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by Stockwatch Business Reporter

West Texas Intermediate crude for September delivery added $1.77 to $97.35 on the New York Merc, while Brent for October added $1.52 to $102.01 (all figures in this para U.S.). Western Canadian Select traded at a discount of $18.10 to WTI ($79.25), down from a discount of $18. Natural gas for September lost 13 cents to $3.77 The TSX energy index added 3.10 points to close at 311.09.

WesternZagros Resources Ltd. (WZR) lost 15 cents to 75 cents on 6.34 million shares. Yesterday, the day it was scheduled to release its second quarter results, it instead announced that it had turned down a $1.46-a-share takeover offer from an international oil and gas company in favour of a refinancing, comprising a $250-million rights offering and a $200-million (U.S.) debt deal. Major shareholder Crest Energy, which owns 19.8 per cent of the company's 476 million shares, is the lender for the debt financing and has also guaranteed $200-million of the rights offering. (Any acquired shares that would take Crest's ownership over 19.9 per cent will be non-voting preferred shares.) The shares will be issued at whichever is less, 65 cents or the market price the day before WesternZagros files its final prospectus for the rights offering. As for the debt, it comes in two tranches, both with hefty interest rates: $150-million at 12 per cent and $50-million at 14 per cent. Depending on how popular the rights offering is, Crest will have a good opportunity to average down. It first invested in WesternZagros in the summer of 2012, paying $1.40 a share for 40.7 million shares. It then acquired another 51 million shares in early 2013 at $1.25. Its third purchase, relatively small at 2.28 million shares, was also at $1.25. It is not the only shareholder to have invested during WesternZagros's better days. U.S. hedge fund and second-largest shareholder Paulson & Co., which owns 52.6 million shares, acquired 10.5 million of them at $2.25 in early 2008, shortly after the stock went public. It was able to average down by picking up 21.5 million at 48 cents in the spring of 2011. What it paid for the rest is not clear. Crest and Paulson also hold $19.8-million and $70-million, respectively, of 4-per-cent notes that mature at year-end 2015 and are convertible into shares at $1.45 each. Paulson says it will vote for the transaction at a special meeting of WesternZagros's shareholders to be held in October.

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