California Resources falls with oil futures; Community Health drops further

By James McCandless

San Antonio, Dec. 18 – Falling oil prices caused distressed oil names to continue to be at the forefront of activity, falling in Tuesday’s session.

Leading trading was California Resources’ notes, losing in Tuesday’s session as crude oil futures continued to hit lows not seen since August 2017.

Meanwhile, Weatherford International plc’s notes were lower a day after the company announced an asset sale and after recently receiving a delisting warning.

The oil price decline also led to negativity in Sanchez Energy Corp., EP Energy Corp. and Ensco plc.

In the medical space, Community Health Systems, Inc.’s and Tenet Healthcare Corp.’s paper continued to drop after a federal judge ruled part of the Affordable Care Act unconstitutional on Friday.

Elsewhere, Xerox Corp.’s issues finished the session lower.

Dean Foods Co.’s paper saw a drop on heightened attention.

CalRes leads energy lower

California Resources’ notes fell Tuesday, traders said.

The Los Angeles-based independent oil and gas producer’s 6% notes due 2024 lost 4½ points to close at 63½ bid. The 8% notes due 2022, leading volume in the distressed space with 62 million of the bonds on the tape, fell 3¾ points to close at 69¾ bid, according to Trace data.

Meanwhile, Weatherford’s issues were also lower.

The 8¼% notes due 2023 dropped 1¾ points to close at 64¼ bid. The 9 7/8% notes due 2024 shed 1½ points to close at 64½ bid.

The Baar, Switzerland-based oilfield services provider has been topical after Monday’s news that it had sold its surface data logging business for $50 million in cash.

It also received a delisting warning from the New York Stock Exchange on Friday.

Other distressed oil names trended negative with crude futures.

Houston-based producer Sanchez Energy’s 6 1/8% paper due 2023 shaved off 2¼ points to close at 18¼ bid.

Houston-based peer EP Energy’s notes joined the negative trend.

The 8% notes due 2024 lost 5½ points to close at 77½ bid. The 8% notes due 2025 fell 3½ points to close at 42 bid.

London-based contract driller Ensco’s 7¾% notes due 2026 declined 1¾ points to close at 76½ bid. The 4½% notes due 2024 dropped 1½ points to close at 67 bid.

The Tuesday session ended with West Texas Intermediate crude oil futures losing $3.64 to settle at $46.24 per barrel.

North Sea Brent crude futures ended at $56.26 per barrel after a $3.35 loss.

“I think energy is going to remain soft for the rest of the year,” a trader said. “There might be a slight recovery but expect more of the same.”

Community Health down

For another day, Community Health’s paper declined, market sources said.

The 6¼% paper due 2023 lost ¼ point to close at 92 bid. The 6 7/8% paper due 2022 dropped ¾ point to close at 48 bid.

On Monday, the 6¼% paper lost 1¼ points and the 6 7/8% paper shaved off ¼ point.

The Franklin, Tenn.-based hospital operator’s paper has been declining in the last few days after news broke this past weekend that a federal judge in Texas ruled that the individual mandate provision of the ACA was unconstitutional, setting up another legal fight over the law.

Dallas-based sector peer Tenet’s 6 7/8% notes due 2031 traded down ¼ point to close at 86 bid.

Xerox negative

Xerox’s issues saw another negative day, traders said.

The 3.8% notes due 2024 lost ¾ point to close at 81½ bid.

On Monday, the 3.8% notes dropped 4½ points.

The Norwalk, Conn.-based print and digital document solutions company recently received a pair of ratings downgrades.

Moody’s Investors Service lowered the company’s senior unsecured debt ratings and affirmed a negative outlook on Friday.

S&P Global Ratings downgraded its long-term issuer credit rating, short-term rating and debt issue-level ratings.

Dean Foods off

Dean Foods’ paper dropped, market sources said.

The 6½% paper due 2023 lost 2¾ points to close at 83¼ bid.

The Dallas-based dairy products producer’s paper has been under pressure throughout the year, moving further into distressed territory in early November after reporting a third-quarter earnings loss of 6 cents per share.

“There’s been no news out on it lately but it’s starting to trade a lot over the last week,” a trader said. “It’s definitely something to watch.”

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