Ecopetrol Model Update

Research evidence excerpt

Ecopetrol Model Update

Milene Clifford Carvalho AC Latin America Equity Research

(55-11) 4950-3475 28 July 2026 J P M O R G A N

milene.carvalho@jpmorgan.com

Investment Thesis, Valuation and Risks

Ecopetrol ADR (Neutral; Price Target: $14.50)

Investment Thesis

We rate Ecopetrol as Neutral. Following De la Espriella's election victory, we believe part

of the reduction in Colombia's risk premium is already reflected in the stock. The new

administration's more supportive stance toward the oil and gas industry could facilitate the

resumption of exploration activity and renew discussions around unconventional resource

development, improving Ecopetrol's long-term outlook. The extension of U.S. shale

contracts has also eased concerns around reserve replacement and reinforced the company's

ability to pursue opportunities outside Colombia. However, given Ecopetrol's mature asset

base, we continue to see limited upside to valuation and expect management to rely

primarily on recovery and optimization initiatives to sustain reserves and production. While

policy developments should remain supportive, we believe the pace of operational

execution will be the key driver of shareholder returns going for

Valuation

Our December 2026 fair value of $14.5/ADR (COP2,830/sh derived from JPM FX forecast)

is derived from a SOTP NAV model for the E&P assets, with a reserve depletion model based

on existing reserves and estimates for produced volumes. The remaining portions of the

portfolio are valued using a DCF model. We apply a discount rate of 10.8%.

Risks to Rating and Price Target

Upside/Downside Risks Include:

• Better (weaker)-than-expected lifting costs/breakevens resulting in stronger (weaker)

margins;

• Successful (unsuccessful) implementation of fuel price hikes;