$EC

3/5/25

• Colombian oil/gas producer (25%), refining (35%), petrochemicals (8%), pipeline/midstream (20%), power transmission (15%), and toll roads (5%).
• MC 19B, EV 51B, 4.2B cash covers next two years of debt payments.
• 9B TTM OCF (up and down, cyclical)
• PE 5.66, EV/FCF 8.7
• Dividend yield 16%
• ROC 26%, EY20%
• Notes: Government owns 88%. Diesel sold at discount in country (vs global market). This money goes into FEPC acct, not earnings, but is redeemed later ($2B currently). Permian accts for 13% of their production. 60% of net income is paid out as dividends. This should equate to >$1 per share USD minimum with possibility for a special dividend. Capex in 2025 increasing (5.5 - 6.4B), less in renewables. Production goal of 740-745 kboe/d.
• Upside: A strong USD:COP ratio (less COP per USD) benefits shareholders in US. Colombian regime change. Massive discovery in Sirius-2 gas well, will need development. Also, shale reserves with Middle Magdalena w/ XOM. Vicky Davila (conservative) leading polls.
• Downside: Petro wants to sell the permian assets. Reserve replacement looked to be over 100% but only because of acquisition. Fajardo (middle of the road liberal candidate) may end up winning. $2B investment in a wind farm would probably be a losing situation, unless heavy discount.
• Thesis: Re-rates to 7x PE (20% higher). +15% dividend. April 4 and June 27 dividends. Collect April 4 dividend, and sell at ~$11.25. Prefer to hold into 2026 elections to maximize though.