RisksĪs an investor in Ecopetrol, there are many risks which can have a great impact. The asset-liability ratio suggests that it might be able to add debt instead of diluting shareholders. Regardless, it also has a quick ratio of 0.23 which indicates short-term problems with paying its obligations within a year by its current business activities. Regarding its balance, the company has a general asset-liability ratio of 146 %, indicating somewhat normal financial health. This is mostly a result of an increase of 4,841 B COP or 1.23 B USD in its Cost of sales. All of this resulted In Q1 2023 and Q1 2022, respectively, of Net Income attributable to shareholders of 5,660 B COP or 1.44 B USD and 6,573 B COP or1.73 B USD, meaning a percentage decline of almost 17 % in Net Income in USD terms and a percentage decline of 14 % in COP terms. While lower growth numbers than the revenue ones, this kind of growth can be considered great for a billion-dollar market capitalization company. These figures result in operating incomes in Q1 2023 and Q2 2022, respectively, of 13,721 B COP or 3.5 B USD and 12,530 B COP or 3.3 B USD, reflecting a percentage increase in the USD figures of 6 % and, in the COP figures, 9 %. In USD terms, this is a quite large percentage increase of 15.4 % while in COP terms, this corresponds to a 19.6 % increase. With Q1 2022’s USD COP exchange rate of about 3,800, Q1 2022 revenue was 8.54 B USD or 32,473 B COP. With the current USD COP exchange rate of about 3,920, Q1 2023 revenue is 9.86 B USD or 38,854 B COP.

Q1 2023 has provided Ecopetrol with favourable dynamics in both the brent oil price (from about 77 USD to current 85 USD) and the USD COP exchange rate. As Ecopetrol earns the largest part of its revenues domestically in Colombian Peso, this means an investor will experience the best returns with a strengthening Colombian Peso relative to the U.S. As both of these will take large amounts of money and time, there is good reason to think large integrated oil companies like Ecopetrol will have shareholder returns- viable oil prices for at least some time in the coming years.Īs American Investors in foreign companies, it is also worth knowing about the latest foreign exchange developments in the relevant currency, here the Colombian Peso.Īs can be seen in the above chart, the Colombian Peso has been strengthening since the end by about 20 % since the start of the year. At least, of course, unless serious innovation in the oil and gas sector makes it possible to increase production or new, low-cost reserves are found. The Oil MarketĪs can be inferred by the above chart from Energy Research firm Rystad Energy, there is a growing long-term supply-demand mismatch in the oil markets, thus making room for high future oil prices.

Although most of its operations are situated in Colombia, it also has biofuel businesses in Brazil, Mexico, and the United States. Today, the Republic of Colombia is the majority shareholder with 88.49 % of shares outstanding. Today, it functions as an integrated oil company, meaning it has activities in all areas of the oil and gas sector from exploration to refining. is the modern successor to the national oil company Empresa Colombiana de Petróleos funded in 1951. It is also uniquely positioned to benefit from increases in not only the oil price but also the Colombian Peso versus the U.S. ( NYSE: EC) is a buy based on a discounted cash flow analysis with assumptions such as sustaining its current financial results, a discount rate of 8 %, and a terminal multiple of 10.

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