Refining margin surge cushions revenue drop amid leadership void

Ecopetrol S.A. (NYSE: EC, BVC: ECOPETROL) reported first-quarter 2026 consolidated revenues of 28.6 trillion COP, a decline of 8.7% from 31.4 trillion COP in the year-earlier period, as lower crude oil prices and reduced hydrocarbon production compressed the top line for Colombia’s state-controlled oil and gas company. Against that backdrop, a marked recovery in refining margins and disciplined cost management lifted EBITDA by 1.5% to 13.5 trillion COP, yielding a 47% EBITDA margin and partially offsetting the revenue headwind. At the Q1 2026 average exchange rate of approximately 3,700 COP per USD, the quarter’s revenues translate to roughly $7.73 billion USD and EBITDA to approximately $3.65 billion USD.

Embattled Ecopetrol CEO Ricardo Roa was appointed to the position by Colombian President Gustavo Petro after managing his political campaign. (photo: Ecopetrol)

Net income for the quarter reached 2.9 trillion COP (approximately $784 million USD), down 7.7% year-over-year, reflecting the combined drag of lower revenues, a sharply elevated effective tax rate of 37.1%, and a one-time charge of 1.2 trillion COP for the impuesto al patrimonio — Colombia’s government-mandated wealth levy on large corporations established to fund post-disaster reconstruction measures. The company is also subject to a 10% income tax surcharge applicable for fiscal year 2026, which is embedded in the reported effective rate. The aggregate tax burden absorbed a disproportionate share of operating improvement relative to prior periods, limiting the flow-through of refining gains to the net income line.

Total hydrocarbon production averaged 725.2 thousand barrels of oil equivalent per day (kboed) in Q1 2026, below the 745 kboed recorded in the 2025 annual average cited by management during the March 2026 general shareholders’ meeting. Domestic crude output represented the largest component at approximately 520 thousand barrels per day (kbd). Ecopetrol’s Permian Basin operations in the United States contributed 91.8 kbd, underscoring the continued strategic importance of the international segment. Gas production continued a multi-year declining trend that poses a medium-term domestic supply challenge; management has sought to address this partially through regasification capacity additions at Puerto Bahía and on the Pacific coast, expected to come online in the second half of 2026 with a combined contribution of up to 430 billion BTU per day.

The refining segment delivered the quarter’s most pronounced operational outperformance. Ecopetrol’s domestic refineries, led by Refinería de Cartagena, processed 417.5 kbd of crude throughput. The integrated refining margin rose to $17.3 USD per barrel, a 60% improvement over the same quarter of 2025, driven by favorable differential pricing between domestic crude benchmarks and refined product values alongside ongoing operational efficiency improvements. The Comisión de Regulación de Energía y Gas (CREG) and the Ministerio de Minas y Energía remain central to the regulatory framework governing downstream margins over the medium term.

The balance sheet carries significant structural and contingent risk items of direct relevance to institutional credit and equity holders. Gross debt stood at 108.1 trillion COP (approximately $29.2 billion USD), representing a leverage ratio of 2.3 times trailing EBITDA — a level that leaves limited room for further deterioration before debt covenants or rating agency thresholds become binding. Ecopetrol holds a receivable of 4.2 trillion COP (approximately $1.14 billion USD) from the Fondo de Estabilización de Precios de los Combustibles (FEPC), a government fuel price stabilization mechanism that represents a claim on the Colombian treasury with timing and recovery risk. A dispute with the Dirección de Impuestos y Aduanas Nacionales (DIAN) over value-added tax assessments totals 12.26 trillion COP (approximately $3.31 billion USD) in aggregate, of which 10.22 trillion COP relates to Ecopetrol’s consolidated operations and 2.04 trillion COP to Refinería de Cartagena. Both cases are under administrative and judicial review; no provisions have been recognized in the financial statements pending resolution, but the potential liability represents a material contingency relative to the company’s quarterly net income.

