ECOPETROL S.A. — Annual Report 2010

Aug 8, 2011

20-F/A 1 v230860_20fa.htm AMENDMENT TO FORM 20-F Unassociated Document Licensed to: Vintage Filings Document Created using EDGARizerAgent 5.3.1.0 Copyright 1995 - 2009 Thomson Reuters. All rights reserved.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F/A

AMENDMENT NO. 1 TO

ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

Commission file number: 001-34175

ECOPETROL S.A.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

REPUBLIC OF COLOMBIA

(Jurisdiction of incorporation or organization)

Carrera 13 No. 36 – 24

BOGOTA – COLOMBIA

(Address of principal executive offices)

Alejandro Giraldo

Investor Relations Officer

investors@ecopetrol.com.co

Tel. (571) 234 5190

Fax. (571) 234 5628

Carrera 13 N.36-24 Piso 8

Bogota, Colombia

(Name, Telephone, E-Mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Name of each exchange on which registered:
American Depository Shares (as evidenced by American Depository Receipts), each representing 20 common shares par value Ps$250 per share	New York Stock Exchange
Ecopetrol common shares par value Ps$250 per share	New York Stock Exchange (for listing purposes only)
7.625% Notes due 2019	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

40,472,512,588 Ecopetrol common shares, par value Ps$250 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

x Yes ¨ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

¨ Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). N/A

¨ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

¨ U.S. GAAP ¨ International Financial Reporting Standards as issued by the International Accounting Standards Board x Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

¨ Item 17 x Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes x No

EFPlaceholder TABLE OF CONTENTS

	Explanatory Note	Page — 1
ITEM 18.	Financial Statements	2
ITEM 19.	Exhibits	3
	Signatures	4

i

EXPLANATORY NOTE

We filed our annual report on Form 20-F for the fiscal year ended December 31, 2010 (which we refer to as the Form 20-F) on July 15, 2011. This Amendment No. 1 to our Form 20-F (which we refer to as Amendment No. 1) is being filed solely for purposes of correcting certain rounding and transposition errors made in the final preparation of certain tables that are part of Note 32 in Item 18. “Financial Statements.” No other change was made to Item 18. “Financial Statements.”

We believe that these corrections are not material to our financial condition, operations or prospects.

This Amendment No. 1 consists of a cover page, this explanatory note, Item 18 (as amended), Item 19 (as amended) and the signature pages and the required certifications of our chief executive officer and chief financial officer.

Except as described above, no other change has been made to the Form 20-F. The filing of this Amendment No. 1 does not, and does not purport to, amend, update or restate the information in any other item, or exhibits to, the Form 20-F.

1

ITEM 18. Financial Statements

See our audited consolidated financial statements beginning on page F-1, incorporated herein by reference.

2

ITEM 19. Exhibits

Exhibit No .	Description
1.1	Bylaws of Ecopetrol S.A. dated November 6, 2007 as recorded under Public Deed No. 5314 of November 14, 2007 (incorporated by reference to Exhibit 1.1 on Form 20-F filed with the U.S. Securities and Exchange Commission on September 12, 2008 (File No. 001-34175)).
1.2	Amended and Restated Bylaws of Ecopetrol S.A., dated March 24, 2011, as recorded under Public Deed No. 560 of May 23, 2011 (incorporated by reference to Exhibit 1.2 on Form 20-F filed with the U.S. Securities Exchange Commission on July 15, 2011 (File No. 001-34175)).
4.1	Transportation Agreement between Ecopetrol S.A. and Oleoducto Central S.A., dated March 31, 1995 (incorporated by reference to Exhibit 4.1 on Form 20-F filed with the U.S. Securities and Exchange Commission on September 12, 2008 (File No. 001-34175)).
4.2	Natural Gas Transportation Agreement between Ecopetrol S.A. and Empresa Colombiana de Gas-Ecogas, dated October 6, 2006 (incorporated by reference to Exhibit 4.2 on Form 20-F filed with the U.S. Securities and Exchange Commission on September 12, 2008 (File No. 001-34175)).
4.3	Indenture, dated as of July 23, 2009, between the Company and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.2 to the Company’s Form F-4 filed with the U.S. Securities and Exchange Commission on July 31, 2009 (File No. 333-160965)).
8.1	List of subsidiaries of Ecopetrol S.A. (incorporated by reference to Exhibit 8.1 on Form 20-F filed with the U.S. Securities Exchange Commission on July 15, 2011 (File No. 001-34175)).
12.1	Section 302 Certification of the Chief Executive Officer.
12.2	Section 302 Certification of the Chief Financial Officer.
13.1	Section 906 Officer Certification.
16.1	Letter dated July 15, 2011 of PricewaterhouseCoopers Ltda. as required by Item 16F of Form 20-F (incorporated by reference to Exhibit 16.1 on Form 20-F filed with the U.S. Securities Exchange Commission on July 15, 2011 (File No. 001-34175)).
23.1	Consent of PricewaterhouseCoopers Ltda.
23.2	Consent of Ryder Scott (incorporated by reference to Exhibit 23.2 on Form 20-F filed with the U.S. Securities Exchange Commission on July 15, 2011 (File No. 001-34175)).
23.3	Consent of Gaffney, Cline & Associates (incorporated by reference to Exhibit 23.3 on Form 20-F filed with the U.S. Securities Exchange Commission on July 15, 2011 (File No. 001-34175)).
23.4	Consent of DeGolyer and MacNaughton (incorporated by reference to Exhibit 23.4 on Form 20-F filed with the U.S. Securities Exchange Commission on July 15, 2011 (File No. 001-34175)).
99.1	Third Party Reserve Report of Ryder Scott (incorporated by reference to Exhibit 99.1 on Form 20-F filed with the U.S. Securities Exchange Commission on July 15, 2011 (File No. 001-34175)).
99.2	Third Party Reserve Report of Gaffney, Cline & Associates (incorporated by reference to Exhibit 99.2 on Form 20-F filed with the U.S. Securities Exchange Commission on July 15, 2011 (File No. 001-34175)).
99.3	Third Party Reserve Report of DeGolyer and MacNaughton (incorporated by reference to Exhibit 99.3 on Form 20-F filed with the U.S. Securities Exchange Commission on July 15, 2011 (File No. 001-34175)).

3

Ecopetrol S.A. and Subsidiaries

Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

F-1

Ecopetrol S.A. and Subsidiaries

Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Contents

Report of Independent Registered Public Accounting Firm	F-3
Consolidated Balance Sheets	F-5
Consolidated Statements of Financial, Economic, Social and Environmental Activities	F-6
Consolidated Statements of Changes in Shareholders’ Equity	F-7
Consolidated Statements of Cash Flows	F-8
Notes to Consolidated Financial Statements	F-10

F-2

Report of Independent Registered Public Accounting Firm

To the Board of Directors

and Shareholders of Ecopetrol S. A.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of financial, economic, social and environmental activities, of changes in shareholders´s equity and of cash flows present fairly, in all material respects, the financial position of Ecopetrol S. A. and its subsidiaries (the “Company”) at December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010 in conformity with generally accepted accounting principles for Colombian Government Entities issued by the Contaduría General de la Nación. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management´s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with generally accepted auditing standards in Colombia and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Accounting principles generally accepted for Colombian Government Entities vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effects of such differences is presented in Note 32 to the consolidated financial statements.

As discussed in Note 32, the Company has restated its 2009 consolidated financial statements reconciled to accounting principles generally accepted in the United States of America to correct some errors.

PricewaterhouseCoopers Ltda., Calle 100 No. 11A-35, Bogotá, Colombia

Tel: (57-1) 634 0555, Fax: (57-1) 218 8544, www.pwc.com/co

F-3

To the Board of Directors

and Shareholders of Ecopetrol S. A.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers Ltda.

Bogotá, Colombia

July 15, 2011

F-4

Ecopetrol S.A. and Subsidiaries

Consolidated Balance Sheets

	December 31, — 2010	2009
	(In millions of Colombian pesos)
Assets
Current Assets
Cash and cash equivalents (Notes 2 and 3)	$ 3,726,778	$ 3,562,119
Investments (Notes 2 and 4)	327,782	462,258
Accounts and notes receivable, net (Notes 2 and 5)	2,736,592	2,969,120
Inventories, net (Note 6)	2,192,088	2,042,697
Advances and deposits (Notes 2 and 7)	3,620,317	3,018,779
Deferred tax assets	4,134	-
Prepaid expenses (Note 8)	21,947	62,815
Total current assets	12,629,638	12,117,788
Non-current assets
Investments (Notes 2 and 4)	5,177,491	3,710,739
Accounts and notes receivable, net (Note 5)	372,273	226,781
Advances and deposits (Note 7)	288,735	253,681
Property, plant and equipment, net (Note 9)	22,266,258	16,782,503
Natural and environmental resources, net (Note 10)	11,774,539	11,155,381
Deferred charges (Note 11)	2,040,140	1,886,529
Other assets (Note 12)	3,151,606	3,034,698
Revaluations (Note 4 and 9)	11,068,676	6,391,417
Total assets	$ 68,769,356	$ 55,559,517
Liabilities and Shareholders’ Equity
Current liabilities
Financial obligations (Note 2 and 13)	$ 1,079,169	$ 437,081
Accounts payable (Notes 2 and 14)	4,062,602	3,280,232
Taxes payable (Note 15)	3,589,263	2,433,022
Labor and pension plan obligations (Note 16)	160,247	165,463
Estimated liabilities and provisions (Notes 2 and 16)	1,151,297	1,154,415
Total current liabilities	10,042,578	7,470,213
Long-term liabilities
Financial obligations (Notes 2 and 13)	7,833,715	5,714,354
Accounts payable ( Note 14)	504,046	51,154
Labor and pension plan obligations (Note 16)	2,814,021	2,669,331
Estimated liabilities and provisions (Notes 2 and 17)	3,398,603	3,411,977
Other long-term liabilities (Notes 2 and 18)	2,362,261	2,731,220
Total liabilities	26,955,224	22,048,249
Non-controlling interest (Note 19)	485,951	941,311
Shareholders’ equity (Note 20 and see accompanying statement)	41,328,181	32,569,957
Total liabilities and shareholders’ equity	$ 68,769,356	$ 55,559,517
Memorandum accounts (Note 21)	$ 216,020,618	$ 138,884,829

The accompanying notes are an integral part of these financial statements.

F-5

EFPlaceholder Ecopetrol S.A. and Subsidiaries

Consolidated Statements of Financial, Economic, Social and Environmental Activities

	Years ended December 31, — 2010	2009		2008
	(In millions of Colombian pesos, except for net income per share expressed in pesos)
Revenue (Note 22)
Local Sales	$ 18,084,425	$	14,058,534	$	21,597,999
Foreign Sales	23,883,886		16,345,856		12,298,670
Total Revenues	41,968,311		30,404,390		33,896,669
Cost of Sales (Note 23)	25,959,001		19,906,073		19,084,436
	16,009,310		10,498,317		14,812,233
Operating Expenses (Note 24)
Administration	603,523		662,336		382,101
Selling and projects	2,526,945		1,962,642		1,772,774
Operating Income	12,878,842		7,873,339		12,657,358
Non-Operating Income (Expenses):
Financial income, net (Note 25)	37,789		495,833		4,101,252
Pension expenses (Notes 16 and 26)	(377,626	)	(595,157	)	(1,144,925	)
Inflation gain (Note 27)	22,030		22,355		30,473
Other expenses, net (Note 28)	(1,068,418	)	(545,526	)	367,046
Income before income tax	11,492,617		7,250,844		16,011,204
Income tax (Note 15)
Current	3,201,041		1,948,819		3,611,020
Deferred tax	37,609		165,210		770,962
	3,238,650		2,114,029		4,381,982
Non-controlling interest	(107,496	)	(4,761	)	455
Net income	$ 8,146,471	$	5,132,054	$	11,629,677
Net income per share	$ 201.28	$	126.80	$	287.35

The accompanying notes are an integral part of these financial statements.

F-6

Ecopetrol S.A. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

(In millions of Colombian pesos, except for the dividend per share)

For de years ended on December 31, 2010, 2009 and 2008

Balance as of December 31, 2008	Subscribed and paid-in capital — $ 10,117,791	Additional paid-in capital — $ 4,679,276	$	2,432,740	Incorporated Institutional equity and other — $ 112,179	Surplus from equity method — $ 1,481,103	$	5,179,961	Public Accounting Application Effect — $ (1,013,010	)	Retained earnings — $ 11,629,677	$	34,619,717
Distribution of dividends ($220 per share)	-	-		-	-	-		-	-		(8,903,953	)	(8,903,953	)
Unpaid subscribed capital and additional paid-in capital	-	24,324		-	-	-		-	-		-		24,324
Addition to paid-in capital – Execution of warranties	-	16,720		-	-	-		-	-		-		16,720
Surplus from revaluations	-	-		-	-	-		1,211,456	-		-		1,211,456
Devaluation in property, plant and equipment	-	-		-	-	-		-	714,205		-		714,205
Adjustment in translation of foreign subsidiaries	-	-		-	-	(288,956	)	-	-		-		(288,956	)
Appropriation to legal reserve	-	-		1,163,072	-	-		-	-		(1,163,072	)	-
Appropriation to investment programs reserves	-	-		1,563,692	-	-		-	-		(1,563,692	)	-
Addition to incorporated institutional equity	-	-		-	43,350	-		-	-		-		43,350
Unrealized income	-	-		-	-	-		-	-		1,040		1,040
Net income	-	-		-	-	-		-	-		5,132,054		5,132,054
Balance as of December 31, 2009	10,117,791	4,720,320		5,159,504	155,529	1,192,147		6,391,417	(298,805	)	5,132,054		32,569,957
Distribution of dividends ($91 per share)	-	-		-	-	-		-	-		(3,682,998	)	(3,682,998	)
Unpaid subscribed capital and additional paid-in capital	337	243		-	-	-		-	-		-		580
Additional receivable paid-in capital	-	(55	)	-	-	-		-	-		-		(55	)
Surplus from revaluations	-	-		-	-	-		4,677,259	-		-		4,677,259
Devaluation in property, plant and equipment	-	-		-	-	-		-	(403,670	)	-		(403,670	)
Appropriation to legal reserve	-	-		525,624	-	-		-	-		(525,624	)	-
Appropriation to investment programs reserves	-	-		1,047,610	-	-		-	-		(1,047,610	)	-
Addition to incorporated institutional equity	-	-		-	1,823	-		-	-		-		1,823
Adjustment for effect of difference in change in surplus equity method	-	-		-	-	(105,364	)	-	-		-		(105,364	)
Unrealized income	-	-		-	-	-		-	-		124,178		124,178
Net income	-	-		-	-	-		-	-		8,146,471		8,146,471
Balance as of December 31, 2010	$ 10,118,128	$ 4,720,508	$	6,732,738	$ 157,352	$ 1,086,783	$	11,068,676	$ (702,475	)	$ 8,146,471	$	41,328,181

The accompanying notes are an integral part of these financial statements.

F-7

EFPlaceholder Ecopetrol S.A. and Subsidiaries

Consolidated Statements of Cash Flows

	Year Ended December 31, — 2010	2009		2008
	(In million of Colombian pesos)
Cash flows from operating activities
Net income	$ 8,146,471	$	5,132,054	$	11,629,677
Adjustments to reconcile net income to cash provided by operating activities
Deferred Income tax, net	37,609		165,210		770,962
Depreciation of property, plant and equipment	1,624,009		1,262,643		691,488
Amortizations:
Natural resources	2,003,771		1,274,979		947,788
Abandonment of installations	241,842		199,939		139,795
Health and education pension liabilities	166,211		502,665		645,770
Intangibles	189,261		152,235		37,496
Deferred charges	107,422		94,288		73,343
Deferred monetary correction, net	(22,030	)	(22,355	)	(30,473	)
Provisions:
Accounts receivable	169,789		30,734		2,275
Inventories	9,743		33,161		49,380
Property, plant and equipment	227,266		127,826		-
Legal proceedings	125,888		271,091		62,380
Other	19,834		-		103,062
Recovery of provisions:
Accounts receivable	(68,772	)	-		-
Inventories	(29,481	)	(118,652	)	(8,711	)
Property, plant and equipment	(55,717	)	(17,091	)	(18,813	)
Legal Proceedings	(80,237	)	(83,258	)	(832,788	)
Other	(138,397	)	(5,564	)	(139,554	)
Write-off of property, plant and equipment	3,395		-		-
Retirement loss of property, plant and equipment	38,945		-		-
Write-off of natural and environmental resources	39,668		-		-
Write-off of other assets	287,918		-		-
Gain in equity method	(82,772	)	(55,143	)	-
Net changes in operating assets and liabilities:
Decrease (increase) Debtors	794,512		2,030,376		5,946,536
Decrease (increase) Inventories	(129,823	)	(291,819	)	(237,710	)
Decrease (increase) Deferred and other assets	698,423		(1,408,834	)	(865,556	)
(Decrease) increase Accounts payable	1,248,736		1,536,580		423,182
(Decrease) increase Taxes payable	(618,440	)	(1,473,446	)	988,828
(Decrease) increase Labor obligations	(26,737	)	37,684		(9,246,210	)
(Decrease) increase Estimated liabilities and provisions	(64,028	)	(24,809	)	(697,407	)
(Decrease) increase Other long term liabilities	(507,467	)	-		-
Net cash provided by operating activities	14,356,812		9,350,494		10,434,740
Cash flows from investing activities:
Payments and advances in acquisition of companies	(1,163,131	)	-		-
Payments in acquisition of companies, net of cash acquired	-		(1,082,580	)	(1,275,049	)
Purchase of investments	(11,808,784	)	(7,939,870	)	(27,801,568	)
Investments redemption and sale	10,578,200		15,972,339		27,054,516
Proceeds from sales of property and equipment	4,751		1,927		-
Investments in natural and environmental resources	(3,874,824	)	(3,613,355	)	(1,844,917	)
Additions to properties, plant and equipment	(6,445,151	)	(9,239,234	)	(4,861,067	)
Net cash used in investment activities	(12,708,939	)	(5,900,775	)	(8,728,085	)
Cash flows from financing activities
Non-controlling interest	(455,360	)	698,360		242,950
Financial obligations	2,761,449		6,161,793		235,720
Received from associates - Capitalizations	525		41,044		832,919
Payment of dividends	(3,789,828	)	(8,902,602	)	(4,654,340	)
Net cash used in financing activities	(1,483,214	)	(2,001,405	)	(3,342,751	)
Net increase in cash and cash equivalents	164,659		1,448,316		(1,636,096	)
Cash and cash equivalents at beginning of year	3,562,119		2,113,803		3,749,899
Cash and cash equivalents at end of year	$ 3,726,778	$	3,562,119	$	2,113,803

The accompanying notes are an integral part of these financial statements.

F-8

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

	2010	2009	2008
Attachment 1 – Cash and cash equivalents detail
Cash	$ 470	$ 82	$ 408
Banks and savings entities	2,124,461	1,508,846	1,395,199
Special and in-transit funds	555,716	1,690,815	703,577
Temporary investments	1,046,131	362,376	14,619
Total cash and cash equivalents	$ 3,726,778	$ 3,562,119	$ 2,113,803

F-9

EFPlaceholder

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

(Amounts are expressed in millions of Colombian pesos, except amounts stated in other

currencies, exchange rates and income per share, which are expressed in Colombian pesos – throughout these

financial statements pesos or Ps refer to Colombian pesos and U.S. Dollar refers to United States dollars)

1. Economic Entity and Principal Accounting Policies and Practices

Reporting Entity

ECOPETROL S.A. and subsidiaries (hereinafter Ecopetrol or the Company) was organized by Law 165 of 1948 and transformed through Extraordinary Decree 1760 of 2003 (added by Decree 409 of 2006) and Law 1118 of 2006 into a state-owned company by shares and then into a mixed economy entity of a commercial character, at national level, related to the Ministry of Mines and Energy, for an indefinite period. Ecopetrol’s corporate purpose is the development, in Colombia or abroad, of commercial or industrial activities corresponding to or related with exploration, production, refining, transportation, storage, distribution, and selling of hydrocarbons, their by-products and associated products, and of subsidiary operations, connected or complementary to these activities in accordance with applicable regulations. Ecopetrol’s principal domicile is Bogotá, D.C. and it may establish subsidiaries, branches and agencies in Colombia or abroad.

By means of the Transformation Decree 1760 of June 27, 2003, the integral administration of the hydrocarbon reserves owned by the Colombian Nation (the Nation), and the administration of non-strategic assets, represented by shares and the participation in companies were separated from Ecopetrol. In addition, Ecopetrol’s basic structure was changed and two entities were created: a) the Agencia Nacional de Hidrocarburos (ANH) was created to hereinafter issue and develop the Colombian petroleum policy (formerly the responsibility of Ecopetrol), and b) Sociedad Promotora de Energía de Colombia S.A., which received the non-strategic assets owned by Ecopetrol.

Law 1118 of December 27, 2006 changed the legal nature of Ecopetrol S.A., and authorized the Company to issue shares to be placed in the equity market and acquired by Colombian individuals or legal entities. Once the shares were issued and placed, corresponding to 10.1% of the authorized capital, at the end of 2007, the Company became a Mixed Economy Entity of a commercial nature, at a national level, controlled by the Ministry of Mines and Energy.

Ecopetrol entered into a deposit agreement with JP Morgan Chase Bank, N.A., as depositary, for the issuance of ADRs evidencing ADSs. Each of the ADSs represents 20 common shares.

On September 12, 2008, Ecopetrol submitted to the Securities and Exchange Commission of the United States (SEC) an application to register and list the Company’s ADSs evidenced by ADRs on the New York Stock Exchange (NYSE). The Company’s ADSs began trading on the NYSE under the symbol “EC” on September 18, 2008.

On December 3, 2009, the National Commission for the Surveillance of Companies and Securities of Peru – CONASEV approved the listing of Ecopetrol’s ADSs on the Lima Stock Exchange and registration of such securities with the Public Registry of the Securities Market. The ADSs began trading on the Lima Stock Exchange on December 4, 2009 in the Peruvian market under the “EC” symbol.

On August 13, 2010, Ecopetrol began trading its Company’s ADSs in the Toronto Stock Exchange - Canada. Ecopetrol became the first Colombian company to list in the Toronto Stock Exchange.

On February 13, 2008, Ecopetrol S. A., as parent company, announced the registration of documentation evidencing the existence of a Corporate Group ( Grupo Empresarial, the term which under Colombian law describes when a company acquires subsidiaries) considering its controlling acquisition of the following subsidiaries: Black Gold Re Limited, Ecopetrol Oleo é Gas do Brazil Ltda., Ecopetrol del Perú S.A. and Ecopetrol America Inc. Subsequently, Andean Chemicals Ltd., parent company of Bioenergy and investor in Propilco S. A., which in turn is the parent company of Compounding and Masterbatching Industry Ltda. (“Comai”), was incorporated into the Corporate Group. EFPlaceholder

F-10

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Likewise, in 2009 the companies ODL Finance, parent Company of ODL; Hocol Petroleum Limited, parent company of Homcol Cayman Inc. and Hocol Limited, which branch in Colombia is Hocol S.A.; Ecopetrol Transportation Company, parent company of Ecopetrol Pipelines International Ltd.; Ecopetrol Global Energy, and Refinería de Cartagena S.A., were all incorporated into the Corporate Group.

On September 20, 2010, Ecopetrol S.A. incorporated its subsidiary company Oleoducto Bicentenario de Colombia S.A.S into the Corporate Group.

By the end of 2010, the subsidiaries Ecopetrol Transportation Investment Ltd. and Ecopetrol Capital AG were established for the purpose of improving the use of the financial resources of the Corporate Group.

The companies consolidated by Ecopetrol in its financial statements as of December 31, 2010, 2009 and 2008 are:

	Percentage of Ownership % — 2010	2009	2008	Activity	Subsidiaries
Ecopetrol Oleo é Gas do Brasil Ltda.	100	100	100	Hydrocarbon exploration and exploitation.	-
Ecopetrol del Perú S. A.	100	100	100		-
Ecopetrol America Inc.	100	100	100		-
Black Gold Re Ltd.	100	100	100	Reinsurance Company of Ecopetrol and its subsidiaries.	-
Andean Chemicals Ltd.	100	100	100	Investment vehicle.	Bioenergy S. A., Refinería de Cartagena and Propileno del Caribe
ODL Finance S. A.	65	65	65	Crude oil Transportation through pipelines.	ODL S. A. ODL - Colombian Branch Office
Propileno del Caribe. Propilco S. A.	100	100	100	Production and selling of polypropylene resin.	Comai S. A.
Bioenergy S. A.	88.6	80	79.14	Bio-fuel production.	-
Ecopetrol Global Energy	100	100	-	Investment vehicle.	Ecopetrol America Inc.
Ecopetrol Transportation Company Limited	100	100	-	Investment vehicle.	Ecopetrol Pipelines International Limited, Ecopetrol Transportation Investment Ltd
Ecopetrol Pipelines International Limited	100	100	-	Investment vehicle.	Ecopetrol Transportation Investment
Oleoducto Central S. A. - Ocensa	60	60	35.29	Crude oil transportation through pipelines.	-
COMAI - Compounding and Masterbatching Industry Ltda.	100	100	100	Manufacture of polypropylene compounds and master batches.	-
Refineria de Cartagena S. A.	100	100	49	Hydrocarbon refining, selling and distribution.	-
Hocol Petroleum Limited	100	100	-	Investment vehicle.	Hocol Limited, Hocol S. A., Homcol Cayman Inc.
Oleoducto de Colombia S. A. – ODC	66	66	43.85	Crude oil transportation through pipelines.
Oleoducto Bicentenario de Colombia SAS	55.97	-	-	Crude oil transportation through pipelines.	-
Ecopetrol Transportation Investment Ltd.	100	-	-	Investment vehicle.	-
Ecopetrol Capital AG	100	-	-	Financing, liquidation of financing of group companies or any other type of company and all activities related thereto.	-

Ecopetrol and certain of its subsidiaries develop exploration and production (“E&P”) operations through E&P, Technical Evaluation Agreements (“TEA”) and Agreements entered into with the ANH, and through Association Contracts of diverse contractual terms, with the following characteristics at December 31, 2010 closing: EFPlaceholder

F-11

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Contract Type	Number of Contracts — Ecopetrol S. A.	Hocol Petroleum Ltd.	Ecopetrol Oleo é Gas do Brasil Ltda.	Ecopetrol America Inc.	Ecopetrol del Perú S. A.
Exploration
E&P Contracts –ANH	27	9	-	-	-
E&P Agreements-ANH	6	-	-	-	-
TEA’s – ANH	3	-	-	-	-
Association Contracts	7	4	10	44	5
Production
Association	58	8	-	1	-
Discovered undeveloped and inactive fields	18	-	-	-	-
Sole risk	-	2	-	-	-
Incremental production	6	2	-	-	-
Risk participation	3	-	-	-	-
Technological alliance	1	-	-	-	-
Business collaboration	1	-	-	-	-
Technical services and cooperation	1	-	-	-	-
Shared risk participation	1	-	-	-	-
Production services with risk	2	-	-	-	-
Operation	1	-	-	-	-
	135	25	10	45	5

Principal accounting policies and practices

The Contaduría General de la Nación or CGN adopted new accounting principles for Colombian state-owned entities in September of 2007. These accounting principles are known as the Regimen de Contabilidad Pública (Regime of Public Accounting or RCP). Pursuant to CGN Communication No. 20079-101345 of September 28, 2007, RCP became effective for Ecopetrol beginning with the fiscal year ended December 31, 2008. RCP is referred to herein as Colombian Government Entity GAAP.

Principles of Consolidation

The consolidated financial statements have been prepared pursuant to the provisions of Article 27 of the Commerce Code and Articles 23 and 122 of Decree 2649 / 1993. The latter article states that the economic entity that holds more than 50% of the capital of other economic entities is required to provide, along with its basic financial statements, the consolidated financial statements and the accompanying notes. The Full Integration consolidation method established in External Circular No. 005 issued on April 6, 2000 by the Superintendence of Companies was used herein.

Presentation Basis

The preparation of the financial statements was carried out under Colombian Government Entity GAAP standards and principles issued by the CGN and other legal provisions. These principles may differ in certain aspects from those established by other standards and other control authorities, and the opinions on specific matters issued by CGN prevail over other regulations.

In accordance with the rules for the inspection, supervision, and/or control of Ecopetrol and the companies that apply Colombian Government Entity GAAP to record operations at the level of source documents or for purposes of standardization, a structure was established to define the accounting treatment of operations not envisioned by the CGN, which is as follows: i) Principal and permanent inspection, supervision, and control: Superintendency of Domiciliary Public Services; ii) Residual control: Superintendency of Corporations and iii) Concurrent control: Superintendency of Finance, on the activities of the Company in its capacity as issuer in the stock market. International Financial Reporting Standards (IFRS) are applied when accounting guidance under Colombian Government Entity GAAP do not address specific accounting issues applicable to the Company, while accounting standards under accounting principles generally accepted in the United States (US GAAP) are applied for accounting issues related to crude oil and natural gas reserves. EFPlaceholder

F-12

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The accrual method was applied for the accounting recognition of financial, economic, environmental and social facts aspects.

The consolidated financial statements include the accounts of the companies in which the Company holds, either directly or indirectly, more than 50% of their voting capital, or over which it has a significant influence although it is not the majority shareholder. All intercompany transactions and balances have been eliminated. The financial statements attached hereto consolidate the assets, liabilities, equity and income of the Ecopetrol subsidiaries.

Certain reclassifications have been made to prior years’ financial information to conform to the December 31, 2010 presentation.

Materiality Concept

An economic fact is material when, due to its nature and amount and the circumstances that surround it, its knowledge or ignorance can significantly alter the economic decisions of the users of the financial information.

The consolidated financial statements include specific headings in accordance with legal requirements, or those representing 5% or more of total assets, current assets, total liabilities, current liabilities, working capital, equity and results of operations, as appropriate. In addition, lower amounts are shown when they are deemed to contribute to a better interpretation of financial information.

Use of Estimates

The preparation of the consolidated financial statements requires that management make estimates and assumptions that could affect the recorded amounts of assets, liabilities, results of activities and the attached notes. These estimates are carried out in accordance with technical criteria pursuant to regulations and current legal provisions. Actual or market values could differ from such estimates.

Transactions in Foreign Currency

Transactions in foreign currency are entered into in accordance with applicable regulations and they are recorded at appropriate exchange rates on the transaction date. Balances denominated in foreign currency are reflected in Colombian pesos at the representative market exchange rates at the end of each period.

The adjustment for exchange differences generated by assets and liabilities denominated in a foreign currency is recorded against results of operations, except when such adjustment is charged to capital investments in controlled entities, in which case the equity is accounted.

The financing costs, including the exchange difference associated with assets purchased under construction, form part of the overall cost of these assets until they are ready for use.

The Company and its subsidiaries associated to crude oil exploration and production activities can freely deal in foreign currency provided that it complies with the provisions of the exchange regime.

With respect to those subsidiaries whose financial statements were originally presented in a currency other than the Colombian pesos, the financial statements were first converted into US dollars and then into Colombian pesos. Market exchange rates at December 31, 2010 were used to convert the balance sheet accounts, weighted average exchange rates were used to translate income statement accounts and historical exchange rates were used to translate equity statement accounts.

F-13

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Joint Operation Contracts

EFPlaceholder Joint venture or common-interest operation contracts are entered into between Ecopetrol or the Corporate Group and third parties in order to share the risk, secure capital, maximize operating efficiency and optimize the recovery of reserves. In these joint ventures, one party is designated as the operator and each party takes its share of the crude oil production according to its agreed participation. When any of the corporate group companies participates as non-operator party, it records these assets, revenues, costs and expenses on a timely basis based on information reported by the operators. When any of the corporate group companies directly operates the facilities, it records assets, revenues, costs and expenses at the same time the accounts receivable to the third party are recognized.

Cash and Cash Equivalents

Cash and cash equivalents are represented by highly liquid investments which have maturities of less than ninety (90) days as of their original acquisition date.

Cash from operations with joint operations partners corresponds to advances from both Ecopetrol and its joint operations partners in the agreed upon participation percentages set for in the relevant joint venture contract, which will be managed in a joint exclusive-use bank account.

Financial Derivative Instruments

The Company enters into hedging agreements to hedge against fluctuations of international crude oil prices and exchange rates. The difference between amounts paid and income received under hedging operations is recognized as financial income or expense in the statements of financial, economic, social and environmental activities. Ecopetrol does not use these financial instruments for speculative purposes.

Hedging operations are carried out with banks and other counterparties with a credit risk rating higher than or equal to A+.

The Company makes periodic evaluations based on the market risk of hedging operations and, together with the Board of Directors and management, determines the need for extension or early termination of the subscribed contracts, when the result is ineffective vis-à-vis the hedged items. In the event of settlement, the financial and contractual effects are recognized in the results of the period.

Investments

The Investments are classified as: i) Liquidity Management Investments, ii) Investments for Policy Purposes and, iii) Equity Investments.

Liquidity management investments correspond to resources invested in debt and equity securities with the objective of obtaining profits through short term price fluctuations. Their initial recording corresponds to their historical cost and they are updated based upon valuation methodologies issued by the Colombian Superintendency of Finance.

Policy purpose investments are made up of debt securities of national or foreign entities, acquired in compliance with macroeconomic or internal policies of the entity, which include investments held through their maturity date and those available for sale, the former being those which are kept for at least one (1) year, as of the first day on which they were classified for the first time, or when they were reclassified.

Investments held to maturity are updated based on the Internal Rate of Return (IRR) included in the methodologies adopted by the Superintendency of Finance and the investments for the purpose of macroeconomic policy and available for sale should be updated based on methodologies adopted by the Superintendency of Finance for tradable investments.

Equity investments in controlled entities where the Company exerts significant influence are recorded using the equity method.

F-14

EFPlaceholder

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Significant influence is defined as the power that the entity has, regardless if the percentage of ownership is less than or equal to 50%, to participate in the setting and overseeing of financing and operational policies of another entity for the purpose of obtaining profits from that entity.

Significant influence may be present in one or more of the following aspects:

· Representation on the Board of Directors or equivalent regulatory organ of the associated entity,

· Participation in policy-making processes,

· Significant transactions between the investor and the associated entity,

· Secondment of officers, or

· Supply of essential technical information.

Equity investments in noncontrolled entities include shares of low or minimum liquidity or shares without any trading on an exchange which do not permit any type of control or the exertion of significant influence and are recognized at historical cost; changes in value arise from the periodic comparison of the cost of the investment to its net book value or its value in the stock market.

Equity variances generated by adjustments in conversion of the controlled entity are recognized as surplus under the equity method, without prejudice to the subaccount with a debit balance, in agreement with Resolution 193 of July 27, 2010, issued by the CGN Office.

Investments made in foreign currency are recognized by applying the Representative Market Exchange Rate (TRM, per its Spanish acronym) of the transaction date. The value shall be re-expressed periodically based on the TRM, as long as this is not considered by the updating methodology. For foreign subsidiaries, the equity method shall be applied in Colombian pesos, following the translation of the foreign currency-expressed financial statements.

Receivables and Provisions for Doubtful Accounts

Receivables of the corporate group companies are recognized at their original amount or at the amount accepted by the debtor, which is subject to periodic updating in accordance with current legal provisions or agreed contractual terms.

The provision for doubtful accounts is reviewed and updated periodically in accordance with the aged analysis of balances and the evaluation of the recoverability of individual accounts. The Company carries out the necessary administrative and legal procedures to recover delinquent accounts receivable as well as the collection of interest from customers that do not comply with payment policies.

It is only possible to write-off accounts and notes receivable against the provisions for doubtful accounts when there is reasonable legal or material certainty of the total or partial loss of the assets.

Inventories

Inventories include assets extracted, in production process, transformed and acquired for any reason, to be sold, intended for transformation and consumed in the production process, or as a part of services rendered. Ecopetrol uses the perpetual inventory system.

Inventories are recorded at historical cost or at purchase cost, which includes direct and indirect charges incurred to prepare the inventory for sale or production conditions.

The valuation of inventories is measured using the weighted average method, considering the following parameters:

· Crude oil and natural gas inventories for the Company’s own production, at production cost.

· Crude oil purchases, at acquisition costs, including transportation and delivery costs incurred.

F-15

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

· Finished goods inventory, at total production costs.

· Work in progress inventory, at production costs.

· Raw material inventory, at weighted average cost.

Raw Materials and supplies in joint ventures are controlled by the operator and reported in a joint account at acquisition costs (recorded in the original currency at average costs). Inventory consumptions are charged to the joint venture as expense or investment, as appropriate.

Additionally, inventories are valued at the lower of market value and average cost, and at the actual cost incurred for in-transit inventories. At the end of the year, provisions are calculated to recognize impairment, obsolescence, excess, slow-moving or loss of market value.

Property, Plant and Equipment and Depreciation

Property, plant and equipment are recorded at the historical cost, adjusted for inflation until 2001, which includes financial expenses and exchange differences from acquisition costs in foreign currency until the asset is put into operation, and the financial revenues corresponding to the still unused portion of financial obligations acquired to finance investment projects. When an asset is sold or retired, the adjusted cost and accumulated depreciation are written off and any gain or loss is recognized in results of operations.

Depreciation is calculated on the total acquisition cost using the straight-line method, based on the assets useful life. Annual depreciation rates used are:

Buildings and pipelines	5
Plant and equipment	10
Transportation equipment	20
Computers	33.3

Regular disbursements for maintenance and repairs are included as a part of expenses. Significant expenditures which improve efficiency or extend asset’s useful life are capitalized as an increased in the value of the respective asset.

The value of property, plant and equipment is subject to periodic update by comparing the net book value with the value determined through technical appraisals. When the value of the asset's technical appraisal is greater than its net book value, the difference is recorded as asset reappraisal credited to the surplus on reappraisals account in equity; otherwise, it is recorded as provision for devaluations charged to results.

