Morning Commentary: Commodity weakness eyed; trading suspended for New Source Energy preferreds

By Christine Van Dusen

Atlanta, Dec. 7 – Trading of New Source Energy Partners' series A preferred stock was suspended on Monday as energy-related names suffered under the weight of plummeting oil prices.

The Oklahoma City-based independent oil and natural gas properties company’s 11% cumulative convertible preferreds got “hammered” before trading was suspended, a trader said.

“That’s a little sketchy,” he said.

New Source recently announced that its revenue, profitability and cash flow have been significantly affected as a result of the substantial drop in oil, natural gas and NGL prices and the related significant drop in rig count.

The company has also said it may not have sufficient funds to cover its operational and financial obligations over the next 12 months, raising substantial doubt as to its ability to continue as a going concern.

Weakness in commodities also hurt Breitburn Energy Partners LP, which saw its 8.25% series A cumulative redeemable preferred units (Nasdaq: BBEPP) fall to $5.58 on Monday morning after declining 12.85% to $6.85 last week.

Legacy Reserves LP’s 8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYO) were also weaker, moving to $7.79 on Monday morning after declining 8.12% to $8.71 last week.

Looking to recent deals, the new issue of preferreds from Prospect Capital Corp. – $150 million of 6.25% $25-par notes due 2024 – traded Monday morning between $24.65 and $24.75 after Friday's $24.70 bid, $24.75 offered, a trader said.

UBS Securities LLC, BofA Merrill Lynch, Morgan Stanley & Co. LLC and RBC Capital Markets ran the books.

And there was little action for the recent issue from Eagle Point Credit Co. Inc. The $25 million of 7% $25-par unsecured notes due 2020, which came to the market via Incapital LLC, traded last week at $24.

“I haven't seen anything on that at all,” a trader said on Monday.

The company’s existing 7.75% series A preferred stock dipped 8 cents on Monday morning to $25.66.

© 2015 Prospect News.
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