On the corporate development front, Ecopetrol disclosed three significant transactions during or following the quarter. The company agreed to acquire producing assets from Gran Tierra Energy (NYSE: GTE, TSX: GTE) for $92.4 million USD, adding Colombian upstream production inventory in basins where both companies have operated. In Brazil, Ecopetrol launched a tender offer for shares of Brava Energia (BVMF: BRAV3) at 23 BRL per share, seeking to expand its footprint in that country’s oil and gas sector. And in a transaction that would reshape the mid-size independent landscape in Colombia, the company reached an agreement to acquire Parex Resources (TSX: PXT) for $250 million USD; Parex is a Colombia-focused producer with a complementary asset base across the Llanos and other producing basins. Collectively, the three transactions signal that Ecopetrol’s capital allocation strategy under the current government continues to favor upstream consolidation despite the elevated leverage profile.

The exploration portfolio generated positive news announcements. The Copoazú-1 exploratory well, drilled in Colombia’s Llanos foothills region, was confirmed as a commercial discovery, adding to the domestic reserve base. The Sirius offshore project advanced through the Consulta Previa process — a legally mandated prior consultation with indigenous and Afro-Colombian communities required before development of projects in or near their territories — reaching a milestone in community engagement that brings the project closer to formal development sanction. The Agencia Nacional de Hidrocarburos (ANH) oversees the licensing framework within which both projects operate.

“Ecopetrol is listed on the New York Stock Exchange; we are governed by the strict regulations of US federal agencies. Agencies like OFAC and the SEC could intervene in the company and could even accelerate the payment of financial obligations, which would be extremely grave for Ecopetrol.” — Martín Ravelo, President, Unión Sindical Obrera (USO)

The ISA transmission segment, managed through Ecopetrol’s majority stake in ISA — Interconexión Eléctrica S.A., contributed stable regulated cash flows during the quarter. ISA completed 46 transmission reinforcement works across its Latin American concession portfolio. The segment also completed the acquisition of 100% of IE Madeira in Brazil, consolidating its position in that country’s power grid interconnection infrastructure. ISA further submitted a competitive bid for the Río Bueno–Puerto Montt high-voltage transmission line concession in Chile, demonstrating the group’s appetite for long-duration, inflation-linked infrastructure assets across the Andes region. For institutional investors evaluating Ecopetrol as a blended hydrocarbons-and-infrastructure holding, ISA’s consistent cash generation provides partial diversification from crude price volatility, though it does not insulate the consolidated entity from headline governance risk.

The most consequential variable for the investment thesis over the near term is Ecopetrol’s prolonged governance crisis. At the company’s general shareholders’ meeting on March 27, 2026, held at the Corferias convention center in Bogotá, minority shareholders loudly heckled president Ricardo Roa — with audible shouts of “¡Fuera, fuera!” reverberating through the hall — as debate over his leadership erupted into open confrontation. The meeting approved a dividend of 121 COP per share for minority holders and a 4 trillion COP distribution to the Colombian government as majority shareholder, payable in two installments by June 30, 2026. Despite the financial business conducted, governance overshadowed the proceedings.

Roa faces two separate judicial proceedings. The Fiscalía General de la Nación formally charged him in connection with alleged influence peddling related to the purchase of an apartment in northern Bogotá — charges he has denied. Separately, the Consejo Nacional Electoral (CNE) is examining whether campaign spending limits were violated during President Gustavo Petro’s 2022 presidential campaign, which Roa managed — an investigation that Finance Colombia has covered in detail. Angela Maria Robledo, Chair of the Board of Directors, defended the board’s decision to retain Roa at the March assembly, citing the constitutional presumption of innocence. However, four of the nine board members had already formally recorded their support for his removal at that point, exposing a divided governance structure at a time when strategic and operational decisions require unified leadership.

The Unión Sindical Obrera (USO), which represents approximately one-third of Ecopetrol’s workforce, issued a production strike ultimatum timed to a March 30 board meeting. Martín Ravelo, president of the USO, framed the leadership crisis explicitly in terms of US regulatory risk: “Ecopetrol is listed on the New York Stock Exchange; we are governed by the strict regulations of US federal agencies. Agencies like OFAC and the SEC could intervene in the company and could even accelerate the payment of financial obligations, which would be extremely grave for Ecopetrol.” Ravelo further warned that the company’s outstanding international debt — which he placed at approximately $30 billion USD and which is exacerbated by elevated interest rates — left Ecopetrol exposed to potential covenant triggers or early repayment demands in a scenario where the Securities and Exchange Commission (SEC) or the Office of Foreign Assets Control were to take enforcement action.