Upon termination of an association contract, Ecopetrol S. A. receives, at no cost, the property, plant and equipment, materials and the amortizable oil investments owned by the associate company. This transaction does not affect the Company's results. The results of the technical appraisal of the properties, plant and equipment are recognized as reappraisal in the respective assets and equity accounts.

The residual value is considered only for the valuation of property, plant and equipment and only in case the assets are either fully depreciated or not in operating condition. In general, 5% of the cost on average is applied, in accordance with the practice of the Company’s industry. Such criterion is not applicable to assets classified as piping and buildings, as recoverable costs are considered equivalent to the removal and transportation for their retirement. Assets are depreciated at 100% of their historical cost, adjusted for inflation.

F-16

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Natural and Environmental Resources

EFPlaceholder The Company applies the successful efforts method of accounting for investments in exploration and production areas. The geological and geophysical seismic information is expensed as incurred, before the discovery of proved reserves. Acquisition and exploration costs are capitalized until the time in which it is determined that exploration drilling was successful. If exploration drilling results are unsuccessful, all incurred costs are expensed. When a project is authorized for development, the accumulated acquisition and exploration costs are transferred to the oil investments account. Costs capitalized also include the cost of asset retirement costs. Asset and liability balances related to asset retirement costs are updated annually. Production and support equipment are accounted for on a cost basis and are part of the Property, Plant and Equipment subject to depreciation.

Oil investments are amortized using the technical units-of-production method on the basis of royalty-free proven developed reserves per field, estimated as of December 31 of the immediately preceding year. The amortization charged to results is adjusted at the close of December, recalculating the DD&A (Depletion, Depreciation and Amortization) as of January 1 of every year, based on the reserve study updated at the end of the current year.

The reserves technical studies are prepared internally by the Company’s reservoirs superintendence and audited by internationally recognized external consultants, approved by the Company Reserves Committee of Ecopetrol and the Boards of Directors of each subsidiary, as applicable. Proved reserves consist of estimated quantities of crude oil and natural gas which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, that is, prices and costs as of the date the estimate is made.

Since Ecopetrol became an issuer on the Colombia Stock Exchange (Bolsa de Valores de Colombia - BVC) and the New York Stock Exchange (NYSE), the Company has used the methodology approved by the SEC (Securities Exchange Commission) for the calculation of natural gas and crude oil reserves. As per such methodology, the reference price is the arithmetical average of the WTI crude oil price over the last twelve (12) months.

When it is determined that a well located in an exploration zone has no proven reserves, it is considered a dry or not commercial well and accumulated costs are expensed in the same period this is known.

The estimation of hydrocarbon reserves is subject to several uncertainties inherent in the determination of the proved reserves, production recovery rates, the timeliness in which investments are made to develop the reservoirs and the degree of maturity of the fields.

In accordance with that established in Resolution 494 of December 22, 2009, issued by the National Hydrocarbon Agency (ANH) Ecopetrol complies with the delivery of information to the ANH using the SPE-PRMS, Petroleum Resources Management System, methodology. Reserves included in the reports are audited by three independent specialized firms.

Deferred Charges

Deferred charges include deferred income tax, which results from the temporary differences arising due to the different ways of determining book profit and taxable income at the end of each period.

Other Assets

Other assets include goodwill, which corresponds to the difference between the value of purchase of the equity investments in controlled entities and their intrinsic value, which reflects the economic benefits expected to be achieved from the investment, originating in goodwill, specialized personnel, reputation of privileged credit, prestige due to sale of better products and services, favorable location and expectations of new businesses, among others.

F-17

EFPlaceholder

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Goodwill is amortized based on methodologies of acknowledged technical value over the term in which recovery of the investment is expected. At the close of each accounting period, goodwill shall be assessed to determine if the conditions for generation of future economic benefits still exist; otherwise, the asset shall be retired. If the book value of equity investment, plus the book value of goodwill which includes its historical cost added to all price adjustments and amortizations, is greater than the implied value, the asset shall, as a result of such difference, be retired in the related period with charge to results, and the reasons on which such decision was based shall be disclosed.

Software, licenses and patents are recognized at their cost of purchase, development or production. Intangible assets are amortized through the straight-line method during the periods when it is expected to receive the benefits from the incurred costs and expenses, or during the term of the legal or contractual coverage of the granted rights.

Advances received from Ecogas to cover Build, Operate, Maintain and Transfer (BOMT) obligations

As a result of the sale of Ecogas by the National Government, and following specific instructions from CGN, the Company recognized as deferred income the net present value of the future payments scheme, in connection with Ecopetrol´s liability related to BOMT contractors. These liabilities are due in 2017, the year when the contractual obligations end.

Revaluations

a. Investments

Revaluations correspond to the difference between the net book value and the intrinsic value or the price quoted on a stock exchange.

b. Property, Plant and Equipment

Valorizations and valorization surplus of property, plant and equipment correspond to the difference between net book value and the market value for real estate or the current value in use (VAU as per its acronym in Spanish) for plant and equipment, determined by specialists registered with the Colombian Real Estate Association or by suitable technical personnel, respectively.

The methodology used to appraise plant and equipment is the current value of the assets in use by going businesses (VAU) for economic valuation of assets, considering current facilities condition and their useful lives in terms of production capability and ability to generate income.

For office equipment, the historical value to the appraisal value adjustment is not mandatory when the historical value is lower than 35 current monthly legal minimum wages or when the property, plant and equipment is located in high risk areas.

Financial Obligations

Public credit operations, as controlled by the state of Colombia, correspond to any action or contract which, in compliance with legal regulations on public credit, are addressed to supply the Company with resources, goods and services under specific payment terms such as loans, issue and placement of bonds and public credit securities, and vendors’ credit.

With respect to loans, public credit operations must be recorded for the actual disbursed amount while bonds and securities placed are recorded at their nominal amount. Placement costs are booked directly under expenses.

Accounts Payable – Suppliers

Accounts payable correspond to obligations incurred by Ecopetrol with third parties in order to comply with its corporate purpose. EFPlaceholder

F-18

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Income Tax

The provision for income tax at year end was calculated by applying to the accounting profit before taxes the effective tax rate determined through the reconciliation of income before income tax and taxable income. The effect of timing differences involving the payment of a lower or higher income tax in the current year is recorded as a deferred tax liability or asset, as applicable, provided that a reasonable expectation exists that such differences will reverse and in the case of the deferred tax asset, that sufficient taxable income will be generated to recover the asset. The deferred tax balance was calculated at the 33% applicable rate.

Labor and Pension Obligations

The system for salaries and fringe benefits for Ecopetrol personnel is governed by the Collective Labor Agreement 01 of 1977, and in the absence thereof, by the Labor Code. In addition to fringe benefits, Ecopetrol employees are entitled to receive additional benefits covered by previous regulations that depend on the place, type of work, length of service, and basic salary. Annual interest of 12% is paid on accumulated severance amounts in favor of each employee and the payment of indemnities is provided for when special circumstances arise that result in the non-voluntary termination of the contract, and in periods other than the qualifying period.

The actuarial calculation includes active employees with indefinite term contract, pensioners and heirs, for pension, health care and education plan; it likewise includes pensions bonds for temporary employees, active employees and voluntary retirements.

All social benefits of employees who joined the Company before 1990 are the direct responsibility of Ecopetrol, without the involvement of the Colombian social security entity or institution. The cost of health services of the employee and his/her relatives registered with the Company is determined by means of the morbidity table, prepared on the basis of facts occurring during 2009. Likewise, the experience of Ecopetrol is considered for the calculation of educational allowances, based on the annual average cost of each business segment, subdivided in accordance with the class of studies: pre-school, primary, high school and university.

For employees who joined the Company subsequent to the enactment of Law 50 of 1990, the Company makes periodic contributions for severance, pensions and labor related injuries to the respective funds that assume all these obligations. Likewise, Law 797 of January 29 of 2003 determined that Ecopetrol employees who joined the Company as of January 29, 2003 will be subject to the provisions of the General Pension Regime.

By virtue of Legislative Act 01 of 2005, enacted by Congress, the pension regimes excluded from the General Social Security System in Colombia expired on July 31, 2010. In accordance with provisions therein, the decision of the Ministry of Social Protection and the analyses conducted by the labor advisers of Ecopetrol, it was concluded that those workers who complied with the age and continuous or discontinuous service time requirements of the law, the Collective Bargaining Agreement currently in force and/or Agreement 01 of 1977, prior to August 1, 2010, consolidated their right to pension, while for other workers who were not covered, it is mandatory to be affiliate with the General Pension System. The agency responsible for paying the respective pension will be the pension administrator chosen by the worker (either the Social Security Institute or private pension funds).

Pursuant to Decree 941 of 2002, once the actuarial calculation was approved by the Ministry of Finance in October 2008 and the mechanism for transfer (“commutation”) of the corresponding liability was approved by the Ministry of Social Protection on December 29, 2008, Ecopetrol, as of December 31, 2008 partially transferred (“commuted”) the amounts corresponding to payments from its pension liability, to autonomous pension trust funds (PAP, per its Spanish acronym). The amounts transferred, as well as their yield, cannot be used for other purposes nor may they be reimbursed to the Company until all pension obligations have been fulfilled. EFPlaceholder

F-19

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The transferred liability corresponds only to pension payments; the portion relating to health care and education services remains Ecopetrol’s direct pension obligations.

In case the yields of the autonomous equity are not sufficient to cover 100% of the actuarial calculation as updated every year, Ecopetrol shall draw the resources to complete funding of the pension liabilities, since Ecopetrol remains liable for payment of pension liabilities transferred.

Through Resolution 1555 of July 30, 2010, the Superintendency of Finance replaced the Mortality Tables used to prepare actuarial calculations and stipulated that the effects from such change could be recognized gradually. Subsequently, Decree 4565 of December 7, 2010 modified the accounting standards for amortization of the actuarial calculation which were in force up to that date. Pursuant to the new Decree, the companies that had amortized 100% of their actuarial calculation at December 31, 2009 may gradually amortize up to the 2029 the increase in the actuarial calculation for 2010 estimated by using the new Mortality Tables.

In view of the foregoing, Ecopetrol modified its accounting policy for amortization of the actuarial calculation of monthly pension payments, pension quotas, parts and bonds (transferred liabilities) and health bonds, and adopted a 5-year term as of 2010 to amortize the increase in the 2010 actuarial calculation. Up to 2009, the yearly increase in the actuarial calculation was recorded as expense of the period, considering that the actuarial calculation was 100% amortized.

Purchase of Hydrocarbons

Ecopetrol purchases hydrocarbons from the ANH that it receives from all of the production in Colombia, at prices established according to section four of Law 756 of 2002 and Resolution 18-1709 of 2003 of the Ministry of Mines and Energy, considering the international reference prices.

Additionally, it purchases hydrocarbons both from partners as well as from other hydrocarbon producers in Colombia and abroad to meet the needs and operating plans of the Company.

Recognition of Income

Income from crude oil and natural gas sales is recognized at the time of transfer of title to the buyer, including its risks and benefits. In the case of refined and petrochemical products, income is recognized when products are shipped by the refinery; subsequently, they are adjusted in accordance with the volumes actually delivered. Income from transportation services is recognized when products are transported and delivered to the buyer in accordance with sale terms. In other cases, income is recognized at the time it is earned and a true, probable and quantifiable right to demand its payment arises.

Late payment interest income on the collection of accounts receivable is recognized following the prudence and realization principles.

By virtue of the current regulations, Ecopetrol and Reficar sell at a regulated price and the Government provides the companies with a subsidy on regular motor gasoline and A.C.P.M, granted to local consumers, which is generated by adding the differences, for every day of the month, between the producer's regulated revenues and the daily price equivalent to the U.S. Gulf reference market price, calculated as per its origin, times the volumes sold per diem. Resolution 182439 and Decree 4839 of December 2008 establish the procedure for recognizing subsidies in the event of which these should be negative (negative value between parity and regulated prices).

In March 2010 the Ministry of Mines and Energy issued Resolution No. 180522 which revoked all provisions contrary to Resolutions 181496 of September 2008, 182439 of December 30, 2008 and 180219 of February 13, 2009 and modifies the formula for calculating the gasoline and diesel international reference prices. EFPlaceholder

F-20

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Costs of Sale and Expenses

Costs are recognized at their historical value both for goods purchased for sale and for accumulated production costs of goods produced and services rendered. Costs are disclosed according to the operation which generates them.

Expenses correspond to amounts required for the development of the ordinary activity and include those caused by extraordinary events. Expenses are disclosed in accordance with their nature and the occurrence of extraordinary events.

Costs and expenses are recognized upon transfer receipt of goods or services or when there is certainty of the occurrence of the economic fact. Fuel shortages and losses due to thefts and explosions are recorded as non- operating expenses.

Abandonment of Fields

The Company recognizes the liability for future environmental obligations and its corresponding entry is capitalized as the greater value between natural and environmental resources assets. The estimation includes plugging costs and abandonment of wells, dismantling of facilities and environmental recovery of areas and wells. Amortization expense is recorded as production costs, using the technical units-of-production method based on proved developed reserves. Changes resulting from new estimates of the liability for abandonment and environmental restoration are capitalized to the respective asset.

Since the extension of certain association contracts, the abandonment costs are assumed by the associates in the percentages of participation established in each contract. Ecopetrol has not allocated funds in order to cover these obligations, with the exception of association contracts Casanare, Guajira, Tisquirama, Cravo Norte and Cravo Norte Pipeline. However, to the extent that activities are generated which are related to abandonment, these will be covered by the Company.

In 2010, the policy for estimating the portion of abandonment/retirement obligations, which are due in U.S. dollars, was changed to Colombian pesos as most payments (greater than 70%) are made in Colombian pesos.

Accounting for Contingencies

As of the date of these consolidated financial statements, conditions that result in losses for the Company might exist, which will only be known if future specific circumstances arise. Management, the legal Vice Presidency and legal counsel evaluate these situations based on their nature, the likelihood that they will materialize, and the amounts involved, to decide on any changes to the amounts accrued and/or disclosed. This analysis includes current legal proceedings against the Company.

The methodology applied to assess current legal proceedings and any contingent obligation is based on the credit system of the Nation, which is used by the Ministry of the Interior and of Justice.

A provision is allocated for legal proceedings when there is a first instance conviction or the risk assessment results are “Likely to lose”.

Risks and Uncertainties

The Company is subject to certain operational risks which are customary to this industry in Colombia and abroad, such as terrorism, product theft, crude oil international price changes, environmental damages, and variations in the estimations of hydrocarbon reserves.

F-21

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Memorandum Accounts

EFPlaceholder Creditor and Debtor Memorandum Accounts represent the estimation of facts or circumstances from which rights or obligations could affect the Company’s financial, economic, social and environmental position. They also disclose the value of goods, rights and obligations that must be controlled and include, additionally, the differences between the accounting information and the information used for tax purposes.

These accounts are not included in the Company’s balance.

Earnings per Share

Earnings per share are calculated based in the annual weighted average of outstanding issued shares.

1. Assets And Liabilities Denominated In Foreign Currency

Transactions and balances in foreign currency are translated into Colombian pesos at the market exchange rate certified by the Superintendency of Finance of Colombia.

At December 31, 2010 and 2009 the consolidated financial statements of Ecopetrol include the following assets and liabilities denominated in foreign currency (which are translated into Colombian pesos at the closing exchange rates of $1,913.98 and $2,044.23 for US$1, for 2010 and 2009 respectively).

Thousands of US$		Equivalent millions of COP	2009 — Thousands of US$	Equivalent millions of COP
Assets
Cash and cash equivalents	822,496	$ 1,574,241	1,133,720	$ 2,317,585
Investments	2,400,833	4,595,146	1,602,179	3,275,223
Accounts and notes receivables	766,604	1,467,265	792,713	1,620,487
Advances and deposits	681,508	1,304,393	120,923	247,194
Other assets	47,498	90,910	713,950	1,459,478
	4,718,939	$ 9,031,955	4,363,485	$ 8,919,967
Liabilities:
Financial obligations	1,668,906	3,194,252	1,601,090	3,272,996
Estimated liabilities and provisions	55,081	105,423	1,519,417	3,106,037
Accounts payable	757,365	1,449,581	607,508	1,241,886
Other liabilities	422,251	808,180	503,388	1,029,041
	2,903,603	$ 5,557,436	4,231,403	$ 8,649,960
Net Asset Position	1,815,336	$ 3,474,519	132,082	$ 270,007

1. Cash and Cash Equivalents

	2010	2009
Banks and saving entities	$ 2,124,461	$ 1,508,846
Sight investments (1)	1,046,131	362,376
Special Funds (2)	555,716	1,690,815
Cash	470	82
	$ 3,726,778	$ 3,562,119

(1) Represented by trust rights and Time Deposits TDs (CDT), primarily of: $478,498 Ecopetrol S.A., $416,687 Ocensa, $63,460 Hocol, and $59,949 Refinería de Cartagena.

(2) Includes investments in overnight operations of $154,899 (2009 - $34), and savings in special funds in pesos and foreign currency of $400,795 (2009 - $1,690,661).

F-22

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Restrictions on banks and corporations

Payment made by Ecopetrol to the Neuro Science Center of Cuba for US$98,447 is currently withheld by the ABN bank, Miami Agency (Now Banco Itau Internacional) as part of the embargo of the United States of America to Cuba following OFAC (Office of Foreign Assets Control) regulations.

1. Investments

	2010	2009
Current:
Fixed yield:
Investment funds administered by third parties	$ 188,461	$ 197,485
Bonds and securities of private or foreign entities	132,261	60,330
Trust funds	5,597	77,929
Treasury Securities – TES	1,463	-
Bonds issued by the Colombian Government	-	126,375
Hedge instruments	-	139
Total current	$ 327,782	$ 462,258
Long-Term:
Variable yield - Shares (2)	$ 830,170	$ 777,503
Fixed yield
Bonds and securities or foreign entities	2,275,466	1,834,779
Treasury Securities – TES	1,067,799	94,252
Bonds issued by the Colombian Government	642,449	602,039
Specific destination Funds – Legal contingencies	361,607	380,463
Other investments (1)	-	21,703
Total long-term	$ 5,177,491	$ 3,710,739

(1) Corresponds to the redemption of securities of remaining resources derived from production of the Teca field – Cocorná Association Contract, which were incorporated into the portfolio, in accordance with the verdict issued in favor of Ecopetrol S. A. by the Arbitration Court, on the date of expiration of the association contract operated by Mansarovar Energy Colombia LTD.

(2) Variable Income - Stock

A summary of long-term investments of variable yield as of December 31, 2010 valued under the cost method is set forth below:

			Valuation month in 2010	Historical Cost	Intrinsic / Market Value	Revaluations (provisions)
STRATEGIC
Sociedad Portuaria de Olefinas	249,992	50	December	$ 333	$ 390	$ 57
Zona Franca de Cartagena S. A.	290	10	November	393	745	352
Sociedad Portuaria del Dique	200	0.5	November	5	5	-
Total strategic				$ 731	$ 1,140	$ 409
NON STRATEGIC
Empresa de Energía de Bogotá	6,310,980	7.35	December	$ 169,421	$ 1,101,266	$ 931,845
Interconexión Eléctrica S.A	58,925,480	5.32	December	69,550	830,850	761,300
Total non-strategic				$ 238,971	$ 1,932,116	$ 1,693,553

F-23

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

A summary of variable yield long-term investments, valued under the equity method, is set forth below:

Equity Share			Valuation month in 2010	Historical cost	Adjusted cost	Equity method effect
Significant Influence
Offshore International Group	250	50	December	$ 404,664	$ 390,479	$ (14,185	)
Invercolsa S. A. (1)	889,410,047	31.76	November	60,282	170,523	110,241
Ecodiesel Colombia S. A.	7,750,000,000	50	November	10,500	11,706	1,206
Serviport S. A.	53,714,116	49	November	2,081	7,182	5,101
Amadine Holding(2)	500	100	March	6,657	6,658	1
Arces Group(2)	10,001	100	March	6,000	3,920	(2,080	)
Total				$ 490,184	$ 590,468	$ 100,284

Restrictions over long-term investments – Variable income:

(1) The 28th Bogota Civil Court issued a decision on February 8, 2007 under which Mr. Fernando Londoño was condemned to return to Ecopetrol the Inversiones de Gases de Colombia S.A. (Invercolsa) shares that he acquired, as well as the amount of dividends he was paid on those shares. This decision was confirmed by the Civil Decision Room of the High Court of Justice (Civil Court), on January 11, 2011, notified through edict dated January 17, 2011. Consequently, this decision has not been entirely finalized and is susceptible to a request for clarification or supplementary information, as well as appealed is for annulment by the defendant.

In addition, the Council of State ruled in favor of Ecopetrol in a popular lawsuit and ordered the return of the shares and its dividends received from these shares to Ecopetrol, a decision which was the object of a writ for constitutional action. Upon review of the popular legal action by the Constitutional Court, the ruling of the State Council was confirmed, except as related to the dividends received by Arrendadora Financiera Bolivariana Internacional S.A. (AFIB), which the same Council had ordered to be returned to Ecopetrol; such dividends are subject to the provisions in the aforementioned civil justice rulings in accordance to which they must be returned entirely to ECOPETROL.

In addition, on September 10, 2009, the Administrative Court of Cundinamarca issued an order requiring the legal representative of Invercolsa to cancel the record of a pledge existing on some shares, in favor of Arrendadora Financiera Bolivariana Internacional S.A. (AFIB), after which such shares should be registered in the name of Ecopetrol. The pledge was cancelled, but the registration of the shares in Ecopetrol’s name is pending, as it was prevented by a seizure warrant and, even though the decision to release such seizure warrant by the 27th Civil Court of the Bogota Circuit currently stands, the Court has not yet notified Invercolsa officially.

(2) As of December 31, of 2010 these companies were undergoing liquidation proceedings.

A summary of the balances of Ecopetrol’s consolidated subsidiaries as of December 31, 2010 is set forth below:

Company	Assets	Liabilities	Equity	Results of the period
Bioenergy S.A.	$ 120,502	$ 19,208	$ 101,294	$ (3,536	)
Black Gold Re Ltd	236,143	12,928	223,215	12,215
Compounding and Masterbatching Industry Ltda – COMAI	110,107	39,527	70,580	43,243
Ecopetrol America Inc	950,578	27,140	923,438	(543,198	)
Ecopetrol Capital AG	254,095	253,890	205	-
Ecopetrol del Perú S. A.	68,031	22,274	45,757	(94,920	)
Ecopetrol Oleo é Gas do Brasil Ltda.	153,490	33,957	119,533	(211,460	)
Ecopetrol Transportation Investments	681,468	18	681,450	(18	)
Hocol Petroleum Limited	2,348,365	712,051	1,636,314	232,762
ODL Finance S. A.	1,854,165	1,414,707	439,458	18,553
Oleoducto Bicentenario de Colombia S.A.S.	271,960	1,105	270,855	(16,615	)
Oleoducto Central S.A.	2,140,871	1,560,321	580,550	277,468
Oleoducto de Colombia S.A.	333,934	55,526	278,408	(6,052	)
Polipropileno del Caribe S.A.	1,062,360	426,305	636,055	65,439
Refineria de Cartagena	4,201,911	1,475,395	2,726,516	(305,187	)

F-24

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

A summary of the balances of Ecopetrol’s consolidated subsidiaries as of December 31, 2009 is set forth below:

Company	Assets	Liabilities	Equity	Results of the period
Bioenergy S.A.	$ 64,928	$ 6,593	$ 58,335	$ (2,476	)
Black Gold Re Ltd	230,652	5,384	225,268	14,705
Compounding and Masterbatching Industry Ltda – COMAI.	76,539	28,516	48,023	27,114
Ecopetrol America Inc	1,249,328	12,880	1,236,448	(318,609	)
Ecopetrol del Perú S.A.	81,228	10,450	70,778	(3,347	)
Ecopetrol Oleo é Gas do Brasil Ltda.	31,340	10,928	20,412	(139,743	)
Hocol Petroleum Limited	1,901,317	608,693	1,292,624	330,590
ODL Finance S.A.	1,381,021	959,245	421,776	12,419
Oleoducto Central	1,773,783	63,824	1,709,959	-
Oleoducto de Colombia	311,550	27,090	284,460	(22,027	)
Polipropileno del Caribe S.A.	983,246	354,652	628,594	47,712
Refinería de Cartagena	3,046,293	572,520	2,473,773	(127,854	)

The economic activity and the net income for companies in which Ecopetrol has investments for 2010 and 2009 are set forth below:

Company	Economic Activity	Net Result 2010		Net Result 2009
Interconexión Eléctrica S. A. (3)	Operation, maintenance, transmission and sale of electrical energy power.	$ 305,496		$ 371,996
Empresa de Energía de Bogotá S. A. E.S.P (1)	Electric power transmission	$ 1,074,394		$ 786,888
Invercolsa S. A. (3)	Investments in energy sector companies including activities inherent to the industry and commerce of hydrocarbons and mining.	$ 87,755		$ 71,903
Serviport S. A. (3)	Provision of support services for loading and unloading of crude oil ships, supply of equipment for the same purpose, load inspections measurements.	$ (1,637	)	$ 941
Ecodiesel Colombia S. A. (3)	Production, sale and distribution of bio-fuels and oleo-chemicals.	$ 2,073		$ 336
Offshore International Group (1) (2)	Exploration, development, production and processing of hydrocarbons	$ 109,283		$ 69,845

(1) Information as of December 2010

(2) Calculated based on the average market exchange rate (TRM) for each month.

(3) Information as of November 2010

The classification of treasury investments depends on the use of the funds, their destination and maturity. Investments whose maturity or realization is shorter than one year are classified as current.

A summary of the non current fixed yield investments as of December 31, 2010 is set forth below:

Maturity	1 - 3 Years	3 - 5 Years	> 5 Years	Total
Bonds and securities of foreign entities	$ 1,968,578	$ 306,888	$ -	$ 2,275,466
Bonds and securities issued by the Colombian Government	473,358	123,532	45,560	642,450
Treasury Securities – TES	485,038	217,793	364,968	1,067,799
Specific destination fund	144,035	11,872	205,699	361,606
	$ 3,071,009	$ 660,085	$ 616,227	$ 4,347,321

F-25

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

A summary of the non current fixed yield investments as of December 31, 2009 is set forth below:

Maturity	1 - 3 Years	3 - 5 Years	> 5 Years	Total
Bonds and securities of foreign entities	$ 1,681,593	$ 101,843	$ 51,343	$ 1,834,779
Bonds and securities issued by the Colombian Government	311,367	290,672	-	602,039
Fund for legal contingencies	61,227	139,009	180,227	380,463
Treasury Securities – TES	36,149	45,905	12,198	94,252
Other investments	21,703	-	-	21,703
	$ 2,112,039	$ 577,429	$ 243,768	$ 2,933,236

1. Accounts and Notes Receivable

	2010
Current portion
Customers
Local	$ 868,238	$	975,743
Foreign	1,282,132		1,202,517
Other debtors	287,594		300,586
Price differential to be received from the Ministry of Mines and Energy (1)	163,386		263,513
Reimbursements and investment yields (2)	3,141		99,798
Doubtful accounts	100,218		62,038
Associations contracts – Joint operations	60,026		85,582
Industrial service customers	26,241		11,965
Accounts receivable from employees	33,171		16,780
Notes receivable	13,845		14,661
Total	2,837,992		3,033,183
Less allowance for doubtful accounts	(101,400	)	(64,063	)
Total current portion	$ 2,736,592	$	2,969,120
Long-term portion
Cavipetrol - Loans to employees (3)	$ 245,824	$	204,647
Credit portfolio (4)	20,156		22,129
Others	106,293		5
Total Long-term portion	$ 372,273	$	226,781

The aging determination and classification of the accounts receivable to customers as of December 31 2010, pursuant to maturity is set forth below:

	Maturity in days — 0 – 180	181 – 360	More than 361*
Current accounts receivable	$ 1,950,537	$ 33	$ -
Past Due accounts receivable	92,043	99,872	7,885
	$ 1,990,684	$ 99,905	$ 7,885
Local customers	866,684	138	1,416
Foreign customers	1,175,896	99,767	6,469
	$ 2,042,580	$ 99,905	$ 7,885

F-26

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The aging determination and classification of the accounts receivable to customers at December 31, 2009, pursuant to maturity is set forth below:

	Maturity in days — 0 – 180	181 – 360	More than 361*
Current accounts receivable	$ 2,037,815	$ -	$ -
Past Due accounts receivable	127,899	5,777	6,769
	$ 2,165,714	$ 5,777	$ 6,769
Local customers	974,241	75	1,427
Foreign customers	1,191,473	5,702	5,342
	$ 2,165,714	$ 5,777	$ 6,769

• Customer receivables included in doubtful accounts.

The changes in the allowance for doubtful accounts are set forth below:

Initial balance	2010 — $ 64,063	$	33,679	$	28,665
Additions (New provisions)	169,789		34,608		3,100
Recoveries	(68,772	)	(779	)	(405	)
Receivables write-off	(60,866	)	-		-
Adjustment to existing allowance	(2,814	)	(3,445	)	2,319
Ending Balance	$ 101,400	$	64,063	$	33,679

(1) Correspond to accounts receivable from the Ministry of Finance and Public Credit for a total amount of $198,490 regarding the calculation of the regular motor gasoline and Diesel price differential pursuant to Resolution 180522 issued on March 29 of 2010. As of December 31, 2009the balance comprises $228,762 corresponding to the opportunity cost and $34,751 corresponding to price differences of the regular motor gasoline and Diesel.

(2) Includes dividends receivable from Interconexión Eléctrica S. A. – ISA for an amount of $2,357 and $2,117 in 2010 and 2009 respectively. In addition, includes $96,669 as a return and yield of investments receivable at December 31, 2009.

(3) By means of Leg contracts 058-80 of 1980 and 4008928 of 2006, the administration, management and control of loans granted to employees by the Company were given to Cavipetrol. In its capacity as administrator, Cavipetrol acts as custodian in its database and financial system of the detail by employee of said loans and their respective conditions.

The future collections of accounts receivable from Cavipetrol, as of December 31, 2010 are as follows:

Year	Amount
2012	$ 26,795
2013	23,338
2014	20,647
2015 and following	175,044
	$ 245,824

There are no other important restrictions to the recovery of accounts and notes receivables’ recovery.

(4) A summary of the long-term recovery credit portfolio for each of the following five years is provided below:

Applicable interest rate	Year 1	Year 2	Year 3	Year 4	Year 5
	Dec-11 to Nov-12	Dec-12 to Nov-13	Dec-13 to Nov-14	Dec-14 to Nov-15	Dec-15 to Nov-16
DTF previous month	$ 57	$ -	$ -	$ -	$ -
CPI + 6	110	70	8	-	-
CPI	37	19	19	19	97
ECP opportunity rate -Bank Average	285	-	-	-	-
DTF + 6 points	10	-	-	-	-
Greater between 6% EA and PCI for semester starting July 2009	6,500	6,500	-	-	-
DTF + 6.25% T.A. percent points in its equivalent to E.A, beginning on March 30, 2011	6,425	-	-	-	-
Total annual recovery	$ 13,424	$ 6,589	$ 27	$ 19	$ 97

F-27

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

DTF: Average of interest rates for fixed term deposits, promulgated by the Superintendency of Finance.

CPI: Consumer Price Index, as indicated by the Colombian Government.

ECP: Ecopetrol

EA: Effective Annual Rate

No other significant restrictions exist for the recovery of accounts and notes receivable.

1. Inventories

	2010
Finished Products:
Crude Oil	$ 772,405	$	763,800
Fuels	491,565		555,359
Petrochemicals	103,007		101,302
Purchased Products:
Fuel	165,067		84,189
Crude oil	91,696		23,212
Petrochemicals	4,081		5,704
Raw Materials:
Crude oil	157,390		74,343
Petrochemicals	21,753		29,045
In-process Products:
Fuels	335,613		316,129
Petrochemicals	10,398		19,458
Materials for the production of goods	53,252		93,298
In transit materials	5,158		21,870
Total	2,211,385		2,087,709
Less allowance for inventories	(19,297	)	(45,012	)
Total	$ 2,192,088	$	2,042,697

Below are the adjustments made to the allowance for inventories for the years ended December 31 2010, 2009 and 2008:

Initial balance	2010 — $ 45,012	$	127,464	$	80,971
Adjustments to allowance, net	(25,715	)	(82,452	)	46,493
Ending balance	$ 19,297	$	45,012	$	127,464

F-28

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

1. Advances and Deposits

	2010	2009
Short-Term
Official entities (1)	$ 1,674,428	$ 2,350,646
Advances to investment projects (2)	1,163,132	-
Partners in joint operations (3)	562,779	474,920
Custom agents	37,824	12,611
Advances to contractors	65,245	27,907
Agreements (4)	18,733	19,364
Advances to employees	968	1,053
Advances to suppliers	97,208	132,278
Total short term	3,620,317	3,018,779
Long-term
Advances and deposits	288,735	253,681
Total	$ 3,909,052	$ 3,272,460

(1) Includes transactions with the National Tax and Customs Administration - DIAN for advance income tax for 2010 in the amount totaling $1,096,649 (2009 - $1,889,555), self-withholdings, and others in the amount of $577,779 (2009 - $461,091).

(2) Advances to investment project for the purchase of BP Exploration Company Colombia Limited for US$637.5 million. The Ecopetrol participation in this transaction was 51% while Talisman participated in 49%.

(3) Joint Operations:

	2010	2009
Contracts in which Ecopetrol is not the operator:
Meta Petroleum Ltd.	$ 287,853	$ 73,450
Chevron Petroleum Company	81,171	76,693
Other operations	22,046	61,253
Occidental de Colombia Inc.	14,721	10,864
Petrobras Colombia Limited	12,507	33,877
BP Exploration Company Colombia	11,204	25,845
Perenco Colombia Limited	13,122	1,262
CEPSA Colombia S. A.	4,337	7,258
Mansarovar Energy Colombia Ltd.	3,753	3,712
Petrobras Internacional Braspetro B.V.	2,321	5,042
Occidental Andina LLC	-	21,386
BHP Billiton Petroleum Colombia	-	5,111
Kappa Resources Colombia Ltd.	-	1,694
Talisman Perú BV, Sucursal del Perú	19,200	-
Anadarko Petroleum Corporation	-	2,495
Petróleo Brasileiro S.A. Petrobras	10	120
Petrobras Energía Perú S.A.	3,815	-
HESS BRASIL	3,142	-
Contracts in which Ecopetrol is the operator:
Oleoducto Caño Limón	47,429	55,931
Other operations	15,951	24,992
JOA Caño Sur	14,816	6,135
La Cira	5,381	51,415
Shared risk Catleya	-	706
Tibú	-	4,120
CRC 2004 – 01	-	1,559
Total	$ 562,779	$ 474,920

(1) Represents the amounts delivered to personnel as advances under the personnel educational plan.

F-29

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

1. Prepaid Expenses

	2010	2009
Insurance (1)	$ 16,514	$ 20,199
Others (2)	5,434	42,616
Total	$ 21,947	$ 62,815

(1) Out of the insurance policies contracted, $11,614 correspond to Ecopetrol S.A and are effective until April 2011, comprising: i) operating, with a cost of $44,258 and amortization for $33,793 as of December 31, 2010, and ii) administrative expense for $5,061 and amortization of $3,912 at the same date.

(2) Includes mainly $2,490 of Hocol as an advance payment related to connection and access of the regional transmission facilities to EMSA, in Puerto Gaitán; $881 as resources for acquisition and maintenance of the vehicles assigned to top officers of Ecopetrol through a leasing handled pursuant to Contract No. 5201716 by Cavipetrol.

1. Property, Plant And Equipment, Net

Plant and equipment	2010 — $ 15,916,349	$	13,438,144
Construction in progress (1)	6,955,251		6,487,411
Agricultural plantations	16,145		-
Pipelines, networks and lines	15,388,663		13,171,399
Buildings	3,362,595		2,184,484
Equipment on deposit and in transit	1,240,606		1,221,822
Computer equipment	343,633		313,891
Transportation equipment and other fixed assets	1,556,915		389,728
Operating materials	63,896		-
Lands	354,601		302,420
Total	45,198,654		37,509,299
Accumulated depreciation	(21,868,192	)	(20,226,621	)
Provision for devaluation of property, plant and equipment (2)	(1,064,204	)	(500,175	)
Total	$ 22,266,258	$	16,782,503

(1) The representative amounts correspond to projects of Ecopetrol S.A such as the Castilla development; drilling projects of the Apiay and Yarigui wells – Direct Operation; drilling projects in the Rubiales field – Joint Operation; construction of the Chichimene Station; construction of the Pozos Colorados-Galan system, and the heavy crude oil transportation infrastructure. In the year 2010 costs were capitalized for $4,380,042, and the project for modernization of Cartagena Refinery for $1,995,138.

Interest derived from payments of the syndicated loan and payable bonds destined for investment projects, net of financial revenues generated by the portion of pending disbursements, adding up to $179,156 and $194,787, respectively, were capitalized during 2010; Ocensa S.A capitalized $19,646.

(2) The provision for devaluation of property, plant and equipment is made up mainly by $890,607 of Ecopetrol S.A and $168,829 of the Cartagena Refinery, as the result of the appraisal performed on fixed assets.

