E&P sector down with crashing oil prices; Claire’s Stores up after Q1 numbers; little movement for iHeart

By Colin Hanner

Chicago, June 7 – A hiccup in estimates for U.S. crude oil inventories caused an across-the-board plunge for exploration and production companies in the distressed debt market on Wednesday, market sources said.

Instead of seeing a decrease of more than 3 million barrels during last week’s production, the Energy Information Agency reported a 3.3 million-barrel increase on the week, prompting crude oil futures to drop several points in tandem with California Resources Corp. and MEG Energy Corp., which were also lower on the day.

Claire’s Stores Inc. reported first quarter earnings that, at the very least, surprised bondholders, who sent two of the Hoffman Estates, Ill.-based retailer issues several points higher each.

A media report suggested that iHeartCommunications, Inc. may be extending its exchange offer deadline past Friday, a potential sixth pushback that has been occurring since mid-April, though bonds were not very active on the session, traders said.

Global shipper Navios Maritime Holdings Inc. were up slightly, as were Guitar Center, Inc. and grocer Fresh Market Inc.

Oil down with market

Estimates of weekly crude oil inventories were markedly off before official figures were released by the EIA on Wednesday, causing a several-point loss for crude oil on the session.

On the heels of an Organization of Petroleum of Exporting Countries supply cut extension that did little to quell market worries, this comes as another roadblock to get crude oil to a comfortable level.

West Texas Intermediate crude was down close to 5% to below $46 a barrel.

California Resources 8% notes due 2022 were down 4¾ points to 67½ on heavy volume, a trader said.

Canadian oil sands producer MEG Energy’s 7% notes due 2024 were down 2 5/8 points to 83 1/8.

Oil driller Noble Holdings International Ltd.’s 7¾% notes due 2024 were down ½ point to 87½.

EP Energy Corp.’s 8% notes due 2025 were down 2¾ points to 81½.

Bristow Group Inc., a helicopter transport service that mostly serves the offshore energy drilling industry, was down 4 points to 62¾ in its 6¼% notes due 2022.

Claire’s higher on earnings

In the struggling retail sector, there was a shimmer of positive news on the traditional store front on Tuesday.

Claire’s Stores was up by several points in its 9% notes due 2019, which were up 4½ points to 52, a market source said.

Its 6 1/8% notes due 2020 were up 5¼ points to 48.

Highlights of the company’s earnings include flat year-over-year sales in the first quarter, which came out to $299.6 million. Excluding foreign currency exchange rates, net sales would have increased 2.4%, the company said.

Adjusted EBITDA was up to $41.8 million from $37 million at the same time last year.

Year-over-year, Claire’s decreased its total global stores to 3,327, an 83-store decrease, and, during the same period, increased concession stores to 901 from 733.

iHeart mixed after pushback whispers

On Wednesday, a media report said that iHeartMedia would likely extend its debt exchange offer past its June 9 deadline, though activity paled on the session to the news.

“There’s not too much to take from it at all,” a market source said of the news. “Maybe there’s some hope that there’s still some ongoing talks, and whether the exchange will have a different form. But unless they change the way they change their structure, it’s not going to go anywhere.

“The probability of bankruptcy has gone higher as no progress has been reached,” the source continued, adding that there is still a window of opportunity for the two parties to come to agreement.

Yet, drawing comparisons to Intelsat SA’s most recent exchange offer, which was pushed back and ultimately terminated, the market source said things are not looking up.

On the day, the 14% notes due 2021 were lower at 21½, movement that a market source said showed bondholders were more concerned with filing for bankruptcy.

The 10 5/8% notes due 2023 were up ½ point to 74¾.

Distressed wrap

Navios Maritime’s 7 3/8% notes due 2022 were up 1 point to 77, a market source said.

Music retailer Guitar Center’s 6½% notes due 2019 were up 1 point to 87.

And Fresh Market’s 9¾% notes due 2023 were up 1 point to 88½, on what a trader called a continued rise most likely attributable to someone “bidding them up.”

© 2015 Prospect News.
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