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)

Roa had already been administratively sanctioned by Colombia’s electoral authority over campaign spending violations, with the case now advancing in the Attorney General’s Office

Ricardo Roa Barragán, president of Colombia’s state-owned oil and energy company Ecopetrol, has been formally charged by the Attorney General’s Office (FGN) over his alleged responsibility in a case involving violations of campaign spending limits tied to President Gustavo Petro’s 2022 presidential campaign, which Roa managed.

The charging hearing took place Monday, May 11, during which Roa pleaded not guilty. The case will continue through the investigative stage, and no conviction has been issued against him.

This marks the second criminal case facing the executive. On March 11, 2026, prosecutors also charged Roa with alleged influence peddling involving a public official. Both investigations remain ongoing.

Read: The charge adds to a separate investigation over alleged violations of campaign finance limits during President Gustavo Petro’s 2022 presidential campaign.

The latest charges come weeks after Ecopetrol’s board authorized Roa to take vacation leave followed by unpaid leave through June 28, 2026, after Colombia’s presidential elections conclude.

The decision means Roa would return to the company only to participate in the transition process with the team designated by Colombia’s next president, who will take office on August 7, 2026.

Read: Ecopetrol Announces Temporary Leave for President Ricardo Roa Amid Investigations by Colombia’s Attorney General’s Office” by Finance Colombia.

Under Articles 396A and 396B of Colombia’s Criminal Law, individuals found responsible for receiving, administering or allowing prohibited campaign funds may face prison sentences ranging from four to eight years, in addition to fines and disqualification from holding public office if convicted.

Roa, however, retains the presumption of innocence while the judicial process continues.

Investigation into campaign financing

The case stems from the 2022 “Petro Presidente” campaign, which Roa Barragán managed. The matter had already resulted in administrative sanctions from Colombia’s National Electoral Council (CNE), which concluded that the campaign exceeded legal financing limits.

The Attorney General’s Office also said it identified alleged inconsistencies in the campaign’s financial reporting, claiming that first-round expenses were reported during the second round and vice versa.

As a result of that administrative investigation, the CNE referred the case to the Attorney General’s Office, which is responsible for conducting criminal investigations.

According to a statement from prosecutors, collected evidence suggests that campaign spending limits “were exceeded by $1.388 billion COP (around $370,000 USD) during the first presidential round and by $276 million COP ($73,000 USD) during the runoff.”

Prosecutors said the allegedly unreported or improperly reported expenses were linked to “hotel press conferences, breakfasts, loans, transportation, logistics, food services, financing for campaign-closing events, advertising materials and union contributions.

The investigation formally began in 2025 after the CNE determined there were possible irregularities involving campaign spending caps.

Petro defends Roa

President Gustavo Petro again defended Roa and questioned the basis of the judicial investigation.

“The Attorney General’s Office is repeating the same thing as the compromised CNE: that expenses incurred after the legal campaign period ended, such as the costs parties incur for election monitors to protect votes (…) are campaign expenses. Their so-called overspending is not overspending,” Petro wrote on X.

The president argued that several of the questioned expenditures took place after election day, when, according to his interpretation, the campaign had already formally concluded.

Ecopetrol’s board has approved a temporary leave for Ricardo Roa, keeping him out of office until Colombia’s presidential elections wrap up at the end of June 2026

Ecopetrol’s board of directors has approved an unpaid leave of absence for its president, Ricardo Roa Barragán, amid ongoing judicial investigations and growing pressure from unions, minority shareholders and political sectors.

In an official statement, the company said Roa “requested to use his accrued vacation days from April 7 to May 27, 2026,” and that the board also approved an unpaid leave requested by himself, “beginning on May 28 and lasting 30 calendar days.” This means he will be away from his duties for a continuous period extending through the end of June, after Colombia’s presidential elections scheduled for May 31 and June 21, if a runoff is required.