Below is the activity of the allowance for property, plant and equipment in each of the years ended December 31, 2010, 2009 and 2008:

Initial balance	2010 — $ 500,175	$	1,093,458	$	105,118
Additions (new provisions)	222,435		144,431		1,013,116
Provision from business combination	-		-		770
Adjustment of existing provisions	(171	)	(714,605	)	(6,733	)
Reversal of prior years provision	(7,089	)	-		-
Recoveries	(54,816	)	(23,109	)	(18,813	)
Devaluation of assets before 2006	403,670		-		-
Ending balance	$ 1,064,204	$	500,175	$	1,093,458

F-30

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Summary of property, plant and equipment at December 31, 2010 is set forth below:

Type of asset	Adjusted cost	Accumulated depreciation	Revaluations	Allowances
Plant and equipment	$ 15,916,349	$ 9,774,126	$ 4,308,464	$ (408,265	)
Pipelines, networks and lines	15,388,663	9,946,601	1,234,652	(353,284	)
Construction in progress	6,955,251	-	-	-
Agricultural Plantations	16,145
Buildings	3,362,595	1,277,854	1,544,947	(122,037	)
Equipment on deposit and in transit	1,240,606	-	-	-
Computer equipment	343,633	252,714	39,448	(13,357	)
Transportation equipment and other fixed assets	1,556,915	616,897	414,596	(165,542	)
Operating materials	63,895			(1,574	)
Land	354,601	-	1,833,015	(145	)
Total	$ 45,198,653	$ 21,868,192	$ 9,375,123	$ (1,064,204	)

Summary of property, plant and equipment as of December 31, 2009:

Type of asset	Adjusted cost	Accumulated depreciation	Revaluations	Allowances
Plants and equipment	$ 13,438,144	$ 9,410,022	$ 3,506,575	$ (347,839	)
Pipelines, networks and lines	13,171,399	9,373,243	787,908	(71,262	)
Construction in progress	6,487,411	-	-	-
Buildings	2,184,484	966,755	777,504	(67,442	)
Equipment on deposit and in transit	1,221,822	-	-	-
Computer equipment	313,892	239,540	30,425	(5,636	)
Transportation equipment and other fixed assets	389,727	237,061	96,802	(7,996	)
Land	302,420	-	162,760	-
Total	$ 37,509,299	$ 20,226,621	$ 5,361,974	$ (500,175	)

There are no restrictions, pledges or bonds over these assets.

1. Natural and Environmental Resources, Net

Amortizable crude oil investments	2010 — $ 20,245,470	$	16,574,494
Less: Accumulated amortization	(10,574,904	)	(8,756,267	)
	9,670,566		7,818,227
Plugging and abandonment, dismantling of facilities and environmental recovery costs	3,074,552		2,942,370
Less: Accumulated amortization	(1,443,451	)	(1,247,047	)
	1,631,101		1,695,323
Reservoirs and appraisals (1)	701,590		701,590
Less: Accumulated depletion	(612,310	)	(598,330	)
	89,280		103,260
Exploration in progress	383,592		1,538,571
Total (2)	$ 11,774,539	$	11,155,381

(1) These reserves were received from the reversals of concession contracts for $520,218 currently administered by Gerencia Sur and $181,372 by Magdalena Medio respectively.

(2) The variance is affected by the developed reserves updated as of 2010 by recalculating the amortization of oil investments and abandonment costs, particularly in Rubiales, Cusiana, Guatiquía, Castilla, Petrólea and Pauto.

F-31

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

1. Deferred Charges

	2010	2009
Deferred income tax	$ 1,492,942	$ 1,408,659
Other deferred charges, net (1)	497,826	419,342
Charges of deferred monetary correction, net	49,372	58,528
	$ 2,040,140	$ 1,886,529

(1) Includes the investments made in execution of the Business Cooperation Contract entered into by Ecopetrol and Schlumberger, the purpose of which is to obtain incremental production in the Casabe field; such investments are amortized based on the field's technical production units.

1. Other Assets

	2010	2009
Goodwill (1)	$ 2,508,402	$ 2,507,552
Deposits held in trust	294,899	258,745
Intangibles: Trademarks, licenses, patents, software	129,610	96,027
Trust funds (2)	80,490	83,342
National Royalties Fund (3)	79,653	76,185
Other assets (4)	58,552	12,847
	$ 3,151,606	$ 3,034,698

(1) Goodwill corresponds to Ecopetrol S.A. and is comprised by:

i) $582,280 (2009 - $621,099) to the net amount between goodwill paid and the monthly amortization as of December 31, 2010 of $103,335 (2009 - $64,516), relating to the acquisition of Andean Chemicals Ltd and Polipropileno del Caribe S. A., with an estimated amortization term of 17 years and 8 months determined based on the net present value of the investment reduced by the amount of the estimated future cash flows from the time of acquisition.

ii) $711,667 (2009 - $773,492) to the purchase of Offshore International Group, which is subject to the adjustments that may arise to the purchase price, with an estimated term for amortization of 14 years, determined based of the valuation of the reserves in block Z2B, the only block from the time of acquisition.

At December 31, 2010, the amount payable for $284,583 (equivalent to US$148.7 million) estimated for the contractually established adjustments in the purchase price based on the WTI crude oil average price, recognized as the greater value of the goodwill.

Amortization accumulated as of December 31, 2010, amounts to $76,376 (2009 - $48,502).

As a result of the commercial credit analysis conducted by Offshore International Group Inc. as of December 31, 2010, Ecopetrol recorded, with charge to results, $287.7 billion as goodwill impairment.

iii) $471,449 (2009 - $507,255) generated as a result of the purchase of IPL Enterprises (now Ecopetrol Transportation Company) with an estimated term for amortization of 15 years determined based on Ocensa’s outstanding contractual agreements as of the date of the negotiation. The cumulative amortization as of December 31, 2010 amounts to $65,645 (2009 - $29,839).

iv) $743,006 (2009 - $605,706) corresponding to the acquisition of Hocol Petroleum Limited with an estimated term for amortization of 16 years determined based on the net present value of the estimated future cash flows from the time of acquisition

As of December 31, 2010, the contractually established adjustments in the purchase price based on the WTI crude oil average price and on the exploratory results of the Huron well, for $176,590, were recognized as the greater value of the goodwill.

The amortization accumulated as of December 31, 2010 amounts to $62,039 (2009 - $22,750)

(2) Includes (i) Contributions and share in amount of $66,853 into the National Hydrocarbons Fund created to support future hydrocarbon investment, exploration and production contracts in minor fields, projects managed by the private equity fund of Hydrocarbons of Colombia, (ii) Contributions of $4,099 to the Procuraduria Fund created for general benefit projects in municipalities near the Cicuco field under the Company’s direct operation: Cicuco, Mompox and Talaigua Nueva (the objective of the fund is to disburse the amounts according to each project development, which will be carried out by the municipalities through agreements with Incoder and the Ministry of Environment) and (iii) Contributions of $9,538 to the Colpet, Condor and Sagoc Fund for possible contingencies in the liquidation of these former subsidiaries.

F-32

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

(3) Corresponds to the FAEP deposits to the National Royalties Fund in favor of Ecopetrol. Its sole purpose is the payment of debts and financing for development projects and programs in hydrocarbon producing and non-producing municipalities and departments. Ecopetrol disburses amounts after the Ministry of Finance issues the corresponding approvals.

(4) Includes restricted funds in amount of $37,304 (2009 - $11,815) mainly represented by legal deposits destined to attend labor, civil and tax claims.

1. Financial Obligations

Financial obligations at December 31, 2010 are composed of:

	2010	2009
Short-term
Foreign currency debt	$ 226,726	$ 101,968
Issued bonds	133,285	-
Local currency debt (1)	719,158	335,113
Total Short-term	1,079,169	437,081
Long-term
Local currency debt (1)	3,962,745	2,648,009
Issued bonds (3)	1,000,000	3,052,500
Foreign currency debt(2)	2,870,970	13,845
Total Long-term	7,833,715	5,714,354
Total	$ 8,912,884	$ 6,151,435

(1) Includes mainly the syndicated loan with eleven local banks for an initial amount of $2,220,200, destined to finance investment programs of Ecopetrol S. A. The conditions applicable to this loan are the following:

Term: 7 years, including a 2 year grace period.

Payment of interest: Starting November 2009

Rate: DTF + 4% (anticipated quarterly rate)

Amortization: Every six months

Guarantee: Ecopetrol granted a closed security over the stock shares owned either directly or indirectly on the following companies, thus reaching a 120% coverage of the credit amount. The value of the stock shares for each entity is as follows:

Company	Amount
Oleoducto Central S.A.	$ 1,110,035
Refinería de Cartagena S.A.	1,274,796
Polipropileno del Caribe S.A.	279,409
Total	$ 2,664,240

The only debt covenant, which requires that the book value of the stock shares be greater than $2,220,200, was met.

(2) On July 23, 2009, the Company issued pursuant to Rule 144A/Regulation S US$ 1.5 billion, of 7.625% unsecured and unsubordinated notes, due in 2019 with registration rights. The notes were later registered and listed on the New York Stock Exchange with the Securities and Exchange Commission of the United States.

The terms of the notes are follows:

Coupon interest rate: 7.625%

Make whole on optional redemption: 50 basis point over equivalent U.S. Treasury Securities. Interest payment dates: July 23 and January 23 of each year, starting January 23, 2010. Maturity date: July 23, 2019

Denomination: US$1,000 / US$1,000

F-33

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Likewise, the company is obliged to comply will covenants among which are the due and timely payment of principal and interests; the restriction on the creation of collateral guaranties by part of Ecopetrol and its subsidiaries with the exception of certain collateral guaranties duly authorized, and the obligation for presenting a purchase offer for the bonds in the event of a repurchase situation due to change of control, pursuant to the definitions of the issue documents.

(3) Through Resolution No. 3150 of October 20, 2010, Ecopetrol S. A. was authorized by the Ministry of Finance and Public Credit to issue, subscribe and place internal government debt bonds for up to one billion pesos, aimed at financing the Investment Plan of Ecopetrol in 2010. Subsequently, through Resolution No. 2176 of November 11, 2010, the Company obtained authorization from the Superintendency of Finance to register its internal government debt bonds with the National Register of Securities and Issuing Agencies and to place its public offering.

Results of the issuing and placing of internal government debt bonds:

Placed sum : 1 billion pesos

Amortization: upon maturity

Date of issue: December 1, 2010

Series A: Bonds in pesos with a CPI-based variable rate

Redemption Term	5 years	7 years	10 years	30 years
Rate	IPC + 2.80 %	IPC + 3.30 %	IPC + 3.94 %	IPC + 4.90 %
Sum (millions)	$ 97,100	$ 138,700	$ 479,900	$ 284,300

1. Accounts Payable and Transactions with Related Parties

Short-term	2010	2009
Suppliers	$ 1,762,461	$ 1,207,724
Advances from Partners	713,405	555,620
Purchase of hydrocarbons from the Agencia Nacional de Hidrocarburos-ANH	554,381	441,533
Deposits received from third parties	521,781	817,937
Other payables	442,115	109,952
Reimbursement of exploratory costs	65,028	141,775
Dividends payable (1)	3,431	3,510
Insurance and reinsurance payable	-	2,181
Total Short-term	$ 4,062,602	$ 3,280,232
Long-term
Other payable (2)	504,046	51,154
Total Long-term	$ 504,046	$ 51,154

(1) Corresponds to dividends payable to shareholders whose installment payment for the purchase of their stock are in arrears and whose economic and political rights have been suspended, pursuant to Article 397 of the Commercial Code, and will be restored once the installment payments are brought up to date.

(2) Corresponds to Fiduciary Duty for ODL Finance in order to complete the funds required to leverage expansion projects.

1. Taxes Payable

	2010	2009
Income tax and other taxes	$ 3,175,500	$ 1,940,756
Income and VAT withholdings	197,294	194,217
Special tax and surcharge on gasoline (1)	110,128	124,667
Sales tax payable	47,418	49,675
Industry and commerce and other minor taxes	58,923	123,707
Total	$ 3,589,263	$ 2,433,022

(1) This tax is levied on sales and/or consumption of regular and premium gasoline and diesel. The funds collected for this tax are paid to the National Treasury Office of the Ministry of Finance and/or regional entities. The special tax is paid on the basis of the percentage participation of each beneficiary in the national monthly consumption of regular and premium gasoline.

F-34

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Income tax provision

Current income tax	2010 — $ 3,201,041	$	1,948,819	$	3,611,020
Deferred tax:
Asset	(100,899	)	(69,230	)	494,757
Liability	138,508		234,440		276,205
	$ 37,609	$	165,210	$	770,962
	$ 3,238,650	$	2,114,029	$	4,381,982

The deferred tax asset arises mainly from timing differences between the accounting balances and the amounts accepted for tax purposes. The deferred tax asset is calculated based on the value of accounting provisions not accepted for tax purposes which are deductible at the time of their utilization, and the value of asset inflation adjustments originated from 2004 to 2006. The deferred tax liability results from the differences in the policy for amortization of crude oil investments which for accounting purposes are amortized by technical units of production whereas for tax purposes are amortized through the straight-line method; from the difference in the method of valuation of fixed income investment, which for accounting purposes are valued at the market price, while for tax purposes are valued by the straight-line method; and from the difference in the amortized value of the goodwill that for tax purposes was accelerated in 2010.

Income tax returns may be reviewed by the tax authorities within two years of their filing date. At this date, the terms of filings for the years 2008 and 2009 are open for review.

Currently, differences exist with the National Tax and Customs Administration (DIAN) regarding the calculation and payment method of the first installment of the 2004 income tax returns because in the opinion of the DIAN the surtax of such years should have been included in the base. The result of this proceeding will not affect the Company’s cash flow since the amounts under discussion have been directly compensated by the DIAN by positively adjusting the Company’s balances with adjustments the Company had previously requested in unrelated cases.

The balance of the deferred tax asset and liability is as follows:

	2010	2009
Deferred tax asset:
Initial balance	$ 1,408,659	$ 1,285,648
Additions (*)	88,417	69,230
Incorporated subsidiaries balance	-	53,781
Final balance	$ 1,497,076	$ 1,408,659
Deferred tax liability:
Initial balance	$ 1,194,848	$ 944,816
Additions (*)	138,508	234,438
Incorporated subsidiaries balance	-	15,594
Final balance	$ 1,333,356	$ 1,194,848

(*) The difference between the increase noted for 2010 for deferred tax assets and the value recorded in the income statement as deferred tax expense (income), is due to a correction recorded by Ecopetrol del Peru for an error detected in the previous year income tax adjustments.

The reconciliation between the accounting income and the net taxable income which is the basis for the income tax is shown below for illustrative purposes since Colombian regulations do not either require or allow filing an income tax return on a consolidated basis:

F-35

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Income before income taxes	2010 — $ 11,492,617	$	7,250,844	$	16,011,204
Monetary correction gain	(1,921	)	(3,471	)	25,300
Effect of tax inflation adjustment	(99,527	)	108,615		(87,788	)
Non deductible costs and expenses	2,184,555		1,256,081		813,248
Special deductions and deductible tax expenses	(3,796,230	)	(3,291,472	)	(2,837,230	)
Other taxable income	158,949		182,199		1,085,307
Income not constituting income or capital gains	(160,600	)	(126,460	)	(907,847	)
Non taxable income	(1,037,204	)	(727,029	)	(1,185,857	)
Non deductible provisions	681,644		574,403		243,623
Income pension trusts	(96,695	)	-		-
Non taxable trust funds yields	1,001,082		(250,265	)	(890,538	)
Net exempt income	(199,949	)	(29,540	)	(1,372,083	)
Excess of presumptive over ordinary income	65,578		403,226		-
Net effect of consolidation of taxable income	(814,687	)	(443,949	)	75,269
Net taxable income	$ 9,377,612	$	4,932,722	$	10,972,608
Net current income tax	$ 3,201,041	$	1,948,819	$	3,611,020

The 2010 effective consolidated tax rate was 28.2% (2009 – 29.2%). The difference between net taxable income and accounting income is mostly affected by the benefit from special deductions on investment in real productive fixed assets, which is equivalent to 30% of the actual investment made during the fiscal year (40% up to 2009). It is important to clarify that if such assets are transferred or no longer used in the income producing activity prior to the maturity of their use lives, it shall be mandatory for the Company to reimburse the proportional value of the deduction requested in the income tax return, in the respective year of occurrence of such event.

As of 2004, income tax payers performing transactions with foreign related or associated parties and / or residents in countries considered tax havens, shall be obliged, for income tax purposes, to determine their ordinary and extraordinary revenues, their costs and deductions, and their assets and liabilities considering for these transactions the market prices and profit margins.

Based on the opinion of the external advisors of the Company, no significant changes are foreseen for taxable year 2010 regarding compliance with the full free competition principle stated in Article 260-1 of the Tax Statute, neither adjustments are expected for the determination of the Company's income tax expense in such year.

1. Labor Obligations

	2010	2009
Short-term
Vacations	$ 63,217	$ 47,061
Bonuses and allowances(1)	26,487	57,022
Severance	39,828	42,598
Salaries and pensions payable	24,712	13,078
Interest on severance	3,884	3,347
Others	2,119	2,357
Total short-term	160,247	165,463
Long-term
Health and education actuarial liabilities (2)	2,729,318	2,583,117
Retirement pensions joint operations	76,725	77,826
Others	7,978	8,388
Total Long-term	2,814,021	2,669,331
Total	$ 2,974,268	$ 2,834,794

(1) The reduction effect in some fringe benefits is derived from payment of the termination benefits to 685 active employees who retired in 2010, using the $4.5 billion retirement bonus provision. The 2009 balance included a $30 billion provision for payment of the variable compensation bonus to employees in 2010. At December 31, 2010, this provision was not recorded, as the targets to obtain the benefit were not met.

F-36

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

(2) The health and education actuarial calculations were based on the new Mortality Tables replaced in 2010. As a result of the change in the amortization accounting principle, the increase in the health actuarial obligation calculation amounted to $806,807, which will be amortized over 5 years as of 2010. Up to 2009, the annual increase was recorded as period expense as the actuarial calculation was 100% amortized. The education actuarial liability is 100% amortized and its reduction in 2010 was recorded as income for the period.

The amortized health actuarial liability is indicated below:

Item — Health obligation actuarial calculation	2010 — $ 2,884,559	$	2,077,752
Less – Actuarial calculation pending amortization	(645,445	)	-
Amortized actuarial liabilities	$ 2,239,114	$	2,077,752

The health and education actuarial calculations were prepared using a 4.8% technical interest rate. The variations in the amortized actuarial liability are described below:

	2010	2009	Variation
Health
Active personnel	$ 302,553	$ 287,909	$ 14,644
Pensioned retirees	1,936,560	1,789,843	146,717
Education
Active personnel	104,606	104,951	(345	)
Pensioned retirees	385,599	400,414	(14,815	)
Totals	$ 2,729,318	$ 2,583,117	$ 146,201

A summary of personnel covered by the actuarial calculation for 2010 and 2009 is set below:

	Headcount — 2010	2009
Health care and education reserve (active and pensioned retirees)	$ 18,337	$ 17,901

1. Estimated Liabilities and Provisions

	2010	2009
Short-term
Provision for legal proceedings (1) (See Note 30)	$ 663,932	$ 680,022
Other provisions	206,179	192,631
Provision for pension obligations (2)	102,478	180,797
Provisions for contingencies (3)	39,602	96,859
Provision for abandonment costs (4)	139,106	4,106
Short-term Total	$ 1,151,297	$ 1,154,415
Long- term
Provision for abandonment, dismantling of facilities and environmental recovery costs (4)	2,995,281	3,013,097
Provision for royalties (5)	391,021	380,933
Other provisions	12,301	17,947
Long-term Total	3,398,603	3,411,977
Total	$ 4,549,900	$ 4,566,392

(1) The movement of the provisions for legal proceedings is the following during the years 2009 and 2010 :

Initial balance as of December 2008	603	$	547,942
Additions (new provision)	252		36,714
Adjustments to existing provisions	(135	)	122,691
Recoveries	(29	)	(27,325	)
Initial balance as of December 2009	691		680,022
Additions (new provisions)	235		63,020
Adjustments to existing provisions	-		19,320
Reincorporation for transfer of processes	76		43,548
Finished processes	(141	)	(80,237	)
Transfer of processes	(39	)	(61,741	)
Ending balance as of December 2010	822	$	663,932

F-37

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

(2) Corresponds to the estimated pending pension contributions of employees who joined Ecopetrol after January 29, 2003 (Law 797 of 2003) and until the first quarter of 2004, who were covered by the General Pension Regulations. In addition the provision for the contingency of losing legal actions for the protection of labor related rights.

(3) It is comprised by $22,973 for probable payment claims from PDVSA for the cleaning and decontamination tasks at Maracaibo lake in Venezuela ; $14,850, related to spillages with environmental impact; $500 related to the retirement bonus for Hocol S.A. personnel, still in process; $560 related to the success commission payable to the attorney in law attending the suit filed by Industrias Crizasa against Ecopetrol S. A., and $719 related to potential liabilities in arbitration decisions.

(4) The Production Vice-Presidency of Ecopetrol carried out the update to June 2010 of the estimated costs of abandonment, dismantling of facilities and environmental recovery. Variation in regard to December 2009 for $160,454 includes the effect from foreign currency exchange in the amount of $818; and the use of liabilities related to the abandonment of wells in the amount of $32,131. Within these, the most representative fields are: Casabe $9,966; Tibú $5,944, Lisama $3,525 and Cusiana $3,237.

Below are the movements of the provisions for the abandonment cost, facility dismantling, and environmental recovery costs; the balance is shared by Ecopetrol S.A $3,068 billion, Hocol $52 billion, and Ecopetrol America Inc. $14 billion for the years 2010, 2009 and 2008:

Initial Balance	2010 — $ 3,017,203	$	1,964,756	$	1,528,374
Retirements and other	(27,414	)	(21,964	)	(2,853	)
Additions	282,229		1,188,670		54,418
Changes in estimation	-		80,243		208,131
Transfer to short term	(136,151	)	-		-
Exchange rate effect	(1,480	)	(194,502	)	176,686
Final Balance	$ 3,134,387	$	3,017,203	$	1,964,756

• For 2010, the policy for recording liabilities related to abandonment costs, which was made in dollars, was changed to recognition in Colombian pesos, since most of the scheduled payments (above 70%) are in pesos. Had the dollar recording process continued, the “estimated” effect of the exchange difference for 2010 would have been a reduction of $186.9 billion (representing 6%, of total estimated liabilities) and $27 billion in results as an effect of less amortization, which represents 14.5% of total amortized abandonment costs and 0.3% of net income.

(5) Includes the provision to cover the claim from the Community of Santiago de las Atalayas and Pueblo Viejo of Cusiana, originated in Royalties Contracts N. 15, 15ª and 16 and 16ª executed with Ecopetrol, but declared null and void by the Council of State. From said amount, $90,752 corresponds to the amount initially recognized by Ecopetrol, together with the valuation of the fund where the amounts are invested and $300,269 of interest generated. The ruling on the extraordinary appeal presented by the Community is pending.

1. Other Long-Term Liabilities

	2010	2009
Deferred income tax liability	$ 1,333,356	$ 1,194,848
Advances received from Ecogas for BOMT obligations	799,950	996,787
Credit for deferred monetary correction	169,048	200,230
Other liabilities (1)	59,907	339,355
Total	$ 2,362,261	$ 2,731,220

(1) Includes $42,118 from Hocol for remittance tax.

F-38

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

1. Non-Controlling Interest

Oleoducto Central S.A.	2010 — $ 232,244	$	684,054	40
ODL Finance S.A.	153,810		147,621	35
Oleoducto de Colombia	95,856		97,940	34.43
Bioenergy S.A.	11,550		11,696	11.4
Oleoducto Bicentenario S.A.S	(7,509	)	-	44
Total	$ 485,951	$	941,311

1. Equity

Authorized capital	2010 — $ 15,000,000	$	15,000,000
Capital to be subscribed	(4,881,872	)	(4,881,872	)
Subscribed Capital	10,118,128		10,118,128
Subscribed capital pending payment	-		(337	)
Subscribed and paid-in capital	10,118,128		10,117,791
Additional paid-in capital	4,721,700		4,721,457
Additional paid-in capital receivable	(1,192	)	(1,137	)
Additional paid-in capital	4,720,508		4,720,320
Surplus from revaluations	11,068,676		6,391,417
Devaluation of assets	(701,694	)	(298,024	)
Responsibilities from pending rulings	(781	)	(781	)
Effects of RCP application	(702,475	)	(298,805	)
Net income	8,146,471		5,132,054
Legal reserve	4,117,020		3,591,397
Appropriation for investment programs	2,615,718		1,568,107
Accounting clearance	17,804		17,804
Surplus from equity method	1,377,240		1,287,118
Incorporated institutional equity	139,548		137,725
Foreign exchange conversion adjustment	(290,457	)	(94,971	)
Total equity	$ 41,328,181	$	32,569,957

Subscribed and Paid-in-Capital

The authorized capital of Ecopetrol is $15,000,000 divided into 60,000,000,000 common shares, with $250 par value each, of which 40,472,512,588 shares have been subscribed, represented by 10.1% held by private shareholders and 89.9% held in Colombia. The value of shares under reserve amounts to $4,881,872, represented by 19,527,487,412 common shares.

Additional paid-in capital

Additional paid-in capital corresponds to (i) the excess over par value in the sale of shares during the 2007 initial public offering for $4,700,882 and (ii) to the value resulting in the new shares offering for the secondary market equal to $20,817 which resulted from foreclosing of guarantees of delinquent debtors pursuant to Article 397 of the Commerce Code.

Effects of RCP application

Corresponds to the transfer of negative balances originated from the devaluation of property, plant and equipment required by RCP since 2008.

This line-item also includes responsibilities from pending rulings related to inventory losses, as required by RCP.

F-39

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Legal Reserve

The legal reserve is set up with 10% of net income and it may be used to absorb losses or to be distributed at the liquidation of the Company.

The Company’s 2009 financial results were available at the General Shareholders’ Meeting which took place on March 25, 2010. The Company’s Shareholders decided to increase the legal reserve by $525,624 to $4,117,020.

The reserves also include $609,334 in occasional reserves for new explorations and $438,276 in reserves for profits not realized from Ecopetrol’s subsidiaries.

Incorporated Institutional Equity

Incorporated Institutional Equity corresponds primarily to the commerciality of Nare, Matambo, Garcero, Corocora, Estero, Caracara, for the Sardinas 6, Remache Norte 3, Abejas 3, Jaguar T5 and T6, Orocué, Guarilaque 7 wells, Campo Rico for the Candalay, Jordan 5, Remache Norte 2 and 5, Abejas 2 and Vigia Wells, and the incorporation of the Cocorná material warehouse.

1. Memorandum Accounts

	2010	2009
Debtor / Rights
Exploitation Rights - Decree 727 of 2007 (1)	$ 72,619,793	$ 46,503,863
Other contingent rights and debtor accounts (2)	15,562,589	11,480,671
Costs and expenses (deductible and non-deductible)	14,027,907	14,736,354
Pension Trust funds (3)	11,202,556	10,971,723
Securities given in custody and guarantee	4,290,149	3,045,181
Execution of investment projects	751,827	780,040
Legal proceedings	584,774	441,675
Total	119,039,595	87,959,507
Creditor / Obligations
Legal proceedings	32,228,241	2,283,219
Goods received in custody (4)	17,981,352	7,949,960
Contractual guarantees (5)	14,864,210	12,420,129
Pension trust funds	10,861,969	10,899,026
Non-tax liabilities	6,817,853	5,205,671
Other contingent obligations (6)	7,096,874	3,403,368
Potential obligation – pension liabilities (7)	1,603,998	-
Non-taxable income	1,555,073	5,826,947
Mandate contracts (8)	1,433,804	1,460,073
Assets and rights received in guarantee (9)	1,220,162	-
Administration Funds - Dec 1939 of 2001 and 2652 of 2002	964,872	972,641
Future BOMT payments	352,615	504,288
Total	96,981,023	50,925,322
	$ 216,020,618	$ 138,884,829

(1) This value corresponds to Ecopetrol´s exploration and production rights, recognized in accordance with Decree 727 of 2007, valued as of December 31, 2010 and 2009 based on the volumes of the audited reserves study and applying the average price determined in accordance with the SEC methodology.

(2) Balance of the tax memorandum accounts groups the differences between the values of both equity and results accounts taken from the tax return for 2009 and the accounting balances. Differences correspond to concepts such as revaluations and provisions not accepted by tax regulations, the difference in the method for amortization of crude oil investments which for accounting purposes is made by production units and for tax purposes by the straight-line method, and the effect of the generated inflation adjustment, among others.

(3) Reflects the contingent right (debt account) for resources allocated to the Pension Autonomous Equity, for payment of the commuted pension liability, in order to control the existence of liquid resources in the autonomous equity. The commuted value (transferred) as of December 31, 2010, amounts to $11,202,556 (on commuting date at December 31, 2008 - $10,092,528), corresponds to the pension liability by pension monthly payments, parties installments and pension bonuses; health and education related items are within the pension liability of Ecopetrol. The destination of commuted resources, as well as their yield, cannot be changed, nor returned to the Company before complying in full with all pension liabilities.

F-40

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

A detail of the trust funds is set forth below:

	2010	2009
Consorcio Fiducafé - Fiduprevisora - Fidupetrol	$ 2,349,054	$ 2,299,552
Consorcio Fiducolombia - Santander Investment	2,206,364	1,622,860
Consorcio Fidupopular - Fiduoccidente	2,061,664	2,032,621
Consorcio BBVA - Fidubogotá - Corficolombiana	1,929,035	1,331,711
Consorcio Fidubogotá - Fiducolpatria	1,328,292	2,378,039
Consorcio Fiduagraria - Fiducoldex - Helm Trust	1,328,147	1,306,940
Total	$ 11,202,556	$ 10,971,723

(4) Comprises royalties corresponding to the balance of Ecopetrol reserves of $17,912 billion, calculated at SEC prices. In addition, the balance is represented by the inventory of products sold, the delivery of which is pending, in the amount of $68.3 billion, and inventory of materials on consignment for own consumption at the various plants, in the amount of $293.

On March 7, 2007, Decree 727 to replace Decree 2625 of 2000 was issued, which includes regulations related to the valuation of reserves and the posting of State owned hydrocarbon reserves in the Financial Statements of the Company. Furthermore, the decree stipulates the posting of hydrocarbon exploration or production rights owned. This is posted under Memorandum Accounts pursuant to the opinion given by the CGN; nonetheless, the Memorandum Accounts are not part of the Company’s Balance Sheet.

(5) Comprises contracts ending execution and entered into in pesos, dollars and Euros, updated to the market representative rate as of December 31, 2010 for $14,223,368; stand-by letters of credit, which guarantee the contracts subscribed to by Ecopetrol in the amount of $433,469, and documentary letters for $203,890.

(6) Includes mainly the closed pledge for $2,664,240 on the shares owned by Ecopetrol S.A., directly or indirectly, in Oleoducto Central, Refinería de Cartagena S. A. and Polipropileno del Caribe S. A., guaranteeing 120% of the amount of the syndicated loan granted by the local banks. (See Note 14).

(7) Comprises the actuarial calculation value of monthly pension payments, pension quotas, parts and bonuses as of December 31, 2009, plus the amortized portion of the increase in the 2010 actuarial calculation. As a result of the change in the amortization accounting principle under Colombian GAAP in 2010, the $2,004 billion increase of the actuarial calculation will be amortized over 5 years as of 2010.

The balance of the amortized actuarial liability is comprised as follows:

Item — Actuarial calculation of monthly pension payments and bonuses	2010 — $ 12,465,967	$	10,899,026
Less – Actuarial calculation pending amortization	(1,603,998	)	-
Amortized actuarial liabilities	$ 10,861,969	$	10,899,026

The balance of pension autonomous equity funds as of December 31, 2010 exceeds the total amortized actuarial calculation as of December 31, 2010 by $340,587. Therefore, the Company did not record costs for monthly pension payments and bonuses, neither was it necessary to make additional fund transfers during 2010.

The balance of pension autonomous equity, the value of the actuarial calculation and the amortized value of pension liability by monthly payment is included in memorandum accounts.

The actuarial calculation was prepared using a 4% technical interest rate. The growth of salaries, pensions in cash and pensions in kind was calculated using the inflation average rate calculated by DANE, the National Statistics Administrative Department, during the three-year period preceding the year of calculation.

Breakdown of personnel covered in the actuarial calculation updated as of December 31, 2010:

Item
Bonus reserve – retired personnel	9,845
Bonus reserve – personnel to be retired after 2010	2,967
Pension reserve (active and retirees)	13,357

F-41

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

(1) Includes the value of assets received in custody from Refinería de Cartagena S. A., to fulfill obligations acquired by virtue of the mandate agreement subscribed to between the Company and this corporation for the operation of the refinery.

(2) Corresponds to the guarantees given by BP Exploration Company resulting from the purchase transaction with this company in August 2010 for US$ 637.5 million.

1. Revenue

	2010	2009	2008
Local sales
Medium distillates	$ 7,099,176	$ 5,738,586	$ 5,914,627
Gasoline	4,302,282	4,374,781	3,644,345
Services	1,947,829	1,113,075	921,652
Other products	1,763,927	833,067	1,367,766
Natural gas	1,159,245	1,000,517	901,414
LPG and propane	627,361	469,551	612,771
Asphalts	326,737	314,230	390,544
Crude Oils	117,186	18,194	4,774,401
	17,343,743	13,862,001	18,527,520
Recognition of price differential (1)	740,682	196,533	3,070,479
	18,084,425	14,058,534	21,597,999
Foreign sales
Crude oil	18,073,357	11,815,512	8,696,282
Fuel Oil	2,377,266	2,325,507	2,093,012
Diesel	1,638,044	551,263	246,158
Other products	831,129	642,877	747,650
Gasoline	698,068	687,206	186,197
Natural gas	146,063	311,734	313,348
Propylene	109,271	-	-
	23,873,198	16,334,099	12,282,647
Premium income, net	10,688	11,757	16,023
	23,883,886	16,345,856	12,298,670
	$ 41,968,311	$ 30,404,390	$ 33,896,669

(1) Corresponds to Decree 4839 applied beginning in December 2008 which determines the price differential (value generated between the parity price and the regulated price, which may either be negative or positive).

1. Cost of Sales

	2010
Variable Cost
Purchase of hydrocarbons from the ANH (1)	$ 5,500,921	$	4,358,408	$	5,584,474
Imported products	5,680,601		2,739,681		3,470,987
Purchase of crude oil in association and concession	4,548,193		4,130,116		3,193,690
Amortization and depletion	2,245,613		1,474,918		1,087,583
Transportation services for hydrocarbon	540,555		637,029		581,945
Purchase of natural gas and other products	316,192		57,335		230,977
Electrical power	205,102		156,405		112,355
Materials in process	146,941		180,602		113,427
Initial and final inventory	(251,431	)	(55,042	)	(239,033	)
Insurance premium cost, net	2,825		554		1,898
Depreciation by production units	55,473		48,834		-
Adjustment in volumes and other assignments	(377,307	)	(334,658	)	(132,040	)
	18,613,678		13,394,182		14,006,263
Fixed Cost
Services contracted with associations	1,469,586		1,290,177		1,188,294
Maintenance	1,384,088		1,274,618		831,553
Labor costs	1,084,149		918,188		751,826
Depreciation	1,548,797		1,239,846		670,279
Contracted services	482,728		451,165		294,351
Project expenses not capitalized	413,692		524,441		571,941
Materials and operations supplies	345,326		302,534		266,134
Taxes	254,489		326,767		199,175
Amortization of deferred charges, intangibles and
insurance premiums	107,422		94,288		73,343
General costs	236,604		7,055		23,914
Amortization of actuarial liability	18,442		82,812		207,363
	7,345,323		6,511,891		5,078,173
	$ 25,959,001	$	19,906,073	$	19,084,436

F-42

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

(1) Corresponds to the crude oil and natural gas purchases of Ecopetrol from the Agencia Nacional de Hidrocarburos derived from national production, both under the Company’s direct operation and under the operation of third parties.

1. Operating Expenses

	2010	2009	2008
Administration
Labor	$ 213,739	$ 281,123	$ 189,757
Amortization (1)	209,000	175,032	58,705
General expenses	149,772	149,644	65,087
Taxes	19,363	9,084	3,046
Rental and lease cost	7,986	17,322	10,156
Maintenance	2,611	17,361	11,295
Active personnel amortization of pension actuarial liability	1,052	12,770	44,055
	603,523	662,336	382,101
Selling and Projects
Exploration expenses (2)	1,465,537	1,099,837	826,615
Project expenses (3)	321,580	296,645	86,136
General expenses	300,837	166,480	113,024
Taxes	155,662	181,109	182,886
Pipeline transportation	125,376	141,889	102,862
Non-compliance gas delivery charges	85,222	27,851	-
Labor expenses	69,490	43,495	26,759
Maintenance	1,786	5,336	5,090
Pipeline transportation	1,455	-	422,697
Active personnel amortization of pension actuarial liability	-	-	6,705
	2,526,945	1,962,642	1,772,774
	$ 3,130,468	$ 2,624,978	$ 2,154,875

(1) Corresponds to the amortization of goodwill in 2010 adding up to $172,660, (2009 - $139,909)

(2) The balance for 2010 is mainly due to Ecopetrol’s exploratory activities for $182,311, unsuccessful exploration, and seismic data acquisition and studies for $268,198. Likewise, as well as Hocol’s seismic acquisition and other projects for $257,227 (including $179,000 in unsuccessful exploration), Ecopetrol Oleo e Gas do Brazil for $214,152 (including unsuccessful exploration in Malbec), Ecopetrol America Inc. for $482,915 (including $380,000 in unsuccessful exploration) and Ecopetrol de Peru $60,734 (including unsuccessful exploration mainly in Runtusapa).

The balance for 2009 corresponds to Ecopetrol’s seismic and exploratory activities for $620,982, Ecopetrol Oleo e Gas Do Brazil $138,421, Ecopetrol America Inc. $220,132, Hocol $117,856 and Ecopetrol de Peru $2,446.

(3) Mainly due to non-capitalized expenses of Ecopetrol S.A. projects for $297,825, the most relevant of which are for: $35 (licensing services, consulting, per diem, socialization services and selection processes) Infrastructure $43 (Management, administration and inventory), ICP $67 (Support for investigation and laboratory services), $44 (Integrated management and Naftaductos), $47 (Recovery factor studies and minor fields characterization studies) and $43 (2010 Modernization of Barrancabermeja refinery and leading projects); Hocol $23,755.

