Colombian state-owned oil company Ecopetrol plans to avoid issuing debt in the international debt market during the rest of 2024 as it looks to reduce refinancing risk, CFO Javier Cárdenas said Wednesday.
“We do not need to increase debt to execute our investment plan,” Cárdenas said in a response to a question from LatinFinance during its second-quarter earnings call. “Remember that we have a significant [debt] tower in 2026.”
The company is, however, “always monitoring the market and looking for the best conditions” to sell bonds either in the domestic or international markets to cover its funding needs, Cárdenas said.
Ecopetrol raised $1.85 billion in the sale of 12-year global bonds in January to fund a tender offer for its 4.125% 2025 bonds. And earlier this month the company announced plans to redeem a chunk of its 5.375% 2026 bonds ahead of schedule.
Moody’s stripped the firm of its investment grade rating in May citing rising debt and negative free cash flow.
JOINT VENTURE
Ecopetrol is currently in talks with US-based energy company Occidental Petroleum about possibly renewing a joint-venture agreement to produce shale gas in the Midland Basin in West Texas, Nicolás Azcuénaga, vice president of strategy and new business, said during the call. The tie-up began in 2019 and expires next year.
“There are four options. The first is to extend the joint venture, the second is to continue operations with Oxy but through a joint development agreement. The next alternative is for Ecopetrol to take on the role of operator in its area and the [other] is to sell our stake,” he said.
The company said last month it had initiated talks with Oxy about jointly acquiring shale oil producer CrownRock for $12 billion but subsequently decided against participating in the deal.
Ecopetrol would have needed to get approval from the Finance Ministry to issue more public debt to fund the acquisition, CEO Ricardo Roa said on the call, adding that “we were told that the issuance of a debt approval would be unviable.”