Updated from 2:42 p.m. EDT

Shares of

Castle Energy

(CECX)

jumped 13% following the company's announcement that it would explore "strategic alternatives": the sale of its oil and gas properties, a merger with another company or a corporate restructuring.

The Radnor, Pa.-based company made this decision because the stock prices of small-capitalization exploration companies, including Castle, failed to climb proportionally with the rise in oil and gas prices, Joseph L. Castle II, Castle's chairman and chief executive, said in a statement.

Energy Spectrum Advisors

, a Dallas-based oil and gas investment banking firm, will advise Castle Energy in the venture.

Shares of Castle Energy finished up 13/16, or 13% at 7.

Richard Staedtler, chief financial officer for Castle Energy, said the company would most likely pursue the sale of its oil and gas properties.

"We looked at several properties and came close to making several big acquisitions the last three months, and right as we were close to closing on a couple transactions, the price went up, and the sellers' expectations went up," Staedtler said. "If we can't get a big acquisition because prices are hot, maybe we should sell."

Castle Energy owns oil and gas interests in about 530 wells in 10 states in the U.S., and operates about half of the wells. It also has a 50% interest in three oil and gas concessions in Romania.

Castle Energy reported a loss of 4 cents a share, or $277,000, for the second quarter ended March 31, compared to earnings of 46 cents a share, or $3.9 million, during the same period last year. Castle blamed the loss on the expiration of its long-term natural gas marketing contracts last May, which were more than 90% of its revenues. The company also stated that a temporary shutdown of several high-producing wells and higher-than-expected operating costs related to wells Castle acquired from

AmBrit Energy

contributed to the loss.

Staedtler said Castle Energy's decision had nothing to do with its losses at the end of the second quarter and reiterated that high oil and gas prices were the main causal factor.