When National Energy Group Inc. recently sold some of its debt and stock to American Real Estate Partners LP, it was really keeping things all in the family-the family of investments majority owned by famed financier Carl Icahn, that is. Essentially, Icahn just moved some of his interests in Dallas-based National Energy Group from one company in which he has a stake to another, the real estate firm. Icahn owns 81% of the real estate entity and it, in turn, now owns 51% of the stock of National Energy Group through an affiliate, and 100% of the outstanding 10.75% senior notes due 2006. Icahn has two representatives on National Energy Group's board of directors. The company has about 59 billion cu. ft. of gas reserves in Oklahoma, Arkansas, West Texas and in the Gulf Coast region. Last year it spent about $12 million on drilling, but this year, the company expects to spend around $30 million and end up participating in 75 wells, says Bob Alexander, chairman and chief executive officer. He sold his former E&P company, Alexander Energy, Oklahoma City, to National Energy Group in the late 1990s and retired. In late 1998, however, the board asked Alexander to step back in, to manage the company through its subsequent Chapter 11 bankruptcy. In August 2000, the company emerged from that bankruptcy. "When I came to NEG in 1998, it was a pretty sick dog. It took awhile, but there is no question the bankruptcy worked. Frankly there was no equity back then, and there is today. The reorganization has worked like it was supposed to. We have developed a better staff and costs are in much better shape," Alexander says. "Carl was the white knight in the bankruptcy. To preserve the wells we had in National Energy Group, he could not own more than 50%, so he [and his affiliates] had owned 49.9% of the company. And he bought 100% of the bonds in the bankruptcy." Today, National Energy Group and Icahn own equal stakes of 50% in NEG Operating LLC, with daily production of about 45 million cu. ft. In November 2002, the company made a $50-million acquisition for cash. -Leslie Haines