Oil, gas bonds drop with crude as Goldman sees prices at $45 by fall; Colt tender extended

By Stephanie N. Rotondo

Phoenix, May 19 – Distressed oil and gas names were pressured Tuesday, along with crude oil prices.

The declines came as Goldman Sachs analysts speculated that crude prices could drop back down to $45 a barrel by October, citing increased production by OPEC producers like Saudi Arabia and Iraq.

West Texas Intermediate crude declined $2.17, or 3.65%, to $57.26 per barrel, while Brent crude dropped $2.08, or 3.14%, to $64.19.

In the oil and gas space, a trader said Sabine Oil & Gas Corp.’s 9¾% notes due 2017 slipped a quarter-point to 19. Comstock Resources Inc.’s 7¾% notes due 2019 were meantime off half a point a 53¼.

SandRidge Energy Inc. and Energy XXI also continued to see a fair bit of weakness in their debt, according to the trader.

But it was Midstates Petroleum Co. Inc. bonds that really took a hit.

A trader was unsure why the debt was hit so hard, remarking that the comments made by Goldman probably would not have resulted in such high losses.

Colt Defense LLC yet again extended an exchange offer for its 8¾% notes due 2017, as the tender has garnered limited support.

Still, trading in the debt was “pretty quiet,” a trader said.

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