F-43

EFPlaceholder Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

1. Financial Income, Net

	2010
Income
Exchange difference gain	$ 4,265,882	$	6,517,914	$	10,863,242
Interest and monetary correction(1)	156,336		479,694		682,542
Equity Method Investment Gain	83,574		55,143		110,824
Income on valuation of derivates (2)	80,445		159,245		4,782
Income on valuation of investment portfolio	80,111		168,442		1,640,338
Dividends in cash	30,941		31,687		39,472
Other	9,202		1,802		-
	4,706,491		7,413,927		13,341,200
Expense
Exchange difference loss	(4,412,224	)	(6,643,557	)	(8,901,184	)
Interest	(145,910	)	(138,801	)	(19,376	)
Hedging operations (2)	(99,139	)	(84,492	)	(74,685	)
Other minor	(10,101	)	(27,806	)	(6,820	)
Equity method loss	(802	)	-		(185,606	)
Administration and securities issuance	(526	)	(23,438	)	(52,277	)
	(4,668,702	)	(6,918,094	)	(9,239,948	)
Net	$ 37,789	$	495,833	$	4,101,252

(1) In 2010 there were no opportunity cost recognized at Ecopetrol S.A.

(2) A total of $11,909 in net losses on asphalt hedging were reported for 2010 at Ecopetrol S.A., along with a net refining margin of $9,971, net profit on WTI $389 and others for $1,529. Similarly, the Cartagena Refinery reported net profit on hedging for $1,268.

1. Pension Expenses

	2010	2009	2008
Amortization of pension actuarial calculation (1)	$ 146,717	$ 407,083	$ 986,565
Health care services	171,636	132,322	107,213
Education services	59,273	55,752	51,147
	$ 377,626	$ 595,157	$ 1,144,925

(1) The reduction in expenses is derived from the change of the accounting policy for amortization of the health actuarial calculation in accordance with change in Colombian GAAP in 2010. The reduction in the education actuarial calculation of 2010, resulting from application of the new Mortality Rates of $15,161 was accounted for as income for the year.

1. Inflation Gain

In 2010 the inflation gain corresponds to the net amortization of the deferred monetary correction for $22,030 ($22,335 in 2009) and ($30,473 in 2008).

1. Other Income (Expenses), Net

	2010	2009	2008
Other income
Recovery of provisions (1)	$ 365,515	$ 224,565	$ 999,866
Long-term crude oil testing	104,970	-	-
Expense recovery	99,900	61,972	7,459
Recovery of exploration costs	40,336	148,996	-
Income for services	28,779	48,878	3,605
Income from undeveloped discovered fields	28,097	19,257	1,228
Income from transferred rights	19,222	28,116	-
Income on sale of materials and plant property and equipment	18,837	3,579	10,435
Recovery from services to associates	15,535	14,219	22,840
Indemnities received	9,253	16,305	6,367
Other minor income	81,716	134,885	23,003
	812,160	700,772	1,074,803

F-44

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

			2009		2008
Other expenses
Provisions (2)	(552,520	)	(462,812	)	(114,035	)
Taxes	(343,128	)	(352,459	)	(299,673	)
Write off of goodwill (3)	(287,662	)	-		-
Gas pipelines availability from Bomt contracts	(63,947	)	(89,906	)	(95,505	)
Other minor expenses	(413,532	)	(151,034	)	(26,135	)
Fuel losses	(140,153	)	(99,771	)	(93,854	)
Inspection quota	(49,435	)	(26,986	)	(25,811	)
Contributions and donations	(23,906	)	(40,497	)	(35,293	)
Loss on sale of fixed assets	(6,295	)	193		(1,399	)
Surveillance and security	-		(23,026	)	(16,052	)
	(1,880,578	)	(1,246,298	)	(707,757	)
$	(1,068,418	)	$ (545,526	)	$ 367,046

(1) Details of recovery of provisions are as following:

	2010	2009	2008
Legal proceedings	$ 80,237	$ 83,258	$ 832,788
Property, plant and equipment	55,717	17,091	18,813
Accounts receivable Recovery	68,772	-	-
Other recoveries *	131,308	5,564	139,554
Products and materials inventories	29,481	118,652	8,711
	$ 365,515	$ 224,565	$ 999,866

• The main recoveries were: Recovery of the allowance for pension liabilities $77,116 million, ruling in favor of the Teca Field proceedings $17,946 million, recovery of the education reserve $15,161 million, allowance for payroll expenses $6,396 million and $5,859 million on the Cocorna Agreement.

(2) The detail of provisions is as follows:

	2010	2009	2008
Property, plant and equipment	$ 227,266	$ 127,826	$ -
Accounts receivable	169,789	30,734	2,275
Legal proceedings	125,888	271,091	59,305
Products and materials inventories	9,743	33,161	49,379
Other provisions	19,834	-	3,076
	$ 552,520	$ 462,812	$ 114,035

(3) Debit to earnings due to write off of goodwill Offshore International Inc. for $287.7 billion.

1. Contingencies

Ecopetrol has recognized provisions corresponding to reasonable estimates intended to cover future situations deriving from loss contingencies or the occurrence of future events that could affect its financial position and results of operations.

The methodology used by the Legal Vice Presidency is based on the credit system of the Nation, which is used by the Ministry of Interior and Justice and includes an analysis of factors such as procedural risk, strength of the claim, proof of the claim, strength of the response, proof of the response, level of jurisprudence and results of first instance decision.

A summary of the most significant proceedings with amounts of claims greater than $10,000 for which provisions have been recognized according to the evaluations of the internal and external attorneys of the Company, as of December 31, 2010, is set forth below:

F-45

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Proceeding	Claim	Provision Amount Dec. 2010	Provision Amount Dec 2009
Foncoeco (1)	Profit participation fund of the employees and ex-employees of Ecopetrol S.A.	143,692	139,933
Municipio de Aguazul, Tauramena	Class Action. Contributions to the solidarity and redistribution of income fund as a consequence of the generation of electricity, according to the Law 142 of 1994.	139,688	139,688
Municipio de Arauca	Class Action. Contributions to the solidarity and redistribution of income fund as a consequence of the generation of electricity, according to the Law 142 of 1994	121,051	121,051
Departamento del Tolima	Class Action for the recalculation of royalties with 20% specified in Law 141 of 1994.	82,287	82,287
Consorcio Protécnica Ltda (Winding-up) - Constructora Kepler S. A. De C.V.	Time over run in construction said to be Ecopetrol’s fault that altered the economic and financial equilibrium of the contract against the contracting consortium.	10,000	10,000

As of December 31, 2010, the balance of the provision for legal proceedings amounts to $663,932 (2009 - $680,022).

(1) Advisor report of 2005 calculated in $542,000 the damages owed by Ecopetrol in the Ordinary Civil Action filed by Foncoeco which claims that Ecopetrol must pay principal and interest on the profit participation fund for the employees of the Company which was established by the Board of Directors. It is the opinion of the Company’s management and its legal advisors that there are sufficient arguments to demonstrate that this lawsuit will not proceed, particularly because the basis of the report includes amounts not authorized by the Board of Directors, therefore, at December 2010 closing date a provision in amount of $143,692 was recorded for this proceeding.

1. Commitments

Natural Gas Supply Contracts

In addition to existing contracts, the Company has entered into new natural gas sale or supply contracts with third parties, including Gecelca, Gases del Caribe, Gas Natural S. A. E.S.P., Transportadora de Gas Internacional E.S.P., among others. As of December 31, 2010, Ecopetrol sold an average 585.96 GBTUD for COP $1,344,231 million (including exports).

During the first half of the year, the so called “El Niño” phenomenon caused a high generation of gas thermoelectricity countrywide and, as a consequence, such fuel sales exceeded historic levels. Additionally, pursuant to government provisions, in order to increase thermal generation levels, the Company supplied throughout the first half of 2010 an average of 2.43 KBD of diesel.

Options

Hedge description

Hedging operations were performed by means of the acquisition of put options. By means of this strategy, Ecopetrol S. A. protects itself from price increase risks on the reference index. In particular, it covers variation in the crude oil price, based on WTI Nymex reference rates.

Hedge instruments

Represent positions in Put Options over WTI Nymex.

Put Options

Effective date in 2011	Expiration date in 2011	Volume	Strike Price
January 1	December 31	2.000.004 Bls.	US$	82	3.69

F-46

EFPlaceholder Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Swap-Spread

Hedge description

A Swap-Spread hedge was performed over the price difference between valuation indexes. Through this derivative portfolio competitive refining margins and discount factors are guaranteed for the Company on crude oil and refined products trading.

Hedge instruments

Swap instruments with long and short positions.

Effective date in 2011	Expiration date in 2011	Volume	Fixed spread
January 1	January 31	500.000 Bls.	US$	6.2
January 1	January 31	100.000 Bls.	US$	7.6
January 1	January 31	100.000 Bls.	US$	8.3
January 1	January 31	140.000 Bls.	US$	9.0
January 1	January 31	500.000 Bls.	US$	6.1
January 1	January 31	100.000 Bls.	US$	9.0

Earn outs in acquired companies

As part of the Company’s acquisition of Hocol Petroleum Ltd. and Offshore International Group (OIG), the Company took over future commitments, called “earn outs”, which must be recognized by the buyer to the seller, depending on the behavior of variables such as the crude oil price and the reserves.

Hocol Petroleum Ltd .

1. An additional amount might have to be paid in January 2011 depending on the behavior of the crude oil average price per barrel. Below is a summary of the additional amount to be paid depending on the actual recorded WTI crude barrel price between January 1, 2010 and December 31, 2010:

Below US$55, the amount to be paid is zero.

Higher than US$55 and less than US$60, the amount to be paid is US$25 million.

Higher than US$60 and less than US$65, the amount to be paid is US$40 million.

Higher than US$65, the amount to be paid is US$65 million.

This commitment was fulfilled on January 24, 2011, through a wire transfer from Ecopetrol S.A. to Maurel & Prom in the amount of US$65 million.

1. Depending of the exploration results of the Huron well and for a period of up to two years (December 2012), 2P (proven plus probable) certified results were multiplied by a percentage (between 8% and 6%) of the WTI average period for a given period; the resulting value, up to a maximum US$50 million would be paid in the first quarter of 2013.

As of December 2010, an equivalent in pesos of US$65 million was recognized as an increase in goodwill due to the behavior of the average price of crude oil by barrel and an adjustment of US$27.3 million due to for the exploration results of the Huron well.

Offshore International Group (OIG)

The commitment implies that if during years following the date of acquisition of the company (i.e., February 6, 2009) the crude oil average price exceeds US$60 per barrel, but is less than or equal to US$70 per barrel, US$200 million shall be paid and should the average price be greater than US$70 per barrel, the payable value amounts to US$300 million. Ecopetrol would be bound to pay 50% of the commitment.

As of December 31, 2010, the pesos currency equivalent of US$148.7 million was recognized as greater value of commercial credit. The payable amount in February amounts to US$150 million. EFPlaceholder

F-47

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Ship or Pay Contracts

Ecopetrol S.A. and ODL Finance S.A. have entered into two contracts (Ship or pay): i) The first supports the debt (Financing Tariff) to “Grupo Aval” for 7 years and is collected through a trust fund in charge of paying the debt amortization payments, and ii) the second supports the securitization (Autonomous Equity Titles) with a validity of 7 years. From the issuance date of the titles, they shall be managed by an equity fund structured for that purpose and to which equity rights for invoicing, collecting and paying to title holders, have been transferred. Under the agreement used to pay Grupo Aval indebtedness, ODL has committed to transport 75,000 barrels of oil a day during the two-year grace period of the facility and 90,000 barrels of oil a day during the remaining five years. Under the second agreement, ODL has committed to transport 19,500 barrels of oil a day during the first phase and 39,000 barrels of oil a day during the second phase.

1. Subsequent Events

Ecopetrol and Talisman acquired BP Exploration Company Colombia Limited

On January 24, 2011, after obtaining the respective governmental authorizations, Ecopetrol S. A. and Talisman Colombia Holdco Limited concluded the acquisition of BP Exploration Company Colombia Limited, the value of which amounted to US$1,750 million. Ecopetrol has a 51% interest in the new corporation and Talisman holds the remaining 49%.

The shareholders announced that the new corporate name will be Equión Energía Limited. The corporation will maintain the property of the assets and the business that the BP affiliate used to hold in Colombia. EQUIÓN currently produces and operates nearly 90 thousand oil equivalent barrels per day (Boe). Equion’s operation includes the holdings that BP had in the association contracts of the Llanos Foothills. These contracts are Piedemonte, Rio Chitamena, Tauramena and Recetor, which cover the fields of Cusiana, Cupiagua in Recetor, Pauto and Floreña.

In addition to the above assets, the holdings in exploration and production contracts, RC4 and RC5, are added; these contracts entered into with Agencia Nacional de Hidrocarburos, are located in the Atlantic Coast in Colombia. Furthermore, the Company operates the Cusiana gas plant, where 200 million cubic feet per day of gas are processed to meet the demand from the inner part of the country.

EQUION also assumes the holding that BP had in Oleoducto Central S. A.-Ocensa (24.8%), Oleoducto de Colombia (14.57%) and in the Alto Magdalena pipeline (4.25%), as well as 20% in Transgas de Occidente and the holding in the Casanare gas plants.

Ecopetrol established Ecopetrol Global Capital SL

Ecopetrol S. A. established Ecopetrol Global Capital SL., in January 2011, where it holds 100% of the equity shares, with an initial equity amounting to 3,100 Euros. The company was incorporated in Madrid, Spain, and will operate as a foreign security holder in Spain.

Ecopetrol increases its share in the exploration of the Caño Sur Block

Ecopetrol S. A. and Shell Exploration and Production Colombia Caño Sur entered into an agreement whereby Ecopetrol acquires the entire holding currently held by Shell in the exploration of the Caño Sur block located in the Llanos Orientales basin.

This agreement is subject to the approval of this holding assignment by the Agencia Nacional de Hidrocarburos, ANH.

Property Tax

According to Law 1370 of 2009, for the year 2011, the Property Tax will be the responsibility of companies, individuals and de facto corporations, who are income tax payers. This law stipulated that the equity tax shall be effective on January 1, 2011, only once and it is to be paid in eight equal installments during the years 2011, 2012, 2013 and 2014, within the terms established by the Colombian Government. EFPlaceholder

F-48

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

On February 16, 2010, the Ministry of Finance and Public Credit issued Decree 514 applicable to accounting matters, which partially amends Decree 2649 of 1993 (which regulates General Accounting and issues accounting principles or regulations generally accepted in Colombia).

Decree 514 of 2010 establishes a provisional paragraph addressing two fundamental aspects:

1. The taxpayers may, once a year, charge against the equity revaluation account the value of payable installments in the respective equity tax that is set forth in Law 1370 of 2009.

2. When the equity revaluation account does not have any balance or it is insufficient to charge the equity tax thereto, the taxpayers can then post in the annual income statements the value of the required installments in the respective period.

3. In accordance with the foregoing and as support of Decree 2649 regarding the accounting recognition of the economic facts, the Superintendence of Corporations issued Writ 115-009819 dated January 26, concluding that the property tax is generated by the possession of the wealth on a specific date (January 1, 2011) and it must be paid in eight equal installments during the years 2011, 2012, 2013 and 2014, recognizing the operation from an accounting standpoint in accordance with that provided for in Decree 514 of 2010.

Based on the foregoing standards, Ecopetrol will recognize as of January 1, 2011 and up to January 1, 2014 the payable equity tax payable and the respective charge to results equivalent to 25% of the total payable value calculated on January 1, 2011. The outstanding balance shall be recognized in memorandum accounts.

Total annual value of equity tax and expense corresponding to payable installments, are the following:

	Total Tax	Year Expense
Ecopetrol	$ 1,894,488	$ 473,622
Ocensa	31,916	7,979
ODC	4,598	1,149
Bioenergy	5,856	1,464
ODL	26,493	6,623
Comai	4,184	1,046
Propilco	27,304	6,826
Reficar	142,334	35,583
Hocol	59,593	14,898
OBC	13,780	3,445
Equion	37,540	9,385
Total	$ 2,248,084	$ 562,021

Hocol S.A.

By Resolution 130 of January 18, 2011, the National Hydrocarbon Agency approved the partial assignment of 50% of the interests, rights and obligations of Hocol S.A. Lewis Energy Colombia Inc., on the exploration and production contract Clarinero, being distributed participation in this contract as follows: 50% Hocol S.A. and 50% Lewis Energy Colombia Inc.

Ecopetrol Oleo e Gas Do Brasil

In BM EN 29, the Malbec well drilling proved unsuccessful (it was fully expensed in 2010). The first period of the exploration phase fully complied with the Minimum Exploration Program. In April and May, the partners decided not to continue drilling in the following period and instead, returned the block to ANP (Brazilian ANH). Therefore, the bond value is being expensed in May 2011.

F-49

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Ecopetrol S.A.

1. According to the second instance decision issued by the Superior Tribunal of Bogotá in January 2011, the return of 324 million shares of Invercolsa to Ecopetrol was confirmed.

After the ruling, Fernando Londoño and Arrendadora Financiera Internacional Boliviariana S.A. (AFIB) requested an appeal before the Supreme Court and AFIB offered a bond to guarantee payment of the damages that may be can caused to Ecopetrol if the sentence is not executed the sentence.

1. The Board meeting of January 21, 2011, approved that Ecopetrol S.A. exercise the preferential right to purchase 50% of the shares of Shell Exploration & Production Caño Sur Colombia. According to the above, we made a request for the authorization of the transaction to the National Hydrocarbons Agency, who determined to perform the negotiation.

2. Having obtained the respective licenses Ecopetrol S.A. and Talisman Colombia Holdco Limited completed in January 24, 2011 the acquisition of BP Exploration Company Colombia Limited - Today Equión Energy Limited.

In February 2011, the Puerto dry well was recognized, while in March, the Kaxan Norte dry well was recognized. The capitalized costs associated with these two exploration activities as of December 31, 2010, were $2,132 and $3,208, respectively, which were expensed as of December 31, 2010 for U.S. GAAP purposes.

It also was announced in the Press Release of the first quarter of 2011, two dry wells known stratigraphic, Zircon-1 and Amber-3

1. Impact on tax reform 2010 on Ecopetrol

Once the 1430 Act of 2010 "Tax Reform" was approved, management analyzed the effects that this law generated for the Company and its subsidiaries in the development of its activities. The following describes the impact that these modifications had for Ecopetrol only:

Deduction for investment in real productive assets: The special deduction for investment in real productive assets was eliminated beginning in 2011, a standard that previously made possible a large number of company projects that were planned in the long-term.

Ecopetrol, based on the paragraph of Article 1 of the Act, upon signing the legal stability agreement with the National Government, may obtain legal stability for the deduction for up to a period not to exceed three (3) years.

Net Worth Tax (includes amendment introduced in the emergency decrees enacted under the state of emergency): Amends the estate tax base for tax years 2011, 2012, 2013 and 2014 that was created by the Act 1370 of 2009. The rate is 4.8% plus a surcharge established in the economic emergency decrees of 25% tax. Therefore, the real rate is 6%

The comprehensive tax reform had a significant impact on the finances of ECOPETROL S.A. and its Corporate Group and affects the profitability of investors for the effects of higher taxes.

Tax on financial movements, gradual elimination of GMF: The tax on financial transactions will be removed gradually from 2014. Beginning in 2014, the rate will be 2 per thousand and will gradually decrease to 1 per thousand in 2016 and 0 per thousand in 2018, at which time the tax disappears and the provisions regulating the application of same legal system.

F-50

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

1. The Civil Division of Judicial Superior Court District of Bogotá revised the decision issued by the Civil Circuit Court 23 of Bogota, which on December 16, 2005 ordered us to pay $541,833 million, or approximately US$260 million to a former employees association known by the acronym Foncoeco, for the Company’s profit-sharing plan offered in 1962 that expired in 1975.

As of December 31, 2010, the associated estimated loss was $146,811, based on the facts and circumstances of the probable loss available on such date.

Instead, on June 22, 2011, the Bogota Higher Tribunal of second instance, ruled in our favor and reduced the amount we must pay to $6.6 million, or approximately US$3,707. Since this is not considered the final ruling in this case, this had no effect on the related provision as of December 31, 2010.

1. Differences between Colombian Governmental Entity accounting principles and U.S. GAAP

The Company's financial statements are prepared in accordance with Colombian Government Entity GAAP (RCP). These principles and regulations differ in certain significant respects from accounting principles generally accepted in the United States of America (U.S. GAAP), and therefore this note presents reconciliations of net income and shareholders’ equity determined under RCP to those same amounts as determined according to U.S. GAAP. Also presented in this note are those disclosures required under U.S. GAAP but not required under RCP.

Restatement of previously issued financial statements

In connection with the preparation of the 2010 fiscal year-end consolidated financial statements, management concluded that for purpose of its reconciliation of Colombian Government Entity GAAP to U.S. GAAP, a material error regarding the accounting of employee benefit plans was identified in the previously issued consolidated U.S. GAAP financial information and related disclosures for the year ended December 31, 2009. Therefore, such U.S. GAAP financial information for 2009 has been restated. This restatement does not affect the financial information under Colombian Government Entity GAAP as of and for the year ended December 31, 2009, nor 2010 or any other prior periods, and therefore there is no impact on dividends declared and paid under the 2009 financial results, which are declared on the basis of the Colombian Government Entity GAAP financial statements.

Employee Benefit Error

This error was due to the incorrect determination of the amount of unrealized gains and losses of health, education and pension bond employee benefit plans. Due to the incorrect determination of gains and losses, the Company amortized an excess amount of actuarial losses. As such, this error led to an understatement of the Company's consolidated net income in 2009 of $1,178,563 and an overstatement of the Other Comprehensive Income - OCI by the same amount. To correct this error the Company reversed the incorrect amortization expense and decreased OCI.

F-51

EFPlaceholder Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Other Errors

Separately, the Company’s management also corrected certain errors in the 2009 U.S. GAAP reconciliation, including errors previously identified which individually and in the aggregate, were considered not to be material to the Company’s consolidated financial information reconciled to U.S. GAAP. These adjustments led to an overstatement of the Company´s consolidated net income reconciled to U.S. GAAP of $38,727. Below is a detail of these errors.

Purchase Price Allocation Errors - Certain errors were identified in the recording of the purchase price allocations relating to 2009 acquisitions. All of these adjustments are individually not material. Included in these purchase price allocation errors are the following:

· Deferred taxes were not recorded in the purchase price allocation process relating to the fair value step up of assets. Therefore, an additional deferred tax liability was recorded.

· Depreciation and amortization was not calculated correctly for the stepped up portion of assets relating to the Oleoducto de Colombia and Propilco acquisitions. As such, an adjustment was made to increase depreciation and amortization expense.

· The investment in OIG is accounted for under the equity method. However, the Company mistakenly presented goodwill and the foreign currency translation adjustment separate from the investment in equity method investee account. As such, the goodwill balance and foreign currency translation adjustment relating to OIG is now presented as part of investment in equity investee.

· In connection with the OIG acquisition, certain contingent consideration liabilities were recorded. Subsequent to initial recording, these amounts were adjusted to fair value. This adjustment was recorded as an expense in the income statement. However, given that these amounts were not settled as of December 31, 2009, and that OIG is accounted for under the equity method, these amounts should have been recorded as an increase to the investment in equity method investee’s account. As such, the expenses recorded in the income statement were reversed and the investment in equity method account on the balance sheet was increased.

Asset Retirement Obligation Errors - Two errors were identified in the Asset Retirement Obligation (ARO) calculation. First, it was determined that the useful lives used in the formula to determine the obligation were incorrect. Second, the 2009 amortization expense under U.S. GAAP was incorrectly booked. The adjustment to correct the first error is a decrease in the ARO liability and a corresponding decrease in the amount capitalized as part of the asset value. The adjustment to correct the second error is a decrease in amortization expense and a decrease in the corresponding asset value.

Fixed Assets Errors - Errors in the fixed asset balances and related depreciation expense were identified. There are certain GAAP differences in the capitalization rules between RCP and U.S. GAAP. As such, as part of the U.S. GAAP process, fixed asset and depreciation amounts are adjusted. During 2009, for certain fixed assets, the Company mistakenly duplicated these GAAP adjustments. The correction of this error resulted in an increase to fixed asset balances and a decrease to depreciation expense.

Foreign Currency Translation Adjustment Errors - The foreign currency translation process for the subsidiary Reficar was applied incorrectly under U.S. GAAP. As such, the adjustment to CTA was incorrect, as well as the individual translated line items of the balance sheet that include Reficar amounts. The Company corrected this error by correctly applying the foreign currency translation methodology as required by U.S. GAAP. This resulted in an increase to the CTA account, and a decrease in individual asset and liability line items.

F-52

EFPlaceholder Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Deferred Tax Errors - Certain errors were identified in the calculation of deferred taxes. The Company incorrectly calculated the deferred tax effect of the mark-to- market adjustments of available-for-sale securities. In addition, included in this category are the deferred tax effects of certain of the previously discussed errors.

Classification Errors - Certain transactions included within individual line items of the 2009 balance sheet and income statement were re-classified due to classification errors. These classification errors include the following:

· The Company had previously included employee benefit plan expense as a non-operating expense. This expense has now been classified as an administrative expense to appropriately reflect the nature of the amount under U.S. GAAP.

· The Company mistakenly booked certain prepaid expenses and accounts receivable balances to the short term deposits and advances line item.

· Certain assets were inappropriately recorded in the long-term available-for-sale investments accounts. These amounts have been presented in the appropriate other assets account.

· Certain provisions and other operating expenses were mistakenly classified as non-operating expenses in the 2009 income statement. These amounts have been re-classed to operating expenses.

Non-Controlling Interest Errors - The non-controlling interest balance was adjusted to reflect the non-controlling interest effect of the above discussed errors.

F-53

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Supplemental consolidated U.S. GAAP restated balance sheet as of December 31, 2009:

	2009 — Previously reported	Adjustments		Restated
Assets
Current assets:
Cash and cash equivalents	$ 3,861,532	$ (23,862	)	$ 3,837,670	(1)
Investments
Available for sale	178,832	-		178,832
Held to maturity	7,876	-		7,876
Accounts and notes receivable, net	2,530,379	317,322		2,847,701	(2)
Inventories	1,929,977	15,679		1,945,656	(1)
Advances and deposits	1,200,682	(856,740	)	343,942	(2)
Prepaid expenses and other assets	62,759	532,515		595,274	(2)
Deferred income taxes	1,015,488	(205,570	)	809,918	(1)
Total current assets	10,787,525	(220,656	)	10,566,869
Investments
Available for sale	4,118,555	(931,477	)	3,187,078	(3)
Held to maturity	130,740	(312	)	130,428	(1)
Equity Method	-	1,154,193		1,154,193	(4)
Accounts and notes receivable, net	226,781	379,994		606,775	(3)
Restricted assets	380,463	469		380,932	(1)
Property, plant and equipment, net	13,098,446	(499,883	)	12,598,563	(5)(6)(11)
Natural and environmental resources, net	9,431,458	(11,096	)	9,420,362	(1)
Goodwill	2,385,113	(953,939	)	1,431,174	(4) (11)
Deferred charges and other assets	1,280,359	117,831		1,398,190	(3)
Deferred income taxes	1,475,559	254,975		1,730,534	(8)
Direct finance lease long-term	19,254	-		19,254
Total Assets	$ 43,334,253	$ (709,902	)	$ 42,624,352
Liabilities and shareholders’ equity
Current liabilities:
Financial obligations	$ 437,111	$ (30	)	$ 437,081	(1)
Accounts payable and related parties	3,571,680	(13,100	)	3,558,580	(1)
Capital lease liability	82,356	-		82,356	(1)
Taxes payable	567,271	632		567,903	(1)
Labor and pension plan obligations	165,472	(9	)	165,463	(1)
Estimated liabilities and provisions	1,122,409	(12,864	)	1,109,545	(1)
Total current liabilities	5,946,299	(25,371	)	5,920,928
Financial obligations, long-term	5,725,099	-		5,725,099
Accounts payable, long-term	248,571	-		248,571
Capital lease liability	278,594	-		278,594
Pension plan obligation and other labor obligations, long-term	4,359,751	(6,827	)	4,352,924	(1)
Estimated liabilities and provisions	2,841,371	(570,558	)	2,270,813	(6)
Other long-term liabilities	809,334	(341	)	808,993	(1)
Total non-current liabilities	14,262,720	(577,726	)	13,684,994
Total liabilities	20,209,019	(603,097	)	19,605,922
Shareholders’ equity of Ecopetrol
Share par value	10,117,791	-		10,117,791
Additional paid-in-capital	4,044,669	-		4,044,669
Retained Earnings	8,107,416	1,138,788		9,246,204
Accumulated Other Comprehensive income (loss)	272,045	(1,296,998	)	(1,024,953	) (4)(7)(8)(10)
Total Shareholders’ equity of Ecopetrol	22,541,921	(158,210	)	22,383,711
Non-controlling interest	583,313	51,405		634,718	(9)
Total equity	23,125,234	(106,805	)	23,018,429
Total liabilities and shareholders’ equity	$ 43,334,253	$ (709,901	)	$ 42,624,351

(1) Represents the correction of immaterial errors identified in the preparation of U.S. GAAP reconciliation.

(2) Primarily represents re-classification of amounts incorrectly booked to the advances and deposits line item. See above discussion on classification errors.

F-54

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

(3) Primarily represents re-classification of amounts incorrectly booked to available-for-sale investments. See above discussion on classification errors.

(4) This adjustment primarily consists of the OIG re-class of goodwill to the Investment in equity method investee, $726,764, as well as the adjustment of OIG contingent consideration, $165,332, increasing the investment balance and non-operating income. The equity method investment account was also decreased $128,985 by the cumulative translation adjustment. See above discussion on purchase price allocation errors.

(5) This adjustment includes the duplicate U.S. GAAP fixed asset adjustments. This caused fixed assets to increase by $221,194 and a decrease in depreciation expense by the same amount. See discussion on fixed assets errors above.

(6) This adjustment primarily relates to the Asset Retirement Obligation error. This adjustment caused a decrease in fixed assets of $674,551, a decrease of Estimated liabilities and provisions of $570,558 and a decrease in cost of sales of $103,993. See discussion on asset retirement obligations.

(7) A portion of this adjustment represents the employee benefit plan error. This resulted in a decrease in operating expenses of $1,759,049 and a decrease in OCI of the same amount. See discussion on employee benefit plans above.

(8) This represents the adjustment to deferred taxes as a result of the above discussed errors. In addition, it includes the adjustment to deferred taxes of $211,444 relating to the error in calculating the deferred tax effect of available-for-sale securities. A portion of the total deferred tax adjustment was recorded in the income statement and a portion in OCI. See discussion on deferred tax errors above.

(9) Represents the non-controlling interest effect of the above discussed adjustments.

(10) This adjustment relates to foreign currency translation error. Assets and liabilities have been adjusted by not material amounts as a result of this error, with a corresponding adjustment to cumulative translation gain/loss included within OCI. See discussion on foreign currency translation adjustment errors above.

(11) This adjustment includes some minor increases to fixed asset and decreases to goodwill due to the recording of the purchase price step up of those assets. See discussion on purchase price allocation errors above.

F-55

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Supplemental consolidated U.S. GAAP restated statement of income for the year ended December 31, 2009:

	2009 — Previously reported	Adjustments		Restated
Revenue:
Local sales	$ 13,808,720	$	-	$	13,808,720
Foreign sales	15,742,854		-		15,742,854
Total revenue	29,551,574		-		29,551,574
Cost of sales	19,136,478		(485,291	)	18,651,187	(5) (6)
	10,415,096		485,291		10,900,387
Operating expenses:
Administration	1,990,603		(963,572	)	1,027,031	(7) (12)
Selling and projects	1,967,139		(148,996	)	1,818,143	(1)
Operating income	6,457,354		1,597,859		8,055,213
Non-operating income, net	549,981		163,189		713,170	(4)(12)
Income before income tax	7,007,335		1,761,048		8,768,383
Income tax:
Current income tax	1,948,819		-		1,948,819
Deferred income tax	375,329		569,815		945,144	(8)
	2,324,148		569,815		2,893,963
Net income	4,683,187		1,191,233		5,874,420
Less: Net (income) attributable to Non-controlling interest	(104,719	)	(51,397	)	(156,116	) (9)
Net Income attributable to Ecopetrol S.A.	$ 4,578,468	$	1,139,836	$	5,718,304
Earnings per share (Basic and diluted) attributable to Ecopetrol common shareholders	$ 113.13	$	28.16	$	141.29
Weighted-average shares outstanding (Basic and diluted)	40,472,512,588		-		40,472,512,588

(1) Represents the correction of immaterial errors identified in the preparation of U.S. GAAP reconciliation.

(4) This adjustment primarily consists of the OIG adjustment of the contingent consideration, $165,332, increasing the investment balance and non-operating income. See the discussion on purchase price allocation errors for more detail.

(5) This adjustment includes the duplicate U.S. GAAP fixed asset adjustments. This caused fixed assets to increase by $221,195 and a decrease in depreciation expense by the same amount. See fixed assets errors discussion above for details.

(6) This adjustment primarily relates to the Asset Retirement Obligation error. This adjustment caused a decrease in cost of sales of $103,993. See the asset retirement obligation discussion above for detail.

(7) A portion of this adjustment represents the employee benefit plan error. This resulted in a decrease in operating expenses of $1,173,990 and a decrease in OCI of the same amount. See the employee benefit plan discussion for details.

(8) This represents the adjustment to deferred taxes as a result of the above discussed errors. In addition, it includes the adjustment to deferred taxes of $211,444 relating to the error in calculating the deferred tax effect of available-for-sale securities. A portion of the total deferred tax adjustment was recorded in the income statement and a portion in OCI. See deferred tax errors discussion above for detail.

(9) Represents the non-controlling interest effect of the above discussed adjustments.

(12) Included in this adjustment is the re-classification of employee benefit expense and other operating expenses, $595,000, from non-operating to operating expenses. In addition, it was offset by the incorrect calculation of the bargain purchase gain on the purchase of Hocol, resulting in a decrease in the gain and a decrease in deferred taxes of $285,000.

(13) Represents re-classification of certain operating expenses that were incorrectly classified as non-operating expenses.

Supplemental consolidated U.S. GAAP restated statement of cash flows for the year ended December 31, 2009:

F-56

EFPlaceholder Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The adjustment related to employee benefit plans did not have an impact on the 2009 U.S. GAAP statement of cash flows. The net effect of the other not material adjustments resulted in a decrease in U.S. GAAP operating cash flow of Ps$ 47,723. There was no adjustment to the investing and financing sections of the U.S. GAAP cash flow statement.

