Cobalt International paper continues to decline; Goodrich stock gyrates ahead of earnings

By Stephanie N. Rotondo

Phoenix, Aug. 6 – Cobalt International Energy Inc.’s convertible debt and equity remained on the decline Wednesday, just one day after the company reported weak earnings.

The 3.125% convertible notes due 2024 closed at 92.5 bid, 92.625 offered versus 92.375 bid, 93 offered. The 2.625% convertible notes due 2019 were pegged at 84.75 bid, 85 offered, which compared to 85.25 bid, 85.375 offered previously.

As for the stock, it was down 18 cents, or 1.27%, at $14.04.

On Tuesday, the Houston-based oil exploration and production company reported a wider-than-expected loss for the most recent quarter. The company also disclosed that it had received a Wells notice from the U.S. Securities and Exchange Commission – a warning that the SEC plans to bring an enforcement action against a person or company – relating to Cobalt’s oil operations in Angola.

The investigation related to the Wells notice has been ongoing since 2011. In regards to the recommendation of an enforcement action alleging violations of certain federal securities laws, the company said in a filing that the SEC staff “may recommend that the SEC seek remedies that could include an injunction, a cease-and-desist order, disgorgement, pre-judgment interest and civil money penalties.”

The company also said the Wells notice “is neither a formal allegation nor a finding of wrongdoing. It allows the company the opportunity to provide its reasons of law, policy or fact as to why the proposed enforcement action should not be filed and to address the issues raised by the staff before any decision is made by the SEC on whether to authorize the commencement of an enforcement proceeding. The company intends to respond to the Wells notice in the form of a ‘Wells Submission’ in due course.”

The company said it believes its activities in Angola have been compliant with all laws, including the U.S. Foreign Corrupt Practices Act.

As for its quarterly results, Cobalt said it lost $95 million for the second quarter, or 23 cents per share, compared with a net loss of $79 million, or 19 cents per share, in the year-earlier period. Analysts were expecting a loss of 17 cents per share.

Elsewhere, a trader noted that Goodrich Petroleum Corp.’s (Nasdaq: GDP) stock was “finally having an up day,” after steadily dropping over the last month and a half. But support faded late in the session, and the stock dropped.

In mid-June, the equity was trading around $30, the trader said. As of Tuesday’s close, the issue was at $17.44.

But come the midweek session, the stock was pushing up 49 cents, or 2.81%, to $17.93 in early trades.

The stock hit its peak around 11 a.m., reaching as high as $17.96. But then the equity began working its way back down, falling sharply in the last half hour of trading.

The shares ended the day at $17.32, down 12 cents.

The 5% convertible notes due 2032 meantime finished at 110 bid, 111 offered.

There hadn’t yet been much movement in the company’s bonds at mid-morning, but the trader noted that the company reports earnings on Thursday, which could create some volatility.

Mentioned in this article:

Cobalt International Energy Inc. Nasdaq: CIE

Goodrich Petroleum Corp. Nasdaq: GDP

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