Newspaper article THE JOURNAL RECORD

Tulsa Firm Faces Challenge with Secondary Stock Offering

Newspaper article THE JOURNAL RECORD

Tulsa Firm Faces Challenge with Secondary Stock Offering

Article excerpt

The small Tulsa company American Natural Energy Corp. hopes to raise $1.5 million in a second offering on a Canadian stock exchange to close a Louisiana drilling venture with Dune Energy.

That promises a significant challenge, said analyst M. "Jake" Dollarhide, since its current shares trade for less than 2 cents.

American said Friday it has filed with TSX Venture Exchange of Calgary, Alberta, to issue up to 30 million shares at 5 cents a share. That exchange for emerging companies operates under the TSX Group, which also owns the Toronto Stock Exchange.

These funds would be used to close a May 12 deal to buy back $7.8 million of American Natural's 8-percent secured debentures from Dune Energy. American Natural would acquire Dune's interest in several producing wells and leasehold rights in the Bayou Couba field, taking over operations there.

"With a secondary offering, 99 percent of the time the stock price goes down due to dilution to shareholders," said Dollarhide, whose Tulsa firm, Longbow Asset Management, has some clients invested in TSX securities, including Dune. "They're between a rock and a hard place here, trapped between expectations of shareholders and the depression of energy prices."

This deal, which requires final closing by July 31, would unravel a partnership with Dune dating back to September 2005, when Dune bought American's exploration and development rights under a joint development with ExxonMobil covering 11,000 acres in St. Charles Parish, La.

The following year, American reported it had defaulted making payments on those 8-percent debentures.

"Desperate times call for desperate measures," said Dollarhide. "They're doing what all the banks are doing. They're doing what every energy company would like to do."

Although he had no personal knowledge of American, Dollarhide said its choice of the Canadian exchange could reflect either the inability to meet U. …

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