Colombia’s state-run oil company Ecopetrol SA could start carrying out a long-awaited share placement on July 27 if it receives the necessary approvals from its board of directors and regulators, a company spokesman said Tuesday.
The company has told local brokerage firms that it could be ready to start the share placement on July 27, an Ecopetrol press officer said after local news reports emerged pointing out that the sale would start on that date and conclude on August 15.
The company, however, still requires the approval of the board of directors to carry out the share sale, which could represent up to a 10% stake in the company. The board is set to meet on July 22, when it will define the price and amount of stock that will be offered. Ecopetrol also still requires the approval of regulators for the share sale, the spokesman said.
The official, who declined to be named to comply with internal company policy, said the date could be changed depending on market conditions.
The new share sale would be offered initially to local investors and would add to the 10% that is already floated in the exchange. Analysts, however, expect that the new share placement will be for a much smaller figure than the 10% limit.
Ecopetrol, Colombia’s largest company, said last month that it was producing a record 753,000 barrels of oil equivalent a day as of late June, up from an average of 610,000 barrels a day in 2010. The oil company has earmarked $8.5 billion in capital investment for 2011.
The Ecopetrol sale, which would be geared at financing the company’s ambitious expansion plans, has been expected by the market for most of this year, but analysts continue to warn that it could still have a wide effect on Colombian stocks.
The stock exchange has seen new issues this year which have maxed out liquidity, and many investors may shed some of their holdings to buy into the Ecopetrol offering.
The amount that the company decides to sell will gauge the repercussions of the new issue. While it can float a maximum of 10%, most analysts expect the new issue to be about half of that figure.
In the past, the company and the government have highlighted that they want to avoid flooding the bourse with Ecopetrol shares, fearing that it could pressure the stock price.
The government is also seeking the approval of Congress to sell another 10% stake, with the funds assigned for large infrastructure projects and repairing the damages of devastating rains that lashed the country in the last months of 2010 and for much of this year.
The government has insisted that it will sell that additional stake in small tranches.
Some of Colombia’s other oil stocks could suffer the backlash of the stock sale slated for the end of July. After a stellar 2010, things could worsen for Colombian-based oil stocks in the coming weeks. As brokers pitch the Ecopetrol offering, their clients might have to sell other stocks, like those of Canadian-based oil firms Pacific Rubiales Energy Corp. and Canacol Energy Ltd.
“There is a tad of chatter that local brokers eyeing a good payday are recommending the forthcoming Ecopetrol issue at the expense of the Canadians,” investment firm Celfin said in a research note.
Investors seemed to have already priced in the Ecopetrol sale, with the stock price nearly unchanged on Tuesday at COP3,600.