Ecopetrol SA reported a 61% drop in net income in pesos in the second quarter, compared to second-quarter 2022, amid lower commodity prices while its Permian Basin operations led the company’s production increases in absolute terms.

Colombia’s state-owned Ecopetrol oil company experienced a 61% drop in net income in the second quarter compared to the same period in 2022, the company reported Aug. 8.

The falloff to 4.1 trillion Colombian pesos (about US$1 billion) from 10.5 trillion pesos was attributed to lower crude oil, natural gas and products prices, which fell an average 22% in the quarter. The company’s average oil basket price fell 35% while its average products basket price fell 34%.

“In terms of the market, during the first half of the year, several factors impacted the price of crude oil, including the possibility of a recession in the developed world, high interest rates and banking pressures in the United States, and the economic slowdown in China,” Ecopetrol President Ricardo Roa Barragán said in the quarterly financial results statements.

“However, our operational resilience and the strategies we have implemented to take advantage of opportunities through market diversification and efficiency and synergy throughout our operations have allowed us to successfully face these trials,” Roa said.

Ecopetrol’s production averaged 728,000 boe/d in the quarter, up 3% compared to 704,600 boe/d in second-quarter 2022. The increase was primarily driven by incremental production from Rubiales and Caño Sur fields in Colombia and the Permian Basin, which offset lower production from other fields. Oil production accounted for 76% of Ecopetrol’s combined production in the quarter.

In the Permian, where Ecopetrol is partnered with U.S.-based Occidental Petroleum, the company reported production of 58,700 boe/d net before royalties in the second quarter, up 31,700 boe/d in second-quarter 2022. The Permian Basin led production increases in absolute terms during the quarter, according to Ecopetrol data compiled by Hart Energy.

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Ecopetrol’s Permian production reached 62,900 boe/d in June 2023 and the company expects its Permian production to average between 62,000 and 64,000 boe/d in 2023.

Ecopetrol said gross production from the Permian Basin joint venture reached a record 100,000 boe/d through second-quarter 2023, while a total of 279 wells were drilled by Ecopetrol and Occidental from 2019 through the first half of 2023, it said.

Offshore Colombia Focus

Bogotá-based Ecopetrol continues with activities offshore Colombia, which could provide it and the country with production upside in the future, based on ongoing activities around its recent exploration successes.

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Ecopetrol continues with the evaluation and maturation of the projects associated with the Uchuva-1 (with partner Petrobras) and Gorgón-2 (with partner Shell Colombia) discoveries in Colombia’s offshore Caribbean region. In particular, the company continues with the Uchuva appraisal campaign, while studies on its development also continue.

Ecopetrol also said pre-drilling activities are underway for the Orca Norte-1 well.

Over the remainder of the year, Ecopetrol has an eye on the completion of the drilling of the Glaucus-1 well close to the Gorgón block. Glaucus-1 is expected to reach maximum depth in the second half of 2023.