Goodrich Petroleum continues climb post-earnings, stock sale; SandRidge remains under pressure

By Stephanie N. Rotondo

Phoenix, March 2 – A trader said it was “quiet” in the distressed debt market on Monday, but a couple names that were notable Friday saw some follow-through.

Goodrich Petroleum Corp. was “up a bunch,” a trader said, as the company announced a secondary offering of stock.

The company’s earnings – which were released Friday – missed estimates.

SandRidge Energy Inc. – which came out with numbers after Thursday’s close – was meantime continuing to decline.

While there was continued activity in those names, Cliffs Natural Resources Inc. “wasn’t trading much,” a trader said.

The company announced a $750 million tender offer on Friday for its four series of senior notes – the company’s second attempt, after nixing a deal in early December.

Still, a trader said the bonds “seemed a little bit lower,” placing the 5.95% notes due 2018 at 88.

Goodrich on the rise

Goodrich Petroleum continued to gain ground Monday, following the company’s earnings release on Friday.

On Monday, the company announced an offering of 12 million common shares, the proceeds of which would be used to reduce borrowings under its credit facility.

One trader placed the 8 7/8% notes due 2019 – which become callable March 15 – in a 50 to 51 context. Another market source pegged the paper around 50¼, up from the mid-40s on Friday.

In the company’s preferreds, the 10% series C cumulative preferreds (NYSE: GDPPC) rose 34 cents, or 3.66%, to $9.64. The 9.75% series D cumulative preferreds (NYSE: GDPPD) improved 14 cents, or 1.53%, to $9.28.

But the common stock (NYSE: GDP) did not fare as well as the new stock offering got under way.

The shares declined 52 cents, or 11.61%, to $3.96.

For the quarter, the Houston-based oil and gas company posted a loss of $225.8 million, or $5.23 per share. On an adjusted basis, the loss was 47 cents per share.

Analysts polled by Zacks Investment Research had forecast a loss of 46 cents per share.

Revenue was $48.6 million for the quarter. That also came in below of expectations of $57 million.

For the full year, net loss increased to $353.1 million, or $8.62 per share. Revenue was $208.6 million.

In addition to announcing its earnings, Goodrich also said that it was planning a $100 million offering of 8% senior secured notes due 2018. The sale will include warrants to purchase up to 4.88 million common shares at an exercise price of $4.66, a 10% premium over Thursday’s closing price.

The company has the option to sell anther $75 million of the notes in the future.

The new issue was not the last of the news the company had to offer. Goodrich said that it had amended its first-lien credit facility in order to extend the maturity to February 2017. The borrowing base was also reset to $200 million and will be reduced to $150 million upon closing of the sale of the second-lien notes.

SandRidge continues to sink

Also in the oil and gas arena, investors continued to be unenthused about SandRidge Energy’s debt, after the company’s own earnings release late Thursday.

The company posted a larger profit, but saw a hefty decline in revenues.

One market source saw the 7½% notes due 2021 falling over 3 points to 72 bid. Another saw the issue in a 71 to 71½ zip code, down from 73 previously.

The second source also saw the 7½% notes due 2023 at 68¾ bid, 69¼ offered, down from 71 bid, 72 offered on Friday.

A third trader placed the 2021 paper in a 71 to 72 area, off “a couple points.”

For the fourth quarter, the Oklahoma City-based company said income improved to $314.1 million, or 48 cents per share, from $73.4 million, or 6 cents per share, the year before.

However, revenue declined over 25% to $346.9 million.

For 2015, SandRidge said its capital budget would be $700 million, a 56% decline year over year. The company also said it was reducing its rig count to 7 by mid-year.

It started the year with 32 rigs.

As the company looks to deal with depressed oil prices – like its sector peers – SandRidge also chose to amend certain financial covenants on its senior credit facility.

The amendments are valid through June 30, 2016.

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