EP Energy, Ensco, rest of distressed E&P lower and slower with post-holiday lull in effect

By Colin Hanner

Chicago, July 5 – The distressed debt market felt “kind of like July 3rd” on Wednesday, a trader said, referring to the minimal activity that was felt on a shortened market session on Monday prior to Tuesday’s Independence Day holiday.

Oil was markedly lower, reversing a trend of upward movement the commodity had felt the past few sessions. Several distressed exploration and production companies were lower with the downswing.

EP Energy Corp. saw some activity, a market source said, and Ensco plc was down in several of its issues. California Resources Corp. was lower on one print, a trader said.

“That’s it for the activity,” a market source said. “Or rather, the inactivity.”

Oil lower

On Wednesday, oil was lower after Russia said it would not support more cuts in the Organization of Petroleum Exporting Countries’ efforts to bring down the global supply glut.

The broader negative effect seemed to weigh more on distressed companies compared to last week’s resurgence.

“When oil rallied on the backend of last week, there wasn’t a lot of reaction in the credit,” a market source said. “If you look at oil, it’s almost to where it closed on Thursday” to a sub-$45 price for West Texas Intermediate crude oil.

“Anybody who didn’t sell on the rally in the past couple of sessions is sitting there going, ‘Back to where we were.’”

On the day, West Texas Intermediate crude was down $1.46, or 3.10%, to $45.61.

In the distressed arena, California Resources’ 8% notes due 20222 were off fractionally to 63, a market source said.

EP Energy’s 9 3/8% notes due 2020 were down 1¼ points to 77¾.

Minnetonka, Minn.-based Northern Oil and Gas, Inc.’s 8% notes due 2020 – a “small issue last traded in May,” a market source said – were down 14 points to 66¼.

Offshore drilling contractor Transocean Ltd.’s 6.80% notes due 2034 were down ½ point to 72½.

Candian oil sands producer MEG Energy Corp.’s 7% notes due 2024 were unchanged at 77¼.

And a glut of Ensco plc bonds traded on the day, including the 4½% notes due 2024, which were up 1 point to 78½, contrary to most movement in the sector.

Ensco’s 5.20% notes due 2025 were down 1 point to 80, as were its 5¼% notes due 2044, which were down 1 point to 65¾.

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