KEY RATING DRIVERS
Ecopetrol's ratings reflect the close linkage with the Republic of
Linkage to Sovereign
Ecopetrol's ratings are linked to the credit profile of the Republic of
Aggressive Growth Strategy
Ecopetrol's growth strategy is aggressive and could be challenging for the company. The company plans to increase consolidated production to 1.3 million barrels of oil equivalent per day (boepd) by 2020, from 788,200 boepd of consolidated production during 2013. It also intends to increase refining capacity to 420,000 barrels per day (bpd) from 335,000 bpd. These aggressive goals increase both business and event risk. Fitch believes that Ecopetrol will face challenges in meeting these goals.
Improving Operating Metrics
The company's operating metrics have been improving during recent years and are now considered somewhat in line with the assigned rating category. Ecopetrol's reserve life stood at 8.1 as of year-end 2013. The company will need to maintain its average Reserve Replacement Ratio (RRR) at or above 164% in order to maintain or increase its reserve life profile while still reaching its 2020 production target. Failure to maintain this level of RRR while increasing production to the company's stated target will reduce Ecopetrol's reserve life, which will imply a the need for higher investments in the future.
Strong Financial Profile
Ecopetrol maintains a strong financial profile with
Aggressive Capex Plan
Ecopetrol plans to finance its
An upgrade could result from an upgrade of
A downgrade could occur following a downgrade of
Additional information is available at 'www.fitchratings.com'.
--'Corporate Rating Methodology' (
--'Parent and Subsidiary Rating Linkage' (
Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage
Parent and Subsidiary Rating Linkage Fitch's Approach to Rating Entities within a Corporate Group Structure
+57-1-3269999 ext. 1016
+57-1-3269999 ext. 1110
Source: Fitch Ratings
Most Popular Stories
- Homeowners More Satisfied With Mortgage Servicers
- Discounts Help U.S. Auto Sales Sizzle in July
- Russia, Ukraine Now Face Off Over Football Clubs
- Colorado Issuing Immigrant Driver's Licenses
- Fiat Looks Abroad After Chrysler Merger Vote
- MassMutual Teams Up With ALPFA
- Chrysler U.S. Sales in July Hit 9-Year High
- Recruiting and Keeping the Perfect Employee
- Obama Vows to Veto House Immigration Bill
- Dow Wipes Out Gains for the Year: What Happens Now?