A) Reconciliation of net income attributable to Ecopetrol S.A.:

The following table presents the reconciliation of net income under Colombian Government Entity GAAP to net income under U.S. GAAP attributable to Ecopetrol S.A. for the years ended December 31, 2010, 2009 and 2008:

		2010				2008
			Restated
	Consolidated net income under Colombian Government Entity GAAP	$ 8,146,471	$	5,132,054	(*)	$ 11,629,677
i.	Investment securities:
	a. Unrealized gain (loss)	63,545		702,876		(924,715	)
	b. Impairment	(36,818	)	28,083		163,902
ii.	Investments in non-marketable securities:
	a. Equity method	(25,063	)	(181,991	)	164,734
	b. Variable Interest Entity (VIE)	(13	)	320,600		(367,743	)
	c. Impairment	(61,371	)	(4,810	)	-
iii.	Derivatives	(24,736	)	20,521		-
iv.	Exchange of non-monetary assets	23,640		23,640		55,623
v.	Deferred charges	(7,167	)	(35,702	)	(228	)
vi.	Employee benefit plans	336,276		342,451		(1,451,179	)
vii.	Provisions, allowances and contingencies	67,629		12,779		1,082,434
viii.	Deferred income taxes	(1,159,147	)	(779,934	)	(159,891	)
ix.	Revenue recognition:
	a. Cost of sales – over and under	158,609		(110,087	)	(8,887	)
	b. Other income	(11,685	)	8,906		-
x.	Inflation adjustment	320,374		177,300		128,837
xi.	Inventories	(87,797	)	16,853		10,274
xii.	Lease accounting	(36,298	)	(43,163	)	39,744
xiii.	Property, plant and equipment:
	a. Interest	(168,527	)	(63,779	)	-
	b. Impairment	(157,446	)	(248,765	)	(121,296	)
	c. Capitalized expenses	38,751		(118,376	)	76,167
	d. Exchange difference	-		(16,028	)	-
xiv.	Depreciation, Depletion and Amortization	702,527		563,145		(1,478,851	)
xv.	Asset retirement obligations	140,959		297,702		(70,014	)
xvi.	Equity contributions:
	a. Incorporated institutional equity	20,281		20,692		21,217
	b. Reversal of concession rights contributed as capital	81,058		18,199		24,117
xvii.	Indebtedness cost	(1,670	)	8,800		-
xviii.	Business combinations:
	a. Goodwill	172,660		139,909		27,512
	b. Fair value adjustments to assets and liabilities acquired	(176,590	)	(362,216	)	449
xix.	Non-controlling interest	(124,394	)	(151,355	)	-
xx.	Cumulative Translation Adjustment	16,977		-		-
	Consolidated net income under U.S. GAAP attributable to Ecopetrol S.A.	$ 8,211,035	$	5,718,304		$ 8,841,883

(*)This restatement does not affect the financial information under Colombian Government Entity GAAP. EFPlaceholder

F-57

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

B) Reconciliation of Shareholders’ equity attributable to Ecopetrol S.A.:

The following table presents the reconciliation of Ecopetrol shareholders’ equity under Colombian Government Entity GAAP to Ecopetrol shareholders’ equity under U.S. GAAP attributable to Ecopetrol S.A for the years ended December 31, 2010 and 2009:

		2010
			Restated
	Consolidated shareholders’ equity under Colombian Government Entity GAAP	$ 41,328,181	$	32,569,957	(*)
i.	Investment securities:
	a. Unrealized gain	1,660,975		645,644
ii.	Investments in non-marketable securities:
	a. Equity method	(1,496,057	)	(1,507,097	)
	b. Valuation surplus	(1,693,553	)	(1,029,443	)
	c. Variable Interest Entity (VIE)	320,587		320,600
	d. Impairment	(66,182	)	(4,810	)
iii.	Derivatives	769		25,505
iv.	Exchange of non-monetary assets	709,654		686,014
v.	Deferred charges	17,026		24,193
vi.	Employee benefit plans	(1,795,081	)	(1,504,997	)
vii.	Provisions – allowance and contingencies	121,718		54,089
viii.	Deferred income taxes	(2,039,099	)	(1,086,406	)
ix.	Revenue recognition:
	a. Cost of sales – over and under	(63,690	)	(98,121	)
	b. Other income	(1,128	)	2,599
x.	Inflation adjustment	(3,515,570	)	(3,835,943	)
xi.	Inventories	(114,868	)	(27,103	)
xii.	Lease accounting	363,315		399,734
xiii.	Property, plant and equipment:
	a. Interest	(192,538	)	(24,011	)
	b. Revaluation of property, plant and equipment and public accounting effect	(9,375,123	)	(5,361,974	)
	c. Impairment	(1,870	)	(248,095	)
	d. Capitalized expenses	(577,976	)	(613,984	)
	e. Exchange difference	(233,563	)	(233,563	)
xiv.	Depreciation, Depletion and Amortization	4,342,688		3,616,158
xv.	Asset retirement obligations	460,668		321,358
xvi.	Equity contributions:
	a. Incorporated institutional equity	(64,412	)	(82,870	)
	b. Reversal of concession rights contributed as capital	(22,202	)	(103,260	)
xvii.	Indebtedness cost	7,130		8,800
xviii.	Business combinations:
	a. Goodwill	142,611		19,020
	b. Fair value adjustments to assets and liabilities acquired	(772,416	)	(595,826	)
xix.	Non-controlling interest	206,626		336,619
xx.	Cumulative Translation Adjustment	(481,336	)	(289,075	)
	Consolidated Ecopetrol shareholders’ equity under U.S. GAAP	$ 27,175,285	$	22,383,712

(*)This restatement does not affect the financial information under Colombian Government Entity GAAP. EFPlaceholder

F-58

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

C) Supplemental condensed financial statements under U.S. GAAP

C) 1. Supplemental consolidated balance sheets The condensed balance sheets of the Company as of December 31, 2010 and 2009 under U.S. GAAP are presented below:

	2010	2009
		Restated
Assets
Current assets:
Cash and cash equivalents	$ 3,910,745	$ 3,837,670
Investments
Available for sale	58,935	178,832
Held to maturity	17,369	7,876
Accounts and notes receivable, net	2,971,109	2,847,701
Inventories	2,055,736	1,945,656
Advances and deposits	277,937	343,942
Prepaid expenses and other assets	491,762	595,274
Deferred income taxes, net	1,438,988	809,918
Total current assets	11,222,581	10,566,869
Investments
Available for sale	5,807,075	3,187,078
Held to maturity	110,755	130,428
Equity Method	932,721	1,154,193
Accounts and notes receivable, net	1,538,450	606,775
Restricted assets	391,021	380,932
Property, plant and equipment, net	17,744,665	12,598,563
Natural and environmental resources, net	10,191,727	9,420,362
Goodwill	1,380,632	1,431,174
Deferred charges and other assets	1,590,565	1,398,190
Deferred income taxes, net	1,405,987	1,730,534
Direct finance lease long-term	15,969	19,254
Total Assets	$ 52,332,148	$ 42,624,352
Liabilities and shareholders’ equity
Current liabilities:
Financial obligations	$ 1,091,079	$ 437,081
Accounts payable and related parties	4,344,528	3,558,580
Capital lease liability	74,681	82,356
Taxes payable	2,222,073	567,903
Labor and pension plan obligations	160,248	165,463
Estimated liabilities and provisions	1,173,401	1,109,545
Total current liabilities	9,066,010	5,920,928
Financial obligations, long-term	7,830,812	5,725,099
Accounts payable, long-term	651,692	248,571
Capital lease liability	242,592	278,594
Pension plan obligation and other labor obligations, long-term	4,787,698	4,352,924
Estimated liabilities and provisions	1,783,282	2,270,813
Other long-term liabilities	485,426	808,993
Total non-current liabilities	15,781,502	13,684,994
Total liabilities	24,847,512	19,605,922
Shareholders’ equity of Ecopetrol	27,175,285	22,383,712
Non-controlling interest	309,351	634,718
Total equity	27,484,636	23,018,430
Total liabilities and shareholders’ equity	$ 52,332,148	$ 42,624,352

F-59

EFPlaceholder Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

C) 2. Supplemental consolidated statements of income

The statements of income of the Company for the years ended December 31, 2010, 2009 and 2008 under U.S. GAAP are presented below:

	2010
		Restated
Revenue:
Local sales	$ 18,291,606	$	13,808,720	$	21,550,543
Foreign sales	22,587,718		15,742,854		12,298,670
Total revenue	40,879,324		29,551,574		33,849,213
Cost of sales	24,059,620		18,651,187		17,927,991
	16,819,704		10,900,387		15,921,222
Operating expenses:
Administration	856,880		1,027,031		4,246,426
Selling and projects	2,084,310		1,818,143		1,834,485
Operating income	13,878,514		8,055,213		9,840,311
Non-operating income, net	1,037,793		713,170		3,587,132
Income before income tax	12,840,721		8,768,383		13,427,443
Income tax:
Current income tax	3,201,040		1,948,819		3,648,451
Deferred income tax	1,196,757		945,144		930,853
	4,397,797		2,893,963		4,579,304
Net income	8,442,924		5,874,420		8,848,139
Less: Net (income) attributable to Non-controlling interest	(231,889	)	(156,116	)	(6,256	)
Net Income attributable to Ecopetrol S.A.	$ 8,211,035	$	5,718,304	$	8,841,883
Earnings per share (Basic and diluted) attributable to Ecopetrol common shareholders	$ 202.88	$	141.29	$	218.47
Weighted-average shares outstanding (Basic and diluted)	40,472,512,588		40,472,512,588		40,472,512,588

F-60

EFPlaceholder Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

C) 3. Supplemental consolidated statements of cash flows

The statements of cash flows of the Company for the years ended December 31, 2010, 2009 and 2008 under U.S. GAAP are presented below:

	2010
		Restated
Cash flows provided by operating activities:
Net income	$ 8,442,924	$	5,874,420	$	8,848,139
Adjustments to reconcile net income to cash provided by operating activities:
Equity method in non-marketable securities	25,063		40,635		(106,845	)
Depreciation, depletion and amortization	3,608,292		4,106,221		3,177,935
Impairment	157,446		248,765		113,087
Provisions	(141,038	)	362,424		(569,969	)
Deferred income tax	1,196,757		945,144		930,853
Exchange (loss) gain	(137,054	)	(544,622	)	(1,390,953	)
Loss (gain) on retirement of property, plant and equipment	42,340		-		-
Losses in retirement of investment in natural and environmental resources	39,668		-		-
Other asset write-offs	359,981		4,810		-
Net changes in operating assets and liabilities:
Accounts and notes receivable	7,910		3,730,221		(2,383,061	)
Inventories	(90,512	)	(45,289	)	(255,090	)
Deferred charges and other assets	(520,175	)	171,413		(245,528	)
Accounts payable and related parties	1,294,450		1,398,162		326,967
Taxes payable	553,613		(4,384,524	)	1,374,621
Labor obligations	(369,839	)	304,686		401,445
Estimated liabilities and provisions	(639,758	)	121,387		668,220
Bargain purchase gain	-		(264,085	)	-
Fair value of pre-existing participation of business combination	-		107,545		-
Net cash provided by operating activities	13,830,068		12,177,313		10,889,822
Cash flows from investing activities:
Payments in advance in acquisition of companies	(1,163,131	)	-		-
Payment for purchase of companies, net of cash acquired	-		(4,061,289	)	(1,274,751	)
Purchase of investment securities	(11,808,784	)	(7,921,615	)	(27,814,744	)
Redemption of investment securities	9,952,542		12,250,387		25,975,418
Proceeds from sales of property, plant and equipment	4,751		1,927		-
Investment in natural and environmental resources	(3,759,410	)	(2,934,666	)	(3,574,418	)
Additions to property, plant and equipment	(5,946,298	)	(6,419,793	)	(3,869,577	)
Net cash used in investing activities	(12,720,330	)	(9,085,049	)	(10,558,072	)
Cash flows from financing activities:
Non-controlling interest obligations	(325,367	)	(340,178	)	240,918
Repayment of financial obligations	(43,677	)	(310,420	)	(99,888	)
Proceeds from financial obligations	2,959,345		6,152,400		235,720
Proceeds from issuance of shares	525		41,044		832,919
Cash paid to acquire a non-controlling interest	-		(998,903	)	-
Dividends paid	(3,782,966	)	(8,902,602	)	(4,652,182	)
Net cash used in financing activities	(1,192,140	)	(4,358,659	)	(3,442,513	)
Effect of exchange rate changes on cash	(155,476	)	(291,470	)	83,923
Net increase (decrease) in cash and cash equivalents	73,075		(974,925	)	(3,194,687	)
Cash and cash equivalents at beginning of year	3,837,670		4,812,595		8,007,282
Cash and cash equivalents at end of year	$ 3,910,745	$	3,837,670	$	4,812,595

F-61

EFPlaceholder Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

	2010	2009	2008
Supplemental cash flows information
Cash paid during the year
Interest	$ 404,708	$ 107,343	$ 9,874
Income taxes	$ 982,783	$ 3,934,441	$ 1,869,475
Non-cash transactions
Liabilities assumed in business combinations	$ -	$ 891,239	$ 184,807
Assets acquired through leasing contracts	$ -	$ -	$ 12,659
Increase of natural and environmental resources through asset retirement obligations	$ 779,913	$ 96,766	$ 137,903

Under Colombian Government Entity GAAP as in effect for 2007, some deposits with banks were considered as short-term investments since they produce yields and the Company has defined them to be used for specific purposes. Under U.S. GAAP, these deposits are considered cash and cash equivalents. The amounts reclassified as of December 31, 2010, 2009 and 2008 were $183,967, $275,552 and $2,404,159. These deposits are valued at fair value.

F-62

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

C) 4. Supplemental consolidated statements of shareholders’ equity

The statements of shareholders’ equity of the Company for the years ended December 31, 2010, 2009 and 2008 under U.S. GAAP follows:

Millions of shares		Value	Additional paid- in-capital	Comprehensive Income		Retained earnings		Accumulated Other Comprehensive income (loss)			Ecopetrol’s Equity	Non- Controlling Interest		Total Equity
Balance at January 1, 2008	40,473	10,113,334	3,607,929		-		8,269,100		(999,332	)	20,991,031		571,597		21,562,628
Business combination													8,718		8,718
Issuance of company shares	-	4,457	828,462		-		-		-		832,919		217,378		1,050,297
Distribution of dividends	-	-	-		-		(4,654,340	)	-		(4,654,340	)	(141,634	)	(4,795,974	)
Other contributions	-	-	-		-		(23,742	)	-		(23,742	)	139,566		115,824
Comprehensive income:	-	-	-		-		-		-		-		-		-
Net income	-	-	-	$	8,848,139		8,841,883		-		8,841,883		6,256		8,848,139
Other Comprehensive income, net of tax:
Unrealized earnings on investment securities, net of tax effect of $(236,974)	-	-	-		524,729		-		-		524,729		-		524,729
Actuarial gain (loss), net of tax effect of $(302,050)	-	-	-		613,251		-		-		613,251		-		613,251
Translation adjustment	-	-	-		316,895		-		-		300,004		16,891		316,895
Total other comprehensive income	-	-	-		1,454,875		-		1,437,984		-		-		-
Comprehensive income	-	-	-	$	10,303,014		-		-		-		-		-
Balance at December 31, 2008	40,473	10,117,791	4,436,391				12,432,901		438,652		27,425,735		818,772		28,244,507
Business combination	-	-	-		-		-		-		-		21,530		21,530
Acquired non-controlling interest	-	-	(432,766	)	-		-		-		(432,766	)	(281,692	)	(714,458	)
Other non-controlling interest	-	-	-		-		-		-		-		22,775		22,775
Issuance of company shares	-	-	41,044		-		-		-		41,044		-		41,044
Distribution of dividends	-	-	-		-		(8,903,953	)	-		(8,903,953	)	(89,736	)	(8,993,689	)
Comprehensive income:	-	-	-		-		-		-		-		-		-
Net income	-	-	-	$	5,874,420		5,718,304		-		5,718,304		156,116		5,874,420
Other Comprehensive income, net of tax:
Unrealized earnings on investment securities, net of tax effect of $226,832	-	-	-		136,600		-		-		136,600		-		136,600
Actuarial gain (loss), net of tax effect of $482,535	-	-	-		(979,694	)	-		-		(979,694	)	-		(979,694	)
Translation adjustment	-	-	-		(634,606	)	-		-		(621,559	)	(13,047	)	(634,606	)
Total other comprehensive income	-	-	-		(1,477,700	)	-		(1,464,653	)	-		-		-
Comprehensive income	-	-	-	$	4,396,720		-		-		-		-		-
Balance at December 31, 2009	40,473	10,117,791	4,044,669				9,247,252		(1,026,001	)	22,383,712		634,718		23,018,430
Acquired non-controlling interest	-	-	(804	)	-		-		-		(804	)	804		-
Other non-controlling interest	-	-	-		-		-		-		-		4,444		4,444
Issuance of company shares	-	337	188		-		-		-		525		-		525
Distribution of dividends	-	-	-		-		(3,682,998	)	-		(3,682,998	)	(418,558	)	(4,101,556	)
Return of Capital due to a Spin-Off	-	-	-		-		-		-		-		(144,251	)	(144,251	)
Comprehensive income:	-	-	-		-		-		-		-		-		-
Net income	-	-	-	$	8,442,925		8,211,035		-		8,211,035		231,889		8,442,925
Other Comprehensive income, net of tax:
Unrealized earnings on investment securities, net of tax effect of $ 8,819	-	-	-		997,425		-		-		997,425		-		997,425
Actuarial gain (loss), net of tax effect of $ 206,699	-	-	-		(419,661	)	-		-		(419,661	)	-		(419,661	)
Translation adjustment	-	-	-		(313,642	)	-		-		(313,947	)	305		(313,642	)
Total other comprehensive income	-	-	-		264,122		-		263,817		-		-		-
Comprehensive income	-	-	-	$	8,707,047		-		-		-		-		-
Balance at December 31, 2010	40,473	$ 10,118,128	$ 4,044,053			$	13,775,291	$	(762,184	)	$ 27,175,285	$	309,351	$	27,484,636

F-63

EFPlaceholder

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

C) 5. Supplemental consolidated Comprehensive Income

Net Income	2010 — $ 8,442,925	$	5,874,420	$	8,848,139
Other Comprehensive income, net of tax:
Unrealized earnings on investment securities, net of tax:	997,425		136,600		524,729
Unrealized actuarial gain (loss), net of tax	(419,661	)	(979,694	)	613,251
Translation adjustment	(313,642	)	(634,606	)	316,895
Total other comprehensive income	264,122		(1,477,700	)	1,454,875
Comprehensive income	8,707,047		4,396,720		10,303,014
Comprehensive (income) loss attributable to the non-controlling interest	(232,194	)	(143,069	)	(23,147	)
Comprehensive income attributable to Ecopetrol	$ 8,474,853	$	4,253,651	$	10,279,867

A detail of accumulated other comprehensive income attributable to Ecopetrol, including the related income tax effects, is presented below:

	2010 — Before-Income Tax		(Income Tax Expense)		Net of Income Tax
	Amount		or Benefit		Amount
Unrealized gain (loss) on securities available for sale	$ 1,734,255		$ (25,802	)	$ 1,708,453
Pension liability - net unamortized actuarial gain (loss)	(2,639,033	)	870,881		(1,768,152	)
Cumulative translation adjustment	(702,485	)	-		(702,485	)
Other comprehensive income (loss)	$ (1,607,263	)	$ 845,079		$ (762,184	)

	2009 — Before-Income Tax		(Income Tax Expense)		Net of Income Tax
	Amount		or Benefit		Amount
Unrealized gain (loss) on securities available for sale	$ 745,649		$ (34,621	)	$ 711,028
Pension liability - net unamortized actuarial gain (loss)	(2,012,673	)	664,182		(1,348,491	)
Cumulative translation adjustment	(388,538	)	-		(388,538	)
Other comprehensive income (loss)	$ (1,655,562	)	$ 629,561		$ (1,026,001	)

	2008 — Before-Income Tax	(Income Tax Expense)			Net of Income Tax
	Amount	or Benefit			Amount
Unrealized gain (loss) on securities available for sale	$ 835,882	$	(261,454	)	$ 574,428
Pension liability - net unamortized actuarial gain (loss)	(550,443	)	181,646		(368,797	)
Cumulative translation adjustment	233,021		-		233,021
Other comprehensive income (loss)	$ 518,460	$	(79,808	)	$ 438,652

F-64

EFPlaceholder

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

D) Summary of significant differences between Colombian Government Entity GAAP and U.S. GAAP and required U.S. GAAP disclosures

i. INVESTMENT SECURITIES

The Company’s investments include both marketable securities and non-marketable securities. Under RCP, the Company classifies investment securities based on the form of their investment return, either as fixed-yield investment or as variable-yield investments. Fixed-yield investments generally represent debt securities and are initially recorded at cost with subsequent adjustments to fair value recorded in the income statement. Variable-yield investments generally represent equity securities or interests in other entities and are initially recorded at cost. Subsequent adjustments to fair value are made with increases in fair value resulting in an increase to equity, while decreases in fair value are charged to the income statement. Fair values are determined using quoted market prices, if and when available. In the absence of quoted market prices, these investments are recorded at Management’s estimate of fair value using discounted cash flow techniques.

Under U.S. GAAP, the Company has classified its investment securities as held to maturity or available for sale, as defined in ASC Sub-topic 320-10-25, Accounting for Certain Investments in Debt and Equity Securities. Debt security investments for which the Company has demonstrated its positive ability and intent to hold until maturity are classified as held-to-maturity. Such investments are reported at amortized cost. Investments classified as available-for-sale are reported at fair value, with unrealized gains and losses reported, net of taxes, as a component of other comprehensive income.

In the event any other than temporary impairment of the values of the investments occurs, the impairment loss is recorded in income.

F-65

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The Company’s short-term and long-term investments at December 31, 2010, December 31, 2009, and 2008 consist of the following:

As of December 31, 2010	Aggregated Fair Value	Gross Unrealized Holding Gains	Gross Unrealized Holding Losses		Gross Recognized Losses		Cost Basis
Short-term Investments - Available for Sale Securities:
Securities issued or secured by Colombian government	$ 19,527	$ 255	$ -		$ -		$ 19,272
Securities issued or secured by financial entities	39,408	-	(1,338	)	(156	)	40,902
Total Short-term Investments Classified as Available for Sale	58,935	255	(1,338	)	(156	)	60,174
Long-term Investments - Available for Sale Securities:
Securities issued or secured by Colombian government	1,622,809	35,723	(5,546	)	(19,654	)	1,612,286
Securities issued or secured by government sponsored enterprise (GSEs)	1,498,957	33,141	(1,021	)	(21,382	)	1,488,219
Securities issued or secured by financial entities	80,636	201	(458	)	(1,430	)	82,323
Securities issued or secured by government USA	642,974	9,061	(1,924	)	-		635,837
Other debt securities	29,585	459	-		(136	)	29,262
Securities issued by mixed- economy governmental entities	1,932,115	1,656,071	-		-		276,044
Total Long-term Investments Classified as Available for Sale	5,807,075	1,734,656	(8,949	)	(42,602	)	4,123,971
Total Available for Sale	$ 5,866,011	$ 1,734,911	$ (10,287	)	$ (42,758	)	$ 4,184,145
	Aggregated Fair Value	Gross Unrealized Holding Gains	Gross Unrealized Holding Losses		Net Carrying Amount
Short-term Investments - Held to Maturity Securities:
Other debt securities	$ 7,700	$ -	$ -		$ 7,700
Securities issued or secured by government USA	9,867	199	-		9,669
Total Short-term Investments Classified as Held to Maturity	17,567	199	-		17,369
Long-term Investments- Held to Maturity Securities:
Securities issued or secured by Colombian government	120,322	9,567	-		110,755
Total Long-term Investments Classified as Held to Maturity	120,322	9,567	-		110,755
Total Held to Maturity	$ 137,889	$ 9,766	$ -		$ 128,124

F-66

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

As of December 31, 2009	Aggregated Fair Value	Gross Unrealized Holding Gains	Gross Unrealized Holding Losses		Gross Recognized Losses		Cost Basis
Short-term Investments - Available for Sale Securities:
Securities issued or secured by Colombian government	$ 126,376	$ 5,472	$ (965	)	$ (6,813	)	$ 128,682
Securities issued or secured by government sponsored enterprise (GSEs)	41,863	4,472	-		-		37,391
Securities issued or secured by financial entities	10,593	1,093	-		-		9,500
Total Short-term Investments Classified as Available for Sale	178,832	11,037	(965	)	(6,813	)	175,573
Long-term Investments - Available for Sale Securities:
Securities issued or secured by Colombian government	597,761	51,997	(375	)	(5,001	)	551,140
Securities issued or secured by government sponsored enterprise (GSEs)	1,670,687	48,476	-		-		1,622,211
Securities issued or secured by financial entities	592	-	(412	)	-		1,004
Securities issued or secured by government USA	153,186	-	(20,667	)	-		173,852
Securities issued by mixed- economy governmental entities	764,853	640,740	-		-		124,113
Total Long-term Investments Classified as Available for Sale	3,187,078	741,213	(21,454	)	(5,001	)	2,472,320
Total Available for Sale	$ 3,365,910	$ 752,250	$ (22,419	)	$ (11,814	)	$ 2,647,893
	Aggregated Fair Value	Gross Unrealized Holding Gains	Gross Unrealized Holding Losses		Net Carrying Amount
Short-term Investments - Held to Maturity Securities:
Other debt securities	$ 8,280	$ 404	$ -		$ 7,876
Total Short-term Investments Classified as Held to Maturity	8,280	404	-		7,876
Long-term Investments- Held to Maturity Securities:
Securities issued or secured by Colombian government	129,769	9,655	-		120,114
Securities issued or secured by government USA	10,950	636	-		10,314
Total Long-term Investments Classified as Held to Maturity	140,719	10,291	-		130,428
Total Held to Maturity	$ 148,999	$ 10,695	$ -		$ 138,304

F-67

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Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

	Aggregated Fair Value	Gross Unrealized Holding Gains	Gross Unrealized Holding Losses		Gross Recognized Losses		Cost Basis
As of December 31, 2008
Short-term Investments - Available for Sale Securities:
Securities issued or secured by Colombian government	$ 239,819	$ 17,825	$ (5,559	)	$ -		$ 227,553
Securities issued or secured by government sponsored enterprise	989,949	148,808	(4,158	)	-		845,299
Securities issued or secured by financial entities	92,535	13,026	-		-		79,509
Other debt securities	23,457	3,175	-		-		20,282
Total Short-term Investments classified as Available for Sale	1,345,760	182,834	(9,717	)	-		1,172,643
Long-term Investments - Available for Sale Securities:
Securities issued or secured by Colombian government	821,342	123,957	(6,259	)	-		724,733
Securities issued or secured by government sponsored enterprise	2,515,761	427,156	(215	)	(390	)	2,110,413
Securities issued or secured by financial entities	596,792	110,263	(64	)	-		487,898
Securities issued or secured by government USA	2,169,197	35,436	(27,653	)	-		2,161,414
Other debt securities	1,452	144	-		(95	)	1,403
Total Long-term Investments classified as Available for Sale	6,104,544	696,956	(34,191	)	(485	)	5,485,861
Total Available for Sale	$ 7,450,304	$ 879,790	$ (43,908	)	$ (485	)	$ 6,658,504
	Aggregated Fair Value	Gross Unrecognized Holding Gains	Gross Unrecognized Holding Losses		Net Carrying Amount
Long-term Investments- Held to Maturity Securities
Securities issued or secured by Colombian government	$ 132,133	$ 993	$ (2,533	)	$ 133,693
Securities issued or secured by government USA	12,436	1,129	-		11,307
Other debt securities	35,829	1,733	-		34,096
Total Long-term Investments Classified as Held to Maturity	$ 180,398	$ 3,855	$ (2,533	)	$ 179,096

F-68

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The maturities of fixed-income investments at December 31, 2010, and December 31, 2009 are as follows:

As of December 31, 2010	Available for Sale		Held to Maturity
	Cost Basis	Fair Value	Cost Basis	Fair Value
Due in one year or less	$ 60,174	$ 58,935	$ 17,369	$ 17,567
Due in one year to five years	3,719,718	5,396,547	110,755	120,322
Due in five years to ten years	404,253	410,529	-	-
Total	$ 4,184,145	$ 5,866,011	$ 128,124	$ 137,889
As of December 31, 2009
	Available for Sale		Held to Maturity
	Cost Basis	Fair Value	Cost Basis	Fair Value
Due in one year or less	$ 175,573	$ 178,832	$ 7,876	$ 8,280
Due in one year to five years	2,397,956	3,123,537	130,428	140,719
Due in five years to ten years	74,364	63,541	-	-
Total	$ 2,647,893	$ 3,365,910	$ 138,304	$ 148,999

Amounts recorded in OCI in prior years realized on securities available for sale sold at December 31, 2010, 2009 and 2008 were:

	2010	2009	2008
Losses	$ 67,225	$ 727,697	$ 188,060
Gains	$ 24,322	$ 38,539	$ 48,108

Foreign Exchange Gains and Losses on Securities Available for Sale

Under RCP, changes in account balances resulting from variations in foreign currency exchange rates are reflected in the company’s net income. Under U.S. GAAP, any change in value of available-for-sale debt securities as a result of changes in foreign currency exchange rates is reflected in equity as required under the guidance in ASC subtopic 320-10-35. The amount reclassified from earnings under RCP purposes to other comprehensive income for U.S. GAAP purposes includes $18,931, $88,278 and $635,430 in 2010, 2009 and 2008, respectively that correspond to exchange rate differences.

F-69

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Unrealized loss

Available-for-sale securities in an unrealized loss position as of December 31, 2010 and 2009 are as follows:

EFPlaceholder

2010	Less Than 12 months		12 Months of Greater		Total
Descriptions of Securities	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Securities issued or secured by Colombian government	346,690	5,432	6,483	115	353,173	5,547
Securities issued or secured by financial entities	69,756	912	121	883	69,877	1,795
Securities issued or secured by government sponsored enterprise (GSEs)	149,485	1,021	0	0	149,485	1,021
Securities issued or secured by government USA	186,224	1,924	0	0	186,224	1,924
Total	752,155	9,289	6,604	998	758,759	10,287

2009	Less Than 12 months		12 Months of Greater		Total
Descriptions of Securities	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Securities issued or secured by Colombian government	18,608	375	27,013	965	45,620	1,341
Securities issued or secured by financial entities	0	0	592	412	592	412
Securities issued or secured by government USA	153,186	20,667	0	0	153,186	20,667
Total	171,793	21,042	27,605	1,377	199,398	22,419

The unrealized losses on Ecopetrol investments in debt securities were caused by interest rate increases. Because Ecopetrol does not intend to sell the investments and it is not more likely than not that Ecopetrol will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, Ecopetrol does not consider those investments to be other-than-temporarily impaired at December 31, 2010 and 2009.

Restricted Assets

Under US GAAP the Company classifies Santiago de las Atalayas securities as restricted assets because its availability depends on a court decision.

These securities are represented in the chart below:

2010
Concept	Amount
Investments available for sale	361,607
Investment fund *	1,251
Cash	28,164
Total	391,022

2009
Concept	Amount
Investments available for sale	380,463
Investment fund *	469
Total	380,932

*This fund receives the coupons and principal payments of the Santiago de las Atalayas investments in US dollars.

F-70

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The investments related to Santiago de las Atalayas at December 31, 2010 consist of the following:

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As of December 31, 2010	Aggregated Fair Value	Gross Unrealized Holding Gains	Gross Unrealized Holding Losses		Gross Recognized Losses		Cost Basis
Long-term Investments - Available for Sale Securities:
Securities issued or secured by Colombian government	$ 201,172	$ 7,835	$ (2,126	)	$ (10,062	)	$ 205,525
Securities issued or secured by government USA	160,435	3,920	-		-		156,515
Total Long-term Investments Classified as Available for Sale	$ 361,607	$ 11,755	$ (2,126	)	$ (10,062	)	$ 362,040

As of December 31, 2009	Aggregated Fair Value	Gross Unrealized Holding Gains	Gross Unrealized Holding Losses		Gross Recognized Losses		Cost Basis
Long-term Investments - Available for Sale Securities:
Securities issued or secured by Colombian government	$ 281,723	$ 18,481	$ (88	)	$ (4,188	)	$ 267,518
Securities issued or secured by government USA	98,740	-	(2,574	)	-		101,314
Total Long-term Investments Classified as Available for Sale	$ 380,463	$ 18,481	$ (2,662	)	$ (4,188	)	$ 368,832

The unrealized gains and losses of the restricted assets are recognized in Other Comprehensive Income

a. Impairment

Impairment of investment securities are reported differently under RCP and U.S. GAAP. Under RCP, impairment is also charged to earnings in the current period, but recoveries in value can be recorded up to the amount that was originally impaired. Under U.S. GAAP, other-than-temporary impairment should be charged to earnings in the current period and a new cost basis for the security is established. Subsequent increases in the cost basis of an impaired investment as a result of a recovery in fair value are included in Other Comprehensive Income.

The Company has a policy under which they conduct periodic reviews of marketable securities to assess whether other-than-temporary impairment exists. A number of factors are considered in performing an impairment analysis of securities. Those factors include:

a) the length of time and the extent to which the market value of the security has been less than cost;

b) the financial condition and near-term prospects of the issuer, including any specific events which influence the operations of the issuer (such as changes in technology that may impair the earnings potential of the investment, or the discontinuance of a segment of a business that may affect the future earnings potential); and

c) carry out the analysis as instructed in ASC paragraph 320-10-65-1 which includes the comparison of the fair value and the amortized cost, evaluates the intention to sell the security and if it is more-likely-than-not that the company will be required to sell the security prior to recovery, including the existence of a credit loss.

The Company also takes into account changes in global and regional economic conditions and changes related to specific issuers or industries that could adversely affect these values.

Ecopetrol’s marketable security portfolio consists only of debt securities, such as treasury investments, bonds, and commercial papers. For this reason, the Company has an internal policy to limit the ratings of their investments and issuers to the following ratings:

Credit Rating Agency	Short-term Credit Rating	Long-Term Credit Rating
Standard & Poor’s	A-1	A
Moody’s Investors Services	P-1	A2
Fitch Ratings	F-1	A

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F-71

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The Company recognized impairment on its investment securities amounting to $44,851, $5,724 and $485 in 2010, 2009 and 2008, respectively.

ii. INVESTMENTS IN NON-MARKETABLE SECURITIES

a. Equity Method and Valuation Surplus

Under RCP, equity securities for which prices are unquoted, or for which trading volume is minimal, and the Company does not control the investee, are accounted for under the cost method and subsequently are valued by the shareholders' equity comparison method. Under the equity comparison method, the Company accounts for the difference between its proportionate share of shareholders' equity of the investee and its acquisition cost, adjusted for inflation through 2001, in a separate valuation account in the assets and equity (valuation surplus), if the proportionate share of shareholders’ equity of the investee is higher than its cost or as an allowance for losses, affecting net income, if the cost is higher than the proportionate share of shareholders’ equity of the investee. The proportionate share of shareholder’s equity is considered as the market value for this purpose and is known as book value. Under this method, the Company only records dividends as income when received. From 2008 the RCP incorporated the concept of significant influence for the recognition of investments in associated entities and established the equity method to update these investments.

Under U.S. GAAP, an investment in a non-marketable equity security is recorded using the equity method when the investor can exercise significant influence over the investee, or the cost method when significant influence cannot be exercised. Under the equity method of accounting for U.S. GAAP the carrying value of such an investment is adjusted to reflect (1) the Company’s proportionate share of earnings or losses from the investee and (2) additional investments and distributions of dividends. The Company’s proportionate share of income or loss is reported in earnings but any dividends or additional investments are reported only as an adjustment of the carrying amount of the investment.

The differences between the application of the cost and the equity method under U.S. GAAP were:Reversal of valuations and allowances for losses recorded under RCP

· Reversal of inflation adjustments recorded under RCP

· Reversal of Goodwill amortization and impairment

· Inclusion of share of earnings or losses under U.S. GAAP, net of intercompany eliminations.

· Inclusion of share in Other Comprehensive Income under U.S. GAAP.

The summary of the investments valued by the equity method for U.S. GAAP purposes is shown in the following table:

For the Year Ended December 31, 2010

Company		Equity Calculated under U.S. GAAP	Equity Under Colombian GAAP	Assets Under Colombian GAAP	Liabilities Under Colombian GAAP	Net Income (Loss) Under Colombian GAAP			Equity Method Accounting Adj (*)	Total Equity Method Investment
Invercolsa S.A.	32 %	$ 312,711	$ 536,744	$ 537,319	$ 575	$ 87,755	$	99,348	$ -	$ 99,348
Serviport S.A.	49 %	3,111	14,656	17,312	2,656	(1,637	)	1,524	-	1,524
Offshore International Group	50 %	712,375	780,957	1,187,267	406,310	109,283		356,188	469,851	826,039
Ecodiesel S.A.	50 %	11,191	23,411	132,028	108,617	2,073		5,596	-	5,596
Sociedad Portuaria de Olefinas	50 %	427	780	1,022	242	33		213	-	213
							$	462,869	$ 469,851	$ 932,720

F-72

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Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

For the Year Ended December 31, 2009

Company		Equity Calculated under U.S. GAAP	Equity Under Colombian GAAP	Assets Under Colombian GAAP	Liabilities Under Colombian GAAP	Net Income (Loss) Under Colombian GAAP			Equity Method Accounting Adj (*)	Total Equity Method Investment
Invercolsa S.A.	32 %	$ 230,058	$ 468,507	$ 479,104	$ 10,597	$ 71,903	$	73,078	$ -	$ 73,078
Serviport S.A.	49 %	4,742	15,170	17,557	2,387	941		2,324	-	2,324
Offshore International Group	50 %	640,866	726,398	860,151	133,753	69,845		320,433	754,875	1,075,307
Ecodiesel S.A.	50 %	5,985	15,842	91,641	75,799	336		2,992	-	2,992
Sociedad Portuaria de Olefinas	50 %	982	834	1,106	272	(134	)	491	-	491
							$	399,318	$ 754,875	$ 1,154,193

(*) Represents the purchase price allocation adjustments to Offshore International Group assets and liabilities as a result of the 2009 acquistion.

Concept	2010	2009
Fair Value of Property, Plant and Equipment	$ 3,665	$ 4,236
Goodwill net of Taxes	466,186	750,638
Total	$ 469,851	$ 754,875

The number of shares which the Company owns with respect to its investment in Invercolsa S.A. has been subject to a legal dispute with another Invercolsa shareholder. Lower court decisions had ruled in favor of both the Company and the other shareholder and a final court decision in January 2011 determined that 324 million shares, equivalent to 11.58% of the capital stock of Invercolsa should be returned to Ecopetrol. As a result Ecopetrol controls 43.35%. The dividends paid in respect of the shares returned to Ecopetrol are still in dispute, as well as the ownership of shares constituting 8.53% of Invercolsa. The resolution of these matters is still pending.

Because the court decision was issued in January 2011, and the registration of the shares on behalf of Ecopetrol was completed in February 2011, Ecopetrol recognized the investment under the equity method, applying the percentage owned as of December 31, 2010 (31.76%) as the transaction represents a contingency gain. As such, the amount of the Company’s investment is adjusted only for its proportionate share of Invercolsa’s net income or loss and any dividends received or additional investments made, and no adjustment is made for changes in Invercolsa’s participation.

b. Variable Interest Entity (VIE)

Under U.S. GAAP, ASC paragraph 810-10-15-13 requires that consolidated financial statements include subsidiaries in which the Company has a controlling financial interest, i.e., a majority voting interest. However, application of the majority voting interest requirement to certain types of entities may not identify the party with a controlling financial interest because that interest may be achieved through other arrangements. Thus, the U.S. GAAP rules also require a Company to consolidate a variable interest entity if that company has a primary beneficiary that has the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and will absorb a majority of the entity’s expected losses, receive a majority of the entity’s expected residual returns, or both. In determining whether it is a primary beneficiary of a variable interest entity, a company shall treat variable interests in that same entity held by the Company’s related parties as its own interest. Under RCP, consolidated financial statements only include subsidiaries in which the Company has the majority voting interest.

Ecopetrol owned 35.29% of Oleoducto Central S.A. (hereinafter “Ocensa”) and was consolidated considering that it was considered the primary beneficiary based on its variable interests in Ocensa. In addition, in March 2009, through a direct transaction with Enbridge Inc., Ecopetrol acquired an additional 24.71% ownership interest for $998,903 in cash. As of such date, Ecopetrol’s participation in Ocensa became 60%. Until March 2009, Ocensa was valued at cost under RCP.