Following sustained pressure from the USO, minority shareholders, and opposition political figures, Ecopetrol’s board approved an extended leave of absence for Roa beginning April 7, 2026. Under the arrangement, Roa used accrued vacation through May 27, followed by 30 calendar days of unpaid leave beginning May 28, extending his absence through the end of June — a period encompassing Colombia’s presidential first round on May 31 and a potential runoff on June 21. Juan Carlos Hurtado Parra, the company’s executive vice president of hydrocarbons and designated first alternate to the presidency since November 2025, was appointed acting president. Hurtado Parra holds an MBA in International Oil and Gas and brings more than 28 years of energy sector experience to the acting role, having previously served as vice president of exploration, development, and production.

The political calendar creates a structural transition risk that sits above the operational and financial results as the primary concern for long-duration investors. Colombia’s incoming government, to be inaugurated August 7, 2026, is widely expected to appoint a new Ecopetrol board and select a new company president. That transition may bring material shifts in strategic priorities — including the pace of upstream investment, the approach to the FEPC receivable recovery, the trajectory of energy transition spending, and the capital allocation balance between the hydrocarbons segment and the ISA infrastructure platform. The Ministerio de Hacienda y Crédito Público and the Ministerio de Minas y Energía will both play key roles in establishing the post-election policy framework under which Ecopetrol operates. Institutional investors holding exposure to Ecopetrol via NYSE: EC or BVC: ECOPETROL must weigh Q1’s genuine operational improvement — most visibly in refining margins and EBITDA stability — against a governance and policy transition risk profile that is unlikely to be resolved before the August handover.

Ecopetrol’s Cartagena refinery (photo courtesy Ecopetrol)

Governance concerns and profit drops dominate shareholder assembly.

The Ecopetrol (NYSE: EC, BVC: ECOPETROL) General Shareholders’ Meeting concluded at the Corferias convention center in Bogotá, marked by a decline in annual profits and an intensifying debate regarding the continuity of the company’s president, Ricardo Roa. During the assembly, shareholders approved a dividend of $121 COP per share for minority holders and a total payment of $4 trillion COP to the Colombian government, which serves as the majority shareholder. The government’s payout is scheduled for distribution in two installments, to be completed by June 30, 2026.

Click on above image to view shareholder meeting

The financial results for the 2025 fiscal year revealed a significant contraction in net income, which fell to $9 trillion COP from the $14.9 trillion COP reported in 2024. Roa attributed this decline primarily to the volatility of international crude prices. He noted that the average price of Brent crude dropped from $80 USD per barrel to $68 USD per barrel over the period. According to company data, every $1 USD drop in the price of Brent corresponds to a reduction of approximately $500 billion COP in net profit and $700 billion COP in EBITDA. Despite the lower earnings, the company maintained a production level of 745,000 barrels per day and achieved a reserve replacement rate of 121%, the highest in five years.

Governance issues remained the primary focus of the assembly. Minority shareholders expressed concern over the legal challenges facing Roa, who is currently under investigation by the Fiscalía General de la Nación for alleged influence peddling. Additionally, the Consejo Nacional Electoral (CNE) has raised accusations regarding the alleged violation of spending caps during the presidential campaign of Gustavo Petro, which Roa managed. Angela Maria Robledo, Chair of the Board of Directors, defended the decision to retain Roa, stating that the board has activated a evaluation protocol while respecting the constitutional principle of the presumption of innocence.

Shareholders Erupt In Anger At CEO Ricardo Roa:

Abuchean a Ricardo Roa en asamblea de Ecopetrol

“¡Fuera, fuera!”: Este es el momento del tenso abucheo de los accionistas al presidente de la empresa

Videos: Néstor Gómez pic.twitter.com/uyjh4chpl2

— EL TIEMPO (@ELTIEMPO) March 27, 2026

“Ecopetrol is listed on the New York Stock Exchange; we are governed by the strict regulations of US federal agencies. Agencies like OFAC and the SEC could intervene in the company and could even accelerate the payment of financial obligations, which would be extremely grave for Ecopetrol,” stated Martín Ravelo, President of the USO.

