Ecopetrol takes control of Brava Energia in $1.2bn deal as Brazil reshapes its oil portfolio

Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) has completed its approximately $1.2 billion acquisition of a controlling 51% interest in Brava Energia S.A. (B3: BRAV3), giving Colombia’s state-controlled energy group immediate control of a substantial Brazilian upstream portfolio rather than another minority international investment. The transaction brings Brava’s approximately 78,800 barrels of oil equivalent per day of first-half 2026 production, 459 million barrels of oil equivalent of proved reserves under the Petroleum Resources Management System and a portfolio spanning major Brazilian onshore and offshore producing assets into Ecopetrol’s consolidated group. Brava will remain publicly listed in Brazil, while Ecopetrol will consolidate its financial results and recognise the remaining ownership through non-controlling interests. The acquisition materially strengthens Ecopetrol’s production diversification outside Colombia, but it also changes the central investment question from whether the company could secure control of Brava to whether it can integrate a leveraged, capital-intensive producer strongly enough to justify the $1.2 billion purchase price.

The completion was announced on August 17, 2026, following a regulatory process and voluntary tender offer that had stretched across several months. Ecopetrol acquired 116,110,717 Brava shares, equivalent to approximately 25% of the company, through the tender offer and another 120,813,490 shares, or roughly 26%, under its April share purchase agreement with existing shareholders. The combined transactions leave Ecopetrol with approximately 51% of Brava’s voting capital, while the acquisition consideration was funded through an intercompany loan from Ecopetrol Capital AG to Ecopetrol Investimentos do Brasil Ltda.

The completion matters more than the original acquisition announcement because Ecopetrol now moves from modelling Brava’s contribution to actually consolidating it. That means future group results will capture Brava’s revenue and operating earnings, but they will also reflect its debt, capital expenditure requirements and operating variability. The strategic benefit therefore arrives together with a much larger financial and execution responsibility.

How much production and reserve exposure does Ecopetrol actually gain from controlling Brava Energia?

Brava averaged approximately 78,800 barrels of oil equivalent per day during the first half of 2026 and increased production to around 84,400 boe/d in June. At Ecopetrol’s 51% ownership level, the first-half production figure corresponds to roughly 40,200 boe/d on a simple equity-share basis, while June output would equate to approximately 43,000 boe/d. Ecopetrol’s earlier acquisition presentation had estimated that Brava could add roughly 42,000 boe/d to a 745,000 boe/d reference production base, lifting the combined figure to approximately 787,000 boe/d.

That roughly 6% uplift is significant for a company of Ecopetrol’s scale because the additional barrels arrive through acquisition rather than depending on years of exploration and development. Ecopetrol has maintained a 2026 production objective of approximately 730,000 to 740,000 boe/d for its pre-Brava portfolio, so the Brazilian business creates an additional growth layer at a time when mature Colombian fields continue to require substantial investment merely to offset natural decline.

The reserve contribution is potentially more important over a longer horizon. Brava reported approximately 459 million boe of proved reserves and 605 million boe of proved plus probable reserves at the end of 2025 under the PRMS methodology. Ecopetrol disclosed transaction metrics of approximately $8.40 per boe of proved reserves and $6.30 per boe of proved plus probable reserves, alongside approximately $45,700 per flowing boe/d of production.

Those figures offer useful acquisition context, but the reserve numbers should not simply be added to Ecopetrol’s existing reported proved reserves because Ecopetrol and Brava have used different reserve-reporting frameworks. The immediate strategic conclusion is therefore narrower but still material: Ecopetrol has purchased control of a sizeable reserve and production platform whose output can diversify the group away from heavier dependence on Colombia.

Which Brava Energia assets are now strategically important to Ecopetrol’s Brazil growth platform?

Brava provides diversification within Brazil itself rather than concentrating the acquisition around a single field. Its current portfolio includes the Potiguar Basin onshore complex, the Recôncavo operations in Bahia and offshore interests including Atlanta in the Santos Basin, Papa-Terra and Parque das Conchas in the Campos Basin, Manati in the Camamu-Almada Basin, Pescada and Ubarana in the Potiguar Basin, and Peroá in the Espírito Santo Basin.

The mix matters because the economic profile of those assets is not uniform. Brava combines mature onshore production, downstream infrastructure and large offshore fields where production growth can require materially higher drilling and development capital. That creates more operational diversification than purchasing a single offshore development, while simultaneously giving Ecopetrol a more complex business to manage.

Atlanta is particularly important because it has become one of Brava’s principal offshore assets, while Papa-Terra is undergoing a drilling campaign intended to support additional production. During the second quarter, Brava said the principal stages of drilling two new Papa-Terra wells were completed during July, while 74% of quarterly capital expenditure was directed toward offshore activities, principally Papa-Terra and Atlanta.

