By Alejandro Pieschacón, Senior Equity Strategist of Casa de Bolsa
First, it is worth reviewing the recent history a bit. In the fifties, the oil companies of the time that dominated almost all of the production, refining and transportation of world oil, known as the “Seven Sisters”, went through several mergers and spin-off processes that resulted in five of the main companies of the world, which we know today as Exxon, Chevron, BP, Shell and Total.
The first two are American, the second is British, Shell is Anglo-Dutch and Total is French. However, and without subtracting the historical prominence that they have had since World War II, at present, none of these companies are close to the world’s largest producers of hydrocarbons.
The top three is headed by Saudi Aramco, with a production close to 12 million barrels of oil per day (BPD). In second place is Gazprom, the largest producer of natural gas in the world and from Russia supplies gas to much of Europe with a production close to 10 million BPD. The third place, with 35% less production than Gazprom, is held by National Iranian Oil, which despite international sanctions and blockages to the Hormuz Strait, continues to be a prominent player, with a production of 6 million BPD. From there, we begin to see the traditional majors with levels ranging from 5.3 to 2.7 million BPD.
Mexico, Venezuela and Brazil, leaders in Latin America
At the regional level, with the data at the end of 2013, the first on the list is Pemex, from Mexico, with an average production of 3.6 million BPD, followed by PDVSA of Venezuela with 2.8 million BPD, and Petrobras of Brazil with 1.9 million BPD. On the next step is Ecopetrol, with 0.8 million BPD, surpassing its peers in Argentina and Ecuador. Unfortunately, of that group of companies the only ones listed are Ecopetrol and Petrobras, making it difficult for others to access information. The most complex case is that of PDVSA, since there are no official data since 2011 and the figures disclosed correspond to the annual statistics bulletin of 2013, published by OPEC.
As for oil reserves, the situation changes a lot, Venezuela with 297,000 million barrels, followed by Brazil, Mexico and Ecuador with 16, 12 and 8,000 million barrels, respectively. Colombia, which shares the last steps with Argentina, has reserves estimated at 2,000 million barrels.
Colombia and Ecopetrol in the international oil scenario
Taking into account the figures, we place Ecopetrol well below production levels and reserves, when compared with the big players, and with their regional peers. However, historically, since its listing, Ecopetrol has had a correlation of 41%, on average, with the large players mentioned previously, which is less than the correlation with its Petrobras pair, which places 35%, although the companies They share many more features.
Now, for two years, the story has been different in the case of Ecopetrol, drastically reducing the correlation with these outstanding companies to 18%, given the strong correction that Ecopetrol presented, whose action fell from $ 5,800 in 2012, to $ 3,600 in which it currently operates.
Should we wait for the correlation to increase and Ecopetrol to behave again like the big global players?
Not necessarily. They are different companies, not only because of their size, but because of the vertical integration of some of their margins and the markets where they operate. The correction in the share price of the local oil company, although strong, has also been healthy, to the extent that the premium paid by Ecopetrol against its peers decreased in terms of earnings per share, Ebitda and reserves . That price closer to the theoretical value, coupled with compliance with corporate policies on production and the improvement of margins with security, can once again attract the attention of foreign investors, who have led the outflow of flows in that asset in recent years. quarters
It is clear that not even the most positive growth expectations will make Colombia one of the largest regional producers in the coming years, but the sustained growth and constant development that the sector has had in recent years, as well as financing policies through from the stock market and the increase in controls to corporate governance policies, they are going in the right direction to position the country and its oil companies as relevant investment options in the emerging universe.