The Unión Sindical Obrera (USO), the primary labor union representing nearly one-third of the company’s workforce, has issued an ultimatum for Roa’s removal. Martin Ravelo, president of the USO, warned that the union will initiate a national strike and affect crude production if Roa is not aparted from his position by Monday, March 30. Ravelo expressed concern that Ecopetrol, which is subject to the regulations of the Securities and Exchange Commission (SEC) and the Office of Foreign Assets Control (OFAC), could face federal intervention. He highlighted that Ecopetrol’s current debt has reached $30 billion USD, exacerbated by rising interest rates, and warned that the company lacks the cash flow to respond to potential demands for early repayment of international obligations.

President Gustavo Petro responded to the union’s concerns via social media, stating that the executive branch will take measures to shield the company’s financial future. Petro emphasized the importance of maintaining investment during periods of high oil prices to prepare for future market downturns. He also criticized past administrations for failing to invest sufficiently in clean energy during previous price cycles. In contrast, Ravelo called for the board to maintain its independence from political influence, noting that four of the nine board members have already left formal records supporting Roa’s departure.

Ecopetrol also addressed the national gas supply, with Roa announcing that new regasification alternatives at Puerto Bahía and on the Pacific coast are expected to begin operations in the second half of 2026. These projects are intended to contribute between 186 and 430 Gbtud to the national grid. A third regasification facility in Coveñas is projected to start operations in 2029 with a capacity of 400 Gbtud. Despite these operational plans, the immediate focus of the international investment community remains fixed on the board’s upcoming meeting on Monday, where the leadership deadlock must be resolved to avoid a potential halt in national production.

Headline photo: Former Senator Jorge Robledo admonishes the Ecopetrol board of directors at the March 2026 shareholders’ meeting.

Colombian President Gustavo Petro has made Gaza the moral centerpiece of his foreign policy. Since the October 7, 2023, Hamas terror attacks, he has devoted extraordinary political capital to denouncing Israel, questioning its right to self-defense, and framing the Gaza war as a singular global emergency.

He summoned “Free Palestine” marches, spent public funds hosting solidarity concerts in Bogotá’s Plaza de Bolívar, donned a keffiyeh near Times Square alongside Roger Waters, branded Israeli Prime Minister Benjamin Netanyahu a “war criminal,” labeled Gaza a “genocide,” and even urged U.S. military personnel to disobey orders from President Donald Trump over Middle East policy.

The performance was theatrical, relentless – and costly. Petro’s visa to the United States was revoked. Months later, he was placed on the U.S. Treasury’s OFAC sanctions list alongside his close political ally and interior minister Armando Benedetti, as well as his wife – or estranged wife – Verónica Alcocer, whose marital status, according to Petro himself, remains mysteriously unresolved.

Yet for all this moral fervor, Petro has remained conspicuously silent on one of the gravest human rights catastrophes unfolding today: Iran’s brutal suppression of nationwide protests.

His silence is deafening.

Since protests erupted across Iran in late December 2025, the regime has responded not with reform but with terror. Demonstrators demanding economic relief, dignity, and political change have been met with live ammunition. Militiamen aligned with the Revolutionary Guards have swept through cities on motorbikes, firing automatic weapons into crowds. Snipers reportedly aim at faces and genitals. Morgues are overflowing. Bodies are stacked in blood-soaked streets.  More than 12,000 are believed dead. Thousands more have been dragged from hospital beds into prisons, many never to be seen again.

This is not metaphorical violence. These are not contested narratives. These are crimes against humanity carried out by a theocracy against its own citizens.

And yet – nothing from Petro.

The Iranian regime insists the unrest is a foreign-engineered plot: psychological warfare orchestrated by hostile powers to destabilize the Islamic Republic. The opposition, by contrast, sees a nationwide rupture—an uprising rooted in decades of repression, economic collapse, and the severing of legitimacy between rulers and ruled.

