McDermott bonds jump on earnings; Midstates cancels earnings release; Goodrich preferreds firm

By Stephanie N. Rotondo

Phoenix, March 3 – There continued to be some strength in the distressed energy space on Tuesday, spurred in part by a gain in oil prices and in part to credit-specific news.

West Texas Intermediate crude ended the day up 72 cents, or 1.45%, at $50.31 a barrel. Brent crude gained $1.51, or 2.54%, to $61.05.

McDermott International Inc. popped in trading as investors reacted to the company’s earnings, which were deemed as solid by analysts.

Investors also shook off a postponed earnings announcement from Midstates Petroleum Co. Inc. The company was slated to release the numbers after the market closed on Tuesday, with a conference call scheduled for Wednesday.

While those names gained traction, Samson Investments Co.’s 9¾% notes due 2020 weakened after Moody’s Investors Service downgraded the company to Caa3 from B3.

A trader called the issue down almost a point at 33¾.

Moody’s said the rating change was due to the company’s “high risk of default.”

McDermott rises

McDermott International, a Houston-based provider of engineering and construction services for the oil and gas industry, saw its bonds jump Tuesday, following the company’s earnings release on Monday.

A trader saw the 8% notes due 2021 rising almost 7 points to 76¼.

The company’s stock (NYSE: MDR) meantime jumped 72 cents, or 27.59%, to $3.33.

For the fourth quarter, McDermott – in the midst of a turnaround effort – reported net income of $8.2 million, or 3 cents per share. That compared to a net loss of $326.2 million, or $1.38 per share, the year before.

Revenue was $806.4 million, up $289.1 million.

In addition to posting the much-improved numbers, the company said it had come up with a plan to improve its cost structure. Its three-point plan included increasing organizational efficiency, centralizing front- and back-office function and operational cost initiatives.

The plan is expected to save the company $50 million in 2015 and $100 million in 2016.

As a result of the cost structure review, McDermott said it expects to see $25 million to $35 million in restructuring costs this year.

Midstates postpones earnings

Midstates Petroleum’s debt ended firm despite the company nixing its earnings release on Tuesday.

A trader called the 9¼% notes due 2021 half a point higher at 61, while the 10¾% notes due 2020 increased almost 3 points to 62½.

However, the company’s equity (NYSE: MPO) fell 2 cents, or 1.89%, to $1.04.

The Tulsa, Okla.-based oil and gas company said the postponement was “to allow for more time to finalize its year-end financial results.”

Goodrich on a roll

Goodrich Petroleum Corp.’s preferreds continued to gain momentum, as the company announced dividends.

The 10% series C cumulative preferreds (NYSE: GDPPC) were up $2.95, or 31.72%, to $12.25. The 9.75% series D cumulative preferreds (NYSE: GDPPD) improved $2.54, or 27.37%, to $11.82.

There was also alot more volume than usual in the issues than usual, with the Cs trading about 375,000 times and the Ds moving approximately 465,000 times.

Holders of the series C preferreds will receive a dividend of 62.5 cents per share on March 16. The dividend on the Ds will be 60.9375 cents per share on the same date.

As for the 5.375% series B convertible preferreds, those holders will get 67.19 cents per share.

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