PIPE volume takes a dip as stocks drop, oil tumbles; Abraxas wraps $12 million offering

By Sheri Kasprzak

New York, July 21 - Private placement issuance volume eased on Thursday as the major stock indexes closed lower and oil prices took a beating from more explosions in London.

"There were actually quite a few news bits out today that really impacted us," said one sell-sider. "You've got the stuff going on in London, which will probably hurt stocks, hurricanes, just several things going on at once, so naturally we're feeling it."

The Dow lost 61.38 to close at 10,627.77; the Nasdaq composite index slipped 9.97 to end at 2,178.60, and the S&P 500 edged down 8.16 at 1,227.04.

A pinch was felt in the PIPE market Thursday from the lower stocks with volume dropping from its recent surge in the United States.

Higher mineral prices helped push volume in Canada, and issuance there was dominated by resource offerings. Because of a significant drop in oil prices, one Canadian market source said energy offerings may be scarce for a while. Oil slid $0.89 to close at $57.13 per barrel.

Back in the United States, San Antonio-based oil and natural gas exploitation company Abraxas Petroleum Corp. closed a $12 million stock offering.

The company sold 4 million shares at $3.00 each, a 6% discount to the company's 15-day trading average.

Abraxas plans to use the proceeds for drilling in Texas and Wyoming, as well as for working capital.

Energy Capital Solutions LP was the placement agent.

"This private placement provides additional funding for our 2005 capital expenditure program, including the accelerated development of the Wolfcamp sands in the Oates [Southwest] Field area of west Texas," said Bob Watson, the company's president and chief executive officer, in a statement.

Watson did not return requests for additional comment on the offering, which was announced late Thursday afternoon.

The company's stock lifted $0.19, or 5.41%, to end the day at $3.70.

According to Abraxas's latest earnings statement, filed on May 13, the company had 37,885,875 outstanding common shares as of May 10.

The company sustained a net loss of $9,217,000 for the quarter ended March 31, up from $5,557,000 for the corresponding period in 2004.

"Our cash flow from operations depends heavily on the prevailing prices of natural gas and crude oil, and our production volumes of natural gas and crude oil," said the company's last earnings statement. "Historically, downturns in commodity prices have reduced our cash flow from operating activities ... Low natural gas and crude oil prices could also negatively affect our ability to raise capital on terms favorable to us."

Three mineral offerings from Canada

As mineral prices - especially nickel - continue to rise, Canada has seen more and more mineral exploration companies with private placements to offer.

Vancouver, B.C.-based Kimber Resources Inc. led that slate of deals on Thursday, announcing its intention to raise C$5 million from three institutions.

The deal includes 3,333,333 units at C$1.50 each.

The units consist of one share and one half-share warrant. The whole warrants provide for the purchase of an additional share at C$1.80 each for 18 months.

The gold and silver exploration company plans to use the proceeds for drilling on the company's Carmen deposit and the Carotare and El Orito Norte targets.

On Thursday, Kimber's stock dropped C$0.02 to close at C$1.48.

Another unit offering came from Garrison International Inc., which announced its plans to raise up to C$4.5 million from the sale of up to 22.5 million units at C$0.20 each.

The units consist of one share and one warrant. The warrants allow for the purchase of an additional share at C$0.30 each for two years.

Garrison is based in Toronto. The company's stock remained unchanged at C$0.20 after slipping slightly earlier in the day.

Finally, Montreal's Golden Goose Resources Inc. announced its plans to head to the private placement market with a C$1 million deal.

The gold exploration company plans to sell up to 6,666,667 units at C$0.15 each.

The units are comprised of one share and one half-share warrant. The whole warrants allow for the purchase of an additional share at C$0.25 each for one year.

The proceeds will be used for work on the Magino property in Ontario and for general corporate purposes.

Golden Goose's stock rose C$0.015, or 9.68%, to close at C$0.17 Thursday.

BearingPoint's stock closes down

A day after announcing the completion of a $40 million private placement of convertible debentures, BearingPoint Inc.'s stock slipped Thursday.

The company's stock lost $0.06 to close at $7.98.

On Wednesday, when the closing was announced, the company's stock rose $0.33, or 4.28%, to close at $8.04.

The debentures are convertible into common shares at $6.75 each.

Based in McLean, Va., BearingPoint is a management consulting company.

BPZ's stock rises

BPZ Energy, Inc.'s stock rose Thursday after closing a $34,398,000 private placement on Wednesday.

The company's stock gained $0.19 to close at $5.24.

One market source said he feels it's likely that the offering did boost the company's stocks, even though after the deal was announced Wednesday morning, BPZ's stock dropped.

"It's a capital infusion; they needed it badly, so I think it helped them," said the market source. "I can't see anything else going on at this company that would explain it. [The] deal seems a little heavy on the discount, if you ask me, but this is an incredibly undervalued company."

After the closing was announced Wednesday morning, the company's stock dropped $0.45 to close at $5.05.

The Houston-based oil and natural gas exploration company sold shares at $3.00 each.

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