Oil, gas names weak despite oil gains; McClatchy revises results, bonds decline; Abengoa falls

By Stephanie N. Rotondo

Phoenix, Aug. 10 – A rally in crude oil prices on Monday did very little to help improve the tone of distressed oil and gas bonds.

Benchmark crude saw a more than 2% gain on the day, due in part to a refinery issue at a BP plant in Indiana. The issue had some investors thinking that the event could help oversupply concerns.

Among oil and gas names, a trader saw Energy XXI Ltd.’s 8¼% notes due 2018 falling over a point to 44.

California Resources Corp.’s 6% notes due 2024 meantime slipped nearly a point to 75¾, the trader said.

Also losing were Chesapeake Energy Corp.’s 5 5/8% notes due 2020, which declined almost a point to 80 5/8.

Swift Energy Co. and MidStates Petroleum Co. Inc. both saw their bonds lose a point on the day, with Swift’s 7 7/8% notes due 2022 ending at 24 7/8 and MidStates’ 9¼% notes due 2021 closing at 33.

But it was SandRidge Energy Inc. that had one of the day’s larger drops, according to a trader. He said the 8 1/8% notes due 2022 fell 3 points to 25 and the 7½% notes due 2021 weakened a deuce to 25¾.

McClatchy revises earnings

McClatchy Co.’s 9% notes due 2022 were under pressure Monday as investors reacted to the newspaper publisher’s revised earnings.

The amended results were released late Friday and showed the company swinging from a previously reported profit to a loss.

A trader called the bonds down 2 points at 87½.

In July, McClatchy announced its second-quarter results, reporting a $98,000 profit. However, at that time, the company warned that it might have to revise said earnings.

As it turned out, McClatchy did have to restate the financial statement to factor in a $300 million impairment charge due to the declining value of goodwill and other nontangible assets.

Based on the revised numbers, the Sacramento-based company posted a net loss of $296 million.

Revenue fell to $262 million from $287 million.

Abengoa falls again

Abengoa SA’s 6½% notes due 2019 remained weak Monday despite news that the company, along with Toshiba Corp., had been tapped to build a new biomass plant in Northern England.

A trader said the notes were off “another 7 points” at 51.

Abengoa’s side of the contract with MGT Teesside – for engineering, design and construction phases of the project – is valued at $656 million.

But the Seville, Spain-based sustainable technology development company has seen its debt sliding in the last week.

On Aug. 3, the company said it wanted to raise €650 million of new capital. Additionally, it wants to divest itself of about €500 million of assets.

The latter figure was up from those presented on Friday during an earnings conference call. Participants in that call also learned that the company’s free cash flow would be about €800 million lower than previously forecast.

© 2015 Prospect News.
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