OREANDA-NEWS. Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC; TSX: ECP) announces that its Board of Directors has approved the Capex budget for 2014. The approved investments total USD 10,595 million, of which USD 6,463 million will be directed to Ecopetrol S.A.'s projects and USD 4,132 million to affiliates' and subsidiaries' projects (of which USD 1,908 million will be funded by Ecopetrol S.A.).

Exploration (USD 928 million)

In 2014, Ecopetrol S.A. plans to drill 20 exploratory wells, 6 appraisal wells and 8 stratigraphic wells in Colombia. Of the exploratory wells, 13 are expected to be drilled in the area of Llanos (Meta and Arauca provinces), 2 wells in the Caribbean offshore, 2 wells in the southern region (Huila province) and 3 wells in the northern region (Cesar, Antioquia and Norte de Santander provinces).

Exploratory activity includes acquisition of seismic programs for 8,460 kilometers equivalent, geology and geophysical studies, regional studies and others associated with project viability of USD 400 million.

The initiative for development of nonconventional resources (shale oil/gas) is expected to continue in Ecopetrol's blocks in Middle Magdalena and Catatumbo, with activities involving the drilling of 9 stratigraphic wells, 3 exploratory wells, and 3 productivity and study pilots.

Production (USD 4,464 million)

The 2014 Capex is targeted to keep increasing crude oil and gas production, which is expected to reach 770 thousand barrels on average a day of oil equivalent (mboed) for Ecopetrol S.A. alone, while the average estimated production for the Ecopetrol Group, including its participation in affiliates and subsidiaries, is estimated at 819 thousand barrels of oil equivalent per day in 2014.

The highest percentage of the Capex will be allocated primarily in projects in Llanos (64%), Orinoqula (11%) and Middle Magdalena (17%). The fields Castilla, Chichimene, Rubiales, Quifa, Caracara, Provincia, Casabe, Tibu, La Cira Infantas and Yarigul should continue to be developed, among others. Development of new fields such as Cano Sur and Akaclas is expected to begin, following the recent confirmation of their commercial viability.

As far as studies, it is expected that USD 335 million will be invested in air and water injection pilot projects, tertiary recovery and acquisition of information.

Downstream (USD 339 million)

The totality of the Capex in this business segment will be allocated to the modernization project of the Barrancabermeja-PMRB (26%) refinery, Barrancabermeja's Utilities Master Plan (21%), and the completion of projects underway such as Consolidated Operational Control and Expansion of Asphalt Production Capacity (1%). Investments are also expected to be allotted to the continuation of the current operation and development of studies (51%).

Other investments (USD 309 million)

In addition to investments in the various business areas, funds are also expected to be allocated to research and development at the Colombian Petroleum Institute (Instituto Colombiano del Petmleo - ICP) and for IT. Initiatives are expected to continue to be developed in connection with technological infrastructure modernization in the Shared Services Centre, in HSE and sustainability, and process management (design and implementation).

Acquisitions

The approved budget for 2014 does not include potential acquisitions. Should they be included, they would be analyzed and approved on an individual basis by the Board of Directors.

II. Capex budget of Ecopetrol's affiliates and subsidiaries (USD 4,132 million)

The following chart shows the breakdown of capex in affiliates and subsidiaries:

The funds for the Capex budget in affiliates and subsidiaries are expected to come from Ecopetrol S.A. (USD 1,908 million) and its affiliates' own sources and financing (USD 2,224 million), for a total affiliates' Capex of USD 4,132 million.

The following is a description of activities and projects:

Exploration (USD 632 million)

In 2014, 5 international exploratory wells are planned to be drilled along the coast of the Gulf of Mexico (U.S.). The drilling goal is consistent with the strategy of focusing on prospects with the greatest potential and value for the company.

In Colombia, Ecopetrol's subsidiary Hocol plans to drill 5 exploratory wells and Equion plans to drill 1 exploratory well.

Production (USD 392 million)

Affiliates and subsidiaries are expected to produce a total of 49 mboed, of which 47% are expected to come from operations in Colombia and 53% from international operations.

Downstream ( USD 1,764 million)

Investments in this business segment will be allocated mainly to Expansion and Modernization Project of the Cartagena Refinery (USD 1,633 million), and the continuation of investments in Propilco, Bioenergy and Ecodiesel.

Transport (USD 1,344 million)

Capex in this segment is expected to increase the crude transportation capacity of the main oil pipelines by 40 mboed in 2014 and by 135 mboed by 2015. As to multipurpose pipeline systems, the increase is expected to be 70 mboed by 2014 and 34 mboed by 2015. The capacity of unload facilities is expected to increase by 26 mboed by 2014. Capex will be allocated in crude and product storage systems and in additional capacities of secondary lines.

III. Sources of funds

The financing needs of the Capex budget will depend on price performance, Ecopetrol S.A.'s cash generation, market conditions and the continued execution of the budget in the various businesses segments, as well as on eventual acquisitions.

The company has indebtedness capacity, an investment grade rating and access to the fixed income and stock markets, both in Colombia and abroad, to obtain funds from different sources.