Brigham Exploration Shares Tumble On Offering

NEW YORK (AP) — Shares of Brigham Exploration Co. plunged after the gas and oil explorer said it would offer 30 million common shares in an effort to shore up funds for capital spending and to pay off debt.

Brigham shares dropped 78 cents, or 22 percent, to $2.71 in morning trading. Shares have ranged between $1.04 and $18.29 over the past 52 weeks. Since the start of March, shares tripled from a low of $1.12 to Wednesday's closing price of $3.49.

KeyBanc Capital Markets analyst Jack Aydin said while the offering was not surprising given the company's need for funding, he expressed concern over the company's plan to use the proceeds for its Bakkan and Three Fork drilling program in the Williston Basin.

"We do not believe increasing activity levels at this time is a prudent move by the company," Aydin said, noting that the company's borrowing base looks as if it is fully drawn.

Given the dilutive equity raise and uncertainty in the strength of its balance sheet, Aydin reaffirmed his "Hold" rating for Brigham's stock.