Brava invested R$765 million during the second quarter, approximately double the previous quarter, reflecting the capital intensity associated with converting offshore resource potential into sustainable production. Ecopetrol is consequently not purchasing 80,000-plus boe/d as a static production stream. It is acquiring a portfolio in which continued investment will determine whether those volumes can be maintained or expanded.

That makes Brazil materially more important inside Ecopetrol’s upstream portfolio. Instead of participating through a collection of individual exploration interests, Ecopetrol now controls an integrated Brazilian producer with operating assets, employees, infrastructure, development programmes and its own capital structure.

Does the $1.2 billion Brava Energia price look attractive against its latest cash generation?

Brava entered the acquisition from a period of improving operating performance. For the 12 months ended June 30, 2026, the company generated approximately $2.34 billion of revenue, $1.05 billion of EBITDA and $122.2 million of net income, according to financial information highlighted by Ecopetrol when the acquisition closed.

Its second-quarter results were particularly strong. Brava reported record net revenue of R$3.60 billion, or approximately $712 million, while adjusted EBITDA excluding IFRS 16 reached a record R$1.77 billion, approximately $351 million. The adjusted EBITDA margin reached 49.3%, compared with 42.3% a year earlier, while net income reached R$871 million after a loss in the previous quarter.

A simple comparison shows why the purchase can initially appear inexpensive. Ecopetrol paid approximately $1.2 billion for 51% of a company that generated roughly $1.05 billion of EBITDA over the latest 12 months. Ecopetrol’s proportional 51% share of that EBITDA would be approximately $536 million, making the purchase consideration equivalent to roughly 2.2 times that proportional trailing EBITDA.

That calculation is useful for understanding the earnings capacity being acquired, but it is not an enterprise-value multiple and should not be interpreted as one. Brava carries substantial financial debt, and Ecopetrol’s controlling ownership means Brava’s balance sheet will be consolidated into the wider group. The apparently low purchase-price-to-EBITDA relationship therefore needs to be viewed alongside the debt and capital obligations that accompany control.

The more relevant test is whether Brava can sustain its recent EBITDA performance once oil prices, production cycles, hedging results and offshore spending normalise. Record quarterly EBITDA provides an attractive starting point, but acquisition economics will ultimately be determined over several years rather than by one strong quarter.

How much balance-sheet risk comes with Ecopetrol’s decision to consolidate Brava Energia?

Brava ended the second quarter with approximately R$12.37 billion, or $2.39 billion, of gross debt excluding a specific Santander foreign-currency debenture backed by a related financial investment. Cash and cash equivalents stood at approximately R$5 billion, or $965 million, leaving reported net debt of approximately R$7.38 billion, equivalent to $1.43 billion. Including commitments associated with earlier asset acquisitions, Brava reported consolidated net debt of approximately R$8.42 billion, or $1.63 billion.

That debt burden has been improving. Brava reduced its average debt cost to 7.86% from 8.70% at the beginning of 2025 and lowered net debt by 17% year over year. Its net leverage had fallen to around 1.97 times by the end of the second quarter as stronger EBITDA and liability-management actions improved the capital structure.

For Ecopetrol, however, control means more than recognising its economic share of Brava’s debt. Under consolidation accounting, Brava’s assets and liabilities enter Ecopetrol’s consolidated financial statements, with the portion belonging to other shareholders reflected separately through non-controlling interests.

That matters because Ecopetrol is entering the transaction with its own capital-allocation constraints. Second-quarter 2026 performance was strong, with revenue of approximately COP40.2 trillion, EBITDA of COP17.7 trillion and net income of COP6.1 trillion. For the first half, EBITDA reached about COP31.1 trillion and net income approximately COP9 trillion, while group gross debt to EBITDA improved to around 2.0 times.

The improvement gives Ecopetrol more financial capacity to absorb Brava, but its credit profile remains relevant. S&P Global Ratings maintained Ecopetrol’s BB- global rating with a stable outlook in June while keeping its stand-alone credit profile at bb+, and Moody’s had lowered its global rating to Ba2 with a negative outlook in April while affirming its b1 base credit assessment.

The acquisition therefore cannot be judged solely by how many barrels it adds. Brava has to generate enough durable cash flow to justify both its purchase consideration and the capital structure being brought into Ecopetrol’s consolidated accounts.

Why could Brava Energia change Ecopetrol’s geographical risk profile rather than simply add more oil?

Ecopetrol remains fundamentally tied to Colombia, where its upstream operations, refining system and government ownership create a strategic relationship with national energy policy. Expanding Brazil gives the company another production platform inside Latin America but under a different geological, fiscal and regulatory system.

That diversification could become increasingly valuable if Brava grows production and reserves without requiring Ecopetrol to depend entirely on Colombian exploration success. The company already has international activity in the Permian Basin and other assets, but controlling Brava creates a different level of operating exposure because Ecopetrol now owns a majority interest in an established Brazilian producer.

