Geokinetics raises $30 million from convertible preferreds; Providence plans €42 million offering

By Devika Patel

Knoxville, Tenn., July 29 - Large equity private placements were prominent for the oil and gas sector on both sides of the Atlantic on Tuesday.

Houston's Geokinetics Inc., a provider of seismic services to the oil and gas industry, pocketed $30 million from a sale of its series B convertible preferred stock to major stockholders Avista Capital Partners, LP and Avista Capital Partners (Offshore), LP. This deal provides the company with funds needed to support its recently increased capital expenditure budget.

Meanwhile, Dublin, Ireland's Providence Resources plc announced it has arranged a €42 million placement of 12% secured convertible bonds, which will be conducted through agent Cenkos Securities plc. The proceeds will go mainly toward the international upstream oil and gas company's planned summer drilling in the Celtic Sea and in the Gulf of Mexico as it continues to explore its projects for oil and gas reserves.

Geokinetics sees $30 million

Geokinetics concluded a $30 million private placement of 8% series B senior convertible preferred stock, which resulted in the company's shares (Amex: GOK) rising 1.93%, or 31 cents, on Tuesday to close at $16.40.

The company sold 120,000 preferreds at $250.00 apiece to shareholders Avista Capital Partners, LP and Avista Capital Partners (Offshore), LP.

The investors also received five-year warrants for 240,000 common shares, which are exercisable at $20.00.

The company increased its capital expenditure budget by 24% to $80 million from $64.7 million on July 2. In addition to the proceeds from this placement, the company also amended its line of credit with PNC Bank, NA on June 26, increasing its size to $80 million from $50 million, according to a July 2 press release, the proceeds of which will also be used to fund the capital expenditure budget.

"As part of our strategic plan for focused growth, Geokinetics has made, and expects to continue making, significant investments in capital equipment in response to strong customer demand for our seismic data acquisition and data processing services," the company's president and chief executive officer, Richard F. Miles, said in a news release on Tuesday. "The completion of this financing gives us the financial strength and flexibility we need at an attractive cost of capital.

"The proceeds will enable us to fully fund our increased capital expenditure budget for growing our revenue-generating capacity in attractive markets."

Providence to get €42 million

Providence Resources arranged a €42 million private placement designed to help it raise funds for drilling in the Celtic Sea this summer.

The company is selling 12% secured convertible bonds in denominations of €100,000 through agent Cenkos Securities.

The notes will mature on July 29, 2012 and are convertible into ordinary shares at €0.10 per share, a 19% premium.

"We are very pleased to have successfully completed the placing of this convertible bond which will facilitate the ongoing development of the company," Providence Resources chief executive officer Tony O'Reilly said in a press release Tuesday. "In particular, the proceeds of this issue will allow the company to pursue its Celtic Sea drilling program this summer as well as giving the company flexibility to invest in new opportunities in the Gulf of Mexico.

"We are particularly satisfied, given the current volatility of the equity and debt markets, to have successfully completed this financing. I look forward to updating shareholders on the progress of our drilling program," O'Reilly added.

The company's shares (London: PVR) dropped 7.53%, or 0.64p, to close at 7.85p on Tuesday.

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