Ecopetrol cuts dividends: tension expected at shareholders’ meeting

Ecopetrol’s General Assembly, scheduled for March 28, will be marked by shareholder discontent due to the continued reduction of the dividend.

From COP$593 per share in 2023, it fell to COP$312 in 2024 and a further decline is proposed to COP$214 in 2025. José Manuel Restrepo, former Minister of Finance, attributes this equity deterioration to the Government’s refusal to allow new exploration contracts and the increase in operating costs, factors that have affected the profitability and value of the share.

Davivienda Corredores points out that the fall in oil prices and the increase in taxes have impacted profits, which in 2024 dropped 21% to COP$14.9 billion, the worst result since the pandemic.

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The Board of Directors approved a payout of 58.9%, and the payment to minority shareholders will be made in two installments: on April 4 and June 27. For the Government, the disbursement will be made until December 31, in line with the obligations of the Fuel Price Stabilization Fund (Fondo de Estabilización de Precios de los Combustibles, FEPC).

The Board also proposed a reserve of COP$16.6 billion to strengthen the company’s financial sustainability. It should be noted that, since 2021, Ecopetrol has had to distribute dividends above its profits to avoid affecting the Government’s cash flow, which has generated indebtedness and a reduction in investments. However, adjustments in fuel prices since 2022 have helped to reduce the FEPC deficit and improve cash flow.

As for the Board of Directors, Gonzalo Hernández will leave his position after completing the cycle initiated in the administration of José Antonio Ocampo. The incorporation of the former Minister of Housing, Luis Felipe Henao, nominated by the pension funds, and Ricardo Rodríguez Yee, nominated by the hydrocarbon producing departments, will be voted.

This is Ecopetrol’s financial situation

Ecopetrol, Colombia’s main oil company, has recently experienced a decline in its financial results. In 2024, the company’s net income fell by 21.7% compared to the previous year, standing at 14.9 trillion pesos (approximately $3,627.9 million).

This drop is due to factors such as lower oil prices, inflation and the impact of the exchange rate. In addition, sales revenues decreased by 6.8%, reaching 133.3 billion pesos, while EBITDA decreased by 10.8%, reaching 54.1 billion pesos.

Ecopetrol’s president, Ricardo Roa, explained in a press conference that 49% of the drop in profit in 2024 is due to the exchange rate, 15% to inflation and 36% to the variation in oil prices.

Despite these challenges, Ecopetrol’s production reached 745,800 barrels per day in 2024, the highest figure in nine years. For 2025, the company has announced an investment plan that ranges between 24 and 28 billion pesos, with the objective of strengthening its position in the energy market.

In addition, Ecopetrol is exploring new investments in renewable energy, including possible acquisitions of wind projects managed by multinationals. The company currently generates 60% of the energy it consumes and is looking to expand its energy matrix to include more wind projects, with announcements expected in the coming weeks or months.

However, the company also faces internal challenges. Ricardo Roa has been under scrutiny for alleged irregularities, including his partner’s alleged interference in company decisions and accusations of misuse of the company for political purposes. These controversies have affected the company’s reputation and raised concerns about its governance.

The uncertainty has impacted the share price, which has been volatile in recent months. For example, on March 4, 2025, the share reached a low of COP$1,880. As of March 21, 2025, its price stood at COP$2,130, reflecting a recovery of 1.43% with respect to the previous close.

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What does the union say?

The Unión Sindical Obrera (USO), Ecopetrol’s main workers’ union, has repeatedly expressed its concern about the company’s financial situation and current hydrocarbons policies. USO emphasizes the need to reactivate hydrocarbon exploration and production in Colombia to guarantee the country’s sustainability and energy self-sufficiency.

Cesar Loza, president of the USO, has pointed out that decisions such as the suspension of new exploration contracts and opposition to unconventional projects have weakened Ecopetrol’s financial position, affecting both the Nation and minority shareholders.

In addition, the USO has criticized Ecopetrol’s failed international investments that have generated significant losses and has warned about the reduction in investments destined to hydrocarbon production, which could compromise the company’s future capacity.

In response to these concerns, Ricardo Roa has assured that the company has no intention of abandoning the hydrocarbons business and remains committed to its development.