Ecopetrol’s Share-Price Dive Raises Questions About Colombian Oil Company’s Future

The majority state-owned oil company’s shares continue to decline following dividend payments, causing concern among analysts regarding Ecopetrol’s future

Ecopetrol's future still cloudy.
May 05, 2023 | 02:08 PM

Bogotá — Ecopetrol, Colombia’s largest company, is going through difficult days in the equity market of the Colombian Stock Exchange, with its shares having fallen sharply amid political uncertainty in the country after a ministerial upheaval, a new CEO at the oil company’s helm, and crude prices on a downward path, coupled with corporate decisions that are not convincing the market.

The combination of all these factors makes many wonder if the company’s future is at risk. Recently there have been important changes not only in the company but also in the government of President Gustavo Petro, which is its main shareholder.

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Ecopetrol’s board of directors was replaced, Ricardo Roa was named CEO of the oil company, replacing Felipe Bayón, and Ricardo Bonilla was named finance minister to replace José Antonio Ocampo, following his resignation.

Ecopetrol’s shares fall on the stock market coincided with the payment of the first installment of dividends, but also with Roa’s first statements as head of the company.


For Andrés Duarte, director of variable income at Corficolombiana, “the entry into the post-dividend period, together with the declarations of the new president of the company regarding exploration, justify the reaction of the share price”.

Ecopetrol will pay 593 pesos ($0.13) per share in dividends. On April 27 it paid the first installment of 197.60 pesos, and a similar drop in its share price was expected, however, since the post-dividend period began, until Thursday, the share has fallen by 530 pesos ($0.11).

The reason for the stock market reaction could be explained by Roa’s first pronouncements as CEO.


“The last thing we had regarding exploration was a communiqué from the ministries of mining, finance and commerce, where, when referring to the energy transition, the word ‘sustainable’ was added. “Sustainable” has to do with public finances, and includes as an instrument to continue with the exploration and exploitation of liquid fuels and gas,” according to Duarte.

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“Last week, Ecopetrol’s CEO declared that there will be no more exploration contracts, and that coincided with the beginning of the post-dividend period, which was incorporated into the stock quotation. This was to be expected, due to the amount of the dividend, and given that non-exploration reduces the possibility of continuing to replace reserves, the most important variable in the valuation of an oil company,” Duarte added.

For his part, Julio César Herrera, CEO of Global Energy and Production, said that the stock’s fall is also related to the increase in country risk after Ocampo’s departure from the finance ministry.

“In this world of showing the cards, there is a problem for Ecopetrol, it has only seven or eight years of reserves, while there are companies that have 30 years or more. In addition, Colombia’s country risk went up a lot because of everything that is known to have changed in Ecopetrol, but to this is added that, with the departure of Ocampo, the country risk increased a lot, and it was a mistake of the national government, Colombia has a very high risk,” Herrera said.


Similarly, Corficolombiana’s Duarte sees recent aspects such as the processing of the company’s development plan also impacting the stock.

“As for this week, from what has been known from the plan to date, the sale of electricity to the grid by Ecopetrol is no longer possible. That was a future line of business for the company,” Duarte said.

For his part, Ómar Suárez, head of equity at Casa de Bolsa, said, “we have seen a significant drop in the price of oil, and this has generated bearish shares in Ecopetrol, also, because of the dividend, many people buy Ecopetrol shares to receive the dividend, and after the payment the shares fall, and all this added to the uncertainty about the new CEO of Ecopetrol, and the new finance minister. So the market will be very aware of the policies related to the hydrocarbons sector”.

“We already know that fracking is not going to happen, it seems that the licensing of new exploration areas is not going to happen either. The market will be watching to see what the energy transition is, and the new members of the government, to see how fast [it all occurs] and how it will all be carried out,” Suárez said.

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