Letter to Shareholders

It is a pleasure for us to share with Ecopetrol’s shareholders and stakeholders the results obtained in 2009, a period in which we managed to move forward on the path to becoming an international energy company, producing one million barrels by 2015 and making the goals set out throughout our business chain a reality.

In 2009, the economic crisis affected most countries in the world. The oil industry saw international oil prices drop 38%, which resulted in a decrease in refining margins and readjustment to the investment portfolios of most companies. To make things worse, the decline of the dollar caused impacts on companies’ non-operating results.

Despite the situation surrounding it, Ecopetrol reported improvement in most of its indicators, increased reserves, and carried on with its expansion as a corporate group, which are fundamental factors for its growth in Colombia and abroad.

After more than twelve years, we have begun seeking financial resources on national and international markets again to leverage our consolidation and growth strategy. The results were a success due to favorable conditions in terms of payment and rates.

We improved our corporate practices in order to have world class human talent, achieve operating excellence, raise our performance levels to international standards and, above all, make our commitment to protecting life a top priority.

We established clear commitments and bridges of communication with our seven stakeholders to guarantee long-term sustainability, continue creating trusting relationships and improve the company’s reputation.

The Expansion

As part of our growth strategy, we executed an aggressive investment plan for US $6.309 billion, over 90% of which was invested in Colombia. This portfolio was 31% higher than 2008.

38% of these resources were used for a procurement plan that made us the owners of 100% of Hocol, a company devoted to oil exploration and development in Colombia.

We also acquired 50% of Savia Peru (formerly PetroTech Peruana), one of the top three oil companies operating in the neighboring country; and we became 100% owners of Reficar, the company in charge of carrying out the Cartagena Refinery modernization plan.

Also, we increased our holding in Ocensa, the main artery for hydrocarbon transport in Colombia, to 60%.

At the same time, we invested 42% of the funds in oil and gas exploration and development projects, while 18% was used for refining, petrochemistry, transport and commercialization.

We also stepped up our participation in different exploratory blocks offshore and in production fields located in different parts of the continent, as revealed by the results of our subsidiaries in the United States, Brazil and Peru.

Ecopetrol America, for instance, was awarded 22 blocks in the Gulf of Mexico (USA), amounting to 101 blocks in one of the most attractive zones for deep-sea exploration in the world.

Ecopetrol Brazil participated in four basins on the Atlantic and expects to invest some US $138 million in 2010, while Ecopetrol del Peru has four blocks in the Marañon basin and another block in the Ucayali basin, and is expected to invest over US $30 million this year.

We established Ecopetrol Global Energy SLU, as a financial subsidiary based in Spain to facilitate our investments abroad.

Higher Levels of Production

The results of 2009 show the sustained growth of our four core businesses.

We reported a historic increase in the company’s proven reserves, which rose to 1.878 billion barrels of oil equivalent (Bboe), 35.5% more than 2008, in accordance with the methodology and prices of the Securities and Exchange Commission, SEC. This was the highest increase over the last decade.

In production, we met the goal to grow 12% per year, as we managed to produce an average of 500 thousand barrels of oil and gas. As a corporate group, we grew 17%, reaching 521 thousand barrels per year on average. In December the group’s production increased to 582 thousand barrels, 32% more than the same month in the year 2008.  This volume includes Hocol and Savia Peru.

Heavy crudes are still growing the most (38%), particularly those coming from the Chichimene and Castilla fields located in the Eastern plains region.

In refining, we fulfilled one of the most important milestones in the company’s history by delivering diesel with 50 ppm of sulfur in Bogotá and 500 ppm in the rest of the country. These fuels are better quality, contain less sulfur and adhere to international standards. Introducing clean diesel is a significant contribution by Ecopetrol to improving the quality of air Colombians are breathing.

We also moved forward in integrating the two refineries, and the expansion and modernization plan for Reficar, estimated at US $3.7 billion, was set in motion.

In Petrochemistry, we stepped up production to 31 thousand tons of propylene and 10 thousand tons of polyethylene in Barrancabermeja. Our subsidiary Propilco increased plant capacity to 50 thousand tons of polypropylene per year and sales grew 4%.

We extended our transport network by 501 kilometers (126 on the Apiay-Porvenir line, 140 on the Pozos Colorados-Galan line, and 235 on the Rubiales-Monterrey line) and we strengthened the heavy crude system in order to make increased production viable in the different regions of Colombia.

New Markets

Production growth and an improved commercialization strategy enabled us to conquer new markets and increase sales volumes by 19%. In fact, it is important to point out that the export volume rose 40% due to the increased output of oil and refined products.

25% of our crudes went to China and India, while 50% of the fuel oil exports were sent to the markets of Singapore and Rotterdam. We sold gasoline and other light products to the Dominican Republic, asphalt to Africa and we optimized the Coveñas port to load tankers with a million-barrel capacity for the Far East.

