Ecopetrol Eyes $1.5 Billion SierraCol Energy Deal Amid Declining Reserves

Colombia’s state-owned oil company, Ecopetrol, is considering acquiring SierraCol Energy, the country’s largest independent oil producer, from Carlyle Group for $1.5 billion.

This potential acquisition reflects Ecopetrol’s urgent need to boost its oil and gas reserves as Colombia faces declining resources and restrictive exploration policies under President Gustavo Petro.

SierraCol Energy produces approximately 45,000 barrels of oil equivalent per day and holds assets acquired by Carlyle in 2020 from Occidental Petroleum for $825 million. The company reported $172 million in free cash flow over the past year and carries a net debt of $511 million.

These figures make it an attractive target for Ecopetrol, which aims to strengthen its production capacity while navigating a challenging energy landscape.

Ecopetrol executives Rafael Guzmán and Ricardo Roa confirmed the company is analyzing the opportunity but has not decided whether to submit a bid.

Ecopetrol’s Strategic Acquisition

The potential deal comes as Colombia’s natural gas reserves dropped to 6.7 years of supply in 2024, down from 7.2 years in 2023. Meanwhile, oil reserves slightly increased to 7.8 years but remain insufficient to meet long-term needs.

President Petro’s refusal to issue new exploration licenses since his 2022 inauguration has intensified the pressure on Ecopetrol to maximize existing contracts.

In February, the company fully acquired the CPO-09 block in Colombia’s eastern plains for $452 million, adding 41 million barrels to its reserves and boosting daily production by 7,000 barrels.

Ecopetrol projects production of 740,000 to 750,000 barrels of oil equivalent per day in 2025 but faces growing challenges. Domestic natural gas production is expected to meet only 88% of demand in 2025 and could drop to 70% by 2026, increasing reliance on costly imports.

The potential SierraCol acquisition aligns with Ecopetrol’s strategy to secure energy stability through both organic growth and acquisitions. However, it also highlights the broader struggle of Colombia’s energy sector under restrictive policies and dwindling resources.

If successful, this deal could provide a lifeline for Ecopetrol while underscoring the urgent need for sustainable energy solutions in Colombia.