New Prudential Offer Expected on Energy Units : Lawsuit: The bid is valued at between $500 million and $717 million. A proposed class-action settlement appears dead.

Prudential Securities this week is expected to unveil a new offer valued at between $500 million and $717 million for a series of limited partnerships that are at the center of a massive class-action lawsuit, sources close to Prudential said.

The new offer would by far top a pending tender offer by Oklahoma oilman George B. Kaiser, who has said he is willing to pay $173.5 million for most of the partnership units.

The oil and gas partnerships are known collectively as the Prudential Energy Income Funds. They were heavily marketed in the 1980s to small investors, who poured in about $1.3 billion. But the more than 120,000 investors suffered hundreds of millions of dollars in losses--by some estimates losing up to $1 billion of their stakes.

The new offer may be announced as early as today, the sources said.

The prospect of a new offer makes it likely that investors eventually will receive substantially more than the few cents on the dollar they would have gotten under a proposed settlement of the class-action lawsuit, which alleges fraud in Prudential’s marketing of the partnerships.

Prudential had put the value of the settlement offer at about $100 million. That amount was sharply disputed by investors’ lawyers, however, who noted that it included only about $30 million in cash.

Approval of the settlement was held up by a federal judge in New Orleans who said he had “serious reservations” about its fairness.

That settlement now appears all but dead. As reported, Prudential last week was on the verge of formally withdrawing it. But the firm apparently has delayed that action at least until it reveals the new offer.

Previously, Prudential had disclosed that it was in talks with an unnamed company that it expected to make a “substantial” offer for the partnership assets. The sources said that the buyer is not Parker & Parsley, a Midland, Tex., oil firm that earlier had said it was contemplating making a bid for the Energy Income Funds’ oil and gas assets.

The sources said the new offer will fall between $500 million and the current estimated value of the partnerships’ oil and gas assets, put at $717 million.

A source also said the new offer does not involve Graham Royalty Ltd., the Louisiana firm that had managed the partnerships.

Under the original settlement proposal, the partnerships would have been reorganized into a new corporation run by Graham. Graham has been accused in lawsuits and arbitration cases of fraud in marketing and managing the partnerships, but has denied any wrongdoing.