Delta Petroleum Corporation
(NDAQ:DPTR) shares rose more than 20 percent today after Tracinda
Corporation agreed to take a 35 percent in the energy company at a 23
percent premium to Friday’s close in a deal valued at around $684
million. Kirk Kerkorian’s Tracinda Corporation is well known activist
hedge fund that specializes in restructuring companies and unlocking
shareholder value. Shareholders are clearly confident that the activist
will work to unlock value.
“Under Roger’s leadership, Delta Petroleum has become a very
important company in the industry, with valuable resource plays, a
strong asset base and well-positioned exploration projects that we
believe hold significant growth potential,” said Tracinda Corporation
in a statement. “Our investment will provide the company with the
capital to accelerate its exploration activities, while giving Tracinda
and Delta Petroleum shareholders the ability to realize value from its
growth going forward.”
Delta Petroleum announced that the transaction would enable them to
accelerate development drilling activities in its core areas, including
the Piceance and Paradox Basins. Furthermore, the company noted that
the investment will give it much more financial flexibility to fund its
long-term drilling programs and allow for additional acquisitions.
“We are very pleased to have Tracinda Corporation as an investor and
strategic partner in Delta,” said Chairman and CEO Roger Parker. “This
transaction will provide the means to significantly increase the
present value of our vast resource potential. The additional capacity
provides Delta the financial flexibility and wherewithal to grow the
company to new levels. We are very enthusiastic about the future for
Delta.”
Notably, Tracinda Corporation withdrew their offer for a 20 percent
stake in Tesoro Corporation – another energy company – last month due
to a perceived lack of energy experience combined with a steep decline
in refining profit margins. It appears that this investment may be a
replacement designed to fill an energy spot in Mr. Kerkorian’s
portfolio. Regardless, this is definitely a stock worth watching
closely over the next few months!
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