Ecopetrol Takes Control of Brava Energia in $1.2B Brazil Growth Bet

Key Points

• Ecopetrol completed its $1.2 billion acquisition of a 51% controlling stake in Brazil’s Brava Energia, creating an operating platform in a strategic growth market and adding production, reserves and cash-flow potential.
• Brava’s first-half 2026 output averaged about 79,000 barrels of oil equivalent per day, with its production equal to roughly 11% of Ecopetrol’s output and its proved reserves representing nearly 24% of Ecopetrol’s reserve base. The deal could have increased Ecopetrol’s revenue by 7% and EBITDA by 8% on a pro forma basis.
• Ecopetrol funded the transaction with a one-year $1.2 billion bridge facility and expects leverage to remain below its 2.5-times debt-to-EBITDA threshold. Integration will focus on governance, operational efficiency and developing assets such as the Papa-Terra and Atlanta offshore fields.

Ecopetrol NYSE: EC said it has completed the acquisition of a 51% controlling stake in Brazilian independent oil and gas company Brava Energia for approximately $1.2 billion, establishing an operating platform in Brazil that the company said will add production, reserves and cash-flow potential to its portfolio.

The transaction closed Aug. 17 following a two-step process conducted through Ecopetrol Investimentos do Brasil. Ecopetrol first signed an agreement in April 2026 to acquire a 26% interest from key shareholders, then launched a public tender offer for an additional 25% stake. The company has appointed three representatives to Brava's board of directors.

Julián Lemos, Ecopetrol's corporate vice president of strategy and new businesses, described Brazil as a strategic growth market due to its hydrocarbon resources, offshore basins, regulatory framework and energy infrastructure. He said Brava is Brazil's second-largest independent oil and gas player by production and reserves.

Production and Financial Contribution

Brava produced approximately 79,000 barrels of oil equivalent per day during the first half of 2026, with oil accounting for 79% of output and gas representing the remaining 21%. Ecopetrol said the acquired business adds production equal to about 11% of Ecopetrol's output, while Brava's proved, or 1P, reserves represent nearly 24% of Ecopetrol's reserve base reported at the end of 2025.

The company said the acquisition price equated to approximately $8.40 per barrel of 1P reserves and $6.30 per barrel of 2P reserves.

Chief Financial Officer Camilo Barco said that, based on first-half 2026 results, Brava would have increased Ecopetrol's consolidated revenue by about 7% and EBITDA by about 8%. Net income attributable to Ecopetrol shareholders would have risen approximately 2%, excluding debt-related transaction costs, he said.

Brava's operations will be consolidated beginning in September, resulting in only a partial impact on Ecopetrol's third-quarter 2026 results. Investors should see a full quarter of Brava's contribution beginning in the fourth quarter, Barco said.

Barco also cited Brava's adjusted EBITDA margin of more than 49% and said its return on average capital employed, or ROACE, is expected to be broadly in line with Ecopetrol's level of roughly 9.1% to 9.2%.

Financing and Integration Plans

Ecopetrol initially financed the acquisition with a bridge facility of about $1.2 billion, including the transaction value as well as estimated financing costs, fees and interest for 2026. The one-year facility was arranged through international financing subsidiary Ecopetrol Capital AG and funded Ecopetrol Investimentos do Brasil.

The company said it is evaluating longer-term financing alternatives, including long-term debt, portfolio management initiatives and internal funding sources. Barco said the selection will be based on cost efficiency, maturity profile, funding diversification and liquidity preservation. He added that the refinancing will not create obligations or guarantees at Brava's operating-company level.

Ecopetrol expects its gross debt-to-EBITDA ratio to remain below its strategic threshold of 2.5 times after consolidating Brava. The company said Brava's EBITDA generation, cash-flow potential and future dividend contribution support that outlook.

Management outlined a three-stage integration roadmap:

• Near-term governance alignment, business-plan review, capital-allocation alignment and reporting integration.
• Short- to medium-term efforts to improve operational reliability, capital efficiency, cash generation and debt management.
• Longer-term development of Brava's reserve base and pursuit of value-accretive opportunities under Ecopetrol's capital-discipline standards.

Portfolio Strategy and Governance

Lemos said Ecopetrol has not yet requested a shareholder meeting to make further changes to Brava's board or management structure. The company is assessing which positions may need to be secured to improve alignment while respecting Brazilian regulations and minority shareholders' rights.

He said Brava will maintain appropriate independence as a Brazilian listed company, though future capital allocation will need to align with Ecopetrol's broader investment plan and return requirements. Barco said investments in Brava will be assessed under the same return, risk and payback criteria used across Ecopetrol's portfolio.

Ecopetrol has not decided whether to combine Brava with its existing Brazilian assets, including Ecopetrol Óleo e Gás do Brasil, according to Lemos. That affiliate holds an exploration portfolio and an ongoing Shell-operated project expected to begin operations in 2029. The company also said it has not considered delisting Brava or taking it private.

Management said Brava's existing downstream and refining assets are included in the acquisition. Lemos cited Brava's reported refining margin of around 13%, while noting that the companies use different reporting and operating structures.

Operational Priorities

Brava's current investment program includes drilling campaigns at the offshore Papa-Terra and Atlanta fields. Lemos said the company is completing two wells at each asset, with production expected to begin by the end of 2026 and early 2027. Ecopetrol said it is committed to capital expenditures already approved for this year, while decisions on new investments will be addressed at the board level.

The company also identified the mature Potiguar Basin as an important value-enhancement opportunity. Lemos said Ecopetrol may apply its experience in enhanced oil recovery, reservoir management and production optimization to improve recovery factors and support reserve growth, although management plans to assess Brava's portfolio as a whole rather than prioritize a single asset.

On reserves, Ecopetrol said it is too early to determine whether Brava's proved reserves would differ under Ecopetrol's SEC-based reporting framework. The assets will be evaluated under Ecopetrol's reserve governance, certification and control processes following the closing.

About Ecopetrol (NYSE:EC)

Ecopetrol SA NYSE: EC is Colombia's state-controlled integrated oil and gas company and the country's largest oil producer. The company's operations span the upstream, midstream and downstream segments of the hydrocarbon value chain, including exploration and production of crude oil and natural gas, refining of petroleum products, transportation and storage via pipeline networks, and the marketing and sale of fuels and petrochemical feedstocks. Ecopetrol serves domestic demand in Colombia and maintains a portfolio of international investments and partnerships across the Americas.

In upstream activities, Ecopetrol focuses on exploration and development of onshore and offshore fields to sustain and grow hydrocarbon production.

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