Gas and oil markets gushing; BreitBurn executes $450 million equity; Northern Oil and Gas wraps $15 million

By LLuvia Mares

New York, Sept. 12 - Despite a sluggish but steady start to the week, the oil and gas market was gushing out deals Wednesday.

Some market analysts said they don't expect the activity in the oil and gas sector to be dawdling any time soon.

"There are lots of deals due to strong commodity prices, especially in oil," said an analyst. "I think it will continue if commodity prices stay strong."

Another market source said that because of strong oil and gas prices investors are looking for opportunities to capture that value.

"I think that it is an opportunity for companies that have good prospects and good opportunities to increase reserves and increase production to raise capital. And I think that it is a pretty opportunistic market," he said.

"Probably between now and year's end, for a lot of reasons, you will probably see an acceleration in the number of oil and gas" deals.

Because many companies are looking to clean up their portfolios, they will be doing a lot of selling, the source said. Buyers looking for opportunities to expand their portfolios and raise capital will most likely be looking to raise cash in the PIPE market.

"You'll probably see a number of capital transactions that will occur between now and the end of the year and probably at a pace slightly faster than you have seen in the first eight months of this year," he said.

In an example of such an offering, BreitBurn Energy Partners LP executed a unit purchase agreement with a group of 23 institutional investors for $450 million in equity securities consisting of 16,666,667 common units.

"This acquisition truly transforms our company by nearly tripling our estimated proved reserves and production while adding Quicksilver's Michigan-based management, technical and operating teams with extensive experience in shale gas development to our current team, Our operating and growth platform is strengthened and we are positioned to compete for both oil and gas opportunities going forward," said Hal Washburn, the company's co-chief executive officer, in a press release.

"The acquisition provides BreitBurn significant operating scale in Michigan making us the largest gas producer in Michigan and one of the top producers in the Antrim Shale."

The proceeds will be used to help finance the purchase of natural gas, oil and midstream assets in Michigan, Indiana and Kentucky from Quicksilver Resources Inc. for $750 million in cash and 21.348 million units.

The transaction is expected to close by Nov. 1.

"This acquisition is highly accretive to distributable cash flow per unit. We expect to recommend to our board of directors an increase in our annual cash distribution rate to $2.30 in the first quarter of 2008 with an expected rate of $2.50 per unit by the end of 2008, while maintaining distribution coverage in excess of 1.2 times," said Randy Breitenbach, company's co-chief executive officer, in a news release.

"These anticipated distribution rates represent increases of 27% and 38% respectively, from the current fourth quarter 2007 recommended distribution rate of $1.81 annually."

Further details on the private placement were not available.

Los Angeles-based BreitBurn Energy is an independent oil and gas limited partnership focused on the acquisition, exploitation and development of oil and gas properties.

Northern Oil wraps $15 million

Northern Oil and Gas, Inc. was glistening after closing a $15 million private placement of shares and warrants.

The company sold 4,545,455 shares at $3.30 per share to a group of accredited investors.

A one-half share warrant to purchase common stock at $5.00 per share for 18 months from the date of closing was also attached to each share sold in the transaction.

For each share bought, investors will also have the right to purchase one-half share of common stock at $6.00 per share for 48 months from closing date.

"We believe the company has a very solid track record of establishing meaningful positions and rapidly evolving in place," said Ryan Gilbertson, company chief financial officer. "Our expertise is really in acreage acquisition and we believe that we are very nimble in acquiring acreage as evidenced by our Bakken position."

FIG Partners, LLC Energy Research & Capital Group is the placement agent.

"Our forte is early acreage acquisition and rapidly evolving place and converting the embedded value in the acreage acquisition into drilling exploratory as evidenced by our deal with Brigham Exploration,"

Proceeds will be used for continued acreage acquisitions in the Williston Basin, the Appalachia Basin, Northern's exploration and development program and general corporate purposes.

Wayzata, Minn.-based Northern Oil and Gas is an exploration and production company.

Gilbertson said the company expects to be trading on the Nasdaq within the next month. The company currently trades on the OTCBB.

Carrizo offers $74.52 million

Carrizo Oil & Gas, Inc. plans to raise $75.52 million through a registered direct offering of common stock.

The company agreed to sell 1.8 million shares to a group of investors at $41.40 per share. No warrants were attached to the transaction.

A company insider said the common equity was selected because it allowed the company to raise the money it needed and permit it to accelerate some drilling in a very prolific part of the Barnett Shale.

"It is real opportunistic but at the same time allows them to bring down their leverage level a little bit, so I think that common equity was the right thing to do there," he said.

RBC Capital Markets acted as lead placement agent, other placement agents included Capital One Southcoast, Inc., Johnson Rice & Co. LLC, BMO Capital Markets Corp., KeyBanc Capital Markets Inc., Pritchard Capital Partners LLC, Tudor, Pickering & Co. Securities, Inc., Howard Weil Inc., Coker & Palmer, Phillips & Mullen, Inc., SunTrust Robinson Humphrey, Inc., FIG Partners, LLC and Natixis Bleichroeder Inc.

Proceeds will be used to fund the company's capital expenditure program, including its drilling and leasing programs in the Barnett Shale, appraisal well drilling in the North Sea and for other corporate purposes. Pending those uses, Carrizo also intends to use a portion of the proceeds to repay $50 million outstanding borrowings under its revolving credit facility.

"It's a solid exploration production company," he said. "It's a good growing exploration company and the fundamentals are pretty good."

Carrizo Oil & Gas is a Houston-based energy company engaged in the exploration, development, exploitation and production of oil and natural gas primarily in proven onshore trends along the Texas and Louisiana Gulf Coast regions and the Barnett Shale area in North Texas.

Origen closes $15 million

In other news, Origen Financial, Inc. completed a $15 million secured financing agreement.

"We are extremely pleased with this cash infusion," said Ron Klein, Origen chief executive officer said in a press release.

"Given the recent period of uncertainty in the credit markets, initiated by problems in the sub-prime mortgage industry, we believe it is appropriate and prudent to take steps to bolster our liquidity and capital resources whenever funds can be sourced at currently reasonable rates and fees.

"Our loan portfolio continues to experience excellent credit performance. However, like many other high quality lenders, we have been impacted by the unrest in the credit markets and have taken steps to bolster our cash resources to protect our business."

The financing consists of a $10 million secured note and a $5 million secured note, both paying interest at 8% and both due Sept. 11, 2008. The term of each note may be extended up to four months with payment of additional fees.

The $5 million note may be converted into shares of the company's common stock at a conversion price of $6.24 per share.

The company also issued a five-year warrant to the lender to purchase 500,000 shares of common stock at an exercise price of $6.16 per share.

"We're very gratified that by making this investment one of our largest shareholders has expressed confidence in Origen and in our platform's ability to continue to deliver outstanding performance," Klein said in the news release. "Acknowledging that the credit markets may remain unsettled for some time, we will continue to monitor our liquidity and act on opportunity to ensure that we have the financial flexibility to navigate through this difficult market environment and continue our progress toward excellence in the principal elements of our business."

Southfield, Mich.-based Origen is a real estate investment trust that originates and services manufactured housing loans.

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