Colombia’s Ecopetrol may farm-out oil production stakes in 2015

DAVID BILLER and ANDREW WILLIS

BOGOTA, Colombia (Bloomberg) -- Colombia’s state-controlled oil company Ecopetrol may farm-out some production assets as part of its effort to improve its portfolio, said Simon Gaviria, head of the National Planning Department.

“It could happen this year if you recalibrate the portfolio to make sure that, in our back-to-basics strategy, Ecopetrol works on its basic assets,” Gaviria, who is an Ecopetrol board member, said in an interview in Washington.

The possibility of farm-outs comes as Ecopetrol strives to focus on core oil operations amid the slump in international prices. The rout, coupled with lagging production, is already weighing on results, with the company posting its first quarterly loss since shares started trading in 2007. The company owns stakes in sectors ranging from petrochemicals to electricity transmission and generation.

Ecopetrol may, for example, sell its stake in energy investment company Invercolsa as soon as this year, Gaviria said.

Its strategy to divest non-petroleum assets “should be year-long, and it is probably not limited to sale of that asset,” he said. It involves “all of non-core assets.”

Ecopetrol could seek as much as $450 million for Invercolsa, about four times its book value, two people with direct knowledge of the matter said in February. Earlier this month, the government authorized Ecopetrol to sell its stake in Medellin-based transmission company ISA after last year authorizing the sale of its stake in power company EEB.

Ecopetrol could also this year accept bids from companies seeking to operate its Rubiales field if it decides not to do so itself, Gaviria said. Pacific Rubiales Energy Corp. currently operates the field, and its contract expires in 2016.

Ecopetrol recorded a net loss of 844 billion pesos ($338 million), in the fourth-quarter. Low oil prices will continue to depress earnings in the first quarter, CEO Juan Carlos Echeverry said April 16.