Ecopetrol Approves 2011 Investment Plan

BOGOTA, Colombia, Nov. 16, 2010 -- Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC; BVL: EC; TSX: ECP) ("Ecopetrol" or the "Company") announced today that its Board of Directors has approved an investment plan for 2011 of US$6.738 billion. Also, the Board assigned the Company a contingent budget of US$1.807 billion for projects still in the development stage, which, once necessary requirements are met, will be presented to the Board for approval during the course of the year. Taking into account this contingent budget, Ecopetrol's investments in 2011 could reach US$8.545 billion. Additionally, of the possible US$8.545 billion investment plan for 2011, US$1.512 billion is destined to intercompany contributions and loans to the Company's subsidiaries and affiliates, and does not include funds for possible acquisitions.

95% of investments will be made in Colombia and the remaining 5% is destined to exploration and production projects along the U.S. Gulf coast, Brazil and Peru, where Ecopetrol maintains operations.

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The table below sets forth a  break-down of the 2011 investment plan by business area:

As in prior years, the majority of investments in 2011 will be destined to exploration and production (60%).

"The 2011 investment plan is key for Ecopetrol in its strategy of meeting the goals we have set for ourselves for the years 2015 and 2020. In 2011, important initiatives and projects will be undertaken that will make it possible for us to fulfill our value promise to our shareholders. This year will be crucial for many strategic investments. So far we have taken important steps to realize that value promise announced three years ago by means of growing production and crude and gas reserves, as well as driving infrastructure projects in refining, natural gas, and hydrocarbon and biofuel transport that will help us improve delivery to customers and all Colombians. 2011 will be a year for demonstrating that we are on the right path toward making our vision as a business group a reality," said Ecopetrol's president, Javier Gutierrez Pemberthy.

The following are some of the main projects that Ecopetrol will develop in 2011 in its principal areas of business.

Exploration

With an investment of US$1.293 billion in 2011, Ecopetrol S.A. plans to proceed with the drilling of 40 exploratory wells, of which 28 will be located in Colombia, primarily in Llanos Orientales. The 12 wells drilled abroad will be along the U.S. Gulf coast, Brazil and Peru. The drilling goal typifies the strategy of focusing on prospects with major potential and value for the Company.

The Company will continue the activities in all of its blocks in Colombia, including the 10 blocks recently granted by the National Hydrocarbon Agency. The Company also plans to explore the development of non-conventional resources (such as shale gas).

Production

Ecopetrol will use US$3.848 million for continued crude and gas production, with an average target of 697 thousand barrels a day of oil equivalent (kbpde) in 2011. This production goal for Ecopetrol S.A. (unconsolidated) represents a 24% increase over that of 2010. Group's average production will reach 750 thousand barrels of petroleum equivalent per day.

Most of the investment will be earmarked for projects in the Llanos Orientales, especially heavy crude development at fields such as the Castilla, Chichimene and Rubiales fields. A representative percentage will also be destined for the development of the Valle Medio del Magdalena fields, including La Cira-Infantes and Casabe fields.

Refining and petrochemicals

The estimated total investment in this business segment is US$1.283 billion, most of which will go into the industrial services project, the plan to improve operations and modernization of the Barrancabermeja refinery, as well as help fund further expansion and modernization at the Cartagena refinery.

Transport

The estimated total investment in this business segment is US$1.729 billion and will be targeted at augmenting crude evacuation capacity by 450,000 barrels a day (bpd) in 2011 and diluting naphtha from 45,000 bpd to 90,000 bpd. These projects will enable the Company to increase production of heavy crude. In addition, investments will be made in port infrastructure in order to increase the movement of ships with up to two million barrel capacity (VLCC-Very Large Crude Carrier) through the Covenas port.

Additionally, the total transport investment includes contributions to the Company's subsidiaries, Oleoducto Bicentenario and Oleoducto de los Llanos.

Other investments

Ecopetrol will allot US$392 million for other investments, primarily energy diversification projects, such as the Llanos-based Bioenergy plant that produces ethanol from sugar cane, research conducted at the Instituto Colombiano del Petroleo (Colombian Petroleum Institute), and information technology. Initiatives will also be advanced in the areas of human resources, shared services center, quality management and social responsibility.

Acquisitions

As stated above, the amount approved for 2011 does not include funds for possible acquisitions, which will be examined and approved by the Company's senior management and Board of Directors on an individual basis.

Business Group Investments

In addition to Ecopetrol's unconsolidated investment plan, the other companies comprising the Business Group will invest US$4.239 billion in 2011, of which Ecopetrol will contribute or loan, as the case may be, the aforementioned US$1,512 million through a finance facility. The remaining resources will be provided through the cash generation of the individual companies, commercial financing and third party or partner contributions, as in the case of Savia (50%),  (45%), Bionergy (15%) and ODL (35%).

The following table sets forth the business group investments by company:

The following table summarizes the contributions and loans from Ecopetrol to other business group companies:

On a consolidated basis, the Ecopetrol Business Group will invest US$10.618 billion in 2011. 66% of the investment is for Ecopetrol and the remaining 34% will be invested through subsidiaries and affiliates.

Sources of funds

The Ecopetrol S.A. 2011 investment plan would require a financing of US$6.060 million at the Ecopetrol level (unconsolidated), which could be obtained from different sources:  capitalization and issuing of shares of up to 9.9%, a resource that remains available through Law 1118 of 2006; the sale of bonds in both the local and international capital markets; credit facilities with commercial banks; export development credits; and sale of shares in non-strategic assets.

In addition, the investment plan of the Company's subsidiaries and affiliates would require an estimated financing of US$1.458 billion.

The schedule for carrying out the 2011 investment plan will depend on the Company's cash generating activities, capital market conditions, execution of the investment budget in the various business areas, and possible acquisitions.

Ecopetrol is the largest company in Colombia and a vertically integrated oil company, among the 40 largest oil companies in the world and four largest in Latin America. In addition to Colombia, where it generates over 60% of the country's production, it maintains exploration and production operations in Brazil, Peru and the United States (Gulf Coast).  Ecopetrol owns the largest refinery in Colombia, the majority of the network of oil pipelines and multi-use pipelines and is increasing significantly its participation in biofuels.

This release contains forward-looking statements related to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of Ecopetrol. These are merely projections and, as such, are based exclusively on the expectations of management concerning the future of the company and its continued access to capital to fund the Company's business plan. Such forward-looking statements depend on changes in market conditions, regulations, competitive pressures, the performance of the Colombian economy and the industry, among other factors, therefore, they are subject to change without prior notice.

SOURCE Ecopetrol S.A.