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Ecopetrol acquires 30% of the Gato do Mato discovery in Brazil's Pre-Salt

  • The Company will hold a 30% interest. Shell will continue as operator with 50%, while Total will retain 20%.
  • Ecopetrol could incorporate some 90 million barrels of crude oil in contingent resources as of 2020, with production that could total around 20,000 barrels of crude per day in 2025.

BOGOTÁ, Colombia, Oct. 21, 2019 /PRNewswire/ -- Ecopetrol S.A. (BVC: ECOPETROL, NYSE: EC) reports that its subsidiary Ecopetrol Óleo e Gás do Brasil Ltda has entered into an agreement with Shell Brasil Petróleo Ltda. to acquire 30% of the interests, rights and obligations in two areas corresponding to the BM-S-54 Concession Agreement and the Sul de Gato do Mato Shared Production Agreement, located offshore in Brazil's Santos basin, in the so-called Pre-Salt, where a hydrocarbon deposit known as "Gato do Mato" was discovered.

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Under this agreement, Shell will reduce its stake from 80% to 50% and continue as operator, while the French company Total will retain the remaining 20%. In addition to these oil companies, the Brazilian government also participates in the Shared Production Agreement, through Pré-Sal Petróleo S.A. (PPSA). After discounting this share, the consortium will proportionally maintain the above percentages.

Three wells that have discovered light hydrocarbons have been drilled in these two blocks. The consortium will continue executing activities and operations in order to initiate production in coming years.

"Joining this discovery in the Brazilian Pre-Salt with world-class companies is part of our growth and internationalization strategy, focused on high potential basins such as Santos in Brazil. This acquisition balances our production portfolio by adding light hydrocarbons. In 2018 we announced the entrance into the Pre-Salt, an area with one of the greatest potential in the continent. Today we strengthen our presence by being part of a discovery that will give us production in a few years" said Felipe Bayon, president of Ecopetrol.

According to Ecopetrol's estimates, the company could incorporate some 90 million barrels of crude in contingent resources as of 2020, which will be gradually added to its balance of reserves. Ecopetrol also estimates that its share of production could total around 20,000 barrels per day of crude in 2025.

This agreement is in line with the company's strategy of capital discipline and sustainable growth in reserves and production and strengthens Ecopetrol's position in the Santos basin in Brazil. The Gato do Mato stake will add to our current position at Pau-Brasil and Saturno blocks.

The agreement signed by Ecopetrol Óleo e Gás do Brasil Ltda. and Shell Brasil Petróleo Ltda. is subject to the respective approvals of assignment to Ecopetrol by Brazil's Ministry of Mines and Energy, the country's National Agency of Petroleum, Natural Gas and Biofuels and other customary transaction conditions.

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Ecopetrol is Colombia's largest firm and is an integrated oil company that is among the 50 largest in the world and the four largest in Latin America. In addition to Colombia, where it generates over 60% of the country's production, it is active in exploration and production in Brazil, Mexico, Peru and the United States (Gulf of Mexico). Ecopetrol operates the largest refinery in Colombia, most of the country's oil-pipeline and polyduct network, and is significantly increasing its share of bio-fuels.

This press release contains statements relating to business prospects, estimates of operating and financial results, and Ecopetrol's growth prospects. All are projections, and therefore are based solely on management's expectations of the company's future and its continuous access to capital to finance the company's sales plan. Achieving these estimates in the future depends on its performance under given market conditions, regulations, competition, performance of the Colombian economy and industry, among other factors; therefore, they are subject to change without prior notice.

For further information, contact:

Capital Markets Manager (e)
Fernando Alexander Suárez
Telephone: +571-234-5190  
Email: investors@ecopetrol.com.co

Media Relations (Colombia
Jorge Mauricio Tellez
Telephone: + 571-234-4329 
Email: mauricio.tellez@ecopetrol.com.co

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