Oil, gas eyed after OPEC supply news; Goodrich Petroleum drops 10 points; Quidel on tap

By Rebecca Melvin

New York, Dec. 1 – U.S. convertibles were mostly quiet Monday following last week’s Thanksgiving holiday. But oil and gas convertibles were in focus as market players reevaluated where these issues should be trading in light of OPEC’s decision to keep oil output steady to prevent U.S. competitors from gaining market share.

Oil producer securities were pummeled despite a sharp rebound in oil prices.

“Nobody knows were to trade oil and gas names,” a New York-based trader said.

Fundamental research and how much tolerance for pain there is at any one issuer and how far underwater they are were things that market players were weighing, he said.

Goodrich Petroleum Corp.’s 5% convertibles due 2032 traded down about 10 points to around 60 and were bid lower, sources said, as shares of the Houston-based oil and gas exploration and development company fell 22%.

Other names in focus were Energy XXI Ltd., Emerald Oil Inc., Cobalt International Energy Inc. and BPZ Resources Inc.

Denver-based oil and gas E&P company Emerald Oil was offered at 57 but was not trading and would probably be offered lower, one source said.

In primary market action, San Diego, Calif.-based Quidel Corp., a provider of diagnostic testing solutions, launched an offering after the market close for $150 million of six-year convertible senior notes. The notes were talked to yield 2.75% to 3.25% with an initial conversion premium of 32.5% to 37.5%.

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