SandRidge weaker on rig count cut; SEC concludes Linn hedging probe; Energy XXI swings to loss

By Stephanie N. Rotondo

Phoenix, Feb. 9 – The trading week began with another gain in oil prices, which helped to push up names like Samson Investments Co.

A trader said that company’s 9¾% notes due 2020 improved 4 points to 38½, as West Texas Intermediate crude gained $1.17, or 2.26%, to $52.86.

“That’s a nice little pop,” he said of Samson’s gains. “Funny how oil can do that.”

Along with the oil price gains, several names in the oil and gas sector had news out, which helped move those issues one way or another.

For instance, SandRidge Energy Inc. was mostly weaker Monday as it was reported that company was cutting its drilling rig count by 75%.

But Linn Energy LLC was pushing higher as the company said a Securities and Exchange Commission investigation into its hedging practices concluded with no further action being taken.

Away from oil, RadioShack Corp.’s notes were seen up a couple points as the newly bankrupt company progressed with its case.

SandRidge cuts rigs

Reuters reported Monday that SandRidge Energy was planning to cut its drill rig count in Oklahoma and Kansas by 75%.

The cut would decrease the amount of operating rigs to eight from 28.

On the news, the company’s bonds were trending toward the softer side.

A trader said the 7½% notes due 2023 fell almost a point to 72¾, while the 8 1/8% notes due 2022 fell almost half a point to 75.

However, he said the 7½% notes due 2021 inched up slightly to 75.

Another market source called the latter issue up half a point at 75 bid.

The oil and gas producer is based in Oklahoma City.

Linn’s SEC probe over

Houston-based Linn Energy was meantime trading up as the company said an SEC investigation into its hedging practices had been completed and that the regulatory agency was taking no further action.

A trader saw the 6¼% notes due 2019 at 84½, up 2½ points, and the 6½% notes due 2019 at 85, up 1½ points.

The company first announced the SEC probe July 1, 2013, following a $4.3 billion bid for Berry Petroleum Co.

“The SEC has requested the preservation of documents and communications that are potentially relevant to, among other things, LinnCo's proposed merger with [Berry], and LINN and LinnCo's use of non-GAAP financial measures and hedging strategy,” the company said in a press release as the probe was launched. “The SEC has stated that the fact of the inquiry should not be construed as an indication that the SEC or its staff has a negative view of any entity, individual or security. LINN and LinnCo are cooperating fully with the SEC in this matter.”

Energy XXI posts loss

Energy XXI paper was weaker Monday after the company reported a loss for its fiscal second quarter.

A trader called the 8¼% notes due 2018 off 1¼ points at 69¾.

For the quarter, the Houston-based oil and gas company posted a net loss of $376.6 million, or $4.01 per share. For the same quarter of fiscal 2014, the company had reported a profit of $7.6 million, or 10 cents per share.

Revenue was $357.8 million, up from $296.8 million.

Along with its earnings, Energy XXI also is looking at ways to monetize assets and reduce costs.

During a conference call to discuss the numbers and its financial future, management said it was looking at all of its options and that it was confident there were several ways it could shore up its balance sheet amid the low oil price environment.

EXCO improves

Also in the oil and gas space, EXCO Resources Inc. said it had amended certain covenants under a credit agreement, giving the company more flexibility to continue operating until oil prices improved.

The 7½% notes due 2018 closed at 71½, up almost 2 points, according to a trader.

EXCO is based in Dallas.

RadioShack rises

A trader said RadioShack’s 6¾% notes due 2019 were “up a couple points” during Monday trading.

He pegged the issue at 17 1/8.

In court papers filed Monday, the bankrupt Fort Worth, Texas-based electronics retailer laid out a list of over 1,000 stores it plans to liquidate. The judge overseeing the company’s case – Judge Brendan Shannon – gave the OK for stores to continue with going-out-of-business sales, many of which began on Friday.

Additionally, the judge granted the company interim approval on its $285 million financing agreement with lenders.

Also in the world of retail, Claire’s Stores Inc.’s debt remained under pressure.

A trader placed the 7¾% notes due 2020 at 35¼, off almost a point, and the 8 7/8% notes due 2019 at 62, down 1½ points on the day.

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