Brazil also gives Ecopetrol access to an offshore industry with extensive infrastructure, specialist contractors and decades of deepwater development experience. Brava’s portfolio spans several basins and combines onshore cash generation with offshore growth opportunities, creating multiple routes through which Ecopetrol can potentially allocate capital.

Diversification does not automatically mean lower risk. Brazil introduces different regulatory, operating, currency and integration exposures, while offshore projects can consume large amounts of capital before incremental production appears. Ecopetrol’s challenge is therefore to use the Brazilian platform to broaden its opportunity set without allowing diversification itself to become an excuse for weaker capital discipline.

What does Ecopetrol’s latest share-price performance suggest about sentiment around the Brava acquisition?

Ecopetrol’s New York-listed American depositary receipts were trading around $18.11 during the August 19 session, up approximately 2.4% from the previous close and reaching an intraday high around $18.16. The move placed the shares at a fresh 52-week high, compared with a 52-week low around $8.57.

The recent momentum extends beyond the acquisition completion. From the August 12 close of approximately $16.96 to the August 19 intraday level around $18.11, the shares had gained roughly 6.8%, while one-month performance was approximately 8%. Ecopetrol had already received support from strong second-quarter results and a favourable oil-price environment, so it would be too strong to attribute the entire rerating to Brava.

The acquisition nevertheless arrives when investors are assigning Ecopetrol its strongest valuation in more than a year rather than punishing the company for deploying $1.2 billion abroad. That suggests the market is at least willing to accommodate the transaction while operating performance remains supportive.

The harder test comes after consolidation. Brava must demonstrate that its production base can generate sufficient cash after offshore investment, interest costs and development spending, while Ecopetrol needs to show that group leverage remains controlled as the Brazilian company enters its accounts.

What evidence will show whether Ecopetrol’s $1.2 billion Brava takeover is actually creating value?

The first proof point will arrive relatively quickly because Ecopetrol plans to hold a dedicated conference call on August 25 to discuss the acquisition. Management will have an opportunity to clarify integration priorities, capital-allocation expectations, financing structure and how Brava will be incorporated into Ecopetrol’s operational and financial targets.

After that, production will become the simplest measurable test. Brava averaged 78,800 boe/d during the first half but reached 84,400 boe/d in June, meaning Ecopetrol is acquiring the company at a point when output has been moving above the half-year average. Maintaining those volumes while completing offshore drilling programmes would strengthen the acquisition case, whereas operational setbacks at Atlanta, Papa-Terra or the onshore portfolio could quickly reduce the expected production contribution.

Cash generation will matter even more. Brava’s record second-quarter EBITDA and 49.3% adjusted EBITDA margin show what the portfolio can generate in a favourable operating and pricing environment, but the company also spent heavily on offshore development and still carries more than $1.4 billion of reported net debt. Ecopetrol needs Brava to convert accounting earnings into sustained cash flow rather than requiring repeated injections of group capital.

The strategic logic of the deal has therefore improved materially now that Ecopetrol actually owns control. It has acquired producing barrels rather than distant exploration optionality, substantially expanded its Brazilian platform and added a reserve base capable of supporting future development. At the same time, control means Ecopetrol can no longer treat Brava’s leverage, offshore capital needs or operating performance as somebody else’s problem.

That is the real significance of the August completion. Ecopetrol has already won the auction for control of Brava Energia; the next stage is proving that the approximately $1.2 billion cheque bought durable cash generation rather than simply a larger consolidated balance sheet.

Key takeaways from Ecopetrol’s $1.2 billion acquisition of Brava Energia

• Ecopetrol has completed the acquisition of approximately 51% of Brava Energia for aggregate consideration of about $1.2 billion.
• The transaction combined a roughly 25% voluntary tender offer with the purchase of another approximately 26% from existing Brava shareholders.
• Brava averaged approximately 78,800 boe/d during the first half of 2026 and produced around 84,400 boe/d in June.
• Brava reported approximately 459 million boe of proved reserves and 605 million boe of proved plus probable reserves under the PRMS methodology at the end of 2025.
• Ecopetrol previously estimated that its economic share of Brava production could add roughly 42,000 boe/d to the group’s production profile.
• Brava generated approximately $1.05 billion of EBITDA during the 12 months ended June 2026, while second-quarter adjusted EBITDA reached a record $351 million.
• Brava’s reported net debt was approximately $1.43 billion at June 30, rising to about $1.63 billion when acquisition-related commitments were included.
• Ecopetrol will consolidate Brava because it now controls the company, meaning the acquisition brings both operating earnings and balance-sheet obligations into group reporting.
• Ecopetrol’s New York-listed shares reached a fresh 52-week high during August 19, although strong second-quarter earnings and oil-market conditions also contributed to recent momentum.
• The August 25 acquisition conference call, Brava production performance, offshore capital execution and consolidated leverage will provide the next evidence of whether the deal is creating durable value.