SeaDrill leads light PIPE volume with $108 million deal; Uranium Resources raises $12 million

By Sheri Kasprzak

New York, Aug. 12 - SeaDrill Ltd. led meager private placement volume Friday with a $108 million deal. Volume in general took a break as the week wound down and stocks took a tumble.

"Friday and the lower stocks," said one sell-sider when asked about the dwindling volume. "Oil's having a field day though, so we're seeing more of those energy deals. Probably see even more early next week."

Oil prices, indeed, continued their skyward march on Friday. Oil gained $1.06 to end at $66.86 per barrel.

Stocks, however, slid with the Dow Jones Industrial Average losing 85.58 to close at 10,600.31, the Nasdaq composite index slipping 17.65 and the S&P 500 edging down 7.42 to end at 1,230.39.

SeaDrill, the Hamilton, Bermuda-based offshore oil drilling company, announced its plans late Thursday night to sell 12 million shares at $9.00 each.

The company's largest shareholder, Hemen Holding Corp., has already agreed to participate in the deal, the proceeds of which will be used to fund one the company's deepwater drilling rigs.

Carnegie ASA and Pareto Securities ASA are the placement agents.

In July, SeaDrill completed a NOK420 million stock offering of 10 million shares at NOK 42 each to eight institutional investors.

Uranium Resources wraps $12 million deal

With natural resources offerings abounding in the PIPE market Friday, Uranium Resources, Inc. completed a $12 million stock deal.

The company sold 24 million shares at $0.50 each to funds managed by one of its directors, George Ireland.

After the closing was announced Friday afternoon, Uranium Resource's stock gained 8.33%, or a nickel, to end at $0.65.

The proceeds will be used for the company's south Texas mining operations.

Uranium Resources reported 134,732,263 outstanding common shares as of May 11.

According to its latest earnings report, the company sustained a net loss of $2,357,989 for the quarter ended March 31, compared to a net loss of $7,233,802 for the same quarter in 2004.

The earnings report also notes that since a drop in uranium prices in the late 90s, the company has been relying on equity infusions to remain in business.

"From August 2000 to February 2004, we raised a total of approximately $6.5 million by issuing shares of our common stock, allowing us to maintain critical employees and assets of the company until such time that uranium prices reached a level where it was prudent to commence operations," the report said.

Based in Lewisville, Texas, Uranium Resources is a uranium exploration company.

Oil offerings heat up in Canada

As oil prices reach unprecedented levels, oil offerings were at the top of the offerings list in Canada Friday.

Calgary, Alta.-based Cinch Energy Corp. led the deals with a C$20 million offering of 2,941,177 non flow-through shares at C$3.40 each and 2,352,941 flow-through shares at C$4.25 each.

A syndicate of underwriters led by Canaccord Capital Corp. has an over-allotment option for up to 735,295 non flow-through shares.

The proceeds will be used for exploration, development and working capital.

Cinch's stock lost C$0.11 to close at C$3.48 Friday.

With oil prices continuing to rise, some energy deals that were arranged when prices were lower are closing oversubscribed or are being increased as oil skyrockets.

Austin, Texas-based Sky Petroleum, Inc. is one of the companies that closed an oversubscribed offering.

Though the exact oversubscription details were unavailable Friday, the company sold more than the 10 million shares it had intended to sell, bringing the proceeds above C$8 million.

"We are very pleased and encouraged to see the amount of investor confidence in Sky Petroleum and the Mubarek development project," said Don Cameron, the company' chief executive officer, in a statement. "As a result of this private placement, Sky Petroleum will have access to the resources required to continue to advance the project."

After the closing was announced Friday morning, the company's stock gained 11.11%, or C$0.15, to close at C$1.50.

Sky is an oil and gas exploration and development company.

"We could see a shift soon," said one Canadian market source familiar with oil. "We've been seeing several [deals] done for a specific project or for this merger or that merger, but because oil [prices are] as high as [they are], that could change. I think it is changing slowly."

As for the deals that are closing either after upsizing or after being oversubscribed, the market source said that's just human nature.

"When you know you can get more for less, you'll try it," he said. "That just makes common sense."

NRG Energy's stock closes up

A day after the company's stock slid more than $1 on the closing of a $250 million private placement, NRG Energy Inc.'s stock made gains on Friday.

The company's stock gained $0.57 Friday to end at $38.93 after losing $1.03 Thursday to end at $38.36.

NRG closed a $250 million convertible preferred stock offering on Thursday, selling preferreds at $1,000 each.

The preferreds are convertible into common shares at the greater of the difference between the closing sale price of the company's stock on each of 20 consecutive trading days, beginning the 30 days immediately before conversion and $59.085.

The Princeton, N.J.-based power-generation facility operator plans to use the proceeds to redeem $228.75 million in principal of its outstanding 8% notes. The remainder of the proceeds will be used for general corporate purposes.

One source who is familiar with the energy sector in general, but admittedly not this company in particular, said he felt the redemption itself may have pushed the company's stock, as opposed to the offering.

"The redemption is really what's good for them [their stock]," he said. "The capital boost is good, of course, as well. I'm not really familiar with the company, but it seems to me like redeeming that amount of notes could help their stock a great deal."

As of June 30, the company had $1.35 billion in outstanding principal on the 8% second priority senior secured notes.

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