PREVIEW-Ecopetrol forecast to report Q2 loss amid oil price slump


By Oliver Griffin

BOGOTA, Aug 3 (Reuters) - Colombia's majority state-owned oil company Ecopetrol SA ECO.CN is expected to swing to a net loss due to lower oil prices when it reports its second-quarter results on Tuesday, according to analysts.

Ecopetrol's results follow regional peers Petroleos Mexicanos PEMX.UL and Brazil's Petroleo Brasileiro SA PETR4.SA, which recently posted quarterly losses of around $1.9 billion and $524 million, respectively.

Ecopetrol will likely post a net loss of 260 billion pesos ($70 million), compared with a profit of 3.49 trillion pesos in the same period a year ago, Bancolombia analysts said in a research note.

Similarly, Credicorp Capital's Sebastian Gallego expects the oil company to post a loss of 146.6 billion pesos for the quarter.

"Ecopetrol should show a severe decline in financials," Gallego said in a research note, citing a 68.5% year-on-year fall in Brent oil prices measured in Colombian pesos in the second quarter.

Revenue is expected to decline to 8.24 trillion pesos - from 18.3 trillion pesos a year ago - according to an average of two analysts' estimates taken from Eikon.

Bancolombia expects Ecopetrol to post revenue of 10.1 trillion pesos, while Credicorp Capital sees a fall to 11.1 trillion pesos.

Despite expected declines, Control Risks' senior analyst Nicolas Urrutia told Reuters recent upwards revision to 2020 investment plans to up to $3.4 billion has eased concerns.

"I think there is a healthy degree of optimism for these results," Urrutia told Reuters.

However, he added the company's performance will be closely watched as the government weighs whether to sell some of its stake in Ecopetrol.

Debate over potential privatization of a stake will likely heat up in the coming months, added Sergio Guzman of Colombia Risk Analysis.

"The government has a huge problem," Guzman said, referring to lost income amid the coronavirus pandemic. "It may eye Ecopetrol as an easy solution."

(Reporting by Oliver Griffin)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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