Oil reaches record highs, may fuel new volume; Crosstex raises $50 million unit offering

By Sheri Kasprzak

Atlanta, June 24 - As oil prices reached new highs Friday, sell-siders said oil and oil-related companies may head to the private placement market in droves in the coming week.

Oil gained $0.42 to close at $59.84 per barrel on Friday, a new high beating Thursday's record of $59.42. On Thursday, oil jumped $1.33.

"At this level, there should be more activity," said one sell-sider, who noted that there have been only relatively small oil deals in the PIPE market over the past week. "I fully expect to see more next week, probably Monday or Tuesday is when we'll see most of them."

"I keep saying we'll see more," said another sell-sider of energy deals. "I think the deals we do see have generally been from issuers who are buying properties or making acquisitions. It's rare to see an [energy] issuer just looking for a capital infusion."

As oil jumped, stocks dipped, pushing overall volume down as the week wrapped up.

"Stocks were down yesterday; they're down today; it's Friday, so all of those things kind of came together to push volume down a bit," said one market source.

The Dow Jones Industrial Average slid 123.60 to close at 10,297.84 on Friday; the Nasdaq composite index slipped 17.39 to end at 2,053.27 and the S&P 500 lost 9.16 to end at 1,191.57.

Elsewhere in natural resources, minerals and base metals may be seen in the PIPE market in the coming week, market sources said. Gold issuers, however, may hold off as gold prices continue to sink after realizing record gains in the June 13 week and in the early part of the June 20 week.

"Copper is up, some other base metals and minerals are up," said one sell-sider familiar with the sector. "You may see some of these things coming up."

Dallas-based Crosstex Energy LP led private placement news Friday with word that it has received agreements for $50,006,510 in a senior subordinated units offering.

The company sold 1,495,410 units at $33.44 each.

The proceeds will be used to fund the completion of Crosstex's North Texas pipeline.

The units will be convertible into common units on a one-for-one basis on Feb. 24, 2006, after the pipeline has been completed.

"The placement of this equity, which will receive no distribution, allows us to continue the construction of our North Texas pipeline with no dilutive effect to our balance sheet," said company chief executive officer Barry Davis in a statement. "We anticipate that the senior subordinated units will not convert to common units and be eligible for a distribution until after the scheduled completion of our North Texas pipeline construction."

After the deal was announced early Friday afternoon, Crosstex's stock gained $1.59, or 4.28%, to close at $38.75.

Crosstex is a midstream natural gas company.

Northern Energy plans C$36 million deal

In the coal exploration sector, Vancouver, B.C.-based Northern Energy & Mining Inc. has arranged a private placement for C$36 million, the company said late Friday.

The offering includes up to 20 million units at C$1.80 each.

The units consist of one share and one half-share warrant. The whole warrants provide for an additional share at C$2.10 each for five years.

The deal is being placed through a syndicate of underwriters led by Salman Partners Inc. The underwriters have an over-allotment option for up to C$14 million in additional units exercisable before closing.

The deal is scheduled to close July 14.

The proceeds will be used to accelerate the development and production of the company's Trend property.

The company's stock closed up C$0.02 at C$1.70 Friday.

Vast Exploration's C$2 million offering

Back to oil companies, Calgary, Alta.-based Vast Exploration Inc. said it has negotiated a C$2 million private placement of stock.

The offering includes 2 million non flow-through shares at C$0.50 each and 1,666,667 flow-through shares at C$0.60 each.

"It's impressive," said one sell-sider familiar with the natural resources sector. "[It] seems to be in line, a bit of a premium. With oil making the kind of gains it has been the past two days, it's hardly surprising."

In fact, the offering is priced at a 22% premium to Vast's closing stock price of C$0.41 on June 23.

Vast's stock benefited from the deal, according to the market source, gaining C$0.05, or 12.2%, to close at C$0.46.

Emerging Equities Inc. is the placement agent in the deal.

Vast is an oil and natural gas exploration company. The proceeds will be used for exploration and development and for general corporate purposes.

Modtech stock slips

A day after Modtech Holdings Inc. announced its $11.7 million private placement, the company's stock continued to dip.

The company's stock closed down $0.08, or 1.23%, at $6.42 Friday.

On Thursday, when the deal was first announced, the company's stock closed down $0.55, or 7.8%, at $6.50 each.

The company has received agreements from three institutional investors and members of its management and board of directors for shares at $5.67 each.

Perris, Calif.-based Modtech manufactures modular buildings for the education, construction and industrial sectors.

Ipix's stock dips

Ipix Corp., which completed a $10 million private placement earlier this week, suffered a slight dip in its stock price Friday.

The company's stock closed down $0.10, or 3.75%, at $2.57 Friday but gained $0.02 in after-hours trading.

On Thursday, the company's stock closed up $0.05, or 1.91%, to end at $2.67 before losing $0.06 in after-hours trading.

After the Vienna, Va.-based company closed the deal Wednesday, the company's stock dipped $0.21, or 7.42%, to close at $2.62.

Ipix, which develops imaging products for government and commercial uses, sold units at $2.41 each.

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