Ecopetrol Expands Permian Development With Occidental Petroleum: Details

Ecopetrol S.A. (EC) has announced an extension of its development plan with Occidental Petroleum Corporation (OXY) in the Permian Basin, located in Texas, USA. The agreement between Ecopetrol Permian and Occidental Petroleum, under the joint venture formed in July 2019, includes a drilling plan for 34 wells to be executed between April 2025 and June 2026, in addition to the ongoing wells planned for early 2025. The companies have also left open the possibility of extending the Development Plan in the future, depending on the macroeconomic environment, industry conditions, and the interests of both partners. Additionally, Ecopetrol and Oxy will maintain an independent contract for developing the Delaware sub-basin, which will remain effective until 2027.

For 2025, Ecopetrol Permian's development plan for the Midland and Delaware sub-basins includes drilling about 91 wells, with an investment of $885 million. This initiative is expected to generate an average annual output of approximately 90,000 barrels of oil equivalent per day (net to Ecopetrol Permian). This plan is in line with the Ecopetrol Group's focus on capital discipline and portfolio diversification. In November, the company’s Board of Directors approved the Ecopetrol Group's annual investment budget for 2025. Investors can gain exposure to EC via First Trust Indxx Global Natural Resources Income ETF (FTRI) and Virtus Real Asset Income ETF (VRAI).

Price Action: EC shares are down 0.32% at $9.25 at the last check Monday.

The extension of Ecopetrol's development plan with OXY in the Permian Basin marks a strategic milestone with significant financial implications. The commitment to drill 34 additional wells through June 2026, coupled with the comprehensive 2025 plan for 91 wells and $885 million investment, demonstrates robust capital allocation in one of North America's most prolific oil-producing regions. The projected 90,000 barrels of oil equivalent per day production target reflects operational optimization and positions Ecopetrol advantageously in the current market environment. The Permian Basin's superior economics, characterized by low breakeven costs and extensive infrastructure, provides a competitive edge in terms of operational efficiency and market access.

This agreement's flexibility clause for potential future extensions shows prudent risk management, allowing adaptation to market conditions while maintaining strategic optionality. The separate continuation of Delaware sub-basin operations until 2027 further diversifies the portfolio and risk exposure. The partnership with OXY, a recognized leader in Permian operations, continues to deliver value through technological expertise and operational synergies. This collaboration has proven successful over the past five years, contributing materially to Ecopetrol's group results and establishing a strong foundation for sustainable growth in U.S. operations.



In conclusion, Ecopetrol's expansion of its Permian development with Occidental Petroleum highlights the company's commitment to capital discipline, portfolio diversification, and strategic growth. By leveraging the Permian Basin's significant resource potential and robust infrastructure, Ecopetrol aims to maximize production and profitability in one of North America's most promising oil-producing regions. The company's balanced approach to risk management and strategic optionality ensures that it remains well-positioned to adapt to changing market conditions and capitalize on future opportunities.