According to Colombian Government Entity GAAP, the acquisition of the 24.71% of the non-controlling interest is accounted for as an increase in investment and goodwill; under U.S. GAAP, the ownership interest increase in a subsidiary is an equity transaction , Non-controlling Interests in Consolidated Financial Statements (ASC Subtopic 810-10, Consolidation - Overall) is accounted for as an equity transaction which decreases additional paid-in-capital in by the difference between the non-controlling interest carrying amount and the consideration paid. Under U.S. GAAP, the additional paid-in capital effect of the transaction was $610,007. A corresponding deferred income tax effect of $177,241 was recorded, resulting in a net effect of $432,766. EFPlaceholder

F-73

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The summary of Ocensa’s financial information under U.S. GAAP as of and for the years ended December 31, 2009, and 2008, are as follows:

Assets	2009 — $ 1,268,681	$	1,000,110
Liabilities	(61,566	)	(106,447	)
Equity	1,207,115		893,663
Net income	$ 497,471	$	10,284

In October 2009, the subsidiary Oleducto de los Llanos Orientales (hereinafter “ODL”) assigned its rights under a "Ship or Pay” contract for the completion of a securitization for the purpose of obtaining the funds required to finish the second phase of the project, the refund of capital to the associates, and maintain the capital structure initially agreed. The structure of this issuance was made through an assets of a trust fund (hereinafter “Fideicomiso P.A. ODL - ECOPETROL”) administered by Corficolombiana S.A., who have to pay the security holder on the due dates. Additionally, each month, the trust company must report to ODL income and expenses that are generated in this process and that are paid, if applicable, to ODL as advances.

Based on the ASC 810 definition, ODL determined that since they are responsible for the entire operation of the Fideicomiso P. A. ODL - ECOPETROL, it qualified as a Variable Interest Entity and therefore consolidated its financial statements for U.S. GAAP purposes.

The summary of Fideicomiso P. A. ODL - ECOPETROL financial information under USGAAP as of and for the years ended December 31, 2010 and 2009, are as follows:

Assets	2010 — $ 522,342	$	514,484
Liabilities	(509,288	)	(512,271	)
Equity	$ 13,054	$	2,213
Net income	$ 13,052	$	2,212

c. Impairment

Under Colombian Government Entity GAAP it is not mandatory to perform impairment tests of the Equity Method Investments unless positive evidence is identified. For the year 2010, the investment in Offshore International Group was evaluated for impairment resulting in a loss of $287,662.

The impairment under U.S. GAAP ASC paragraph 325-20-35 1A and 2, assets held at cost, including non-marketable equity investments, should be evaluated for impairment if the Company is aware of any events or changes in circumstances that may have significant adverse effects on the fair value of the investment. If the Company believes such circumstances exist, the Company would estimate the asset’s fair value and compare that to cost to determine if any impairment is necessary. During 2010 the Company evaluated its investments and concluded there was an impairment in Offshore International Group “OIG” under both Colombian Government Entity GAAP and U.S. GAAP. This 2010 impairment loss under U.S.GAAP equaled $349,033. For the year 2009 the Company experienced a U.S. GAAP impairment loss of $4,810.

F-74

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Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

iii. DERIVATIVES

Ecopetrol is exposed to market risk from changes in foreign currency exchange rates, interest rate risk of its financial obligations and to commodity price risk, resulting from the fluctuations of international crude oil prices which affect its earnings, cash flows and financial condition. Ecopetrol manages its exposure to these market risks through its regular operating and financial activities and, when appropriate, through the use of derivative financial instruments. Ecopetrol has established a control to assess, approve and monitor derivative financial instrument activities. Ecopetrol does not buy, hold or sell derivative financial instruments for trading purposes. Ecopetrol's primary foreign currency exposures relate to the U.S. dollar; however, Ecopetrol manages its foreign currency risk position internally, using non-deliverable forwards, according to the size of the mismatches between its asset-liability position in U.S. Dollars and its asset-liability position in Colombian pesos. If no mismatches occur Ecopetrol has a perfect natural hedge. Ecopetrol also utilizes other derivative agreements to mitigate changes in the fair value of commodities. None of the derivatives were designated or documented for hedge accounting.

The Company periodically enters into call and put option contracts to cover the price risk associated with fluctuations in market prices of asphalt. The option contracts limit the unfavorable effect that the price increase will have on asphalt. The maximum term over which the Company is managing its exposures to the variability for commodity price risk is 12 months.

As of December 31, 2009, the Company had entered into four (4) commodity call options with an effective date of January 1, 2010 and a termination date of December 31, 2010. Under these call options, Ecopetrol had the right to purchase 2.040.000 bls. equivalent of asphalt.

As of December 31, 2010, the Company had entered into a commodity put option with an effective date of January 1, 2011 and a termination date of December 31, 2011. Under these put options, Ecopetrol has the right to sell 2.000.004 bls. equivalent of crude oil.

The subsidiary Refineria de Cartagena has 41 foreign currency delivery forward transactions outstanding to cover the exchange rate exposure created by the purchase of property plant and equipment in Euros. The purchased equipment is part of the new refinery under construction.

Total results recognized related to derivative activities during the periods are as follows:

	2010 — Realized		Unrealized		2009 — Realized	Unrealized		Realized			Unrealized
Options (1)	$ (13,175	)	$ (1,474	)	$ 66,889	$	25,943	$	-		$ -
Swaps	(7,031	)	2,242		(23,757	)	(438	)	(45,024	)	-
Forwards	245		107		5,862		-		(24,879	)	-
Total	$ (19,962	)	$ 875		$ 48,994	$	25,505	$	(69,903	)	$ -

(1) Amounts include premiums paid

Under RCP, each derivative has its own accounting treatment depending on the type of derivative. Option premiums paid are recorded as deferred charges and amortized to the income statement as financial expense in a straight line basis over the life of the contract, the option contract is recognized in memo accounts unless it is likely to be exercised, the gain is recognized as an investment. Swap and forward contracts net result is recorded as an investment. In all cases, gains and losses are recognized in earnings as financial income or expense. Amounts receivable or payable upon maturity resulting from net payments are recorded using current rates for the period.

U.S. GAAP requires that all derivative instruments be recorded on the balance sheet at fair value. Changes in the fair value of derivatives are recorded each period in current earnings. See note xxvii for amounts recorded on the balance sheet relating to derivative instruments. The fair value of derivatives instruments is recorded other assets and other liabilities.

F-75

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Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Under U.S. GAAP, embedded derivative instruments shall be separated from the host contract, and accounted for using different measurement attributes, if certain conditions are met. In the case of the Company, some contracts to which the Company is counterparty include embedded foreign exchange derivatives. According to ASC paragraph 815-15-15-10 through 13 these contracts do not require separate accounting for the embedded derivative and the host contract because contract payments are made in the functional currency of a party to the contract or contract payments are made in a currency in which the price of the good or service delivered is routinely denominated in international commerce.

Gas imbalance agreements were evaluated to identify if they were derivatives. Management concluded these agreements are not derivatives since they do not contain fixed notional amounts.

iv. EXCHANGE OF NON-MONETARY ASSETS

During 2007, the Company exchanged a refinery business with a book value of $234,371 for a 49% interest in Refinería de Cartagena S.A. The Company estimated the fair value of the 49% investment as $1,369,546. Under RCP, this difference between the cost of the assets given and the fair value of the assets received was recorded as an increase to asset revaluation and equity. However, under ASC Subtopic 845-10-30, 51% of the difference between the book value of the Refinery and the fair value of the assets received, which the Company determined to be a more reliable indicator of the value of the exchange since the fair value of the investment was greater, was recorded in the results of operations as a gain in the amount of $578,939. The remaining 49% of the difference, equivalent to $556,236 is to be amortized over the useful life of the equipment. The reconciliation includes $23,640 in 2010 and 2009 and $55,623 in 2008 corresponding to the amortization of the deferred gain.

v. DEFERRED CHARGES

Under RCP, the Company deferred certain pre-operating expenses and other deferred charges, which are expensed as incurred under U.S. GAAP. These charges include research studies and projects in the research and development phase. Normal recurring maintenance is also included in this category. Under U.S. GAAP, the mentioned deferred charges are not applicable and must be reclassified or reversed.

vi. EMPLOYEE BENEFIT PLANS

Under Colombian Government Entity GAAP, the Company estimates the net present value of its actuarial liability for all pension and other post-retirement obligations. Annually, the Company estimates the net present value of the actuarial liability and adjusts the recorded liability accordingly. The amount of the adjustment is reflected in the Company’s net income.

For other post-retirement benefits, the payments are made according to seniority and the salary at the time of retirement, as stipulated in the Collective Labor Agreement and the Agreement No. 01.

Under the post-retirement benefits plan for Ecopetrol personnel, the Company covers 90% of educational expenses for children of employees, including enrollment fees, tuition and other associated costs. A fixed annual sum, depending on grade level, is also provided for the acquisition of textbooks. Educational coverage includes kindergarten, elementary school, high school and college. Ecopetrol´s financial statements must also show the cost of post-retirement educational benefits for children of retired employees, since benefits continue irrespective of retirement or death.

According to the Collective Labor Agreement and Agreement No. 01, the Company will pay for health services for employees and enrolled family members. Health services include: office visits and required laboratory services, drugs, diagnostic examinations, ambulatory treatment, hospitalization due to illness or accident, surgery due to illness or accident, maternity and rehabilitation treatments and orthopedic parts. Therefore, such post-retirement health benefit costs are recorded in the RCP Ecopetrol financial statements, since retired workers and enrolled family members continue to receive full medical coverage. The same is true for deceased non-retired employees.

F-76

EFPlaceholder

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

U.S. GAAP requires the recognition of pension, health care and education plans costs based on actuarial computations under a prescribed methodology which differs from that used under RCP. For purposes of U.S. GAAP reconciliation, the transition obligation is calculated at the date the Company adopted the ASC Topic 420, 715, 805, 835, 958 and 980 Employers Accounting for Pensions and is being amortized from January 1, 1989. The transition obligation for the education and medical plan is being amortized from January 1, 1995.

Under Colombian law, employees are entitled to one month salary for each year of service. This benefit is known as the “severance obligation” or “cesantias”. This benefit accumulates during the time of employment and is paid to employees upon their termination or retirement from Ecopetrol. However, employees may request advanced benefit payments at any time. In 1990, the Colombian government revised its labor regulations to permit companies, subject to employee approval, to pay the severance obligation to their employees on a current basis. Law 50 of 1990 also enabled each employee to freely choose yearly which trust fund would manage the amount accrued during each year in which they are eligible for severance payments. This amount must be transferred by the company to the trust fund no later than the next subsequent year.

In addition, the Company under Colombian law must pay pension bonds for certain employees when they leave Ecopetrol. And those bonds payable accrue interest at the DTF rate, which rate averaged 5.6% for 2009, and 6.27% for 2010.

The economic assumptions used in the determination of pension obligations under U.S. GAAP differ from those used under RCP because the latter are established annually by the Colombian regulations.

The combined costs for the above mentioned benefit plans, determined using U.S. GAAP, for the years ended December 31, 2010, 2009 and 2008 are summarized below: (all obligations were measured at the year-end)

Components of net periodic benefit costs:	2010 — Pension		Other Benefits (*)	Total			2009 — Pension		Other Benefits (*)		Total		2008 — Pension	Other Benefits (*)		Total
Service cost	$ 46,686		$ 32,840	$	79,526		$ 21,126		$ 40,279		$ 61,405		$ 57,957	$	20,549	$	78,506
Interest cost	845,144		386,159		1,231,303		1,037,577		446,502		1,484,079		861,042		787,838		1,648,880
Expected Return on plan assets	(1,303,018	)	(290,075	)	(1,593,093	)	(1,013,399	)	(238,744	)	(1,252,143	)	(366,541	)	(78,806	)	(445,347	)
Amortization of net (gain) or loss	22,977		41,293		64,270				10,009		10,009		270,231		143,337		413,568
Net periodic pension cost under U.S. GAAP - (gain) or loss	(388,211	)	170,217		(217,994	)	45,304		258,046		303,350		822,689		872,918		1,695,607
Net periodic pension cost under Colombian GAAP (gain) or loss	264,693		(146,411	)	118,282		118,677		527,124		645,801		(608,473	)	852,901		244,428
Difference to be recognized under U.S. GAAP (income) loss	$ (652,904	)	$ 316,628	$	(336,276	)	$ (73,373	)	$ (269,078	)	$ (342,451	)	$ 1,431,162	$	20,017	$	1,451,179

(*) Other benefits include education, health, pension bonds and accrued severance.

F-77

EFPlaceholder

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The changes in the benefit obligations and in plan assets for the above mentioned benefit plans, determined using U.S. GAAP, for the years ended December 31, 2010 and 2009, are summarized below:

	Pension Plans — 2010		2009		Other Benefits — 2010		2009
Reconciliation of project benefit obligation:
Project benefit obligation as of January 1	$ (10,338,890	)	$ (8,910,139	)	$ (4,844,216	)	$ (3,838,042	)
Cost of service	(46,686	)	(21,126	)	(32,840	)	(40,279	)
Cost of interest	(845,144	)	(1,037,577	)	(386,159	)	(446,502	)
Actuarial (gain) loss	(58,216	)	(920,726	)	120,377		(729,243	)
Benefit payments	602,693		550,678		254,017		209,850
Projected benefit obligation as of December 31	(10,686,243	)	(10,338,890	)	(4,888,821	)	(4,844,216	)
Reconciliation of plan assets :
Fair value of plan assets as of January 1	8,973,955		8,501,667		1,997,767		1,671,124
Fund Contribution	-		-		-		(80,264	)
Expected return on plan assets	1,303,018		1,013,399		290,075		238,744
Benefits paid	(602,693	)	(550,678	)	(6,776	)	-
Actuarial (gain) loss on plan assets	(569,101	)	9,567		(183,690	)	168,163
Fair value of plan assets as of December 31	9,105,179		8,973,955		2,097,376		1,997,767
Projected benefit obligation, as of December 31	80,142		(308,069	)	(1,813,618	)	(1,890,642	)
Amounts recognized in other comprehensive (income) loss	(1,661,206	)	(1,056,866	)	(977,827	)	(955,807	)
Net liability	(1,581,064	)	(1,364,935	)	(2,791,445	)	(2,846,449	)
Net liability under RCP	383,380		118,676		2,194,048		2,587,711
Net effect under pension plan and other benefits	$ (1,197,684	)	$ (1,246,259	)	$ (597,397	)	$ (258,738	)

Net liability of employee benefit plans is classified as follows:

	Pension Plans — 2010	2009		2010		2009		2010		2009
Current portion	-	-			(468,350	)	(246,881	)	(468,350	)	(246,881	)
Long-term portion	(1,581,064	)	(1,364,935	)	(2,323,095	)	(2,599,568	)	(3,904,159	)	(3,964,503	)
Net liability	(1,581,064	)	(1,364,935	)	(2,791,445	)	(2,846,449	)	(4,372,509	)	(4,211,384	)

The decrease in the asset related to the health fund in 2009 amounting to 80,264, treated as a contribution, was originated in the remaining asset once the partial transfer “conmutación” was completed in 2008.

Under U.S. GAAP, the Company applies the provisions of Statement on ASC Topic 420, 715, 805, 835, 958 and 980, as amended by Statement on ASC Topic No. 450 and 715, Employers Disclosure about Pension and Other Post-retirement Benefits, an amendment to ASC Topic No. 420, 715, 805, 835, 980, 712 and 710. The Company adopted Statement on ASC Topic No. 715 and 958 Employers Accounting for Defined Benefit Pension and Other Postretirement Plans effective January 1, 2006, in respect of its defined benefits pension, health and education plans. Accordingly, the Company recognizes the overfunded and underfunded status of each of its defined benefit pension and other postretirement benefit plans as an asset or liability and to reflect changes in the funded status through Accumulated Other Comprehensive Income, as a separate component of shareholders’ equity. The actuarial calculations are estimated at year-end dates.

F-78

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

As of December 31, 2010 and 2009, net obligation amounts recognized in the balance sheet related to pension, health, education, bonds and severance obligations consist of:

	2010		2009
Long-term liability
Pension	$ (1,581,064	)	$ (1,364,935	)
Health	(2,799,628	)	(2,343,212	)
Education	(413,241	)	(437,424	)
Bonds	899,400		191,319
Severance	(9,626	)	(10,251	)
Total long-term liability	$ (3,904,159	)	$ (3,964,503	)

As of December 31, 2010 and 2009, the amounts recognized in accumulated other comprehensive loss, related to pension, health and education obligations consist of:

	2010		2009		2008
Other comprehensive income
Pension	$ (1,661,206	)	$ (1,056,866	)	$ (145,707	)
Health	(1,373,096	)	(951,590	)	(343,811	)
Education	(139,445	)	(144,247	)	(60,925	)
Bonds	534,714		140,030
Total other comprehensive income	(2,639,033	)	(2,012,673	)	(550,443	)
Deferred income tax effect	870,881		664,182		181,646
Total	$ (1,768,152	)	$ (1,348,491	)	$ (368,797	)

The significant variation in the other comprehensive income 2009 compared to the year 2008, of pension plans and health are due to the impact they had retained product actuarial losses of the applicability of the mortality table, for pension plan was $920,726 and for pension medical was $616,837.

The Company expects the following amounts in other comprehensive income to be recognized as components of net periodic pension cost during 2011:

Pension	0.67	Amortization — $ 592,582
Bonds	13.03	$ 24,941
Health	19.24	$ 49,898
Education	19.24	$ 4,100

As of December 31, 2010 and 2009, the amounts of liability for gains and losses related with pension, health, education and bonds consist of:

Gain (loss)		Cumulative Gain (loss)		Gain (loss)		Cumulative Gain (loss)
Pension	(58,216	)	(1,661,206	)	(920,726	)	(1,056,866	)
Health	(457,941	)	(1,373,096	)	(616,837	)	(951,590	)
Education	(56	)	(139,445	)	(84,273	)	(144,247	)
Bonds	578,374		534,714		(28,133	)	140,030

F-79

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Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The economic assumptions adopted are shown below in nominal terms. Those assumptions used in determining the actuarial present value of the pension obligation and the projected pension obligations for the plan years were as follows:

Pension	Health	Education	Bonds	Severance	Pension	Health	Education	Bonds	Severance
Discount rate	8.00 %	8.50 %	8.00 %	8.00 %	8.00 %	8.50 %	8.50 %	8.50 %	-	-
Rate of compensation and pension increases	3.48 %	3.48 %	3.48 %	3.48 %	3.48 %	5.06 %	4.00 %	4.00 %	-	-
Expected rate of return	4.37 %	-	-	4,37 %	-	4.33 %	-	-	4,33 %	-
Mortality table	*	*	*	*	*	*	*	*	*	*

• Colombian Mortality Table ISS, male and female, 2005-2008.

The Superintendency of Finance concluded a mortality study based on the experience of the affiliated workers to the pension funds and to the Social Security Institute ISS, during the years 2005-2008. The resulting mortality table from such study reflects the current mortality of the Colombian workers. As it was expected, the new table shows a lower mortality rate compared with those of the actual mortality table, ISS, experience 1981-1989. For such reason, the new table was applied for purposes of executing the different actuarial calculations included in this valuation in 2009.

The rate of return of the plan assets during 2010 was 7.85%. We have considered the rate corresponding to the government bonds, TES, at December 31 2010 of 8.0%, and an expected inflation rate equal to 3.48% with a real discount rate of 4.37%.

Estimated future benefit payments

The benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:

Period	Pension Benefits	Health Care Benefits	Education Benefits	Bonds Pension Plan	Severance Plan
2011	$ 612,222	$ 204,843	$ 80,018	$ 177,190	$ 6,299
2012	614,638	196,196	66,353	22,906	53
2013	604,529	191,731	62,690	25,203	74
2014	594,230	186,675	57,059	29,963	97
2015	583,766	181,609	52,138	26,707	125
Years 2016 – 2021	$ 4,376,510	$ 1,299,362	$ 205,643	$ 683,030	$ 13,816

All of the benefits estimated in the table above are to be paid from plan assets. The Company does not have any insurance policies that are intended to cover benefits that plan participants are to receive in the future.

Furthermore, currently the Company does not intend to contribute to the fund in the upcoming fiscal year. Management believes that the plan assets will provide for a sufficient return to cover any payments that are necessary to be made in the upcoming year.

Assumed health care cost trend rates have an effect on the amounts reported for the health care plans. A one percentage point change in assumed health care cost trend rates would have the following effects:

	1% Percentage Point — Increase	Decrease
Effect on total of service and interest cost	$ 264,539	$ 207,387
Effect on postretirement benefit obligation	$ 3,409,159	$ 2,694,759

F-80

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Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Plan assets

Pension and pension bonds are covered by assets in a single fund with the following investment allocation:

Government securities	50 %	51 %
Private bonds	29 %	24 %
Foreign currency	2 %	3 %
Other	18 %	22 %
	100 %	100 %

The plan assets do not contain any shares of stock of Ecopetrol or any of its related parties.

In 2007, the Company outsourced administration of its pension plan to a third party (known as a partial transfer). As a result, on October 28, 2008, the Ministry of Finance and Public Credit approved the partial transfer (“commutation”) of the pension obligation of the Company, which was then approved by the Ministry of Social Security, according to the actuarial calculation at December 31, 2008 of $10,092,528. Since Ecopetrol continues to be financially responsible for the transferred pension liability, this amount continues being considered in the calculations for U.S. GAAP purposes.

vii. PROVISIONS, ALLOWANCES AND CONTINGENCES

The amount at which the provision is valued under RCP is the estimated amount of the loss at year end. In 2008, the modification of the methodology generated a net decrease (recoveries and new provisions) of $425,376, recorded in December 2008. In addition, in 2009, the modification of the methodology generated a net decrease (recoveries and new provisions) of $142,452, recorded in December 2009. In 2010, the Company used the same methodology of 2009 and recorded a net decrease (Recoveries and new provision) of $127,706.

For U.S. GAAP, Accounting for Contingencies (ASC 450), provides the guidance for recording contingencies. Under ASC 450, there are three levels of assessment of contingent events – probable, reasonably possible and remote. The term probable in ASC 450 is defined as “the future event or events that are likely to occur”. The term reasonably possible is defined as “the chance of the future event or events occurring is more than remote but less than likely”. While the term remote is defined as “the chance of the future event or events occurring is slight”.

Under ASC 450, an estimated loss related to a contingent event is to be accrued by a charge to income if both of the following conditions are met:

• Information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements.

• The amount of loss can be reasonably estimated.

The amount recorded is an estimate of the amount of loss at the date of the financial statements. If the contingent event is evaluated to be reasonably possible, no provision for the contingent event may be made, but disclosure of the event is required.

As a result of the difference in the definition of “probable” between RCP and U.S. GAAP, and the general interpretation of the definition in practice in Colombia, there is a difference in the amount of the provision for legal proceedings. In 2010, 2009 and 2008, there was a difference in the amount at which the provision for loss is recorded, as described above.

F-81

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Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

viii. DEFERRED INCOME TAXES

Under RCP (Colombian Government Entity GAAP), deferred income taxes are recognized only for temporary differences using the liability method. Under U.S. GAAP, deferred tax must be recorded for all temporary differences between the financial and tax basis of assets and liabilities.

Under RCP, deferred income tax asset is recorded to the extent the Company expects to generate taxable income tax to recover that amount. Under U.S. GAAP, a valuation allowance is provided for deferred tax assets to the extent that it is more likely than not that they will not be realized.

Under RCP, deferred income taxes are calculated using the current statutory tax rate. Under U.S. GAAP, deferred income taxes are calculated based on rates and tax laws enacted at the reporting date considering the future tax rate that will apply when the deferred income tax difference will be realized.

Under RCP, since 2009, goodwill is deductable and does not generate differences between tax laws and the RCP, except by the difference in the time of amortization. Under U.S. GAAP, the goodwill is not amortizable and generates a temporary difference, as a result it is necessary to compute and recognize deferred income taxes for differences originated by deductions since the acquisition date.

Under RCP, the fair value of the assets is not recorded, the difference between this value (zero) and the value recorded under U.S. GAAP generates deferred tax calculated under ASC 740.

The Company and its subsidiaries file separate income tax returns since tax regulations do not allow consolidated income tax returns. There are no requirements to file tax returns by segments. Tax returns are required for each legal entity.

The following information regarding income taxes has been prepared under U.S. GAAP:

Income Taxes

Total income taxes for the years ended December 31, 2010, 2009 and 2008 were comprised as follows:

Income tax expense	2010 — $ 4,397,797	2009 — $ 2,893,963	2008 — $ 4,579,304
Income tax effects based on items of Other Comprehensive Income:
Pension Plan Liability	206,699	482,535	(302,050	)
Available-for-sale securities	8,819	226,833	(236,974	)
Additional paid in capital	-	177,241	-
	$ 4,613,315	$ 3,780,572	$ 4,040,280

Income tax expense attributable to income from continuing operations consists of:

	2010	2009	2008
Current provision	$ 3,201,040	$ 1,948,819	$ 3,648,451
Deferred tax	1,196,757	945,144	930,853
	$ 4,397,797	$ 2,893,963	$ 4,579,304

In 2010, 2009 and 2008, subsidiaries in foreign countries have not generated taxable income and, consequently, they have not incurred income tax expense. In the countries that are accepted the carry forward under fiscal losses they recorded differed tax asset less a valuation allowance in the case that applies. In other countries the current tax rate is 0% or they considered exempt income, also, the companies were not recorded current tax provision.

F-82

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Tax Rate Reconciliation

EFPlaceholder Income tax expense attributable to income from continuing operations was $4,397,797 , $2,893,963, and $4,579,304 for the years ended December 31, 2010, 2009 and 2008, respectively, and differed from the amounts computed by applying the statutory income tax rate for Colombian entities that is 33% in 2010, 2009 and 2008 to pretax income from continuing operations as follows:

Statutory income tax	33.00	%	33.00	%	33.00	%
Non – taxable income	(2.37	)%	1.39	%	(1.09	)%
Non – deductible expenses	4.64	%	(1.91	)%	3.56	%
Others	(0.45	)%	0.26	%	1.94	%
Exempt revenue	(0.52	)%	(0.11	)%	(3.29	)%
Effect of foreign profit taxed at other rate	(0.05	)%	0.02	%	(0.02	)%
Business combination	-		0.35	%	-
Effective income tax under U.S. GAAP	34.25	%	33.00	%	34.10	%

Deferred Taxes

The significant components of deferred income tax expense attributable to income from continuing operations for the years ended December 31, 2010, 2009 and 2008 are as follows:

	2010		2009		2008
Deferred income tax expense (exclusive of the effects of other components below):
Accounts payable	$ (6,586	)	$ (21,075	)	$ 8,192
Inventories	(6,949	)	52,705		(14,554	)
Property, plant and equipment, principally due to DD&A	(1,223,111	)	(666,473	)	521,649
Deferred charges	92,747		(845	)	(70,630	)
Prepaid expenses	(52,613	)	55,679		-
Capital lease asset	11,597		43,120		10,488
Monetary correction and other	212,482		(103,012	)	(39,573	)
DD&A and inflation adjustments	890,348		295,638		-
Investment	(111,530	)	125,899		655,164
Estimated liabilities and provisions	87,423		(178,468	)	(106,139	)
Accounts and notes receivable	(3,734	)	13,375		(19,110	)
Carry forward loss	16,652		(42,681	)	-
Labor obligations	(98,280	)	(360,488	)	51,299
Deferred income	7,811		8,052		(156,470	)
Natural and environmental resources capitalized expenses	23,841		241,725		(11,979	)
Valuation allowance	91,712		(11,475	)	4,126
Additional tax discount on the acquisition of productive assets according to ASC 740 (1)	1,276,705		1,107,934		637,418
Excess in presumptive income tax	(217,577	)	(106,437	)	-
Other	5,654		369		(4	)
Amortization of actuarial loss recorded in OCI	206,699		482,535		(302,050	)
Unrealized loss in available for sale securities	8,819		226,835		(236,974	)
Amortization of fiscal goodwill according to (ASC 830)	(15,353	)	(217,768	)	-
	$ 1,196,757		$ 945,144		$ 930,853

(1) This value corresponds to the deferred tax generated by the calculation of ASC 740, due to the implementation of the special deduction for investment in real productive assets.

F-83

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2010 and 2009 are presented below:

	2010
Deferred income tax assets and liabilities
Deferred income tax assets:
Inventories	$ 69,145	$	62,196
Investments	1,048,981		333,719
Accounts and notes receivable	3,039		(695	)
Deferred income	140,422		148,233
Property, plant and equipment, principally due to DD&A	3,032,395		1,809,284
Deferred charges	16,583		109,330
Prepaid expenses	63,024		10,411
Financial obligation, principally due to capitalized leasing	107,517		119,114
Pension obligations	657,008		558,728
Accounts payable	141,253		134,667
Carry forward loss (1)	130,280		146,932
Excess in presumptive income tax (2)	332,320		114,743
Other	1,585		5,672
Amortization of fiscal goodwill according to ASC 830	472,536		457,183
Estimated liabilities and provisions (3)	786,153		873,576
Total gross deferred income tax assets	7,002,241		4,883,093
Less valuation allowance	(195,139	)	(103,427	)
Deferred income tax assets	6,807,102		4,779,666
Deferred income tax liabilities
Natural and environmental properties due to the difference between the methods of amortization	464,335		440,494
Monetary correction and other	630,480		425,488
DD&A and inflation adjustments	1,185,986		295,638
Investments	1,681,325		1,077,594
Deferred income tax liabilities	3,962,126		2,239,214
Net deferred income tax assets (4)	$ 2,844,976	$	2,540,452

(1) Carry forward looses are generated by subsidiaries and according to local tax laws, these losses do not expire.

(2) The excess in presumptive income tax are generated by subsidiaries and will expire in 5 years.

(3) Includes in 2009, $14,364 from Ecopetrol del Perú that are calculated an 29% income tax rate that is the income tax rate in this company.

(4) The Company does not intend to withdraw the dividends originated from subsidiaries in a foreign country in the short-term, for that reason the deferred income taxes just include the deferred income taxes recognized by the subsidiaries.

ASC 740 “Income Taxes” (formerly FIN No. 48) prescribes a comprehensive model for the recognition, measurement, financial statement presentation and disclosure of uncertain tax positions taken or expected to be taken in a tax return. This standard does not have any effect on the financial position or result of operations of the Company.

The Company classifies income tax related interest and penalties as income taxes in the consolidated financial statements. See note 15 for the years remain open to examination.

ix. REVENUE RECOGNITION

a.1 Natural Gas Imbalance

For U.S. GAAP purposes, the Company utilizes the entitlement method of accounting for natural gas balancing arrangements by which the amount of natural gas sold is based on its shared interests in the properties. The Company’s natural gas imbalance positions at December 31, 2010 and 2009 were $ 13,187 and $539 in favor, equivalent to 1.733.334 MBTU and 147.903 MBTU, respectively. Under RCP, natural gas imbalances are settled with a purchase or sale to the partner that are accounted for at the end of each period.

a.2 Over and Under

Under RCP, the Company recognizes receivables from or payables to partners based on the cost of the inventory. EFPlaceholder

F-84

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

For U.S. GAAP purposes, the Company utilizes the entitlement method of accounting for over and under positions by which the amount of crude oil sold is based on its shared interest in the properties, and revenue is recognized based on market prices. The Company’s crude oil over and under balance position at December 31, 2010 was $28,836 and at December 31, 2009 was $227,900 equivalent to 193,411 and 1,674,479 barrels, respectively.

a.3 Cost of Sales

Under U.S. GAAP, the related cost of sale for over and under transactions described at a.2 above amounted to $158,609 $(110,087) and $(8,887) during 2010, 2009 and 2008, respectively, in comparison with the amount recognized under RCP.

x. INFLATION ADJUSTMENTS

The RCP consolidated financial statements were adjusted for inflation based on the variation in the IPC (Colombia’s equivalent to the consumer price index in the United States) for middle income-earners from January 1, 1992 to December 31, 2001 for Ecopetrol S.A. and from January 1, 1992 to December 31, 2006 for Oleoducto de Colombia S.A. (“ODC”), Hocol S.A., Oleoducto Central S.A. (“Ocensa”) and Reficar S.A. The adjustment was applied monthly to non-monetary assets, equity (except for the valuation surplus) and memorandum accounts.

Under U.S. GAAP, the aforementioned adjustments under RCP are not applicable and must be reversed.

xi. INVENTORIES

Under RCP, inventories are valued at the lower of average cost or sale price. Under U.S. GAAP, inventories are valued at the lower of average cost or market value, the determination of which can be made using several different methods acceptable under U.S. GAAP. An adjustment has been recorded to reflect the difference in the method used to determine the valuation of inventories that arises from using sale price instead of market value, as defined by U.S. GAAP. The effects of this adjustment (loss)/gain in the reconciliation of income were $(87,797) $16,853, $10,274, in December 2010, December 2009 and 2008, respectively.

Inventories are also affected by the effect of adjustments to cost of sales included in this reconciliation. These adjustments relate to depreciation, expenses capitalized in property, plant and equipment, asset retirement cost and impairment of long lived assets. The effects of these adjustments in the reconciliation of equity and the corresponding effect in inventory were $(114,868) and $(27,103) in December 2010 and 2009, respectively.

xii. LEASE ACCOUNTING

Under both RCP and U.S. GAAP, lessee accounting for capital leases and operating leases is identical. However, the tests used to determine if a lease is a capital or an operating lease differs between RCP and U.S. GAAP. In applying the tests in accordance with RCP, the Company has determined that all leases are operating leases. Under U.S. GAAP some of these leases should be accounted for as capital leases in accordance with ASC 840-10. As a result, adjustments were recorded to reflect the related assets and liabilities, and to recognize interest expense and de-recognize operating expenses associated with the lease payments.

Embedded Leasing

Under RCP, there is no requirement to identify whether the arrangements or contracts contain leases.

Under U.S. GAAP, an arrangement contains a lease if both of the following two criteria are met:

1. The arrangement depends on a specific fixed asset, either identified contractually or implicitly identified as no alternative item could feasibly be used.

F-85

EFPlaceholder

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

1. The purchaser has the right to control the use of the underlying fixed asset, such control demonstrated by the existence of any of the following qualitative conditions:

a) The purchaser can operate the asset or direct others to operate the asset while obtaining or controlling more than a minor amount of the asset’s output;

b) The purchaser can control physical access to asset while obtaining or controlling more than a minor amount of the asset’s output; or

c) Probability is remote that another party will get more than minor amount of the asset’s output and the price is not fixed per unit.

Under U.S. GAAP, if the arrangement contains a lease, ASC 840 is applied by both purchaser and supplier for recognition, measurement, classification and disclosure purposes.

Build, Operate, Maintain and Transfer (BOMT)

	BOMT — Ecogas (1)		Hocol (2)		Dina – Tello (3)		Transmetano (4)
Year	USD (million)	Pesos	USD (million)	Pesos	USD (million)	Pesos	USD (million)	Pesos
2011	20	$ 38,420	$ 1,083	$ 2,072	2,5	$ 4,840	$ 9,220	$ 17,647
2012	18	35,098	$ 1,181	2,261	2,9	5,549	10,709	20,498
2013	17	33,098	$ 1,289	2,467	3,3	6,332	-	-
2014	17	32,513	$ 1,345	2,575	3,8	7,199	-	-
2015	17	32,513	-	-	4,3	8,155	-	-
Payments after 2015	27	50,920	-	-	10,2	19,586	-	-
	116	$ 222,561	$ 4,899	$ 9,376	27,0	$ 51,660	19, 929	$ 38,145

The outstanding amount of rentals, excluding operation and maintenance, payable under the BOMT obligations that were not relieved during future years are as follows for these leases:

At December 31, 2010 and 2009, the capitalized amount and the related liability are as follows:

	BOMT – Hocol (2) — 2010	2009		2010		2009
Assets
Property, plant and equipment (Building offices)	$ 8,733	$	9,326	$	83,245	$	83,245
Land	503		538		-		-
Equipment F&F	1,051		1,122		-		-
Accumulated depreciation	(1,783	)	(1,481	)	(72,147	)	(66,596	)
Net book value	8,504		9,506		11,098	$	16,649
Liabilities:
Financial obligations	$ 9,376	$	11,258	$	38,145	$	56,903

(1) Three original leases that were accounted for as capital leases under U.S. GAAP are BOMT contracts, the use of which are specifically required under Colombian law for projects that involve the building, operating, maintaining and transferring of natural gas pipelines for the transportation of natural gas. These contracts had original terms of 20 years, no renewal provisions, and a purchase option. The rights to the leased assets were subsequently transferred to a related Company (ECOGAS) that was sold, but Ecopetrol was not relieved of the primary obligation under the original lease. This transfer was considered a sublease accounted for as a direct finance lease. In 2007, Ecopetrol received a prepayment of all amounts to be received during the term of the sublease contract.

F-86

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

(2) The subsidiary Hocol has another BOMT contract, which is accounted like an operating lease under Colombian Government Entity GAAP. Under U.S. GAAP, this BOMT is accounted for as capital leases in accordance with ASC 840-10. As a result, adjustments were recorded to reflect the related assets and liabilities.

(3) In 2010, we entered in a new BOMT, corresponding to the gas treatment plant located in the Dina-tello field with an estimated value of construction US$28 million. This BOMT is accounted as capital lease in accordance with ASC 840 such as the contracts described previously, this contract had original term of 8 years, ending in 2017.

(4) In the case of the Company, it was determined that there were leases included in various contracts. The most significant embedded lease was determined to exist in Contract DIJ 970 (Transmetano), Natural gas transportation - Sebastopol – Medellín pipeline.

The contractor is entitled to receive natural gas at the designated point, and it is also obligated along with the Company to transport the product throughout the pipeline and bring it to the delivery point (conducting up to 67 million cubic feet per day). The contract has a duration of 15 years, and could be extended for periods of one year, for a period no longer than 10 years. Lease payments include the costs of transportation, administration, operation and pipeline maintenance.

