Ecopetrol’s new strategy targets 870,000 bopd by 2020

BOGOTA, Colombia (Bloomberg) -- Ecopetrol, the worst performing major oil stock in the past year, is scraping a high-growth strategy to focus on preserving margins and boosting reserves.

Colombia’s state-controlled oil producer unveiled a strategic plan targeting an average annual production increase of 1% to 2%. Output would reach about 870,000 bopd by 2020 in the board-approved plan, the company said in a statement.

Ecopetrol will focus production on major profitable fields as it expects earnings before interest, taxes, depreciation and amortization of more than $30 a barrel, based on a Brent price of $70 to $80 a barrel. The company plans to boost proved reserves by 1.7 Bbbl by 2020.

Ecopetrol has slumped 46% in the past year, the worst rout among producers in the BI Global Integrated Oils Valuation Peers Index. The Bogota-based company is targeting savings of about $1 billion a year through 2020, with annual investments to average $6 billion.

As part of the new plan, Ecopetrol will continue to divest non-strategic assets including stakes in Empresa de Energia de Bogota and Interconexion Electrica, as well as non- strategic exploration and production assets.

The company is offering a block divestment plan called Ronda Ecopetrol. It expects offers by June for a first tranche of assets including five onshore and three offshore blocks, Exploration Vice President Max Torres said.