The planned $1.4 billion share sale by Ecopetrol, Colombia's state-run oil producer, expired today, falling short of the company's target. The company said it raised just over $1.3 billion in the offering, which Ecopetrol said was hampered by the recent decline in global equity markets and oil prices.
Ecopetrol (EC) announced the share offering in July and while it was believed to be widely anticipated by some investors, analysts cautioned that demand could be light because of Colombian laws that limit the percentage of shares institutional investors can own in any particular Colombian firm. The Ecopetrol offering was limited strictly to domestic investors.
Ecopetrol CEO Javier Gutierrez acknowledge to the Wall Street Journal that ''Investors don't want to spend their money in the middle of a crisis.'' The company is planning to use proceeds from the share sale to fund its 2011 exploration budget of over $8.5 billion. Ecopetrol is looking to double output to 1.5 million barrels per day in 2020, the Journal reported.
Prior to the most recent share sale, only 10% of Ecopetrol's shares were available to the public following the company's 2007 IPO. The government is expected to sell another 10% of its stake in the oil producer next year, though that sale is expected to be broken into several parts.