Rising oil prices spark increase in energy offerings; Delta Petroleum raises $100 million

By Sheri Kasprzak

New York, Sept. 22 - Oil prices backed off on Thursday but not before rising to $68 per barrel, enough to start a flurry of energy offerings in the PIPE sector. Oil ultimately fell $0.30 to finish at $66.50 per barrel.

Still, some sellsiders speculated Thursday that crude oil prices will rise, perhaps sharply, if Hurricane Rita impacts oil refineries on the Gulf Coast.

"It still has room to move up," said one market source in San Francisco. "It's very likely that it will if the hurricane hits those refineries. It could get worse than last time [with Hurricane Katrina] since some refineries are still recovering."

Another source in Vancouver, B.C., agreed.

"We're just seeing the beginning of it," he said when asked about a new slate of energy offerings priced on Thursday. "I imagine this will go on for the better part of next week, but a lot of it does hinge upon where oil prices go and how the weather impacts things."

Even though stocks recovered from significant losses on Wednesday, speculation over the economic damage that could come from Hurricane Rita may keep PIPE issuers in the broader market away for the short term.

They are "probably just wary," replied one source on how issuers in general may be affected by the hurricane. "[They're] waiting it out to see what's going to come of it."

On Thursday, the Dow Jones Industrial Average gained 44.02 to close at 10,422.05; the Nasdaq composite index closed up 4.14 at 2,110.78; and the Standard & Poor's 500 composite index finished the day up 4.42 to close at 1,214.62.

Heading up those energy offerings was a $100,000,233 private placement Delta Petroleum Corp., which is getting ready to wrap up.

The Denver-based oil exploration company will issue 5,405,418 shares at $18.50 each to institutional investors. The company had 42.71 million outstanding shares as of Sept. 12, according to the company's latest earnings report, released on Tuesday.

The offering was announced early Thursday afternoon, and Delta's stock gained $0.35, or 1.79%, to close at $19.95 before losing $0.05 in after-hours trading.

Neither Roger Parker, the company's president and chief executive officer, nor representatives from the company's investor relations' department returned requests for comment on the offering by press time Thursday.

Proceeds from the deal will be used to acquire assets from Savant Resources, LLC and to fund drilling on the company's properties.

JP Morgan Securities, Inc. and Coker, Palmer, Phillips & Mullen, Inc. are the placement agents.

On the year, Delta has seen its revenues increase substantially. For the fiscal year ended June 30, 2005, the company reported net revenues of $94,707,000, up from $36,367,000 for fiscal 2004.

Mart prices $29 million offering

Calgary, Alta.'s Mart Resources, Inc. also took advantage of increased energy stocks to price a $29,052,000 stock deal.

The offering is comprised of up to 40 million shares at $0.7263 each.

As of June 30, Mart had 95,199,708 outstanding common shares.

At press time Thursday, Wade Cherwayko, a spokesman for the company, had not returned requests for comment on the deal.

Mart plans to use the proceeds to contract oil rights and equipment for drilling on its Nigerian oil and gas fields. The company also plans to acquire seismic data for the fields, design and construct production facilities and negotiate the acquisition of oil and gas concessions in the Democratic Republic of Congo with the proceeds. The rest will be used for working capital.

Financially, the company's net losses have more than doubled over the second quarter of 2004.

For the quarter ended June 30, 2005, the company reported a net loss of C$462,597 compared to a net loss of C$158,839 for the same quarter of 2004.

Mart's stock remained unchanged at $0.775 on Thursday.

Sky closes $11 million preferreds deal

Back in the United States, Sky Petroleum, Inc. announced the closing of an $11 million private placement of series A convertible preferreds.

The Austin, Texas-based oil explorer issued 3,055,556 preferreds at $3.60 apiece.

Each preferred is initially convertible into four common shares, and the company may force conversion if its stock exceeds $3.00 during any five consecutive trading day period.

The closing was announced Thursday morning, and the company's stock gained 7.39%, or $0.10, to finish at $1.38.

"We are very pleased that we have successfully closed this preferred stock offering, as well as the oversubscribed private placement financing, as we believe it demonstrates the strength and potential of this venture," said Don Cameron, the company's chief executive officer, in a statement. "Today, we have raised approximately $22 million and we are currently exploring financing opportunities to raise additional capital to complete our funding for the Mubarek project."

Suroco's C$8 million unit offering

Moving to Canada, Suroco Energy Inc. led private placements there, with word that it plans to raise up to C$8 million.

The non-brokered deal includes up to 18,181,819 units at C$0.44 each.

The units consist of one share and one quarter-share warrant. The whole warrants are exercisable at C$0.55 each for nine months.

Proceeds will be used for the acquisition, exploration and development of oil and natural gas properties.

Suroco is a Calgary-based oil and natural gas exploration company.

On Thursday, the company's stock remained unchanged at C$0.55.

Memory Pharma stock edges up

A day after closing a $30.59 million private placement of shares, Memory Pharmaceuticals Corp.'s stock gained 1.09% Thursday.

The company's stock ended up $0.02 to finish at $1.85.

On Wednesday, when the impending closing was announced, the company's stock slipped $0.03 to close at $1.83.

In the offering, which is expected to close Friday, Memory will issue shares at $1.90 each to new and existing institutional and accredited investors.

Memory is a Montvale, N.J.-based biopharmaceutical company focused on treatments for central nervous system.

GenVec stock dips

Looking elsewhere in the biopharmaceutical sector, GenVec, Inc.'s stock slipped slightly on Thursday after the company announced that it had received agreements for its $15.3 million direct placement.

GenVec's stock lost $0.03, or 1.44%, to close at $2.06 and lost another penny in after-hours trading.

The Gaithersburg, Md.-based company is getting ready to issue shares at $2.00 each.

The shares will be sold under the company's shelf registration.

GenVec is focused on developing treatments for cancer and cardiac disease.

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