State-owned Ecopetrol is eyeing another year of consecutive double-digit production growth in the Permian Basin, even though overall company production will only grow in the low single-digits.

Production in the Permian is expected to average between 50 MMboe/d and 55 MMboe/d in 2023 net to the company before royalties, with as many as 130 new wells to be drilled, Ecopetrol’s COO Alberto Consuegra said March 1 during the company’s fourth-quarter 2022 webcast. Net production in the U.S. Gulf of Mexico is expected to average 10 MMboe/d.

If the Permian forecast holds, it would represent a year-over-year growth of between 32% and 46%, according to Hart Energy calculations. Average production was 37.8 MMboe/d in 2022, up 95% compared to 2021.

Average production in the Permian reached a monthly high of 57.4 MMboe/d in late December.

Ecopetrol’s operational and financial results in the Permian, where it has joint operations with Occidental Petroleum, continue to advance positively, according to Consuegra.

Drilling operations in the Delaware Basin began in December with 88 wells being drilled and 106 wells being enabled for production in 2022. The acquisition of new areas in the Delaware sub-basin added 48 MMboe to the company’s 2022 reserve balance, which ended the year with 207 MMboe.

Ecopetrol Permian Growth
Ecopetrol's Permian growth profile. (Source: Ecopetrol)

Also, Ecopetrol reported zero routine flaring and the successful monitoring for the early detection of methane fugitive emissions in the Permian.

Production and reserves rise in 2022

Bogota-based Ecopetrol reported average production of 709.5 MMboe/d in 2022, up 4.5% compared to 679 MMboe/d in 2021. Production is expected to come in between 720 MMboe/d and 725 MMboe/d in 2023.

Higher production this year will be driven by Permian and Cano Sur operations and campaigns in the Rubiales, Piedemonte, Quifa, Arauca and Akacias fields despite scheduled maintenance in the Castilla and Chichimene fields as well the scheduled shutdown of the Florena plant in April, Consuegra said.

Ecopetrol is continuing efforts to boost production and reserves in a push to assist Colombia with its energy security amid country reserves that could run out in less than a decade based on current production rates.

Ecopetrol’s proven reserves reached 2,011 MMboe at the end of 2022, the highest level in the past eight years compared to 2,002 MMboe in 2021 and 1,849 MMboe in 2015. The company’s 2P reserves are 2,497 MMboe, while its 3P reserves are 2,866 MMboe.

The company’s reserve replacement ratio averaged 104% in 2022, and over the past five years, Ecopetrol has “maintained an average reserve replacement of 130%, even under challenging market conditions by implementing continual in-field innovations in its processes,” Consuegra said.

Approximately 89% of Ecopetrol’s proven reserve base is located in Colombia with the remaining 11% in the U.S. The reserve base is 75% skewed to oil and 25% gas, and the average reserve life ratio for oil is 8.3 years while it is 8.8 years for gas.

Year-end 2022 earnings rise 100%

Ecopetrol reported net income in Colombian pesos of 33.4 trillion (US$6.9 billion) in 2022, up 100% compared to 2021 due to higher production and pricing. The average Brent oil price was $99/bbl in 2022, up 39% compared to $71/bbl in 2021.

Felipe Bayon, Ecopetrol’s outgoing CEO, said during the webcast that “these results are underpinned, amongst other things, by some of the following factors: a favorable environment of international prices, the increased production of hydrocarbons, our traditional business, our trading strategy, outstanding results in the electricity transmission, toll roads and telecommunication business line and the growth in domestic demand for our fuels, which meant higher sales of products.”


Ecopetrol Aims to Strengthen Low-Carbon Business

Ecopetrol’s CFO Jaime Caballero reiterated capex is forecast between $5.6 billion to $6.6 billion in 2023 using an average exchange rate of 4,500 pesos to the dollar. This compares to capex of $5.5 billion in 2022.