Shares of Colombia’s Ecopetrol  fell sharply early Tuesday in Bogota after the state-controlled oil company reported a 22% drop in profits last quarter, leading analysts to tell investors to sell the stock.

 

The company, which has been at the forefront of a years-long oil boom that’s made Colombia Latin America’s fourth-largest oil producer, said late Monday its third quarter consolidated net income was 3.22 trillion pesos ($1.76 billion) compared with COP4.15 trillion a year earlier.

Ecopetrol shares, which trade in Bogota and New York, dropped 3% at the opening bell, and have only recovered modestly since, recently down 2.6% at COP5,610, a two-week low.

Analysts at InterBolsa, Colombia’s top brokerage firm, called the earnings report “significantly below expectations,” and blamed the reduced profits on lower production, lower sales volumes and higher operating costs.

“We are changing our recommendation on Ecopetrol from hold to sell,” InterBolsa said.

Analysts at Celfin, meanwhile, also told investors to “avoid the stock” after earnings were released, though it also pointed out the company “has such a strong track record of growth and delivery that we don’t think investors will take this one weaker set of results and run.”

Beyond the lower profits, analysts focused on Ecopetrol’s production levels, noting output in the third quarter was well under expectations at 743,100 barrels of oil equivalent a day. The lower output was due to disruptions in transport infrastructure delays in acquiring environmental licenses needed to expand production.

Last quarter’s production levels “leaves the company’s goal to produce an average of 780,000 barrels a day in 2012 as virtually impossible to achieve as it would have to produce around 870,000 barrels a day” in the fourth quarter, InterBolsa said.

Ecopetrol shot to fame among international investors May when it briefly overtook Brazilian oil giant Petrobras (PBR, PETR4.BR) to become Latin America’s largest company in terms of market capitalization. Its share price that month hit an all-time high of COP5,850.

But Petrobras soon retook the top spot, and Ecopetrol shares have since fallen by 4%. The share price, though, is still up 33% this year.

InterBolsa’s mid-December target price for Ecopetrol is COP5,030.