EC

EC

Ecopetrol

Cyclical Commodities

Overvalued

Price today

$17.25

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The business

An oil company where the politician in Bogotá calls more shots than the geologist.

Ecopetrol extracts, refines, and sells crude and derivatives, mainly in Colombia. It charges per barrel sold at the international price, so its revenue rises and falls with oil. It also owns ISA, which moves electricity across Latin America and provides steadier cash.

Reserves and internal transport infrastructure give it an edge in Colombia, but oil is a commodity: nobody pays extra for its brand. The real moat is geographic and regulatory, not quality. ISA is the hidden gem with regulated, predictable revenue.

Revenue history

$42.0B
2022
$34.0B
2023
$33.0B
2024
$31.0B
2025
$31.0B
2026
CAGR 5 años: +-7%

From $42.0B to $31.0B in 4 years. Sales are shrinking — the engine is losing steam.

Where each $100 of sales goes

Revenue $32.0B · FY2025

Cost of sales$21.9B · 69%
Operations$2.9B · 9%
Taxes and other$3.3B · 10%
Net profit$3.9B · 12%

Of every $100 in sales, $88 goes to costs and operations; $12 is left as net profit (12% margin).

Catalysts and risks

ISA provides stable regulated flow that the market still doesn't value separately.

Dividend near 4.2% supported by free cash flow of ~$3.2B.

Any sustained rise in Brent crude multiplies earnings quickly.

⚠️

The government controls 88.5%: it decides dividends and strategy based on politics, not shareholders.

⚠️

Net debt of 2.1x EBITDA limits room to maneuver if oil falls.

⚠️

Energy transition and political pressure against new exploration in Colombia.

Charlie's note

Paying well above a 3.5x EV/EBITDA anchor for a cyclical business growing at 3% and answering to a political owner is expensive optimism. Quality doesn't justify the multiple.

Analysis · June 2026

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