Ecopetrol Announces a Boost in Spending, Shares Jump Almost 20%

Dec.21.08 | About: Ecopetrol S.A. (EC)

Colombian Ecopetrol's ADR (NYSE: EC) gained 19.44% on Friday as the company's shares on the local exchange lifted less than one percent on Friday. On Thursday, the company reported increased capital expenditure in 2009.

According to local media, Ecopetrol will boost spending on oilfields, refineries and other investments in 2009 by 35%, reaching a total planned capital expenditure of US$6.22 billion. The company, which currently has no debt, is considering debt financing to cover its needs by borrowing up to US$1 billion.

Ecopetrol intensifies the company's investments as it plans on reaching a total output of one million barrels of oil per day. Production output for 2008 averages 542.000 barrels per day.

After the reported plans of increased capital expenditure, Ecopetrol's shares on the local exchange fell 3.1%, to close at 2.010 pesos on Thursday. Friday's close was at 2.015 pesos. The year-to-date performance of the company's shares is flat, but from the May 2008 high of approximately 2.900 pesos, the share is down over 30%.

On Friday, December 19, the national bank of Colombia reported that they may leave interest rates unchanged for the fifth straight month. The Colombian Peso gained 5.4% on the day against the U.S. Dollar.