The decision comes in a context marked by two investigations led by the Attorney General’s Office. The first relates to an alleged case of influence peddling involving the purchase of an apartment in northern Bogotá, for which Roa has already been formally charged, although he has pleaded not guilty. The second concerns a possible breach of campaign finance limits during President Gustavo Petro’s 2022 presidential campaign, which Roa managed.

Both cases remain under review by judicial authorities, who will assess the evidence and issue a ruling (Colombia’s Top Prosecutor Charges Ecopetrol President in Alleged Influence-Peddling Case).

Roa’s temporary departure also follows pressure from some of the company’s main labor unions (Strike Threat Looms as Colombia Oil and Gas Union Calls for Ecopetrol President’s Removal), as well as minority shareholders (Ecopetrol Shareholders Loudly Heckle CEO Ricardo Roa at Annual Meeting as Leadership Dispute & Corruption Scandal Roils The Petroleum Company), and opposition political groups.

If this timeline holds, his potential return will coincide with the post-election period, ahead of the transition process with the new government set to take office on August 7, which is expected to appoint a new board and select a new president for the state-controlled oil and gas company.

Acting president appointed

Juan Carlos Hurtado Parra, Acting President of Ecopetrol. Photo by of Ecopetrol.

During Roa’s absence, the board appointed Juan Carlos Hurtado Parra as acting president of Ecopetrol. According to the statement, Hurtado currently serves as executive vice president of hydrocarbons and has been the first alternate to the presidency since November 16, 2025.

He has “more than 28 years of experience in the energy sector, including roles as vice president of exploration, development, and production at Ecopetrol and has held executive positions focused on resource management and coordination. He is an electrical engineer, holds a specialization in Project Evaluation and Development, and has a Master of Business Administration (MBA) in International Oil and Gas.”

The petroleum workers called for Ricardo Roa’s head following formal influence-peddling charges filed by Colombia’s Attorney General’s Office.

One of Colombia’s principal petroleum worker’s unions, the Unión Sindical Obrera (USO), has formally requested that Ecopetrol’s board of directors remove Ricardo Roa Barragán as president of the state-controlled oil company, amid ongoing investigations against him by the Attorney General’s Office. The union warned that it will call a nationwide strike if the request is not addressed.

The request was made in a letter dated March 24, sent after a meeting between union representatives and the company’s board. In the document, the USO stated that, “understanding the feelings of the Colombian people as reflected by the thousands of Ecopetrol workers, we immediately request that, within the framework of due diligence, the board of directors adopt the necessary measures to remove Dr. Ricardo Roa Barragán from his position as president of Ecopetrol.”

The union added that, if the request is not met, “this union will call for nationwide mobilization in defense of the most important asset of the Colombian people.”

On the same day, March 24, Ecopetrol’s board issued a public response, reported by outlets such as Caracol Radio, stating that it had reviewed requests from employees, the union and some minority shareholders.

In its statement, the board said it is “aware of its responsibilities within the framework of due diligence” and has been assessing the risks to the company stemming from reports related to Roa. However, it confirmed that Roa will remain in his position while the evaluation process continues.

The union’s request follows charges filed by the Attorney General’s Office on March 11 against Roa for alleged influence peddling. According to prosecutors, Roa is accused of favoring a third party in the allocation of a project in exchange for a reduction in the price of an apartment he purchased in 2023.

More details on the case can be found in the article “Colombia’s Top Prosecutor Charges Ecopetrol President in Alleged Influence-Peddling Case,” published by Finance Colombia.

At this stage, although the information has been publicly reported, judicial decisions remain under the authority of the Attorney General’s Office, which is leading the proceedings.

Roa’s legal situation is also linked to another investigation involving alleged irregularities in the financing of the Pacto Histórico presidential campaign in 2022, which he managed and which resulted in Gustavo Petro’s election as president.

In February, the Attorney General’s Office said investigators found indications that the campaign may have exceeded legal spending limits. A similar case had already been reviewed by Colombia’s elections authority, the National Electoral Council, which fined those responsible more than $5 billion Colombian pesos (over $1.4 million USD).

Photo by Ecopetrol.