Shares of BPZ Resources Inc. tumbled on Friday, a day after the company announced an $88 million common stock offering.
The Houston-based oil and gas exploration and production company's shares dropped 23 cents, or 4.3 percent, to $5.10 in afternoon trading.
On Thursday BPZ said it had agreed to sell 18.8 million common shares for $4.66 each in a registered direct offering worth about $88 million. The price per share is a 12.6 percent discount from its Thursday closing price of $5.33.
The company plans to use net proceeds to fund its ongoing oil development in the Corvina and Albacora oil fields in a coastal offshore region in northwest Peru, a second platform in the Corvina field, certain capital expenditures and general corporate purposes.
Morgan Keegan analyst Chris Pikul said BPZ is still a "show-me story" and he expects mixed reactions from investors. The good news is that proceeds from the offering mean funds are in place to develop the Corvina and Albacora oil fields. The bad news is the dilutive effect of the offering, he said.
"Another equity offering is likely to trouble investors who have already absorbed $50 million this year, only to see Corvina underperform," Pikul said.
Pikul rates the stock "Outperform," citing expected production upside at Albacora as a "reason to stay involved in the shares." If the stock tumbles in reaction to the offering Pikul said he would snap up the stock given the improved financial situation and asset upside.
Still, the dilutive impact of the stock offering prompted Pikul to lower his 2009 estimate for the company to a loss of 8 cents per share, down from his earlier estimate of a loss of 7 cents per share. Analysts polled by Thomson Reuters forecast a loss of 8 cents per share.
source: Yahoo
The Houston-based oil and gas exploration and production company's shares dropped 23 cents, or 4.3 percent, to $5.10 in afternoon trading.
On Thursday BPZ said it had agreed to sell 18.8 million common shares for $4.66 each in a registered direct offering worth about $88 million. The price per share is a 12.6 percent discount from its Thursday closing price of $5.33.
The company plans to use net proceeds to fund its ongoing oil development in the Corvina and Albacora oil fields in a coastal offshore region in northwest Peru, a second platform in the Corvina field, certain capital expenditures and general corporate purposes.
Morgan Keegan analyst Chris Pikul said BPZ is still a "show-me story" and he expects mixed reactions from investors. The good news is that proceeds from the offering mean funds are in place to develop the Corvina and Albacora oil fields. The bad news is the dilutive effect of the offering, he said.
"Another equity offering is likely to trouble investors who have already absorbed $50 million this year, only to see Corvina underperform," Pikul said.
Pikul rates the stock "Outperform," citing expected production upside at Albacora as a "reason to stay involved in the shares." If the stock tumbles in reaction to the offering Pikul said he would snap up the stock given the improved financial situation and asset upside.
Still, the dilutive impact of the stock offering prompted Pikul to lower his 2009 estimate for the company to a loss of 8 cents per share, down from his earlier estimate of a loss of 7 cents per share. Analysts polled by Thomson Reuters forecast a loss of 8 cents per share.
source: Yahoo
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