EM LATAM CREDIT: Brava Energia: Denies Ecopetrol Talks – Neutral

(RRRPBZ; NR/B+pos/BB-)

• An article in Brazil’s Valor Pipeline yesterday said Colombia’s Ecopetrol (ECOPET; Ba1/BBneg/BB+neg) had interest in buying a stake in Brazil oil and gas E&P company Brava Energia and that still might be the case but the company clarified that it was not aware of any potential parties seeking to acquire its shares with the intention of forming a controlling block.
• RRRPBZ 31s were about ¼ point higher yesterday and were quoted unchanged today at $103.22, a yield of 8.8%, so overall market impact was limited without any more concrete details. By comparison, the other major independent oil and gas E&P company Prio (PRIOBZ; Ba3pos/BB/BB+) had 2030 notes quoted at a much lower yield of 7.27%, though the company has lifting costs half of Brava’s at about $10 per barrel and larger production estimated by Fitch at 198,000 bpd for 2026.
• Ecopetrol’s mature fields and declining production further limited by the current government’s prohibition on new exploration make it seem plausible that the Colombia government-controlled oil and gas E&P company would look outside its borders to acquire reserves.
• Brava Energia would be an appealing target as it has been successful with its offshore drilling platforms. Overall production has more than doubled from 39,349 bpd for Q4 2024 to 91,816 bpd for Q3 2025.