Morning Commentary: Oasis Petroleum trades actively on common stock sale; Great Plains lists

By Stephanie N. Rotondo

Seattle, Oct. 18 – Oasis Petroleum Inc.’s convertible bonds were trading actively as the Houston-based oil and gas producer announced an offering of 40 million common shares.

A trader placed the 2.625% convertible notes due 2023 at 112.82 against a stock price of $10.98.

At that level, the equity was down about 2% for the day.

The trader said he was hearing the common stock sale was upsized to 48 million shares, with pricing expected around $10.80 per share.

The trader also noted that the convertibles were trading at a 75% delta.

Proceeds from the offering will be used to fund the acquisition of SM Energy’s Bakken assets, as well as for general corporate purposes, including the 2017 capital expenditure program.

Meanwhile, Great Plains Energy Inc.’s $750 million of 7% $50-par series B mandatory convertible preferreds began trading on the New York Stock Exchange on Tuesday.

The ticker symbol is “GXPPB.” The deal came Sept. 27 with an initial conversion premium of 20%, compared to the 17.5% to 22.5% talk. The yield priced at the tight end of the 7% to 7.5% talk.

Paper was trading at $51.40 at mid-morning, down from $51.50 at the open.

The preferreds are convertible at a threshold appreciation price of $31.74.

Holders of the preferreds can also elect to convert the securities early upon a fundamental change. In such a case, holders will receive a make-whole premium amount calculated using a 4.25% discount rate on top of the initial conversion rate.

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