Citi's convert desk picks oil service, E&P names after sector decline

By Rebecca Melvin

New York, June 30 - A number of E&P and oilfield service companies whose stocks and convertibles have declined in the wake of the Deepwater Horizon accident in April may be attractive given their diversified geographic business mix or, in some cases, no operations at all in the Gulf of Mexico, Citi's convertibles sales and trading desk said in a research note Wednesday.

Those names include the likes of Bristow Group Inc., which obtained only 16% of its revenue from North America in 2009, and Carrizo Oil & Gas Inc., which has had its bonds hold in despite a 30% drop in the underlying shares.

Houston-based Bristow has a 3% convertible due 2015 that stands at about 82.5 versus a share price of $30.50, compared to 90 versus a stock price of $38.10 on April 1.

Houston-based Carrizo has a 4.375% convertible due 2013 that stands at about 87 versus a stock price of $17, compared to 87 versus a stock price of $23.90 on April 1.

Other names include SM Energy Co., which is land-based, and Endeavor International Corp., which has no exposure to the Gulf of Mexico, as well as 12 other names.

The names seem attractive based on a pullback since April, theoretical cheapness, or in the case of the preferred issues, low point premiums, the Citi note said.

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