announced a capital investment plan of $5 billion, focusing on both conventional and renewable energy projects.

Community Engagement

Ecopetrol allocates approximately $100 million annually for social investment programs focused on education, health, and community development.

Global Recognition

The company has been recognized as one of the most sustainable companies in Latin America and has been included in the Dow Jones Sustainability Index for several consecutive years.

Future Outlook

Ecopetrol aims to increase its annual renewable energy generation capacity to 1,000 MW by 2025.

Conclusion

The mission statement of Ecopetrol S.A. underscores its commitment to sustainable energy solutions that not only focus on maximizing shareholder value but also address environmental and social responsibilities.

How Ecopetrol S.A. (EC) Works

Corporate Overview

Ecopetrol S.A. is Colombia's largest petroleum company, primarily involved in the exploration, production, refining, distribution, and commercialization of oil and gas. As of 2022, the company had total assets of approximately USD 63 billion.

Financial Performance

For the fiscal year 2022, Ecopetrol reported a revenue of USD 34.6 billion, a significant increase from the previous year's USD 25.4 billion.

The net income for the same period was recorded at USD 9.4 billion, a sharp rise compared to USD 2.9 billion in 2021. The company's EBITDA margin stood at approximately 36%.

Operational Structure

Ecopetrol operates mainly through its upstream and downstream segments. The upstream segment focuses on exploration and production, while the downstream segment deals with refining and marketing activities.

Upstream Operations

The company has a significant number of hydrocarbon reserves, totaling approximately 6.2 billion barrels of oil equivalent (boe) as of 2022. Ecopetrol produced an average of 700,000 barrels per day (bpd) of crude oil during the same year.

Downstream Operations

Ecopetrol has a refining capacity of 450,000 bpd. Its main refining facilities include:

• Refinery in Barrancabermeja
• Refinery in Cartagena

Investment and Projects

Ecopetrol's capital expenditures for 2022 reached USD 5.7 billion. Key investments included:

• Exploration in the Orinoco Belt, Venezuela
• Development of the Castilla field
• Modernization of refining facilities

Market Presence

Ecopetrol operates in multiple countries beyond Colombia, with a presence in:

• United States
• Brazil
• Peru

In 2022, the company secured a contract for the exploration of offshore blocks in the Guyana-Suriname Basin.

Environmental Commitment

The company reports that it has invested over USD 500 million in environmental sustainability initiatives. Ecopetrol aims to reduce its carbon emissions by 25% by 2030.

Key Financial Metrics

Conclusion

As a state-owned enterprise, Ecopetrol plays a critical role in Colombia's economy, contributing significantly to the nation's GDP and employment.

How Ecopetrol S.A. (EC) Makes Money

Revenue Sources

Ecopetrol S.A. generates revenue from several key segments:

• Exploration and Production
• Refining
• Transportation
• Marketing and Distribution
• Other Activities

Exploration and Production

The primary source of revenue for Ecopetrol is the exploration and production of hydrocarbons. In 2022, the company reported an average daily production of approximately 700,000 barrels of oil equivalent (BOE).

In the same year, the segment generated $13.5 billion in revenue.

Refining

In 2022, Ecopetrol's refining operations achieved a throughput of around 371,000 barrels per day, contributing $9.1 billion to the overall revenue. The key refining facilities include:

• Refinery in Barrancabermeja
• Refinery in Cartagena

Transportation

The transportation segment involves the movement of oil and gas through pipelines. In 2022, this segment generated approximately $2.6 billion. The company operates over 3,000 kilometers of pipelines.

Marketing and Distribution

Ecopetrol has a vast network for distributing fuels and lubricants. In 2022, the marketing and distribution operations reported revenues of $5.8 billion.

As of 2023, Ecopetrol had a market presence in over 600 service stations across Colombia.

Financial Performance

The financial performance of Ecopetrol has shown positive trends over recent years. For the year ending December 31, 2022, the company reported:

International Operations

Ecopetrol is not only focused on domestic markets but also engages in international ventures. The company has operations in countries such as:

• Peru
• Brazil
• USA

In 2022, revenues from international operations contributed approximately 20% to the total revenue.

Future Projects and Investments

Looking ahead, Ecopetrol aims to invest around $25 billion from 2023 to 2027 in various projects, including renewable energy and green hydrogen. This strategic shift seeks to diversify income sources and enhance sustainability.