Narrative control matters. In modern conflict, perception is a battlefield. As scholars Ihsan Yilmaz and Shahram Akbarzadeh have noted, authoritarian regimes increasingly rely on Strategic Digital Information Operations—psychological warfare designed not merely to suppress dissent, but to reshape reality itself. The objective is cognitive: to induce fear, discredit opponents, and convince societies that resistance is futile.

Petro’s brand of performative moralism has not been cost-free. His compulsive need to condemn Israel – and, by extension, the United States – was read in Washington not as symbolism but as direct provocation. It coincided with a marked deterioration in U.S.–Colombia relations, freezing high-level dialogue, undermining security cooperation, and contributing to the unprecedented decision to revoke his U.S. visa. For a country whose military, intelligence, and counter-narcotics apparatus remains deeply intertwined with American support, the damage was neither abstract nor symbolic – it was strategic.

The rupture with Israel was even more explicit. By publicly referring to Prime Minister Benjamin Netanyahu as a “Nazi,” Petro crossed a diplomatic red line that few world leaders have dared approach. The comparison – historically illiterate, morally inflammatory, and deeply offensive- effectively severed Colombia–Israel relations. Defense cooperation was halted, diplomatic channels collapsed, and decades of bilateral engagement in security, technology, and trade were sacrificed to rhetorical escalation. Whatever one’s view of Israel’s conduct in Gaza, equating the Jewish state with the architects of the Holocaust is not principled criticism; it is diplomatic arson.

In both cases, Petro appeared less concerned with consequences than with signaling ideological virtue to a global activist audience. The result has been the erosion of Colombia’s standing with two key partners—one its most important ally, the other a longstanding strategic collaborator—while yielding no tangible benefit to the civilians whose suffering he claims to champion.

What makes Petro’s silence on Iran so damning is not merely its contrast with his Gaza activism; it is the exposure of a deeper incoherence. For years, leftist politicians, celebrities, and fringe groups have flooded streets in capitals around the world denouncing Israel’s war as “genocide.” Now, when protesters are machine-gunned in Iran, hospitals are raided, and young people are summarily executed, this outrage dissipates.

As Allister Heath wrote recently in The Telegraph, this is “pure, unadulterated evil… a stain on humanity.” And yet where are the chants? Where is the flotilla? Where are the luvvies? One might also ask: where is the Colombian president who claims human rights as his moral compass?

The answer is uncomfortable. Gaza became a performative ritual of sit-ins and campus “occupations.” The tragedy of Iran exposes the hollowness of that performance.

When Iran’s protests began in Tehran’s Grand Bazaar, authorities initially assumed they were manageable. Bazaar merchants—traditionally conservative and closely linked to the state—were seen as transactional actors seeking economic relief, not regime change. Even Supreme Leader Ali Khamenei acknowledged their grievances, a rare concession.

But the regime miscalculated. Protests spread to more than 25 provinces. Ethnic minorities—Kurds, Baluch, Arabs, and Azeris—joined despite deep skepticism about the opposition and fears of what might follow. The unrest evolved from economic protest into an existential challenge to the state, triggering a massacre reportedly claiming more than 6,000 lives.

Meanwhile, fears of chaos loom. Exiled figures such as Reza Pahlavi position themselves as transitional leaders, even as their proposed roadmaps concentrate power in ways eerily reminiscent of the current theocracy. The Syrian precedent—where Western intervention elevated jihadist actors rather than democratic forces—haunts the region.

None of this excuses silence.

President Petro has every right to condemn injustice – especially on his own soil, where human rights abuses by FARC dissidents and the ELN guerrilla continue to inflict immense suffering on Colombia’s most vulnerable. Yet here, too, the silence has been deafening: soldiers kidnapped, children cowering under desks amid gunfire in Cauca, an ongoing humanitarian catastrophe in Catatumbo that has displaced more than 60,000 people and quietly slipped from the government’s agenda.

For Petro, moral leadership is selective. If civilian lives matter, they matter everywhere. If state violence is intolerable, it is intolerable whether committed by an ally, an adversary, or a regime ideologically convenient to ignore.

Silence in the face of mass murder is not neutrality. It is complicity by omission.

Petro’s foreign policy has become a study in selective empathy – loud where ideology demands it, louder still on social media, but mute where principle requires courage. That is not moral clarity. It is hypocrisy incarnate.