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$100 Billion Evaporates As World's Worst Oil Major Plunges 90%

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Bloomberg:

$100 Billion Evaporates as World's Worst Oil Major Plunges 90%

Colombia is nursing paper losses of more than $100 billion after its oil boom fell short of expectations, wiping out 90 percent of the value of what was once Latin America’s biggest company.

From being the world’s fifth-most valuable oil producer at its zenith in 2012, worth more than BP Plc, state-controlled Ecopetrol SA now ranks 38th. Its market capitalization has fallen to $14.5 billion, down from its peak of $136.7 billion.


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“They just haven’t found oil, it’s as simple as that,” Rupert Stebbings, the managing director of equity sales at Bancolombia SA, said from Medellin. “The whole oil sector got massively over-bought, and people assumed that one day they’d hit an absolute gusher.”

As the army wrested back territory from Marxist guerrillas over the last decade and a half, opening up more land for exploration, the outlook was bright for the oil sector in Colombia, which borders Venezuela, the nation with the world’s largest reserves. Ecopetrol’s share price soared to “irrational levels” as investors bet on surging output that then failed to materialize, Stebbings said.

With shares in the oil producer still high, the government opted in 2013 to sell a stake in electricity producer Isagen SA rather than Ecopetrol.

Finance Minister Mauricio Cardenas, who sits on the board of Ecopetrol, said in an August 2013 interview that the government didn’t want to sell a further stake in the company because its growth prospects were better than Isagen’s. Since then, Isagen shares have risen 4.2 percent, while Ecopetrol’s have fallen 74 percent. The Isagen stake sale has yet to take place due to a series of legal challenges.

Over the past year, Ecopetrol shares are down 55 percent in dollar terms, the worst performance among global oil drillers with a market capitalization over $10 billion. The company’s original 2015 production target of 1 million barrels of oil equivalent was changed to 760,000 barrels.

Ecopetrol’s growth in oil production since 2006 is among the world’s best, with a 24 percent success rate in exploration in 2014, the company said in an e-mailed response to questions. The Kronos-1 and Orca-1 discoveries in the Colombian Caribbean “opened a new exploration frontier,” it said.

Despite some bright spots, including the gas discoveries, exploration budget cuts along with already-meager reserves are worrying, said Corredores Davivienda equity analyst Francisco Chaves.

Slumping oil prices may force the company to downsize its reserves next year, according to Chaves. A foray into Angola last year proved to be an expensive failure, while government hopes that shale exploration could help boost reserves no longer look viable at current oil prices.

“The U.S. may have the ability to adapt to low prices and continue with its shale oil and gas industry,” Ecopetrol Exploration Vice President Max Torres said in an interviewDec. 3. “But for a new industry like ours it’s very difficult. It’s for the future, when prices improve.”

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Should have asked Gidiot for a sub. Every other oil major's had one.

The UK is alone among G7 nations in dramatically increasing its fossil fuel subsidies, despite an earlier pledge to phase them out, a new report has found.

The revelation will embarrass ministers who want to take a leading role at a crunch UN climate change summit in Paris in December, but who have been sharply cutting support for green energy at home.

The report from the Overseas Development Institute (ODI) and Oil Change International found that as a whole, G20 nations are responsible for $452bn (£297bn) a year in subsidies for fossil fuel production. The G20, which meets on Sunday in Turkey, pledged in 2009 to phase out fossil fuel subsidies.

In the UK, production subsidies of £5.9bn have already benefited major fossil fuel companies operating in the country, most foreign-owned, while £3.7bn is used to subsidise fossil fuel production overseas in countries including Russia, Saudi Arabia and China, the new analysis found.

New tax breaks for North Sea oil and gas production announced by the chancellor, George Osborne, earlier in 2015 will cost taxpayers a further £1.7bn by 2020, according to government figures.

http://www.theguardian.com/environment/2015/nov/12/uk-breaks-pledge-to-become-only-g7-country-increase-fossil-fuel-subsidies

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Should have asked Gidiot for a sub. Every other oil major's had one.

The UK is alone among G7 nations in dramatically increasing its fossil fuel subsidies, despite an earlier pledge to phase them out, a new report has found.

The revelation will embarrass ministers who want to take a leading role at a crunch UN climate change summit in Paris in December, but who have been sharply cutting support for green energy at home.

The report from the Overseas Development Institute (ODI) and Oil Change International found that as a whole, G20 nations are responsible for $452bn (£297bn) a year in subsidies for fossil fuel production. The G20, which meets on Sunday in Turkey, pledged in 2009 to phase out fossil fuel subsidies.

In the UK, production subsidies of £5.9bn have already benefited major fossil fuel companies operating in the country, most foreign-owned, while £3.7bn is used to subsidise fossil fuel production overseas in countries including Russia, Saudi Arabia and China, the new analysis found.

New tax breaks for North Sea oil and gas production announced by the chancellor, George Osborne, earlier in 2015 will cost taxpayers a further £1.7bn by 2020, according to government figures.

http://www.theguardi...-fuel-subsidies

UK taxpayers are subsidising fuel production in Saudi Arabia???

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It's Venezuela - including their super heavy oil / bitumen reserves.

How on earth are they in such a financial mess then? Surely London houses should have been swallowed up by rich Venezuelans and not rich Arabs?

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How on earth are they in such a financial mess then? Surely London houses should have been swallowed up by rich Venezuelans and not rich Arabs?

Chavez and his legacy

Edited by Kurt Barlow

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How on earth are they in such a financial mess then? Surely London houses should have been swallowed up by rich Venezuelans and not rich Arabs?

5 years oil production = $x Bln

Chavez spends - $x * 2.

Thats how.

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Something similar happening there around the time of the 80s/90s recession.

Oil companies seem to regularly discover the most incredibly massive oil fields there but the oil in them eventually turns out to be the wrong sort to be recoverable - far too heavy or something. Boomed shares/collapsed shares. No doubt in time they might become recoverable if the oil price goes high enough.

Edited by billybong

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How on earth are they in such a financial mess then? Surely London houses should have been swallowed up by rich Venezuelans and not rich Arabs?

Lefty government.

One that survived much longer than lefty governments usually do, probably because Uncle Sam got caught trying to stage a coup against it, which of course bolstered Chavez's popularity to the point of being effectively invincible amongst his electorate.

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