Oil names continues slide as crude falls; Abengoa off on earnings, Fluidigm converts lower

By Paul Deckelman

New York, Aug. 7 – Recently beleaguered energy names remained under pressure on Friday, part of an overall heavier market tone.

Traders specifically cited the continued deterioration of world crude oil prices as a key factor – the benchmark U.S. crude grade breached the $44 per barrel support level.

That hurt names such as California Resources Corp., SandRidge Energy, Inc. and Chesapeake Energy Corp.

Other energy credits taking it on the chin included BreitBurn Energy Partners LP – which reported disappointing quarterly financial results – and Energy XXI.

Abengoa SA’s notes were seen down several points, on top of the losses in those credits seen earlier in the week on investor concerns about the company’s announced capital plan.

Away from the energy credits, Fluidigm Corp.’s convertible notes fell on an outright basis and contracted on a dollar-neutral, or swap, basis, a trader said, after the biotech company reported disappointing earnings.

Energy names on the slide

Traders said that the much-battered energy arena was once again an area of activity on Friday.

“The oil patch has been under tremendous pressure here again,” a trader said, “with oil closing down below $44.”

The benchmark U.S. crude grade, West Texas Intermediate for September delivery, fell 79 cents per barrel, ending at $43.87 on the New York Mercantile Exchange, while Europe’s Brent crude September contract lost 91 cents per barrel to end at $48.61 on the London ICE Future Exchange.

Against that backdrop, he said, “you’ve had some of the on-the-run energy names getting banged around.”

Among them was Los Angeles-based exploration and production operator California Resources’ 6% notes due 2024.

“CalRes was really active,” one trader said, although he added that “they were only down about a quarter.”

At another desk, though, a trader called the bonds “down a couple of points.”

Yet a third trader quoted them at 75½ to 76, saying “that’s probably pretty close to the lows I’ve seen.”

Elsewhere in the sector, a trader said that “one thing that was weak was SandRidge – the 8¾s [of 2020] looked down 2 to 3 points at 52. In general, I would say there was a little heaviness – but the SandRidges were a lot lower.”

A second trader said the Oklahoma City-based oiler “clearly” was getting hit.

Other names in the sector fared no better.

A trader said that “Chesapeake is down a little bit.”

He said “Energy XXI – they all seem to be trading at the lows.”

A second trader declared that “oil showed no life again today. I’m noticing Carrizo [Oil & Gas’ issue of 7½% notes due 2020] was pretty active” at 98¾, which he said was down ¾ point.

“Oil closed down almost a buck. Oil is showing no life, so most of that stuff is going to remain heavy,” he concluded.

Abengoa pressured again

Abengoa’s 8 7/8% notes due 2017 fell 6 points to close at 59, a trader said.

That continued the slide in the Seville, Spain-based renewable energy company’s bonds seen earlier in the week, when its 7¾% notes due 2020 fell 10 points on Monday and another 7 points on Tuesday as investors expressed skepticism over its capital-raising plan.

On Monday, Abengoa said it wanted to raise €650 million of new capital. Additionally, it wants to divest itself of about €500 million in assets.

It also recently reported that expected free cash flow would be about €800 million lower than previously forecast.

Fluidigm converts slip

In the convertibles market, Fluidigm’s convertibles fell on an outright basis and contracted on a dollar-neutral, or swap, basis, a trader said, after the South San Francisco-based genomics and DNA research company reported disappointing earnings.

The Fluidigm bonds fell more than 9 points into the mid 70s as Fluidigm common shares fell 36% to $12.70.

“Fludigm came in a lot. It’s trading all over the place and everyone is on a different delta, but it definitely came in,” the trader said. Fluidigm’s 2.75% convertibles due 2034 were quoted at 73 bid, 77 offered, in the early going with the bond’s underlying shares down 35%.

A second market source said the paper was at 74 bid. Prior to Friday the bonds were trading in the mid 80s.

Fluidigm shares ended down $7.08, or 35.5%, to $12.85.

A trader said he didn’t immediately know by how much the bonds came in because holders were on various deltas.

Fluidigm reported a second quarter loss, and earnings excluding items missed estimates substantially. Revenue also missed estimates and the company cut its full-year revenue outlook below consensus.

Revenue for the quarter was up 4% at $28.6 million compared to the year earlier period but its quarterly loss, excluding items was wider at $5.8 million compared to a loss of $1.7 million in the second quarter of 2014.

“2015 continues to be a challenging year for Fluidigm,” according to a company news release. “While our single-cell proteomics product line performed well in the second quarter, our results were pressured by decreased sales of consumables to production genomics customers and a decline in single-cell genomics instrument sales.”

The company said it has implemented an action plan to address the issues.

-Rebecca Melvin contributed to this review

© 2015 Prospect News.
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