This contract meets the criteria of Emerging Issues Task Force 01-08, Determining Whether an Arrangement Contains a Lease ASC 840 in order to be considered a lease agreement. Similarly, according to ASC 840, the contract meets the criteria to be recognized as a capital lease.

xiii. PROPERTY, PLANT AND EQUIPMENT

Under RCP, property, plant and equipment are recorded at cost and were adjusted for inflation until 2001. Costs include administrative expenses until 2004, financial expenses, asset retirement costs and exchange differences from foreign currency financing until the asset is placed in service. Normal disbursements for maintenance and repairs are charged to expense and those significant costs that improve efficiency or extend the useful life are capitalized. Under U.S. GAAP, cost includes expenditures until the asset is placed in service such as installation cost, freight, interest, retirement cost; construction cost and other direct expenses are capitalized, with exception of adjustment for inflation and foreign currency loss that generate a reconciling item since assets do include adjustments for these concepts under RCP. For U.S. GAAP purposes, administrative expenses capitalized, inflation adjustments and exchange difference were eliminated from property, plant and equipment. In addition, a deferred income tax asset resulted from the application of the provisions of ASC 740 SEC Staff Guidance Accounting for Acquired Temporary Differences in Certain Purchase Transactions that are not Accounted for as Business Combinations , since the investment in productive assets creates an additional tax deduction of 30% in 2010 and 40% in 2009 and 2008.

The following table reflects the net changes in capitalized exploratory wells during 2010, 2009 and 2008 and does not include amounts that were capitalized and subsequently expensed during the same period.

Beginning balance at January 1	2010 — $ 363,922	$	218,413	$	206,300
Additions from business combination	-		143,541		-
Additions to capitalized exploratory well costs	1,029,203		349,162		268,041
Reclassifications to wells, facilities and equipment based on the determination of proved reserves	(132,672	)	(149,130	)	(163,817	)
Capitalized exploratory well costs charged to expense*	(841,713	)	(198,064	)	(92,111	)
Ending balance at December 31	$ 418,740	$	363,922	$	218,413

• Includes $7,514 and $32,351 of capitalized exploratory well costs at December 31, 2010 and 2009, respectively, which were declared as dry wells during 2011 and 2010 (see subsequent events note), respectively.

F-87

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The balances at December 31, 2010, 2009 and 2008 correspond to well costs capitalized during the years ended at those dates. The increase along time is explained by the growing of exploratory activities in recent years.

a. Interest

Under RCP, all interest paid net of interest income is subject to capitalization regardless of the utilization of the funds. Exchange rate differential is also capitalized as part of the asset.

The Company´s assessment of the methodology followed to determine the capitalization amount under US GAAP considered more detailed information available to estimate the interest to be capitalized. Previously, the calculations were made based on the average monthly disbursements, as an improvement, the Company obtained a detail of the assets associated to the debt and was able to apply the analysis and calculations based on each project, providing further detail of interest capitalized. The impact was recognized during the period as it was considered a change in an accounting estimate per ASC 250-10-45-17 and 18, Change in Accounting Estimates.

The total interest capitalized during 2010 under RCP was $319,326 and the total interest capitalized under U.S. GAAP was $150,800. The effect of this adjustment in the reconciliation of income was $168,527. The total interest capitalized during 2009 under RCP was $127,026 and the total interest capitalized under U.S. GAAP was $63,247. The effect of this adjustment in the reconciliation of income was $63,779. There is not interest capitalized during 2008.

b. Revaluation of property, plant and equipment and public accounting effect

Valuation surplus of property, plant and equipment and the public accounting effect correspond to the difference between net book value and the market value for real estate or the current value in use for plant and equipment, determined by specialists. These accounts are reflected as Valuations and as Valuation Surplus from reappraisals of assets and the public accounting effect (components of equity) in the Company’s consolidated balances sheets. The last valuation was in December 2009. The effects of the valuation were recorded in 2010. Technical appraisals are valid for three years.

Under U.S. GAAP valuation, valuation surplus of assets and the public accounting effect are not permitted.

c. Impairment

Under RCP, technical appraisals for property, plant and equipment are performed at least every three years. If the technical study is lower than the carrying value, the difference is recorded in equity as a reduction of the property, plant and equipment carrying value even if it reduces the valuation surplus below zero. Under U.S. GAAP, in accordance with ASC 360-10, Property, Plant, and Equipment - Impairment or Disposal of Long-Lived Assets (ASC 360-10), property, plant, and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by the asset to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. For U.S. GAAP purposes, the Company reviewed property, plant and equipment for impairment as of December 31, 2010, 2009, 2008, and recorded impairment losses when required. For U.S. GAAP purposes, the Company recorded in 2010, 2009 and 2008, $135,469, $395,044, and $121,765, respectively, as additional impairment charges to reduce the net book value of certain wells and pipelines to their estimated values.

xiv. DEPRECIATION, DEPLETION AND AMORTIZATION

EFPlaceholder Under RCP, all tangible equipments, including those used in the production of crude oil and natural gas, are depreciated on a straight-line basis over the related estimated useful lives. Intangible crude oil and natural gas assets reflected on the Company’s consolidated balance sheets as natural and environmental resources are depleted on a units-of-production basis. Under U.S. GAAP, all assets, including tangible equipment, used in crude oil and natural gas producing activities are required to be depreciated or depleted using a units-of-production method, using proved reserves calculated in accordance with U.S. GAAP requirements. Therefore, an adjustment to net income per U.S. GAAP has been recorded to account for the difference in depreciation, depletion and amortization expense based on the above-described differences in the methods used.

F-88

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

xv. ASSET RETIREMENT OBLIGATIONS

Under RCP, the Company annually updates an analysis of the estimated liability for future asset retirement obligations as of each balance sheet date. The liability is adjusted to the current value and an offsetting amount is recorded as an adjustment to the asset cost. Until 2009 the elements of the liability originated in U.S. dollars, changes in the foreign currency rates are included in the adjustment to the liability and the related asset, the component of the asset cost resulting from this liability is included in the depreciable base of the related asset. In addition, as explained in the Principal Accounting Policies and Practices, we eliminated the exchange rate effect during 2010 that represents an amount close to ($170,590).

For purposes of U.S. GAAP reporting, the Company follows the provisions of Accounting Standards Codification (ASC) 410-20 Asset Retirement Obligations. ASC 410-20 requires the Company to recognize a liability for the present value of all legal obligations associated with the retirement of tangible, long-lived assets as of the date the related asset was placed into service, and capitalize an equal amount as an asset retirement cost (asset). Each period the liability is accreted using an effective interest rate method. The accretion is included as an operating expense. The cost associated with the abandonment obligation, is included in the computation of depreciation, depletion and amortization.

An adjustment has been recorded in the consolidated financial statements to reflect accretion expense, and the related obligation and assets in accordance with ASC 410-20.

It is not possible at this time to reasonably estimate the amount of any obligation for Asset Retirement Obligation related to refineries because the company undergoes major renovations. In addition, the Company believes that there is not sufficient information available to estimate the fair value of the asset retirement obligation because the settlement date or the range of potential settlement dates has not been specified by others and information is not available to apply an expected present value technique.

The following table presents the changes in abandonment obligations for December 2010 and 2009 as is required by ASC 410-20.

Balance at beginning of period	2010 — $ 1,904,096	$	1,320,058
Liabilities incurred in the current period	30,748		6,857
Abandonment Cost from Business combination	-		58,143
Revisions in estimated cash flows	(237,906	)	562,453
Liabilities settled in the current period	(30,663	)	(17,435	)
Accretion expense	151,516		(25,980	)
Balance at end of period	$ 1,817,791	$	1,904,096

xvi. EQUITY CONTRIBUTIONS

a. Incorporated Institutional Equity

At the end of association contracts that were signed prior to January 1, 2004, private companies are required to transfer, without cost, to Ecopetrol, all producing wells, facilities and other real estate and assets acquired in executing the contracts. Under RCP, the Company accounts for the receipt, using the relinquishing company’s reported historical cost, by recording an increase to assets and equity. The assets are then depreciated in accordance with the Company’s previously disclosed accounting policies. For U.S. GAAP reporting purposes, these balances and their related impacts on accumulated depreciation, depletion and amortization, and cost of production have been removed from the financial statements, based on the fact that the cost of these assets is zero. The adjustment to conform to U.S. GAAP in 2010 was a reduction in equity of $64,412 (original value of $137,010 net of $74,418 of accumulated depreciation of the assets received) and hold materials of $1,881. The adjustment to conform to U.S. GAAP in 2009 was a reduction in equity of $82,870 (original value of $137,068 net of $54,198 of accumulated depreciation of the assets received). EFPlaceholder

F-89

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

b. Reversal of Concession Rights Contributed as Capital

Under RCP, prior to the effectiveness of Decree 1760 of 2003, the Company recorded the total amount of all crude oil and natural gas reserves that were returned to the nation as a result of expire concessions that were previously issued to third parties. Reserves were valued by means of the technical-economic model where the value per barrel resulted from the relation of the net present value obtained at a discount rate and the total proved reserves on the contribution date.

For U.S. GAAP purposes, these reversals were considered a transfer of assets between entities under common control. Ecopetrol, the entity that received the net assets, recognized the assets transferred at their carrying amounts in the accounts of the transferring entity at the date of transfer which was zero value. The unamortized value of the reverted reserves at December 31, 2010 and 2009 was $89,280 and $103,260, respectively.

xvii. INDEBTEDNESS COST

Under RCP, the borrowing costs correspond to interest paid, lender commissions and other costs related to the debt transactions, the exchange difference for the interest rate to be paid, the amortization of premiums and discounts in the placement of bonds and securities, and any income results earned on the temporary investment of such loans.

Under U.S. GAAP, the borrowing costs correspond to interest payable, lender commissions and other costs related to the debt transactions, the amortization of premiums and discounts in the placement of bonds and securities, should not offset interest expense with interest income, unless the financing transaction involves restricted, tax-exempt borrowings. Unlike RCP, the cost of borrowing does not include the exchange difference for the interest rate to be paid, unless such difference forms part of the negotiation of the interest rate for the transaction.

The total indebtedness cost incurred during 2010 under RCP was $519,697 and the total indebtedness cost incurred under U.S. GAAP was $521,367. The effects of this adjustment in the reconciliation of income were $1,670. The total indebtedness cost incurred during 2009 under RCP was $ 210,362 and the total indebtedness cost incurred under U.S. GAAP was $201,562.The effects of this adjustment in the reconciliation of income were $8,800. There were no indebtedness costs incurred during 2008.

xviii. BUSINESS COMBINATIONS EFPlaceholder

a. Goodwill

Under Colombian Government Entity GAAP, goodwill corresponds to the difference between the acquisition price and the book value of the acquired company recognized as an intangible asset, separate intangibles are not identified under RCP nor are assets stepped up to fair values as a result of acquisitions; if the book value is higher than the acquisition price, the resulting difference is recorded as a gain. The amount recognized as goodwill is amortized during the period in which the Company expects to receive future benefits; in addition, it is subject to annual impairment test

Under U.S. GAAP, goodwill is not amortized, but it is subject to an annual impairment test.

F-90

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The following table shows, by company, the goodwill balance at the end of 2010, 2009 and 2008, net of the amount of deferred income tax on goodwill and assets recognized at the purchase date, (indicating the impact of paragraphs 262 and 263 of ASC 805), and the translation adjustment:

Company	Balance 2008	Goodwill acquired during 2009	Exchange Rate Effect		Balance before tax 2009	Deferred income tax		Balance 2009
Propilco - Andean Chemicals	$ 652,948	$ -	$ -		$ 652,948	$ (899	)	$ 652,049
Refineria de Cartagena S.A.	-	834,048	(63,916	)	770,132	-		770,132
Bioenergy	8,993	-	-		8,993	-		8,993
Hocol	-	185,624	-		185,624	(185,624	)	-
Total	$ 661,941	$ 1,019,672	$ (63,916	)	$ 1,617,697	$ (186,523	)	$ 1,431,174

Company	Balance 2009	Goodwill acquired during 2010	Exchange Rate Effect		Balance before tax 2010	Deferred income tax		Balance 2010
Propilco - Andean Chemicals	$ 652,049	$ -	$ -		$ 652,049	$ (1,472	)	$ 650,577
Refineria de Cartagena S.A.	770,132	-	(49,070	)	721,062	-		721,062
Bioenergy	8,993	-	-		8,993	-		8,993
Total	$ 1,431,174	$ -	$ (49,070	)	$ 1,383,004	$ (1,472	)	$ 1,380,632

Under RCP, the following table shows the amounts deductible for income tax purposes for 2009 and 2010.

Company	2010 — Goodwill	Accumulated Amortization		Balance	Net Effect	Remaining time-years
Andean Chemicals Ltd	$ 357,629	$ (53,903	)	$ 303,726	$ 100,230	16.8
Offshore International Group – “OIG”	788,043	(76,376	)	711,667	234,850	13.0
Hocol	805,045	(62,039	)	743,007	245,192	15.0
Total	$ 1,950,718	$ (192,318	)	$ 1,758,400	$ 580,272

Company	2009 — Goodwill	Accumulated Amortization		Balance	Net Effect	Remaining time-years
Andean Chemicals Ltd	$ 357,629	$ (33,655	)	$ 323,974	$ 106,911	17.8
Offshore International Group – “OIG”	821,994	(48,502	)	773,492	255,252	14.0
Hocol	628,456	(22,750	)	605,706	199,883	16.0
Total	$ 1,808,079	$ (104,907	)	$ 1,703,172	$ 562,046

Under RCP in 2010 and 2009, $172,660 and $139,909 were amortized in regard to goodwill acquired from OIG, Ecopetrol Transportation Company, Hocol, and Andean Chemicals. The amortization in the table above represents the accumulated amortization of the companies that could be deductible for income tax purposes. Under U.S. GAAP, goodwill acquired from OIG, which is recognized by the equity method, is included in the investment.

Under U.S. GAAP, Ecopetrol tests goodwill for impairment at least annually using a two step process that begins with an estimation of the fair value of a reporting unit. The first step is a screen for potential impairment and the second step measures the amount of impairment.

Fair value is determined by reference to market value, if available, or by a qualified evaluator or pricing model. Determination of a fair value by a qualified evaluator or pricing model requires management to make assumptions and use estimates. Management believes that the assumptions and estimates used are reasonable and supportable in the existing market environment and commensurate with the risk profile of the assets valued. However, different assumptions and estimates could be used which would lead to different results. The valuation models used to determine the fair value of these companies are sensitive to changes in the underlying assumptions. For example, the prices and volumes of product sales to be achieved and the prices which will be paid for the purchase of raw materials are assumptions which may vary in the future. Adverse changes in any of these assumptions could lead the Company to record a goodwill impairment charge. During 2010, Ecopetrol conducted an impairment test of goodwill which showed that no goodwill had been impaired. EFPlaceholder

F-91

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

b. Business Acquisition Subsequent to year-end

In August 2010, we entered in into a memorandum of understanding with Talisman Colombia Holdco Limited, or Talisman, a Canadian oil and gas company, to acquire BP Exploration Company (Colombia) Limited, a subsidiary of British Petroleum operating in Colombia. After obtaining the necessary governmental authorizations, we completed the acquisition, in January 2011, which includes assets in gas and oil exploration and production as well as oil transportation and gas marketing, for US$1,642 billion net, plus an additional US$145 million return of equity to Ocensa’s shareholders, resulting in a 51% ownership by Ecopetrol and 49% by Talisman. The company’s new name is Equion Energia Limited. As a result of this acquisition, we increased our participation in Ocensa from 60.00% to 72.65%, in ODC from 66% to 73% and in Oleoducto del Alto Magdalena, or OAM assets, from 83.00% to 85.12%. We also acquired a 10.20% interest in Transgas de Occidente.

With this acquisition, Ecopetrol aims towards the fulfillment of its strategic objectives with an immediate increase in the reserves and current production representing 5% of Ecopetrol’s consolidated production; the exploratory opportunities contribute to the achievement of the 1,000,000 gross barrels of clean crude equivalent per day production expected for the year 2015.

The total purchase price was US$1,750 million with a negative price adjustment of US$108 million to bring the transaction to a net purchase price of US$1,642 million, of which US$837 represents the 51% share paid by Ecopetrol. The following table details the purchase price calculation (USD in millions) as well as the Colombian peso equivalent (in billions) of the transaction using the effective exchange rate on the dates of the payments.

Purchase Price	1,750,000
Less: Purchase Price Adjustment	(108,389	)
Adjusted Purchase Price	1,641,611
Participation (%)	51	%
Ecopetrol Purchase Price	837,222

The proceeds were paid in cash by Ecopetrol on two separate dates, as follows:

Earnest Money Deposit	Date — August 5, 2010	637,500	Amount COP — $ 1,163,132
Closing of Transaction	January 24, 2011	199,722	367,276
Total Purchase Price		837,222	$ 1,530,408

The Share Sale Agreement established that after the closing date, the seller has a 120-day period to review the price adjustments, including working capital adjustments, based on the financial statements at the closing date. The buyers then have an additional 60 days to complete the review of the price adjustments in order to consider the final purchase price. Adjustments to the price can result from the review, therefore, the final purchase price and information required to prepare the initial accounting for the business combination will be available during the second half of 2011. Therefore, disclosures related to fair value measurements, goodwill/intangible recognition, assets and liabilities recognized and effects of the business combination in the financial statement will be available in the 2011 year-end filing.

xix. NON-CONTROLLING INTEREST

To determine the attributable non-controlling interest at December 31, 2010, 2009 and 2008, Ecopetrol used the net equity from all subsidiaries at the beginning of the period and considered all activity (net income, retained earnings, non-controlling interest, distribution of dividends, purchase price allocation, translation adjustments, and others) for purposes of calculating the carrying amount of total equity (net assets) attributable to the non-controlling interest at the end of 2010, 2009 and 2008.

EFPlaceholder In August 2010 Ecopetrol incorporated with a participation of 54.80% of the company Oleoducto Bicentenario de Colombia S.A. (hereinafter “OBC”), in which we have a total participation of 55.97% interest.

F-92

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The following table sets the information for Ecopetrol’s non-controlling interests in 2010, 2009 and 2008, respectively.

Balance 2007	OCENSA — $ 571,074	$	49	$	474	$	-	$	-	$	-	$	-		TOTAL — $ 571,597
Issuance of company shares	-		-		-		-		217,378		-		-		217,378
Other Non-Controlling Interest	-		(45	)	(484	)	-		-		-		-		(529	)
Net income (loss)	8,716		-		-		-		-		(2,460	)	-		6,256
Distribution of dividends	(141,634	)	-		-		-		-		-		-		(141,634	)
Retained Earnings	140,095		-		-		-		-		-		-		140,095
Purchase Price Allocation	-		-		-		-		-		8,718		-		8,718
Translation Adjustments	-		(4	)	10		-		16,885		-		-		16,891
Balance 2008	578,251		-		-		-		234,263		6,258		-		818,772
Acquired Non Controlling Interest	(300,377	)*	-		-		21,495		-		(2,810	)	-		(281,692	)
Other Non Controlling Interest	-		-		-		-		(78,405	)	-		-		(78,405	)
Net income (loss), restated	198,968		-		-		(26,691	)	(15,325	)	(836	)	-		156,116
Distribution of dividends	(89,736	)	-		-		-		-		-		-		(89,736	)
Retained Earnings	95,790		-		-		(2,142	)	991		6,541		-		101,180
Purchase Price Allocation	-		-		-		21,530		-		-		-		21,530
Translation Adjustments	-				-		-		(13,047	)	-		-		(13,047	)
Balance 2009 , restated	482,896		-		-		14,192		128,477		9,153		-		634,718
Other Non Controlling Interest	-		-		-		3,902		-		1,346		-		5,248
Net income (loss)	223,403		-		-		(7,173	)	21,676		(975	)	(5,042	)	231,889
Distribution of dividends	(99,888	)	-		-		-		-		-		-		(99,888	)
Return of capital through and due to Spin-Off	(144,251	)	-		-		-		-		-		-		(144,251	)
Dividends for Spin-Off	(318,670	)	-		-		-		-		-		-		(318,670	)
Translation Adjustments	-				-		-		305		-		-		305
Balance 2010	$ 143,490	$	-	$	-	$	10,921	$	150,458	$	9,524	$	( 5,042	)	$ 309,351

• Corresponds to acquisition of an additional 24.71% ownership interest in Ocensa for $998,903 in cash. The difference of $610,007 was registered as an additional paid in capital net of income tax in an amount of $171,241 as a result of the difference between local deductible goodwill.

xx. CUMULATIVE TRANSLATION ADJUSTMENT

Under RCP, the companies domiciled outside of the country, regardless of its functional currency, must report in USD and then translated to Colombian pesos with the impact recorded as cumulative translation adjustment.

For U.S. GAAP, the company must prepared its financial information in the functional currency and then translate it to the reporting currency. This difference in methodology results in a difference in the translated amounts recorded in the financial statements.

As such an adjustment is made to appropriately reflect amounts under translated U.S.GAAP.

xxi. EARNINGS PER SHARE

Under RCP, earnings per share ("EPS") are calculated by dividing net income by the weighted average of both common and preferred shares outstanding for each period presented. However, although the Company has presented EPS under RCP for informational purposes, the presentation of EPS is not required for financial statements issued under RCP. The Company does not have any issued or outstanding preferred shares.

U.S. GAAP requires dual presentation of basic and diluted EPS for entities with complex capital structures, as well as a reconciliation of the basic EPS calculation with the diluted EPS calculation. Basic EPS is calculated by dividing net income available to common shareholders by the weighted average of common shares outstanding for the corresponding period.

Diluted EPS assumes the issuance of common shares for all dilutive potential common shares outstanding during the reporting period. For the years ended December 31, 2010, 2009 and 2008, the Company had a simple capital structure. There are no stock compensation plans or any other compensation plan involving shares. Therefore, the Company is not required to present diluted EPS for these years.

F-93

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

xxii. CONCENTRATIONS

At December 31 2010, 2009 and 2008, 31%, 32% and 33%, respectively, of the Company’s employees belong to unions. Management believes that the Company’s relationships with labor unions are good. The current labor agreement with the union was renewed on September 10, 2009 that will expire in 2014.

In 2010, one customer of the refining segment accounted for 11.4% of total sales. No other customers accounted for more than 10% of total sales in 2010. In 2009, one customer of the refining segment accounted for 13.1% of total sales. No other customers accounted for more than 10% of total sales in 2009. In 2008, one customer of the production segment accounted for 14.2% and one customer of the refinery segment accounted for 11.7% of the total sales. No other customers accounted for more than 10% of total sales in 2008. There is no exposure that affects the financial position of Ecopetrol if the Company were to lose a client.

The significant majority of the Company’s assets and activities are located in Colombia. The financial position and results of operations of those subsidiaries located outside of Colombia are not material to the Company.

xxiii. RECENT U.S. ADOPTED ACCOUNTING STANDARDS AND U.S. GAAP PRONOUNCEMENTS

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASU”) 2010-03, Oil and Gas Reserve Estimation and Disclosures. This ASU aligns the oil and gas reserve estimation and disclosure requirements of FASB ASC Topic 932, Extractive Activities—Oil and Gas, with the requirements in the SEC Rule, Modernization of the Oil and Gas Reporting Requirements, which was issued on December 31, 2008 (SAB-113). The amendments to Topic 932 are effective for annual reporting periods ending on or after December 31, 2009 and should be accounted for as a change in accounting principle inseparable from a change in estimate; this accounting standard update was applied since December 31, 2009 at Ecopetrol. The adoption of this guidance had an impact on the disclosures of the company. Refer to Note xxviii for more information regarding such impact.

In January 2010, the FASB issued ASU 2010-04, Accounting for Various Topics—Technical Corrections to SEC Paragraphs (SEC Update), this accounting standard update represents technical corrections to SEC paragraphs, this accounting standard update had been applied by Ecopetrol as of December 2010. The adoption of this guidance did not have a significant impact on our consolidated financial statements and related disclosures.

In January 2010, the FASB issued ASU No. 2010-06 - Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 requires new and revised disclosures for recurring or non-recurring fair value measurements, specifically related to significant transfers into and out of Levels 1 and 2, and for purchases, sales, issuances, and settlements in the rollforward of activity for Level 3 fair value measurements. ASU 2010-06 also clarifies existing disclosures related to the level of disaggregation and the inputs and valuation techniques used for fair value measurements. The new disclosures and clarifications of existing disclosures about fair value measurements were effective on January 1, 2010, except for the disclosures about activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. This accounting standard update was applied by Ecopetrol at December 2010. Refer to Note xxvii for more information regarding such impact.

Also in February 2010, the FASB issued ASU 2010-09 Subsequent Event (Topic 855) in order to clarify questions about the requirements to disclose the date that the financial statements are issued potentially conflict with some of the Securities and Exchange Commission’s (SEC) guidance. All of the amendments in this update are effective upon issuance of the final update, except for the use of the issued date for conduit debt obligors. That amendment is effective for interim or annual periods ending after June 15, 2010. Ecopetrol adopted this standard at December 2010. Refer to Note 31 for more information regarding such impact.

In April 2010, the FASB issued ASU 2010-14 Accounting for Extractive Activities—Oil & Gas—Amendments to Paragraph 932-10-S99-1 (SEC Update), modernization of Oil & Gas Reporting, the amendments was adopted by Ecopetrol at December 2010. The adoption of this guidance had an impact on the disclosures of the Company. Refer to Note xxviii for more information regarding such impact.

F-94

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

In February 2010, the FASB issued ASU 2010-08, Technical corrections to various topics, by eliminating the inconsistencies and outdated provisions and providing the needed clarifications to make ASC easier to understand and apply, the amendments in this update are effective for the first reporting period beginning after issuance, in August 2010, the FASB issued ASU 2010-21 Accounting for Technical Amendments to Various SEC Rules and Schedules Amendments to SEC Paragraphs Pursuant to Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies (SEC Update), and ASU 2010-22 Accounting for various topics, Technical corrections to SEC paragraphs, an announcement made by the staff of the US Securities and Exchange Commission. The amendments were adopted by Ecopetrol at December 2010.

xxiv. RECENTLY ISSUED ACCOUNTING STANDARDS AND U.S. GAAP PRONOUNCEMENTS

In December 2010, the FASB issued ASU No. 2010-29 Business Combination (Topic 805) - Disclosure of Suplementary pro-forma information for Business Combination, to address diversity in practice about the interpretation of the pro-forma revenue and earnings disclosure requirements for business combinations. This amendment is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Ecopetrol will be adopting this standard at December 2011, The adoption of this guidance is not expected to have a significant impact on our consolidated financial statements and related disclosures.

In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs in order to ensure that fair value has the same meaning in U.S. GAAP and in IFRSs and that their respective fair value measurement and disclosure requirements are the same (except for minor differences in wording and style). The Boards concluded that the amendments in this Update will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. Ecopetrol will be adopting this standard beginning in January 2012. Ecopetrol is evaluating the impact of the adoption of this guidance on the disclosures of the Company.

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income, in order to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of ítems reported in other comprehensive income. The FASB decided to eliminate the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity, among other amendments in this Update. Ecopetrol is evaluating the impact of the adoption of this guidance on the disclosures of the company.

xxv. SEGMENT INFORMATION

The following segment information has been prepared in accordance with ASC 280, Disclosure about Segments of an Enterprise and Related Information. Financial information by business segment is reported in accordance with the internal reporting system under RCP and shows internal segment information that is used by the chief operating decision maker to manage and measure the performance of Ecopetrol.

In 2010, the Company’s management modified the methodology used to analyze financial information by business segment in order to obtain a better measure of the Company's operations. Specifically, since the year 2010 the Exploration and Production segment sells to customers at market price, while, until the year 2009 revenues were valued at a transfer price at the field of production. This change did not result in a material adjustment in the income from the field to the point of sale to final customers was recorded in the Market & Supply segment along with all associated marketing costs.

F-95

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

In 2010, the Company reports its information in four segments: Exploration & Production, Refining, Transportation and Market and Supply. Until 2009 a Corporate segment was reported. The Corporate segment in the new methodology is assigned to the four segments.

The financial information between segments is reported considering each business as a separate entity. Prices between segments are established by referencing those that can be earned in transactions with third parties or unrelated parties. Each segment should bear the costs and expenses required to put the product in terms of use or marketing. Each segment assumes its administrative expense and all non-operational transactions related to their activity.

The structure of the Company’s internal organizations was not modified. The segment information for 2009 and 2008 included herein has been updated for comparison purposes.

The Company operates under the following segments, which are described as follows:

Exploration and Production — this segment includes the Company’s oil & gas exploration and production activities. Revenue is derived from the sale of crude oil and natural gas to inter-company segments and to third parties, at market prices. Revenue is derived from local sales of crude oil, regulated fuels, non-regulated fuels and natural gas. Sales are made to local and foreign distributors. Costs include those costs incurred in production. Expenses include all exploration costs that are not capitalized.

Refining – this segment includes the Company’s refining activities. Goods sold, both internally and to third parties, include refined products such as motor fuels, fuel oils and petrochemicals at market prices. This segment also includes sales of industrial services to third parties.

Transportation – this segment includes the Company’s sales and costs associated with the Company’s pipelines and other transportation activities.

Market and Supply – this segment includes the Company’s revenues, costs and expenses associated with sales of crude and gas purchased from third parties and the ANH (Agencia Nacional de Hidrocarburos), and with sales of imported products to broader areas. It also includes revenues generated for products trading operations.

These functions have been defined as the operating segments of the Company since these are the segments (a) that engage in business activities from which revenues are earned and expenses are incurred; (b) whose operating results are regularly reviewed by the Company's chief operating decision maker to allocate resources to the segments and assess their performance; and (c) for which discrete financial information is available. Internal transfers represent sales to intercompany segments and are recorded and presented at market prices.

The following presents the Company’s balance sheet by segment in accordance with RCP:

F-96

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

	As of December 31, 2010 — Exploration & Production		Refining Activities		Transporting		Market and Supply		Eliminations		Total
Current assets
Cash and cash equivalents	$ 2,319,046		$ 150,236		$ 1,239,258		$ 18,238		$ -		$ 3,726,778
Accounts and notes receivable	1,485,854		1,126,737		559,147		565,442		(1,000,588	)	2,736,592
Inventories	1,083,572		1,105,022		4,669		173,906		(175,081	)	2,192,088
Investments	243,000		57,419		24,086		3,277		-		327,782
Other current assets	2,588,375		807,608		208,294		42,121		-		3,646,398
	7,719,847		3,247,022		2,035,454		802,984		(1,175,669	)	12,629,638
Investments in non-consolidated companies	773,821		11,309		29,167		15,873		-		830,170
Property, plant and equipment, net	20,104,180		7,511,806		6,322,588		120,843		(18,620	)	34,040,797
Other non-current assets	12,350,678		5,773,967		3,564,576		272,258		(692,728	)	21,268,751
Non Current assets	33,228,679		13,297,082		9,916,331		408,974		(711,348	)	56,139,718
Total assets	$ 40,948,526		$ 16,544,104		$ 11,951,785		$ 1,211,958		$ (1,887,017	)	$ 68,769,356
Accounts payable	$ (2,663,441	)	$ (920,862	)	$ (513,038	)	$ (855,040	)	$ 889,779		$ (4,062,602	)
Financial obligations (short-term)	(555,665	)	(709,968	)	(195,578	)	(2,958	)	385,000		(1,079,169	)
Other Current Liabilities	(2,938,090	)	(1,367,859	)	(538,577	)	(64,437	)	8,156		(4,900,807	)
Current Liabilities	(6,157,196	)	(2,998,689	)	(1,247,193	)	(922,435	)	1,282,935		(10,042,578	)
Financial obligations (long-term)	(3,638,479	)	(1,912,991	)	(2,667,276	)	(40	)	385,071		(7,833,715	)
Other non Current Liabilities	(6,539,180	)	(1,299,702	)	(1,002,119	)	(260,467	)	22,537		(9,078,931	)
Non-current liabilities	(10,177,659	)	(3,212,693	)	(3,669,395	)	(260,507	)	407,608		(16,912,646	)
Total Liabilities	(16,334,855	)	(6,211,382	)	(4,916,588	)	(1,182,942	)	1,690,543		(26,955,224	)
Non-controlling interest	-		(11,550	)	(474,401	)	-		-		(485,951	)
Shareholders’ equity of Ecopetrol	(24,613,671	)	(10,321,172	)	(6,560,796	)	(29,016	)	196,474		(41,328,181	)
Total Equity	(24,613,671	)	(10,332,722	)	(7,035,197	)	(29,016	)	196,474		(41,814,132	)
Total liabilities and equity	$ (40,948,526	)	$ (16,544,104	)	$ (11,951,785	)	$ (1,211,958	)	$ 1,887,017		$ (68,769,356	)
Capital expenditures	$ 5,878,246		$ 2,084,554		$ 2,351,662		$ 5,513		$ -		$ 10,319,975
Goodwill	$ 1,423,801		$ 613,152		$ 471,449		$ -		$ -		$ 2,508,402

	As of December 31, 2009 — Exploration & Production		Refining Activities		Transporting		Market and Supply		Eliminations		Total
Current assets
Cash and cash equivalents	$ 2,621,304		$ 476,518		$ 441,505		$ 22,791		$ -		$ 3,562,119
Accounts and notes receivable	1,878,701		752,130		185,046		157,580		(4,337	)	2,969,120
Inventories	761,501		1,133,913		38,168		229,608		(120,492	)	2,042,697
Investments	352,997		-		104,787		4,473		-		462,258
Other current assets	1,959,128		884,055		206,585		31,827		-		3,081,595
	7,573,631		3,246,617		976,090		446,278		(124,829	)	12,117,788
Investments in non-consolidated companies	734,748		11,135		27,667		3,952		-		777,503
Property, plant and equipment, net	17,077,895		5,792,130		5,050,438		17,421		-		27,937,884
Other non-current assets	8,153,792		3,778,164		2,560,488		254,696		(20,799	)	14,726,341
Non-Current assets	25,966,435		9,581,430		7,638,593		276,069		(20,799	)	43,441,729
Total assets	$ 33,540,067		$ 12,828,047		$ 8,614,683		$ 722,348		$ (145,627	)	$ 55,559,517
Accounts payable	$ (1,852,745	)	$ (386,400	)	$ (259,115	)	$ (791,505	)	$ 9,533		$ (3,280,232	)
Financial obligations (short-term)	(83,316	)	(246,093	)	(107,671	)	-		-		(437,081	)
Other Current Liabilities	(1,730,724	)	(1,543,690	)	(434,626	)	(43,861	)	-		(3,752,901	)
Current Liabilities	(3,666,785	)	(2,176,183	)	(801,412	)	(835,366	)	9,533		(7,470,213	)
Financial obligations (long-term)	(3,220,265	)	(1,452,892	)	(1,041,198	)	-		-		(5,714,354	)
Other non-Current Liabilities	(6,218,381	)	(1,307,492	)	(1,130,167	)	(223,244	)	15,602		(8,863,682	)
Non-current liabilities	(9,438,646	)	(2,760,384	)	(2,171,365	)	(223,244	)	15,602		(14,578,036	)
Total Liabilities	(13,105,431	)	(4,936,567	)	(2,972,777	)	(1,058,610	)	25,136		(22,048,249	)
Non-controlling interest	-		(11,696	)	(929,615	)	-		-		(941,311	)
Shareholders’ equity of Ecopetrol	(20,434,636	)	(7,879,784	)	(4,712,291	)	336,262		120,492		(32,569,957	)
Total Equity	(20,434,636	)	(7,891,480	)	(5,641,906	)	336,262		120,492		(33,511,268	)
Total liabilities and equity	$ (33,540,067	)	$ (12,828,047	)	$ (8,614,683	)	$ (722,348	)	$ 145,627		$ (55,559,517	)
Capital expenditures	$ 5,652,330		$ 3,634,939		$ 3,556,733		$ 8,587		$ -		$ 12,852,589
Goodwill	$ 1,393,705		$ 603,193		$ 510,654		$ -		$ -		$ 2,507,552

F-97

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The Company’s statement of net income by segment is as follows in accordance with RCP:

	Year ended December 31, 2010 — Exploration & Production	Refining Activities			Transportation	Market and Supply		Eliminations			Total
Revenues:
Local sales	$ 1,302,275	$	14,166,202		$ 1,819,125	$	955,576	$	(158,753	)	$ 18,084,425
Foreign sales, net	13,629,198		5,641,545		717		8,163,371		(3,550,945	)	23,883,886
Inter-segment net operating revenues	9,032,898		1,024,563		1,876,594		47,061		(11,981,116	)	-
Total Revenue	23,964,371		20,832,310		3,696,436		9,166,008		(15,690,814	)	41,968,311
Cost of sales	6,990,223		20,421,756		1,538,713		8,542,971		(15,510,409	)	21,983,254
Depreciation, depletion and amortization	2,759,835		487,911		727,970		31		-		3,975,747
Selling and projects	2,014,600		338,349		91,512		82,484		-		2,526,945
Administration expenses	242,717		184,420		164,985		11,401		-		603,523
Costs and expenses	12,007,375		21,432,436		2,523,180		8,636,887		(15,510,409	)	29,089,469
Operating income	11,956,996		(600,126	)	1,173,256		529,121		(180,405	)	12,878,842
Financial income (expenses), net	115,361		(55,244	)	983		(7,242	)	(16,069	)	37,789
Pension expenses	(157,035	)	(171,547	)	(48,706	)	(338	)	-		(377,626	)
Other non-operating income (expenses)	(443,165	)	(230,956	)	(178,391	)	(193,876	)	-		(1,046,388	)
Other expenses, net	(484,839	)	(457,747	)	(226,114	)	(201,456	)	(16,069	)	(1,386,225	)
Income before income taxes and non-controlling	11,472,157		(1,057,873	)	947,142		327,665		(196,474	)	11,492,617
Income tax benefit (expense)	(3,127,944	)	266,997		(294,616	)	(83,087	)	-		(3,238,650	)
Non-Controlling interest	-		403		(107,899	)	-		-		(107,496	)
Net income for the year attributable to Ecopetrol	$ 8,344,213	$	(790,473	)	$ 544,627	$	244,578	$	(196,474	)	$ 8,146,471

