Colombia's state-run oil firm Ecopetrol SA unveiled Tuesday its investment plan for next year, raising its exploration budget as the company moves to increase output and engages in an aggressive expansion plan.
The company could invest $8.54 billion next year, a 23% increase from 2010, Ecopetrol said in a statement. The company's investments will be focused on Colombia, which will receive 95% of the funds. The rest will be destined for exploration and production projects in the U.S. Gulf Coast, Brazil and Peru.
The company is earmarking $1.29 billion for exploration, a 36% increase from the 2010 budget. Ecopetrol plans to drill 40 exploratory wells, with 28 of them located in Colombia, mainly in Llanos Orientales, a heavy-oil rich region.
Ecopetrol SA is planning an ambitious $80 billion investment plan until 2020 to hike output to as much as 1.3 million barrels per day. For next year, the company expects oil output to jump for the company and its subsidiaries to an average 750,000 barrels per day. Production by Ecopetrol and its partners reached 719,000 barrels per day in September.
Ecopetrol is also earmarking $3.84 billion for production and $1.28 billion for refining and petrochemicals. "This in line with the Ecopetrol strategy to increase the recovery factor of their fields," said local brokerage firm Interbolsa SA in research note.
Shares of Ecopetrol declined 4.83% to COP3,945 as Colombian assets have suffered under increased risk aversion triggered by concerns over sovereign debt in the euro zone. The benchmark IGC index was down 4.8% to 14,382.35 points.
Oil production in Colombia has surged in recent years, fueled by improved security in areas once controlled by leftist guerrillas. Government officials expect oil output to close the year at 900,000 barrels per day and jump to 1 million barrels per day next year.
Ecopetrol's investment plan for next year will require $6.06 billion in financing, which the company says could be obtained from floating an additional 9.9% stake next year. Another option is the sale of "bonds in both the local and international capital markets," the firm said.
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