Crimson Exploration Inc. (Nasdaq:CXPO) is an oil and gas exploration and production company with onshore assets in the U.S. The company issued 20 million shares at $5 per share, and will use the proceeds to pay down its credit line and an unsecured promissory note. The stock is down about 10% since the offering.

Along with Cobalt Energy International (NYSE:CIE), this represents a second equity offering in the energy sector that has been a disappointment. Is this a case of investors souring on the energy story, or were the companies too early stage and risky for the majority of investors? Let's take a look.

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Cobalt Energy
Cobalt Energy International came to market last week and was priced below its expected range. The stock also sold off after trading started.

The stock used to trade on the over-the-counter bulletin board, but along with the new offer, it started trading on the Nasdaq Global Market. Crimson Exploration has proved reserves of 104.8 billion cubic feet as of September 30, 2009, mostly in natural gas.

Crimson Exploration made headlines in November 2009 when Devon Energy (NYSE:DVN) reported the completion of a well in the Haynesville Shale. The Kardell Gas Unit No.1H located in east Texas came in at an initial production rate of 30.7 million cubic feet per day of natural gas, the highest reported well rate in the Haynesville Shale. Although Devon Energy was the operator, it only had a 48% working interest, with Crimson Exploration having 52%.

Crimson exploration has legacy positions in several areas in the U.S, but is targeting the Haynesville Shale and Eagle Ford Shale in 2010. (Hedge against rising energy prices and diversify your portfolio. Check out ETFs Provide Easy Access To Energy Commodities to learn more.)

Haynesville Shale
Crimson Exploration has 12,000 net acres in the Haynesville Shale in San Augustine County and Sabine County in Texas. The Kardell well is located in the Bruin prospect, where the company has 3,000 acres under lease. Crimson Exploration plans to drill seven gross (three net) wells on its Haynesville Shale acreage in 2010.

Eagle Ford Shale
Crimson Exploration has 2,800 net acres in south Texas that the company believes is prospective exploration ground for the Eagle Ford Shale. The company is drilling the Dubose No.1 well, which is currently being completed, and will allocate capital here in 2010 based on the evaluation of this well.

Preferred Stock Conversion
Investors should be aware Crimson Exploration had two outstanding series of preferred stock that will convert to common shares upon the completion of the offering. The Series G and H preferred stock conversion will result in the issuance of 11,785,488 and 300,000 shares of common stock, respectively. After the conversion and equity offering, 40% of the company will be owned by entities affiliated with Oaktree Capital Management, an alternative asset manager. (You've heard about preferred shares, but why don't you learn what they actually are? Read A Primer On Preferred Stocks.)

Crimson Exploration has other producing properties in other areas of the U.S. In May 2007, it bought fields in South Louisiana and the Texas Gulf coast from EXCO Resources (NYSE:XCO) for $285 million.

Investors willing to take a little more risk might want to take a look at Crimson Exploration as it moves into two promising shale plays. Those that are more risk averse might want to stick with industry leaders that have significant acreage and production already from shale areas. These include Chesapeake Energy (NYSE:CHK) and Petrohawk Energy (NYSE:HK), which have 510,000 and 345,000 net acres under lease in the Haynesville Shale, respectively.

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