Bogota, Colombia — Colombia's state-controlled Ecopetrol said Monday that its 2020 investment plan will involve capital expenditures between $4.5 billion and $5.5 billion, up from the $3.5 billion to $4 billion in 2019 forecast at the start of the year.

The company also said the investment is designed to achieve average full-year output 750,000 to 760,000 barrels of oil equivalent a day next year, well above the 720,000 to 730,000 boe/d Ecopetrol executives have targeted for 2019.

From January through September, the company's production has averaged 723,000 boe/d.

In a conference call with analysts last month, the company said it expects a boost fourth-quarter and full-year output as it begins to book added production from its 49% interest in a joint venture that closed this quarter with Occidental Petroleum to develop unconventional oil and gas deposits in the Permian Basin. The deal will add 160 million barrels to the company's reserves and 95,000 boe/d in added output by 2027. Occidental Petroleum has a 51% stake in the joint venture.

The company also recently signed a deal for a 30% stake in the offshore Gato de Mato project in Brazil with Shell and Total, although terms were not announced and it is not clear how soon the company will see increased reserves and output. Shell has a 50% stake in the project, while Total has a 20% stake.

The company's increased capex budget represents a 180-degree change in direction after three years of severe cost cutting expected to shave $3 billion from overhead by the end of next year. The $5.5 billion top end of the 2020 investment target would be nearly double the $2.9 billion in capex the company invested in 2017.

The plan assumes an average price of Brent crude between $50/b and $60/b during 2020. On Thursday, the company said its breakeven price of crude is down to $30/b.

Among the projects highlighted in the investment plan was a $85 million interconnection scheme that, by 2021, will raise throughput at the new Reficar refinery near Cartagena to 200,000 b/d from the current maximum of 165,000 b/d. Although plagued with overruns and delays during construction, Reficar has become an important profit center for its high (97%) utilization rate and ability to refine marketable fuels, including low sulfur diesel, since it was inaugurated in 2015.

The company expects to drill 18 exploratory wells in 2020, of which 16 will be drilled in Colombia. That's an increase from 12 exploratory wells planned for 2019 and 17 drilled in 2018. The drilling increase was decided upon despite a deterioration in oil field security this year evidenced by an uptick in bombings of oil infrastructure and installations by suspected leftist guerillas. There were 27 such incidents in the quarter that ended September 30.

The company said it will spend $76 million in continuing evaluation of at least two offshore gas discoveries to determine whether commercial development is viable and, if so, the timing of commercialization.

The capital investment projection does not include amounts that may be spent next year on three pilot projects involving non-conventional oil and gas deposits. Colombia has the continent's second-highest estimated non-conventional reserves totaling up to 7 billion barrels, but the government as yet has not given the green light to exploit them because of environmental concerns.

The government has given provisional approval to three pilot projects Ecopetrol is partnering with ExxonMobil and ConocoPhillips to demonstrate the safety of such projects, but has not issued operational guidelines. So the projects remain in limbo.

To hedge its domestic exploration-and-production bets, the company is boosting its commitments to invest in overseas projects in the US and Brazil, which is evident in the statistic the company revealed that only 78% of the 2020 capital budget will be dedicated to Colombian projects, down from 90% or above in previous years.

-- Chris Kraul, newsdesk@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com