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Ecopetrol (EC US) (not covered) to acquire Colombian interest from Chevron (CVX US) (not covered) | Jadestone Energy (JSE LN): HOLD, £0.60; 3Q19 results | Noreco (not covered): 3Q19 results
Ecopetrol SA Jadestone Energy PLC
Centaurus Energy (CTA CN) (not covered): 3Q19 results in Argentina | Ecopetrol (EC US) (not covered): Increasing spending in Colombia | i3 Energy (I3E LN)1 ; Speculative Buy, £1.50: Well result at Liberator | Longboat Energy (LBE LN) (not covered): Proposed trading on AIM | Wintershall: Dry well in the Norwegian Sea | Regal Petroleum (RPT LN) (not covered): Potential assets acquisition | Regal Petroleum (RPT LN) (not covered): Potential assets acquisition
ECOPETL I3E ENW GBP
Ecopetrol (EC US) (not covered): Production update in Colombia | Royal Dutch Shell (RDSA/B LN) (not covered): 3Q18 Results | DNO (DNO NO) (not covered): 3Q18 results | Genel Energy (GENL LN); SPEC. BUY, £3.65: Tawke and Peshkabir update | Africa Oil (AOI CN/SS): BUY, C$2.60 & Vitol & Delonex; Acquisition of Petrobras production offshore Nigeria | Tower Resources (TRP LN) (not covered): Cameroon reserves report
ECOPETL SHEL NK1A GENL AOI TRP
Ecopetrol (EC US) (not covered): 1Q18 results | Repsol (REP SM) (not covered): 1Q18 results | Volga Gas (VGAS LN) (not covered): Production update in Russia
ECOPETL VGAS REP
Ecopetrol (EC US) (not covered): YE17 reserves in Colombia | Range Resources (RRL LN/RRS AU) (not covered): Operating update | OMV (OMV AG) (not covered): 4Q17 results | SDX Energy (SDX LN)1,6; BUY, £0.60: Drilling results in Morocco | San Leon Energy (SLE LN) (not covered): Low production in Nigeria | Tlou Energy (TLOU LN) (not covered): Reserves increase in Botswana
ECOPETL OMV SLE TLOU SDX 0KTW
Ecopetrol (EC US) (not covered): 4Q16 results | Genel Energy (GENL LN); SPEC. BUY, £1.50: Payment for KRG export | Victoria Oil & Gas (VOG LN)1; BUY, £1.15: Very good deal in Cameroon | Cairn Energy (CNE LN); HOLD, £2.60: Drilling update in Senegal | Anglo African oil & Gas (AAOG LN) (not covered): New listing on AIM
ECOPETL GENL VOG CNE
Ecopetrol (EC US) (not covered): Reserves update in Colombia | Sirius Petroleum (SRSP LN) (not covered): Equity placing raising £2 mm & convertible loan facility cancellation
Ecopetrol SA Sirius Petroleum
Ecopetrol reported 1Q16 production of 736,600 boe/d (FCC 748,932 boe/d); however, cash flow was stronger at US$856 mm (FCC US$507 mm), due to a reduction in the purchase of hydrocarbons and lower contracted services, maintenance and labour costs. The Company recently announced revised 2016e production guidance of 715,000 boe/d, due to a reduction in capital spending that is now expected to range between US$3.0 and US$3.4 billion. We have reduced our target price to US$8.50 per share, while maintaining our Underperform ranking.
Ecopetrol SA
Market Impact: Negative.
Ecopetrol reported 4Q15 production of 761,300 boe/d and cash flow of US$1.3 billion that beat our expectations.
Market Impact: Negative. Ecopetrol reported that 1P reserves decreased 11% to approximately 1.85 billion boe at year-end 2015. Negative reserve revisions due to the lower crude oil price could not be offset by cost optimization and improved efficiencies achieved by the Company. For 2015, total net reserve additions were approximately 15 mmboe, which results in a reserve replacement ratio of 6%. We estimate upstream capital expenditures at approximately US$3.0 billion in 2015e, which implies a very high FD&A cost of approximately US$199/boe on 1P reserves. This estimate excludes changes in future development capital.
Ecopetrol has announced a 2016 capital program of US$4.8 billion and production guidance of 755,000 boe/d, which is in line with our expectations. FirstEnergy is currently forecasting 2016e capital expenditures of US$4.8 billion and production of 750,000 boe/d. For 2016e, we are forecasting cash flow of approximately US$3.4 billion, which is insufficient to cover capital expenditures of US$4.8 billion and estimated dividends of US$1.9 billion. The cash shortfall of approximately US$3.3 billion is expected to be financed with the disposition of non-core assets and increased bank debt. It would be reasonable to assume that Ecopetrol will need to consider a dividend reduction in 2016e.
Market Impact: Neutral. Ecopetrol has announced a 2016 capital program of US$4.8 billion and production guidance of 755,000 boe/d, which is in line with our expectations. FirstEnergy is currently forecasting 2016e capital expenditures of US$4.8 billion and production of 750,000 boe/d.
Ecopetrol’s 3Q15 production of 740,900 boe/d and sales volumes of 939,000 boe/d were negatively impacted by restrictions to transportation systems. Fortunately, access has resumed to normalized operating levels and Ecopetrol states that production has recovered to reach the goal of 760,000 boe/d in 2015. Cash flow in 3Q15 of US$1.3 billion was better than anticipated, due to lower selling, operating, labour and administrative costs. Also, there were reduced diluent purchases. Lastly, the Colombian peso was 6% weaker than estimated, which results in lower reported US dollar costs. Our go-forward cash flow estimates and core NAV estimate have increased, as a result of the cost savings initiatives. Our target price has increased to $14.00 per share.
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