In 2007 the company began the process to conciliation its financial statements as per the U.S. Generally Accepted Accounting Principles (US GAAP). This process will allow the company to negotiate ADR’s in the New York Stock Exchange to thus increase the liquidity of its shares.

With this initiative the company progresses in its introduction of the capital market, whether through issuance of capital or through financial indebtedness, in accordance with the requirements of its business plan.

Budget Execution

The Fiscal Policy Superior Counsel, Confis, issued Resolution No. 010 of December 26, 2006, which approves Ecopetrol`s budget, which was modified by the Board of Directors in its December meeting as a result of the change in the company’s legal status.

The budget for 2007 was prepared on the basis of a WTI of US$65 per barrel and a production level of 522 Kbpd (Ecopetrol and partners). The execution of the annual closing was based on US$72.3 per barrel, on average, and an actual production of 525 Kbpd.

This variation increased the revenues of the company, the royalties disbursed to territorial agencies, and the purchase and imports of crude oil and products. The company executed a budget of US$16.01 billion, that is, a 51 % increase as compared with 2006.

From a current income perspective, the foregoing is caused by the growth in local sales, particularly of diesel, the subsidies received from the Government, and the higher export price of crude oil and products.

The collection of resources generated by the 2007 capitalization, estimated at US$2.28 billion out of the US$2.83 billion that were capitalized, also had a favorable effect on company revenues. The same occurred with the US$1.14 billion received from Ecogas debt prepayment.

The operating expenses execution level was US$5.90 billion, equivalent to 97% of the budgeted value. Out of this total, US$5.08 billion were transferred to the Colombian Government and territorial agencies, representing 86% of the total operating expenses. Personal services and overhead expenses represented 4% each of the total execution of this line item.

Payroll and benefit expenses were reduced by 0.2%. Even though there was an average salary increase of 6.5%, this was not sufficient to make up for the decrease of the annual average payroll, whose variation dropped 2% versus the year 2006, from 5,984 to 5,850 average person (personnel on indefinite term contract and temporary) in 2007.

Operating expenses grew by 8% as compared with 2006, basically on account of the financial transactions tax, referred to as 4x1000, which increased by $8.93 million, with a nominal 23% growth.

Investment execution amounted to US$4.4 billion, equivalent to 93% of the total budgeted as gross capital investment. In addition, another contribution was made for US$50.6 million, as investment, to fund pension plan obligation.

As compared with the year 2006, the gross capital investment increased by 55%, as a result of greater production investment.

Of the total investment, 70% was allocated to exploration and production, 20% to recovery of availability factors, optimization of refineries and improvement of transportation systems, and 10% to corporate services.

The tax surplus closed at US$0.45 billion, not including either revenues generated by the capitalization, or the prepayment of Ecogas’s debt, as it is assumed that these are financing operations; had these been taken into account, the surplus result would amount to US$3.86 trillion.

Finally, there was a 6% budget under execution, equivalent to US$0.65 billion.

Treasury situation

Even though the budget exercise proposed for the year 2007 a crude oil average price of US$65 per barrel, the average price was US$72.3 at the end of the year, that is, US$7 above the budget estimate. This implied the availability of greater liquidity surplus, both in pesos and dollars. Thus, at the onset of the year, the portfolio in dollars amounted to US$2,085 million, while on December 31 it closed at US$3,543 million, including US$215 million deposited in trust with the Latin American Reserves Fund.

In turn, the portfolio in pesos at the beginning of the year amounted to US$780 million and closed at US$148 million. The company operation was strongly focused on the execution of projects in pesos and on its main tax obligations, which added up to US$6.16 billion, including income tax (US$0.74 billion), dividends (US$2.18 billion) and royalties (US$1.94 billion), VAT (US$0.57 billion) and global tax (US$0.46 billion), among others.

The treasury situation was also affected, negatively t this time, due to little growth of resources backing the pension plan obligation of the company, as the sustained increase of local interest rates (the expansion reposition rate set by the Central Bank began the year at 7.50% and closed at 9.50%), plus the revaluation of the Colombian peso.

Early in the year, the market value of pension portfolios added up to US$4.44 billion, while at the end of the year it reached US$4.7 billion, including US$50.6 million funded in July 2007.

On the other hand, the issue and placement of 10.1 % of Ecopetrol’s stock in the local market implied the availability, as of November 2007, of surplus resources in pesos, which closed the year at US$1.8 billion. Said resources were deposited in trusts through the agreement between the Nation – Ministry of Finance and Public Credit to ensure their support, as well as minimum profitability consistent with the overall liquidity of the economy.