It's amazing what a difference a single well can make to a small exploration and production outfit. For Delta Petroleum (NASDAQ:DPTR), the failure of its Washington wildcat has done some real damage to the company, which has since hired bankers to help it evaluate strategic alternatives, including a sale of the entire shop. Crimson Exploration (NASDAQ:CXPO) has had a much more pleasant experience.

The firm, previously languishing on the OTC bulletin board with a big slug of debt, happens to hold a 52% interest in the monster Haynesville well that Devon Energy (NYSE:DVN) recently announced to great fanfare. This discovery, on the Texas side of the border with Louisiana, dramatically alters the previous conception of the Haynesville's "core" or fairway. This is good news for Devon, EOG Resources (NYSE:EOG), and St. Mary Land & Exploration (NYSE:SM). It's fantastic news for privately held Ellora Energy, which recently put itself up for sale, and Crimson, which last week did a big equity offering and is now listed on a national exchange.

Crimson initially planned to offer 18 million shares at $6 to $8 per stub. On the big day, Crimson only got $5 per share, but bumped its offering up to 20 million shares. Gross proceeds thus could have been over 40% higher, but still came in at a cool $100 million. This subpar investor turnout was mirrored by the IPO of Cobalt International Energy (NYSE:CIE), whose numbers we crunched late last week.

So what's Crimson doing with the money? It sounds like every last dollar is going to pay down debt. Good thing, because the company had almost maxed out its $140 million bank line, which is getting cut by 25% on January 1.

After applying the proceeds of this offering, Crimson will still have about a 50% debt-to-capitalization ratio. That's still quite a lot of leverage. While this company should see some excellent results in its 2010 drilling program, I have a hard time recommending the shares wholeheartedly.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.