Financial Stability

The company’s total revenues amounted to $27 trillion, 15% less than 2008, while net income totaled $5.3 trillion; both indicators were affected by the drop in international prices and margins. However, the company is still financially solid and its investments have continue to grow.

The company paid out $8.9 trillion in dividends, equivalent to 76.55% of the income in 2008, pursuant to the mandate by the General Shareholders Assembly held in March 2009.  89.9% went to the Nation, represented by the Ministry of Finance and Public Credit as the majority shareholder, and the rest went to over 460 thousand Colombians who are shareholders in the company, based on a dividend of $220 per share.

The price per share closed at $2485, which is equivalent to a 24% increase in value. For the second year in a row, it was the most traded stock on the Colombian stock exchange. The ADR, which is the security traded on the NYSE, presented a 32% growth and closed at US $24.26.

The search for fresh resources using financing mechanisms was a success. During the first half of the year, we signed a loan with the local bank for $2.2 trillion. In the second half, we placed international bonds for US $1.5 billion in conditions that were favorable to the company as regards rates and terms of payment.

In addition, international rating agencies gave us good grades, such as the case with Moody's, which rated us as Baa2 investment grade, which is a sign of the stability of our portfolio and sustained growth.

In September, we met the requirements of the Sarbanes-Oxley Act for issues on international markets in order to strengthen our reporting and control systems.

Organizational Consolidation

The labor climate improved by 6.8 points in the work environment index, reaching a score of 70.7 due to improvements in 13 variables of the standard employed by the Great Place to Work.

In 2009, we signed a trust agreement with the company’s coexisting unions in order to maintain permanent dialogs to build bridges to settle differences.

The agreement led to the signing of a new collective bargaining agreement on August 22 for five years, which will result in a better environment and tools to support the company’s growth.

It is important to point out that we managed to reduce the accident rate by 28% by means of initiatives to improve the safety and reliability of our operations. However, we are aware of the fact that we still have a long way to go in this regard over the next few years.

We executed a social investment plan for $135 billion in the different areas of influence where we are operating to back projects of regional development, science and technology, labor reconversion and the development of local suppliers.

2009 also came with several awards. We made first place on the Merco (Corporate Reputation Monitor) index, which evaluates leading companies in their Corporate Social Responsibility policy. We made second place on the management transparency ranking by the Transparency for Colombia Corporation, and our clients gave us 97% on the annual satisfaction index conducted by the National Consultancy Center.

The Role of Subsidiaries

The achievements made by Ecopetrol no longer depend solely on the performance of its operating businesses; it now includes the effort, commitment and efficiency of its subsidiaries.

Hocol and Savia, for instance, contributed 21 thousand barrels to the corporate group's average annual production and played a role in the 17% increase in this indicator compared to 2008.

International subsidiaries boosted Ecopetrol’s presence in the United States, Brazil and Peru by increasing its participation in exploratory blocks, directly or in association with other companies in the industry.

Reficar, Propilco, Ocensa and Oleoducto de los Llanos promoted the growth of refining, petrochemicals and transport businesses by increasing sales volumes, providing new products and adding to the capacity of their infrastructures.

Ecodiesel, the plant being built in the Middle Magdalena to produce biodiesel will begin operating in the first half of this year; while Bioenergy, the company to produce ethanol in the Eastern Plains region will begin working in 2011.  Both form an essential part of our penetration in the biofuel markets.

Our Goals in 2010

We are satisfied with our achievements, but we also believe there is still a long way to go to for our dreams of making Ecopetrol an international energy company, with international standards, profitable for its shareholders and reliable for all its stakeholders, come true.

In the year 2010, we will invest US $6.925 billion in the company's different businesses. 60% will be used on exploration and development projects in order for our production to continue growing 12%. As a group, we will invest US $8.476 billion, 18% of which will be invested in our subsidiaries.

Pursuant to our investment plan, we have to go to national and international markets to find US $3.5 billion to leverage the growth strategy we have set, considering an average WTI of US $55.67 per barrel in the budget for 2010.

We will continue consolidating our management systems, adhering to best practices as a corporate group, research, innovation and development processes through the Instituto Colombiano del Petroleo (Colombian Petroleum Institute), improvements in our exploration projects and, most importantly, the reduction in the number of accidents and environmental incidents.

We know it is not only about managing to produce a million barrels and meeting our operating goals. The biggest challenge is to do so in harmony with our communities and preserving the environment. That will guarantee our sustainability and at Ecopetrol that is what we call a million clean barrels.

Acknowledgments

The results we are bringing you today are the product of the efforts made by our workers and contractors, the confidence of our shareholders, our teamwork with suppliers, the loyalty of our clients and the endeavor of our Board of Directors.

In 2010, may God help us to continue working to strengthen Ecopetrol, earn the confidence of our stakeholders, and continue playing an important role in the sustainable development of our country and the markets where we are operating.

Thank you very much