	Year ended December 31, 2009 — Exploration & Production	Refining Activities			Transportation	Market and Supply			Eliminations		Total
Revenues:
Local sales	$ 2,865,478	$	11,838,570		$ 964,194	$	2,083,460		$ (3,693,168	)	$ 14,058,534
Foreign sales, net	6,838,783		4,196,143		836		5,310,094		-		16,345,856
Inter-segment net operating revenues	7,801,225		958,026		1,703,915		67,607		(10,530,773	)	-
Total Revenue	17,505,486		16,992,739		2,668,945		7,461,161		(14,223,941	)	30,404,390
Cost of sales	5,490,208		16,512,052		1,340,638		7,725,926		(14,103,449	)	16,965,375
Depreciation, depletion and amortization	1,893,936		411,512		635,186		64		-		2,940,698
Selling and projects	1,569,576		250,862		69,927		72,277		-		1,962,642
Administration expenses	260,901		231,497		161,344		10,122		(1,528	)	662,336
Costs and expenses	9,214,621		17,405,923		2,207,095		7,808,389		(14,104,977	)	22,531,051
Operating income	8,290,865		(413,184	)	461,850		(347,228	)	(118,964	)	7,873,339
Financial income (expenses), net	530,074		(79,891	)	(2,802	)	48,452		-		495,833
Pension expenses	(249,252	)	(272,284	)	(73,085	)	(536	)	-		(595,157	)
Other non-operating income (expenses)	(256,842	)	(8,364	)	(159,406	)	(97,031	)	(1,528	)	(523,171	)
Other expenses, net	23,980		(360,539	)	(235,293	)	(49,115	)	(1,528	)	(622,495	)
Income before income taxes and non-controlling interest	8,314,845		(773,723	)	226,557		(396,343	)	(120,492	)	7,250,844
Income tax benefit (expense)	(2,330,443	)	183,019		(77,441	)	110,836		-		(2,114,029	)
Non-controlling interest	(39,270	)	31,272		3,237		-		-		(4,761	)
Net income for the year attributable to Ecopetrol	$ 5,945,132	$	(559,432	)	$ 152,353	$	(285,507	)	$ (120,492	)	$ 5,132,054

F-98

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

	Year ended December 31, 2008 — Exploration & Production	Refining Activities			Transportation	Market and Supply		Eliminations		Total
Revenues:
Local sales	$ 3,221,054	$	14,500,342		$ 716,284	$	3,160,319	$	-	$	21,597,999
Foreign sales, net	4,888,275		3,273,018		1,139		4,136,238		-		12,298,670
Inter-segment net operating revenues	11,644,466		828,629		1,436,763		62,938		(13,972,796	)	-
Total Revenue	19,753,795		18,601,989		2,154,186		7,359,495		(13,972,796	)	33,896,669
Cost of sales	4,649,150		17,898,231		1,101,136		7,370,147		(13,972,796	)	17,045,868
Depreciation, depletion and amortization	1,538,320		302,534		197,345		369		-		2,038,568
Selling and projects	991,203		300,188		431,576		49,807		-		1,772,774
Administration expenses	131,546		161,223		85,093		4,239		-		382,101
Costs and expenses	7,310,219		18,662,176		1,815,150		7,424,562		(13,972,796	)	21,239,311
Operating income	12,443,576		(60,187	)	339,036		(65,067	)	-		12,657,358
Financial income (expenses), net	3,717,490		87,440		104,502		191,820		-		4,101,252
Pension expenses	(479,495	)	(523,803	)	(140,597	)	(1,030	)	-		(1,144,925	)
Other non-operating income (expenses)	162,097		143,400		151,486		(59,464	)	-		397,519
Other expenses, net	3,400,092		(292,963	)	115,391		131,326		-		3,353,846
Income before income taxes and non-controlling	15,843,668		(353,150	)	454,427		66,259		-		16,011,204
Income tax benefit (expense)	(4,330,126	)	90,574		(124,321	)	(18,109	)	-		(4,381,982	)
Net income	11,513,542		(262,576	)	330,106		48,150		-		11,629,222
Less: Net loss (income) attributable to Non-controlling interest	-		-		455		-		-		455
Net income for the year attributable to Ecopetrol S.A.	$ 11,513,542	$	(262,576	)	$ 330,561	$	48,150	$	-	$	11,629,677

The following tables illustrate sales by geographic zones:

Sales by Geographic Zones for the year ended December 31, 2010

Zone	Products	Value
Colombia*	Crude oil, Refined, Petrochemicals and natural gas	$ 18,229,158	43.4 %
United States of America	Crude oil, Refined and Petrochemicals	14,965,911	35.7 %
Asia	Crude oil, Refined and Petrochemicals	3,952,186	9.4 %
South America (excluding Colombia)	Crude oil, Refined, Petrochemicals and natural gas	1,031,808	2.5 %
Central America and Caribbean	Crude oil, Refined and Petrochemicals	2,311,529	5.5 %
Europe	Crude oil, Refined and Petrochemicals	1,431,301	3.4 %
Other	Petrochemicals	46,418	0.1 %
		$ 41,968,311	100.0 %

*Includes sales to free trade zone sales of $144,734 (The sales of Natural gas $34,904 and $109 of petrochemicals as a part of sales to free trade zone)

Sales by Geographic Zones for the year ended December 31, 2009

Zone	Products	Value
Colombia*	Crude oil, Refined, Petrochemicals and natural gas	$ 14,134,884	46.5 %
United States of America	Crude oil, Refined and Petrochemicals	10,875,221	35.8 %
Asia	Crude oil, Refined and Petrochemicals	2,151,854	7,1 %
South America	Crude oil, Refined, Petrochemicals and natural gas	561,221	1.8 %
Central America and Caribbean	Crude oil, Refined and Petrochemicals	1,473,225	4.8 %
Europe	Crude oil, Refined and Petrochemicals	1,207,367	4.0 %
Other	Petrochemicals	618	0.0 %
		$ 30,404,390	100.0 %

• Includes sales to free trade zone of $76,350

F-99

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Sales by Geographic Zones for the year ended December 31, 2008

Zone	Products	Value
Colombia	Crude oil, Refined, Petrochemicals and natural gas	$ 21,597,999	63.7 %
United States of America	Crude oil, Refined and Petrochemicals	7,847,375	23.2 %
Asia	Crude oil, Refined and Petrochemicals	1,516,946	4.5 %
South America	Crude oil, Refined, Petrochemicals and natural gas	1,024,709	3.0 %
Central America and Caribbean	Crude oil, Refined and Petrochemicals	1,188,904	3.5 %
Europe	Crude oil, Refined and Petrochemicals	605,655	1.8 %
Other	Petrochemicals	115,081	0.3 %
		$ 33,896,669	100.0 %

Sales of products by Segment for the year ended December 31, 2010

Local Sales	Exploration & Production	Refining Activities	Transportation	Market and Supply	Eliminations		Total
Medium distillates	$ 5,058	$ 6,588,097	$ -	$ 506,021	$ -		$ 7,099,176
Gasolines	-	4,324,551	-	-	(22,269	)	4,302,282
Crude Oil	123,797	-	-	-	(6,611	)	117,186
Other products	189,833	1,214,831	-	16,124	(68	)	1,420,720
Services	97,350	32,546	1,819,125	54,492	(55,684	)	1,947,829
Natural Gas	854,427	-	-	378,939	(74,121	)	1,159,245
L.P.G.	31,810	595,551	-	-	-		627,361
Diesel and gasoline price differentials	-	740,682	-	-	-		740,682
Plastic and rubber	-	669,944	-	-	-		669,944
Total local sales	$ 1,302,275	$ 14,166,202	$ 1,819,125	$ 955,576	$ (158,753	)	$ 18,084,425

The following tables illustrate sales of products by Segment:

Sales of products by Segment for the year ended December 31, 2010

Foreign Sales	Exploration & Production	Refining	Transportation	Market and Supply	Eliminations		Total
Crude oil	$ 13,515,877	$ -	$ -	$ 8,108,425	$ (3,550,945	)	$ 18,073,357
Fuel oil	-	2,377,266	-	-	-		2,377,266
Gasoline	-	687,984	-	10,084	-		698,068
Diesel	-	1,638,044	-	-	-		1,638,044
Natural Gas	101,363	-	-	44,700	-		146,063
Plastic and rubber	-	673,574	-	-	-		673,574
Other products	11,958	264,677	717	162	-		277,514
Total foreign sales	$ 13,629,198	$ 5,641,545	$ 717	$ 8,163,371	$ (3,550,945	)	$ 23,883,886

Sales of products by Segment for the year ended December 31, 2009

Local Sales	Exploration & Production	Refining	Transportation	Market and Supply	Eliminations		Total
Medium distillates	$ 9,808	$ 5,087,659	$ -	$ -	$ -		$ 5,097,467
Gasolines	-	5,001,527	-	14,373	-		5,015,900
Crude Oil	1,943,410	-	-	1,692,832	(3,618,048	)	18,194
Other products	128,038	446,647	-	1,605	-		576,290
Services	75,322	82,616	964,194	38,284	(47,341	)	1,113,075
Natural Gas	691,930	-	-	336,366	(27,779	)	1,000,517
L.P.G.	16,970	452,581	-	-	-		469,551
Diesel and gasoline price differentials	-	196,533	-	-	-		196,533
Plastic and rubber	-	571,007	-	-	-		571,007
Total local sales	$ 2,865,478	$ 11,838,570	$ 964,194	$ 2,083,460	$ (3,693,168	)	$ 14,058,534

F-100

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Sales of products by Segment for the year ended December 31, 2009

Foreign Sales	Exploration & Production	Refining	Transportation	Market and Supply	Eliminations	Total
Crude oil	$ 6,613,961	$ -	$ -	$ 5,201,551	$ -	$ 11,815,512
Fuel oil	-	1,660,911	-	-	-	1,660,911
Gasoline	-	1,713,823	-	10,712	-	1,724,535
Natural Gas	214,091	-	-	97,643	-	311,734
Plastic and rubber	-	544,912	-	-	-	544,912
Other products	10,731	276,497	836	188	-	288,252
Total foreign sales	$ 6,838,783	$ 4,196,143	$ 836	$ 5,310,094	$ -	$ 16,345,856

Sales of products by Segment for the year ended December 31, 2008

Local Sales	Exploration & Production	Refining Activities	Transportation	Market and Supply	Eliminations	Total
Medium distillates	$ 11,312	$ 5,587,435	$ -	$ 315,880	$ -	$ 5,914,627
Gasolines	41	3,635,254	-	9,050		3,644,345
Crude Oil	2,312,950	-	-	2,461,451	-	4,774,401
Other products	178,233	1,160,873	-	36,685	-	1,375,791
Services	94,644	70,912	716,284	39,812	-	921,652
Natural Gas	603,973	-	-	297,441	-	901,414
L.P.G.	19,901	592,870	-	-	-	612,771
Diesel and gasoline price differentials	-	3,070,479	-	-	-	3,070,479
Plastic and rubber	-	382,519	-	-	-	382,519
Total local sales	$ 3,221,054	$ 14,500,342	$ 716,284	$ 3,160,319	$ -	$ 21,597,999

Sales of products by Segment for the year ended December 31, 2008

Foreign Sales	Exploration & Production	Refining	Transportation	Market and Supply	Eliminations	Total
Crude oil	$ 4,658,337	$ -	$ -	$ 4,037,945	$ -	$ 8,696,282
Fuel oil	-	2,093,012	-	-	-	2,093,012
Gasoline	-	186,197	-	-	-	186,197
Natural Gas	215,312	-	-	98,036	-	313,348
Plastic and rubber	-	704,034	-	-	-	704,034
Other products	14,626	289,775	1,139	257	-	305,797
Total foreign sales	$ 4,888,275	$ 3,273,018	$ 1,139	$ 4,136,238	$ -	$ 12,298,670

xxvi. RELATED PARTIES

In addition to the transactions disclosed in Note 14, Ecopetrol is controlled by the Colombian Government which owns a majority stake in the Company. Therefore Ecopetrol has numerous transactions with other government entities as well as state-owned companies in the ordinary course of its business. The most significant of these transactions are disclosed below:

Price differentials: Ecopetrol sell prices are regulated and the National Government pays to Ecopetrol the amount of the benefit price for the refined products generated between the income of the regulated producer and the equivalent price quoted in the international market . The amount of price differential included in revenue in 2010, 2009 and 2008 were $740,682, $196,533 and $3,070,479, respectively. Additionally, in 2010, 2009 and 2008, the Company recognized interests amounting to $929, $235,704 and $93,218, respectively, which corresponds to the price differentials recorded.

Purchases of hydrocarbons from ANH – The Company purchases the physical product that the ANH receives from all producers in Colombia at prices set forth in the Law 756 of 2002 and Resolution 18 1709 of 2003, which reference international prices. For more information on this transaction, please see Notes 1 and 24. (Consolidated Financial Statements).

F-101

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The following table presents accounts receivable and payable with related parties as of December 31, 2010 and 2009:

	2010 — Assets	Liabilities	2009 — Assets	Liabilities
Ministerio de Hacienda y Crédito Público	$ 1,930,947	$ 332	$ 1,015,691	$ 130,668
Ministerio de Minas y Energía	-	-	37,228	-
U.A.E. Agencia Nacional de Hidrocarburos	66,913	-	134,108	9,093
E.S.P. Empresa de Energía de Bogotá S.A.	1,101,455	-	503,217	-
E.S.P. Generadora de Energía del Caribe S.A.	37,219	-	54,337	23,735
Interconexión Eléctrica S.A. – ESP	833,206	74	766,969	-
Entidades Territoriales (Departamentos, Municipios)	37,232	24,099	17,438	7,399
Empresas Públicas de Medellín S.A. – ESP	8,568	113	33,038	62
Isagen S.A.	199	23	8,306	45
E.S.P. Transportadora de Gas del Interior S.A.	3,982	434	4,666	-
Empresa Colombiana de Gas	-	-	-	-
E.S.P. Termoemcali S.A.	-	-	34,001	-
E.S.P. Gestión Energética S.A.	-	-	600	-
Central Hidroeléctrica de Caldas S.A. E.S.P	-	937	529	-
Universidad Industrial de Santander U.I.S.	11	-	18	-
Dirección de Impuestos y Aduanas Nacionales DIAN	1,341,223	3,288,780	11,961	2,023,516
Others	1,498	5,124	484	3,855
	$ 5,362,455	$ 3,319,915	$ 2,622,591	$ 2,198,373

Other transactions with related parties during 2010, 2009 and 2008 are:

	2010 — Income	Expenses	2009 — Income	Expenses	2008 — Income	Expenses
Ministerio de Minas y Energía	$ -	$ -	$ -	$ -	$ 3,870,348	$ -
Dirección de Impuestos y Aduanas Nacionales DIAN	1	3,523,700	19	4,295,093	-	4,855,718
Entidades Territoriales (Departamentos, Municipios)	1,328	30,986	15	121,396	-	133,346
Contraloría General de la República	-	52,876	-	33,106	-	25,811
Ministerio de Defensa Nacional	124	-	-	12,128	-	15,774
Ministerio de Transporte	-	-	-	-	-	13,922
Inversiones de Gases de Colombia S.A. - Invercolsa	-	-	-	-	9,231	-
Unidad de Planeación Minero Energética	-	2,557	-	2,308	-	2,206
Others	376,712	49,347	745	19,526	1,653	7,311
	$ 378,165	$ 3,659,466	$ 779	$ 4,483,557	$ 3,881,232	$ 5,054,088

Material Related Party Agreements

Set forth below is a description of the Company's material related party agreements:

We entered into a supply agreement with Ecodiesel Colombia S.A., or Ecodiesel, a company in which we have a 50% equity interest. This agreement has been operative since August 1, 2010. Pursuant to the terms of this agreement, Ecodiesel must deliver to us and we must purchase from Ecodiesel at least the guaranteed amount of 48.100 bls of Ecodiesel's biodiesel production each month. Payments vary depending on the purchased volumes of biodiesel. This agreement expires on December 31, 2017.

In 2010, we renewed the service agreement with Sociedad Colombiana de Servicios Portuarios S.A. or Serviport S.A., a company in which we have 49% equity interest. Pursuant to the terms of the agreement, Serviport assists the Company in its maritime operations in the Coveñas port. This agreement expires on May 27, 2019.

The Technical Service Agreement signed between SAVIA and us consists of management, administration, technical and business advice in order to implement all the necessary operations of several offshore oil and gas concessions in Peru, the Technical Services shall be implemented in Peru and will mainly concentrate on the following matters: Technical, Geological, Drilling, Operation, HSE, Administration, Legal, Human Resources, and Information Technology. Ecopetrol has a 50% equity interest in Offshore International Group which owns SAVIA Peru S.A. The Technical Service Agreement is worth US$ 1,000,000 per year.

F-102

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

xxvii. FAIR VALUE

Accounting standards for fair value measurement (ASC 820) establish a framework for measuring fair value and stipulate disclosures about fair value measurements. The standards apply to recurring and nonrecurring financial and nonfinancial assets and liabilities that require or permit fair-value measurements. Among the required disclosures is the fair-value hierarchy of inputs the company uses to value an asset or a liability. The three levels of the fair-value hierarchy are described as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. For the Company, Level 1 inputs include marketable securities that are actively traded.

Level 2: Inputs other than Level 1 that is observable, either directly or indirectly. For the Company, Level 2 inputs include quoted prices for similar assets, prices obtained through third-party broker quotes, and prices that can be corroborated with other observable inputs for substantially the complete term of a contract.

Level 3: Unobservable inputs. The Company does not use Level 3 inputs for any of its recurring fair-value measurements. Level 3 inputs may be required for the determination of fair value associated with certain nonrecurring measurements of nonfinancial assets and liabilities. In 2010, the Company used Level 3 inputs to determine the fair value of certain nonrecurring nonfinancial assets.

The fair value hierarchy for recurring assets measured at fair value at December 31, 2010, and December 31, 2009, is as follows:

		Fair Value at Reporting Date Using — Quoted Price in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs		Fair Value at Reporting Date Using — Quoted Price in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
Description	2010	(Level 1)	(Level 2)	(Level 3)	2009	(Level 1)	(Level 2)	(Level 3)
ASSETS
Available for sale debt securities
Securities issued by mixed – economy governmental entities	$ 1,932,115	$ 1,932,115	$ -	$ -	$ 764,853	$ 764,853	-	-
Securities issued or secured by Colombian government	1,642,336	1,642,336	-	-	724,137	724,137	-	-
Securities issued or secured by government sponsored enterprise (GSEs)	1,498,957	1,498,957	-	-	1,712,550	1,712,550	-	-
Securities issued or secured by financial entities	120,044	120,044	-	-	11,185	11,185	-	-
Other debt securities	29,585	29,585	-	-	-	-	-	-
Securities issued or secured by USA government	642,974	642,974	-	-	153,186	153,186	-	-
Total available for sale debt securities	5,866,011	5,866,011	-	-	3,365,910	3,365,910	-	-
Derivatives
Option	12,651	-	12,651	-	66,099	-	66,099	-
Swap	21,191	-	21,191	-	184	-	184	-
FX Forward	107	-	107	-	-	-		-
Total derivatives	33,949	-	33,949	-	66,283	-	66,283	-
Total Recurring Assets at fair value	$ 5,899,960	$ 5,866,010	$ 33,949	$ -	$ 3,432,193	$ 3,365,910	$ 66,283	$ -

F-103

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Marketable Securities: The Company calculates fair value for its marketable securities based on quoted market prices for identical assets and liabilities. The fair values reflect the cash that would have been received if the instruments were sold at December 31, 2010.

Derivatives: The Company records its derivative instruments on the Consolidated Balance Sheet at fair value, with the offsetting amount to the Consolidated Statement of Income. For derivatives with identical or similar provisions as contracts that are publicly traded on a regular basis, the company uses the market values of the publicly traded instruments as an input for fair-value calculations.

The company’s derivative instruments principally include foreign exchange and refined-product (asphalt) swaps, options and forward contracts, principally with financial institutions and other oil and gas companies, the fair values for which are obtained from third-party broker quotes, industry pricing services and exchanges.

The company obtains multiple sources of pricing information for the Level 2 instruments. Since this pricing information is generated from observable market data, it has historically been very consistent. The company does not materially adjust this information.

The fair value hierarchy for non-recurring assets measured at fair value at December 31, 2010 is as follows:

Description	2010	Fair Value Measurements Using — Quoted Price in Active Markets for Identical Assets Level 1	Significant Other Observable Inputs Level 2	Significant Unobservable Inputs Level 3	Total Gains (Losses)	2009
Equity Method Investment	$ 826,039	$ -	$ -	$ 826,039	$ 349,033	$ 1,075,308
Production fixed assets with impairment	93,069	-	-	93,069	134,604	338,158
Transportation fixed assets with impairment (*)	-	-	-	-	865	19,888
Other fixed assets	11,609,275	-	-	11,609,275	-	8,382,912
Total Fixed Assets	$ 11,702,344	$ -	$ -	$ 11,702,344	$ 135,469	$ 8,740,959
Total Non-Recurring Assets	$ 12,528,383	$ -	$ -	$ 12,528,383	$ 484,502	$ 9,816,267

• Transportation fixed assets were written down to their fair value of $0, resulting in an impairment charge of ($865). Under U.S. GAAP in 2010 two transport systems were measured at fair value, in 2009 four transportation systems were measured at fair value.

Impairment of “Equity Method Investment”- During 2010 and in accordance with the accounting standard for Investments – Equity Method and Joint Ventures (ASC 323), the acquired participation in Offshore International Group with a carrying amount of $1,175,073 was written down to a fair value of $826,039, resulting in a before-tax loss of $359,981. The fair value was determined from internal cash-flow models, using discount rates consistent with those used by the company to evaluate cash flows of other assets of a similar nature.

Impairment of “Properties, plant and equipment”- During 2010 and in accordance with the accounting standard for the impairment or disposal of long-lived assets (ASC 360), long-lived assets “held and used” with a carrying amount of $12,232,611 were written down to a fair value of $11,702,344, resulting in a before-tax loss of $134,469. The fair values were determined from internal cash-flow models, using discount rates consistent with those used by the Company to evaluate cash flows of other assets of a similar nature. The respective long-lived assets were reviewed for impairment on a well-by-well basis.

Assets and Liabilities Not Required to Be Measured at Fair Value

F-104

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The Company holds cash and cash equivalents. The instruments held are primarily time deposits and money market funds. The fair values reflect the cash that would have been received or paid if the instruments were settled at year-end. Cash equivalents had carrying/fair values of $3,910,745 and $3,837,670 at December 31, 2010 and 2009, respectively. Fair values of other financial instruments at the end of 2010 and 2009 were not material.

xxviii. SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)

In accordance with the requirements of the United States Securities and Exchange Commission (SEC), Accounting Standards Codification 932 and the ASU- 2010-03 “Oil and Gas reserve Estimation and Disclosures” Rule, this section provides supplemental information on oil and gas exploration and producing activities of the Company. The information included in items (i) through (iii) provides historical cost information pertaining to costs incurred in exploration, property acquisitions and development, capitalized costs and results of operations. The information included in items (iv) and (v) presents information on Ecopetrol’s estimated net proved reserve quantities, standardized measure of estimated discounted future net cash flows related to proved reserves, and changes in estimated discounted future net cash flows.

The following information prepared under U.S. GAAP corresponds to Ecopetrol’s oil and gas producing activities at December 31 of 2010, 2009 and 2008 in direct and joint operations.

Under the new SEC final rule optional disclosure of possible and probable reserves is allowed, but the Company opted not to do so. Ecopetrol estimated its reserves without considering non-traditional resources.

Table i – Capitalized costs relating to oil and gas producing activities

Consolidated Companies	Year ended December 31 — 2010	2009		2008
Natural and environmental properties – proved properties	$ 16,977,248	$	12,188,806	$	8,657,429
Wells, equipment and facilities – property, plant and equipment	6,564,590		5,359,419		4,112,318
Construction in progress	2,490,365		2,321,427		1,828,945
Accumulated depreciation, depletion and amortization	(11,864,137	)	(9,883,704	)	(7,637,750	)
Net capitalized costs	$ 14,168,065	$	9,985,947	$	6,960,942

It includes information of the subsidiary companies of the sector of E & P.

There are no capitalized costs associated with unproved oil and gas properties for the periods reported.

In accordance with ASC 410-20, Asset Retirement Obligations, during 2010, 2009 and 2008 were added $30,748, $6,857 and $25,902, respectively, to the cost basis of oil and gas wells for wells drilled.

Table ii – Costs incurred in oil and gas exploration and development activities

Costs incurred are summarized below and include both amounts expensed and capitalized in the corresponding period.

	Year ended December 31 — 2010	2009	2008
Acquisition of Proved Properties	$ -	$ 2,879,233	$ 1,049,402
Exploration costs	1,307,379	1,258,827	941,369
Development costs	5,835,141	4,717,550	3,109,011
Total costs incurred	$ 7,142,520	$ 8,855,610	$ 5,099,782

It includes information of the subsidiary companies of the sector of E & P.

F-105

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Table iii - Results of operations for oil and gas producing activities

	2010
Net revenues
Sales	$ 15,245,110	$	9,957,793	$	8,109,328
Transfers	9,032,898		7,801,224		11,644,467
Total	$ 24,278,008	$	17,759,017	$	19,753,795
Production cost (1)	3,577,780		3,117,872		3,990,929
Depreciation, depletion and amortization (2)	1,856,118		1,184,584		884,372
Other costs (3)	3,554,315		2,533,031		691,002
Exploration expenses (4)	1,696,383		1,357,147		871,619
Other expenses (5)	593,257		535,494		368,231
Total	11,277,854		8,728,129		6,806,154
Income before income tax	13,000,155		9,030,889		12,947,641
Income Tax expenses	(4,290,051	)	(2,980,193	)	(4,272,722	)
Results of operations for producing activities	$ 8,710,104	$	6,050,695	$	8,674,919

Note: Effects of naphtha addition are included into results of operations in the table above. During 2010, 2009 and 2008 the additional total barrels (million boe) were 12.2; 8.5 and 5.4.

(1) Production costs are lifting costs incurred to operate and maintain productive wells and related equipment and facilities, including such costs as operating labor, materials, supplies, and fuel consumed in operations and the costs of operating natural gas liquids plants. In addition it also include accretion expense related to asset retirement obligations that were recognized during 2010, 2009 and 2008 in production costs which were approximately $ 151,516, $(25,980) and $195,191, respectively. The Company’s results of operations from oil and gas producing activities for the years ending December 31, 2010, 2009 and 2008 are shown above

(2) In accordance with ASC 410-20, the expenses related to asset retirement obligations that were recognized during 2010, 2009 and 2008 in depreciation, depletion and amortization were approximately $180,484, 69,371 and $16,352 respectively.

(3) Relate to transportation costs and naphtha that do not form part of the company´s lifting cost.

(4) Exploration expenses include the costs of geological and geophysical activities and non-productive exploratory wells.

(5) Correspond to administration expenses and marketing expenses.

The Company transferred approximately 37%, 44% and 59% of its crude oil and gas production; (percentages are based on the sales value in Colombian pesos) to inter-company business units in 2010, 2009 and 2008, respectively. Using volumes, those transfers were 47%, 57%, and 69% respectively (included Reficar), in 2010, 2009 and 2008. The inter-company transfers were recorded at values equal to the Company’s market prices.

In 2010 the Company reports its information in four segments: Exploration & Production, Refining Activities, Transportation and Market and Supply. Until 2009 a Corporate segment was reported. The Corporate segment in the new methodology is assigned to the four segments as detailed in note xxv.

The information for 2009 and 2008 included herein has been updated for comparison purposes in accordance with the methodology used during 2010.

Table iv – Reserve information

The reserve information presented in this section is based on the definitions and rules used for U.S. GAAP purposes. The estimates for proved oil and gas reserves used in the preparation of the consolidated financial statements were prepared by Ecopetrol’s engineers, audited in a 99% by the “external engineers” and approved by the Company’s reserves committee, consisting of the Chief Financial Officer, the Exploration and Production Executive Vice-President and the Vice-President of Strategy. Decisions of the Reserves Committee have to be unanimous. Finally, results are presented to the Audit Committee of the Board of Directors and the Board of Directors.

F-106

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Information concerning the technical definitions used for the estimated proved reserves is included in this annual report. The information provided in this annual report about our 2010 net proved reserves is based on the 2010 audited reserve reports for 99% of our total reserves prepared by experts under the SEC definitions and rules. The remaining 1% corresponds to calculations made by us internally using SEC definitions and rules set forth in Rule 4-10(a) of Regulation S-X and the disclosure guidelines contained in the SEC’s “Modernization of Oil and Gas Reporting” final rule dated December 31, 2008 and effective as of January 1, 2010.

Reserves were audited by Ryder Scott, DeGolyer and MacNaughton and Gaffney, Cline & Associates (collectively, the “External Engineers”). By corporate definition, Ecopetrol reports the reserves values obtained from the External Engineers. Our 2010 crude oil and natural gas net proved reserves include reserves from production assets located in the United States, Perú and Hocol’s assets in Colombia.

The Company’s proved reserves as of December 31, 2010 and 2009 are based on the SEC average price methodology for U.S. GAAP purposes, which mirrors the average price methodology used by the Company in Colombia during this period. The Company’s proved reserves as of December 31, 2008 are based on the SEC year end price methodology for purposes of U.S. GAAP which mirrors the year-end price methodology used by the Company in Colombia during this period.

Future development, abandonment and production costs were computed by estimating the expenditures to be incurred in developing, producing, and abandoning proved oil and gas reserves at the end of the year, based on year-end costs. Future income taxes were computed by applying statutory tax rates to the estimated net pre-tax cash flows after consideration of tax basis and tax credits and carry forwards. Discounted future net cash flows are calculated using 10% mid period discount factors. This discounting requires a year-by-year estimate of when the future expenditures will be incurred and when the reserves will be produced.

The arbitrary valuation methodology prescribed under ASU 2010-03 and ASU-2010-14 requires assumptions as to the timing and amount of future development and production costs. The calculations are made as of December 31 each year and should not be relied upon as an indication of the Company’s future cash flows or the value of its oil and gas reserves.

Ecopetrol used deterministic methods that are commonly used internationally to estimate reserves. These methods have some uncertainty in degradation, and thus, the estimates should not be interpreted as being exact amounts. However, the technology used to estimate reserves is considered reliable.

Estimates of reserves were prepared by geological and engineering methods commonly used in the oil industry. The method or combination of methods used in the analysis of each reserve was adopted from experience with similar reserves, stage of development, quality and completeness of basic data and production history.

The majority of the producing proved reserves were estimated by applying appropriate decline curves or other performance relationships. In analyzing decline curves, reserves were estimated by calculating economic limits that are based on current economic conditions. In certain cases, where the methods previously employed could not be used, reserves were estimated by analogy with similar reserves where more complete data was available.

Most of the Company’s activities and reserves are located in Colombia. The Colombian Nation is the owner of all mineral interests located in Colombia. The Company and, by extension of joint association contracts, its partners, are given the right to explore, develop, produce and sell those reserves, but do not own them. The reserve quantities and their standardized measure, presented in the following tables, represent those reserves and their estimated value that the Company has the right to extract and sell.

The table below sets forth the Company’s total proved oil and gas reserves together with their changes therein as of and for the years ended December 31, 2010, 2009 and 2008. The estimates (oil in million barrels, gas in billion cf, gas converted to million barrels at 5.7 billion cf per million barrels) using the SEC rules in effect for each respective year. In 2010 Hocol and Savia increased the Company’s total reserves of oil and gas by 9.5 million boe, 3 million boe, respectively. The Company did not consider these additional reserves as significant to be disclosed separately.

F-107

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

Oil		Gas		Total		Oil		Gas		Total		Oil		Gas		Total
million barrels		billion cf		million boe		million barrels		billion cf		million boe		million barrels		billion cf		million boe
Proved Reserves:
Beginning of year	1,123.3		2,329.4		1,538.2		798.9		1,898.9		1,137.0		857.4		1,979.6		1,209.9
Revisions of previous estima tes (1)	99.1		558.7		190.9		246.0		537.2		341.6		44.2		54.5		53.9
Improved recovery	47.4		-		47.4		-		-		-		-		-		-
Purchases of minerals in place	-		-		-		84.2		33.2		90.1		0.8		0.5		0.9
Extensions and discoveries	126.3		0.3		126.5		126.1		16.8		129.1		7.5		0.4		7.6
Production	(159.8	)	(165.9	)	(188.9	)	(131.9	)	(156.6	)	(159.7	)	(111.0	)	(136.0	)	(135.2	)
End of year	1,236.4		2,722.6		1,714.0		1,123.3		2,329.4		1,538.2		798.9		1,898.9		1,137.0
Proved developed reserves:
Beginning of year	630.5		1,732.6		939.0		518.4		720.6		646.7		651.3		1,210.5		866.9
End of year	800.7		2,261.7		1,197.5		630.5		1,732.6		939.0		518.4		720.6		646.7
Proved undeveloped reserves:
Beginning of year	492.8		596.9		599.2		280.5		1,178.3		490.3		206.1		769.1		343.0
End of year	435.7		460.9		516.5		492.8		596.9		599.2		280.5		1,178.3		490.3

(1) Includes enhanced oil recovery component for years 2009 and 2008

The Company’s revisions during 2010 amounted to 191 million boe, corresponding primarily to the following activities:

· Rubiales Field: the reservoir has demonstrated a better production performance (lower decline rates) and a more favorable economic limit (35 million boe); Chuchupa Field: the reservoir has demonstrated a better performance resulting from the compression project (27 million boe).

· Cusiana Field: New gas sales agreements (38 million boe);

· Cupiagua Field: The Company signed an internal gas sales agreement to Barrancabermeja Refinery (20 million boe);

· Pauto Field: The Company has updated the field development plan (additional wells and optimization for gas injection strategy) (10 million boe).

The activities described above represented 68% of the additions to reserves revisions in 2010; the remaining 61 million boe resulted from varying increases and decreases from a variety of fields.

The Company’s improved recovery during 2010 amounted to 47 million boe, which corresponded mainly to better production results amounting to in the secondary performance of the Casabe field, which at the same time allowed for updating of the development plan, (35 million boe), which represented 74% of the Company’s additions by improved recovery. The remaining 12 million boe are distributed in Yariguí-Cantagallo, San Francisco, La Cira, Infantas, Cusiana and Cupiagua fields.

F-108

Ecopetrol S.A. and Subsidiaries

Notes to the Consolidated Financial Statements

Years ended December 31, 2010, 2009 and 2008

The Company’s extensions and discoveries during 2010 amounted to 126 million boe, which corresponded to 21 million boe of newly discovered fields and 106 million boe of extensions of proved acreage. The newly discovered fields corresponded mainly to Quifa Suroeste and Casabe Sur fields, representing 90% of the additions. In terms of extensions of proved acreage, 80% of the 106 million boe was associated with Rubiales Field (85 million boe), where the Company has created an improved development plan, covering existing and new proved areas, which supports additional future drilling activities. The remaining 20% is distributed in smaller changes in several fields like, Chichimene, Castilla, Provincia, Sardinata and others.

Table v – Standardized measure of discounted future net cash flows relating to proved oil and gas quantities and changes therein

The standardized measure of discounted future net cash flows, related to the above proved crude oil and natural gas reserves, is calculated in accordance with the requirements of ASU 2010-03. Estimated future cash inflows from production under U.S. GAAP are computed by applying unweighted arithmetic average of the first-day-of-the-month for oil and gas price to year-end quantities of estimated net proved reserves.

Future cash inflows	2010 — $ 186,295,426	$	137,518,875	$	91,719,056
Future production and development costs	(57,267,518	)	(52,670,688	)	(40,753,567	)
Future income tax expenses	(36,783,230	)	(27,574,537	)	(18,409,888	)
Future net cash flow	92,244,678		57,273,650		32,555,601
10% annual discount for estimated timing of cash flows	(36,690,043	)	(21,813,763	)	(13,897,290	)
Standardized measure of discounted future net cash flows	$ 55,554,635	$	35,459,887	$	18,658,311

The following are the principal sources of change in the standardized measure of discounted net cash flows:

Net change in sales and transfer prices and in production (lifting) cost related to future production	2010 — $ 23,136,538	$	11,522,615	$	(20,440,064	)
Changes in estimated future development costs	(2,936,160	)	(4,585,987	)	(3,920,730	)
Sales and transfer of oil and gas produced during the period	(24,278,008	)	(17,759,017	)	(19,753,794	)
Net change due to extension discoveries	4,102,951		1,129,590		137,845
Net change due to purchase and sales of minerals in place	-		2,387,443		53,468
Net change due to revisions in quantity estimates	10,577,037		13,532,916		1,758,941
Previously estimated development costs incurred during the period	4,352,080		3,369,970		2,934,497
Accretion of discount	3,545,989		1,865,831		4,251,867
Other – unspecified	6,674,884		11,859,363		3,059,763
Net change in income taxes	(5,080,563	)	(6,521,148	)	8,057,853
Aggregate change in the Standardized measure of discounted future net cash flows for the year	$ 20,094,747	$	16,801,576	$	(23,860,354	)

F-109

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

ECOPETROL S.A.
By:	/s/ Adriana M. Echeverri
	Name: Adriana M. Echeverri
	Title: Chief Financial Officer
By:	/s/ Javier G. Gutiérrez
	Name: Javier G. Gutiérrez
	Title: Chief Executive Officer

Date: August 8, 2011

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