Ecopetrol's $1.2 billion Brava deal reshapes its Latin America footprint

Colombia's state-controlled Ecopetrol has completed a $1.2 billion acquisition of a 51% controlling stake in Brazil's Brava Energia, its largest cross-border deal to date.

Ecopetrol closed a $1.2 billion deal to take a 51% controlling stake in Brazilian oil and gas producer Brava Energia, adding roughly 459 million barrels of proved reserves and about 79,000 barrels of daily production to its portfolio.

"Brazil is a strategic growth market due to its hydrocarbon resources, offshore basins, regulatory framework and energy infrastructure," said Julián Lemos, corporate vice president of strategy and new businesses at Ecopetrol.

The transaction closed Aug. 17 through a two-step process executed via subsidiary Ecopetrol Investimentos do Brasil: a tender offer on the B3 exchange for roughly 116.1 million common shares, about 25 percent of Brava's capital, and a share purchase agreement signed April 23 for another 120.8 million shares, roughly 26 percent. Brava produced approximately 78.8 thousand barrels of oil equivalent per day in the first half of 2026, with oil accounting for 79 percent of output. The acquired business adds production equal to about 11 percent of Ecopetrol's output, while Brava's proved reserves represent nearly 24 percent of Ecopetrol's reserve base reported at the end of 2025.

The deal gives Ecopetrol a controlling position in Brazil's second-largest independent oil and gas producer by output and reserves, a market the company has identified as a priority for geographic expansion beyond Colombia. Brava's operations will be consolidated beginning in September, with CFO Camilo Barco estimating the acquisition would have increased consolidated revenue by about 7 percent and EBITDA by about 8 percent based on first-half results.

Reserves, production, and what Ecopetrol paid

Brava held estimated proved reserves of approximately 459 million barrels of oil equivalent as of Dec. 31, 2025, and proved plus probable reserves of about 605 mmboe, both measured under the Petroleum Resources Management System standard. The company reported revenue of approximately $2.341 billion for the twelve months ended June 30, 2026, with EBITDA of roughly $1.050 billion and net income of about $122.2 million.

Ecopetrol effectively paid around $8.40 per barrel of 1P reserves and $6.30 per barrel of 2P reserves. Brava's adjusted EBITDA margin exceeds 49 percent, and its return on average capital employed is expected to be broadly in line with Ecopetrol's level of roughly 9.1 to 9.2 percent.

Financing, integration, and the road ahead

Ecopetrol initially financed the acquisition with a one-year bridge facility of about $1.2 billion arranged through international financing subsidiary Ecopetrol Capital AG. The company is evaluating longer-term alternatives including long-term debt, portfolio management initiatives, and internal funding sources, with Barco saying the refinancing will not create obligations 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.

Management outlined a three-stage integration roadmap: near-term governance alignment and business-plan review, short- to medium-term operational reliability and capital efficiency improvements, and longer-term development of Brava's reserve base. Brava's current investment program includes drilling campaigns at the offshore Papa-Terra and Atlanta fields, with two wells at each asset expected to begin production by the end of 2026 and early 2027. Ecopetrol also identified the mature Potiguar Basin as a value-enhancement opportunity where it may apply enhanced oil recovery expertise.

The acquisition marks a meaningful shift in Ecopetrol's geographic profile. For years, most of its operations were concentrated in Colombia. Brazil's offshore pre-salt reserves have made the country one of the most productive and cost-competitive oil provinces in the world, and Ecopetrol has not ruled out combining Brava with its existing Brazilian affiliate, Ecopetrol Óleo e Gás do Brasil, which holds an exploration portfolio and a Shell-operated project expected to begin operations in 2029.

Whether the deal delivers on its promise will depend on how Brava's development assets perform under Ecopetrol's capital-discipline standards. The company has not considered delisting Brava or taking it private, and Brava will maintain independence as a Brazilian listed company while capital allocation aligns with Ecopetrol's broader investment plan.

This article is for informational purposes only and does not constitute investment advice.