Energy names end mixed, oil prices hit again; Alpha Natural earnings on tap, bonds edge higher

By Stephanie N. Rotondo

Phoenix, Feb. 11 – Energy remained in focus in the distressed debt market on Wednesday.

But even as oil prices fell again – this time on news that U.S. stockpiles grew more than expected – the sector continued to trade mixed.

West Texas Intermediate crude slipped 79 cents, or 1.58%, to $49.23 a barrel, as Brent crude dropped $1.48, or 2.62%, to $54.95.

On Wednesday, the Department of Energy said that commercial crude inventory increased by 4.9 million barrels for the week ended Feb. 6. Analysts polled by Bloomberg had forecast a gain of 3.6 million barrels.

The DoE noted that the stockpile was “at the highest level for this time of year in at least the last 80 years.”

In distressed dealings, several oil and gas names were seen moving higher, despite the oil dip.

Energy XXI’s 8¼% notes due 2018 improved by over half a point, according to a trader, ending at 70¼. The 7½% notes due 2021 and 6 7/8% notes due 2024 were up a quarter- to a half-point, at 50 and 48, respectively.

Quicksilver Resources Inc.’s 9 1/8% notes due 2019 were also edging upward, rising a quarter-point to 11¼.

A trader also saw Swift Energy Co.’s 7 7/8% notes due 2022 popping at least 6 points to close at 45¼. He noted that the paper hadn’t traded in a couple of days.

Some oil and gas names, however, did not fare as well as some of their sector peers.

Linn Energy LLC’s 8 5/8% notes due 2020 were seen down a quarter-point at 87¾. In SandRidge Energy Inc. bonds, the 7½% notes due 2021 were pegged at 71½, off 2¼ points.

Another market source placed that issue at 72 bid, down 1¼ points.

In Midstates Petroleum Co. Inc., investors continued to weigh on the company’s debt, following an operational update that suggested EBITDA would be toward the lower end on Tuesday.

A trader said the 10¾% notes due 2020 lost 2½ points, ending at 55. The 9¼% notes due 2021 slipped nearly a point to 53.

Petroleos de Venezuela SA was meantime quieter than usual – the name is often at the top of the activity list in the high yield space – as Standard & Poor’s downgraded the state-owned oil company.

A trader called the 8½% notes due 2017 almost 2½ points weaker at 60. The 6% notes due 2026 declined 3 points to 32½ and the 6% notes due 2024 lost 3½ points, finishing at 32 7/8.

S&P dropped its rating on PDVSA to CCC from CCC+, citing high political risk in the country, as well as lower oil prices. Those factors could place the company in a sticky situation, given that it has significant debt maturities in the second part of 2015.

Away from oil, coal producer Alpha Natural Resources Inc. is scheduled to release its fourth-quarter results on Thursday.

Analysts are predicting a loss of 70 cents per share on revenues of $997.01 million.

Ahead of the numbers, a trader saw the 9¾% notes due 2018 inching up a touch to 39¼.

© 2015 Prospect News.
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