OREANDA-NEWS. November 21, 2016. Colombia's state-controlled Ecopetrol is reviving exploration drilling next year, with a focus on the offshore Caribbean frontier, in a bid to check a steady decline in oil and natural gas production.

"We're putting a priority on stabilizing production… (and) we'll be very aggressive in drilling offshore next year," chief executive Juan Carlos Echeverry said on an earnings call this week.

Ecopetrol has 15 exploration wells slated for 2017, including four earmarked for offshore acreage. The company drilled just five exploration wells in 2016.

Next year's offshore drilling roster includes the Molusco well on the wholly owned RC-9 block. At RC-11, in which Ecopetrol holds a 50pc stake, Spanish operator Repsol will spud the Siluro well.

At the Tayrona block, Brazilian state-controlled Petrobras will drill the Brahma well. The company operates Tayrona with a 40pc stake. Ecopetrol holds 30pc, Repsol 20pc and Norwegian Statoil 10pc.

Operator Anadarko will spud the Gorgon well at its Grand Fuerte offshore complex next year after completing the adjacent Purple Angel-1 well this month. Ecopetrol has a 50pc stake in the acreage.

All of Colombia's 846,000 b/d of crude production comes from onshore basins.

Onshore, Ecopetrol is betting on the government's peace agreement with the main rebel group Farc to open onshore areas that have traditionally been off limits because of security issues and a dearth of infrastructure.

Echeverry said the company is particularly optimistic in the medium to long term about geological potential in the Catatumbo basin in Norte de Santander province, Llanos basin areas in northern Arauca province, and territory in the Putumayo-Cagu?n basin, where he believes the company "could increase production two-to-three fold."

Colombia's second largest rebel group ELN is not a party to the Farc peace deal, and remains active in these areas while the government presses to begin formal talks.

Ecopetrol's pivot toward upstream investment follows the completion of its cost-heavy 165,000 b/d Cartagena refinery (Reficar) earlier this year and a belief that the worst of the crisis over oil prices is over.

To fund its upstream capital expenditures, Ecopetrol is working to raise cash through refined product sales, crude sales from its new 100pc holding of the Rubiales heavy oil field and asset divestitures.

The company expects Rubiales production will average 120,000-125,000 b/d in 2017 now that development drilling has ramped up again, down from an earlier expected 130,000-135,000 b/d.

Ecopetrol also hopes to raise cash by selling its 100pc in polypropylene business Esenttia early next year.

The firm paid \\$690mn in 2007 for the then-named Polipropileno del Caribe (Propilco).

Ecopetrol produced a net 722,600 b/d of oil equivalent (boe/d) in the third quarter, down by 2.5pc year on year. Nearly all of the production came from onshore Colombian reservoirs, with small volumes from the US Gulf of Mexico and Peru.

Net profit shrank to 229bn pesos (\\$76.3mn) compared with 654bn pesos in third quarter 2015.