Early in the day, Denver-based Delta said it agreed to sell a 35 percent stake to the 90-year-old billionaire's Tracinda Corp. for $19 a share -- a premium of 23 percent over the stock's flagging closing price Friday.

Shares surged to near that level in premarket trading, then pushed even higher in heavier-than-usual trading after the opening bell. The stock at one point rose to $19.50, its highest point in more than two months, but nonetheless remained well below an April peak of $24.94.

Tracinda's deal to buy 36 million shares will inject Delta with much-needed capital. In exchange, Tracinda will have the right to nominate a third of Delta's directors.

Delta said the cash infusion will help it speed drilling in the gas-rich Piceance and Paradox basin regions in Colorado and Utah. The added funds will also give Delta "significant financial flexibility" to pay for long-term drilling projects and possible acquisitions, the company said.

Wachovia Capital Markets analyst David Tameron said the deal alleviates concerns about how Delta will pay for its $250 million 2008 capital spending plan.

"This removes the funding overhang and removes any concern about its debt coverage capability," he said in a note to investors. "At the end of (the third quarter), Delta had net debt of $368 million, which could be entirely paid off if the company so chooses."

Kerkorian, best known as an investor in Las Vegas casinos, last month saw his bid for another oil company scuttled. Tracinda withdrew a $1.4 billion offer for a stake in Tesoro Corp. after the refiner adopted a "poison pill" plan that would have diluted Kerkorian's investment.

In a statement, Tracinda praised Delta as "a very important company in the industry, with valuable resource plays, a strong asset base and well-positioned exploration projects that we believe hold significant growth potential."

The involvement of such a high-profile activist investor could bring about quick change at the company.

"We had expected Delta management to divest assets and clean up its portfolio in 2008, and Tracinda could accelerate this process," Tameron said. He rates the stock "Market Perform."

Delta shares rose $3.34, or 21.5 percent, to $18.85 Monday as major indexes fell.