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Ecopetrol plans to invest US$17 billion under an average crude price scenario of US$70 oil through 2020.
The new plan, based on a reference US$50 oil scenario, allows for obtaining benefits in case of potential price increases by the end of this decade, the Colombian company said in its statement.
Ecopetrol will channel almost 90 percent of its capital investments to the upstream sector, which is one of the three pillars in its plan. The other two priorities will be cash flow increase via consolidation of savings and efficiencies, as well as capital discipline.
At US$50 oil, the company estimates its production would be 760,000 boed by 2020, up by 6 percent compared to this year’s estimated output. At oil at US$70, production is estimated to reach 830,000 boed, which is 16 percent higher than current output. At US$80 crude price, production is seen at 870,000 boed.
Ecopetrol has been focusing on boosting its cash generation since oil prices started crashing in 2014, and has cut costs by USD$1.1 billion since, divested non-core assets, and initiated the sale of minor fields.
In June of this year, Ecopetrol said it was auctioning off 20 oil and gas blocks as part of its strategy to increase cash flows. Back then it said that it believed the auction process would help to “divest (its) portfolio in order to obtain higher returns for shareholders”.
The company’s updated plan, announced on Thursday, envisages efficiencies that could free up to another US$700 million in savings by 2020. Ecopetrol also plans to receive between US$700 million and US$1 billion in proceeds from asset sales in the period.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.