New York-based hedge fund Jana Partners LLC has called upon the Houston-based The Houston Exploration Co. (NYSE: THX) to use the proceeds from its recently announced $590 million Gulf of Mexico offshore asset sale to fund the buy back of a substantial amount of its outstanding shares. Jana owns approximately 9% of the outstanding shares of Houston Exploration. Houston Exploration has indicated that it may use the proceeds of the sale of its Gulf of Mexico properties to pursue new acquisitions and repay debt. Jana managing partner Barry Rosenstein indicated in a letter sent to the company's board that using the proceeds of the Gulf of Mexico property sale would destroy value given the risks associated with acquisitions of the company's history of underperformance. "As one of the company's largest investors, we have a substantial interest in seeing its leadership commit to a clear, determined path to delivering maximum value for all shareholders," Rosenstein says. "We have therefore spent a significant amount of time analyzing the various options available to the company and have made every effort to work constructively with management in discussing our analysis. As you know, we believe this analysis leaves no doubt that using the proceeds of the recent Gulf of Mexico asset sale and the strength of the company's balance sheet to institute an immediate share repurchase is the option that creates the most value for shareholders."