Constellation Energy secures $210 million offering of common units; Eagle Rock stock up

By Sheri Kasprzak

New York, July 13 - Constellation Energy Partners, LP rounded out the week in PIPEs with a $210 million placement of common and class F units as part of its merger with Amvest Osage, Inc.

News of the deal sent Constellation's stock up almost 6.3%. The stock gained $2.53 to end the day at $42.83 (Nasdaq: CEP).

Volume was lower than usual with just 8,000 shares traded compared with the average 17,541 shares.

Lehman Brothers MLP Opportunity Fund LP and GPS Partners LLC led a group of investors that agreed to buy 2,664,998 common units and 3,371,219 class F units at an average price of $34.79 each.

The offering is expected to close along with the company's merger with Amvest Osage, a subsidiary of Amvest Corp., for $240 million. Amvest owns producing and undeveloped oil and gas properties in the Cherokee Basin in Oklahoma. The merger is set to close at the end of the month.

Merger to be paid with proceeds

Proceeds from the placement, along with the company's existing revolving credit facility, will fund the merger.

"This transaction is another demonstration of our commitment to our acquisition growth strategy and is consistent with our target acquisition profile," said Felix Dawson, the company's chief executive officer, in a statement released Friday morning.

"These acquired properties combined with our previous acquisition in the Cherokee Basin expand our ownership and further establish us as one of the leading producers in the basin. The acquisition also provides potential opportunities for operational synergies and better positions us for further acquisition growth. Our Cherokee Basin properties are an excellent fit with both CEP and Constellation Energy's existing asset portfolios."

Citigroup Global Markets Inc. was the placement agent.

Baltimore-based Constellation acquires and develops oil and natural gas properties.

Eagle Rock stock gains

Elsewhere in oil-related deals, Eagle Rock Energy Partners, LP's stock climbed on Friday, a day after the company closed a $204,000,017 offering of common trust units as part of its acquisitions of Escambia Asset Co., LLC and Redman Energy Holdings II, LP.

The stock gained $1.07, or 4.13%, to end Friday at $27.00 (Nasdaq: EROC). The stock had gained 8%, or $1.92, on Thursday to close at $25.93.

The company issued common units at $22.10 each to a group of investors led by Lehman Brothers MLP Opportunity Fund LP and including New Mountain Vantage; Perry Capital, LLC; Harvest Fund Advisors, LLC; RCH Energy MLP Fund, LP; and Strome MLP Fund.

The proceeds will be used to partially fund its acquisition of Escambia and of Redman Energy Holdings, LP and Redman Energy Holdings II, LP, another natural gas company. The combined purchase price is expected to be $420 million.

Houston-based Eagle Rock is a midstream and upstream natural gas and oil gathering, processing and transporting company.

More mineral deals in Canada

In the broader market, a Vancouver, B.C.-based market source said higher oil prices may be pushing more mineral, energy and other resources deals.

Oil prices gained $1.43 on Friday to end at $73.93 per barrel.

"Oil prices tend to push up certain minerals; so, that may be driving things," he said. "Gold prices have also been up so that's making a difference too."

Loon Energy's offering

Moving to particular resources deals, Loon Energy Inc. wrapped a C$25 million placement.

The company issued 25 million shares in the deal to Kulczyk Investment House International S.a.r.l.

News of the deal shoved the company's stock down by 12.5%, or 10 cents, to end the session at C$0.70 (TSX Venture: LEY).

Calgary, Alta.-based Loon is an oil and natural gas exploration company.

Great Western prices C$10 million deal

Another resources offering came from Great Western Minerals Group Ltd., which priced a C$10 million offering of units.

The deal includes up to 25 million units at C$0.40 each. The units consist of one share and one warrant. The warrants are exercisable at C$0.55 each for two years.

PowerOne Capital Markets Ltd. is the placement agent.

"We are pleased to be working with PowerOne and appreciate their commitment to help us advance the Hoidas Lake project through to production decision," said Jim Engdahl, the company's president, in a news release.

Proceeds will be used to complete preliminary economic assessment at Hoidas Lake, construction and operation of a pilot plant facility and moving the project through to the final feasibility and a production decision.

The placement is set to close on July 31.

The stock lost half a cent on Friday to end at C$0.385 (TSX Venture: GWG).

Based in Saskatoon, Sask., Great Western is a metals exploration and development company.

Cadiscor's C$3.3 million placement

One gold offering came from Cadiscor Resources Inc. That gold producer plans to raise C$3.3 million.

The company plans to sell 4.4 million units at C$0.75 each. The units include one share and one half-share warrant with each whole warrant exercisable at C$0.95 for 18 months.

The size of the offering may be increased to C$4 million.

Becher McMahon Capital Markets is the placement agent.

The placement is expected to close on July 31.

Proceeds will be used for exploration on the company's Discovery, Flordin and Cameron Shear properties. The rest will be used for working capital and general corporate purposes.

On Friday, the company's stock gained 7.69%, or 5 cents, to end the day at C$0.70 (TSX Venture: CAO).

Cadiscor is based in Montreal.

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