Ecopetrol S.A. obtains authorization to execute a loan agreement with an international bank for five hundred million dollars

Rhea-AI Summary

Ecopetrol has secured authorization from Colombia's Ministry of Finance to execute a $500 million loan agreement with Banco Santander. The five-year loan, governed by New York law, will be indexed to the SOFR rate and is payable at maturity.

The funds will support non-investment expenses and help achieve the company's Gross Debt/EBITDA target for 2025. As Colombia's largest company, Ecopetrol controls over 60% of national hydrocarbon production and holds key positions in petrochemicals and gas distribution.

The company's international presence includes operations in the US Permian Basin, Gulf of Mexico, Brazil, and Mexico. Through its 51.4% stake in ISA, Ecopetrol has expanded into power transmission across Brazil, Chile, Peru, and Bolivia, along with Chilean road concessions and telecommunications.

Positive

• Secured USD 500 million loan with Banco Santander with a 5-year maturity term
• Maintains strong access to international financing despite challenging market conditions
• Holds dominant market position with 60% of Colombia's hydrocarbon production
• Diversified energy portfolio including stakes in ISA (51.4%) for power transmission
• Strategic international presence in US Permian basin, Gulf of Mexico, Brazil, and Mexico

Negative

• Additional debt burden could impact company's leverage ratios
• Loan funds allocated to non-investment expenses rather than growth initiatives
• Exposure to market volatility through SOFR-indexed interest rate

Insights

Financial Analyst

Ecopetrol secures $500M loan authorization with 5-year term under favorable conditions, supporting debt/EBITDA targets amid challenging market context.

Ecopetrol has received authorization from Colombia's Ministry of Finance and Public Credit to execute a $500 million loan agreement with Banco Santander. The financing features a 5-year term with bullet repayment (payable at maturity) and an interest rate indexed to SOFR, which is significant for the company's financial structure.

This financing is explicitly designated for non-investment expenses according to Ecopetrol's 2025 financing plan, indicating it's intended for general corporate purposes rather than capital projects or expansion initiatives. The loan is designed to help the company meet its Gross Debt/EBITDA target for the year, suggesting strategic liability management.

The approval required multiple internal procedures and regulatory reviews, culminating in Resolution 0910 dated April 25, 2025. The loan will be governed by New York State law, providing standard international financing protections for cross-border transactions.

What's noteworthy is Ecopetrol's explicit mention of securing these funds under "favorable financing conditions" within what they describe as a "challenging market context," indicating the company maintains strong credibility with international lenders despite potential market headwinds. For Colombia's largest company, responsible for over 60% of the nation's hydrocarbon production, maintaining access to international capital markets on advantageous terms provides important financial flexibility.

This transaction represents normal financial management for a major integrated energy company rather than signaling any exceptional development in Ecopetrol's operations or strategy.

BOGOTA, Colombia, April 28, 2025 /PRNewswire/ -- Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) announces that the Ministry of Finance and Public Credit ("MHCP") authorized the company to execute a loan agreement of up to USD 500 million with [Banco Santander, S.A.], by means of Resolution 0910 dated April 25, 2025. The term of the loan will be five years, payable at maturity, and the interest rate will be indexed to the SOFR rate.

The funds from this operation are intended to be allocated to non-investment expenses, in accordance with the Resolution issued by the MHCP and the company's 2025 financing plan and help reach the Gross Debt/EBITDA target for the year.

To obtain the MHCP authorization, the Company complied with all required internal procedures and approvals. The MHCP reviewed and authorized the terms of the draft agreement which will be governed by the laws of the State of New York.

The conditions obtained for this agreement reaffirm the support and confidence of the international financial sector in Ecopetrol Group's strategy, amidst a challenging market context where the company continues to achieve favorable financing conditions.

Ecopetrol is the largest company in Colombia and one of the main integrated energy companies in the American continent, with more than 19,000 employees. In Colombia, it is responsible for more than 60% of the hydrocarbon production of most transportation, logistics, and hydrocarbon refining systems, and it holds leading positions in the petrochemicals and gas distribution segments. With the acquisition of 51.4% of ISA's shares, the company participates in energy transmission, the management of real-time systems (XM), and the Barranquilla - Cartagena coastal highway concession. At the international level, Ecopetrol has a stake in strategic basins in the American continent, with Drilling and Exploration operations in the United States (Permian basin and the Gulf of Mexico), Brazil, and Mexico, and, through ISA and its subsidiaries, Ecopetrol holds leading positions in the power transmission business in Brazil, Chile, Peru, and Bolivia, road concessions in Chile, and the telecommunications sector.

This release contains statements that may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. All forward-looking statements, whether made in this release or in future filings or press releases, or orally, address matters that involve risks and uncertainties, including in respect of the Company's prospects for growth and its ongoing access to capital to fund the Company's business plan, among others. Consequently, changes in the following factors, among others, could cause actual results to differ materially from those included in the forward-looking statements: market prices of oil & gas, our exploration, and production activities, market conditions, applicable regulations, the exchange rate, the Company's competitiveness and the performance of Colombia's economy and industry, to mention a few. We do not intend and do not assume any obligation to update these forward-looking statements. 

For more information, please contact:

Head of Capital Markets
Carolina Tovar Aragón
Email: investors@ecopetrol.com.co 

Head of Corporate Communications (Colombia) 
Marcela Ulloa 
Email: marcela.ulloa@ecopetrol.com.co 

View original content:https://www.prnewswire.com/news-releases/ecopetrol-sa-obtains-authorization-to-execute-a-loan-agreement-with-an-international-bank-for-five-hundred-million-dollars-302440426.html

SOURCE Ecopetrol S.A.

FAQ

How much is Ecopetrol's (EC) new loan agreement worth and what is its purpose?

Ecopetrol (EC) secured authorization for a USD 500 million loan agreement with Banco Santander, intended for non-investment expenses. The loan will help the company reach its Gross Debt/EBITDA target for 2025.

What are the terms of Ecopetrol's (EC) 2025 loan with Banco Santander?

The loan has a five-year term, is payable at maturity, and features an interest rate indexed to the SOFR rate. The agreement will be governed by New York State laws.

How does Ecopetrol's (EC) $500M loan approval impact its market position?

The loan approval demonstrates continued support and confidence from the international financial sector in Ecopetrol's strategy, allowing the company to secure favorable financing terms despite challenging market conditions.

What is Ecopetrol's (EC) current market presence in Colombia?

Ecopetrol is Colombia's largest company, controlling over 60% of hydrocarbon production, most transportation and logistics systems, and holds leading positions in petrochemicals and gas distribution.

What international operations does Ecopetrol (EC) currently maintain?

Ecopetrol operates internationally in strategic basins across the Americas, including the US Permian basin and Gulf of Mexico, Brazil, and Mexico. Through ISA, it has significant presence in power transmission across Brazil, Chile, Peru, and Bolivia.