Delta Petroleum Says Tracinda to Buy 35% Stake
Billionaire investor Kirk Kerkorian's Tracinda will pay $684 million to acquire a 35 percent stake in Delta Petroleum the independent oil and gas company said Monday.
Tracinda will buy 36 million Delta shares for $19 per share, a premium of about 23 percent to the stock's Friday closing price, the company said, and have the right to nomimate up to one-third of the members of Delta's board of directors.
Denver-based Delta, which reported third-quarter production of 4.58 billion cubic feet of natural gas equivalent and expects output to grow by 40 to 60 percent in 2008, has core operations in the Rocky Mountains and Texas.
The deal will allow Delta Petroleum to accelerate development drilling activities in Colorado's Piceance basin and Utah's Paradox basin.
"The additional capital provides Delta the financial flexibility and wherewithal to grow the company to new levels," Delta Chairman and Chief Executive Roger Parker said in a statement.
For Tracinda, the move is its second in recent months to try to increase its exposure to the energy sector.
Last month, Kerkorian's company canceled its offer to buy 16 percent of refiner Tesoro corp. after the company adopted a 'poison pill' shareholder rights plan that would have prevented Tracinda from taking control of it.
Shares in Delta traded up about 23 percent in pre-market action on the Nasdaq.
Those share have had a difficult year, sliding to an 18-month low earlier this month at $13.06, less than half its all-time high of $30.47 reached in November 2006.