Ecopetrol Warns of Significant Hit to Profits Amid Lower Oil Price

Core Viewpoint - Ecopetrol S.A. (EC) is facing significant profit risks due to declining oil prices, which could lead to a potential profit decrease of up to 12 trillion pesos by 2025 and may necessitate the cessation of production in certain fields [1][5]. Group 1: Oil Price Impact - The ongoing U.S.-China trade tensions have contributed to a drop in crude oil prices, with Brent crude currently around $65 per barrel and West Texas Intermediate near $62 per barrel [2]. - Brent futures traded close to $63.45 per barrel, raising concerns for Ecopetrol as many of its fields have breakeven production costs near this price [3]. - A $1 per barrel decrease in oil prices results in a decline of 900 billion pesos in EBITDA and a 700 billion peso reduction in net profit for Ecopetrol [5]. Group 2: Production Adjustments - Ecopetrol's president indicated that 20 to 30 fields may be at risk of shutdown, although these fields are not significant to the company's overall production [4]. - The company operates a total of 158 fields, and the decision to pause operations will depend on ongoing monitoring of oil prices [4]. Group 3: Financial Forecast - For 2025, Ecopetrol's average benchmark oil price is projected to be around $73 per barrel, but current prices are significantly lower, which could impact profits by up to 12 trillion pesos if the decline continues [5].